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SMA Arbitration Panel holds that structural failure at load port does not constitute force majeure

In "In the Matter of the Arbitration between Norden A/S and Integrity Coal Sales," an SMA Panel held that a structural failure of a pier at a load port does not constitute force majeure justifying cancellation of a contract. 

In December 2007, charterer and claimant Integrity, and disponent owner and respondent, Norden, entered into a charter party, based on an amended Americanized Welsh Coal Charter form (amended 1979), for a voyage carrying 63,000 metric tons of coal from Baltimore to Immingham or Rotterdam. On January 3, 2008, the marine terminal in Baltimore reported that Pier 2 of the terminal had a structural deficiency, which caused all cargo operations from that terminal to be suspended. Thereafter, Charterer Integrity was informed of this structural deficiency, that repairs would take up to four (4) weeks, and that the terminal declared force majeure. Consequently, Integrity declared force majeure since the cargo would not be delivered within the agreed laydays. Integrity did offer to Norden a different cargo at a reduced rate due to a drop in the market price, however, Norden refused and arranged to obtain a cargo from another charterer at a further reduced rate.

The Panel cited sections of both the fixture recap and the charter party, and determined that the language of the fixture recap regarding the load port description prevailed over that found in the charter party. Specifically, the Panel reasoned that, "the fixture recap is the clearest representation of the parties' intentions at the time of the negotiations and outweighs the alternative language of the pro-forma charter party." The provisions of the fixture recap required the charterer to provide the cargo at any safe accessible berth in the port of Baltimore. Accordingly, since the charterer failed to do so, the panel concluded that it was in breach for wrongful cancellation. The disponent owner Norden was awarded full damages and attorneys' fees, as the panel determined that it acted reasonably in fixing another cargo at the market rate.

Read a copy of the decision

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