The UK high court has allowed a claim for demurrage in an "uncommon" ruling despite the application appearing to be time-barred.
Sir Ross Cranston found in favour of Glencore Energy in a case it brought against OMV Supply & Trading.
Glencore had sold OMV 80,000 tonnes of Siberian crude in 2015, which was to be carried on the chartered 106,000-dwt Seagrace (built 2004), operated by Thenamaris and owned by Cooper Navigation.
Because of congestion at the discharge port of Trieste, OMV requested, and Glencore agreed, that the vessel should wait offshore until a berth was available.
The judge said it is common ground that ordinarily OMV would make payment in respect of the period the vessel spent waiting.
Glencore argued that no discharging operations were performed at the waiting position and their claim was therefore for detention and not demurrage.
But OMV contended that Glencore's claim was for demurrage and that it was time-barred because it was not made within the contractual period.
Demurrage was to be paid at a rate of $32,000 per day, the court revealed.
On 9 November 2015, OMV sent an email to Glencore saying: "As there are no berthing prospects currently for the Seagrace at Trieste, can you please ask the master to remain off Trieste Gulf until further instructions are issued."
Tanker delayed
On 13 November, OMV requested details of the demurrage rate from Glencore Energy, which it duly provided.
OMV later said a notice of readiness was to be tendered by the ship at Trieste on 13 December.
The vessel arrived at Trieste late on 12 December. The oil was discharged on the 13/14 December.
Shipowner Cooper requested a payment from Glencore given the vessel had been waiting at Trieste roads since 17 November. It was paid $379,200 for "demurrage on account".
In the following months, Glencore Energy made no claim against OMV for the waiting time.
OMV later informed Glencore that the time bar for demurrage claims meant that no claim could be made against it, the ruling said. An invoice was then sent to OMV by Glencore.
Claim delayed
The judge said: "My conclusion is that the timing and phraseology of the owners-Glencore Energy invoice, and of the Glencore Energy-OMV invoice, were prompted by OMV informing Glencore Energy that the time bar for demurrage claims had expired.
"The characterisation of the claim in both as for detention was unsurprising given OMV's approach."
The key point the judge considered was that OMV had inquired on 13 November about the demurrage rate and Glencore provided it to them.
"In light of that it seems to me that the demurrage rate became the implied contractual benchmark for quantification of Glencore Energy's claim for providing the services of the vessel in the waiting area," he added.
"It was the fair commercial rate and met the standard of reasonableness for the service Glencore Energy provided."
He ruled Glencore is entitled to compensation for the service it provided to OMV at the demurrage rate for the days the vessel spent at the waiting area, and for the bunkers consumed during that period.
Implied contracts 'not standard'
Demurrage financing company C Demurrage told TradeWinds that OMV viewed the claim as time-barred on the basis that what had happened fell under the existing sales contract or a variation of it.
"But the court rejected that and made the uncommon finding that all was under an implied contract, which gave business reality to the matter and stood apart from the existing contract structure. How the claim had been variously described afterwards did not matter.
"Thus the sellers were not time-barred and their claim succeeded. However, the case is a reminder that, especially in what may be the hectic operational moment, parties should pause, consider and make certain how requested changes will affect arrangements and will be paid for."
C Demurrage warned: "Implied contract is not a standard thing and should not be relied on."
