INTERTANKO SEMINAR,
DALIAN
Session 5
Tanker Charterparties – recent
cases and model clauses
John C. Fawcett-Ellis
Introduction
The 2 areas on which I shall concentrate are
the following:
1. Demurrage – The Happy Day;
2. INTERTANKO’s Model Clauses
THE “HAPPY DAY” [2002] 2 Lloyd’s Rep. 487.
The case raised the following question, what are the
rights of owners to demurrage and charterers to
despatch when, under a charterparty which provides for
a notice of readiness (“NOR”) to be given at the
discharge port to trigger the start of laytime, the owners
give NOR which is invalid for prematurity, yet the vessel
thereafter, and without further NOR being given,
commences and completes discharge over a period well
in excess of the number of laydays provided for.
Demurrage – Notice of Readiness
In THE “HAPPY DAY”, the charterparty contained the
following relevant clauses.
“3.
Being so loaded, the vessel shall proceed
direct to
1-2 safe berth(s) anchorage(s) [various
named ports] in charterers’ option …
28.If by reason of congestion the vessel is unable
to
enter the loading / discharging ports,
Master has privilege to tender NOR in accordance
with the Charterparty … and laytime is to
commence …, whether in berth or not,
whether in port or not …
30. At first or sole discharging port notice to be
given to Receivers / Agents during normal local
office hours and laytime to start counting at 8 am
next working day whether in berth or not, whether in
port or not, …
Time from Friday 5 pm until Monday 8 am not to
count even if used.”
FACTS
The vessel completed loading 23,000 tonnes of wheat at
Odessa departing for Cochin where she arrived off the port on
Friday, 25th September at 1630 hours. At the time of her arrival
off the port the vessel could not immediately enter port in order
to berth because she had missed the tide. Nevertheless, the
Master purported to give NOR by cable at 1630 hours on 25
September 1998. Because the charterparty was a berth charter
and there was no congestion at the berth, the NOR was
premature and was invalid when given.
FACTS (Cont)
The vessel was able to enter the port on the morning tide of Saturday,
September 26th, berthing at 1315 hours.
No further NOR was ever given. However, discharge commenced on
Saturday, September 26th and as a result of various delays was not
completed until December 25th, 1998.
The matter was submitted to arbitration where the arbitrators found that
the NOR tendered was ineffective as the charterparty was a berth
charterparty. However, the arbitrators nonetheless concluded that laytime
commenced at 0800 hours on Tuesday, September 29th, which was the
first moment on which it could have commenced under clause 30 of the
charterparty if valid NOR had been given in accordance with that clause at
the time discharging in fact started.
The Decision of the High Court
The High Court reversed the arbitrators’ decision and held in favour of the
charterers. In essence, the reasoning was that the triggering of laytime
under the charterparty required the tendering of a valid notice which was
never given and that, based on the arbitrators’ fact finding, the charterers
had not waived their right to a further valid NOR nor were they estopped by
their conduct to this right.
In his judgment Mr Justice Langley considered the judgment of the Court in
THE “MEXICO I” and applied the view of Mustill LJ as stated in that case
that where an invalid NOR to discharge is given and discharge takes place
without the giving of any further notice then:
Langley J in the Happy Day:
“… unless something happened after the
notice was sent to make the laytime start,
it 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 charterer’s
despatch money for the whole of the
laytime.”
When THE “HAPPY DAY” reached the Court of Appeal, the Court
recognised the force of the argument that the purpose of the
laytime clause is to create certainty where otherwise there might
be argument over the moment of commencement of the laytime
and the precise amount of demurrage / despatch payable.
However, in the Court’s view, the circumstances of the case and
the demands of commercial good sense were such that the Court
would be reluctant to arrive at a result whereby, despite the fact
that the vessel had arrived, NOR had been tendered and the
unloading operation commenced without any reservation
expressed in respect of it, the charterers were free of any
constraints upon the time which they took in unloading and,
despite delays for which they would otherwise be liable for
demurrage, were in fact entitled to despatch.
The ruling of the Court of Appeal was as follows: Laytime can commence under a voyage charterparty requiring service of
a notice of readiness when no valid notice of readiness has been served
in circumstances where (a) a notice of readiness valid in form is served
upon the charterers or receivers as required under the charterparty prior
to the arrival of the vessel; (b) the vessel thereafter arrives and is, or is
accepted to be, ready to discharge to the knowledge of the charterers;
(c) discharge thereafter commences to the order of the charterers or
receivers without either having given any intimation or rejection or
reservation in respect of the notice of readiness previously served or any
indication that further notice of readiness is required before laytime
commences. In such circumstances, the charterers may be deemed to
have waived reliance upon the invalidity of the original notice as from the
time of commencement of discharge and laytime will commence in
accordance with the regime provided for in the charterparty as if a valid
notice of readiness had been served at that time.
Important points to note about THE “HAPPY DAY”
1. It is not a decision which downplays the importance of
tendering a valid NOR. In the end, the decision favoured the
owners only because the Court found the charterers had
waived the requirement to a valid NOR being tendered.
2. Waiver is an extremely flexible concept which depends on
various factors, such as the effect of the communications or
conduct of the parties, the intention of the party alleged to
have waived his rights being judged by objective standards.
Silence by itself cannot constitute waiver. In THE “HAPPY
DAY”, what constituted waiver was the failure to object to the
invalid notice in combination with the commencement of
discharge of the cargo signifying acceptance of the readiness
of the vessel by the charterers.
3. In a situation where an invalid NOR is tendered and
the charterers do not object to it but also do not
agree to the commencement of loading or
discharging, the Courts are highly unlikely to find
that laytime has commenced.
4. If Owners are in doubt about the validity of the
NOR tendered, it is advisable to tender a further
NOR. This can be without prejudice to the
contention that the earlier NOR tendered was
valid.
INTERTANKO’s Model Clauses
• Vetting Clause
• Pumping Clause
• Demurrage Payment
• Quality Management
Thank You
www.intertanko.com