Inter-Club Agreement: Validity of written notification
The written notification of the Cargo Claim under clause (6) of the Inter-Club NYPE Agreement 1996 and its amendment in 2011 does not have to include details of the cargo claim and the claim amount. It is clarified in the latest London Arbitration 3/20.
The Factual Background
The concerned vessel was time-chartered by the charterers to ship a cargo of engine equipment from a United States port to a North African port. The time charter was on an amended NYPE form which expressly incorporated the Inter-Club NYPE Agreement 2011 (the ICA). On 9 January 2015, the charterers issued bills of lading on charterers' house form. During the voyage, on 2 February 2015, the crew accidentally pumped water into one of the cargo holds causing damage to part of the equipment. On or about 8 March 2015, the cargo was delivered at the discharge port.
The charterers are the contractual carrier. They received notice by shippers of their intention to pursue a cargo claim, and passed the information onto the owners. However, the shippers did not bring the claim formally, and extension of time was given by the charterers to the shippers, and the owners to the charterers.
The current case centered on whether the charterers' recourse claim was time-barred by the provisions in the clause (6) of the ICA after 24 months of the date of delivery of the cargo.
Clause (6) stated:
Recovery under this Agreement by an Owner or Charterer shall be deemed to be waived and absolutely barred unless written notification of the Cargo Claim has been given to the other party to the charterparty within 24 months of the date of delivery of the cargo or the dates the cargo should have been delivered ...... Such notification shall if possible include details of the contract of carriage, the nature of the claim and the amount claimed.
The Tribunal's decision
- The charterers informed the owners of their intention to bring a cargo claim in 2015 following the incident and requested to arrange a joint survey. This correspondence constitutes a written notification of the Cargo Claim.
- Specific legal consequence is set out in the first sentence of clause (6) that the recovery claim under the ICA would be time-barred if no written notification of the Cargo Claim is given within the prescribed period. By comparison, the second sentence of clause (6) contains no such provisions. The Tribunal was of the view that if the draftsmen were intended to bar the cargo claim due to notifying party's failure to comply with the obligation to incorporate the information specified, the draftsmen would have so expressed.
- The wording "if possible" in the second sentence clearly suggests that the provision of claims details and other information specified is not a must to the notification. Non-provision would not render the notice ineffective.
- Where the details could be included in the notification but were not included, it would be a breach by the notifying party of the obligations in the second sentence. The breach would give rise to a right to damages if any loss could be established, which appeared to be an unlikely eventuality.
- The Tribunal did go on further to conclude that the written notification did not have to refer to the ICA, either expressly or impliedly. Clause (2) provides that the terms of ICA shall apply notwithstanding anything to the contrary in any other provisions of the charterparty. Clause (5) further says that the ICA applies regardless of legal form or place of arbitration specified in the charter party and regardless of any incorporation of the Hague, Hague Visby Rules or Hamburg Rules therein. The combined effect of clauses (2) and (5) is to make the application of ICA and the recourse provisions mandatory if it is incorporated to a charterparty. Therefore, specific reference to ICA in the written notification is not essential.
Tips to take from the case
To avoid similar future disputes on whether a valid written notification of Cargo Claims under clause (6) is given, the notifying party is advisable to:
- Give a clear written notification of a Cargo Claim by reference to the applicable ICA as early as possible and in any event within the period prescribed in clause (6); and
- Provide the other party with claim details as much as possible even if the cargo claim is not fully or formally presented by the third party.