When charterers fail to challenge invoices in time - Quick reads - Gateley
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When charterers fail to challenge invoices in time

Gateley Legal

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The standard BIMCO Supplytime 2017 charterparty for offshore support vessels contains a ‘Payments’ clause which provides for owners' invoices to be paid within a specified number of days (agreed between the parties).

This also requires charterers to notify the owners promptly, and no later than the due date, if they dispute an invoice. In the case of Boskalis Offshore v Atlantic Marine (the “Atlantic Tonjer”) the agreed payment period was 21 days from receipt of the invoice.

The owners, Atlantic Marine, invoiced the charterers, Boskalis Offshore, for hire and other items totalling over €1.4 million. Boskalis didn’t pay or give notice of a dispute within 21 days, but raised an off-hire defence later, claiming that hire of approximately €1.1 million was not due.

At arbitration the tribunal issued a partial award in favour of Atlantic, finding that Boskalis had lost the right to raise a defence to the invoice because they didn’t give notice of the dispute before the deadline. Boskalis appealed to the court, which confirmed the tribunal’s decision.

Appeal dismissed

In the judge's view, the clause was clear. The time period was freely negotiated between two equal parties, and the clause was intended to ensure that any dispute was raised promptly. It didn’t prevent a charterer from not paying, provided they gave the required notice but, without notice, the owner should have been paid. The judge thought this made commercial common sense as cash flow is critical to shipowners. The award and the judgment recognised that the clause didn’t stop Boskalis from submitting a counterclaim for financial loss from payment of the invoice, for example a claim for unjust enrichment. This was a separate question which the arbitrators might consider later.

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