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2 July 2020
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Sea Views

Issue 5 - Summer 2014


Introduction

When Clint Eastwood, as Inspector "Dirty"Harry Callahan, delivered that memorable line at the end of 1973's "Magnum Force", he was clearly not referring to time limits in London maritime arbitration/litigation, but in view of the potentially drastic consequences for a claimant of a failure to be fully aware of the time limitation applicable to a given situation, Inspector Callahan's comment seems perfectly apt.

This firm has been involved in several cases recently where a time limit issue has played a pertinent part. In this article, I shall highlight three time limitation issues - first, when does time start to run for the purposes of a time limitation provision, second, how might the running of time be interrupted, and third, the options available to extend time.

Starting Time

Section 5 of the Limitation Act 1980 provides for a limitation period of six years from the date the cause of action accrues.

BEWARE!

I emphasise the reference to "cause of action"as this might be relevant in the case of a long term time charterparty where an event giving rise to a claim (ie a cause of action) occurs early in the charterparty period - the time limit period would start to run from the date of the cause of action, not the redelivery of the vessel at the end of the time charterparty.

It is often the case that the statutory time limitation is amended by the express terms of the contract. The Hague Visby Rules, for example, refer to time running from the date of the delivery of the goods or the date the goods should have been delivered (Article III, Rule 6).

Some contractual provisions might not be so clear. Take, for example, the Centrocon arbitration clause which provides

"... Any claim must be in writing and claimant's arbitrator appointed within three months of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred ...".

In a situation involving a single voyage charter, there would be little doubt about the date of "final discharge", but how would "final discharge"be interpreted in the case of a charterparty for several consecutive voyages or, alternatively, a time charterparty? It is tempting to equate "final discharge"with redelivery of the vessel after the final voyage.

BEWARE!

In Simonburn [1973] 1 Lloyd's Rep 392, a consecutive voyage charterparty case, Lord Denning in the Court of Appeal said

"... I think the words "final discharge"mean final discharge of the cargo on the voyage in respect of which the claim arises ...".

The Court focussed on the three objects of the Centrocon arbitration clause, namely (i) to provide some limit to the uncertainties and expense of arbitration, (ii) to facilitate the obtaining of evidence and (iii) to facilitate the settling of accounts for each voyage as and when they fall due.

That decision was followed by Aristokratis [1976] 1 Lloyd's Rep 552, a time charter case, the Judge commenting

"... the clause must be intended to apply to final discharge of cargo at the end of a cargo-carrying voyage: had the intention been that the limitation period should run from redelivery of the vessel .... nothing would have been easier than to say so ..."

This approach has been followed in the recent case of X -v- Y [2011] 1 Lloyd's Rep 694.

Interrupting time - "Notice"or "Suit"?

Some contractual time limit provisions merely require notice of a claim to be given - for example, clause 6 of the Inter Club Agreement ("ICA") refers to "written notification of the cargo claim"to be given to the other party within 24 months of the date of delivery of the cargo or the date the cargo should have been delivered.

In M H Progress Lines -v- Orient Shipping [2012] 1 Lloyd's Rep 222, the Court held that the clause 6 ICA notice requirement prevailed over a time limit provision (in the arbitration agreement in the charterparty concerned) requiring the appointment of an arbitrator within 12 months of final discharge - clause 2 of the ICA provides that "...in particular the provisions of clause (6) (time bar) shall apply notwithstanding any provision of the charterparty or rule of law to the contrary".

Some contractual time limit provisions refer expressly to suit. If the English High Court has jurisdiction, the claimant must issue a claim form within the contractual or statutory time limit to avoid his claim being time barred, although that claim form need not be served on the opponent at the time of issue. However, care must be taken to ensure that the claim form is served on the defendant within the time allowed under the English Civil Procedure Rules ("CPR") (four months from the date of issue or, if service is to be effected outside England and Wales, six months from the date of issue), otherwise the claim form will no longer be valid and its earlier issue to interrupt the running of time would not be effective.

BEWARE!

The issue of a claim form in London within the time limit but in circumstances where the English Court does not have jurisdiction is unlikely to be sufficient to interrupt time running. Similarly, the issue of a claim form in circumstances where the contract of carriage refers disputes to arbitration is also unlikely to interrupt the running of time. Proceedings before an incompetent Court fall outside the definition of "suit".

Where disputes are to be referred to arbitration, a claimant will only effectively interrupt time running for the purpose of any time limits if he gives his opponent(s) "...notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment in respect of the matter..."(Section 14, Arbitration Act 1996).

As for service of notices, section 76 provides that the parties are free to agree on the manner of service of any notice and, in the absence of any such agreement, "... A notice ... may ... be served on a person by any effective means ...".

This then leads to the question on whom a notice of arbitration should be served. It often happens that prior to any formal commencement of arbitration, negotiations are conducted not by the parties themselves but by their respective P&I Clubs so that when the time comes for the service of a notice of arbitration, the claimant serves his notice on his opponent's P&I Club.

BEWARE!

This happened in Lantic Sugar Ltd -v- Baffin Investments Ltd [2010] 2 Lloyd's Rep 141 where the claimant, intending to interrupt an approaching time bar, served his arbitration notice on his opponent's P&I Club with whom he had been negotiating the claim. The Judge had no hesitation in finding that the claimant's arbitration notice had not been properly served.

While the Judge acknowledged that section 76 of the Arbitration Act 1996 allows for flexibility in the service of notices, he went on to say that

"... nothing in the Act, authority or principle exempts an arbitration claimant from serving a notice commencing arbitral proceedings on the correct party ... The fact that the Club was authorised by Baffin to deal with a wide range of matters, including the LOUs, settlement negotiations and extensions of time, did not give rise to a representation on the part of Baffin that the Club had authority to accept service of originating process ...".

It might well be that in circumstances where a party has expressly indicated that his P&I Club would have authority to accept arbitration notices, service of a notice on that P&I Club would constitute valid service for the purposes of interrupting time, but given the consequences for a claimant of serving an invalid notice, it is clear that no assumptions about authority should be made.

Extending Time

I have heard it said that there is no need to worry too much about approaching time limits because the Court has the power to grant a time extension upon a party making an appropriate application.

BEWARE!

While it is true that the Court does have some power to extend time, it cannot be taken for granted that the Court will always grant a party's application because the exercise of the Court's discretion will depend on the facts of each case. If you are going to rely solely on the Court exercising its discretion in your favour, then, to quote Inspector Callahan, "You've got to ask yourself a question - do I feel lucky?".

In F G Hawkes (Western) Ltd -v- Beli Shipping Co Ltd [2009] EWHC 1740 (Comm), the claimant, having issued a claim form in order to protect a one year time limit, took no action to serve the claim form until a few weeks before the end of the permitted six month period. The Court's Order extending the time for service of the claim form was later set aside on the application of the defendant because the delay in service was for reasons solely attributable to the claimant. The claim was thus time barred.

As for arbitration, section 12 of the Arbitration Act 1996 gives the Court the power to extend time for commencing arbitration.

BEWARE!

The scope of section 12 is limited. Section 12 applies only in circumstances where the time limit provision for commencing arbitration is contained in the arbitration agreement itself (for example, the Centrocon arbitration clause above) so that the power provided to the Court is only to extend time to begin the arbitration proceedings, not to extend time generally.

So, in circumstances where a charterparty clause provides for an owner to present demurrage claim documents to a charterer within 90 days of discharge, failing which the demurrage claim would be deemed waived and time barred, and that owner were to fail to comply with that 90 day deadline, it is unlikely that section 12 would assist.

Any statutory time limit, for example under the Limitation Act 1980, is outside the scope of section 12. So, a missed one year time limit in circumstances where the Hague Visby Rules applied as a matter of statute by reason of the application of the Carriage of Goods by Sea Act 1971 would likely also fall outside the scope of section 12.

The section 12 test is strict and so successful applications are rare.

Conclusion

The limited space available for this note permits only a brief overview of some of the issues involved with time limits and their effect, but given the major consequences of missing or misinterpreting a time limit provision, parties would be well advised to err on the side of caution and take legal advice where necessary.

If you would like further information on any issue which has been raised in this note, or on any time limitation matter, please do not hesitate to contact us.

Inspector Callahan was right - a man has got to know his (time) limitations. A party who thinks otherwise and takes a rather cavalier approach to time limitation issues should not be surprised when his opponent replies "Go ahead, make my day".

 

Laurence Marron
June 2014

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The contents of this bulletin are not intended to be a substitute for legal advice on any of the specific issues discussed in it.

 
   

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