October, 2021 - THE MARIA: calculating demurrage time bars and the applicable time zone
The Commercial Court has recently handed down a judgment in Euronav N.V. v Repsol Trading S.A (“The Maria”) [2021] EWHC 2565 (Comm) confirming that, for the purpose of calculating a demurrage claim time bar, the date of completion of discharge is determined according to the time zone applicable at the place where discharge took place.
Background facts
A dispute arose between the Owner (Euronav N.V.) and the Charterer (Repsol Trading S.A.) under a voyage charterparty on an amended Shellvoy 6 form (“the Charterparty”) for the carriage of crude oil from Brazil to 1/2 ports within a range on the US West Coast.
In the event, cargo discharge took place at Long Beach, California and hoses were disconnected at 21:54 local time (Pacific Standard Time) on 24th December, 2019. In Europe, the time was 06:54 on 25th December, 2019 applying Central European Time (CET) or 05:54 on 25th December, 2019 applying Greenwich Mean Time. Both the Owner and the Charterer were based in the CET time zone.
The Charterparty was subject to English law and the exclusive jurisdiction of the English High Court. Regarding presentation of demurrage claims, clause 15(3) of the Charterparty provided for two separate time bars as follows:
“Owners shall notify Charterer within 30 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully and correctly documented and received by Charterers within 90 days after completion. If Owners fail to give notice of or to submit any such claim with Documentation provided available, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished.”
On 24th January, 2020 at 12:42 CET the Charterer received an email from the broker with notification that the Owner considered that demurrage had been incurred. The ship had spent a total of 151 hours 48 minutes on demurrage during the voyage, which resulted in a claim for US$487,183.12.
The dispute
The Charterer disputed that the Owner’s notice had been sent within the 30 day limit in clause 15(3) of the Charterparty on the basis that completion of discharge should be determined using the local time at the place where discharge occurred. In their view, discharge was completed on 24th December, 2019 in Long Beach, California and the last day for notification was 23rd January, 2020, being 30 days from 25th December, 2019. Therefore, the Charterer asserted, the demurrage claim was time-barred as the notice of 24th January, 2020 was sent out of time.
The Owner disagreed and argued that a time zone which has the closest connection to the contractual provision in question should be applied. Its position was that the time zone most closely connected to the Charterparty provision was not Pacific Standard Time, but a European time zone where the parties’ administrative staff were based and where the notice had been sent/received. Applying a European time zone, discharge was completed on 25th December, 2020 and the last day for notification was 24th January, 2020, being 30 days from 26th December, 2019. Therefore, the Owner’s email notification of 24th January, 2020 was sent within time.
The question for the Commercial Court to consider was which time zone should be used to determine the date of completion of discharge for the purpose of calculating time and the demurrage time bar.
The judgment
The Commercial Court found in the Charterer’s favour and held that the date of completion of discharge should be determined according to the time zone of the place where discharge occurred.
In reaching its decision, the court considered that the ordinary and natural approach is to allocate to an event the date that was current in the place where the event occurred. Discharge of cargo from a ship is a tangible and physical event which occurs at a specific location and in a particular time zone which will be recorded in the documentation (e.g. the statement of facts) as having occurred at the local time and date.
Furthermore, the court agreed with the Charterer’s argument that the date of discharge of the cargo is significant not only for notification of demurrage claims but also for determining (1) the end of the contractual service to the shipper; (2) the end of the running of laytime/demurrage; and (3) the starting point for any cargo claims under the Hague-Visby Rules.
It would therefore be illogical for there to be more than one date of discharge used for different purposes. The use of local time at the place of discharge gives rise to a single, clear and easily ascertainable date and time of completion of discharge which promotes certainty and reduces the risk of confusion.
Accordingly, on the basis that the local time at the place of discharge applied to the 30-day time limit for notification of the demurrage under clause 15(3) of the Charterparty, the Owner’s notice dated 24th January, 2020 was served out of time and the demurrage claim was time-barred.
Comment
This decision clarifies that, absent any express provision in the charterparty, the date/time for completion of discharge is to be determined according to the local time zone where discharge took place.
In addition, the judgment contains a helpful summary of the general principles applicable to calculating time limits in contracts:
- When computing a period of time within which a certain thing must be done, the first day is not ordinarily counted i.e. in this case, the date of discharge was day zero and did not count as one of the 30 days for providing notice.
- Unless there is an express provision to the contrary, a ‘day’ is a period of twenty-four hours beginning and ending at midnight i.e. a calendar day. It does not mean a period of 24 consecutive hours.
- Except where it is necessary to settle which of two acts done on the same day was done first, the law does not recognise fractions of a day. To determine the duration of a period it is necessary to go forward to midnight on the day of the event before starting to count the days.
This decision is a reminder of the importance of timely notification of demurrage claims and that leaving notification to the last minute should be avoided.
As always, if Members have any questions in relation to the above issues, they are invited to contact the Club for further information.