Further to our last newsletter, we have now assembled an Industry Working Group to examine some of the difficult questions surrounding the validity of NOR’s. The intention is (a) to establish clear guidelines on the interpretation of NOR clauses in frequently used tanker charter parties and (b) to draft an alternative clause that will eliminate as much uncertainty as possible. The Working Group currently includes the following volunteers: Susan Wear of TotalFinaElf, Phil Stalley of BP Shipping, Nikos Paschos of Eletsons, Jens Huttemeier of A.P. Moller, Jan Bratek of Marc Rich, Martin Wisdom of Waterson Hicks and Roger Sepkes of Asdem.
We have completed a considerable number of arbitrations under Asdem terms since our last news update. It is not possible to cover them all in detail and for many of them the parties involved wish the details to remain confidential. However, the following general conclusions may be worth noting:
1) ACCEPTANCE OF CARGO BEFORE DELIVERY DATES. Although a cargo may be accepted before the delivery dates stipulated in a sales contract, the English courts have accepted the principle that laytime will not begin before the time stipulated in the contract unless there has been an agreement between the parties or at least a clear waiver to commence laytime at an earlier time. For example, in the case of the "Khios Breeze" [1958], the judge had no difficulty in following the House of Lords' decision in Nelson & Sons Ltd v. Nelson Line (Liverpool) Ltd. (No 3) [1907] to the effect that the commencement of work will not automatically trigger the running of laytime. He said: "I can see no ground whatever on which I could infer an agreement here that, because the charterers started to unload, and the shipowners' servants assisted in doing so, at 2.30 in the morning, there was an agreement between the parties that laytime should start then….. Equally, I can see no ground upon which I should be entitled to hold that it had been waived by the charterers."
2) ALLOWANCE FOR DOCUMENTS AFTER LOADING. Bills of lading and certificates of quantity cannot be produced until loading has been completed and the total quantity calculated and agreed. The charterers are entitled to a reasonable period to complete this. As the judge said in Ford and others v. Cotesworth and another (1868) 4 QB 127: “…whenever a party to a contract undertakes to do some particular act, the performance of which depends entirely on himself, so that he may chose his own mode of fulfilling his undertaking, and the contract is silent as to time, the law implies a contract to do it within a reasonable time under the circumstances. And if some unforeseen cause, over which he has no control, prevents him from performing what he has undertaken within that time, he is responsible for the damage”. Although this is a very old judgment, it has been referred to in many later cases as defining a principle of English law. It means that although the charterers must be entitled to a reasonable period of time to place documents on board, any additional time taken, regardless of the reasons, even if outside the charterers’ control, will be for their account and can be claimed by the ship owners as damages for detention. The next question is how much time should be allowed when nothing has been specified in the charter party? Our answer is to concur with the majority of charter parties that now allow 2 hours at each port of loading.
3) EXCLUDING “REACHABLE ON ARRIVAL” FROM CL.9 OF ASBATANKVOY. Ship owners should be aware that by agreeing to delete or modify the “reachable on arrival” provision in Asbatankvoy cl.9, they are likely to find themselves open to a far wider interpretation of the words in clause 6: “However, where delay is caused to Vessel getting into berth after giving notice of readiness for any reason over which Charterer has no control such delay shall not count as used laytime." For example, port traffic congestion could be the result of something over which the charterers had no control and therefore the time lost would not count as used laytime. Of course, if charterers want the full benefit of this they must also include an amendment to Clause 6 such as: “Last line, add at end ‘or demurrage’”.
4) WHO DECIDES IF WEATHER IS TOO BAD FOR SAFE BERTHING? What is the position when the port has not been closed but the ship’s Master considers that conditions render berthing unsafe? Our view is that unless there is some evidence that the Master has acted unreasonably, the half-rate provisions of the charter party for weather delays will apply. Standard weather clauses refer to delays in berthing due to weather conditions. They do not say delays due to the port being closed. We have been assured that the courts would normally accept that the Master was best placed to decide whether conditions were safe to berth his particular vessel.