11

NEW ISSUES AND RECENT CASES IN NEW ISSUES AND RECENT CASES IN CHARTERINGCHARTERING

TokyoTokyoMay 12, 2009May 12, 2009

William J. HonanWilliam J. HonanHolland & Knight LLPHolland & Knight LLP

22

Clause 5, Part II, ASBATANKVOYClause 5, Part II, ASBATANKVOY

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

33

Clause 6, Part II, ASBATANKVOYClause 6, Part II, ASBATANKVOY

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

44

Issue No. 1Issue No. 1

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

55

Issue No. 2Issue No. 2

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

66

Issue No. 3Issue No. 3

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

77

Issue No. 4Issue No. 4

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

88

Issue No. 5Issue No. 5

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

99

Mr. Justice Langley’s HoldingMr. Justice Langley’s Holding

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

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

1010

““Northgate”: Clause 6Northgate”: Clause 6

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

1111

Judge Siberry said:Judge Siberry said:

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

1212

He continued:He continued:

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

1313

Clause 6, Part II, ASATANKBOYClause 6, Part II, ASATANKBOY

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

1414

The arbitrators said:The arbitrators said:

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

1515

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

Clause 23(b)Clause 23(b)

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

Clause 25Clause 25

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

1616

““Nikmary” Facts SummaryNikmary” Facts Summary The vessel arrived at the port of Sikka to load a cargo of gasoil on The vessel arrived at the port of Sikka to load a cargo of gasoil on

December 2 and proceeded immediately to its berth.December 2 and proceeded immediately to its berth.

The vessel's tanks were inspected on December 3rd by an independent The vessel's tanks were inspected on December 3rd by an independent surveyor appointed by the charterer and were rejected.surveyor appointed by the charterer and were rejected.

The supplier, Reliance Petroleum Limited, was prepared to supply the The supplier, Reliance Petroleum Limited, was prepared to supply the cargo on December 3rd.cargo on December 3rd.

The vessel's crew cleaned the holds and, on December 5, the two 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 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 charterer passed the holds and the vessel gave its valid NOR to the receiver.receiver.

No cargo was forthcoming and, on December 9, Reliance notified the No cargo was forthcoming and, on December 9, Reliance notified the charterer that due to its other commitments, the “Nikmary” would not be charterer that due to its other commitments, the “Nikmary” would not be loaded until the end of the month.loaded until the end of the month.

Loading in fact did not commence until January 3.Loading in fact did not commence until January 3.

1717

““Nikmary” Clause 30(c)(v)Nikmary” Clause 30(c)(v)

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

1818

Charterer’s Duty to Provide CargoCharterer’s Duty to Provide Cargo

A voyage charterer owes an A voyage charterer owes an absolute and non-delegable duty to absolute and non-delegable duty to provide cargo for loading andprovide cargo for loading and

Charter exceptions will normally be Charter exceptions will normally be read as protecting a charterer only read as protecting a charterer only in respect of its duty to load, and in respect of its duty to load, and not as covering its duty to provide a not as covering its duty to provide a cargo.cargo.

1919

Clause 23Clause 23

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

2020

Owner argued:Owner argued:

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

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

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

2121

Mrs. Justice Gloster held:Mrs. Justice Gloster held:

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

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

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

2222

Mr. Justice Steel ruled:Mr. Justice Steel ruled:

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

2323

Time Bar General PrinciplesTime Bar General Principles

1.1. Contractual time bars are enforced.Contractual time bars are enforced.

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

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

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

2424

Time Bar Practice TipsTime Bar Practice Tips

1.1. If the Owner:If the Owner:a)a) seek to eliminate altogetherseek to eliminate altogetherb)b) make the clauses mutually applicablemake the clauses mutually applicablec)c) provide as long a period as possibleprovide as long a period as possibled)d) provide training to the persons handling provide training to the persons handling claimsclaims

2.2. If the Charterer:If the Charterer:a)a) include all claims not just demurrage and include all claims not just demurrage and

detentiondetentionb)b) draft the clause so as to avoid obvious draft the clause so as to avoid obvious loopholes loopholes

2525

ElandEland: S.M.A. 4027 (March 4, 2009): S.M.A. 4027 (March 4, 2009)

The term "WVNS," coupled with a description of The term "WVNS," coupled with a description of the cargo segregation system, exists primarily to the cargo segregation system, exists primarily to protect owners . . . from being compelled to load protect owners . . . from being compelled to load different cargoes in such manner as to result in different cargoes in such manner as to result in potential cargo claims. It is not a descriptive potential cargo claims. It is not a descriptive phrase that charterers . . . can waive in order to phrase that charterers . . . can waive in order to maximize the amount of cargo intake.maximize the amount of cargo intake.. . . Since the Owner did not have to follow the . . . Since the Owner did not have to follow the improper voyage orders, it could impose, within improper voyage orders, it could impose, within reason, any conditions it felt necessary to protect reason, any conditions it felt necessary to protect its contractual rights.its contractual rights.

2626

ElindaElinda: S.M.A. 4006 (May 30, 2008): S.M.A. 4006 (May 30, 2008)

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

2727

Clause 23Clause 23

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

2828

Charterer instructed:Charterer instructed:

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

then:then:

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

2929

Charterer replied:Charterer replied:

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

3030

Mr. Justice Steel held:Mr. Justice Steel held:

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

3131

Redelivery ClauseRedelivery Clause

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

3232

Charterer stated:Charterer stated:

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

3333

Charterer revised instruction:Charterer revised instruction:

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

3434

Panel held:Panel held:

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

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

3535

Mr. Justice TomlinsonMr. Justice Tomlinson

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

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

3636

For Promissory Estoppel:For Promissory Estoppel:

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

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

3737

NEW ISSUES AND RECENT CASES IN NEW ISSUES AND RECENT CASES IN CHARTERINGCHARTERING

TokyoTokyoMay 12, 2009May 12, 2009

William J. HonanWilliam J. HonanHolland & Knight LLPHolland & Knight LLP