Shell have now issued their long-awaited update to Shellvoy5 with effect from 18 April 2005. It includes most of the amendments that Shell previously covered in the additional chartering terms that they published in 1996 and 1999. It also reflects the experience Shell has had in areas such as ship-to-ship transfers and problems with the granting of free pratique.
Shellvoy6 remains a berth charter party and as such the terms for the commencement of laytime are still as complex as before. In fact, they are more complicated because in clause 13(1)(a)(i)-(iii), unless the owners now obtain customs clearance or free pratique within 6 hours of the original NOR (or when time would otherwise commence under the c/p), the NOR will not be valid and a new one will have to be tendered when customs clearance or free pratique has been given. There is a proviso “unless this is not customary prior to berthing”. This appears to apply to “free pratique” but not to “customs clearance”. There are some other areas which ship owners will need to examine very carefully. These include the clauses that cover pumping and crude oil washing in Part I (A)(vii), and Part II cl. 20 coupled with cl. 46 in respect to Letters of Protest. Also, the provisions for transhipment at sea where clause 13(2) now states that time will begin in accordance with the terms for the commencement of laytime in clause 13(1)(a). In clause 26 (2), the charterers can elect to treat the transhipment point as a load or discharge port.
Shellvoy5 has always been renowned for the amount of cross-referencing required, thus making it difficult to follow unless one checks every clause very carefully. This tradition has certainly been maintained in Shellvoy6.
The International Ship and Port Facility Security Code became mandatory on 1 July, 2004. It is supposed to help detect and deter threats to international security. Most charterers have added additional clauses to their charter parties to cover any delays at the loading and discharge ports when complying with the code’s obligations. BIMCO’s (Baltic and International Maritime Council) ISPS clauses have often been used. These entitle the vessel to tender NOR even if clearance to berth under the code has not yet been received. They also state that any delays resulting from measures imposed by the port or relevant authority before, during or after the running of laytime/ demurrage are for the charterer’s account. Not surprisingly, most tanker charterers have amended the BIMCO clauses so that such delays are shared 50/50 with owners. We have now seen some owners trying to claim that if the berth is not “reachable on arrival” in accordance with clause 9 of Asbatankvoy, any delay due to compliance with ISPS regulations must count for the charterers in full. There is no logical reason or authority for this. As we have mentioned on several occasions, see News Update no. 20 and News Update no 23, The House of Lords decision in The “Laura Prima” [1982] did not say that all time will automatically count for the charterers if the berth is not reachable on arrival. Time will only count in full when there is no applicable exception to laytime or demurrage in the charter party or additional clauses. We have recently been advised of yet another unpublished London arbitration that affirms this point. Martin Wisdom, a founding partner of London maritime lawyers, Waterson Hicks, will be talking about the implications of adherence to the ISPS at the Demurrage Conference on 17/18 May.
It is with no sadness whatsoever that we are able to report that an increasing number of important charterers have taken the decision to stop using Asbatankvoy as their charter party of choice. While some lawyers and arbitrators may regret the reduction in their revenue, there are considerable benefits to be gained from adopting one of the more modern charter parties, both for clarity and the wider coverage of their terms. Several companies, such as ConocoPhillips in the US are currently switching to ExxonMobil Voy2000. In our opinion, this is one of the clearest and most concise of the modern forms. Ship owners will, understandably, complain that oil company charter parties are increasingly biased in the charterers’ favour. Some would, no doubt, prefer to fix on a completely unamended Asbatankvoy form. However, the usual practice is to amend Asbatankvoy with forty or more additional clauses. These clauses, which are often poorly drafted, have been the cause of most of the recent disputes that we have seen. When Asbatankvoy accounts for more than 90% of all tanker demurrage disputes, there is good reason for both owners and charterers to look for something better. Asbatankvoy was known as Exxonvoy69 before it was taken over by the American Association of Ship Brokers and Agents in 1977. However, Asbatankvoy’s origins are even older than this. Its arcane laytime and demurrage clauses were taken from Warshipoilvoy which was first published in 1945.
There are several good reasons why laytime and demurrage clauses need to be kept separate in sales contracts. For example, if you say “laytime and demurrage as per charterparty rate, terms and conditions pro rata for part cargo”, it will be far from clear what the laytime allowance should be. You may also find, when the sale is for a part cargo that the demurrage rate will be pro rated according to the percentage of cargo loaded or delivered. You may also find, even if you have specifically stated a laytime allowance in such a clause, that because the charter party has been referred to in the context of laytime that your demurrage claim has become an indemnity, i.e. there is no obligation to pay more demurrage than is actually due to the ship owner.
There were various arguments in the High Court and the Court of Appeal in the case of Fal Oil Co. Ltd. v. Petronas Trading Company [2004] about whether or not the requirement to pay demurrage was an absolute obligation or only an indemnity. Only two of the three Court of Appeal judges considered that it was an absolute obligation. It was clear that there is a fine line between the two positions. Therefore, unless the specific intention is that no more demurrage will be payable than is due to the ship owner, the demurrage clause must be drafted to ensure that there is no ambiguity that could allow the recipient of the claim to argue that he does not have an absolute obligation to pay the claim calculated in accordance with the terms of the sales contract.
We were recently asked when we considered laytime should begin in the following situation:
The charter party clause stated “vessel not to tender notice of readiness before laydays”. The vessel arrived and tendered NOR before the first day of laydays. No further NOR was tendered. The vessel berthed about a week later due to congestion at the load port. On the Statement of Facts, the NOR was accepted from the first day of laydays and duly signed by the receivers. However, because of the charter party clause, the charterers claimed that the NOR was not valid and that laytime should only start to run from the time the vessel commenced loading.
We referred to the Court of Appeal decision in The Petr Shmidt [1998] where it was held that there was a significant difference between an invalid NOR and an NOR which was in all respects valid but was tendered at the wrong time. Although a clause in the charter party stated that the NOR had to be tendered between 0600 and 1700 hrs, an NOR tendered outside these hours was not invalid. It simply became effective at the time stipulated for the opening of business at 0600. The Court of Appeal was confirming an earlier arbitration award and High Court decision. On this basis, it seemed reasonable to conclude that a Notice of Readiness tendered before the commencement of laydays would become valid at 0000 on the first day of laydays.