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The recent months have seen an unprecedented surge in the use of tankers as floating storage for oil and petroleum products caused by a perfect storm of collapsing demand for such products due to the COVID-19 pandemic - leading to the rapid overwhelming of onshore storage capacity - together with falling oil prices. The use of a tanker for such storage may have a range of practical and legal implications that arise from using a ship in a manner that was not contemplated or specifically provided for by the relevant charterparty.

There are two main types of guarantee: “see to it” guarantees, where the guarantor is only liable to pay out if the underlying debtor is found liable to the creditor, and “demand” guarantees, where the guarantor is liable to pay out against the creditor’s demand, irrespective of whether or not the underlying liability is proven. The difference can clearly be crucial for the party seeking to draw down on the guarantee as demonstrated in the recent case of Shanghai Shipyard Co. Ltd. v Reignwood International Investment (Group) Company Ltd [2020] EWHC 803 (Comm).

In Tricon Energy Ltd v. MTM Trading LLC (“MTM Hong Kong”) [2020] EWHC 700 (Comm), the High Court (Robin Knowles J) held that the owners were required to submit bills of lading in support of a demurrage claim for a part cargo to prevent the claim from being time-barred.

A recent decision of the English High Court in MUR Shipping BV v Louis Dreyfus Company Suisse SA (“The Tiger Shanghai”) is likely to add to the sleepless nights of claims handlers who need to submit claims with supporting documents in order to comply with a short contractual time limit.

In this case the court rejected the charterer’s attempt to time bar the owner’s claim for demurrage. The strict approach taken by the court is yet another example of the English courts holding parties to the deal agreed in the contract, in order to achieve contractual certainty. It is a reminder to both owners and charterers to consider carefully the terms of their charterparty to ensure strict compliance with the same.


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