The Four-Month Detention Saga 

Episode 1: Exclusion from the JCC list 

In October 2022, a Polish company chartered a bulk carrier with a deadweight of ~7,000 mt to transport Ukrainian grain from Chornomorsk, Ukraine, to Marmara, Turkey. The voyage was to be performed under the Black Sea Grain Initiative, which required the inspection of vessels by the Joint Coordination Centre (“JCC”). 

To comply with the unique requirements of the Grain Initiative, the parties made specific adjustments to the charter party. 

1. The shipowner had to tender the notice of arrival (“NOA”) at the Istanbul JCC inspection area between 8 and 12 October 2022. 

1. The vessel had to satisfy the requirements of the loading port. 

1. The charterer was to appoint a loading port agent. 

1. Detention at the Istanbul JCC inspection area was to be paid with the freight. 

The vessel arrived at the Istanbul JCC inspection area within the lay days in October 2022.  

However, the inspection, initially expected to proceed promptly, faced repeated postponements, eventually stretching into late November 2022. In December 2022, the situation escalated when the vessel was unexpectedly removed from the JCC inspection list.  

Although it was later reinstated to the waiting list, this did not last long. The vessel was repeatedly removed again without any explanation, further aggravating the delays and uncertainty.  

Episode 2: The Termination of the Charter Party 

In mid-January 2023, following the vessel's third exclusion from the JCC inspection list, the shipowner sought explanations for the repeated removals and demanded compensation for four months of detention. The charterer, however, rejected this claim, maintaining that any detention could be paid only after the shipowner earned the freight. 

The charterer then shifted the blame onto the shipowner, alleging that the vessel's exclusion resulted from its failure to meet the loading port's requirements. The charterer demanded compensation for the prolonged storage of the goods and losses incurred under their sale contract. 

When the shipowner rejected these claims, the charterer terminated the charter party because of "non-delivery of the vessel for loading". Left with no alternative, the shipowner initiated LMAA arbitration, seeking to recover $1 million in detention costs. 

Episode 3: The Vessel Arrest 

In July 2023, the charterer escalated the dispute by arresting the vessel at the Ukrainian port of Izmail. The arrest rendered the vessel unable to perform its intended voyage, prompting the shipowner to seek its immediate release.  

Acting on behalf of the shipowner, our team secured the vessel’s release by depositing the claimed amount into the court’s account. This solution provided us with the necessary time to challenge the validity of the arrest and return the shipowner’s deposit. 

What was the outcome of the dispute? 

The LMAA arbitration resulted in a victory for the Turkish shipowner. The tribunal awarded $1 million in demurrage and issued several key rulings for shipping practice. 

• The shipowner’s obligation was limited to delivering the vessel to the Istanbul JCC inspection area. Responsibility for arranging the JCC inspection and the vessel’s passage to Ukrainian ports rested with the agent appointed by the charterer. 

• The tribunal held that the charterer bore the risk of the vessel’s exclusion, as it had appointed the loading port agent. The charter party terms overrode typical shipping practices, where agents nominated by the charterer are still subordinate to the shipowner. 

• The termination of the charter party was wrongful, as the agent, acting on the charterer’s behalf, failed to arrange the vessel’s passage to the Chornomorsk port. 

• Although detention was to be settled together with freight under the charter party, this did not make detention conditional on the performance of the voyage. The shipowner retained the right to claim detention, even without earning the freight. 

Key takeaways! 

This case highlights several critical lessons for shipping practice.

• Entitlement to Detention vs. Timing of Payment. Distinguish between the accrual of detention and its payment. The timing of payment does not change the shipowner’s right to claim compensation for detention. 
• The Charter Party is the King! The charter party's wording is crucial. It can override both applicable law and established shipping practices, as demonstrated in this case, where the charter party terms determined the agent’s principal.  
• Lifting Vessel Arrest Through Court Deposits. In urgent situations, vessel arrest can be lifted by depositing the claimed amount into the court’s account. Once released, the validity of the arrest can be contested, and the deposit can be returned to the shipowner.

Stay tuned for our next publications, where we’ll explore more pivotal maritime disputes and their implications!