The
English High Court recently held that a Master had not tendered the Notice of
Readiness (“NOR”) within port limits despite the vessel being anchored in a
location directed by the Port Authority. Accordingly the NOR was invalid.
The consequences of tendering an invalid NOR can mean,
in the case of a voyage charter, that the laytime provisions do not kick in.
Ultimately this may mean the loss of a considerable amount of demurrage for an
owner.
The Notice of
Readiness
The form and content of a NOR will depend on the terms
of the charter party. However, it must state that the vessel has arrived at the
agreed destination where she may tender the NOR pursuant to the charter party.
It must also state that she is ready to load/discharge.
A voyage charter will either be a berth charter or a
port charter. If the charter is a berth charter then, unless there is a
clause in the charter party allowing the Master to tender the NOR earlier, the
vessel must be securely moored at the berth before she can tender her NOR. If
the charter is a port charter then, provided the ship has arrived at the port,
she can tender her NOR. It is not uncommon for berth charters to allow
the NOR to be tendered when the vessel arrives at the port if the vessel cannot
proceed to the berth, e.g. because the berth is congested.
Most voyage charter parties start the running of
laytime after a valid NOR has been tendered. Therefore, if an invalid NOR is
given because the vessel is not at the agreed place, then laytime will not
start to run.
Is
the vessel within port limits?
Unless there is a “WIPON” (“whether in port or not”)
clause in the charter party, allowing the NOR to be tendered outside the port
(and, thus, meaning the NOR will be valid even if tendered outside port
limits), it is extremely important to tender the NOR within the port limits. If
the charter is a port charter and there is no WIPON clause then the vessel must
be within the port limits to tender a valid NOR.
In the case of The MV Arundel Castle the fixture recap provided that the
NOR was to be tendered within the port limits. The load port in question was
Krishnapatnam, which was congested at the time. Due to the congestion the
vessel was unable to proceed straight to the berth. Therefore, the vessel
instead anchored at a location directed by the Port Authority. There the Master
tendered the NOR.
The Charterers urged the court to hold that “Port
Limits” means the geographical port limits as shown on the admiralty chart. The
chart produced by the Charterers showed an area described as “Limit of Port of
Krishnapatnam”. In the instant case, the vessel was anchored outside this
area at a distance of 1250 meters.
While the owners accepted that the vessel was outside
the port limits by reference to the admiralty chart, they sought to argue
either:
A. that the term “Port Limits” in the charter party
included any area within which vessels are customarily asked to wait by the
authority and over which the Port Authority exercises authority and control over
the movement of shipping. On the basis of this definition, because the Port
Authority at Krishnapatnam ordered the vessel to wait where she did, the owners
argued, the vessel was within port limits; or
B. that by using the definition of “Port” in Laytime
Definitions for Charterparties 2013 and The Baltic Code 2014, “Port Limits”
includes any area where the vessels load or discharge cargo including berths,
wharfs, anchorages, buoys and offshore facilities, as well as places outside
the legal, fiscal or administrative area where vessels are ordered to wait for
their turn no matter the distance from that area. Again, because this vessel
waited where she was ordered to wait by the Port Authority the owners claimed
that she was within the port limits when the NOR was tendered.
The court followed the decision in The Joanna
Oldendorff [1973] 2 Lloyds Rep 285. This case states that to be an
arrived ship or vessel must have reached a position within the port where she
is at the immediate and effective disposition of the charterer, with such
position usually including the normal waiting place, although that will not
always be the case. Relying on conclusions from the judges in The Joanna
Oldendorff, the court in the present case held that:
(I) where there is a national or local law that defines
the port limits, these are the limits that will apply;
(II) where there is no such law then a good indication of
what the port limits are is given by the area of exercise by the Port Authority
of its powers to regulate the movement and conduct of ships.
(III) In the present case, however, because the parties did
not provide any evidence of local or national laws, or any information showing
the area where the Port Authority can exercise its powers of vessel movement,
the arbitrators were entitled to reach the conclusion that the vessel was not
within the port limits by reference to the admiralty chart. It is interesting
to note, however, that had the owners been able to provide evidence to show a
national or local law defining the port limits differently, or evidence as to
the port authority’s powers in a wider area, then the court may have decided
the case differently.
The
Golden Rules
1. Know whether or not you are
within the port limits.
Just because the Port Authority has directed a vessel
to wait for a berth at a particular place, this does not mean it is within the
port limits. The Port Authority, agent or admiralty sailing directions may
provide this information. If not, or if in any doubt, obtain advice as to
whether there are any local or national laws defining the port limits. If there
is no such law then obtain information about the area within which the Port
Authority can exercise authority and control over the movement of ships.
2. An invalid NOR cannot become
valid – keep tendering new NORs “without prejudice”
Once the ship gets to the correct position for the
purpose of tendering a NOR then a new NOR must be tendered. If in doubt, or
indeed in any event, when there is a change in the vessel’s position tender a
new NOR “without prejudice” and keep issuing new NORs “without prejudice” to
the earlier NORs. This should mean that, even if the first NOR is not valid,
then one of the later ones will be. If no new NOR is given after an invalid NOR
then it is likely that laytime will only start to run once the vessel starts
loading/discharging.
3. Include a WIPON clause in the
charter party
If the vessel is going to go to a port where it is
possible it will be ordered to wait outside of the port limits then the owners
should seek to include a WIPON clause in the charter party. As noted above,
this should mean that the Master can validly tender NOR once at the waiting
place even if this is outside the port limits and the NOR will be valid.
Most voyage charterparties make the commencement of
laytime conditional on the tender of a valid notice of readiness. If the notice
is invalid, then in the absence of a waiver by charterers (on which see below)
laytime will not commence at all, even if the charterers knew or ought to have
known that the vessel was in all respects ready. The tender of a valid Notice
of Readiness and the subsequent commencement of laytime has been a fertile area
of debate in the English courts, this past year or so being no exception with
the much commented cases of the "PETR SCHMIDT" [1998] and the
"AGAMEMNON" [1998] being heard. These have assisted in the
development and clarification of this area of the law.
OVERVIEW
General Observations
If a notice is required but none is given then strictly,
laytime will not start to run.Arbitrators may however, take a more commercial
view and decide on the facts that the charterers were aware or ought to have
been aware that the vessel was ready to load and knew that loading was taking
place, and that therefore laytime should commence on loading. The burden of
proof, however, is on the owners to show that laytime should start to run even
though a notice of readiness was not given. This is not satisfactory from the
owners’ point of view as there is
no assurance for them that laytime will commence at all.
Where a notice is required then in the absence of an
express provision to the contrary, this is required only at the first load port
and not at the subsequent load ports or at the discharge port(s).
At common law, the notice may be given orally or in writing.
The notice of readiness is the notice to the charterer,
shipper, receiver or other person as may be required under the charterparty
that:
(1) The vessel has arrived at the specified destination
where the notice of readiness can be given. The question of whether the vessel
is an "arrived" one for the purposes of commencement of laytime has
been the subject of much discussion and case law which is outside the scope of
this article. However, it can be said briefly that the specified destination
will depend on the terms of the contract; if the charterparty is a berth
charterparty then the specified destination is the nominated berth or, if a
berth has not been nominated, it will be the first available berth to which the
vessel is ordered and the notice of readiness may be tendered at that place
subject to the other conditions being satisfied. If, however, the charterparty
is a port charterparty then the notice of readiness must be tendered when the
vessel is in berth within the specified port or, if a berth is not available,
when the vessel is within the port limits and at the waiting area where vessels
usually wait for a berth.
Various clauses in the charterparty may advance the time that the vessel may
tender the notice even though she may not be at the specified destination. The
most familiar is the WIBON ("whether in berth or not") provision
which means that under a berth charterparty, if the berth is not immediately
accessible, the notice of readiness may be given when the vessel is in the port
in which the berth is situated.
Similarly a WIPON ("whether in port or not")
provision will enable the notice in certain circumstances to be tendered even
if the vessel has not yet entered the port area.
(2) The vessel is ready to load or discharge the cargo as the case may be. This
means that the vessel must be both physically ready in that the holds are ready
to receive the cargo and legally ready in that all documentation necessary to
enable her to commence loading is in order. If, however, the vessel is ready
subject only to a mere formality then the notice may still be able to be
tendered. For example, if customs clearance is only obtainable on berthing but
the notice can be tendered when the vessel is off berth then this will not
affect the vessel’s
readiness.
(3) All other requirements under the charterparty
concerning the form, timing and the party to whom the notice is to be tendered
have been complied with.
Validity of the notice of readiness.
A notice of readiness therefore contains several
statements of fact. In order to be a valid notice, those statements must be
true. If the statements are incorrect the notice is invalid and a nullity so
far as the contract is concerned and ineffective to start laytime. Further, as
was made clear in the leading authority of the "MEXICO I" [1990]
(described below), if the statements were untrue when they were made, the
notice does not subsequently become valid when the circumstances change. If
therefore, there is any doubt as to the validity of the notice, it is always
advisable for the master to tender a further notice.
The "MEXICO I" [1990] 1 Lloyd’s Rep 191
The owners let their vessel to the charterers for the
carriage of a part cargo of maize from Argentina to Angola. Under the
charterparty, the owners had a right to complete the vessel with other cargo.
On completion of loading, the vessel was also carrying a cargo of beans for the
same charterer under another agreement. Both the maize and the beans were
overstowed by parts of the completion cargo. On arrival at the discharge port,
the vessel tendered notice of readiness (on 25th January). However, at the time
of tender neither of the charterers’ cargo
was accessible due to the overstow of the completion cargo. The charterers’ maize cargo became
accessible on 6th February and the beans on 19th February which is when
discharge of both cargoes commenced. The owners claimed that laytime commenced
when the cargo became fully accessible on 6th February. Charterers on the other
hand claimed that time commenced only when discharge actually commenced on 19th
February.
The Court of Appeal held that the notice was invalid and a nullity when given
and ineffective therefore to commence laytime even if the charterers knew or
ought to have known of the vessel’s
subsequent readiness. Accordingly, the charterers were entitled to insist on a
further notice of readiness in order for laytime to commence unless they had in
the meantime waived their right to a further notice or agreed that it would not
be necessary. On the particular facts in this case, the Judge found that
although the notice was invalid, the charterers had nevertheless accepted it
via their agents on the commencement of discharge. As a matter of principle,
however, the judge confirmed that an acceptance of an invalid notice in
circumstances where the charterers were unaware of the inaccuracy in the notice
could not bind the charterers and they were not prevented from subsequently
disputing the effect of the notice. What will constitute a waiver of the defect
or acceptance of an invalid notice is considered in more detail below.
Unless there is provision to the contrary in the
charterparty, the statements in the notice must relate to the time that they
are made and when the notice is given. There is a distinction however between
an invalid notice and one that is uncontractual in that it has been tendered to
the wrong party or at the wrong time of day. A notice that falls within the
second category may still be regarded as valid. The law in this area has
recently been clarified in the following recent cases.
The "AGAMEMNON" [1998] CLC Rep 106
The "AGAMEMNON" was chartered to load a cargo
of steel pipes from Baton Rouge to Brisbane. The charterparty provided that the
vessel was at the South West Pass and "ready to proceed to loading port
weather permitting". The South West Pass, however, was 170 miles from
Baton Rouge and it did not form part of that port. A notice of readiness was
tendered at the South West Pass. It was not until two days later however that
the vessel arrived at Baton Rouge general anchorage but, due to the designated
berth being unavailable, loading did not commence until later the following
day.
The charterparty provided that if the berth was not
available on the vessel’s
arrival at the port or so near thereto as she may be permitted to approach, the
notice could be tendered on arrival and laytime would then commence as if she
were in berth and in all respects ready.
The charterers considered that the notice of readiness tendered at the South
West Pass was premature, since it was given prior to the vessel’s arrival at a point so
near to Baton Rouge as she could approach i.e. the Baton Rouge general
anchorage, and as no notice was given when the vessel reached that point later,
laytime did not commence until loading started.
The charterers failed to persuade the arbitrators to agree with this view, but
on appeal, the Judge found in their favor. In accepting their arguments, the
Judge relied on the Court of Appeal decision in the "MEXICO I"
[1990] which made clear that when a notice is to be given in order to start
laytime running, this must be a valid notice and not an "inchoate" or
"delayed action device" seeking to commence laytime automatically on
the happening of a certain event. In such cases, a fresh notice must be given.
Applying that case to the facts before him, the Judge found that the notice of
readiness in this case represented that the vessel was at the place at which it
was permissible for the notice to be tendered (the Baton Rouge anchorage). This
was clearly not the case and the notice was therefore invalid and could not
trigger the commencement of laytime.
The "PETR SCHMIDT" [1998] C.A.
In this case, the charterparty provided that the notice
of readiness had to be tendered to the charterer or his agent within 0600 and
1700 hours local time and laytime was to commence six hours from the receipt of
that notice or upon the vessel’s
arrival, whichever first occurred. Of the various notices given at the load and
discharge ports, one was given at 0100 hours and the other two at 1800 hours.
The charterers argued that since the notices were tendered outside the
specified period they were non-contractual being in breach of the relevant
clause and therefore invalid and of no effect in accordance with the principles
in the "MEXICO I".
It was common ground that (a) when the notice of
readiness was given the vessel had then arrived at the appropriate place within
the port in question (b) the vessel was in fact ready to load or discharge as
required by the charterparty and the statement of readiness was therefore
correct (c) the vessel continued to be ready and (d) no further notices were
given.
In their judgment, the Court of Appeal confirmed the principle decided in the
"MEXICO I" namely, that in order to be a valid notice, it must
contain accurate statements of existing fact. In the "MEXICO I" the
notice stated that the vessel was ready when in fact she was not and the notice
was therefore invalid. In the "PETR SCHMIDT", however, the notice was
correct in that the vessel was ready and at the required place but was sent to
the charterers outside office hours. The Court drew a distinction between the
requirement to "tender" a notice of readiness and to "give"
or to "receive" one. The Court found in this case that the telex
notice was sent out of office hours but was "tendered" at the
receivers’ office
opening at 0600 hours the following morning and that this therefore complied
with the charterparty requirement. However, the Court also considered what the
position would be if the charterparty required the notices of readiness to be
"given" or "received" by charterers within certain periods
and they are in fact given or received outside these periods. The Court held
that in such cases (provided the notice was otherwise correct) the notice would
be non-contractual and therefore wrong but not invalid at the time it was
given. The practical effect of a non-contractual notice which is tendered outside
the required time is, that while it may not be effective to start the laytime
clock running, the defect may be "cured" by, for example, the passage
of time and laytime will start at that point. As the Court pointed out, whether
the defect can be so "cured" is a question of fact rather than the
law and will vary from case to case.
The charterers may choose to accept an otherwise invalid
notice. However, this acceptance must be in clear terms and in these
circumstances owners will leave themselves open to the argument that this
acceptance was induced by an incorrect representation in the notice as happened
in the "MEXICO I". In those cases, the charterers would not be
precluded from disputing the effect of the invalid notice.
Acceptance/Waiver by charterers.
In other cases the charterers may be regarded as having
accepted the invalid notice with full knowledge of the defect, or as having
waived the defect such that they are subsequently estopped from relying on it
(such as in the "SHACKLEFORD" [1978] 2 Lloyd’s Rep. 154). Whether
there has been such an acceptance will depend on the facts of each case.
However, as expressed in the "MEXICO I", at the very least it must be
shown that there was some kind of bilateral representation and conduct by the
parties to provide evidence that the original contractual arrangement as to the
commencement of laytime had been replaced by something new.
CONCLUSION
It will be seen from the above that the recent cases have
clarified the law. However, there are still some grey areas. In order
therefore, to be absolutely certain that time will start to count at the
earliest opportunity, if there is any doubt as to the validity of the original
notice the master should issue a further notice of readiness.
LAYTIME
"Laytime" is the term
used to refer to the time allowed to the charterers to load/discharge cargo in
return for payment of freight to the owners. If the charterers are unable to
load/discharge cargo within this allowed period, they will be obliged to pay demurrage
(liquidated damages for break of contract) or detention (unliquidated damages
for breach of contract) to compensate the owners for their loss of use of the
vessel. Naturally, most charterparties contain provisions which suspend the
running of laytime and/or demurrage in certain circumstances as may have been
agreed between the parties. In addition, neither laytime nor demurrage will run
if the loss of time is due to a breach on the owners’ part.
It is clearly important to
determine when laytime commences since this is the key to the division of
responsibility for the time spent at the load and/or discharge port. Most
charterparties require the owners to serve a notice of readiness at load or
discharge port stating that the vessel is ready in all respects for cargo
operations. Whilst the owners are also usually required to serve various
approximate and definite notices of expected arrival at load or discharge port
to enable the charterers to make all necessary arrangement in time, the notice
of readiness constitutes the contractual step which is required to trigger the
commencement of laytime. Due to this, charterparties usually contain provisions
which stipulate a) when notice of readiness may be contractually served and b)
when laytime commences once notice of readiness has been validly served (often
a set period after tender of the notice of readiness, although commencement of
laytime may be further suspended to make allowance for weekends and other
periods when the port is not operative).
Requirements for a valid notice of
readiness to be served:
1. The vessel is an arrived vessel
2. The vessel is ready to receive or discharge the cargo
3. The notice of readiness is tendered to and received by
the proper person according to the charterparty
4. The notice of readiness is tendered in a contractual way
5. The notice of readiness is tendered at a time that is
allowed by the charterparty.
a) "Arrived ship"
Notice of readiness cannot be
validly served before the vessel qualifies as an "arrived ship". To
be an "arrived ship", the vessel must have reached the place within
the port where notice of readiness may be served. This place is specified,
expressly or impliedly, by the charterparty. Under a port charterparty, the
vessel must reach the place where vessels usually wait within the port unless,
of course, she is able to proceed directly to the load/discharge berth in which
case notice of readiness may be tendered as soon as she enters the port. Under
a berth charterparty, the vessel must reach the nominated load/discharge berth.
These basic propositions may be varied by the inclusion of specific provisions
such as "whether in berth or not" ("WIBON") or
"whether in port or not" ("WIPON"), although the meaning of
the latter phrase has not yet been determined by the Courts.
b)
"WIBON"/"WIPON" provisions
The effect of a "WIBON"
provision on the tender of notice of readiness under a berth charterparty was
considered by the House of Lords in the "Kyzikos"¹. The Kyzikos had
been fixed to carry a cargo of steel and/or steel products from Italy to
Houston. The charter was on the Gencon form and provided, inter alia, as
follows: "Discharging port or place – 1/2 safe always afloat, always
accessible berth(s) each port …. Time lost in waiting for berth to count as
laytime …. Wipon/Wibon/Wifpon/ Wccon." The vessel arrived at Houston to
discharge. When notice of readiness was tendered, and at all material times
thereafter, the berth was available. However, the vessel could not proceed to
the berth for three days because fog had closed the pilot station. The owners
argued that, by virtue of the "WIBON" provision in the charterparty,
a valid notice of readiness could be tendered as soon as the vessel arrived at
the customary waiting place within the port of Houston and that the "WIBON"
provision effectively converted the charterparty into a port charterparty. The
charterers argued that, at most, the phrase had the effect of allowing a valid
notice of readiness to be tendered at the customary waiting place if the
nominated berth was unavailable due to congestion and not if it was available
but could not be reached for some other reason.
The House of Lords conducted an
extensive review of the relevant authorities and observed that the argument
that a "WIBON" provision converted a port charterparty into a berth
charterparty was based upon the following passage from the judgement of Roskill
L.J. in the "Joanna Oldendorf" :
"The phrase "whether in
berth or not" was designed to convert a berth charterparty into a port
charterparty and to ensure that under a berth charterparty Notice of Readiness
could be given as soon as the ship had arrived within the commercial area of
the port concerned so that laytime would start to run on its expiry. It has no
proper place in a port charterparty".
The House of Lords felt, however,
that these observations applied only if no berth was available for the vessel
on her arrival at the port and not if a berth was available but the vessel was
prevented from proceeding to it by bad weather. The long line of authority on
the use of the phrase "WIBON" in berth charterparties dealt
exclusively with the problem of congestion in ports, and not with bad weather
preventing the vessel from proceeding to a vacant berth.
On this basis, The House of Lords
held that the phrase had for a long time been treated as shorthand for
"whether in berth (a berth being available) or not in berth (a berth not
being available).
As indicated above, the
"WIPON" provision does not appear to have been tested in the Courts.
It seems reasonable to suppose, nevertheless, that this will be interpreted in
a similar fashion so as to allow notice of readiness to be tendered as soon as
the vessel reaches the customary waiting place for the port in the case of
congestion within the port even if this is outside port limits.
c) "Ready in all
respects"
Even if the vessel has reached the
place within the port which is required by the charterparty, notice of
readiness cannot be served unless she is also physically and legally ready in
all respects to load or discharge the cargo. It is possible to accelerate the
tender of a valid notice of readiness by the inclusion of a "whether
customs cleared or not" ("WCCON") or a "whether in free
pratique or not" ("WIFPON") provision.
Tender of notice of readiness
before the vessel is an arrived ship and/or ready in all respects.
In the "Mexico I"³
, the English Court of Appeal reaffirmed the proposition that a notice of
readiness, which is invalid when tendered because the vessel is not an arrived
ship and/or ready to load or discharge, does not automatically become valid
when these requirements are subsequently satisfied.
The "Mexico I" was
chartered to carry a part cargo of 5,000 tonnes of bagged maize to Angola with
the owners retaining the right to complete with other cargo. The maize cargo
was partially overstowed by the owners’ own cargo and 500 tonnes of alubia
beans which they had agreed to carry for the charterers under a separate
contract. The ship arrived at the discharge port on 20th January and
tendered notice of readiness the following day by telex, although the maize
cargo was not totally freed from overstowed cargo until 1025 hours on 6th
February. Discharge of the maize cargo did not begin until 1435 hours on 19th
February. The owners conceded that the notice of readiness was defective when
tendered, but argued that it automatically triggered laytime when the ship
subsequently became ready to discharge the maize cargo at 1025 hours on 6th
February. The Court of Appeal disagreed, holding that the master should have
tendered a fresh, valid notice at that time to start laytime running, and that
an invalid notice of readiness could not operate as a delayed-action device to
trigger laytime.
The owners also argued that the
charterers were bound to acknowledge that the invalid notice of readiness
triggered laytime as soon as the ship became ready to discharge, because they
had accepted the invalid notice. This argument was based upon the following
alternative propositions:
a)
the charterers had expressly or impliedly surrendered
their right to enforce the strict terms of the contract (waiver); or
b)
the charterers could not rely on the strict terms of the
contract because these terms had been varied by agreement of the parties, as
evidenced by a mutual course of dealing (variation of contract); or
c)
the charterers were estopped from enforcing the strict
terms of the contract because both parties had acted in reliance upon a
mutually shared assumption that their legal relationship operated in a
different manner (estoppel by convention).
The Court found that the
charterers had initially accepted the invalid notice of readiness only because
they had relied upon the master’s implied assurance that the ship was ready to
discharge the maize cargo. The Court also found that the charterers had not
expressly or impliedly accepted that laytime began once the ship was ready to
discharge the maize cargo. Thus, none of the grounds put forward by the owners
was established. The Court did not, however, have to decide when laytime
commenced because the charterers conceded that it had commenced as soon as
discharge commenced. If the charterers had not made this concession, the Court
might have decided that, in the absence of a fresh valid notice of readiness
being tendered by the owners, laytime had never commenced.
The decision in "The Mexico
I" was applied by the English Commercial Court in the
"Agamemnon"4. The "Agamemnon" was chartered on
the Gencon form for a voyage from one good and safe berth Baton Rouge to one
good and safe berth Brisbane. The relevant terms of the charterparty were as
follows:
"Time lost in waiting for
berth to count as loading or discharging time .…" (clause 8);
"If the loading/discharging
berth is not available on vessel’s arrival at or off the port of
loading/discharging or so near thereto as she may be permitted to approach, the
vessel shall be entitled to give notice of readiness on arrival there with the
effect that laytime counts as if she were in berth and in all respects ready
for loading/discharging .…" (clause 32) and
"Time to count whether in
berth or not, whether notice accepted or not .…" (clause 33)
The master gave notice of
readiness at the South West Pass, which was a customary waiting area for
vessels wishing to enter the Mississippi river to proceed to one of the up
river ports. Baton Rouge has its own anchorage is abut 170 miles from the South
West Pass. The Court of Appeal held that a notice of readiness given before the
vessel arrived at the Baton Rouge anchorage was not a valid notice and the
subsequent arrival of the vessel at the Baton Rouge anchorage could not
validate it.
Tender of notice of readiness at a
non-contractual time when the vessel is an arrived ship and ready in all
respects
As indicated above, voyage
charterparties frequently provide that notice of readiness must be tendered
within office hours or some other specified period. It is also common for
masters to tender notice of readiness on arrival even if this means that the
notice of readiness is tendered outside the period specified in the governing
charterparty. In the "Petr Schmidt"5 the English Court of
Appeal had an opportunity to consider the validity of a notice of readiness
tendered outside the hours stipulated by the charter at a time when the vessel
was ready in all respects and in the place provided for by the charterparty.
The "Petr Schmidt" was chartered on an amended Asbatankvoy form
charterparty. Clause 30 provided that "notice of readiness at loading and discharging port is to be
tendered within 06.00 and 17.00 hrs. local time". Clause 6 of
the charterparty provided, inter alia, that "laytime …. shall commence upon the expiration of six (6) hours
after receipt of such notice or upon the vessel’s arrival in berth .… whichever
first occurs". The master tendered notice of readiness at the
load port and both discharge ports outside the period specified in clause 30.
On each occasion, the vessel was an arrived ship and was physically and legally
ready to load or discharge.
The Court of Appeal held that a
notice of readiness which is tendered at a non-contractual time in respect of a
vessel which is an arrived ship and is in all respects ready to load or
discharge is valid. However, the Court also ruled that, although valid, such a
notice of readiness could only become effective to trigger the commencement of
laytime under clause 6 at the earliest moment it could have been contractually
tendered under clause 30.
Conflict between notice of
readiness provisions and "reachable on arrival" clauses in berth
charterparties
In the "Laura Prima"6,
the House of Lords considered the meaning of the words "reachable on
arrival" in the context of a charterparty on the Exxonvoy 1969 form. The
vessel was chartered for a voyage from one safe berth in Libya to two safe
ports in Italy. The charterparty provided, inter alia, as follows:
"6. Notice of readiness. Upon
arrival at customary anchorage at each port of loading .… the master .… shall
give the charterer .… notice .… that the vessel is ready to load .… cargo,
berth or no berth, and laytime .… shall commence upon the expiration of 6 hours
after receipt of such notice or upon the vessel’s arrival in berth whichever
first occurs. However, where delay is caused to vessel getting into berth and
after giving notice of readiness for any reason over which charterers has no
control, such delay shall not count as used laytime."
and
"9. Safe berthing – shifting.
The vessel shall load .… any safe place or wharf, or along side vessels .…
reachable on her arrival, which shall be designated and procured by the Charterer
.…"
The vessel arrived at her loading
place in Libya and tendered notice of readiness but was unable to proceed to a
loading berth since all possible berths were occupied by other vessels. This
remained the situation for almost two weeks. The charterers sought to rely on
clause 6 to prevent the running of laytime on the grounds that the delay in
berthing was beyond their control. The owners countered this argument by
pointing out that the charterers were in breach of clause 9 as they had not
procured a berth which was reachable on arrival of the vessel. The House of
Lords held that clause 9 did prevail over clause 6 and that clause 9 therefore
required the charterers to nominate a berth which was reachable on the vessel’s
arrival. If the vessel was unable to proceed to the berth on arrival charterers
were in breach of their obligations under the charterparty and could not rely
on the exception to laytime contained in clause 6. In delivering his judgment,
Lord Brandon said;
"Reachable on arrival"
is a well-known phrase and means precisely what it says. If a berth cannot be
reached on arrival, the warranty is broken unless there is some relevant
protecting exception … The berth is required to have two characteristics: it
has to be safe and it has also to be reachable on arrival."
"The Laura Prima" was
later applied in the "Sea Queen"7(berth not reachable due
to unavailability of tugs) and the "Fjordaas"8 (berth
unavailable due to bad weather). The fact that the principle established by the
Laura Prima applies when a berth is not reachable on arrival for any reason and
not just congestion was thus affirmed by these two judgments. This was clearly
demonstrated by London arbitration No. 16/98 (LMLN ). In this case, the vessel
was chartered on an amended Asbatankvoy form charterparty which contained
clauses 6 and 9 which were identical to those quoted above from the Laura Prima
charterparty. Additional clause 13 also provided as follows:
"Suspension of Running Time
Clause: Time shall not count as laytime, or if on demurrage as demurrage, when
spent or lost: (a) for and on an inward passage moving from anchorage to first
berth, including awaiting tugs, pilot .… until the vessel is securely moored at
the berth .…"
When the vessel arrived at the
discharge port on 31st December, the berth to which she had been consigned was
vacant. On the previous day, another vessel chartered by the same charterers
had arrived at the port and they wished her to berth first for commercial
reasons. Bad weather initially prevented the other vessel from berthing on 31st
December and she was unable to berth as no tugs were available due to holidays
until 2nd January. The other vessel berthed on 2nd January and sailed on 3rd
January. The first vessel then berthed. The Tribunal was asked to consider if
time ran from 31st December or from 2nd January. The charterers contended that
a berth had been available upon arrival and that the proximate cause preventing
berthing was not congestion (as in the "Laura Prima") but adverse
weather and the unavailability of tugs. The Tribunal held that the "Laura
Prima" applied not only when congestion meant that the berth was not
reachable on arrival but also when the berth was not reachable on arrival for
any other reason (as in the "Sea Queen" and the "Fjordaas").
Accordingly, the owners’ claim succeeded in full.
