By Andrew Wilding, Managing Director, Asdem Asia Pte. Ltd.
At the start of the 20th century in Nelson & Sons v. Nelson Line (Liverpool) Ltd. (No 3) [1908] the House of Lords said that the mere fact of cargo work being carried out in excepted periods was insufficient to vary the express terms of a charterparty so as to allow time to count during an excepted period. Following this decision it was universally accepted that starting work in advance of laydays did not automatically trigger the start of laytime unless the charterers had agreed to vary the terms of the charter party. Indeed, this was the conclusion reached fifty years later by the High Court in The Khios Breeze [1958] where the charter party stated, "Laytime to commence 24 hours after written notice was given". Loading started half an hour after arrival, even before notice had been given. The court held there was no basis on which to imply an agreement to shorten the 24 hour notice period so that laytime started early.
In an effort to eliminate any doubt on this issue most oil company charter parties now make it clear that laytime will not begin before 0600 hrs on the first day of laydays unless agreed in writing by the charterer (See BPVOY4 cl.7.3.1, SHELLVOY6 cl.12(2)).
We were recently asked to consider a situation where a vessel tendered NOR prior to commencement of laydays and the charterer requested the vessel to berth for additional cleaning for the particular product they wished to load. Owners agreed and when submitting their claim for demurrage counted all the time spent cleaning whilst alongside. The charterers disputed the claim taking the view that, as they did not expressly consent or sanction the early commencement of laytime, time did not start for their account until 0600 on the first day of laydays. They argued that use of the vessel in advance of the earliest layday, without their consent, would not start time running.
In the English Court of Appeal decision in, Tidebrook Maritime Corporation v. Vitol SA. ("The Front Commander") [2006], the Court of Appeal said that in the absence of clear a clear statement to the contrary, a charterer could not expect to use a vessel for free.
Taking account of this strong statement of principle and by analogy with the commercial principles on which The Happy Day [2002] was decided, our view was that by issuing instructions for the vessel to berth for additional cleaning, charterers had accepted that the NOR served in advance of laydays was valid and time was for their account as soon as the vessel was alongside.
By Andrew Wilding, Managing Director, Asdem Asia Pte. Ltd.
Clause 14 of ExxonMobil VOY2012 is headed "LAYTIME/DEMURRAGE CONSEQUENCES"; cl.14(a) specifies when laytime and time on demurrage counts in full, cl.14(b) specifies consequences for which demurrage only is at half rate, and Clause cl.14(c) sets out a number of consequences when laytime or time on demurrage does not count, including if time is "spent or lost" in the following circumstances:
(vi) By reason of local law, or regulations, requirements or orders of any governmental or military authorities (including, but not limited to, port authorities, Coast Guard, Naval, Customs, Immigration and/or Health authorities);
(vii) By reason of action or inaction by local any governmental or military authorities (including, but not limited to, Port, Coast Guard, Naval, Customs, Immigration and/or Health authorities), with the exception, however, of port closure due to weather and/or sea conditions.
It is common to provide for the commencement of laytime "whether Customs cleared or not" and "whether in free pratique or not" (WIFPON) and in such cases these matters are irrelevant to the giving of a notice of readiness. Even where there is no such express provision, if these matters are reasonably believed to be "mere formalities" and routine, notice of readiness may be given without having obtained the necessary clearances (See The Delian Spirit [1972]). There is no such express WIFPON provision in ExxonMobil VOY2012 and on more than one occasion this year we have been asked whether the cl.14(c)(vi) and (vii) exceptions have the consequence that time spent waiting at anchor does not count at terminals where free pratique is not granted until after the vessel has berthed.
When we have been approached to advise on this clause the charterers' position is that as local authorities require Free Pratique before commencing loading or discharging operations, laytime or time on demurrage does not count "by reason of... regulations and requirements of... Port... [and]... Health authorities" which require Free Pratique before any operations are permitted and/or by "inaction of... Port... [and]... Health authorities" in granting Free Pratique.
Our advice is, as a matter of English law, that even though there is no express WIPFON provision in ExxonMobil VOY2012, if the granting of Free Pratique is reasonably believed to be a mere formality and routine, the vessel is legally ready and notice of readiness may be given without having obtained the necessary clearances. Furthermore, we do not see that the exceptions in cl.14(c)(vi) and (vii) alter this position because no time has been spent or lost in the granting of Free Pratique if it is granted upon berthing.
In the case of The "Kriti Filoxenia", ST Shipping & Transport Inc v. Kriti Filoxenia Shipping Co. SA [2015] EWHC 997 (Comm) the charterers appealed to the High Court against an arbitration award in favour of the owners. The fixture had been concluded on a standard BPVOY3 charter party. While the vessel was sailing towards Tuapse, the original loading port nominated by the charterers, the charterers changed their orders and nominated Batumi as the loading port. They were entitled to do so under clause 24 of the c/p. The owners then advised the charterers that the vessel's eta at Batumi would be one day later than the cancelling date in the charter party. The charterers then cancelled the charter party, relying on the terms of clause 17 "If it appears to Charterers that the vessel will be delayed beyond the Cancelling Date... Charterers shall have the option to cancel this Charter".
The Court considered that charter parties required a degree of cooperation between owners and charterers if they were going to work successfully. The charterers should not do anything to impair the owners's ability to comply with the cancelling date. Furthermore, if the drafters of BPVOY3 had intended that the rights of cancellation in clause 17 would apply to a variation in the load port under clause 24, express words to that effect would have been included in the charter party. The High Court therefore dismissed the charterers' appeal.