This post first appeared in the January 2013 Asdem Oil Barge Newsletter. To see this Newsletter please go to www.asdem.co.uk and look for the ‘Newsletters’ tab
It is interesting to see that the LEAP group is specifically going to incorporate the principle of reversibility in their terms whereby any time save at the load port will be passed back to the buyer at the disport and vice versa. This reflects the position of a number of companies which already incorporate reversibility such as Stasco, BP and Total.
There is confusion where the sales contract terms are silent on this point but TTB rules have been incorporated into the deal. TTB rules cover the entire voyage of the barge and as such are reversible. When they are incorporated into an oil sales contract both parties mean that only half of the laytime applies as the contract only covers the load port or the discharge port and not both. In my view, merely incorporating the TTB rules does not import the principle of reversibility into the contract.
Many people insist on reversibility and quote “industry practice” to support the view. I am always reminded by Roger Sepkes that it is very difficult to prove custom and practice in an English court unless the expert witnesses on both sides agree that it is indeed the case. Furthermore, under English law it is permissible to make a profit in demurrage and conceding reversibility obviously removes one of the most common ways of making a profit.
Clearly, a lot of people agree to concede the point of reversibility as they wish to claim the same when the position of the parties is reversed. There may be other commercial reasons to concede this point as often the amount of money at stake is small. However, it is much better to ensure that your contracts clearly reflect whether reversibility is to apply or not.
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