IMC Maritime v. RFCP

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IMC Maritime Group Inc., as Disponent Owners of the "Adventure 1" v. Russian Farm Community Project
United States of America: Society of Maritime Arbitrators of New York: Klaus C.J. Mordhorst, Chairman, Manfred W Arnold and George H. Hearn, Arbitrators: 14 April 2004

Lambos & Junge for IMC Maritime
Nemirow Hu & Shea for Russian Farm Community Project

In this arbitration conducted under the Rules of the Society of Maritime Arbitrators of New York, the panel held that disponent ownerís claim for demurrage at the discharging port of St. Petersburg in Russia, was in large measure correct, except that laytime could not begin until the vessel reached the in-bound pilot station and became an arrived ship. The panel did not accept Chartererís claim to deduct from laytime substantial periods of bad weather, preferring instead evidence from the vesselís logs Ė and those of other vessels discharging similar cargoes in the port at the same time - as to the extent to which rain interfered with discharging operations. The panel also found that discharge had been delayed by a shortage of rail cars, despite evidence from the Charterer that it had taken extraordinary precautions to avoid delay in discharging from this factor

DMC Category Rating: Confirmed

By a charterparty dated 25 October 2001, on the Approved Baltimore Berth Grain Form, IMC Maritime Group ("IMC") fixed the vessel "Adventure 1" to Russian Farm Community Project ("RFCP") for a voyage with 30,010 tons of corn from port/s US Gulf to St.Petersburg in Russia, where the cargo was to be discharged at the average rate of 1,500 tons per day, "free of risk and expense to the vesselÖ." Laytime was to be calculated on the basis of "weather working days, Sundays and holidays excepted, even if used" and the demurrage rate was US$5,000.00 per day. Notice of readiness ("NOR") was to be delivered in writing at the office of the Receivers within regular office hours at or before 4pm on weekdays, Monday to Friday, or 12pm on Saturdays, whereafter laytime would begin at 0800hrs the next working day, whether in berth or not. An additional clause provided that "If discharge port is iced, vessel must be able to navigate icy waters in the wake of icebreakers. If icebreakers are required, Owners must arrange and pay for same."

The vessel loaded her cargo of yellow corn at Ama, Louisiana and proceeded without incident to Russia. On 15 January, she arrived at the outer ice edge off the port of St.Petersburg and, having proceeded as far as practical under these circumstances, she anchored at 1435hrs to await icebreaker assistance and berthing instruction. The Master tendered notice of readiness accordingly. The vesselís position was near fairway buoy No.10, as recommended by the icebreaker "Kapitan Sorokin", approximately 17 miles west of the portís inbound pilot station. Some ten other vessels were also anchored and waiting at this anchorage. The "Adventure 1" remained there until 21 January 2001, when Ė with the assistance of the icebreaker "Ermak" - she proceeded to the inbound pilot station, where she anchored and re-tendered her notice of readiness, "without prejudice" to her earlier notice. On 9 February, she shifted from the anchorage to her discharging berth but did not commence discharge until 14 February. Delayed by bad weather, rail car shortages and Customs formalities, discharge was not completed until 11 March, the vessel sailing for her next commitment around noon that day.

As a result of the long delay at St.Petersburg, IMC calculated that the vessel had earned some 27 days demurrage amounting to US$136,200.00. RFCP refused to pay any demurrage and claimed, on the contrary, that they were due despatch.

The issues between the parties were 1) the time at which laytime began and 2) the extent to which laytime was to be interrupted by periods of bad weather. IMCís calculations were based on the premise that the notice of readiness given on 15 January, when the vessel was anchored at the outer edge of the ice off the port, was valid; and that the only periods of bad weather to be deducted were those recorded in the vesselís logs and corroborated by the log entries from two other unrelated vessels in port, discharging corn for RFCP at the same time. These amounted to 40 hours and 43 minutes. According to IMC, the dominant cause of the delay in discharging was a shortage of rail cars in the port.

RFCP, on the other hand, contended that the notice of readiness given on 15 January was invalid, as the vessel was not an "arrived ship" at the ice edge and further that both notices of readiness given (the one on 15 January and the other on 21 January, on reaching the inbound pilot station) were invalid, since they had been addressed to the wrong party. As a result, laytime did not begin until discharge commenced on 14 February, on which basis, RFCP were due despatch of US$16,632.00. As regards the bad weather periods, RFCP based their calculations on the data from the St.Petersburg station of the official state agency, the Russian Federal Agency for Environmental and Hydrometeorological Monitoring. These showed bad weather deductions of 549 hours 5 minutes.

Arrived Ship
On this question, the panel found that the Notice of Readiness given at the ice edge on 15 January was "premature and not effective. The charterparty described the discharge port as "one safe port, St. Petersburg, Russia" which by definition makes this a "port charter" and so obliges the vessel to reach jurisdictional limits of the port before she can be considered an arrived ship. The position off the outer ice edge near buoy No.10, although considered part of the fairway into port, clearly was outside the portís fiscal limits. Whereas the vessel herself may have been physically ready in all respects to discharge her cargo she was not at the ready disposition to the Charterer. Further, the custom of the port required the vessel to tender her NOR from the pilot station in order to be considered for a berth assignment by the [relevant authority]. The prevailing ice conditions do not provide relief either; the charter party, in no uncertain terms, required the vessel to either be able to navigate in "icy waters" or, if she was not ice-strengthened, to make arrangements for ice breaker service."

Applying, however, the doctrine of "substantial readiness", the panel found that it was permissible for the vessel to tender her NOR from the ice edge position, being substantially ready to discharge, only that time would not count until she actually reached the pilot station. As a result, it was not necessary for the vessel to give a second NOR at the pilot station; the earlier one took effect on her arrival there and laytime started accordingly on 23 January, at 0800hrs. The panel concluded " If indeed a berth had been available for the "Adventure 1" upon her arrival, she could have entered port and proceeded to her berth which was to be assigned by Charterer/Receiver. The proximate cause for the delay at St.Petersburg was the lack of an available discharging berth and not whether the vessel tendered her NOR at the ice edge or at the inbound pilot station."

NOR given to Wrong Party
The panel dismissed Chartererís argument that the NOR had been given to the wrong party, describing Incotec Steamship, to whom the notice had been given, as comprising all branches of the agency business. The fact that Incotec was the agent nominated by the Charterer/Receiver for IMC to appoint and pay for, in compliance with the charterparty, did not make it Ownerís agent. Its connection and ties to the Receivers were, the panel held, clearly implied if not totally established and giving notice to them accordingly satisfied the charterparty requirement of delivery to the office of the Receivers.

Weather Delays
As regards the weather delays, the panel held that the "most realistic proof for the weather conditions and the effect upon the cargo operations is the contemporaneous entries in the vesselís logs, work reports for the port, other vessels discharging the same cargo and the vesselís stevedoring records. With the presence of the "Adventure 1" logs, the burden is upon Charterer to disprove Ownerís assertions conclusively." This Charterer was unable to do, the panel thereby accepting the vesselís observations as prima facie [at first sight] evidence of the prevailing weather conditions.

Rail Car Shortages
That led the panel to consider the contentions of rail car shortages and their effect upon the discharge operations. From the available evidence, the panel concluded that "the rail stock of the port of St.Petersburg is heavily burdened, that the logistics of marshalling cars from depots and rail yards to the different berths in the port area and their assignment to individual ships for discharge and cargo work was, to say the least, a challenging and cumbersome operation". Although the panel accepted that RFCP had made particular efforts to prepare for an efficient and effective discharge of the vessel, well in advance of her arrival, they held that such was a Charterer/Receiver was expected to do. "The procurement of rail wagons and their availability for an uninterrupted discharge of the vessel was Chartererís burden and the delays which their unavailability caused, can hardly be held against the Owner."

As a result, the panel awarded IMC demurrage in the amount of US$93,358, together with interest and an allowance towards costs.

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