Claims time bars – beware the time zone trap!

In Euronav N.V. v Repsol Trading S.A. (The “Maria”) [2021] EWHC 2565 (Comm), the nine-hour time difference between where the parties were based and where the vessel discharged, led to a loss of almost US$500,000 demurrage.

Facts of the case

Owners voyage chartered “Maria” to Charterers on a Shellvoy 6 form, for the carriage of a cargo of crude oil from Brazil to the US West Coast, by which clause 15(3) provided that:

“Owners shall notify Charterers within 30 days after completion of discharge if demurrage has been incurred … If Owners fail to give notice … Charterers’ liability for … demurrage shall be extinguished.”

The vessel loaded at Santos, Brazil and discharged at Long Beach, California with Owners claiming US$ 487,183.12 of demurrage.

The vessel disconnected cargo hoses at 21:54 Pacific Standard Time (PST) on 24 December 2019.  This corresponded with 06:54 Central European Time (“CET”) on 25 December 2019, where both parties were based – a nine hours’ time difference.

On 24 January 2020, Owners sent Charterers an email timed at 12:42 CET, stating that demurrage had been incurred on the voyage and that the email was notice of demurrage.  A dispute arose about whether that notice had been sent in time.

Judgment

As the charter was silent on the issue, the judge concluded that the date of final discharge of the cargo should be determined using local time at the place the cargo was discharged. That meant Owners had until midnight PST on 23 January 2020 to give notification within the 30 days allowed, with the result that the notice sent to Charterers the following day was out of time.

That conclusion followed a thorough legal analysis on how days and time are treated.  Days are ordinarily treated as calendar days counted from the day after the relevant event, and time is essentially a local concept. As such, the claim notification time bar was most closely connected with the place at which discharge was completed, as recorded in the statement of facts.

Furthermore, the paramount desirability of certainty as a guiding principle for commercial parties necessarily meant that adopting a far more complicated approach, such as by factoring in where the parties are based (which, unlike in this case, are often in different countries where different time zones apply), would undermine shipowners knowing what is required of them.

Conclusion

The stark result of this case underlines the importance of carefully checking charter terms, diarising deadlines and, above all, not leaving steps required to avoid time bars expiring until the last minute.

At North, we have experience of disputes where the lack of express terms on how days and time apply for the giving of notices and the taking of other time-sensitive steps, has caused ambiguity.

As such, where there are time-sensitive provisions in charters, it is far better to state expressly how days and time are to be treated to clarify how to protect and exercise rights in time.

Read the judgment at https://www.bailii.org/ew/cases/EWHC/Comm/2021/2565.html