(MUR Shipping B.V. v Louis Dreyfus Company Suisse S.A.  EWHC 3240 (November 2019))
Standard form charterparties often contain an additional clause requiring any claim made by charterers to be accompanied by “all supporting documents”. It is not always simple to decide what this means, and this case, the strict drafting of the clause had the effect that not attaching a document later found to be a “supporting document” led to the claim becoming time barred.
In MUR Shipping B.V. v Louis Dreyfus Company Suisse S.A.  EWHC 3240 (November 2019), MUR, as charterer, asked Louis Dreyfus for permission to cut new cement feeder holes into the hatch covers of the chartered vessel, the TIGER SHANGHAI. Louis Dreyfus refused without giving reasons for its refusal, whereupon MUR terminated the contract, on the basis that permission had been unreasonably withheld, and claimed return of hire paid in advance. Just three days prior to cancellation, MUR had engaged CSS Control Systems (CSS) to produce a report, which described the difficulties and proposed technical solutions but made no concrete recommendations.
The charterparty provided that the owners would have no liability unless
“such claims have been notified in detail to [Owners] in writing accompanied by all available supporting documents (whether relating to liability or quantum or both) and an arbitrator appointed within 12 months from completion of charter.”
On the face of it, MUR complied, as it sent a claim letter to Louis Dreyfus within 12 months which adequately set out MUR’s claims on liability and quantum. But the letter did not attach the CSS report, which was only disclosed during the arbitration, after the 12-month period had expired. Louis Dreyfus argued that the report went to the heart of the issue of liability and that had it been presented, it was likely that the parties could have resolved the dispute without arbitration. MUR pointed out that the report made no concrete recommendations, and as Louis Dreyfus had never given any reasons for its refusal, it was not clear that the report would be relevant to those reasons when given. It could therefore not be said that the report was relevant and thus a “supporting document”. However, the arbitration tribunal found that the report should have been attached to the claim letter. Failure to attach it meant that the claim had not been properly made and was invalid. The original 12-month period to claim having since expired, the claim was now time barred. MUR appealed.
In the High Court, the judge began by citing earlier authority to the effect that the purpose of clauses requiring disclosure is (as Louis Dreyfus had argued) to put the parties in possession of all the factual material so that they can decide if the claims are well founded, provided the documents are relevant. In this case, the words “all available supporting documentation” – particularly the word “all” - and the reference to both liability and quantum, were even wider than those discussed in the authorities, and the CSS report was certainly within their scope. MUR’s appeal was therefore dismissed.
The judge also considered whether it made a difference that the CSS report was reasonably arguably privileged (having been obtained following the refusal by Louis Dreyfus, in contemplation of a possible dispute), and concluded that it did not; the whole purpose of the clause is that the party claiming should make full disclosure and it would be “profoundly uncommercial” to exempt documents from the disclosure requirement on this basis.
It seems extraordinary that MUR, having submitted its claim form and appointed its arbitrator in good time, should nevertheless have found itself time barred, yet such was effect of the clause. The High Court has therefore given another indication – if it were needed – of the importance of careful drafting of such “standard” clauses.