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Saturday, January 20, 2018

NEWTON SHIPPING’S TIME BAR PROVISION

We have been notified of a number of instances where an owner’s claim has been time barred inadvertently.

Most charters contain provisions that specify the number of days in which a claim must be submitted, usually 90 days from completion of discharge. Owners are familiar with such provisions and are therefore careful to ensure that a claim is submitted well before that deadline. Having submitted a claim within the prescribed time then owners have usually up to 6 years to bring arbitration proceedings to enforce a claim.

Newton Shipping in their standard amendments to Part II of Shellvoy 5 have included the following amendment to clause 43:

“…delete lines 604 to 625 insert “unless suit is brought within 6 (six) months from the date of completion of discharge by the owners in respect of any claim under this charter party, the charterers shall be discharged from all liability whatsoever notwithstanding compliance with clause I 13 (claims) herein”

This amended clause represents a radical departure from standard chartering practice. Owners only have up to six months from the date of completion of discharge to bring proceedings for any claims. So unless legal proceedings have been commenced in the High Court of Justice in London within six months from completion of discharge any claims will be time barred and unrecoverable. Post fixture it is possible for the parties to agree an extension to the time bar provision, however, this is probably unrealistic.

If the parties’ “without prejudice” negotiations on a claim result in an agreement being made, then this can be relied upon even if the six months’ time limit has expired. The reason being that the agreement is separate to the charterparty and therefore falls outside the scope of the claims time bar provision. Sometimes there may be dispute as to which law this agreement is to be subject to and also which jurisdiction will be able to decide disputes, though these can be settled by agreement. If the negotiations fail to produce an agreement then unless owners bring proceedings within six months from completion of discharge their claim will be time barred.

We therefore wish to warn members to be vigilant of amendments to the standard submission of claims/time bar provisions in the charterparty forms.

Should any members wish to report any particular clauses or chartering practice please send an e-mail to john.fawcett-ellis@intertanko.com