Logjam - NOR, freight and demurrage - London Arbitration 22/19 

London Arbitration 22/19 [(2019) 1040 LMLN 1] involved a log carrier chartered for a part cargo. Owners agreed to change the original disport in return for increased freight, and later claimed about $89,000. Charterers countered for over $55,000, and demurrage was central amid many issues arising from a seeming straightforward fixture. 
 
Main Issues 
 
1. Additional freight 
 
This was routine application of the well known rule in the "ARIES" [1977] 1 Lloyd’s Rep 334 - when freight is payable, it is almost impossible for charterers to make a valid deduction. 
 
Freight was payable within five banking days of completion of loading, and the Tribunal unsurprisingly applied that to the additional freight, too. 
 
For some reason charterers had argued that such was not in fact payable, because delivery had not been made - after discharge the logs were held by owners, in continuing exercise of a lien for non-payment of the (presumably) additional freight. 
 
The Tribunal ruled that valid exercise of a lien for unpaid freight did not prevent delivery occurring, and awarded owners $32,520.81 for additional freight and accrued interest. 
 
2. Loadport demurrage 
 
The issues were whether the vessel had (a) reached her specified destination and (b) otherwise tendered a valid NOR. 
 
Terms 
 
Clause 35 said that NOR: 
 
“ …. shall not be given before the vessel is in all respects ready to receive ... the cargo [and when tendering loadport NOR] the Vessel [must] advise that the … holds [comply with] Clause 66.” 
 
Clause 66 said: 
 
“On delivery, the Vessel shall be fully ... suitable for [handling the] cargo both under … and on deck … . 
 
… on arrival ... the Vessel’s holds will be clean, dry and free of cargo residues and loose rust material in excess of normal log trading ... and [likewise for] the deck except the word ‘dry’. 
 
Where any residual cargo ... affects the loading [in any way] ... Owners shall be responsible for all costs/expenses incurred by Charterers ... 
 
[If] removal of contamination ... from the Vessel’s hold [means that] the Vessel [vacates] its loading berth [for any reason] ... Owners [are] responsible for all extra [resulting] costs … [until] the Vessel is [again] alongside … and ready in all respects for loading.” 
 
Facts 
 
The holds failed the loadport authorities’ inspection. Fumigation was needed, and likewise for the deck, after which the vessel unberthed, and further fumigation was carried out at the anchorage. 
 
NOR was first tendered on arrival at the roads, and then on three further occasions. 
 
Decision 
 
Noting the accepted wisdom of tendering a series of NORs, the Tribunal nevertheless ruled that all were invalid. 
 
NOR (1) had been tendered while the vessel was still under way, so she had plainly not reached her specified destination. 
 
Moreover, she was not “in all respects ready to receive … the cargo”, under clause 35, because of infestation. 
 
Owners had urged that “infestation” was not mentioned in clause 66, but the Tribunal accepted charterers’ submission that the presence of insects meant that owners had breached their common law duty as to the condition of the holds, and the vessel was not ready until fumigation had been completed. 
 
NORs (2) and (3) were tendered during fumigation, and though (4) was tendered afterwards it was before the holds had been passed for loading. 
 
Local agents said it took ten days for fumigation to be effective, though the Master had reckoned only five, hence NORs (2) to (4), but the Tribunal found that the authorities would not have allowed loading before satisfactory re-inspection, and only then could a valid NOR have been tendered, which limited owners’ claim here to US$19,751.20. 
 
3. Charterers’ counterclaim 
 
Due to the fumigation, charterers sought the additional costs and expenses arising from “contamination” under clause 66. 
 
However, the Tribunal ruled that this was confined to contamination caused by matters referred to in the second paragraph, i.e. here “cargo residues”. But the origin of the infestation was another cargo, which had been loaded earlier, at a different port. This could not be described as “cargo residues”, so charterers’ counterclaim failed. 
 
Discussion 
 
Alongside rote application of the “ARIES” rule, this Award is a very good example of the need for care with fixture wording and also with time-dependant matters like fumigation, whose proven effect will often need to be shown before a valid NOR can be (re) tendered. 
 
Also, as to the extra outlay relating to a period when the vessel was ruled not to have been on demurrage, in persuading the Tribunal to restrict contamination to that caused by “cargo residues”, when the reported wording presents no particular reason for that, owners were probably fortunate in defeating charterers’ counterclaim. 
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