Part of Asbatankvoy Clause 8 states
If, however, demurrage shall be incurred at ports of loading and/or discharge by reason of fire, explosion, storm or by a strike, lockout, stoppage or restraint of labor or by breakdown of machinery or equipment in or about the plant of the Charterer, supplier, shipper or consignee of the cargo, the rate of demurrage shall be reduced one half of the amount stated in Part I per running hour or pro rata for part of an hour for demurrage so incurred.
I have a regular debate about this clause when I share a practical demurrage session with a lawyer on one of the training seminars I am involved with.
My point of view – if there is a delay whilst the vessel is still within her laytime but the vessel nevertheless incurs demurrage, if that delay is caused by one of the quoted causes then for the duration of that delay the demurrage should run at half rate. T
he Opposing view – because the clause mentions only demurrage, then the half rate provision will only apply if the delay occurred after laytime has expired. As an example in a case where the charter allows 72 hours, if the event occurs in the first 72 hours then time runs in full and any demurrage incurred after the 72 hours is paid at the full rate. If the event occurs after the first 72 hours then that part of the demurrage will run at half rate.
Our argument depends on the interpretation of the words “If, however, demurrage shall be incurred” and my view is that demurrage has been incurred albeit that the event happened before laytime had expired.
In my defence I quote two rather old arbitration cases where this was decided in my favour: London Arbitration 10/89 and London Arbitration 18/04.
I had thought there were no court cases on this point but I have come across this article on the Skuld website http://www.skuld.com/templates/newspage.aspx?id=881 which infers that the breakdown of the Afrapearl was decided in my favour. I don’t know if this was ever part of the dispute in this case as the Afrapearl was a landmark case in dealing with what constitutes a “breakdown of machinery or equipment in or about the plant of the Charterer, supplier, shipper or consignee of the cargo”
What do you think? Are you on my side? Do you have arguments for the opposing view? Please convince me by posting your views here.
20 thoughts on “Asbatankvoy Clause 8 Half Demurrage Rate”
Hi Phil,
This is an interesting topic and one in which the interpretation of the clause has evolved over time. In the beginning, there was strict adherence in requiring that the Vessel be on demurrage in order to fall within this exceptions clause. However, today both sides of the ocean consistently agree that the exceptions within Clause 8 applies whether on laytime or demurrage. Here's a reasoned decision by a New York arbitrator who in fact cites the London Arbitration award that you had previously mentioned:
Half-Rate Demurrage – Applies even if Vessel is not “on demurrage”
Chembulk Rotterdam, SMA No. 3443 (4/30/98) (Asbatankvoy). After the vessel was All Fast a typhoon warning was issued. Discharge was suspended and the vessel was ordered off the berth. After the typhoon had subsided the vessel re-berthed and completed discharge. The Owners argued that the half-demurrage rate in Clause 8 of Asbatankvoy was not applicable prior to the expiration of allowed laytime. The entire period of delay at this discharge port, one of several disports for the cargo, had occurred with allowed laytime still remaining. The Owners argued that Clause 8 would only apply once the vessel went on demurrage. The sole arbitrator disagreed relying, in particular, on two earlier SMA Awards, No. 3112 and No. 3165, and also LMLN 247. The conclusion was that there was no reason to restrict the application of Clause 8 of Asbatankvoy to causes of demurrage that occurred once laytime had expired. The Owner’s demurrage claim was reduced by half the time lost as a result of the typhoon.
Kind regards,
K
Hi K
thanks for your comments and I'm pleased that you and the SMA agree with my view! Thanks for the SMA references too
best regards
Phil
Hi Phil
I agree with your interpretation too, and have always maintained the argument under asbatank. However, it is good to see K's contribution from the other side of the pond and that there is a common view by London and SMA Arbitrators.
This also gives me the opportunity to make reference to the fact that there must be many more common issues arbitrated on both sides of the pond, but not always so easy to compare, when London Arbitration bodies are so reluctant to publish awards, whereas the SMA seem to publish automatically. Something for your next blog maybe, unless considered 'political'??
Best Regards
David Atkins
Hi David
Thanks for your comments and agreement, it's 2-0 to me so far!
Thanks also for the suggestion to blog on LMAA, it's a good idea and I'll give it some thought
Best regards
Phil
Phil
I agree with your viewpoint, if there is a delay even within the first 72 hours then that would have contributed to a demurrage situation occuring. If it doesn’t then we wouldn’t even be discussing it.
Many people ignore half rate and go for half time, but that is incorrect, although in most cases it won’t make a difference to the amount being recovered.
Regards
Ritchie Jennings
Noble Clean Fuels Ltd
Hi Ritchie
thanks for your comment and another one on my side! I agree with your point about half time/half rate – it's all about the arithmatic.
best regards
Phil
Hi Phil,
I also agree with your view on the above. This is how i perceive it too and was also how my predecessor, Norma, perceived this clause!
Best Regards
Zara McCarthy
James Fisher Everard Ltd
Hi Zara
Thanks for your comment and I'm pleased to get another vote in my favour.
Best regards
Phil
Phil,
What would Tiger think…..BP V 4 is what he would say! But I agree with you, however we have gone down the BP Voy 4 route all be it with 59 additional clauses (god bless bank lawyers!)
Good luck
Toby
Hi Toby
Good to hear that BPVoy4 has been adopted although with 59 clauses that's more than a lot of people add to Asbatankvoy!
Best regards
Phil
The facts concerning The ‘Afrapearl’ reveal laytime had expired, with the ship then on demurrage, when discharge was suspended. The decision itself was founded on the Court having determined the leaking shore line was ‘equipment’,so falling within cl 8 of Asbatankvoy. Breakdown of the equipment had undoubtedlyarisen prior to the ship being berthed, and prior to demurrage occurring, but in that there was a breakdown of equipment, for which the Charterers were not liable,occassioning demurrage, that of itself sufficed to bring the issue within cl 8.
Support for the point that it remains immaterial as to when the event 1st ocurred, lies in words of Clarke L.J. that there was a breakdown of equipment, whenever the breakdown occurred, and the question is simply whether the delay was caused by that breakdown.
Incidentally, In the ‘Saturnia’, a case on the infamous Centricon ‘strike’ clause, where the evidence was that the ship was already on demurrage when strikes arose, Charterers were denied the opportunity to rely upon a 50% demurrage rate. That was on account the clause did not apply to a situation arising after the ship was on demurrage.. In short ‘once on demurrage, always on demurrage’ , not half demurrage applied.
David Mount, , , .
Hi David
thanks for the further clarification on the 'Afrapearl'. Interesting point on the 'Saturnia' – I find strike clauses to be a bit of a can of worms…
best regards
Phil
Dear phil,
it's a pleasure reading your blogs!.keep up the good work!
I think I have a rather easy question for you with reference to the clause 8 (50% demurrage):
We sold FOB from our terminal. Vessel was delayed due to a blocked loading line (product requires heating) for 8 hours. We rejected part of seller's claim basis 'breakdown of equipment', however seller refutes that is more of 'technical problem'. The delay is causally linked to the blocked loading line, but what's your opinion on the definition 'breakdown of equipment' versus 'technical problem' and the consequence of thus relying on clause 8.
thanks for your vision!
David
Hi David
Thanks for your comment, you raise an interesting point. I think you would have to look at the reason why the line was blocked. If it was as a result of a failure of the heating system I would say it is clearly a breakdown. If it was a case that it was not properly cleared after the previous shipment I think you may struggle on this point.
A case you may want to look at is the Afrapearl where there was some debate about what constitutes a breakdown. In this case a leaking shoreline was found to be a breakdown and reading the summary in Schofield's Laytime and Demurrage this was becuase the leak caused it [i]'not to function as a pipe'[/i]. You could make the same arguement in this case, that a blocked pipe causes it not to function as a pipe but on balance I would prefer to rely on the nature of what cuased the blockage in the first place.
I will throw this open to other readers – any other opinions out there on this point?
best regards
Phil
Dear Phil & esteemed Colleagues in Demurrage.
Being from Owners side, I have a question in relation to the concept of "Bad weather" under the Asbatankvoy.
Clause 8 specifically states "if demurrage incurs due to Storm":
So not any case of "bad weather applies for half rate of demurrage to apply – Charterers have to prove that the weather conditions is classified as "Storm" – which to best of my knowledge requires a certain rating on the Beaufort scale of wind-speed? (off-hand, I believe "storm" requires wind-speed to be 12 m/second or more?)
So even if swell or high waves prevent berthing, it does not necessarily justify half rate to apply under a standard Asbatankvoy.
Or under a BPvoy for that matter, where only "adverse weather" justifies half rate demurrage in relation to weather. So if a port is customarily considered prone to weather preventing berthing, can such frequently occuring weather condition be considered "adverse"? When it is not in any way uncommon for that specific port?
Hi Annette
I agree with you regarding storm under Asbatankvoy. In English law the definition of a storm is Beaufort Scale 10 or above. Often only weather conditions of Beaufort Scale 4 or 5 is enough to prevent the berthing of a vessel and to get this protection Charterers must prove that it was a storm. It was for this reason than many fixtures now contain the Conoco Weather Clause which just refers to bad weather.
BPVOY4 is a different case as 'adverse weather' has a much wider application. A long period of good weather may be great if you are on holiday but for a farmer it could ruin his crop and this 'good weather' would be 'adverse weather' for the farmer. I remember a terminal where a minimum of a light breeze was required to disperse the vapours from the deck of the tanker. Loading had to be stopped bvecuase there was no wind – this is 'adverse weather' as it is adverse to the loading operation.
When a port is susceptible to weather I don't think you can avoid the applicatiuon of the weather clauses. What happens is the addition of another clause which lists those ports or areas which are more susceptible to weather delays and the clause will say that time will count in full.
Another argument put forward is the bad weather renders the port unsafe – this argument is most unlikly to succeed as the courts have given high hurdles when defining an unsafe port.
Hope this clarifies and if anyone else has a view please add it here
best regards
Phil
Hi Phil,
This is interesting and I can’t agree more to your view/example for ‘adverse weather’. However, as I had dealt with a similar case as above in the past and still encounter at times, I can’t stop wondering if a certain weather condition like lack of light breeze/no wind blowing is really qualified as ‘adverse weather’ since this weather condition can be overcome or wouldn’t become “a problem” if/when terminal has a vapour recovery reception and the ship is equipped with vapour recovery lines as believe that the stoppage/suspension of loading operation is taken by terminal as a precautionary measures in order to avoid building of toxic gas.
A port becomes susceptible to weather, not because of a geographical or topographical reasons, just because the status of facilities at a port.
The wording of the common weather clause is: Any delay arising from … adverse weather …” Implied in this must be that the weather objectively causes the delay, i.e. that the weather would be a factor generally for all ships in the port at the time. The situation like above seems to that there is in place a certain local procedure at the terminal to the effect that cargo operations are suspended when there is no wind blowing. But if my understanding is correct, this is a subjective requirement based on the perception that the absence of wind produces an undesirable scenario. Just a thought.
Hi Rachel
Thanks for your comments and you raise some interesting issues.
I agree that a port properly equipped with a vapour recovery system would overcome delays of this nature. I think it could be argued in many other situations. For example some weather clauses exclude 'open sea berths' but without such a phrase weather delays would count at half rate. You could argue that the terminal owners should install a breakwater and this would cut down the number of delays due to weather.
I don't think the weather delay has to be such that it must affect all vessels in that port. I know of ports where different levels of wind speed affects differnet vessels according to the size of the vessel.
You are right that to some degree declaring a port closed due to weather is subjective. Most ports will close when the wind speed reaches a certain level, or the swell is at a certain level. However, I have come across one occasion where the Master decided that the weather was too bad to berth his vessel which made me think that there is no one authority that has exclusive jurisdiction over these decisions and of course the master must always consider the safety of his vessel.
If you have any further thoughts please add your comments here
best regards
Phil
Would like to know more about conoco clause, in what situation will it apply and is there any exception that stop it from being effective.
Hi Caroline
The Conoco Weather clause is normally added to Asbatankvoy as other tanker charter parties deal with weather delays in different way. There are a number of variations but assume it is something like:
Delays in berthing for loading or discharging and any delays after berthing which are due to weather conditions shall count as one half laytime or, if on demurrage, at one half demurrage rate.
Then any delays due to weather will mean that the delay is shared on a 50/50 basis between Charterers and Owners.
There are a few limitations though. For example it will only apply to the vessel at the head of the queue i.e. next vessel in line to berth. If the vessel is second in line to berth or further back in the queue arbitrators have held that the delay is congestion and the Conoco Weather clause does not apply.
Another issue is that the Conoco Weather Clause only applies to weather delays. In some ports a vessel may get delayed due to swell. Swell is often the result of bad weather such as high winds but in itself swell is a sea state condition and not a weather condition.
If you have a dispute over this clause I would be interested to hear. Please post it here or if you are unable to publicly disclose the details please drop me an email.
best regards
Phil