In our newsletter No. 2 we referred to an arbitration over a charter party clause which specified that the NOR's were only to be tendered between 0600 and 1700 hrs. The High Court has now heard, and dismissed, an appeal by the charterers against the arbitrators' decision that an NOR tendered outside this period was a valid notice, but that it would only take effect at 0600 hrs. The charterers had contended that such NOR's were invalid and therefore laytime never commenced to run. The High Court concluded that the NOR, provided it was not untruthful or inaccurate, would become effective at the time the charter party fixed for it to be tendered. However, leave was granted for the charterers to take their case to the Court of Appeal and we understand a hearing is scheduled for March.
Several companies have advised us that more than half their long-outstanding demurrage disputes for crude oil shipments involve disagreements over vessels' pumping performances. Arguments about crude oil washing, tank stripping, inadequate pumping logs, the absence of letters of protest and unreasonable deductions of all time in excess of 24 hrs pumping are all too familiar. We therefore propose to hold a debate on these problems at our next demurrage conference in May. With the assistance of a discussion panel of very experienced industry representatives, we hope to make some progress towards defining how charter party pumping clauses should be fairly applied. Contributions to the debate from delegates will be most welcome.
Several of the disputes we have been asked to resolve have involved deciding what was meant by phrases in sales contracts such as "working hours", "working days" or "close of business". In the absence of any clear custom of the trade we have often had to consider what the parties envisaged when the contracts were written. However, to avoid unnecessary disputes in international contracts we would most strongly recommend defining the precise time by which notices and nominations have to be given, specifying the offices to which they must be sent and stating which time zone is to apply.
Two points emerged from an arbitration which we settled recently. Firstly, where notices or instructions have to be given a fixed number of days prior to the vessel's arrival, the days must be counted back from the time of tendering NOR, not from an earlier time when the vessel physically arrived at the port. Secondly, a failure to give documentary instructions by a due date may cause a delay to the preparation of loading documents. In such circumstances the FOB seller will not be liable for the delay. On the other hand, the seller cannot claim that, due to the buyer's failure to comply with a stipulation to give timely documentary instructions, laytime will only commence from berthing. There is usually no link between a requirement to give these instructions and the laytime provisions.
A more unusual dispute referred to Asdem concerned time lost as a result of loading more than the agreed quantity under an FOB sale. If the excess quantity had been returned to the shore tanks immediately, there would probably not have been a dispute. Unfortunately, the master had earlier received orders from the charterers to load up to a full cargo. The result was that the master declined to return any cargo unless he was instructed to do so by the charterers. Eventually, a price was agreed for the purchase of the excess quantity, the letter of credit was amended and the vessel was allowed to sail. It had been agreed in advance that loading would be to "ship's stop". This is not an unusual procedure, but in this instance it seems that the master was prepared, perhaps due to a misunderstanding, to continue loading until he received a full cargo. The question was who should pay for the extra time while the vessel remained at the jetty after hoses had been disconnected.
We concluded that even though the terminal had agreed to load until the vessel confirmed it had received the agreed quantity, the ultimate responsibility for loading the correct amount always remained with the FOB seller. The time required to return the excess quantity would be for the loader's account. However, any further delay arising from the master's refusal to return the excess would have to be for the buyer's account.
Unless you are fully aware of the implications, we would recommend caution when adding the Conoco weather clause to Shellvoy5. According to Shellvoy5, if, on arrival, bad weather prevents the vessel from reaching the berth, laytime will not commence. In this case, and in any of the other circumstances detailed in Clause 13 (1)(a) of Shellvoy5, the provisions of the Conoco weather clause, whereby delays in berthing due to bad weather count as one half laytime/demurrage, cannot be applied.