UKDC - Soundings December 2010

AET Inc Ltd v Arcadia Petroleum Ltd, (The "Eagle Valencia"),[2010] EWCA Civ 713.

The ruling of the Court of Appeal highlights that the Courts will treat documentary requirements under demurrage clauses very strictly but it is also stated that in relevant circumstances it is not unreasonable to expect an owner to include alternative notices of readiness when it submits a demurrage claim.

The EAGLE VALENCIA was chartered by the Member, AET, to Arcadia under an amended Shellvoy 5 Form. The ship arrived at Escravos, the Chevron Terminal in Nigeria, and tendered NOR, (“the original NOR”), but was required to wait as the berth was occupied. The following day the Port Health Authority boarded the ship and free pratique was granted. The Master tendered a further NOR, (“the second NOR”), expressed to be without prejudice to the original NOR. The ship however waited at anchorage for a further 3 days before she berthed.

AET submitted a demurrage claim with supporting documents, (within the requisite 90 days after completion of discharge), based on the original NOR. The second NOR was not included in the supporting documents. Well after the 90 days period had expired, Arcadia contended that laytime had not commenced until the ship was alongside since free pratique was not obtained within 6 hours as per the Shell Additional Clauses clause 22, set out below.

[22.1] If owners fail

(a) to obtain Customs clearance and/or

(b) free pratique and/or

(c) to have onboard all papers/certificates to perform this charter

Either within the six hours after the notice of readiness originally tendered or when time would otherwise normally commence under this charter, then the original notice of readiness shall not be valid.

The full document is available for download below.