The Industry Working Group on the validity of Notices of Readiness held its first meeting in March. Both owners’ and charterers’ representatives agreed that there was a need for certainty which could only be achieved by having a standard approach to the tendering and acceptance of NOR’s. Some guidance could be given on the best way to comply with the requirements of current charter party clauses. However, not all such clauses balanced the general practice of tankers tendering NOR on arrival within the port against the established position in English law that the vessel must demonstrably have reached the end of her sea voyage. The Working Group is therefore in the process of drafting an NOR clause that could be added to the Asbatankvoy charter party which would eliminate most, if not all, of the current arguments.
In our News Update No.16 we reported on the dry cargo case, The Happy Day . Although discharge took three months to complete, the unfortunate owners found that because a valid NOR had not been tendered, laytime never commenced. We understand that the owners have now appealed and the judgment of the Court of Appeal is due very shortly.
The formula for assessing the pumping performance of tankers relative to the pumping warranty in the charter party (or any lower shore restriction) has now become widely accepted. We have written a simple Excel spreadsheet that automatically calculates any time lost due to inefficiency of the vessel. You only need to enter details of the quantity discharged, the pumping time used, the warranted back pressure and the average back pressure actually achieved. If you would like a copy of this, just let us know by email and we can send it to you by return.
In the appeal to the High Court in the case of Stolt Tankers Inc. V. Landmark Chemicals SA (The “Stolt Spur”)  LMLN 579 the question was whether laytime or demurrage was interrupted when the vessel, while waiting for the charterers’ berth to become free, undertook cargo operations under other concurrent charter parties and also carried out tank cleaning. The judge agreed with the arbitrators that in order to claim demurrage, the ship owners had to do nothing to prevent the vessel being available and at the disposal of the charterers for the purpose of loading and unloading cargo. This was the “wider principle” referred to in The Union Amsterdam  2 Lloyd’s Rep 432 which derived from Ropner Shipping v. Cleeves W.V.A. Collieries (1927) 27 Ll L Rep 317. The Court rejected the owners’ argument that this would mean that the vessel had to maintain an absolute state of readiness to shift to the berth at all times. The requirement was as stated in The Virginia M  1 Lloyd’s Rep 603 as “readiness in a business sense [which] does not involve completion of what are mere formalities.”
The principle is that the charterers agree in the charter party to pay compensation by way of demurrage if the loading and discharge operations are delayed beyond the agreed time allowed. However, if the vessel is unavailable to the charterers for their cargo operations, because she is being used by the owners for their own purposes, the vessel is not being detained by the charterers. There is, therefore, no reason for the charterers to pay compensation.
In the past, there has been a general view in the oil industry that if a vessel could take on bunkers without losing her place in the berthing queue, laytime or demurrage would continue to run. It would appear that this may not be correct under English law unless a relevant provision is included in the charter party to cover it.
We have been asked more than once for a definition of what constitutes “breakdown of machinery or equipment” as described in Asbatankvoy Pt. II, cl.8. Unfortunately there is a shortage of helpful case law. Having discussed this question with a number of experienced lawyers and demurrage managers we have reached some general conclusions. Machinery could be any mechanical or electrical device such as a pump. A hydraulic loading arm could possibly be described as either machinery or equipment. Flexible hoses are usually considered as equipment. However, jetties, fenders and pipelines have been held by the Court as not being either machinery or equipment - Olbena SA v. Psara Maritime Inc. (The Thanassis A)  LMLN 68. On this basis, a floating roof on a tank would probably be considered to be a fixed installation and not equipment.
BPVOY3 cl.21 uses the slightly wider wording “breakdown or failure of equipment, plant or machinery”. We would be grateful if anyone could provide a legal definition of what constitutes “plant”.
Delays arising from leaks between a manifold (not equipment) and a hose or loading arm (equipment), often give rise to disputes. The reason for the leak may have some bearing, but it seems that many charterers will accept that an incorrectly fitted seal or gasket is not a breakdown of equipment. In most cases the faulty connection will have been made by the shore personnel.
There is a conflict of opinion over whether there is a duty to maintain the equipment or machinery in good order. Is there an implied term that the charterers will maintain their shore equipment with reasonable diligence in the same way that the ship owner must maintain his ship? The opinion received from one experienced lawyer was that the word “breakdown” excluded any such duty of care. So long as the equipment was working and then broke down, that was sufficient.