Niki Maritime v. Global Companies
DMC Category Rating: Confirmed
The relevant clause in the charterparty read as follows:
The Owner argued that excessive pumping time meant time over and above that which the ship would have taken to discharge the cargo, had a pressure of 100psi been maintained at the manifold. In this case, the average pressure had been about 73psi. The Charterer argued that, as an average of 100psi was not achieved, excessive pumping time is all time in excess of 24 hours.
In the present case, the Owner had argued strongly that the excess pumping time should be calculated in accordance with the ASDEM formula1, which reflects the presumption that the pressure is proportional to the square of the velocity of the cargo.
But the Panel noted two problems in this approach. First, there was nothing in the charterparty itself to indicate that the excessive pumping time was to be calculated in accordance with this formula. Second, the formula presented problems in the practical environment. "Is there," the panel asked," a limited range over which this formula would apply? For example, to determine the time to discharge a fixed quantity of cargo at 100psi, will it produce equally accurate results if the actual average pressure was 99psi or 85 psi, or, as in this case, 73 psi? How often should pressures be recorded to produce accurate results? What influence do shutdowns have on the formula’s accuracy when discharge pressures might be zero for some period of time? What effect, if any, does variation in back pressure, which is rarely static, have on the accuracy of the calculated results?"
Answers to these questions were not presented by the Owner, who should have provided information regarding the derivation of the formula and any applicable limitations. The Panel acknowledged that the formula might reflect a fair and equitable solution to "the vexing problem" of defining excessive pumping time but concluded that, "failing a fundamental revision of this pumping clause, it will be the burdensome responsibility of owners to convince future panels that an adequate method exists and should be applied to achieve the fairness and justice expected of the arbitration process."
The panel noted that this was not the first occasion on which a New York arbitration panel had urged the "principals in the bulk liquid transportation business [to] address this issue by more carefully defining the meaning of excessive time and providing a satisfactory means to determine it." Until that was done, however, "these apparently inequitable decisions [by which the charterers appear to be gaining an undeserved advantage] will persist."
Accordingly, the Panel ruled that the Owner’s claim for increased demurrage failed.
PUMPING PERFORMANCE FORMULA:
PUMPING PERFORMANCE FORMULA SPREADSHEET
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