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DMC/SandT/08/30
Astromar Navigation Co., Ltd., as Owners of the M/V "Astromar"
v. Hugo Neu, Corporation, as Charterers
United States of America: Society of Maritime Arbitrators of New York:
Arbitration Award: David W. Martowski, Chairman, Klaus C.J. Mordhorst and Alexis
Nichols, Arbitrators: Award dated 17 June 2008: SMA Award # 4004
Peter J. Gulowski, of Freehill, Hogan and Mahar, for the Owners
Richard A. Zimmerman, for the Charterers
SHIPPING: CHARTERPARTY FOR CARRIAGE OF SCRAP: LUMP SUM FREIGHT: CHARTERERS’
RIGHT TO LOAD ADDITIONAL CARGO TO VESSEL’S MAXIMUM DRAFT AT DISCHARGE PORTS:
ADDITIONAL CARGO LOADED: WHETHER OWNERS ENTITLED TO ADDITIONAL FREIGHT PRO-RATA
TO ADDITIONAL CARGO: RECOVERY OF LEGAL FEES
Summary
This arbitration involved a dispute over whether, when the ship was fixed on a
lump sum basis, additional freight was due when the cargo loaded exceeded the
amount anticipated. The panel denied Owners’ claim, holding that the terms of
the charterparty gave Charterers the right - in return for the lump sum freight
agreed - to load to the full capacity of the vessel allowed by the draft
available at the ports of discharge
DMC Category Rating: Confirmed
This case note is based on a summary prepared by Patrick V.
Martin, counsel to the Society of Maritime Arbitrators
Background
Under a Gencon Charter dated June 5, 2003, the Owners agreed to load "a
full and complete cargo of shredded scrap…in the Boston-New York range to one
safe berth at Lazaro Cardenas, Mexico, for a lump sum freight of $941,500."
The Owners guaranteed "… 1,819,412 cubic feet bale capacity and [maximum]
37,500 metric tons DWCC" (Deadweight Cargo Capacity).
The Charterers guaranteed "11 M salt water minimum
available draft at discharge port. "Charterers not to be denied the
privilege of loading maximum cargo provided the draft allows at …the
discharging ports."
Subsequent to the fixing, Charterers advised Owners that
additional draft was available at the discharging port. The Owners responded
stating that, with the additional draft, the vessel could load about 39,800 tons
and that they wanted additional freight pro-rata for the additional cargo. In
the event, the vessel loaded 39,178.30 mt. The Charterers paid the lump sum
freight and disputed Owners’ right to any additional freight.
The Issues
Owners contended that the charter clearly defined the maximum quantity of
cargo to be loaded for the lump sum freight and any additional cargo was to be
paid for on a pro-rata basis. Charterers responded that the lump sum freight was
for a "full and complete cargo". The maximum cargo lift of 37,500 mt
was tied to the draft at Lazaro Cardenas which the parties believed was
available at the time of fixing. It did not limit the Charterers’ right to
load additional cargo, for the same lump sum freight, if the draft so allowed.
The Award
The arbitrators denied the Owner’s claim. They reasoned that scrap
cargoes, by their very nature, are not susceptible of precise cubic or
deadweight measurement prior to loading. Their stowage factors will vary
according to the type and grade of scrap being loaded. Therefore, lump sum
freight is often agreed. In these circumstances, Charterers assume the risk of
how much cargo can be loaded and the Owners have the benefit of being better
able to predict voyage revenues. In this instance, the Charter provided that the
Charterers had the full reach of the available cubic and was free to use it
without payment of additional freight. The panel cited prior arbitration awards
stating that it would have been an easy matter to insert a clause providing for
pro-rata additional freight for all cargo in excess of 37,500 if that had been
the intent of the parties.
In accordance with New York practice, Charterers, as the
prevailing party, were awarded attorneys’ fees.
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