This article focuses on pre-action disclosure requirements specifically for notifying a counter-party of a quality, quantity or demurrage claim. As a general principle the wording of timebar clauses are strictly construed, with the exclusion clauses demanding precise compliance and adherence to the period of days within which to bring a claim.
The typical clause which the parties may encounter could include words to the effect of:
- "accompanied by evidence fully supporting the complaint"; or
- "accompanied by essential supporting documentation"; or
- "accompanied by relevant documents"; or
- "unless a claim has been presented in writing with supporting documentation within (x) days for demurrage and (x) days for other claims from completion of discharge of the cargo under this charterparty"
Regardless whether the requirements arise under a charterparty or a sale/purchase agreement, the test is the same for both. The court is entitled to prefer the construction which is consistent with business common sense and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant.
Meeting the timebar is critical but that is not the only condition needing to be satisfied to bring a timely claim. It is incumbent of the claimant to produce primary documents containing factual material upon which their claim is founded and consistent with the meaning of the clause.
The failure to produce one primary document could lead to severe consequences, an entire claim may be shut out as the obligation to present full supporting documentation has not been met.
More recently the courts have distanced themselves from the "strict and absolute" approach applied in The Sabrewing and instead Tomlinson J commented in The Abqaiq that it is not a resolute position that in the absence of third party documents produced in time the claim should be destined to be time barred. He stated at paragraph 64:
"I would however again caution against too mechanistic an approach. I cannot think that the mere fact that a necessary document has been supplied by a third party who is not for that purpose an agent of the Owners should of itself and automatically result in the conclusion that there has been non-compliance with the clause."
The purpose of the notification of claims' timebar clauses by the courts was not to require a batch of documents to be presented by the claimant.
In The Oltenia Bingham J, albeit in connection with a differently worded clause, said "The owners would not, as a matter of common sense be debarred from making factual corrections to claims presented in time [... ] nor from putting a different legal label on a claim previously presented, but the owners are in my view shut out from enforcing a claim the substance of which and the supporting documents of which (subject always to de minimis exceptions) have not been presented in time.".
The importance is placed on reference to supporting documentation which is critical for the claim to be accepted within the relevant period.
Furthermore, there is an unwillingness to allow a de minimis document omission even if there is no express requirement for such a document in the contract. This is because it is "plainly relevant" as referred to in The Sabrewing.
He then went on to say: "The commercial intention underlying [the notification] clause seems to me plainly to have been to ensure that claims were made by the owners within a short period of final discharge so that the claims could be investigated and if possible resolved while the facts were still fresh .... This object could only be achieved if the charterers were put in possession of the factual material which they required in order to satisfy themselves whether the claims were well-founded or not."
In The Eagle Valencia Longmore J held in this Court of Appeal decision that when bringing a demurrage claim a NOR is an essential document which is the pillar upon which the claim is based upon. So, when the owners submitted an invalid NOR the court found that the claim not to be "fully and correctly documented" within the wording of the relevant charterparty clause. At paragraph 30 Longmore J said "[It] is not necessarily to say that alternative laytime statements and invoices would always have to be submitted to avoid the extinction of an alternative claim but merely to say that the documents to be submitted pursuant to the clause must include a valid notice of readiness. It is not unreasonable for charterers to require such a notice nor is it unreasonable to expect owners to supply it."
Thus, not only are periods of notifications critical to the protection of onerous timebars but also the requirement to present valid and essential documents which are to form the basis of the claim.
Furthermore, the question of what constitutes relevant documentation was considered in The Adventure at paragraph 22 where Hamblen J agreed with the notion that the claimant had an obligation to disclose "all relevant documents in its possession and control when the claim is first made rather than waiting for disclosure to take place in the normal course of an arbitration."
By contrast, a party's claim is not time barred if the claim is based on a materially irrelevant document missing from the notice of claim.
However, post Abqaiq the guidance is clear as to which documents should be presented when notifying of a demurrage claim. They are "documents which objectively the charterers would or could have appreciated substantiated each and every part of the claim".
To avoid being barred from presenting a claim, the parties should:
- Negotiate longer periods of time for submitting claims for instance from 60 days to 90 days or more;
- Expressly classify a list of supporting documents in order to avoid any misconstruing of what documents should form the basis of presentation of a valid claim;
- Specify the claims to which the notice applies to so as to avoid any misunderstandings;
- Should a document such as a charterparty not be drawn and signed by all the parties in time prior to loading/discharge operations then the parties should have an express provision dealing with this kind of situation which would seek to avoid being shut out from bringing a claim in time for want of a missing key document.
The case law which addresses the issues of time and documentation are namely:
"The Oltenia" Babanaft v Avant [1982] 1 Lloyds Rep 448; "The Sabrewing" Waterfront Shipping Company Limited v Trafigura AG [2008] 1 Lloyd's Rep. 286; "The Eternity" The Petroleum Oil and Gas Corp of South Africa (Pty) Ltd v FR8 Singapore Pte Ltd [2009] 1 Lloyd's Rep 107; Eagle Valencia AET Inc Ltd v Arcadia Petroleum Ltd [2010] 1 Lloyd's Rep. 257; "The Abqaiq" National Shipping Company of Saudi Arabia v BP Oil Supply Company [2012] 1 Lloyd's Rep. 18; "The Adventure" Kassiopi Maritime Co v Fal Shipping Co Ltd [2015] 1 Lloyd's Rep. 473.