The Court of Appeal delivered its long-awaited judgment in March 1998. It upheld the Commercial Court’s ruling which had, in turn, confirmed the arbitrators’ original award. The Appeal Court agreed that a Notice of Readiness, given outside the hours specified in the charter party, will be effective when the specified hours begin. Provided the statements in the Notice of Readiness are correct when it is tendered and the notice is transmitted in such a way that it will be available to the intended recipient at the commencement of the specified period (from 0600 hours in this instance), the notice is valid and will be deemed to have been correctly tendered at that time.
Several references were made in this judgment to the High Court decision in The Agamemnon (T.A. Shipping Ltd. v. Comet Shipping Ltd.) . In that case, the judge, Mr. Justice Thomas, overturned the arbitrators’ award, and held that an NOR given at the South West Pass was invalid as it had been given at a completely different area from Baton Rouge where the vessel had been fixed to load. According to the terms of the charterparty, the NOR should have tendered at or off the port of Baton Rouge or as near as the vessel could reach. In these circumstances laytime did not begin until loading operations commenced. The Appeal Court judges in the “Petr Shmidt” case were careful to explain why they did not perceive any inconsistency between the judgements in these two cases.
A time clause will usually be considered a fundamental condition of a contract and its breach may permit the other party to cancel the contract or to accept the breach but claim for any damages suffered. Alternatively, he may accept the breach conditional upon revised terms being agreed. However, we have often had to point out that a late nomination or notice does not automatically entitle the injured party to claim, after the event, that laytime only commenced on berthing. We have always advised that if the intention is that laytime will commence on berthing, the contract should say so. We have recently seen this taken literally in an FOB contract which contains the following clause “In case of buyer’s failure or delay in complying with its duties in respect of timing, nominations, notices, planning, opening of l/c provided by this contract, the seller will be entitled to start laytime upon berthing. Notwithstanding the above, the agreed lifting period is an essential element of the contract in favour of the seller.” Hence, failure to meet any one of the many time stipulations in the contract will eliminate the buyer’s claim for waiting time prior to berthing.
Incidentally, this contract also includes another interesting clause “Any claim, including demurrage, arising out of this agreement shall be presented latest within six months from B/L date and settled within one year from B/L date. No further advice/agreement after that period shall be considered unless either party has commenced legal proceedings or both parties have agreed to extend the above period.” As the demurrage clause in the contract already includes a 90 day time bar for the submission of demurrage claims, the inclusion within this modified cargo clause of two further time limits is inconsistent. It is difficult to say how the clause would work in practice and resolving any disagreement over its interpretation could well necessitate additional legal expenses.
As we mentioned in the last newsletter, this book by Malcolm Edkins and Ray Dunkley, is now available from Lloyds of London Press. We have had an opportunity to review the book which is divided into two sections. The first part covers shipping demurrage and includes a comparison of the commonly used charterparties. The second part discusses contract demurrage and some of the standard contracts. While we do not always agree with the opinions of the authors, we believe the book would be a useful addition to your demurrage library.
There are a few points which have arisen recently that affect companies lifting Nigerian oil. NNPC have recently advised some buyers that in future they will not pay any demurrage for VLCC loadings. Their reasoning, we understand, is that VLCC’s require the co-loading of two crude oil parcels with different date ranges. This can, apparently, inconvenience NNPC while providing considerable cost savings for the buyer.
Additionally, NNPC have advised that they will no longer consider any claims for demurrage for loadings prior to 1995.
A further point that has been brought to our attention is the number of long delays to berthing (up to six days) which have been ascribed to “awaiting pilots”. In one instance under BPVOY3 terms, the ship owner was responsible for all the time lost. In another, under Asbatankvoy, the charterer had to pay. It may be worth considering an amendment to charterparties for Nigerian loadings whereby time awaiting pilots is shared 50/50.