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NEW ISSUES AND RECENT CASES IN CHARTERING. Tokyo May 12, 2009 William J. Honan Holland & Knight LLP. Clause 5, Part II, ASBATANKVOY. 5. LAYDAYS. Laytime shall not commence before the date stipulated in Part I, except with Charterer's sanction. Clause 6, Part II, ASBATANKVOY.

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new issues and recent cases in chartering


TokyoMay 12, 2009

William J. Honan

Holland & Knight LLP

clause 5 part ii asbatankvoy
Clause 5, Part II, ASBATANKVOY

5. LAYDAYS. Laytime shall not commence before the date stipulated in Part I, except with Charterer's sanction . . .

clause 6 part ii asbatankvoy
Clause 6, Part II, ASBATANKVOY

6. NOTICE OF READINESS. Upon arrival at customary anchorage at each port of loading or discharge, the Master or his agent shall give the Charterer or his agent notice by letter, telegraph, wireless or telephone that the vessel is ready to load or discharge cargo, berth or no berth, and laytime, as hereinafter provided, 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. However, irrespective of whether the berth is reachable on arrival or not where delay is caused to Vessel getting into berth after giving notice of readiness for any reason over which Charterer has no control, such a delay shall not count as used laytime or demurrage. In any event, Charterer shall be entitled to six hours notice of readiness at loading and discharging ports, even if the vessel is on demurrage.

issue no 1
Issue No. 1

1. If a vessel arrives prior to commencement of the laydays and is ready to load, is the vessel under an obligation to give its notice of readiness?

issue no 2
Issue No. 2

2. If the vessel gives its notice of readiness prior to the commencement of laydays, does the six hour free period begin running upon the giving of the notice of readiness or at midnight of the first layday?

issue no 3
Issue No. 3

3. Does the giving of an early notice of readiness require the charterer to commence loading immediately (or at least 6 hours afterwards)?

issue no 4
Issue No. 4

4. If the charterer upon receipt of the early notice of readiness, orders the vessel to a berth, can the vessel refuse?

issue no 5
Issue No. 5

5. If the charterer orders the vessel to its berth upon receipt of the early notice of readiness and begins loading the vessel, all before the commencement of the laydays, does the time used prior to the first layday count as laytime?

mr justice langley s holding
Mr. Justice Langley’s Holding

1. "[Laytime] never started at all, with the consequence not only that the owners have earned no demurrage, but also that they are obliged to pay the charterers despatch money for the whole of the laytime."

2. Charterer’s awareness that discharge had commenced without protesting or reserving its rights was not itself a “sufficient happening” to cause laytime start.

northgate clause 6
“Northgate”: Clause 6

Vessel is to give its NOR upon arrival at the inner anchorage at Sepetiba but may give its NOR at the outer anchorage if space is unavailable in the inner anchorage.

judge siberry said
Judge Siberry said:

. . . , I consider that is a matter of commercial practicality, such an intended recipient of the NOR must have implied authority to waive a condition as to the commencement of laytime.

he continued
He continued:

. . . if Charterer did not communicate the Northgate charter terms to the Terminal/MBR and/or give specific instructions that NOR was not to be accepted from the other anchorage unless the vessel was compelled to wait there because the inner anchorage was congested, it seems to me that they [i.e., the Charterer] took the risk that the Terminal/MBR would accept a NOR that could have been rejected under the Northgate Charter and thereby waive Charterers' right to invoke the invalidity of that NOR.

clause 6 part ii asatankboy
Clause 6, Part II, ASATANKBOY

Upon arrival at customary anchorage at each port of . . . discharge, the Master shall give the Charterer . . . notice . . . that the Vessel is ready to discharge . . . .

the arbitrators said
The arbitrators said:

In the tribunal's view "anchorage" in clause 6 could not be read too literally. The situation in the waters off Lagos was notorious . . . . To deprive an owner of the right to give a valid notice of readiness under the Asbatankvoy form of charter in such circumstances seemed to the tribunal wholly unreasonable and not what the parties could have intended.

agios dimitrios clauses 23 b and 25
“Agios Dimitrios”: Clauses 23(b) and 25

Clause 23(b)

At loading port(s) when tendering notice of readiness, Vessel's cargo holds and hatch covers shall be clean, dry of loose rust and otherwise ready and suitable to receive the intended cargo.

Clause 25

Crew and mechanical failure – time lost at loading and/discharging port(s) which can be reasonably attributed to crew and/or ship's mechanical failure, shall not be counted as laytime or time on demurrage.

nikmary facts summary
“Nikmary” Facts Summary
  • The vessel arrived at the port of Sikka to load a cargo of gasoil on December 2 and proceeded immediately to its berth.
  • The vessel's tanks were inspected on December 3rd by an independent surveyor appointed by the charterer and were rejected.
  • The supplier, Reliance Petroleum Limited, was prepared to supply the cargo on December 3rd.
  • The vessel's crew cleaned the holds and, on December 5, the two surveyors, one appointed by the owner and the other appointed by the charterer passed the holds and the vessel gave its valid NOR to the receiver.
  • No cargo was forthcoming and, on December 9, Reliance notified the charterer that due to its other commitments, the “Nikmary” would not be loaded until the end of the month.
  • Loading in fact did not commence until January 3.
nikmary clause 30 c v
“Nikmary” Clause 30(c)(v)

Owner shall indemnify Charter for all direct and/or indirect costs and consequences as a result of the Vessel not being clean to the satisfaction of jointly appointed inspector and . . . all time until connection of hoses, after the Vessel has been passed as clean to the satisfaction of jointly appointed inspector shall not count as laytime or, if on demurrage, as time on demurrage.

charterer s duty to provide cargo
Charterer’s Duty to Provide Cargo
  • A voyage charterer owes an absolute and non-delegable duty to provide cargo for loading and
  • Charter exceptions will normally be read as protecting a charterer only in respect of its duty to load, and not as covering its duty to provide a cargo.
clause 23
Clause 23

23. Charterers shall be discharged and released from all liability in respect of any claim for demurrage which Owners may have under this Charter unless a claim in writing has been presented to Charterers together with supporting documentation substantiating each and every constituent part of the claim within 90 days of the completion of discharge of the cargo carried hereunder.

owner argued
Owner argued:

1. the absence of the vessel officer's signature was of no relevance; indeed, it was prepared to sign the pumping logs anytime.

2. the Charterer was shown to have received pumping logs signed by its own representative within the 90 day period.

3. even if the discharge port demurrage was time barred, due to the absence of a signed pumping log, the Owner should be able to recover the demurrage that it incurred at the load port.

mrs justice gloster held
Mrs. Justice Gloster held:

1. There as a significant commercial purpose in requiring a signature of a vessel's officer for someone should be identified that is willing to confirm its accuracy.

2. The Charterer should have the documents in one package and should not have to review its own files or make its own investigation.

3. Clause 23 refers to a single claim and there is no suggestion that part of a claim would be permitted if the Owner's submission was defective.

mr justice steel ruled
Mr. Justice Steel ruled:

. . . I am not persuaded that . . . the failure to provide all "supporting documentation" . . . for one constituent part of the claim discharged liability for the entire demurrage claim.

time bar general principles
Time Bar General Principles

1. Contractual time bars are enforced.

2. Arbitrators require strict compliance to satisfy contractual time bars. Substantial compliance probably is insufficient.

3. Contractual time bars are enforced even if there is no dispute concerning the claim in question.

4. Contractual time bars are construed strictly against the drafter.

time bar practice tips
Time Bar Practice Tips

1. If the Owner:

a) seek to eliminate altogether

b) make the clauses mutually applicable

c) provide as long a period as possible

d) provide training to the persons handling claims

2. If the Charterer:

a) include all claims not just demurrage and detention

b) draft the clause so as to avoid obvious loopholes

eland s m a 4027 march 4 2009
Eland: S.M.A. 4027 (March 4, 2009)

The term "WVNS," coupled with a description of the cargo segregation system, exists primarily to protect owners . . . from being compelled to load different cargoes in such manner as to result in potential cargo claims. It is not a descriptive phrase that charterers . . . can waive in order to maximize the amount of cargo intake.

. . . Since the Owner did not have to follow the improper voyage orders, it could impose, within reason, any conditions it felt necessary to protect its contractual rights.

elinda s m a 4006 may 30 2008
Elinda: S.M.A. 4006 (May 30, 2008)

Should the vessel be off-hire for more than fifteen (15) days, charterer shall have the option to cancel the charter party provided there is no cargo onboard.

clause 231
Clause 23

Charterer to give 30 days notice with 10 days notice laycan speed and Owners to nominate the vessel latest 10 days prior first day with complete itinerary of he vessel . . . .

charterer instructed
Charterer instructed:

"Baltimore/Constanza shipment #5 under the subject COA: 5/14 Oct.“


". . . would like to move the laycan for shipment #5 to 21/30 Oct.”

charterer replied
Charterer replied:

Actually the stem 5/14 has moved to 22/30 by the shippers because of cargo availability in this port. Therefore requesting owners for this amendment .

mr justice steel held
Mr. Justice Steel held:

... , in my judgment, as soon as the notice is given the owners can rely on it. The idea that over the period of 20 days before the nomination of the vessel has to be made the charterers can change the lays on dates as frequently and as substantially as they see fit, or even thereafter up to the stage that an estoppel be clearly established, is commercially unreal and uncertain.

redelivery clause
Redelivery Clause

. . . charterers are to give Owners not less than 30 days followed by 20/5/10/7 days notice of approximate redelivery date and intended port thereafter 5/3/2/1 days definite notice of redelivery date and port.

charterer stated
Charterer stated:

approximate notice of redelivery for the MV Zenovia at DLOSP 1 sp China on about 04 Nov 2007 basis agw, wp, wog, uce

charterer revised instruction
Charterer revised instruction:

Pls note that we hereby revise the date of redelivery to owners to about Nov. 20th within the range of redelivery.

panel held
Panel held:

1) the Owner had relied on Charterer's statement in refixing its vessel on the assumption that it would have the vessel back on about Nov. 4 (promissory estoppel).

2) there was implied a term that, when an approximate date is given by the Charterer, the Charterer was obliged "not to do anything deliberately which prevents that approximate date being met."

mr justice tomlinson
Mr. Justice Tomlinson

1) If the arbitrators believed the acronym "WP" stood for "without prejudice" those words should have put the Owner on notice that Charterer could change the approximate redelivery date.

2) To imply a term in a negotiated contract, the term must be so obvious that the parties must have intended it for a part of the contract. Pointing to the notice periods (30/20/10/7 approx; 5/3/2/1 definite), the Court stated that "[i]n my judgment the very structure of that regime militates against any argument that the parties must be bound to have agreed that the giving of the first notice constrained

for promissory estoppel
For Promissory Estoppel:

(i) a clear and equivocal representation by the charterers that they were giving up their rights (that is, giving up their right to retain the vessel until November 22) and

(ii) owner acted in reliance on that representation in a way that would make it inequitable to permit charterer to change its position.

new issues and recent cases in chartering1


TokyoMay 12, 2009

William J. Honan

Holland & Knight LLP