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Notice of claim: provide all supporting documents or risk time bar

Insights / / Dubai

MUR Shipping B.V. v Louis Dreyfus Company Suisse S.A. (Tiger Shanghai) [2019] EWHC 3240 (Comm)

The Court has recently upheld a majority tribunal finding that a charterparty claim was time-barred due to the Charterers’ failure to provide “all available supporting documents” required under the relevant clause.

The background facts

By a NYPE time-charterparty, the Charterers chartered the Vessel from the Owners. The Vessel was delivered into the Charterers’ service and advance hire and delivery bunkers were paid. The first leg of the charter involved loading a cement clinker cargo at the port of Carbenaros, Spain.

The loading crane at Carbenaros was too short to reach the feeder holes on the Vessel’s starboard side and so the Charterers sought the Owners’ approval to cut new feeder holes into the hatch covers. 

Clause 46 of the charterparty provided as follows:


"The Charterers, subject to the Owners' and Master's approval which is not to be unreasonably withheld, shall be at liberty to fit/weld any additional equipment and fittings for loading ... cargo..."

The Owners refused this request and eventually the Charterers terminated the charter on the ground that the cutting of the holes fell within the ambit of clause 46 and the Owners’ refusal to grant permission to cut such holes had been unreasonably withheld. The Charterers alleged that the Owners were in repudiatory breach and that they were entitled to terminate and claim damages. 

Clause 119 of the charterparty, (the “Time Bar Clause”), provided as follows:

“[Owners] shall be discharged and released from all liability in respect of any claim or claims which [Charterers] may have under Charter Party and such claims shall be totally extinguished unless such claims have been notified in detail to [Owners] in writing accompanied by all available supporting documents (whether relating to liability or quantum or both) and arbitrator appointed within 12 months from completion of charter.”

The Charterers commenced arbitration, claiming damages arising out of the Owners’ purported breach within 12 months.  In their subsequent claim submissions (served after 12 months), the Charterers attached a report by a surveyor on the cutting of new holes in the hatch covers (the “Report”) which they argued supported their contention that the Owners had no justifiable reasons for refusing to allow the temporary installation of holes in the hatch covers. The Owners asserted that the Report went to the heart of the issue of liability and that if it had been presented earlier, it was likely that the parties could have resolved the dispute without the need for arbitration. As the Charterers had not submitted it as part of “all available supporting documents … within 12 months” as required by the Time Bar Clause, the Owners argued that the claim was time-barred.

The Charterers maintained that the Report was prepared for the purposes of arbitration and fell outside the category of “supporting documents”.  The majority of the Tribunal concluded that the Report was a supporting document of the type required by the Time Bar Clause, that it was not privileged and that the claim was therefore time-barred. The dissenting arbitrator took the view that the Report was privileged.

The Commercial Court decision

The Court stated that the Time Bar Clause combined both specific reference to "all" and specific reference to "liability and quantum", while not confining itself to any particular sort of claim.  As such, the Time Bar Clause was wider than the clauses in the authorities cited, which either omitted the "all" or arose in the context of a simple accounting claim such as demurrage, which did not involve issues such as termination.

Furthermore, the claim depended on the date of termination and the date of termination depended in turn on entitlement to terminate, which itself depended on the Owners’ unreasonable refusal. Accordingly, on its face, the Report was within the ambit of the claim advanced by the Charterers and supportive of it.

The Court added that the purpose of the Time Bar Clause was not just to enable an early closure of the books but also, given the provision of details, to enable the claim to be evaluated to facilitate early settlement. Accordingly, and since the Time Bar Clause covered the full range of disputes, it became feasible and compelling for supporting documents to include more complex material in appropriate cases.

The Court concluded that the Report was both supportive and a document in the sense required. What was supportive was determined by the claim being advanced. What was required to support the claim was elucidated by the process of setting out the limbs of the claim, covering both liability and quantum. If there was a document that supported any limb or claim, it had to be supplied. It was telling that when following that process (at a later stage), the Charterers turned to this document to support their case and in anticipation of the defence that the Owners were expected to put forward.

While the Charterers accepted that the Report was not privileged, the Court considered the position on the basis that, at the relevant time, the Report was reasonably arguably privileged. The Court rejected the argument that if a document was reasonably arguably privileged, then its disclosure was not required by an “all supporting documents” time bar clause even if it was ultimately held not to be privileged.

Comment

This case makes it clear that a widely drafted time bar clause, particularly one that requires the provision of “all available supporting documents” within a particular period of time, could encompass the disclosure of documents that might not immediately appear relevant or supportive of the claim. It is important to establish the nature of the claim being put forward. Furthermore, the status of potentially privileged material should be considered carefully.

Rania Tadros

Rania Tadros Managing Partner

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