commencement of laytime - davies

COMMENCEMENT OF LAYTIME

FOURTH EDITION

ESSENTIAL MARITIME AND TRANSPORT LAW SERIES

Bills of Lading: Law and Contractsby Nicholas Gaskell and

Regina Asariotis, Yvonne Baatz(2000)

Modern Law of Maritime Insurance, Volume 2Edited by Professor D. Rhidian Thomas

(2002)

Maritime Fraudby Paul Todd

(2003)

Port State ControlSecond edition

by Dr Z. Oya Ozçayir(2004)

War, Terror and Carriage by Seaby Keith Michel

(2004)

Freight Forwarding and Multimodal Transport Contractsby David A. Glass

(2004)

Contracts of Carriage by Land and Airby Malcolm Clarke and

David Yates(2004)

Marine Insurance: Law and Practiceby F. D. Rose

(2004)

General Average: Law and PracticeSecond editionby F. D. Rose

(2005)

Marine Insurance ClausesFourth edition

by N. Geoffrey Hudson andTim Madge

(2005)

C O M M E N C E M E N TO F L AY T I M E

BY

DONALD DAVIES, R.D. , R.N.R.of Gray’s Inn, Barrister, Master Mariner

Fellow of the Institute of Chartered Shipbrokers, theChartered Institute of Arbitrators, and the Nautical Institute

F O U RT H E D I T I O N

LONDON2006

Informa LawMortimer House

37–41 Mortimer StreetLondon W1T 3JH

[email protected]

an Informa business

First published 1987Second edition 1992Third edition 1998Fourth edition 2006

© Donald Davies 1987, 1992, 1998, 2006

British Library Cataloguing in Publication DataA catalogue record for this book

is available from theBritish Library

ISBN 1–84311–530–1

All rights reserved. No part of this publication may be reproduced,stored in a retrieval system, or transmitted, in any form or by any

means, electronic, mechanical, photocopying, recording orotherwise, without the prior written permission of Informa Law.

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nor Informa Law can accept any responsibility for anyerrors or omissions or for any consequences

resulting therefrom.

Text set in 10/12pt Plantinby Interactive Sciences Ltd, Gloucester

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To Mia

for her continuing patience and understanding

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PREFACE TO THE FOURTH EDITION

The object of this book is to research the English common law in relation to thesubject of the commencement of laytime, to consider criticisms of that law, and tolook at various remedies which may be open to the parties to a charterparty contractto vary the common law position. For example, many types of clauses have beenintroduced into charterparties over the years which compensate shipowners for timespent by their vessels waiting at or off a port when laytime, under the common law,would not have commenced. Consideration is also given to breaches of contractwhich, by allowing shipowners a remedy in damages, provide compensation for thetime that a vessel is waiting off a port when laytime would not otherwise havecommenced.

Commencement of laytime (laytime being the amount of time allowed for load-ing/discharging vessels over and above which the shipowner is invariably paiddemurrage) is a subject of extreme importance since it applies to every voyagecharterparty and involves large sums of money in the aggregate. In practice, it isinvariably the most important factor in laytime/demurrage disputes. The subject hasled to a great many court cases as well as scores of arbitrations—in fact, arbitrationson the subject continue to take place in London every year and it seems that thesubject is incapable of exhaustion.

In 1924 Lord Justice Scrutton said that for as long as he could remember therehad been controversy between shipowner and charterer as to who is to bear the riskof waiting at or off a port. Not only does the controversy remain with us but it wouldappear, because of the large number of arbitrations on the subject, that the con-troversy shows no sign of any significant abatement. Commencement of laytimemust surely be one of the most fertile areas for arbitrators and lawyers within thewider ambit of carriage of goods by sea.

The fact that, under English law, there is complete freedom of contract regardinglaytime (no statutory provisions whatsoever) leads to new clauses being drawn up tomodify the position in respect of the commencement of laytime; such clauses are notalways clear and/or they conflict with other charterparty clauses with the result thatarbitrators have a staple diet of arbitrations concerning the commencement oflaytime. The courts are also involved on frequent occasions.

Only English common law is considered (apart from a few U.S.A. arbitrations/proceedings and an Indian case) even though arbitrations and court proceedingstake place in many other maritime nations. While there may be some differencesbetween the approach of the English judges/arbitrators and those of other maritime

vii

countries it is thought that, in the main, such differences are few; it seems thatEnglish common law has been followed to a great extent by judges and arbitratorsin other maritime nations.

The work makes reference to a large number of English judgments (most of whichcommenced as arbitrations and proceeded to the courts by way of the special caseprocedure or, in more recent times, by way of a reasoned award) as well as bycountless reported London arbitrations which have been reported in Lloyd’sMaritime Law Newsletter.

This edition brings the book up to date, the last edition being in 1998. Allchapters of the book have needed revising in view of the many important Court ofAppeal and High Court judgments in addition to the very large number of Londonmaritime arbitrations which have been reported over the past eight years and whichaffect, and illustrate, the legal aspects of commencement of laytime.

Important judgments, such as The ‘‘Happy Day’’ (commencement of loading anddischarging re waiver and estoppel), The ‘‘Mass Glory’’ (assessment of damages rearrival of vessel and setting off the laytime), The ‘‘Stolt Spur’’ (owners using theirvessel for their own purposes while it waits for a berth), The ‘‘Nikmary’’ (readinessand absolute obligation of charterer to provide cargo), The ‘‘Solon’’ (exceptions), areconsidered in depth along with how those judgments have affected and clarified thelaw. The ‘‘Happy Day’’ is very detailed because of its importance regarding a noticeof readiness; the Court of Appeal judgment has dealt with an area which requiredclarification to ensure certainty in respect of a topic which can affect all voyagecharterparties and international contracts for the sale of goods.

The much-debated area of the effect of the Conoco Weather Clause in an Asba-tankvoy charterparty is dealt with fully, as is the aftermath of The ‘‘Linardos’’/‘‘JayGanesh’’ judgments (as illustrated by way of the reported arbitrations of Londonarbitrators).

New sections have been added to the book to cover important matters whichaffect, and are interrelated to, the commencement of laytime, such as the 2004 ISPSCode and different type clauses to deal with its effects, failures by owners orcharterers regarding the non-production of bills of lading, and the position ofowners if using their vessels for their own purposes when a vessel waits for a berth.An important new section is devoted to international sale contracts and includes fullconsideration of the recent Court of Appeal decisions in Fal Oil v. Petronas andKronos v. Sempra.

I repeat my previous plea for many more awards of London maritime arbitratorsto be publicised (by way of disguise as in the Lloyd’s Maritime Law Newsletter andperhaps a stated minimum period after an award has been published). The fact isthat very few cases are getting through to the courts and, because of the way inwhich the right of appeal has been radically diminished by the Arbitration Acts 1979and 1996 it is imperative that if the maritime world is to get to know what Londonmaritime arbitrators are deciding there should be a big increase in the publicising ofawards. It is difficult to understand any legitimate grievance, by the users of Londonmaritime arbitration, to the publicising of awards by way of disguise and a statedminimum period after an award has been published. After all, most maritime

viii


arbitration centres around the world publicise their awards (without disguise) and itwould seem that London would not lose by taking a similar approach, particularlywith the safeguards mentioned above.

I thank many of my colleague arbitrators for their help and advice as I do alsoRoger Sepkes of ASDEM, Mike Cohen of New York, and Angelos Pantazatos ofAthens.

It is hoped that the wide-ranging and in-depth examination of the all importantfinancial aspect of laytime is in a style which is readable by shipowners, charterers,ship operators, shipbrokers, traders and other lay persons in addition to lawyers andarbitrators.

The law is stated as it was thought to be as at 1 February 2006.

DONALD DAVIES


ix

CONTENTS

Preface viiTable of Cases xiii

Decisions in LMLN Reports xixBibliography xxi

INTRODUCTION—GENERAL REQUIREMENTS OFENGLISH LAW 1

CHAPTER 1—ARRIVING AT THE AGREED DESTINATION

Port charterparty, geographical—the Oldendorff test 3Difficulties in the application of the ‘‘within the port’’ Oldendorff test 22At the immediate and effective disposition of the charterer 38

Sale contract 45Berth charterparty 47Dock charterparty 53Tanker charterparties 54

CHAPTER 2—SPECIAL CLAUSES RELEVANT TO ARRIVINGAT THE DESTINATION

General 57Advancing laytime including ‘‘whether in berth or not’’ and ‘‘whether in port or

not’’ 57Specific sums for waiting time 74Time lost waiting for a berth including the Darrah decision 76Other special clauses 93

CHAPTER 3—BREACHES OF CONTRACT/DAMAGESRELEVANT TO ARRIVING AT THE DESTINATION: IMPLIEDTERMS

Reachable on arrival/always accessible including the Laura Prima decision 99Damages—implied terms 121Assessment of damages 135

xi

CHAPTER 4—READINESS

General 145Cargo spaces including the Tres Flores decision 145Equipment 172Documentation—legal readiness—including the Delian Spirit decision 183Draught (Draft)/Lightening 192Tankers—Ballasting/deballasting 196

CHAPTER 5—SPECIAL CLAUSES/BREACHES OF CONTRACT/DAMAGES RELEVANT TO READINESS (INCLUDINGDRAUGHT AND BILLS OF LADING AND FAULT OFOWNERS)

Special clauses 201Breach of contract/damages (including draught and bills of lading and fault of

owners) 224

CHAPTER 6—NOTICE OF READINESS INCLUDINGRELEVANT SPECIAL CLAUSES AND ACCEPTANCE OFNOTICE OF READINESS

Notice of readiness—common law 237Notice of readiness—express clauses 244Correctness of notice 252Acceptance of notice of readiness including waiver/estoppel etc. 268Elapsed time 287Notice of readiness tendered prior to the laydays 290

CHAPTER 7—MISCELLANEOUS MATTERS

General 293Readiness and cancellation 293Work before the commencement of laytime 296Overchartering and obstacles created by chartering 301Exceptions 304Estimated time of arrival 312Sale contracts 319Multiple charters 328

Index 331

xii

CONTENTS

TABLE OF CASESAll references are to paragraph number

Para.A/B Nordiska Lloyd v. J. Brownlie (1925) 22 Ll L Rep 79; 30 Com Cas 307; 41 TLR 503; 69 SJ

661 (CA) ......................................................................................................................... 100, 123A/S Uglands Rederi v. The President of India. See Danita, TheAchillet, The, 1985 Arbitration, LMLN 180—25 September 1986 ............................................. 115Adolf Leonhardt, The, Pagnan (R) & Fratelli v. Finagrain Compagnie Commerciale Agricole et

Financiere SA [1986] 2 Lloyd’s Rep 395 .................................. 17, 18, 29, 62, 127, 128, 134–137Aello, The, Sociedad Financiera de Bienes Raices SA v. Agrimpex Hungarian Trading Co for

Agricultural Products; sub nom. Agrimpex Hungarian Trading Co for Agricultural Products v.Sociedad Financiera de Bienes Raices SA [1960] 1 Lloyd’s Rep 623; [1961] AC 135; [1960] 3WLR 145; [1960] 2 All ER 578; 104 SJ 543 (HL) ....................................... 2, 4–8, 11, 54, 62, 64

Agamemnon, The, 1974 Arbitration ........................................................................................10, 14Agamemnon, The, TA Shipping Ltd v. Comet Shipping Ltd [1998] 1 Lloyd’s Rep 675 ........17, 21, 109,

111Agios Stylianos, The, Agios Stylianos Compania Naviera SA v. Maritime Associates International

Ltd Lagos [1975] 1 Lloyd’s Rep 426 ......................................................................... 40, 139, 140Agrimpex Hungarian Trading Co for Agricultural Products v. Sociedad Financiera de Bienes

Raices SA. See Aello, TheAktieselskabet Inglewood v. Millar’s Karri (1903) 8 Com Cas 196 ............................................. 125Alaska, The, New York Arbitration, LMLN 452—1 March 1997 ............................................... 53Albion, The, President of India v. Davenport Marine Panama SA [1987] 2 Lloyd’s Rep 365; [1987]

2 FTLR 240 .......................................................................................................................... 86Aldebaran Compania Maritima SA v. Aussenhandel AG. See Darrah, TheAllied Marine Transport Ltd v. Vale Do Rio Doce Navegacao SA. See Leonidas D, TheAmalgamated Investment and Property Co Ltd v. Texas Commerce International Bank Ltd [1982]

1 Lloyd’s Rep 27 (CA) .......................................................................................................... 116Amstelmolen, The, NV Reederij Amsterdam v. President of India [1961] 2 Lloyd’s Rep 1

(CA) ........................................................................................................... 26, 29, 127, 128, 130Anco Elias, The, 1977 Arbitration ........................................................................................... 14–16Anders Utkilens Rederi A/S v. Compagnie Tunisienne de Navigation of Tunis. See Golfstraum,

TheAngelos Lusis, The [1964] 2 Lloyd’s Rep 29 .....................................................................27, 45, 46Antclizo, The, Antclizo Shipping Corp v. Food Corporation of India [1992] 1 Lloyd’s Rep 558

(CA); affirming [1991] 2 Lloyd’s Rep 485 ...........................................................................79, 86Apollo, The, Sidermar SpA v. Apollo Corporation [1978] 1 Lloyd’s Rep 200 ............................. 78Apollon, The, NZ Michalos v. The Food Corporation of India [1983] 1 Lloyd’s Rep 409 .......... 80,

86Armement Adolf Deppe v. John Robinson [1917] 2 KB 204 .................................. 64, 72, 74, 75, 78Atlantic Sunbeam, The, Sunbeam Shipping Co Ltd v. President of India [1973] 1 Lloyd’s Rep

482 .......................................................................................................... 56, 57, 62, 98, 118, 126Austin Friars, The (1894) 71 LT 27 .......................................................................................... 78Azur Gaz, The, SHV Gas Supply & Trading SAS v. Naftomar Shipping & Trading Co Ltd Inc,

LMLN 680—9 December 2005 ............................................................................................. 132

Barque Quilpue v. Brown (1903) 9 Com Cas 13 ....................................................................... 125

xiii

Para.Barrett Bros (Taxis) Ltd v. Davies [1966] 2 Lloyd’s Rep 1; [1966] 1 WLR 1334; [1966] 2 All ER

972; 110 SJ 600 (CA) ............................................................................................................ 100Blue Anchor Line Ltd v. Alfred C Toepfer International GmbH. See Union Amsterdam, TheBoral Gas, The [1988] 1 Lloyd’s Rep 342; [1988] FTLR 201 .................................................90, 91Borg (Owners of SS) v. Darwen Paper Co (1921) 8 Ll L Rep 49; [1921] WN 192 .................... 120Brereton v. Chapman (1831) 7 Bing 559 ................................................................................... 42Brown v. Johnson (1842) 10 M & W 331 .................................................................................. 42Budgett & Co v. Binnington & Co [1891] 1 QB 35 (CA); affirming (1890) LR 25 QBD 320 .... 97

Cape of Good Hope Motor Ship Company Ltd v. Ministry of Agriculture, Fisheries and Food. SeeReardon Smith Line v. Same

Carga Del Sur Compania Naviera SA v. Ross T Smyth & Co Ltd. See Seafort, TheCarlton Steamship Company Ltd and Cambay Steamship Company Ltd v. Ministry of Agriculture,

Fisheries and Food. See Reardon Smith Line v. SameCero Navigation Corp v. Jean Lion & Cie. See Solon, TheCheikh Boutros Selim El–khoury and Others v. Ceylon Shipping Lines Ltd. See Madeleine, TheChristensen v. Hindustan Steel Ltd. See Maria LF, TheCiampa v. British India Steam Navigation Co Ltd [1915] 2 KB 774 .......................................... 128Clerco Compania Naviera SA v. The Food Corporation of India. See Savvas, TheCompania Argentina de Navegacion de Ultramar v. Tradax Export SA. See Puerto Rocca, TheCompania de Naviera Nedelka SA v. Tradax International SA. See Tres Flores, TheConoco Weather Clause, 2005 Arbitration ................................................................................. 53Cosmar Compania Naviera SA v. Total Transport Corporation. See Isabelle, The

Damodar General TJ Park, The, Mosvolds Rederi A/S v. The Food Corporation of India (The KingTheras) [1986] 2 Lloyd’s Rep 68 ........................................................................................... 12

Danita, The, A/S Uglands Rederi v. The President of India [1976] 2 Lloyd’s Rep 377 ............... 105Darrah, The, Aldebaran Compania Maritima SA v. Aussenhandel AG [1976] 2 Lloyd’s Rep 359;

[1977] AC 157; [1976] 3 WLR 320; [1976] 3 All ER 129; 120 SJ 553 (HL) ............... 35–41, 140Delian Leto, The, Food Corporation of India v. Carras Shipping Co Ltd [1983] 2 Lloyd’s Rep

496 ........................................................................................................................................ 86Delian Spirit, The, Shipping Developments Corporation SA v. V/O Sojuzneftexport [1971] 1

Lloyd’s Rep 506; [1972] 1 QB 103; [1971] 2 WLR 1434; [1971] 2 All ER 1067 (CA); reversing[1971] 1 Lloyd’s Rep 64 .....................................2, 6, 7, 15, 48, 57, 61, 64, 71, 74, 78, 79, 83–85

Democritos, The, Marbienes Compania Naviera SA v. Ferrostaal AG [1976] 2 Lloyd’s Rep 149(CA) ...................................................................................................................................... 67

Demosthenes V, The, (No 1), Gerani Compania Naviera SA v. General Organisation for SupplyGoods and Alfred C. Toepfer [1982] 1 Lloyd’s Rep 275 ........................................ 72, 74, 75, 108

Deppe. See Armement Adolf Deppe v. RobinsonDespina, The, 1980 Arbitration ................................................................................................. 69Dubhe, The, 1981 Arbitration .................................................................................................68, 82

EL Oldendorff & Co GmbH v. Tradax Export SA. See Johanna Oldendorff, TheEpaphus, The, Eurico SpA v. Philipp Brothers [1987] 2 Lloyd’s Rep 215; [1987] 2 FTLR 213

(CA); affirming [1986] 2 Lloyd’s Rep 387 .............................................................................. 64Etablissements Soules et Cie v. Intertradex SA. See Handy Mariner, TheEurico SpA v. Philipp Brothers. See Epaphus, TheEurobreeze, The, 1984 Arbitration ............................................................................................ 103Eurus, The, LMLN 473—20 December 1997 (CA); [1996] 2 Lloyd’s Rep 408 .......................42, 62Evera SA Commercial v. North Shipping Co Ltd [1956] 2 Lloyd’s Rep 367 .............................. 131

Fal Oil Co Ltd v. Petronas Trading Corpn (The Devon) [2004] 2 Lloyd’s Rep 282 (CA) ... 135, 136, 137Federal Commerce and Navigation Co Ltd v. Tradax Export SA. See Maratha Envoy, TheFinix, The, Neu Tyhi Maritime Co Ltd of Piraeus v. Compagnie Grainiere SA of Zurich [1975] 2

Lloyd’s Rep 415 ..................................................................................................................... 21Fjordass, The [1988] 1 Lloyd’s Rep 336; [1988] 2 All ER 714 ................................................ 50–53Fontevivo, The, Gem Shipping Co of Monrovia v. Babanaft (Lebanon) Sarl [1975] 1 Lloyd’s Rep

339 ........................................................................................................................................ 97Food Corporation of India v. Carras Shipping Co Ltd. See Delian Leto, TheFornyade Rederiaktiebolaget Commercial v. Blake & Co and Others (1931) 39 Ll L Rep 205

(CA) ...................................................................................................................................... 126

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TABLE OF CASES

Para.Franco-British Steamship v. Watson and Youell (1921) 9 Ll L Rep 282 ..................................... 100Freijo, The, Logs & Timber Products (Singapore) Pte Ltd v. Keeley Granite (Pty) Ltd [1978] 2

Lloyd’s Rep 1 (CA) ............................................................................................................... 30Front Commander, The, Tidebrook Maritime Corporation v. Vitol SA, LMLN 682—11 January

2006 ...................................................................................................................................... 125Frota Oceanica v. Continental Ore Corporation [1973] AMC 2315, New York .......................... 121

Garibaldi Societa Co–operativa di Navigazione ARL v. President of India. See Reardon Smith Linev. Ministry of Agriculture, Fisheries and Food

Gem Shipping Co of Monrovia v. Babanaft (Lebanon) Sarl. See Fontevivo, TheGerani Compania Naviera SA v. General Organisation for Supply and Alfred C. Toepfer. See

Demosthenes V, The, (No 1)Gill & Dufus SA v. Rionda Futures Ltd [1994] 2 Lloyd’s Rep 67 ...................................90, 134–137Glencore Grain Ltd v. Flacker Shipping Ltd. See Happy Day, TheGlencore Grain Ltd v. Goldbeam Shipping Inc; Goldbeam Shipping Inc v. Navios International

Inc. See Mass Glory, TheGolfstraum, The, Anders Utkilens Rederi A/S v. Compagnie Tunisienne de Navigation of Tunis

[1976] 2 Lloyd’s Rep 97 ........................................................................................................ 12Government of Ceylon v. Societe Franco-Tunisienne d’Armement–Tunis. See Massalia, The

(No 2)Graigwen (Owners) v. Anglo–Canadian Shipping Company Ltd [1955] 2 Lloyd’s Rep 260 ........ 107Grampian Steamship Co Ltd v. Carver and Co (1893) 9 TLR 210 ............................................ 76Gundulic, The, 1980 Arbitration ............................................................................................... 15

Handy Mariner, The, Etablissements Soules et Cie v. Intertradex SA [1991] 1 Lloyd’s Rep 378;Financial Times, 14 November 1990 (CA) ...................................................................19, 134–136

Happy Day, The, Glencore Grain Ltd v. Flacker Shipping Ltd [2002] 1 Lloyd’s Rep 487 (CA) ... 17, 21,100, 101, 108, 111, 116–119

Helle Skou, The, Sofial SA v. Ove Skou Rederi [1976] 2 Lloyd’s Rep 205 ...108, 112, 114, 115, 117Horsley Line Ltd v. Roechling Bros, 1908 SC 866 ..................................................................... 33

Ian Stach Ltd v. Baker Bosley Ltd [1958] 2 QB 130; [1958] 1 Lloyd’s Rep 127 ........................ 138Inca Compania Naviera SA and Commercial and Maritime Enterprises Evanghelos P Nomikos SA

v. Mofinol Inc. See President Brand, TheIngram v. Little [1962] 1 QB 31; [1960] 3 WLR 504; [1960] 3 All ER 332; 104 SJ 704 (CA) ........ 64, 75Ino, The, 1979 Arbitration ........................................................................................................ 57Investors Compensation Scheme Ltd v. West Bromwich Building Society, The Times, 24 June

1997 ...................................................................................................................................... 62Ionian Navigation Company Inc v. Atlantic Shipping Company SA. See Loucas N, TheIrinikos, The, 1977 Arbitration .................................................................................................. 69Isabelle, The, Cosmar Compania Naviera SA v. Total Transport Corporation [1984] 1 Lloyd’s Rep

366 (CA); affirming [1982] 2 Lloyd’s Rep 81; [1982] Com LR 90 .......................................21, 99

Jag Leela, The, LMLN 242—11 February 1989 ........................................................................ 86James Nelson v. Nelson Lines. See Nelson (James) v. Nelson LinesJay Ganesh, The [1994] 2 Lloyd’s Rep 358; Lloyd’s List, 8 July 1994 .....................................71, 130Johanna Oldendorff, The, EL Oldendorff & Co GmbH v. Tradax Export SA [1973] 2 Lloyd’s Rep

285; [1974] AC 479; [1973] 2 WLR 382; [1973] 3 All ER 148; 117 SJ 760 (HL); reversing[1972] 2 Lloyd’s Rep 292; [1972] 3 WLR 623; [1973] 3 All ER 420; 116 SJ 616 (CA); affirming[1971] 2 Lloyd’s Rep 96 ......................................................................2, 8–11, 13–18, 20, 22, 23,

26–29, 32, 37, 38, 42, 45, 50Johs Stove, The, Sametiet M/T Johs Stove v. Istanbul Petrol Rafinerisi A/S [1984] 1 Lloyd’s Rep

38 .....................................................................................................................................52, 130

Kell v. Anderson (1842) 10 M & W 498 .................................................................................... 18King Theras, The. See Damodar General TJ Park, TheKronos Worldwide Ltd v. Sempra Oil Trading SARL [2004] 1 Lloyd’s Rep 260 ......................8, 138Kyzikos, The, Seacrystal Shipping Ltd v. Bulk Transport Group Shipping Co Ltd [1989] 1 Lloyd’s

Rep 1; [1989] AC 1264; [1988] 3 WLR 858; [1988] 3 All ER 745; 132 SJ 1526 (HL); reversing[1987] 2 Lloyd’s Rep 122; [1987] 1 WLR 1565; [1987] 3 All ER 222; [1987] FTLR 171; 131SJ 1550 (CA); reversing [1987] 1 Lloyd’s Rep 48 ...............................................................18, 21,

26, 28, 29, 39, 53

TABLE OF CASES

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Para.Laura Prima, The, Nereide SpA de Navigazione v. Bulk Oil International Ltd [1982] 1 Lloyd’s Rep

1; [1981] 3 All ER 737 (HL) ............................................................................17, 47–53, 80, 129Lee Frances, The, LMLN 253—15 July 1989 ............................................................................ 44Lefthero, The [1992] 2 Lloyd’s Rep 109 (CA) ......................................................................97, 130Leonidas D, The, Allied Marine Transport Ltd v. Vale Do Rio Doce Navegacao SA [1985] 2

Lloyd’s Rep 18; [1985] 1 WLR 925; [1985] 2 All ER 796; 129 SJ 431; 82 L S Gaz 2160(CA) ...................................................................................................................................... 118

Leonis Steamship Co Ltd v. Rank Ltd [1908] 1 KB 499 ........................................... 2–4, 8, 15, 123Linardos, The [1994] 1 Lloyd’s Rep 28 ........................................................................... 71, 75, 130Logs & Timber Products (Singapore) Pte Ltd v. Keeley Granite (Pty) Ltd. See Freijo, TheLoucas N, The, Ionian Navigation Company Inc v. Atlantic Shipping Company SA [1971] 1

Lloyd’s Rep 215 (CA); affirming [1970] 2 Lloyd’s Rep 482 ................................... 35–38, 41, 128

Mackay v. Dick (1881) 6 App Cas 251 ...................................................................................... 56Madeleine, The, Cheikh Boutros Selim El–khoury and Others v. Ceylon Shipping Lines Ltd [1967]

2 Lloyd’s Rep 224 .............................................................................................................79, 123Maratha Envoy, The, Federal Commerce and Navigation Co Ltd v. Tradax Export SA [1977] 2

Lloyd’s Rep 301; [1978] AC 1; [1977] 3 WLR 126; [1977] 2 All ER 849; 121 SJ 459 (HL);reversing [1977] 1 Lloyd’s Rep 217; [1977] QB 324; [1977] 2 WLR 122; [1977] 2 All ER 41;120 SJ 834 (CA) ......................................................................2, 8, 10–14, 17, 23, 26, 28, 29, 39

Marbienes Compania Naviera SA v. Ferrostaal AG. See Democritos, TheMaria LF, The, Christensen v. Hindustan Steel Ltd [1971] 1 Lloyd’s Rep 395; [1971] 1 WLR

1369; [1971] 2 All ER 811 ..................................................................................................... 108Mass Glory, The, Glencore Grain Ltd v. Goldbeam Shipping Inc; Goldbeam Shipping Inc v.

Navios International Inc [2002] 2 Lloyd’s Rep 244 .................................................... 61, 111, 117Massalia, The, (No 2), Government of Ceylon v. Societe Franco-Tunisienne d’Armement–

Tunis [1960] 2 Lloyd’s Rep 352; [1962] 2 QB 416; [1961] 2 WLR 161; [1960] 3 All ER 797;105 SJ 129 .........................................................................................75, 108, 109, 115, 120, 139

Mediolanum, The [1984] 1 Lloyd’s Rep 36 ............................................................................... 99Metalimex v. Eugenie Maritime Company Ltd [1962] 1 Lloyd’s Rep 378 .................................. 119Metals & Ropes Company Ltd v. Filia Compania Limitada. See Vastric, TheMexico 1, The, Transgrain Shipping BV v. Global Transporte Oceanico SA [1990] 1 Lloyd’s Rep

507; Financial Times, 7 February 1990 (CA); reversing [1988] 2 Lloyd’s Rep 149 .................. 21,67, 70, 71, 74, 75, 80, 100, 101, 106, 108–112, 115–118, 139

Michalos (NZ) v. The Food Corporation of India. See Apollon, TheMiramar Cia Nav SA v. Government of The Union of South Africa. See Reardon Smith Line v.

Ministry of Agriculture, Fisheries and FoodMitsui OSK Lines v. Garnac Grain Co Inc. See Myrtos, TheMonroe Brothers Ltd v. Ryan, 51 Ll L Rep 179; [1935] 2 KB 28; [1935] WN 59; 153 LT 31; 40

Com Cas 193; 51 TLR 361; 104 LJ (KB) 150 (CA) .............................................................. 131Moorcock, The (1884) 14 PD 64 .............................................................................................. 54Mosvolds Rederi A/S v. The Food Corporation of India. See Damodar General TJ Park, TheMozart, The [1985] 1 Lloyd’s Rep 239 ..................................................................................... 100Myrtos, The, Mitsui OSK Lines v. Garnac Grain Co Inc [1984] 2 Lloyd’s Rep 449 ............ 131, 132

N.V. Reederij Amsterdam v. President of India. See Amstelmolen, TheNavrom v. Callitsis Ship Management SA. See Radauti, TheNea Tyhi Maritime Co Ltd of Piraeus v. Compagnie Grainiere SA of Zurich. See Finix, TheNelson (James) v. Nelson Line [1908] AC 108 .......................................................................... 124Nereide SpA de Navigazione v. Bulk Oil International Ltd. See Laura Prima, TheNessfield, The [1912] 1 KB 434 ................................................................................................ 26Nestor, The [1987] 2 Lloyd’s Rep 649 ...................................................................................... 86Nikmary, The, Triton Navigation Ltd v. Vitol SA [2004] 1 Lloyd’s Rep 55 (CA) ....................58, 65Noemijulia Steamship Company Ltd v. Minister of Food (1950) 84 Ll L Rep 354; [1951] 1 KB

223; 66 TLR (Pt 2) 342; [1950] 2 All ER 699; 94 SJ 534 (CA); affirming (1949–50) 83 Ll L Rep500; 66 TLR (Pt 1) 819 .................................................................................. 64, 72, 73, 75, 123

North King, The, Pacific Carriers Corporation v. Tradax Export SA [1971] 2 Lloyd’s Rep460 .................................................................................................................................. 112, 113

Notos, The, Societe Anonyme Marocaine de L’Industrie du Raffinage v. Notos Maritime Corpora-tion [1987] 1 Lloyd’s Rep 503; [1987] 1 FTLR 519; 84 LS Gaz 1141 (HL) .......................... 129

xvi

TABLE OF CASES

Para.OK Petroleum AB v. Vitol Energy SA (The Chemical Venture and The Jade) [1995] 2 Lloyd’s Rep

160 ........................................................................................................................................ 136Odfjfell Seachem v. Continentale des Petroles et D’Investissements [2005] 1 Lloyd’s Rep 275 ... 83Ogmore v. Borner (1901) 6 Com Cas 104 ................................................................................. 125Oldendorff (EL) & Co GmbH v. Tradax Export SA. See Johanna Oldendorff, TheOrion Insurance Co Plc v. Sphere Drake Insurance Plc [1990] 1 Lloyd’s Rep 465; The Independent,

1 February 1990; affirmed [1992] 1 Lloyd’s Rep 239 (CA) .................................................... 116

Pacific Carriers Corporation v. Tradax Export SA. See North King, ThePagnan (R) & Fratelli v. Finagrain Compagnie Commerciale Agricole et Financiere SA. See Adolf

Leonhardt, ThePan Journey, The, 1986 Arbitration ........................................................................................... 93Panaghis Vergottis, The (Owners) v. Cory & Son (1926) 25 Ll L Rep 64; [1926] 2 KB 344; [1926]

WN 151; 135 LT 254; 31 Com Cas 262; 95 LJKB 1002 ....................................................... 126Panchaud Freres SA v. Etablissements General Grain Co [1970] 1 Lloyd’s Rep 53 (CA) ........... 112,

114, 116, 134Pegasus, The, 1975 Arbitration .................................................................................................. 83Pericles Halcoussis, The, 1985 Arbitration ................................................................................. 58Petr Schmidt, The [1998] 2 Lloyd’s Rep 1 (CA); affirming [1997] 1 Lloyd’s Rep 284 .... 71, 80, 83, 106,

109, 111Petros Hadjikyriakos, The [1988] 2 Lloyd’s Rep 56 ................................................................... 80Plakoura, The [1987] 2 Lloyd’s Rep 258 ................................................................................... 23Polyfreedom, The, 1974 New York Arbitration ..................................................................10, 11, 13President Brand, The, Inca Compania Naviera SA and Commercial and Maritime Enterprises

Evanghelos P Nomikos SA v. Mofinol Inc [1967] 2 Lloyd’s Rep 338; 117 New LJ1192 .............................................................................................................................. 46–48, 80

President of India v. Davenport Marine Panama SA. See Albion, ThePteroti Compania Naviera SA v. National Coal Board [1958] 1 Lloyd’s Rep 245; [1958] 1 QB 469;

[1958] 2 WLR 505; [1958] 1 All ER 603; 102 SJ 216 ...................................................... 117, 124Puerto Rocca, The, Compania Argentina de Navegacion de Ultramar v. Tradax Export SA [1978]

1 Lloyd’s Rep 252 ...............................................................................................................20, 21

Radauti, The, Navrom v. Callitsis Ship Management SA [1988] 2 Lloyd’s Rep 416 (CA); affirming[1987] 2 Lloyd’s Rep 276 ................................................................................................ 127, 128

Radnor, The, North River Freighters Ltd v. President of India [1955] 2 Lloyd’s Rep 668 .......... 20,21, 35, 38

Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food; Garibaldi Societa Co–operativa di Navigazione ARL v. President of India; Carlton Steamship Company Ltd andCambay Steamship Company Ltd v. Ministry of Agriculture, Fisheries and Food; Cape of GoodHope Motor Ship Company Ltd v. Ministry of Agriculture, Fisheries and Food; Miramar CiaNav SA v. Government of The Union of South Africa (The Vancouver Strike Cases) [1963] 1Lloyd’s Rep 12; [1963] AC 691; [1963] 2 WLR 439; [1963] 1 All ER 545; 107 SJ 133 (HL);reversing in part [1961] 1 Lloyd’s Rep 385; [1962] 1 QB 42; [1961] 3 WLR 110; [1961] 2 AllER 577; 105 SJ 567 (CA); affirming [1959] 2 Lloyd’s Rep 229; [1960] 1 QB 439; [1959] 3 WLR665; [1959] 3 All ER 434; 103 SJ 920 ................................................................................... 128

Republic of India v. India Steamship Co Ltd (The Indian Endurance and The Indian Grace) (No.2) [1998] AC 878; [1998] 1 Lloyd’s Rep 1 (HL); affirming [1996] 2 Lloyd’s Rep 12 (CA) .... 117

Ropner Shipping Co Ltd v. Cleeves Western Valley Anthracite Collieries Ltd (1927) 27 Ll L Rep317; [1927] 1 KB 879; [1927] WN 91; 43 TLR 384; 96 LJKB 654; 137 LT 221; 32 Com Cas259; 17 Asp 245 (CA) ........................................................................................... 39, 75, 97, 140

Sametiet M/T Johs Stove v. Istanbul Petrol Rafinerisi A/S. See Johs Stove, TheSan Carlos, The, 2001 Arbitration ............................................................................................. 53Santa Clara Valley, The, Reardon Smith Line Ltd v. East Asiatic Company (1938) 62 Ll L Rep

23 .......................................................................................................................................... 26Sati Rani, The, 1977 Arbitration ................................................................................................ 84Saturnia, The, Superfos Chartering A/S v. NBR (London) Ltd [1987] 2 Lloyd’s Rep 43 ........... 53Savvas, The, Clerco Compania Naviera SA v. The Food Corporation of India [1982] 1 Lloyd’s Rep

22 (CA) ................................................................................................................................. 80Scapdale, The, 1980 Arbitration ................................................................................................ 21

TABLE OF CASES

xvii

Para.Sea Queen, The [1988] 1 Lloyd’s Rep 500 .............................................................................. 50–53Seacrystal Shipping Ltd v. Bulk Transport Group Shipping Co Ltd. See Kyzikos, TheSeafort, The, Carga Del Sur Compania Naviera SA v. Ross T Smyth & Co Ltd [1962] 2 Lloyd’s

Rep 147; 106 SJ 651 ............................................................................................... 26, 27, 29, 34Seamaster, The, 1988 Arbitration .............................................................................................. 18Shackleford, The, Surrey Shipping Co Ltd v. Compagnie Continentale (France) SA [1978] 2

Lloyd’s Rep 154; [1978] 1 WLR 1080; 122 SJ 555 (CA); affirming [1978] 1 Lloyd’s Rep191 ...........................................................................................................29, 33, 82, 87, 112–116

Shipping Developments Corporation SA v. V/O Sojuzneftexport. See Delian Spirit, TheSHV Gas Supply & Trading SAS v. Naftomar Shipping & Trading Co Ltd Inc. See Azur Gaz,

The ....................................................................................................................................... 132Sidermar SpA v. Apollo Corporation. See Apollo, TheSociedad Financiera de Bienes Raices SA v. Agrimpex Hungarian Trading Co for Agricultural

Products. See Aello, TheSociete Anonyme Marocaine de L’Industrie du Raffinage v. Notos Maritime Corporation. See

Notos, TheSofial SA v. Ove Skou Rederi. See Helle Skou, TheSolon, The, Cero Navigation Corp v. Jean Lion & Cie [2000] 1 Lloyd’s Rep 292 ...................... 130Spalmatori, The, Union of India v. Compania Naviera Aeolus SA; sub nom. Compania Naviera

Aeolus SA v. Union of India [1964] AC 868; [1962] 2 Lloyd’s Rep 175 (HL) ........................ 53Stanton v. Austin (1872) LR 7 CP 651 ...................................................................................... 100Steamship Garston Co v. Hickie & Co (1885) 15 QBD 580 ...................................................... 8Stolt Spur, The, Stolt Tankers Inc v. Landmark Chemicals SA [2002] 1 Lloyd’s Rep 786 .......... 97Sun Shipping v. Watson and Youell (1926) 24 Ll L Rep 28; 42 TLR 240 ................................72, 75Sunbeam Shipping Co Ltd v. President of India. See Atlantic Sunbeam, TheSuperfos Chartering A/S v. NBR (London) Ltd. See Saturnia, TheSurrey Shipping Co Ltd v. Compagnie Continentale (France) SA. See Shackleford, The

TA Shipping Ltd v. Comet Shipping Ltd. See Agamemnon TheThemistocles, The (1949) 82 Ll L Rep 232 ............................................................................... 43Tidebrook Maritime Corporation v. Vitol SA. See Front Commander, The ................................ 125Tielrode, The, 1973 Arbitration ..............................................................................................83, 87Timna, The, Zim Israel Navigation Company Ltd v. Tradax Export SA [1971] 2 Lloyd’s Rep 91

(CA); affirming [1970] 2 Lloyd’s Rep 409 ............................................60, 61, 100, 109, 111, 116Torm Estrid, The, 1978 Arbitration ......................................................................................... 14–16Transgrain Shipping BV v. Global Transporte Oceanico SA. See Mexico 1, TheTres Flores, The, Compania de Naviera Nedelka SA v. Tradax International SA [1973] 2 Lloyd’s

Rep 247; [1974] QB 264; [1973] 3 WLR 545; [1973] 3 All ER 967 (CA); affirming [1972] 2Lloyd’s Rep 384 ....................................................................................39, 57, 64, 65, 68–75, 78,

79, 81, 82, 86, 92, 107, 108Triton Navigation Ltd v. Vitol SA. See Vikmary, The

Union Amsterdam, The, Blue Anchor Line Ltd v. Alfred C Toepfer International GmbH [1982] 2Lloyd’s Rep 432 ..................................................................................................................... 97

Union of India v. Compania Naviera Aeolus SA; sub nom. Compania Naviera Aeolus SA v. Unionof India. See Spalmatori, The

Universal Cargo Carriers Corp v. Citati (No. 1) [1957] 1 Lloyd’s Rep 174 ................................ 58

Valla Giovani & C SpA v. Gebr Van Weelde Scheepvaartkantoor BV. See Chanda, TheVancouver Strike Cases. See Reardon Smith Line v. Ministry of Agriculture, Fisheries and FoodVastric, The, Metals & Ropes Company Ltd v. Filia Compania Limitada [1966] 2 Lloyd’s Rep

219 ................................................................................................................................35, 36, 38Venore, The, Venore Transportation Co v. President of India [1973] 1 Lloyd’s Rep 494 (US Ct) .... 125Vikmary, The, Triton Navigation Ltd v. Vitol SA [2004] 1 Lloyd’s Rep 55 ................................ 58Virginia M, The [1989] 1 Lloyd’s Rep 603 ......................................................... 51, 64, 72, 75, 107Vyse v. Wakefield (1840) 6 M & W 442 .................................................................................... 99

Werrastein, The, Roland-Linie Schiffahrt GmbH v. Spillers Ltd and Others [1956] 2 Lloyd’s Rep210 ........................................................................................................................................ 34

Winston, The, 1985 Arbitration ................................................................................................. 92

xviii

TABLE OF CASES

Para.Woodhouse AC Israel Cocoa SA v. Nigerian Produce Marketing Co Ltd [1972] 1 Lloyd’s Rep 439;

[1972] AC 741; [1972] 2 WLR 1090; [1972] 2 All ER 271; 116 SJ 329 (HL) ........................ 114World Navigator, The [1991] 2 Lloyd’s Rep 23 (CA) .......................................... 56, 59, 61, 62, 134

Zim Israel Navigation Company Ltd v. Tradax Export SA. See Timna, The

DECISIONS IN LMLN REPORTS

Para.LMLN 15—29 May 1980 ......................................................................................................... 105LMLN 18—10 July 1980 .......................................................................................................... 18LMLN 35—5 March 1981 ......................................................................................................78, 84LMLN 44—9 July 1981 ............................................................................................................ 105LMLN 62—18 March 1982 ...................................................................................................... 67LMLN 71—22 July 1982 .............................................................................................. 39, 139, 140LMLN 72—5 August 1982 ....................................................................................................... 81LMLN 90—14 April 1983 ........................................................................................................ 86LMLN 103—13 October 1983 .................................................................................................. 121LMLN 114—15 March 1984 .................................................................................................... 41LMLN 117—26 April 1984 ....................................................................................................... 51LMLN 143— 25 April 1985 ...................................................................................................16, 29LMLN 151—15 August 1985 .................................................................................................... 103LMLN 155—10 October 1985 .................................................................................................. 16LMLN 179—11 September 1986 .............................................................................................. 83LMLN 180—25 September 1986. See Achillet, TheLMLN 205—12 September 1987 .............................................................................................. 99LMLN 206—26 September 1987 .............................................................................................. 115LMLN 230—27 August 1988 .................................................................................................... 41LMLN 239—31 December 1988 ............................................................................................... 67LMLN 242—11 February 1989. See Jag Leela, The .................................................................. 86LMLN 248—6 May 1989 ......................................................................................................... 58LMLN 253—15 July 1989. See Lee Frances, The ...................................................................... 44LMLN 262—18 November 1989 .............................................................................................. 115LMLN 266—13 January 1990 ........................................................................................ 82, 87, 115LMLN 267—27 January 1990 ................................................................................................52, 53LMLN 274—5 May 1990 ............................................................................................... 16, 84, 118LMLN 285—6 October 1990 ...............................................................................................65, 121LMLN 299—20 April 1991 ..............................................................................................31, 65, 81LMLN 303—15 June 1991 ....................................................................................................... 52LMLN 304—29 June 1991 ....................................................................................................... 81LMLN 305—13 July 1991 ........................................................................................................ 132LMLN 307—10 August 1991 .................................................................................................... 121LMLN 328—30 May 1992 ............................................................................................. 57, 82, 118LMLN 329—13 June 1992 ....................................................................................................... 61LMLN 332—25 July 1992 ......................................................................................................57, 67LMLN 337—3 October 1992 .................................................................................................65, 81LMLN 338—17 October 1992 ..............................................................................................57, 118LMLN 351—17 April 1993 ........................................................................ 39, 40, 51, 75, 139, 140LMLN 356—26 June 1993 ....................................................................................................... 39LMLN 383—9 July 1994 .......................................................................................................... 132LMLN 387—3 September 1994 ................................................................................................ 110LMLN 401—18 March 1995 .................................................................................................... 42LMLN 408—24 June 1995 ....................................................................................................... 104LMLN 409—8 July 1995 ........................................................................................................16, 18LMLN 411—5 August 1995 ..................................................................................................... 83LMLN 416—14 October 1995 .................................................................................................. 78LMLN 417—28 October 1995 .................................................................................................. 83LMLN 421––23 December 1995 ............................................................................................... 78LMLN 434—22 June 1996 ............................................................................................. 30, 57, 118

TABLE OF CASES

xix

Para.LMLN 445—23 November 1996 ..........................................................................................67, 123LMLN 446—7 December 1996 ................................................................................................ 82LMLN 450—1 February 1997 .................................................................................................. 124LMLN 452—1 March 1997. See Alaska, The ............................................................................ 53LMLN 459—7 June 1997 .....................................................................................................57, 118LMLN 463—2 August 1997 ..................................................................................................... 53LMLN 471—22 November 1997 ..........................................................................................18, 139LMLN 473—20 December 1997. See Agamemnon, The ........................................................... 132LMLN 473—20 December 1997. See Eurus, The ...................................................................42, 62LMLN 488—21 July 1998 ......................................................................................................80, 83LMLN 489—4 August 1998 ..................................................................................................... 52LMLN 493—29 September 1998 .............................................................................................. 99LMLN 510—27 May 1999 ....................................................................................................... 94LMLN 511—10 June 1999 ....................................................................................................... 70LMLN 538—22 June 2000 ....................................................................................................... 83LMLN 545—28 September 2000 ............................................................................................71, 78LMLN 559—12 April 2001 ....................................................................................................... 18LMLN 562—24 May 2001 ....................................................................................................... 120LMLN 566—19 July 2001 ......................................................................................................21, 99LMLN 587—16 May 2002 ....................................................................................................... 95LMLN 594—22 August 2002 .................................................................................................... 105LMLN 615—12 June 2003 ...............................................................................................17, 29, 38LMLN 619—7 August 2003 ..................................................................................................... 95LMLN 628—12 December 2003 ............................................................................................... 96LMLN 636—31 March 2004 .......................................................................................... 17, 71, 130LMLN 647—1 September 2004 ..............................................................................................17, 80LMLN 648—15 September 2004 .............................................................................................. 87LMLN 651—27 October 2004 .................................................................................................. 124LMLN 669—6 July 2005 .......................................................................................................... 75LMLN 672—17 August 2005 ......................................................................................... 17, 61, 118LMLN 676—12 October 2005 .................................................................................................. 65LMLN 680—9 December 2005 ................................................................................................ 132LMLN 682—11 January 2006 ................................................................................................... 125

TABLE OF CASES

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BIBLIOGRAPHY

Schofield on Laytime and Demurrage (Informa Professional 5th ed. 2005)Scrutton on Charterparties and Bills of Lading (20th ed. 1996)

Summerskill on Laytime (4th edition, Sweet & Maxwell/Stevens, 1989)

xxi

INTRODUCTION

GENERAL REQUIREMENTS OFENGLISH LAW

English law is clear and simple when looked at in general terms regarding thecommencement of laytime. It is the application of the general principles to detailedcommercial events, circumstances and activities which results in complications anddifficulties.

In general, there are three requirements which have to be satisfied for laytime tocommence under English common law, as follows:

1. The vessel has arrived at the agreed destination. The destination may be aport, dock, mooring, berth, etc., or an area coupled with the provision thatthe vessel then proceeds to a part of the area nominated by thecharterers.

2. The vessel is ready to load or discharge the cargo.3. Notice of readiness is tendered to the charterers or their agents. Such a

notice is only required at the first loading port under English commonlaw; it is not required for discharging ports unless there is a custom tosuch effect; in practice, it is usual for a charterparty to contain anexpress clause requiring the tendering of notice of readiness at bothloading and discharging ports and perhaps also at subsequent loading/discharging ports.

When the three requirements above are satisfied the vessel is considered to be anarrived ship and, under English law, laytime then commences. In practice charter-parties usually provide that laytime is not to commence until a stipulated time (e.g.8 a.m. next working day), alternatively, after a prescribed time (e.g. 24 hours) afterthe tendering of a notice of readiness and, naturally, such an express provisiongoverns the precise moment that the laytime clock is triggered off. A good exampleof a much-used notice of readiness provision is that in the Asbatankvoy charterpartyform, which reads:

‘‘Upon arrival at customary anchorage at each port of loading or discharge, the Master or hisagent shall give the Charterer or his agent notice by letter, telegraph, wireless or telephonethat the Vessel is ready to load or discharge cargo berth or no berth, and laytime, ashereinafter provided, shall commence upon the expiration of six (6) hours after receipt ofsuch notice, or upon the Vessel’s arrival in berth (i.e., finished mooring when at a sealoadingor discharging terminal and all fast when loading or discharge alongside a wharf), whicheverfirst occurs.’’

1

However, there are still some charterparties which do not have such an expressprovision, in which case the common law position applies so that laytime com-mences at the very moment that the notice of readiness is tendered to the charterersor their agents.

The words ‘‘arrived ship’’, emphasised above, are somewhat confusing since theysometimes lead persons to think that they refer to one requirement only, that is, thevessel arriving at the agreed destination. While many people talk about the arrival ofvessels, and charterparty clauses often refer to vessels having arrived, the position isthat, under English law, the words ‘‘arrived ship’’ only come into effect when allthree requirements have been satisfied. The fact that a vessel has arrived at theagreed destination does not determine that the vessel is an ‘‘arrived ship’’ within thecontext of the commencement of laytime; the other two requirements also have tobe satisfied. Despite what has just been stated, many persons use the words ‘‘arrivedship’’ when speaking of the first requirement only; it is commonly used in this wayeven by judges and arbitrators so that, when reading judgments and awards,allowance has to be made for the licence existing therein. Such licence may alsobe used in this book when considering the first requirement of reaching the agreeddestination.

2

GENERAL REQUIREMENTS OF ENGLISH LAW

CHAPTER ONE

ARRIVING AT THE AGREEDDESTINATION

1. The agreed destination may be a port, dock, mooring, berth, etc., or an areacoupled with the provision that the vessel then proceeds to a part of the areanominated by the charterers. The destination which has caused the most litigation/arbitration is that of the ‘‘port’’, and it is this destination which will form the majorpart of this chapter.

In practice, a vast number of port charterparties are made every year; theirimportance cannot be under-estimated particularly in the light of the large numberof arbitrations, in addition to court cases, which have taken place over the years.The majority of port charterparties name a specific port as the destination, alter-natively the charterparty makes the destination a port to be nominated by thecharterers.

PORT CHARTERPARTY, GEOGRAPHICAL—THEOLDENDORFF TEST

2. Until The ‘‘Maratha Envoy’’1 the highest and most recent authority regarding aport charterparty was The ‘‘Johanna Oldendorff ’’2 in which the House of Lords gavefull consideration to the ‘‘arrived ship’’ concept. As will be seen, the Oldendorffdecision has been left untouched. However, before considering these judgments itis helpful to look at the earlier cases of Leonis v. Rank,3 The ‘‘Aello’’4 and The ‘‘DelianSpirit’’5 in order to see how the law has developed since the turn of the century inrespect of a port charterparty.

3. In Leonis v. Rank3 the vessel arrived in the port of Bahia Blanca and lay in theriver outside the pier where the charterers required her to load; the place in whichshe lay was the usual place for vessels to be while awaiting a pier berth; there wasevidence that she could have been loaded there. The Court of Appeal decided thatthe vessel was an ‘‘arrived ship’’ because she was within the commercial area of the

1. [1977] 1 Lloyd’s Rep. 217.2. [1973] 2 Lloyd’s Rep. 285.3. [1908] 1 K.B. 499.4. [1960] 1 Lloyd’s Rep. 623.5. [1971] 1 Lloyd’s Rep. 506.

3

port and at the disposition of the charterers. The leading judgment of Lord JusticeKennedy has been much quoted and reads (inter alia) as follows:

‘‘It is when the stipulated point of destination is a port only without further limitation, as inthe present case, that a question as to the fact of the ship’s arrival at her destination is likelyto arise. The limits of a port established by law or ancient custom may be very wide; or, again,in the case of a newly established place of shipping traffic, the limits may be uncertainbecause they are not yet defined by any competent authority . . . In the case of a port, andnothing more, being designated in a charterparty as the point of destination our Courts haveacted in accordance with those dictates of reason and practical expediency which ought to beparamount especially in the region of mercantile business. Just as a port may have one set oflimits, if viewed geographically, and another for fiscal or for pilotage purposes, so when it isnamed in a commercial document, and for commercial purposes, the term is to be construedin a commercial sense in relation to the objects of the particular transaction . . . But thencomes the question what does the expression the ‘port’ viewed commercially, or the ‘com-mercial area’ in this connection mean? Certainly it does not mean the loading berth, that isto say, the actual spot at which the work of loading or unloading the ship is performed . . .The commercial area of a port, arrival within which makes the ship an arrived ship and, assuch, entitled to give notice of readiness to load, and at the expiration of the notice to beginto count lay days, ought, I think to be that area of the named port of destination on arrivalwithin which the master can effectively place his ship at the disposal of the charterer, thevessel herself being then, so far as she is concerned, ready to load, and as near as circum-stances permit to the actual loading ‘spot’ . . . be it quay or wharf, or pier, or mooring, andin a place where ships waiting for access to that spot usually lie, or, if there be more suchloading spots than one, as near as circumstances permit to that one of such spots which thecharterer prefers.’’

Before leaving this case it is emphasised that the courts disregarded the geo-graphical, fiscal and pilotage limits of the port; they focused on the commercial area,bearing in mind that they had a commercial contract to construe and that commer-cial matters were to the fore. As will be see, the ‘‘commercial area’’ remained the testunder English law for a considerable time vis-a-vis the ‘‘arrived ship’’ concept.

With the advance of time and the growth/expansion of ports it became moredifficult to delineate the ‘‘commercial area’’ of a port, particularly so after theSecond World War. Even so, it could be said that a vessel had to get fairly close tothe loading spot for a vessel to come within the ‘‘commercial area’’ of a port, asdefined in Leonis v. Rank.3 The result caused economic hardship to owners but itdid lead to a considerable amount of certainty. It is doubtful whether the originaldraftsmen of ‘‘proceed to . . . or so near thereto as she may safely get’’ would haveapproved of the narrow interpretation by the courts vis-a-vis ‘‘commercial area’’,even though the Court of Appeal judges in Leonis v. Rank3 thought they were beingquite bold in widening the area for a vessel to be an ‘‘arrived ship’’. After all, theydid reverse the High Court judge who had held that the vessel was not an arrivedship when she anchored in the river within the port.

4. The case of The ‘‘Aello’’6 was an application of the Leonis v. Rank7 decision to theport of Buenos Aires. Although the House of Lords had the opportunity to changethe ‘‘commercial area’’ test they did not do so. However, the case is interestingbecause of the application of the ‘‘commercial area’’ test to a large port in 1961,

6. [1960] 1 Lloyd’s Rep. 623.

4

Para. 3 ARRIVING AT THE AGREED DESTINATION

some 52 years after the Leonis v. Rank7 decision. It will be seen that the nature of thecargo played an important part in the decision.

The facts were that the vessel was chartered to load a cargo of maize at the portof Buenos Aires; she anchored at the intersection (22 miles distant from the dockarea of the port but within the legal and administrative limits of the port) on 12October and could not enter the inner harbour of the port until 29 October becauseof the non-availability of a berth. The House of Lords held, by a majority of threeto two, that she was not an ‘‘arrived ship’’ until 29 October since the intersection(the Roads) could not be considered the ‘‘commercial area’’ of the port. In applyingLeonis v. Rank7 Lord Jenkins stated (inter alia):

‘‘ . . . the ‘commercial area’ of the port, that is to say, the area in which the actual loading spotis to be found and to which vessels seeking to load cargo of the relevant description usuallygo, and in which the business of loading such cargo is usually carried out. The area presumedto be intended by the hypothetical owner and charterer is further particularised in point ofproximity to the actual loading spot as being the area on arrival within which the master caneffectively place the ship at the disposal of the charterer, and the position of the ship in whichis to be as near as circumstances permit to the actual loading spot and in a place where shipswaiting for access to that spot usually lie. The judgments, as I think, clearly postulate as the‘commercial area’ a physical area capable (though, no doubt, only within broad limits) ofidentification on a map. When the given ship enters that area and positions herself within itin accordance with the requirements just stated, she is (in point of geographical position) anarrived ship; until she does so, she is not an arrived ship, and lay days and demurrage are tobe calculated accordingly.’’

The judgment of Lord Morris also put emphasis on the cargo which was to beloaded/discharged; he said (inter alia):

‘‘The phraseology used in Leonis Steamship Co. Ltd. v. Rank Ltd. and other cases shows thatit is no easy matter to employ the appropriate words to describe an area of water which is itselfwithin a larger area, but Lord Justice Kennedy conveys the conception when he speaks of thecommercial area within the port which is usually occupied by vessels whose obligation andpurpose is to receive a cargo. A vessel may be within that area but may not be actually loading:she may be waiting to be loaded—or waiting to move to a berth at which she can be loaded.But if it can reasonably be said that a ship which is required to go to a port in order there toload has reached the commercial area of the port within which are the loading spots for herspecified cargo, so that she next awaits details as to her particular loading spots and directionsas to proceeding to them, then it can also fairly be said that she has arrived at herdestination.’’

Lord Keith (the other majority law lord) saw no reason why the question couldnot be answered satisfactorily by an application of the principles elaborated in Leonisv. Rank and tabulated eight reasons for his decision that the Aello was not an arrivedship when she reached the intersection, the most relevant appearing to be:

‘‘The free anchorage was not an area within the port in which grain ships usually lay whenwaiting to load . . . the vessel lay some 22 miles from the dock area and had still to finish hervoyage to Buenos Aires in the sense that she had to be piloted and be assisted with tugs alonga 22 mile channel in order to reach the usual ‘place’ for loading as distinguished from theactual loading ‘spot’ . . . no loading or unloading of grain ships ever took place at theanchorage in the roads . . . a point ‘as near as circumstances permit to the actual loading spot’must be within the port in its commercial sense . . . the fact that oil vessels or other types of

7. [1908] 1 K.B. 499.

Para. 4THE OLDENDORFF TEST

5

vessel might load or discharge in the roads is nothing to the point. There may be differentcommercial areas in a port for different types of vessel and cargo, or a vessel may have to loador discharge outside a port . . . ’’

The dissenting judgments of Lord Radcliffe and Lord Cohen were perhaps more intune with a simplistic approach which would satisfy commercial instincts. Theformer stated (inter alia):

‘‘My Lords, applying the principle of the Leonis case as I have tried to explain it, I am of theopinion that the Aello arrived in the port of Buenos Aires on 12 October. My reason forthinking so is based on the combination of the following facts. She was under the control ofthe port authority at Buenos Aires in the anchorage. She was lying in what was, by theprevailing regime of the port, the proper waiting place for vessels under orders to load maize.She could go no farther into the port without the giro which would allocate her a berth. Shewas at the disposition of the charterers, ready to take up the berth selected by them, as soonas they provided the cargo which would make the berth available. The free anchorage was an‘extension of the port of Buenos Aires’ which at the relevant date was in a commercial sense‘the port’ for the purposes of the chartered voyage.

I am bound to say that I regard this conclusion as more satisfactory than the suggestedalternative. It seems to me that, if we are looking for a general test of an ‘arrived ship’applicable to all ports with their great varieties of structure, formation and local condition, itis unwise to identify the ‘commercial area’ too closely with the idea of a fixed geographicallimit.’’

While Lord Cohen, agreeing with the reasoning and conclusions of Lord Radcliffe,added;

‘‘As I read the judgment of Lord Justice Kennedy in Leonis Steamship Co. Ltd. v. Rank Ltd.,he was saying that in the case of a charterparty naming a port and nothing more as the pointof destination, the test of whether a ship had become an arrived ship was whether the ship hadreached the commercial area of the port; he regarded, I think, the question what was thecommercial area in any particular case as one to be decided on the facts of the case. To putthe matter in other words, he was saying that the test to be applied was what would a man ofbusiness, a marine officious bystander, to adapt Lord Justice Mackinnon’s well-knownphrase, looking at all the facts of the case, including any relevant port regulations, regard asthe commercial area of the port.’’

In the event, it was to be over a decade before an approach, more simplistic than thatof the majority in The ‘‘Aello’’, prevailed.

5. Although The ‘‘Aello’’ did not change the law regarding the principle to beapplied vis-a-vis an ‘‘arrived ship’’, it did clarify the application of the ‘‘commercialarea’’ principle in that it militated for a broader area which could constitute thecommercial area than what many had thought to be possible, particularly in the caseof large ports.

Much emphasis was put on the nature of the cargo to be loaded/discharged so asto lead to the result that parts of a port would not constitute the commercial areafor a particular vessel unless that vessel was within the area of the port whichhandled the goods to be loaded/discharged. This led to certainty in many cases sothat shipowners, charterers, arbitrators, maritime lawyers and others were able tosee, at a glance, if the vessel was an arrived ship simply by looking at the nature ofthe cargo to be loaded/discharged and the sections of the port which handledcargoes of such a nature.

6


The application of the test could, and did, lead to findings that the commercialarea might be well away from the heart of the port and, in some instances, evenoutside the administrative limits of the port. For example, tankers often load/discharge many miles from a port nucleus and it is obvious that they must be arrivedships when anchoring very close to the loading/discharging berth. What is not soobvious is how close such vessels had to get to the berth in order to have reached thecommercial area and to be designated ‘‘arrived ships’’.

Even though the ‘‘commercial area’’ test had some flexibility it could lead toeconomic unjust results as far as owners were concerned; further, the fact that thetest had flexibility caused some uncertainty when considering some ports andcargoes.

Before leaving The ‘‘Aello’’8 it is worth mentioning that, even though the ownerswere denied the commencement of laytime at the intersection anchorage, the Houseof Lords allowed them damages for delay because the non-availability of a berth wasdue to the failure of the charterers to supply a cargo; this aspect will be consideredlater under remedies available to owner (see later paragraph 55).

6. The increase in size of ship led to greater difficulty in applying the ‘‘commercialarea’’ concept. It also led to commercially unrealistic results in that a vessel reacheda position as close as she could get to the loading port (and could go no furtherbecause of the lack of a berth and/or port authority restrictions) and was still notconsidered an ‘‘arrived ship’’ because her anchorage (invariably the usual waitingplace) was outside the ‘‘commercial area’’ of the port.

The result was often economic hardship to the owner since his money-makingchattel was getting no compensation for time during which the vessel was lyingdoing nothing even though she had completed the sea passage and was as near to theloading/discharging spot as she could get. Of course, many persons asserted that itwas up to an owner to get a ‘‘time lost waiting for berth’’ provision, or some othersuitable clause, in the charterparty to take care of a situation, but this may be easiersaid than done. This approach complicated an area of shipping law which should besimple, bearing in mind the large sums of money which can turn on whether or nottime is to score up while a vessel is waiting at an anchorage after her completing hersea passage; further, the charterparty contract spells out the laytime for loading anddischarging and it would appear to be commercially just that an owner should getcompensation for the time that his vessel is at or off a loading/discharging port andthis exceeds the contractual period laid down for the loading and discharging ofcargo.

Because of the general feeling of sympathy for owners, some judges and arbi-trators tended to strain the limits of the ‘‘commercial area’’ test to decide that avessel was an ‘‘arrived ship’’ when, strictly speaking, she was not. Nowhere was thismore evident than in The ‘‘Delian Spirit’’,9 a case which went to the Court of Appealin 1971.

8. [1960] 1 Lloyd’s Rep. 623.9. [1971] 1 Lloyd’s Rep. 506.


7

7. In The ‘‘Delian Spirit’’9 the vessel was chartered to load a cargo of crude oil at oneor two Black Sea ports. The charterers ordered the vessel to Tuapse, a port ofmodest size with a breakwater within which was a jetty with berths for four tankers.When the vessel presented herself, the berths were occupied, so she anchored in theroads some one and a quarter miles from the jetty at the anchorage appointed forships proceeding to the oil berth within the harbour.

The learned umpire (Mr Michael Mustill QC as he then was, later Lord Mustill)found that the waiting area was within the legal, fiscal and administrative area of theport but that is was not a usual place for the loading of oil and felt constrained tohold that the ship was not arrived although, in every practical sense, she hadcompleted her voyage when she came to rest at the anchorage. Both the High Courtand the Court of Appeal reached an opposite conclusion to the umpire. Althoughthe decision of the courts was in accordance with commonsense it appeared to bewrong under the application of the ‘‘commercial area’’ test, the principle which hadbeen adopted by the House of Lords in The ‘‘Aello’’.8

The Delian Spirit9 judgment caused much uncertainty in the shipping sphere andit was obvious that the concept of the ‘‘arrived ship’’ required re-canvassing beforethe highest of English tribunals. The wish of many persons was soon fulfilled sinceThe ‘‘Johanna Oldendorff ’’10 went to the House of Lords within two years of theCourt of Appeal’s decision in The ‘‘Delian Spirit’’.9 The latter case also involved‘‘reachable on arrival’’; see later Chapter 3.

8. In The ‘‘Johanna Oldendorff ’’10 the vessel was voyage chartered to carry bulk grainfrom the U.S.A. to Liverpool/Birkenhead, the charterparty stipulating: ‘‘Time tocount from the first working period on the next day following receipt during officehours of written notice of readiness to discharge whether in berth or not’’.

The charterers were informed that the vessel was due at Mersey Bar anchorage at17.00 hours on 2 January 1968, but no berth was nominated by them. When shearrived she anchored there. The next day she proceeded to Princes Pier landingstage, Liverpool, and cleared with the customs. She was then ordered by the portauthority to leave and proceed to anchor at the Bar light-vessel. She did so arrivingat that anchorage at 14.40.

Meanwhile the owners gave to the charterers notice of readiness. This wasreceived at 14.30 on 3 January. The vessel lay at anchor at the Bar from 3 to 20January ready, so far as she was concerned, to discharge. Evidence was given thatthe Bar anchorage, which was 17 miles from the nearest discharging berth, was theusual place where grain ships lay awaiting such a berth. A dispute arose as to whenthe vessel had become an ‘‘arrived ship’’, and was referred to arbitration. Theumpire stated a special case, the question for the court being: Whether laytime fordischarge started (i) at 08.00 hours on 4 January 1968; or (ii) at 08.00 hours onMonday, 22 January; or (iii) at 08.00 hours on 23 January.

Subject to the decision of the court the umpire held that the laytime started at08.00 hours on 4 January. It was decided by Mr Justice Donaldson (as he then was)that (1) on the evidence, the vessel was not an ‘‘arrived ship’’ when she reached the

10. [1973] 2 Lloyd’s Rep. 285.

8


Bar anchorage; (2) nor was she an ‘‘arrived ship’’ when she reached the Prince’slanding stage because (a) it was not a usual waiting place for grain ships seeking adischarge place, and (b) she was no longer there when the notice of readiness wasserved; (3) the laytime began to count at 08.00 hours on 22 January or at 08.00hours on 23 January but, as the matter was of academic interest only, no view aswhich of these two dates should be preferred need be expressed; (4) that the answerto the question in the special case was either (ii) or (iii) and that the alternativeaward in favour of the charterers was upheld.

On appeal by the shipowners, it was contended that (1) the vessel was an ‘‘arrivedship’’; and (2) the words ‘‘whether in berth or not’’ had the effect of casting the riskof delay upon the charterers, it was held by the Court of Appeal (Lord JusticesBuckley and Roskill; Lord Denning, M.R., dissenting) that (1) the vessel was not an‘‘arrived ship’’, for (a) she had not reached the commercial area of the port; (b) therelevant waiting area must be in the commercial area; and (c) that commercial areamust be that part of the port where she could be discharged (or loaded) when aberth was available; (2) the application of the words ‘‘whether in berth or not’’ waslimited to a case where a vessel was already an ‘‘arrived ship’’; their use did notdispense with the necessity for her being an arrived ship before notice of readinesscould be given and the laytime start to count; and only when she had arrived did theclause operate to make laytime commence even though she was not in berth. Theappeal was dismissed. Both the High Court and the Court of Appeal had held, onthe strength of The ‘‘Aello’’,11 that the vessel was not an arrived ship. However, theHouse of Lords, after canvassing the topic, produced a unanimous decision that theJohanna Oldendorff10 was an arrived ship when she anchored off the Bar light-vessel.In doing so they reversed the Court of Appeal and overruled The ‘‘Aello’’.

The all-important ratio decidendi of the Oldendorff case10 (now known as the Reidtest) is that a vessel can be said to have arrived at a port if she has reached a positionwithin the port where she is at the immediate and effective disposition of the charterers,her geographical position being of secondary importance; she will be at the immedi-ate and effective disposition of the charterer if she is at a place within the port wherewaiting ships usually lie unless the charterer can show circumstances to the con-trary; if the vessel is waiting at some other place in the port then it is up to the ownerto prove that the vessel is as fully at the disposition of the charterer as she would havebeen if in the vicinity of the berth for loading or discharging. The precise words ofLord Reid were:

‘‘Before a ship can be said to have arrived at a port she must, if she cannot proceedimmediately to a berth, have reached a position within the port where she is at the immediateand effective disposition of the charterer. If she is at a place where waiting ships lie, she willbe in such a position unless in some extraordinary circumstances proof of which would lie onthe charterer . . .

If the ship is waiting at some other place in the port then it will be for the owner to provethat she is as fully at the disposition of the charterer as she would have been if in the vicinityof the berth for loading or discharge.’’

11. [1960] 1 Lloyd’s Rep. 623.


9

Apart from Lord Reid’s speech other speeches which are of help in understandingthe House of Lords’ decision are those of Viscount Dilhorne and Lord Diplock. Theformer summarised his conclusions, as follows:

‘‘(1) That under a port charterparty to be an arrived ship, that is to say a ship at a placewhere a valid notice of readiness to load or discharge can be given, she must haveended her voyage at the port named.

(2) The port named in the charterparty must be given the meaning which thosepersons using it as a port, shippers of goods, charterers of vessels and shipowners,would give to it.

(3) The physical limits of a port afford no reliable guide, for the physical limits asindeed the pilotage limits, may extend far beyond the limits of what those using itwould regard as the port.

(4) The area of some ports may be defined by law.(5) A vessel has not reached her port of destination until it has ended its voyage within

the port, either in its legal, or if it differs, in its commercial sense. If it is refusedpermission and ordered to wait outside the port by the port authority it is not an‘arrived’ ship.

(6) If it is within the port in its legal sense it does not follow that it is within the portin its commercial sense.

(7) Brett, M.R.’s definition in Steamship ‘Garston’ Co. v. Hickie & Co. and his referenceto port discipline may be useful in determining what are the limits of the port in itslegal sense but port discipline may be exercised and submitted to over a wider areathan the port in its commercial sense.

(8) Under a port charterparty a vessel has arrived when(i) if it can proceed directly to a berth or dock, it has arrived there and(ii) if it cannot do so, it has reached that part of the port in which vessels waiting

to load or discharge cargo usually lie before moving directly to a dock orberth. At that part of the port she can be effectively placed at the charterers’disposal for loading or unloading and that part of the port is to be regarded aspart of the port in its commercial sense.

(9) If within the port though not for some reason at the usual waiting place, a ship maystill be an ‘arrived ship’ if, at the place where she is, she can be effectively placedat the disposal of the charterers.

(10) The ‘usual place’ may be changed by a port authority or by a regulation. If for somereason due to the conditions of the port and not of the ship, a vessel wishing to waitat the usual waiting place is ordered to lie elsewhere by the port authority, I think,though the question does not arise for decision in this case, that she ought to beregarded as an arrived ship.’’

Lord Diplock analysed the characteristics of a voyage charterparty in four successivestages as follows:

‘‘(1) The loading or approach voyage, viz. the voyage of the vessel from wherever sheis at the date of the charterparty or the conclusion of her previous fixture, if that islater, to the place specified as the place of loading.

(2) The loading operation, viz. the delivery of the cargo to the vessel at the place ofloading and its stowage on board.

(3) The carrying or loaded voyage, viz. the voyage of the vessel from the place ofloading to the place specified in the charter as the place of delivery.

(4) The discharging operation, viz. the delivery of the cargo from the vessel at the placeof delivery and its receipt there by the charterer or other consignee.’’

This analysis has been well recognised over the years and has been referred to againby the Court of Appeal in a fairly recent decision in Kronos Worldwide Ltd. v. Sempra

10


Oil Trading S.A.R.L.,12 see Lord Justice Mance at page 264. This case concerneda sale contract and is detailed under Sale Contracts in Chapter 7, paragraph 138.

Lord Diplock also had this to say:

‘‘A dock encloses a comparatively small area entered through a gate. There is no difficulty insaying whether a vessel has arrived in it. As soon as a berth is vacant in the dock a vesselalready moored inside the dock can get there within an interval so short that for the practicalbusiness purpose of loading or discharging cargo it can be ignored. For such purposes she isas much at the disposal of the charterer when at her mooring as she would be if she werealready at the actual berth at which the charterer will later make or accept delivery of thecargo, but is unable for the time being to do so.

The area of a port, however, may be much larger. It may sometimes be less easily determin-able, because of absence of definition of its legal limits or variations between these and thelimits within which the port authority in actual practice exercises control of the movement ofshipping; but I do not believe that in practice it is difficult to discover whether a place whereships usually wait their turn for a berth is within the limits of a named port; or is outside thoselimits as is the case with Glasgow and with Hull. In the days of sailing ships, whosemovements were dependent on favourable wind and weather, and even in the days ofsteamships before there was regular radio communication between ship and shore, a shipprevented by congestion in the port from reaching a berth on her arrival there might becompelled to moor at some place which, although it was within the limits of the port, wasnevertheless one at which she could not fairly be regarded for business purposes as beingalready at the disposition of the charterer, because the interval which would elapse betweenthe time when a berth did become actually available and the time when the vessel would beable to reach it in response to directions given by the charterer, might be so long that it wouldbe of practical business significance.

. . . My Lords, the application of the principle that under a port charter the vessel must be put

at the disposal of the charterer before laytime for loading or discharge can start, calls forconsideration of the particular circumstances of the adventure contemplated by the charter-party, and must take into account changes in the kinds of ships used in maritime commerce,in means of communication and in port facilities and the management of ports. If a port iscongested so that on arrival within its limits the chartered vessel cannot proceed immediatelyto a berth to load or to discharge, it is of no business importance to the charterer where shewaits within those limits, so long as it is a place (1) where she counts for turn if the port isone where vacant berths are allotted to waiting vessels in order of arrival; (2) where thecharterer can communicate with her as soon as he knows when a berth will become availablefor the cargo to be loaded or discharged, and (3) from which the vessel can proceed to theavailable berth when she receives the charterer’s communication, so as to arrive there as soonas the berth has become vacant or so shortly thereafter as not to be significant for practicalpurposes.

The waiting places within the limits of an extensive port which have these characteristicsalter as ships become more manoeuverable, faster or larger, and communications betweenship and shore improve. It was an area of the port which embraced but did not extend beyondthese places that Lord Justice Kennedy in Leonis v. Rank called ‘the commercial area of theport’ which the parties to a port charter must be taken to have meant as the area in which thevessel must have arrived and come to stop in order to complete its loading or carrying voyage.Whether these waiting places were also places at which other ships could be actually loadedor discharged, or usually were at other times, was irrelevant to the business purposes of theparties to the particular adventure if the chartered vessel itself could not.

Since it is to the interest of all concerned, of port authorities as well as charterers andshippers, that time should not be wasted by leaving berths vacant when they are available for

12. [2004] 1 Lloyd’s Rep. 260.


11

loading or discharging cargo, the usual places for ships to wait their turn for a vacant berthare those which do possess the three characteristics that I have mentioned, if there are anysuch places within the limits of the port. In days of sailing ships close proximity to berthslikely to become vacant may have been necessary in order that a place should possess thosecharacteristics, but distance from the actual berth becomes of less importance as steam anddiesel power replaces sail and instantaneous radio communication is available between shipand shore. In modern conditions it is possible for port authorities and charterers to know atleast some hours in advance, when a berth presently occupied by a loading or dischargingvessel will become vacant and available for use by the chartered vessel. Notice of similarlength can be given by the charterer to the waiting vessel so as to enable her to reach the berthas soon as it becomes vacant, if she can make the journey from her waiting place to the berthwithin that time. And if she can she is as effectively at the disposal of the charterer for loadingor discharging while at that waiting place as she would have been if waiting in the immediatevicinity of the berth.

My Lords, this no doubt is why the Bar anchorage, which is within the legal limits of theport of Liverpool and included in the area in which the port authority is entitled to controlthe movement of shipping, has become the usual place to which vessels are directed by theport authority to wait their turn for a berth. And the same must generally be true of usualwaiting places within the limits of other ports where congestion is liable to occur, I wouldtherefore accept as a convenient practical test as to whether a vessel has completed herloading voyage or her carrying voyage under a port charter so as to cast upon the chartererthe responsibility for subsequent delay in finding a vacant berth at which her cargo can beloaded or discharged, the test as it is formulated by my noble and learned friend, Lord Reid,at the conclusion of his speech.’’

While there is considerable virtue in what was stated by Viscount Dilhorne andLord Diplock, both of them held to that part of the so-called Reid test ‘‘within theport’’ notwithstanding that they placed reliance upon the control of the movementof shipping as a guideline for determining the limits of a port. Neither of thempostulated a situation where the usual waiting place was close to but outside thelegal limits of a port where the port authority had no direct but only inferentialinfluence in respect of the particular vessel; for example, the port authority onlybeing able to say to the vessel ‘‘come in’’ at an appropriate time. It seems that thoselaw lords, along with Lord Reid, thought that they were taking a relatively bold step(which perhaps in the strict legal sense they were) by way of their disapproval of the‘‘commercial area’’ test and the introduction of the ‘‘Reid’’ test. The references tosailing ships speak volumes in indicating a conservative approach and it is worthnoting that Lord Diplock took the lead in the later 1977 Maratha Envoy decision,another House of Lords case of some importance and which is considered later inparagraph 11.

The decision widened the area within which a vessel can be considered an‘‘arrived ship’’ and this was generally welcomed; however, it is submitted that thedecision did not go far enough and this is be to regretted in view of the House ofLords having had a golden opportunity to simplify an area of law which had becomeunnecessarily complicated over the years.

9. The disappointment in the Johanna Oldendorff decision10 is that part of the ratiodecidendi which stipulates that the vessel must be within the port in order to be an‘‘arrived ship’’. This can lead to illogicalities (illustrated later), also to difficultiesbecause of many ports not having well defined legal limits. Since the Oldendorff

12


decision10 arbitrators have been faced with problems regarding whether or not ausual waiting place is, or is not, within the port, and this runs counter to the wordsof Lord Reid (leading judgment in the case) which read (inter alia):

‘‘But I find it difficult to believe that there would, except perhaps in rare cases, be any realdifficulty in deciding whether at any particular port the usual waiting place was or was notwithin the port. The area within which a port authority exercises its various powers canhardly be difficult to ascertain. Some powers with regard to pilotage and other matters mayextend far beyond the limits of the port. But those which regulate the movements and conduct ofships would seem to afford a good indication [emphasis supplied]; and in many cases the limitsof the port are defined by law.’’

There have been arbitrations since the Oldendorff decision10 where there has beendoubt not only concerning the exact legal limits of the port but also as to the extentand degree of regulation of ships by port authorities. Notable examples have beensome of the Mediterranean ports although other areas of the world have alsoproduced problems in this respect.

Although a move in the right direction the Oldendorff decision10 did not gosufficiently far in order to simplify, and remove uncertainty from, the application ofthe ‘‘arrived ship’’ concept. Although it may be illogical to say that a ship has arrivedat a port when she is not within the port, does it really matter whether or not a vesselhas reached certain limits (which can be difficult to ascertain) so long as she hascompleted her sea passage and is lying where vessels usually wait for a berth,adjacent to the port?

10. The commercial illogicality which can result from the Oldendorff10 decision iswell illustrated by two 1974 arbitrations which occurred soon after the Oldendorffdecision, one in London and the other in New York, both of which concerned grainladen vessels which waited at the usual waiting anchorage off the Hook of Hollandbefore proceedings to their discharging berths at Rotterdam.

In the London arbitration The ‘‘Agamemnon’’,13 the charterparty stipulated:

‘‘Notification of vessel’s readiness to discharge must be delivered to the office of the charter-ers or their agents, at or before 4 p.m. (or at or before 12 noon if on a Saturday) and thelaydays will then commence at 7 a.m. on the next business day, whether in berth or not.’’

The charterers nominated Rotterdam as the port of discharge and the vessel,carrying a cargo of grain, arrived at the recommended anchorage off the Hook ofHolland at 01.00 on 18 August 1973 which anchorage was partly outside of Nether-lands Territorial Waters; the Agamemnon anchored in that particular part of theanchorage. While lying at the anchorage the vessel was about 20 miles from theindicated discharging berth which, at the time, was occupied by another vessel. Theowners made attempts to secure a waiting berth within the port of Rotterdam butwere unsuccessful. It was usual for vessels to lie at the recommended anchorage ifno discharging or waiting berth was available and when the Agamemnon reached therecommended anchorage she had reached as practically close as circumstancespermitted to the berth nominated by the charterers. The recommended anchoragewas outside of the legal and fiscal limits of the port of Rotterdam and the Port of

13. 1974.


13

Rotterdam authorities did not have any control over the vessels at the recommendedanchorage save for that of forbidding them to move into the port although for thepurpose of assisting vessels, Netherlands state authorities exercised duties in rela-tion to pilotage, dredging, buoyage, beaconage and lighting, in areas including andwell to the seaward side of the recommended anchorage. Pilotage was not compul-sory insofar as the area traversed by the Agamemnon was concerned, prior toanchoring.

Notice of readiness was given on behalf of the vessel at 09.00 on 18 August 1973;this notice was not accepted by the charterers. A further notice of readiness wastendered at 06.00 on 28 August 1973 and this notice was accepted at 09.00 on 28August 1973 by which time the vessel had arrived at her discharging berth.

The question which the umpire had to decide was whether or not the vessel hadreached the agreed destination of Rotterdam, within the rule laid down in theOldendorff at the time that the 18 August notice of readiness was tendered. Hedecided the special case in favour of the charterers, holding reluctantly that thevessel had not reached the port of Rotterdam, under the Reid test, when sheanchored off the Hook of Holland on 18 August. Part of his reasoning was:

‘‘It appears to me that there is virtually no difference between a vessel waiting at therecommended anchorage off the Hook of Holland in relation to the port of Rotterdam, anda vessel waiting at anchor off the Bar light-vessel in relation to the port of Liverpool, whenconsidering the ‘arrived ship’ concept, except that the former anchorage is outside the legallimits of the port, whereas the latter anchorage is inside the legal limits of the port. It seemsstrange that, in one case, the vessel should be an ‘arrived ship’, whereas, in the other case, thevessel should not be so considered, but, in view of the Oldendorff decision (which, as I see it,specifies that a vessel must be within the port in order to be an ‘arrived ship’) one appears tobe left with this illogicality, simply because of where the legal limits of a port are drawn.

With respect, it seems a pity to myself, and to many persons in the City of London andother shipping centres around the world, that the Oldendorff decision did not go a little furtherso as to embrace places where vessels usually wait off the port when they are prevented fromproceeding further because of no berth being available to them. Such an extension of the‘arrived ship’ concept would have avoided some of the problems now coming before arbi-trators as to whether a usual waiting place is, or is not, within the port; there are a good manyports in the world which make it difficult (because of, for example, no defined legal limits)for arbitrators to decide whether or not the usual waiting place is within the port.

Lord Reid’s test, in the Oldendorff decision does not appear to be of easy application tomany ports and, in addition, can often lead to considerable time consuming and costlyresearch in attempting the establishment of the limits of the various powers exercised by portauthorities.

The views expressed above are prompted simply by a desire to see the ‘arrived ship’concept made easier and more certain of application, also in the hope that, one day, theEnglish law will be in step with so many other maritime nations.’’

The case was never set down in the courts by the owners because they were advisedthat there was no likelihood that the House of Lords would depart from one of itsprevious decisions so soon after the Oldendorff.

In New York the arbitrators in The ‘‘Polyfreedom’’,14 on virtually identical facts,took a different approach and decided in favour of the shipowners in that the vesselwas an ‘‘arrived ship’’ when she reached the anchorage off the Hook of Holland.

14. 1974.

14


The arbitration panel, agreeing that the ship was outside the legal, fiscal andgeographical limits, posed the question, ‘‘does this geographical imaginary linedrawn up by the Dutch government authorities for totally different purposes, meanthat under the terms of this particular charterparty, the Polyfreedom had not arrivedat Rotterdam?’’ The majority answered the question in the negative, in favour of theowners stating (inter alia):

‘‘Under a port charterparty containing a ‘whether in berth or not’ provision, if a vessel hasreached a point as close as she may reasonably arrive to the designated discharging berth, andcan prove that it was not possible or practical to get nearer, then the physical and geographicallocation of the waiting point (provided it is within the usual waiting area) is of no importance.The owner of the vessel has at that point in time executed the requirement of the contract tothe extent required to place the ship and cargo at charterers’ disposal. Clearly this requiresthat the vessel be able, immediately she is required to do so, to proceed on charterers’instructions to the discharging berth, without causing any delay to charterers at thattime.’’

While the New York arbitrators had the Oldendorff decision put to them it only hadpersuasive authority albeit by the highest English tribunal and the majority, quiterightly, it is submitted, rejected it. The above quotation surely reflects what the lawshould be in respect of reaching the agreed destination regarding a port charter-party. Interestingly, the New York Polyfreedom arbitration was referred to a few yearslater, by the English Court of Appeal, in The ‘‘Maratha Envoy’’15; see later paragraph11 for discussion of this case.

11. The ‘‘Maratha Envoy’’16 was perhaps a bad case on its facts to take to the Houseof Lords so relatively soon after the Oldendorff decision, particularly since three ofthe five law lords in the Oldendorff sat in the Maratha Envoy case; the leading andonly judgment was given by Lord Diplock (the other four law lords simply concur-ring) who had delivered a lengthy speech and analysis of the Oldendorff decision (seeabove, paragraph 8). It appeared that the chance of the House of Lords departingfrom one of its previous decisions, within four to five years, was indeed very slighteven though the Court of Appeal was unanimous in deciding that the vessel hadarrived at Brake when she anchored at the Weser light-ship to wait for a berth, theanchorage being outside the legal, fiscal and administrative limits of Brake andabout 25 miles from her intended berth.

The facts were that the vessel anchored at the Weser light-vessel at 22.10 on7 December and on the same day the charterers directed that the vessel shouldproceed to Bremen after lightening at Brake. At 03.00 on 8 December, the vesselsailed for the River Weser. The vessel was taken up river to Brake on the flood tide,turned in the river off the port of Brake and went back to the light-vessel. There wasno berth available for her, there were no waiting places in the port of Brake andanchoring in the river in or near the area of the port was forbidden. The vessel didnot obtain clearance from either the health or customs’ authorities. The vesselturned in the river at about 07.20 and notice of readiness was tendered at 09.00,when the vessel was back at Bremerhaven. That notice was rejected.



15

On 10 December the charterers nominated the port of Brake as the dischargingport. At 07.30 on 12 December the vessel made a second excursion up the RiverWeser. Again there was no available berth but the vessel obtained special healthclearance. No customs’ clearance was obtained. The vessel turned in the river offthe port at 11.45 and notice of readiness was given but this too was rejected.

On 30 December at 04.00 hours the vessel finally berthed in the port ofBrake.

The owners contended (i) that Maratha Envoy became an arrived ship at Brake on8 or 12 December 1970; and (ii) the cost of waiting at the light-vessel was recover-able as damages for failure to give discharging port orders timeously.

The charterers replied that the vessel did not become an arrived ship before 30December 1970, and, although the discharging port orders were given late, theowners suffered no damage.

It was held by Mr Justice Donaldson (as he then was) that (i) although in acommercial and legal sense vessels were within the port of Brake when they were offthe quay, the Maratha Envoy had not ‘‘arrived’’ on 8 or 12 December because thevoyage had not ended and the vessel was not waiting; her trips to the port of Brakeand back to the light-vessel did not constitute arrival in a commercial or in a legalsense; (ii) therefore, the failure to nominate a discharging port in time caused noloss to the owners.

On appeal by the shipowners it was held by the Court of Appeal (Lord Denning,M.R., Lord Justices Stephenson and Shaw), that (1) when the vessel droppedanchor at the Weser light-ship and was waiting for a berth she was an arrived ship;and there were no authorities binding the court to hold that a vessel could not be anarrived ship until she got within the limits of the port; (2) (Lord Justice Stephenson,dissenting): it was implied by the terms of the charterparty operating in conjunctionwith the nomination of a Weser port (Brake) that arrival at the Weser light-shipshould take effect as if it were arrival in the port of Brake.

Lord Denning took the approach of the New York arbitrators in The ‘‘Polyfree-dom’’ and said (inter alia):

‘‘I think that, at the present day, a vessel should be held to be an arrived ship when she hasreached the usual waiting place for the port, even though it may be a few miles outside thelimits of the port itself. The reason being that she has completed her carrying voyage and isat the disposition of the charterers as effectively as if she was inside the port itself in thevicinity of a berth.’’

On the implied term aspect Lord Denning had this to say:

‘‘If the vessel is ordered to a port—and goes there—within which there is no available berthand no available waiting area (such as the port of Brake), what is the shipowner to do? Is heto sail away with the cargo to a distant port? Obviously not. He must go to the appointed areafor waiting outside the port. That must be implied. But who then is to bear the cost andexpense of waiting? Obviously the charterer, because it is his responsibility to provide a berth,and he has not done so. It must necessarily be implied that the vessel becomes an arrived shipwhen she arrives at the usual waiting place, even though it is outside the port. . . .

None of the authorities hitherto has discussed these implied terms. So there is nothing toprevent our introducing them. And, if they are necessary to do justice, I think we shouldintroduce them. It is a legitimate way of getting round the bad interpretation of the past.’’

16


The decisions of the Court of Appeal received short shrift in the House of Lordswhere it was held that in a port charterparty the vessel could not be an ‘‘arrivedship’’ at any waiting place short of the limits of the named port and, further, therewas no ground for implying a term into the charterparty as proposed by the majorityin the Court of Appeal. Lord Diplock emphasised that the Oldendorff stipulated‘‘within the port’’ by stating:

‘‘My noble and learned friend Viscount Dilhorne stated specifically that for it to have‘arrived’ the place where the vessel is waiting must be within the port. A vessel ordered to waitoutside the port is not an arrived ship. In the course of my own speech I spoke throughoutof a waiting place within the port and this qualification was a necessary consequence of theanalysis of the four stages of the adventure contemplated by a charterparty which led to myacceptance of the Reid test as correct.’’

He then went on to say ‘‘it would be doing a grave disservice to the shippingcommunity if this House were to allow the legal certainty introduced by the Reidtest to be undermined’’.

Lord Diplock dealt very cursorily with the implied term aspect, as follows:

‘‘Lord Denning M.R. and Lord Justice Shaw were also prepared to imply a term in thecharterparty to the same effect as the express Weser Lightship clause. Charterparties enteredinto upon printed forms and adapted to the particular adventure contemplated by the partiesoften contain surplus phrases or clauses; but there is no ground for implying terms which arenot necessary to give business efficiency to the contract and which if incorporated in thecontract would alter the allocation of a misfortune risk in a way for which the partiesthemselves had not provided when negotiating rates of freight and provisions for demurrage.I agree with Lord Justice Stephenson that in the instant case there is no ground for any suchimplication.’’

It is submitted that the implied term aspect was worthy of greater considerationthere being much sense in equating the charterers’ obligation to provide a berthwith that of supplying a cargo. After all, the charterer has an absolute obligation toprovide a cargo; see The ‘‘Aello’’ (see earlier paragraphs 4 and 5 and later paragraphs54 and 55) where the owners obtained damages for the vessel’s detention at theIntersection because the charterers breached their absolute obligation to supply acargo and this resulted in the vessel having to wait at the Intersection (where she wasnot an ‘‘arrived ship’’ until the cargo had been supplied and the vessel was grantedpermission to move into a berth). The charterer also has to provide a berth for thecargo to be loaded/discharged; why should the obligation not be of identical natureunder the law in view of one obligation being so closely bound up with the other?What could have more business efficacy than having parallel legal obligations wherethey are so closely juxtaposed?

12. Although an implied term is strictly within the field of damages (see laterChapter 3) it has a bearing on the ‘‘arrived ship’’ concept because of what has beenstated earlier in paragraph 11. It is of more than passing interest that shortly beforeThe ‘‘Maratha Envoy’’ went to the House of Lords it had been decided in the HighCourt that in the case of delivery under a time charterparty there was an impliedterm that a berth should be available on the vessel’s arrival. In The ‘‘Golfstraum’’17

17. [1976] 2 Lloyd’s Rep. 97.


17

the time charterparty stipulated (clause 1) that the vessel was to be delivered andplaced at the disposal of the charterers at Sfax ‘‘in such available berth where shecan safely lie always afloat’’. The Golfstraum arrived at Sfax Roads on 8 March andat 08.00 hours, the master informed the charterers’ agents at Sfax by radio that thevessel was ready to be delivered. Owing to harbour congestion, non-availability ofberth and the nature of the commercial operations the Golfstraum was engaged in,no berth was available until 12 March when she was allowed to enter the port andthe charterers took delivery of her.

In the arbitration the umpire decided, by way of a special case, that the chartererswere under an obligation to direct the vessel on her arrival to an available berth andthere take delivery of her, they were in breach of this obligation and could not relyfor relief from such breach on the fact that they had no control over the portauthority, and that the owners were entitled to damages, based upon the dailyamount of hire, for the 8–12 March period. The umpire’s award was upheld in theHigh Court by Mr Justice Mocatta who stated:

‘‘Clause 1 of the charter does not expressly provide for the time when the charterers must givedirections for the available and safe berth to which the vessel is to go to make her delivery, butI think the necessary inference is that the directions must be given either on arrival at Sfax orbefore arrival. I do not think the clause can be read as imposing no obligation to give thenecessary directions until a berth shall become available.’’

The ‘‘Golfstraum’’ was not cited in The ‘‘Maratha Envoy’’ but it is unlikely that itwould have swayed the conservative-minded Lord Diplock who contended for astringent test regarding an implied term in respect of demurrage obligations undera charterparty. The stringency of the test came up in the later case of The ‘‘DamodarGeneral Park and King Theras’’18 where Mr Justice Steyn (as he then was) decided toimply a provision into a Sandheads clause which allowed a notice of readiness to betendered at a place some 40 miles closer to Calcutta than Sandheads. It was foundnecessary to discharge the cargo into lightening vessels and, under the terms andconditions of the charterparty, time used for discharging from the ‘‘mother vessel’’was to be disregarded, and laytime had to be calculated with reference to thelightening operation. Clause 38 of the charterparty (the ‘‘Sandheads Clause’’)provided inter alia that, ‘‘if vessel is unable to give notice of readiness by reason ofcongestion at Calcutta, time shall commence to count at 8 a.m. on the next businessday after notice of vessel’s arrival off Sandheads has been given’’.

The lightening vessels could not proceed straight up to Calcutta, and there givenotice of readiness in the usual way, because of the congestion at that port. Eight ofthe nine lightening vessels never reported their readiness on arrival off Sandheads.Each was loaded from the mother vessel after she had shifted from Sandheads toSaugor. Then only did they purport to give notice. Sandheads was some 40 milesoff the mouth of the River Hooghli and was the area where vessels would normallywait if they were unable to proceed directly to Calcutta. Saugor was much closer toCalcutta and was at the mouth of the river some 40 miles north of Sandheads.

The charterers contend that notices given on completion of loading at Saugorcould not constitute valid notices under clause 38 because what that clause called

18. [1986] 2 Lloyd’s Rep. 68.

18


for was notice of the vessel’s arrival off Sandheads. It was therefore argued that theSandheads Clause had no application, and laytime for eight of the nine vessels onlystarted to run as and when each vessel, having reached Calcutta and obtainedcustoms entry and free pratique, gave notice of readiness. The owners of the vesselmade a contrary submission.

The arbitrator decided in favour of the owners of the vessel. In so awarding, thearbitrator was constrained to comment on the absurdity of a lightening vessel,loaded at Saugor, having to waste time and money proceeding out to Sandheads inorder to comply with the strict letter of the clause. He then said that there could beno real doubt as to the basic intention of the shipowners and charterers, namelythat, given a congestion situation, the waiting time should count as laytime as fromthe day following upon receipt of advice that the vessel was ready to proceed up toCalcutta. Also that, in selecting arrival off Sandheads as the turn-key for thepurpose of clause 38, the draftsman plainly overlooked the possibility of tranship-ment being effected, in the words of clause 35 ‘‘closer to Calcutta’’—language whichwas wide enough to embrace transhipment being carried out, as it was here, atSaugor.

When the dispute came before the Commercial Court it was held that on no viewcould the phrase ‘‘off Sandheads’’ in clause 38 be given a meaning so extensive asto cover the vicinity of Saugor, and that the owners’ position could not therefore besustained by any process of construction, the only question being whether it couldbe supported on the basis of implying a term in the contract.

In deciding the case of favour of the owners and upholding the arbitrator MrJustice Steyn had this to say:

‘‘Keeping in mind the stringency of the test applicable to the type of implied term underconsideration, and the approach enunciated by Lord Diplock in The ‘Maratha Envoy’, I nowturn to the question whether an appropriate term can be implied in clause 38.

I do not accept that demurrage provisions under a charterparty are entirely immune fromthe application of general principles of contract law regarding the implication of terms, I do,however, accept that the stringent test applicable to the implication of such terms will rarelyresult in a term being implied in commercial contracts, and particularly in the field ofdemurrage obligations under a charterparty. The question whether a term as set out in MrEckersley’s award or in substantially similar terms ought to be implied is not susceptible ofdetailed analysis. It is a matter of first impression. In my judgment, Mr Eckersley’s descrip-tion of the basic purpose of the relevant contractual provision is manifestly sound. Thesenselessness and wastefulness of requiring the vessels to return to Sandheads after comple-tion of loading at Saugor in order to give notice at a place substantially further away from thedischarging port is obvious. In my view, reasonable men versed in the shipping business, andfaced in the real commercial world with the question posed in the two arbitrations, wouldundoubtedly have said: ‘Yes, of course, the vessels need not undertake an 80 or 100 milesdeviation in order to give notice of readiness; they may give notice of completion of loadingif the transhipment is effected at a place closer to Calcutta.’ The term implied by MrEckersley is in my judgment so obvious that reasonable men, circumstanced as the partieswere, would without doubt have assented to the overlooked and unexpressed term set out inMr Eckersley’s award.’’

The business efficacy approach of the arbitrator and judge was sensible; it may bethat a similar approach (also the approach taken by the umpire and judge in The‘‘Golfstraum’’) will lead eventually to the implication of a term in respect of the


19

provision of a berth by the charterer in a port charterparty, when a vessel gets asclose to the port as she can.

13. It may appear surprising that the courts have been so sluggish and slow regard-ing developments in the ‘‘arrived ship’’ concept as applied to a port charterparty.The words of Lord Justice Shaw in the Court of Appeal Maratha Envoy19 judgmentreflect the thoughts of many commercial persons:

‘‘An intelligent layman who had occasion to study the long and tortuous history of judicialwrestling with the legal concept of ‘an arrived ship’ might be forgiven if he expressed somewonderment as to what it was that had caused so much difficulty and disputation. If heventured to seek an explanation he might come to the conclusion that in applying itsprinciples to the complexities of maritime commerce the law has been slow to adapt itself topractical advances in maritime traffic. Thus in times past a trading vessel could offer noassurance that she would be able to discharge her cargo at a particular port until she hadreached a safe harbourage within the confines of that port. It was reasonable that she shouldnot be regarded as an arrived ship while substantial hazards still stood between her and theberth where her cargo was to be discharged. In the present day shipping is not dependent onfair weather and favourable winds. The master of a vessel can now be confident of makingport at a prescribed time when he is still far from it.

The law does not at once react to or reflect such vital changes. The time lag is no doubtinevitable. It may even be salutary if not too long extended, for changes in legal principles intheir application to practical affairs are likely to result in confusion and doubt as to the rightsand liabilities of those concerned in those affairs. A cautious advance is calculated to preservecommercial equilibrium, but advance there must be if the law is to operate in conformity withcontemporary conditions.

Inevitably there does come a time when the gap must be closed if incongruities andartificialities are not to develop and persist so as to give rise to absurdities and injustices. Thecourts must then re-examine the concept and formulae which have become entrenched in amercantile law. This may reveal that while established principles are properly maintained,their application and operation must be given a different impact from that which has hithertoprevailed.’’

The application of the above surely leads to a conclusion that a vessel becomes anarrived ship in the case of a port charterparty when she has completed the seapassage, is at or off the port and at the immediate and effective disposition of thecharterer, it being irrelevant as to whether or not she is in or outside certaingeographical, administrative, legal or fiscal limits of the port. Such a test is thesimplest and easiest to apply when considering if a vessel has arrived. While LordDiplock made much about the essential characteristics of a voyage charterparty inthe Oldendorff, and divided the adventure into four successive stages (pure pedantry,by the way, to a commercial shipping person), the essence surely has to be thecarrying voyage, viz, the voyage of the vessel to the place specified in the charter-party. A coach and four can be driven through Lord Diplock’s assertion that thecarrying voyage only terminates ‘‘in the port’’; the carrying voyage surely terminateswhen the vessel anchors at the usual waiting place when she can go no furtherthrough no failure on her part, it being irrelevant whether some commerciallyartificial line (fiscal, legal or administrative port limit) lies a few miles on one sideor the other of the usual waiting place for the port in question.

19. [1977] 2 Lloyd’s Rep. 301.

20


In The ‘‘Maratha Envoy’’ the reasons given by Lord Diplock for the rejection ofthe Oldendorff test were:

(a) The provision of legal certainty.(b) Freight rates are, or can be, adjusted to reflect the risk of congestion.(c) The Johanna Oldendorff test has not proved difficult of application.(d) The risk of waiting due to congestion can be taken care of by an appro-

priate type-added clause, many of such now being standard form.

Dealing first with the certainty aspect, there is no doubt that commercial menwish for this and do not want the law changed that frequently. However, when thelaw changed from the commercial area to the Oldendorff test the change tended tolead to some uncertainty in deciding whether or not ships had arrived, simplybecause the Oldendorff decision did not go far enough. Lord Diplock puts it too highwhen he states that the commercial area test had turned out to be obscure anddifficult to apply: it may have been commercially unjust but it was sometimes easierto apply than the test established in the Oldendorff. It is ironic that his lordship statedthat the purpose of the Oldendorff was to replace the commercial area test to providegreater legal certainty but then baulked at going on to adjust the Oldendorff test toproduce even greater certainty. Even though only a few years separated the Old-endorff and Maratha Envoy decisions, it is a pity that the House of Lords did not havethe vision to follow through and to make the ‘‘arrived ship’’ test as simple andcertain as reasonably possible.

Regarding the inter-relationship between freight rates and demurrage, his lord-ship surely took an unrealistic approach. The fact is that both freight and demurragerates tend to move together according to the state of the market and cannot be usedin the bargaining manner postulated by Lord Diplock (freight rate up to coversufficiently the expense of waiting at the owner’s risk, and down if the charterertakes the waiting risk). Owners do not calculate their freight rate on the suppositionthat laytime will not count at the loading/discharging ports. Further, as opposed toliner terms where the owner has to find a berth, a voyage charterparty makes itincumbent on the charterer to provide a berth and to take the risk of obtaining such.Before the law lords speculate upon commercial matters as they stand it might bebetter if they took stock of the current realities of commercial life.

The reason regarding the Oldendorff test not having proved difficult of applicationhas not been supported in practice; see paragraph 14 below, et seq. on this aspect.Arbitrators have had problems put to them in this respect and, in many of thosedisputes, considerable time and expense was expended in searching for and provid-ing evidence in order to attempt to show that the vessel was in or outside of theport.

In respect of the contention that the risk of congestion be transferred to thecharterer by way of a time lost waiting for berth, or other provision, the answer mustbe that, on a principle which applies to every port voyage charterparty, the lawshould be simple, certain and commercially just, so as not to necessitate the for-mulation of special clauses to compensate an owner for the time that his vesselexceeds the contractual periods laid down for the loading and discharging of cargo.It is because the law has not been commercially just in respect of the ‘‘arrived ship’’


21

concept that owners have been forced into seeking special provisions to compensatethem for the time that their money-making chattels are lying idle at anchoragesbecause charterers are not able to provide loading/discharging berths. It is surelybetter that the law should be simple and commercially just, leaving the parties tocontract out if they so desire, rather than the law be commercially unjust with theparties having to negotiate a clause (sometimes in difficult economic circumstances)in order to achieve commercial justice.

It is mentioned that the law of some other maritime nations favours the simpleapproach. For example in New York The ‘‘Polyfreedom’’ has won the day (seeparagraph 10 above) and in Hamburg (now expanding in the maritime arbitrationfield) arbitrators have decided that if a vessel has to wait for a loading/dischargingberth it does not matter at all whether she anchors outside or within the limits of aport, the real importance of which often cannot be realised, provided that the vesselis able to proceed as quickly as possible to the nominated loading/discharging berth;see Lloyd’s Maritime and Commercial Law Quarterly, May 1986, page 251, ‘‘Laytimeproblems and comparison of law’’ by Dr Johannes Trappe. Perhaps, in due coursethe House of Lords will get an opportunity to reconsider the matter and, hopefully,it will adopt the simple approach of the Court of Appeal in The ‘‘Maratha Envoy’’and that of arbitrators in Hamburg and New York.

DIFFICULTIES IN THE APPLICATION OF THE ‘‘WITHINTHE PORT ’’ OLDENDORFF TEST

14. In The ‘‘Maratha Envoy’’18 the House of Lords considered that the Oldendorff 10

test had not proved difficult of application. In practice matters have worked theother way in that there have been a good many arbitrations where the Oldendorff 10

test, apart from resulting in illogicalities (see above, paragraph 10) has poseddifficulties. The ‘‘Agamemnon’’ arbitration, (see paragraph 10 above),20 although nota commercially sound decision, was not difficult of resolution because of the legallimits of the port being capable of definition. However, in the later Anco Eliasarbitration21 the matter was not so simple, the port in question being Alexandria.The facts were as follows:

(a) The vessel arrived at the outer anchorage off Alexandria on 30 December;she anchored there (about two miles north of Great Pass Beacon) becauseof severe congestion arising from limited discharging facilities. This was theusual waiting place for vessels awaiting discharging berth when such berthswere unavailable by reason of congestion.

(b) The outer anchorage was outside the limits of the port, as described in The‘‘Mediterranean Pilot’’. In the Pilot these limits are defined as administrativelimits.

(c) There were no bye-laws or statutes defining the legal administrative orfiscal limits of the port of Alexandria.

20. 1974.21. 1977.

22


(d) The harbour master did not regard the statement in the Pilot as accurate;he considered his administrative control extended beyond those limits.

(e) The port authorities exercised de facto administrative control over the areawithin which the Anco Elias was anchored. Further, there was no rigidouter limit to this area of control within which vessels could be ordered toanchor; it varied with the number of vessels waiting for berths.

(f) There were statutory provisions which controlled the movement of vesselsafter their arrival. By ministerial decree all ships coming within the 12-mileterritorial limit of Egypt, bound for Alexandria, were subject to control andinspection by the Alexandria Port Authorities when they came within 10miles of Great Pass Beacon.

The arbitrator decided that the vessel had arrived at Alexandria when she reachedthe outer anchorage, albeit that she was outside the administrative limits as definedin The ‘‘Mediterranean Pilot’’. He relied upon the words of Lord Reid (see paragraph9, earlier) regarding the area within which a port authority exercises its powers incoming to his decision that the vessel had reached the agreed destination ofAlexandria.

The decision was commercially sound and one that the arbitrator was able tomake because of the uncertainty regarding the legal limits of the port of Alexandria.In such cases, where there is uncertainty regarding the legal limits of a port,commercial arbitrators tend to take a broad view and to decide that the vessel hasarrived at the port so long as she is waiting off the port at the place where vesselsusually wait for a berth and can proceed no further because of the lack of a berth.If it can be shown that the port authority exercises administrative control over thearea in which the vessel lies (as in The ‘‘Anco Elias’’ arbitration21), then an arbitratoris fully justified in concluding that the vessel has reached the agreed destination.

Of course, there can be argument as to what is meant by administrative controlas exercised by a port authority, bearing in mind factors such as pilotage, anchor-ages, advice and/or orders to vessels from the port authority, etc. The words of LordReid, that these powers which regulate the movement and conduct of ships afford a goodindication of when the port authority exercises its various powers, for the purposeof deciding whether or not a vessel is within the port, are not always as clear andunambiguous as he imagined. It would have been so much simpler if the Olden-dorff22 ratio had not been restricted to the vessel having to be within the port.

The ‘‘Torm Estrid’’ arbitration23 followed soon after The ‘‘Anco Elias’’ arbitration21

and was, again, concerned with a large port—this time, Leningrad. The chartererscontended that, since the vessel was anchored off the pilot station and/or so-called‘‘receiving buoy’’ some 24 miles off the inner port and well outside the commerciallimits of the port, the vessel had not reached the port of Leningrad. However, theevidence showed that the port authority (Port Control Service) exercised controland jurisdiction over the area within which the vessel lay to regulate and order themovements of ships and their conduct, and the arbitrator accepted this as satisfying

22. [1973] 2 Lloyd’s Rep. 285.23. 1978.

Para. 14DIFFICULTIES OF ‘‘WITHIN THE PORT ’’

23

the Oldendorff22 test so as to hold that the vessel had reached the agreed destination.The arbitrator summed it up by stating:

‘‘There can be no doubt that on any objective test any area over which the Port Authorityexercises control in such direct manner must be deemed to be an area within port limits,especially so in the case of the Soviet Union where public authorities exercise quasi-govern-mental powers.’’

Here again, the arbitrator was able to use the extent of the port authority’s controlto circumvent the argument that the vessel had not arrived because either she wasoutside certain limits or the limits were vague and uncertain.

Because The ‘‘Anco Elias’’21 and ‘‘Torm Estrid’’23 arbitrations appeared to bedecided correctly many persons might think that the Oldendorff22 test is satisfactory.However, even though the arbitrations were probably decided correctly it has to beremembered that it is costly and time consuming to get the requisite evidence andto fight arbitrations. Neither of those arbitrations would have been necessary if theHouse of Lords had plumped for the simple test advocated by the vast majority ofshipping commercial persons, namely, completion of the sea passage and at theimmediate and effective disposition of the charterers.

Many other arbitrations have been fought on the same point over the years, someof them going in favour of the charterers because the vessel was not within the legallimits of the port; there have been a good many arbitrations which have requiredconsiderable research in order to establish whether or not the vessel was within theport.

15. The ‘‘Gundulic’’24 is an interesting arbitration regarding the Oldendorff22 test; itconcerned the South American port of Necochea. The legal arbitrator (not theauthor) was faced with the problem of the vessel being anchored in the place wherevessels normally wait for a berth but there being conflicting evidence regarding portlimits, controls, etc. The relevant factors in favour of the vessel having arrivedwere:

(a) There was a defined area, within a radius of 1.5 miles from the southernbreakwater of the harbour entrance, which was recognised by the portauthorities as ‘‘Necochea Roads’’, within which pilots embarked and dis-embarked and from which pilotage into the protected harbour wascompulsory.

(b) When vessels arrived in Necochea Roads they were considered by the portauthorities as ‘‘on turn’’ for the granting of a berth.

(c) Contrary to what was stated to be the practice in the Centrade NavegacionTransatlantico (CNT) Year Book for 1973, free pratique was granted to thevessel by wireless upon her arrival at the anchorage.

(d) Frequent references in the contemporaneous documents to ‘‘NecocheaRoads’’ or ‘‘the roads of the port’’ (as being a recognised geographicalarea).

24. 1980.

24


(e) According to the owners’ local Argentine agents, ‘‘ . . . the anchorage zoneat Necochea Roads was definitely considered by the Port Authorities withinthe legal, fiscal and commercial limits of the Port . . . ’’

On the other side of the coin the relevant factors were:

(a) There was no physical geographic feature which defined the extent ofNecochea Roads and the only geographical enclosure was the harbourwithin the twin breakwaters.

(b) The local chart did not define or even mention ‘‘Necochea Roads’’, butreferred only to the area within the breakwaters as the ‘‘Puerto’’ and‘‘Antepuerto’’.

(c) The local South American Pilot (10th edn, 1959) referred to the port ofNecochea as being protected by two breakwaters, and referred to the factthat in certain weather conditions it was ‘‘ . . . difficult and sometimesimpossible to enter the port’’.

(d) No charges were levied by the port authorities on vessels lying at anchor inthe roads, and ‘‘port services’’ were only available to vessels within theenclosed harbour.

(e) The CNT Year Book for 1973 described the port as being protected by thetwin breakwaters, and stated (inaccurately as at March 1977) that althoughfree pratique could be given in the roads it is ‘‘now given only whenalongside or in the pool’’, and finally stated that ‘‘ . . . shippers consider theOuter Roads as open sea and will not accept Notice of Readiness until thevessel enters the port’’.

The arbitrator said that he did not find it easy to decide whether or not theanchorage in Necochea Roads was within the port of Necochea. With some hesita-tion he concluded that the anchorage was within the port for the purpose ofdetermining whether the vessel was an arrived ship. He gave little weight to theexpressions of opinion by interested parties or to references to the ‘‘port’’ in docu-ments where the word may have been used as synonymous with ‘‘harbour’’ or‘‘docks’’ without the present problem being in mind. He considered the mostimportant fact to be that there was the required defined area, referred to as ‘‘Neco-chea Roads’’ and within which the port authorities exercised a degree of control, onarrival within which vessels were allocated their berthing turn, where ‘‘free pra-tique’’ may be granted, and within which the port pilots will embark for thepurposes of compulsory pilotage into the protected harbour. It seemed to him thatin so deciding the case he was following the approach of Lord Reid in The ‘‘JohannaOldendorff ’’25 where his lordship considered that the exercise by the port authorityof powers to regulate the movement and conduct of ships afforded a good indicationof the limits of port.

The arbitrator drew some support for his decision from the previous cases ofLeonis Steamship Company Ltd. v. Rank Ltd.26 (the vessel was held to be within thecommercial area of the port of Bahia Blanca while at anchor in the River Parana in

25. [1973] 2 Lloyd’s Rep. 285.26. [1908] 1 K.B. 499.


25

the usual place where vessels lay while awaiting a berth at the loading pier) and The‘‘Delian Spirit’’27 (the vessel was within the Black Sea port of Tuapse when anchoredin the roads in a place about one and a quarter miles from the loading berth whichwas one of four within a harbour protected by breakwaters).

It is interesting that the legal arbitrator decided as he did since it is thought thatsome other legal arbitrators might have decided the case differently. It is submittedthat the arbitrator was correct in deciding that the anchorage was within the porteven though the case could be described as marginal. The fact that the port wassmall made it easier for the arbitrator to arrive at his decision and, like the arbi-trators in The ‘‘Anco Elias’’28 and ‘‘Torm Estrid’’,29 he was able to pray in aid thewords, ‘‘powers which regulate the movement and conduct of ships’’ from The ‘‘JohannaOldendorff ’’25 in support of his decision.

16. Two arbitrations reported in 1985 were concerned with the problem of thegeographical arrival of a vessel in circumstances where the waiting places were manyhundreds of miles from the actual loading ports. Both related to the ArabianGulf.

In the first arbitration30 the vessel loaded a cargo at a European port for dischargein Iran; the charterparty called for discharge at Bandar Abbas or Bushire and thelatter became the nominated port when the vessel passed Suez. The charterpartyincluded a Wipon (whether in port or not) provision so that it was not, strictlyspeaking, a port charterparty; however the arbitration is of interest, in a portcharterparty context because of the approach of the arbitrators to ‘‘Wipon’’ and‘‘the usual waiting place’’ as per The ‘‘Johanna Oldendorff ’’. It also has relevance tolater paragraph 29 which considers ‘‘Wipon’’. The vessel arrived at Bandar Abbas inSeptember 1981, anchored there, and the master cabled an intended notice ofreadiness. Eventually, the vessel joined a convoy for Bushire late in November 1981and she reached Bushire Roads in early December, berthing a few days later andcompleting discharge towards the end of December.

The owners brought a claim for demurrage and argued that the vessel was an‘‘arrived ship’’ when she had reached Bandar Abbas even though the contractualdischarge port of Bushire was almost 400 miles distant. The owners submitted that,although the vessel was not then at the nominated discharge port, she was ready todischarge and fully at the disposal of the charterers; therefore, two out of three testsderived from The ‘‘Johanna Oldendorff ’’25 were satisfied. The third test (the physicalarrival at the contractual port of discharge) was, according to the owners, displacedby the operation of clause 22 of the charterparty which stipulated that a notice ofreadiness could be tendered ‘‘whether in port or not’’ (‘‘Wipon’’).

The owners argued that the Wipon stipulation operated in the very specialcircumstances extant at Iranian ports at that time to make valid a cabled notice ofreadiness tendered by the master in September. They further contended that thosesame circumstances made Bandar Abbas the ‘‘usual waiting place’’ for vessels going

27. [1971] 1 Lloyd’s Rep. 506.28. 1977.29. 1978.30. LMLN 143—25 April 1985.

26


to Bushire. The owners also argued that there was no evidence put forward by thecharterers to show that the vessel was waiting for a convoy. It was plain, said theowners, that the vessel was not waiting for any purpose of theirs.

It was decided by the tribunal that, by agreeing to go to Bushire (which was notdescribed as a safe port in the charterparty) the owners held out that they had madeall proper enquiries on their own initiative as to the navigational and like problemswhich would attend the voyage from Europe to Bushire, and that they accepted fortheir own account the risks, particularly of delays, arising from such a voyage—savewhere protected by exception clauses or if there were a relevant default by thecharterers. The general situation in Iran at that time was well known and the ownersought to have been aware that some sort of convoy system was in operation. Onproper enquiry, they would or at least should have discovered the edict of theIranian Ports and Shipping Organisation which provided:

‘‘We hereby nominate Bandar Abbas as ‘Mother Port’ and it is required that all ships carryingcargoes for Iranian Ports, on passing Ras al Kuh, contact Bandar Abbas in order that theymay be allocated an anchorage position within Bandar Abbas port limits. The diversionthereafter of any vessel to Bushire . . . will take place according to Ports and ShippingOrganisation planning and programme schedules.’’

The arbitrators decided that the wait at Bandar Abbas could only be regarded asan interruption to the voyage on which the vessel was engaged, a voyage which wasonly completed when the vessel arrived at Bushire Roads. A place which was almost400 miles distant from the port of destination could not possibly be held to bewithin the ambit of Wipon. If it were to be the place at which a valid notice couldbe given, that could only be achieved by very clear and special wording in thecharterparty.

The main reason for rejecting the owners’ case turned on the arbitrators’ analysisof why the ship waited at Bandar Abbas. The owners’ statement that the wait wasnot for their purpose could not be accepted. The vessel was plainly waiting to joina convoy to go to Bushire. That was the very convoy system which the owners oughtto have known about, and in all probability did know about. The vessel could notcomplete her voyage until she was permitted to join a convoy. That was as much ahazard of the voyage falling to the owners’ account as any other awkward naviga-tional impediment which could arise, such as a mishap blocking the Suez Canalshortly before the vessel intended to transit it. Clause 22, and in particular theWipon aspect, related only to the port of Bushire and to the normal waiting placebefore entering that port which was Bushire Roads.

In addition, the arbitrators considered that Bandar Abbas, despite the Port andShipping Organisation’s edict, could not be viewed as the ‘‘usual waiting place’’ forBushire in the sense acquired by that particular phrase in The ‘‘Johanna Olden-dorff ’’.31 In colloquial language it would have been natural to have referred toBandar Abbas Roads as the required waiting place for a vessel wishing to go toBushire when discussing how the Iranian naval convoy system operated. But thatdid not elevate the status of Bandar Abbas Roads to being the ‘‘usual waiting place’’for Bushire in the legal sense which attached to the phrase for notice of readiness

31. [1973] 2 Lloyd’s Rep. 285.


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purposes. Accordingly the owners’ claim failed. It is submitted that a differenttribunal might well have taken a different approach when analysing the combinationof ‘‘usual waiting place’’, ‘‘Wipon’’, and the then edict of the Iranian Ports andShipping Organisation.

In the second reported 1985 arbitration32 the vessel was chartered on the Asba-tankvoy form in 1982 for the carriage of crude oil from Kharg Island to India. Shetendered a notice of readiness at Sirri Island (some hundreds of miles from Kharg)where she anchored for four days before proceeding to the loading terminal atKharg Island. The owners contended that the time spent at anchor at Sirri shouldcount as laytime on the basis that the anchorage at Sirri Island was a customaryanchorage for the loading port in accordance with clause 6 of the charterpartywhich read: ‘‘Upon arrival at customary anchorage at each port of loading . . . theMaster . . . shall give the Charterer . . . notice by . . . and laytime . . . shall com-mence upon the expiration of six hours after receipt of such notice . . . ’’

It was decided by the tribunal that under the terms of the charterparty the actualsteaming time between Sirri and Kharg could not count as laytime but that therewas no doubt that the regulations of the Iranian authorities governing the movementof vessels through the Arabian Gulf to the terminal at Kharg Island rendered theanchorage at Sirri Island a ‘‘customary anchorage’’ for Kharg Island so that theowners were entitled to count the time spent at Sirri Island as laytime after the sixhours’ notice time had run out. It would appear that the arbitration turned verymuch on its own very special facts (Iraq/Iran war and Iranian regulations) since,otherwise, it is difficult to see how an anchorage at Sirri Island could be a customaryanchorage for another loading port several hundred miles away.

In a much later reported arbitration, LMLN 274—5 May 1990, the vessel waschartered on the Ferticon form to carry a cargo of bulk supplies to ‘‘1/2 safe ports/safe anchorages East Court India . . . in charterers’ option’’.

The charterers nominated Haldia. The vessel arrived at Sandheads and gavenotice of readiness. One of the issues in the arbitration was whether Sandheads wasa place where the vessel could give notice of readiness.

It was held that Haldia was a comparatively new port which was developed duringthe 1970s on the banks of the Hooghli and Haldia Rivers. It was some 120 km fromCalcutta by road. Calcutta and Haldia were treated as two separate ports notwith-standing the fact that following a Government of India Notification dated 26February 1977 the operation of Haldia came under the management of CalcuttaPort Trust (‘‘CPT’’).

The chart indicated a point outside the Haldia lock as Haldia anchorage. Thecharterers contended that the Haldia anchorage was that point just outside the lockgates and that as Sandheads was outside the limit of the jurisdiction of CPT, a vesselcould only be considered to be at the Haldia anchorage when outside the lock gates.However, the evidence showed that the anchorage was only used for temporarypurposes, such as waiting to enter the locks, or in cases of emergency such as forbunkers or supplies or medical assistance. Vessels did not customarily wait there toenter the port in the event of congestion.

32. LMLN 155—10 October 1985.

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The evidence showed that on arrival at Sandheads vessels gave notice of readinessand immediately came under the control of the port authority (CPT), which eitherarranged for a pilot to bring the vessel into dock or gave orders regardinganchoring.

It was not disputed that vessels did customarily wait at Sandheads, but thecharterers had contended that at some ports of the world it was not sufficient for avessel to reach the place where vessels customarily waited outside the port limit.The charterers had contended that Haldia was one such port, and that as Sand-heads was outside the port limits, the vessel was not an ‘‘arrived ship’’.

The evidence showed that CPT, as far back as 1977, did not consider the Haldiaanchorage to be the point just outside the locks. It took about two hours to reach theport from the anchorage. Accordingly the anchorage had to be where Sandheadswas shown on the chart.

All the evidence indicated that the commercial practice that had developed wasfor vessels to arrive at Sandheads and there give notice of readiness.

Accordingly, the vessel was an ‘‘arrived ship’’ when she gave notice of readiness atSandheads.

In LMLN 409—8 July 1995 (a 1993 arbitration) the vessel was chartered on theEuromed form as amended. Notice of readiness was tendered at the first loadingport, Rosario, as soon as the vessel reached the Zona Comun anchorage in the lowerreaches of the river at 14.40 hours on 30 May. The owners submitted that laytimebegan to run from 06.00 hours on 3 June. The Zona Comun was the anchoragewhere vessels were customarily held awaiting berths when there was congestion atthe up-river loading ports of San Lorenzo and Rosario.

The charterers contended that the NOR as tendered by the vessel whilst in theZona Comun was invalid, and that no valid NOR had been tendered at the loadingports. They argued that at the time NOR was tendered the vessel was outside thelimits of the nominated loading port and thus failed to meet a fundamental require-ment of the ‘‘arrived ship’’ criterion. They also argued that at the time the NOR wastendered certain essential requirements were absent.

It was held that so far as the charterers’ first contention was concerned, the factthat Zona Comun was outside the Rosario port limits was clear on the evidence.What was really in contention was the effect that that factor might have upon the‘‘arrived ship’’ doctrine (i.e. the Johanna Oldendorff test). Although the general rulewas that, for a vessel to be treated as having arrived at her destination she had to bewithin the port limits, that had to be understood as being subject to an exceptionwhere the Port Authorities had designated another area within their administrationwhere vessels had to wait before proceeding to a berth. Such interpretation of thelaw as it stood on that point had been widely accepted in commercial arbitrationsand made good commercial sense where, as in the present case, the vessel becameeffectively an ‘‘arrived ship’’ when waiting off the port at a place where it wascustomary for vessels to be held pending the availability of a berth, and when it hadbeen shown that the designated loading port exercised administrative control overthe waiting area.

This arbitration has relevance to earlier paragraph 9 (Lord Reid—‘‘Some powerswith regard to pilotage and other matters may extend far beyond the limits of the


29

port. But those that regulate the movements and conduct of ships would seem toafford a good indication’’) and also earlier paragraphs 14 (The ‘‘Anco Elias’’ and‘‘Torm Estrid’’ arbitrations) and 15 (The ‘‘Gundulic’’ arbitration) and also to later,paragraph 18, where an arbitrator in an earlier 1988 arbitration took the view thata vessel at the Zona Comun anchorage was not an arrived ship in respect of Rosario:however, it may well be that the administrative limits of Rosario altered between1988 and 1993.

The arbitrations referred to above, also those referred to earlier in paragraphs 14and 15 above, more than suggest that arbitrators continued to have problems put tothem regarding the geographical arrival of vessels under port charterparties, thusdefying the forecasts of the law lords, in the Johanna Oldendorff and the MarathaEnvoy cases that there should be no real difficulty in deciding whether a usualwaiting place was or was not within the port.

17. In more recent times there has been a reduction in the number of disputescoming before arbitrators in respect of a port charterparty and reaching the agreeddestination. That results from the clarification of legal limits of ports by locallegislation and/or port authority directions and/or arbitrators’ decisions and also byparties to voyage charterparty contracts agreeing to clauses which allow a notice ofreadiness to be given irrespective of whether or not the vessel has reached a position‘‘within the port’’ as per the Johanna Oldendorff/Maratha Envoy decisions. Examplesof notice of readiness clauses which allow notices to be given as soon as a vesselcompletes her sea passage and has to wait at a place where vessels usually waitbefore proceeding inwards to the loading/discharging berth are:‘‘Notice of readiness to be given . . . whether in port or not . . . whether in free pratique ornot . . . ’’

see later in Chapter 2 for detailed consideration of whether in port or not(Wipon).

Having said the above it is worth considering the arbitrations in LMLN 636—31March 2004, LMLN 647—1 September 2004 and LMLN 672—17 August 2005,all of which were concerned with arrival in the geographical sense in respect of aport charterparty. In the first arbitration the vessel was chartered on a Voyage ScrapForm for a voyage with scrap to Masan, Korea. One of the disputes concerned thenotice of readiness at the discharge port of Masan.

Clause 20 of the charterparty read:‘‘At each port, time to count from 8:00 am on the first working day after due notice given.Notice of Readiness to be given in writing within office hours from 09.00–17.00 Mondaythrough Friday . . . If because of congestion vessel unable to enter port or designated berththe Notice of Readiness to be tendered by cable from customary waiting anchorage . . . ’’

The owners said that notice was given at 08.47 local time on 17 May. The chartererssaid, first, that at that time the ship was not at a place where notice could properlybe given. She was then at an anchorage area near the pilot station outside the port,whereas, according to the Guide to Port Entry, a ship was only considered as‘‘arrived’’ when at the quarantine anchorage. The charterers’ second argument wasthat notice of readiness was not, in any event, actually given. The alleged notice waspurportedly tendered before 09.00 and was thus invalid under clause 20. Moreover,

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a valid notice could only be given by cable, and the document in question wasplainly not that.

It was held that, as to the charterers’ first point, clause 20 only required that anotice be given from the customary anchorage in the case of congestion. It wasplain, long before the vessel’s arrival, that she would have to wait some days due tocongestion, and there was clear evidence that the ship was actually ordered to waitat the anchorage by the port authority due to congestion. In the tribunal’s view thatanchorage was to be taken as ‘‘customary’’ for the purposes of clause 20, and thefact that it might be outside the port was irrelevant.

As to the charterers’ second point, it overlooked the fact that at almost 09.20 localtime the master had sent, via Inmarsat, a notice of readiness to all concerned. Aspreviously indicated, an Inmarsat electronic communication satisfied the ‘‘by cable’’requirement in clause 20. Thus notice was given within office hours and in accor-dance with clause 20 of the charter. The point is not really relevant to this chapter;it is more concerned with Chapter 6 and will be referred to again in that chapter.

The second arbitration in LMLN 647—1 September 2004 is particularly inter-esting, not least for the unusual contention of the owners that laytime had notcommenced. The vessel was charterered on an amended Sugar Charterparty 1969for a voyage from Santos or Paranagua to Banjul and Nigeria with a cargo of baggedsugar. There were two issues relating to the commencement of laytime, one at thefirst discharge port of Banjul and the other concerned the second discharge port ofLagos. The port charterparty provided for notice of readiness to be given ‘‘from thecustomary waiting place in ordinary office hours’’.

In the first issue the owners’ case was that a valid notice had been given at 03.50on 5 September after the vessel had anchored at a position fairly close to the fairwaybuoy marking the approach to Banjul. The charterers said that the vessel did notcomplete her approach voyage until she arrived in the roads at 12.30 on 5 Sep-tember and then proceeded to the customary anchorage at the port which appearedto be close to the cargo berths, at one of which the vessel eventually discharged.They said that a notice of readiness could not have validly been given before 12.30on 5 September. The owners gave no explanation as to why the vessel might haveanchored in the vicinity of the fairway buoy for several hours but produced a copyof the relevant port guide which appeared to suggest that the vessel would have beenable to take a pilot from the point where she first anchored at 03.50 and on thatbasis they said that the vessel was an arrived ship. The charterers produced astatement from the agents at the port which said that the point at which the vesselpurported to tender notice of readiness was 27 nautical miles from the dischargingberths. They also referred to the statement of facts signed by the master whichrecorded the time of the vessel’s arrival at the roads but did not mention the vesselanchoring at any earlier point.

It was held that the notice of readiness was good at 12.30 on 5 September, whichwas the time the vessel arrived at the roads. Even if she did anchor at 03.50 it wasnot at the anchorages for Banjul described in the port guide and the agents had saidin a fax addressed to the charterers that the vicinity of the fairway buoy was not thewaiting place for Banjul. Accordingly, if the vessel did anchor for the first time at03.50, she was not then at the customary place for ships waiting for a berth at


31

Banjul, which was the requirement of the charter. The tribunal also pointed outthat, as had been said in a number of cases, before presenting a notice of readiness,the ship had to proceed as close to her berth as possible, from which point herproceeding further would serve no useful commercial purpose. In the present casethere was nothing to suggest that the vessel was in any way prevented from proceed-ing direct to the customary waiting place, whether because of a restriction on nightmovements or because of orders from the port authority. In other words, ownerscannot advance the position of arrival artificially by anchoring at any place withinthe port limits; the vessel must be at the customary waiting place or as close to theberth as practically possible, see also later LMLN 615—12 June 2003 in Chapter 2,paragraph 29, regarding this aspect.

The second issue was whether the owners had a claim for detention for the periodthe vessel was waiting off Lagos or whether a notice of readiness that was given waseffective and therefore laytime and thereafter demurrage ran during the period ofdelay.

Clause 22 of the charterparty provided:

‘‘ . . . master had the right to tender notice of readiness from the customary waiting place inordinary office hours, notice of readiness to be tendered to agents . . . whether in berth ornot.. . .

At discharging port(s) in the event of congestion master has the right to tender his notice ofreadiness by cable/telex in ordinary office hours to agents, whether in berth or not, whetherin port or not, whether in free pratique or not, whether customs cleared or not . . . ’’

Clause 24 provided:

‘‘In the event that charterers require the vessel to wait at any time prior to arrival atdestination, owners agree to instruct the master to anchor at any safe place on passage ininternational waters or in charterers’ option at waiting place at discharge port. In respect ofsuch charterers are to pay owners US$5,500 gross of commission per day or pro rataexcluding bunkers but less commission. However, if the vessel waits at a place where thevessel is able to tender her notice of readiness, then charterers may elect to commence laytimeas per charterparty.’’

The figure of US$5,500 payable under clause 24 was considerably higher than thecharterparty demurrage rate. The question was whether the owners were entitled torely on clause 24 in order to claim damages for detention.

On arrival off Lagos on 23 September the master had given notice of readiness.However, the owners now said that the notice was ‘‘nothing more than a knee-jerkreaction’’ by the master and was ineffective to trigger the running of laytime becausethe vessel was not at the time in a position where a valid notice could be given. Thecharterers said that it was a valid notice which triggered the commencement oflaytime.

After arrival off Lagos the vessel was instructed by port control to drift at adistance of 10/15 nautical miles offshore pending further instructions. The masteradvised that the port of Lagos was very congested, with about 50 vessels waitingoutside the port. That message was passed on to the charterers by the owners whosaid that they guessed that the detention rate in the charter should apply for thedelay in berthing. That brought a response from the charterers on 24 September

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saying that they had asked that the vessel tender notice of readiness and that timewould count as laytime.

By 25 October the owners were pointing out that the vessel had been waiting toberth for more than 30 days which they said could not be considered normal waitingtime, especially as they said the delay did not seem to originate from the port beingcongested but from problems on the trading side. The charterers continued to saythat they hoped the vessel would soon berth, but throughout the long delay did notat the time give any real explanation as to whether the delay was purely due tocongestion or whether there were other factors involved. However, by the end of thehearing it appeared that the problem lay simply with the port being congested.

The vessel berthed at 15.15 on 7 November, discharge commenced at 08.00 on11 November and was completed at 13.30 on 21 November. The further delaybetween berthing and commencing discharge resulted from a combination of astrike by truck drivers and no work on a Saturday.

It was held that where the vessel waited was not in international waters and thecharterers gave no specific instruction for the vessel not to proceed to berth.However, clause 24 could be triggered by implicit instructions by which the tribunalmeant that the charterers either did something or failed to do something whichwould have enabled the vessel to proceed to berth. But, even if there were implicitinstructions, the final sentence of clause 24 allowed the charterers to commencelaytime if the vessel was waiting at a place where she was able to tender notice ofreadiness.

On 24 September the charterers had pointed out to the owners that they hadasked for notice of readiness to be tendered. Also, the vessel was waiting at a placewhere she was able to tender notice of readiness. Clause 22 did not require thevessel to be at the customary anchorage, but at the customary waiting place, whichwas a rather wider term. According to the Africa Pilot, in addition to the twoanchorages also referred to in the Pilot, there was even in 1982 a practice for vesselsto be anchoring over 20 miles off-shore to avoid the attention of well-organisedgangs of pirates. The tribunal was aware from its own experience that there stillremained a serious threat of piracy to vessels waiting off Lagos and that it wascommon for vessels not to anchor, which would make them sitting targets, but todrift off-shore with their engines ready should any threat of attack materialise. In thepresent case, the vessel had been ordered to drift 10–15 nautical miles off-shore byLagos port control. Although that was outside port limits as marked on the chart itwas nevertheless an area where the port control still exercised authority. Accord-ingly, when notice of readiness was tendered, the vessel was within an area whichcould be called ‘‘the customary waiting place’’. The vessel had also reached a pointwhere her proceeding further would serve no useful commercial purpose. It fol-lowed that even if clause 24 could be invoked by the owners, nevertheless by virtueof the final sentence, the charterers were entitled to, and did, elect to have laytimecount in respect of the delay and pay demurrage thereafter. There was nothinguncommercial or nonsensical about that, and it is what the parties clearly agreed.

The third arbitration, LMLN 672—17 August 2005 (also referred to later inChapter 6, paragraph 118 regarding estoppel), concerned a number of issues, oneof which was whether notice of readiness was tendered at the discharge port of


33

Fujairah where the charterparty described the place of discharge as ‘‘one safeanchorage Fujairah’’. The vessel was chartered on a Asbatankvoy form from RasTanura to Fujairah with a cargo of butane and involved discharge of the cargo intoanother vessel by ship to ship transfer. Apart from the standard clauses 6 and 9 ofthe Asbatankvoy the charterparty stipulated, by way of Clause M10 (headed ‘‘Light-erage Clause’’) that notice of readiness was to be tendered during daylight hours.

The owners submitted that, as far as commencement of laytime at the dischargeport was concerned, the normal laytime regime set out in clause 6 of the charter didnot apply to ship to ship transfers, which they described as lighterage operations.Instead, they argued that such operations were governed by clause 9 and additionalclause M10.

The vessel had waited for the mother vessel into which she was to discharge hercargo, at anchorage D, the dedicated LPG/LNG anchorage at Fujairah. There wasno evidence as to where the actual transfer took place, but it was probably at thesame anchorage, which was dedicated to LPG/LNG vessels, with the charteredvessel, the smaller vessel, coming alongside the larger vessel.

The tribunal did not believe that the parties intended a separate regime for shipto ship transfers. The charter described the place at which discharge was to takeplace as ‘‘One safe anchorage Fujairah’’. The tribunal would accept the charterers’submission that commencement of laytime for ship to ship transfers was governedby clauses 6 and 9 of Part II of the charter in the same way as would apply if thevessel had discharged alongside. The distinction, which was not applicable in thepresent case, was that in respect of ship to ship transfers, notice of readiness couldonly be tendered during daylight hours. Accordingly, the owners’ argument that thetendering of a notice of readiness and the notice time required by clause 6 was notrequired for lighterage or ship to ship transfers would be rejected.

The owners said that NOR was tendered at 10.45 on 1 June. The charterersdenied that NOR was tendered, and said that even if it had been it would have beenpremature and thus invalid, since the vessel did not arrive at anchorage D until12.00 on 1 June.

It was held that although the tribunal had been given a copy of a printed formdated 1 June, where the blanks had been completed which stated that the vessel wasready to load/discharge her cargo of butane as from 10.45 on that date, it was signedas being received at 07.40 on 3 June. The statement of facts for Fujairah recordedthat NOR was tendered at 10.45 and received at 07.40 on 3 June. It was commonground that at 10.45 on 1 June the chartered vessel was not at any position wherethe printed form of notice could be handed over and thus tendered. Nor had thetribunal been given a copy of any electronically transmitted document, whichannounced the arrival of the vessel at 10.45 on 1 June and her readiness to dis-charge. Nor was there a statement from the master or other evidence from the vesselthat that information was passed orally to the charterers or to anyone, such as themaster of the mother vessel, who might be considered as their agents for the purposeof receiving notice of readiness. The charterers might have been in contact with theport authorities at Fujairah about her arrival, but the port authorities were notthe charterers’ agents for the purpose of receiving such a notice.

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Clause 6 of the charter required notice of readiness to be given when it wasreceived or at least offered. All the tribunal had was the printed form of notice whichalthough dated 1 June recorded that it was received on 3 June. Accordingly, thetribunal found that the owners had failed to prove that a NOR was tendered at10.45 on 1 June.

Even if NOR had been tendered at 10.45 on 1 June it would not have been valid.At that time the vessel had noted ‘‘EOSP’’ (end of sea passage). The charterers hadsubmitted (relying on The ‘‘Johanna Oldendorff’’33 and The ‘‘Agamemnon’’34) that thecarrying voyage did not come to an end until the vessel had finished her voyage andreached a point as close as possible to where cargo operations were to be carriedout.

In the tribunal’s experience, the phrase ‘‘end or commencement of sea passage’’as used in a vessel’s records meant the point in time when the vessel changed hermanning state to or from sea watches to one for entering or leaving harbour. Thephrase ‘‘full away’’ was sometimes used to indicate when the sea passage hadcommenced. In other words it was more to do with who was on the bridge and whowas in the engine room than whether the vessel had reached a particular geo-graphical point. There was nothing in the present case to suggest that the transitionfrom sea watches was linked to arrival at any particular geographical point. Thedocuments showed that there was a considerable length of time between the end orcommencement of the sea passage and the arrival/departure from the berth/anchor-age of the vessel. Anchorage D at Fujairah was a relatively small geographical areawith only sufficient space for six vessels. The tribunal therefore did not accept thatthe end of the sea passage was coterminous with arrival at anchorage D.

In an arbitration award relied on by the owners, it was crucial to the arbitrator’sreasoning that he had found that the end of the sea passage coincided with thevessel’s arrival at the entry buoy to the port in question, which was Ras Tanura. Inthe present case, there was no suggestion that the vessel had reached any suchdefined point one and a quarter hours before she anchored (at 12.00 on 1 June).

Accordingly, no valid NOR was tendered. However, on the authority of The‘‘Happy Day’’,35 laytime commenced when discharge began at 08.05 on 3 June andended with completion of discharge of the cargo of butane at 10.25 on 4 June. In theevent, no demurrage was due to the owners.

The owners also argued that if they were not entitled to demurrage, they wereentitled to claim damages for detention in a similar sum for a failure by thecharterers to procure a berth ‘‘reachable upon arrival’’, as required by clause 9. Itwas also held that since the mother vessel was not at Fujairah when the charteredvessel arrived, there was clearly a breach by the charterers of their obligation underclause 9. The relationship between the ‘‘reachable on arrival’’ provision in clause 9and the commencement of laytime provisions in clause 6 had of course been settledlaw since The ‘‘Laura Prima’’.36 What the law, as it now stood, said was that if the

33. [1973] 2 Lloyd’s Rep. 285.34. [1998] 1 Lloyd’s Rep. 675.35. [2002] 2 Lloyd’s Rep. 487.36. [1982] 1 Lloyd’s Rep. 1.


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ship in question could not give a valid NOR because she could not proceed to herspecified destination, her owners could claim damages. However, if she had arrivedat a place from which NOR could be given, the owners’ remedy was to give noticeand use their laytime. In those circumstances, the owners did not have the option ofclaiming damages instead, but had to give notice.

In the present case, the owners could have given NOR on arrival at anchorage Dat Fujairah, and it was not therefore open to them to claim damages. This issue isalso relevant to Chapter 3 (‘‘reachable on arrival’’/damages) and to Chapter 6(estoppel).

It is mentioned that Charterparty Laytime Definitions 1980, Voylayrules 1993 andthe Baltic Code 2003 (applicable if incorporated expressly into a charterparty con-tract) appear to allow the tendering of a notice of readiness in a port charterpartyeven though the vessel is not ‘‘within the port’’ as per the Johanna Oldendorff/Maratha Envoy decisions, but the matter is not free from doubt. The definitionsread, ‘‘port’’ means an area within which ships are loaded with and/or discharged ofcargo and includes the usual places where ships wait for their turn or are ordered orobliged to wait for their turn no matter the distance from that area. If the word‘‘port’’ is not used, but the port is (or is to be) identified by its name, this definitionshall still apply. The rules read, ‘‘port’’ shall mean an area, within which vessels loador discharge cargo whether at berths, anchorages, buoys or the like, and shall alsoinclude the usual places where vessels wait for their turn or are ordered or obligedto wait for their turn no matter the distance from that area. If the word ‘‘port’’ is notused, but the port is (or is to be) identified by its name, this definition shall stillapply; the Baltic Code has similar wording.

While it is thought that virtually all maritime arbitrators would decide that anyplace where vessels usually wait for a loading/discharging berth would fall within theabove definition/rule irrespective of whether it was not ‘‘within the port’’ as per theOldendorff/Maratha Envoy decisions the matter is not completely free from doubt sothat parties who do incorporate the definitions/rules into their contracts might wellmake it clear, by appropriate wording, that it is in order to tender a notice ofreadiness from any usual waiting place irrespective of it not being ‘‘within the port’’as per the Oldendorff/Maratha Envoy decisions. Perhaps a future edition of Voylay-rules could ensure that the matter is absolutely free from doubt.

A clause which is crystal clear regarding the tendering of a notice of readinessoutside of port limits is clause 17(b) of the Norgrain 89 form which reads:

‘‘(b) Waiting for Berth Outside Port LimitsIf the vessel is prevented from entering the limits of the loading/discharging port(s) becausethe first or sole loading/discharging berth or a lay berth or anchorage is not available withinthe port limits, or on the order of the Charterers/Receivers or any competent official body orauthority, and the Master warrants that the vessel is physically ready in all respects to load ordischarge, the Master may tender vessel’s notice of readiness, by radio if desired, from theusual anchorage outside the limits of the port, whether in free pratique or not, whethercustoms cleared or not. If after entering the limits . . . ’’

This 1989 version of the North America Grain charterparty is an improvement onthe 1973 version of the same form (which reads ‘‘commercial limits’’ rather than

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‘‘port limits’’), see later paragraph 31 for more detailed consideration of the twoforms. It makes sense for parties to agree the kind of clause set out in clause 17(b)of the Norgrain 89 form or to agree a Wipon provision in order to obviate disputesin relation to whether a vessel is ‘‘within the port’’ as per the Johanna Oldendorff/Maratha Envoy decisions. Clause 17(b) of the Norgrain 89 form is to be preferredto the Wipon provision since apart from its cogency and clarity it may avoid the kindof argument displayed in The ‘‘Adolf Leonhardt’’ and an unreported arbitration (bothdiscussed later in paragraph 18) on account of its wording, ‘‘usual anchorageoutside the limits of the port’’. This wording would surely take care of any conten-tion (as made in The ‘‘Adolf Leonhardt’’ and the unreported arbitration) that thevessel was not ‘‘at the immediate and effective disposition of the charterer’’. Yetanother kind of clause seen in some dry cargo voyage charterparties is:

‘‘If berth is not available, notice of readiness to be given when the ship is anchored at waitingberth/place within port limits, or so near thereunto as she may be permitted to approach ator off the port, whether customs cleared or not, whether in free pratique of not . . . ’’

which clause is favourable to owners of vessels.The Australian Wheat Charter 1990 (‘‘Austwheat 1990’’) is also favourable to

owners of vessels, part of which reads:

‘‘If the loading berth is congested on Vessel’s arrival at or off the first or sole port of loadingor so near as she may be permitted to approach, the Vessel shall be entitled to give Notice ofReadiness during ordinary office hours on arrival there, with the effect that laytime counts asif she were in berth and in all respects ready for loading provided that the Master warrantsthat she is in fact ready in all respects. Actual time occupied in moving from place of waitingto loading berth not to count as laytime. If after berthing the Vessel is found not to be readyin all respects to load, the actual time lost between the time of this discovery to the time thatshe is in fact ready to load shall not count as laytime.’’

In addition to being favourable to owners regarding reaching the agreed destinationin respect of a port charterparty the above wording of the Austwheat 1990 is alsofavourable to owners in circumstances where the vessel is later not found readywhen she berths (so that the original notice of readiness is, strictly speaking,invalid). Time will count save for the time lost between the discovery of the unreadi-ness and when that is remedied. This appears to be a commercially fair approach inrespect of time which a vessel uses waiting for a loading/discharging berth. Thepoint just made is, of course, also relevant to Chapter 4 where readiness is coveredin detail.

Charterers in the tanker trade do not appear to take fine points in respect of‘‘within the port’’. Many of the voyage charterparties state (inter alia) that a noticeof readiness shall be given at a ‘‘customary anchorage or waiting place’’ or the‘‘customary waiting place’’ or ‘‘the vessel is lying in the area where she was orderedto wait or, in the absence of any such specific order, in a usual waiting area’’.Although some of these places may turn out to be outside of the legal limits of a portso long as the vessel is at a customary anchorage or waiting place the master isentitled to send a notice of readiness. This is practical and sensible. See also laterparagraph 23, in this chapter, regarding tanker charterparties.


37

AT THE IMMEDIATE AND EFFECTIVE DISPOSITION OFTHE CHARTERER

18. As illustrated in previous paragraphs the main problems arising from the Old-endorff test have been in connection with that part of the test relating to ‘‘within theport’’. Not a great deal has arisen in respect of the other limb of the test, ‘‘at theimmediate and effective disposition of the charterer’’; one reported arbitration,obiter dicta in a High Court decision, an unreported arbitration, and the Kyzikos casewhich went to the Court of Appeal. These are set out below as in the previousedition of this book. Two more recent arbitrations have been reported and areincluded at the end of and as part of this paragraph 18.

In both the reported arbitration and the Kyzikos case the question was raised asto whether or not a vessel was at the immediate and effective disposition of thecharterer when, although she was within the port, tidal factors/weather preventedher from proceeding to a loading/discharging berth. In the arbitration37 the con-tractual discharge destination was Brest. The vessel arrived off the port andanchored in the roads, not being able to proceed to her discharge berth because oflack of water. As a result of neap tides she had to wait a week until she was able toproceed to a discharge berth. The arbitrators decided that the vessel was within theport of Brest when she anchored in the roads (within the fiscal limits of the port asdefined by the authorities) so that she satisfied part of the Oldendorff 31 test; how-ever, they then went on to decide the case against the owners on the basis that thevessel was not at the immediate and effective disposition of the charterers while shewas lying neaped in the roads. They had this to say regarding the second limb of theOldendorff 31 test:

‘‘No detailed guidance was given by Lord Reid, or the other Lords, regarding the fullmeaning of ‘at the immediate and effective disposition of the charterer’; however, it is not difficultto establish what they intended so to mean, by way of considering their remarks in theOldendorff case31; these remarks showed that if a vessel had to proceed 17 miles from theanchorage to the berth such was of no account within the context of ‘immediate and effectivedisposition’, particularly in this day and age when ships can be contacted on VHF and weighanchor rapidly; they remarked that, in such conditions, there was nothing to prevent thevessel weighing anchor and being in a loading/discharging berth within a few hours; theimplication must be that the vessel is capable of moving soon after being ordered so to do.Further, the fact that the vessel was waiting at the usual waiting place indicated that she wasfully at the charterers’ disposal. What one gleans from the remarks of the Law Lords is thata vessel would be at the immediate and effective disposition of the charterer when she iswaiting at the usual waiting place and can move to a loading/discharging berth as soon as sheis called to do so by the charterer. This, in no way, equates with the facts of the instant casewhere the vessel could not move for several days because of the combination of draught andtide; the vessel could not move to the discharging berth and, therefore, could not have been,by any stretch of the imagination, at the immediate and effective disposition of thecharterers.’’

The arbitrators went on to say, by way of emphasis, that it was trite law, in the caseof voyage charterparties, for owners to bear the risk of an delays which occurredbecause of low tides preventing the ship from reaching the loading/discharging place

37. LMLN 18—10 July 1980.

38


absent, of course, any breach of contract by the charterers or any express wordingin the charterparty to the contrary. It may well be that the arbitrators were wrong intheir conclusions since some other arbitrators have been of the view that, oncehaving reached the geographical destination, the risks of weather, tides and othernavigational factors pass to the charterers; in fact, the Court of Appeal took theopposite approach to that of the arbitrators in the 1980 reported arbitration; see The‘‘Kyzikos’’, below.

The Kyzikos decision of Mr Justice Webster38 is of some importance on othermatters such as ‘‘whether in berth or not’’ and ‘‘always accessible’’ which areconsidered later in Chapters 3 and 4. Suffice it to say that, regarding the presentsubject, Mr Justice Webster delivered some obiter dicta in respect of ‘‘at the immedi-ate and effective disposition of the charterer’’ in circumstances where a vessel, afterarriving within the port limits anchored because she could not move into heravailable discharging berth for several days because of fog.

He concluded that even if he was wrong in his decision regarding ‘‘whether inberth or not’’ so that he was dealing with a port charterparty, the vessel was not anarrived ship at the port, within the meaning of Lord Reid’s test in the Oldendorff,31

until she left her anchorage because she was not, until that time, at the immediateand effective disposition of the charterer even though, as the arbitrator had found,the vessel was not being used for the owners’ purposes while being at anchorbecause of the fog conditions. In a later part of his judgment, when considering‘‘always accessible’’, he drew attention to there being no reported case in whichcharterers had been held liable for bad weather in the context of bad weather beforelaytime began (see below on this particular aspect, paragraph 53).

In the Court of Appeal39 it was decided that Mr Justice Webster was wrong; it washeld that once the ship was in the appropriate geographical area and ready in herselfshe was entitled to give a notice of readiness even if she was unable to proceed to aberth by reason of bad weather. The leading judgment was delivered by Lord JusticeLloyd who stated (inter alia):

‘‘I now turn to the second question. Was the vessel at the immediate and effective dispositionof the charterers when she gave her notice of readiness? If not, then the notice would beinvalid and time would not begin to run. This question seems to have occupied more time inthe court below than it did before us in some ways, however, it is the more important of thetwo questions. Mr Eder argues that the vessel could not, as a matter of common sense be saidto be at the immediate and effective disposition of the charterers if she was unable to proceedby reason of fog. The arbitrator had found that the pilot station had closed down. Withouta pilot the vessel was as much disabled as if her steering gear had broken down or her masterand crew were on strike. Even in a port charter, navigational delays are at the risk of theowners. So even if, in a port charter, the vessel would otherwise have arrived, nevertheless ifat the moment of arrival she is unable to proceed to her berth by reason of bad weather sheis not entitled to give notice of readiness. In support of his argument Mr Eder relied on Kellv. Anderson (1842) 10 M. & W. 498, which though an old authority, is, he submits, the onlyauthority directly in point.

I cannot accept Mr Eder’s argument. The conditions which must be fulfilled before a vesselis entitled to give notice of readiness in a port charter are now well-established. First, she


Para. 18IMMEDIATE AND EFFECTIVE DISPOSITION

39

must have arrived at the place within the port where she is at the immediate and effectivedisposition of the charterers. Secondly, she must be ready, so far as she is concerned, to loador discharge her cargo. She need not be absolutely ready, for example, by having all her cargogear fixed up and in position. But she must be capable of being made ready, in ordinarycourse, by the time her cargo gear is needed. If therefore her steering gear were broken down,so that she was unable to get to her berth, or if her cargo gear were broken down, so that shewas incapable of loading or discharging, the second condition would not be fulfilled, and apurported notice of readiness would be invalid. However it is not suggested in the presentcase that the second condition was not fulfilled or that the vessel was not ready in herself. Thesuggestion is that the first condition was not fulfilled.

. . . On the whole matter I think that it ought to be made clear that the essential factor is that

before a ship can be treated as an arrived ship she must be within the port and at theimmediate and effective disposition of the charterer and that her geographical position is ofsecondary importance. But for practical purposes it is so much easier to establish that, if theship is at a usual waiting place within the port, it can generally be presumed that she is therefully at the charterer’s disposal.

I would therefore state what I would hope to be the true legal position in this way. Beforea ship can be said to have arrived at a port she must, if she cannot proceed immediately toa berth, have reached a position within the port where she is at the immediate and effectivedisposition of the charterer. If she is at a place where waiting ships usually are, she will be insuch a position unless in some extraordinary circumstances proof of which would lie in thecharterer.

. . . Mr Eder however submits that the Reid test, in addition to extending the distance from the

actual loading or discharging spot at which the vessel might be said to have arrived, intro-duced a wholly new factor. If his submission is correct, it is now necessary to consider not justthe place where the vessel is anchored, waiting to get into berth, but also the circumstancesprevailing at the moment of her arrival. If the weather is good when she arrives at the ordinaryplace of waiting, so that she could proceed direct to her berth if a berth were available, shecan give a valid notice of readiness. But if the weather is bad, and the pilot station has closeddown, she cannot give a valid notice of readiness until the weather improved even though sheis anchored in precisely the same place.

I do not believe that the Reid test was intended to introduce a new factor into the equation.It is true that Lord Reid speaks of a vessel’s geographical position being of secondaryimportance. But it is still a position which he has in mind. If she is in the place where waitingships usually lie, then she will normally be in that position. In exceptional or extraordinarycases, the proof of which would lie on the charterers, she may be required to be at some otherplace. But nothing in Lord Reid’s speech suggests that if she is where waiting ships usuallylie she may nevertheless not be at the immediate and effective disposition of the charterersbecause of the weather. It was conceded by Mr Eder that a vessel could be at the immediateand effective disposition of the charterers despite a temporary obstruction in the fairwaypreventing her getting to her berth when vacant. I can see no difference in principle betweena temporary obstruction of the fairway and the temporary closing down of the pilot stationby reason of fog or by reason of a strike or for any other reason.

Nor does Lord Diplock’s speech in The ‘‘Johanna Oldendorff ’’ suggest that he had anythingin mind other than arrival at a place as determining whether a vessel has ‘arrived’ or not. TheReid test is, as Lord Diplock says, a convenient and practical test for ascertaining where thatplace is. It would be much less convenient and practical if, in addition to ascertaining wherethat place is, one had also to enquire as to the circumstances prevailing at the moment whenthe vessel arrived at that place. At present there are only two questions to be answered:‘Where does the vessel have to be?’; and ‘Is she ready in herself?’ The Reid test provides theanswer to the first of those questions. I see nothing in favour of having to ask a third question,to which the answer would vary according to the circumstances.’’

40


Lord Justice Glidewell did not express any view on the subject (deciding in favourof the owners on the other point in the case) while Lord Justice Megaw only had afew words to say:

‘‘The issue of substance, as it appears to me, on this appeal is whether, in the now acceptedformula, ‘the position within the port where she is at the immediate and effective disposal ofthe charterers’, the last nine words are simply part of the definition of the place where thevessel must be. The answer to that question in my opinion is ‘yes’.’’

The case went to the House of Lords but the law lords did not consider ‘‘at theimmediate and effective disposition of the charterer’’ since it decided the case infavour of the charterers on the basis of the application/construction of ‘‘whether inberth or not’’ (see below, paragraph 26 et seq.); therefore, the Court of Appeal’sdecision in The ‘‘Kyzikos’’ stands in respect of ‘‘at the immediate and effectivedisposition of the charterers’’, although, strictly speaking, it is obiter dicta only. It issubmitted that the Court of Appeal’s decision is disappointing since it results incharterers having to bear risks which traditionally had been borne by the owners ofvessels. Further, it is difficult to see the reasoning about it being much less conven-ient and practical to enquire as to circumstances prevailing when a vessel arrives ator off a port, bearing in mind that twentieth-century refinements should obviateproblems in establishing the circumstances which prevail when a vessel arrives off aport, since it is not that difficult to ascertain whether a vessel is waiting for a berthor waiting because of weather or because of tides or for some other reason. It seemsthat the Court of Appeal laboured the inconvenient/impractical aspects unduly andunnecessarily and moved perfunctorily to a decision which merged the two limbs ofthe Oldendorff test in such a manner that, in reality, the readiness of the vessel (whichis a completely separate element to the commencement of laytime from reaching theagreed destination) was transposed for ‘‘at the immediate and effective dispositionof the charterers’’; this surely runs counter to what was said by the law lords in theOldendorff case. Unfortunately, the House of Lords did not give its views on thesubject in The ‘‘Kyzikos’’ because of its decision in respect of ‘‘whether in berth ornot’’. It may be many years before the House of Lords gets another opportunity toconsider ‘‘at the immediate and effective disposition of the charterer’’ and, in themeantime, charterers will have to live with the Court of Appeal’s decision albeitthat, strictly speaking, it is obiter dicta; they may circumvent it, of course, by gettingowners to agree a particular clause in the charterparty whereby laytime does notcommence or run in circumstances where a vessel arrives and anchors at the usualwaiting place when a berth is available for her but is unable to proceed to her berthbecause of fog and/or some other weather/navigational factor.

In obiter dicta from a High Court case and an unreported arbitration the judge andthe arbitrator were concerned with the vessel being at one of the usual waiting placesfor the loading port Rosario but this place was about 200 miles from the port andit was the vessel’s distance/steaming time from the port which was for their con-sideration; there were no weather factors preventing the vessels moving to theirloading ports, it being a matter of berth congestion per se. In The ‘‘Adolf Leonhardt’’40

the vessel’s destination was Rosario, she anchored at Intersection (some 200 miles

40. [1986] 2 Lloyd’s Rep. 395.


41

from Rosario) and the master gave a notice of readiness from the anchorage. Thecharterparty stipulated (inter alia) that laytime could commence whether the vesselwas in port or not. Mr Justice Staughton (as he then was) said, by way of obiter, thathe considered it a difficult point whether or not the vessel was ‘‘at the immediate andeffective disposition of the charterer’’ in the circumstances in question but he did goon to say that it seemed to him that a vessel was as effectively at the disposition ofthe charterer at Intersection as modern conditions demanded given that she was notrequired to be in the port of Rosario by reason of the words ‘‘whether in port or not’’(the latter words are considered later in Chapter 2). It would appear that theinclusion of the Wipon phrase had some bearing on his lordship’s obiter.

In the unreported arbitration, The ‘‘Seamaster’’,41 the arbitrator, on virtuallyidentical facts to The ‘‘Adolf Leonhardt’’ save that there was not a Wipon provisionin the charterparty, also did not have to decide whether or not the vessel was at theimmediate and effective disposition of the charterer because of his decision that thefirst limb of the Oldendorff test was not satisfied, i.e. the vessel was not within theport of Rosario while lying at the Zona Comun anchorage (very close to Inter-section) because the anchorage was not within the legal, fiscal or administrativelimits of Rosario and the Rosario port authorities had no control over the vessel.However, he did have something to say regarding ‘‘at the immediate and effectivedisposition of the charterer’’, as follows:

‘‘The fact that Zona Comun is so far from Rosario (about 200 miles) involving at least 17/18hours of steaming militates against the vessel being at the immediate and effective dispositionof the charterer while lying at anchor at Zona Comun. It is a far cry from being one or twohours away from a berth while at anchor (such as was the Johanna Oldendorff regardingLiverpool) to the facts of the instant case where the Seamaster was lying so far from RosarioRoads to which roads the vessel had to get before being allocated a berth in circumstances ofcongestion at the roads. It seems to me that in order to be at the immediate and effectivedisposition of the charterer a vessel must be a relatively short distance from the loading berthso that she can reach it reasonably rapidly when called upon so to do; I am thinking in termsof a few hours at most rather than at least 17/18 hours steaming during which time a vesselmay encounter difficulties during an upriver passage. For example, fog is encountered attimes in the River Parana particularly during the time of the year in question; in fact, theSeamaster was herself delayed by fog on her outward passage; further, the Zarate bridgeapparently cannot be navigated during the hours of darkness so that a passage from ZonaComun to Rosario can take up to 29/30 hours depending upon what time the vessel leavesZona Comun which time, of course, will be dependent upon the party calling on the vesselto move up river.’’

He considered what Mr Justice Staughton had said in The ‘‘Adolf Leonhardt’’ by wayof obiter but felt that he could not follow it particularly since the obiter appeared tobe based on meagre evidence and the Wipon provision in that particular contract.See also earlier on this aspect paragraph 16 and LMLN 409—8 July 1995 where thearbitrators appeared to accept that the vessel was ‘‘at the immediate and effectivedisposition of the charterers’’ in a Rosario Zono Comun context.

The two further reported arbitrations mentioned at the beginning of this para-graph are those in LMLN 471—22 November 1997 and in LMLN 559—12 April2001. In the former arbitration the vessel was chartered on an amended Synacomex

41. 1988.

42


form for the carriage of a part cargo of wheat in bulk to ‘‘1 Safe Berth’’ [namedport], at a berth equipped with grabs suitable for discharge bulk wheat and theredischarge cargo’’.

The vessel ran on a liner service, and she carried a number of parcels of cargo fordifferent shippers/charterers. She arrived at the named discharge port on 30November, berthing at berth 11 at 08.30 hours and giving notice of readiness at09.00 hours. Some work then took place, though not to the wheat cargo with whichthe tribunal was concerned. The following morning, 1 December, between 06.30hours and 07.40 hours, the ship shifted to berth 22 for further discharging. Thewheat cargo was only discharged at that berth.

The owners claimed demurrage. Clause 6 of the charterparty provided:‘‘Laytime . . . shall commence, whether vessel be in berth or not, in port or not, at 2 pm, ifwritten notice of readiness . . . is given during usual local office hours before noon, and at8 am on next working day if written notice of readiness is given during usual office hours afternoon . . . ’’

Clause 30 provided:‘‘Shifting from anchorage or lay-by berth to loading/discharging berth not to count as laytimeeven if the vessel is already on demurrage.’’

The charterers submitted that the shift between berths had been arranged by or onbehalf of the owners to suit the convenience of other cargo on board, in particularsteel consignments, and contended that until the ship arrived at berth 22 she wasnot effectively at their disposal, and that time should not count until she arrivedthere, i.e. from 07.40 hours on 1 December. Consequently, they said, the owners’demurrage claim had to fail.

The owners contended that berth 11 was equipped with grabs suitable for dis-charging wheat cargo and that, this being a berth charter, once the ship had arrivedat that berth she had completed her voyage, the notice of readiness given was valid,and laytime ran until completion of the discharging of the wheat cargo.

It was held, that the tribunal had some sympathy with the charterers’ position. Inliner operations, in practice, they were likely to have very little control over whereand when their cargo was discharged. No doubt it was for that reason that theparties had included the typewritten requirement that the berth to which the shipwas to be sent be equipped with grabs suitable for discharging bulk wheat. It wouldbe a strange situation if the charterers agreed to have time counting against themwhilst other cargo was being discharged. Certainly very clear words would berequired to achieve that result.

The problem for the charterers was that the first berth to which the ship went(berth 11) was equipped with grabs suitable for wheat. What was beyond questionwas that movements of that kind usually arose because of the nature of the owners’service, in that their ship was carrying a number of different parcels of cargo. Therewas the consideration that notice of readiness could plainly be tendered before thevessel reached the discharging berth, viz the ‘‘whether in berth or not’’ and relatedprovisions, and also clause 30.

On a proper analysis there was nothing in the berthing of the vessel on 30November at berth 11 to invalidate the notice of readiness tendered that day. Berth11 was a contractual berth for the purpose of the counting of time, and the


43

charterers had acknowledged that the cargo could and would have been dischargedthere if the vessel had remained at that berth. In such circumstances time countedfrom 14.00 hours on 30 November until completion of discharge.

In the later LMLN 559 arbitration the vessel was chartered on the BaltimoreBerth Grain Charter Party form for the carriage of 16,000 tonnes of peas in bulkfrom Canada to Mumbai, India. The vessel arrived at the discharge port of Mumbaion 3 December, tendering notice of readiness at 10.00 hours that day. However, shedid not berth until 17.00 hours on 19 December. The owners said that laytimecommenced at 08.00 hours on 4 December. The charterers contended that laytimedid not begin to count until the vessel berthed on 19 December.

The charterers said that the delay in berthing was attributable to the fact that theowners did not remit funds to cover port expenses to the agents at Mumbai until 11December, with the result that funds were not received by the Bombay Port Trust(‘‘BPT’’) until 16 December. It was only then, they said, that the vessel wasconsidered ready to discharge by the BPT and a berth allocated to her. Thecharterers referred to clause 9 of the charterparty, which provided that ‘‘customaryport charges including all dockage to be for Owners’ account’’, as placing theresponsibility for the prompt remittance of port expenses upon the owners. Thecharterers also relied on a BPT Notice to Shipowners, which stated that owners ofvessels who applied for a berth would have to pay, in advance, a deposit equivalentto the charges calculated on the basis of the expected stay of the vessel at the berthplus 15% of the amount so calculated before allotment of the berth.

The charterers said that because the port expenses had not been paid the vesselwas not in position to proceed to a berth and consequently had not reached aposition within the port where she was at their immediate and effective disposition.Thus she was not an arrived ship within the test laid down in The ‘‘JohannaOldendorff’’.42 As the notice of readiness tendered on 3 December was thus invalid,and as there was no evidence that a second notice of readiness had been tenderedby the owners, the charterers calculated that laytime commenced when dischargestarted.

The owners responded that laytime was to be calculated by reference to clause 12of the charterparty which specified the time permitted for discharge but containedno exception for any failure to pay port dues. Nor did the notice of readinessprovisions in the charterparty contain any requirement that port dues be paid beforeany valid notice could be tendered, consequently, the notice of readiness tenderedon 3 December was valid. They said that the only other course open to the charter-ers was to claim damages for breach of contract under clause 9 of the charterparty.The owners did not deny their obligation to pay such dues, or that they had onlyeffectively been paid to the BPT on 16 December. However, they said that inmaking such payment they had complied fully with their obligations under clause 9of the charterparty.

It was held that, on the evidence, the BPT would not allocate a berth to the vesseluntil port dues had been paid, something which the owners had admitted to be theirobligation under clause 9, and which they had also admitted had not been done

42. [1973] 2 Lloyd’s Rep. 285.

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until 16 December. Whether or not there was any formal requirement of the BPT,the agents at Mumbai had made it very clear to the owners from the beginning thatthey would not be able or prepared to give any undertakings to the BPT so that aberth could be allotted unless and until the owners put them in funds. In thosecircumstances, the tribunal concluded that the owners had been obligated to placethe agents in funds in sufficient time as to ensure that a berth could be allotted tothe vessel on, or shortly after, her arrival at Mumbai. However, the receipt of fundsby the agents was not a pre-condition for the tender of a valid notice of readiness,and nothing in the charterparty suggested that any connection between the two wasintended. Rather, the tribunal considered that the owners’ failure to place the agentsin funds entitled the charterers to any damages sustained as a result of the breachof clause 9. To the extent, therefore, that the berthing of the vessel was delayed afterthe tender of notice of readiness, such time should not count against the charterersas laytime or time on demurrage (or was recoverable as damages if it otherwise didso).

Sale contract

19. In the last edition of this book there was a relatively short section on salecontracts. Since then there have been some important Court of Appeal decisions inrespect of basic principles attaching to laytime and demurrage in the context of saleof goods contracts and the subject will be considered in more depth in Chapter 7.At this stage there will be some introductory remarks regarding sale contracts plusreference to a Court of Appeal decision (referred to in the previous edition) con-cerned with the commencement of laytime (in the context of arriving at the agreeddestination) as between sellers and buyers when the c.i.f. contract stipulated, ‘‘freeout Lorient’’; did it have the effect of being a port charterparty or a berthcharterparty?

Although this book is concerned with ‘‘commencement of laytime’’ in the contextof voyage charterparties such charterparties invariably form part of the transactionsbetween sellers and buyers of goods (the cargo) so that the subject has relevance tocontracts for the sale of goods which incorporate laytime/demurrage provisions. Inthose circumstances the laytime/demurrage provisions may well be back to backwith the charterparty provisions so that where, for example, a seller of goods undera c.i.f. contract becomes liable for demurrage to the shipowner under a voyagecharterparty, that seller will be able to claim against the buyer of the goods for thedemurrage he pays the shipowner because under the laytime/demurrage provisionsof the sale contract, the buyer stands in the equivalent position of the seller/chartererin the charterparty. The commencement of laytime can be all-important and hap-pily it will coincide for both sale contract and charterparty contract: however, thismay not always be so even if one of the parties to the sale contract thinks this hasbeen achieved by way of the terms in the sale contract. The Court of Appealdecision in The ‘‘Handy Mariner’’43 evidenced how sellers of goods came unstuck inrespect of their claim for demurrage against buyers under a c.i.f. contract stipulating

43. [1991] 1 Lloyd’s Rep. 378.


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‘‘free out Lorient’’. The Court of Appeal, in dismissing an appeal from the HighCourt, decided that discharging time under a c.i.f. contract began to run when thevessel berthed, in the absence of clear words to the contrary, if the contract providedfor discharge at a named port at specified rates for discharge, demurrage, anddispatch, but included a GAFTA 100 term that discharge shall be as fast as thevessel can deliver in accordance with port custom.

The facts were that by a contract for sale dated 25 June 1987, Intertradax assellers and Etablissements Soules as buyers, agreed the sale of a cargo of sweetpotatoes ‘‘c.i.f. free out Lorient—discharge 400 metric tonnes per hold/whetherworking day . . . demurrage $3,500 per day pro rata with half dispatch’’.

The contract provided that other terms should be in accordance with Form 100of the Grain and Feed Trade Association (GAFTA).

Clause 16 of GAFTA form 100 provided ‘‘discharge shall be as fast as the vesselcan deliver in accordance with the custom of the port’’.

The Handy Mariner arrived with the cargo at Lorient on 30 September 1987.Owing to congestion in port she had to wait for a berth until 13 October before thecargo could be discharged.

The sellers claimed for demurrage against the buyers and their case was that timestarted to count when the vessel arrived in port, or at latest, when notice of readinesswas tendered on 1 October. The buyers contended that time could not start to rununtil the vessel berthed on 13 October. GAFTA arbitrators decided in the sellers’favour. Their award was upheld by the GAFTA Board of Appeal. On appeal to theHigh Court, Mr Justice Hobhouse (as he then was) upheld the buyers’ contentionthat time could not start to run until the vessel reached a berth. He substituted anaward in the buyers’ favour. The sellers appealed.

The leading judgment was given by Lord Justice Staughton. In deciding againstthe sellers in dismissing their appeal he had this to say:

‘‘If the contract to be construed had been a charterparty, there could be no doubt of theanswer. A contract to proceed to Lorient has the effect that the carrying stage of the voyageends when the vessel reaches the port. It is for the charterer then to discharge her, and delayin obtaining a berth counts against his discharging time.

The question, as I have said, is whether the parties to this sale contract must be taken tohave used the words (‘‘c.i.f. free out Lorient’’) (or rather their French equivalent) in thecharterparty sense. But before one comes to that question there is a point which might havebeen, but in the event was not, of some importance. That is whether by the terms of thecontract notes the buyers assumed any obligation at all to the sellers to discharge the cargoin a given time, or of pay demurrage if they did not do so. . . . Like the judge, I think it rightto start by considering the printed form of GAFTA 100. Clause 3, labelled ‘price’, has spacefor a figure followed by the words ‘gross weight, cost, insurance and freight to . . . ’. When theparties insert a destination—or more probably agree on one in a contract note—they gen-erally name only a port or ports, without any reference to berths . . . where only a port isnamed in or pursuant to clause 3, I do not consider that the parties intend the result whichwould ensue with a charterparty if only a port is named as the destination—that time startsto count when the vessel reaches the port. Assuming that clause 16 has been left unamended,they have agreed that: ‘ . . . discharge shall be as fast as the vessel can deliver in accordancewith the custom of the port’. It is difficult to suppose that this covers a period when the vesselcannot deliver because she is at anchor in the roads, at all events unless it is the custom of theport to discharge into lighters, which is not shown to be the case here.

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If that be the construction of form 100 when only a port is named in clause 3 and clause16 is not amended, what is the right interpretation of the contract in this case? Once againonly a port is named; but the parties have amended clause 16, by providing a fixed rate ofdischarge, a fixed rate of demurrage for failing to discharge at that rate, and a fixed sum fordispatch if the date is exceeded.

I find this is a very difficult problem, principally because both trade tribunals have foundin favour of the sellers. They must therefore have considered that the parties to this contractdid indeed intend, when they named the port of Lorient as the destination, that the con-sequence would be the same as if Lorient had been named as the destination in a charter-party. Although the question is one of law for the court, one should always give weight to theopinion of trade arbitrators; and this seems to me particularly important when one isconsidering whether traders are likely to have used words in a particular technical sense.Nevertheless, like the judge, I conclude, in the end, that the parties did not intend to alterwhat I consider to be the effect of naming a port as the destination in form 100, withoutamending clause 16.

To undertake a liability for demurrage while the vessel is in port but waiting for a berthwould be an open-ended commitment in a contract for the purchase of what must probablybe a part cargo. It would also be open-ended for a full cargo, since the receiver cannotnormally control congestion in the port; yet many traders do assume such a commitment. Inthe case of a part cargo the problem is worse and the result may be capricious; the buyer doesnot know when he makes the contract how much other cargo will be carried on the vessel andso share his liability pro rata—unless some or all of it has been discharged at a previous port.I would require rather clearer words before holding that the buyers had assumed such aliability in this case.’’

The other two Lord Justices took a similar approach so that the Court of Appealwere unanimous in their decision against the sellers of the goods. The decisionwhich evidences the different approach taken at times as between commercialarbitrators and judges, illustrates the care required on occasions to ensure that salecontracts and charterparties are essentially back to back in respect of laytime/demurrage provisions, taking the English common law into account. But moreabout this in Chapter 7.

BERTH CHARTERPARTY

20. There are still many berth charterparties, albeit that special clauses may, forcommencement of laytime and practical purposes, turn a large number of them intoport charterparties or effectively so. If there is a named berth in the charterpartythen the position is quite clear in that the vessel has to get into that berth before shereaches her destination and is in a position to give a notice of readiness. The pointwas put very clearly by Lord Justice Jenkins in The ‘‘Radnor’’44 when he stated:

‘‘ . . . whereas in the case of a berth charter (that is to say, a charter which requires the vesselto proceed for loading to a particular berth either specified in the charter or by the expressterms of the charter to be specified by the charterer) lay days do not begin to run until thevessel has arrived at the particular berth, is ready to load, and has given notice to the chartererin manner prescribed by the charter of her readiness to load.’’

In the later ‘‘Johanna Oldendorff ’’ case the words of Lord Diplock were to thesame effect:

44. [1955] 2 Lloyd’s Rep. 668.

Para. 20BERTH CHARTERPARTY

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‘‘Where a single berth was specified in the charterparty as being the place of loading or ofdischarge, the loading voyage or the carrying voyage did not end until the vessel was at thatvery berth. Until then no obligation could lie upon the charterer to load the cargo, or toreceive it, as the case might be. If the specified berth were occupied by other shipping, thevessel was still at the voyage stage while waiting in the vicinity of the berth until it becameavailable, and time so spent was at the shipowner’s expense.’’

One point in favour of a berth charterparty is certainty since there can be little orno argument as to when a vessel arrives at a particular berth, the obvious test beingthat of the vessel being securely moored alongside the berth in question so thatcargo can be loaded or discharged. This means that the owner has to bear the riskof any factor which prevents the vessel getting into her berth and because of thisunsatisfactory position for owners it is now common for a berth charterparty tocontain special wording whereby a notice of readiness can be given before the vesselgets into her berth in order to start the laytime earlier than would otherwise be theposition. Some special wording in use, regarding this aspect, such as ‘‘whether inberth or not’’, will be considered later in Chapter 2.

The word ‘‘berth’’ means the loading or the discharging berth and not a lay-byberth. The point came up in The ‘‘Puerto Rocca’’45 where the vessel was chartered tocarry bulk grain to ‘‘one safe berth Seaforth Liverpool’’. The charter provided:

‘‘47. Time to count at discharge port from the first working period on the next business dayfollowing vessels customs clearance and receipt of written notice of readiness during ordinaryoffice hours by Charterers agents from 09.00 hours to 17.00 hours from Monday to Friday,unless a holiday whether in berth or not.

50. In the event that vessel is unable to berth immediately upon arrival, on account ofcongestion, vessel is to present notice of readiness in accordance with clause No. 47 fromarrival at Mersey Bar and time is to count accordingly but time from berth becomingavailable within the port until vessels arrival in the berth is not to count.’’

The vessel arrived at the Mersey Bar anchorage at 16.45 on Thursday, 4 Novem-ber and at 16.50 gave notice of readiness to the charterers. The charterers rejectedthe notice on the ground that the vessel was not customs cleared in accordance withclause 47.

The owners, maintaining the validity of the first notice, ordered the vessel toproceed to a lay-by berth in Seaforth Dock, obtained customs clearance and serveda second notice of readiness on 8 November, at 12.00. The charterers accepted thenotice and time began to run at 08.00 on 9 November.

The dispute between the parties, as to whether the first notice of readiness wasvalid or only the second, was referred to arbitration and the arbitrator stated hisaward in the form of a special case the question of law for decision of the courtbeing: whether on the facts found and on the true construction of the charterpartylaytime commenced at 08.00 hours on Friday, 5 or 08.00 hours on Tuesday, 9November 1976.

It was held by Mr Justice Mocatta that clause 50 had to be read in relation to thisparticular charter which provided that the vessel was to discharge a cargo of grainin bulk at ‘‘one safe berth Seaforth’’; and on the natural construction of the clausein its context in the charter, the words ‘‘to berth’’, ‘‘from berth’’ and ‘‘arrival in

45. [1978] 1 Lloyd’s Rep. 252.

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berth’’ meant discharging berth; this was a berth charterparty in that the destinationof the vessel was ‘‘one safe berth Seaforth’’; and to require a vessel to go to a lay-byberth and only then give notice of readiness seemed unreasonable and uncommer-cial; as this was a berth charter and the discharging berth was unavailable owing tocongestion at the time that the vessel reached Mersey Bar, clause 50 came intooperation and the notice of readiness given on 4 November was valid; the questionof law would be answered to the effect that laytime commenced at 08.00 on Friday,5 November. The decision makes sense in that a berth referred to in a charterpartymeans the loading or discharging berth; this is consistent with Charterparty LaytimeDefinitions 1980 (applicable only if incorporated expressly into a contract) whichdefines ‘‘berth’’ as the specific place where the ship is to load and/or discharge.Voylayrules 1993 have added the words ‘‘within a port’’ so that ‘‘berth’’ shall meanthe specific place within a port where the vessel is to load or discharge. If the word‘‘berth’’ is not used, but the specific place is (or is to be) identified by its name, thisdefinition shall still apply.

The Puerto Rocca case also has relevance to later Chapter 2 (special clausesrelevant to arriving at the destination) and would lie comfortably in paragraph30.

Occasionally disputes arise between owners and charterers regarding the exacttime that a vessel reaches the agreed berth destination and is in a position to tendera notice of readiness; the differences between the parties tend to be minimal and notusually worth taking to arbitration although a five or 10-minute difference in thecommencement of laytime may have a knock-on effect whereby the exhausting oflaytime stretches over a holiday and/or other excepted periods because of thelaytime having commenced, say, 10 minutes later than it would otherwise havedone. The knock-on effect may be several days demurrage in certain circumstances,e.g. Indian ports with a combination of weekend excepted period, legal holidays,and bad weather periods.

As stated earlier the obvious test surely has to be that of the vessel being securelymoored in her berth so that cargo can be loaded or discharged; the exact time thatthe vessel is securely moored is invariably cited in the statement of facts and in themajority of circumstances this time will be taken by owners and charterers as thetrigger time. A charterparty may spell out the obligation of the vessel; e.g. sometanker charterparties stipulate ‘‘the vessel is securely moored at the specified loadingor discharging berth’’, thus leaving no doubt whatsoever as to the position betweenthe parties.

Queries have been raised about the positioning of access to a vessel, e.g. agangway. Many statements of facts now cite the time that access to the vessel isavailable and this will usually be a later time than the time the vessel is securelymoored in her berth; charterers sometimes assert that the later time, when accessbecomes available to the vessel, is that which should be taken for reaching theagreed destination, in a berth charterparty, and when the notice of readinessbecomes effective. It is submitted that the better view is that the vessel reaches theagreed berth destination when she is securely moored in that berth, leaving it for thecharterers to contend, if the facts be apposite, that the vessel was not ready to loador discharge her cargo because there was no access to the vessel and access was


49

required in order to start the loading/discharging operation; if there is a deficiencyin respect of access it seems that this would have relevance to the readiness of thevessel to load/discharge cargo, which essential is covered later in Chapter 4. Further,and in any event, there may then be an issue regarding whose obligation it is toprovide access (it may be the charterers in some circumstances) and the loss of timeflowing from a breach of this obligation (more pertinent to a damages situation, seelater Chapter 5). Of course, the matter may be governed by an express clause in thecharterparty such as Exxonvoy 90 which states in clause 1(d) ‘‘Arrival in berth’’shall mean the vessel being all fast with gangway down and secure when loading ordischarging alongside a wharf/berth.

As mentioned earlier in paragraph 19 the Court of Appeal decided that a c.i.f. salecontract providing free out Lorient with a discharging rate should be construed asa berth charterparty despite that, had the contract been construed as a charter, itwould have been a port charterparty.

21. It is not necessary for a berth to be named in a charterparty for it to be a berthcharterparty. It is sufficient if there is an express right to nominate a berth by thecharterer—the charter is a berth charterparty.

It is also now settled that where the destination is an area of wider extent, andthere is an implied right in the charterer to nominate the berth or other dischargingspot, the ship is ‘‘arrived’’ when she reaches the appropriate part of the wider areaand not when she later reaches the discharging berth or spot.

There was some uncertainty at one time regarding the position where the charter-party provided that discharge should take place at, for example, ‘‘one safe berth,London’’ or ‘‘London, one safe berth’’. The test is one of construction of the charter-party; is the destination London or the berth?

In The ‘‘Finix’’46 Mr Justice Donaldson (as he then was) stated, as obiter, that thefirst illustration would be a berth charterparty and the second one a port charter-party. He took some support in deciding in this manner by views expressed by twoLords Justices of Appeal in The ‘‘Radnor’’.47 His words were:

‘‘But there is a realm of uncertainty where the charterparty provides that discharge shall takeplace at, for example, (a) ‘One safe berth, London’ or (b) ‘London, one safe berth’. The testis undoubtedly whether on the true construction of the charterparty, the destination isLondon or the berth. My own view is that in case (a) it is the berth and in case (b) it isLondon. This point arose in The ‘Radnor’ and Lords Justices Singleton and Parker seem tohave inclined to this view.

The matter is further complicated where, as here, the reference to the berth takes the formof ‘one or two safe berths, one safe port’, since it may be said—and it is said in this case—thatthis has nothing to do with the destination, but means only that the vessel can be asked todischarge at more than one berth. Again my present view is that ‘one or two safe berths,London’ would make the first berth the destination, whereas ‘London, one or two safeberths’ would make London the destination.’’

Although Lords Justices Singleton and Porter inclined to the view that ‘‘one safeberth Dairen’’ indicated that the agreed destination was a berth they did not labour


50


the point and their views were obiter. Likewise, Mr Justice Donaldson (as he thenwas) did not elaborate on the point and his brief view was also obiter. In a later case,The ‘‘Puerto Rocca’’, see paragraph 20, above, Mr Justice Mocatta was of the firmview that ‘‘one safe berth Seaforth Liverpool’’ was a berth charterparty but noargument was put to him that it was a port charterparty. It appears that there hasbeen no further court case which has considered the matter fully (although there hasbeen at least one arbitration, see below) and this is perhaps unfortunate since itwould be more satisfactory if there had been a definitive ruling in the courts that thelaw was as indicated as above, alternatively that the obiter of the above judges neednot be adopted and that ‘‘one safe berth, London’’ meant the same as ‘‘London, onesafe berth’’, both being adjudged as port charterparties.

Many persons find the above distinction illogical and consider that a berthcharterparty should only be one where the berth is actually named in the charter-party itself. After all, a vessel always has to go to a berth of some kind to load/discharge so that it seems sensible that the destination, for the commencement oflaytime, should only be a berth where a named berth is expressly contained in thecharterparty.

The matter of the distinction between ‘‘one safe berth London’’ and ‘‘London onesafe berth’’ came up for adjudication in The ‘‘Scapdale’’48 arbitration. An award wasmade in the form of a special case and it was hoped that the matter would get to thecourts in order to get a definitive ruling vis-a-vis the obiter of Mr Justice Donaldsonand the two earlier Lord Justices.

The charterparty stipulated that the vessel was to proceed to ‘‘one or two safeberths Tampa Range, Florida, including Boca Grande—port at Charterers’option’’. The vessel was ordered to the port of Tampa and arrived at the Seabuoy onthe morning of 4 August 1978. The master gave a written notice of readiness to thecharterers’ agents at 05.30 on that day and the vessel remained at an anchorage untilshe berthed at 18.00 on 26 August, the delay in berthing being due to berthcongestion.

One of the questions for the umpire in the arbitration was whether the charter-party was a port or a berth charterparty. While feeling sympathetic to the owners intheir contention that there should be no distinction between ‘‘one safe berth Lon-don’’ and ‘‘London one safe berth’’ so that both charterparties should be consideredas port charterparties, the umpire still felt constrained to decide against the ownersand to follow Mr Justice Donaldson because of the identical wording in the twocases. However he did have this to say in his special case award:

‘‘With respect to Mr Justice Donaldson I find it difficult to follow the distinction between‘one safe berth London’ and ‘London one safe berth’. I feel that this is too artificial adistinction and it is a distinction that would be missed by most brokers when fixing a vessel.There is little doubt that the commercial community would like a simple test laid down forguidance in the future so that the legal niceties which have occurred in this case do not occuragain. A few suggestions have been put forward; the first is that if the word ‘berth’ ismentioned then the charterparty is automatically a berth charterparty, although this positionis often made more complicated by the insertion of the phrase ‘whether in berth or not’ later,which affectively deprives the charterer of any benefit of having a berth charterparty. Another

48. 1980.


51

commercial suggestion has been to say that no charterparty can be a berth charterpartyunless it specifically names a berth in a given port.’’

Unfortunately, the case never reached the courts so that the position remains in thatthere is persuasive obiter dicta that the use of the word ‘‘berth’’ preceding the nameof the port, then describing the destination, makes it a berth charterparty so that,absent any special provisions appertaining to the advancement of laytime, the vesselhas to get into her loading/discharging berth before a notice of readiness can begiven. The matter was touched upon in The ‘‘Isabelle’’49 where Mr Justice Goff (ashe then was) stated, where the wording was, ‘‘proceed to a berth . . . as ordered bycharterers in one safe port Algeria’’, that it was plain that this was a berth charter;again this was obiter but it fell into line with the earlier cases. In many berthcharterparties the position may be academic in respect of ‘‘commencement oflaytime’’ because of the propensity of the parties to agree a special provision in thecharterparty whereby a notice of readiness can be given at an earlier time than whenthe vessel berths, e.g. Wibon, but even then there may be a factor which prevents thenotice of readiness being effective; see below, paragraph 26 et seq., The ‘‘Kyzikos’’.

In LMLN 566—19 July 2001 the tribunal had to decide whether it was a port ora berth charterparty where a rider clause 43 provided:

‘‘One safe and suitable ice-free port Black Sea out of Odessa, Novorossisk, Tuapse, Con-stanza, Bourgas, Varna East and /or Varna West . . . one or two safe berths at dischargingport.’’

The charterers had contended that the vessel had ‘‘arrived’’ at Novorossisk on 21March because the charterparty was a ‘‘berth charter’’—because rider clause 43provided that the vessel was to discharge at ‘‘one or two safe berths at dischargingport’’. Although the vessel did not berth on her arrival because of congestion, clause22 of the charterparty provided that in the event of congestion the master hadliberty to tender notice of readiness ‘‘whether in port or not, whether in berth ornot . . . ’’ The submission that the vessel had ‘‘arrived’’ at Novorossisk on 21 Marchwould be accepted, but not for the reasons put forward by the charterers. Thecharterparty was not a ‘‘berth charter’’. Rider clause 43 called for the vessel todischarge at ‘‘One safe and suitable ice-free port’’; the reference to ‘‘port’’ comingbefore the reference to ‘‘one or two safe berths of discharging port’’ in the finalsentence of that clause. Thus, the charter was a ‘‘port charter’’ and the vessel had‘‘arrived’’ at the port upon her arrival at Novorossisk Pilot Station at 17.30 hours onSunday 21 March, irrespective of her subsequent delay in berthing.

The Commercial Court emphasised the importance of a master not giving anotice of readiness until his vessel had reached the agreed destination (as stipulatedin the charterparty). In The ‘‘Agamemnon’’,50 the parties agreed that the vessel waschartered for a voyage from one good and safe berth Baton Rouge with the followingrelevant words:

‘‘If the loading . . . berth is not available on vessel’s arrival at or off the port of loading . . . orso near thereto as she may be permitted to approach, the vessel should be entitled to givenotice of readiness on arrival there as if she were in berth . . . ’’.


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The vessel arrived at the South West Pass at 23.00 hours on 5 October 1995and gave notice of readiness. The South West Pass was a customary waiting areafor vessels wishing to enter the Mississippi river and to proceed to one of theports in the river. It was about 170 miles from Baton Rouge and was not partof the port of Baton Rouge. The vessel arrived at the Baton Rouge generalanchorage at 10.25 hours on 7 October. No further notice of readiness was giventhen. The vessel eventually berthed at 20.30 hours on Sunday 8 October andcommenced loading at 10.15 hours on 9 October.

The arbitrators held that the Master, having tendered notice of readiness at theSouth West Pass, had effectively fulfilled the purpose of tendering notice of read-iness by informing the charterers/shippers of the vessel’s readiness to load therequired cargo. The charterers’ agents were thereafter in regular contact with theMaster during the up river transit and it followed that they therefore must havebeen fully aware of the vessel’s arrival at the Baton Rouge anchorage. As theBaton Rouge anchorage was the nearest that the vessel was permitted toapproach the berth, the notice of readiness should have been accepted by thecharterers on her arrival there at 10.25 hours on 7 October 1995. Although theSouth West Pass was 170 miles from the anchorage at Baton Rouge, the vesselwas from that time onwards under the effective control of the charterers’ agentsas regards the organisation of pilots for the transit of the Mississippi and thecharterers’ agents were, or ought to have been, fully aware of the vessel’s time ofarrival at the Baton Rouge anchorage.

The charterers appealed to the High Court, contending that the notice ofreadiness had been given prematurely and before the vessel’s arrival at a point asnear to Baton Rouge as she could approach, and that as no notice had beengiven when she arrived at that point on 7 October, laytime could not commencebefore the vessel started to load at 10.15 hours on Monday 9 October.

It was held that the charterers were correct in their contention and that since theCourt of Appeal decision in The ‘‘Mexico 1’’51 had ruled out the inchoate theory thenotice of readiness given by the master on October 5 was a nullity. This case will beconsidered in more detail later in Chapter 6 which deals in depth with the validityor otherwise of a notice of readiness and the Court of Appeal decision in The‘‘Mexico 1’’ and The ‘‘Happy Day’’.52

DOCK CHARTERPARTY

22. Little will be said about this type of charterparty for the simple reason that it hasnow gone out of fashion. Dock charterparties came to the fore in the latter part ofthe nineteenth century with the big upsurge of dock systems but they are almostunknown in modern-day circumstances. The position, if there is a dock charter-party, is virtually identical to that of a port charterparty. There is no point inrepeating what has been said earlier except to say that it must obviously be the case,


Para. 22DOCK CHARTERPARTY

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in a dock charterparty, that the vessel has to get into the dock in order to be anarrived ship. Admittance to the dock is all that is required, it being unnecessary forthe vessel to get into the loading/discharging berth.

Although there are no modern/recent cases directly on the point Lord Diplockdid have the following to say in the Oldendorff case:

‘‘A dock encloses a comparatively small area entered through a gate. There is no difficulty insaying whether a vessel has arrived in it. As soon as a berth is vacant in the dock a vesselalready moored inside the dock can get there within an interval so short for the practicalbusiness purpose of loading or discharging cargo it can be ignored.’’

He thus endorsed earlier held views that entering the dock and mooring was all thatwas required to reach the agreed destination in a dock charterparty, there being noneed to be moored at the actual loading/discharging berth.

TANKER CHARTERPARTIES

23. Because of the nature of their work tanker vessels which are voyage chartered inthe bulk oil trade frequently have special clauses regarding the agreed destinationand the time that a notice of readiness can be given. Some of them will be coveredin more detail in later chapters; suffice it to say for the moment that the clausesregarding the agreed destination are usually more detailed than those seen in drycargo bulk voyage charterparties where there is often simply a bald reference to aparticular port or to one safe berth at a particular port. Many standard tankervoyage charterparties are port charterparties; e.g. the Asbatankvoy and the ASBA IIcharterparties state: ‘‘Upon arrival at customary anchorages at each port of loadingor discharge the master shall give the charterer notice . . . ’’ and the Tankervoy 87states: ‘‘When the vessel has arrived at a customary anchorage or waiting place foreach loading and discharging port or place . . . notice of readiness . . . shall be givento charterers . . . ’’.

The Beepeevoy charterparties are also port charterparties but the Shellvoy char-terparties are prima facie berth charterparties (vessel securely moored at the speci-fied loading or discharging berth) although they allow a master to give a notice ofreadiness at an earlier time in certain circumstances. The ‘‘Plakoura’’53 was con-cerned with the Shellvoy 4 form and whether or not the vessel had reached theagreed destination. The charterparty stipulated:

‘‘3 . . . In this chapter ‘place’ shall include any berth . . . anchorage . . . or any other placewhatsoever to which charterers are entitled to order the vessel . . .

13(1)(a) . . . laytime at each loading and discharging place shall commence when the vesselis in all respects ready to load and written notice thereof has been received . . . and the vesselis securely moored at the loading place. Whether or not the nominated loading or dischargingplace is available and accessible, if the vessel is . . . ordered . . . to wait before proceedingthereto laytime shall commence . . . when written notice of readiness has been received andthe vessel is lying at the place where the charterers have ordered her to wait or . . . at a usualwaiting place.’’

53. [1987] 2 Lloyd’s Rep. 258.

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The vessel arrived off the loading port on 7 February but it was closed owing to badweather; she was ordered by the port authorities to anchor and await berthinginstructions. The vessel anchored in the recommended anchorage area and ten-dered a notice of readiness which was received by the charterers in the early hoursof 8 February. The port reopened on 13 February and the vessel was all fast at hersea berth mooring at 10.24. The owners contended that the vessel had reached theagreed destination on 8 February because (inter alia) of the vessel being ordered toa loading port in accordance with the loading port range clause in the charterparty.They relied upon that part of the ‘‘Reid’’ test, ‘‘if she is at a place where waiting shipsusually lie’’. According to them the main issue was whether the charterparty was tobe regarded as a port or berth charter and, if it was the former, whether the vesselhad reached the agreed destination when she had anchored within port limits. Thecharterers submitted that the question was not to be decided on the historic distinc-tion between a port and a berth charter but on the wording of the particularcharterparty which called for the vessel ‘‘to be securely moored at the loadingplace’’. Further, they asserted that ‘‘securely moored’’ meant ‘‘tied to a berth, jettyor buoys or, in the technical sense, anchored with both anchors down’’; by implica-tion that excluded riding to one anchor only (which was how the vessel was moored)so that the vessel could not be securely moored until she was tied to the berth orbuoy where loading was to take place.

Mr Justice Leggatt (as he then was) did not accept the submissions of thecharterers regarding the ‘‘securely moored’’ aspect per se but still decided the case intheir favour on the construction of clauses 3 and 13(1)(a) so that the vessel had notreached the agreed destination until she was moored at the actual loading place, thisbeing the sea berth mooring. He said:

‘‘I accept that the expression ‘available and accessible’ is more apt to refer to the actual pointat which loading or discharging is to occur than to the port as a whole. It seems to me thatin the phrase ‘securely moored at the loading or discharging place’, the words ‘loading ordischarging’ describe and identify the actual spot when the loading or discharging is to occur.In my judgment, construing clause 13(1)(a) in the light of the charterparty as a whole, thephrase ‘securely moored at the loading or discharging place’ means ‘all fast at the spot wherethe actual process of loading or discharging is to occur’. It bears the connotation that thevessel should be so secured at a particular place in the port so as to enable loading ordischarging to occur at that place.’’

In the Shellvoy 5 charter (which replaced the Shellvoy 4) ‘‘place’’ has been taken outof clauses 3 and 13(1)(a) leaving the emphasis very much on ‘‘berth’’. The sameholds for the Shellvoy 6 (issued March 2005) where the all important and verydetailed notice of readiness clause 13(1)(a) reads:

‘‘Time at each loading or discharging port shall commence to run 6 hours after the vessel isin all respects ready to load or discharge and written notice thereof has been tendered by themaster or Owners’ agents to Charterers or their agents and the vessel is securely moored atthe specified loading or discharging berth. However, if the vessel does not proceed imme-diately to such berth time shall commence to run 6 hours after (i) the vessel is lying in the areawhere she was ordered to wait or, in the absence of any such specific order, in a usual waitingarea and (ii) written notice of readiness has been tendered and (iii) the specified berth isaccessible. A loading or discharging berth shall be deemed inaccessible only for so long as thevessel is or would be prevented from proceeding to it by bad weather, tidal conditions, ice,

Para. 23TANKER CHARTERPARTIES

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awaiting daylight, pilot or tugs, or port traffic control requirements (except those require-ments resulting from the unavailability of such berth or of the cargo).’’

The clause is even more complicated than that in Shellvoy 5 since it also specifiesthat unless the owners now obtain customs clearance or free pratique within 6 hoursof the original notice of readiness (or when time would otherwise commence underthe charterparty), the notice of readiness will not be valid and a new one will haveto be tendered when customs clearance or free pratique has been given. There is aproviso ‘‘unless this is not customary prior to berthing’’ which applies to freepratique but not to customs clearance. This proviso may well give ownersproblems.

Regarding port charterparties in the bulk oil trade charterers do not appear totake fine points in respect of ‘‘within the port’’ as per the Oldendorff/Maratha Envoydecisions test and a vessel being outside port limits. The usual wording is the‘‘customary anchorage’’ or the ‘‘customary waiting place’’ at or for the port inquestion and those in the trade appear to accept that these places may be outside thestrict legal limits of a port on occasions but take no point on it so long as the vesselis at the anchorage/place where vessels usually wait for a loading/discharging berth,see also earlier paragraph 17.

Many tanker charterparties contain transhipment clauses but such do not usuallygive rise to any problems regarding the commencement of laytime. They usuallyspecify that laytime commences from the arrival of the vessel at the transhipmentarea or from the commencement of the laydays, whichever is the later. But more onthis later.

In recent times, an increasing number of charterers have decided to stop using theAsbatankvoy form and have switched to other forms such as the ExxonMobil Voy2000 charterparty (which is a port charter). See, for example, ASDEM NewsUpdate No. 28 of May 2005. As far as notice of readiness is concerned the Exxon-Mobil Voy 2000 form is simple in that it specifies:

‘‘Upon arrival at customary anchorage or waiting place at each loading and discharging portor place, Master or Vessel’s agent shall give Charterer or its representative notice by letter,electronic mail, telex, facsimile, radio or telephone (if radio or telephone, subsequentlyconfirmed promptly in writing) that Vessel is in all respects ready to load or dischargecargo . . . Laytime or time on demurrage, as herein provided, shall commence or resume upon theexpiration of six (6) hours after receipt by Charterer or its representative of Notice ofReadiness or upon Vessel’s Arrival in Berth, whichever occurs first. Laytime shall not com-mence before 06.00 hours local time on the Commencing Date specified in Part 1(B) unlessCharterer shall otherwise agree, in which case laytime shall commence upon commencementof loading.’’

Therefore, as far as notice of readiness is concerned the ExxonMobil Voy 2000 andthe Asbatankvoy charterparties appear to be very similar save that the formerextends the methods of communication for tendering a notice of readiness, e.g.electronic mail, facsimile etc.

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CHAPTER TWO

SPECIAL CLAUSES RELEVANT TOARRIVING AT THE DESTINATION

GENERAL

24. An owner may avoid the financial rigours which can arise from the applicationof the English common law to a vessel waiting at or off a port either by way of specialclauses in the charterparty contract or because the charterer breaches an express orimplied term of the contract which results in the owner obtaining compensation, byway of damages, for the period which his vessel waits at or off a loading or discharg-ing port. Breach of contract and damages are dealt with in Chapter 3. The expressclauses and terms which are in common use can be categorised as follows:

(a) Clauses which advance the time when laytime commences.(b) Clauses which provide for the payment of specific sums when a vessel waits

at or off a port.(c) Clauses which cater specifically for the time lost by a vessel waiting for a

berth.

A usual and important clause in the past, and also today, in the tanker trade hasbeen that which obliges a charterer to provide a berth reachable on the vessel’sarrival but this clause, strictly speaking, comes under breach of contract/damagesand will be considered later in Chapter 3.

ADVANCING LAYTIME INCLUDING ‘‘WHETHER IN BERTHOR NOT ’’ AND ‘‘WHETHER IN PORT OR NOT ’’

25. Clauses which advance the commencement of laytime in respect of arriving ata destination can be divided into those which do this directly and those whichachieve the same or a similar result indirectly. An example of the former is ‘‘laytimeto commence when the vessel anchors off the Hook of Holland’’ in a voyage charterpartyinvolving the port of Rotterdam while an example of the latter is ‘‘whether in berth ornot’’. There is bound to be some overlap between clauses falling into the category ofthose advancing laytime and those which cater specifically for time lost waiting fora berth (see below, paragraph 35 et seq.) but there is some sense in separating out theclauses, particularly because of the practical importance of a time lost waiting for aberth clause.

Those clauses which directly advance the commencement of laytime such as‘‘laytime to commence when the vessel anchors off the Hook of Holland’’ are,

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generally speaking, simple of application and do not usually lead to problems. If itwere not for such a clause laytime might not commence under English law until thevessel moved into the port of Rotterdam, see earlier, paragraph 10. With such aclause, laytime commences as soon as the vessel anchors on completion of her seapassage. In practice, adjustments are often made to such clauses whereby laytimecommences at a specific time (say 12 or 24 hours) after the vessel anchors at thestipulated place but these do not significantly affect their benefit to owners ofvessels.

One tends to see this type of clause in charterparties where vessels are trading tolarge and complex ports a considerable distance from the open sea such as Rotter-dam, Hamburg, Antwerp, Glasgow and Calcutta; their virtue is their simplicity and,to owners of vessels, the compensation received for time which would not otherwiseunder English law score up for laytime purposes. Examples of such clauses are:

‘‘Should the vessel be ordered to discharge at Avonmouth or Glasgow or Hull and be unableto berth immediately upon arrival on account of congestion vessel shall be permitted topresent notice of readiness at the anchorage at Walton Bay or Tail-of-Bank or Spurnheadrespectively, and laytime to count accordingly, but time from berth becoming available inAvonmouth or Glasgow or Hull until vessel’s arrival at the berth in Avonmouth or Glasgowor Hull is not to count as laytime.’’

This clause allows the vessel to tender a notice of readiness outside the port limitsso that the part of the ‘‘Reid’’ test, ‘‘within the port’’, does not militate against theowners of the vessel. A similar clause for vessels discharging at ports like Bremen orBremerhaven is the Weser Lightship clause which states:

‘‘If vessel is ordered to anchor at Weser Lightship by Port Authorities, since a vacant berth isnot available, she may tender notice of readiness upon arriving at anchorage near WeserLightship, as if she would have arrived at her final loading/discharging port. Steaming timefor shifting from Weser Lightship to final discharging port, however, not to count.’’

Yet another is the so-called Sandheads Clause, already adverted to earlier in para-graph 12, which reads:

‘‘At Calcutta if vessel is unable to give notice of readiness by reason of congestion at Calcutta,time shall commence to count at 8 a.m. on the next business day after notice of vessel’s arrivaloff Sandheads has been given by radio to Charterers or their agents and received duringordinary office hours. Whilst waiting off Sandheads (or such other place of transhipment)Sundays and holidays and Saturday after 12.00 noon till 8 a.m. Monday not to count unlessvessel is already on demurrage. Time proceeding from Sandheads (or such other place oftranshipment) is not to count.’’

The above clauses are, in general, fair to owners of vessels; they compensate anowner for the time that his vessel is waiting because of the non-availability of aloading/discharging berth but they do not bite in respect of delays occasioned bynavigational/weather factors, which factors have in the past been considered owners’risks.

26. The use of the words ‘‘whether in berth or not’’ (‘‘Wibon’’) can have the effect ofadvancing the commencement of laytime in a berth charterparty. The words are inthe printed form of many charterparties, alternatively they are incorporated veryfrequently by type-added words and are of considerable importance. Until recently

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Para. 25 SPECIAL CLAUSES RE ARRIVING

there was doubt whether the words had the effect of converting a berth charterpartyinto a port charterparty; however, the matter came up for adjudication as a mainpoint (ultimately the main point) in The ‘‘Kyzikos’’1 along with ‘‘at the immediateand effective disposition of the charterer’’; see earlier, paragraph 18 (vessel arrivedwithin the port limits but could not move to her available discharge berth becauseof fog).

Mr Justice Webster (later reversed in the Court of Appeal) decided (inter alia) thatthe provision did not have the effect of changing the primary obligation of theowners from being one to carry the cargo to a berth to being one to carry the cargoto the named port; nor could the provision have the effect of converting what wouldotherwise not be an arrived ship, in certain circumstances, into such a vessel, if byan arrived ship is meant a ship which had reached the agreed destination, was readyto discharge and had given a notice of readiness to the charterers. The judgereversed an arbitrator who had decided ‘‘on well established authority that thewords had the effect of making the charter into a port charter’’. Although reversedby the Court of Appeal,2 Mr Justice Webster gave a full and well reasoned judgmentand it is worth considering before looking at the Court of Appeal decision, whichdecision was itself later reversed by the House of Lords. He held that there was nodecision of any court which was binding on the point and in so concluding heconsidered six authorities (ranging from the High Court to the House of Lords) inaddition to Laytime by Summerskill and Laytime and Demurrage by Schofield. Thebrief facts (some of which have already been mentioned earlier) were that the vesselarrived within the discharge port of Houston at 06.45 on 17 December; at the timewhen the notice of readiness was tendered, and at all material times thereafter, theberth to which the vessel was destined and at which she ultimately discharged wasavailable, but she could not proceed to it because of fog until 20 December. MrJustice Webster said (inter alia):

‘‘None of those six authorities are binding on me. In each of them the vessel was unable tocome alongside a berth because none was available; and only two of them related to berthcharterparties, The ‘Nessfield’3 and The ‘Amstelmolen’.4 But I have cited them at some lengthin order, primarily, to try to discover whether (as the arbitrator concluded), they support theproposition that the ‘Wibon’ provision has the effect of converting a berth charter into a portcharter and, if I conclude that they do not support that proposition, to try and identify someother proposition which they do support.

I recognise that, when a vessel is unable to come alongside because no berth is available,the ‘Wibon’ provision in the ordinary case has, in practice, that effect; but in my view itcannot be said without doubt that the authorities which I have considered, read as a whole,support the proposition that it has that effect in law, still less that it actually converts a berthcharter into a port charter.

Undoubtedly, Lord Justice Roskill, in the passage which I have emphasised in The ‘JohannaOldendorff ’,5 said expressly that the provision was designed to convert a berth charterpartyinto a port charterparty; and the dicta of Lord Justices Ormrod and Upjohn, which I haveemphasised (particularly the former) can be said to support the proposition inferentially.

1. [1987] 1 Lloyd’s Rep. 48.2. [1987] 2 Lloyd’s Rep. 122.3. [1912] 1 K.B. 434.4. [1961] 2 Lloyd’s Rep. 1.5. [1972] 2 Lloyd’s Rep. 292.

Para. 26ADVANCING LAYTIME

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But the dicta of Mr Justice Branson in The ‘Santa Clara Valley’,6 of Mr Justice McNair inThe ‘Seafort’,7 and of Lord Justice Buckley in The ‘Johanna Oldendorff ’,5 support the morerestricted proposition that the ‘Wibon’ provision does not override the primary obligationcreated by the charterparty, or those obligations as modified by the express exception, andthat it does not affect, in principle as distinct from detail, the question of where the risk is tofall in the event of delay affecting the vessel. If this more restricted proposition is the right oneto derive from the authorities, and if it is to be applied to the facts of the present case, it wouldseem that the arbitrator’s conclusion was wrong.

The passages which I have emphasised from the dicta of Lord Justice Farwell in The‘Nessfield’,3 and of Lord Diplock in The ‘Maratha Envoy’,8 justify an even more restricted andmore specific proposition, namely that the effect of the ‘Wibon’ provision is that, under it,time starts to run when the vessel is waiting in the named port for a berth there to becomeavailable, ready so far as she is concerned to unload. If that proposition is the correct one,then there is no question but that the arbitrator’s conclusion in the present case is wrong. Forthe purpose of the present case, to which that proposition can be directly applied, I prefer,with great respect, that last proposition to that of Lord Justice Roskill and conclude that inthe present case time did not begin to run until the vessel was berthed because it was not,before that time, waiting for a berth to become available, ready (so far as it was concerned)to unload.

It seems possible to me to reach the same conclusion in reliance upon the dictum of LordJustice Upjohn in The ‘Amstelmolen’9 that ‘liability for demurrage caused by delay in comingalongside the berth caused by congestion or other reason is thrown upon the charterer’ if, asin my view it can be, a distinction is to be drawn between the impossibility of comingalongside a berth on the one hand, and the impossibility of leaving an anchorage to shift toa berth on the other. The application of that dictum, with that distinction, to the facts of thepresent case, would also lead to the result that the arbitrator’s conclusion was wrong becausethere was no reason to prevent the vessel coming alongside; it was being prevented fromleaving its anchorage.’’

In the first edition of this book it was submitted that the judgment of Mr JusticeWebster made sense to many in the overall context of ship operating and charteringin that charterers bear the risk of congestion and owners bear the risk of bad weatherwith a ‘‘Wibon’’ provision. The words would still afford relief to owners of vesselsin the case of berth congestion which has been traditionally at the risk of charterersbut charterers would not be liable for delay preventing the vessel from getting intoa berth over which they have no control, and in circumstances where a berth is freelyavailable for the vessel. However, the Court of Appeal thought differently anddecided that a ship’s right under a berth charterparty to give notice of readiness toload ‘‘whether in berth or not’’, arises as soon as she arrives in port and is ready toload, in the same way as under a port charterparty, and the ship has ‘‘arrived’’ if shehas reached a place within the port where she is at the immediate and effectivedisposition of the charterers irrespective of whether she is unable to reach anavailable berth due to fog or other bad weather. In practical terms, the effect of‘‘whether in berth or not’’ was to turn a berth charterparty into a port charterparty.In deciding in favour of the owners Lord Justice Lloyd (as he then was), in deliver-ing the leading judgment, supported the Court of Appeal’s decision by reference tothree main matters:

6. (1938) 62 Ll.L.Rep. 23.7. [1962] 2 Lloyd’s Rep. 147.8. [1977] 1 Lloyd’s Rep. 217.9. [1961] 2 Lloyd’s Rep. 1.

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1. The absence of any words of qualification in the phrase ‘‘whether in berthor not’’.

2. The traditional view of the effect of the phrase.3. The importance of certainty in relation to a commercial contract of the

kind here concerned.

Apart from detailing more the above points Lord Justice Lloyd also mentioned thedefinition of ‘‘whether in berth or not’’ contained in the Charterparty LaytimeDefinitions 1980 (applicable only if incorporated expressly into a contract) issuedjointly by CMI, GCBS, BIMCO and FONASBA as follows: ‘‘ ‘whether in berth ornot’ . . . means that if the location named for loading/discharging is a berth and ifthe berth is not immediately accessible to the ship a notice of readiness can be givenwhen the ship has arrived at the port in which the berth is situated’’.

He went on to say:‘‘It will be noticed that the above definition is not limited to cases where the berth isunavailable. ‘Immediately accessible’ is wider than ‘immediately available’ and would appearto cover a case where the berth is inaccessible through bad weather as well as cases where itis inaccessible through congestion. The definition is therefore consistent with the view whichI have formed.’’

In the House of Lords10 the only speech was given by Lord Brandon, the other fourlaw lords simply concurring with him. Lord Brandon dealt with the above threepoints of Lord Justice Lloyd, as follows:‘‘First, as to the absence of any words of qualification. I accept, of course, that the phrase ‘inberth or not’ does not of itself indicate that being in berth or not is related to the availabilityof a berth. I do not, however, think it possible, when interpreting a phrase which has beenregularly included in berth charterparties over a long period, to disregard long-establishedauthority as to the purpose intended to be served by it. The authorities to which I referredearlier show that, since 1912 at least, it has been recognised that the purpose of the phrasewas to deal with the problem of a ship chartered under a berth charterparty arriving at herport of destination and finding no berth available to her. There is further no reported caseprior to this one in which it has ever been suggested that the phrase was intended to deal withthe problem of a ship chartered under a berth charterparty arriving at a port where a berthis available for her but being prevented by bad weather from proceeding to it. As I indicatedearlier, the phrase has been treated as shorthand for what, if set out in longhand, would be‘whether in berth (a berth being available) or not in berth (a berth not being available)’. Thephrase has been interpreted and applied in that way for so long that I think that it shouldcontinue to be so interpreted and applied.

Secondly, the traditional view of the effect of the phrase. Lord Justice Lloyd said that thisview had always been that the phrase became operative so to enable a valid notice of readinessto be given as soon as the vessel has arrived in the port provided that the other conditions ofa valid notice are satisfied. I cannot accept this generalisation as correct. So far as cases whereno berth is available when the ship arrives are concerned, that has certainly been thetraditional view. But, so far as cases where a berth is available for the ship on arrival butunreachable by reason of bad weather are concerned, no traditional view has ever beenestablished, for the simple reason that the question of the effect of the phrase in that situationhas never previously arisen from decision by any court.

Thirdly, the need for certainty. I accept that certainty of interpretation is a most desirablecharacteristic of any contract, especially a commercial contract containing expressions com-monly in use. I cannot see, however, that a decision that the phrase ‘whether in berth or not’

10. [1989] 1 Lloyd’s Rep. 1.


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only takes effect when a berth is not available provides any less certainty than a decision thatit also takes effect when a berth is available but is unreachable by reason of bad weather.

With great respect to Lord Justice Lloyd and the other members of the Court of Appealwho agreed with him, I do not consider, in the light of the examination which I have madeof the three main matters relied on by Lord Justice Lloyd, that they provide the support forhis conclusion which he regarded them as providing. On the contrary, I am of opinion, havingregard to the authorities to which I referred earlier and the context in which the acronym‘Wibon’ is to be found in the charterparty here concerned, that the phrase ‘whether in berthor not’ should be interpreted as applying only to cases where a berth is not available and notalso to cases where a berth is available but is unreachable by reason of bad weather.’’

The short result of the House of Lords’ decision is that the ‘‘Wibon’’ clause onlyapplies to cases where a berth is not available and does not apply to cases where aberth is available for the vessel but unreachable because of weather/navigationalfactors. The decision/result was well received by many in the shipping commercialcommunity albeit that the vast majority of commercial counsel were convinced that‘‘Wibon’’ converted a berth charterparty into a port charterparty in all circum-stances absent a breach of contract by the owners.

27. Before leaving the ‘‘Wibon’’ provision it is emphasised that, even if the provisionbites so as to advance the commencement of laytime the vessel still has to satisfy theOldendorff test vis-a-vis the ingredients regarding a port charterparty. That is, shehas to be within the port and at the immediate and effective disposition of thecharterers. That point was brought out in The ‘‘Seafort’’.11 The vessel was charteredfor the carriage of grain from Vancouver to London and Hull and the charterpartyprovided (inter alia): ‘‘ . . . Time at second port to count from arrival of the vesselat second port, whether in berth or not.’’ The second port was Hull and the vesselanchored at Spurn Head anchorage (the usual place for vessels of this size to waitfor a berth in respect of Hull) but did not berth until 9 February. The anchorage was22 miles from Hull but was not within the legal, administrative or fiscal limits ofHull. It was decided by Mr Justice McNair that, by using the words ‘‘arrival atsecond port’’ the parties must be presumed to have intended the normal conditionsdetermining whether a vessel was an arrived ship should apply and that the words‘‘whether in berth or not’’ merely emphasised the continuity of laytime and securedthat time should count whether the vessel was in berth or not provided she hadarrived at the port. On arrival at Spurn Head, the vessel had not reached the legal,administrative or fiscal limits of Hull and the words ‘‘whether in berth or not’’ didnot extend the meaning of ‘‘arrival at the second port’’ to include a place not withinthe limits of the port so that the owners’ claim failed.

The point appeared arguable because of the use of the word ‘‘arrival’’ (see later,for a wider interpretation of ‘‘arrival’’ in 1964 in The ‘‘Angelos Lusis’’12 in respect of‘‘reachable on arrival’’) but the Seafort decision remains valid. The perhaps uncom-mercial interpretation of the Seafort decision may be circumvented by the partiesusing the acronym Wipon (whether in port or not) instead of or in addition to


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Wibon (whether in berth or not); see below, paragraph 29, for consideration of theformer phrase.

28. In paragraph 26 mention was made of Charterparty Laytime Definitions 1980(referred to by Lord Justice Lloyd in The ‘‘Kyzikos’’) and the acronym Wibon. InVoylayrules 1993 the wording has been altered in that ‘Whether in berth or not’’(Wibon) shall mean that if no loading or discharging berth is available on her arrivalthe vessel, on reaching any usual waiting-place at or off the port, shall be entitled totender notice of readiness from it and laytime shall commence in accordance withthe charterparty. Laytime or time on demurrage shall cease to count once the berthbecomes available and shall resume when the vessel is ready to load or discharge atthe berth. There are several differences between the wording of Voylayrules andDefinitions, namely:

(1) Voylayrules refers to the berth being available as compared to the berthbeing accessible in the Definitions and reflects the House of Lords deci-sion in The ‘‘Kyzikos’’.

(2) ‘‘On reaching any usual waiting-place at or off the port’’ as compared to‘‘when the ship has arrived at the port in which the berth is situated’’ asin the Definitions. The obvious intention of the differing words is to allowa notice of readiness, under Voylayrules, to be given outside of the portlimits (not allowed under the common law, see earlier paragraph 27) solong as the vessel is at the usual waiting place whereas under the Defini-tions the vessel has to arrive ‘‘within the port’’ as per the ‘‘Oldendorff/Maratha Envoy’’ decisions.

(3) The last sentence of Voylayrules (not in the Definitions) states that lay-time shall cease to count once a berth becomes available and shall resumewhen the vessel is ready to load or discharge at the berth. It appears thatthis sentence bites even though the berth may not have become accessibleand therefore it is perhaps unfair to an owner of a vessel because othercircumstances may have arisen after laytime has commenced which laterprevent the vessel moving to a berth even though the berth has becomeavailable.Baltic Code 2003 has a similar definition to Charterparty Laytime Defini-tions 1980 since it reads, ‘‘if the designated loading or discharging berth isnot available on her arrival, the vessel on reaching any usual waiting placewithin the port, shall be entitled to tender notice of readiness from it andlaytime shall commence as provided under the charterparty’’.

It is emphasised, as mentioned earlier, that Charterparty Laytime Definitions 1980,Voylayrules 1993 and Baltic Code 2003 only apply if they are expressly incorporatedinto a charterparty contract. It may be better to remain with the common law ratherthan incorporating the Definitions/Voylayrules into charterparties.

29. ‘‘Whether in port or not’’ is now seen commonly in voyage charterparties andthe phrase should circumvent the effect of the Seafort decision where the parties usethe words ‘‘time to count from arrival . . . ’’ in a port charterparty. As yet there are


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no legal authorities regarding the ambit of ‘‘whether in port or not’’ when consider-ing whether a vessel has reached the agreed destination in order to give notice ofreadiness but commercial commonsense dictates that the words should bite incircumstances where the vessel has not got within the port according to the Old-endorff13 test but has reached the usual waiting place for the port in question and cango no further because of the non-availability of a berth. If the vessel cannot move toa berth because of weather/navigational factors (such as the Kyzikos14 circum-stances) the position may be different since presumably what Lord Brandon had tosay in The ‘‘Kyzikos’’ would be germane. In other words, Wipon would allow anotice of readiness to be tendered at the usual waiting place, even if the vessel wasoutside the port limits, so long as the reason for the vessel not moving into the portwas the non-availability of a berth but, where weather/navigational factors preventedthe vessel moving into the port the phrase would not bite and the vessel would haveto get within the port in order to tender a notice of readiness. No doubt the courtswill eventually deliver a binding precedent but in the meantime it will remainspeculative as to the full effect of Wipon.

What has been said above regarding the restrictions on Wipon may conflict withthe Court of Appeal’s decision in The ‘‘Kyzikos’’ regarding ‘‘at the immediate andeffective disposition of the charterers’’ (weather conditions preventing the vesselfrom moving to an available berth but not affecting the vessel being at the immediateand effective disposition of the charterer). It is a pity that the House of Lords did notgive consideration to ‘‘at the immediate and effective disposition of the charterer’’when it had the opportunity in The ‘‘Kyzikos’’ but declined to do so because of itsdecision regarding Wibon. If it had given full consideration to the subject it mighthave reversed the Court of Appeal and decided that a vessel could not be at theimmediate and effective disposition of the charterer when she arrived geographicallyso as to tender a notice of readiness but could not move further because of aweather/navigational factor. Such a decision would have parallelled the ultimatedecision in respect of Wibon and provided consistency so that a notice of readinesscould be tendered at the usual waiting place within the port if a berth was notavailable but not if a berth was available for the vessel but unreachable because ofweather/navigational factors. The same reasoning should, it is submitted, be appli-cable to Wipon.

Although there are no binding authorities regarding ‘‘whether in port or not’’ thephrase was the subject of some obiter in The ‘‘Shackleford’’15 and even more obiter inThe ‘‘Adolf Leonhardt’’.16 In the former case Mr Justice Donaldson (as he then was)stated:

‘‘The words ‘whether in port or not’ cover the possibility, if such there was, that a bunkeringor other berth might be ‘at’ but not ‘in’ the port of Constanza, and also the possibility of anychange in the regulations allowing customs entry in the roads.’’


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The vessel was in Constanza Roads when notice of readiness was given and itappeared that the learned judge considered her to be at, but not in, the port. Thecase went to the Court of Appeal but no further guidance to this problem materi-alised in that court. In the later Adolf Leonhardt (see also earlier paragraph 18,above) case Mr Justice Staughton (as he then was) had to decide whether the sellersor the buyers of grain were liable for delay (no berth available) at the Intersectionanchorage regarding a vessel bound for Rosario, a port some 200 miles up river fromthe Intersection; the Intersection was recognised as a waiting area for Rosario as itwas also for other ports in the rivers Plate and Parana; the master gave a notice ofreadiness after he anchored at the Intersection. The sale contract incorporated theCentrocon charterparty terms and in respect of laytime, read: ‘‘time to count . . .WIBON, WIPON, WIFPON [whether in free pratique or not] . . . ’’.

Mr Justice Staughton decided that the sellers (standing in the shoes of charterers)had no liability in respect of the delay at the Intersection on the basis that theCentrocon strike clause operated in favour of the sellers as per the binding Court ofAppeal decision in The ‘‘Amstelmolen’’17; the cargo could not be loaded by reason ofobstructions beyond the sellers/charterers control. Therefore, there was no need forhim to make a decision regarding Wipon but he considered this point by way ofobiter, as follows:

‘‘The contract in this case does have the words ‘whether in port or not’. Manifestly the effectis to avoid in part the rule that a vessel must have arrived at the port before laytime cancommence. But how near to the port must the vessel be, and what hazards can remain to beovercome, when notice of readiness is given?

If I had to decide the issue, it would be on the basis that the appropriate waiting places forRosario are first the roads there, or if they are congested Intersection, or if Intersection iscongested, Recalada; and that a vessel obtains no priority until she reaches Rosario Roads.But I have doubts as to the last point.

There is scarcely any authority on the words ‘whether in port or not’.With great respect to Mr Justice Donaldson if he intended to deal with the problems, his

distinction between being at or in a port is of no assistance to shipowners when there is nowaiting area which is even at the port, as for example in the River Weser. Perhaps the phrase‘whether in port or not’ was not intended to help shipowners in such cases. But the contractsin the present case were concluded a few months after the decision of the House of Lords inThe ‘Maratha Envoy’. . . . It appears to me not unlikely that the use of the words ‘whether inport or not’ by these parties, or at least the more general use of those words amongst othersfollowed by these parties, may have been directed at ports with no waiting area within theirlimits. In point of geographical proximity I therefore prefer Mr. Hallgarten’s solution, whichis that the vessel must reach a usual waiting area for the port in question.’’

His inclination to decide that Wipon included the Intersection anchorage (a usualwaiting area for Rosario although not the only area, and some 200 miles from theport) ran parallel with his other inclination that the vessel was ‘‘at the immediate andeffective disposition of the charterer’’ when she was lying at the Intersection anchor-age waiting for a berth. There is no doubt that his lordship took a broad, robust andcommercially practical approach to ‘‘whether in port or not’’ and ‘‘at the immediateand effective disposition of the charterer’’ in a berth congestion circumstance; it willbe interesting to see what binding precedent eventually emanates from the courts

17. [1961] 2 Lloyd’s Rep. 1.


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regarding circumstances like those just described so that the commercial commu-nity will know, with more certainty than at present, the full ambit of Wipon incircumstances where a waiting area (not necessarily the waiting area) is some hun-dreds of miles from the loading/discharging port. For example, in recent times,Nigerian port authorities have insisted that ships anchor at least 160 miles out to seain order that they be out of the range of pirate boats. Would Wipon bite in thosecircumstances?

The only guidance available from any reported arbitration regarding similarcircumstances is that referred to earlier in paragraph 16 (LMLN 143—25 April1985) where the arbitrators decided that a waiting place some 400 miles distantfrom the port of destination could not possibly be held to be within the ambit ofWipon. In any event, can it really be said that a vessel is at the immediate andeffective disposition of the charterers if it is some hundreds of miles from theloading/discharging area?

A relatively recent reported arbitration regarding Wipon is that in LMLN615—12 June 2003 where the vessel was chartered on an amended Africanphos1950 form for the carriage of a cargo of phosphate in bulk from ‘‘one good and safeberth always afloat Sfax’’ to ‘‘one good and safe berth always afloat Setubal’’. At11.50 on Wednesday 5 December, at the end of the vessel’s sea passage to Setubal,the master tendered notice of readiness. The vessel waited outside Setubal Port until13.20 for a pilot to come on board, and then shifted inwards to Setubal Roads,where she anchored at 15.15 and free pratique was granted 15 minutes later. Thevessel then waited until 09.30 on Saturday 8 December for a second pilot to comeon board to bring the vessel in to her berth, where she arrived alongside at 11.00,commenced discharge at 08.00 on Monday 10 December and completed at 14.45the following day.

The owners acknowledged that the charter was a berth charter, but they relied (1)on clause 21, which provided that notice of readiness might be tendered whether inport or not (‘‘Wipon’’) and whether in berth or not (‘‘Wibon’’), and (2) on clause45, which stated that ‘‘time lost in waiting for berth to count as laytime providedthat all excepted periods for loading/discharging itself would also apply’’.

As to clause 21, the owners said that the effect of that provision was that the vesselmight tender notice of readiness even though not actually in the port of Setubalitself at the time. That was because the parties had agreed to shift, and allocate tothe charterers, the risk of delay from congestion which would otherwise be for theowners’ account under the berth terms of the charterparty. On completion of thesea voyage and arrival at Setubal, the vessel had been unable to proceed immediatelyto berth due to port traffic/congestion and, thus, notice of readiness might betendered when the vessel got as near as she could proceed to the berth. The ownerssaid that when the notice of readiness was tendered the vessel was in all respects atthe immediate and effective disposition of the charterers in that she could haveproceeded to berth without any significant delay if the charterers had called uponher to do so. That was the case even if the vessel had not then reached what couldbe defined as the usual waiting place for vessels waiting to berth at Setubal.

The charterers contended that the notice of readiness was invalid. They said thatnotice could only be given upon arrival at the usual waiting place at which the vessel

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could be described as an ‘‘arrived ship’’. The designated waiting place at Setubal,they said, was the inner roads at which the vessel anchored at 15.15 on5 December.

It was held that, by comparison to the expression Wibon there were surprisinglyfew cases that had considered the meaning of the term Wipon. Parties had atendency to attempt to construe the expression too broadly. Whilst it might extendthe range of places at which notice of readiness might be tendered, it did not do soat the expense of the paramount requirement that the owners should have done asmuch as possible to place the vessel at the disposal of the charterers. In the case ofa berth charter, that at very least required that the vessel should have completed thesea leg of the voyage and reached a point as near as possible to the loading ordischarge berth. At ports where that point was outside port limits, the Wiponprovision would assist the owner by allowing the vessel to tender notice of readinessthere. Where, however, as at Setubal, the vessel merely paused on its passage in tothe port or berth, for example, to pick up a pilot, the requirements of the provisionwould not be satisfied.

Although no evidence on the point had been put before the tribunal, the indica-tions were that the requirements of the Wipon provision were not satisfied. Itseemed clear that the master had tendered notice of readiness as soon as the vesselreached the pilot station outside the port of Setubal. The vessel had only waitedthere for 1 hour 30 minutes before a pilot had come out to take the vessel to theinner anchorage inside the port. That indicated persuasively that the pilot stationwas merely a transit point on the voyage and did not properly represent the point atwhich the carrying leg of the voyage came to an end and the vessel was as near aspossible to the berth and at the immediate and effective disposition of the charter-ers. That point was the inner anchorage where the vessel had arrived at 15.15 on5 December. That was the usual waiting place for a berth at Setubal. Accordingly,notwithstanding the Wipon provision, the master was only entitled to tender noticeof readiness on arrival at the inner roads and no earlier. Thus, the notice ofreadiness tendered by the master was invalid and ineffective to start laytimecounting.

However, the owners had not relied merely on clause 21. They had also relied onthe time lost waiting for berth provision of clause 45, which was a rider clause, andin which they were successful, see later paragraph 38.

30. Sometimes owners try to advance the commencement of laytime by morecomplicated clauses than those referred to in paragraphs 25–29, above. For exam-ple, in The ‘‘Freijo’’18 the charterparty contained (inter alia) the following clauses:

‘‘6. Time to count from after the ship has reported as ready and in free pratique whetherin berth or not . . .

26. If through congestion at the port of discharge and loading steamer is kept waiting offthe port lay days are to commence to count as per Clause 6 but not until 36 hours fromarrival . . . ’’

18. [1978] 2 Lloyd’s Rep. 1.


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The vessel anchored at the discharge port pilot station but could not move into aberth because of congestion. Free pratique could not be granted until the vesselmoved into the inner anchorage. The charterers contended that when clauses 6 and26 were taken together it was a condition precedent that, before laytime com-menced, the ship had to be reported and to have obtained free pratique. In the HighCourt Mr Justice Donaldson (as he than was) held that:

(1) under clause 6, time would only run if (a) the vessel was within the port,(b) she had reported, (c) she was in every respect ready to load and (d) shewas in free pratique; and in this case when the vessel lay at the pilot stationanchorage she was not within the port nor was she in free pratique andtime therefore could not begin to run under clause 6;

(2) clause 26 provided alternative criteria which if met caused laytime tocommence, i.e. the vessel had arrived off the port of Lourenco Marquesand she was kept waiting there by congestion at the port; and laytimebegan to count 36 hours from arrival if those criteria were met;

(3) the phrase ‘‘clause 6’’ in clause 26 governed the word ‘‘count’’ and not thewords ‘‘commence to’’; and viewed as a commercial point, the parties hadcontemplated two possibilities (a) that the vessel might sail straight intoport and thus comply with clause 6 and time would begin to count at most24 hours later; (b) that the vessel might be kept waiting outside the portdue to congestion and the first 36 hours of delay but no more was to beto the owners’ account;

(4) it was the obligation of the shipowner to have the vessel ready to loadcargo including having the vessel in free pratique as soon as the chartererwas ready to load and if he was in breach of this obligation the chartererwould have a cross-claim which would extend the laytime or extinguishthe demurrage for the period of delay.

Judgment was given for the owners. The charterers appealed and, in dismissingthe appeal, the Court of Appeal held that:

(1) on the construction of clauses 6 and 26, the arbitrator and the learnedjudge were right in the conclusion which they reached that reporting asbeing ready and obtaining free pratique was not a condition precedent tothe operation of clause 26 so as to make laytime count long before thevessel got to the inner anchorage and could give the relevant notice underclause 6;

(2) it was plain that the burden of waiting time through congestion, as a resultof which the ship could not get to the inner anchorage to commenceloading was by clause 6 cast upon the charterers;

(3) the parties had chosen to advance the time for the commencement oflaytime and therefore laytime commenced to count notwithstanding thatthe ship had neither reported nor was ready nor had received free pratiqueunder clause 6.

The Freijo case18 is a good illustration of how a departure from simple straight-forward wording can lead to complications with attendant high level costs—the

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dispute resulted in an arbitration, a High Court action and a hearing in the Courtof Appeal. Another example of special wording, intended to deal with berth conges-tion, and which finished up in the courts, is that found in The ‘‘Puerto Rocca’’ (seeparagraph 20 above for the facts and decision); it started as an arbitration butfinished up in the High Court.

In a much later reported London Arbitration LMLN 434—22 June 1996 thevessel was chartered on the C (Ore) 7 Mediterranean Iron form for a voyage to carrysome 25,000 metric tons of bulk sulphur from Aqaba to Constanza. Disputes arosebetween the parties regarding the calculation of laytime and demurrage at bothloading and discharging ports. The dispute in respect of the loading port is notrelevant to the present text although it is relevant to the aspect of an implied termof reasonable despatch, see later paragraph 56 et seq. The charterparty provided:

Clause 6‘‘Time for loading to count 24 hours after the ship is reported ready, and in free pratique andnotice accepted (whether in berth or not), Fridays, Holidays excepted and for discharging 24hours after ship is reported and in every respect ready, and in free pratique, and notice acceptedwhether in berth or not Sundays, Holidays excepted. Steamer to be reported during officialhours only . . . ’’

Clause 25‘‘Waiting time for berth to count as loading/discharging time subject to all exceptions agreed forlaytime under this CP.’’

Clause 26‘‘If through congestion at the port of discharge steamer is kept waiting on the roads laytime tocommence to count as per clause 6, but not until 36 hours from arrival (Sundays andHolidays excepted).’’

[Typewritten amendments shown in italics.]At the discharge port, notice of readiness was given on 31 July. Due to congestion

the ship did not berth until 14 August. The notice was not accepted until 15 August.The charterers accordingly argued that time did not start counting until 08.00hours on 16 August, whereas the owners said that it started on 1 August.

It was held that the position at the discharge port was not entirely the same as itwas at the loading port, in particular because it was not until the ship berthed (at21.15 hours on 14 August) that she could obtain customs clearance and freepratique, which she did at 22.35 hours that day. It was not, accordingly, until thattime that the requirements of clause 6 (that she be ‘‘reported and ready, and in freepratique’’) could be said to have been satisfied. In that context, though, clauses 25and 26 of the charter were relevant.

The problem that arose when, as so often was the case, a ship could not complywith clause 6 requirements until she was berthed, had been ventilated in arbitrationson many occasions over the years. It should have been put to rest, as the point hadbeen clearly decided by the Court of Appeal in The ‘‘Freijo’’,18 a decision on theform of charter in issue in the present case. The Court of Appeal held that reportingand being ready and obtaining free pratique was not a condition precedent to theoperation of clause 26, so that laytime could count before the ship got to the inneranchorage and gave the relevant notice under clause 6. If there was any room left fordoubt, it was removed by clause 25 of the present charter.


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The above-mentioned cases and arbitration illustrate the problems which mayevolve where parties depart from a simple approach for advancing the commence-ment of laytime (by incorporating more complicated clauses) in circumstanceswhere vessels have to wait off a port for reasons such as congestion.

31. The North American Grain charterparty came into existence in 1973 and hasbeen widely used in the grain trade since that time; it was amended in 1989particularly in relation to the commencement of laytime/waiting for a berth. In the1973 edition of the port charterparty the clause (17b) which may practicallyadvance the commencement of laytime if the vessel cannot enter the port becauseof berth non-availability reads, as follows:

‘‘(b) Waiting for BerthIf the vessel is prevented from entering the commercial limits of the loading/dischargingport(s) because the first or sole loading/discharging berth or a lay berth or anchorage is notavailable, or on the order of the Charterers/Receivers or any competent official body orauthority, and the Master warrants that the vessel is physically ready in all respects to load ordischarge, the time spent waiting at a usual waiting place outside the commercial limits of theport or off the port shall count against laytime. Such laytime shall count from vessel’s arrivalat such usual waiting place and will continue to run. . . . If after entering the commerciallimits of the loading port, vessel fails to pass inspections . . . and requires more than fourhours SHINC to pass such inspections from the time of initial failure to pass the time spentwaiting outside the commercial limits of the port as per lines shall not count . . . but if saidvessel passes inspections within said four hours any delay in commencing loading directlyattributable to its failure to pass initial inspections shall not count as laytime or time ondemurrage.’’

The above clause has been the subject of arbitrations in London, one of which wasof interest in respect of the application of the clause in circumstances where thefour-hour period came into play; that arbitration also has relevance to Chapter 4(readiness). The events took place in 1983, the arbitration occurred in 1985 and itwas reported in LMLN 299—20 April 1991.

The vessel, an OBO, was chartered on 26 April for the carriage of a cargo of grainfrom a Mississippi port. She had previously been carrying a cargo of oil and had toclean and ballast three holds in order to reach the load port.

On 3 May the charterers informed the owners that there was an anticipatedberthing delay of three to four days. On 5 May, the vessel having completed cleaningof the holds, the master advised the charterers that the vessel was ready to load. Thevessel anchored at an anchorage which (as the arbitrators found) was a usual waitingplace for vessels loading at the load port although it was about 42 miles down-riverof the loading port, Ama. As at 5 May the earliest berthing date was put at 11May.

On 6 May, six holds were passed for loading, at the anchorage, by NCB andUSDA inspectors. Holds 3, 5 and 7 were in ballast. The holds passed by theinspectors could have lifted the intended cargo, but shortly after the inspection,officials at the elevator refused to accept a notice of readiness stating that No. 5 holdwas scheduled for loading and had not been inspected and passed. The vesseldeballasted No. 5 hold, and that hold was inspected and passed by NCB and USDAinspectors on 7 May. The deballasting had taken longer than four hours. A notice

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of readiness was accepted by the charterers on 7 May. The vessel had to reballastNo. 5 hold to pass under a bridge for her eventual passage up-river to the load porton 14 May.

The vessel was at the anchorage for the whole of the period from 5 May to 14May. During that time no loading berth was available for the vessel at the loadport.

The laytime allowed under the charterparty for the loading of cargo was fiveweather working days of 24 consecutive hours, Sundays and holidays excepted. Theowners claimed that the whole of the time waiting for berth counted as laytime.They relied on the above clause.

The charterers submitted that the master’s warranty required to be given underclause 17(b) went to the readiness of the vessel to load, and that the validity of thewarranty was dependent upon whether more than four hours was taken at a laterstage to obtain the NCB and USDA certificates. Furthermore, time at the anchor-age had to be spent waiting for berth. That was not so if time was utilised obtainingNCB/USDA certificates and ballasting cargo spaces prior to the inspection ofsuch.

The owners contended that the scheme of clause 17 was to allow time waiting fora berth to score as laytime and that, since the vessel was always outside the commer-cial limits of the load port during relevant times, the third sentence of clause 17(b)had no applicability. The vessel passed all inspections before entering the commer-cial limits so that, in the present case the inspections had no relevance to waitingtime and the counting of such against laytime.

It was held that the evidence showed that the vessel was prevented from enteringthe commercial limits of the load port because the up-river anchorages were con-gested. The anchorage where the vessel waited was widely known as one of the usualwaiting places for vessels loading grain at the load port. Clause 17(b) did not statethe usual waiting place, but a usual waiting place.

There was no failure by the master when he made his warranty regarding thereadiness of the vessel on 5 May. At that time there was sufficient space available onthe vessel, in the required condition (as proved by the inspections on 6 May), for theintended cargo. It was sensible and safe for the master to retain ballast in No. 5 hold.Spaces used for necessary ballasting should not come into the reckoning regardingthe master’s warranty under clause 17(b). There were circumstances where vesselslike OBO’s had to retain ballast in cargo spaces at anchorages for safety reasons, andclause 17(b) could become unworkable if the master’s obligation was to have suchcargo spaces pumped out and passed within four hours of an inspection by NCB/USDA officials. It made sense that the warranty was satisfied even if some cargospaces were ballasted.

When the charterers gave instructions that No. 5 hold should be inspected andpassed there were no problems in that respect. All that was required was to deballastthe hold and allow the officials to reboard the vessel and inspect a hold which hadbeen properly cleaned. If the charterers had made their position clear regarding No.5 hold at an earlier time the master might have been able to have arranged mattersso that that hold would have been available for inspection on the morning of 6 May,along with other cargo spaces.


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Accordingly, the master’s warranty on 5 May was valid for the purpose of clause17(b). Had the warranty not been valid, the charterers might have had a remedy indamages for any loss or damage flowing from the breach of warranty.

The whole of the time at the anchorage was time spent waiting for a berth andshould count against laytime. During part of that time inspections and deballastingof cargo spaces were taking place, but that did not make any difference. The essenceof the matter was that the vessel was waiting for a berth and clause 17(b) operatedin favour of the owners. The clause was designed to put the risk of waiting time onthe charterers, but the charterers did have safeguards if a vessel’s cargo spaces werenot physically ready when inspected inside the commercial limits of the loading port.In fact, clause 17(b) could operate in a draconian manner against owners as, forexample, they could lose the whole benefit of time waiting for a berth (which couldbe several weeks) if remedial measures, after an inspection, took longer than fourhours. In the present case any remedial measures were completed before the vesselentered the commercial limits of the load port so that they became irrelevant in thelight of the third sentence of clause 17(b).

Although the arbitration was decided in favour of the owners, on its particularfacts, it emphasised the dangers to owners of the relatively short time (four hours)for passing inspection which, as is well known, can be very rigorous in many loadingports. The draconian aspect of this part of the clause was specifically mentioned bythe arbitrators. The clause is also unsatisfactory in that it refers to the ‘‘commerciallimits’’ of the port, a phrase which, it was thought, went out of vogue with theOldendorff decision. While the Norgrain 1973 may still be used by some organisa-tions it has been replaced by the Norgrain 89 charterparty which radically altersclause 17(b) regarding the commencement of laytime in the context of waiting fora berth. The new clause (already referred to earlier in paragraph 17), identified as18(b) rather than 17(b), reads:

‘‘(b) Waiting for Berth Outside Port LimitsIf the vessel is prevented from entering the limits of the loading/discharging port(s) becausethe first or sole loading/discharging berth or a lay berth or anchorage is not available withinthe port limits, or on the order of the Charterers/Receivers or any competent official body orauthority, and the Master warrants that the vessel is physically ready in all respects to load ordischarge, the Master may tender vessel’s notice of readiness, by radio if desired, from theusual anchorage outside the limits of the port, whether in free pratique or not, whethercustoms cleared or not. If after entering the limits of the loading port, vessel fails to passinspections as per Clause 18(e) any time so lost shall not count as laytime or time ondemurrage from the time vessel fails inspections until she is passed, but if this delay inobtaining said passes exceeds 24 running hours shex all time spent waiting outside the limitsof the port shall not count.’’

The 1989 version is a vast improvement on the 1973 version since it has replaced‘‘commercial limits’’ by ‘‘port limits’’, thus avoiding disputes as to the meaning of‘‘commercial limits’’, and it has increased the four-hour period for passing inspec-tions to 24 running hours Sundays and holidays excepted: however, if the 24-hourperiod is exceeded then none of the waiting time outside the port limits will countso that some harshness remains. The rationale for the four hours harshness in the1973 charterparty was that if more than that time was required for passing inspec-tions the master’s unverified representation that the vessel was ready to load or

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discharge might prove inaccurate; the four hours part of the clause was intended tobe a deterrent to the making of such misrepresentations and thus be a safeguard tocharterers. In practice it was found that the four hours time limit was too shortbecause surveyors/inspectors might not be readily available at all times; thus, whilethe rationale still remains, its harshness has been ameliorated by the 24-hoursperiod and is much more reasonable for owners of vessels.

32. There are a good variety of clauses in existence in the dry bulk cargo worldwhich are tailor made for advancing the commencement of laytime in circumstancesof berth congestion and a vessel having to wait outside port limits apart from thosealready referred to. A good clause for owners which is relatively simple is the BalticConference General Waiting for Berth Clause, 1968 (‘‘Genwait’’), which reads:

‘‘(a) If the loading berth is not available on Vessel’s arrival at or off the port of loadingor so near thereunto as she may be permitted to approach, the vessel shall beentitled to give notice of readiness on arrival there with the effect that laytimecounts as if she were in berth and in all respects ready for loading provided that theMaster warrants that she is in fact ready in all respects. Actual time occupied inmoving from place of waiting to loading berth not to count as laytime. If afterberthing the Vessel is found not to be ready in all respects to load, the actual timelost from the discovery thereof until she is in fact ready to load shall not count aslaytime.

(b) If the discharging berth is not available on Vessel’s arrival at or off the port ofdischarge or so near thereunto as she may be permitted to approach, the Vesselshall be entitled to give notice of readiness on arrival there with the effect thatlaytime counts as if she were in berth and in all respects ready for dischargingprovided that the Master warrants that she is in fact ready in all respects. Actualtime occupied in moving from place of waiting to discharging berth not to count aslaytime. If after berthing the Vessel is found not to be ready in all respects todischarge, the actual time lost from the discovery thereof until she is in fact readyto discharge shall not count as laytime.’’

The clause allows laytime to commence outside of port limits in a port charter-party because of the wording ‘‘at or off the port or so near thereunto as she may bepermitted to approach’’; thus it would appear to cover circumstances of berthcongestion and a vessel waiting for a berth up to hundreds of miles from her berthbecause she is not permitted to proceed further, such as are encountered in respectof ports in the rivers Plate and Parana and waiting places at the Intersection/ZonaComun. The clause is also advantageous to an owner in that it does not allow acharterer to contend that laytime does not commence because the vessel was notready to load/discharge cargo when she arrived of the port and the notice ofreadiness was tendered (which argument may be available to a charterer in a ‘‘timelost waiting for a berth to count as laytime’’ clause; see paragraph 39, below on thisaspect); the clause is quite specific in that only the actual time lost because of thevessel not being ready is not to count as laytime.

33. There are other clauses in use which may have the effect of advancing thecommencement of laytime but they may also have the effect of delaying it; forexample ‘‘time to commence on being reported at Custom House’’ may allowlaytime to begin, in the case of a port charterparty, when a vessel waits outside the


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port but can be reported at the Custom House while at that waiting place. In theScottish case Horsley Line Ltd. v. Roechling Bros19 a charterparty for the carriage ofpig-iron from Middlesbrough provided that the ship should ‘‘proceed to Savona orGenoa, as ordered . . . and there deliver the same . . . Time for discharging tocommence on being reported at the custom house.’’ The ship anchored in theSavona Roads and was reported to the Custom House on the same day. The roadswere the usual place for ships to lie while the harbour was full. The parties agreedthat the roads were outside both the geographical limits of the port and what wasknown commercially as the port. It was not the custom to discharge in the roads.There was a delay before the ship could get into the harbour, and a further delaybefore she could berth there. The shipowners claimed demurrage, contending thatby the custom of the port ships were allotted berths according to the order ofreporting on arrival in the roads. The charterers said that until the ship got withinport limits she was not an arrived ship. The Court of Session held that time beganwhen the ship was reported, it being put by Lord Ardwall:

‘‘ . . . although when there is no express stipulation on the subject in the contract, lay-dayswill not be held to commence to run till the ship becomes what has been called an ‘arrivedship’, yet the parties may contract otherwise, and as in this case fix the date of arrival in theHarbour roads as the commencement of the lay-days, thus throwing on the charterers the riskof the vessel failing to get a harbour berth for some time after arrival in the roadstead off theport.’’

Conversely, a ‘‘time to commence on being reported at Custom House’’ clause willdelay the commencement of laytime in the case of a port charterparty where thevessel gets within the port but cannot report at the Custom House until she berths,as has been and still is the circumstance at some ports; see The ‘‘Shackleford’’20

where the clause was similar in that, ‘‘notice of readiness must be delivered . . . vessel also having been entered at the Custom House . . . ’’. The vessel reached thedischarge port destination in the port charterparty, anchoring at the usual waitingplace within the port limits, but she could not be entered at the Custom House untilshe berthed, this being a requirement of the port. It was held that the vessel had tobe entered in the Custom House before a notice of readiness could be given. Forcompleteness it is mentioned that the case was decided in favour of the owners onother grounds, see later Chapter 6.

SPECIFIC SUMS FOR WAITING TIME

34. With one exception (see below in this paragraph) intrinsic problems do notappear to have arisen regarding clauses which spell out that specific payments haveto be made to an owner for the time when his vessel waits off a port. In practice,such clauses are not used that frequently but, when they are, are usually worded,‘‘all waiting time to be paid for at $——per day’’ or ‘‘all waiting time to be paid forat the demurrage rate’’. The Austral and Austwheat charterparties are examples of

19. 1908 S.C. 866.20. [1978] 1 Lloyd’s Rep. 191.

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this approach, the wording in such being: ‘‘Provided always that if such dischargingplace is not immediately available, demurrage in respect of all time waiting thereaf-ter shall be paid at the rate——.’’

The case which provided the exception referred to above was The ‘‘Werrastein’’.21

The vessel was chartered for a voyage from Sydney, Australia, to Hull on terms (interalia) for discharge at any customary dock, wharf or pier, as ordered by the charter-ers, plus the proviso cited above. The vessel was intended for the King George Dockat Hull and had to anchor off Spurn Head which was outside the geographical, legaland physical fiscal limits of the port of Hull, which was a customary anchorage forvessels awaiting entry to the docks. The vessel had to wait for just over seven daysbefore moving into a dock and the owners claimed for demurrage in respect of thisperiod: however, the charterers contended that the proviso of the charterparty hadno application until the vessel was ‘‘an arrived ship’’, that is when she got within theport limits. It was held by Mr Justice Sellers (as he then was) that the proviso dealtwith waiting time due to the discharging place being unavailable before laytimebegan to run and provided for just such an occasion as had arisen in the circum-stances where the vessel had reached a recognised waiting place for the port andcould do no more than be ready and available to discharge. He had this to say:

‘‘The vessel had reached the appropriate waiting place for the port. She was ready todischarge. She had to wait there because no berth was available. She had, therefore, in thecourse of her voyage to Hull reached the place where she had to stop until a berth wasavailable. The considerations which apply to a vessel which has to wait are obviously differentfrom those which apply to a vessel which has to load or discharge or may often be so. A vesselcannot load or discharge until she is in the position properly designated for the purpose.

. . . In my view, the proviso deals with waiting time (due to the discharging place being

unavailable) before lay-days commence to run, and provides for just such an occasion as hasarisen here. The loss due to waiting for discharge has to fall on one of the parties to theadventure and, of course, depends on the terms of their bargain; but provided the vessel hasreached the recognised waiting place for the port, she can do no more than be ready andavailable to discharge. The cargo-owner has the selection (within the terms of the contract)of the place of discharge. It does not seem wholly inappropriate that if loss by waiting for aberth is incurred it should fall on the charterers or consignees. The ship has to face thehazards of the voyage whereby she may be delayed by storm, fog, tides and many other events.But for Clause 2, the waiting at the anchorage would likewise have fallen on the ship, for itwould seem that the earliest time, on any view, that she could have become an arrived shipso that time for discharge would run against the charterers or their agents would be when sheentered the King George Dock, and she could not have done that before she in fact didenter.’’

This decision made sense and the judge in question was surely right to take afairly broad approach to the matter. It seems that a similar approach could havebeen taken in The ‘‘Seafort’’22 although it is conceded that the word ‘‘arrival’’ in thelatter case allowed a more restricted approach than that in The ‘‘Werrastein’’.21

One of the advantages of this type of clause (which strictly speaking does notdirectly concern the commencement of laytime) is that the whole of the waiting timescores up, at the demurrage or other specified rate, for the benefit of the owner

21. [1956] 2 Lloyd’s Rep. 210.22. [1962] 2 Lloyd’s Rep. 147. See para 27, above.

Para. 34SPECIFIC SUMS FOR WAITING TIME

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whereas, if the parties have agreed the kind of waiting clause which triggers thelaytime clock, the laytime exceptions will be applicable to the waiting time.

TIME LOST WAITING FOR A BERTH INCLUDINGTHE DARRAH DECISION

35. The much-used Gencon charterparty contains the following printed words:‘‘time lost waiting for berth to count as loading/discharging time’’. Some otherprinted forms have similar words and the words are frequently incorporated intocharterparties by way of type-added clauses. Important judgments concerning thesewords took place between 1955 and 1976. The fortunes of owners and charterersebbed and flowed through these judgments, charterers for some years sufferingconsiderable financial hardship because of the manner in which the waiting timewas counted.

The House of Lords canvassed the subject words in The ‘‘Darrah’’23 and, tocommercially minded persons, remedied what was an unjust position. Withoutgoing into too much detail, it is worth looking at the judgments in three previouscases in order to see how the judges had taken the wrong road prior to the Darrahdecision.23

In The ‘‘Radnor’’24 the vessel was chartered to carry soya beans from ‘‘one safeberth Dairen (Manchuria)’’ to Madras and Calcutta. The charterparty provided, byclause 17, that lay days should begin 24 hours after notice of readiness to load hadbeen given. Clause 5 stated: ‘‘Time lost in waiting for berth to count as loadingtime’’.

When the ship anchored in the quarantine anchorage at Dairen customs and portofficials sealed the radio, took away a number of ship’s documents, and bannedcommunication with the shore. Seven days later the ship was taken to a berth(though not loaded there) and on the following day the master was able to givenotice of readiness. The Court of Appeal held that the shipowners were entitled tocount the eight days although notice had not then been given. Mr Justice Singletonsaid:

‘‘The clause as to time wasted is independent of clause 17. It is inserted to avoid questionswhich have arisen in many cases which have been before the courts. The risk of time wastedin waiting for a berth is put upon the charterers whose agents are, or ought to be, familiarwith local conditions. The clause might have provided simply that time lost in waiting for aberth should be paid for at the rate of £600 a day. As drawn, it gives the charterers anadvantage, for they may save on loading time some, or all, of the time lost in waiting for aberth. The time lost is to count as, or to be added to, loading time in order to ascertain theposition between the parties. . . .

Upon the terms of this contract it is clear, I think, that the risk of time lost through waitingfor a berth is undertaken by the charterers, and there is nothing which deprives the ownersof the right which, on the face of the document, is given to them. Again, it appears to me thatthe master could not give the notice envisaged in clause 17 of the charterparty until the vessel


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arrived at the nominated berth. Upon the charterparty, she had to proceed to ‘one-safe berthDairen’. . . .

In my opinion, the provision as to notice in clause 17 does not affect the question arisingunder clause 5 of the charterparty, and the lack of a notice under that clause does not avoidthe owners’ rights in regard to time lost through waiting for a berth. The notice is somethingwhich has to be given for the purpose of calculating lay-days. That calculation is independentof the provision in clause 5, though the one has to be added to the other to reach the trueposition under the contract. There was certainly no obligation on the master to give a noticeunder clause 17 when the vessel arrived at—or perhaps I should say reached—the port ofDairen. The charterers knew of her arrival and the next step was for them to nominate theberth to which they wished her to go. If they failed to do so within a reasonable time, andwithout any adequate explanation, time was lost by the ship in waiting for a berth. It was tomeet such a case that the words in clause 5 were inserted in the charterparty.’’

Therefore it was decided that where the laytime provisions are in a separate clauseto the time lost waiting for berth provisions, the time lost provisions are independentof the laytime provisions and are, therefore, not to affect the independent time lostcode. The Gencon draftsman must have turned in his grave at this adumbrationsince, in commercial reality, the two clauses are not really independent. Simply forconvenience and to incorporate longer and more complicated laytime provisionsinto the contract the provisions are not inserted in the printed clauses 5 and 6 of theGencon charterparty but are type-added with a reference in clauses 5 and 6 as towhere they can be found in the type-added clauses of the charterparty.

It is strange that a minor technicality such as this should have persuaded theCourt of Appeal in The ‘‘Radnor’’24 to conclude that the time lost waiting for berthprovisions in the charterparty were independent from the laytime provisions; it islikely that bona fide motivation of the Court of Appeal led it to the above conclusionso that compensation could be given to owners for the waiting time of their vesselswhen compensation could not be given because of the strict interpretation of anarrived ship vis-a-vis the commercial area of a port and the tendering of notice ofreadiness of the vessel.

It is also strange that the court should think that the words loading and discharg-ing time meant something different to laytime; to commercial men the terms aresynonymous. Whatever the motivation, the result was to allow owners to score up allthe time the vessel was waiting for a berth if the vessel was not an arrived ship. Thelaytime exceptions were not applied and this resulted in owners being better off thanif the vessel had been an arrived ship. This led to owners striving to get time lostwaiting for berth provisions into charterparties other than the Gencon (where theyare in the printed form). It is ironic that while the courts took a realistic view of the‘‘arrived ship’’ concept they took an over-liberal approach when considering the‘‘time lost waiting for berth’’ provisions in a charterparty.

The injustice of the application of The ‘‘Radnor’’24 was emphasised in the case ofThe ‘‘Vastric’’.25 The vessel arrived off the port on a Saturday afternoon and did notberth until Monday morning; the whole of the weekend scored up as time lostwaiting for a berth even though the period was excepted under the laytime provi-sions. In so deciding Mr Justice McNair expressed his reservations regarding the

25. [1966] 2 Lloyd’s Rep. 219.

Para. 35TIME LOST WAITING FOR A BERTH

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effects of the Court of Appeal’s decision in The ‘‘Radnor’’ but felt that he had toapply it because it was binding on him.

The illogicality of the decision can be seen when it paid owners for their vesselsto arrive off a port on a weekend, rather than during a working period when thevessel might well berth immediately. The result was that owners often got compen-sated for time which, otherwise, would not be paid for by the charterers. A mitigat-ing factor, as far as charterers were concerned, was that in The ‘‘Vastric’’25 the timelost waiting for a berth was added at the end of the laytime calculation. At least thishad the effect, in many cases, of not allowing the time lost waiting for a berth toexhaust the laytime and put the vessel on demurrage before the vessel berthed.However, as far as charterers were concerned, the situation was to deterioratefurther with the decision in The ‘‘Loucas N’’.26

36. In The ‘‘Loucas N’’ it was decided by the High Court that time had been lost atboth loading and discharging ports in waiting for a berth and the time lost provi-sions in clauses 5 and 6 of the charterparty (time lost in waiting for berth to countas loading/discharging time respectively) were independent of the strike clause inthe charterparty (which would otherwise have been effective at the discharging portto stop laytime commencing). In respect of how to apply the waiting time in thecompilation of time sheets the following questions were posed:

(i) before the commencement of loading or discharge . . . at the port for aberth in which the vessel was waiting;

(ii) after the conclusion of loading or discharge at that port;(iii) after the conclusion of loading at the last loading port (where the time is

lost waiting for a berth at a loading port) and at the conclusion of dis-charge at the last discharging port (where the time is lost waiting for aberth at a discharging port);

(iv) after the conclusion of discharge at the last discharging port;(v) in some other, and if so what, manner.

Mr Justice Donaldson (as he then was) decided, regarding the above, that time lostwaiting for a berth should be applied moment to moment as it occurred and it hasbeen the practice to follow this approach. This exacerbated the position for charter-ers as compared with the Vastric decision25 since it could lead to a situation wherethe time lost waiting for a berth exceeded the laytime thus putting the vessel ondemurrage before she berthed, and this by applying all of the time lost waiting fora berth to the actual laytime. Thus, seven days of straight time waiting for a berthput the vessel on demurrage for one day if the laytime allowed was six weatherworking days, holidays and Sundays excepted; the obvious advantage of the decisionto owners can be seen at a glance.

To add insult to injury, vis-a-vis charterers, the High Court judge went on to stateby way of obiter:

‘‘The fact that a ship is or is not an arrived ship is totally irrelevant to the question of whethertime lost waiting for berth is to count . . . I have already pointed out that a situation can arise

26. [1970] 2 Lloyd’s Rep. 482.

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in which both the laytime and the time lost provisions are operative. This occurs if a ship isemployed under a port charterparty and lies within the commercial area of the port whilstwaiting for berth. In such a case the laytime provisions can be ignored so long as the ship iswaiting for a berth, for the same moment of time cannot count twice. Once the waiting timeis over it is necessary to look again at the laytime provisions, if the ship is not already ondemurrage, in order to see whether, although time is no longer counting by virtue of beinglost in waiting for a berth, it is then counting as loading or discharging time properly socalled.’’

This obiter was, inferentially, approved by the Court of Appeal,27 and applied in theshipping world until the 1976 decision in The ‘‘Darrah’’.28 The effect was that (interalia) if the vessel waited for a berth, in a position where she was an ‘‘arrived ship’’,the notice time was used up so that when the vessel moved to a berth the time afterthe completion of shifting to a berth scored up immediately, and without referenceto the notice time in the charterparty, assuming, of course, that the notice ofreadiness which was given originally was good in all respects.

To put it in another way, the vessel arrives in the port and waits for a berth so thatthe time lost waiting for a berth provision operates; the laytime provision alsooperates so as to commence laytime but laytime does not run (in view of the timelost provision taking priority), but simply remains inchoate until the vessel com-pletes shifting to a berth whereupon the laytime clock is triggered off so as to scoreagainst the laytime remaining after the deduction from the laytime allowed of thetime lost waiting for a berth. The injustice to charterers is easily manifested.

The result of the Loucas N decision29 was that owners won hands down in caseswhere there was time lost waiting for berth provisions in the charterparty. If thevessel had not become an ‘‘arrived ship’’ when waiting for a berth all the time scoredup without exceptions, as it did also even in cases where the vessel became an‘‘arrived ship’’. In both kinds of situation the owners were compensated for timewhich they would not normally be compensated for (Sundays, holidays, etc.) with-out a time lost waiting for berth provision. To this extent, at least, the Loucas Ndecision29 was unfair as well as commercially unrealistic. In the latter type situation(vessel arrived and waiting for berth) the result could be grossly unfair in circum-stances when the laytime was swallowed up by the time lost waiting for a berth thusdenying the charterers any benefit whatsoever regarding the notice time.

37. It is ironic that the extension of the ‘‘arrived ship’’ concept by the JohannaOldendorff decision30 (an improvement to owners) did not benefit charterers in caseswhere the charterparties contained ‘‘time lost waiting for berth’’ provisions. Itappeared just that laytime exceptions should be applied to the time lost waiting forberth provisions but, unfortunately, the Johanna Oldendorff case30 was only con-cerned with the arrived ship concept and gave no thought whatsoever to the law inrespect of time lost waiting for a berth.



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Of course, a court will only answer the question put to it and unless many partiesjoin together and put general principles to the courts on a consolidated basis, thelaw tends to develop piecemeal. This is unfortunate since it can lead to unsat-isfactory law if problems, which are intrinsically interrelated, are taken in isolation.There was a strong argument that, when The ‘‘Johanna Oldendorff ’’30 went to theHouse of Lords, the highest court in the land should also have considered the timelost waiting for a berth aspect but it did not do so. Luckily, only a few years passedbetween the Oldendorff decision30 and that of the House of Lords in The ‘‘Darrah’’.31

Before passing to the Darrah decision,31 it is worth mentioning that, during theperiod from 1970 to 1976 (from the Loucas N29 to the Darrah decisions), charterersmust have paid out many millions of dollars demurrage over and above that whichwould have been paid if the charterparty exceptions had been applied to the timelost waiting for a berth when a vessel arrived at or off the port.

38. Turning to the Darrah case itself, the vessel was chartered on the Gencon formfor a voyage to Tripoli, Libya. The printed clause had been amended so that it read‘‘time lost waiting for berth to count as laytime’’ instead of the printed ‘‘time lostwaiting for berth to count as discharging time’’. The vessel anchored in TripoliRoads, where she was within the port and thus an arrived ship on 2 January, andgave a notice of readiness. She did not berth until 9 January because of berthcongestion. The owners contended that the whole of the waiting time should scoreup with the effect that they should be entitled to 14 days demurrage; the charterersargued for the laytime exceptions to be applied to the waiting time with the resultthat the owners were entitled to demurrage for only just under four days. Theleading maritime arbitrator of the day, Cedric Barclay, took a bold and perhapsheretical approach in deciding the matter in favour of the charterers whereby theexceptions applied to the waiting time. Like most other maritime arbitrators of thetime he felt that the Loucas N decision was unfair and commercially wrong and tookthe bull by the horns in not following it. His award was in the form of a special caseand it was set down in the courts. In the High Court32 Mr Justice Ackner (as he thenwas) reversed the arbitrator’s decision, deciding that where time was lost waiting fora berth all the time so lost was to count whenever and wherever the waiting placeand the laytime exceptions only operated once the discharging berth was ready forthe vessel. In other words, he applied the decisions set out earlier in paragraphs 35and 36. His decision was in turn reversed by the Court of Appeal33 where it washeld, unanimously, that where a ship was an ‘‘arrived ship’’, as in the case inquestion, and she was waiting for a berth the laytime provisions applied so thatlaytime exceptions applied to the time lost waiting for a berth. The case then wentto the House of Lords34 where the Court of Appeal’s decision was upheld, ondifferent reasoning, to the effect that:


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(a) In the computation of time lost in waiting for a berth the excepted periodshad to be applied just as if the vessel had actually been in berth and laytimewas running.

(b) There was no conflict between the laytime provisions and the time lostwaiting for berth provisions in the case of an arrived ship under a portcharterparty.

(c) The fact that there was an overlap of the time lost waiting for berthprovisions and the laytime provisions did not matter since the time wascounted in the same way and the owner did not gain a greater advantagefrom his ship being kept waiting for a berth than he would get from herbeing kept at the loading/discharging berth.

In the leading judgment Lord Diplock had this to say:

‘‘In recommending your lordships to overrule the construction of a standard clause in amuch-used form of charterparty which has no doubt been accepted as correct by shipowners,charterers and maritime arbitrators for the last 10 years since the decision of Mr JusticeMcNair in The ‘Vastric’, I am not unaware of the importance of not disturbing an acceptedmeaning of a clause commonly used in commercial contracts upon which the parties to suchcontracts have relied in regulating their business affairs. But this is a consideration which inmy view carries little weight in the case of the ‘time lost’ clauses in the Gencon form of voyagecharters. In the first place, the results of ascribing to the clauses the meaning accepted since1966 do not make commercial sense; it gives to the shipowner the chance of receiving a bonusdependent upon whether (a) his ship is lucky enough to be kept waiting for a berth and (b)is so kept waiting during a period which includes time which would not have counted againstpermitted laytime if the ship had been in berth. In the second place, I do not think that thechance of obtaining such a bonus is likely to have influenced the freight or demurrage ratescharged. In the third place, the effect of using the variant ‘counted as laytime’ in place of‘counted as loading time’ and ‘counted as discharging time’, as has been done in the instantcase, has never previously been the subject of judicial decision. Shipowners and chartererswould not go to the trouble of altering the printed words in the standard form of ‘time lost’clause, unless they wished the clause to bear some other and more commercially sensiblemeaning than that which has been ascribed by judicial decision to the clause in its printedform. For my own part, as I have already said, I do not think that the alteration makes anydifference to the meaning of the clauses, but I have little doubt that if you gave to the clausein the version which appears in the charter the effect which I have ascribed to it and to theprinted clauses alike your lordships would be carrying out the intentions of the parties whenthey entered into the charter. For these reasons I would dismiss the appeal.’’

Apart from the effect of the House of Lords decision as in (a), (b) and (c) above itwas also made clear (as from Lord Diplock above) that there was no differencebetween time lost waiting for a berth to count as laytime and time lost waiting fora berth to count as loading/discharging time; they mean the same.

There was a point that The ‘‘Darrah’’31 did not expressly consider, with a ‘‘timelost waiting for a berth’’ clause: the application of the notice time in the case of aberth charterparty. However, it must surely be that the approach to take is that ofrunning the vessel hypothetically into the loading/discharging berth on her arrival atthe port and taking the berthing time as that for a notional tender of the notice ofreadiness. This approach should compensate the owner properly on the basis thatthis is what would/should have happened if a berth had been available when thevessel arrived off the port and it appears correct in the light of what Lord Diplock


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had to say in The ‘‘Darrah’’ (see later paragraph 39) regarding what would have beenthe position if the vessel had not been prevented from berthing because of conges-tion. In the case of a port charterparty the notice of readiness will usually beeffective as from the time the vessel arrives off the port and a notice is given to thecharterers.

In taking their decision the House of Lords overruled The ‘‘Vastric’’35 and The‘‘Loucas N’’.36 Regarding the Radnor decision,37 the court took the view that it hadbeen misinterpreted over the years and that all that The ‘‘Radnor’’37 decided was thattime lost waiting for a berth could start before notice of readiness was given. Withdue respect to their lordships this cannot be right as the Court of Appeal, in The‘‘Radnor’’,37 certainly drew the distinction between the independence of the twocodes. However, it does not really matter, from the overall point of view, as towhether or not The ‘‘Radnor’’37 was misinterpreted because of the decisions in The‘‘Darrah’’,38 as stated in (a), (b) and (c) above. All one can say is that if The‘‘Radnor’’ had been misinterpreted up until 1976, it cost charterers around theworld some very large sums of money. The fact that the House of Lords have nowgot the time lost waiting for berth aspect correct is perhaps small consolation tothose whose pocket was badly hit over the years.

The Darrah decision38 by the House of Lords is obviously right since it defeats thestartling position which had arisen whereby an owner was enriched simply becausethe absence of a berth prevented the charterer from using some of the exceptionsthat would have otherwise been available to him. The improved position is that onemakes a calculation as if the vessel had not been prevented from berthing becauseof congestion at the port and had moved into a loading or discharging berthimmediately. Unlike its approach in The ‘‘Johanna Oldendorff ’’39 the House ofLords, in The ‘‘Darrah’’,38 went the whole hog and abrogated the commercialinjustice which had arisen from the earlier decisions; its decision surely reflected theintention of the original draftsman of the Gencon charterparty.

Since the House of Lords decision in The ‘‘Darrah’’ there have not been that manyreported arbitrations regarding ‘‘time lost waiting for a berth’’ although a few aredetailed later in paragraphs 39, 40 and 41 in relation to the application of the wordsin particular circumstances. In a general sense, the fairly recent reported arbitrationLMLN 615—12 June 2003 (detailed earlier in paragraph 29 regarding Wipon)concerns circumstances where the owners could not take advantage of Wiponbecause the vessel tendered an invalid notice of readiness when she merely pausedon passage into the port to pick up a pilot. A Rider clause provided:—

‘‘At both ends, time lost in waiting for berth to count as laytime provided that all exceptedperiods for loading/discharging itself will also apply.’’

It was decided that the usual effect of such provisions was that where the mainreason why a notice of readiness could not be given (for example, in the case of a

35. [1966] 2 Lloyd’s Rep. 219.36. [1970] 2 Lloyd’s Rep. 482.37. [1955] 2 Lloyd’s Rep. 668.38. [1976] 2 Lloyd’s Rep. 359.39. [1973] 2 Lloyd’s Rep. 285.

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berth charter) was that there was no loading or discharging berth available, laytimewould commence to run when the ship started to wait for berth and continued torun until the ship stopped waiting. When the waiting time ended, time ceased tocount, unless exhausted, and restarted when the vessel reached the loading/dis-charge berth, tendered notice of readiness and any notice time provided in thecharterparty expired. The provision was independent of the laytime provisions of acharter, although time counted subject to the same exceptions as laytime.

In the present case, after the vessel reached the inner roads at Setubal at 15.15 on5 December she anchored and waited there for a berth until a pilot came on boardto take her into berth at 09.30 on 8 December. The vessel therefore waited for aberth for 66 hours 15 minutes, which exceeded the allowable laytime of 46 hours 52minutes. Not all of that time, however, was necessarily to count as laytime, and inparticular time from 17.00 on Fridays until 08.00 on Mondays was excepted byclause 21. However, since time began to count when the vessel started to wait at15.15 on Wednesday 5 December the allowable laytime would have been exhaustedby 17.00 on Friday 7 December and the vessel would already have been on demur-rage, so that time would run for demurrage, without interruption, during thatotherwise excepted period.

The tribunal was mindful of the fact that laytime did not begin to count whilst thevessel was waiting for a berth because the master had tendered an invalid notice ofreadiness at the pilot station. The tribunal considered whether that should precludethe owners from seeking the benefit of the time lost waiting for berth provisions ofclause 45. The decided cases were clear, however, that the two provisions wereindependent of each other, even though on many occasions where laytime wasrunning the time lost provision might add nothing to the position. In the presentcase, however, it did so, and the tribunal therefore concluded that time waitingbegan to count as laytime at 15.15 on 5 December (as per rider clause 45) with theresult that the owners were entitled to demurrage for the period of 4 days 38minutes (being time from 14.07 on 7 December until 14.45 on 11 December).

While there is no doubt that a time lost waiting for a berth clause can beinvaluable to owners in circumstances such as congestion, because of its independ-ent nature, it has to be remembered that the vessel in question still has to reach theusual waiting place or to get as close as practically possible to the loading/discharg-ing berth which may be or may not be within port limit.

39. Although there have been no further court decisions in respect of time lostwaiting for a berth (understandably in view of the House of Lords decision in The‘‘Darrah’’) one point worthy of consideration is that regarding a ‘‘time lost waitingfor a berth to count as laytime’’ clause in a charterparty in circumstances where avessel waits for a berth because of berth congestion but is subsequently found notto be ready to load/discharge and this can be related back to the time when the vesselarrived at or off the port and a notice of readiness was given, e.g. a few weevils inone of the holds. One argument is that since the vessel was waiting for a berth thetime lost in that respect should score up as laytime even though the original noticeof readiness was later found to be invalid; the competing contention is that time lostis directly related to laytime and since the original notice of readiness was invalid,


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because the vessel was not ready to load/discharge, laytime cannot commence sothat no time scores up in respect of the time that the vessel was waiting for a berth.While one would like to think that a purposive approach would be taken by thecourts to this set of circumstances (which are more common than is thought) thereis no guarantee of this, particularly, since there appears to have been some narrow-ing of approach by some commercial judges whereby there is a more literal inter-pretation of the words used by the parties. There is some support for the purposiveapproach from The ‘‘Darrah’’, in particular the words of Lord Diplock:

‘‘ ‘Time lost in waiting for berth’ in the context of the adventure contemplated by a voyagecharter, as it seems to me, must mean the period during which the vessel would have beenin berth and at the disposition of the charterer for carrying out the loading or dischargingoperation, if she had not been prevented by congestion at the port from reaching a berth atwhich the operation could be carried out. The clauses go on to say that that period is to countas loading time or as discharging time, as the case may be. That means that for the purposesof those provisions of the charterparty which deal with the time allowed to load or todischarge the vessel and how it is to be paid for (i.e. laytime and demurrage) the vessel is tobe treated as if during that period she were in fact in berth and at the disposition of thecharterer for carrying out the loading or discharging operation. So whatever portions of thewaiting period would have been taken into account in calculating the permitted laytime used up if thevessel had in fact then been in berth and at the disposition of the charterer (e.g. weather workingdays) are to be treated as if they had been available for loading or discharging cargo, and whateverportions of the waiting period would not have been taken into account in the calculation (e.g.Sundays or Fridays and legal holidays and days on which working was prevented by inclem-ent weather) are not to be treated as if they had been available for loading or discharging cargo.’’[author’s emphasis]

There is also some support for the approach from what Lord Justice Roskill (ashe then was) had to say in The ‘‘Tres Flores’’,40 see paragraph 64, below.

It is submitted that the time lost waiting for a berth should score up as laytime, evenif the vessel is later found not to have been ready when she tendered a notice ofreadiness, subject to an allowance of some kind to the charterer in respect to any timeutilised to make the vessel ready for loading/discharging. A calculation can be madeas to when the vessel would have been ready if she had in fact moved to a berth at thetime of her arrival at or off the port; alternatively there can be a later deduction fromthe laytime or demurrage time regarding the time lost in remedying the unreadinessof the vessel. The former approach is perhaps more reconciled to the above words ofLord Diplock regarding ‘‘the period during which the vessel would have been in berthif she had not been prevented by congestion from reaching a berth’’ and the nowaccepted approach of applying time lost waiting for a berth moment to moment as itoccurs; the difference in the two approaches can, naturally, lead to different end-results particularly when the expiry of laytime is close to an excepted period such as aweekend. Support for the submission, apart from the above words of Lord Diplock,comes also from what his lordship had to say in the slightly later Maratha EnvoyHouse of Lords decision:

‘‘In the case of both port and berth charters, however, it is the common practice, by the useof standard clauses, which too have been the subject of judicial exegesis, to provide expresslyfor the way in which the risk of delay by congestion at the loading or discharging port is to

40. [1973] 2 Lloyd’s Rep. 247.

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be allocated. These standard clauses generally provide for transferring from the shipowner tothe charterer the whole or part of this risk which would otherwise fall upon the shipownerunder the kind of charter used. A clause in common use which has the effect of imposingupon the charterer the whole of the risk of delay due to congestion at the port is ‘Time lostwaiting for a berth to count as laytime’ or as ‘loading time’ or ‘discharging time’. The timelost clause applies whether the usual waiting place lies within or outside the limits of theport.’’

If the pure literal approach is taken to ‘‘laytime’’ (that is, it cannot commence ifthe original notice is found to be invalid) so as to prevent time lost waiting for aberth to count as laytime when the vessel is waiting for a berth because of conges-tion, such surely nullifies the intention of the parties, which is to compensate ownersfor time spent waiting for a berth. Even further support for the purposive approachcomes from the Charterparty Laytime Definitions 1980 (applicable only if expresslyincorporated into a contract) which provide:‘‘ ‘TIME LOST WAITING FOR BERTH TO COUNT AS LOADING/DISCHARGING TIME OR AS LAYTIME’means that if the main reason why a notice of readiness cannot be given is that there is noloading/discharging berth available to the ship the laytime will commence to run when theship starts to wait for a berth and will continue to run unless previously exhausted, until theship stops waiting. The laytime exceptions apply to the waiting time as if the ship was at theloading/discharging berth provided the ship is not already on demurrage. When the waitingtime ends time ceases to count and restarts when the ship reaches the loading/dischargingberth subject to the giving of a notice of readiness if one is required by the charterparty andto any notice time if provided for in the charterparty unless the ship is by then ondemurrage.’’

This definition must surely have been drafted with the 1976 Darrah38 decision inmind and appears supportive of the purposive approach.

Voylayrules 1993 and Baltic Code 2003 similarly provide:‘‘TIME LOST WAITING FOR BERTH TO COUNT AS LOADING OR DISCHARGING TIME’’ or ‘‘AS

LAYTIME’’ shall mean that if no loading or discharging berth is available and the vessel isunable to tender notice of readiness at the waiting-place then any time lost to the vessel shallcount as if laytime were running, or as time on demurrage if laytime has expired. Such timeshall cease to count once the berth becomes available. When the vessel reaches a place whereshe is able to tender notice of readiness, laytime or time on demurrage shall resume after suchtender and in respect of laytime, on expiry of any notice time provided in thecharterparty.

It is surprising that no case has been to the courts regarding the subject althoughthere have been two reported arbitrations on the topic (see below). No doubt therewill eventually be a judicial ruling on the matter. In the meantime it would appearthat if owners of vessels wish to avoid the possibility of a dispute when their vesselswait for a berth in circumstances of berth congestion, they should strive for a clausethat is sufficiently clear to ensure that time waiting for a berth scores up for theirbenefit irrespective of whether the vessel is later found not to be ready for loading/discharging at the time that the original notice of readiness was given; see earlierparagraphs 31, 32 and 34.

The first reported arbitration is LMLN 71—22 July 1982 which concerned partcargoes and a time lost waiting for berth clause. The charter was on an amendedGencon form. Charterers were to load a part cargo of fertiliser. Clause 4 providedthat time lost in waiting for berth was to count as laytime. Clause 11 provided that


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charterers were liable for demurrage at the discharge port. The charterparty alsocontained the Centrocon Completion Clause, which provided: ‘‘Owners have theliberty to complete with other . . . merchandise from port or ports to port or portsen route for owners’ risk and benefit, but . . . same not to hinder the . . . dischargeof this cargo.’’ The vessel arrived off the discharge port on 26 January 1978 andcabled notice of readiness to the receivers of the fertiliser. At about the same time,she tendered notice of readiness to the receivers of the other part cargoes. Therewere a large number of ships waiting to discharge fertiliser—the average waitingtime before berthing was 40 days.

On 1 February 1978 the vessel shifted to the inner harbour and on the followingday a written notice of readiness to discharge the fertiliser cargo was given by thevessel and received by the agents of the fertiliser receivers. However, because ofoverstowage of other cargoes, the vessel was not in fact ready to discharge fertiliseruntil 12 February. The other part cargoes were discharged between 2 February and4 March when discharge was interrupted. On 7 March, for the first time, a fertiliserberth became available to this ship and discharge of fertiliser commenced, beingcompleted on 17 March. Discharge of the remaining part cargo resumed on 13March and was completed on 17 March. The vessel sailed the next day.

The owners claimed demurrage. Although they could not maintain that a validnotice of readiness could be given before 12 February, the owners submitted that allthe time from the ship’s arrival on 26 January until 7 March when a fertiliser berthbecame available, was ‘‘time lost in waiting for berth’’ and should count as laytimeunder clause 4 of the charter.

The charterers contended that in a ‘‘port’’ charter, a ‘‘time lost’’ clause effectivelyadded nothing, and did not allow the counting of time which could not be countedas laytime ordinarily because a ship was unfit for discharge. They contended thatuntil 2 February, the ship was waiting for a berth at which she could first dischargethe overstowed cargoes, and from 2 February to 7 March she was discharging cargoother than fertiliser at berths where she was put for that purpose. Therefore she wasnot waiting for a fertiliser berth, but was discharging. Also, while the ship wasprofitably employed in performing other contracts, it could not be said that she was‘‘losing’’ time.

The charterers also relied on the Centrocon Completion Clause, contending thatthe other cargo here hindered discharge of the fertiliser, and that without it the shipwould have gone straight to a fertiliser berth. To the extent that the ship might haveearned demurrage, that was as a consequence of a breach of this clause and thecharterers were entitled to be indemnified for it and for dispatch which they wouldhave earned but for the breach.

It was held that the owners were entitled to succeed. If the ship had had the samecargoes on board on arrival at the discharge port, but none of them had obstructedaccess to the fertiliser, the first notice of readiness would have been valid and laytimewould have started at 08.00 on 28 January. Assuming events had thereafter followedas they did, laytime would have continued to count notwithstanding the ship’s otheractivities, for it would seem that Ropner v. Cleeves41 would have been decided in

41. (1927) 27 Ll.L.Rep. 317.

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favour of the owners if it had been shown that the charterers there were unable towork the ship during her period of unavailability, as was the case here. If that wereright, and if it were also correct (a) that ‘‘time lost’’ provisions might operate evenwhen a ship could not give a valid notice of readiness, and (b) that ‘‘time lost’’ wasto be counted as if it were laytime counting under ordinary laytime provisions, itfollowed that all the time should count in this case.

This also seemed a commercially just result since the ship would have waited fora fertiliser berth as long as she did in any event, and the charterers lost nothing byher other activities. What the owners might have earned under their other fixturesappeared irrelevant, for the charterers knew they were only getting part of the ship,and they gave express permission for completion cargoes to be loaded. If thecharterers had thought that the Centrocon Completion Clause gave them inade-quate protection they should have sought other remedies at the time of fixing, e.g.a demurrage rate not reflecting the full value of the ship.

The second reported arbitration is LMLN 351—17 April 1993 which referred(inter alia) to LMLN 71. The vessel was chartered on the Gencon form for thecarriage of a part-cargo of bagged fishmeal. The fishmeal was loaded in the bottomsof each of the ship’s five holds. It was then over-stowed by another similar cargowhich was carried under an entirely separate charter for different charterers. Bothlots had to be discharged at the same berth. On the evidence, the charterers had andwould have had no possibility of discharging the cargo at any other berth even if ithad not been over-stowed.

When the ship arrived at the discharging port on 10 October at 10.00 hours, noberth was available for her and she had to wait until 16.04 hours on 22 October,when a pilot boarded and took her into her berth, where she arrived at 18.40 hours.Discharging then commenced at 01.35 hours the following morning, 23 October.Meanwhile, discharging of the cargo under the present charter had started at 17.40hours that day. If the cargo under the present charter had not been over-stowed, theship would still have had to wait as long for the berth as she in fact did.

The charterers submitted that no valid notice of readiness could be given undertheir charter until the cargo covered by it was accessible. They accepted that oncetheir cargo was available to them, laytime started. The owners did not dispute thatproposition. However, they said that they were entitled to rely on clause 6 of thecharter, which read:

‘‘Time lost in waiting for berth to count as . . . discharging time . . . ’’

It was held that the owners’ submission was correct. The tribunal had beenreferred to pages 143/4 of Summerskill on Laytime, pages 278/286 of Schofield onLaytime and Demurrage, and to the arbitration award reported in Lloyd’s MaritimeLaw Newsletter (LMLN 71—22 July 1982). Those texts supported the owners’position in the present case. What emerged from them were certain principles.

First, the time which it was sought to count must have been lost in waiting for theberth for the cargo in question, not for some other cargo. That requirement wassatisfied in the present case. Second, another charter covering the same voyage wasnot to be taken into account unless it was apparent on a reading of the charters inquestion that they did overlap or were intended to impinge on one another. That


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was particularly important in relation to arguments that owners might be earning‘‘double demurrage’’. There was nothing in the present case to suggest that the twocharters should in any way affect one another. Third, the owners’ contentions led toa just result in that even if the cargo had not been overstowed, as much time wouldhave counted against it because there was no berth available for it.

The arbitrators obviously took a purposive approach to the time lost waiting fora berth clause but there is no guarantee that the courts will do likewise if and whenan identical matter comes before them.

The tribunal also took a purposive approval in the arbitration cited in LMLN356—26 June 1993. The vessel was chartered on the Gencon form. The vessel wasto ‘‘proceed to one safe berth . . . always afloat/always accessible . . . to loadbulk cement clinker’’. Clause 5 provided:

‘‘Time to commence at 2.30 pm if notice of readiness to load is given in writing/by cableupon vessel’s arrival at pilot station before noon and at 8 am next working day if noticegiven during office hours after noon.

. . . Time lost in waiting for berth or cargo to count as loading time. Time actually used

before commencement of laytime shall count. Should the vessel not be berthed onarrival, Master right to tender NOR WIPON, WIBON; however, vessel to be cus-toms cleared and in free pratique prior tendering NOR at both ends.’’

(Bold characters indicate typewritten amendments or insertions to the printed form.)

The ship arrived at the loading port anchorage at 05.25 on 2 September. Theanchorage was within the port limits. At 05.30 the ship purported to give notice ofreadiness. There was then no berth available for her, and she waited at the anchor-age until the early hours of 10 September. She berthed at 07.50 that day. Freepratique was granted at 08.35 and customs clearance at 09.30. Loading only startedat 14.00, at which time the charterers purported to accept the notice ofreadiness.

The owners claimed demurrage.It was held that the charterers had denied liability on various grounds. First, they

said that the ‘‘time lost’’ provision could not apply because the ship was ‘‘arrived’’in the technical sense at the anchorage, and could thus tender notice of readinessand start ‘‘ordinary’’ laytime counting provided she could comply with the require-ments as to free pratique and clearance. If she could not, that was the owners’problem, but they could not rely in default on the ‘‘time lost’’ provision. Thefundamental flaw in that argument was quite simply that the charter was plainly a‘‘berth’’ charter, and therefore arrival in the port was irrelevant for laytime purposesunless the master exercised his right (not an obligation) to tender notice at anchor-age. On the evidence, it was not in fact possible for the master to tender noticewhilst at the anchorage, for free pratique and customs clearance could only beobtained in cases of urgency, and the present case was not one such. Contrary to thecharterers’ submission, the decision in The ‘‘Kyzikos’’42 did not mean that ‘‘Wibon’’

42. [1989] 1 Lloyd’s Rep. 1.

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converted a berth charter into a port charter. That case decided just theopposite.

In the present case there was a clear provision that time lost in waiting for a berthor for cargo (the latter by specific amendment) was to count, and effect ought to begiven to that in the circumstances prevailing, i.e. the ship actually having to wait fora berth. Had she not been able to enter the port but for reasons other than those ofawaiting a berth or cargo, then the master would have had the right to avail himselfof the special notice inserted into clause 5 if he had been able to get pratique andclearance at the anchorage. Failing that, the risk of the waiting time would havefallen upon owners. That was a perfectly understandable bargain for the parties tohave made, since it meant that delay caused by the charterers’ failure to performtheir part of the bargain—getting cargo and a berth for the ship ready for herarrival—fell on them, whereas other delays, for example, those caused by weather,tug strikes and similar matters, fell on the owners. That also disposed of thecharterers’ other argument, that the ‘‘time lost’’ provisions were in some way to beoverridden by the other typed insertions in clause 5.

It is mentioned that the incorporation of Definitions/Voylayrules/Baltic Code intoa charterparty may lead to a different conclusion to the common law regarding thelaytime/demurrage computation because of the last sentence under each of them inthat any notice time is not brought into the computation until the vessel reaches theplace where she can tender a notice of readiness. Usually there will be no problemin respect of a port charterparty but in a berth charterparty there is a differentapproach to the calculation of laytime/demurrage as between the Definitions/Voylayrules/Baltic Code and what the author considers to be the common law inrespect of this matter. Under the Definitions/Voylayrules/Baltic Code the noticetime is applied when the vessel gets into the berth whereas under the common law(at least in the author’s opinion) the notice time should be applied at the momentwhen the vessel would have arrived in her berth if the berth had been available, seeearlier paragraph 39 as to what Lord Diplock had to say in The ‘‘Darrah’’. Thedifference in approach can lead to a materially different end result. For example, onthe basis that there is a six hours’ notice time clause (very usual), an exceptedlaytime period of 17.00 Friday/08.00 Monday, laytime is exhausted at 13.00 onFriday under the Definitions/Voylayrules/Baltic Code, the berth becomes availableat 07.00 on a Monday and the vessel berths and tenders a notice of readiness at08.00 on the Monday. By the application of the notice time when the vessel shouldhave berthed (under the common law) laytime is exhausted at 10.00 on the Monday(two hours after the excepted period of 17.00 Friday—08.00 Monday since 4 hoursof the 6 hours notice time would have been available to the charterers prior to theweekend excepted period) and the vessel comes on demurrage at that time whereasunder the Definitions/Voylayrules/Baltic Code (mentioned already) the vessel wouldhave been on demurrage from 13.00 on the Friday right through the weekendperiod with demurrage simply ceasing for the period from 08.00 until 14.00 on theMonday. Therefore, a very clear advantage to the shipowner and a good example ofthe Definitions/Voylayrules/Baltic Code being less advantageous to the charterersthan the common law in certain circumstances.


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40. A time lost waiting for berth clause and overstowed cargo arose for adjudicationin The ‘‘Agios Stylianos’’43 (that is before the Darrah decision) where the owners ofthe vessel entered into two separate charterparties for carriage of cargoes fromConstanza to Lagos. One was in respect of 450 tons of vehicles and the other inrespect of 8,800 metric tons of cement which was wholly overstowed by the vehicles.The charterparties were in Gencon form and provided for demurrage at the rate of$1,500 per day with ‘‘time lost in waiting for berth’’ to count as dischargingtime.

The vessel arrived at Lagos at 12.20 hours on 15 May 1971, and waited for aberth until 20.00 hours on 29 May 1971. Discharge of the vehicles was completedon 1 June 1971, at 13.00 hours and discharge of cement began immediatelythereafter.

The owners were awarded demurrage from the vehicle charterers at the agreed ratefor the period spent in waiting for a berth between 15 and 29 May. In arbitrationproceedings the owners sought to recover a similar amount from the cement charter-ers. The arbitrators dismissed their claim and stated their award in the form of aspecial case, the question of law for decision of the court being:

‘‘Whether on the facts found and the true construction of the charter time for the purposeof laytime and demurrage calculations should start running from 12.20 on 15 May, when thevessel arrived off Lagos and waited for a berth or from 08.00 on 2 June, when the vessel wasable to discharge the cargo of cement.’’

It was held by Mr Justice Donaldson (as he then was) that:

(i) the words ‘‘time lost waiting for a berth’’ in the cement charterparty meanttime lost waiting for the cement berth;

(ii) none of the time lost or wasted before the vehicles had been dischargedwas spent lost or wasted waiting for the cement berth and that once thevehicles had been discharged the cement charterers had the right and dutyto nominate a berth and this did not arise at any earlier point of time;

(iii) the question of law would be answered by holding that for the purposes oflaytime and demurrage calculation time started to run from 08.00 hourson 2 June 1971, and the award would be upheld.

See also LMLN 351—17 April 1993 detailed earlier in paragraph 39 for a similarapproach by arbitrators where there were two part cargoes, one overstowing theother.

41. An issue arose in arbitration LMLN 114—15 March 1984 regarding whetherthe charterparty laytime exceptions should be applied to the time spent waiting fora berth where the printed words ‘‘discharging time’’ had been replaced by ‘‘count infull’’.

The relevant charterparty clauses stipulated:

‘‘4. Time to commence at 2 p.m. if NOR to discharge is given before noon and 8 a.m. nextworking day if notice given during office hours after noon unless commenced earlier . . . Anytime lost in waiting for berth whether in free pratique or not to count in full.’’

43. [1975] 1 Lloyd’s Rep. 426.

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(The last two words had been inserted in place of the printed words ‘‘as dischargingtime’’, which had been deleted.)

‘‘29. . . . Cargo to be discharged at the rate of . . . weather permitting, and time fromSaturday noon to 8 a.m. on Monday and holidays excluded, even if used, unless vesselalready on demurrage. Laytime reversible at loading/discharging port.’’

The owners argued that the words ‘‘time lost in waiting for berth whether in freepratique or not to count in full’’ had the effect of ensuring that all time spent by thevessel in waiting for a berth at the discharge port should count without the applica-tion of any charterparty exceptions. They place heavy reliance on the words ‘‘infull’’. The charterers contended that ‘‘time’’ meant laytime. Therefore, clause 4 hadto be construed as meaning that any laytime lost in waiting for berth was to countin full. Charterers also argued that the exceptions should apply to the time lostwaiting for a berth unless it was abundantly clear that the position should beotherwise.

It was held that the charterers’ construction was correct. The first two words ofthe sentence ‘‘Any time lost in waiting for a berth . . . to count in full’’ were mostimportant in giving meaning to the later words in the same sentence. There was nodoubt that the words ‘‘any time lost’’ meant any laytime lost.44 The parties hadtherefore intended, by way of the first words in that sentence, that laytime was theall-important aspect. There was an onus on the owners to show why the words ‘‘tocount in full’’ should derogate from laytime so that every minute of time that thevessel was waiting for a berth should score in full for the owners’ benefit. Theowners had not satisfied that burden. If the owners’ intention had been to derogatefrom the opening words of the sentence so as to strike at the core of establishedlaytime computations, they should have ensured that sufficiently cogent languagewas used in the all-important sentence so that it was clear that all time waiting fora berth should score up without the application of the laytime exceptions. (Forexample, wording such as: ‘‘Any time lost in waiting for berth to count in full, withall exceptions excluded.’’) The owners’ claim for balance of demurrage thereforefailed.

References have been made earlier to the counting of laytime with a ‘‘time lostwaiting for a berth’’ provision and to the favoured view that the time should beapplied moment to moment as it occurs. There is some judicial support for this, seeThe ‘‘Loucas N’’ (already referred to earlier in paragraph 35 on the principal argu-ment) where Mr Justice Donaldson (as he then was) decided that the time lostshould be brought into the account as and when the delay occurs and this viewappears to be adopted by London arbitrators. Of course, the position may bedifferent if the parties have expressly agreed as to how the time lost waiting is tocount, as in the North American Grain Charterparty 1989 (referred to earlier inparagraph 31) where clause 17(b) of the form provides for time waiting for a berthto be added to laytime or time on demurrage. An issue came up in LMLN 230—27August 1988 where clause 17(b) of the Norgrain form read:—

44. The ‘‘Darrah’’ [1976] 2 Lloyd’s Rep. 359.


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‘‘If the vessel is prevented from entering the commercial limits of the . . . port . . . on theorder of the charterers . . . and the Master warrants that the vessel is physically ready in allrespects to . . . discharge, the time spent waiting at a usual waiting place outside the commer-cial limits of the port or off the port shall count from vessel’s arrival at such waiting place andwill continue to run as per clause 18 until . . .

Time so used is to be added to laytime (or time on demurrage) used for . . . discharging theentire cargo if clause 18(b) and 18(c) apply . . . [Lines 149/150] . . . ’’

The vessel was chartered for a voyage from Holland to Saudi Arabian Red Sea.Because of problems they had with their receivers the charterers did not want theship to enter Saudi territorial waters immediately, and accordingly they gave ordersthat the ship was to wait outside until they said otherwise. The ship anchored offJeddah on 26 April and gave notice of arrival. She moved into port, pursuant to thecharterers’ instructions, on 7 May when she anchored in the roads. She berthed on13 May and commenced discharging on 14 May.

It was held, that clause 17(b) applied to the facts of the present case. Accordingly,under the first sentence of clause 17(b), the time spent waiting outside the port’scommercial limits was to ‘‘count against laytime’’.

If the clause stopped there, one would readily be tempted to the conclusion that,as in the case of a ‘‘time lost waiting for berth’’ provision, the waiting time in thepresent case should be counted against the available laytime as and when itoccurred. That view might seem to be reinforced by the reference in the followingsentence of clause 17(b) to the time continuing ‘‘to run as per clause 18’’, i.e.subject to the exceptions relating to weather, Fridays and holidays.

That initial impression was, however, disturbed by the provisions of lines149/152. There, the Norgrain form provided that time ‘‘so used’’ (in this casewaiting off Jeddah pursuant to the charterers’ orders) was ‘‘to be added to laytime(or time on demurrage) used for . . . discharging the entire cargo’’. If time was tobe added it could not already have been counted against laytime as and when itoccurred, and more so since it was to be added to laytime which had been used, thussuggesting that it was brought in at the end of the calculation.

The conclusion that, under lines 149/150 waiting time was to be brought intoaccount after ‘‘ordinary’’ laytime, was reinforced by the reference to ‘‘time ondemurrage’’ and ‘‘the entire cargo’’. The latter certainly suggested an ‘‘end of theday’’ calculation, but the former made anything else inconceivable. By definition,where there was separate laytime for loading and discharging operations (as in thepresent case) a ship that was prevented from entering her discharging port could notarrive on demurrage, and so waiting time could not be added to demurrage timeunless it was treated separately and account of it was only taken at the end of theordinary laytime/demurrage calculation.

The proper way to read lines 142/3 was as though they only provided for waitingtime to be calculated as if it were laytime. So, once the ship entered the port andgave notice of readiness, ‘‘ordinary’’ laytime started to count and run until its expiry,whatever might have happened earlier. A laytime/demurrage statement was thenprepared starting with the calculation of time used within the port, and there wasadded to that the out-of-port waiting time.

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The calculation of that waiting time was a simple matter. It started from thearrival at the usual waiting place (line 143) and then counted subject to laytimeexceptions (‘‘as per clause 18’’—line 143). If whatever laytime was permitted byclause 18 was consumed in the process, thereafter the exceptions did not apply.That would give a period of time which would then be brought into account at theend of the ‘‘ordinary’’ laytime/demurrage calculation. If that calculation hadresulted in some of the available laytime being left unused, then the waiting timewould simply be applied against that amount of unused time. If the waiting timeexceeded that time, demurrage would be due for the difference. If the unusedlaytime exceeded the waiting time, dispatch would be due for the difference, and ifthe two were the same neither dispatch nor demurrage would be due.

OTHER SPECIAL CLAUSES

42. In the first edition of this book no consideration was given to clauses such as‘‘To be loaded as per colliery guarantee’’, ‘‘In regular turn’’, ‘‘Custom of the port’’,because it appeared that they had no modern practical application whatsoever.However, it seems that ‘‘custom of the port’’ (‘‘COP’’) has been making somethingof a comeback in certain trades and should be considered.

If the parties have agreed a ‘‘custom of the port’’ clause evidence will be admis-sible to show that there is a recognised and established custom of the port which hasa bearing upon when a vessel becomes an ‘‘arrived ship’’. By custom it may benecessary for a vessel to reach a particular part of the port or to be in someparticular place before she can be an ‘‘arrived ship’’. The English cases which haverelevance to the subject have considerable vintage but are none the worse for that;they simply became irrelevant because ‘‘custom of the port’’ became obsolescent.

In Brereton v. Chapman45 the port of discharge was Wells, a port formed by aninlet of the sea the entrance to which was very distant from the quay where shipswere unloaded. It was proved that, by a custom of the port, laytime for dischargingdid not commence until the vessel was at the unloading quay and that this would beapplicable to the charterparty in question.

Brown v. Johnson46 concerned the port of Hull where the vessel was ordered todischarge. She arrived and was reported on 1 February, entered the discharging dockon 2 February and moved into the discharging berth on 4 February. By custom theusual place of discharge was the dock and laytime therefore commenced on 2 Februaryand not at the earlier date when the vessel arrived at the port.

Custom of the port seems to have resurfaced in some of the far eastern trades and,as stated already, its effect may be detrimental to owners of vessels regarding a shipreaching the agreed destination. In some ports in the Far East it may well be that avessel will not have reached the agreed destination in a port charterparty, with a‘‘custom of the port’’ stipulation, because of a custom that a vessel is not consideredto be at the immediate and effective disposition of the charterer until she reaches an

45. (1831) 7 Bing. 559.46. (1842) 10 M. & W. 331.

Para. 42OTHER SPECIAL CLAUSES

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inner anchorage where inspections take place, rather than anchoring at an outeranchorage within the port where she would otherwise satisfy the Oldendorff test andbe an ‘‘arrived ship’’.

It has to be emphasised that a party who attempts to show a binding custom hasa heavy duty to discharge, the more so in the modern context of substantiallyextended and diverse commercial activity. The difficulty is all the more apparentwhen it is sought to show that words, which are fairly capable of having a perfectlycomprehensible meaning on an ordinary reading, have a particular meaning byvirtue of some custom.

It was normal to prove a custom by adducing expert evidence and frequently bycollecting statements from a large number of people in the relevant industry as to analleged custom. To succeed on a ‘‘custom’’ argument a party has to show that thereis a custom which is notorious, certain and reasonable and while a party might beable to satisfy the last two ingredients fairly easily there are obvious problems inshowing that there is a custom which is notorious. See for example LMLN 401—18March 1995 which concerned the quality of low pour fuel oil from Nigeria. In thatarbitration the respondent buyers argued that in a contract for the sale of inter aliaa cargo of low pour fuel oil from Nigeria, the phrase ‘‘ . . . grade . . . as per usualNigerian export quality’’ meant, in particular, that the cargo had to have a sulphurcontent of not greater than 0.37% by weight. The claimant sellers contended thatthe phrase had to be given its ordinary, everyday meaning, i.e. ‘‘the quality of oilusually lifted out of Nigeria’’, and that said—which was hardly disputed—that thesulphur content of such oil varied between 0.30 and 0.40%.

It was held, that a party who attempted to show a binding custom had a heavyduty to discharge, the more so in these days of substantially extended and diversecommercial activity. This difficulty was all the more apparent when it was sought toshow that words, which were fairly capable of having a perfectly comprehensiblemeaning on an ordinary reading, had a particular meaning by virtue of somecustom. It might not be without significance that of the half dozen cases which post-date 1952 listed under the heading ‘‘Custom’’ in Lloyd’s Law Reports SubjectIndex for 1919–1986, a custom was only successfully shown in one, and that was inrelation to a custom of a port.

It was normal to prove a custom by adducing expert evidence and frequently bycollecting statements from a large number of people in the relevant industry as tothe alleged custom. To succeed on the ‘‘custom’’ argument, the buyers had to showthat there was a custom which was notorious, certain and reasonable. There couldbe no argument about the certainty and reasonableness of the custom they soughtto set up, but they first had to show that there was a notorious custom.

The buyers relied on the evidence of the President of their company. He had saidthat for the past 21

2 years or so he had been involved in purchasing about 80% of allNigerian fuel oil cargos, always from intermediate buyers. He had said that it wasstandard practice when traders of Nigerian fuel oil talked to refer to ‘‘usual’’ or‘‘standard’’ specifications or guarantees for Nigerian fuel oil as a shorthand for aparticular specification provided by Nigerian exporters which included a maximumof 0.37% sulphur content. The buyers had also relied on some contract documenta-tion, but this was certainly not complete, and there was no documentation relating

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to any transaction at around the time of the contract in the present case. Moreover,whilst such documentation as had been produced invariably referred to a 0.37%sulphur content, in one instance the contract contained price adjustment provisionsto cover the eventuality that the content might be higher. In another, that was alsotrue, and there were provisions for the content to be determined on the basis of asample at the loading port as well as a special condition to cover the repeatability/reproduceability difficulties of testing; and in a third instance (where the priceprovisions were not included in the papers) a particular testing method was actuallyspelt out.

Moreover, although the buyers said that they purchased some 80% or so ofNigerian fuel oil cargoes, that still left 20% unaccounted for. It would have beenhelpful to have had evidence from some at least of the buyers of those cargoes.Similarly, evidence would have been desirable from those involved in selling suchcargoes to the buyers. It was also curious that there should be a custom as to aspecific sulphur content when the Nigerian sellers themselves sold on the basis of aspecified content, but with a price adjustment provision to cover the eventuality thatthe sulphur content was higher, and when as a matter of fact the range of sulphurcontents of Nigerian fuel oil varied between 0.30 and 0.40%, with a not insub-stantial proportion exceeding 0.37 as the evidence clearly showed. It could not besafely concluded that there was a custom as the buyers had alleged. On the contrary,the words ‘‘usual Nigerian export quality’’ had to be given their ordinary meaningand be read as covering the normal range or specified elements. In the present case,that meant that the cargo complied with the terms of the contract.

However, in The ‘‘Eurus’’47 there was a finding by the arbitrators that the 8 o’clockrule (any oil shipment in Nigeria which was completed before 0800 on the first dayof any month was treated as though it had been completed on the last day of theproceeding month) was a custom of the Nigerian oil export trade. See later para-graph 62 for details of the case under the assessment of damages.

43. While ‘‘In regular turn’’ does not appear to have resurfaced in recent times theuse of a specified turn time is seen in some voyage charterparties. In some trades avoyage charterparty allows a charterer say ‘‘12 hours turn time’’. The expression‘‘turn’’ speaks for itself in that it relates to the sequence in which ships are taken forloading or discharging and this is usually governed by port authorities. In practice‘‘12 hours turn time’’ means that time will not count for 12 hours during the periodfrom the vessel’s arrival until she is brought forward to a loading or dischargingberth. It therefore has the effect of delaying the running of laytime for 12 hours incircumstances where a vessel waits in turn for a berth. With a ‘‘12 hours turn time’’some charterers take the view that they are entitled to this period of time come whatmay in that it should always bite after the vessel reaches her destination. This wouldappear to be a fallacy since turn time should only be applicable if a vessel waits tobe called in to her loading or discharging berth; otherwise it should not be applic-able. For example, if a vessel reaches her destination in a port charterparty andproceeds straight to her berth then turn time is irrelevant and the charterers are not

47. [1996] 2 Lloyd’s Rep. 408.


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entitled to a delay in the running of laytime because of this factor. The same shouldapply in the case of a berth charterparty where the vessel moves straight to a berthwithout any wait. In The ‘‘Themistocles’’48 clause 6 of the charterparty stipulated that‘‘the vessel be loaded at Sfax and Casablanca in the customary manner alongside thewharf reserved to shippers, at the berth they indicate and according to their orders,in turn not exceeding 48 hours . . . ’’. The ship berthed at Sfax and loading com-menced at 1 p.m. on Friday, 24 October (the day before a local holiday) no timebeing lost in awaiting turn. The charterers contended that they were entitled to thefull period allowed for turn even if the vessel in fact berthed before the expiration ofthat period. Mr Justice Morris (as he then was) decided the matter against thecharterers, and had this to say:

‘‘In my judgment, the contentions of the charterers lead to an unnatural result and give nosufficient or reasonable meaning to the words employed. If the charterers are correct, therewould seem to be no reason for the employment of the word ‘turn’. The period might becontinuing to run when the vessel was in no sense being keep waiting. Nor would anymeaning be derived from the words ‘not exceeding 48 running hours’ . . . .

In my judgment, the words of clause 6 of the charter mean and provide that the vessel mustnot be kept waiting for more than 48 hours for her turn to be at the particular loading berthindicated to the vessel by the shippers. Such period of 48 hours may, however, be extendedon account of holidays or Sundays. When the vessel has in fact occupied the loading berthindicated by the shippers, and, being in free pratique, is ready in all respects to load, and withher loading gear free for loading, then the lay days begin to count.’’

The decision cannot be faulted in logic and makes sense in every way.

44. The case of The ‘‘Lee Frances’’ LMLN 253—15 July 1989 is reported as anarbitration and a Commercial Court decision but it does not appear to have enteredthe Law Reports. However, it does have some interest and it also has some relevancebecause of its construction of a charterparty guarantee clause in the context of aberth charterparty and the time when the vessel was considered to have arrived inorder to activate the guarantee clause in the charterparty. The charterparty was onthe Gencon form. It provided that the discharging port or place was to be one goodsafe berth Cork. Box 21 read:

‘‘Provided the vessel is ready for discharge in all respects by latest 08.00 hours 22.12.86,charterers guarantee completion of discharge by latest 24.12.86, weather permitting andsubject to mechanical breakdowns.’’

The vessel arrived at Cork on 22 December 1986. Notice of readiness was tenderedand accepted at 06.25 that same day. The vessel only received orders to proceed toberth on 29 December. Discharge commenced on 30 December and was completedat 20.30 that day.

The owners commenced arbitration proceedings claiming damages in respect ofthe delay at Cork. The issues were (1) whether the vessel arrived at Cork in time totrigger the ‘‘Guarantee Clause’’ in the charterparty; (2) if it did, whether ‘‘demur-rage’’ was payable or whether ‘‘damages at large’’ were recoverable; and (3) if‘‘demurrage’’ was payable, what was the amount.

48. (1949) 82 Ll.L.Rep. 232.

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The arbitrators held that the vessel did arrive in time to trigger the ‘‘GuaranteeClause’’ and that the owners were entitled to recover ‘‘damages at large’’. Thearbitrators found that the vessel, having arrived at the anchorage at 06.25, was readyin all respects to discharge her cargo by the deadline of 08.00 hours on 22 December;that the vessel could have reached the berth before the deadline; and that no orders toproceed to a berth were given by the charterers on 22 December, which was why thevessel did not arrive at the berth by the deadline.

So far as clause 21 was concerned, the arbitrators said:

‘‘In order to trigger the guarantee provision the vessel had to be ready in all respects todischarge her cargo by the deadline. The Guarantee provision does not require the vessel tobe at the discharging berth by that time; the requirement is only that she should at that timebe an ‘arrived ship’ in the accepted charterparty sense, and be operationally ready to dis-charge her cargo.’’

The arbitrators found that those requirements had been satisfied.The charterers appealed to the High Court. They argued that the charterparty

was a berth charterparty since it provided in effect for carriage to a berth to benominated by the charterers. The vessel could therefore only become an ‘‘arrivedship’’ when she reached the berth.

The owners contended that this was a port charter, and that the vessel was anarrived ship by 06.25 on 22 December. Alternatively, even if the charterparty was aberth charter, the owners argued that on a proper construction of the guaranteeclause or by necessary implication, the guarantee clause was activated when thevessel arrived at the anchorage at 06.25 hours on 22 December.

It was held that the laytime/demurrage provisions were standard provisions in avoyage charterparty. The rationale was that for a shipowner time was money. Hewanted a quick turn-round. Conventionally, therefore, he stipulated for laytime anddemurrage and dispatch provisions. They afforded him protection in the event ofdelay, albeit that the demurrage rate set a ceiling on his recovery. The correlativewas that the charterers were entitled to keep the vessel substantially beyond the laydays at the expense of paying demurrage, provided that the delay did not frustratethe commercial object of the adventure.

In the present case the shipowners wanted far greater protection. Plainly, theowners’ concern was the usual delays experienced in ports, the main one being portcongestion. That seemed to be the contextual scene against which the guaranteehad to be viewed.

The owners had sought and obtained rights under the guarantee provision whichwere intended to be separate and more extensive than those conferred by the laytimeand demurrage code.

The first question was whether the vessel arrived in Cork in time to trigger theguarantee. In the Court’s view, the guarantee was intended to be a separate andabsolute undertaking by the charterers. It ought to be interpreted in a purposiveway. The concept of an ‘‘arrived ship’’, and the distinction between berth and portcharterparties, was a recondite [abstruse] part of English law. It abounded withartificial distinctions and qualifications. That body of law had developed in thecontext of laytime and demurrage provisions. There was no reason whatever why


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that approach should be extended to the interpretation of an entirely separate clausesuch as the guarantee in the present case.

On the contrary, and bearing in mind the commercial purpose of the guarantee,it was wrong to introduce into the guarantee the concept of an ‘‘arrived ship’’ asunderstood in a conventional laytime and demurrage code. It was sufficient that thearbitrators had found that the vessel arrived at the anchorage of the port; that it wasat the effective disposition of the charterers; and that it probably would have reachedthe berth before 08.00 hours on 22 December if the charterers had given suchorders. The vessel was, therefore, ‘‘ready for discharge in all respects’’ in everyrelevant sense of the word.

Accordingly, the arbitrators rightly concluded that the guarantee had been trig-gered, and it was unnecessary to express any view on the question whether this wasa port or berth charter.

As to the second question, namely, whether the owners’ remedy for breach of theguarantee was confined to the recovery of demurrage, the broad purpose of theguarantee was plainly to confer on the owners rights in respect of delay over andabove the rights contained in the conventional laytime and demurrage code. Therewas no hint in the language of the guarantee or elsewhere in the charterparty, thatthe remedy for breach of the guarantee would be the recovery of demurrage.

The appeal would be dismissed.As mentioned at the beginning of this chapter, at the end of paragraph 24, the

important clause relating to the charterer providing a berth ‘‘reachable on arrival’’is considered next in Chapter 3.

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CHAPTER THREE

BREACHES OF CONTRACT/DAMAGESRELEVANT TO ARRIVING AT THEDESTINATION: IMPLIED TERMS

REACHABLE ON ARRIVAL/ALWAYS ACCESSIBLE INCLUDINGTHE LAURA PRIMA DECISION

45. The potential in a ‘‘reachable on arrival’’ provision in a voyage charterparty(which is more germane to tanker charterparties than to dry cargo charterpar-ties) was not fully realised until the 1960s. An ‘‘always accessible’’ provision (seenmore in bulk dry cargo charterparties) is considered to have the same meaningas ‘‘reachable on arrival’’: see later paragraph 53. The modern interpretation ofthe words by the courts has been very favourable to owners whereby they receivecompensation (damages), usually based upon the demurrage rate but not neces-sarily so, in respect of delays in berthing because of charterers not providing aberth which is reachable at the time of the vessel’s arrival at or off the port.

The first important case before the courts concerned port congestion. It startedas an arbitration and then went to the High Court as a special case—The ‘‘AngelosLusis’’.1 The charterparty stipulated (inter alia) that: ‘‘ . . . a voyage from Constanzato . . . . The vessel shall load and discharge at a place or at a dock or alongsidelighters reachable on her arrival which shall be indicated by Charterers . . . ’’.

The vessel anchored in the roads off the loading port of Constanza p.m. on 28January 1962. She was not permitted by the port authorities to enter the port untila berth was available and this occurred on 2 February. Cargo was ready at all timesfor loading but loading by lighters was impracticable in the surrounding weatherconditions. The owners claimed against the charterers for damages in respect of thetime that the vessel was delayed in the roads waiting for a berth. They alleged thatthere was an absolute obligation on the charterers to have a place for loadingreachable on the arrival of the vessel at Constanza; further, even though the vesselmight not have been an ‘‘arrived vessel’’ for laytime purposes she had arrived withinthe meaning of the above-mentioned clause.

The charterers contended that the charterparty was a port charter and the risk ofany loss of time, before the vessel became an ‘‘arrived vessel’’, was on the ownersunless either (a) there was a clear provision in the charterparty to the contrary or (b)the vessel’s inability to enter the port and become an ‘‘arrived vessel’’ was caused bythe charterers’ breach of contract. ‘‘Reachable on arrival’’ meant arrival in the portand the charterers were not obliged to nominate a loading berth until the vessel

1. [1964] 2 Lloyd’s Rep. 29.

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entered the commercial area of the port on 2 February (at this time the Oldendorffcase had not even commenced its voyage through the courts).

In the arbitration, the umpire decided the case in favour of the owners subject tothe opinion of the court on a question of law as to whether the charterers were inbreach of contract in failing to provide a reachable berth for the vessel when shearrived off Constanza on 28 January. It was held by Mr Justice Megaw (as he thenwas) that the charterparty provisions referred to above were intended to impose onthe charterers a contractual obligation of value to the owners; that the charterers’obligation was to nominate a reachable place where she could load (i.e. a berthwhich the vessel, proceeding normally, would be able to reach and occupy), at thepoint, whether within or outside the fiscal or commercial limits of the port, wherein the absence of such nomination she would be held up; that it was the charterers’responsibility to ensure that there was at that point of time a berth which the vessel,proceeding normally, would be able to reach and occupy; that the charterers were inbreach of contract in failing to provide a reachable berth for the vessel (occasionedby port congestion) when she required such on her arrival. In deciding as above, thejudge emphasised:

(a) The roads were the normal and proper place for a vessel to lie whileawaiting permission to enter the port and that the words in the charterparty‘‘on her arrival’’ did not have the technical meaning of ‘‘arrival’’ in respectof an ‘‘arrived vessel’’ in a port charterparty. The words denoted thephysical arrival of the vessel at a point, wherever it might be, whetherwithin or outside the fiscal or commercial limits of the port, where theindication or nomination of a particular loading place became relevant ifthe vessel were to be able to proceed without being held up.

(b) When the vessel had arrived as in (a) above, the charterers had to nominatea reachable place, which meant that it was the charterers’ responsibility toensure that there was, at that point of time, a berth which the vessel,proceeding normally, would be able to reach and occupy.

(c) The time of the vessel’s arrival, within the above-mentioned charterpartywords, had come when the vessel had gone as far as she could go, whetherto the verge of or within the port, in the absence of a nomination by thecharterers of a place, which she could not reach without being held up,where she could load.

The decision went in favour of the owners in circumstances of port congestionand the ‘‘reachable on arrival’’ provision of the charterparty. It appeared to be asensible decision bearing in mind that it was port congestion which prevented thevessel from moving into a berth when she arrived off the port; historically, portcongestion had been, in respect of port charterparties, at the risk of charterers.

In many port charterparties, charterers may be able to show that the vessel hasnot become an ‘‘arrived ship’’ when she arrives off the port so that laytime cannotcommence; however, with the inclusion of the important words ‘‘reachable onarrival’’, owners may be compensated on the basis of damages for breach of con-tract, it being irrelevant that the vessel has not arrived within the port, the word‘‘arrival’’ being given, correctly it is submitted, a broad interpretation. In other

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Para. 45 BREACHES OF CONTRACT/DAMAGES RE ARRIVING

words, so long as the vessel has got as far as she can get, without the nomination ofa reachable berth, she has satisfied the word ‘‘arrival’’ when lying off the port.

46. A few years later a further case came before the courts regarding the words‘‘reachable on her arrival’’: The ‘‘President Brand’’.2 The case went straight to theHigh Court on an agreed statement of facts which stated (inter alia) that:

(a) The vessel was voyage chartered to proceed from one safe port PersianGulf to one or two safe ports on the Mombasa/Capetown range.

(b) Clause 6 of the charterparty stipulated that the vessel shall load and dis-charge at a place or at a dock or alongside lighters reachable on her arrivalwhich shall be indicated by the charterers.

(c) Under the charterparty the owners guaranteed that the vessel would arriveat Lourenco Marques with a maximum draught of 32′ 5″ with no dead-weight for the charterers’ account.

(d) After loading a cargo of crude oil the vessel was ordered by the charterersto discharge at Lourenco Marques.

(e) At Lourenco Marques there were only two berths suitable for the dischargeof oil cargoes from vessels of the size of the President Brand; the vessel onher arrival draught of 32′ 3″ could have lain safely afloat at all states of thetide at either of these berths but was not able to cross the bar and proceedup the estuary to these berths because of a shortage of water.

The owners adopted the same arguments which had been used in The ‘‘AngelosLusis’’.3 According to them, there should be the same result albeit that the AngelosLusis case3 involved port congestion whereas the circumstances in The ‘‘PresidentBrand’’2 concerned a vessel which was prevented from crossing the bar at theentrance to the port of discharge because of lack of water.

In deciding the case in favour of the owners Mr Justice Roskill (as he then was)agreed with the decision of Mr Justice Megaw regarding the meaning of ‘‘arrival’’,in the context of ‘‘reachable on arrival’’; further, on the words ‘‘reachable on arrival’’he concluded that they applied to the circumstances in question so that, althoughthe berth was not reachable because of a shortage of water at the bar, the chartererswere in breach of their obligation to nominate a berth which the vessel could reachon her arrival. He said (inter alia):

‘‘ ‘Reachable’ as a matter of grammar means ‘able to be reached’. There may be many reasonswhy a particular berth or discharging place cannot be reached. It may be because anothership is occupying it; it may be because there is an obstruction between where the ship is andwhere she wishes to go; it may be because there is not a sufficiency of water to enable her toget there. The existence of any of those obstacles can prevent a particular berth or dock beingreachable and in my judgment a particular berth or dock is just as much not reachable if thereis not enough water to enable the vessel to traverse the distance from where she is to that placeas if there were a ship occupying that place at the material time. Accordingly, in my judgment,the charterers’ obligation was to nominate a berth which the vessel could reach on arrival andthey were in breach of that obligation if they are unable so to do.’’


Para. 46REACHABLE ON ARRIVAL/ALWAYS ACCESSIBLE

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The charterers sought to distinguish the facts in this case from The ‘‘AngelosLusis’’3 (shortage of water on the bar as opposed to port congestion) so as to assertthat there was no causation factor regarding ‘‘reachable on arrival’’ since the vesselwould have ground to a halt in any event, not because of the want of a berth butbecause of insufficiency of water. On this aspect the judge went on to say that it wastrue, as a matter of causation, that the reason why the vessel could not cross the barwas a shortage of water but that was not the crucial consideration; the crucialconsideration was that, because of a shortage of water, there was not a place or adock reachable on the vessel’s arrival at Lourenco Marques and therefore theresulting loss of time had to be borne by the charterers.

Some exception was taken to this decision because tide/shortage of water hadbeen, generally speaking, so much at the risk of owners in the past and the fact that,although the charterparty stipulated for one or two ports of discharge from aMombasa/Capetown range, the discharge port to which the vessel was eventuallyordered was named in the charterparty (clause 25—Owners undertake the vesselwill arrive at Lourenco Marques with a maximum draught of 32′ 5″ with nodeadweight for charterers’ account). Therefore, it appeared that the owners tookthe risk of their vessel, with maximum cargo, being delayed because of known tidalproblems. Like The ‘‘Angelos Lusis’’,4 The ‘‘President Brand’’5 was not concerned withthe counting of laytime but with damages for breach of contract: however, unlikeThe ‘‘Angelos Lusis’’,4 there was emphasis on ‘‘reachable’’ as well as ‘‘arrival’’although there appeared to be no departure from the ratio of The ‘‘Angelos Lusis’’4

regarding the words emphasised earlier in paragraph 45, at that point of time a berthwhich the vessel, proceeding normally, would be able to reach and occupy.

47. The application of the President Brand decision5 is that owners get compensatedfor loss of time because of a ‘‘reachable on arrival’’ provision in a charterparty incircumstances when otherwise they might not be so fortunate. Further, they can getthe benefit of time lost in respect of delay factors which, traditionally, have been atthe risk of owners; for example, insufficiency of water. It logically follows that if avessel cannot get into a berth because of bad weather (traditionally at the risk ofowners) owners get the benefit of the clause since, according to the reasoning of thejudge in the President Brand case,5 the crucial consideration would be that, becauseof the bad weather, there was not a place or a berth reachable on the vessel’sarrival.

Although there were no reported English cases regarding the application of thewords ‘‘reachable on arrival’’ to a bad weather situation until 1988 (see paragraph50, below) there were arbitrations where, it was understood, some arbitratorsallowed the words to bite in favour of the owners when bad weather prevented thevessel, after her arrival at the port, from proceeding into a berth. Other arbitratorsfound it objectionable that owners should get the benefit of time lost waiting toenter a port when a vessel was delayed because of factors which, in the past, hadbeen traditionally at the risk of owners; they thought that the words should only bite


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in favour of owners in respect of those factors (preventing a vessel reaching a berth)which had been traditionally at the risk of charterers, such as port congestion; delayswhich, in the past, had been traditionally borne by owners should not be switchedto the risk of charterers simply by way of a ‘‘reachable on arrival’’ clause. While The‘‘Laura Prima’’6 did not resolve the conflict between London maritime arbitrators inrespect of the application of The ‘‘President Brand’’ to bad weather circumstanceswhen a vessel arrived at or off a loading/discharging port, it resulted (inter alia) inparties and arbitrators focusing upon the application of ‘‘reachable on arrival’’ tobad weather arrival circumstances in the context of clauses 6 and 9 of the then muchused Asbatankvoy charterparty; further, the House of Lords decision ultimately ledto a resolution of the divergent approach taken by different arbitrators to the samefacts and problems.

48. The words ‘‘reachable on arrival’’ were not considered by the courts between1967 and late 1979 when The ‘‘Laura Prima’’ was heard in the High Court save forThe ‘‘Delian Spirit’’7 which case, in any event, was more concerned with the assess-ment of laytime/damages in the context of a breach, by the charterers of theirobligation (see later in this chapter, paragraph 61). The ‘‘Laura Prima’’ concernedport congestion and important standard clauses in tanker charterparties vis-a-visthe counting of laytime. The standard clauses 6 and 9 of the Asbatankvoy charter-party were as follows:

‘‘6. NOTICE OF READINESS. Upon arrival at customary anchorage at each port of loading ordischarge the Master or his agent shall give the Charterer or his agent notice by letter,telegraph, wireless or telephone that the Vessel is ready to load or discharge cargo, berth orno berth, and laytime, as hereinafter provided, shall commence upon the expiration of six (6)hours after receipt of such notice, or upon the Vessel’s arrival in berth (i.e. finished mooringwhen at a sealoading or discharging terminal and all fast when loading or dischargingalongside a wharf), whichever first occurs. However, where delay is caused to Vessel gettinginto berth after giving notice of readiness for any reason over which Charterer has no control,such delay shall not count as used laytime . . .

9. SAFE BERTHING—SHIFTING. The Vessel shall load and discharge at any safe place orwharf, or alongside vessels or lighters reachable on her arrival, which shall be designated andprocured by the Charterer, provided the Vessel can proceed thereto, lie at, and departtherefrom always safely afloat, any lighterage being at the expense, risk and peril of theCharterer . . . ’’

It was decided by the House of Lords that:

(1) clauses in charterparties as in other contracts had to be construed as awhole and it was impossible to ignore the opening words of clause 9 inconstruing the penultimate line of clause 6 and the reference in clause 7to loading and discharging berth meant ‘‘designated and procured berth’’for it was to that berth the vessel would be moving, the time occupied bysuch movement being excluded from the laytime calculation;

(2) ‘‘reachable on arrival’’ was a well-known phrase and meant precisely whatit said; if a berth could not be reached on arrival the warranty was broken

6. [1982] 1 Lloyd’s Rep. 1.7. [1971] 1 Lloyd’s Rep. 64 and 506.


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unless there was some relevant protecting exception and the berth wasrequired to have two characteristics: it had to be safe and it also had to bereachable on arrival;

(3) although the finding by the umpire that the sole cause of the delay to thevessel getting into berth was the unavailability of a berth due to thepresence of other vessels over which the charterers had no control wasunequivocal, this fact did not avail the charterers unless the berth whichthe vessel was prevented from reaching by reasons over which they had nocontrol was one which had already been designated and procured by thecharterers in accordance with clause 9;

(4) clauses 6 and 9 were not in conflict with each other;(5) in the circumstances, the owners’ claim for demurrage succeeded.

The decision by the House of Lords was welcomed by many in the shippingcommercial world, not necessarily because of the reasoning set out in the speech ofLord Roskill vis-a-vis ‘‘reachable on arrival’’ (he adopted what he had said in The‘‘President Brand’’; see above at paragraph 46), but, primarily, because berth conges-tion had been traditionally at the risk of charterers and there was no case to displacethis risk by the words of the second sentence of clause 6 of the charterparty. Thatis, the words should not bite in favour of the charterers in respect of port congestionbut would be free to do so regarding bad weather or some other cause of delayoutside the control of the charterers, this view turned out to be wrong, see below atparagraph 50. However, the House of Lords decision in The ‘‘Laura Prima’’8 threwconsiderable doubt on whether or not charterers could take any benefit from the lastsentence of clause 6 in such circumstances; many lawyers were of the view that thedecision of the House of Lords prevented charterers from taking any intrinsicbenefit from the last sentence of clause 6.

49. For some years maritime arbitrators differed as between themselves regardingthe application of ‘‘reachable on arrival’’ to bad weather circumstances preventing avessel berthing vis-a-vis an Asbatankvoy charterparty. The result of an arbitrationcould depend on which arbitrators were deciding whether or not the last sentenceof clause 6 applied to bad weather situations; a very unsatisfactory state of affairs.The previous edition of this book details this aspect in more detail (in its paragraphs48 and 49) but such is now a matter of history in view of the courts’ decisions in1988, see paragraph 50 below.

50. The divergency between London maritime arbitrators continued throughout1986 and 1987. In the latter year two arbitration awards were made regarding theeffect of the Laura Prima decision in circumstances of bad weather, prohibition ofnight navigation, and the unavailability of tugs when a vessel arrived at or off theloading/discharging ports; both awards (The ‘‘Sea Queen’’ and The ‘‘Fjordass’’)became the subject of appeals.

8. [1982] 1 Lloyd’s Rep. 1.

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In The ‘‘Sea Queen’’ the vessel was chartered on the Asbatankvoy form. Shearrived off the loading port at 06.55 on 1 January 1985 and tendered notice ofreadiness. There were two berths capable of accommodating the vessel and bothwere unoccupied at 06.55 on 1 January when the charterers designated one of thoseberths for the vessel.

The vessel could not, however, be berthed without the assistance of tugs. Between06.55 and 14.00 on 1 January, the only two tugs available at the port were occupiedin berthing two other ships and were unavailable to assist the vessel. The tugs inquestion were owned by companies separate from the charterers and the charterershad no control over them and had no control over the day to day running of the portinstallation.

From 14.00 on 1 January until 22.15 on 3 January the berthing of the vessel wasdelayed by bad weather (strong winds and swell). Throughout that period, however,the berth which had been designated by the charterers for the vessel remainedvacant. The vessel finally berthed at 00.36 on 4 January.

The owners claimed demurrage, contending that laytime commenced at 12.55 on1 January and continued to run while the vessel was delayed. The charterers arguedthat the period of delay in berthing should not count as laytime.

In the arbitration it was held (by a majority) that the application of clauses 6 and9 of the Asbatankvoy charterparty to circumstances where the non-availability oftugs and/or wind/swell (referred to as ‘‘bad weather’’) prevented a vessel getting intoa loading/discharging berth when she arrived off a loading/discharging port, prior tothe commencement of laytime, had not been considered by the courts. Theythought that the circumstances of no tugs being available to berth the vessel waseven more compelling than bad weather particularly when the responsibility forobtaining tugs was on the owners of the vessel.

In the High Court Mr Justice Saville (as he then was) had few doubts whatsoeverin reversing the majority arbitrators in The ‘‘Sea Queen’’.9 He held that it was clearfrom The ‘‘Laura Prima’’8 that clauses 6 and 9 of the charter had to be read together,and that the word ‘‘berth’’ in the last sentence of clause 6 meant a berth for thevessel reachable on her arrival designated or procured by the charterers in accor-dance with clause 9.

The majority of the arbitrators in the present case had taken the view that adistinction should be drawn between reasons for delay in berthing traditionallyregarded as being at owners’ risk, such as non-availability of tugs or bad weather,and ‘‘charterers’ risk’’ factors, such as congestion. They had expressed the view thatif every reason for delay were to be at charterers’ risk, the result would be ‘‘veryunreasonable’’. They accordingly concluded that the charterers were protected bythe last sentence of clause 6.

The approach adopted by the majority of the arbitrators could not be sustained.First, what might or might not be regarded as ‘‘the traditional position’’, or as beingreasonable or unreasonable, could not be the starting point for construing a con-tract of the present kind. The starting point had to be the phrases the parties had

9. [1988] 1 Lloyd’s Rep. 500.


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chosen to use. It was not a permissible method of construction to propound agenerally accepted principle for sharing the risk of delay between owners andcharterers or seeking in the abstract to determine a reasonable allocation of risk ofdelay and then to seek to force the provisions of the charter into the straitjacket ofthat principle or into that concept of reasonableness. To do so would be to rewritethe bargain that the parties must be taken to have made by the words that they hadchosen to use.

Secondly, there were in any event great difficulties in trying to propound somegeneral principle which divided delaying events into owners’ risk and charterers’risk factors. The arbitrators regarded bad weather as a case in the former category,but, for example, how would the principle operate on congestion caused by badweather?

Thirdly, there was nothing in the case which qualified the ambit of the obligationimposed upon the charterers to designate and procure a berth which the vessel wasable to reach upon her arrival. Clearly, if there had been some relevant protectingexemption the charterers could take advantage of it. Equally, if the reason the berthcould not be reached was some breach of charter by the owners, then the chartererswould also be protected—either on the basis that their obligation only extended tofinding a berth for a vessel conforming to the charter, or on the basis that any claimby the owners with regard to the delay would be defeated by a cross-claim based onthe owners’ breach. Short of such cases, however, or where the contract could besaid to be frustrated, the charterers had warranted in clear and simple words thatthere would be a berth which the vessel would be able to reach on her arrival.

It was clear that the arbitrators did not regard with satisfaction the fact that theHouse of Lords had held that the word ‘‘berth’’ in clause 6 meant a berth dulynominated in accordance with clause 9. However, the Laura Prima decision wasbinding on the court and there were no grounds for distinguishing between thevarious causes which might make a berth unreachable for the vessel, unless theparticular cause was specifically exempted elsewhere in the charter or was a con-sequence of the owners’ breach of the charter or was such as to frustrate theadventure as a whole. Accordingly, the appeal would be allowed. The chartererswere not protected by clause 6.

He also had this to say regarding ‘‘proceeding normally’’:

‘‘Finally, it was argued that, since the requirement on the charterers was to nominate a berthwhich the vessel, proceeding normally, would be able to reach, there was no breach in thepresent case, for the vessel would not normally proceed to berth in this port without tugs orin the weather conditions that prevailed. To my mind this argument too is unsustainable. Thephrase ‘proceeding normally’ is taken from the judgment of Mr Justice Megaw in The ‘AngelosLusis’. To my mind the phrase in context simply means that the berth nominated must be onewhich the vessel can reach by proceeding without waiting [to go] into the port in the ordinaryway. Were this not so, then in no case would the charterers be in breach of clause 9, for in thesense for which they contend no vessel would proceed normally if the berth was not reachablefor any reason, including congestion.’’

(The words in square brackets are inserted by the author as the words are missingin the law report.)

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At about the same time The ‘‘Fjordass’’ arbitration reached the High Court.10 Thesame charter terms were applicable (Asbatankvoy clauses 6 and 9) in circumstanceswhere at the discharge port, Mohammedia, the vessel’s size made it impossible forher to berth and discharge anywhere but at Sealine No. 3. The vessel tenderednotice of readiness at 00.45 on 8 April 1985 but was unable to proceed immediatelyto her designated berth due to combination of a prohibition of night navigationcoupled with a requirement of compulsory pilotage. Pilotage was not available until9 a.m.

At 10.55 on 8 April a pilot came on board. Until 14.02 attempts were made tobring the vessel to the discharging line but eventually the attempts were abandoneddue to bad weather. Until 16 April bad weather continued to prevent the vessel fromberthing. Thereafter, on 16 and 17 April a strike by tug officers operated to preventberthing. At 14.45 on 18 April the vessel eventually berthed.

The principal issue before the arbitrators related to the ‘‘reachable on arrival’’clause (clause 9) of the charterparty. The majority of the arbitrators held that thedecision in The ‘‘Laura Prima’’11 only applied in cases where the berth was con-gested. The present case was distinguishable because the primary cause of delay hadbeen the combination of the prohibition of night navigation coupled with compul-sory pilotage. Both those restrictions had been imposed by the local port authority.The berth designated by the receiving installation had been available on the vessel’sarrival at the discharging port. Accordingly, the charterers were entitled to takeadvantage of the exception in the last part of clause 6. The owners appealed. It washeld by Mr Justice Steyn (as he then was) that the approach of the majority waswrong. They had failed to give the words ‘‘reachable on arrival’’ their ordinarymeaning. Instead, they had started from the premise that in relation to voyagecharterparties responsibility for navigational matters rested on the shoulders ofowners and not charterers. That was referred to as the owners’ traditionalresponsibility.

No doubt the arbitrators had in mind the observations of Lord Diplock in The‘‘Johanna Oldendorff ’’,12 where he referred to the importance of the four stages intowhich the adventure was divided. However, Lord Diplock’s general observationswere never intended to lay down a special rule of construction, or to require that oneshould approach a special clause such as a ‘‘reachable on arrival’’ provision with apredisposition in favour of the ‘‘traditional’’ allocation of risk. On the contrary, LordRoskill made clear in his opening observations in The ‘‘Laura Prima’’ that such anapproach would be wrong.

Adopting the reasoning of the dissenting arbitrator, most charterparty disputesand particularly laytime/demurrage disputes did not involve fault in a moral sense.One was merely considering the allocation of risk provided for in the charterparty.In the present case, the events at Mohammedia could in no way be described as

10. [1988] 1 Lloyd’s Rep. 336.11. [1982] 1 Lloyd’s Rep. 1.12. [1973] 2 Lloyd’s Rep. 285.


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being the fault of the owners or the charterers. However, the terms of the charter-party specified that the charterers should bear the risk of the delays that actuallyoccurred.

The charterers had argued that the Laura Prima decision covered only physicalcauses of obstruction which rendered the place in question not reachable, andtherefore did not apply in the present case. However, it would be wrong to approachthe ‘‘reachable on arrival’’ clause with a predisposition in favour of a restrictiveinterpretation. The charterers’ argument involved interpreting the relevant words as‘‘reachable on arrival without delay due to physical causes’’. That ignored the fact thatMr Justice Mocatta and the House of Lords contemplated that a non-physical causesuch as an embargo could put charterers in breach of a ‘‘reachable on arrival’’clause. In any event, the distinction sought to be drawn by the charterers was inconflict with the interpretation of the ‘‘reachable on arrival’’ clause in The ‘‘PresidentBrand’’.13 The report of The ‘‘Laura Prima’’ did not mention that The ‘‘PresidentBrand’’ had been cited in argument, but counsel had informed the court that it hadbeen cited.

The distinction between physical causes of obstruction and non-physical causesrendering a designated place unreachable was not supported by the language of thecontract or by common sense. It was in conflict with the reasoning in The ‘‘LauraPrima’’ and was unsupportable on the interpretation given to that provision in The‘‘President Brand’’. Quite independently of authority, the court believed it to bewrong. The interpretation which found favour with the dissenting arbitrator hadmoreover the merit of avoiding disputes as to different causes of delay in reachinga designated berth.

The appeal would be allowed. The charterers had not designated a berth whichwas reachable on arrival and could therefore not take advantage of the clause 6exception.

Regarding ‘‘proceeding normally’’ Mr Justice Steyn had this to say:

‘‘But counsel for the charterers sought to support the arbitrators’ decision on another basis.He submitted that charterers are only required to designate or procure a berth which thevessel, proceeding normally, would be able to reach and occupy. Consequently, in the presentcase, it is submitted that until the impediment of a prohibition on night navigation, absenceof tugs, and bad weather, disappeared, the charterers were under no obligation to designatea berth. The phrase ‘proceeding normally’ comes from the judgment of Mr Justice Megaw inThe ‘Angelos Lusis’,14 at p. 34 (col. 1). It was in my view not used, or intended, as a generalguide as to which causes may or may not rank for consideration under the ‘reachable onarrival’ provision. Reachability of a berth may involve practical considerations as to what canfairly be expected of a vessel. In that sense the idea of a vessel ‘proceeding normally’ isrelevant. But, if I have correctly interpreted the ‘reachable on arrival’ provision, there is nomerit in this alternative argument.’’

Although Mr Justice Steyn and Mr Justice Saville differed in their reasoning regard-ing ‘‘proceeding normally’’ the end results were the same.

If charterers wish to avoid the rigours of a reachable on arrival provision in acharterparty, as now interpreted and well enshrined in the English common law,


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they should use a different charterparty to the Asbatankvoy such as the ExxonMobilVoy 2000 (no reachable on arrival provision) alternatively to ensure appropriatewording in a charterparty so that risks of circumstances such as bad weather aretransferred to the owners or, alternatively, they are shared. See for example theConoco Weather Clause which reads:

‘‘Delays in berthing for loading or discharging and any delays after berthing which are due toweather conditions shall count as one-half laytime, or, if on demurrage, at one-half demur-rage rate.’’

That clause, often type-added in standard form charterparties, should have theeffect of sharing the bad weather risks which may affect the berthing of a vessel sothat if the charterers are in breach of a reachable arrivable provision due to badweather the laytime will commence but it will only run on a half-time basis. Therehas been some deabte on this subject which is considered later in paragraphs 52and 53.

51. There are circumstances other than those considered in earlier paragraphswhich may be affected by a ‘‘reachable on arrival’’ provision and where that provi-sion affords an advantage to owners when laytime would not otherwise commence.For example, in LMLN 117—26 April 1984 the relevant charterparty clausesprovided:

‘‘4. Notice of readiness and commencement of laytime. . . Laytime shall commence . . . at the expiration of 6 running hours after tender of notice

of readiness . . . except that any delay to the vessel in reaching her berth caused by the faultof the vessel or owner shall not count as used laytime . . . 6. Safe berth. Shifting. . . the vessel shall . . . discharge at any safe place or wharf, or alongside vessels or lighters,

reachable on her arrival, which shall be designated and procured by the charterer . . . Additional clause 1. . . At . . . discharging port before tendering notice of readiness the vessel to comply with all

port formalities including Gas Free Certificate . . . .’’

The vessel arrived off the floating light at the discharge port at 04.30 on 31 July.Notice of readiness was tendered at that time, but because the inspector could notget out to the anchorage due to bad weather, the Gas Free Certificate was notobtained until 15.00 on 3 August. Furthermore, because of congestion, the vesseldid not actually berth until 13 August.

The owners contended that laytime commenced at 10.30 on 31 July. The charter-ers argued that the obtaining of the Gas Free Certificate was a condition precedentregarding the commencement of laytime and that therefore laytime did not com-mence until 21.00 on 3 August.

It was held that because the Gas Free Certificate was not obtained until 15.00 on3 August, the notice of readiness did not become good until that time, and accord-ingly laytime commenced at 21.00 on 3 August. However, the charterers were inbreach of charter because they had failed to designate a berth reachable on arrivalwhen the vessel arrived off the discharge port (The ‘‘Laura Prima’’11). It followedthat the owners were entitled to be put in the same position as if the contract had


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been performed by the charterers; that was on the basis of a berth being available forthe vessel when she arrived off the discharge port.

If a berth had been available for the vessel on her arrival on 31 July then thearbitrators assumed she would have berthed by about 08.00 on that day. Theevidence did not point to the vessel not being able to berth on 31 July, because ofbad weather, or any physical reason. It was simply a matter of a berth not beingavailable. The weather, although preventing small boats coming out to the anchor-age at the discharge port, did not close the port for larger vessels. On the basis thatthe Gas Free Certificate would have been given by 10.00 on 31 July, laytime wouldhave commenced at 16.00 on that date. The result was that the owners’ timesheetwas incorrect to the extent of 5 hours 30 minutes only.

In view of the fact that the charterers were in breach of contract they could notreally complain that they should compensate owners on the basis as if the contracthad been performed. It was a fundamental principle that parties should carry outtheir obligations under the contract; that overrode the other factors such as theterms regarding commencement of laytime. The charterers were, however, entitledto set off the amount of laytime against the delay arising from the breach ofcontract.

Accordingly, the charterers were liable to pay demurrage for the period from16.00 on 31 July to 21.00 on 3 August.

Yet another example of a ‘‘reachable on arrival’’ provision affording an advantageto owners in circumstances where there was a breakdown of a vessel’s windlasswhich delayed the berthing of the vessel is the arbitration reported in LMLN351—17 April 1993 (cited in paragraphs 39 and 40 regarding other matters and alsolater in paragraph 75).

The vessel was chartered on the Asbatankvoy form. When the ship arrived at thedischarge port (when she was already on demurrage) she was not able to reach aberth because of weather conditions. She accordingly gave notice of readiness andanchored at that time. But for the weather conditions she would have been able togo straight into port and anchor at the multi-buoy mooring to which she wasdestined to go.

It had been indicated to the ship that she might move from anchorage to thatberth early in the morning of 18 July, but when attempts were made to raise her portanchor, the motor of the port windlass, which had just been tested in both direc-tions, broke down. It was subsequently discovered that that breakdown was due tothe defective manufacture of certain steel parts of the motor. That amounted to alatent defect not discoverable by the exercise of due diligence.

The receivers of the cargo refused to accept a proposal by the owners that the shipshould moor without her port anchor, being held in place by a tug. There was nopositive evidence to indicate that a tug would have been available, and such evidenceas there was led the tribunal to conclude that one would not have been available inany event.

In the event, the ship was unable to berth until a new windlass motor had beenobtained and fitted in the evening of 24 July. The motor was fully operational at20.20 hours that day, and the ship berthed at 15.50 hours the following day,completing at 19.10 hours on 26 July.

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On the evidence, it was plain that if there had been a berth reachable on arrival,the ship would have been able to go straight to it without having to stop at theanchorage, and she would have been able to moor at it, using two anchors withoutany difficulty, just as in the event she moored safely at the anchorage on 17 July. Nodoubt the port windlass motor would have given up the ghost when attempts weremade to raise the anchor after the completion of discharging, but that would haveled to other problems which were not of present concern.

The owners contended that time ran from 17.12 hours on 17 July, i.e. six hoursafter giving notice of readiness. The charterers’ principal submission was that timedid not start until 15.50 hours on 25 July. They said that the ship was not in factready to discharge when the notice of readiness was given, the notice was thereforeinvalid and time could not start counting until she berthed. However, the ship wasready in the sense that she could have gone to her berth, moored safely anddischarged without difficulties at the relevant time. Indeed, she could then have leftthe berth, though that would have involved slipping the port anchor and having itraised by a special operation.

The charterers argued, second, that the delay in berthing which apparentlyresulted from the problem with the windlass motor was not caused by any breach ofthe laytime provisions or of the obligation upon them to provide a berth reachableon arrival. There was, they said, a break in the chain of causation, or the con-sequence was too remote in the sense of not being foreseeable as a result of thelaytime or ‘‘reachable on arrival’’ breaches.

Third, the charterers contended that the owners were in breach of Special Provi-sion (i) in Part I, M of the charter, which read:

‘‘Further vessel’s characteristics:. . .

Vessel . . . is in compliance with usual discharge ports mooring requirements/restrictions fordischarge fuel oil . . . ’’

It was held that the ship was ready when she gave notice of readiness, and thatnotice was valid. The fact that she became unready subsequently (as a result only ofhaving to anchor because of the charterers’ breach) did not affect that position. Thecase was quite different from that of The ‘‘Virginia M’’ (see later paragraphs 64 and75) in that there, at the time notice was given, the facts were such that the ship wasnot able to complete her discharging operation. Here, the contrary was the case.The vessel only became unable to discharge because the charterers’ breach led tothe last straw being placed on the camel’s back significantly earlier than it wouldhave been but for that breach.

There was no doubt that there was such a breach, for under clause 9 of the charterthe charterers were bound to designate and procure a berth reachable on the ship’sarrival (in the sense which had been given to that word in cases such as The ‘‘LauraPrima’’15). Whilst that breach in effect allowed a valid notice to be given anddemurrage time to count six hours later in accordance with clause 6 (as amended),it remained a breach and the charterers were responsible for damages flowing fromit, subject to the ordinary rules on causation and remoteness.

15. [1982] 1 Lloyd’s Rep. 1.


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It was totally foreseeable that if a charterer failed to provide a reachable berth incircumstances such as the present, other matters might later intervene and causedelay to the ship beyond that which was created by the simple unavailability of theberth in question. It might be, for example, that a berth was occupied but that whenit became free the weather was such as to prevent berthing, or there was a strike ofrelevant operatives which had the same effect, or any one of a number of otherpossibilities might manifest.

The charterers therefore remained responsible for all the time following theiroriginal breach subject to any relevant charterparty exceptions (of which there werenone in the present case) or a relevant breach or fault on the part of the owners, forall such time flowed sufficiently directly from that breach by charterers.

There was no breach or fault on the part of the owners in the present case. Theprovision as to ‘‘compliance with usual discharge ports mooring requirements’’ wasa warranty as to the ship’s description which applied either at the date of the charteror at the start of the voyage, but was not a continuing warranty any more than anyof the other provisions appearing in Part I, A (‘‘Description and Position of Vessel’’)and M, Special Provision (i). But even if that was wrong, the owners were protectedby the General Exceptions Clause, clause 19 of Part II, in the particular circum-stances of this case.

Accordingly, the owners were entitled to demurrage as claimed.

52. Problems may still arise with a ‘‘reachable on arrival’’ clause in a voyagecharterparty if there are other clauses in the charterparty which bear on the com-mencement of laytime in a breach/damages situation and there is no wording likethat in the last sentence of the Asbatankvoy clause 6. In a 1991 reported arbitration,LMLN 303—15 June 1991, the vessel was delayed by bad weather after arrival atthe loading port. Clause 6 of the Tanker Motor Vessel Voyage form charter providedthat the ship was to ‘‘load . . . at a place or at a dock or alongside lighters reachableon her arrival, which shall be indicated by charterers . . . ’’ and by clause 7 thelaytime was to ‘‘commence from the time the vessel is ready to receive . . . her cargo,the Captain giving six hours’ notice to the charterers’ agents, berth or no berth’’.Typewritten clause 28 read:‘‘Any time used in waiting for daylight, normal tide conditions, bad weather or port servicessuch as pilotage and towage shall not count as laytime at ports of loading anddischarging.’’

Typewritten clause 46 incorporated an addition to printed clause 9 reading:‘‘Neither owners nor charterers shall be responsible if, in the event of strikes of workmen,lock-outs, riots or floods or any accident or cause beyond the control of either party, loadingor unloading of the vessel is delayed, prevented or interrupted. In such circumstances,laytime will not commence, or if commenced, will not continue until the cause of theinterruption or delay is removed.’’

The shipowners contended that the charterers were in breach of their obligationunder clause 6 and were accordingly not entitled to rely on either clause 28 or clause46. The charterers said that the present case was not like The ‘‘Laura Prima’’,16

16. [1982] 1 Lloyd’s Rep. 1.

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which was concerned with the effect, if any, to be given to the exception in the lastsentence of clause 6 in the charter there under consideration, an exception whichdid not appear in the present case.

It was held that the charterers’ argument was correct. The charterers were enti-tled to the benefit of the bad weather exception in clause 28 (or, if necessary, thegeneral exceptions in clause 46) and were accordingly entitled to succeed on thatissue.

A later arbitration, LMLN 489—4 August 1998, involved consideration of anAsbatankvoy charterparty with standard clauses 6 and 9 ‘‘(reachable on arrival)’’but with an additional clause 13 which provided:

‘‘Suspension of Running Time Clause: Time shall not count as laytime, or if on demurrageas demurrage, when spent or lost:

(a) for and on an inward passage moving from anchorage to first berth, includingawaiting tugs, pilot . . . until the vessel is securely moored at the berth . . . ’’

The vessel arrived at the discharge port at 13.45 on 31 December. At the time of herarrival the berth to which she was destined to go was empty. However, the charter-ers had also chartered another ship (‘‘the other vessel’’) which had arrived at thesame discharge port the previous day, and they wanted to berth her first. Unfortu-nately, the other vessel could not berth on 31 December because of bad weatherduring the first part of the day and because, from 17.00 onwards until 08.00 on 2January tugs were not available due to holidays. The other vessel berthed in themorning of 2 January and sailed on 3 January, thereafter the subject vessel berthedand discharged. The owners contended that time counted from 19.45 on 31December (6 hours after notice of readiness) while the charterers said that time didnot start counting until 08.00 on 2 January.

The charterers said that they were protected because there was a berth availablewhen the subject vessel arrived. In any event, they said, The ‘‘Laura Prima’’16 onlyapplied to cases where there was congestion, i.e. not the present case. Thus, if theship was not able to proceed because of weather or other risks traditionally borne byowners, then laytime could not count. In addition, they relied on clause 13 and saidthat plainly time was here spent or lost awaiting tugs. Therefore, the proximatecause preventing berthing was not congestion, but was adverse weather and theunavailability of tugs, and time could only start counting once those impedimentshad ceased.

It was held that the charterers were wrong. The position in English law wasperfectly clear. The ‘‘Laura Prima’’ did not simply apply to congestion as had beenmade more than clear in the subsequent decisions of The ‘‘Sea Queen’’17 and The‘‘Fjordass’’.18

The only question was whether clause 13 affected the position in any way. In theview of the majority of the tribunal it did not. The time that the subject vessel spentwaiting was not spent ‘‘awaiting tugs’’. (Indeed, for the first few hours even thatcould not be argued since it was heavy weather which originally prevented the other



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vessel from berthing.) The simple fact was that the charterers had failed to designateand procure a berth that was reachable upon the vessel’s arrival, and all the time shespent until she did berth was time spent in waiting for a reachable berth to beprocured. Even if there had been no bad weather and no tug strike there would havebeen no reachable berth for the vessel because the other vessel would have occupiedit. The fact that the other vessel was delayed (inter alia) by the tug’s holiday did notenable the charterers to rely upon clause 13 because it was the other vessel that wasawaiting tugs and not the subject vessel. The exception to laytime in clause 13 hadto be read strictly against the charterers and could not be held to apply to the vessel,particularly given that the charterers were in breach of their fundamental obligationto designate and procure a berth reachable on that ship’s arrival. Accordingly, themajority of the tribunal concluded that the owners’ claim succeeded in full.

Although not directly on the point of ‘‘commencement of laytime’’, but more todo with the commencement of demurrage, a 1990 reported arbitration, LMLN267—27 January 1990, is of interest for its consideration of ‘‘reachable on arrival’’and the Laura Prima decision. A vessel chartered on the Asbatankvoy form wasordered to discharge at a port where, at the time of her arrival, a tug strike was inprogress. A discharging berth was available but the vessel was unable to be bertheddue to the tug strike.

The arbitrator held that the laytime remaining available for discharge started tocount on expiry of the six hours ‘‘grace’’ period allowed by clause 6. That, he held,necessarily followed from the fact that the charterers were in breach of their obliga-tion under clause 9 to provide a berth ‘‘reachable on arrival’’: The ‘‘LauraPrima’’.

On the following day the laytime expired, so that in the ordinary course the vesselwould have gone onto demurrage. But the tug strike was still going on and, as thearbitrator found, prevented the berthing of the vessel for a further five days.

Were the charterers liable for demurrage for those five days or did the lastsentence of the demurrage clause excuse them from liability until the vessel was ableto berth and commence discharge?

The demurrage clause (clause 8) provided as follows: ‘‘The Charterer shall not beliable for any demurrage for delay caused by strike, lockout, stoppage or restraint oflabour for [sic] Master, officers and crew of the Vessel or tugboat or pilots.’’

Was this exception available to the charterers notwithstanding that they were incontinuing breach of their obligation under clause 9 to provide a berth ‘‘reachableon arrival’’? It was a different problem from that posed in The ‘‘Laura Prima’’, wherethe only question was whether breach of the clause 9 obligation operated to preventreliance upon the last sentence of clause 6 (‘‘ . . . where delay is caused to vesselgetting into berth after giving notice of readiness for any reason over which Chart-erer has no control, such delay shall not count as used laytime’’).

The arbitrator found nothing in the speech of Lord Roskill in The ‘‘Laura Prima’’to indicate that breach of the ‘‘reachable on arrival’’ obligation would have the sameimpact upon the demurrage exception in clause 8 as it was held to have upon thelaytime exception in clause 6. He decided that the charterers were excused fromliability for demurrage.

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The arbitrator observed that a not dissimilar argument had been raised in The‘‘Johs Stove’’19 in relation to the half-demurrage provision contained in the secondsentence of clause 8. Although the argument failed because the arbitrator in thatcase had found as a fact that the relevant delay had been caused by congestion andnot (as the charterers had sought to argue) by the shore labour dispute, there wasno suggestion that the argument would have been rejected if, on the facts, thecharterers could have brought themselves within clause 8.

Although the present arbitration decision turned upon somewhat unusual facts,it appeared to raise a question which could be of wider significance, namely whetherbreach of the ‘‘reachable on arrival’’ obligation was of any materiality where a vesselwas already on demurrage on her arrival at the discharge port and there existed asituation falling within either the second or third sentences of clause 8.

Both of the above arbitrations, LMLN 303 and LMLN 267, support the premisethat a ‘‘reachable on arrival’’ provision in a charterparty may not be as favourable toshipowners as owners imagine and where an exceptions clause is sufficiently cleararbitrators may apply it so as to suspend the running of laytime or the time ondemurrage in circumstances where the berth is not reachable on the vessel’s arrival.For arbitrations regarding ‘‘reachable on arrival’’ and the Conoco Weather Clause(same principle in issue) see later, paragraph 53.

53. The meaning of ‘‘reachable on arrival’’ and ‘‘always accessible’’ appear to besynonymous. That was the view of Mr Justice Webster in The ‘‘Kyzikos’’.20 Charter-party Laytime Definitions 1980 is to the same effect and stipulates: ‘‘6 ‘REACHABLE ON

ARRIVAL’ or ‘ALWAYS ACCESSIBLE’ (applicable only if incorporated into a contract)—means that the charterer undertakes that when the ship arrives at the port therewill be a loading discharging berth for her to which she can proceed without delay’’as is also Voylayrules 1993 which reads ‘‘ ‘REACHABLE ON HER ARRIVAL’ or ‘ALWAYS

ACCESSIBLE’ shall mean that the charterer undertakes that an available loading ordischarging berth be provided to the vessel on her arrival at the port which she canreach safely without delay in the absence of normal occurrence’’. ‘‘However, BalticCode 2003 reads, ‘REACHABLE ON HER ARRIVAL OR ALWAYS ACCESSIBLE’—means thatthe charterer undertakes that an available and accessible loading or dischargingberth will be provided to the vessel on her arrival at or off the port which she canreach safely without delay proceeding normally. Where the charterer undertakes theberth will be ‘ALWAYS ACCESSIBLE’, he additionally undertakes that the vessel will beable to depart safely from the berth without delay at any time during or on comple-tion of loading or discharging.’’ As illustrated in the previous paragraphs ‘‘reachableon arrival/always accessible’’ provisions in a voyage charterparty have considerableadvantages for owners of vessels; there may yet be further advantages in respect ofthe assessment of damages (see paragraph 61 et seq. on this aspect) since it has to beremembered that the provisions do not deal directly with the commencement oflaytime but allow owners damages because of the breach by charterers in not



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providing a berth ‘‘reachable on arrival’’ or ‘‘always accessible’’ at the time of thevessel’s arrival at or off the loading/discharging port; it follows that the principlesrelating to damages are applicable.

Because of the decisions of the English courts and arbitrators regarding ‘‘reacha-ble on arrival’’ many charterers will not agree such a provision in their charterpar-ties; they sometimes go further in that they will not warrant the safety of theloading/discharging place (not necessarily relevant to the commencement of laytimein the wider sense). It may be that the victories of the owners in the Sixties,Seventies and Eighties in respect of ‘‘reachable on arrival’’ have turned out to be ofa Pyrrhic nature with charterers switching from the Asbatankvoy form to othercharterparties which do not contain a ‘‘reachable on arrival’’ term and, further,make it clear that laytime will not run when bad weather, pilot/tug strikes etc.prevent a vessel berthing when she arrives off the loading/discharging port. SeeASDEM UPDATE—May 2005 for evidence regarding companies moving awayfrom using the Asbatankvoy form.

It is mentioned that the word ‘‘accessible’’ can be used to advantage by charterersregarding the commencement of laytime. For example, in the Shellvoy 5 and theShellvoy 6 charterparties it is stipulated:

‘‘Time at each loading or discharging port shall commence to run 6 hours after the vessel isin all respects ready to load or discharge and written notice thereof has been tendered by themaster or Owners’ agents to Charterers or their agents and the vessel is securely moored atthe specified loading or discharging berth. However, if the vessel does not proceed imme-diately to such berth time shall commence to run 6 hours after (i) the vessel is lying in the areawhere she was ordered to wait or, in the absence of any such specific order, in a usual waitingarea and (ii) written notice of readiness has been tendered and (iii) the specified berth isaccessible. A loading or discharging berth shall be deemed inaccessible only for so long as thevessel is or would be prevented from proceeding to it by bad weather, tidal conditions, ice,awaiting daylight, pilot or tugs, or port traffic control requirements (except those require-ments resulting from the unavailability of such berth or of the cargo).’’

It follows that if a berth is inaccessible at the time that the vessel arrives at or off theloading/discharging port laytime will not commence if the inaccessibility arises frombad weather, tidal conditions, ice, awaiting daylight, pilot or tugs or port trafficcontrol requirements save for those requirements resulting from the unavailability ofa berth or cargo. What this wording does is to restore to the owners the risk of whatwas thought to be theirs in times past but the charterers retain the risk of berthcongestion which, again traditionally, was thought to be theirs.

In arbitration LMLN 463—2 August 1997 an interesting point came up regard-ing whether ‘‘always accessible’’ also meant ‘‘always leavable’’. It was an unsafe portcase where after completion of loading the vessel had to wait nine hours 30 minutesfor a high tide in order to unberth. Thereafter the vessel dropped anchor in the innerport and had to wait a further 21 hours 42 minutes for the high tide in order to sailout of the port. The owners contended that those delays were caused by thecharterers’ breach of contract where the relevant charterparty clause read:

‘‘That the vessel . . . shall . . . proceed to one safe port and there load at one safe loadingberth in charterers’ opinion, always accessible, always afloat, a full and complete cargo in bulkof . . . ’’

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One of the contentions of the owners was that the berth was not always accessibleand that the charterers should have ordered the vessel to a berth where there wouldbe access to and from the berth at all times. In other words, access to the berth forthe vessel to reach it and access from the berth to the open sea. In the event, theberth designated turned out to be not always accessible.

It was held that the textbooks were of little assistance seeming to concentrate on‘‘always accessible’’ being synonymous with ‘‘reachable on arrival’’. Its possibleapplication to departing from the berth appeared to have been ignored entirely.Similarly, the Voylayrules 1993 only explained that ‘‘reachable on arrival’’ of ‘‘alwaysaccessible’’ meant that the charterer undertook that when the ship arrived at theport there would be loading/discharging berth for her to which she could proceedwithout delay. They made no reference to a ship leaving a berth or a port.

The inference was that charterers agreeing ‘‘always accessible’’ terms were underan obligation to provide a berth which was available immediately on arrival, but thatthat particular regime did not apply after the ship was actually in the berth, whenthe normal charterparty provisions as to laytime would apply.

The tribunal had also looked at the English dictionary definitions of ‘‘accessible’’,and whether it meant accessible (or ‘‘exitable’’) from the berth as well as accessible(‘‘reachable’’) to the berth. They had all referred to ‘‘approach’’ and being ‘‘withinreach’’, or ‘‘easy to reach or to get into’’, or ‘‘a way or means of approach’’, and nonehad made any mention of access from as opposed to access to.

Accordingly, the warranty did not extend to leaving the berth.Even if the warranty of ‘‘always accessible’’ did extend to departure from the

berth, the circumstances which prevented the ship from leaving became relevant. Inthe present case, it was simply the state of the tide. The rise and fall of the tide wassuch an everyday occurrence that it could in no sense be viewed as abnormal orphenomenal. Since this was a berth charterparty, where the vessel’s obligation wasto reach the berth, and any weather or navigational hazards en route were to beborne by the owners, it seemed to the tribunal that exactly the same conditionsshould apply when leaving the berth. Consequently, even if the warranty extendedto departure from the berth, waiting for the tide to flood sufficiently for the vesselto leave the berth was a delay for which the charterers could not be heldresponsible.

There have been no further reported arbitrations on the subject and also nojudgments. The decision of the tribunal is, perhaps, arguable, but appears to be theonly one in existence at the moment. While the tribunal did look at Voylayrules(which makes no reference to a ship leaving a berth or port) it did not have thebenefit of seeing Baltic Code 2003 which specifies that ‘‘always accessible’’ addition-ally undertakes that the vessel will be able to depart safely from the berth withoutdelay at any time during or on completion of loading or discharging (see earlier inthis paragraph). Neither did the tribunal appear to consider the full effect of‘‘always’’ in the phrase ‘‘always accessible’’.

The Conoco Weather Clause was mentioned earlier in paragraph 50 and wascited in full. The opinion was ventured that if the clause was a later type-addedclause to a reachable on arrival provision it would have the effect of halving thelaytime used in circumstances where bad weather prevented the vessel berthing


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when she arrived off the loading/discharging place. Although arbitrations have takenplace in London regarding the subject since the last edition (detailed later in thisparagraph) they have not, as yet, been reported in the LMLN reports. It appearsthat there has only been one arbitration in New York in respect of the subject andthis was reported many years ago in LMLN 452—1 March 1997 (SMA No. 3290).It was detailed in the last edition and it remains in this edition for, at least,completeness even though, in general, London arbitrators take a different approachto the majority arbitrators in the reported New York arbitration (see below).

The vessel Alaska was chartered on the Asbatankvoy form for a voyage fromSkikda, Algeria, to one or two safe US Atlantic, Gulf or Caribbean ports. A disputearose as to demurrage at the loading port.

The charterers claimed that on the disputed days, they were required to pay onlyone-half demurrage because of the wording of the Conoco Weather Clause, whichread:

‘‘Delays in berthing for loading or discharging and any delays after berthing which are due toweather conditions shall count as one-half laytime, or, if on demurrage, at one-half demur-rage rate.’’

The owners contended that that clause should be narrowly construed to applyonly to delays in getting into a berth which had already been designated by thecharterer in accordance with the charterer’s obligations under clause 9 of theAsbatankvoy form. The owners also argued that the clause did not apply wherethe charterer had not as yet met its overriding obligation to procure a cargo forthe vessel as well as its duty of procuring a berth ‘‘reachable on her arrival’’.

It was held (by a majority), that it was clear that the weather did at times interferewith some operations in the port. However, it was not at all clear that those weatherconditions were responsible for the delays experienced by the Alaska.

The first delay occurred before the vessel’s turn to berth had arrived, and beforea berth had been designated and procured by the charterer. The intended berth wasoccupied when NOR was tendered and the Alaska was third in the lineup for thatberth. This was an Asbatankvoy form of charter, the same form as in The ‘‘LauraPrima’’.16 There, the charterer could not be excused for delays ‘‘getting into’’ berth,but that distinction was not enough to excuse the charterer from its duty to desig-nate and procure a berth ‘‘reachable on her arrival’’ under clause 9.

The Conoco Weather Clause did not go far enough to change that rule. It spokeof ‘‘berthing’’ rather than ‘‘getting into’’ berth, but that distinction was not enoughto excuse the charterer from its duty to designate and procure a berth ‘‘reachable onher arrival’’ under clause 9.

The dissenting arbitrator (whose view the writer thinks is to be preferred) had thisto say regarding the initial period of delay when the port was closed due to badweather and no berth was available for the vessel:

‘‘The panel majority concludes it is inappropriate to apply the clear and relevant provisionsof Special Clause 9—Conoco Weather Clause—because Charterer failed to designate andprocure a berth reachable on arrival as per Clause 9. First of all, Clause 9 is not a berthavailability clause, although Laura Prima, supra, has considered it so in determining whethera charterer may invoke the last sentence of Clause 6. It cannot and should not be consideredas a bar to Charterer’s right to apply the one-half laytime/demurrage of the Conoco Weather

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Clause to weather related delays in berthing and after berthing. There is no language in theConoco Weather Clause to suggest that it is in any way tied to Clause 9 and the allegedobligation to provide a berth reachable on arrival. Nor does it make commercial sense tocondition the Conoco Weather Clause, or for that matter a number of other laytime exceptionclauses, to the ‘berth availability’ provision of Clause 9.

The Conoco Weather Clause is a special rider provision to the charter party designed tosimplify and clarify the one-half ‘storm’ severity requirement of Clause 8 and to expresslyprovide for its application to waiting time and time getting into berth. It is nothing more thana bargained for allocation of risk for weather related delays. Simply stated, the ConocoWeather Clause provides for an alternative one-half laytime/demurrage application whenadverse weather periods are encountered. However, the panel has declined to apply theConoco Weather Clause, not because there were no weather related port closures, whichthere were, but because of the Clause 9 berth availability concept. That interpretation readsa condition into the Conoco Weather Clause which is simply not there.’’

Although there have been no reported London arbitrations there have been anumber of unreported arbitrations regarding the Asbatankvoy form with an addedConoco Weather Clause. It appears that the majority of London arbitrators haveapplied the clause to bad weather circumstances which prevent a vessel berthingwhen there is no berth reachable on arrival because of the bad weather. Further,there have been arbitrations where London arbitrators have applied the demurrageclause 8 of the Asbatankvoy in a ‘‘reachable on arrival’’ context, see earlier LMLN267—27 January 1990 in paragraph 52 and the later 2005 arbitration below.

In the 2001 San Carlos arbitration three well known London arbitrators had nohesitation in concluding that if the vessel was delayed from berthing because of badweather (thus a breach of clause 9 of the Asbatankvoy) that fell within the agreedConoco Weather Clause and the clause would be applicable so that laytime wouldcount on a half time basis. They said that the decision in The ‘‘Laura Prima’’ did notoverride express exceptions to laytime such as the added Conoco WeatherClause.

In a more recent, 2005 arbitration, it was common ground that the loading berthwas not reachable on arrival because of another ship being on the berth so that thecharterers were in breach of clause 9 of the charter. The question was whether ornot the charterers were precluded from relying on the laytime/demurrage exceptionsin clauses 8 and 42 of the charterparty and in circumstances where the vessel hadberthed and by which time she was on demurrage. Clause 8 read:

‘‘DEMURRAGE . . . if, . . . . Demurrage shall be incurred at ports of loading and/or dis-charging by reason of fire, explosion, storm, BAD WEATHER or by a strike, lockout,stoppage or restraint of labour or by breakdown of machinery or equipment in or about theplant of the Charterer, supplier, shipper or consignee of the cargo, the rate of demurrage shallbe reduced one-half of the amount stated in Part 1 per running hour or pro rata for part ofan hour for demurrage so incurred. . . . ’’ (The words ‘‘Bad Weather’’ did not appear in thestandard form version of the charterparty and were inserted electronically into the actualcharterparty, in accordance with cl. 1 of the Lukoil standard terms, in capital letters.)

Clause 42 (Conoco Weather Clause) read:

‘‘Delays in berthing or loading or discharging and any delays after berthing which are due toweather conditions shall count as one half laytime or, if on demurrage, at one half demurragerate.’’


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The majority (both leading maritime arbitrators) held that the delays in loading,because of bad weather, were covered by clauses 8 and 42 of the charterparty andshould only count half time for demurrage. In reaching their conclusion the major-ity considered the owners’ contention that, since the berth was not reachable onarrival, as it clearly was not, the charterers were in breach of charter and thus couldnot rely on the bad weather half demurrage/laytime exceptions in clauses 8 and 42of the charterparty. The central premise of their argument was that the bad weatherwas only encountered because the vessel could not berth on arrival and therefore thecharterers were relying on their own breach. The owners relied on the decision ofthe House of Lords in The ‘‘Laura Prima’’. The majority said that The ‘‘LauraPrima’’ was not concerned with a demurrage exception, which necessarily wouldassume a breach of charter, but an exception to the running of laytime. It wasconcerned with whether a delay in getting into berth beyond the charterers’ control,as excepted by the last sentence of clause 6 of the Asbatankvoy form, was affectedby the duty in clause 9 to procure a berth that was reachable on arrival; clauses 6and 9 had to be read together as a coherent scheme. The House of Lords heldmerely that a delay in getting into berth required the berth to have been one whichwas reachable on arrival in the first place. It went no further than that and, impor-tantly, Lord Roskill made it plain that the decision did not generally affect theoperation of other laytime exceptions or a fortiori demurrage exceptions. Thisapproach appeared to be reinforced in the two subsequent judicial decisions in The‘‘Fjordass’’21 and The ‘‘Sea Queen’’.22

The majority also said that the owners’ contention might have confused the aboveprinciple with the similar but analytically very different one that unless an exceptionis very clearly applicable to demurrage as well as to laytime, it should not apply todemurrage since it is only because of the excess over the laydays (itself a breach) thatthe vessel is exposed to the relevant peril; hence the often-misleading mantra ‘‘Onceon demurrage always on demurrage’’. As is clear from The ‘‘Spalmatori’’23 and The‘‘Saturnia’’,24 it is a principle of construction of charterparties, not a principlegoverning how one approaches exceptions which are expressly and plainly demur-rage exceptions. Clauses 8 and 42 are both without question demurrage exceptions;they operate only because the charterer is in breach of charter in not loading ordischarging within the agreed laytime. The application of the relevant exceptions isnot concerned with the reason why the laytime has been exceeded but why there isrelevant delay during the time on demurrage. They tested their conclusion bysupposing that the berth had been reachable on arrival and the vessel had gonestraight in but the terminal had thereafter been very slow in loading and thusexposed the vessel to the delaying bad weather. There could then be no question ofthe half-demurrage provision not applying. There was no good reason for assumingthat a reachable berth means that one is not at risk to further delays and, above all,the risk of being exposed to later events which fall within demurrage exceptions.

21. [1988] 1 Lloyd’s Rep. 336.22. [1988] 1 Lloyd’s Rep. 500.23. [1964] A.C. 868.24. [1987] 2 Lloyd’s Rep. 43.

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Although there was a dissent it is submitted that the majority arbitrators werecorrect and in line with other leading London maritime arbitrators.

Before leaving this paragraph and moving to damages and implied terms mentionis made of an interesting unreported 1997 arbitration regarding reachable on arri-val, the Conoco Weather Clause, and circumstances where a vessel waited in aqueue for a particular berth. The vessel arrived off the port early on 17 Decemberand it was common ground that laytime commenced 6 hours later. Unfortunately,the vessel was unable to proceed to her loading berth until 30 December due to acombination of the effects of congestion and adverse weather on the ships ahead inthe queue for berthing. Because of the vessel’s deadweight, there was only one berthwhich could accommodate her and that was occupied on her arrival. In addition tothe vessel that was alongside, there were a further seven vessels ahead waiting for theberth.

The arbitrators said it was necessary to look at clauses 6 and 9 of the Asbatankvoyform plus the negotiated additional Conoco Weather Clause. It was commonground that once the vessel berthed delays due to weather should count as half timebut the parties differed as to the application of the clause to delays prior to berthingwhere the vessel was not at the front of the queue. The question was whether alltime lost until she did come to the head of the queue was delay due to congestionor whether for the periods sought to be excluded by the charterers, the proximatecause was weather and not congestion.

It was decided that:

(a) The Conoco clause refers to delays in berthing and therefore those periodswhen berthing was prevented by bad weather rather than bad weatherpreventing the vessel currently in berth from loading.

(b) There was no conflict between the Conoco added clause and the printedclauses in the charterparty. They could be read together in such a way asto make sense and it was a rule of construction that if that is possible thatis the way the charter should be construed.

(c) The clause should be construed contra proferentem the charterers and, as amatter of causation, the only delays in berthing that would count againstthe owners, for which time would run at half rate, were those that occurredwhile the vessel was at the head of the queue and therefore the next vesselto berth. Once the vessel had reached that situation the clause wouldprotect the charterers either where the weather prevented her from berth-ing or prevented the vessel then in berth from leaving the berth. In eithercase it would be fair to say that she was delayed in berthing due to weather.The charterers’ argument that the proximate cause of delay can changewhile in the queue, from congestion to adverse weather, even though theremay still be several ships ahead of her, was not accepted.

DAMAGES—IMPLIED TERMS

54. While ‘‘reachable on arrival’’ and ‘‘always accessible’’ provisions are expressclauses in charterparties which invoke principles of breach of contract/damages they

Para. 54DAMAGES—IMPLIED TERMS

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are not always looked upon in that light by many persons in the shipping world.Strictly speaking, any breach of the provisions by a charterer has to be looked atwithin the context of the principles relating to damages so that the party breachedagainst is put in the same position as if the contract had been performed, but moreabout that later in this chapter under ASSESSMENT OF DAMAGES.

While some express clauses which impinge upon the geographical arrival of avessel will be mentioned in the following paragraphs the major consideration willattach to implied terms which bear upon the commencement of laytime, such as theobligation of a charterer to provide a cargo and the obligation to act with reasonabledispatch to enable a vessel to become an ‘‘arrived ship’’ both of which concernreadiness as well as reaching the agreed destination. Before going further it isemphasised that in the past a fairly stringent approach has been applied in respectof implied terms and laytime/demurrage provisions in a charterparty (see above,paragraph 12); however, as stated by Mr Justice Steyn (above, paragraph 12) suchprovisions are not immune from the application of general principles of contract lawregarding the implication of terms. The general principle is that a term will beimplied if it is necessary, in the business sense, to give efficacy to the contract. It wasthus stated by Lord Justice Bowen in The ‘‘Moorcock’’25—where it was decided thata term should be implied into a contract for the use of a wharf that it was safe forthe ship to be at the wharf:

‘‘Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from anexpress contract or express warranty, really is in all cases founded upon the presumedintention of the parties, and upon reason. The implication which the law draws from whatmust obviously have been the intention of the parties, the law draws with the object of givingefficacy to the transaction and preventing such a failure of consideration as cannot have beenwithin the contemplation of either side; and I believe if one were to take all the cases, andthere are many, of implied warranties or covenants in law, it will be found that in all of themthe law is raising an implication from the presumed intention of the parties with the object ofgiving to the transaction such efficacy as both parties must have intended that at all events itshould have.’’

A term will not be implied merely because it would have been reasonable to haveinserted it in the contract or because it would make the carrying out of the contractmore convenient, nor will it be implied if the contract is effective without theproposed term and it is not obvious that it was the intention of the parties at thetime. In the words of Lord Justice Scrutton:

‘‘A term can only be implied if it is necessary in the business sense to give efficacy to thecontract; that is, if it is such a term that it can confidently be said that if at the time thecontract was being negotiated someone had said to the parties, ‘What will happen in such acase?’ they would both have replied: ‘Of course, so and so will happen; we did not trouble tosay that; it is too clear.’ That is, the so-called officious bystander test.’’

In the absence of appropriate exceptions in the charterparty it is the absolute dutyof the charterer to furnish a cargo so long as he can do so legally. This had beenestablished before The ‘‘Aello’’26 but this House of Lords decision affirmed the

25. (1884) 14 P.D. 64.26. [1960] 1 Lloyd’s Rep. 623.

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general principle and applied it to arrived ship circumstances (see earlier, Chapter1, for its relevance to reaching the agreed destination).

55. The vessel, bound for Buenos Aires to load a cargo of maize, anchored at theIntersection (22 miles from the dock area) and waited there from 12 October until29 October. At the date of the charterparty the system of traffic control operating inthe port of Buenos Aires did not permit vessels arriving to load maize to enter thecommercial area of the port until they had obtained a ‘‘giro’’ or permit. This wasissued by the customs authority on the ship’s application only when the shipper hadobtained from the Grain Board a certificate to the effect that cargo had beenallocated. Once the giro had been obtained, the ship could proceed to the dock area,where vessels due to load grain usually lay, and wait there until a loading berthbecame available.

At the relevant time supplies of maize were coming down to the port so slowlythat, by August, there was a congestion of vessels arriving to load maize. On 1September, to meet the temporary emergency, the port authority changed theprevious system of traffic control by passing a resolution that, before a giro could beissued, not only must the Grain Board’s certificate be obtained, but also a cargoready to be loaded must be available. The charterers did not have a cargo ready tobe loaded when the vessel arrived at the Intersection; therefore, they could notobtain a giro and the vessel could not become an arrived ship. The House of Lordsheld that the charterers were not relieved of their absolute obligation to provide acargo by showing that they had taken all reasonable steps to provide it. There wereno facts known to both parties which modified the charterers’ obligation; thematerial factor which prevented the ship from becoming an arrived ship was theresolution of 1 September which, at the date of the charterparty, was not known toeither party. Accordingly, the shipowners were entitled to counterclaim against thecharterers by way of damages in respect of demurrage lost by the failure of the shipto become an arrived ship.

The principle to be derived is that, if the provision of a cargo is necessary toenable the ship to perform its obligation, namely, to become an arrived ship, theimplied absolute obligation of the charterer is to provide the cargo, or at any rate areasonable part of it, in time to enable the ship to perform its obligation. It isabsolute in the sense that, although the charterer has exercised reasonable diligenceto provide the cargo, that does not excuse him unless he can pray in aid suchvitiating elements of contract law as frustration or illegality.

What has been stated above regarding the charterers’ absolute obligation doesnot, in practice, help owners as much as one would think. While there may beoccasions when a vessel has to wait off a port and, in reality, the waiting is becauseof cargo not being available, owners cannot always prove this. The evidence is morefrequently that the vessel is simply waiting for a berth because of congestion and notbecause of the non-availability of cargo, so that the absolute obligation of thecharterer does not come into effect on that many occasions. Further, in manyloading areas involving bulk cargoes it is very difficult to get appropriate anddetailed evidence showing the availability of a cargo for a vessel from a time pointof view. However, it does behove owners to make more efforts, through local agents,


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to ascertain the arrival time of cargoes at the stipulated loading berth, includinggrain elevators; there have been arbitrations where owners have been able to showthat no cargo was available for the vessel when she arrived at or off the loading portand this was causative of the vessel not being able to proceed to a berth.

While on the topic of absolute obligations mention is made again of the incon-sistency between the position as between providing a cargo and providing a berth.This aspect was raised in Chapter 1 (above, paragraph 10). It certainly seemssensible to line up the obligations to supply a cargo and a berth on the same basissince one is inextricably bound up with the other. Further, absolute obligations areuseful in that they reduce the area of argument as compared to the test of reason-ableness. This, in turn, leads to simplicity.

56. It is well established law that, as a general rule, where in the written contract itappears that both parties have agreed that something shall be done which cannoteffectually be done unless both concur in doing it, the construction of the contractis that each agrees to do all that is necessary to be done on his part for the carryingout of that thing, though there may be no express words to that effect; see the classicstatement of Lord Blackburn in Mackay v. Dick.27 From that classic statement canbe derived an implied term that both parties to a contract act with reasonabledispatch in co-operating with the other party and performing their part of thecontract.

The principle has relevance to the commencement of laytime as was illustrated inthe case of The ‘‘Atlantic Sunbeam’’.28 The vessel was chartered for a voyage from theUnited States to one or two safe berths or ports on the east coast of India. Thecharterers directed the vessel to Calcutta where she could not become an ‘‘arrivedship’’ unless (a) ‘‘prior entry’’ had been obtained by the owners and (b) a documentcalled a ‘‘jetty challan’’ had been obtained by the charterers from the port commis-sioners. The ‘‘prior entry’’ was obtained by the owners but four days were wasted inobtaining the jetty challan. A dispute arose between the parties and was referred toarbitrators who held that the charterers were liable in damages to the owners for thedelay. The award was in the form of a special case and the question for the court waswhether upon the facts found and the true construction of the charter (includingany implied term thereof) the charterers were in breach of their contractual obliga-tions to the owners. Mr Justice Kerr (as he then was) decided that the term to beimplied into the charterparty was that the charterers were bound to act withreasonable dispatch and in accordance with the ordinary practice of the port ofCalcutta in doing those acts which had to be done by the charterers to enable thevessel to become an ‘‘arrived ship’’ and the burden of proving that the chartererswere in breach of that term lay with the owners but the arbitrators were, of course,entitled to draw inferences adverse to the charterers if there were unexplainedperiods of delay or inactivity.

The principles adumbrated above are frequently applied to disputes betweenowners and charterers. However, it is emphasised that the test is only one of

27. (1881) 6 App. Cas. 251.28. [1973] 1 Lloyd’s Rep. 482.

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reasonableness. However much one would like to see it, there is no requirement ofa high standard of initiative let alone any excess of zeal to be implied. If, for instance,there are two procedures in a certain port whereby a vessel’s documentation can bedealt with, one on paying an expedition fee or taking some special steps, and theother one the ordinary procedure, then it appears that the charterers would beunder no implied obligation to use the speedier and unusual procedure; see whatMr Justice Kerr had to say at page 488. If owners want charterers to be obliged toa speedier and different procedure then such has to be obtained by way of an expressterm in the charterparty contract.

The difference between the absolute obligation in respect of supplying a cargoand the obligation of reasonable dispatch in respect of co-operating to ensure an‘‘arrived ship’’ formed the basis of some discussion in the recent case of The ‘‘WorldNavigator’’29; see below, paragraph 62.

57. Circumstances which arise frequently regarding the obligation to exercise rea-sonable dispatch and the commencement of laytime are those in relation to theinspection of a vessel when she arrives off a port. It is common for a vessel to arriveoff a port but laytime cannot commence until an express provision in the charter-party regarding the inspection of the vessel’s cargo spaces has been satisfied (moreabout this under later sections dealing with readiness and notice of readiness).

Obviously, in some circumstances it is in the charterers’ interests to delay inspect-ing the vessel whereas, from the owners’ point of view, an inspection should takeplace as soon as possible in order that laytime can commence. In such circum-stances the obligation of the charterers already referred to in the previous paragraphshould apply so that they exercise reasonable dispatch in carrying out the inspec-tion. In many circumstances, this will result in an inspection as soon as the vesselarrives off the port so that, so long as the vessel’s cargo spaces are in order, laytimewill commence. However, there are sometimes delays in the inspection of a vesseland, if the charterers cannot show good reason for the delay, the owners may becompensated for the time so lost.

Problems arise in practice where there are weather conditions (wind and/or swell)where the vessel lies at anchor off a port which makes it difficult to get a boat to avessel and the charterers take advantage of this to delay an inspection of the vessel.In some cases the delay is justified for the simple reason that the weather conditionsare so poor that a small boat cannot get to the anchorage in order to put an inspectoron board the vessel. On the other hand, there have been cases where no great effortshave been made by the charterers to put an inspector on board in conditions wherethe weather is inclement but, perhaps, not sufficiently poor to prevent a boat gettingout to the vessel if real efforts had been made so to do. If the owners can produceevidence that a boat could and should have moved to the vessel then a tribunal willaccept that the charterers did not act with reasonable dispatch. Unfortunately,owners’ representatives do not always think about obtaining this evidence at therelevant time so that when a dispute comes to arbitration the tribunal is left withinconclusive evidence as to whether or not a boat could have reached the vessel in

29. [1991] 2 Lloyd’s Rep. 23.


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the conditions which were in existence, in which case the charterers get the benefitof the doubt because of the onus of proof being on the owners (see above, paragraph56). In The ‘‘Ino’’ 1979 arbitration, the vessel was not inspected at the outeranchorage (where she lay for four days) with the result that the notice of readinessdid not become valid until five days after it had been tendered. The umpire said(inter alia):

‘‘In this case the charterers accepted the notice some five days after it was tendered. On theface of it any contract term requiring both the parties to play their part in bringing about thedesired result obligates both the parties to co-operate and to act reasonably and diligently inso achieving the desired result. In other words, did the charterers act reasonably and with duediligence in accepting the notice tendered on 3 May only on 8 May? Again, there is alamentable lack of evidence. The only evidence there is (which was not rebutted by ownersin any way) was that it was physically impossible for any surveyor to reach and inspect thevessel before it passed from the outer into the inner anchorage. I strongly suspect that in viewof the port’s congestion and the knowledge that many days would pass before loading couldcommence, the charterers’ sense of urgency was somewhat blunted and that they found itconvenient to delay inspection of the vessel until the vessel had reached the inner anchorage.However, I am bound to determine the matter on the evidence before me and on that basisI am reluctantly obliged to hold that there was no breach of charterers’ obligations to use duediligence in effecting the vessel’s inspection and that therefore the notice was effectivelyaccepted at 10.00 hrs on Monday, 8 May.’’

In a later arbitration LMLN 328—30 May 1992, the owners were successfulregarding an implied term as applied to the facts of the case. The charterpartystipulated, ‘‘Ship’s holds to be odourless and free from insects, properly swept,cleaned and dried to the satisfaction of shippers’ or charterers’ agents before load-ing . . . ’’. The vessel arrived at the loading port on 6 October and tendered a noticeof readiness at 19.00. The charterers did not arrange to survey the holds until 10.00on 8 October. It was held (inter alia) that unless there was a good reason why thesurvey could not have been held earlier, it was incumbent on the charterers to playtheir part by arranging prompt inspection on arrival, which had not been done inthe present case. Accordingly, the notice of readiness should have been accepted onthe opening of offices on 7 October.

In yet a later reported arbitration, LMLN 459—7 June 1997 the implied obliga-tion regarding a prompt inspection was dealt with more thoroughly and although itwas a time charterparty arbitration it has much relevance to the inspection of avessel by charterers within the context of commencement of laytime and the impliedobligation of reasonable dispatch. The owners claimed time charter hire or damagesequivalent to hire arising out of the alleged inordinate amount of time taken by thecharterers to carry out an inspection at the commencement of the charterparty. Thevessel had previously been on charter to the charterers for a period of 12 monthsprior to the present charter. Redelivery under the previous charter had taken placeon 8 January 1992 and it had been agreed prior to redelivery that the vessel wouldbe fitted with new cargo pumps to improve her performance prior to entering intothe present charter.

The vessel arrived at Rio de Janeiro on 28 January. It was the owners’ intentionto drydock her for her annual drydocking survey and to attend to outstanding itemsfrom her last special survey, as well as to replace two reciprocating cargo pumps with

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centrifugal pumps. The vessel was in drydock between 17 and 21 February andrepairs then continued at a layby berth. The laycan under the charterparty was27/29 February, but on 24 February the owners requested an extension beyond 29February because of unforeseen delays.

The owners’ case was that all repairs were completed to the satisfaction of theClass (Lloyd’s Register) surveyor on 27 February, and that the yard allowed thevessel to remain at the layby berth whilst the crew continued to carry out routinemaintenance awaiting delivery to the charterers under the new charterparty. How-ever, Lloyds did not issue an Interim Certificate of Class until 10 March.

At 11.00 hours on 28 February the owners confirmed to the charterers that thevessel was ready for inspection by the charterers. On 5 March two ABS surveyorsinspected the vessel on behalf of the charterers. They returned on 6 March tocontinue the inspection, and again on 7 March, when they completed their inspec-tion. ABS sent their report to the charterers on 9 March, but that report was notforwarded to the owners until 13 March.

The owners’ case was that nothing further was heard from the charterers or ABSbetween 7 March and 12 March, when the charterers sent a fax setting out allegeddeficiencies found during the ABS inspection which the charterers requested shouldbe remedied before the vessel was accepted under the charter. The owners carriedout the necessary work, which was completed on 15 March to the satisfaction of theClass surveyor.

A further complication arose on 16 March when the charterers informed theowners that the Diretoria de Portos e Costas (‘‘DPC’’) had determined on the basisof the ABS report that the vessel was not in a safe condition to operate in Brazilianwaters. The ABS surveyor visited the vessel for a further inspection on 17 Marchand confirmed that the repairs had been carried out properly. However, it was notuntil 19 March that the DPC confirmed that the vessel was approved for operationin Brazilian waters. At 17.00 hours on 19 March, the vessel was approved by thePort Captaincy.

The charterparty was on the Shelltime 3 form, and provided:

‘‘Clause 3—Owners agree to let and charterers agree to hire the vessel for a period of 12months . . . commencing from the time and date of delivery of the vessel . . .

The vessel shall be delivered by owners at Rio de Janeiro with full ship inspection byPetrobras and regular inspection by Port Captaincy . . .

Clause 43—Drydocking—Owners warrant that the vessel will not drydock during c/p periodand will comply with all requirements with class society and/or Brazilian port authorities . . .

Clause 75—Inspection—Before the vessel is delivered to charterers all tanks/lining/pipingpumping arrangements and other vessel specifications laid down in the charterparty shall beinspected by owners, charterers and Port-Captaincy. When it is jointly agreed that the vesselsatisfies the above mentioned requirements the vessel will be considered on hire at deliveryport specified in clause 3. Each party shall pay for their own costs for such survey but timerequired for the above inspection shall be for owners’ account.’’

The owners submitted that they had presented the vessel for delivery at 11.00hours on 28 February and that they were entitled to hire or damages equivalent to


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the rate of hire from that time until 20.00 hours on 19 March, making due allow-ance for the periods of actual inspection. They also claimed for the cost of bunkersconsumed during that period.

It was held that the words of clause 75 were so clear that there could be no doubtthat inspections by the charterers and the Port Captaincy were a condition prece-dent to the due delivery of the vessel under clause 3. However, the rigour of thatconstruction was mitigated by implying terms that the charterers should co-operatein carrying out their inspection as quickly as possible after the vessel had beentendered for delivery, and that the charterers should not interfere with any arrange-ments which the owners might have made with the Port Captaincy, and that thecharterers should notify the owners immediately of the results of the inspections.

The burden was on the owners to show that the charterers were in breach of thoseimplied terms, and that that breach had resulted in the delay complained of. Theabsence of any attempt on the part of the charterers to explain the steps which theyhad taken to carry out the inspections and the reasons for what was clearly on itsface an inordinate period of delay (having regard to the equivalent inspection underthe previous charterparty) was bound to lead the tribunal to the conclusion thatthere was a prima facie breach of the implied obligations relied on by the owners.

On the evidence, the vessel had not in fact been ready for delivery under the newcharter until 10 March. However, the report of the ABS surveyor instructed onbehalf of the DPC which had been sent to the charterers on 9 March was notforwarded to the owners until 13 March. The charterers’ obligation was to pass onthat report immediately they received it on 9 March. The owners could haveremedied the defects noted in the ABS report by 12 March had the report beenpassed on to them promptly. It was therefore likely that the owners would have beenable to deliver the vessel into service in accordance with the requirements of thecharterparty by 17.00 local time on 13 March, six days earlier than in facthappened.

Accordingly, the owners were entitled to damages equivalent to the daily rate ofhire for the period of six days during which delivery was delayed as a result of thecharterers’ breach of their implied obligation. See also later paragraphs 62 and 126for more on the implied obligation of reasonable dispatch.

At one time it was postulated whether or not the charterers should be under anabsolute obligation to put an inspector on board the vessel timeously. In The ‘‘TresFlores’’30 the tribunal, on an alternative basis, decided that there was an absoluteobligation on the charterers to inspect the vessel timeously. This case will also bereferred to later under readiness but suffice it to say at the moment that the vesselarrived off Varna on 22 November; no berth was available for several days and shewas not inspected by the port authorities until 27 November, at which time pestswere found in the cargo spaces and fumigation was ordered. On 1 December thecharterers accepted the notice of readiness. The reason for the delay in the inspec-tion was the bad weather which prevented an inspector getting out, in a boat, to the

30. [1973] 2 Lloyd’s Rep. 247.

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vessel. The owners claimed for the time that the vessel was waiting from 22 Novem-ber to 27 November (in that laytime commenced) but failed on the grounds that thevessel was not ready to load cargo when she arrived off Varna.

On the alternative argument by the owners for damages for detention because ofthe failure of the charterers to inspect the cargo spaces timeously the courts reversedthe tribunal and decided that any obligation to inspect the cargo spaces was not anabsolute one; since bad weather prevented the inspection of the cargo spacesbetween 22 November and 27 November there was no breach of any obligation bythe charterers so that the owners were not entitled to damages for detention.

An implied term may also arise regarding a charterers’ obligation to accept anotice of readiness within a reasonable time, see later Chapter 6, LMLN 434—22June 1996 (also referred to earlier in paragraph 30 regarding another aspect) andLMLN 338—17 October 1992. Both of these arbitrations are detailed later inparagraph 118.

Such a term as above will only be implied if necessary to give business efficacy tothe contract and, in any event, the charterers will be able to set-off the laytime in anydamages computation, if the carrying voyage has been completed. In LMLN329—13 June 1992 the owners claimed damages for detention at the discharge port.The vessel arrived on 9 November and waited until 26 November before thereceivers accepted the notice of readiness. The delay arose as a result of a disputeover the sale of the cargo. The charterers had sold the cargo to purchasers who inturn had sold it on to other purchasers. However, some difficulty had arisen asbetween the first and second purchasers which led to the delay in the acceptance ofthe notice of readiness and the consequent delay in the discharge of the vessel.

The owners relied on The ‘‘Atlantic Sunbeam’’,31 and contended that the charter-ers were under an obligation to act with reasonable diligence in carrying out theirpart of the contract. That they had failed to do in arranging for a party to beavailable at the port of discharge capable of accepting the notice of readiness andprocuring the discharge of the cargo. They contended that the charterers weretherefore in breach of an independent obligation in respect of which the ownerswere entitled to a separate cause of action for damages.

It was held that that was an attractive argument, but it was inconsistent with legalprecedent. The freight paid by the charterers included the privilege of using acertain number of laydays without incurring liability for delay. The laydays wereavailable for use at the port of discharge after the vessel had completed her voyage.The notice of readiness was accepted by the agents, who were unable to obtainacceptance from the receivers. However, the fact that notice of readiness was notaccepted by the receivers was not relevant to consideration of whether or not a vesselwas an arrived ship. This was a case where the approach voyage had beencompleted.

In The ‘‘Delian Spirit’’,32 it had been held that if the charterers were guilty of abreach causing delay to a vessel that had completed her voyage, they were entitledto apply their laytime so as to diminish or extinguish any claim for delay. That



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principle was applicable to the present case. Accordingly, the charterers were enti-tled to laytime being counted during the period of the delay.

58. It appears that the only implied absolute obligation of the charterers which hasrelevance to the commencement of laytime is that in respect of providing a cargo, allother obligations appeared to revolve around the test of reasonableness.

An interesting recent case concerning the absolute obligation of the charterersand the unreadiness of the vessel to load cargo when she arrived at the loading portis that of the Court of Appeal in The ‘‘Nikmary’’,33 where the decision of thecommercial judge was upheld; he had decided that the charterers were liable to theowners for a sizable sum of demurrage in respect of the detention of the vessel. Thevessel was charterered on the Asbatankvoy form with the standard notice of readi-ness clause and the standard cleanliness clause. An amended operations clause 30stipulated:

‘‘ . . . (i) The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of theCharterer’s Inspector who shall inspect the Vessel as per local and/or Charterer’s require-ments prevailing at the time.. . .

(v) Owner shall indemnify Charterer for all direct and/or indirect costs and consequences asa result of the Vessel not being clean to the satisfaction of jointly appointed Inspector andshould the Charter not be cancelled all time until connection of hoses, after the Vessel hasbeen passed as clean to the satisfaction of jointly appointed Inspector, shall not count aslaytime, or if on demurrage, as time on demurrage.’’

On 2 December 2000 the vessel arrived at the Indian port of Sikka and gavereadiness to load a cargo of gasoil. She entered berth on 3 December where hertanks were inspected by a surveyor (Caleb Brett) on behalf of charterers Vitol andthe shippers Reliance Petroleum Ltd. (Reliance).

The vessel was rejected on the ground that the tanks were unfit to load gasoil. Thevessel shifted to the anchorage to carry out further cleaning. On 5 December thevessel’s tanks were passed fit for loading and the master gave notice at 19.30 thatday.

From 5 December until 2 January 2001 the vessel remained at the anchoragewaiting for a cargo. On 2 January the vessel entered berth at 15.00 and loading wascompleted on 3 January.

The owners claimed demurrage in respect of the time spent waiting at Sikka.They contended that the delay was due to the absence of cargo. The chartererssubmitted that the vessel had simply lost her turn in the queue as a result of the timetaken to carry out additional cleaning and had been forced to wait while cargo wassupplied to other vessels which had arrived within their nominated loading periods.They further argued that by virtue of clauses 6, 7, and 30(v) none of the time spentwaiting at Sikka counted for the purpose of calculating laytime and demurrage. Thedelay of the vessel was caused by the fault of the owners themselves and thecharterers were relieved of liability to pay demurrage.

It was held by the Court of Appeal (inter alia) that:

33. [2004] 1 Lloyd’s Rep. 55.

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(1) A voyage charterer owed an absolute and non-delegable duty to provide acargo for loading, and charterparty exceptions would normally be read asprotecting a charterer only in respect of its duty to load, and not ascovering its duty to provide cargo, although they might cover the latter ifsufficiently clear and distinct words were used.

(2) The charterer’s duty was to provide the cargo for loading within thestipulated lay days; Universal Cargo Carriers Corp. v. Citati (No. 1),34

considered.(3) The problem faced by the charterers was not a problem in obtaining

access to or loading immediately accessible cargo; the reason why theNikmary was not permitted to berth was not that the other vessels wereoccupying the shipper’s berth or had arrived first at the anchorage, to waittheir turn to do so; it was a contractual reason, namely that, in so far asthe charterers had any continuing contractual right to cargo at all, it wasone which was postponed to all those other buyers to whom the charterershad or incurred December commitments; the shipper’s problem was acontractual procurement problem which related to the charterers’ busi-ness and arrangements and meant in effect that the charterers had nocargo available until early January 2001 for loading.

(4) The delay in getting into berth could not be delay caused for a reason overwhich the charterers had no control.

(5) Clause 30(v) could not assist the charterers. Despite the unqualifiedlanguage of the clause it could not extend to circumstances of delaycaused by a charterer’s failure to provide a cargo ready for loading. Thecharterers were in breach of charter in failing to have cargo available forloading when or six hours after the vessel became ready to load at 22.00on 5 December 2000 or at any later time until 2 January 2001. In thatsituation, clause 30(v) did not apply.

(6) The delay was not caused by anything which could properly be regardedas either a breach of contract or relevant fault on the part of the owners;the vessel did not fail to proceed with due despatch; nor did the crew failto do as much as they could have done during the voyage to clean her; norcould the vessel with reasonable efforts have been made ready to loadbefore 5 December; the fact that she presented after the cancelling datewas not a breach; it merely gave the charterers a right to cancel which theychose not to exercise; rejection by the ‘‘jointly appointed inspector’’ underclause 30 would have had a similar effect; all that happened was that thevessel gave an (ineffective) notice of readiness and presented before clean-ing had been completed; that was not a breach but even if it were to beregarded as involving a breach or a fault it caused no delay in loading. Theappeal would be dismissed.

If ever a case emphasises the importance of the absolute obligation of a voyagecharterer to provide a cargo for shipment it must surely be this decision by the

34. [1957] 1 Lloyd’s Rep. 174.


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Court of Appeal. The case also has relevance to Chapter 4 regarding cargo spaces(paragraph 64 and onwards) and to Chapter 5 in respect of breach of contract(paragraph 90 and onwards).

The duty to exercise reasonable dispatch applies to owners as well as charterersbut, in practice, the implied obligation is a sword more frequently used by ownersto attack charterers rather than the reverse. However, the implied obligation wastried by a charterer in The ‘‘Pericles Halcoussis’’35 arbitration where the main disputebetween the parties concerned the commencement of laytime and the loading portof Dumai and/or whether or not the owners were in breach of contract because ofthe absence of an SKU certificate at the relevant time. The salient facts, as far as thelatter point was concerned, were:

(a) The vessel arrived off Dumai at 05.00 on Thursday, 11 August; an appro-priate notice of readiness was tendered at that time by the master but wasnot accepted by the shippers until 15 August.

(b) An SKU permit was issued at Jakarta on Friday, 12 August valid from 10August until 10 November 1983. An urgent cable to this effect was sentfrom the owners’ agents in Jakarta to agents in Dumai on Friday, 12August.

(c) The vessel did not berth until 03.45 on Monday, 15 August; pratique wasgranted at 03.55 and cargo lines were connected at 05.30. The notice ofreadiness was accepted by the shippers at 03.45 on 15 August, the time thatthe vessel berthed.

(d) There was no express clause in the charterparty about an SKUcertificate.

On the alleged breaches of contract that the vessel did not have an SKU certificateat the time of contracting or at the time that the vessel arrived off the loading port,the tribunal emphasised the promptness of the fixture and decided that, althoughthere was no valid SKU certificate for the vessel at the date of the fixture, the ownerswasted no time in getting one so that, in the event, it was effective as from the timethat the vessel arrived off the port; even if it were not, the owners had still acted withreasonable dispatch in obtaining the SKU certificate. This according to the tribunal,substantiated that there was no breach of contract by the owners regarding theirobligation to exercise the utmost dispatch to obtain an SKU certificate.

In another arbitration, LMLN 248—6 May 1989, the charterers prayed in aid animplied term in respect of the master of the vessel. The ship was chartered on theAsbatankvoy form containing a ‘‘reachable on arrival’’ provision and the usualclause 6 which provided:

‘‘Upon arrival at customary anchorage at each port . . . the Master or his agent shall give thecharterer or his agent notice by letter, telegraph, wireless or telephone that the vessel is readyto . . . discharge cargo, berth or no berth, and laytime, as hereinunder provided, shall com-mence upon the expiration of six hours after receipt of such notice, or upon the vessel’sarrival in berth . . . whichever first occurs. However, where delay is caused to vessel gettinginto berth after giving notice of readiness for any reason over which charterer has no control,such delay shall not count as used laytime.’’

35. 1985.

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The vessel arrived off the discharge port at 23.00 on Saturday, 2 February. At23.50 a cable was sent to the official agents advising them of the fact and that theship was ready to discharge. That cable was not received by the charterers’ agentsuntil 08.42 on 3 February.

The charterers submitted that that notice was invalid. They argued that there wasan implied term of the charter that ‘‘the master and/or crew would do as soon aspractically possible any and all the things necessary or customary to be done bythem on arrival at the discharging port in order to facilitate the prompt berthing ofthe ship and the discharge of her cargo’’. The charterers maintained that the shipshould have called the Port Control by VHF immediately on her arrival so as toregister.

The point was that the master (as the tribunal found) had not registered the vesselwith the port authority, so that by the time the vessel was in a position to get intoan available berth a subsequent vessel, which had registered in the early hours of 3February, was given priority for berthing.

It was held that the implied term contended for satisfied none of the usual tests.Neither the officious bystander, nor the parties, would say that ‘‘of course’’ it was tobe implied. It was not necessary to give business efficacy to the contract, and it wasnot even reasonable.

The officious bystander, if asked, would say that the detailed arrangements forberthing the ship—including the giving of any necessary notice to the authorities soas to allow prompt berthing arrangements to be made—was something that fellwithin the sphere of responsibility of the charterers. That was all the more so whena particular port had or might have special requirements, knowledge of which wasunlikely to be at all widespread, especially because such requirements might bechanged without notice or might be more or less rigorously enforced according towhim. Masters were normally entitled to expect that agents would deal with formal-ities and give particular advice if the ship itself was required to take some steps.

The charter was, in a business sense, perfectly workable without the implicationof any term such as that contended for. The burden was expressly put on thecharterers to designate and procure a berth reachable on the ship’s arrival. Therewere detailed provisions for the giving of notice and the running of laytime. Shortlyafter the charter was fixed, the charterers had provided detailed voyage orders,including particulars as to the giving of various notices. Yet they said nothing aboutthe alleged need to register by VHF immediately on arrival at the discharge port.

In any event, even if such a term was to be implied, the charterers had not provedthat the master had failed to do anything that he ought reasonably to have knownwas required by regulations, custom or practice. Accordingly, the notice of readinesswas valid.

The implied term ploy of the charterers appeared to have been made to getaround the ‘‘reachable on arrival’’ provision of the charterparty but failed in princi-ple and on the facts.

59. Although, as stated above (paragraph 54) there is a stringent test in respect ofimplying a term into laytime/demurrage provisions, the principle is adopted andtried fairly frequently. Apart from the circumstances already mentioned, where


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parties have sought the application of an implied term there are other circumstanceswhich may arise on an ad hoc basis which give rise to consideration of the principleby maritime arbitrators. For example, it sometimes happens that charterers assellers/buyers of goods, have not satisfied certain requirements under their salecontracts and this has a knock-on-effect whereby laytime does not commence forthe vessel carrying the goods; in such circumstances charterers may be liable toowners because of breach of their obligation to exercise reasonable dispatch toenable the vessel to become an ‘‘arrival ship’’. See The ‘‘World Navigator’’,36 below,paragraph 62, for an illustration of a seller’s implied obligation in respect of co-op-eration/reasonable dispatch in the context of documentation.

Yet another area where the implied term principle may be relevant is that inrelation to the appointment of agents; this may apply to both owners and charterersin respect of an implied term to appoint a competent agent to fulfil the dutiesordinarily required of agents at the loading/discharging ports in circumstanceswhere the agent fails to act reasonably in ensuring that a vessel becomes an ‘‘arrivedship’’. In any event, the party appointing an agent will usually be responsible for anyfailure by that agent in respect of exercising reasonable dispatch. If there is a failureby the agent appointed on behalf of the charterers the owners may be entitled todamages for the delay. Conversely, if there has been a failure regarding the agentappointed on behalf of the owners, which prevents the vessel becoming an ‘‘arrivedship’’, the owners will of course have no claim against the charterers for the delayand may be liable to them under a counterclaim for e.g. extra expenses relating tostorage/transportation of the cargo.

It is possible, although unlikely in modern times, for a term to be implied into acharterparty by way of custom/usage which affects a vessel being ‘‘an arrived ship’’in respect of reaching the agreed destination. All the reported cases in respect of thistopic are of nineteenth century vintage when custom/usage was much morerelevant.

60. From time to time charterers fall foul of their obligation to exercise reasonabledispatch in the context of nominating a port in sufficient time to avoid delay and thisaffects the commencement of laytime. If a charterparty provides for a vessel toproceed to a port as ordered and for discharging port orders to be given in thecourse of the vessel’s passage from the loading port, it is the obligation of thecharterer to furnish the requisite orders within whatever time may be specified or,if no time be specified, within a reasonable time. A breach of the implied obligationregarding a reasonable time can give rise to a claim for damages by the owner.

In The ‘‘Timna’’37 the vessel was chartered for a voyage carrying grain fromVirginia to European ports. Part of the cargo was for delivery at Bremen and partfor an unspecified destination. At the time the vessel passed Lands End, Bremenwas intended as a second discharge port but the charterers instructed the vessel toproceed to the River Weser and said that they would name the first discharging portlater. On reaching the mouth of the Weser firm orders had not been given to those


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on the vessel by the charterers. The following day the master took the vessel up riverto Bremerhaven but the charterers refused to accept the notice of readiness ten-dered there by the master, telling him that the vessel was intended for Brake whichwas a port further up river. The owners did not consider this an order to proceedto Brake and the vessel remained at Bremerhaven waiting for orders for some 16days. The owners claimed demurrage and/or detention.

It was decided by Mr Justice Donaldson (as he then was) that the vessel was neveran arrived ship at Bremerhaven (so that laytime could not commence) but that thedetention claim succeeded on the basis that the charterers were in breach of theirreasonable dispatch obligation to give orders for the first discharging port and thatthe message given to the master regarding the intention for Brake did not amountto an order to go to Brake. The charterers were liable in damages from the timewhen the orders should have been given (3 January) until the time when they werein fact given (19 January). The charterers contended that no damages should beawarded to the owners because the vessel would have waited in any event outside theport, without laytime commencing, and, therefore, no loss was suffered. However,they were unable to prove that no loss was suffered and the owners were awardeddamages, on the basis of the vessel’s demurrage rate for the whole of the period thatthe vessel was delayed, no set-off being made in respect of the allowed laytime (seethe next paragraph for further consideration of this case).

ASSESSMENT OF DAMAGES

61. An important matter can be the calculation of damages in a breach of contractsituation. The basic principle is that a party should be put, as far as is reasonablypossible, in the same position as if the contract had been performed subject ofcourse to the rules relating to remoteness and mitigation. By and large there shouldbe no windfall for the party breached against but simply a true measure of the losswhich has been suffered by that party. In The ‘‘Timna’’ (see paragraph 60, above) MrJustice Donaldson had this to say regarding damages:‘‘It is, of course, the law that a claimant must prove his loss. However, a merchant ship is aprofit-earning chattel, and in the case of this ship it is agreed that the measure of loss for thevessel’s detention is U.S. $2,500 per day or pro rata, i.e., the same rate as that agreed betweenthe parties as applicable to demurrage claims. If, therefore, the owners prove that the ship wasdetained in a non-profit-earning state by the need to await orders, they establish a prima facieloss which, in the absence of further evidence, becomes a proved loss. If, on the other hand,there is evidence that the vessel could not have been used as a profit-earning chattel, even ifshe had not been so detained, the prima facie loss is rebutted. I see no reason to infer that thevessel could not have become an arrived ship at an earlier point of time than was in fact thecase, just because no berth regularly used for the discharge of the type of cargo concerned wasavailable. The absence of such a berth no doubt induced the charterers to delay nominatingthe first port of discharge, since it ensured that the vessel could not become an arrived shipat what, from their point of view, might be a premature moment, but that is quite anothermatter and involved a breach of their obligations under the charterparty. On the existing stateof the evidence, I find the loss proved.’’

As stated already he awarded damages for the whole of the 16 days that the vesselwas out of orders from the charterers without any set-off in respect of the allowed

Para. 61ASSESSMENT OF DAMAGES

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laytime (which would of course become relevant when laytime actually com-menced). The award of damages was affirmed in the Court of Appeal,38 LordDenning adding (page 94 of the law report):

‘‘In any case, I think that Mr Goff was wrong in putting the burden of proof on theshipowners. It was the charterers who were in breach. It was for them to nominate a port. Itdoes not lie in their mouth to say: ‘If we had nominated a port, the vessel could not have gotthere as an ‘‘arrived ship’’’. The matter was never put to the test, and it was their fault it wasnot put to the test. If they wished to say that there was no damage, they ought to have provedthat there was no port at all to which the vessel could get as an ‘arrived ship’. They gotnowhere near proving it.’’

The judgments of the High Court and Court of Appeal made no reference tosetting off laytime in respect of a damages computation; the emphasis was verymuch on proving the loss and the onus of proof. Whether or not laytime should beset off in a damages calculation was touched upon in The ‘‘Delian Spirit’’, seebelow.

In The ‘‘Delian Spirit’’39 (referred to on other matters in Chapters 1 and 2) theowners appeared to get a windfall from the High Court. It was decided that thevessel was waiting for a berth within the limits of the port so that, on the face ofthings, laytime commenced but also that the charterers were in breach of the‘‘reachable on arrival’’ provision in the charterparty. Originally, the shipownersclaimed demurrage on the basis that time spent at the anchorage counted as laytime,but later restated their claim as one of damages for delay with a claim for demurragein the alternative, the damage being based upon a delay of four and a half days whilethe vessel was waiting in the roads. The charterers maintained that no damages werepayable because the vessel was an ‘‘arrived ship’’ as soon as she had arrived in theroads and an award of damages would deprive them of the benefit of 120 runninghours of laytime which would have had the effect of more than exhausting the timethat the vessel was waiting for a berth.

It was held by Mr Justice Donaldson (as he then was) that the charterers had twoquite distinct obligations, one under the ‘‘reachable on arrival’’ provision and theother one to load and discharge the vessel within the laytime. In point of time thesetwo obligations may or may not overlap wholly or partly but a breach of either mustbe considered separately from a breach of the other save in so far as it can be shownthat the interaction of the clauses presents a situation in which no losses flowed fromthe breach.

In the present case, the charterers were in breach of their obligation under the‘‘reachable on arrival’’ provision whether or not the vessel was an arrived ship andtheir liability to compensate the owners for any loss occasioned thereby does notdeprive them of the benefit of the laytime. It is true that the laytime is wasted if thevessel is not at her berth but this flows from the charterers’ failure or inability tosecure a berth for her and may well involve them in a further breach of contract infailing to complete loading and discharging within the laytime (indeed, it did in thepresent case). It does not flow as such from the operation of the ‘‘reachable on

38. [1971] 2 Lloyd’s Rep. 91.39. [1971] 1 Lloyd’s Rep. 64; [1971] 1 Lloyd’s Rep. 506 (C.A.).

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arrival’’ provision and is not a case of their being deprived of the benefit of thelaytime by the operation of that clause.

Mr Justice Donaldson went on to decide that the owners were entitled to damagesfor four and a half days of delay even though the laytime, if applied, would haveextinguished any claim by the owners. His lordship was motivated, to a certainextent, by the overwhelming probability that, if a berth had been available and therehad in consequence been no breach of contract by the charterers, the vessel wouldhave gone straight in to a berth and would have completed loading and have sailedas expeditiously as she did four and a half days earlier. The charterparty did notprovide for the payment of dispatch money so the owners would have had the useof their vessel four and a half days earlier than in fact occurred, without cost tothem.

The Court of Appeal reversed Mr Justice Donaldson, deciding that the chartererswere entitled to their full laytime as from when the vessel arrived and gave noticeand it was only after using up that laytime that they were liable to demurrage at theagreed rate and they were not additionally liable for damages for delay under the‘‘reachable on arrival’’ provision of the charterparty. Lord Denning (the then Masterof the Rolls) said that he could not agree with the High Court judge since it wouldbe most unjust that the charterers should be made liable twice over. He stated thatthe answer was given by a long line of cases which had established that wherecharterers had been guilty of a breach causing delay they were entitled to apply theirlaytime so as to diminish or extinguish any claim for the delay leaving the owners toclaim for demurrage at the agreed rate for any extra delay over and above thelaytime. The reason is because they have bought their laytime and paid for it in thefreight and are entitled to use it in the way which suits them best and in particularto use it so as to wipe out or lessen any delay for which they would otherwise beresponsible.

The position is now clear enough on the authorities that if a vessel has arrived ather destination then the charterers will be entitled to set off any laytime against thetime that a vessel is waiting off a port when a breach of contract by them hasoccasioned that delay. If the vessel has not arrived at her destination then theposition appeared to be open at one time. Sir Gordon Willmer, in The ‘‘DelianSpirit’’40 had this to say:

‘‘I prefer to say no more upon the difficult question which might have arisen if the vessel hadnot been found to be an arrived ship at the time when she was lying in the roads. But Icertainly do not wish to be taken as accepting that, even in that situation, the owners wouldnecessarily be entitled to prosecute an independent claim for damages, without giving creditfor the laytime to which the charterers were entitled, and for which, as we have beenreminded, they paid when they paid the freight.’’

In the same case Lord Denning delivered obiter that the laytime should be appliedagainst the time the vessel is waiting in respect of a damages computation. Hesaid:

‘‘The answer is given by a long line of cases which establish that where the charterers havebeen guilty of a breach causing delay, they are entitled to apply their laytime so as to diminish

40. [1971] 1 Lloyd’s Rep. 506.


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or extinguish any claim for the delay, leaving the shipowners to claim for demurrage at theagreed rate for any extra delay over and above the laytime. The reason is because they havebought their laytime and paid for it in the freight, and are entitled to use it in the way whichsuits them best, and in particular to use it so as to wipe out or lessen any delay for which theywould otherwise be responsible.’’

Lord Denning appeared to be putting it very wide in that a charterer would alwaysbe entitled to set off the laytime vis-a-vis the waiting time in any damages computa-tion irrespective of whether or not the vessel had reached the exact geographicaldestination.

The matter is no longer open since it came up for consideration in The ‘‘MassGlory’’,41 which was an appeal from a decision by London arbitrators. The caseconcerned a number of issues, including the setting off of laytime aspect.

The vessel entered Xiamen on Sunday, 14 June 1998 and passed the normalinward inspection later that day. She was then ready to berth and a berth wasavailable for her, but she was unable to occupy it because the cargo documents werenot in order and because the sellers of the cargo ordered the vessel not to allowanyone to have access to the vessel without production of an original bill oflading.

The master gave notice of readiness at 08.00 hours on Monday, 15 June but it wascommon ground that both voyage charters were berth charters and that since thevessel was not prevented by congestion from reaching her berth the notice ofreadiness was invalid.

The problems with the cargo documents were not resolved until 9 August.Discharging began later that day but no further notice of readiness was given thenor at any time after she reached her berth. Discharge was completed on 19 Augustand the vessel left for Nantong to discharge the remainder of her cargo. The ownersunder each charterparty claimed damages for detention from the charterers inrespect of the time lost while the vessel was kept waiting at Xiamen.

The disputes were referred to arbitration. The arbitrators held that the delay tothe vessel at Xiamen was caused by the charterers’ breach of contract, that since thenotice of readiness given on 15 June was invalid time did not start to count and thelaytime exceptions did not apply while the vessel was waiting at the anchorage, andthe whole of the time was to be taken into account in calculating damages fordetention.

This decision of the arbitrators was upheld in the Commercial Court by MrJustice Moore-Bick, who had these important words to say:

‘‘It has long been recognized that the completion of the carrying voyage is a critical stage inthe adventure, not least because it marks the point at which the charterer’s obligation toco-operate with the owner in discharging the goods begins. For this reason it is usually alsothe point at which notice of readiness can be given in order to bring into operation the laytimeand demurrage provisions of the charter and at which the risk of delay to the vessel passesfrom the owner to the charterer. The purpose of a notice of readiness in this context istwofold: to inform the charterer that the vessel has completed the carrying voyage and is athis disposal for the discharging of cargo; and to start the running of laytime. Unless the

41. [2002] 2 Lloyd’s Rep. 244.

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parties have agreed otherwise a valid notice of readiness cannot be given until the vessel hadreached her agreed destination, whether that be the port, berth or some other place identifiedin the charter.’’

He declined to adopt Lord Denning’s obiter (see above) and he also distinguishedthe case from the earlier 1991 World Navigator judgment (see later paragraph 62),as had the arbitrators, so that he rejected the premise that laytime saved should beset off regarding the damages claim.

While we now have some authority on the subject the author feels some disquietabout the result for the simple reason that a charterer buys the laytime and yetcannot have it set off in a damages computation simply because, strictly speaking,laytime has not commenced. While seeing the logic of not being able to set offsomething which has not yet commenced it is surely artificial to allow this somewhattheoretical point to deny a charterer what appears to be sensible, practical and just.To put it in a nutshell, it seems illogical to offset laytime if the vessel (in the case ofa port charterparty) is anchored a few hundred metres within the port limits but notto do so if the vessel is anchored a few hundred metres the other way and justoutside the port limits, after the completion of the sea voyage. The breach ofcontract, and the resulting delay, is the same whether or not the vessel is a little oneside or the other of a line which, to a certain extent, may be somewhat artificial. Ofcourse, the author realises that the Mass Glory case was concerned with a berthcharterparty but it does not see why that should obfuscate a practical and fairapplication whereby a charterer is allowed what appears to be a sensible and justapproach to a damages computation which would, in the event, appear to be in linewith the general principles relating to damages. Surely, a charterer should beallowed to set-off the laytime which is bought in the contract in respect of a claimagainst him for damages where the vessel he has chartered waits at or off a port fora loading/discharging berth, after the completion of the sea voyage. Otherwise theowners of a vessel may obtain a windfall, as they did in The ‘‘Delian Spirit’’, prior tothe appeal to the Court of Appeal (see above).

Having said the above, the fact is that we now have judicial authority on thematter and, since the Mass Glory decision was never appealed, we have to wait foran appeal to the Court of Appeal or to the House of Lords for any change in thisaspect of maritime law. The judgment is, perhaps, another example of too muchrespect being paid to Lord Diplock’s four stages, in particular ‘‘the carrying voy-age’’; after all, there is a sound argument that, practically speaking the carryingvoyage ends when a vessel gets at or off a discharging port (anchors or lies there)which may or may not be in within port limits, in the case of a port charterparty.

As mentioned more than once in the book, if the vessel has reached a place fromwhich notice of readiness can be given the owners’ remedy is not to claim fordamages but to give a notice of readiness and use the laytime as a set-off, see forexample LMLN 672—17 August 2005 in Chapter 1 and LMLN 329—13 June1992 set out earlier in this chapter when dealing with implied terms.

62. Although not on all fours with the damages point referred to earlier, and beingconcerned with a sale contract rather than a voyage charterparty, the Court of


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Appeal decision in The ‘‘World Navigator’’42 is of interest in how damages were dealtwith by that court also, in respect of an implied term; although it was a contractappertaining to the sale of goods it was concerned with laytime/demurrage. RoplackEnterprises sold a quantity of 12,000 tonnes of maize f.o.b. Rosario to Kurt A.Becher. The contract was on two standard sets of conditions, namely GAFTA 64and the Argentine Centro conditions.

Clause 7 of GAFTA 64 provided:

‘‘7. Delivery— . . . Vessel to load in accordance with the custom at port of loading unlessotherwise stipulated . . . ’’

The Argentine Centro conditions provided:

‘‘Loading Rate: . . . sellers guarantee provided vessel is able to receive, a minimum averageloading rate of 500 tonnes per weather working day . . . Buyers to give sellers at least 15 daysnotice of readiness of vessel to load . . . ’’

The buyers nominated the vessel World Navigator to load the maize. She arrived atZona Comun and tendered notice of readiness. The authorities instructed her toremain at Zona Comun because of congestion at Rosario Roads. Since the shipper’sdocumentation was not in order the World Navigator lost her place in the loadingschedule and was overtaken by other vessels. The vessel following the World Nav-igator moored at 06.10 on 25 June 1985. World Navigator eventually moored at03.00 on 18 July 1985. She loaded a total of 24,000 tonnes and finished loading on22 July 1985.

The buyers claimed that the sellers had the obligation to deliver the goods byloading them when the vessel was ready to receive them, and that the delay inloading the 12,000 tonnes fell squarely on the sellers. The sellers were accordinglyliable for the additional demurrage the vessel incurred.

The GAFTA Board of Appeal rejected the buyers’ claim on the ground thatalthough the sellers were in breach of contract the buyers had suffered no loss. Thevessel in the event used less than 18 days of laytime whereas, under the sale contract,24 days were allowed.

The buyers appealed and Mr Justice Phillips held that:

(1) the evidence demonstrated that the World Navigator could not berth withoutthe co-operation of the sellers in providing appropriate loading documentation andit was common ground that it was necessary to imply into the f.o.b. contract a termrequiring the sellers to provide that co-operation; there was an implied obligation onthe sellers to act with reasonable dispatch and in accordance with ordinary practicein doing those acts which were necessary to enable the buyers to present their vesselfor loading at the berth; if availability of goods sold was necessary to enable thebuyers’ vessel to berth there was an absolute obligation on the sellers to have thegoods available when the vessel arrived provided 15 days’ notice had been given; itmight be that this obligation could be extended to cover the procurement of doc-umentation if this was something solely within the control of the sellers;

42. [1991] 2 Lloyd’s Rep. 23.

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(2) if the sellers were in breach of the duty that they were under, the immediateconsequence of their breach was that the World Navigator was detained for a periodwhich on the board’s findings was about 17 days before being permitted to berth;when assessing the damages the board should not have proceeded on the premisethat had the vessel berthed promptly the sellers would have loaded so slowly thatthey would have used all the available laytime; the board’s task was to ask how longloading would have taken had the World Navigator berthed promptly without losingher place in the queue; if the sellers were in a position to influence the loading ratethen the board ought to have considered how they would have done so and thatquestion fell to be answered by considering all the factors that would have beenlikely to influence their conduct; both appeals would be allowed and the awardsremitted to the board for reconsideration of the buyers’ claim for damages fordetention.

The sellers appealed, the issues for decision being: (1) What was the sellers’obligation, if any, with regard to enabling the vessel to reach the loading berth afterhaving received a valid notice of readiness? (2) What was the sellers’ obligation withregard to the rate of loading once the vessel had berthed and was able to receive thecargo? (3) On what basis should damages be assessed if the sellers were in breach ofan obligation under (1) above?

It was held by the Court of Appeal (Lord Justices Parker and Staughton and SirDavid Croom-Johnson), that (1) there was an obligation to do all that was necessaryto enable the vessel to berth on the expiry of the 15 days’ notice; it was probablyimpossible and undesirable to define the precise ambit of the obligation for in allcases what was to be implied would or might be dependent on both the terms of thecontract and the surrounding circumstances:

(2) the GAFTA provision was that the vessel was to load in accordance with thecustom of the port unless otherwise stipulated; the Centro clause did otherwisestipulate and under that clause the sellers would not be in breach if they maintainedan average of at least 500 tonnes a day; the clause was intended to be a compre-hensive clause providing as it did for exceptions from laytime; and the sellers wereentitled once the vessel was in berth to take up to 48 counting days to load thecomplete cargo or 24 counting days to load the contracts in question;

(3) if the breach had not occurred laytime would have begun to run on 26 Juneand the sellers’ obligation would have been to load in the number of counting daysarrived at by the application of the Centro terms but no more; a defendant inperforming his contractual obligations was assumed to have chosen to perform themin the way least beneficial to the plaintiff; there was no question of looking at theextraneous events and therefore no question of it being permissible to look at theprobabilities; the rate at which the sellers had chosen to load was not in any sensean event extraneous to the contract; it was expressly provided that they should loadat a minimum average rate of 500 tonnes per day and they were entitled to loadfaster; there was nothing in the award to show that loading in the customary mannerat Rosario would have prevented the sellers using all the time which the contractallowed; the buyers were not entitled to damages and the appeal would beallowed.


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While there was no direct consideration of setting off laytime in a damagescomputation the parties appeared to accept that this principle was operative in thecircumstances of the vessel being at Zona Comun with a loading port (Rosario)some 200 miles away (same facts as The ‘‘Adolf Leonhardt’’); of course, it may be thatno point was ever taken with the actual owners in respect of the vessel not havingreached the agreed destination of Rasario and that the parties proceeded on thebasis that a valid notice of readiness could be given at Zona Comun (thus obviatingan argument that since the vessel had not reached the agreed destination a claim indamages for detention should not include a set-off in respect of the laytime).

On the implied term aspect there was discussion, which resulted in obiter only,regarding why there should be an absolute obligation in respect of the charterers’obligation to supply a cargo (irrespective of whether they exercised reasonabledispatch) as in The ‘‘Aello’’, whereas, otherwise, the obligation is only one of reason-able dispatch, as in The ‘‘Atlantic Sunbeam’’. Lord Justice Staughton had this tosay:

‘‘It may well be that the cases can be reconciled if one has regard to the precise task whichremained unperformed in each. In The ‘Aello’ the charterers had not obtained a giro permit,because they did not have cargo available ready to be loaded. That was held to be solely theirconcern, and they must bear the responsibility for lack of a cargo even though their bestendeavours had failed to find one. In The ‘Atlantic Sunbeam’, on the other hand, the obstaclewas delay in obtaining a jetty challan, which required the co-operation not only of theconsignees or receivers but also of the port authority and the customs. It was at least possiblethat the port authority or the customs had caused the delay.

Having explored the problem thus far, I agree with Lord Justice Parker that it need not bedecided in this case, having regard to our conclusion as to damages if there was any breachof an implied term.’’

The Court of Appeal decision emphasised the benefit to a defendant of the ‘‘leastburdensome obligation’’ (see (3) above) in addition to airing some views and doubtsin respect of implied obligations as related to absolute/reasonable dispatchobligations.

On a final note regarding damages in general it is emphasised that while inpractice the daily rate used is usually the demurrage rate of the vessel it does notnecessarily follow that this is so for all damages computations. The true measure ofdamages may result in owners being entitled to more than the demurrage rate(market rises sharply and rapidly); alternatively there can be reverse circumstanceswhere they are entitled to less than that rate.

It is also mentioned that principles of causation, mitigation, and remoteness ofdamage are applicable to any assessment of damages although in practice theseprinciples rarely produce problems in respect of laytime/demurrage disputes. How-ever, the case of The ‘‘Eurus’’43 raised interesting matters in relation to foreseeabilityand remoteness of damage. The case is also referred to earlier in paragraph 42 inrelation to custom.

The vessel Eurus was chartered on the Asbatankvoy for a voyage to carry aminimum cargo of 122,000 metric tons of Forcados crude oil from Nigeria to arange of possible discharging ports. The charterers wanted loading to be completed

43. [1996] 2 Lloyd’s Rep. 408 (Com. Ct.) and LMLN 473—20 December 1997 (C.A.).

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in February 1992 so that they could obtain a February bill of lading. This wasbecause the February 1992 price of Forcados crude was US$0.60 per barrelcheaper than the January price. Under the charter the vessel was not due to arriveand give notice of readiness until 31 January. To ensure completion of loading inFebruary the charterers, on 24 January, sent instructions by telex that notice ofreadiness was not to be tendered to the terminal at Forcados before 11.00 on 31January at the earliest. Because of a misunderstanding by the Master, the vesselmoved into berth at 00.30 on 31 January without waiting to tender notice ofreadiness. Loading commenced at 06.36. At 12.00 the Master gave an estimatedtime of completion of 01.00 on 1 February. The charterers gave instructions to theowners to request the vessel to slow down to ensure a bill of lading dated 1February. Loading was completed at 01.30 on 1 February.

Neither the charterers nor the owners knew that there was a rule in Nigeria (‘‘the8 o’clock rule’’) that any oil shipment which was completed before 8 am on the firstday of any month was treated as though it had been completed on the last day of thepreceding month. Because of the 8 o’clock rule, the Master was compelled to signa bill of lading dated 31 January, notwithstanding that loading had in fact beencompleted at 01.30 on 1 February.

As a result of the loading being completed before 8 am on 1 February thecharterers had to pay an extra US$681,934 for their oil to their suppliers. Thecharterers brought arbitration proceedings against the owners claiming damages oran indemnity under clause 36 of the charterparty which provided:

‘‘Owners shall be responsible for any time, costs, delays or loss suffered by charterers due tofailure to comply fully with charterers’ voyage instructions provided such instructions are inaccordance with the charterparty and custom of trade.’’

The arbitrators held that the charterers’ instructions to the vessel not to tender anotice of readiness amounted to an instruction not to present or berth for loadingprior to that time. They went on to hold (by a majority) that the claim in damagesfailed because the 8 o’clock rule was not foreseeable and the damages were thereforetoo remote, but that the claim for an indemnity succeeded because that was a purequestion of causation, and the Master’s failure to follow his instructions had indeedcaused the loss.

The owners appealed to the High Court. Mr Justice Rix allowed the appeal,holding that on its true construction clause 36 was not an indemnity but was a termwhich required the owners to comply with charterers’ voyage instructions, providedsuch instructions were in accordance with the charter and custom.

The charterers appealed to the Court of Appeal. It was held that the case for thecharterers was that clause 36 was an indemnity clause, although damages were analternative remedy. In its role as an indemnity clause, it required proof that the losswas caused by failure to obey the charterers’ orders, but not that the loss should bewithin the reasonable contemplation of the parties. That was the route which thearbitrators had adopted.

The problem was to be treated as a question of interpretation of the contract. Didclause 36 provide that the charterers could recover even if the loss suffered was notwithin the reasonable contemplation of the parties?


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What was the purpose with which clause 36 was intended to fulfil? It had beencommon ground before the arbitrators that clause 36 contained an implied termrequiring the owners to comply with the charterers’ voyage instructions. However,there was such a term without clause 36. On the face of the charterparty thecharterers had an option to nominate the loading port, the discharging port(s) andthe quantity and grades of cargo. If the charterers had that right the owners musthave had a corresponding duty to obey. The extent of the charterers’ right to giveother orders was not clear; but whatever it was, the owners must again have had aduty to obey. The words ‘‘provided such instructions are in accordance with thecharterparty and custom of the trade’’ showed that clause 36 was not intended toincrease the scope of the charterers’ right to give orders. Any implied term derivedfrom clause 36 would therefore be surplusage.

As to the purpose of clause 36, the Court of Appeal could not see why the partieswould have wished to provide that, for some breaches of contract by the owners, thecharterers’ loss would be recoverable whether or not it was within the reasonablecontemplation of the parties, whilst for all other breaches the ordinary rule as todamages in a contract case would apply.

It was not the intention of the parties to provide, by clause 36, that a particularkind of breach of contract by the owners should attract liability even for unforesee-able consequences, whilst in the case of all other breaches of contract the ordinaryrule of remoteness would apply. That could not be extracted from the wording ofclause 36; and even if it arguably could be, the Court was now enjoined to haveregard to the purpose or aim of contractual provisions as well as to the actual wordsused—see Investors Compensation Scheme Ltd v West Bromwich Building Society,44 perLord Hoffmann.

The decision of the judge would be upheld and the appeal dismissed.The real interest in the case is that in relation to causation and remoteness of

damage. What the arbitrators decided (the vessel could not berth and commenceloading prior to tendering a notice of readiness) was based upon the particular factsof the case since the charterers had given express instructions that a notice ofreadiness was not to be tendered before a specific time and that the owners were inbreach of this instruction. The arbitrators did not even suggest that the common lawfunctions of a notice of readiness had an additional general potential function in thata vessel could not berth and commence loading prior to tendering a notice ofreadiness, as mooted in [1997] LMCLQ at pages 486/7.

44. The Times, 24 June 1997.

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CHAPTER FOUR

READINESS

GENERAL

63. The second requirement to be satisfied in order for laytime to commence underthe common law is that the vessel must be ready to load or discharge the whole ofher cargo when she has reached her destination and/or when a notice of readinessis tendered. Under English common law a notice of readiness is only required at thefirst loading port (absent a custom that a notice has to be given at other ports)although, in practice, it is usual for a charterparty to contain an express clausewhich requires the tendering of a notice of readiness at both the loading and thedischarging ports and frequently also at second or subsequent loading and discharg-ing ports.

Readiness involves the vessel being available to the charterers for use by them andthis, in turn, requires that:

(a) the vessel’s cargo spaces are ready for loading or discharging;(b) the vessel is properly equipped for loading or discharging operations and

such is in a state of readiness;(c) all relevant documentation is in order, sometimes referred to as legal

readiness.

CARGO SPACES INCLUDING THE TRES FLORES DECISION

64. In practice it is the cleanliness of the cargo spaces prior to loading which givesthe most problems in respect of readiness and which prevents the laytime clock fromstarting to tick. The common law position has been set out in several cases over theyears but was emphasised in the much-publicised case of The ‘‘Tres Flores’’.1 Thecase is worth looking at in detail since it is the leading case on the subject, beingreferred to time and time again in arbitrations. The facts were that by a charterpartyon a Synacomex form the owners of the vessel chartered her for a voyage from Varnato Famagusta and Beirut to carry a cargo of bulk maize. The charterparty provided(inter alia):

1. [1972] 2 Lloyd’s Rep. 384; [1973] 2 Lloyd’s Rep. 247 (C.A.); cited above, paragraphs 39 and 57,on other matters.

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‘‘6 . . . Any time lost in fitting the shifting boards or other material do not count as laytime.Before tendering notice, the Master has to take necessary measures for holds to be clean, dry,without smell and in every way suitable to receive grain to Shippers’ Charterers’ satisfac-tion. . . .

21 . . . At loading port, time to commence whether the vessel be in berth or not . . . at 2p.m. if written notice is given during usual local office hours before noon and at 8 a.m. nextworking day if notice is given during usual office hours after noon. Master is allowed to givenotice of readiness by telegram when ship has arrived on the road of loading port.’’

Although the charterparty contained an express clause regarding the state of thevessel’s holds prior to tendering notice of readiness (which in the event militatedagainst the owners), the standard required under this clause was virtually synon-ymous with the common law; in fact, all the judges involved in the case (High Courtand Court of Appeal) laid stress on the common law position in respect of cargospaces.

The further facts were that the vessel arrived at Varna at 05.00 on Sunday, 22November, and anchored on account of no berth being available. Notice of readi-ness was declared by the master and delivered to the agents at Varna at 10.00 on theSunday. Owing to heavy weather the vessel could not be inspected while at anchoruntil 15.15 on Friday, 27 November and, at the inspection which took place then,pests were found in the cargo spaces and fumigation was ordered in order to makethe vessel ready for loading maize. Fumigation took place between 15.00 and 19.30on Monday, 30 November, and cost $170.94; at the latter time the vessel was in allrespects ready for loading and her notice of readiness was accepted by the agents at11.00 on Tuesday, 1 December. The vessel berthed on 7 December and completedloading on 13 December. Evidence was adduced by the charterers to show that thecargo was in the loading port on 23 November.

The owners contended that, in view of the type-added clause 21 of the charter-party, laytime should commence at 14.00 on Monday, 23 November. The vesselhad reached the agreed destination and, as far as the master was aware, the ves-sel was ready for loading; the fact that the vessel could not be inspected for five daysafter arrival (the inspection showing that the vessel was not ready in all respects)should not detract from the intention of the type-added clause which was to applythe laytime calculations to laytime spent waiting off the port. They further con-tended that they should not, at the very least, be worse off than if an inspection hadtaken place at the time or soon after the arrival of their vessel off the port. Accordingto the owners, if an inspection had taken place when the vessel arrived at the agreeddestination, fumigation would have been effected soon afterwards and laytimewould have commenced. The charterers submitted that, in view of the conditions tobe satisfied under the law in order for laytime to commence, and the fact that thevessel was not ready when she arrived at the agreed destination, laytime could notcommence until 14.00 on 1 December.

The two arbitrators (they did not call in an umpire) published a joint award infavour of the owners of the vessel. They considered that the intention of the parties,to be derived from the words agreed by them, was that any time spent at or off portafter reaching the agreed destination was to enter into the laytime calculation. Itseemed to them that the type-added clause was tailor-made for the situation which

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Para. 64 READINESS

occurred at the loading port, a situation not uncommon, namely, that, through nofault of the owners, a vessel has to wait off a port for a berth to become available.They went on to say that, had they decided otherwise, the type-added clause wouldnot have been of much help to the owners. While they were mindful of the strictnessof the common law relating to an ‘‘arrived ship’’ they were also mindful of the wordsof Lord Justice Devlin (as he then was) in Ingram v. Little2 when he stated: ‘‘Thegreat virtue of the common law is that it sets out to solve legal problems by theapplication to them of principles which the ordinary man is expected to recogniseas sensible and just. The true spirit of the common law is to override theoreticaldistinctions when they stand in the way of doing practical justice.’’

The arbitrators were obviously sympathetic to the owners in the situation whichhad arisen and decided for them on the basis that laytime commenced. In thealternative, they decided in favour of the owners that there was an absolute obliga-tion to inspect the vessel by the charterers after she had arrived at Varna and, sincethis obligation was breached, the owners should get damages for the delay to theirvessel.

In the High Court, Mr Justice Mocatta decided on the evidence that the vesselwas not ready to load on Sunday, 22 November, and could not give a notice ofreadiness to load on that day because her holds were infested; this was a seriousmatter when one was contemplating the loading of a grain cargo, even though it onlytook four and a half hours and no very great expenditure of money to rid the vesselof the pests. On the aspect relating to the type-added clause, his lordship stated thatalthough the clause contained words which sought to protect the shipowner asregards the initiation of laytime, it was only so in respect of geographical require-ments and it did not lessen the requirement regarding the state of the vessel’s cargospaces. He went on to say:

‘‘It is the duty, in my judgment, of the shipowner to make his ship fit to carry cargo. If he doesnot do this, he is not in a position, as long as his ship is unfit, to give a valid notice ofreadiness. No doubt to certain facts, as in all branches of the law, the maxim de minimis wouldapply, but I do not consider that the facts here fall within that maxim at all.’’

He reversed the arbitrators’ decision on the commencement of laytime as he didalso their alternative decision vis-a-vis the absolute obligation to inspect the vessel.This decision was appealed but the Court of Appeal upheld Mr Justice Mocatta.The following are parts of the judgments by the Lords Justices of Appeal which arenow embodied in English maritime commercial law and which are frequentlyreferred to in arbitrations:

Lord Denning, Master of the Rolls:

‘‘One thing is clear, in order for a notice of readiness to be good, the vessel must be ready atthe time the notice is given, and not at a time in the future. Readiness is a preliminary existingfact which must exist before you can give a notice of readiness. . . .

In order for it to be a good notice of readiness, the Master must be in a position to say ‘Iam ready at the moment you want me, whenever that may be, and any necessary preliminar-ies on my part to the loading will not be such as to delay you’. Applying this test, it is apparent

2. [1962] 1 Q.B. 31.

Para. 64CARGO SPACES

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that notice of readiness can be given even though there are some further preliminaries to bedone, or routine matters to be carried on, or formalities observed. If those things are not suchas to give any reason to suppose that they will cause any delay, and it is apparent that the shipwill be ready when the appropriate time arrives, then notice of readiness can be given. In thepresent case there were pests in the hold such as to make the ship unready to receive cargo.Fumigation was not only a preliminary, nor a routine matter, or a formality at all. It was anessential step which had to be taken before any cargo could be received at all. Until the vesselhad been fumigated, notice of readiness could not be given. It has always been held that, fora notice of readiness to be given, the vessel must be completely ready in all her holds toreceive the cargo at any moment when she is required to receive it.’’

Lord Justice Roskill (as he then was):

‘‘First, it has been accepted in this branch of the law that a vessel which presents herself ata loading port must be in a position to give the charterer unrestricted access to all her cargospaces before she can give a valid notice of readiness. This state of readiness must beunqualified. It is not open to the shipowner to say: ‘Here is my ship; she is not quite readybut I confidently expect to be able to make her ready by such time as I consider it likely thatyou will in fact need her.’ The charterer has contracted for the exclusive and unrestricted useof the whole of the vessel’s available cargo space, and he is entitled to expect that that spacewill be placed at his disposal before he can be called upon to accept the vessel as havingarrived and therefore being at his risk and expense as regards time.

Secondly, I do not think that this principle is in any way weakened by the decision inDeppe. . . . In my judgment the essential distinction between the present case, on the onehand, and Deppe and The ‘Delian Spirit’ on the other, is that in those latter cases the matterswhich remained to be done before the vessel could begin to discharge or load were in thenature of normal and usual preliminaries which would require to be carried out in every case,whereas the fumigation in the present case could not so be described.

Thirdly, the adoption of the test contended for . . . would introduce an unwelcomeelement of uncertainty into this area of the law. In a case such as Deppe, some slight delay mayoccur after the vessel has berthed and before cargo operations can begin, but it is delay whichis to be expected as normal and is predictable within narrow limits. The charterer can safelyaccept the vessel’s notice of readiness knowing that he can act upon it because, apart from theusual preliminaries, the vessel will be fully available to him as soon as she berths. Such aposition would not obtain if Mr Mustill’s proposition were accepted. In a case such as thepresent a statement in the notice of readiness that the ship was ready would be factuallyincorrect and that statement could only become correct (if at all) at some future date whichcould not be accurately predicted and of which a shipowner’s honest prediction might well besubsequently falsified by intervening events.

A ship in order to be ready and thus entitled to give valid notice of readiness must be readyto obey the charterer’s orders whenever they are given. In the present case the ship was notin a position to do this since at the time when she gave notice she could only be made readyby fumigation of then unknown extent at some future time. The fallacy in the appellants’argument was (if I may say so) aptly pointed out by my lord, Lord Justice Cairns, duringyesterday’s argument when he said that if the argument be right, a charterer might have to paydemurrage as liquidated damages for failing to load when the ship was in fact unfit to load.That is not and never has been the law.

In my judgment the law is correctly set out in the first full paragraph on p. 130 of Scruttonon Charterparties, 17th ed. (1964):

‘The degree of necessary readiness of the ship for her part is relative to that of thecharterers or consignees for theirs. Therefore the ship need not be absolutely ready (e.g. byhaving all her gear fixed up for the work) at a time when the charterers or consignees arenot in a position to do any of their part of the work, so long as the ship can be absolutelyready as soon as they are.’

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Para. 64 READINESS

I would qualify this statement in only two respects. First, a short delay after berthing whilethe vessel carries out the usual preliminaries for loading or discharging will not affect herreadiness if she is otherwise ready—that is clear from the Deppe case. Secondly, I venture tothink that there might usefully be added in the next edition of Scrutton at the end of thepassage I have quoted, the words suggested this morning by Mr MacCrindle, ‘whenever thatmay be’. That addition would I think put the position beyond all doubt and is in accord notonly with Deppe but also with the judgments of Mr Justice Devlin and of Lord Justices Tuckerand Cohen in the Noemijulia case.

If it be said that the maintenance of an absolute rule of this kind (subject only to questionsof de minimis) may work hardship on shipowners or lead to unjust results, the answer is thatthe parties are always free to modify the common law rule. In the present case that rule mighthave been modified by a ‘time lost waiting for berth’ provision. But in this class of case, wherenot only questions of laytime and demurrage arise, but also the right of a charterer to cancelbecause a ship is not ready by a stated date, it is of crucial importance that the basic principlemust be able to be simply applied to the given facts of a particular case. Certainly it isessential in commercial matters and certainly is more important than that there may behardship in a particular case because the application of the principle may cast the incidenceof liability one way rather than the other. . . . ’’

It is mentioned, for the sake of completeness, that the amendment referred to byLord Justice Roskill has been made and is now in Scrutton.

Lord Justice Cairns:

‘‘There is . . . nothing . . . to support the view that a ship can be considered to be readyto load unless her holds are free of other cargo and free from any contamination which wouldmake her unsuitable for loading with the cargo in question . . . I do not consider this strictrule as to holds is limited to cases where the place of arrival is the place where loading is tobe effected. If a few remnants have been left in the hold or if some cleaning remains to bedone, that will be taken care of by the de minimis rule. In The ‘Aello’3 and The ‘Delian Spirit’4it was accepted that mere formalities need not necessarily be carried out in order to make aship ready to load; and in the Noemijulia case5 it was recognised again as being a completelystrict rule in relation to holds.’’

The Aello3 and Delian Spirit4 judgments have already been referred to on othermatters (see Chapters 1, 2 and 3) and The ‘‘Delian Spirit’’4 will be referred to againlater in this chapter (see paragraphs 78 and 79, below) as will the Deppe andNoemijulia5 judgments (see paragraphs 72–74, below). The above judgmentsemphasise the strictness of the English common law in respect of a vessel’s cargospaces vis-a-vis the giving of a notice of readiness. This is something which ownersof vessels have to live with and the principles can have serious repercussions forthem in situations where only very minor cleaning is required to put the holds in acondition required by those who are going to load the vessel. Of course, in somecircumstances, the de minimis rule will give some help to shipowners since arbi-trators may tend to take a sympathetic view of circumstances where the amount ofcleaning is very slight and causes no intrinsic delay. While a vessel will not be readyto load/discharge cargo if her cargo spaces are unready because of infestation (as inThe ‘‘Tres Flores’’) the position will be otherwise if the infestation lies within the

3. [1960] 1 Lloyd’s Rep. 623.4. [1971] 1 Lloyd’s Rep. 506.5. Noemijulia v. Minister of Food, (1949–50) 83 Ll.L.Rep. 500.


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cargo and/or arises because of infestation coming on board the vessel with the cargo.In The ‘‘Epaphus’’6 the vessel was unable to enter Ravenna since her draughtexceeded the allowable maximum and it was arranged that the vessel should go toAncona.

She arrived there and berthed at 13.40 on 22 May having presented a notice ofreadiness at 07.37 that day. About 688,150 tonnes of cargo was discharged. Thevessel returned to Ravenna where she arrived on 27 May 1981, awaiting a berth. Afurther notice of readiness was presented on 28 May 1981, at 09.40 and the vesselfinally berthed on 30 May 1981.

It was then found on opening the hatches that the cargo was slightly infested withlive insects and the cargo had to be fumigated; a disinfestation certificate was notreceived until 11 June.

The vessel commenced discharge on Friday, 12 June at 08.00 and completeddischarge on Thursday, 16 July at 10.00.

The buyers of the cargo, standing in the shoes of charterers, contended that thevessel was not ready to discharge cargo when she presented a notice of readiness on22 May; an effective notice could not be given until 11 June. It was held by MrJustice Staughton (as he then was) that: on 28 May the vessel was fit and ready todischarge her cargo; the problem was the presence of insects in the cargo and sincethere was no finding that the insects were the fault of the vessel, the vessel was readyto discharge and time started to count at 8.00 a.m. on 29 May following the noticeof readiness given in Ravenna on 28 May; the submission that the risk of deteriora-tion in the condition of the rice was by the sale contract, if not by the charter, placedon the buyers would be rejected. On appeal it was held by the Court of Appeal thatthe infestation affected only the readiness of the cargo to be discharged not thereadiness of the vessel to discharge that cargo and the learned judge was plainly rightin holding that any infestation of the cargo did not affect the readiness of the vesselas a vessel to do her part in the discharge of the cargo; the buyers’ contention thatthe vessel was not ready to discharge and could not give an effective notice ofreadiness before 11 June would be rejected. It was put by Lord Justice DonaldsonM.R.:

‘‘The infestation of the cargo escaped the attention of the port authorities at Ancona,assuming that it then existed, which must be considered probable, but it caused a hold-up indischarge when the vessel eventually entered Ravenna after lightening. The award finds thatthe vessel gave notice of readiness at 09.40 hours on 28 May 1981, and that the infestationwas detected when the hatches were opened after she had berthed on Saturday, 30 May. OnMonday, 1 June, application was made for the fumigation of the cargo and a disinfestationcertificate was received on Thursday, 11 June. Thereupon discharge began.

On these facts Mr Merriman argued here and below that the vessel was not ready todischarge, and could not therefore give an effective notice of readiness, before 11 June. Thelearned judge rejected this contention, holding that any infestation of the cargo did not affectthe readiness of the vessel, as a vessel, to do her part in the discharge of the cargo, this havingalways been the test applied. This is plainly right. The infestation affected only the readinessof the cargo to be discharged, not the readiness of the vessel to discharge that cargo which isquite different. The appeal on this point therefore fails.’’

6. [1986] 2 Lloyd’s Rep. 387; [1987] 2 Lloyd’s Rep. 215.

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The Tres Flores decision was applied in the more recent case of The ‘‘Virginia M’’7

which related to whether a vessel was ready to discharge her cargo when she onlyhad 15 tons of fresh water remaining on board and this amount of fresh water wouldnot have permitted her steam driven winches to have discharged all the cargobecause of the amount of fresh water required for the auxiliary boiler to providesteam for the winches. The case is considered in more detail later (paragraph 75)but suffice it to say for the moment, that the High Court decided that the vessel wasnot ready to discharge her cargo when she tendered a notice of readiness, with theresult that laytime did not run during the period that the vessel was waiting for aberth with an insufficiency of water; there was no clause in the charterparty whichprovided compensation to the owners for time lost waiting for a berth so that theunreadiness of the vessel, because of a lack of fresh water, had a disadvantageouseffect as far as the owners were concerned. Although the case was concerned withmatters other than the physical readiness of cargo spaces it emphasised, as did The‘‘Tres Flores’’, the disadvantage to owners in a vessel being found not ready to load/discharge cargo some time after she arrives at or off a port when she waits aconsiderable time for a berth (without an appropriate compensatory clause) and theunreadiness relates back to the time that a notice of readiness was given, thusmaking it a nullity, with the result that laytime does not commence and run duringthe period that the vessel waits for a berth in a state of unreadiness.

65. Although in The ‘‘Tres Flores’’ Lord Denning said that for a notice of readinessto be given the vessel must be completely ready in all her holds to receive the cargoat any moment when she is required to receive it (see earlier paragraph 64) this mustbe in the context of the contractual cargo for the port in question.

In LMLN 337—3 October 1992 a tribunal decided that a valid notice of readi-ness could be given in circumstances where the vessel had slops of a previous cargoin one tank (No. 4C) where the charterers had exercised their option to load at twoports and the tank in which the slops were contained was not originally required forthe first loading port. It was held that although The ‘‘Tres Flores’’ made it clear thatthe whole of the vessel’s available cargo-space had to be available to the charterersat the time a notice of readiness was given the situation was clearly different in thecontext of the exercise of an option to load at two ports. This was not a case offuture readiness or of any necessary preliminary still to be performed by the owners.The vessel was in all respects ready to load all the nominated cargo. The fact thatthe charterers subsequently changed their minds and decided to load all the cargoat one port could not retrospectively invalidate the notice of readiness. It was clearthat, had the original nomination been maintained, the original notice of readinesswould have been unassailable since the vessel would have loaded and proceeded tothe second loading port with the slops in No. 4C tank as envisaged by theowners.

It was common for tankers to arrive at loading ports with cargo tanks filled withballast and to discharge that ballast during loading. In such a case, or in circum-stances where a master retained ballast in some tanks to enable a vessel to sail

7. [1989] 1 Lloyd’s Rep. 603.


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between loading ports with a part cargo, it could not thereafter be said that thevessel was not ready because all the tanks were not available for loading at the firstport. On this last mentioned aspect see also earlier paragraph 31, in particularLMLN 299—20 April, 1991.

Again, in the recent LMLN 676—12 October 2005, the vessel was chartered onan amended Asbatankvoy form for the carriage of a cargo of paraxylene from Haifato two safe ports Taiwan. After the fixture was concluded, the charterers obtainedan option from the owners to load at Haifa and Iskenderun, and in due courseexercise that option, such that when the ship arrived at Haifa she was intended toload at both ports. Two days after arrival at Haifa and the tendering of notice ofreadiness the charterers said that they only wanted to load at Haifa, and not atIskenderun.

Meanwhile, the ship had not berthed. That was because the charterers hadproblems with the shippers. Another ship took the berth to which the vessel wouldotherwise have gone.

After tendering notice of readiness the vessel was inspected on behalf of thecharterers. The surveyor required certain tanks to be further cleaned. However,those were not the tanks that were required for loading at Haifa if, as was thenintended, the ship was to load at two ports.

The charterers said that the ship was not ready to load, and therefore the noticeof readiness was not valid. Accordingly, they disputed the owner’s entitlement todemurrage as claimed.

It was held, that the central issue was whether, for the notice to have been valid,the ship had to be fully ready in all her tanks, or whether it was sufficient that thosetanks that would have been required for loading at Haifa alone—had the charterersnot subsequently reneged on the exercise of their option—were ready for loading.

In principle, a notice of readiness had to be read in the context of the circum-stances prevailing at the time it was given. In the present case, the relevant circum-stances were the fact that the ship was destined to load at two ports, and that thetanks required for the first were in fact ready. On that basis, and subject to the termsof the charter, the notice was valid. What was required of the ship at the time noticewas given was that she load at Haifa a limited quantity of cargo into certain tankswhich were then ready.

Did the provisions of the charter relating to notice of readiness affect the defaultposition previously outlined? Printed clause 6 of the charter read:

‘‘Upon arrival . . . at each port of loading . . . the master . . . shall give the charterer . . .notice . . . that the vessel is ready to load . . . cargo . . . and laytime . . . shall commence uponthe expiration of six hours after receipt of such notice, or upon the vessel’s arrival in berth . . .whichever first occurs . . . ’’

Whilst Interchem clause 2, which in the event of conflict had to prevail, read:

‘‘Laytime . . . shall commence to run 6 hours after the vessel is in all respects ready toload . . . and written notice thereof has been tendered . . . ’’

In addition, Interchem clause 11 provided:

‘‘Vessel to clean . . . to the charterer’s inspector’s satisfaction. If the vessel is not acceptedafter first inspection the vessel to continue cleaning for owner’s time and account . . . ’’

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It was not commercially sensible to read words such as ‘‘in all respects’’ in Inter-chem clause 2 as meaning that, at the time notice was given, the ship had to be readyto load all her cargo, wherever it might be destined to be loaded. What was requiredwas that she was ready to do what the charterers at that time and place wanted herto do. In the present case, that was to load a part cargo at Haifa, and the vessel wasperfectly capable of doing that.

Nor did Interchem clause 11 affect the position. Again, the cleanliness requiredhad to be that needed to enable the ship to do what she was saying, by her notice,she was ready to do, i.e. to load a part cargo at Haifa.

Accordingly, the tribunal was in agreement with the tribunal in LMLN337—3 October 1992. The recent decision in The ‘‘Nikmary’’8 was of no relevance.The owner’s claim for demurrage succeeded.

In LMLN 285—6 October 1990 a question arose as to whether a notice ofreadiness could be given when the vessel was being used for storage purposes.Under the terms of the charterparty the charterers had an option to use the ship forup to 20 days as a floating storage facility against the payment of hire amounting to$13,000 per day. The charterers exercised that option and the ship lay off thedischarge port acting as a storage facility. The owners gave a notice of readiness todischarge while the vessel was still lying off the discharge port acting as a storagefacility and she remained at anchor for another five days or so. The owners sub-mitted that the six hour period ran from the giving of the notice and that once thestorage period ended the ship went straight onto demurrage, having arrived fromthe loading port on demurrage. The charterers contended that the notice periodcould not run until the storage period had come to an end and that they wereentitled to credit for an additional six hours. It was held that the charterers’ conten-tion would be rejected. There was nothing in the charter to prevent the ship givinga valid notice of readiness while she was still performing storage services. Thepurpose of the period of grace was to allow the charterers an opportunity to makepreparations when they did not or might not know exactly the ship’s position. In thepresent case, they were more than aware of the ship’s precise position so there wasno commercial reason for them to be given any further period of grace.

66. Readiness in respect of cargo spaces includes readiness regarding cargo whichis overstowed where different parcels are carried on the same voyage with differentcharterers. In such circumstances the cargo which is overstowed is not consideredready for discharge until it becomes accessible and it is at that moment of time thatthe master should give a notice of readiness for the cargo which is overstowed;accessibility is all that is required, it not being necessary for all the top cargo to bedischarged. The dangers of not giving a notice of readiness at that time are con-sidered fully later in Chapter 6 as are other aspects relating to a notice of readiness;as will be seen, a notice of readiness given prematurely is a nullity (see Chapter 6)so that it behoves the master of a vessel to ensure that a notice of readiness is givenwhen the vessel is ready to discharge; if a notice of readiness has been given at anearlier time (which may not have been valid) a further notice should be given when

8. [2004] 1 Lloyd’s Rep. 55.


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the vessel is truly ready. Vessels often have to wait for a berth with overstowedcargoes and this can give rise to problems in respect of compensation for time lostwaiting for a berth (see paragraphs 39 and 40, above); since a vessel will not beready until the overstowed cargo is accessible owners require very clearly wordedclauses if they wish to obtain compensation for the period during which the vesselwaits for a berth but is not ready to discharge the overstowed cargo during thatperiod. As mentioned in paragraphs 39 and 40, there may be drawbacks in a ‘‘timelost waiting for berth to count as laytime’’ clause although in paragraph 39 a 1982reported arbitration is detailed where the arbitrators solved the problem by way ofa purposive approach in circumstances of overstowed cargo.

67. The degree of cleanliness required in a vessel’s cargo spaces will vary very muchdepending upon the cargo and trade in question. For many cargoes only minimalcleaning may be necessary but for other cargoes a high degree of cleaning may berequired, e.g. carriage of grain and foodstuffs and clean liquid cargoes such asnaphtha and aviation spirit. For some cargoes there may be specific and verydetailed cleaning clauses in the charterparties, some of which will be mentionedlater. Since it is invariably a question of fact whether cargo spaces are sufficientlyclean for the intended cargo very little gets reported by way of court decisions andreported arbitrations. (Each case turns on its own facts so that, usually, there are notissues of principle and in any event arbitrators are the final arbiters on facts.) Onereported arbitration is LMLN 239—31 December 1988 where the vessel waschartered under Asbatankvoy form for the carriage of a cargo of fuel oil, havingpreviously carried cargoes of crude. One of the issues in the arbitration concernedthe commencement of laytime. The parties had agreed that time was to count assoon as the owners gave a valid notice of readiness.

At 10.00 on 29 June the master tendered notice of readiness. However, thearbitrators found that the vessel was not in fact ready to load at that time since thecargo tanks had not been fully cleaned. Butterworth machinery was still being usedintermittently until about midday on 1 July, and the pumps were used there-afterfrom time to time.

On 5 July at 08.30 the master filed cables to the agents and the cargo receiverswhich read:

‘‘[Vessel] has collected all the remain cargo on board after wash tanks amounting 300 M3 inNo 2C ready give ashore when ship berthed for loading in compensation for the quantityreported as shortage as agreed with you on completion of discharging.’’

It was held that the ship was ready to load for the purposes of giving a valid noticeof readiness when her tanks had been cleaned and the water and crude slopscollected into separate tanks. The Chief Officer’s evidence was to the effect that thewhole operation had been completed by the evening of 28 June. However, thatevidence would be rejected. The ship was not in fact ready to load the fuel oil cargountil shortly before the cables of 5 July were sent. The notice of readiness given on29 June was accordingly invalid. However, from that time on the charterers, theshippers and the agents knew that the ship was at anchorage cleaning her tanks priorto the intended loading under the charter. On a number of occasions between 30

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June and 4 July the master had advised the charterers (who had known of thepurported notice on 29 June) that the ship was still at anchor awaiting a berth.

Then, on 5 July, the master had sent to the agents and the shippers (who were alsoreceivers of the previous crude cargo) the cables already quoted. In the context ofthe knowledge which all relevant parties then had, and of the cable notices of 29June and the subsequent cables from the master, the 5 July cables should be treatedas valid notices. Alternatively, at about the time they were sent the ship becameready, and the notices previously given became valid. On the basis that the firstapproach was correct, and allowing time for the cables to be received, laytime statedto count at 10.30 on 5 July.

In the light of the ‘‘Mexico 1’’ Court of Appeal decision (see later Chapter 6) itmay be that the arbitrators’ conclusion was incorrect regarding the validity of the 5July notice of readiness although it would appear, on the brief reported facts, thatthere may have been an estoppel by convention because of the communicationsbetween the parties during the period 30 June to 5 July whereby the charterers wereestopped from denying the validity of the 5 July notice of readiness.

The degree of the cleanliness required to make the vessel ready, for the purposeof tendering a valid notice of readiness and the terms of the charterparty, maydepend upon what is known to the parties in addition to the surrounding circum-stances. For example, in LMLN 62—18 March 1982 the vessel was chartered toload a cargo of heavy grain, sorghum or soyas from a U.S. gulf port to North Africanports. The ship arrived at the loading port on 13 July 1979 and was inspected by theNational Cargo Bureau Surveyor and by the U.S. Department of Agriculture Sur-veyor. The NCB Surveyor passed holds 1, 2, 3 and 5 on 14 July and hold 6 on 16July. The USDA Surveyor however rejected all 6 holds on 14 July on account ofpaint and rust scale and did not pass the holds until 10.00 on 17 July, after cleaningby shore contractors. Notice of readiness was given on that day and the ownerscontended that laytime began at 08.00 on 18 July, and that on this basis 2 days 20hours 10 minutes demurrage was earned at the loading port.

The charterers contended that as the vessel was not clean on arrival at the loadingport the owners were in breach of lines 11 and 12 of the charterparty and weretherefore liable in damages. The relevant charterparty lines read as follows:

‘‘The . . . now discharging at . . . where expected to complete discharge . . . and sail in ballast18.00 hrs 10 July for loading port, where expected ready to load, basis . . . , 13 July 1979,all going well. Owners to instruct the master to thoroughly wash the holds and hatches duringthe ballast voyage to load port so as to be clean on arrival.’’

The charterers submitted that they had an obligation to give bills of loading dated10 July, subject to a penalty for later bills and that they had already cancelled onevessel as she was too late as a result of having dirty holds. The present vessel in facthad to wait for a berth for some 8 days after being passed by the surveyor as therewas congestion at the loading port. Furthermore, while the vessel was beingcleaned, several other vessels had entered the loading port and had taken turn aheadof her. The charterers claimed that had the vessel been ready on arrival, the periodof waiting for berth would have been avoided. On this basis the charterers submitted


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that they were entitled to deduct that period from the time used and calculated thatdespatch in the amount of $12,823.35 was payable by the owners.

It was held, that the owners’ description of the vessel in line 10 of the charterpartyas ‘‘expected ready to load, basis [name of loading port], 13 July’’ was hedged by theproviso ‘‘all going well’’. In the light of what occurred, the arbitrators could notconsider that that estimate was given recklessly by the owners, in such a manner asto give risk to liability. According to the evidence both deck and cabin crew had beenengaged on the work of washing the holds and hatches during the ballast voyage,and in fact the vessel was clean on arrival.

The arbitrators could not interpret lines 11 and 12 of the charterparty as impos-ing on owners the obligation to have paint and rust scale removed from the holds intime to enable the vessel to be accepted as ready on 13 July by the USDA Surveyor.Such an obligation would have required more specific wording. The owners hadsimply undertaken to make the holds clean. There was no undertaking that thevessel, within the short time available, would be ready to meet the stringent require-ments of the USDA Surveyor.

It is possible that owners may put themselves under a particularly heavy burdenin respect of cleaning because of what they agree with charterers. See for exampleLMLN 445—23 November 1996. No charterparty had been signed but the agree-ment between the owners and the charterers was set out in two telexes. Thedescribed cargo was ‘‘bulk rice’’ and clause 26 of an earlier charterparty wasincorporated into the agreement and read:

‘‘ . . . vessel to present at loading port with holds clean dry and able to pass NCB/USDAInspection for loading bulk edible milled rice.’’

It was held that clause 26 was not inconsistent with the description of the cargo andthat it should not be struck out (as contended for by the owners). There was a worldof difference between, on the one hand, the description of a cargo to be carried, andon the other hand the standard to which a ship might be required, contractually, toclean. Further, the phrase ‘‘bulk rice’’ was capable of covering any type of rice fromthe coarsest to the most refined, from that requiring minimal cleaning to thatrequiring the highest possible standards. There was thus no inconsistency betweenthe description of the cargo and clause 26 of the earlier charterparty. Accordingly,the ship was not sufficiently clean by the cancelling date and the charterers whereentitled to cancel and to recover damages.

This arbitration also has relevance to readiness/cancellation, see later para-graph 123.

It will be implied that any inspection carried out by, or on behalf of the charterers,has to be conducted properly and reasonably but this will be of no avail to theowners unless they comply with the cleanliness required in the context of what maybe difficult circumstances. In LMLN 332—25 July 1992 the vessel was chartered onthe Sugar Charterparty. She arrived at the loading port and gave notice of readinessat 13.48 on 12 February. The following day, the holds were inspected by surveyorsappointed by the charterers’ agents, who rejected her as she was undergoing clean-ing by the crew from a previous cargo of fishmeal.

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The vessel was subsequently inspected and rejected on 17 and 21 February onaccount of the presence of fishmeal odour. From 17 February onwards the ownersvigorously protested against the vessel’s rejection, contending that she was to allintents and purposes clean. On 23 February, a joint survey was held, attendedamong others by a surveyor appointed by the owners’ P & I Club and a surveyorappointed by Lloyd’s agents at the request of the charterers. Traces of fishmeal werefound in the holds. The charterers’ surveyor rejected the vessel again on account ofthe smell of fishmeal and bleach in the holds, and the Lloyd’s surveyor concurredthat the vessel could not be considered ‘‘clean or odour free’’.

The P & I Club’s surveyor disagreed. He considered the holds were clean andtraces of fishmeal negligible. In his view, the faint odour in the holds would not haveaffected the shipment of sugar, particularly in view of the fact that this was packedin polypropylene bags lined with polythene. He considered that the charterers’surveyor was unreasonably cautious because of instructions from the ultimate pur-chasers that ‘‘holds should be exhaustively free from odour’’.

The vessel was finally accepted on 26 February, when a second notice of readi-ness was given.

The charterers contended that laytime commenced at 14.00 on 26 February. Theowners submitted that it should be treated as having commenced at 14.00 on 12February, following the issue of the first notice of readiness. They said that thecharterers’ agents’ judgment as to the condition of the holds had to be exercisedreasonably, and that their decision as to the suitability of the holds wasunreasonable.

It was held that there was an obligation on the charterers’ agents to judge thecondition of the holds on proper and reasonable grounds. Their decision had to beexercised on the basis of an objective assessment of the vessel’s holds. The evidenceof the P & I Club’s surveyor, who did not see the vessel prior to the survey on 23February, was of comparatively little help in judging the condition of the vesselwhen the first notice of readiness was given. It was incontrovertible that the vesselwas not fit to load the sugar cargo prior to 22 February.

The continued refusal to accept the readiness of the holds between 22 and 26February could not be regarded as improper or unreasonable. It was accepted thatabsolute cleanliness and absolute freedom from odour could not reasonably beachieved in a ship’s holds. The degree of cleanliness acceptable had to some extentbe a subjective assessment which took into account the nature of the previous cargoand of that to be loaded. Minor residues of an odoriferous cargo would obviously beof more consequence when loading foodstuffs than would say, ore.

The charterers had claimed damages inter alia on the basis that the owners hadfailed to take reasonable steps to ensure they presented an acceptable and fit vesselfor the carriage of the cargo. It was accepted, following dicta in the Democritos9 thatthe owners were under an obligation to use reasonable despatch in tendering thevessel in a fit condition to load the cargo.

The problems of cleaning a vessel from fishmeal were notorious. There was noreal chance of getting the ship ready in time unless the owners had checked what

9. [1976] 2 Lloyd’s Rep. 149.


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was required in order to clean after fishmeal and arranged for a professional team toclean at the previous discharge port as and when each hold became ready. Theyshould at least have had arranged for professional help with the necessary equip-ment and chemicals to be ready on the vessel’s arrival at the loading port under thepresent charterparty.

In the event, the initial efforts of the crew were not very effective. It could not besaid that the owners had used reasonable diligence to get the vessel ready within areasonable time when there were still residues of cargo in the cargo spaces on 22February. Accordingly, the owners were in breach, and were liable to the charterersin damages.

A good illustration of what may occur in practice, in respect of cleanliness, is setout in the next paragraph by way of a one-time typical arbitration. The subjectmatter overlaps Chapter 5 because of the specific clause in the charterparty but itrelates to a situation which occurs frequently in U.S.A. grain loading ports inrespect of cargo spaces; further, and in any event, the standard of cleaning requiredunder the specific clause probably equates with that required under the commonlaw for a grain-type cargo.

68. In The ‘‘Dubhe’’10 arbitration the relevant parts of the charterparty were, asfollows:

‘‘Vessel to load under inspection of National Cargo Bureau, Inc., and a United StatesDepartment of Agriculture Grain Inspector and/or a Grain Inspector holding a licence issuedby the United States Department of Agriculture pursuant to the U.S. Grain Standards Act,in U.S.A. Ports as required by Charterers . . . (Lines 22/23.)

Notification of the vessel’s readiness must be delivered at the office of the charterers ortheir agents during ordinary office hours (Sundays and holidays excluded) at or before 16.00hours or at 12.00 if on Saturday, the vessel also having been entered at the Custom House,accompanied by pass of the Inspector’s attesting to the fact that the vessel is clean-swept andready in all compartments without the use of artificial linings and the laydays will thencommence at 07.00 hours on the next business day whether in berth or not.’’ (Lines63/66.)

The facts were that the vessel arrived at Mobil anchorage at 07.30 on 16 Novem-ber. There was infestation in some of the holds and they had to be cleaned but, by14.45 on Sunday, 19 November, all the holds had been passed by the NationalCargo Bureau (NCB) and the United States Department of Agriculture (USDA).A notice of readiness was tendered at 09.00 on 20 November but the vesselremained at anchor waiting for a berth until 1 December. She berthed at 07.10 on1 December alongside the grain elevator and, between 08.00 and 09.00 the USDAmade a further inspection of the holds. They failed to pass holds Nos. 2 and 5 as twolive insects were found in these spaces. These holds were sprayed between 14.00and 16.00 on 1 December and at 20.30 the holds were inspected by USDA andwere passed. Some of the other holds had begun loading earlier in the day, one asearly as 09.15.

The owners contended that laytime should commence at 07.00 on Tuesday, 21November. According to them, the vessel had been passed by both NCB and USDA

10. 1981.

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on Sunday, 19 November, so that notice of readiness tendered on 20 November wasgood. Their primary case was that the charterparty provisions, in respect of readi-ness and the giving of notice, were satisfied by Sunday, 19 November, and that,therefore, the notice given on the Monday must have been good.

The main contention of the charterers was that the vessel, on her arrival, was notin fact ready to load, and the original notice of readiness did not reflect the truefacts; the re-inspection on 1 December proved that the vessel was not ready in allcompartments to load cargo when she gave her notice of readiness on 20 November;further, she was not in every way fitted for the voyage as required by an expressclause in the charterparty. In an overall general conclusion the charterers submittedthat, if all the requirements of readiness, subject to minimal qualifications, are notsatisfied when a notice is given, or if subsequently it is found that notice does notreflect the true facts, the notice is wholly ineffective and thus invalid.

The arbitrator did not find the matter easy of resolution. It was his view that oneshould look first at the laytime code in the charterparty in order to see if the laytimeclock had started and then to consider if the clock was prevented from runningbecause of a breach of contract whereby an assessment of damages could bereflected by adjusting the laytime computation. He went on to say:

‘‘The charterparty provisions make it clear that a notice of readiness can be delivered,whether in berth or not, accompanied by the pass of the Inspectors attesting to the fact thatthe vessel is clean-swept and ready in all compartments for loading. The inspection must be,because of lines 22/23 of the charterparty, a combination of the NCB and USDA. The NCBpassed the vessel for loading on November 18 and USDA on November 19. At 14.45 onNovember 19 both authorities had passed the vessel; the NCB certificate stated that the holdshad been passed to load and the USDA certificates stated, ‘stowage space examined andfound to be substantially clean and dry, and ready to receive grain on the above date’. If thecharterers had been prepared to commence loading that afternoon then such was permitted.Therefore, at that time the owners were in a position to deliver a notice of readiness, incompliance with lines 63/66 of the charterparty, in that there was an Inspector’s pass attestingto the fact that the vessel was clean-swept and ready to load in all relevant compartments. Thenotice of readiness tendered on the Monday morning was a good notice at that time and,therefore, sufficient to trigger off the laytime clock. I see no injustice whatsoever to thecharterers in this, particularly as they only accepted the notice subject to the terms ofthe charterparty so that their rights, in respect of any breach of contract coming to light as alater stage, were being preserved and could, if relevant, have the effect of clawing back, byway of damages, any time allowed unjustifiably to the owners through the running of thelaytime clock. Therefore, I am for commencing the laytime clock at 07.00 on Tuesday,November 21.

The charterers contended that the later discovery of the insects made the original notice ofreadiness invalid. I do not think that this can be so in view of what I have already stated, thenotice being good at the relevant time. Neither do I consider that The ‘Tres Flores’11 case helpsthe charterers since that case was concerned with the inspection of a vessel days after herarrival at the port, there being no inspection when the vessel arrived. . . .

I now turn to the breach/damages aspect of the arbitration. In view of the insects whichwere discovered on December 1 the charterers do have a case that the vessel was not in everyway fitted for the voyage. Anyway, I shall assume such so that the charterers are entitled todamages in respect of any loss/damage flowing from the breach. The question then arises,‘what loss/damage did the charterers suffer on account of the later discovery of the insects?’It appears that the loss could only be the time lost, vis-a-vis the loading of the vessel,

11. [1973] 2 Lloyd’s Rep. 247.


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occasioned by the vessel’s holds being sprayed and re-passed. The statement of facts showsthat Nos. 2 and 5 holds were failed by 09.00 on December 1 and were not ready, to thecharterers, until 20.30 on that day. It does seem that this did not affect loading in other holdsand that, in any event, no more than one hold was being loaded, at any one time. However,the position is not abundantly clear from the documentation and I have to remember thewords of Lord Denning from The ‘Tres Flores’9 that all cargo spaces should be accessible to thecharterers. Therefore as I see it the maximum loss to the charterers was the loss of time from09.00 to 20.30 on December 1; therefore, in order to compensate the charterers in respectof the owners’ breach of contract the time from 09.00 to 20.30 on December 1 cannot countas time on demurrage.’’

The circumstances which arose in The ‘‘Dubhe’’12 arbitration are relatively commonparticularly in grain loading ports. It is emphasised that other arbitrators might wellhave taken a different approach to the Dubhe12 arbitrator on similar facts andconcluded that the Tres Flores11 principle was applicable so that the notice ofreadiness could not be valid until after the work required, as a result of the furtherinspection at the loading terminal, had been performed. The problem is sometimestaken care of by way of the following added words to a Dubhe style notice ofreadiness clause: ‘‘If after berthing the vessel is found not ready in all respects forloading the actual time lost from the discovery thereof until she is in fact ready toload will not count as laytime.’’ Those words have much to commend them in thatthey are fair to both parties.

69. As mentioned in paragraph 64, above (Lord Justice Roskill and Lord JusticeCairns), the de minimis principle may be of help to shipowners in some circum-stances but such are likely to be limited in number. What degree of uncleanlinessfalls under the de minimis rule is a matter of conjecture and it is thought that, inpractice, the uncleanliness would have to be very minor to be adjudged of noaccount in order to invoke the de minimis principle. In The ‘‘Tres Flores’’11 thearbitrators did not apply their minds to the de minimis principle but the High Courtjudge was convinced that it could not avail the owners even though it only took fourand a half hours and $170.94 to clear up the infestation. Further, if an expressclause in the charterparty specifies that the vessel can only be ready after beingpassed by a named authority then that appears to be the end of the matter since theexpress requirement becomes a condition precedent to the tendering of notice ofreadiness.

In The ‘‘Despina’’13 an arbitrator did apply the de minimis principle in circum-stances where the vessel had been failed initially by inspectors but then passed afterthe cargo spaces had been cleaned. The vessel had to wait for a berth (no ‘‘time lostwaiting for a berth’’ provision in the charterparty) and did not go alongside untilseven days later at which time loading of all holds commenced except for one holdwhich was sprayed for one hour on account of larva. The arbitrator decided that thesmall amount of infestation and spraying was of a trifling nature and could bedisregarded under the de minimis principle; he also found that the rejection of the

12. 1981.13. 1980.

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hold caused no delay to the completion of the loading since the hold in question wasone of the earlier holds to complete loading.

Again, in The ‘‘Irinikos’’14 arbitration an arbitrator applied the de minimis principlein circumstances where there was a conflict of evidence concerning the dryness ofthe vessel’s cargo spaces late one afternoon. The vessel moved into berth in the earlyhours of the next morning and commenced loading at 06.00; he decided that thevessel was ready at 16.00 but, if there was any further drying of cargo spaces to takeplace, such was of a minor nature and could be disregarded under the de minimisprinciple.

70. The previous paragraphs have referred mainly to grain or grain-type cargoesnot only because of their propensity to problems but also because of the largenumber of arbitrations which have taken place over the years concerning uncleanli-ness/infestation of hold and the commencement of laytime with such cargoes. Thesubject is also of importance in the carriage of bulk liquid cargoes although it doesnot appear to show in so many arbitrations, probably because the loading of crudeoil (which forms the major amount of bulk liquid carried) does not demand thesame standard of cargo space cleaning, also because of the particular cleaningclauses in various tanker charterparties. In the carriage of clean bulk liquid cargoes,the degree of cleanliness is very stringent but arbitrations appear to be few and farbetween since a vessel usually has to satisfy the charterers or an independentinspector at the loading port so that, in the event, the inspector becomes somethingof a quasi-arbitrator.

A common type clause in a tanker voyage charterparty is: ‘‘Master to cleanvessel’s tanks, pipes and pumps, to Charterer’s satisfaction’’. A very simply wordedclause but sufficient to allow the charterer’s representatives to press for as muchcleaning as can reasonably be demanded. The owners do have a safeguard in that,if the charterers or their representatives are unreasonable in their demands concern-ing the amount of cleaning, they may be in breach of the implied term to exercisereasonable dispatch (see above, paragraphs 56–57) so that the owners would beentitled to damages for delay resulting from such a breach. In most cases thedamages would be based on allowing the laytime to commence in accordance withthe time when the vessel’s tanks had been sufficiently cleaned for the loading of thecargo in question. In practice, it is difficult for owners to go behind the charterer’sinspector, because of lack of proof. There may be no surveyors available to call inquickly to provide an assessment of the state of the vessel’s tanks to convince thecharterers’ representatives that the tanks are sufficiently clean; further, even if asurveyor can be found, the result can often be a conflict of evidence between twosurveyors so that an arbitration at a later date can be a game of chance.

Charterers do not appear to take advantage of the strict Tres Flores15 point asfrequently as they might do in the tanker trades. In many cases they apply a breach/damages approach to the uncleanliness of cargo tanks and only deduct laytime for

14. 1977.15. [1973] 2 Lloyd’s Rep. 247.


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the period that the vessel is not available to them for the loading of cargo becauseof the unreadiness of the cargo tanks—a very fair approach in circumstances where,on occasions, they have a valid argument that laytime need not commence until thetanks are clean and a further notice of readiness has been tendered.

In some instances, the specific laytime provisions will bite so as to trigger offlaytime leaving it that laytime will be suspended for the time that the cargo spaceshave to be cleaned as appears to be the case with the Beepeevoy 3 and similar-typecleaning clauses. If there is a ‘‘reachable on arrival’’ clause in the charterparty andthe charterers are in breach regarding this provision, then a damages situationresults so that the owners get compensation for the delay arising from the breachwhich may not include time spent cleaning the cargo spaces to make the vesselready.

A 1999 reported arbitration, LMLN 511—10 June 1999, illustrates the kind ofproblem which can arise with a clean type bulk liquid cargo. The vessel waschartered on the Asbatankvoy form for the carriage of a cargo of benzene. Shearrived at the loading port pilot station at 07.30 on 12 August, and the mastertendered notice of readiness. At 20.42 the same day the vessel shifted into the inneranchorage where she remained at anchor for six days. Surveyors attending on behalfof the charterers had boarded the vessel at 17.00 on 18 August to carry out aninternal cargo tanks inspection. At 21.00 the surveyors rejected the cargo tanksbecause wall wash tests showed an unacceptable quantity of chlorides in all cargotanks. The master was asked to steam wash all tanks for a period of 6 hours priorto each inspection. The master immediately started to steam-clean #1C in com-pliance with the surveyors’ request and informed the disponent owners. The dis-ponent owners contended that the level of chlorides present would not damage thebenzene. They told the master to complete the steaming cycle in #1C tank but notto carry out any further cleaning. They called in their own surveyor who carried outan inspection at the inner anchorage at 11.00 on 19 August. The surveyor carriedout a visual check on the condition of the tanks and found them clean, apart froma few small stains on the tank ladders and sounding pipes. He did not carry out wallwash tests. He concluded that the tanks were clean enough to load benzene.

The vessel berthed at 20.18 on 19 August. The charterers’ surveyors made asecond inspection and the vessel successfully passed her second wall wash tests at07.00 on 20 August. The cargo hoses were connected at 08.30 the same day andsufficient cargo was loaded to enable the taking of samples of the first foot of cargoin #2C tank at 09.15. Thereafter, the first foot cargo quantity was circulatedthrough lines, pumps and tanks before accumulating in #3P at 1230, followingwhich a tank cleanliness certificate was issued by the surveyors.

Loading of cargo commenced at 18.30 on 21 August and completed at 03.20 on23 August. Hoses were disconnected at 04.00, documents placed on board at 05.30,and the vessel sailed at 07.40.

The disponent owners counted laytime from 00.01 on 16 August and contendedthat laytime was used and the vessel entered demurrage at 17.55 on 17 August andthat demurrage then ran continuously through to disconnection of cargo hoses at04.00 on 23 August.

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It was held that the evidence showed that apart from 1C, none of the tanks hadbeen steam-cleaned in accordance with the instructions of the charterers’ surveyors,yet the vessel passed a second wall wash test when it appeared that the tanks werein the same condition as during their earlier inspection. It was therefore clear thatone or other of the wall wash tests was unreliable. In such circumstances had therebeen no other relevant evidence, it would have been reasonable for the tribunal toconclude that the vessel was probably ready in every respect to load her cargo on theoccasion of the master tendering notice of readiness on 12 August.

However, during the submission process, evidence was adduced to the effect thata surveyor from SGS attended the vessel on 15 August whilst she was anchored atthe inner anchorage. The master reported to the disponent owners on 15 Augustthat the SGS surveyor had found the centre tanks ‘‘ok’’ but had suggested that thefour wing tanks should be re-washed. In fact, the SGS report recorded that #1P, 1S,3P and 3S ‘‘were not clean and require recleaning’’. According to the master, thatcleaning process took the form of 5/6 hours washing of each of the four tanks withhot salt water followed by fresh water with final crew hand cleaning ‘‘if necessary’’.Nonetheless, the master rendered a second notice of readiness at 21.35 on 15August even though washing of the wing tanks was still in progress at that time, anda third notice of readiness was tendered at 10.48 on 16 August stating that the vesselhad arrived at the pilot station at 07.30 on 12 August ‘‘and is ready in all respect toload her cargo since then . . . ’’. The information contained in the third notice ofreadiness was misleading because it was clear that at the time it was tendered, tankwashing was still in progress. It followed that neither the first, second nor thirdnotice of readiness was valid in that at the time each of those notices was tendered,further tank cleaning was either necessary or was actually in progress, and the vesselwas not ready in every respect to commence loading her cargo of benzene. In fact,the vessel was not ready in all respects until the early afternoon of 17 August. Nosubsequent notice of readiness was tendered.

Since the master did not tender a valid notice of readiness between the vessel’sarrival on 12 August and her eventual commencement of loading, the tribunal hadto decide when, if at all, laytime commenced at the loading port. Both sides hadreferred to The ‘‘Mexico 1’’.16 The disponent owners had submitted that laytimeshould start at latest upon commencement of cargo operations which, they said, waswhen cargo hoses connected prior to pumping cargo into the vessel—i.e. at 08.30 on20 August. The charterers had contended that loading commenced properly only at18.30 on 21 August.

The evidence was that the reason for the substantial delay between the taking ofsamples of the first foot of cargo (09.15 on 20 August) and the issuance by thecharterers’ surveyors of the tank cleanliness certificate (12.30 on 20 August) on theone hand, and the commencement of loading of the main body of cargo at 18.30 on21 August on the other hand, was due to problems with the cargo not being withincontract specification and was not due to any problems with the vessel. Accordingly,the candidates for the commencement of laytime were:

16. [1990] 1 Lloyd’s Rep. 507.


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20 August 08.30 Hoses connected08.42 Commencement of first foot test12.30 Completion of first foot test

Issuance of cleanliness certificate

In the tribunal’s view, provided that the subsequent first foot test was passedsuccessfully, which in the present case it was, laytime should be deemed to havecommenced with the connection of cargo hoses in readiness to commence loadingoperations. Accordingly, time would be counted from 08.30 on 20 August throughto the disconnection of cargo hoses at 04.00 on 23 August.

The above arbitration is a good example of owners losing out because of the laterdiscovered unreadiness of the vessel in circumstances where vessels have to wait fora berth and the charterparty does not contain an appropriate congestion typeclause.

71. It has already been mentioned that in practice it is very common for cargospaces to be found not ready some considerable time after a vessel arrives at or offa port/terminal and has to wait for a berth. The situation is so common that ownersshould attempt to get particular clauses in their charterparty contracts so that theyget compensation for time actually lost waiting for a berth; some usual clauses havebeen mentioned earlier in Chapters 2 and 3 (e.g. time lost waiting for a berth,reachable on arrival). Charterers, understandably, may be reluctant to agree a‘‘reachable on arrival’’ provision but may be more amenable to a ‘‘time lost waitingfor a berth’’ provision or something similar.

Two decisions by the same commercial judge illustrated the continuing problemand they also evidenced his purposive approach to the construction of the relevantcharterparty clauses in circumstances where the cargo spaces were found insuffi-ciently clean after the tendering of a notice of readiness. In The ‘‘Linardos’’17 theowners chartered their vessel Linardos to the charterers for the carriage of coal fromRichards Bay, South Africa to Antwerp on the terms of the Standard Form RichardsBay Coal Charter (RBCT) the laydays/cancelling days being 1 October and 10October 1991.

On arrival at Richards Bay, no berth was available for docking. The vesselnevertheless tendered a notice of readiness to load at 16.50 on 4 October 1991,from its position off-shore. The vessel did not dock until 08.50 on 7 October, andwas inspected by the marine surveyor who found water and rust in her hatches andfailed her for loading. She was not finally accepted as ready until 06.30 on 8October. A dispute later arose under the charterparty as to whether the 4 Octobernotice was valid given that at the time of tender the vessel was not in truth ready forloading.

The material provisions of the charterparty were as follows:Clause 4 Lines 67–78:

‘‘Time commencing, subject always to the undermentioned provisos, 18 hours after Noticeof Readiness has been give by the Master, certifying that the vessel has arrived and is in allrespects ready to load, whether in berth or not . . . Any time lost subsequently by vessel not

17. [1994] 1 Lloyd’s Rep. 28.

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fulfilling requirements for Free Pratique or readiness to load in all respects, including MarineSurveyor’s Certificate . . . or for any other reason for which the vessel is responsible, shallNOT count as notice time or as time allowed for loading.’’

Clause 24:

‘‘RBCT Regulations to apply to this Charterparty.’’

Clause 25:

‘‘In the event of vessel having to wait for berth at load/discharge port due to congestion thenNotice of Readiness may be tendered by cable or telex or off the port whether in berth or not,whether in port or not, whether in free pratique or not, whether customs cleared or not.’’

RBCT regulations clause 2.12:

‘‘Vessels–2.12.1 shall be required to present a Master’s certificate that the holds have been washed anddried prior to tendering Notice of Readiness;2.12.4 if berthed and the holds are not passed as clean, will be required to vacate the berthand will lose their loading turn. The Notice of Readiness will only be accepted after receiptof an independent marine surveyor . . . that the vessel is clean, dry and free ofcontaminants.’’

The reference to RBCT Regulations was to Richards Bay Coal TerminalRegulations.

The charterers challenged the validity of the notice of readiness, the arbitratorfound that the notice of readiness was valid and awarded the owners the full amountof their demurrage claim in the sum of $40,277.77 plus interest.

The charterers appealed to the High Court against the finding on the notice.It was held by Mr Justice Colman that:(1) although in general a valid notice of readiness could not be given unless and

until the vessel was in truth ready to load it was always open to the parties toameliorate the black or white effect of the principle by express provisions to thecontrary;

(2) the express provision in clause 4 lines 75 to 78 as to what was to happen in theevent of time lost subsequently by vessel not fulfilling requirements for ‘‘ . . .readiness to load in all respect, including Marine Surveyor’s Certificate’’ contem-

plated loss of time due to the occurrence of surveyor declaring the holds unfit afterthe master had already presented what on the face of it was a perfectly valid noticeof readiness; the argument that lines 75 to 78 should be construed as confined toloss of time due to events occurring after the giving of notice of readiness would berejected; and the effect of clause 4 was to contract out of the normal rule that thevessel must be ready at the time of giving notice;

(3) a notice of readiness proved to be given by the master or chief officer with theknowledge that it was untrue i.e. in the knowledge that the vessel was not then readywould be ineffective to start time running; there had to be by implication a require-ment of good faith;

(4) the RBCT regulations and clause 2.12.1 in particular contained nothing tosuggest that presentation of the master’s certificate that the holds had been washedand dried prior to tendering notice of readiness was to have any other function than


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part of the ‘‘requirements in respect of the Notice of Readiness’’ which the regula-tions required to be satisfied before the vessel would be allocated to a berth; thegeneral incorporation in clause 24 of the general requirement in clause 2.12.1 didnot make that requirement a condition precedent to the commencement of time;the arbitrator was right in his conclusion that the regulations did not supplement theeffect of clause 4 and the appeal would be dismissed.

In The ‘‘Jay Ganesh’’18 the owners chartered their vessel to the charterers for thecarriage of bagged rice from Ben Qasim in Pakistan to various ports in West Africa.The charterparty was on the World Food Programme voyage charter (‘‘Worldfood’’)which provided:

‘‘8(a) At each port of loading and discharging notice of readiness shall be given by the Masterto the Charterers . . . when the vessel is in the loading or discharging berth and has obtainedcustoms clearance and free pratique and is in all respects ready to load and discharge.

(b) At loading port before tendering notice of readiness the Owners . . . shall ensure thatall holds . . . are clean, dry and free from smell and in all respects suitable to receive thecargo to the . . . Charterers’ satisfaction.

(c) If a loading/discharging berth . . . is not available upon the vessel’s arrival at or off theport, notice of readiness may be given upon arrival at the customary waiting place at or offthe port, whether cleared at Customs or not and whether in free pratique or not.

However if upon the vessel’s arrival at or off the port she is prevented from proceeding tothe loading/discharging berth by her inefficiency . . . notice of readiness may only be givenwhen such hindrance(s) has (have) ceased . . .

9. Laytime Counting (Loading and Discharging).(c) If the notice of readiness has been tendered while the vessel is at or off the port, in

accordance with Clause 8(c) the laytime shall commence to count and shall count as if thevessel were in berth . . .

(e) If after berthing the Vessel is found not to be ready in all respects to load/discharge, theactual time lost until the Vessel is in fact ready to load/discharge (including customs clearanceand free pratique if applicable) shall not count as laytime or as time on demurrage.’’

The vessel proceeded in ballast to the anchorage of the loading port and gavenotice of readiness on 10/11 August 1990. There was no berth available. On 28August the vessel was inspected by the charterers’ representative and the master wasinstructed to clean the holds and remove the infestation of insects.

On 7 September the vessel shifted from the anchorage into berth. On 8 Septemberthe vessel was inspected and the surveyor found that the infestation was still present.She was declared unfit to load the rice cargo and her holds needed fumigation.

On 9 September she was reinspected and declared fit to load. Loading com-menced on 10 September.

The owners claimed demurrage and the dispute was referred to arbitration. Thearbitrators found that when the master gave notice of readiness to load on 10/11August he believed that the vessel was physically ready to load but in truth she wasat that time unknown to the master infested with insects and mites. The arbitratorsheld that the shipowners were entitled to recover demurrage and that a valid noticehad been given.

There was an appeal. The issue for decision was whether the notice of readinessgiven on 10/11 August was a nullity because the vessel’s holds were then infested so

18. [1994] 2 Lloyd’s Rep. 358.

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that time did not commence until the commencement of loading on 10 September,or whether as the shipowners contended that notice was valid so as to start therunning of laytime from 10/11 August but subject to the deduction of about 21

2 daysfrom berthing on 7 September to being ready to load on 9 September.

It was held by Mr Justice Colman that:

‘‘(1) the charter imposed on the owner, as a matter of contract, exactly the duty as to physicalreadiness of the cargo spaces which he would have had at common law; to make sure beforegiving notice of readiness that they were in all respects fit to receive the cargo and only to givenotice if he had ensured that; just as the effect of clause 9(e) in relation to free pratique wasto deal with additional delay arising from the fact that the master gave the notice of readinessunder a misapprehension as to the medical condition of the crew, so must its effect in relationto physical unreadiness be to deal with additional delay which the master gave notice contraryto the owners’ duty at common law and under clause 8(b) under a misapprehension as to thephysical condition of the cargo spaces; time being thrown away in both cases it was thescheme of the contract that the owners should bear the expense of the delay;

(2) the overall effect of clauses 8 and 9 was that this form of charter required that thecharterers must pay for waiting time at the anchorage when they had not provided a berth,but that if the vessel then caused delay after arrival in berth because she was not in truth thenready to load or discharge that loss of time was to be borne by the owners;

(3) the failure to obtain free pratique or to obtain charterers’ satisfaction would be analo-gous to the failure to obtain a marine surveyors’ certificate and it was no less unrealistic todistinguish between delay cause by unreadiness attributable to events existing when thenotice was given and delay caused by subsequent events; the purpose of the clause was tomake the owners pay for the loss because the master, albeit innocently, gave notice that hisvessel was ready when in truth it was not and to make the charterers pay for the delay causedby their failure to provide a berth; the appeal would be dismissed.

The ‘‘Linardos’’ [1994],17 applied.’’

In a much later arbitration LMLN 636—31 March 2004 (already referred to inChapter 1 regarding geographical arrival and also later in Chapter 7 regardingexceptions), one of the issues was whether, as the owners argued, the notice ofreadiness given on 29 July was valid, and only the period following the refusal of thelocal inspector at the loading port to be satisfied as to the cleanliness of the vessel’sholds for loading until he passed them should be regarded as:

‘‘ . . . all time lost due to the vessel’s holds not being ready to receive the cargo until vessel’sholds are ready to receive the cargo not to count as laytime . . . ’’ (Recap clause 11);

or whether, as the charterers argued, the vessel’s uncleanliness prevented a validnotice of readiness being given so that laytime did not commence until the surveyorwas satisfied.

The owners relied on the decisions of Mr Justice Colman in The ‘‘Linardos’’17 andThe ‘‘Jay Ganesh’’.18 The charterers contended that those decisions should bedistinguished on the facts and/or that they should be regarded as clearly out of stepwith other judgments which stressed the importance of the accuracy of the factsstated in the notice of readiness before it could be effected. They said that in thepresent case the notice of readiness was clearly inaccurate in stating that the vesselwas ready to load.

It was held that, it was true that in the present charter the recap clause 11 wasquite separate from the notice of readiness provisions in clause 24, whereas in The


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‘‘Linardos’’ the notice of readiness and requirement for a Marine Surveyor’s certifi-cate as part of the vessel’s readiness were both in clause 4 of that charter. However,in The ‘‘Jay Ganesh’’ the two aspects (giving of NOR and cleanliness, and loss oftime due to the vessel being found not to be ready) were in separate clauses (8 and9). Mr Justice Colman said, at page 362:‘‘The overall effect of clauses 8 and 9 is accordingly, that this form of charterparty requiresthat the charterers must pay for waiting time at the anchorage when they have not provideda berth but if the vessel then causes delay after arrival in berth because she was not in truththen ready to load or discharge, that loss of time is to be borne by the owners. That is anentirely logical division of the risk of delay between the parties.’’

Accordingly, the tribunal considered that it had to follow the guidance so providedby Mr Justice Colman as the wording and layout of the present charter could not bedistinguished from The ‘‘Jay Ganesh’’ provisions.

Nor was there a sufficient, if indeed any, distinction that could be drawn betweenthe facts of the present case and the two previous cases. The charterers had sub-mitted that Mr Justice Colman regarded it as being necessary that there had to bea requirement of good faith in the giving of the NOR, without which it would notbe effective to start time running. The charterers asserted that extensive cleaning,descaling and preparation of the holds was required before they were ready. Theowners had challenged that assertion. The tribunal’s finding was that, whatever wasthe exact cleaning that was required (and there were few facts about that), there wasno evidence that the notice of readiness was given in anything other than goodfaith.

As to the charterers’ submission that the decision in The ‘‘Linardos’’ and The ‘‘JayGanesh’’ were out of step, both decisions originated from awards by extremelyexperienced LMAA tribunals, and the judge in question (Mr Justice Colman) hadspent his career frequently involved in charterparty cases. Far from being out of stepwith shipping law and decision in this area of maritime jurisprudence, the tribunalconsidered that those decisions represented a wholly logical and commercial excep-tion to the readiness requirement in a notice of readiness, and was one whichfollowed from the language used in the charter.

Accordingly, the wording of recap clause 11 was sufficient to qualify the normalreadiness requirement of the notice of readiness. The plain and ordinary meaningof the words ‘‘all time lost . . . ’’, when included in a clause dealing with thesatisfaction of ‘‘local inspectors’’ as to the readiness of the holds, could only be thatwhere there was dissatisfaction, then the time involved from the inspection to thesatisfaction of the inspector was excluded from laytime which was otherwise run-ning from the expiry of the notice of readiness. The issue would be decided in favourof the owners.

The above cases and arbitration are very good examples of charterparty clauses notbeing sufficiently clear regarding what happens in respect of the very common typecircumstances of a vessel having to wait for a berth and subsequently cargo spacesfailing to pass the required standards of readiness. While the decisions by Mr JusticeColman were eminently sensible and showed a purposive approach to the inter-pretation of the charterparty clauses in question there would have been no necessityfor the arbitrations and the court proceedings if the parties had agreed simple and

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clear wording which left it in no doubt that the owners would have received com-pensation for the period that their vessels were waiting for berths and subsequentlywere found to be not ready to load/discharge their cargoes. Before suggesting anappropriate clause to cover the situation, the commercial justice of such a clause wasput by Mr Justice Colman in his ‘‘Linardos’’ judgment:

‘‘If it were not for lines 75 to 78, owners whose vessel, having given notice of readiness at theanchorage, then had to wait for a period of several days or even weeks because no berth wasavailable, was found on getting into berth to need one final washing of one or more of hercargo spaces, perhaps only a few hours work, could lose the benefit of all time lost at theanchorage. The printed form of this charterparty avoids that very commercially unbalancedresult.’’ (Emphasis by the author.)

The commercial judge surely hit the nail on the head regarding a commerciallyunbalanced result so that, in the context of commercial justice, it makes sense tohave a simple and clear clause in a voyage charterparty which leaves it in no doubtthat when a vessel is waiting for a berth, particularly in respect of congestion whichresults in no berth being available to the vessel, and later the cargo spaces are failed,time counts in favour of the owners but on the basis of the laytime exceptions beingapplicable. Such a clause could read:

‘‘If a loading/discharging berth is not immediately available at the time of the vessel’s arrivalat or off the loading/and discharging port/terminal laytime shall commence . . . and shall runsubject to the laytime exceptions irrespective of whether the vessel is subsequently found notto have been ready to load/discharge cargo. Laytime, or time on demurrage, will not runduring any periods when the vessel has to be cleaned in order for the vessel to load/dischargeher cargo.’’

A sentence could also be inserted in such a clause to the effect that any notice ofreadiness given by the master had to be given in good faith although this will beimplied, in any event, because of what Mr Justice Colman had to say in the‘‘Linardos’’:

‘‘In the arbitration it was submitted that the master must have acted in bad faith when he gavehis notice of readiness but in the motion before this Court no alternative case was put forwardfounded upon the allegation that the master did act in bad faith or indeed was negligent whenhe did give the notice of readiness. It is therefore unnecessary for the purpose of this appeal todetermine that issue. It is sufficient to say for present purposes that a notice of readiness provedto be given by the master or chief officer with knowledge that it was untrue, that is to say in theknowledge that the vessel was not then ready would be ineffective to start time running. Theremust by implication be a requirement of good faith.’’

An even simpler clause, although not so attractive to charterers, reads:

‘‘Provided always that if a loading/discharging berth is not immediately available at the timeof the vessel’s arrival at or off the loading/discharging port all time waiting thereafter for aberth shall be paid for by the charterers at a rate of $ . . . per day.’’

There are, of course, other forms of words which could make variations to the aboveclauses in simple and clear language so as to remove any doubts as to what theparties intended in the common type circumstances cited above.

The failure to do so can result in owners losing out despite having a congestiontype clause in respect of tendering a notice of readiness. In LMLN 545—28 Sep-tember 2000, a case concerned more with documentation and legal readiness (see


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also later paragraph 78 and onwards) than cargo space readiness, the ownerssubmitted that laytime commenced at 13.00 on 28 May whereas the chartererscontended that the laytime clock did not start running until 07.00 on 10 June. Thedifference arose out of the position taken by the charterers that the vessel’s initialnotice of readiness was bad in that the master and three other crew members did nothave valid vaccination certificates when the vessel arrived off the loading port, andthat that amounted to the unreadiness of the vessel to load, which was not cureduntil late on 9 June when the vessel obtained free pratique and the port authorityauthorised the vessel to berth.

The vessel was chartered on the Sugar Charter Party form. The relevant clauseswere, as follows:

‘‘19. At . . . loading port, laytime . . . to begin at the next regular working period commenc-ing before 3pm after written/cables/telexed notice of readiness to receive cargo has beentendered to Agents in ordinary office hours, whether in berth or not, whether in port or not,whether customs cleared or not . . .

45. In the event of congestion at load and /discharge, Master has the right to tender hisnotice of readiness by cable/radio from customary anchorage, whether in port or not, whetherin berth or not, whether entered customs or not, whether in free pratique or not, and time tocommence as per Charter Party.’’

The vessel arrived off the loading port at 19.30 on 27 May and tendered a notice ofreadiness. No berth was available for her and no port health officials boarded thevessel, because of bad weather. Port agents advised the charterers on 28 May (copyto the owners) that there was a berthing prospect of 3 June if ‘‘cargo/docs ready’’.That advice was repeated on 30 May but on 2 June the agents advised that theberthing prospect for the vessel was 4 June if the cargo/documents were ready, andthey further advised that the vessel would be inspected by port health authorities onthat day, at the outer roads, if weather permitted. On 3 June the agents advised thatthe port health authorities had discovered crew members without valid vaccinationcertificates for yellow fever and that the crew members would have to be vaccinatedwith the vessel remaining in quarantine for a period of 10 days. The affected crewmembers were the master, 2nd engineer, 3rd engineer and the chief cook. In theevent, it was not until 9 June that the agents advised that the port health authoritieshad authorised the berthing of the vessel as from 17.00 hours that day and the vesselberthed at 20.20. Free pratique was granted at 20.45 and loading commencedat 22.05.

The owners submitted that laytime commenced at 13.00 on 28 May and rancontinuously thereafter. They said that clauses 19 and 45 of the charterparty wereunambiguous in providing for a valid notice of readiness to be tendered whether ornot the vessel was in free pratique. The NOR tendered at 19.30 on 27 May was validin that the obtaining of the necessary vaccination certificates was a pure formalitywhich did not cause any delay to the vessel so that it did not invalidate the 1930NOR—see The ‘‘Delian Spirit’’.19 They said that the real cause of the delay was thecharterers’ failure to supply the cargo at the relevant time. They also cited The‘‘Linardos’’20 and said that their submissions accorded with an objective view of


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fairness between parties, and were consistent with the approach taken by Mr JusticeColman in that case.

The charterers contended that the clear inference of clause 19 was that, althoughthe vessel did not require free pratique on arrival, the vessel should obtain freepratique at the first opportunity and not at any stage in the future. The owners hadto ensure that the vessel and crew were in the best possible position to be grantedfree pratique at the first inspection by the port health authorities. They relied on The‘‘Tres Flores’’.21 The absence of four vaccination certificates when the vessel arrivedat the loading port from ‘‘an infected area’’ amounted to failure by the owners topresent a vessel which satisfied a valid notice of readiness. For the whole of the timethat the vessel did not satisfy the port health authorities she was not at the full andimmediate disposition of the charterers.

It was held that The ‘‘Delian Spirit’’ was not relevant because, as a matter of fact,the obtaining of free pratique at the loading port was not a pure formality. Themaster and three of the other crew members did not have valid vaccination certifi-cates, and free pratique could not be granted until vaccination had taken place andthe port health authorities granted free pratique.

It was the decisions in The ‘‘Tres Flores’’ and The ‘‘Linardos’’, which were relevantto the present case, as well as The ‘‘Petr Schmidt’’22 and The ‘‘Agamemnon’’ LMLN473—20 December 1997, where fundamental principles regarding the commence-ment of laytime (as set out in The ‘‘Mexico 1’’23) were emphasised.

In The ‘‘Tres Flores’’ there was nothing like the present clause 45 which referredspecifically to congestion and permitted the master to tender a notice of readinesswhen he arrived off the loading port whether in free pratique or not in the circum-stances of congestion.

There was no problem in distinguishing the cases so as to give effect to clause 45of the present charterparty. Clause 45 was tailor-made for congestion, and on theassumption that the clause did bite when the vessel arrived off the loading port, ithad to follow that the master had been right to tender a notice of readiness at thattime. That situation was very common in practice and it was such in The ‘‘Linardos’’so that the same principles were applicable.

In The ‘‘Linardos’’, Mr Justice Colman decided the case in favour of the ownerson the basis of the wording in the commencement of laytime clause 4 of thecharterparty, at lines 75–78, ‘‘any time lost subsequently by vessel not fulfillingrequirement for . . . ’’. He said that those words contemplated that subsequent tothe giving of a notice of readiness the loading of the vessel would be delayed, andfurther contemplated that the causes of such delay might be failure to obtain freepratique or unreadiness to load in all respects or other reasons for which the vesselwas responsible. Those words were not in the charterparty in the present case, soThe ‘‘Linardos’’ could be distinguished. However, The ‘‘Linardos’’ charterparty didhave a clause (clause 25) which was almost identical to the present clause 45, andwhile Mr Justice Colman did not decide The ‘‘Linardos’’ by invoking clause 25, he



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did have something important to say about it—see the two paragraphs of hisjudgment in the left-hand column on page 32 of the report beginning ‘‘The arbi-trator came to the same conclusion’’ and ending ‘‘that very commercially unbal-anced result’’. Those paragraphs in Mr Justice Colman’s judgment made it clearthat unless there were particular words in a charterparty which contracted out of thenormal rule regarding the vessel to be ready at the time of the giving of a notice ofreadiness, the normal rule would be applicable albeit that it might lead to a verycommercially-unbalanced result.

That was the result for the owners in the present case since, because of thetribunal’s finding that obtaining free pratique was not a pure formality, the notice ofreadiness which was tendered on 27 May was invalid and of no effect. Further, therewere no particular words in the present charterparty which contracted out of thenormal rule requiring a vessel to be ready at the time that a notice of readiness wastendered. While clause 45 of the charterparty might incline an arbitrator to the viewthat the normal requirements should not apply (as did the arbitrator in The ‘‘Linar-dos’’ with a similar worded clause) it was clear from the judgment of Mr JusticeColman in that case that such a view was not permitted.

The facts of the case emphasised that if owners wanted compensation for whentheir vessels had to wait for a berth, they should ensure that their charterpartiescontained clear and appropriate clauses to reflect that. Since the port authorities didnot authorise the berthing of the vessel until the evening of 9 June, and free pratiquewas not granted until 20.45 of that day, it followed that laytime commenced at07.00 on 10 June. The owners claim would be dismissed.

The arbitrators took a strict approach in distinguishing their case so as not toapply The ‘‘Linardos’’ judgment in favour of the owners; much importance wasattached to the words ‘‘any time lost subsequently by vessel not fulfilling require-ments for . . . ’’ in The ‘‘Linardos’’. Their decision contrasts with that of the arbi-trators in the later arbitration LMLN 636—31 March 2004 (already detailed earlierin this paragraph and where there was an ‘‘any time lost provision’’) and illustrates,again, the need for owners to strive for an appropriate and clearly-worded conges-tion type clause in their charterparties.

The contents of this paragraph are also relevant to Chapter 5 which covers specialclauses in the context of readiness.

EQUIPMENT

72. Any equipment which has relevance to the loading/discharging operations hasto be in a state of readiness; such equipment may include derricks, cranes, winches,hatches, pumps, crude oil washing machines, shifting boards, vacuvators, etc. Thestate of readiness only has to be such that the equipment can be made ready andavailable for use when actually required. Not only is it a pointless exercise to haveequipment such as derricks rigged to work while waiting at an anchorage but, insome circumstances, it might even be dangerous. On the other hand, if the relevantequipment is not ready and available for use when required, after the vessel hasreached the agreed destination, then the vessel will not be ready so as to satisfy the

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second requirement needed for the commencement of laytime; further, it wouldappear that the readiness must be such that the equipment is capable of loading/discharging the whole of the cargo at the time that the notice of readiness istendered. The cases Armement Adolf Deppe v. Robinson,24 Sun Shipping v. Watson andYouell,25 Noemijulia v. Minister of Food,26 The ‘‘Demosthenes V ’’ (No. 1)27 and The‘‘Virginia M’’28 are important cases to look at in order to see the approach of thecourts over the years regarding the required degree of readiness for a vessel’sequipment. The recent Virginia M case is considered since it indirectly concernedequipment, albeit that the case focused upon the lack of fresh water to supply steamfor the vessel’s winches.

In Armement Adolf Deppe24 the ship was to proceed to Avonmouth for discharge.She reached that port and entered the dock on 28 October; since no dischargingberth was available, she moored at buoys. Discharge could have been carried out atthe buoys but the consignees of the cargo did not want this. The hatches had notbeen removed nor had the owners’ stevedores brought all their discharging gear onboard. The Court of Appeal held, reversing the High Court judge, that the vesselwas ready to discharge and that the laydays began to run on 28 October. LordJustice Swinfen Eady in his judgment said:

‘‘It is the duty of the merchants to co-operate with the owners in the receipt of cargo, andupon the facts I am satisfied that the only reason why the ship did not take on board the gangand rig the gear to fulfil the owners’ duty in discharging was that the receivers were notdesirous of receiving the cargo at the buoys and were so not willing to co-operate in herdischarge there and made no preparations for doing so. The ship was lying at a waiting berth,her voyage being ended; it would have been an idle form to take on board and open hatchesand make other preparations at the buoys when there was no desire or intention of themerchants to receive cargo until the ship was berthed at the quay. The ship was ready todischarge in a business and mercantile sense, and the idle formality of incurring uselessexpense was not necessary as a condition precedent to the commencement of the laydays.’’

The judgment is full of common sense; the only surprising thing about the case isthat the High Court decided the matter in the reverse way. The case is to becontrasted very much with that of Sun Shipping v. Watson and Youell25 where thecourt was concerned with shifting boards and the loading of grain in bulk. Thevessel had to load a cargo of grain at certain Danube ports and she arrived at Brailaon 4 June where a portion of the cargo was loaded; she then went to Galatz andcontinued the loading which was completed on 20 June. The charterers claimedthat laytime should not count on 5, 6 and 7 June because the vessel was not readyin all holds as work was in progress on the erection of shifting boards. At the timethat the notice of readiness was given the vessel had not finished putting up hershifting boards (fixed to prevent the grain from working from one side to the other);it was possible to commence loading when the boards were only partly fixed.

24. [1917] 2 K.B. 204.25. (1926) 24 Ll.L.Rep. 28.26. (1949–50) 83 Ll.L.Rep. 500, and (1950) 84 Ll.L.Rep. 354 (C.A.).27. [1982] 1 Lloyd’s Rep. 275.28. [1989] 1 Lloyd’s Rep. 603.

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It was decided by Mr Justice Rowlatt that

‘‘it was quite clear that, if no shifting boards had been put in, the ship was not ready to load; ifthat was so, and though she may be ready to load when some, but not all, of the boards wereput in, you get into the case a question of degree and fact and I think that the constructionshould be adopted that the shifting boards have got to be ready and fitted before the ship couldbe said to be ready. Further, it is said that there is no evidence that the Charterers wereprevented from loading; that probably is the case but, as far as I know, that has nothing to dowith it; the ship to be ready to load before the time begins to run; and there is an end of it.’’

This judgment appears on the harsh side rather in line with The ‘‘Tres Flores’’29 but,of course, the decision is very much different, in principle, to that of the Court ofAppeal in the Armement Adolf Deppe case.24

73. The next case in chronological order is that of Noemijulia v. Minister of Food.30

The vessel arrived at Buenos Aires with inward cargo and there was a collapse of themain mast due to steps taken in extinguishing a fire in a storeroom. Temporaryrepairs were effected and the ship was given a certificate of seaworthiness for hervoyage homewards with grain. No. 3 hold (tween and lower) was occupied bybunker coal. Notice of readiness was given by the shipowners in accordance with thecharterparty but was refused by the charterers on the grounds (inter alia) that theship had no main mast or after derricks and that No. 3 hold still contained bunkercoal. The umpire found that No. 3 hold was designed as reserve bunker space andthat No. 3 tween deck and No. 3 lower hold, if not used for reserved bunkers, werecapable of carrying cargo; that, in order to proceed to the nearest bunkering port onthe homeward voyage, sufficient reserve bunkers could have been carried in No. 3tween deck leaving No. 3 lower hold free for grain and that the ship was not readyto load by her cancelling time in that she was without main mast or after derricksand in that part of her No. 3 lower hold was not free for grain.

The case then went to the High Court where Mr Justice Devlin (as he then was)decided the case in favour of the owners of the vessel and reversed the award of theumpire. He decided against the charterers on the point relating to bunkers/No. 3hold (on this he was upheld by the Court of Appeal in that the master was entitledto take bunkers for the whole of the voyage and not just the nearest bunkeringstation) and, in deciding on the other aspect of the case, he held that the chartererwas entitled to no more than the reasonable co-operation of the shipowners inselecting and working the most convenient method of loading, and that the evidenceof the absence of a main mast and after derricks (which defects could probably havebeen remedied in time if the method of loading required their use) was inadequateto discharge the onus upon the charterer of showing that the defects in the ship’sequipment were such that she would probably be unready or unable to employ orassist in any reasonable method of loading which might be decided upon.

Before going further, it is stressed that this case was really concerned with thecancellation of the vessel, also that the charterer had no express right to use any partof the ship’s gear and the charterparty did not prescribe any particular method of

29. [1973] 2 Lloyd’s Rep. 247.30. (1949–50) 83 Ll.L.Rep. 500; (1950) 84 Ll.L.Rep. 354 (C.A.).

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loading or allow the charterer to select such a method. Having said that, thefollowing words of Mr Justice Devlin are pertinent:

‘‘The lack of main mast and after derricks meant a deficiency in the ship’s gear which mighthave interfered with the loading of Nos. 4 and 5 holds. The extent of the possible interferenceis dependent upon the method of loading and is detailed in the case. The authorities onreadiness to load mostly deal with the condition of the holds. But it is not disputed that theprinciple in some form must be applied to the ship’s gear, where it has to be used; for it wouldbe pointless to insist on the space being available if the ship was in no condition to play herpart in filling it. But it does not follow that the principle is to be applied with the samestringency . . . it would be unsatisfactory if the work of making ready had to be chased by thework of loading; the shipper wants to know all is in readiness before he begins, and it is bestto make a firm rule. The ship’s gear is different; some of it may not be required at all; someof it may not be needed until an advanced stage of loading, and the keeping of it in constantreadiness from the first moment to the last may involve labour and expense unnecessarily. Ithink, that outside the clear rule about the condition of the holds, some elasticity is permis-sible. In particular, Lord Justice Swinfen Eady lays down the test of readiness in a businessand mercantile sense and deprecates the idle formality of incurring useless expense. Apartfrom useless expense, I find it hard to believe that if, for example, a winch, which would notbe needed for some days after loading began, required an hour or two’s overhaul, thecancellation of the charter would be justified. Examples of this sort could be multiplied andwould serve to show that a test which produces a sensible result in the case of the holds maynot work equally well in respect of gear.’’

He went on to say that if the charterparty expressly gave to the charterer the rightto use any part of the ship’s gear the end result might be different, as it also couldbe with a charterparty which prescribed a particular method of loading or allowedthe charterer to select a method of loading where the ship’s gear was required forsuch methods.

The decision of Mr Justice Devlin was taken to appeal but the Court of Appealupheld the judgment. Lord Justice Tucker stated: ‘‘It seems to me that there is a realdistinction to be drawn between the cargo space and the gear. The charterer isentitled to control of the whole of the cargo space from the outset of the voyage.’’Lord Justice Cohen had this to say: ‘‘I agree with the learned Judge that there is adifference, if not in principle, at least in the application of the principle, betweenspace in the hold and readiness of ship’s gear’’.

There is perhaps, a fine point of distinction between Lord Justice Tucker andLord Justice Cohen/Mr Justice Devlin but in practice the distinction between themappears to be of no practical significance; so long as there is a difference in theapplication of the principle regarding readiness, to equipment as compared tothe cleanliness of cargo spaces, that should suffice to ensure that the strictness of theTres Flores19 decision does not impinge in such a way regarding the equipment ofthe vessel so as to result in a departure from common sense and practical justice.

74. In The ‘‘Demosthenes V’’ (No. 1),31 the decision appeared to be more marginalthan in the previous cases adverted to in respect of equipment. The facts were thatthe vessel arrived at Alexandria at 15.30 on 26 May with a cargo of grain and sheanchored in the inner port giving a notice of readiness at 11.40 on the following day,

31. [1982] 1 Lloyd’s Rep. 275.

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27 May. That notice was rejected on the ground that the vessel was not equippedwith the necessary vacuvators for the discharge of cargo in accordance with clause18 of the charterparty so that, consequently, the vessel was not ready for thedischarge of cargo. No vacuvators were put on board the vessel until 12.00 on 29May when three of them were put on to the ship. It was doubtful whether anyvacuvators could have been put on board the vessel before that time and the threevacuvators that were put on board the vessel were capable of discharging cargo at agreater rate than that specified in the charterparty. The charterparty provided thatthere should be six vacuvators and three more vacuvators could have been obtainedwithin a matter of hours. Three more vacuvators were obtained at 11.30 on 15 Juneat which time the vessel was still waiting in the inner port without having starting thedischarge of cargo. There was a finding by the arbitrator that any lack of vacuvatorsbetween the arrival of the vessel at Alexandria and 15 June was not causative of anydelay in the berthing of the vessel. The relevant provisions of the charterpartywere:

‘‘Notification of the vessel’s readiness must be delivered at the office of Charterers . . . at orbefore 4 p.m. . . . laydays will then commence at . . . 8 a.m. on the next business day whetherin berth or not at discharge.

Notice of readiness at port of . . . discharge is only to be tendered at the office of Charterers,Receivers or their Agents on official business days during office hours not after 4 p.m. . . .

Owners to supply sufficient vacuvators . . . to operate same capable of discharging atcharterparty rate of discharge. Cargo to be discharged by Receivers . . . at the average rate of1,500 tons per weather working day of 24 consecutive hours provided vessel can deliver at thisrate . . . .’’

By an addendum it was agreed that the discharging rate be amended to 1,000 metrictons per weather working day and for the owners to guarantee minimum six vacuva-tors at the discharging port.

It was decided by Mr Justice Staughton (as he was then) that:

(1) There was no express link between the notice of readiness clause and thoserequirements as to vacuvators; all that was required before notice of readi-ness was given was that the vessel ought to be ready; and that had noconnection with vacuvators which the owners would supply for the opera-tion of discharging. The vacuvators were essentially equipment which wasto emerge from the shore when the operation of discharge was to com-mence. The vessel as a vessel was ready and all that had not been done wasto supply the equipment which the owners were to supply for the purposeof discharge. In the circumstances, the notice of readiness which was givenon 27 May was a valid notice.

(2) However, if the vessel had not been, in point of a physical state, ready todischarge on 27 May and the vacuvators were an essential part of thevessel’s readiness, the vessel would still have been ready at any rate from 29May because at that time there were three vacuvators on board and afurther three could have been obtained within a matter of hours.

(3) If the notice of readiness given on 27 May had been invalid then once thevessel became ready a further notice period was necessary; here the court

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would have required a great deal of persuading to reach the view that thecharterers, who had had notice of the vessel’s arrival, were entitled to allowher to sit there for a period of just over two weeks and not pay demurrageor bear the cost of the time that had elapsed merely on the ground that theyhad not received notice from the owners that another three vacuvatorscould be obtained within hours.

The judge’s decision in fact upheld the award of the arbitrator. In making hisdecision Mr Justice Staughton did not have to give a ruling between the competingprinciples in The ‘‘Tres Flores’’32 and Armement Adolf Deppe33 (because of what hedecided in (1) above) but he did consider it just in case he was found to be wrongon appeal in respect of his decision in (1) above (in fact the case never went toappeal). He considered, by way of obiter, the more difficult issue which was, if theship was not, in point of her physical state, ready to discharge on 27 May, whetherthe notice was still valid because she could have been made fit within such time asthe charterers could conceivably have required for her to start discharging. Hislordship appeared to think that it was a marginal point but, at the end of the day, herejected the application of the Tres Flores32 approach and was of the opinion that thefacts of the instant case fell within the Armement Adolf Deppe33 principle. In comingto this conclusion he relied (inter alia) on the words of Lord Justice Roskill (as hethen was) in The ‘‘Tres Flores’’32:

‘‘In my judgment the essential distinction between the present case, on the one hand, andArmement Adolf Deppe and The ‘Delian Spirit’ . . . on the other, is that in those latter cases thematters which remained to be done before the vessel could begin to discharge or load werein the nature of normal and usual preliminaries which would require to be carried out inevery case whereas the fumigation in the present case could not so be described.’’

Mr Justice Staughton said that he would be prepared to describe the supply ofvacuvators in the present case as normal and usual preliminaries, at any rate in thecase of a vessel which has to be discharged in that way, in contrast with thefumigation in the Tres Flores32 case.

Mr Justice Staughton also has some obiter dicta regarding the giving of a furthernotice of readiness (see decision (3) earlier in this paragraph) but, since this aspectwill be considered later in Chapter 6 (see paragraph 107 et seq.), no further mentionwill be made of it except to say that, in view of the Court of Appeal decision in The‘‘Mexico 1’’, and later cases, he was probably wrong on this point.

75. The ‘‘Virginia M’’ facts have already been adumbrated earlier in paragraph 64.In more detail they were that the vessel was chartered for a voyage from Constanzato one safe port in Nigeria, charterers’ option, with a cargo of bagged calciumammonium nitrate. The laytime allowed at the discharge port was in excess of 15weather working days and the charterparty provided for notice of readiness to begiven at the discharge port. After several changes of destination the vessel was finallyordered to Lagos where she arrived at 08.30 on 8 March with about 15 tons of fresh

32. [1973] 2 Lloyd’s Rep. 247.33. [1917] 2 K.B. 204.

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water remaining on board. The vessel’s main propulsion was a four-cylinder Dox-ford engine but her auxiliaries and in particular her steam winches were steamdriven, the steam being provided by an auxiliary boiler; subject to using salt waterin an emergency she was dependent upon having a supply of fresh water (about 20tons per day) to feed her boiler and provide the steam necessary to run her auxilia-ries. A notice of readiness was tendered by the vessel at 10.00 on 8 March and adispute arose as to whether this notice was valid. The arbitrators found that thevessel could have proceeded to a discharging berth when she arrived at Lagos if onehad been available and she could have commenced discharge of cargo but this couldnot have lasted for more than a day at most with the fresh water then on board. Infact the vessel waited for a berth until late March but she received a supply of freshwater on 13 March.

The majority of the arbitrators held, in deciding for the owners, that in order togive a valid notice of readiness the vessel had to be ready, apart from routineformalities, to discharge or load at the time of giving notice. She did not have tosustain her readiness for any length of time. Provided that notice was given inaccordance with charterparty stipulations, that would be good notice. Thereafter,the laytime provisions of the charterparty took over and governed what was tohappen after notice had been given. If at some time later the vessel had to ceasedischarge due to the fault of the owner/vessel then the laytime ceased to countagainst the charterer.

Before Mr Justice Hobhouse (as he then was), in the High Court, the rivalcontentions concerned whether or not the readiness must relate to the whole of thecargo or only some part of it and whether or not the readiness need only bereadiness to start discharging cargo as opposed to readiness to continue to dischargeit once started. He considered that the majority arbitrators’ approach was notproper or sound in law and decided that the readiness required was readiness todischarge the whole of the cargo that was the subject matter of the charterparty; itdid not suffice that the vessel was ready to discharge some of the cargo if she was notready to discharge the remainder. It was not enough for the shipowner to say: ‘‘TrueI am not ready now but I will be ready as soon as you the charterer are ready.’’

In coming to his conclusions as above his lordship did give consideration to SunShipping v. Watson and Youell34 and Armement Adolf Deppe v. John Robinson35 but notto Noemijulia v. Minister of Food36 and The ‘‘Desmosthenes V ’’.37 He also gaveconsideration to what Mr Justice Diplock had to say in The ‘‘Massalia’’ (No. 2)38 andthe obiter dicta of Mr Justice Evans in The ‘‘Mexico 1’’39; both of these cases con-cerned overstowage of cargo and the latter judgment stated:

‘‘It is also well established, subject always to express argument in a particular case, that noticeof readiness cannot be given until the vessel in question is ready to load or to discharge thewhole of the cargo in question’’ [emphasis supplied].

34. (1926) 24 Ll.L.Rep. 28.35. [1917] 2 K.B. 204.36. (1949–50) 83 Ll.L.Rep. 500.37. [1982] 1 Lloyd’s Rep. 275.38. [1960] 2 Lloyd’s Rep. 352.39. [1988] 2 Lloyd’s Rep. 149.

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Further, Mr Justice Hobhouse gave particular consideration to the Tres FloresCourt of Appeal decision and, while it is difficult to reconcile some of his reasoningin relation to the usual preliminaries for loading/discharging and routine formalitieson the one hand, and something which would prevent the vessel from being abso-lutely ready to load or discharge the cargo whenever the charterers might order herso to do, the fact is that the recent judicial inclination appears to be for a stringentapproach to readiness of a vessel’s equipment (which may be caused by way of a lackof fresh water) as compared to the earlier approach to the courts in, for example,Noemijulia v. Minister of Food (see earlier paragraph 73) where a distinction wasdrawn between the application of the principle regarding readiness, to equipment,as compared to the cleanliness of cargo spaces. Mr Justice Hobhouse obviouslyadhered to the more stringent Tres Flores approach even though he was not dealingwith the readiness of cargo spaces but inferentially, at least, with the readiness ofequipment. The narrowing of approach was disappointing to some and not inaccord with what Lord Justice Devlin (as he then was) had to say in Ingram v. Little40

(see earlier paragraph 64) in that, ‘‘the great virtue of the common law is that it setsout to solve legal problems by the application to them of principles which theordinary man is expected to recognise as sensible and just. The true spirit of thecommon law is to override theoretical distinctions when they stand in the way ofdoing practical justice’’. Further, ‘‘some elasticity is permissible’’ as in Noemijulia v.Minister of Food (see above, paragraph 73) appears to have gone by the boardalthough owners may still have the benefit of ‘‘preliminaries’’ in certaincircumstances.

In The ‘‘Virginia M’’ it may well have been that practical justice militated for theapproach of the owners, which approach his lordship dealt with as follows:

‘‘I was urged by Mr Simon on behalf of the owners to approach the test of readiness as beingwholly divorced from what may subsequently happen after laytime has begun to run. Eventsmay occur after laytime has started which gave rise to laytime exceptions and thereforeinterrupt laytime or events may occur which amount to breaches of charterparty by theshipowners. He submitted that such considerations are distinct from and in contrast to whatthe shipowner has to do to make his ship ready to load or discharge. He used the analogy,which I accept in the context of the situation pertaining at Lagos as a useful analogy, of thevessel interrupting loading or discharging in order to bunker. (See Ropner Shipping Co. Ltd.v. Cleeves Western Valley Anthracite Collieries Ltd.41) However this points the absurdity of hisargument once it is also accepted that readiness to load or discharge refers to readiness toload or discharge the whole of the relevant cargo. It is absurd, and would be wholly unbusi-nesslike, to say that laytime must be treated as starting even though, within a matter ofminutes or hours of its doing so, laytime is interrupted owing to the incapacity of the ship tocontinue. If the vessel having proceeded into berth and having discharged some cargo has tostop and take on fresh water or bunkers either at that berth or another berth, that is notconsistent with the vessel having been ready to discharge nor is it consistent with the criterialaid down in the authorities, in particular by the Court of Appeal in The ‘Tres Flores’.’’

With due respect to his lordship there is nothing absurd whatsoever in laytimecommencing and then being suspended a matter of minutes or hours later; this isalways happening in respect of ‘‘weather working days’’ and the effect of inclement

40. [1962] 1 Q.B. 31.41. (1927) 27 Ll.L.Rep. 317.

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weather. What is the difference in principle between an interruption of laytimebecause of a breakdown of a vessel’s equipment and an incidence of weather? Inpractice, laytime is often interrupted soon after commencing, not just by an inci-dence of weather but also perhaps because of breakdown of equipment such aswinches or cranes. However, it obviously behoves parties to be mindful of thejudicial climate and to draw up their contracts accordingly.

Leave to appeal the decision of Mr Justice Hobhouse was given but the partiessettled the case before the appeal was due to be heard (thus indicating some doubtsregarding the decision) so that the shipping community were denied the benefit ofany erudition from the Court of Appeal or the House of Lords in respect of thepoints raised in the High Court. The decision of Mr Justice Hobhouse stands on theparticular facts of the case; as his lordship himself stated, the burden of proof isupon the owners to prove the ‘‘preliminary existing fact which must exist’’ before avalid notice of readiness can be given; he further said, quite correctly, in some ports,maybe even in most ports of the world, the taking on board of further fresh waterat a discharging berth may be a mere formality which will in no way impede or holdup the discharge of the cargo and will not prevent the vessel from being ready todischarge the whole cargo as soon as the charterers may wish and at the rate thatthey may wish.

By analogy, what was decided in The ‘‘Virginia M’’ must also have relevance toequipment which is dependent upon electric power produced by a vessel’s gen-erator, e.g. electric winches or pumps. It can therefore be a matter of some impor-tance as to what defect is discovered in respect of a vessel’s equipment and thetiming of such, in the context of a vessel waiting for a berth without an appropriatecompensatory clause. It may be that charterers will be able to take considerablebenefit from The ‘‘Virginia M’’, as applied to a vessel’s equipment, in circumstanceswhere the evidence shows that a vessel’s equipment was not ready to load/dischargethe whole of the cargo when she arrived off the loading/discharging port. However,in LMLN 351 (detailed earlier in paragraph 39) the tribunal decided that the factthat a windlass motor failed due to a latent defect subsequent to the vessel’s arrival,which delayed her from shifting to her loading berth, did not invalidate the noticeof readiness which was given by the vessel on her arrival.

Navigational equipment, charts and the trim of the vessel may all be aspectswhich relate to readiness to load/discharge cargo in the context of a valid notice ofreadiness. In LMLN 669—6 July 2005 the vessel was chartered on an amendedGencon form for the carriage of 60,000 metric tons of bulk phosphate from Aqabato Paradip in India. The charterparty provided inter alia:

Clause 6(C)

‘‘Time lost in waiting for berth to count as loading or discharging time, as the case maybe.’’

Clause 20

‘‘Breakdown of EquipmentAnytime actually lost through lack of ship’s power breakdown or inefficiency of equipment orany neglect on the part of the vessel, its Owners, Master or crew or their Agents affecting theloading or discharging operation shall not count as laytime.’’

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Clause 26

‘‘Notice of Readiness to be tendered any time day or night, Sundays and Holidays included,whether in port or not, whether in berth or not, whether customs cleared or not, providedthat the vessel being in free pratique.

Laytime to commence 12 hours after the Notice of Readiness has been given, unless soonercommenced.’’

The vessel arrived at Paradip and tendered a notice of readiness at 08.30 on 9 July.The discharging berth was occupied when the vessel arrived, and so she remainedat the roads.

On 15 July the Harbour Master and a pilot boarded the vessel to take her intoberth, but they refused to berth her, alleging five deficiencies, namely; the gyrocompass was not working, the engines were not able to operate at their rated RPMand generate enough speed to manoeuvre in monsoon weather, the vessel did nothave a proper chart for ‘‘approaches to Paradip’’ on board, the vessel had declareda draught of 12.5 metres in even keel in salt water whereas the maximum permis-sible draught in the port was 12.5 metres in dock water, and the vessel was drawingmore than the draught declared and was trimmed down by the head and notresponding to the engines and helm properly.

As a result of the vessel’s rejection by the Harbour Master, the cargo receiversinformed the owners that the vessel would only be berthed after the deficienciescomplained of had been rectified.

On 25 July the Harbour Master inspected the vessel again and on the 26 July heapproved her entry into the port. However, the vessel did not berth immediatelybecause of congestion. The vessel eventually berthed at 08.42 on 30 July, com-menced discharge at 15.30 that day, and completing at 09.00 on 8 August.

The charterers disputed the validity of the NOR tendered on 9 July. They saidthat laytime did not begin to count until the commencement of discharging opera-tions at 15.30 on 30 July. They said that because of the deficiencies noted by theHarbour Master on 15 July the vessel was neither physically nor legally ready todischarge her cargo until cleared by the Harbour Master on 26 July; that whether ornot there had been congestion at the berth the vessel would still not have beenpermitted by the Harbour Master to proceed from the roads without remedying thedeficiencies.

The owners maintained that the notice of readiness tendered on 9 July was validand that the delay in berthing was attributable only to congestion. They also saidthat the combined effect of clauses 6(c) and 20 of the charterparty was that time wasto count when the vessel was waiting for a berth and that, if there was any break-down or inefficiency of equipment or any neglect or default of the vessel, only thetime actually lost as a result of that would be excluded from laytime counting. Thepresent case was similar to The ‘‘Linardos’’.42 The vessel was simply waiting for aberth up until 15 July and no time had been lost before the pilot boarded, so thattime counted in full. The vessel would not have discharged until the freight hadbeen paid, which had only been on 12 July and between 12 July and 15 July the

42. [1994] 1 Lloyd’s Rep. 28.

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berth had been occupied by another vessel. Consequently, laytime expired at 17.50on 13 July before any attempt had been made to berth the vessel.

The charterers accepted that the prima facie effect of the WIBON provisions ofclause 6 was to transfer the burden of waiting time from the owners to them.However, they said that that was subject to the proviso that the vessel was to be attheir immediate and effective disposal at the time that the notice of readiness wastendered and that that was not the case by reason of the defects noted by theHarbour Master. Clause 6(c) was only effective to make time count before the vesselhad arrived at a point from which notice of readiness could be tendered. If then avalid notice of readiness could not be tendered for any reason, and laytime did nottherefore count, neither could time count under Clause 6(c). Moreover, clause 6(c)only applied where the vessel was prevented from berthing by congestion at theberth. Even if there had been no congestion at the berth the Harbour Master wouldstill not have permitted the vessel to proceed from the roads without remedying thedeficiencies noted on 15 July.

It was held that the first question was whether the notice of readiness tendered on9 July was valid or not. It was a puzzling feature of the dispute that several of theconcerns expressed by the Harbour Master on 15 July (and specifically thoseconcerning the main engine operation and draught) evaporated when he attendedthe vessel again on 25 July even though nothing had been done by the owners andthe crew in the meantime to alter the position.

It could not be said with any certainty whether, if the Harbour Master hadattended the vessel on 9 July, he would have adopted his view of 15 July (andrejected the vessel) or that of 26 July (and approved it for berthing). The onlydifference of note in the condition of the vessel between 9 and 26 July seemed tohave been the problem with the gyro compass listed by the Harbour Master on 15July. There was, however, no evidence or suggestion that the gyro compass had notbeen working when the notice of readiness was tendered on 9 July. For that reason,and because the other alleged deficiencies did not in the event prove to be impedi-ments to berthing, the notice of readiness tendered on 9 July was valid and effectiveto trigger the commencement of laytime.

While on this occasion the tribunal did not accept the evidence submitted by thecharterers the arbitration illustrates the kind of readiness or unreadiness which mayarise in practice regarding causation and a vessel’s notice of readiness.

76. Little need be said regarding the provision of dunnage and mats since it is nowthe charterers who invariably organise the loading and discharging of cargo and seeto the provision of dunnage, mats, etc. However, if the charterparty contractualposition between the parties be that the owners are to provide dunnage and matsthese do not have to be laid in order to satisfy the condition of readiness unless, ofcourse, the contract expressly so states; all that is required is that the relevantmaterials are ready to be used when required; see Grampian Steamship Co. Ltd v.Carver and Co.43

43. (1893) 9 T.L.R. 210.

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77. It was mentioned earlier in paragraph 20, when considering a berth charter-party, that the time of access to a vessel might have relevance to the commencementof laytime. If it be the ship’s obligation to provide access for shore personnelinvolved in the loading/discharging operations then a failure to provide the accessmay mean that the vessel is not ready to load/discharge cargo at the time she givesa notice of readiness under a berth charterparty and the condition of readiness willnot be satisfied until access has been provided for personnel essential to the loading/discharging operations. In the case of a port charterparty, where a vessel waits fora berth and laytime has commenced, then the failure to provide access at a later datemay amount to a breach situation so that laytime will be suspended for the delay inproviding the access assuming, of course, a legal failure by the owners in notproviding access.

DOCUMENTATION—LEGAL READINESS—INCLUDING THEDELIAN SPIRIT DECISION

78. In order for a vessel to be ready all necessary papers have to be in order wherebythe vessel, if required by the charterers, can proceed immediately to her loading ordischarging place. There can be an exception to this whereby a mere formality isrequired at the behest of a port authority or some other organisation and this doesnot turn out to be a legal impediment to the commencement of the loading ordischarging of the cargo. The papers which are usually required are those needed forthe port authorities but there can be documentation appertaining to the cargo itselfwhich might prevent the vessel being ready. In the latter case the responsibility forobtaining such may fall within the sphere of the charterers rather than the ownersand, if the charterers fail to obtain the appropriate documentation, the owners maybe compensated by damages for delay because of a breach of the implied term ofreasonable dispatch by the charterers, see earlier The ‘‘Atlantic Sunbeam’’.44

Taking first free pratique (the vessel having a clean bill of health and probably themost important matter in practice) the older cases will not be cited in this work—suffice it to say that it used to be trite law that, if a vessel was refused free pratique,she could not be ready and, therefore, did not satisfy the second condition requiredin respect of the commencement of laytime.

The all-important cases on the subject of free pratique are The ‘‘Austin Friars’’45

and The ‘‘Delian Spirit’’46 (the latter already cited on other matters in Chapters 1, 2and 3).

In The ‘‘Austin Friars’’45 the facts were that the vessel had sailed from Con-stantinople in ballast on an approach voyage to Galatz and on this voyage collidedwith another vessel which caused her to go back to Constantinople for temporaryrepairs. After these repairs were completed she sailed again for Galatz arriving thereat 23.00 on 10 October. Nobody could board or leave the vessel until pratique wasgiven after the ship had been visited by the port doctor. The doctor boarded the

44. Para. 56, above; [1973] 1 Lloyd’s Rep. 482.45. (1894) 71 L.T. 27.46. [1971] 1 Lloyd’s Rep. 64; [1971] 1 Lloyd’s Rep. 506 (C.A.).

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vessel the following morning and gave her a clean bill of health. Unfortunately, thecharterparty provided that the charterers could cancel the charter if the vessel wasnot ready by midnight on 10 October which, in fact, they did.

The main issue in the case was whether or not the charterers had the right tocancel the vessel and this, in turn, depended upon whether the vessel was ready intime. It was decided in the High Court that the vessel was not ready by midnight on10 October so that the charterers were entitled to cancel the vessel. The judge sawno distinction between a medical officer in authority ordering a ship into quarantineand his prohibiting access to her until he can examine her. In both cases, a superiorauthority, in pursuance of regulations, disqualifies a ship from taking cargo onboard. The decision appeared harsh but it emphasised the strictness of the commonlaw in respect of the conditions to be satisfied for laytime to commence, at least in1894. The ‘‘Austin Friars’’45 led to the proposition that a notice of readiness was notvalid without free pratique.

In the later case of The ‘‘Delian Spirit’’46 the subject of free pratique came to thefore (as did other matters which have been discussed in earlier chapters). Thecharterers directed the vessel to Tuapse and she reached the roads at that port on19 February at 01.00. On the morning of that day the master gave a written noticeof readiness to load which was accepted by the charterers’ agents. The vessel lay inthe roads until 08.00 on 24 February when she was ordered by the charterers to goalongside a loading berth. She arrived in the loading berth at 13.20 and freepratique was granted at 16.00. One of the points at issue in the case was whether ornot the vessel could be an ‘‘arrived ship’’ if free pratique had not been obtained.

It was decided by Mr Justice Donaldson (as he then was) that the mere fact thatfree pratique had not been obtained did not prevent the vessel from being an‘‘arrived ship’’ if it could be obtained at any time and without the possibility ofdelaying the loading and that, in the present case, the obtaining of free pratique hadno effect on when the loading began. (In fact, the loading did not begin until 21.50and the obtaining of free pratique had no bearing on loading not commencing untilthat time.) His lordship considered The ‘‘Austin Friars’’.45 He stated that difficultiesflowed from the decision in that case but that, unless constrained by authoritybinding upon him, he would hold that a vessel is ready to load and can be an arrivedship if she is in such a state of physical and legal readiness that there was nothing toprevent her being made ready at once if required. He relied upon the ArmementAdolf Deppe47 case in coming to this conclusion. He cited the words of Lord JusticeSwinfen Eady (already referred to in paragraph 72) but he went further andstated:

‘‘It is an idle exercise to obtain free pratique before the time for loading unless it be requiredfor ship’s purposes, and if it is a fact that it can be obtained at any time without the possibilityof delaying the loading, the mere fact that it has not been obtained does not prevent the shipfrom becoming an ‘arrived ship’.’’

The case went to the Court of Appeal where the decision of Mr Justice Donald-son, on the pratique point, was upheld. Lord Denning (the then Master of the Rolls)had this to say:

47. [1917] 2 K.B. 204.

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‘‘It was said that the vessel was not ready to load until free pratique was given . . . in supportof that proposition the case of The ‘Austin Friars’45 was cited. I do not think that case warrantsthat proposition. It was a very special case. I can understand that, if a ship is known to beinfected by disease such as to prevent her getting her pratique, she would not be ready to loador discharge. But if she has apparently a clean bill of health, such that there is no reason tofear delay, then even though she has not been given her pratique, she is entitled to give noticeof readiness, and laytime will begin to run. That is supported by the case of the hatch covers,see Armement Adolf Deppe.47’’

In The ‘‘Delian Spirit’’48 the judges took a practical common sense approach tobring the law into harmony with modern conditions of shipping practice/operations.The result is that at common law the actual obtaining of free pratique is not now arequirement before a ship can be considered ready. The position will be different ifthe charterparty contains an express clause making the obtaining of free pratique acondition precedent to the tendering of a notice of readiness but this aspect will beconsidered later (see Chapter 5).

Despite the sensible decision in The ‘‘Delian Spirit’’48 a vessel will not be ready atcommon law if pratique has been refused. The ‘‘Delian Spirit’’ was only concernedwith a vessel which had not obtained free pratique and the obtaining of such was amere formality in the circumstances. If the inspection by the port authority had notbeen a mere formality but had resulted in the vessel being refused pratique then, ofcourse, she would not be ready under common law and, presumably, could not havebeen ready at an earlier moment of time. Although not a commencement of laytimecase The ‘‘Apollo’’49 is a good illustration of the action of health officials being morethan a ‘‘mere formality’’. The vessel was chartered on the New York Produce form.While she was discharging at Naples two of her crew members were taken tohospital with suspected typhus. She then sailed to Lower Buchanan to load. Onarrival off that port she was met by health officials who, upon being told of what hadhappened at Naples, inspected the crew and the ship. Although no evidence oftyphus was found, the officials disinfected parts of the ship before granting freepratique. The delay in obtaining free pratique because of the inspection and disin-fection caused nearly 30 hours loss of time to the charterers. They claimed theywere entitled to put the ship off-hire under clause 15. It was held by Mr JusticeMocatta that the action of the health officials was more than a mere formality in thecircumstances, that it prevented the full working of the vessel and she was off-hireduring the time which was lost. Obviously, the same approach would have beentaken if the circumstances had been a voyage charterparty and readiness in thecontext of commencement of laytime. Therefore, if a vessel has been waiting for aberth and some days later pratique is refused then any notice of readiness givenwhen the vessel arrived must surely be invalid so that laytime cannot commence.Here again, special charterparty clauses such as those relating to ‘‘waiting for aberth’’ and a ‘‘berth reachable on arrival’’ may have relevance. For an interestingarbitration relating to free pratique and special clauses see the reported arbitrationLMLN 545—28 September 2000 which is detailed earlier in paragraph 71 andreadiness and cargo spaces.

48. [1971] 1 Lloyd’s Rep. 64; [1971] 1 Lloyd’s Rep. 506 (C.A.).49. [1978] 1 Lloyd’s Rep. 200.


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In different ports of the world there are different approaches regarding inspec-tions by port health and other authorities. The principle enunciated in The ‘‘DelianSpirit’’48 in relation to pratique is also applicable to other types of inspections whichtake place in various ports of the world.

In a London arbitration, LMLN 35—5 March 1981, the owners claimed forbalance of demurrage, the dispute being concerned with the commencement oflaytime. The owners contended that laytime commenced at 08.00 on 10 May(notice of readiness having been tendered at 08.00 on Saturday, 8 May) while thecharterers submitted that it did not commence until 14.45 on 13 May; the differ-ence between the parties concerned the effect of the inspection of the vessel byChinese harbour authorities on 12 May, the charterers arguing that such was acondition precedent to the commencement of laytime. The owners took the viewthat the inspection was a mere formality which should have no effect on thecommencement of laytime. The inspection itself took 40 minutes and there was noevidence to show that this was other than the approximate usual time for this typeof inspection. The inspection did not find anything untoward with the vessel andwas not causative of any delay to her since, after the inspection, the vessel waited fora discharge berth for about a week.

The arbitrator decided the case in favour of the owners. He considered that afairly broad approach should be taken to preliminaries which have to be carried outwhen vessels arrive at a port and such preliminaries cannot be carried out for sometime after the vessel has arrived, assuming no failure by those on the vessel inpresenting the vessel for the preliminaries. He accepted the owners’ argument thata routine inspection is a mere formality which can be ignored for the purpose of thecommencement of laytime and that it is not a condition precedent or something ofsuch substance that it prevented the triggering of the laytime clock. In support of hisdecision the arbitrator relied upon part of Lord Denning’s judgment in The ‘‘TresFlores’’,50 as follows:

‘‘ . . . notice of readiness can be given even though there are some further preliminaries to bedone, or routine matters to be carried on, or formalities observed. If those things are not suchas to give any reason to suppose that they will cause any delay, and it is apparent that the shipwill be ready when the appropriate time arrives, then notice of readiness can be given.’’

In a later reported arbitration LMLN 421—23 December, 1995 the vessel waschartered on the Gencon form for the carriage of a cargo of bagged fertilisers. Afterthe vessel had berthed at the discharge port a period was spent obtaining PortAuthorities’ clearance. The charterers contended that this period should be dis-counted from the computation of laytime. It was held that the clearance was to beregarded as a formality. There was no evidence that time was lost during it. Itaccordingly counted against laytime.

An important document in relation to the legal readiness of a tanker, vis-a-visUnited States waters, is the US Coast Guard tank vessel examination letter(‘‘TVEL’’). In a New York arbitration, LMLN 416—14 October 1995 (no Englisharbitration as yet to the writer’s knowledge) the sole arbitrator had to decide (interalia) whether or not the obtaining of a TVEL was a mere formality in relation to the

50. [1973] 2 Lloyd’s Rep. 247.

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tendering of a notice of readiness. The OBO vessel Permeke was chartered on theExxonvoy 84 form for the carriage of a cargo of crude oil from Mongstad to NewYork. After loading cargo at Mongstad the vessel sailed for New York, arriving at thepilot station on the morning of 1 April 1994. The vessel tendered NOR for dis-charge at 12.12 hours.

At the time NOR was tendered the vessel did not have a valid US Coast Guard tankvessel examination letter (‘‘TVEL’’) (not obtainable until after first arrival in theUSA following an inspection by the Coast Guard). US law prohibited foreign flagvessels from off-loading oil on US waters without a TVEL. Accordingly, at theowners’ request the US Coast Guard boarded the vessel at 09.25 hours on 2 April1994 for the purposes of carrying out a detailed examination of the vessel and itsintentional trading and safety certificates. No deficiencies were found, and at 13.00hours that same day the US Coast Guard issued a TVEL to the vessel. Theprogrammed discharge of part cargo into the barges began at 01.25 hours on 3 April1994.

The dispute concerned when laytime at New York began. The owners relied onthe fact that the TVEL inspection was completed with no time having been lost tothe charterers, and submitted that laytime commenced at 18.12 hours on 1 April1994, or six hours after the vessel tendered its NOR. The charterers contended thatin the absence of the required TVEL the vessel was not ‘‘ready’’ for discharge andits NOR was both premature and invalid so that laytime could not commence until19.00 on 2 April. The charterparty did not specifically refer to the vessel having aTVEL but it did contain a clause which required the vessel to have on board allcertificates or other documents required by the laws of the countries to which thevessel might be ordered.

The sole arbitrator rejected the owners’ contentions and held (inter alia) that thefact that the TVEL was issued without difficulty was evidence that the vessel waswell maintained and did comply with international safety requirements. That mightaccount for the owners’ confidence in making the representations they did. How-ever, the issue was not the physical condition of the vessel but what effect theabsence of a valid TVEL had on the NOR and the commencement of laytime.Laytime did not begin to count until six hours after the TVEL was issued, or 19.00hours on 2 April 1994. Other New York arbitrators have taken a similar approachin later aribtrations.

It may well be that London arbitrators would take a similar approach to that takenin New York so as to decide that the obtaining of a TVEL is more than a mereformality. Owners can get round the problem by way of an agreed charterpartyclause which is tailor-made for the circumstances, such as:

‘‘In the event that the vessel requires a TVEL inspection prior to the commencement of cargooperation at any United States port, NOR may be tendered upon arrival, prior to theinspection by the US Coastguards. Provided that the inspection commences within the sixhours allowance and the vessel is granted a TVEL, then the NOR will be deemed to be valid.Should the vessel fail to pass the inspection, the NOR would be deemed to be invalid andcannot re-tendered until the vessel has passed the examination and a TVEL is issued. All timelost shall not count as used laytime, or demurrage, if the vessel is on demurrage. Furthermore,any additional costs incurred due to such failure shall be for the account of the vessel Owner.These costs shall include, but not be limited to, tugs pilots and other port costs.’’


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See Laytime and Demurrage in the Oil Industry by Edkins and Dunkley,51 page 10.

79. The preceding paragraphs, in respect of documentation/legal readiness, havebeen mainly concerned with pratique/health and inspections by port authoritiesunder the common law. The principles involved can, of course, also be applied toother areas (not covered by express provisions in the charterparty) which affect legalreadiness. Examples are certificates appertaining to deratisation and stability asrequired under international regulations, also documentation which has to belodged with customs in order for a vessel to obtain customs clearance.

A deratisation certificate, or the lack of it, figured prominently in The ‘‘Made-leine’’.52 Although this case was concerned with the cancelling of a charterparty itdrove home the importance of documentation required under international/nationalregulations. The charterers were held entitled to cancel the charterparty in circum-stances where the vessel’s deratisation certificate expired a few days before thecancelling date and the owners of the vessel were unable to get a new certificate,without a fumigation, before the expiry of the cancelling date. Obviously, in thecontext of the commencement of laytime, the vessel would not be deemed ready ifshe did not have a valid deratisation certificate at the time that notice of readinesswas tendered.

There have been a good many disputes over the years in circumstances wherevessels tendering for the loading of grain have not been properly documented inrespect of stability information/calculations, as required under international legisla-tion, and this has been causative of the delay at the loading port. Arbitrators have nocompunction whatsoever in deciding that a vessel is not ready in suchcircumstances.

Regarding clearance by customs, the regulations appertaining to such may varyfrom country to country and from port to port. It is up to owners to know therelevant regulations, when involved in voyage charterparties, so that they are notpenalised because vessels are not cleared through customs timeously thus prevent-ing the commencement and running of laytime. The problem can be acute in someports of the world where customs clearance cannot be obtained until after a vesselgets into a berth so that the vessel cannot satisfy legal readiness until that time whichmay, on occasions, be many days/weeks after anchoring off the port in question.Unless the clearance by customs can be considered a mere formality, as per The‘‘Delian Spirit’’,53 laytime will not commence; therefore, the owners will be losersunless they have a compensatory clause in the charterparty for berth congestion.

Clearance by customs will be a mere formality in many ports of the world but, atothers, clearance can be complicated and in no way be considered a mere formality.Legal readiness, in relation to customs, was considered in The ‘‘Antclizo’’.54

Although the case was very much concerned with an express clause relating to‘‘having been entered at Custom House’’ (this aspect is considered fully later inparagraph 86), prior entry at the Custom House was effected for the vessel before

51. LLP Limited, 1998.52. [1967] 2 Lloyd’s Rep. 224.53. [1971] 1 Lloyd’s Rep. 64; [1971] 1 Lloyd’s Rep. 506 (C.A.).54. [1991] 2 Lloyd’s Rep. 485; [1992] 1 Lloyd’s Rep. 558 (C.A.).

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she arrived and customs permission to discharge at the inner anchorage, i.e. tobreak bulk in stream, was obtained, but actual completion of final entry was noteffective until after a notice of readiness had been tendered by the vessel soon aftershe arrived off the port. The charterers took the point that even if the special clauseregarding ‘‘entry at the Custom House’’ was satisfied at the time the notice ofreadiness was tendered (by way of the ‘‘prior entry’’), the vessel was not at that timeready to discharge her cargo, in that strict legal discharge could not have com-menced until some time later; therefore, the notice of readiness was not valid. It washeld by Mr Justice Hirst, adopting the findings of the umpire in the arbitration, thatthe vessel satisfied the ‘‘readiness at once’’ test when the notice of readiness wastendered; he applied the criteria of Mr Justice Donaldson and Lord Justice Roskillfrom the Delian Spirit and Tres Flores cases; see earlier in this paragraph, alsoparagraph 64. In the Court of Appeal the decision of Mr Justice Hirst was upheld;giving the leading judgment Lord Justice Parker set out fully passages from The‘‘Tres Flores’’ and The ‘‘Delian Spirit’’ (the latter case which he thought to be ofcritical importance to the instant case) and also the passage from Scrutton set outearlier in paragraph 64. He then went on to say:

‘‘How then does the present case stand in the light of the authorities? Clearly the chartererscould not have required the vessel to discharge until she reached the Inner Anchorage. As shehad already been given permission to discharge there she could, if the receiver had hadlighters waiting, have been required to discharge. On the arbitrator’s findings had thathappened there would have been no material delay. Either the preventive officer would havebeen present and granted inwards entry or if he was not available discharge would havecommenced. There is, it is true, a possibility that if a preventive officer had been there andbecome suspicious there would have been a delay but in The ‘Delian Spirit’ there was apossibility that at an inspection some reason might have been found not to grant freepratique. Furthermore, in the case of the ship’s tackle or hatches there is always the possibilitythat some unforeseen accident will occur which will result in a delay. Those possibilitiescannot in my judgment affect the validity of a notice of readiness. If they do, no notice ofreadiness could, as it seems to me ever be given.

In The ‘Delian Spirit’ Donaldson J. at first instance observed:

‘There is no evidence before me that the performance of the quarantine inspection whilethe vessel was in berth had any bearing on the time taken to begin and carry out theoperation of loading.’

In the present case, not only is there no evidence that the inward entry requirements had anybearing on the operations of discharging, there are the specific findings of the arbitratorwhich I have already cited.

In my judgment the case is covered by The ‘Delian Spirit’ and I therefore conclude that thenotice of readiness was valid and that the charterers’ appeal fails.’’

Regarding the passage from Scrutton which reads:

‘‘The degree of necessary readiness of the ship for her part is relative to that of the chartereror the consignees for theirs. Therefore the ship need not be absolutely ready (e.g. by havingall her gear fixed up for the work) at a time when the charterer or consignees are not in aposition to do any of their part of the work, so long as the ship can be absolutely ready as soonas they are, whenever that may be. Nor apparently need the ship have obtained free pratiqueprovided that the practice in the port and the actual medical condition of the crew are suchthat pratique can subsequently be obtained without delaying the loading or discharge. Sim-ilarly, the ship can be ready to load for the purpose of starting laytime, even if she has not yetcomplied with all the local routine formalities.’’


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his Lordship had this to say, earlier in his judgment:

‘‘Although this statement must in my view be read with caution for it may seem to suggestthat a notice will be valid if, when given, the vessel will be ready to load at some future time.In a sense this is of course true. Where a berth charterparty provides for notice to be givenwhether in berth or not it can be given when the vessel has arrived at the port notwithstandingthat it may take many hours steaming before she can reach a berth and in fact be physicallyready to load or discharge as the case may be. Equally, as pointed out in the article, if herloading or discharging tackle is not rigged a valid notice can be given notwithstanding that thevessel is not then in fact ready to discharge. Mr Hamilton rightly stresses the words ‘wheneverthat may be’ which appear in the article and which plainly indicate that when the notice isgiven the situation must be such that at the earliest time that the charterers or consignees canbe ready to perform their part in loading or discharging, the vessel will, barring accidents, beready at once to perform her part in such operations. Mr Hamilton further submitted that anotice will be premature and invalid if when given there is even a possibility that she will notbe ready at the earliest moment that the charterers or consignees can require loading ordischarge. I cannot accept this. It is in my view contrary to the authorities to which I nowturn.’’

It is submitted that the Court of Appeal’s decision is sound in the light of practicaland commercial common sense and militates for customs clearance being mereformalities in very many ports: however, it in no way watered down the vessel’sobligation that when the notice of readiness is given the situation must be such thatat the earliest time that the charterers or consignees can be ready to perform theirpart in loading/discharging, the vessel will, barring accidents, be ready at once toperform her part in the loading/discharging operations.

Other factors which are relevant to the readiness of a vessel are the variousregulations which have come into force over the years such as port state control(‘‘PSC’’), the international safety management code (‘‘ISM’’) and the internationalship and port security code (‘‘ISPS’’). Obviously, if a vessel fails any of theseregulatory features this will, in many instances, affect the readiness of the vessel toload or discharge cargo when she arrives at a port.

PSC has been in operation since 1982 in Europe and has expanded to cover mostof the world (save for the USA which has its own strict control measures). A largenumber of vessels have been detained over the years although there seems to havebeen improvements in recent times: for example the detentions in Europe in 2004had reduced to 1,187, down from 1,764 five years previously.

The ISM code came into effect in 1998 and provides that every company towhich it applies has to obtain a Document of Compliance (‘‘DOC’’) and a SafetyManagement System (‘‘SMS’’). A designated person (having access to top manage-ment in the company) has to be appointed in order to ensure that the company’sSMS is operated effectively. The combination of the ISM code and increasing PSChas resulted in fewer sub-standard ships being operated. Parties do agree specialISM clauses albeit that such may not be necessary in view of the code being verymuch an owners’ responsibility. BIMCO has produced a standard clause whichreads:

‘‘From the date of coming into force of the International Safety Management (ISM) Code inrelation to the vessel and thereafter during the currency of this Charter Party, the Ownersshall procure that both the vessel and ‘The Company’ (as defined by the ISM Code) shallcomply with the requirements of the ISM Code. Upon request the Owners shall provide a

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copy of the relevant Document of Compliance (DOC) and Safety Management Certificate(SMC) to the Charterers.

Except as otherwise provided in this Charter Party, loss damage, expense or delay causedby the failure on the part of the Owners or ‘The Company’ to comply with the ISM Codeshall be for the Owner’s account.’’

The ISPS code came into force on 1 July 2004 and vessels run the risk of beingrefused entry into ports if they do not have their security plans in order; ports facefinancial consequences if they fail to comply with the code. The implementation ofthe code by IMO was in response to the international threat of global terrorism.Compliance with the code is checked by port state control officers. There have beenresultant delays to vessels and this is likely to be a continuing fact of life withdisputes arising between owners and charterers regarding delays and expenseswhich arise from the implementation of the code. BIMCO has produced ISPSclauses for both time and voyage charterparties. The last mentioned, which hasrelevance to the commencement of laytime, and which was revised in June 2005 inthe light of earlier criticisms, states:

‘‘(a) (i) The Owners shall comply with the requirements of the International Code forthe Security of Ships and of Port facilities and the relevant amendments toChapter XI of SOLAS (ISPS Code) relating to the Vessel and ‘the Company’(as defined by the ISPS Code). If trading to or from the United States orpassing through United States waters, the Owners shall also comply with therequirements of the US Maritime Transportation Security Act 2002 (MTSA)relating to the Vessel and the ‘Owner’ (as defined by the MTSA).

(ii) Upon request the Owners shall provide the Charterers with a copy of therelevant International Ship Security Certificate (or the Interim InternationalShip Security Certificate) and the full style contact details of the CompanySecurity Officer (CSO).

(iii) Loss, damages, expense or delay (excluding consequential loss, damages,expense or delay) caused by failure on the part of the Owners or ‘the Com-pany’/‘Owner’ to comply with the requirements of the ISPS Code/MTSA orthis Clause shall be for the Owners’ account, except as otherwise provided inthis Charter Party.

(b) (i) The Charterers shall provide the Owners and the Master with their full stylecontact details and, upon request, any other information the Owners requireto comply with the ISPS Code/MTSA.

(ii) Loss, damages or expense (excluding consequential loss, damages or expense)caused by failure on the part of the Charterers to comply with this Clause shallbe for the Charterers’ account, except as otherwise provided in this CharterParty, and any delay caused by such failure shall count as laytime or time ondemurrage.

(c) Provided that the delay is not caused by the Owners’ failure to comply withtheir obligations under the ISPS Code/MTSA, the following shall apply:

(i) Notwithstanding anything to the contrary provided in this Charter Party, theVessel shall be entitled to tender Notice of Readiness even if not cleared dueto applicable security regulations or measures imposed by a port facility or anyrelevant authority under the ISPS Code/MTSA.

(ii) Any delay resulting from measures imposed by a port facility or by anyrelevant authority under the ISPS Code/MTSA shall count as laytime or timeon demurrage, unless such measures result solely from the negligence of theOwners, Master or crew or the previous trading of the Vessel, the nationalityof the crew or the identity of the Owners’ managers.. . . .’’


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The result of the above is that so long as any delay is not caused by the owners’failure to comply with their obligations under the code a vessel will be entitled totender a notice of readiness and laytime will run during any delay periods arisingfrom measures imposed by any authority under the code save where they arise solelyfrom the negligence of the owners or the crew, or the previous trading of the vessel.Although the revised clause is less favourable to owners of vessels than the originalBIMCO clause it remains not unfavourable to owners.

Parties are, of course, free to agree their own ISPS clauses and many of them areso doing by varying the BIMCO ISPS clause. For example, the VITOL ISPS clausevaries (c)(ii) above so that any delay resulting from measures imposed by an author-ity under the code shall count only as half laytime or half time on demurrage absentany failure by the owners. The LUKOIL ISPS clause (based on BIMCO withCHEVTEX amendments) has a similar effect regarding (c)(ii).

At the moment it is too early to say how ISPS clauses will work out in practice,as there has been insufficient time for disputes to work through the arbitrationprocess and to see how arbitrators deal with problems which will undoubtedly arisefrom the application of the ISPS code. It appears that some owners have been tryingto claim that if a berth is not ‘‘reachable on arrival’’ (clause 9 of the Asbatankvoy)any delay due to compliance with ISPS regulations should count in full for laytime(see ASDMEM UPDATE—May 2005). This must surely be untenable in view ofwhat has been said earlier in Chapter 3 (paragraph 53) regarding ‘‘reachable onarrival’’ and exception clauses.

Much of what has been said above regarding ISPS clauses is also relevant toChapter 5 where special clauses regarding readiness are considered.

DRAUGHT (DRAFT)/LIGHTENING

80. No mention of a vessel’s draught has yet been made in this chapter and thisfactor may have relevance to a vessel’s readiness and also to lightening. If the ownersare aware or should have been aware, of any draught restrictions regarding thenamed port in the voyage charterparty then the risk of not complying with theserestrictions may fall upon them. A vessel may be delayed in proceeding to a berthbecause of fluctuations in the depth of the water available at certain times of the day;alternatively, because of fluctuating depths of water over a longer period due to tidaleffects as governed by the phases of the Moon. In those circumstances, a vessel canbe delayed in being ready to load or discharge and this may prevent the commence-ment of laytime.

Owners may be able to claim compensation for delay because a berth is not‘‘reachable on arrival’’55 on account of a lack of water but that will usually be incircumstances where the charterparty contains an express clause regarding themaximum draught of the vessel when she arrives at a port and she arrives within thatmaximum (see The ‘‘President Brand’’56). Since special clauses usually govern the

55. See above, paragraph 45 et seq.56. [1967] 2 Lloyd’s Rep. 338; above, paragraph 45 et seq.

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subject it will be left over for more detailed consideration in Chapter 5 under specialclauses having relevance to readiness.

In general, if lightening takes place before a vessel has become an ‘‘arrived ship’’,laytime does not, strictly speaking, commence unless there is a particular clause inthe charterparty to this effect. On the other hand, if a vessel has become an ‘‘arrivedship’’ laytime will commence and will continue during the lightening operation.

A problem which may arise is where a vessel is unable to get into her dischargingberth, by reason of her draught, in a berth charterparty and requires lightening andwhere the vessel is in all other respects ready to discharge the cargo. In thosecircumstances can a notice of readiness be tendered before the vessel berths? Absentany particular clauses in the charterparty detailing the position regarding the ten-dering of a notice of readiness in those circumstances the judicial authority is on theside of owners in that where a berth charterparty states expressly that the vesselmight require lightening a notice of readiness may be given before the berth isreached and when lightening is due to take place, see The ‘‘Petros Hadjikyriakos’’,57

The ‘‘Apollon’’58 and The ‘‘Savvas’’,59 in particular the reasoning of Mr JusticeBingham (as he then was) in The ‘‘Appollon’’ at page 414:

‘‘Clearly the parties to this charterparty contemplated that two kinds of discharge might beinvolved: lightening by discharge into barges and discharge alongside a berth. I find in thelanguage of the charterparty no indication that notice of readiness could be given only whenthe vessel was ready for the second stage and not when it was ready for the beginning of thefirst stage. In any port where lightening is necessary or may be necessary to enter a berth itmust be foreseeable that there may be delay before the extent of the lightening needed isknown. Under this charter the risk of delay in obtaining a berth rests on the charterer.’’

The position will be different if the vessel arrives at the discharge port with adraught in excess of the agreed charterparty maximum draught. The charterers willbe entitled to claim damages for breach of contract by the owners so that wouldallow them to claw back any time lost to them arising from the breach of con-tract—see later paragraphs 92 and 93 regarding arbitrations concerned with thisaspect.

A question may arise, what is the position if a berth charterparty makes noexpress reference to lightening? On the assumption that the port of discharge isnamed and that there is no berth in the named port which the vessel can get intowithout lightening, it appears that a valid notice of readiness cannot be tendereduntil the vessel gets into the discharging berth and is ready to discharge the cargo,this being on the basis that the owner, in accepting the named port of discharge, alsoaccepts that the vessel will be able to get into the port with the contractual cargo inthe conditions to be expected for the relevant time of the year.

Many charterparties make express provisions for lightening in order to detail theposition between the parties regarding the tendering of a notice of readiness. Thoseprovisions may be very detailed, particularly in tanker voyage charterparties. Forexample, clause 15 of the ExxonMobil VOY 2000 states:


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‘‘LIGHTERING/DISCHARGE AT SEA/CARGO ADVISOR(a) Except when required by reason of fault attributable to Vessel, any lightening or

discharge at sea or at a place outside a port shall be at the expense of Charterer and,notwithstanding Clauses 11, 13(a) and 14(a) and (b), time used for such lightening ordischarge shall count as laytime or as time on demurrage, as provided below:

(i) If the Vessel is lightered at sea or at a place outside a port, laytime or, if Vessel ison demurrage, time on demurrage shall commence when Vessel arrives at thelightering site designated by Charterer and shall end when disconnecting of thecargo hoses from the last cargo receiving vessel has been completed.

(ii) If Vessel is fully discharged at sea or at a place outside a port, laytime or, if Vesselis on demurrage, time on demurrage shall commence upon the expiration of six (6)hours after Vessel arrives at the lightering site designated by Charterer or whenVessel is all fast alongside the first cargo receiving vessel, whichever occurs first,and when disconnection of the cargo hoses from the last cargo receiving vessel hasbeen completed.. . . ’’

Although a different charterparty was under consideration in LMLN 488—21 July1998 (Asbatankvoy) the arbitration is of interest since it concerned (inter alia) theeffect of a lightering provision in a rider clause to the charterparty which read:

‘‘27. Lightering/STSIf lightering/STS is required at any designated port, safe place, or anchorage, time, costsconsumed performing this operation (including back loading) shall count as laytime or timeon demurrage. In either event, time shall commence six hours after anchoring or wheneverthe lightering/STS craft is all secure alongside, whichever occurs first. The anchorage, STSor lighterage area shall not be considered as an additional port or berth. Any running timefrom such lightering area to berth shall not count as laytime or time on demurrage.’’

The facts were that, on 7 February, as the vessel was proceeding to the dischargeport, it was indicated to the master from the charterers that there would be light-erage in the roads that should commence at the end of the next week. On 8February it was indicated from the charterers that at the moment there were noberthing prospects available and the vessel would have to lighter to reach an appro-priate draft for berthing, which would take about 30 hours. At 18.30 on 10 Feb-ruary the vessel anchored off the discharge port and gave notice of readinessindicating that the vessel was now waiting for lightening/discharging. On 12 Feb-ruary the owners’ managers were informed by the charterers that the receivers hadadvised that due to port traffic about three vessels were engaged for lightering sothat the lightering for the subject vessel was not expected before 15 February. In theevent, after further updates, the vessel berthed on 4 March. Hoses were discon-nected at 17.30 on 6 March.

The owners submitted that laytime recommenced at the discharge port at 00.30on 11 February. The charterers contended that the notice of readiness tendered at18.30 on 10 February was invalid, due to it being tendered outside the timespecified for the tendering of notice of readiness by clause 16 of the Rider. They saidthat the only laytime, which ran at the discharge port, was during the lighteringperiod on 22–24 February and upon the vessel’s arrival at the permanent berth on4 March. They further contended that under clause 27 of the Rider dealing withlightering, it was implicit that laytime only commenced 6 hours after tendering avalid notice of readiness at the customary anchorage, or when a lighter was secure

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alongside, whichever first occurred. No notice of readiness having been validlytendered, laytime could only commence once a lighter was alongside on 22 Feb-ruary. Alternatively, if clause 27 of the Rider did not depend on notice of readinessbeing tendered in accordance with clause 16 of the Rider they argued that they wereentitled to rely upon the last sentence of clause 6 of the Asbatankvoy form as theberth referred to in that sentence could only equate to the lighters being alongsideready to receive cargo from the vessel. The charterers said that they were not inbreach of the ‘‘reachable on arrival’’ warranty because they had provided a placereachable on arrival where lightening was to take place and did take place and whichwas part of the discharge operation.

It was held, that the charterers’ arguments would be rejected. Clause 27 of theRider had no requirement for the giving of notice of readiness before time com-menced when lightering was required, and clearly provided for a separate regime tothat in clause 16. It was not implicit that under that clause laytime only commenced6 hours after tendering a valid notice of readiness.

Nor did the laytime, which commenced in accordance with clause 27 of the Rideronly run until lightening was concluded. Once started, laytime continued (althoughby the conclusion of lightening the vessel was on demurrage). In any event, on thebasis of The ‘‘Petr Schmidt’’ and the reasoning of Lord Justice Mustill in The ‘‘Mexico1’’,60 by the termination of lightening the charterers were under no doubt that thevessel had arrived and was ready to discharge so that the notice of readiness givenoutside the prescribed time on 10 February would, either by the end of lighteninghave taken effect, or there was an estoppel by convention based on the conduct ofthe parties that precluded the charterers from taking any point regarding the givingof an invalid notice of readiness.

Even if the owners had not been entitled to rely on clause 27 of the Rider, becausean invalid notice of readiness had been given the tribunal would still have held,following The ‘‘Petr Schmidt’’, that the notice of readiness was not a nullity, butsimply non-contractual and therefore, as said by Justice Longmore in The ‘‘PetrSchmidt’’ at page 287: ‘‘There is in my view no good reason why the notice shouldnot be effective as at the time when the contract fixes for it to be tendered’’. (Thiswould have been 00.01 on 11 February so time would have commenced at 06.01 on11 February.) The present case, like The ‘‘Petr Schmidt’’, was not a case where (asin The ‘‘Mexico 1’’) a notice was inaccurate because the vessel was not in fact ready.Here the charterers were undoubtedly perfectly well aware from the master’s mes-sages to all interested parties on 7 February, as the vessel was approaching thedischarge port, that her ETA was 18.00 that day and from the repetition of thenotice of readiness message to other interested parties around 18.30 on 10 Februarythat the vessel had now anchored, and that the vessel was indeed arrived at thedischarge port. As early as 12 February the receivers were advising the prospects oflightering to the owners, and the tribunal had no doubt that at all material times,including 00.01 on 11 February, the charterers were perfectly well aware of thevessel’s arrival. Nor could the tribunal accept the charterers’ argument that, in thealternative if laytime had commenced in accordance with clause 27 of the Rider

60. [1990] 1 Lloyd’s Rep. 507.

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then, in accordance with the last sentence of clause 6, as there was delay in the vesselgetting into berth after giving notice of readiness for a reason over which thecharterer had no control, such delay should not count as used laytime. The anchor-age position where the lightering took place did not constitute a berth within themeaning of clause 9 of the charterparty so that the charterers were in breach of theopening sentence of that clause whereby they were obligated to designate andprocure a discharge place or alongside vessels or lighters ‘‘reachable on herarrival’’.

The vessel was at the place where lightering ultimately took place for some twodays between 22 and 24 February, but on the true construction of the charterpartythe discharge place intended by clause 9 was clearly not an intermediate lighteningpoint when the vessel subsequently performed her discharge elsewhere at berth.That was underlined by clause 27 of the Rider. The charterparty drew a distinctionbetween a lighterage area simply for the purpose of lightening the vessel, and a placewhere a substantial discharge took place, whether that be by lighterage or in berth.In those circumstances, the charterers were precluded by The ‘‘Laura Prima’’61 fromrelying upon the protection of the last sentence of clause 6 of the charterparty. Theowners’ laytime calculation at the discharge port was correct.

In a later arbitration, LMLN 647—1 September 2004 (also referred to in Chapter1 regarding geographical arrival), the parties had agreed that the discharge of cargowould be at Qingdao, without lightening. In the event it was agreed that thedischarge port would be changed to Yantai where it would be necessary for thevessel to lighten. It was further agreed that the lightening would be carried out insafe conditions under the master’s supervision and approval and that if the masterconsidered it was unsafe to commence or to continue discharge he would remove hisvessel from alongside and laytime was to count. The vessel had to wait about fivedays before she was able to start lightening because of strong winds and rough seas.Once she had been able to berth at the floating terminal, where lightening was totake place, lightening had to be interrupted for almost a day, again because of strongwinds and rough weather. The charterers said that time did not run during theseperiods. It was held that the periods in question fell within the terms of theaddendum and such weather as fell within the terms of the addendum was to countfor laytime purposes.

TANKERS—BALLASTING/DEBALLASTING

81. Virtually all tankers arrive off their loading port containing ballast water andthis ballast may have to be pumped out, or partly so, before loading can commence,although with the modern tendency of tankers having segregated ballast tanks theproblem is correspondingly reduced. The ballast is a necessity for safety purposes sothat it should not prevent the master from tendering a good notice of readiness. Infact, it appears to be the accepted practice in the tanker trade that a good notice ofreadiness can be tendered even though some of the cargo spaces contain ballast. It

61. [1982] 1 Lloyd’s Rep. 1.

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also appears to be tanker practice that the time taken in deballasting, while thevessel is alongside a loading terminal, does not count for laytime purposes if itdelays/interrupts the loading operation. This is a sensible and practical approachalbeit that the common law, strictly applied, may militate for a different result in that(i) a vessel cannot be ready to load cargo with ballast water in cargo spaces and (ii)once commenced laytime runs continuously unless express exceptions come intoeffect. In the event, most tanker charterparties contain special clauses regardingballast and some of these are considered later.

One might analogise, to a certain extent, between the removal of ballast water andpreliminaries as explained by Lord Denning in The ‘‘Tres Flores’’,62 although thereare obvious weaknesses in such an analogy. One day there may be a judicial rulingregarding the effect on the commencement of laytime by ballast in a tanker’s cargospaces (absent a special clause in the charterparty) but no doubt, in the meantime,owners and charterers will continue their sensible and practical practice of ballastwater in cargo spaces not interfering with the giving of a notice of readiness whena tanker arrives at or off a port. This practice appears to have been adopted by manymaritime arbitrators in London although there is little in respect of reported arbitra-tions regarding the subject. There is one reported arbitration, LMLN 337—3October 1992 (also cited earlier in paragraph 65) where the tribunal took whatappeared to be a sensible and commercially correct approach and held (interalia):

‘‘It was common for tankers to arrive at loadports with cargo tanks filled with ballast and todischarge that ballast during loading. In such a case, or in circumstances where a Masterretained ballast in some tanks to enable a vessel to sail between loading ports with a partcargo, it could not therefore be said that the vessel was not ready because all the tanks werenot available for loading at the first port.’’

There is also the arbitration cited earlier in paragraph 31 (LMLN 299—20 April1991) where the tribunal held (inter alia) that a valid notice of readiness could betendered where one of the vessel’s holds (she was an OBO) was ballasted.

There are other reported arbitrations where the tribunals do not appear to havetaken such a commercially sensible approach but this may have been because of theconstraints of the wording agreed between the parties and that the deballasting/ballasting caused delay in respect of the cargo operation. An example of the formeris the arbitration reported in LMLN 72—5 August 1982.

Owners chartered their vessel on an STB VOY form for the carriage of a cargo ofcrude oil from Das Island to Mohammedia. The ship had utilised all the laytimeavailable to her before arrival at the discharge port. Notice of readiness was acceptedat Mohammedia at 09.30 on 10 March 1981; the ship was in berth at 12.45; hoseswere connected at 14.40, and pumping commenced at 15.25.

At 08.00 on 11 March 1981 the ship started to ballast, and ballasting continueduntil 05.00 on 12 March. Meanwhile, discharge continued through one 12in. hoseuntil 18.25 on 12 March. Hoses were disconnected at 18.40.

The owners submitted that time on demurrage continued until discharge of cargowas completed and hoses were disconnected. The charterers contended that time

62. [1973] 2 Lloyd’s Rep. 247; above, paragraph 64.

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on demurrage stopped at 08.00 on 11 March, when the ship started to ballast,although this was some 36 hours before discharge of cargo was completed. Theyrelied on lines 173–175 of clause 11 of the Charterparty, which provided:

‘‘Laytime, or if the vessel is on demurrage, time on demurrage shall continue until the hoseshave been disconnected or until ballasting begins at the discharge port(s), whichever occursfirst.’’

The owners argued that this could not be the intention of the clause. The ship mighthave started to ballast for safety reasons. Mohammedia was an open roadstead andthe master was being cautious. Furthermore, the ship might have been fresheningup her permanent ballast and not ballasting for the purpose of increasing her draftprior to sailing. The ship might have had two ballasting systems, one constitutingpermanent ballast and the other being ballast for the unladen voyage.

It was held that there was no evidence of the existence of permanent water ballastor of ballast water being freshened up during operations commencing at 08.00 on11 March. Clause 11 was puzzling. It may be that in days of old the clause had somemeaning if the shore connection were used for ballasting after completion of dis-charge, but this did not take place at Mohammedia. There was no doubt that inroads exposed to adverse weather such as is likely to occur in early March, themaster felt it safer to increase his draft to avoid having a light ship at the mercy ofsudden gusts. Clause 11 was not a sensible clause, but the parties had accepted it.Accordingly, demurrage time stopped when ballasting began, even though the cargohad only partially been discharged. Judgment for the charterers.

The arbitrators took a very literal interpretation to clause 11 of the charterpartyand it seems that no consideration was given to the fact that a vessel might starttaking on ballast before all her cargo has been discharged. It is mentioned, for thesake of completeness, that although it did not appear to have been put forward inthis particular arbitration there would seem to be no valid reason why the ownerscould not have put forward a claim for detention during the period in question sincethe vessel was being detained for the charterers’ purpose which was the discharge ofcargo.

While, strictly speaking, particular clauses relating to deballasting should beconsidered in Chapter 5 it makes sense to consider them now when dealing withtanker deballasting. Before citing the more common type of deballasting clauses,mention is made of a reported arbitration LMLN 304—29 June 1991 which,although concerned with demurrage rather than the commencement of laytime, isof interest because of the tribunal’s approach to the application of a wide exemptionclause to a deballasting period. Typewritten clause 46 read:

‘‘Neither owner nor charterers shall be responsible if, in the event of strikes of workmen, lock-out, riots or floods or any accident or cause beyond the control of either party, loading orunloading of the vessel is delayed, prevented or interrupted. In such circumstances, laytimewill not commence, or if commenced, will not continue until the cause of the interruption ordelay is removed.’’

One issue in the arbitration was whether the owners’ demurrage claim should bereduced in respect of a period of 3 hours’ deballasting at the loading port. Thecharterers sought to rely on clause 46, emphasising that the ship was bound to arrive

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in ballast, so that the need to deballast her was a cause beyond the control of eitherparty. They said it was a self-evident fact that loading was delayed whilst deballast-ing was carried out. Alternatively, they suggested that they should not be liable forthe time spent deballasting because during it the ship was not available to them forloading. It was also the case that if the ship had gone straight to her berth, she couldnot have given a valid notice of readiness until she had completed deballasting.

It was held that the charterers were entitled to rely upon clause 46. The tribunalwas prepared to infer that loading could not take place until deballasting had beencompleted, and was thus delayed by performance of that operation. The owners’claim for demurrage was to be reduced accordingly.

While the above decision appears open to criticism regarding the application ofclause 46 (no express mention of time on demurrage) it is assumed that the tribunalwas influenced by the deballasting affecting the loading operation so that the ownersshould not get the benefit of time counting for demurrage purposes when theloading operation could not take place. The arbitrators would obviously have beenon much stronger ground, in the application of the type-added clause 46 if thecircumstances had been either that laytime was about to commence or that laytimewas running prior to the vessel going on demurrage.

Turning now to tailor made clauses in respect of the commencement of laytimeand deballasting the Vegoilvoy tanker voyage charterparty contains a notice ofreadiness and commencement of laytime clause which reads:

‘‘When the vessel has arrived at the port of loading or discharge and is ready to load ordischarge, a notice of readiness shall be tendered. . . . The vessel shall be deemed readywithin the meaning of this clause . . . whether or not she has ballast water or slops in hertanks. Laytime shall commence . . . .’’

The clause makes it abundantly clear that the vessel is ready in respect of thecommencement of laytime, even though there is ballast water in the cargo tanks.Further, this particular charterparty does not suspend the running of laytime fornormal deballasting operations even if they interfere with the loading of cargo sothat the charterparty is advantageous for owners of tankers.

The majority of tanker voyage charterparties differ from the Vegoilvoy in that theydo not contain a ‘‘deemed ready’’ provision regarding ballast water in cargo tanksand, further, they usually include an express exception in respect of time lost inhandling ballast. For example, Tankervoy 87, while permitting a notice of readinessto be tendered at a customary anchorage or waiting place (when many tankers willinvariably have ballast in cargo spaces if at the loading port) goes on to say:

‘‘Time lost owing to any of the following causes shall not count as laytime . . . in handlingballast unless carried out concurrently with cargo operations such that no time is lostthereby . . . ’’

Beepeevoy 4 and Shellvoy 6 charterparties take a similar approach but the Asba-tankvoy charterparty (applicable to deballasting and not ballasting), while permit-ting a notice of readiness to be tendered at a customary anchorage, states:

‘‘Time consumed by the vessel in . . . discharging ballast water or slops, will, not count asused laytime.’’

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The result is that under the Asbatankvoy charterparty causation regarding the lossof time has no relevance since, according to the wording of the clause, laytime willnot run during deballasting operations even if such are not causative of any loss oftime to the charterers in the loading operations.

To sum up in respect of ballasting/deballasting there appears to be no judicialauthority which has considered the matter in detail under the common law. Absenta special clause in the charterparty which deals with the matter expressly (such ascited above and to be recommended in order to remove doubt) different tribunalshave taken different approaches when applying the common law. It can perhaps besaid that, under the common law in respect of readiness, some arbitrators willconsider that a vessel is ready to load with ballast in some of the vessel’s tanks(necessary for safety purposes) so that a valid notice of readiness can be tenderedand this, in any event, is what the majority of organisations in the tanker tradeappear to accept. A practical and sensible approach is that if deballasting is takingplace concurrently with the cargo operations commencement of laytime should notbe affected. But if it does interfere with cargo operations then this will affect therunning of laytime save perhaps for circumstances where deballasting/ballasting arecarried out as a necessity in respect of the vessel.

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Para. 81 READINESS

CHAPTER FIVE

SPECIAL CLAUSES/BREACHES OFCONTRACT DAMAGES RELEVANT TO

READINESS (INCLUDING DRAUGHT ANDBILLS OF LADING AND FAULT OF

OWNERS)

SPECIAL CLAUSES

82. It is usual for charterparties to contain special clauses regarding readiness—they are frequently rolled up with clauses dealing with notice of readiness provi-sions. For such a clause, in a short and simple form, see earlier The ‘‘Tres Flores’’1;for a more comprehensive clause, see The ‘‘Dubhe’’2 arbitration, both of which wereconcerned with dry bulk cargoes. These clauses, although eminently sensible tohave in a charterparty in order to clearly set out the position between the parties,often do no more than add some flesh to the underlying common law bare bones(for example, the owners failed under the common law in The ‘‘Tres Flores’’1 evenwithout the special clause and the owners also would have failed under the commonlaw in The ‘‘Dubhe’’2 arbitration regarding the time before the vessel was first passedby the NCB and the USDA). In areas other than dry bulk cargoes, cleaning clausesmay be more comprehensive although it is questionable whether they add more tothe requirement of readiness which would in any event be applied to a particularcargo under the common law.

In the bulk oil trade a good example of a cleaning clause is that in the Beepeevoy4 charterparty which reads:

‘‘Without prejudice to Clause 1, Owners shall use due diligence to ensure that the Vesselpresents for loading with her tanks, pumps and pipelines properly cleaned to the satisfactionof any inspector appointed by Charterers and ready for loading the cargo described inSections C and D of PART 1. Any time used in cleaning tanks, pumps and pipelines toCharterers’ inspector’s satisfaction shall not count as laytime or, if the Vessel is on demur-rage, as demurrage and shall, together with any costs incurred in the foregoing operations, befor Owners’ account.’’

For completeness clause 1 of the Beepeevoy 4 states:

‘‘Owners shall, before, at the commencement of, and throughout the voyage carried outhereunder, exercise due diligence to make and maintain the Vessel, her tanks, pumps, valvesand pipelines tight, staunch, strong, in good order and condition, in every way fit for thevoyage and fit to carry the cargo stated in Sections C and D of PART 1, with the Vessel’smachinery, boilers and hull in a fully efficient state, and with a complement of Master,

1. [1973] 2 Lloyd’s Rep. 247; paragraph 64, above.2. 1981; paragraph 68, above.

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officers and crew who are fully qualified as evidenced by internationally recognised certifica-tion (and endorsements where applicable) and are experienced and competent to serve in thecapacity for which they are hired.’’

The charterers, by linking the above clauses, ensure that the seaworthiness clause isin no way prejudiced by the cleaning clause.

There are many other tanker voyage charterparties which contain identical orvery similar clauses.

What has been stated above at paragraph 54 et seq. and paragraph 67 et seq.regarding cleaning to ‘‘charterers’ satisfaction’’ or ‘‘charterers’ inspector’s satisfac-tion’’ has relevance in that there may be a safeguard to owners (by way of an impliedterm of reasonable co-operation) in circumstances where the charterers’ inspectormay be over-fastidious: however, it may be much better and fairer if the partiesagree a cleaning clause such as seen in a standard charterparty for the carriage ofchemicals (Bimchemvoy), and some ad hoc charterparties, which reads:‘‘Owners shall clean Vessel’s tanks pipes and pumps at their expense and in their time andunless the Master certifies that Vessel’s coils have been tested and found tight, shall testtightness of coils at their expense and in their time to the satisfaction of Charterers’inspector.

If, in Owners’ opinion, acceptance of the tanks and/or coils is unreasonably withheld, thenan independent inspector shall be appointed whose decision shall be final. If the independentinspector considers that the tanks are insufficiently clean to receive the cargo, then they shallbe further cleaned at Owners’ expense and time to the satisfaction of the independentinspector whose fees and expenses shall be paid by the Owners. If the independent inspectorconsiders that the tanks are sufficiently clean to receive the cargo his fees and expenses plusany loss of time and expenses incurred by Owners shall be borne by Charterers.’’

Special clauses regarding a vessel’s equipment do not usually impose a morestringent position than that under the common law although, here again, they canbe very useful for clarification as to what equipment the owners have to provide and,further, how the equipment is to be operated. In the tanker trade, we now see specialclauses regarding crude oil washing and inert gas systems and while some of thesemay appear stringent at first sight they, in general, reflect what the common lawwould probably say regarding equipment which, under the contractual terms(express or implied), are required for the loading/discharging of cargo. Examples ofthese clauses are seen in clauses 12 and 19 Part B of the Beepeevoy 4 whichreads:

‘‘12.1 Owners undertake that the Vessel is equipped with a fully functional IGS which isfully operational or, if not in use, capable of being fully operational on the date hereof, thatthey shall so maintain the IGS for the duration of this Charter, and that the Master, officersand crew are properly qualified (as evidenced by appropriate certification) and experiencedin the operation of the IGS. Owners further undertake that the Vessel shall arrive at theloading port with her cargo tanks fully inerted and that such tanks shall remain so inertedthroughout the voyage and the subsequent discharging of the cargo. Any time lost owing todeficient or improper operation of the IGS shall not count as laytime or, if the Vessel is ondemurrage, as demurrage.

12.2 The Vessel’s IGS shall fully comply with Regulation 62, Chapter II–2 of the SOLASConvention 1974 as modified by its Protocol of 1978 and any subsequent amendments andOwners undertake that the IGS shall be operated by the Master, officers and crew inaccordance with the operational procedures as set out in the IMO publication entitled ‘InertGas Systems 1990’ (IMO 860E) as same may, from time to time, be amended.

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Para. 82 CLAUSES/BREACHES RE READINESS

12.3 If Charterers so require, Owners shall arrange for the Vessel’s tanks to be de-pres-surised to facilitate gauging and sampling or to be de-inerted or gas freed to facilitateinspection, in each case in accordance with the operational procedures referred to in Clause12.2. Any time taken to de-pressurise, gauge, sample and re-pressurise, or to de-inert or gasfree, inspect and re-inert thereafter shall count as laytime or, if the Vessel is on demurrage,as demurrage.

19.8 Owners undertake that the Vessel is equipped with a fully functional Crude OilWashing System and that the officers and crew are properly qualified (as evidenced byappropriate certification) and experienced in the operation of such system. Whilst Charterersmay instruct Owners to carry out additional crude oil washing in all tanks which containedthe cargo the Master shall, in any event, arrange for crude oil washing of the cargo tanks atthe discharge port to the MARPOL minimum standard, as set out in the Vessel’s Crude OilWashing Operation and Equipment Manual.

When the Vessel carries out crude oil washing to the MARPOL minimum standard, in theabsence of instructions from Charterers to carry out additional crude oil washing, there shallbe no increase in the time allowed for discharge of the cargo. If Charterers instruct Ownersto carry out additional crude oil washing then the period referred to in Clause 19.3.2, 19.4or 19.5 as the case may be, shall be increased by twenty-five per cent (25%).

Owners shall carry out crude oil washing concurrently with discharge of the cargo and theMaster shall provide a crude oil washing log identifying each tank washed, and statingwhether such tank has been washed to the MARPOL minimum standard or has been thesubject of additional crude oil washing.’’

In the area of documentation/legal readiness, express clauses (as compared to thecommon law) may make the position difficult for shipowners, particularly thoseclauses which relate to pratique and customs entry/clearance and other documenta-tion (considered in the following paragraphs). It is emphasised that, if parties haveagreed special words to cover certain circumstances then they are bound by such sothat, unless relief can be found under ambiguity or the de minimis rule or estoppelor some other principle, courts, and tribunals, will hold the parties to what theyhave agreed. The clauses relating to cleanliness and documentation are invariablyconditions precedent to the tendering of a notice of readiness so that the notice willnot be valid unless the clauses have been complied with. For example, in thearbitration reported in LMLN 328—30 May 1992 (also cited in paragraphs 57, 82and 118 regarding other matters) the facts were that on 15 May the vessel was sub-chartered by disponent owners on the Sugar Charterparty, clause 17 of whichprovided:‘‘Ship’s holds to be odourless and free from insects, properly swept, cleaned and dried to thesatisfaction of shippers’ or charterers’ agents before loading. Ship’s holds to be washed downonly if cargo injurious to sugar carried previously, and if done, holds to be completely drybefore tendering notice of readiness.’’

The vessel tendered notice of readiness under the voyage charterparty at 08.00 on26 May. The vessel had not, as at that date, been delivered by the registered ownerto the disponent owners. Delivery under the head charter did not take place until 28May, on which date SGS carried out a survey in respect of the head charter. Thecertificate of delivery recorded that the hatches required more cleaning and removalof peeled paints. The holds were eventually passed clean at 18.00 on 3 June.

The disponent owners brought arbitration proceedings against the voyage chart-erers, claiming demurrage. The charterers contended that the notice of readinesswas not valid because, when it was tendered, the vessel had not been in a condition

Para. 82SPECIAL CLAUSES

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to load cargo. The disponent owners accepted that the period between the timewhen the holds were failed on 31 May and eventually passed on 3 June should notcount. However, they argued that the notice of readiness was valid because thevessel was available and ‘‘ready’’ in the legal sense. They argued that clause 17 wasnot a condition precedent that had to be fulfilled before a valid notice of readinesscould be tendered. It only imposed a requirement that had to be fulfilled prior toloading and it was not worded so that it could be construed as a condition prece-dent.

It was held, that although there was no specific reference in the survey reports toprevious cargo residues, it was to be assumed that they would have been ‘‘injuriousto sugar’’ since otherwise the presence of the cargo residues would have been amatter of indifference to the surveyors. If that assumption was correct, the obliga-tion that the holds should be washed down and dry was one that applied before thenotice of readiness could be tendered. The obvious intention of the parties, as wellas the need to give a business efficacy to the clause would require one to imply aterm that the washing down had to be carried out effectively. That had not beendone until 3 June.

Even if it was assumed that only the first part of the clause was applicable, theowners’ argument would be rejected. Although clause 17 was not flagged ‘‘conditionprecedent’’, it was difficult to see how the clause could be construed as anythingelse. The entitlement of a charterer to have presented to him holds that were insufficiently good condition to avoid a serious danger of contamination or damage tothe cargo was an extremely important entitlement. If a charterer faced problemsunder his sale contracts with purchasers of the cargo because the cargo had becomedamaged or contaminated because of the condition of the holds, possible indemnityrights against the owners, even if they turned out to be enforceable, would notprovide adequate protection to a charterer, whose commercial reputation mightsuffer if the condition of the cargo led to disputes as to quality.

Given the fundamental importance of clause 17 for a charterer, it must have beenthe intention of the parties that it should be fulfilled before the vessel could beconsidered ready to load. In other words, it did constitute a condition precedent.The notice of readiness was accordingly invalid when tendered, and laytime did notcommence until 18.00 on 3 June. The disponent owners’ claim would bedismissed.

The condition precedent approach will, in general, only be applicable if thecharterparty clause in question, regarding readiness, is sufficiently clear. In LMLN446—7 December 1996 the vessel was chartered on the Gencon form for thecarriage of a part cargo of 10,000 metric tons of ‘‘12M DEBAR IN BUNDLES OFABOUT 2.5 MTS’’. The owners claimed demurrage. The charterers contendedthat the delay at the loading port which gave rise to the demurrage claim was causedby the owners’ breaches of contract. The charterers argued that the difficulties atthe loading port arose due (1) to the fact that the master had not prepared anadequate stowage plan, and (2) to various characteristics of the ship which were saidto constitute breaches of charter by the owners.

So far as the stowage plan point was concerned, clause 24 of the charter providedfor notice of readiness to be tendered, and concluded:

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‘‘Owners upon fixing to present intended stowage plan 24 hours prior arrival latest priortendering notice of readiness, Owners/Master to tender final stowage plan.’’

It was held that the charterers’ submission that the presentation of a properstowage plan was a condition precedent to the ship’s entitlement to give a validnotice of readiness would be rejected. That was not what clause 24 said, eitherexpressly or by implication. The obligations upon the owners set out by that clausewere quite distinct, and breach of them might have consequences, but one of thosewas not the invalidation of any notice of readiness given. See also later paragraph 87regarding a condition precedent, in particular The Shackleford and LMLN 266.

83. The obtaining of free pratique in the context of special clauses and the com-mencement of laytime have been the subject of several arbitrations over the years. InThe ‘‘Tielrode’’3 arbitration, the argument concerned the exact date of the com-mencement of laytime at Riga, the port of discharge. The vessel arrived in RigaRoads on 29 February at 06.00 but, because of congestion, could only berth on 13March. Free pratique was granted after berthing on the same day, at 10.30. Therelevant charterparty clause stipulated: ‘‘Notice of readiness to be delivered by thevessel during official working hours after receiving free pratique, whether in berth ornot, whether in port or not, whether entered Customs or not . . . ’’. Notice ofreadiness was given by the vessel on 29 February at 10.00 while she lay in the roadsbut, at the same time, the ship had not received free pratique.

The arbitrator decided in favour of the charterers in that the notice of readinesswas not good until after the vessel had received free pratique because of the expresswords in the contract which had been agreed between the parties. He said that it wasunfortunate that at Riga pratique could not be obtained by radio before arrival, aswas the practice at many other ports but, since pratique could not be given untilafter the ship had berthed, that was the end of the matter. Although the obtainingof pratique was a mere formality it was a specific requirement of the contract and,although he sympathised with the owners for the unfortunate turn of events, theexpress term won the day. Free pratique was included in the contract and its termsmust be respected and given their intended meaning. The arbitrator did not thinkthat the terms ‘‘whether in berth or not’’, ‘‘whether in port or not’’ superseded theprimary pratique condition.

In the later Pegasus4 arbitration, a different arbitrator came to the same conclusionregarding a charterparty which contained (inter alia) the words ‘‘time to count 6hours from . . . and in free pratique whether in berth or not . . . ’’. The vessel arrivedat the Tyne Roads on 21 October at 21.18 and the master immediately gave a noticeof readiness. This notice was refused by the charterers on account of the vessel nothaving obtained free pratique; consequently, the vessel moved to a position wherepratique could be obtained and, as soon as it was effected, the charterers acceptedthe notice of readiness.

3. 1973.4. 1975.


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The owners relied upon The ‘‘Delian Spirit’’5 (no express clause in the charter-party relating to pratique and the court decided it was a mere formality to obtainsuch) in support of their contention that the notice of readiness given on 21 Octoberwas a valid notice. However, the arbitrator took the same approach as the previousarbitrator and decided the case against the owners. He stated that, since the partieshad agreed an express clause in respect of the matter he had no alternative but todecide the commencement of the laytime aspect in favour of the charterers, theparties having specially agreed that time was not to count until after the vessel wasin free pratique so that that amounted to a condition precedent to the commence-ment of laytime.

At least, in this case, the owners were able to mitigate the position to a certainextent because of the early refusal of the charterers to accept the notice of readinessso that the master moved his vessel into a position whereby he could obtain freepratique and then tendered a valid notice of readiness.

The two arbitrations mentioned above were decisions made many years ago andit was thought that there would be no more arbitrations concerning the obtaining offree pratique/commencement of laytime when the charterparty contained anexpress clause amounting to a condition precedent. However, in a 1986 arbitra-tion6, the facts were virtually identical to the two arbitrations cited above in thatthere was an express clause stating that time was not to count until after (inter alia)the vessel was in free pratique and, factually, the obtaining of free pratique was aformality since it was granted immediately. Again, the owners relied on The ‘‘DelianSpirit’’5 in support of their argument. The arbitrator decided that it was clearlydistinguishable from The ‘‘Delian Spirit’’5 since there was no express requirement inthat case that the vessel be in free pratique at all. In the present case, there wereclear, unambiguous, express terms that the vessel had to be in free pratique beforenotice of readiness could be given. That requirement was a condition precedent sothat no valid notice of readiness could be given until it had been complied with.

There may be charterparty clauses which are not as clear as those referred toabove and where the obtaining of free pratique is mentioned expressly in a clausewhich also includes other factors and options and the interpretation of such leads todifficulties and arbitrations. In LMLN 411—5 August 1995 the vessel was char-tered to carry a cargo of iron ore pellets in bulk from one safe berth/port at a namedChilean port to one safe berth/port at another named port. Clause 52 of the charterprovided:

‘‘Laytime for loading shall commence 12 hours after notice of readiness is tendered, whethervessel is in berth or not, or when loading commences whichever is sooner. Notice of readinessto load shall be tendered with clean holds, hatches open and in all respects ready to load, atany time day or night Sundays, Holidays included after the vessel has duly arrived at the portof loading subject to free pratique being granted prior to or on arrival in berth of loadingprovided however that if free pratique is not granted prior to or on arrival in berth of loadingdue to causes attributable to the vessel then such notice of readiness shall be tendered if andwhen vessel is in free pratique with clean holds, hatches open and in all respects ready toload.’’

5. [1971] 1 Lloyd’s Rep. 506; see above, paragraph 78 et seq.6. LMLN 179—11 September 1986.

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The vessel arrived at the loading port on 16 July at 06.00 hours. Notice ofreadiness was tendered simultaneously. She took her pilot at 06.47 hours and shereached the loading berth at 07.20 hours, mooring operations commenced at 07.25hours and were completed at 09.08 hours. The authorities boarded at 09.00 hoursand free pratique was granted at 09.45 hours. The vessel commenced loading at10.20 hours and completed loading on 17 July at 14.10 hours.

The owners submitted that time started to count upon commencement of loadingat 10.20 hours on 17 July. The charterers contended that time started to count 12hours after free pratique had been granted, i.e. from 21.45 hours on 17 July. Theyargued that the Master’s notice of readiness had no effect and should have beenre-tendered when free pratique was granted at 09.45 hours on 16 July.

It was held that it was clear that the intention of clause 52 was that if loadingcommenced before the notice time elapsed then laytime commenced at the momentthat loading commenced, and any conditions attaching to the notice of readinessregarding pratique or other matters became irrelevant. It was an alternative option,available to the owners, of commencing laytime at the very moment that loadingcommenced, irrespective if details relating to the notice of readiness such as obtain-ing free pratique. In fact, the clause had the effect of a waiver regarding notice ofreadiness details once loading had commenced. That was understandable sinceonce loading had commenced the notice of readiness usually became irrelevantregarding the commencement of laytime although it might still be relevant if iteventually transpired that the vessel was not in fact ready to load all hatches at thetime that loading commenced and the charterers claimed damages from the ownersfor breach of contract in not tendering a vessel which was in fact ready to load cargoin all hatches at the time that loading commenced. But the charterers would in anyevent have a sound claim against the owners for damages under the common lawirrespective of the status of the notice of readiness, if indeed the facts were that thevessel was not ready to load the cargo in all hatches and that that was the causativeof loss of time to the charterers.

Since loading commenced at 10.20 hours on 16 July laytime commenced at thattime. Accordingly, the charterers’ argument would be rejected.

However, in LMLN 417—28 October 1995 the charterers succeeded in anarbitration before a sole arbitrator where the charterparty clauses were morecomplicated.

The vessel was chartered on the Stemmor form as amended. She arrived at theloading port at 22.47 hours on 26 May, tendering notice of readiness immediately.The notice was accepted by the shippers at 08.00 hours on 27 May. Loading startedat 14.30 hours on 31 May, free pratique not having been obtained until 13.00 hourson 29 May.

The charterers referred to clause 6 of the charterparty and contended that laytimecould only start at 08.00 hours on 30 May, being 08.00 hours on the day followingthe obtaining of free pratique, since free pratique had been obtainable at theanchorage. The owners said that laytime started counting at 08.00 hours on 28May.

The charterparty provided (with typewritten inserts shown in bold face type):Clause 2 (line 27)


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‘‘After arrival written or by cable notice is to be given . . . of the vessel being in all respectsready . . . Prior to tendering Notice the vessel’s holds are to be washed, swept and cleaned anddry and free of loose rust scale . . . If after berthing any cleaning or drying . . . is tobe carried out, then same to be at owner’s expense and time. If upon vessel’s holdinspection she is found unsuitable and consequently loses her turn for berthing, thenlaytime is not to count until such time as vessel is actually berthed. However, timelost waiting for berth prior to first inspection to be counted as laytime if vessel is keptwaiting for a berth due to port congestion . . . ’’

Clause 6 (line 53)

‘‘Time for loading to count from 8am on the next working day after the ship is reported andready, and in free pratique provided free pratique obtainable at anchorage and writtennotice tendered (whether in berth or not) whether in port or not, whether customscleared or not, whether in free pratique or not . . . steamer to be reported during officialhours only.’’

It was held that at first sight, it appeared that there was a conflict between thewords inserted at the beginning of clause 6 (‘‘provided free pratique obtainable atanchorage’’) and those inserted later on which included the phrase ‘‘whether in freepratique or not’’. If there had been such a conflict, the tribunal would have con-cluded that the first insertion should prevail because it was focused on a particularset of circumstances (being a proviso that pratique was obtainable at the anchorage)whereas the latter words were general.

However, on further reflection, the tribunal’s view was that the charterers’approach to the interpretation of the clause was correct, and that the first insertionconcerned the condition the ship had to be in, in order for time to start counting onthe next working day, whereas the later insertion related to the condition she mightbe in when giving a notice of readiness. Either way, the construction of the clausefavoured the charterers. Free pratique was obtainable at the anchorage and it wasobtainable upon the ship’s arrival if appropriate arrangements were made, so thattime could not count until 8 a.m. on the next working day after the ship was actuallyin free pratique. If the tribunal’s preliminary view of the clause had been correct(which view had been rejected), a valid notice could not be given until the ship wasactually in the free pratique.

The owners had also said that more weight should be given to the secondinsertion because the words ‘‘in free pratique’’ in line 52 appeared in print. Theanswer to that was that the insertion following the words ‘‘and in free pratique’’ wastypewritten and could not be read separately from the preceding printed words, sono greater weight was to be given to the second insertion on that ground.

It remained to deal with the question of the effect, if any, of the notice having beenaccepted by the shippers at 08.00 hours on 27 May. One answer to that, on theconstruction of clause 6 preferred by the tribunal, was that all the requirements speltout there had to be satisfied before laytime started; i.e. the ship had to be (i)reported, (ii) ready, (iii) in free pratique and (iv) written notice had to have beentendered. In addition, there were none of the ingredients required for an argumentof waiver or estoppel to succeed. That was all the more so since the printedrequirement that notice of readiness should also be accepted had been deleted. Itwas permissible to look at the deletions made to standard printed forms of contract,

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and it was therefore at least highly arguable that the parties intended that acceptanceor non-acceptance of the notice of readiness should have no effect on the countingof laytime.

The owner’s claim for demurrage accordingly failed.A few years later an arbitration, LMLN 488—21 July 1998, involved the absence

of free pratique where the relevant clauses were:

‘‘2 . . . In any event Charterers shall have the benefit of six hours notice of readiness at allports . . . ’’‘‘Free Pratique (clause 22)If free pratique is not granted promptly upon arrival, Master will immediately protest inwriting by cable/telex to port authorities, and owners must attach such protest to the demur-rage claim, if any, otherwise time so lost shall be for owners account.’’

The vessel arrived at the loading port at 02.30 on 4 February and tendered noticeof readiness at that time. The vessel proceeded into berth, being all fast at 08.36.Hoses were connected by 09.35. Free pratique was granted at 11.00. The vesselcommenced loading at 11.20 and hoses were disconnected at 19.50 on 5February.

The owners submitted that laytime ran from 08.30 on 4 February, when thevessel actually berthed, until 19.50 on 5 February. The charterers contended thatlaytime should not commence until 11.00 on 4 February, being the time at whichfree pratique was granted. They contended that that was the case under the generallaw or alternatively by virtue of the specific terms of clause 22 of the Rider to thecharterparty which related specifically to free pratique.

It was held that laytime commenced at the loading port at 08.30 on 4 February.That was the expiration of the 6 hour notice period under clause 6. The absence offree pratique until 11.00 of 4 February did not nullify the notice of readiness givenat 02.30. The obtaining of free pratique was merely a formality and did not preventa valid notice of readiness being given at 02.30 (see The ‘‘Delian Spirit’’7). The‘‘mere formality’’ doctrine could be over-ridden by an express free pratique clause.Clause 22 of the Rider did not have that effect, i.e. to make the obtaining of freepratique a condition precedent to the giving of a valid notice of readiness. As MrJustice Longmore (as he then was) had commented in The ‘‘Petr Schmidt’’8 ‘‘in theabsence of express wording, courts generally lean against constraint clauses asconditions precedent to liability’’. Clause 22 of the Rider was not so drafted. Ratherit was a ‘‘time so lost’’ clause requiring a party seeking to rely upon it to assert andestablish what time was lost by the absence of free pratique. No such attempt hadbeen made in the present case, and it was clear to the tribunal that no time was infact lost. The owners’ laytime calculation at the loading port was correct.

A later arbitration, LMLN 538—22 June 2000 concerned a notice of readinessclause which read :

‘‘Immediately after arrival of the ship at the pilot station both at loading and discharging ports,whether in port or not, whether custom cleared or not, but always in free pratique, written or



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wireless notice of readiness is to be tendered by . . . Laytime . . . shall commence at 13.00hours if notice of readiness tendered up to and including 12.00 hours same day . . . ’’

Notice of readiness was given at 09.06 on 18 March. On that basis the ownerssubmitted that laytime began at 13.00 on 18 March. The charterers contended thatsince the vessel did not obtain free pratique until 19.00 on 20 March laytime did notcommence until 13.00 on 21 March. The owners responded that the fact that freepratique was only granted on 20 March did not mean that the ship was not in ‘‘freepratique’’ for the purpose of clause 22 of charter on giving notice of readiness on 18March. The ship in fact had a free bill of health. She was, on 18 March, in a fit stateto obtain free pratique on first inspection. It was a pure formality, they said, that theship could not be inspected for the purpose of free pratique until she arrived at theinner anchorage, which she did on 20 March. The owners relied on The ‘‘DelianSpirit’’.7

It was held that The ‘‘Delian Spirit’’ was concerned with a different issue, namelywhether a ship could be regarded as an ‘‘arrived ship’’ if she was not in free pratique.The point in the present case was not whether the ship was an ‘‘arrived ship’’ butwhether she complied with the explicit requirement that the ship should be in ‘‘freepratique’’. The ship did not comply until 19.00 on 20 March, when she was givenfree pratique. Laytime could not therefore commence until 13.00 on 21 March.

The above arbitration affords a good illustration of obtaining free pratique beinga condition precedent, as opposed to the wording in the earlier arbitration above,LMLN 488—21 July 1998. It is emphasised that any requirement for free pratiquehas to be clearly expressed in order to be considered as a condition precedent. Asmentioned in the earlier arbitration, the courts generally lean against constraintclause as conditions precedent to liability.

An interesting point of construction came before the courts in Odfjfell Seachem v.Continentale des Petroles et D’Investissements9 where the charterparty was on the termsof an amended BPVOY 4 form. One of the disputes related to the commencementof laytime at the loading port. The charterparty provided:

‘‘Notwithstanding tender of a valid NOR by the vessel such NOR shall not be effective norbecome effective, for the purposes of calculating laytime, or if the vessel is on demurrage,demurrage unless and until the following conditions have been met:6.3.3 Free pratique has been granted or is granted within six (6) hours of the mastertendering NOR. If free pratique is not granted within six (6) hours of the master tenderingNOR, through no fault of owners, agents or those on board the vessel, the master shall issuea protest in writing (NOP) to the port authority and the facility at the port (the terminal)failing which laytime or, if the vessel is on demurrage, demurrage shall only commence whenfree pratique has been granted . . . 7.3.2 Laytime, or if the vessel is on demurrage, demurrage, shall commence, at each loadingand each discharge port, upon the expiry of six (6) hours after a valid NOR has becomeeffective as determined under cl. 6.3, berth or no berth, or when the vessel commencesloading, or discharging, whichever first occurs.’’

Notice of readiness was given at 01.30 on 27 September. Free pratique was notobtained until 10.30. The owners said that laytime commenced at 10.30 but the

9. [2005] 1 Lloyd’s Rep. 275.

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charterers said that it commenced at 16.30, i.e. six hours after free pratique wasgranted.

In deciding the case against the charterers it was held, by the Commercial Court(Mr Nigel Teare QC), that:

The commencement of laytime was governed by clause 7. It started six hoursafter a valid NOR had become effective or when the vessel commenced loading,whichever first occurred. When a valid NOR became effective it was governed byclause 6.3. One requirement was that free pratique had been granted. If it had beengranted before NOR was given that requirement was satisfied and the NOR waseffective when it is given. If free pratique was granted within six hours of NOR beinggiven it was common ground between the parties that the NOR was effectiveimmediately the NOR was given. (It was not argued that in such case the NOR onlybecame effective once free pratique was granted.) In such cases laytime commencedupon the expiry of six hours from the NOR becoming effective. If free pratique wasnot granted through no fault of the ship and the master issued a protest then itseemed that the NOR became effective on the issue of his protest.

If no such protest was issued then clause 6.3.3 provided that ‘‘laytime shallcommence when free pratique has been granted.’’ Having regard to the purpose ofcl. 6.3 this was odd because clause 6.3 was intended to state when a NOR becomeseffective not when laytime commenced running. However, I do not consider itpermissible to read the words at the end of clause 6.3.3 as stating merely that theNOR becomes effective once free pratique has been given; for the words state interms that laytime shall commence when free pratique has been granted. Clauses6.3.3 and 7.3.2 have to be read together and the way to do so which does leastviolence to the language of each clause is to regard clause 6.3.3 as stating whenlaytime commences in the event that free pratique is granted more than six hoursafter issue of the NOR and to regard clause 7.3.2 as being impliedly subject to anycontrary provision in clause 6.3.3.

For these reasons the charterers do not have a real prospect of showing thatlaytime commenced at 16.30 on 27 August. Upon the true construction of thecharterparty laytime commenced at 10.30 on 27 August.

The decision has some importance since the type of clauses in issue has similarityto many which are used in the tanker trade.

The above arbitrations illustrate the economic loss which may fall upon owners ofvessels if a charterparty contains an express clause regarding the obtaining of freepratique before notice of readiness can be tendered. A vessel may have to wait forseveral weeks because of port congestion in circumstances where the charterpartydoes not contain a compensatory type clause for waiting for a berth. There are stillquite a few ports in the world where a vessel cannot obtain free pratique until sheactually gets into a berth in the port or, alternatively can only obtain free pratiqueby waiting for a small vessel with port health authorities on board to visit the vesselat an outer anchorage. In the latter circumstances heavy weather may prevent thevessel being visited for days.

84. LMLN 274—5 May 1990 illustrated the application and effect of a conditionprecedent relating to port formalities in circumstances where the vessel arrived


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within port limits in a port charterparty. The vessel arrived at the outer anchorageof the discharge port at 07.20 on 20 April and tendered a notice of readiness whichwas not accepted until 08.00 on 6 May (by which time the vessel had berthed). Thevessel had waited at the anchorage (some 60 miles from the discharge port) from 20April until 14.20 on 4 May when she started to proceed up river. The prolongedwaiting time was due to berth congestion.

Clause 52 of the charterparty provided:

‘‘Laytime shall commence 24 hours after master’s notice of readiness to discharge has beenaccepted within ordinary business hours . . . whether in berth or not provided formalities forentering port have been passed by Port Authorities.’’

The charterers contended that the vessel had not been passed by the port author-ities regarding formalities for entering the port until 5 May so that clause 52 of thecharterparty was not satisfied at the outer anchorage. The charterers said that clause52 was not satisfied until the completion of the ‘‘Entry Joint Inspection’’ which tookplace between 21.10 and 22.00 on 5 May.

It was held that it was probably the case that the joint inspection was a mereformality so that, in the absence of other considerations, the charterers ’ contentionwould have no merit (see The ‘‘Delian Spirit’’5). The inspection in the present caselasted some 50 minutes and would have been a mere formality having no effect onthe commencement of laytime were it not for the important words in clause 52‘‘provided formalities for entering port have been passed by Port Authorities’’. Thoseexpress words could not be satisfied until all formalities for entering the port(including the joint inspection) had been completed.

It was somewhat artificial for owners to argue that since the vessel was legallywithin the port at the outer anchorage, all formalities for entering the port had beenpassed. Vessels were forever entering the legal limits of the port and then anchoringbefore later moving into the heart of the port to undertake the commercial opera-tions of loading/discharging, and this often required formalities or further formal-ities to be completed. It was unrealistic to say that all formalities to enter a port hadbeen complied with when certain formalities still had to be completed before thevessel could move into the loading/discharging area of the port albeit that she hadgot within the legal limits of the port where, as in the present case, no formalitieshad to be carried out to allow the further progress of the vessel in to the heart of theport.

The Guide to Port Entry made it clear that formalities had to be undertakenwhen a vessel got close to the heart of the port (some 60 miles up-river from theouter anchorage) when a vessel would be boarded by the harbour authorities and(inter alia) a crew inspection took place. Therefore, it was not possible for formal-ities to be completed for entering the port, in the practical/commercial sense, whilethe vessel was at the outer anchorage.

The owners had agreed an express clause that formalities for entering the porthad to be passed in order to present a valid notice of readiness. Therefore, thepassing of the formalities became a condition precedent for the tendering of a noticeof readiness under clause 52. While the joint inspection might well have been a mereformality, it was still a formality which fell within the ambit of the express clause of

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the charterparty and had to be satisfied before a valid notice of readiness could betendered.

The charterers’ argument was correct. A valid notice of readiness could not betendered until ordinary business hours on 6 May, so that laytime did not commenceuntil the morning of 7 May.

The arbitration should be compared with that set out earlier in paragraph 78,LMLN 35—5 March 1981, where it was decided that the 40-minute inspection wasa mere formality which had no effect on the commencement of laytime: however,there was no express clause relating to port authority formalities in the earlierarbitration.

85. Although conditions precedent are to be applied strictly, their harsh and com-mercially unrealistic results may be avoided by way of the de minimis principle or byan estoppel or by construing the words in a broader sense. In The ‘‘Sati Rani’’10

arbitration the charterparty stipulated:

‘‘Time for loading shall commence to count 24 hours after the written notice, and a certifi-cate from a Marine Surveyor approved by the Charterers certifying the vessel’s readiness inall cargo spaces, whether in berth or not, has been given by the Master or agents . . . that thesteamer is ready to receive cargo.’’

The vessel arrived at the outer anchorage on 30 May at 12.48 and gave a notice ofreadiness. She berthed on Monday, 2 June at 14.00 and the notice of readiness wasaccepted by the charterers at 15.30 on that day. The vessel commenced loading at16.40. On 3 June the marine surveyor’s certificate was issued following inspectionof the holds at 09.30 on that day. The charterers contended that laytime should notcommence until 09.30 on 4 June in view of the charterparty provision cited above.The tribunal decided that notice of readiness given on 30 May at 12.48 was a goodnotice, its reasoning being as follows:

‘‘It appears to us that, in view of loading having commenced on June 2 at 16.40, the surveyon June 3 turned out to be a mere formality. The survey showed that the vessel’s compart-ments were ready in all respects and had no effect on the loading operation which hadcommenced the previous day. Since the survey turned out to be a mere formality, and did notlead to any interruption in the loading process, it should have no effect on the laytimecomputation. Where there is a mere formality to be effected, which does not affect theposition in any way, the tendency is to disregard the formality, see The ‘Delian Spirit’11; werealise that, in that case, there was no express wording as in the charterparty now before us,but we think that a general principle has been evolved which allows a liberal approach to betaken to wording in a clause which turns out to have no intrinsic relevance when the facts andcharterparty provisions are looked at in a global sense and without undue fastidiousness.Further, the de minimis principle militates against the charterers.’’

It is submitted that although the arbitrators might have been correct in theapplication of de minimis principle they were wrong in their other reasoning: after allthe clause was specific in that time could not commence until after a surveyor’scertificate was issued. They could have come to a less favourable decision to theowners perhaps by way of the application of estoppel, the basis being that, by

10. 1977.11. [1971] 1 Lloyd’s Rep. 506.


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commencing to load the vessel at 16.40 on 2 June, the charterers impliedly acceptedthe notice of readiness to load at that time (but see later on this aspect in Chapter6); however, this would have resulted in the laytime commencing at a later time thanthat decided by the arbitrators but before the time contended for by the charterers.Alternatively, the charterers might have been in breach of the implied obligation tosurvey the vessel with reasonable dispatch if there were facts to support this, thusallowing the owners a claim in damages for the time lost by a delayed certificate.

86. Problems regarding the commencement of laytime have arisen, particularly inIndian ports, regarding customs clearance. LMLN 90—14 April 1983 illustratedsuch a problem. The vessel was chartered on a Baltimore Grain form to carry acargo of wheat from the United States to Bombay. Clause 26 provided:‘‘Vessel to tender notice of readiness to discharge to charterer or his agents during theordinary office hours on a weekday before 4 pm, similarly before noon if on a Saturday, vesselhaving been entered at the Custom House and in free pratique and ready in all respects todischarge the cargo, time will then commence 24 hours after acceptance of tender.’’

The vessel arrived at Bombay at 15.00 on 22 October 1976 and gave notice ofreadiness to discharge at 10.00 on Saturday, 23 October by which time she had fileda ‘‘prior to entry’’ with the customs. Charterers endorsed the notice ‘‘receivedsubject to relevant charterparty terms and confirmation from concerned authoritiesregarding the time of arrival, entry and grant of free pratique’’. The vessel com-menced discharging at 21.15 on 27 October.

The issue between the owners and charterers depended on whether the notice ofreadiness was valid when given and received at 10.00 on 23 October, or whether itonly became valid at 10.45 on Monday, 25 October, which was when inward entrywas obtained.

The arbitrators found that when notice of readiness was tendered and received at10.00 on 23 October:

(a) the vessel was an ‘‘arrived ship’’;(b) the vessel was entered at the Custom House;(c) the vessel was in free pratique since 17.30 on 22 October;(d) the vessel was ready to discharge cargo.

The charterers contended, however, that with regard to (b), prior actual entry hadnot been made at the time of tendering notice of readiness since the vessel did notobtain inward entry until 25 October; therefore she did not have break bulk permis-sion from customs; therefore she could not discharge her cargo until 25 October.

It was held that it was well known that the custom at Indian ports was to lodgeprior entry to a vessel’s arrival. A ‘‘prior entry manifest’’ was filed with customs toenable the receivers to process the documents required for receiving and clearingthe goods. Final entry was a routine matter which had nothing to do with receiversand did not prohibit discharge by the receivers. Although final entry might beapplied for over the weekend it could not be granted until the following businessday. If a vessel arrived after business hours on Friday, final entry might not beobtained until the following Monday morning. This is what happened in the presentcase.

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If the vessel had been required to discharge cargo before 10.45 on 25 October shewould have needed the break bulk authorisation. However, as she only berthed andcommenced operations on 27 October the authorisation was not required on the23rd.

Furthermore, the real test when tendering notice of readiness was that pro-pounded by Lord Denning M.R. in The ‘‘Tres Flores’’,12 namely that the master cansay:

‘‘I am ready at the moment you want me when ever that may be, and any necessarypreliminaries on my part to the loading will not be such as to delay you. . . . Applying this testit is apparent that notice of readiness can be given even though there are some furtherpreliminaries to be done, or routine matters to be carried on, or for formalities to beobserved. If those things are not such as to give any reason to suppose that they will cause anydelay, and it is apparent that the ship will be ready when the appropriate time arrives, thennotice of readiness can be given.’’

In the present case, evidence showed that once prior entry had been filed withcustoms, the application to break bulk was a mere formality, and that ‘‘break bulk’’permission was not usually granted until the receivers signified an intention to breakbulk.

Accordingly, the notice of readiness tendered at 10.00 on 23 October was valid atthe time of service, and laytime started running at 00.00 on Monday, 25October.

Soon after this arbitration two cases went to the High Court, on similar facts, The‘‘Apollon’’ and The ‘‘Delian Leto’’.

In The ‘‘Apollon’’13 and in The ‘‘Delian Leto’’14 each of the laytime clauses con-tained a condition precedent that the vessel concerned should have been entered atthe Custom House before laytime could commence, as in the London arbitration.In both of the High Court cases an issue was raised as to whether it was necessaryfor the full customs procedure to be followed before a valid notice of readiness couldbe given or whether it would be sufficient for the first or ‘‘prior to entry’’ stage tohave been completed. Both High Court judges decided that the initial stage wouldbe sufficient.

In his Apollon13 judgment Mr Justice Bingham (as he then was) had this to sayabout the charterers’ contention that entry of the vessel under ‘‘prior to entry’’ rulesdid not satisfy the charterparty which referred to ‘‘the entry of the vessel at theCustoms House’’.

‘‘In my judgment this is a point of quite unreasonable technicality and one which cannotprevail against the clear and, to my mind, very convincing reasoning of the learned umpire.He was, in my judgment, entitled to hold that for all practical purposes the entry thatmattered was the entry that occurred on September 19, that being, so far as customs wereconcerned, the formal prelude to discharge. Although the language of the charterparty didnot expressly refer to entry under the ‘prior to entry’ rules, it was, in my judgment, both thecorrect and the commercial construction of this contract that the vessel was indeed enteredat the time when entry was necessary and required in order to permit discharge.’’



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Both High Court judges took the same approach as the arbitrators in not beingtoo technical. The decisions show that the judges and arbitrators often adopt acommercial approach where possible to reflect not only the practicalities of asituation but also common sense.

In the later cases of The ‘‘Albion’’15 and The ‘‘Nestor’’16 both Mr Justice Websterand Mr Justice Leggatt (as he then was) decided, on the facts found by the arbi-trators, that ‘‘entered at the Custom House’’ meant final customs entry rather than‘‘prior to entry’’ so that the owners did not satisfy the condition precedent until thetime of the final customs entry. Both judges were influenced by sections 30 and 31of the Indian Customs Act 1962, which legislation had not been emphasised in The‘‘Apollon’’ and The ‘‘Delian Leto’’. The ‘‘Albion’’ and The ‘‘Nestor’’ will not be con-sidered in depth since they, along with The ‘‘Apollon’’ and The ‘‘Delian Leto’’ werecited in the later The ‘‘Antclizo’’17 where the Court of Appeal upheld Mr JusticeHirst who, coming to a different conclusion to the judges in The ‘‘Albion’’ and The‘‘Nestor’’, decided that entry at the Custom House occurred at the prior entry stage.Prior to The ‘‘Antclizo’’ (see later) the matter was considered by the Indian HighCourt at Bombay in The ‘‘Jag Leela’’18 (judgment December 1988). On the samecondition precedent the charterers argued that the commercial interpretation of thecharterparty had to be considered as superseded by the general law, and that sincesection 31 of the Customs Act did not permit the master to discharge the cargo atan Indian port until ‘‘entry inwards’’ or final entry, laytime commenced 24 hoursafter final entry was granted and notice of readiness to discharge was served on thecharterers. The charterers cited The ‘‘Apollon’’19 and The ‘‘Delian Leto’’20 and reliedon The ‘‘Albion’’21 and The ‘‘Nestor’’.22

The shipowners contended that ‘‘entry inwards’’ or final entry could not beimported into the charterparty contract, and that once the conditions of the charter-party had been complied with, notice of readiness on the charterers would besufficient compliance for laytime to commence 24 hours after service of suchnotice.

The shipowners argued that the charterparty should be interpreted uninfluencedby the provisions of the Customs Act, because the terms of the charterparty, whichwas a commercial document, had to be interpreted in accordance with their ordi-nary commercial connotation. ‘‘Entered at Custom House’’ was a term of art usedin any standard charterparty but not found in the Customs Act.

Therefore, the words ‘‘entry inwards’’ in section 31 of the Customs Act had to beconstrued in the sense it was used in the Act, and was nothing to do with thecharterparty. Accordingly, once the customs authorities had granted ‘‘prior entry’’,that should be considered as ‘‘entered at Custom House’’ as contemplated underthe charterparty.

15. [1987] 2 Lloyd’s Rep. 365.16. [1987] 2 Lloyd’s Rep. 649.17. [1991] 2 Lloyd’s Rep. 485; [1992] 1 Lloyd’s Rep. 558.18. LMLN 242—11 February 1989.19. [1983] 1 Lloyd’s Rep. 409.20. [1983] 2 Lloyd’s Rep. 496.21. [1987] 2 Lloyd’s Rep. 365.22. [1987] 2 Lloyd’s Rep. 649.

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It was held that the court was concerned with the words ‘‘entered at CustomHouse’’ as set out in the charterparty. Although those exact words were not foundin the Customs Act, the phrase which came nearest was to be found in section30(1), which provided that a ship’s agent ‘‘shall, within 24 hours after arrival thereofat a customs station, deliver to the proper officer . . . an import manifest . . . in theprescribed form.’’ That was nothing but entering at Custom House. That was theone thing the ship’s agent had to do for entering the customs area. The rest was forthe proper officer. The charterparty could not provide for what the customs officerhad to do. It could only provide for what the parties to the agreement had to do. Ithad, therefore, to follow that on a ‘‘prior entry’’ being made, and a notice ofreadiness being given, 24 hours thereafter laytime should necessarily begin. Thatwas the law. That was the law as understood by commercial men.

It was true that in The ‘‘Albion’’ and The ‘‘Nestor’’ the English courts had taken acontrary view. The Indian court was not bound by those decisions. It had respect forthem, but that should not and could not overawe the court’s sense of judgment. Forthe English judges, the Indian law was essentially a question of fact, but for theIndian court it was otherwise. It was a living instrument operating within theparameters of actual experience. The English courts had missed the significance ofsection 30 of the Act, and also the role of the proper officer, and above all the objectof the Act. It could not be said, even remotely, that the Customs Act purported toregulate in any manner the jural relations or obligations of the parties arising underthe charterparty. Accordingly, the shipowners’ submissions would be upheld.

The decision of the Indian High Court (since upheld in the Bombay Court ofAppeal) made sense in the context of ‘‘commencement of laytime’’. Althoughhaving no binding precedent it had persuasive cogency and it was referred to laterin The ‘‘Antclizo’’.

The Antclizo (also relevant in another context, see above, paragraph 79) waschartered for a voyage to Bombay with a clause in the charterparty that ‘‘laytime wasto count from 24 hours after receipt of master’s notice of readiness to discharge . . .vessel also having been entered at Customs House and in free pratique whether inberth or not’’.

An issue arose as to when the vessel was ‘‘entered at Custom House’’. By section31(1) of the Indian Customs Act 1962 the master could not permit unloading untilcustoms had granted ‘‘entry inwards’’ to the vessel. No such order would be givenuntil an import manifest had been delivered.

The learned umpire, having considered the 1962 Act and the Central Manual ofthe Import Department in the Customs Houses published by the Indian CentralBoard of Excise and Customs, found that Indian Customs encouraged delivery ofthe import general manifest before the expected date of arrival. Some days beforearrival, local agents would prepare an import general manifest and an applicationfor entry inwards, including an undertaking to enter the vessel immediately afterarrival. They would take those documents to the Custom House and the vesselwould be entered in the inward entry register and stamped as having been admittedunder ‘‘prior entry rules’’.

Prior entry was the name given by those in the Indian shipping trade and thecustoms authorities to the system of lodging the import general manifest and


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application for entry inwards. The system was widely used for the purpose of savingtime in completing customs procedures. It was used for 95 per cent of vesseldischarging at Bombay. A vessel on whose behalf prior entry procedures had beencompleted was described in the Indian shipping trade as having been ‘‘entered’’ withcustoms.

Where the vessel was to be discharged at inner anchorage, her agents had toobtain special permission to break bulk in stream from the customs import depart-ment. After approval, the vessel was treated by customs as if she had received anorder granting entry inwards before completion of the inward entry register.

The umpire found that the prior entry procedure had been completed and thevessel was entered at the Custom House before notice of readiness was given.

The charterers submitted that the umpire was wrong in concluding that the vesselwas entered once prior entry procedure was completed. They argued that on theproper construction of the clause ‘‘entry at Customs House’’ was not made until thefinal stage of entry inwards procedure, that was, final entry.

It was held by Mr Justice Hirst23 that entry at the Custom House occurred at theprior entry stage where an actual physical entry in the register at the Custom Housetook place followed by the posting of prior entry on the notice board at the CustomHouse; prior entry was not a mere ‘‘application’’ but was a substantive procedure sothat a vessel on whose behalf this procedure had been completed was at all materialtimes described as having been entered with the customs; the owners’ constructionwas correct and there was no fault in the umpires’ chain of reasoning and the factsfound by him in reaching that conclusion.

In his analysis and reasoning Mr Justice Hirst stated that there was a verysubstantial and significant body of additional material which was not before thecourt in the earlier cases and that he had to put his own construction on thecharterparty clause in the light of all the evidence and must apply that constructionto the facts before him as found by the umpire. The most salient features were, hesaid:

(1) Discharge at Bombay became legal when the preventive officer permittedinward entry, i.e. between prior entry and final entry. This criticallyweakened the tie between the crucial words in the clause and finalentry.

(2) Prior entry mattered a very great deal, not only intrinsically, since itinvolved both physical entry in the register and display in the noticeboard, but also in the perception at all material times of traders and thecustoms authorities at Indian ports, and in the eyes of the domestic law asfound (at any rate at first instance) in the Indian courts. This was in verystrong contrast to the evidence before Mr Justice Webster and Mr JusticeLeggatt, which led them to treat prior entry as a mere application for finalentry.

(3) Not only did the present evidence significantly upgrade the intrinsicimportance of prior entry for the reasons given in the previous paragraph,but it also downgraded the intrinsic importance of final entry since the

23. [1991] 2 Lloyd’s Rep. 485.

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umpire’s findings showed clearly that, in accordance with the manual andthe practice of the Indian ports, discharge would normally have begunbefore the final entry was completed.

(4) An application for entry inwards had been lodged in the course of theprior entry procedure, but in no way derogated from the substantivesignificance of prior entry.

(5) So far as commercial good sense was concerned, the owner’s constructionseemed much more appropriate, seeing that prior entry is a physical entryin the register to which all relevant parties attach importance for thereasons given above, and also seeing that it constitutes the only entrymade as a matter of practice, in accordance with the provisions of themanual, prior to the commencement of discharge.

In the Court of Appeal Lord Justice Parker, giving the leading judgment, statedthat in the absence of binding authority he would have no hesitation in upholdingthe conclusion of the umpire and Mr Justice Hirst in that the vessel was entered atthe Custom House on completion of prior entry. Regarding the thrust of thecharterers’ argument (since prior entry does not carry with it an order permittinginwards entry, prior entry was not within the ambient of the clause and only finalentry at completion of the procedures would satisfy the clause) he had this tosay:

‘‘This argument has obvious difficulties. First, if notice cannot be given until final entry andthis does not take place until after inwards entry has been granted and discharge has beencommenced it is at the least unlikely that clause 34 was intended to produce the resultcontended for. To provide for a 24-hours notice of readiness to be given after discharge hasalready begun, in my view makes no sense at all. Secondly, the vessel, as a fact, is physicallyentered at the Customs House when Prior Entry is completed. Its name and particulars willhave been entered in the register, it will have been given a rotation number and the customswill have published on the notice board the fact that Prior Entry or entry prior to arrival iscomplete. Thirdly, Prior Entry is an important matter for importers, who will then know thatthey can proceed under s. 46 of the 1962 Act and make arrangements for discharge. It is truethat at that stage the vessel cannot lawfully discharge but what happens thereafter does notappear to me to constitute entry of the vessel at the Customs House. Subsequent steps leadnot to that but to final admission of the manifest. Mr Hamilton submits that completion ofPrior Entry does not amount to entry at Customs House because it does not convey to thecharterers that the vessel can legally discharge. In my view that argument is misconceived.Entry at Customs House is to precede notice of readiness and it is notice of readiness whichis intended to and does convey to the charterers that the vessel has been so entered, hasobtained free pratique and is both physically and legally ready to discharge. It may bedefective because the vessel has not been so entered or has not obtained free pratique or hasnot obtained an inwards order or because for some reason the vessel is not physically readyto discharge, but they are separate matters and do not in my view assist in the constructionof the clause. Furthermore, although it was submitted that the Indian law was irrelevant tothe construction of a charterparty governed by English law, it is in my view of great impor-tance. If in Indian law a vessel is entered at the Customs House on completion of prior entryit must in my judgment follow that, at least prima facie such entry satisfies the requirementsof clause 34.

There is no binding authority which would compel me to reach a different conclusion fromthat of Hirst J. and the arbitrator and I accordingly conclude that the vessel was entered at theCustoms House at the time notice of readiness was given.’’


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He dealt with the four earlier High Court authorities in which the questionwhether prior entry was within the clause had been considered, very briefly,concluding:

‘‘Hirst J. considered all four cases at length and concluded that on the basis of the findingsin the present case he should not follow that last two cases. I agree with his analysis of thosecases and do not repeat it. It is common ground that in the present case the question of thelaw and practice at Bombay was considered in much greater detail than in any of the fourearlier cases and the subject of much more detailed findings than in any of them. On the basisof those findings which I have summarised earlier in this judgment Hirst J. was in myjudgment correct in declining to follow the two more recent cases.’’

The Court of Appeal refused leave to appeal to the House of Lords so it appearsthat the long-running saga of disputes concerning Indian ports and ‘‘entered atCustom House’’ is now at an end. Although each case turns on its own facts it nowseems unlikely that charterers will be able to contend that laytime does not com-mence on the basis of a ‘‘prior entry’’. It is a pity that the court cases in 1983 werenot more detailed in respect of back-up evidence and that one of them did not gothrough to the Court of Appeal for a ruling from that court; this would in allprobability have put an end to disputes concerning the matter as from that time thussaving the arbitrations and further High Court cases which took place in the lateEighties.

87. Entry at the Custom House may pose problems in respect of ports other thanIndian ports because of a restriction regarding when a vessel can be entered at theCustom House. The importance of entry at the Custom House for the purpose ofcommencement of laytime and adhering to a condition precedent is nowhere betterillustrated than in The ‘‘Shackleford’’.24 The case is also important in respect ofestoppel and the acceptance of a notice of readiness (to be considered later inChapter 6). One of the important facts in the case was that a vessel could not beentered at the Custom House at the port in question until after she berthed(somewhat similar to The ‘‘Tielrode’’ arbitration and free pratique; see earlier para-graph 83). At the time of the fixture the discharge port of Constanza was congestedand it was not unlikely that the port would be congested for the period of perform-ance under the charter. The all-important charterparty provision stipulated:

‘‘Notification of the vessel’s readiness at port of discharge must be delivered at . . . vessel alsohaving been entered at the Customs House and the laydays will then commence at 8 a.m. onthe next business day, whether in berth or not, whether in port or not, whether in freepratique or not.’’

Before going further, it is worth remarking that the owners had managed toobtain a clause whereby the harshness of the Tielrode arbitration type decision wouldbe avoided. On first appearance, it would seem that the owners were well covered forport congestion since it is not unusual to be able to enter a vessel at the CustomHouse while anchored in the roads.

The vessel arrived at Constanza Roads on Friday, 15 October, at 08.26 and thenotice of readiness was given immediately by cable by the master and this notice was

24. [1978] 1 Lloyd’s Rep. 191; [1978] 2 Lloyd’s Rep. 154 (C.A.).

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accepted by the receivers on the same day. The vessel was lying at the usual waitinganchorage at the port and was at the immediate and effective disposition of thecharterers. Customs entry could not be obtained until the vessel berthed—in theordinary way, customs entry at the port was a pure formality. The vessel moved toa berth to bunker on 26 November and obtained customs clearance at 18.20 on thatday.

The owners contended that laytime commenced at 08.00 on 16 October and thecharterers militated for 08.00 on 27 November. Obviously, there was a considerablesum of money at stake. Leaving aside any arguments relating to estoppel in respectof the acceptance of the notice of readiness (see later, Chapter 6) so as to concen-trate on the application of the relevant clause to the facts, the arbitrator (althoughhe decided in favour of the owners on the estoppel argument) would, on the basisof the charterparty words ‘‘whether in berth or not, whether in port or not, whetherin free pratique or not’’, and the impossibility of obtaining customs entry while thevessel was in the roads, have decided the commencement of laytime point in favourof the owners, partly on the basis that the words ‘‘whether in berth or not’’ wereinconsistent with and overrode the reference to the customs entry.

However, Mr Justice Donaldson (as he then was) took a different view anddecided that customs entry was a condition precedent which had to be satisfiedbefore the notice of readiness became good. On the ‘‘whether in berth or not’’argument by the owners, he saw some force in it but not as much as might appearat first sight. He said that as it was a berth charter, the words ‘‘whether in berth ornot’’ referred to discharging berths and showed that the notice of readiness could begiven if customs entry was obtained at some other berth, e.g. a bunkering berth, asindeed occurred at Constanza. His lordship put the matter succinctly, as follows:

‘‘The clause was the brainchild of the charterers, who knew that customs entry could not beobtained at Constanza until after the vessel had berthed, albeit not necessarily at the dis-charging berth—a bunkering berth would do. There was a very real risk of delay by conges-tion at the port, and, in the event, the vessel waited for about six weeks for a dischargingberth. Other things being equal, it was in the charterers’ interest to put this ‘misfortune risk’upon the shipowners.

The shipowners are part of the Rethymnis and Kulukundis organisation, who are large andexperienced shipowners and managers. In 1964, BIMCO had warned shipowners about thedangers of accepting the stipulation ‘vessel also having been entered at the Custom House’,particularly in relation to Genoa. It was explained that this stipulation was dangerous to theinterest of shipowners at ports where customs house entry could not be obtained until afterentering port or berth.

I do not know to what extent the presence of this unusual clause was reflected in the agreedrate of freight and do not inquire. Both parties were, or should have been, equally wellinformed as to the risks attendant upon carrying cargo to Constanza. Both parties must bedeemed to have known precisely what the clause meant, even if I have had to give itconsiderable thought and even if, hereafter, my brethren in higher courts do not agree withme or with each other. Both parties must be deemed to have freely and voluntarily acceptedthe distribution of risk which results from the clause. No question of ‘merits’ therefore arises.It is simply a question of determining what the parties agreed and applying that agreementto the facts.’’

The Court of Appeal upheld the decision of Mr Justice Donaldson and, in theleading judgment, Sir David Cairns dealt with the matter perfunctorily:


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‘‘For the owners is contended that the words ‘vessel also having been entered at the CustomHouse’ are overridden by the words ‘whether in berth or not, whether in free pratique or not’.I do not see how that could possibly be so. The latter words do not conflict with the earlierwords, but make it clear that laydays are to commence at the time specified notwithstandingthat certain events, which might in some circumstances delay the commencement of laytime,had not taken place. If at Constanza it was to be expected that all these events would havetaken place before customs entry it merely means that the later part of the clause has noeffect. . . . Like Mr Justice Donaldson, I quite fail to see how any reasonable construction ofthe clause could fail to give effect to the words relating to customs entry.’’

The ‘‘Shackleford’’ illustrated what was, at least in the late 1970s, something of adivide between arbitrators and judges regarding a condition precedent which it wasimpossible to satisfy at the time intended (under the terms of the charterparty) forthe tendering of a notice of readiness. In fact, the obtaining of customs entry atConstanza turned out to be a trap for the owners within the notice of readinessprovisions which, because of the wording, ‘‘whether in berth or not, whether in freepratique or not’’, militated strongly for laytime to run in a port congestion situation.Even though obtaining customs clearance may be a condition precedent a notice ofreadiness clause may be suitably worded to give the owners relief in certain circum-stances. For example, in LMLN 648—15 September 2004, the additional clause 22of the charterparty read:‘‘If Owners fail . . . to obtain customs clearance . . . either within the 6 hours of notice ofreadiness originally tendered or when time would otherwise normally commence under thischarter, then the original notice of readiness shall not be valid. Owners responsible only ifvessel fails clearance, that is, customs inspectors fail vessel after an inspection . . . vessel isonly then not considered cleared.’’

Notice of readiness was tendered at 12.24 on 19 March. The owners contended thatlaytime started six hours later. Customs clearance was only obtained at 22.40 on 21March. The delay in obtaining that clearance was not due to any problems concern-ing the ship but was attributable (as inferred by the tribunal) to delay on the part ofthe authorities.

The charterers argued that laytime only started to count at 22.45 on 21 March,when loading started. The owners contended that the last sentence of additionalclause 22 meant that if on inspection the ship was passed the original notice wasvalid.

It was held that the object of clause 22 was to provide an exception to thecounting of laytime. That exception applied in certain specified circumstances. Thewords ‘‘Owners responsible only if vessel fails . . . ’’ had to be read in the light of thatpurpose. The tribunal had no hesitation in concluding that the owners’ approachwas right, namely that what the clause meant, in its concluding sentence, was thatthe exception was only to apply if the vessel failed on inspection. Whilst the use ofthe words ‘‘Owners responsible’’ was not ideal, it was at least consistent to an extentwith the opening words ‘‘If Owners fail’’, and the tribunal did not see how it couldrealistically be read so as to mean—as the charterers had argued—that the sentencein question only limited any liability the owners might otherwise have to charterersfor costs and expenses that might result from the failure to obtain clearance,pratique or papers. Not only was no part of the clause concerned with such costsand expenses, but they would in any event be for the owners’ account and there was

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no warrant for suggesting—extraordinarily—that if the vessel were not to satisfy thenecessary requirements in time, then any such expenses should suddenly fall to thecharterers’ account but for the concluding sentence. Therefore, the tribunal wouldfind for the owners.

The strict adherence to a condition precedent by the courts in The ‘‘Shackleford’’25

has ensured that, by and large, arbitrators have themselves to take a strict approach.For example, in LMLN 266—13 January 1990 the vessel was chartered under theAsbatankvoy as amended to carry a cargo of crude oil from Africa to the U.S. fordischarge into lighters. The charterparty provided that the vessel was to complywith all U.S. Coast Guard regulations and contained a warranty by the owner thatat all necessary times the vessel would have on board all certificates required forservice in the United States.

The charterparty further provided that laytime should commence six hours afterreceipt of notice of readiness by charterers or when the first lighter arrived along-side, whichever occurred first.

United States law required that a ‘‘certificate of compliance’’ had to be issuedbefore foreign vessels could operate in navigable waters of the United States orcould carry out the function of transferring oil. Such certificate was issued only afterthe vessel had been examined and found to be in compliance with the prescribedregulations.

The vessel arrived at the lightering anchorage at 16.30 hours on 4 August.Despite the fact that the vessel had no certificate of compliance on board the ownersgave a notice of readiness. The certificate of compliance was eventually issued at16.00 on 5 August.

There was a dispute about laytime. The owners said that laytime commenced at22.30 on 4 August. The charterers said that laytime commenced at 11.00 on 6August when the lighter made fast alongside.

The charterers contended that because of the absence of a certificate of com-pliance on board the vessel at the time when the owners gave their notice ofreadiness at 16.30 on 4 August, that notice was premature and wholly ineffective.The owners were entitled to give a new notice of readiness at 16.00 on 5 Augustwhen the certificate came to hand.

The owners said that the notice of readiness was validly given as there was noprovision in the charterparty that the procurement of a valid certificate of com-pliance was a condition precedent to the giving of notice of readiness; that thecertificate was secured before the arrival of the lighter so that no time was lost; thatthe vessel was ‘‘ready’’ both in a physical and a legal sense when the notice ofreadiness was tendered at 16.30 on 4 August.

It was held that a legal and contractual requirement that the vessel should have onboard all certificates without which she could not operate on the navigable waters ofthe United States or transfer oil could hardly be more clearly a condition precedentto the giving of a notice of readiness indicating her readiness to discharge. It was notsufficient that the vessel was physically ready. She had to be legally ready as well.Accordingly, the notice which the owners purported to give at 16.30 on 4 August

25. [1978] 1 Lloyd’s Rep. 191; [1978] 2 Lloyd’s Rep. 154 (C.A.).


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was premature and wholly ineffective and a nullity. The charterers were entitled tobe put in the same position as if the notice of readiness had been given at 16.00 on5 August when the certificate was issued. Laytime for discharging therefore startedto count from six hours afterwards, i.e. at 22.00 hours on 5 August. See also earlierparagraph 82.

The arbitration also contained an estoppel point regarding the acceptanceof a notice of readiness and it will be cited again later on this particular topic(Chapter 6).

88. Regarding the express wordings ‘‘vessel being in free pratique’’ and ‘‘havingbeen entered at the custom house’’ (considered earlier in paragraphs 83 and 87)such are defined in Voylayrules 1993 as, ‘‘VESSEL BEING IN FREE PRATIQUE’’and/or ‘‘HAVING BEEN ENTERED AT THE CUSTOM HOUSE’’ shall meanthat the completion of these formalities shall not be a condition precedent totendering notice of readiness, but any time lost by reason of delay in the vessel’scompletion of either of these formalities shall not count as laytime or time ondemurrage. The Baltic Code 2003 has similar wording but does say, to the effect, thatthe words may be a condition precedent if so expressed in the charterparty; it reads,‘‘the completion of these formalities shall not be a condition precedent to tenderingnotice of readiness, unless the charterparty expressly requires their completionbefore notice is tendered. If it does not, any time lost by reason of delay on the partof the vessel in the completion of either of these formalities shall not count aslaytime or time on demurrage’’.

The rules and the code will only apply if they are specifically incorporated into thecharterparty contract and it may be that charterers are not that keen to have suchdefinitions in their contracts since they take away rights which they would otherwisehave under the common law in respect of the application of the words inquestion.

BREACH OF CONTRACT/DAMAGES (INCLUDING DRAUGHTAND BILLS OF LADING AND FAULT OF OWNERS)

89. This book is mainly concerned with commencement of laytime and specificclauses bound up with readiness and the tendering of a notice of readiness. Theclauses are part of the laytime code so that they do not usually come into thereckoning in respect of breach of contract/damages in the context of charterersclaiming against shipowners for damages because a vessel is not ready to load/discharge cargo. Clauses appertaining to laytime per se will not usually providecharterers with potential claims for damages unless the clauses are worded in sucha way that non-compliance with them amounts to a breach of contract.

In practice, there are very few laytime type clauses which have such wording andthere is no need for them since charterers invariably have a remedy in damages fora breach of other and non-laytime clauses which, although they may relate to someof the requirements relating to the commencement of laytime (in particular, thereadiness of cargo spaces and equipment) and so overlap in this respect, are

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designed to impose express obligations on shipowners in respect of their vessels andtheir equipment so that any breach gives rise to a potential claim for damages bycharterers. In addition, charterers have rights under cancellation clauses which mayalso, in certain circumstances, allow a claim for damages in addition to the expressright to cancel the contract.

There are many examples of express clauses which give charterers remedies indamages and which relate to the readiness of the vessel and her equipment, such as‘‘every way fitted to carry . . . ’’, ‘‘in a thoroughly efficient state’’, ‘‘being seaworthyand having all pipes pumps and heater coils in good working order . . .’’. If ship-owners are in breach of these clauses then charterers are entitled to claim for loss/damage flowing from any breach subject to arguments in respect of mitigation andremoteness of damage. Of course, laytime will not usually start under the laytimeprovisions if a vessel is in breach of one of these types of clauses but, even if it did,the charterers would be able to claw back any loss of time for breach which causedloss of time by way of having the laytime suspended.

It is possible for the owners to be in breach of a clause as above regarding thevessel’s equipment but for laytime to run simply because the breach of contract isnot causative of loss. For example, a vessel’s gear may be defective but shore gear isused, and was intended to be, for the loading/discharging of the cargo. In a breachsituation the charterers have to show that any breach was causative of loss/damage;a completely different approach to that of a condition precedent which has to besatisfied before laytime commences.

Non-laytime clauses which are relevant to the readiness of a vessel frequently biteregarding stand-by time for shore labour. It often happens that labourers areordered up to start loading/discharging a vessel for the arrival time of a vessel in herintended berth. If the vessel is not ready to load/discharge at that time laytime willnot commence but the charterers may have to look to one of the non-laytime clausesto see if they can show a breach of such so as to be entitled to claim, in damages,against the owners for the stand-by labour charges.

90. It is sometimes questioned as to whether a vessel is ready, for the purposes oftendering a notice of readiness, if the owners are exercising a lien on the cargo. InGill & Dufus S.A. v. Rionda Futures Ltd.26 the dispute was between sellers andbuyers of cargo and the second issue was whether a valid notice of readiness hadbeen given or whether there was some failure by the owners in this respect. At thetime the notice was tendered there were two reasons why the vessel would not in facthave discharged the cargo. First, the owners would not have discharged cargo untilthey had received security in respect of a general average incident. Second, theowners had been instructed not to discharge the vessel as a result of instructionspassed to them by the shippers pursuant to instructions from the plaintiffs whichemanated from the buyers, who had no intention of allowing discharge to take placeuntil their sub-buyers had opened a letter of credit or paid for the goods.

It was held that when notice of readiness was given, the vessel had to be bothlegally and physically ready to discharge the cargo. She had to be at the disposal of

26. [1994] 2 Lloyd’s Rep. 67.

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the charterers. The only respect in which it had been suggested that the Opal Islandswas not at the disposal of the charterers was that it was said that her owners wereasserting a lien for general average.

Although there was no case which was direct authority for the propositionadvanced by the plaintiffs, it nevertheless received considerable support from thedecision of Mr Justice Evans in The ‘‘Boral Gas’’ (see next paragraph 91 fordetails).27 Provided the shipowners’ exercise of their lien for general average wasboth lawful and reasonable (which it was), its exercise did not prevent the ship-owners from tendering a valid notice of readiness. The test was not whether thevessel was willing to discharge, because a vessel might be both physically and legallyready and at the disposal of the charterers without being willing to discharge thecargo.

The defendants had submitted that while that might be the position as betweenthe shipowners and the charterers, it was not the position as between the plaintiffsas sellers and the buyers. They argued that the buyers came under no obligationwith regard to the discharge of the vessel until after tender of notice of readiness, thevessel being at the time of such tender ready and willing to discharge her cargo andat the disposition of the buyers for that purpose and until such time as they becameobliged to take up the shipping documents. In other words, time could not begin torun until the vessel was at the disposal of the buyers.

The correctness of the defendants’ submission depended upon the true construc-tion of the contract. Despite the defendants’ arguments to the contrary, the trueconstruction was that the master had to give a notice of readiness which compliedwith the detailed provisions of the contract and was valid from the shipowners’ pointof view, and that such a notice was valid under the contract whether or not docu-ments were tendered before or after the vessel arrived.

91. Although unusual it is possible that the readiness of a vessel is affected by thebreach of an express term of the contract by charterers so that they are liable indamages to the owners and this may affect the commencement of laytime. In The‘‘Boral Gas’’27 the vessel was chartered on the Asbatankvoy form for eight consec-utive voyages for the carriage of a cargo of anhydrous ammonia. The charterpartyprovided:

‘‘E. Cargo, 8 consecutive voyages . . . Cargo quantity 3000 mt fully refrigerated anhydrousammonia each voyage 5% more or less owners option.

M.3(a) The ship shall be clean and ready in all respects before tendering notice ofreadiness. The ship shall be refrigerated and the cargo tanks to be pre-cooled to minus 33degrees C . . . Ammonia cargo will be pumped into ship at minus 33 degrees C or belowtemperature. No venting and draining of ammonia during loading/unloading operations. Inother words vessel should be in every way fit to load and discharge cargo at minus 33 degreesC . . . and this temperature to be maintained throughout the voyage . . . up to completion ofunloading operations . . . Notice of Readiness should be tendered when the vessel is so ready,except the period dusk to dawn, and laytime will count after six hours of such Notice ofReadiness . . .

M.4 Vessel to go deep sea for cooling down if necessary, and time consumed for precoolingnot to count as laytime. Shippers to supply ammonia for purging and pre-cooling operations

27. [1988] 1 Lloyd’s Rep. 342.

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at the loading port and such quantity to be included in the bill of lading. But any quantitydischarged short of the bill of lading figure shall be paid by owners to charterers at the C andF price.

M.8(c) Vessel must maintain about minus 33 degrees Centigrade temperature to facilitateloading/unloading and should be equipped with adequate discharge pumps and other facili-ties . . . ’’

The arbitrators found that the standard loading/cooling technique was for the vesselfirst to load a small charge of cargo, say 30 tons, and then over the course of severalhours, by internal circulation of the product under pressure, bring down the tem-perature of the cargo tanks appropriately for the receipt of refrigerated liquid gas.The operation was known as ‘‘pre-cooling’’ and the small charge of cargo wasreferred to as the ‘‘pre-coolant’’. The vessel was ordered to the first loading port,Umm Said (Qatar), and arrived there on 27 July 1981. No berth was available andthe vessel remained at anchor until 7 August when she berthed in order to load 30tonnes of ammonia for pre-cooling purposes. After this was loaded she returned tothe anchorage. She reberthed and gave notice of readiness to load on 10 August.The vessel therefore was kept waiting for the pre-coolant from 28 July until 7August.

The pre-coolant was provided by the Qatar Fertiliser Company (‘‘QFC’’) whowere the shippers of the cargo subsequently loaded.

One issue before the High Court was whether the charterers were in breach of thecharterparty by reason of the failure of QFC or anyone else to supply the requiredcharge of ammonia. The majority of the arbitrators held that they were. Thedissenting arbitrator considered that the owners were obliged to make the vesselready for loading, that it was up to them to obtain the necessary ‘‘foot’’ (or charge)from the shippers, if there was none already on board, and that the amount of thecharge was agreed to be added to the bill of lading weight as ‘‘a facility granted bycharterers to the owners, so that the ship would not have to pump out the coolantback to shore and return it to the shippers’’.

It was held by Mr Justice Evans that clause M.4 envisaged, if it did not require,that ‘‘shippers’’ would provide the ammonia; the shippers were identified in thecharter as the factors of the charterers from whom the vessel was to receive thecargo; it was assumed that the charterers would make the appropriate arrangementsfor the supply of the ammonia and QFC became the shippers by virtue of whatevercontractual arrangements were made between it and the charterers; the charterersundertook to procure delivery by the shippers of the quantity of ammonia requiredand the arbitrators correctly inferred that the charterers’ undertaking was that theshippers would do this within a reasonable time after receiving notice of the vessel’srequirements; the shippers’ failure to provide the ammonia within such time consti-tuted a breach of the charter by the charterers.

In respect of the damages arising from the charterers’ breach of contract hislordship found the arbitrators’ reasoning confusing and remitted the award to themfor further consideration. However, he did say regarding the measure ofdamages:

‘‘The measure undoubtedly is the amount of loss suffered by the shipowners through theunlawful detention of the ship. At the relevant time the laytime had neither begun nor


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expired, and so no claim for demurrage can arise. The agreed demurrage figure neverthelessmay be regarded as the appropriate amount to award as unliquidated damages—this is aquestion of fact for the arbitrators to consider and decide. They have in fact awarded eightdays damages for detention at the demurrage rate.’’

It is not known how the arbitrators eventually assessed the damages but it issubmitted that one way, and perhaps the fairest, would have been to have run alaytime computation after the time of the vessel’s arrival (allowed laytime was 72running hours) in order to arrive at the loss to the owners arising from the charter-ers’ breach of contract, particularly since it appeared that the daily damages rateequated with the demurrage rate.

92. Special clauses relating to draught give rise to disputes which affect the com-mencement of laytime, either indirectly under damages or directly because of theexpress words in the draught clause. It is common for owners to undertake in thecharterparty that a vessel’s maximum draught on arrival at the discharge port is notto exceed a certain figure. If the vessel arrives with a draught in excess of this thenthe owners are in breach of contract and are liable for any loss/damage flowing fromthis breach of contract subject, of course, to arguments relating to mitigation andremoteness of damage.

Since it is a breach of damages situation the charterers have to show that thebreach is causative of loss and, in many circumstances, there will be no loss inrespect of delay for the simple reason that the overdraught does not prevent vesselmoving into the discharging area. The laytime will commence in accordance withthe laytime provision and the breach of contract will be non-causative of delay so asnot to affect the commencement and the running of laytime. If the charterers canshow that the overdraught is causative of delay then, naturally, the laytime calcula-tion will be affected and it may be that laytime will not even commence or, if it hascommenced, will have to be suspended.

A special clause relating to draught may have something to say regarding laytimeand prevent its commencement even if the excess draught is not causative of delay.An interesting arbitration which concerned overdraught and special draught clauseswas that of The ‘‘Winston’’.28 The relevant charterparty provisions were:

‘‘ . . . proceed to . . . 1/2 safe berths Port Said. Owners undertake that vessel’s maximumdraught on arrival at discharge port not to exceed 32 feet salt water without any deduc-tion . . .

Clause 22. Master to declare by cable to Receivers and Harbour Master time of droppinganchor at discharging port and at the same time tender Notice of Readiness to Receivers ortheir Agents by cable or otherwise and laytime will then commence to count 24 hours aftervessel’s dropping anchor at the outer roads, outer port anchorage, whether vessel in berth ornot, whether vessel in port or not, in which case customs clearance not required, whethervessel in free pratique or not.

Clause 23. Any alleged excess draught of the vessel must be declared by the Receivers onarrival and the Notice of Readiness must be rejected at that time otherwise the Notice ofReadiness remains fully valid and counting of time will continue to run withoutinterruption.’’

28. 1985.

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The vessel arrived off Port Said on 23 June and immediately sent a notice ofreadiness by cable; she was lying at the outer anchorage and could not berth becauseof port congestion. No inspection of the vessel was made by the charterers and nodraught readings were taken. It was not until the receivers’ surveyor made a draughtsurvey on 11 July that it was discovered that the draught was in excess of 32 feet.

The two principal questions for the consideration of the tribunal were:

(1) What was the actual draught of the vessel at the time she arrived off PortSaid?

(2) If the draught in (1) above was more than that stipulated in the charter-party what effect, if any, did this have on the laytime/demurragecalculation?

The tribunal found that the vessel was drawing 32′ 112″ salt water when she arrived

off Port Said so that, obviously, there was a breach of contract by the owners.However, the tribunal also decided that the vessel could have brought herself on toan even keel of 32′ at any time by pumping out some of the fresh water which wasin the vessel’s tanks.

Turning to the effects of the owners’ breach of contract the tribunal was of theview that clause 23 of the charterparty was tailor-made for the circumstances ofoverdraught on the vessel’s arrival. It did not affect the commencement of laytimesince it was not a separate clause which had the effect of making the draughtlimitation a condition precedent to the tendering of a notice of readiness. Clause 22of the charterparty spelt out how the notice of readiness should be tendered andmade no reference to the notice of readiness including details of the vessel’sdraught. The notice of readiness which was tendered on 23 June was a valid notice;it did not, as it did not have to, include details of the vessel’s draught. Informationregarding the vessel’s arrival draught had been cabled to relevant persons before thevessel arrived off Port Said.

The tribunal decided in favour of the owners on the basis that any initial breachof contract did not affect the commencement of laytime because the notice ofreadiness provision clause did not contain any details regarding draught and that thetailor-made clause 23 (which dealt with draught) had no real relevance since breachof the clause was not causative of any loss to the charterers.

Although the tribunal did not mention preliminaries and The ‘‘Tres Flores’’29 itcould have done so on the basis that the vessel could always have rapidly achievedan even keel of 32′ by pumping out fresh water from the vessel’s tanks. This couldalways have been done as the vessel was moving into berth so that it could becategorised as a preliminary which did not affect the commencement of laytime.

Regarding the special clause 23 the tribunal decided against the charterersbecause the receivers did not activate the clause when the vessel arrived off PortSaid. In fact, the receivers made no complaint about the vessel’s draught until aftera draught survey on 11 July (almost three weeks after the vessel arrived off the port).The tribunal decided that the receivers’ failure to utilise clause 23 left the 23 Junenotice of readiness valid so as to trigger off laytime on 24 June.

29. [1973] 2 Lloyd’s Rep. 247.


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The tribunal also emphasised that the draught of the vessel could easily have beenread at the outer anchorage at or soon after the vessel’s arrival on 23 June—it onlynecessitated the sending of a boat to the anchorage so that any remedy regardingoverdraught and the commencement of laytime always lay in the hands of thereceivers/charterers. If the receivers had checked the draught when the vesselarrived off Port Said then they could have rejected the notice of readiness when itwas tendered, thus leaving the owners to see that the vessel’s draught was adjustedso as to bring it to 32′ salt water and then to tender another notice of readiness.

93. The ‘‘Pan Journey’’30 arbitration was also concerned with draught; further, itraised interesting points of causation, de minimis, and ‘‘knock-on’’ effects. Thecharterparty contained an express warranty: ‘‘Owners undertake vessel’s arrivaldraught will not exceed 37′ 5″ salt water’’. The vessel arrived at the Aqaba anchor-age on 10 January 1985 and tendered a notice of readiness; she then waited for adischarging berth. When the pilot boarded her on 24 January to berth her at herdesignated berth, the No. 1 berth, he refused to take her in on the grounds that shewas over draught; at that time the midship’s draught was 37′ 7.5″. On 8 Februarythe vessel began lightering at berth No. 3 in order to reduce her draught; on that dayher draught was reduced to 37′ 6″ and was further reduced to about 36′ 1″ on 10February when she moved back to the anchorage. As a result of priority being givento vessels with government cargoes, she was not able to berth until 2 March. Again,the vessel had to move off the berth to make way for another vessel with governmentcargo. Eventually, on 27 March, she completed discharge of cargo.

The owners calculated that laytime and demurrage ran without interruption(except for days excepted under the terms of the charterparty) from 10 January to27 March 1985. They calculated that demurrage started accruing on 16 February.Their calculation of 38.5903 days at a daily demurrage rate of US$5,500 less 2.5 percent commission gave them a net demurrage entitlement of US$206,940.48. Thecharterers, however, argued that the vessel’s inability to berth on 24 January wasdue to a breach of the charterparty by the owners. Allowing for the interruption thatwould have occurred as a result of priority being given at the No. 1 berth togovernment cargo on the Seabird, they calculated that discharge would have com-pleted on 19 February. The vessel would therefore have been on demurrage for only2.19 days.

The tribunal decided that there was a breach of the charterparty absolute under-taking in respect of draught and that the owners could not take any benefit underthe de minimis principle. Without deciding what difference would have been deminimis, it seemed that an excess draught of 2.5″ could not be so described,particularly in the light of the importance of an undertaking regarding a vessel’smaximum arrival draught.

The tribunal also decided that the vessel’s draught warranty was not a conditionfor the tendering of a valid notice of readiness, it being an independent warranty, abreach of which allowed the charterers to claim damages in respect of their loss.Laytime was triggered off by the 10 January notice of readiness and continued to

30. 1986.

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run until 24 January since the breach of contract was not causative of any delay tothe vessel as she had to wait for a berth, in any event, during the 10–24 Januaryperiod. Regarding the period after 24 January it was decided that the ownersremained in breach of contract concerning the draught until 8 February but thatcomplications arose, in respect of assessing damages, because vessels carrying gov-ernment cargo took priority. The tribunal concluded, on the evidence, that even ifthe vessel had been able to berth on 24 January she would have had to move off herberth on 31 January because of a priority cargo and that there would have then beena pattern of delays thereafter because of priority cargoes so that the only loss of timeto the charterers, arising out of the breach of contract in respect of draught, was the24–31 January period. The result was a reduction in the time on demurrage by eightdays.

94. While the arbitrations referred to in paragraphs 92 and 93 concerned breachesof contract by the owners in respect of draught the later arbitration, LMLN510—27 May 1999, related to a breach of contract by the charterers. Clause 11 ofPart 1 of the charter provided that the charterers guaranteed that a minimum of 9.5metres salt water would always be available. However, at the port chosen by thecharterers no more than 8.15 metres was available. That meant that if the vessel wasto discharge at the nominated port some of the cargo would first have to bedischarged into lighters. In the event the parties reached agreement that the light-ening period should be dealt with on the basis of discharge at a rate of 1,500 mt perweather working day, Sundays and holidays included.

The lightening operation was seriously delayed, initially due to non-availability ofbarges, and subsequently because of bad weather. The cargo to be lightened wassome 4,499.97 mt. At the rate agreed that meant that the time allowed was some 3weather working days. As provided for in the charter, the remainder of the cargo wasto be discharged on the basis of customary quick despatch.

The vessel arrived off the discharge port at 05.00 on 27 September and tenderednotice of readiness. Time commenced at 14.00 that day. On that basis, the timeallowed would have expired at 14.00 on 30 September. No cargo had in fact beendischarged by the time laytime expired due to non-availability of barges. Nor hadany time been lost.

It was common ground that it was to be implied in the agreement that 3 weatherworking days would be allowed for lightening and that if the operation was notcompleted in that time the owners would be entitled to be compensated for thefurther detention of the vessel at the rate of $10,000 per day. There was a disputeas to the method of calculation.

It was held that the owners had run time to 11.00 on 7 October, which was whenthe vessel commenced discharge of the balance of the cargo after having berthedalongside. However, in the tribunal’s view, detention consequent on lighteningshould have ceased at 13.00 on 6 October, when the last lightening barge left thevessel. On that basis, the vessel was detained from 14.00 on 30 September until13.00 on 6 October, a total of 5 days 23 hours and not the longer period claimedby the owners.


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95. Problems can arise which impact on the commencement of laytime regardingthe non-production of bills of lading bearing in mind that a vessel’s master mayrefuse to start discharging cargo until an original bill of lading is presented, alter-natively until the charterers or the receivers of the cargo produce a letter of indem-nity which is acceptable to the owners of the vessel. Such a letter of indemnity is,strictly speaking, illegal so that owners do not have to accept such unless, of cause,the parties have agreed to the contrary. Having said that, from a practical point ofview, there are some ports where the authorities do not allow a vessel to refuse todischarge cargo once it has berthed.

However, in general, commencement of laytime will not be affected where amaster refuses to give a delivery of cargo without the production of a bill of lading.For example, in LMLN 587—16 May 2002 there was a delay between the time ofthe ship’s arrival at her discharging port at 01.25 hours on 21 November, and herberthing at 21.30 on 24 November. Discharging started the next day. The charter-ers said that the owners were responsible for the delay. It was held, that the tribunalcould not accept the charterers’ case that the delay had to be laid at the owners’door. The fact was that bills of lading were not available when the ship arrived, andit was their absence, coupled with the absence of a letter of indemnity, that led tothe ship not being berthed and discharged earlier.

As between owners and charterers, the provision or non-provision of cargo docu-ments permitting discharge was plainly a matter for charterers. So they had to bearthe consequences of any delay arising from late production of such documents.What had caused the delay in the commencement of discharging was the absence ofbills and of a letter of indemnity. To the extent that the charterers sought to say thatit was for the owners to demand a letter of indemnity, the tribunal could not agreeless. It was true that under clause 29 of the charter the owners were obliged toaccept a letter in the form there specified, but it was obviously for the charterers toprocure and offer one. That they had totally failed to do.

The charterers had suggested that production of a bill of lading was relevant onlyto discharge, not to berthing. In itself that argument might be correct. But it did nothelp in the present case, because even if the ship had been berthed earlier she wouldnot have started discharging materially earlier than she in fact did. Further, theowners could not be blamed for any delay in berthing for another reason, namelythat the agents, who were charterers’ agents, gave express instructions that the shipwas not to berth pending the arrival of the documents. In those circumstances theowners’ claim had to succeed.

Depending on the circumstances, decisions can go either way, depending on thecharterparty terms and also the conduct of the parties. While, in the main, decisionsby London arbitrators have gone in favour of owners, LMLN 619—7 August 2003illustrates where the owners of the vessels did not act reasonably in the surroundingcircumstances. The vessel arrived outside Swinoujscie and dropped anchor at14.30 on Tuesday 29 May. After delaying for just over one day because the originalbills of lading were unavailable the owners agreed to allow the vessel to enter theport. The pilot boarded at 22.45 on 30 May and she was all fast alongside inSwinoujscie at 02.00 on 31 May. The master tendered two notices of readiness, thefirst at 14.30 on 29 May, and the second at 02.00 on 31 May. The charterers

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contended that the first notice was invalid because at that time the berth was freeand available for the vessel. In consequence, laytime only commenced following thetender of the second notice of readiness.

It was held that the parties had agreed a berth charter under the provisions ofwhich notice of readiness to discharge had to be tendered from the first dischargingberth unless Swinoujscie was affected by congestion (Rider Clause 28) when themaster was permitted to tender notice once the vessel had arrived within thecommercial area of the port. It was plain from the evidence that the vessel wasdelayed by the owners in berthing on arrival at Swinoujscie because the original billsof lading were unavailable. They were eventually presented at 12.00 on 31 May. Theowners accepted that the first notice was invalid and that laytime did not commenceuntil 08.00 on 1 June. They claimed compensation for time lost by the vesselwaiting outside Swinoujscie between her arrival at the anchorage and her eventualberthing, less the shifting time, on the basis that they were entitled to keep the vesseloutside the port in the absence of the original bills of lading as the only way withinwhich to keep control of the cargo. However, the evidence indicated that the arrivalof the bills of lading was always imminent, and that the owners had receivedassurances from shoreside to that effect. The owners had other choices than todisregard those assurances. They might have berthed at Swinoujscie on arrival andcommenced discharge in reliance on the agents’ assurance that arrival of the billswas imminent; or berthed and kept the hatch covers closed until the bills hadarrived; or berthed and discharged against a letter of indemnity. In each case, a validnotice of readiness could have been tendered and laytime would have commencedas of 08.00 on 31 May. Late arrival of original bills of lading was endemic ininternational trade. That was due in most cases to routine banking procedures andbanking delays and was not the fault of shippers, charterers, traders or receivers. Itwas especially likely to be the case where, as in the present case, the originaldischarge port intention was altered during the voyage. There was no need to keepthe vessel outside Swinoujscie and there was no reason why the charterers should beexpected to compensate the owners for the choice exercised by the owners; therewas no real risk that the owners would have been forced to discharge cargo in Polandagainst their will. Accordingly, the owners’ claim for damages for detentionfailed.

96. An interesting arbitration relating to the production of bills of lading and thecommencement of laytime was that reported in LMLN 628—12 December 2003.The vessel was chartered for a voyage with a cargo of sunflower seeds from Glad-stone to Bin Qasim. It was apparent to the charterers that the bills of lading wouldnot be available at Bin Qasim when the vessel arrived there and the charterersaccordingly tried to agree terms with the owners for letters of indemnity for dis-charge without presentation of original bills of lading before the vessel arrived atBin Qasim.

Since there was no provision in the charterparty by which the owners agreed todeliver the cargo without production of bills of lading against letters of indemnitythey took the view that they were not under any obligation to deliver the cargo at BinQasim against a letter of indemnity from the charterers and that any agreement to


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do so would be a concession on their part. The charterers, on the other hand,argued that they were not under any obligation to provide the owners with a letterof indemnity to procure discharge of the cargo.

The vessel arrived at Bin Qasim by 4 March and there was much backing andfilling regarding the wording of an indemnity with such being finally signed andpresented to the owners on the evening of 11 March. In addition, the bills of ladingwere also released by the owners’ agents in Sydney on 12 March. However, by thattime it was too late for arrangements to be made to discharge cargo over theweekend of 13/14 March and accordingly the vessel only berthed on the afternoonof 15 March. Discharge commenced at 19.25 that day and was completed at 17.35on 17 March.

The owners calculated laytime on the basis that time began to count at 15.00 on5 March and expired at 18.36 on 10 March, the vessel thereafter being on demur-rage for 6 days 22 hours 59 minutes. That produced a demurrage claim ofUS$48,703.47. The charterers contended that the notice of readiness only becamevalid on the release of the bills of lading on 12 March, and that time thereaftercommenced at 09.00 on 15 March. On that basis, despatch of US$2,773.26 wasearned.

It was held that, whilst the charterers were correct in saying that they were notunder any obligation to provide the owners with a letter of indemnity to procuredischarge of the cargo, they were not entitled to expect the owners to discharge ordeliver the cargo unless the original bills of lading were surrendered or someagreement reached regarding the terms of a letter of indemnity. Any idea thecharterers might have had that the owners were obligated to agree the terms of anyletter of indemnity offered to them was misconceived.

The charterers had to bear the responsibility for the delay which arose from thelate conclusion of their sale arrangements and errors in the terms of the letters ofindemnity sent to the owners. However, the owners also had to bear some responsi-bility for the delay that took place in resolving the matter, particularly when theywere seeking to claim demurrage for the full period of the delay. The owners’ actionshad prolonged the delays that arose following the charterers’ failure to concludetheir sale arrangements promptly after the vessel sailed from Gladstone. To thatextent the tribunal found that the owners only had themselves to blame for at leastpart of the delay and could not therefore expect to recover the demurrage claimedin full. Whilst it was difficult to quantify precisely the extent of that additional delaythe tribunal considered that it was appropriate to reduce the owners’ demurrageclaim by two days, on the basis that the vessel might otherwise have commencedand completed discharge operations that much earlier than she eventually did.Accordingly, the owners’ discharge port demurrage claim would be reduced toUS$34,703.47.

97. Previous editions of this book have not considered fault of the shipowner (asopposed to a breach situation) in the context of an owner using the vessel for hisown purposes (e.g. bunkering, repairs) when the vessel arrives and is waiting to loador to discharge cargo. Usually, the subject has more relevance to laytime after it hascommenced running but it is possible that fault, taken on the basis of a so-called

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‘‘wider principle’’, prevents the commencement of laytime, at least in practicalterms. Take for an example, a vessel arriving off a loading port and being advised towait for a berth; if during that period she proceeds to a bunkering berth to take onbunkers can the charterers claim that laytime cannot commence running duringthat period? The case of The ‘‘Stolt Spur’’31 had a number of comments to makeregarding an owner using what might be considered as idle time for his vessel toperform other tasks.

The ‘‘Stolt Spur’’ was a parcel tanker which arrived at the discharge port ofMumbai but no berth was likely to be available for 15 days for the first charterers’parcel of cargo. The owners sent the vessel to discharge another two parcels of cargofor different charterers as well as performing some tank cleaning at sea, all within 15days. In the event the owners claimed laytime and demurrage from the firstcharterer for all the waiting time. The claim was disallowed by the arbitrators on thebasis that when the vessel was discharging the other parcels of cargo and tankcleaning she was not available to the first charterer so that laytime should not count.On appeal, Mr Justice Smith upheld the decision of the arbitrators. In so doing hecanvassed earlier decisions such as Ropner v. Cleeves,32 The ‘‘Fontevivo’’,33 and The‘‘Lefthero’’.34 At issue was the ‘‘wider principle’’ referred to by Mr Justice Parker inThe ‘‘Union Amsterdam’’,35 put by Mr Justice Smith as follows:

‘‘It seems to me that charterers, if they are to succeed on this issue, must rely upon the ‘widerprinciple’ referred to by Mr Justice Parker in The ‘Union Amsterdam’ and which formed thebasis of his third reason for rejecting the claim for demurrage in that case. That principle wasthe basis of the Court of Appeal’s judgment in Re Ropner Shipping Co. Ltd.36 There, charter-ers were not liable for demurrage where the shipowners removed the ship to take on bunkers,for reasons unconnected with the charter in question, and there was no finding by thearbitrator that the charterers would not have been able to load, even if the ship had beenthere.’’

Mr Justice Smith went on to say:

‘‘Mr Justice Evans in The ‘Lefthero’ acknowledged that the ‘wider principle’ reflects a qual-ified, and not an absolute, obligation upon the owners. He also acknowledged that it oftendoes not find expression in the authorities. However, it seems to me that there are firstinstance judgments other than The ‘Lefthero’ in which it is recognized. These cases seem tome to support the view of Mr Justice Evans that the obligation of the charterers to paydemurrage depends upon the owners fulfilling a qualified obligation to have the vessel readyand able to give discharge in accordance with the contract.’’

and he concluded:

‘‘Drawing together these authorities, I conclude that the ‘wider principle’ recognized by MrJustice Evans in The ‘Lefthero’ is reflected in the judgments of . . . It might be that it isproperly to be regarded as a kind of ‘fault’ on the part of the owners, which by its very natureprevents cargo operations. It might be regarded as a separate principle from that whereby

31. [2002] 1 Lloyd’s Rep. 786.32. (1927) Ll.L.Rep. 317.33. [1975] 1 Lloyd’s Rep. 339.34. [1992] 2 Lloyd’s Rep. 109.35. [1992] 2 Lloyd’s Rep. 432.36. (1927) Ll.L.Rep. 317.


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fault prevents laytime or demurrage from running. Unless the principle in Budgett v. Binning-ton requires that the fault for which the owners are responsible be the only cause, or the onlyeffective cause, of the cargo operations not progressing, it does not seem to me to matterwhich of these views is preferred. I consider that if a vessel is unavailable for cargo operationsit is natural to regard that in itself as preventing the loading or discharge of the vessel. It is acause of any delay in cargo operations. This, it seems to me, is why the ‘wider principle’ inno way conflicts with such authorities as . . .

If a vessel is not available for the charterers’ cargo operations but is being used by theowners for their own purposes, there is no reason that they should pay compensation. She isnot being detained by the charterers.’’

The above decision goes against the commercial grain held by many in the shippingworld and also the views of some commercial lawyers. After all, the unavailability ofthe intended berth was the only reason discharge of cargo was delayed and there wasno real prejudice to the charterers of the first parcel by the owner’s actions indischarging other parcels of cargo first and carrying out some tank cleaning. Theirreasoning is that, in addition to commercial commonsense, some of the earlier courtdecisions give support to the premise that time does not count if, when the charter-ers are denied the use of the vessel, they intended to use the vessel.

Unfortunately, Mr Justice Smith refused the owners leave to appeal his decisionso there is no question of the Court of Appeal deciding the matter for the timebeing. In the meantime, owners of vessels will have to live with the decision and, onthe basis of its reasoning, it would appear that the question posed at the beginningat this paragraph has to be answered in the affirmative so that charterers are entitledto contend that laytime does not commence running in the bunkering circum-stances which were cited therein.

98. When considering laytime per se in the context of breach of contract/damages,the implied term of reasonable dispatch/co-operation can have relevance to thereadiness of a vessel although its use appears to be of limited application, probablybecause of the burden of proof which owners have to satisfy before they can availthemselves of it.

The principle has already been discussed above at paragraph 56 et seq., where itwas shown that the implied term can be of use to owners of vessels in certaincircumstances. Regarding the readiness of a vessel, the principle may be relevant inrespect of cargo spaces and documentation. For example, if charterers delay in theinspection of a vessel (see in particular paragraph 57) they may be in breach of theirimplied obligation if they have acted unreasonably, as they may also be in breach oftheir obligation regarding documentation if they delay in fulfilling their obligations,see The ‘‘Atlantic Sunbeam’’.37 There is no point in repeating what has been detailedearlier but, for the sake of completeness, paragraph 56 et seq. are adopted here inextenso.

37. [1973] 1 Lloyd’s Rep. 482; above, paragraph 56.


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CHAPTER SIX

NOTICE OF READINESS INCLUDINGRELEVANT SPECIAL CLAUSES AND

ACCEPTANCE OF NOTICE OF READINESS

NOTICE OF READINESS—COMMON LAW

99. Leaving aside for the moment any particular clauses agreed between the partiesregarding a notice of readiness, in order to consider the position solely underEnglish common law, a notice of readiness only has to be given at the loading port.The requirement to give a notice of readiness at the loading port falls within theambit of the common law rule that where the acts of one party are not within theknowledge of the other then the obligations of the other, which depend upon theknowledge of these acts, do not commence until that other has, or should have, thatknowledge. In Vyse v. Wakefield1 (failure to tell the assured by the person effectingthe insurance for the assured that an insurance policy would be null and void if theassured went outside Europe) it was put by Lord Abinger, Chief Baron:

‘‘ . . . where a party stipulates to do a certain thing in a certain specific event which maybecome known to him, or with which he can make himself acquainted, he is not entitled toany notice, unless he stipulates for it; but when it is to do a thing which lies within the peculiarknowledge of the opposite party, then notice ought to be given him.’’

The requirement is eminently sensible and practical so that the charterer is madeaware of the readiness of the vessel at the loading port and can then work the vesselas he sees fit. Under the common law there is no requirement for any further noticeof readiness to be given either at other loading ports or at the discharging port(s).This also makes sense since, once the vessel has tendered for loading, the chartererscontrol the vessel to a large extent and are in a position to follow the progress of thevessel through her voyage until the completion of her discharge of cargo. In practice,charterparties invariably contain express provisions regarding a notice of readinessat ports other than the first loading port but that is another matter—such provisionswill be considered later.

At common law, a notice of readiness can be given either orally or in writing. Inpractice it is sensible to put it in writing from a proof point of view in case argumentdevelops as to when a notice of readiness was given: it may be far more difficult toprove that an oral notice of readiness was given at a particular time compared to thepassing over of a written notice of readiness.

1. (1840) 6 M. & W. 442.

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The notice of readiness should be given to the charterers or their agents (shippersor receivers may be agents for this purpose) or to any other person directed by thecharterers. Charterparty Laytime Provisions 1980 and Voylayrules 1993 (both onlyapplicable if expressly incorporated into the charterparty) state that notice of readi-ness (NOR) shall mean the notice to the charterer, shipper, receiver or other personas required by the charterparty that the vessel has arrived at the port or berth, as thecase may be, and is ready to load or discharge. Baltic Code 2003 (also only applicableif expressly incorporated) states the same but with the addition, (alternatively: thenotice may be specified to relate to the vessel arriving at/off the port or berth).

The alternative definition is one which may be more of a notice of arrival than anotice of readiness, strictly speaking. There can be occasions when an owner wishesto differentiate between a notice of arrival and a notice of readiness where the ownerintends to make a claim against a charterer for damages for detention. This arose inLMLN 566—23 July 2001 (already referred to in Chapter 1, paragraph 21, inrespect of port or berth charterparty). The vessel arrived at Novorossisk to dis-charge at 17.30 hours on 21 March. The relevant entry in the statement of factsrecorded that original bills of lading were unavailable to commence/complete cargoinward formalities, without which the vessel was unable to berth and discharge. Asa result, the master tendered a notice of arrival and the vessel anchored to waitinward clearance. The notice of arrival said that it ‘‘should not be taken as purport-ing laytime to commence by any concerned party and any time waiting for receiversto present original bills of lading as per port regulations complete cargo documenta-tion will count as detention time.’’ This was done in order to enable the owners tohave immediate access to detention money at the rate of US$6,000 per day asprovided by Rider clause 47. A week later, on 28 March, the receivers presented theoriginal bill of lading to the forwarders, who completed the cargo paperwork by14.00 hours on 1 April, at which time the master tendered a notice of readiness. Aberth became available on 4 April and the vessel shifted from her anchorage at 17.06hours and tied up all fast alongside the berth at 19.12 hours.

The owners contended that the master had given notice to the agents and charter-ers of the vessel’s arrival at Novorossisk, that the notice of arrival was ineffective tostart the running of laytime as the vessel was not an arrived ship as no berth hadbeen nominated by the charterers, and the vessel could not berth due to the lack ofbills of lading required to complete the cargo documentation (which was requiredby the port authorities to allow the vessel to enter the port and to discharge hercargo). It was the owners’ view that the charterers’ failure to ensure that the originalbills of lading were sent to the receivers and/or their failure to ensure that the cargowas customs cleared and to make requisite payments and/or to nominate a berthand/or to proceed to a berth, all constituted a breach and/or breaches by thecharterers of their obligations under the charterparty. In particular, the ownerscontended that the charterers were in breach of their obligations to act with reason-able diligence to enable the vessel to become an arrived ship and to berth, also thatthey used the vessel as a warehouse until they and the receivers had completed theirarrangements. The owners claimed damages for detention for the period betweenthe vessel’s arrival at Novorossisk at 17.30 hours on 21 March until 14.00 hours on1 April.

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Para. 99 NOTICE OF READINESS AND ITS ACCEPTANCE

It was decided that the position was that in order to claim that the vessel wasdetained the owners had intentionally instructed the master not to tender notice ofreadiness, but to tender instead a notice of arrival. The notice specifically said thatit ‘‘should not be taken as purporting laytime to commence by any concernedparty’’. The charterers had relied on that comment, and had argued that they wereentitled to take the notice of arrival at its face value, and not count laytime until aftera valid notice of readiness had been properly served, relying on the owners’ ownevidence that such a notice of readiness was not served until 14.00 hours on 1 April,on which basis laytime commenced 24 hours later in accordance with clause 22 ofthe charterparty.

The charterers’ argument would be rejected. The notice may have been termeda ‘‘notice of arrival’’ instead of a ‘‘notice of readiness’’ but the notice tendered on 21March fulfilled the functions of a notice of readiness. The only cause of potentialdelay in discharging (other than berth congestion) was the lack of the original billof lading and/or completion of inward cargo paperwork and/or payment of importduties and railway fees, none of which was within the powers of the owners, and allof which were the responsibility of the receivers. Thus, whereas the owners werewrong in their attempt to manipulate the clear provisions of Rider clause 47 beyondits natural meaning, the charterers were equally wrong to refuse to count laytime onthe basis of the vessel’s arrival at Novorossisk on 21 March and her joining thequeue at that time, all in accordance with the charterparty. Accordingly, the charter-ers were not liable to pay damages for detention for the time waiting to berth.Laytime counted as per the charterparty terms.

This arbitration also has some relevance to Chapter 5, paragraphs 95 and 96.Extreme care should be exercised by owners, masters or any person giving a

notice of readiness to ensure that the notice is tendered to the correct person ororganisation. A master may think that tendering a notice of readiness to one of theport authorities is sufficient to constitute a good tender of a notice of readiness tothe charterers and may come unstuck because of this. In two cases, one of whichconcerned commencement of laytime, the owners lost arguments relating to theagency position of a port authority and a refinery vis-a-vis charterers.

In The ‘‘Isabelle’’2 one of the questions to be answered by the High Court waswhether or not an order by the port authority for the vessel to wait for a berth wasan order by the charterers in circumstances where there was only one loading berthfor the vessel and the charterers’ agents (Sonatrach, a large local oil company) werethe shippers of the cargo. Mr Justice Goff (as he then was) decided, on the evidence,that the port authority was fulfilling no other function than ordering the vessel towait and there was no evidence that the shippers ordered the vessel to wait off theport. Even on the basis that the charterers simply left the port authority to nominatea loading berth, it did not follow from that delegation that any order by the portauthority to the vessel to wait was an order made by them on behalf of the charter-ers. It was inevitable that where, as here, there was only one loading jetty for tankers

2. [1982] 2 Lloyd’s Rep. 81.

Para. 99NOTICE OF READINESS—COMMON LAW

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and congestion in the port, the port authority, in the exercise of its own admin-istrative function, would have ordered the vessel to wait outside the harbour whileother vessels loaded and it could not be inferred that such orders were the orders ofthe charterers. On its face the decision may appear impractical and uncommercialbut it was in the context of a charterparty clause which read:

‘‘14. . . . laytime shall at each loading and discharging port commence when the vessel isin all respects ready to load or discharge and written notice thereof has been received fromthe Master . . . by the Charterers . . . and the vessel is securely moored at the berth or otherloading or discharging spot. Whether or not the specified berth or other loading or discharg-ing spot is available and accessible if the vessel is nevertheless ordered by Charterers to waitbefore proceeding thereto laytime shall commence six hours after written notice of readinesshas been received and the vessel is securely moored at the customary anchorage.’’

In enlarging on his decision the learned judge stated:

‘‘It is against this background that I turn to consider the owners’ submissions. Their firstargument was that the vessel was required to wait by the port authorities and/or Sonatrach,who were for this purpose the agents of the charterers. Now the evidence before the courtindicated that there was at the time only one berth (i.e. one side of the jetty) at which theIsabelle could have loaded. I will, however, assume that, in fact, the charterers simply left itto the port authority to nominate a loading berth—i.e. to identify the berth where the vesselwas to load. But it does follow from this delegation that any order by the port authority to thevessel to wait was an order made by them on behalf of the charterers. In point of fact, the portauthority must have ordered the vessel to wait. There is no evidence that Sonatrach did so.But every port authority exercises control over the ships in the area of the port and where, ashere, there is only one loading jetty for tankers and congestion in the port, it is inevitable thatthe port authority, in the exercise of its own administrative function, will order vessels to waitoutside the harbour while other vessels load at the jetty. There is no evidence at all in thepresent case that the port authority was fulfilling any other function than this. Certainly theywere not acting on any instructions from the charterers, who had no control over the portauthority in this respect; and it is quite impossible to infer that the orders of the port authorityto wait were the orders of the charterers. This submission of the owners is simply an attemptto read the second sentence of cl. 14 as though it read ‘Time lost in waiting for berth to countas loading time’ (or ‘as discharging time’, as the case may be). It cannot be read in that way,and the submission fails.’’

The case went to appeal but the owners got very short shrift in the Court of Appeal,3

the only judgment being that of Lord Justice Donaldson (as he then was) whosaid:

‘‘The learned judge in a full and carefully reasoned judgment has set out the facts, the areasof dispute, the shipowners’ arguments and his reasons for rejecting them. For my part, I seeno advantage in seeking to repeat this exercise using my own words since I am fully contentto adopt his judgment as my own, and to say that for those reasons I would dismiss theappeal.’’

Nothing could have been more succinct.In The ‘‘Mediolanum’’4 the argument related to the agency function of the refinery

at a bunkering port. The owners contended that the refinery was the agent of thecharterers regarding the provision of fuel and also for the purpose of indicating andselecting the ultimate place within the port to which the vessel was to proceed for


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bunkering. The vessel grounded while en route to the bunkering berth to which ithad been directed by the refinery. The Court of Appeal decided that the refinery wasthe agent of the charterers for the purpose of the charterers’ obligations under thecharterparty to provide fuel but was not the agent of the charterers for the purposeof communicating or selecting the ultimate place to which the vessel was to proceedfor bunkering, which turned out to be unsafe, particularly when the charterers’agents had previously ordered her to proceed to a different and safe place at thatport.

The above cases illustrate that care is required regarding the giving of notices/orders as between the parties to a contract. It is up to owners to make certain towhom notices should be tendered to avoid charterers taking a point that they werenot given a notice of readiness which, in turn, might prevent the commencement oflaytime. It is possible that arbitrators may take a more generous approach to ownersthan judges regarding the tendering of notices. For example, in LMLN 205—12September 1987 the charterers relied, in a demurrage dispute with the owners,upon clause 4 of the Vegoilvoy form which provided for notice of readiness to betendered ‘‘to the charterer or its agent’’ and for laytime to start running six hoursafter such tender. It was held that although it was true that notice of readiness hadnot been given to the charterers, notice had been given to the shippers or consigneesor forwarding agents who were, in each case, the relevant party for the purposes ofknowing of the ship’s readiness so that arrangements to load/discharge could bemade. The charterers appointed no agents as such. At the times the relevant voyageswere performed and the relevant notices were given, no complaint had been raisedby or on behalf of the charterers in relation to the notices. Under those circum-stances, the parties to whom the notices were in fact given had to be considered as‘‘agents’’ for the purposes of clause 4 of the charter, and the notices were thereforevalid.

Again, in LMLN 493—29 September 1998, the vessel was chartered on theAsbatankvoy form. Clause 6 provided that ‘‘Upon arrival at customary anchor-age . . . the Master . . . . shall give the charterer . . . notice . . . . That the vessel isready to load or discharge cargo, berth or no berth, and laytime . . . shall . . . .Commence upon the expiration of six hours after receipt of such notice, or upon thevessel’s arrival in berth . . . whichever first occurs.’’

The charterers said that a notice of readiness given on 2 February and receivedby the shippers and the local agents was not a valid notice because it had not beengiven to them or their agents. They relied on clause 6 of the charterparty.

It was held, that the local agents were, as the evidence tended to show, the onlyagents at the port and acted as agents for both the ship and the shippers. For thepurposes of tendering a notice of readiness, the shippers and their agents were to betreated as if they were ‘‘charterers’ agents’’, unless the charterparty specificallydesignated other agents, which it had not done.

Accordingly, the notice of readiness was validly tendered.Although arbitrators may take a reasonably broad approach to the tendering of a

notice of readiness vis-a-vis shippers, consignees, etc. instead of charterers, ownersshould instruct masters to adhere as strictly as they can to the charterparty terms inrespect of the person(s) to whom a notice of readiness should be tendered. Further,


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if tendered to an agent it has to be the agent of the charterers or the shippers or theconsignees and not just the owners’ agents.

100. Despite not giving a notice of readiness laytime may still commence if thecharterers were aware, or should have been aware, of the readiness of the vessel toload. Some persons think that it is still an open question whether that is sufficientto start the laytime clock. Although there is no modern direct authority on the pointit seems commercially sensible that there be no need for a notice of readiness fromthe vessel if the charterers are aware, or should be aware, of the readiness of thevessel to load.

In A/B Nordiska Lloyd v. J. Brownlie5 Lord Justice Scrutton said obiter:

‘‘ . . . whether it is enough that the charterer knows of the presence of the ship from othercircumstances, although he has no notice from the shipowner. That question, in my view, isnot decided by Stanton v. Austin6 and remains open for decision in some other case whichraises the question on a charter which does not exclude the point.’’

This case, was in essence, concerned with a notice of readiness under a cancellingclause so that the obiter dictum of Lord Justice Scrutton is very much peripheral.

In Franco-British Steamship v. Watson and Youell7 the charterparty provided for theloading of cargo at Galatz. Written notice of readiness to receive cargo was given atthe charterers’ office at a nearby port (Braila, where inward cargo was being dis-charged) on a Saturday before a holiday Monday; orders to go to Galatz were givenon the Wednesday and the vessel waited there for a further six days before beingordered to load. No written notice was given at Galatz but the charterers were awareof the arrival and readiness to load on the Thursday. Loading time was to begin‘‘from the morning after . . . and notice of readiness given . . . ’’. It was held thata verbal notice was sufficient in the circumstances, Mr Justice Horridge having (interalia) this to say:

‘‘There is no request that notice in writing should be given and, therefore, verbal noticewould be sufficient . . . When she came to Galatz the Captain would have to see thecharterers . . . under these circumstances it seems to me impossible to say there was notmaterial on which the umpire could find that the charterers had notice of readiness for theship to load . . . I cannot say that time did not run because the Master did not go up intothe office and say formally, ‘I give you notice that my ship is ready to load’.’’

Although the matter is certainly not free from doubt on legal authority, it is sub-mitted that, on balance, there is no need to give a notice of readiness when thecharterers are aware, or should be aware, of the readiness of the vessel to load incircumstances when the charterparty does not call for a written notice ofreadiness.

In the last edition of the book considerable space was taken up in considering ifa written notice of readiness, called for under the charterparty, could becomeunnecessary if the charterers were aware that the vessel was ready to load or

5. (1925) 30 Com. Cas. 307.6. (1872) L.R. 7 C.P. 651.7. (1921) 9 Ll.L.Rep. 282.

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discharge. In support of this premise the cases of Barrett v. Davies,8 The ‘‘Mozart’’,9

and others, were referred to. The point was well laboured but it has now beendecided by the courts to be wrong, in particular by the Court of Appeal in The‘‘Happy Day’’10 (see later in this chapter for a detailed consideration of the case).The result is that if the charterparty calls for a written notice of readiness (as the vastmajority do) such has to be complied with in order for the laytime to commence anda master of the vessel should insure that the notice of readiness clause is strictlyadhered to regarding where it is given and when and to whom it is given. A mastershould bear in mind the words of Mr Justice Donaldson (as he then was) in The‘‘Timna’’11 (cited earlier on other matters):

‘‘It is a good working rule . . . to give notice of readiness and to go on giving such noticesin order that, when later the lawyers are brought in, no one shall be able to say: ‘If only theMaster had given notice of readiness, laytime would have begun and the owners would nowbe able to claim demurrage’.’’

Mr Justice Donaldson also said, a little later in the same judgment:

‘‘Just as it is a good working rule for Masters, when in doubt, to give notices of readiness, itis an equally good working rule for charterers’ agents to reject them if there is any conceivabledoubt as to their validity.’’

The importance of the latter words will become clear when considering theacceptance of a notice of readiness within the context of estoppel; see later in thischapter, paragraphs 112–115.

101. There may be occasions when the doctrines of estoppel and waiver are of useto owners when a valid notice of readiness has not been given by the master, eitherverbally or in writing. This doctrine has developed much over the years and will beconsidered in more detail later in this chapter. Suffice it to say, for the moment, thatthe conduct of the charterers may be such as to preclude them from contending thatlaytime cannot commence because the master has not given a valid notice ofreadiness. For example, when charterers commence loading the vessel, an estoppelor waiver argument may be available to the owners to prevent the charterers takinga notice of readiness point, although some doubts were thrown upon that argumentin The ‘‘Mexico 1’’; but the Court of Appeal, in the more recent case of The ‘‘HappyDay’’12 covered this area in detail, see later paragraph 117.

102. Under the common law a notice of readiness can be given at any time of theday and on any day of the week unless it is unlawful to do so at the port in question,something which is most unlikely in this day and age. Therefore, apart from theunlawful aspect, there are no restrictions whatsoever in respect of when a notice ofreadiness can be tendered although, in practice, special charterparty clauses (to beconsidered later) may ensure that a notice of readiness can only be validly tendered

8. [1966] 2 Lloyd’s Rep. 1.9. [1985] 1 Lloyd’s Rep. 239.10. [2002] 2 Lloyd’s Rep. 487.11. [1970] 2 Lloyd’s Rep. 409.12. [2002] 2 Lloyd’s Rep. 487.


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at stipulated times. This is particularly so in the dry cargo trade; however, in thetanker trade, express provisions do not usually derogate from the common lawposition whereby a notice of readiness can be given at any time.

NOTICE OF READINESS—EXPRESS CLAUSES

103. Express clauses regarding a notice of readiness come in a great number offorms and varieties—they can range from a simple clause such as: ‘‘Time to com-mence 24 hours after notice of readiness has been tendered in writing’’ to moresophisticated clauses such as:

‘‘Notification of the vessel’s readiness must be delivered at the office of the charterers or theiragents, at or before 4 p.m. (or at or before 12 noon if on Saturday). The vessel also havingbeen entered at the Custom House, accompanied by pass of the inspector of vessel’s readi-ness in all departments, and the lay days will then commence at 7 a.m. on the next businessday.’’

No matter how they are worded the clauses are to be complied with althoughprinciples relating to de minimis, construction of the words used, and waiver/estop-pel may be effective so as to afford some relief to owners from a strict compliancewith the clause.

Many clauses state that a notice of readiness must be given in writing and therehave been some disputes over the years regarding whether a notice of readinessgiven by cable, telegram, telex, facsimile or e-mail satisfies this requirement. Com-mon sense decrees that it should do so and this has been the approach of Londonmaritime arbitrators—in fact, one cannot think of any arbitrator who would take adifferent view. The common sense approach is embodied in Charterparty LaytimeDefinitions 1980 (applicable to those who incorporate them into their contracts)where it is stated that, in relation to a notice of readiness, ‘‘in writing’’ means anotice visibly expressed in any mode of reproducing words and including cable,telegram and telex while Voylayrules 1993 and Baltic Code 2003 (also applicable onlyif incorporated into the charterparty contract) goes further by stating ‘‘in writing’’shall mean any visibly expressed form of reproducing words; the medium of trans-mission should include electronic communications such as radio communicationsand telecommunications. It is thought that maritime arbitrators will always take abroad approach to ‘‘in writing’’ so as to give a modern application to the words inthe context of any new electronic machinery involved in maritime operations.

Difficulties can arise in respect of the actual time that a notice of readiness is givenwhen transmitted by way of cable, telegram, telex, facsimile or e-mail. In the caseof a telex there should usually be little or no problem since the evidence should showwhen the telex notice of readiness printed out on the charterers’ telex and that willconstitute the time that the notice of readiness was tendered The same goes forfacsimile and e-mail. In the case of a cable or telegram, problems may arise as towhen the cable or telegram was actually received in the charterers’ camp. Noproblems perhaps when a cable goes directly from a vessel to the charterers’ officeor that of their agents but, on some occasions, a cable or telegram has to go via aland line and there may be a certain amount of guesswork as to when the cable was

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received, particularly in holiday periods and night-times when offices are notmanned.

In a London maritime arbitration13 the charterers contended that, since thenotice of readiness which had been sent by way of cable had been endorsed with atime and date as 08.30 on 6 March, the notice was not effective until that time, eventhough it had been transmitted by cable, from the vessel, many hours earlier. Thetribunal held that the charterers’ argument would be rejected. The tanker tradescustomarily continued round the clock and the evidence showed that a notice ofreadiness was tendered by cable at 04.30 on 3 March, which was also recorded onthe formal notice of readiness. Notice by cable or radio was accepted as writtennotice although the tribunal divided on whether the fact that it was being recordedas sent by cable meant that some time ought to be allowed for transmission time,namely, between sending and receiving. The majority accepted that the use of theword ‘‘cable’’ meant that land lines were used and considered that three hours wasan appropriate delay between sending and receiving. The dissenting arbitratorconsidered that there was insufficient evidence to depart from the usual practice ofregarding a radio message as received at the same time as it was sent from the vesseland regarded ‘‘cable’’ as being synonymous with ‘‘radio’’. This kind of problem isvery unlikely in view of parties now using faxes, e-mails etc.

As can be seen from one of the clauses set out at the beginning of this paragraph,it is common for a notice of readiness to have to be given within stipulated times.Another usual provision is for the notice to be given during office working hours.Both kinds of clauses may give rise to disputes. For example, in The ‘‘Eurobreeze’’14

arbitration, a notice of readiness was given in the early hours of Saturday (04.15)and the charterparty stipulated:

‘‘Laytime at Rostock shall commence from 2 p.m. Monday to Friday if NOR is given between8 a.m. and noon and from 8 a.m. next working day if NOR is given between noon and 5 p.m.Time from Saturday noon or on a day preceding a legal holiday until 8 a.m. Monday or nextworking day not to count, even if used.’’

The above clause said nothing about the tendering of a notice of readiness on aSaturday. The owners contended that the notice of readiness given at 04.15 on theSaturday was good and that laytime commenced at 08.00 on the Monday morningwhereas the charterers submitted that 14.00 on the Monday was the appropriatetime for the starting of the laytime clock, based upon the contention that a validnotice of readiness could not be tendered until 08.00 on Monday morning.Although the parties only differed by six hours regarding the commencement oflaytime there was a knock-on effect, bound up with the following weekend, whichmade a difference of just over two days in respect of the time on demurrage. Thefacts were:

(a) Saturdays at Rostock were ordinary working days for the loading anddischarging of cargo.

13. LMLN 151—15 August 1985.14. 1984.

Para. 103NOTICE OF READINESS—EXPRESS CLAUSES

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(b) The normal office hours at Rostock on Saturdays were from 08.00 to 12.00hours.

(c) The offices of the agents handling the vessel at Rostock were normally openon Saturday mornings and were so on the Saturday in question.

Counsel could put no authorities before the arbitrator which would have been of anyguidance to the resolution of the matter.

The owners put their case in that the clause dealt with the effectiveness of noticesfor two situations only (the tendering of a notice between 08.00 and 12.00 onMondays to Fridays and the tendering of a notice between 12.00 and 17.00 onMondays to Fridays) and, since there was no express provision for the tendering ofa notice on Saturday mornings, a term should be implied that a notice tenderedduring normal office hours on a Saturday morning should be effective so as tocommence laytime at 08.00 on the Monday morning.

The charterers submitted that one should hesitate before implying the termsuggested by the owners since there may have been cogent reasons for the non-inclusion of Saturday mornings in the clause with the effect that it was not envisagedthat a notice of readiness would be tendered on a Saturday morning. Alternatively,if it was envisaged that a notice could be given on a Saturday morning then, in viewof the wording of the clause, the notice could not be effective until the Mondaymorning. Under either approach, laytime would not commence until 14.00 on theMonday; further, their approach did the least violence to the clause and, in anyevent, there was no reason why a special case should be made for Saturdays.

The arbitrator did not find the dispute easy of resolution because of the evenlybalanced contentions of the parties. As a matter of first impression he was of theview that a notice given on a normal working day, within normal office hours,should be effective irrespective of the relevant clause in the charterparty having alacuna regarding Saturdays; the purpose of tendering a notice of readiness was togive the charterers sufficient time to organise labour for the loading/dischargingoperations and that was why its effectiveness was related, in so many instances, tothe usual office working hours. Since the evidence was clear that the usual officehours were 08.00 to 12.00 on Saturdays and that the agents in question wereworking those hours he was for implying a term into the contract so as to give itbusiness efficacy. Without rewriting the contract he thought a tribunal should fillgaps to ensure that the contract was workable in line with the intention of theparties, such intention to be gleaned objectively from the words used by them, andif necessary, praying in aid the relevant surrounding circumstances.

He went on to decide in favour of the owners, as follows:

‘‘Since the Clause had the port of Rostock specifically in mind, and since Saturday was anormal working day along with Mondays to Fridays, also that notices could be tenderedduring normal office hours Mondays to Fridays, it appears sensible to treat them together forthe purposes of tendering a notice of readiness as far as non-excepted periods are concerned.Saturday morning was a non-excepted period and I think that everything fits into place,leaving no lacuna, if a term is implied into the contract that a notice of readiness tendered onSaturday morning, before the expiry of normal office hours, becomes effective so as to triggeroff the laytime clock at 08.00 on the Monday morning. The implying of this term fills the gap

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in the notice clause as well as permitting a procedure which is usual when this kind of noticeclause is used in a voyage Charterparty.’’

104. In LMLN 408—24 June 1995 the issue was whether a valid notice of readinesscould be given on 26 December. The vessel was chartered on a Amwelsh form asamended for the carriage of a cargo of bulk coal from Australia to Turkey. The vesselarrived at the loading port at 08.24 hours on 26 December and tendered notice ofreadiness. That was a Saturday, but although it was the day after Christmas it wasnot celebrated as Boxing Day, the latter public holiday being gazetted for thefollowing Monday 28 December. The vessel did not berth on arrival because herberth was occupied and remained anchored until Friday 1 January (also a publicholiday) when she shifted to berth and in the same evening commenced loading.She then sailed for Turkey.

The loadport statement of facts said that the notice of readiness was accepted at09.00 hours on 29 December, the Tuesday following the weekend extended by thepublic holiday on Monday. The issue related to the appropriate day to deem thenotice of readiness accepted. If Tuesday was the appropriate day, then by line 29 ofthe charterparty the notice should have been accepted at 00.01 on that day.

Clause 4 of the charterparty, as amended, provided:

‘‘The Cargo to be loaded into vessel at the rate of 30,000 metric tons per weather workingday(s) of 24 consecutive hours Sundays and holidays included See also Clause 35laytime commencing 24 hours Charterers’ option 12 hours after vessel tenders and isready to load, [unless sooner worked, whereupon time is to commence] and written notice isgiven of the vessel’s being completely discharged of inward cargo and ballast in all her holdsand ready to load, such notice to be given between business hours of 00.01 and 24.00.’’

(The typewritten insertions are in bold print. The square brackets were not in thecharterparty clause either in its original form or as amended, but were inserted bythe arbitrators in their Reasons to assist their commentary.)

Clause 35 had the rubric ‘‘Loading and Discharge’’, but the only relevant partsaid:

‘‘ . . . Time for discharge port to commence 24 hours, or in charterers option 12 hours afterNotice of Readiness tendered, unless sooner commenced. Declarable latest upon vessel’sarrival load port.’’

It was held that the words within the square brackets in clause 4 were, in thetribunal’s opinion, a provision to deal with the situation when the charterers electedto work the vessel prior to the expiration of the 24 hours notice period (or 12 hoursif the charterers had exercised their option in clause 35). If the vessel was ‘‘soonerworked’’ then time commenced immediately.

That stipulation could therefore be put to one side. Without it, the main thrust ofclause 4 was seen to be that laytime was to commence 24 (or 12) hours after thevessel tendered, was ready to load, and had given written notice of readiness beingcompletely discharged of inward cargo and ballast. The clause then dealt with whenthe notice might be given and specified ‘‘between business hours of 00.01 and24.00’’.

Elsewhere, at clause 15, there was the stipulation that the vessel could not tenderbefore 9 a.m. on 16 December. Further, if the vessel was not ready at the loading


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port before 24.00 hours on 24 December, the charterers had the option of cancel-ling the charter, declarable on the notice of readiness being given. It followed thatthe charterparty contemplated the possibility of a notice being effective even ifserved at, say, 23.30 hours on 24 December. Clause 15 therefore provided not onlythe dates on which a notice might validly be tendered (and not risk being cancelled)but also the precise minutes at which that period opened (9 a.m. on 16 December)and closed (24.00 hours on 24 December).

Returning to the stipulation at clause 4 regarding ‘‘business hours’’, the printedtext left blanks in line 29 which had been completed in typewriting with the hours‘‘00.01’’ and ‘‘24.00’’.

The key word here was ‘‘business’’. There could be no doubt that when thephrase ‘‘business hours’’ was used and defined as, say, 08.00–17.00 hours, then thatprecluded the service of a notice (immediately effective) not only outside of thosehours on a business day, but also at any time during a relevant holiday, e.g. a Fridayin a Muslim country. The original printed text in the charterparty went on tostipulate the period of 9 a.m. to 1 p.m. on Saturdays as a legitimate period fortendering notice. The whole of that Saturday stipulation had been struck out at thatpoint, not just the hours on that day. In the tribunal’s opinion that showed that theparties had addressed their minds to the point and agreed that notice of readinesscould properly be tendered throughout a Saturday—within the hours 00.01 and24.00 hours inserted in the preceding blanks.

The charterers had argued that by striking out the ‘‘Saturday’’ phrase the partiesshould be taken to have agreed that notice could not be tendered on a Saturday atall. But it seemed to the tribunal to be irrational for the ‘‘business hours’’ onMonday to Friday to be extended to every minute of every day only to be followedby a two day forbidden period. The charterers’ argument on that point would berejected.

Read in conjunction with clause 15 it seemed clear enough that the objectiveintention of the parties when contracting was to permit a notice of readiness to betendered at any minute throughout the whole period 9 a.m. 16 December to 24.00hours on 24 December except on a holiday. In other words, for the purpose oftendering a notice of readiness, the loading port business hours were deemed to becontinuous whether or not the shipping offices were in fact open and/or attended.Such a regime was not exceptional at a busy and prominent international bulk coal-shipping port such as the designated loading port in the present case.

On the tribunal’s view of the construction of clause 4, the tribunal was left onlywith the necessity of being satisfied that the notice of readiness was in fact tenderedin accordance with the contractual provisions. In the tribunal’s opinion the partieshad agreed, contractually, to regard Saturdays as business days, and as 26 Decem-ber was not one of the four recognised holidays at the loading port, that did happen.Accordingly, the owners’ submission as to when laytime commenced would beaccepted.

105. Two London arbitrations have been reported regarding disputes relating to arequirement that notice of readiness be given within office hours when the noticewas given on a Saturday morning and, in each case, the office was closed.

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In the earlier arbitration, LMLN 15—29 May 1980, a notice of readiness wastendered at 08.50 in Lisbon on Saturday, 18 September, and the owners contendedthat laytime commenced at 08.00 on Monday, 20 September. The charterers sub-mitted that laytime did not commence until 08.00 on the Tuesday because, as thereceivers’ office was closed on Saturdays, notice of readiness could not be tendereduntil the Monday. The charterparty provided: ‘‘Discharge time to count from thefirst working period on the next working day following receipt during ordinary officehours of written notice of readiness to discharge.’’

The issue was whether or not Saturday mornings, in Lisbon, came within theambit of ‘‘ordinary office hours’’.

The facts were that the port was open on Saturday mornings and all port author-ities were available during such times, stevedoring on Saturday mornings was com-pulsory although at premium rates, all shipping agents were closed on Saturdaymornings except those attending vessels, the majority if not all of importers/export-ers were closed on Saturday mornings and one of the provisions of the charterpartystipulated that the cargo was to be received at destination at the rate of so many tonsper weather working day of 24 consecutive hours, Saturday afternoons/Sundaysexcepted. The arbitrator decided that, on balance, the evidence gave greater supportto the charterers’ submission. More weight should be given to the evidence relatingto business offices rather than to the hours which port authorities and stevedoreshad to work, it being well known that the latter often have to work outside ordinaryhours in order to keep the operational side of shipping and ports in motion;therefore, written notice of readiness could not be received until Monday morningin view of the receivers’ office being closed on the Saturday.

The later arbitration, LMLN 44—9 July 1981, concerned the discharge port ofLiverpool. The vessel arrived at the Mersey Bar at 03.09 on 5 June 1981, which wasa Saturday. Notice of readiness was given by telex to the charterers’ agents at 09.55and to the charterers themselves at 10.00—being a Saturday, neither the charterers’nor their agents’ offices were open. The relevant charterparty clauses were:

‘‘8 . . . At discharging port notification of vessel’s readiness to discharge must be deliveredat the office of charterers or their agents at or before 4 p.m. (or at or before 12 noon if onSaturday), vessel also having been entered at the Custom House subject to clause 10 andlaydays will then commence at 7 a.m. on the next business day, whether in berth or not . . .

10. At the nominated discharge port, should discharging berth be unavailable on vessel’sarrival, time is to count from 7 a.m. on the next working day after notice of arrival at theanchorage . . . has been given to charterers or their agents during ordinary office hours,whether vessel has been entered at Custom House or not . . . ’’

The charterers’ argument was that clause 10 applied on the facts of this case andthat since the Saturday telex was not sent during ‘‘ordinary office hours’’ laytime didnot commence until 7 a.m. on the Tuesday. Charterers submitted that clauses 8 and10 were distinct and separate and each clause had to be dealt with in isolation.Clause 8 dealt with the situation where a discharging berth was available for thevessel on her arrival; clause 10 applied where a berth was unavailable. Furthermore,clause 10 was the appropriate clause for dealing with notice of arrival at the anchor-age, rather than notice of readiness (as per clause 8). Clause 10 was therefore theapplicable clause in the present case and was capable in itself of triggering off the


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laytime clock. There was no need to look at any other wording in the charterpartyand in particular, the meaning of ‘‘ordinary office hours’’ must be found from theactual factual circumstances rather than looking at other charterparty clauses.

The owners submitted that both clauses had to be looked at together and thatclause 8 represented that the charterers’ offices would be open until noon on aSaturday for the purpose of tendering a notice of readiness. The meaning of ‘‘ordi-nary office hours’’ in clause 10 had to be construed in the light of this representa-tion. Furthermore, clause 23 also showed that the charterers’ offices would be openat least until 11 a.m. on a Saturday. Clause 23 provided:

‘‘23. Orders for discharging port to be given within 48 hours of receipt of Master’s wirelessapplication . . . when vessel is 96 hours off Land’s End. If Master’s application is receivedafter 11 am on a Saturday, the time allowed to charterers shall be 52 hours instead of 48hours as above.’’

It was held that laytime commenced at 7 a.m. on the Monday. Clauses 8 and 10were directly linked and had to be looked at together. The intention behind theclauses was to provide alternatives for the commencement of laytime depending onwhether the vessel could not be entered at the Custom House on, or prior to, herarrival.

The words ‘‘during ordinary office hours’’ in clause 10 did not derogate from theowners’ right to give a notice up until noon on a Saturday which was expresslyprovided for by clause 8. In any event, clauses 8 and 23 did show that the chartererslooked upon Saturday morning as being good for the tendering of notices, whetherthey be notices of readiness or of arrival at an anchorage.

Furthermore, the charterers’ argument that clause 8 applied only when a dis-charging berth was readily available was not strictly correct since a vessel couldenter at a Custom House without being at a discharging berth, and thus still be ina position to give notice of readiness under clause 8 (this being a port and not aberth charterparty). There was some illogicality in the charterers’ construction inthe context of commencement of laytime, particularly because of the link-upbetween the two clauses. The timing of the entering of the vessel at the CustomHouse should not affect the intention of the parties regarding the commencementof laytime; the intention was to put the owners in the same position, vis-a-viscommencement of laytime, whether or not the vessel could enter at the CustomHouse at, or before, arrival, so as to give a notice of readiness.

The ‘‘Danita’’15 gave some support to the arbitrator’s decision when looking atclause 8, for amplification of the words ‘‘ordinary office hours’’ in clause 10 of thecharterparty. In that case the learned judge decided that what was called ‘‘ordinaryoffice hours’’ in the second part of the clause should be treated in the same way asthe rather more detailed definition of ‘‘ordinary office hours’’ in the first part of theclause.

Although not of major importance it was felt that clause 23 of the charterpartyafforded further support for the owners’ contention that the charterers were holdingout that ordinary office hours included Saturday morning. While it might be exig-uous in effect when taken in isolation it helped, when looking at matters as a whole,

15. [1976] 2 Lloyd’s Rep. 377.

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to come to a conclusion that the charterers looked upon Saturday morning as beinggood for the tendering of notices, whether they be notices of readiness, or notices ofarrival at an anchorage, etc.

There were good grounds for the two arbitrators taking a different approach inthe two arbitrations for the simple reason that, apart from anything else, the clausesagreed between the parties in the later arbitration were very different to those in theearlier arbitration. While it may be that other arbitrators might have come todifferent conclusions in respect of the two arbitrations it is submitted that thedecisions of the different arbitrators were unlikely to fall within the category of beingobviously wrong (a ground for granting leave to appeal in a one-off case) althoughthe later decision may appear suspect to some in that, although a charterpartyshould be construed as a whole, clause 10 of the charterparty seemed to be tailor-made for the circumstances in question. The decision evidenced a sympathy toowners regarding the commencement of laytime, something not unknown in an areawhere many take the view that laytime should commence as soon as reasonablypossible after the vessel’s arrival.

Another London arbitration which is of interest regarding office hours is LMLN594—22 August 2002. It was not concerned with office hours and Saturday morn-ings but office hours in general. The charterparty provided:

‘‘At first (or sole) discharging port, anytime to commence 24 hours after written notice ofreadiness to deliver cargo has been tendered to Agents in ordinary office hours, whether inberth or not, Saturdays after noon, (except in Lagos where from Fridays 5 pm Saturdays),Sundays (or local equivalents) and holidays excepted . . . ’’

The statement of facts said that ‘‘working hours’’ in Lagos began each working dayat 07.30 hours. The shipowners took that as evidence that office hours began at thesame time. That information coincided with that provided by the BIMCO ‘‘HolidayCalendar’’ for the port of Lagos. However, the charterers contended that officehours were different from port working hours, and argued that office hours in Lagosbegan at 08.00 hours.

BIMCO had been asked to provide an opinion, and had pointed out that ‘‘officehours’’ and ‘‘working hours’’ did not necessarily coincide; also that according totheir data (which was admittedly several years old), private sector office hours inLagos began 08.00 hours Monday to Friday, although public sector office hoursbegan at 07.30 hours. On a private sector basis the office opening hours on therelevant date would have been at 08.00 hours. That assumption had been confirmeddirectly by local agents who had stated unequivocally ‘‘The normal office hours atLagos commence at 08.00 hours and not 07.30 hours’’.

The local correspondents of the shipowners’ P&I Club had responded that portauthority offices ‘‘and offices of associated companies such as agents’’ opened inLagos at 07.30 hours, Mondays to Fridays. Moreover, the port agents for the vesselnominated by the charterers in accordance with clause 27 of the charter had advisedthat their offices were open from 07.00 hours.

With that conflicting evidence in mind, the tribunal had to decide on the meaningof the reference to ‘‘ordinary office hours’’ agreed in the charterparty. Clearly‘‘working hours’’ were not the same as ‘‘office hours’’. Furthermore, the opening


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hours of the port authority and public offices were not necessarily the same as theoffice hours of the private sector. However, even in respect of the private sectoroffice hours the evidence was conflicting. On the one hand, the local correspondentshad contended that offices of companies associated with the port, such as agents,opened at 07.30 hours. The evidence from the port agents nominated by thecharterers appeared to support that statement (even though those agents openedparticularly early at 07.00 hours), whereas the information from other local agents—themselves port agents—indicated that agents’ offices opened only at 08.00hours.

It was held that, without any precise definition of the term ‘‘ordinary officehours’’, one had to apply commercial logic. The reference in the present case surelymeant the ‘‘ordinary office hours of cargo receivers or their agents’’ where notice ofreadiness was to be tendered. The ordinary office hours of the private commercialsector in Lagos—for example, banks, etc.—was of less importance. Indeed thecharterparty referred specifically to the tendering of the notice’’ . . . to Agents inordinary office hours’’, which would be interpreted to mean ‘‘to the vessel’s agentsin the ordinary office hours of port agents in the port of Lagos’’.

In the present case the ordinary office hours of the vessel’s port agents began at07.00 hours on a weekday morning. However, evidence from the P&I Club corre-spondents was to the effect that, in general, port agents’ offices opened at 07.30hours, in line with the opening hours of the port authority, which one wouldexpect.

In the tribunal’s view, the evidence established that office hours commenced at07.30 hours, as contended for by the owners.

106. Since The ‘‘Petr Schmidt’’16 concerned a notice of readiness tendered outsideand prior to the hours stipulated in the charterparty it might be appropriate for it tobe included in this part of the book. However, it seems more sensible and logical toconsider the case in detail in the next section of the book which deals with thecorrectness of the notice of readiness and includes the important Court of Appealdecision in The ‘‘Mexico 1’’.17 Suffice it to say, at this stage, that the ‘‘Petr Schmidt’’case decided that the notice of readiness in question was given prior to and outsideof the specified hours in the charterparty but that it could be deemed to have beentendered at the commencement of the office hours on the next working day. Seelater paragraph 111 for detailed consideration of the case.

CORRECTNESS OF NOTICE

107. A notice of readiness is a statement that the vessel is ready to load/dischargeeither under the common law (requirement only for the first loading port) or theexpress provisions of the charterparty. This statement involves the vessel havingreached the agreed destination, port, dock or berth in addition to being ready to

16. [1997] 1 Lloyd’s Rep. 284; [1998] 2 Lloyd’s Rep. 1 (C.A.).17. [1990] 1 Lloyd’s Rep. 507.

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load/discharge. As has been shown already, some express provisions of a charter-party are well detailed regarding what has to be carried out prior to the tendering ofa notice of readiness, e.g. pratique, clearance, passes, etc. The question has arisenin the past as to whether, when a notice of readiness is given, the facts of which itspeaks have to be in existence at that time. There is also the further question, if anotice of readiness is not a valid notice when first given, does it have to be givenagain when the facts of which it speaks come into existence or does it become validas soon as such facts come into existence?

The first question was answered at least as far back as Graigwen v. Anglo-Cana-dian18 where Mr Justice McNair decided that the facts relating to the notice(namely, entry at Custom House and readiness in that case) must be true at the timewhen the notice was given, otherwise the notice will be bad. The principle has beenemphasised in more recent cases like The ‘‘Tres Flores’’,19 see earlier paragraph 64,in particular the words of Lord Denning:

‘‘One thing is clear, in order for a notice of readiness to be good, the vessel must be ready atthe time the notice is given, and not at a time in the future. Readiness is a preliminary existingfact which must exist before you can give a notice of readiness.’’

and The ‘‘Virginia M’’20 where Mr Justice Hobhouse (as he then was) drew partic-ular attention to the above words of Lord Denning (see earlier paragraphs 64 and75 for details regarding this particular case).

108. The other question (does the master have to give a further notice of readinesswhen the facts necessary to make the notice good come into existence?) has beenconsidered in at least five judgments, The ‘‘Massalia’’ (No. 2)21; Christensen v.Hindustan Steel Ltd.22; The ‘‘Helle Skou’’23; The ‘‘Demosthenes V ’’24 and The ‘‘Mexico1’’.25 The last named authority removed the earlier doubts in respect of the matterbut before considering that case it is thought apposite to look into the earlier cases.There have also been later judgments where the Court of Appeal decision in The‘‘Mexico 1’’, on this aspect, has been followed, including the important Court ofAppeal judgment in The ‘‘Happy Day’’.26

In The ‘‘Massalia’’ (No. 2)27 the vessel was chartered to carry a part cargo of flourfrom Europe to Colombo and had liberty to complete the cargo en route with othergoods in the same holds as the flour. Some of the flour became overstowed bygeneral cargo. When the vessel berthed at Colombo discharge commenced inrespect of some of the flour but it was not until three days later that all the flourcargo became accessible.

18. [1955] 2 Lloyd’s Rep. 260.19. [1973] 2 Lloyd’s Rep. 247.20. [1989] 1 Lloyd’s Rep. 603.21. [1960] 2 Lloyd’s Rep. 352.22. [1971] 1 Lloyd’s Rep. 395.23. [1976] 2 Lloyd’s Rep. 205.24. [1982] 1 Lloyd’s Rep. 275; see also paragraphs 72 and 74, above.25. [1990] 1 Lloyd’s Rep. 507.26. [2002] 2 Lloyd’s Rep. 487.27. [1960] 2 Lloyd’s Rep. 352.

Para. 108CORRECTNESS OF NOTICE

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It was held by Mr Justice Diplock (as he then was) that notice of readiness todischarge referred to readiness to discharge the flour cargo in the particular charter-party and that, although given at a time when the ship was not ready to dischargeall of the flour cargo, it took effect as soon as all the flour was available for dischargeso that it was unnecessary to serve a new notice of readiness at that time. Hislordship did not give any detailed reasoning for this decision—perhaps there was noneed to since it accorded so much with commercial common sense.

However, in the later case of Christensen v. Hindustan Steel Ltd.,28 Mr JusticeDonaldson (as he then was) declined to follow the approach of Mr Justice Diplock.In different circumstances (no overstowed cargo) he held that the Massalia30 deci-sion turned upon very special facts and did not cast doubt upon the general rule thata notice of readiness is wholly ineffective (emphasis supplied) if, subject to minimalqualifications, the vessel is not ready to discharge at the time at which it is given. Inthe case before him, the charterers had no special source of information as to thestate of readiness of the vessel.

In The ‘‘Helle Skou’’29 (Mr Justice Donaldson) the judge was able to decide thecase in favour of the owners of the vessel on the basis that the charterers initiallyaccepted a notice of readiness albeit that they might have a claim against the ownersfor damages in respect of breach of contract because the vessel’s cargo spaces hadnot been properly cleaned. On the notice of readiness point he had the following tosay, some of which is apposite to waiver/estoppel vis-a-vis the acceptance of a noticeof readiness (see paragraphs 112 et seq.):

‘‘There have been many cases of notice of readiness being rejected as premature and subse-quently accepted: see, for example The ‘Tres Flores’,30 but I think that this is the first case inwhich charterers have accepted such a notice and later claimed to reject it. I do not think thatthey can do so. As Mr Hallgarten pointed out, the contrary view would enable a charterer toreject a notice of readiness and to start laytime all over again if he discovered some lack ofreadiness in the ship at a late stage in loading. And this would be the case even if the cargodid not have to be discharged.

A notice of readiness which is rightly rejected is a nullity, save to the extent that, with theexpress or implied agreement of the charterers, it may be left with them instead of beingreserved and will then take effect when it truly represents the facts. But this notice was farfrom being a nullity. It was the key which unlocked the holds of the vessel and allowed loadingto begin. And it was the charterers’ act which created this position. Whether it is labelled aswaiver to estoppel or something else, I do not consider that the charterers can resile from thisposition, save upon grounds of fraud.’’

It is clear from the cases of The ‘‘Helle Skou’’29 and Christensen v. Hindustan SteelLtd.31 that Mr Justice Donaldson (as he then was) was firmly of the view that afurther notice of readiness would have to be given by a master save to the extentthat, with the express or implied agreement of the charterers, the notice could be leftwith them instead of being re-served. In practice, a notice of readiness is frequentlyif not usually left with the charterers, even when the notice is rejected, so that it maynot have been difficult, in many circumstances, for arbitrators to have decided that


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there was an implied agreement between the parties that a notice of readiness couldbe left with the charterers so that it took effect when it truly represented the facts.The ‘‘implied agreement’’ point is no longer good because of what the Court ofAppeal had to say in The ‘‘Mexico 1’’ (see later paragraph 109).

In any event, there was a conflict between the two High Court decisions of MrJustice Donaldson and the decision of Mr Justice Diplock in The ‘‘Massalia’’ (No.2).32 In The ‘‘Demosthenes V ’’ (No. 1),33 Mr Justice Staughton (as he then was)found it unnecessary to decide the point as to whether a notice which was invalidwhen given became valid when the facts changed and satisfied, strictly speaking, thenotice of readiness. He said that the authorities on the point were perhaps a littlesparse. The ‘‘Massalia’’32 and Christensen v. Hindustan31 were cited (but not The‘‘Helle Skou’’29) and he also had cited to him the words of Lord Justice Roskill (ashe then was) in The ‘‘Tres Flores’’30: ‘‘notice of readiness that the ship will be readyto load at some future time is a bad notice’’. Without deciding the point Mr JusticeStaughton indicated how he felt about the matter by stating, on the basis of the factsof the case before him (see earlier paragraph 74 about waiting for furthervacuvators):

‘‘The point did not actually arise in the Tres Flores30 case because there was no argumentthere—as far as I can see, as to whether an old notice became validated when the ship wasready, or whether a fresh notice had to be given. It seems to me by no means easy to decidebetween those authorities, and I do not do so. But I just say this. I would require a good dealof persuading to reach the view that the charterers, who had had notice of this ship’s arrival,were entitled to allow her to sit there for a period of just over two weeks, and not paydemurrage or bear the cost of the time that had elapsed, merely on the ground that they hadnot received notice from the shipowners that another three vacuvators could be obtainedwithin a matter of hours.’’

The sympathies of Mr Justice Staughton were not difficult to infer: he was veeringto the approach taken by the vast majority of commercial shipping arbitrators.However, in the event, a later and higher authority (the Court of Appeal in The‘‘Mexico 1’’) chose to take a different approach; see later paragraph 109.

109. The Court of Appeal’s decision in The ‘‘Mexico 1’’34 (impeccable logic, butperhaps lacking commercial/practical common sense and reality) has caused acertain amount of consternation in shipowners’ and ship operators’ offices through-out the world because of its repercussions regarding all voyage charterparties whichare subject to English law. The case (inter alia) considered and cleared up differ-ences of opinion which had been in existence for some 30 years regarding theeffectiveness or otherwise of a notice of readiness which, when given, is not aso-called ‘‘good notice’’. Does the master have to give a further notice of readinesswhen the facts necessary to make the notice good come into existence? The alter-native proposition was that the notice, although not being valid when given, had aninchoate status and became valid and effective when the appropriate facts came into



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existence. The latter proposition had been favoured by virtually all London com-mercial maritime arbitrators.

Clause 24 of the Mexico 1 charterparty of 27 July 1984 provided that ‘‘at loadingand discharging ports notice of readiness shall be delivered in writing at the officeof the shippers/receivers. . . . Time to commence to count next working day 08.00hours . . . ’’.

The vessel loaded part cargoes of maize and beans for the charterers and theowners also loaded various cargoes for their own account. At the final discharge portof Luanda the master cabled a notice of readiness to the agents on 20 January whenhe arrived at the port and he telexed a further notice to the receivers on thefollowing day. At that time the cargo of maize was partially overstowed with beansand with cargo carried for the owners’ account. Unloading of cargo commenced on28 January and it was not until 6 February that the maize cargo was cleared ofoverstowed cargo and accessible. No further notice of readiness was tendered at thattime. Discharge of the maize was not then begun because the vessel was put out ofberth to give priority to another vessel. After a delay of eight days the vesselreberthed and commenced discharging the maize cargo. The two arbitrators agreeda joint award (not calling upon the umpire who attended at the hearing). Theyapplied the inchoate theory to the maize cargo and decided that the initial cablednotice of readiness (which was not valid because the maize was not accessible whengiven) became valid when the maize became accessible, that is, on 6 February. Theyfollowed The ‘‘Massalia’’35 which they thought still to be good law despite laterjudicial and text book doubts. They found that the discharging of the other cargooverstowing the maize was an operation openly performed with the active participa-tion of the mutual agents to the parties and was hence patent to the charterers. Theyalso found that it appeared that the receivers, agents and the master on the spot allrealistically treated the initial notice of readiness as one which would be effective assoon as all requisite conditions of accessibility were met: however, they did not makethis a separate ground for deciding in favour of the shipowners on the basis ofwaiver/estoppel.

On appeal to the High Court,36 Mr Justice Evans reversed the arbitrators on theinchoate status of the notice of readiness but still decided the case in favour of theshipowners on the basis of an estoppel or waiver in that the receivers and agentsproceeded on the basis that the original invalid notice became valid and effectivewhen the state of unreadiness caused by the overstowage was replaced by one ofreadiness for discharge. He held that:

(1) when the charter required a notice of readiness to be given the chartererwas entitled to insist that the laytime could not begin until the notice hadbeen given; if he so acted to waive that right, in whole or in part, thenlaytime would begin notwithstanding that the required notice or validnotice had not been given;

(2) if an inaccurate notice was invalid when given, then the circumstances inwhich no further notice was required were limited to those where there


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were further dealings between the parties after the invalid notice wasgiven, which resulted in the charterers’ losing the right to insist that a validnotice of readiness should have been served;

(3) in the absence of special factors (such as particular circumstances, waiver,estoppel) a master must give a further notice of readiness because in thosecircumstances there was nothing to prevent the charterers from relyingupon the contractual requirement that notice must be given before lay-time could begin and an invalid notice was a nullity; this was not a rule oflaw but the requirement of the clause on its sensible and trueconstruction;

(4) an inaccurate notice was invalid and a nullity unless it was accepted oracknowledged by the charterers as a valid notice with effect from somelater time; the arbitrators’ conclusion that laytime began immediately themaize cargo became fully accessible for discharge was correct; the noticebecame effective for the purposes of clause 24 at 10.25 on 6 February andlaytime began under the clause at 8 a.m. on 7 February.

On the waiver/estoppel aspect he had this to say:

‘‘The arbitrators’ conclusion that laytime began immediately the maize cargo became fullyaccessible for discharge is correct in law, therefore, if the facts entitled them to hold that thecharterers waived the right to require a notice of readiness in accordance with clause 24, orare otherwise prevented by law from asserting that right. An alternative possibility is that theywaived or lost the right to require that a further notice should be given when the cargobecame ready for discharge, thereby accepting or acknowledging that the original noticeshould become effective for the purposes of clause 24.

In my judgment, the facts found by the arbitrators do not justify the wider conclusion thatthe charterers effectively released the shipowners from the need to give any notice underclause 24. There is no finding to this effect. Rather, the findings are that the receivers andagents proceeded on the basis that the original (invalid) notice became valid and effective,presumably for the purposes of clause 24, when the state of unreadiness caused by over-stowage by other cargo was replaced by one of readiness for discharge. If these findings affectthe charterers as well as the receivers and agents, then in my judgment the correct conclusionin law is that the notice became effective for the purposes of clause 24 at that time (10.25 on6 February). Whether this was by implied (or express) agreement, or by ‘waiver, estoppel orsomething else’ (per Mr Justice Donaldson) it is unnecessary to inquire. That position cannotbe resiled from now. It will follow that laytime began under the clause at 8 a.m. on the nextworking day (7 February).’’

In the Court of Appeal the issues were canvassed by Lord Justice Mustill (as hethen was—the other two Lord Justices concurring): the court upheld Mr JusticeEvans on the pure notice of readiness point (thus continuing the reversal of thearbitrators, but reversed him on the ‘‘estoppel, waiver or something else’’ aspect,thus overall deciding against the shipowners and in favour of the charterers. It washeld (inter alia) that:

(1) the contract provided for laytime to be started by the giving of notice ofreadiness; the learned judge was right to reject the argument that thenotice was a delayed-action device, effective to start the laytime automat-ically when at a later date the vessel became ready to discharge the


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contractual cargo; and was right to reject the submission that time beganwhen the charterers knew or ought to have known of the readiness;

(2) on the facts, waiver, estoppel or agreement could not be inferred; thenotice of readiness was invalidly given but the arbitrators had found thatit was accepted and since such acceptance must have been given inreliance on the master’s implied assurance that the vessel was ready fordischarging it could not have any value; when the ship was ready todischarge the contractual cargo there was no notification to the charterersor their agents nor was there anything in the award by way of intimationon the part of the charterers that they accepted that the laytime could nowbegin; and there was no basis in the award for finding that the laytimebegan before the operation of discharge;

. . . (4) the charterers conceded that laytime began to run when the discharge of

the maize actually commenced; the appeal would be allowed to the extentthat laytime for the discharge commenced at the time when the dischargeitself commenced.

Regarding the inchoate theory and The ‘‘Massalia’’35 Lord Justice Mustill con-sidered it appropriate to consider the question entirely afresh. He distinguishedbetween the idea of an inchoate notice of readiness in its purest form (invalid noticeautomatically takes effect, without more, as a notice at the moment when the shipbecomes ready), which he found impossible to accept, and a modified versionwhereby the notice would be effective, not when the ship was ready for dischargebut when the charterers knew of this and, perhaps with the added qualification,‘‘have the means of knowledge’’. He had this to say, in rejecting the owners’contentions:

‘‘To start at the beginning one must ask whether the laytime would automatically beginupon the ship’s becoming ready, even if no notice was ever given at all. (I stress ‘automat-ically’ because for the time being I exclude special facts which might found an express orimplied agreement, waiver or the like). The owners have not sought to assert an affirmativeanswer, for such a proposition would be unarguable in any case where the charterer expresslyrelates laytime to the giving of a notice. One must then enquire what reason there would befor reaching a different answer when the master had given a notice stating that the ship wasready when she was not? If there is any reason, it must be found in the idea that the master’smessage, which was not a valid notice, and which moreover stated something which (in termsof English charterparty law) was untrue, nevertheless had validity as an ‘inchoate’ notice.This word served a useful forensic purpose in the argument addressed in The ‘Massalia’, butwith due respect to counsel (as he then was), I am unable to give it a precise meaning: andthe word must have a precise meaning if a document which all agree was ineffective whengiven is afterwards to be given some effect. Perhaps it means that the notice of readiness is tobe taken as incomplete, with the master announcing the arrival of his vessel at the port, butsaying nothing about its readiness to discharge the contractual cargo; and that the message isto be taken as automatically completing itself with the words ‘and also take notice that myship is now (at 10.25 hours on 6 February) ready to deliver your cargo’—even though nothingwas then said or done by either party. I confess that I can see no way in which these wordscould be notionally added, any more than if the master (as he should in law have done) hadsaid nothing about readiness at all on 21 January, so far as concerned the cargo of maize.

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An alternative understanding of the concept of an inchoate notice is that the messageshould be construed as saying ‘Please be advised of the arrival of the above-named vessel atthe port of Luanda at 12.00 hours 20/1/85. The vessel is not now ready to commencedischarging cargo, but will be ready at some time in the future which I cannot specify’. Themost obvious objection to this interpretation is that it is not what the message actually said.But even if it could be strained to have this meaning, by what mechanism could it be said that,at the moment when the discharge became possible, and when nothing else happened, therewas a compliance with the requirements of clause 24 that:

‘ . . . notice of readiness shall be delivered at the office of the Shipper/Receivers or theirAgents.’

To my mind the contract provided with absolute clarity what step must be taken to start thelaytime, and I find it impossible to say that the taking of this wrong step is somehow to bedeemed as the taking of the right step. Moreover, I would find it very odd if the contract hadcontemplated any such result. At common law no notice of readiness is required at thedischarging port to place the charterer under the obligation to take delivery of the cargo: heis expected to be on the lookout for the ship and for his cargo. Here, as is nowadayscommonplace, the parties have stipulated for the giving of a notice to be the trigger for thecharterers’ obligations. There must have been some reason for this. Why construe the clauseas omitting half the requirement for a valid notice of readiness? And why above all construeit as starting the charterers’ obligation by reference to an event (namely readiness) happeningat a precise moment of which he has no notice and may be completely unaware? I can see noground for such an unbusinesslike reading of a perfectly clear contract.

No doubt oppressed by the practical difficulty just mentioned the owners have modifiedthe pure inchoate theory, so as to make the time run, not when the ship is ready for discharge,but when the charterers know of this: and, perhaps, with the added qualification ‘have themeans of knowledge’. It seems from the part of their reasons which I have quoted that thearbitrators were disposed to accept this proposition.

To my mind, although this variant of the argument removed one flaw, it simply addsanother. For although it does at least avoid the consequence that the time allowed to thecharterer for performing discharge is running even though he may have no means of knowingthat performance is even possible, it substitutes a basis for the computation of laytime whichmust be a fertile source of dispute. Even in the absence of a provision such as clause 31, whichexpressly makes the furnishing of a countersigned time sheet a part of the mechanism for thepayment of demurrage, the assembling of a time sheet is an important part of business in theport. For this purpose certainty is essential. The parties know when the ship berthed; whendischarging began; when it finished. But in many cases the owners and their agents will notknow when the charterers or their agents became aware that the cargo was ready; and still lesswill they know, or be able to agree with the charterers, when the latter ought to have beenaware of it. Moreover, quite apart from the practical objections to this variant of the argu-ment, it does not meet the fundamental objection that the contract provides for laytime to bestarted by the notice (which means a valid notice) and in no other way.

I would therefore agree with the learned judge in his rejection of the argument that thenotice was a delayed-action device, effective to start the laytime automatically when, at a laterdate, the ship became ready to discharge the contractual cargo: and also the linked argumentthat time began when the charterers knew or ought to have known of the readiness.’’

The end result is abundantly clear in that, absent special factors like an impliedagreement, waiver, estoppel etc., laytime does not commence, where there is acontractual written notice of readiness which triggers off laytime, until a valid noticeof readiness has been tendered. In the light of the Court of Appeal’s decision it isimperative that masters of vessels follow the advice given by Mr Justice Donaldson


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(as he then was) in The ‘‘Timna’’37 (see earlier paragraph 100) in that mastersshould, as a good working rule, give notice of readiness and should go on givingsuch notices in order that, at a later date, nobody can contend that a valid notice ofreadiness was not given at a particular stage in the operations.

In The ‘‘Mexico 1’’ the courts were also concerned with waiver/estoppel (where, asalready stated, the Court of Appeal took a different approach to the High Court) butsee later, paragraph 112 et seq., for particular discussion of this aspect.

The ‘‘Mexico 1’’ decision is considered further in paragraph 110 by way of areported arbitration and also by way of the recent decisions in The ‘‘Petr Schmidt’’and The ‘‘Agamemnon’’ (see later, paragraph 111, for consideration of bothcases).

110. A Mexico 1 point arose in the arbitration reported in LMLN 387—3September 1994 where the arbitrators avoided the strict approach of the Court ofAppeal decision.

The vessel was chartered for the carriage of grain from the US Gulf to Spain. Thecharterparty provided that notification of the vessel’s readiness to load should bedelivered in writing at the office of the charterers or their agents between 09.00 and17.00 on all days except Sundays and holidays, and between 09.00 and 12.00 onSaturdays. The charterers or their agents were not required to accept notice ofreadiness on Saturdays after 12.00 or on Sundays or holidays. Following receipt ofreadiness to load or discharge, laytime would commence at 08.00 on the next day,Sundays and holidays excepted.

Clause 17(d) provided:

‘‘At the loading port(s), master’s notice of readiness shall be accompanied by pass of theNational Cargo Bureau . . . and USDA Inspector and Grain Inspector’s Certificate ofvessel’s readiness in all six holds and such wing tanks required for loading for the entire cargocovered by this charterparty . . . ’’

The vessel arrived at the pilot station of the loading port at 07.42 on Thursday 31January and was all fast at the elevator at 11.00 at which time a notice of readinesswas tendered. The main holds were passed by USDA and NCB inspectors at 11.45and the stevedores reported for work at 08.00 the following day, 1 February, atwhich time the statement of facts recorded that the notice of readiness wasaccepted. However, at some earlier point of time, after the inspection of the mainholds, it was decided that the vessel would need to use some of her wing tanks forthe carriage of the cargo. The wing tanks were inspected and passed by both USDAand NCB at 06.45 on 1 February. Those tanks were then used for the carriage ofgrain.

It was apparent that two written notices of readiness came into existence, bothstating that they had been tendered at 11.00 on 31 January, even though theyrecorded the times of events which occurred subsequent to the time when the noticewas said to be tendered, the times having been filled in by hand. One notice statedthat it was accepted as of 11.50 on 31 January, which was immediately following thepassing of the main holds by the inspectors. The other stated that it was accepted

37. [1970] 2 Lloyd’s Rep. 409.

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at 08.00 on 1 February, which was the commencement of office hours following thepassing of the vessel’s wing tanks. Both notices had been signed by the shippers.

Given the clear provisions of clause 17(d) that the notice of readiness should beaccompanied by the pass of NCB and the USDA inspectors relating to the six holdsand such wing tanks as should be required for loading, the charterers contendedthat any notice tendered at 11.00 on 31 January could not be a valid notice ofreadiness as neither the holds nor wing tanks had been passed at that time. Theyalso said that having regard to The ‘‘Mexico 1’’38 the subsequent passing of thevessel’s holds by the inspectors did not validate that notice so as to trigger thecommencement of laytime. Relying on the principle that the notice was not adelayed action device, effective to start the laytime automatically when, at a laterdate, the ship became ready to discharge the cargo, the charterers said that a freshnotice of readiness was required for the commencement of laytime, which noticewas never given. The owners contended that the second notice was valid.

It was held, although it was not clear when the second notice of readiness wasprepared, it appeared that it had been prepared by the master as soon as he becameaware that the wing tanks were to be inspected. On the other hand, it also appearedthat the master did not wish to retract from the earlier notice of readiness given at11.00 am on 31 January, presumably believing that it was in the owners’ interest fora notice to be given immediately on arrival even though it was not possible for thevessel to tender a valid notice at that time. Whilst there was no evidence one way orthe other as to whether the notice was handed to the charterers before or after theinspection of the wing tanks had taken place, it had been prepared in such a way asto allow for the recording of events as they occurred.

A copy of the notice was returned to the vessel showing that it had been acceptedat 08.00 on 1 February by the shippers who were acting as the charterers’ agents forthat purpose. As that was the earliest time at which a valid notice of readiness couldhave been tendered, that acceptance had to be to some effect. Either the noticeshould be treated as if it had been given again or a fresh one had been given at thattime.

In the case of The ‘‘Mexico 1’’ the notice of readiness was purportedly accepted bythe charterers at a time when the vessel was not ready for discharge. In the presentcase the acceptance took place at a time when the vessel was ready for discharge anda valid notice of readiness could have been tendered. The vessel did in fact com-mence loading at that same time. As the following day was a Saturday laytimeaccordingly commenced at 08.00 on Monday 4 February.

The owners were correct in their contention that the second notice was valid.

111. The ‘‘Petr Schmidt’’39 was concerned with notices of readiness tendered outsidethe hours stipulated in the charterparty but the vessel was in fact ready to load ordischarge cargo at the time that the notices were given. Were the notices invalid asper The ‘‘Mexico 1’’?

38. [1990] 1 Lloyd’s Rep. 507.39. [1997] 1 Lloyd’s Rep. 284 and [1998] 2 Lloyd’s Rep 1 (C.A.).


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The charterparty provided:

‘‘NOTICE OF READINESS

Upon loading at customary anchorage at each port of loading or discharge, the Master or hisagent shall give the charterer or his agent notice by letter, telegraph, wireless or telephone thatvessel is ready to load or discharge cargo, berth or no berth, and laytime, as hereinafterprovided, shall commence upon the expiration of six hours after receipt of such notice orupon the vessels arrival in berth . . . whichever first occurs.’’

There was an additional typed clause 30 which provided:

‘‘30 NOTICE OF READINESS CLAUSE

Vessel not to tender notice of readiness at loading port prior to laydays unless charterers givetheir consent to do so. Notice of readiness at loading and discharging port is to be tenderedwithin 06.00 and 17.00 hrs local time.’’

The vessel arrived at the loading port at 08.00 on 6 August 1994. She anchoredat that time and, when in fact ready to load, tendered a notice of readiness at 00.01on 9 August. She berthed at 00.40 on 10 August and loading commenced at 02.00on that day. The vessel then arrived at the first discharge port at 18.00 on 16 August1994 and notice of readiness was tendered at that time. She was in fact ready todischarge. She berthed at 07.50 on 17 August and discharge of cargo commencedat 13.45 on that day. The vessel subsequently arrived at the second discharge portat 18.00 on 18 August 1994 and a notice of readiness was tendered at that time.Again, she was ready to discharge. She berthed at 11.50 on 19 August and dischargeof cargo commenced at 17.40 on that day.

The owners contended that laytime commenced as follows:

(a) at 12.00 on 9 August at the loading port, that is six hours after the firstmoment when notice of readiness was permitted to be given according toclause 30 of the charterparty;

(b) at 07.50 on 17 August at the first discharge port, that is at the time ofberthing which occurred before the expiration of six hours after the firstmoment when notice of readiness was contractually permitted;

(c) at 12.00 on 19 August at the second discharge port that is six hours afterthe first moment when notice of readiness was contractually permitted.

The arbitrators decided that the notices of readiness, although they were notgiven during the hours stipulated by the charter, were not legal nullities and tookeffect so as to commence laytime, in accordance with clause 6, six hours after 06.00in the morning of the day (or day after) they were given.

The charterers appealed to the High Court. They submitted that a notice ofreadiness given outside the specified hours was invalid and a nullity. They said thatthe giving of a timely notice of readiness was a condition precedent to running oflaytime both as a matter of pure construction and of authority.

The owners submitted that the notices of readiness were good notices in thehands of the charterers at 06.00 hours on the relevant day. It was held by Mr JusticeLongmore (as he then was) that:

(1) the clause did not say in terms that a notice of readiness given outside thecontractual hours would not merely prevent laytime from starting but wasto be regarded as a nullity so that a second notice of readiness would be

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required; in these days of instantaneous communication it was somewhatsurprising to be told that a notice of readiness given five minutes beforethe contractual time was to be treated as a complete nullity; and it wasstrangely uncommercial that the charter should require in that event, asecond notice of readiness to be given;

(2) in the absence of express wording, the courts generally leaned againstconstruing clauses as conditions precedent to liability; and clause 30,requiring a timely notice of readiness to be given, would not be construedas imposing a condition precedent to the beginning of laytime providedalways that the vessel was in fact ready when the notice was given;

(3) the vessel was ready when the notices were given; they were notices whichstated the truth viz. that the vessel was ready to load or discharge; the onlything wrong about the notices was the time that they were tendered, whichwas outside the contractual hours specified in the contract; to say thatsuch notices were invalid and must therefore be nullities begged thequestion; they were accurate but non-contractual in that they were ten-dered outside the contractual hours; that did not make them invalidnotices in the sense of being nullities; timing provisions had nothing to dowith whether notices were nullities and it was only if a notice was untruethat it made sense to say that it was invalid in the sense of being anullity;

(4) although it might be correct to say that a notice given outside the con-tractual hours was invalid in the sense that it did not comply with thecontract it did not follow that the courts should hold that a prematurenotice of readiness was a nullity and of no effect; there was no good reasonwhy the notice should not be effective as at the time which the contractfixed for it to be tendered; Transgrain Shipping Ltd. v. Global Transport, The‘‘Mexico 1’’.40

(5) it was impossible to see any real prejudice in a premature notice providedit did not have contractual consequences before the time stipulated in thecontract; and there was no prejudice to the charterer because if circum-stances changed so that the ship was in fact not ready at the contractualtime of 06.00 the notice would be invalid in the traditional sense;

(6) the vessel was ready when the notice of readiness was given and she wasalso ready at 06.00 hours when the charterers were in receipt of anaccurate notice of readiness;

(7) the arbitrators said that there was a valid tender of notice of readiness atthe next 06.00 in circumstances when it was actually transmitted andreceived outside of the 06.00—17.00 period, there being no further actionrequired by anybody nor any change in circumstances; that conclusionwould be agreed with and the award would be upheld.

The charterers appealed, the question of law for decision being: Whether if a clausein a charterparty required a notice of readiness to be tendered within particular

40. [1990] 1 Lloyd’s Rep. 507, distinguished.


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hours of the day and it was, in fact, tendered outside those hours but at a time whenthe ship was physically ready to load or discharge, it was an invalid notice and anullity so that a fresh notice had to be given before laytime could begin, or whetherthe notice took effect when those hours began?

It was held by the Court of Appeal,41 that:

(1) the telex message was sent out of hours in the knowledge that it wouldremain on the receivers’ machine until the following day when it would beavailable for office staff to deal with it at or after 06.00; this was a clearcase of ‘‘tender’’ at that time; neither the fact that the message was‘‘received’’ by the charterers’ machine at the same time as it was sent, northe possibility that the office staff might take it off the machine and evendeal with it before 06.00, prevented this from being a ‘‘tender’’ at 06.00for the purposes of clause 30.

(2) a notice was invalid if the statements made in it were in fact incorrectwhen the notice was tendered, received or given; but it did not follow thatthe statements could not also relate to the time when they were made; theprimary requirement was that they should be statements of existing fact;and there was an implied representation that the statements were accurateat the moment when the notice was tendered but this did not mean thatthe notice was invalid because the statements were made at some earliertime; in such a case the implied representation was that the statementremained accurate when tendered.

(3) a notice which was tendered outside the hours permitted by clause 30 wasnon-contractual and could not be relied on as a valid notice, meaningeffective to start the time clock running for loading or discharge; noticestendered outside the permitted hours were non-contractual and therefore‘‘wrong’’, and not to be relied on as having contractual effect at the timeof tender; whether the defect was ‘‘cured’’ by the passage of time was aquestion of fact rather than law.

(4) the notice was given in writing and by means which were equivalent toleaving it at the offices to be attended at 06.00 the following day; there wasa tender at 06.00 whether or not there was previously a tender at the timewhen the telex or fax message was sent; clauses 6 and 30 should be readtogether and the receipt by the charterers of the notice could be said to bethe counterpart of the tender by the owners; the appeal would bedismissed.

In deciding as above the Court of Appeal considered The ‘‘Mexico 1’’,42 and The‘‘Agamemnon’’43 (the latter also referred to Chapter 1 in respect of arriving at theagreed destination). Regarding The ‘‘Agamemnon’’, which judgment came betweenthat of Mr Justice Longmore and the Court of Appeal in The ‘‘Petr Schmidt’’, it wassuggested by counsel in The ‘‘Petr Schmidt’’ that Mr Justice Thomas’s decision in


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The ‘‘Agamemnon’’ was inconsistent with Mr Justice Longmore’s judgment at firstinstance. Lord Justice Evans did not think so and was of the view that what MrJustice Thomas said, when referring to The ‘‘Petr Schmidt’’, was:

‘‘The notice was sent by telex or fax after 17.00 hours local time and was on the receivingmachine of the charterers at 06.00 hours the following morning. At the time it was sent andat 06.00 the following morning, the vessel was in compliance with the condition for giving thenotice of readiness—being at the contractual position and being ready to discharge. Thearbitrators held that it was a valid notice and there was a valid tender of notice at 06.00 hoursthe following morning. That decision was upheld by Mr Justice Longmore. He agreed withthat reasoning and held that the notice was a valid notice. He concluded that there was nogood reason why a notice given in these circumstances should not be effective as at the timeat which the contract fixed for it to be tendered. I respectfully agree with that decision.’’

Lord Justice Evans went on to say that, in his judgment, that was a correct analysisof the issue and of Mr Justice Longmore’s decision in the present case. Moreover,in his respectful view, Mr Justice Thomas’s decision in The ‘‘Agamemnon’’ wasentirely correct.

Lord Justice Peter Gibson, while agreeing with the above reasoning of LordJustice Evans, also had the following pertinent words to say:

‘‘The result for which Mr Priday contended seems to me manifestly to accord with commer-cial common sense. The fact that the transmission of the telex or fax giving notice ofreadiness occurred too early to comply with the terms of clause 30 was of no practicalsignificance for the charterers. As the experienced arbitrators said, it would never haveoccurred to the Master to send another notice of readiness after 06.00 hours as he would onlyhave repeated what he said previously; thus the sending of another notice would haveappeared a futile exercise. As the arbitrators pointed out, a notice of readiness telexed into thecharterers’ office at 05.59 would on the charterers’ view be invalid, whereas a notice telexeda minute or two later would be valid even though the office had not been opened at the time.The arbitrators considered that to be a commercial nonsense and they referred to thecommercial practice whereby notices are accepted as having been given at the start of officehours on the next working day.’’

Sir Christopher Slade agreed with the judgments of Lord Justice Evans and LordJustice Peter Gibson and concurred in dismissing the charterers’ appeal andupholding the arbitrators’ award. He also had this to say:

‘‘Laytime under this charterparty was pressed to begin on the expiration of six hours afterreceipt of the notice of readiness. The commercial purpose of the second sentence of clause30, as I would infer, must have been to ensure that the charterers or their agents should notbe saddled with the receipt of a notice of readiness, and the consequent commencement oflaytime, between 17.00 hours and 06.00 hours, that is to say outside what might be regardedas office hours.

The primary conclusion reached by Lord Justice Evans namely that on the facts of thepresent case there was a ‘tender’ at 06.00, is in my judgement entirely consistent not onlywith this commercial purpose but also with the wording of clause 6 and 30, which I thinkshould be read together. The wording of clause 6 makes it clear that the time of the giving ofthe notice plus the receipt thereof are the relevant factors for the purpose of the clause.’’

Commonsense came out top at all levels, by the arbitrators, by the CommercialJudge and by the three Lord Justices of Appeal so that in general, a written noticeof readiness, given to the charterers outside the office hours, will be considered to


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have been tendered at the commencement of hours on the next working day, absentany special factors.

The ‘‘Agamemnon’’44 has already been referred to in the context of a vessel havingto reach the agreed charterparty destination before a valid notice of readiness can betendered; see earlier paragraph 21 for the brief facts of the case and what wasdecided by the arbitrators and the commercial court judge (in outline). Mr JusticeThomas (as he then was) had two questions to consider on the basis of which leaveto appeal was granted:

1. Upon the true construction of the charterparty, what is the effect of anotice of readiness which is given at a time when the vessel is ready but forthe fact that she has not arrived at the place required under thecharterparty?

2. In particular, what is the effect upon such notice of readiness if the vessel,remaining in the same state of readiness, subsequently arrives at the placeat which the charterparty required the notice to be given?

His Lordship decided that when the notice of readiness was given at the South WestPass, the vessel had not, on the findings of fact made by the arbitrators, reached apoint as close to the loading berth as she might be permitted to approach; she onlyreached that point when she arrived at the Baton Rouge anchorage at 10.25 on 7October. Thus at the time the notice was given, the Owners had not complied withthe terms of the charterparty for the giving of notice. It was not a valid notice andcould not operate as the event to trigger the commencement of laytime. Therefore,as in The ‘‘Mexico 1’’, unless something happened after the notice was given to makelaytime start, it never started at all. No further notice was given and nothing furtherof relevance happened which is raised by the questions before the court on theappeal.

The owners sought to distinguish The ‘‘Mexico 1’’ on the basis that the notice wasuntrue in that the ‘‘Mexico 1’’ was not in fact ready to discharge the cargo (althoughthe notice stated that it was), thus making the notice invalid, whereas in The‘‘Agamemnon’’ the notice was truthful in its terms but inchoate because it had notbeen given at the right point of time. Mr Justice Thomas said that the notice in The‘‘Agamemnon’’ was not truthful (the vessel had not reached the point which it waspermitted to reach that was nearest to Baton Rouge), but he went on to consider theposition if the notice had been a truthful notice and came to the same conclusion:the decision in The ‘‘Mexico 1’’ was quite clear that a valid notice of readiness canonly be given when all the conditions set out in the charterparty for its giving hadbeen met, including the geographical position, and the charterparty geographicalposition had not been met by the Agamemnon when the notice of readiness was sentwhen the vessel arrived at the South West Pass. The port of Baton Rouge did notextend all the way down to the Pass; it had its own physical boundaries and was ineffect a separate port with its own authority like other ports on the MississippiRiver.

44. [1998] 1 Lloyd’s Rep. 675.

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The owners also sought to rely upon the decision of Mr Justice Longmore in The‘‘Petr Shmidt’’ (see earlier this paragraph). Mr Justice Thomas did not accept thatThe ‘‘Petr Shmidt’’ was of help to the owners, although he agreed with that decision,of which he had the following to say:

‘‘It applies the principles set out in The ‘Mexico 1’; the notice was valid as the conditionsstipulated in the charter as to the readiness of the ship and her arrival at the contractual placeof destination had been met. The decision was solely concerned with the time of tender of anotice which was in fact valid as it met the conditions stipulated both at the time it was sentand the time it was tendered. At the time the notice of readiness was given in this case, thevessel was not at the point she was required to be at and therefore the conditions for givinga notice were not met.’’

In his conclusion Mr Justice Thomas also had the following pertinent words tosay:

‘‘In my judgment the decision in The ‘Mexico 1’ is clear. . . . It has been observed . . . that thisdecision caused a certain amount of consternation in shipowners’ and ship operators’ officesthroughout the world because of its repercussions regarding all voyage charterparties whichare subject to English law. If the shipping community did not find the law as clearly set outby Lord Justice Mustill (as he then was) in The ‘Mexico 1’ met its commercial needs, it wasopen to them to modify the language of charterparties to start laytime running in a differentway, by a simple provision that would permit the giving of an inchoate notice which wouldtake effect on a subsequent event. They no doubt might have hesitated long and hard beforedoing so, as the principles on which The ‘Mexico 1’ is based are straightforward, easy tooperate and give rise to far fewer problems than contractual language that would enable‘inchoate’ notices to be given which would take effect upon a further event stipulated in thecharterparty.

In any event, as has been repeatedly pointed out, there has long been a simple solution tohand. As long ago as 1970, Mr Justice Donaldson said in The ‘Timna’ [1970] 2 Lloyd’s Rep.409 at 411 all Masters should:

‘Go on giving such notices in order that, when later the lawyers are brought in, no one shallbe able to say: ‘‘If only the master had given notice of readiness, laytime would have begunand the Owners would now be able to claim demurrage.’’ ’

The Master could easily have done so in the present case. This requirement is simple andmakes for much greater commercial certainty than attempts to revive the concept of allowinginchoate notices to be given which take effect upon a subsequent event.’’

It is obvious from cases like The ‘‘Agamemnon’’ that masters of vessels are not doingwhat they were exhorted to by Mr Justice Donaldson (see above and also earlier atparagraph 100) and no doubt many masters will continue not to take heed of theEnglish law regarding the valid tendering of a notice of readiness. It may well be thatthe time has come when owners of vessels, if they have not already done so, shouldgive serious thought to making a radical change to their approach to the commence-ment of laytime and the tendering of a notice of readiness (NOR). They should bethinking of a notice of arrival (NOA) clause in their charterparties whereby thelaytime clock starts ticking as soon as the vessel arrives off the pilotage area for theport (or for a stipulated number of hours after the notice of arrival is tendered) andthe vessel is in all respects ready to commence loading/discharging, whether in berthor not or whether or not a notice of readiness is tendered, and laytime is onlysuspended for the laytime exceptions and/or breaches of contract by the ownerswhich occasion delay to the charterers.


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The later cases of The ‘‘Mass Glory’’45 (already referred to Chapter 3, paragraph61 in relation to damages) and The ‘‘Happy Day’’46 also had something to say aboutthe correctness of a notice of readiness. They adopted and confirmed The ‘‘Mexico1’’ and The ‘‘Agamemnon’’ in respect of the strict approach to the correctness of anotice of readiness as set out earlier in this chapter. Both of the former cases areconsidered later, in the next section of the book, which relates to the acceptance ofa notice of readiness and also to waiver and to estoppel.

ACCEPTANCE OF NOTICE OF READINESS INCLUDINGWAIVER/ESTOPPEL ETC.

112. In the past there was some controversy in respect of circumstances wherecharterers or their agents or those to whom a notice of readiness should be tenderedaccepted a notice which had been tendered by the master; in such circumstances,was it the end of the day in that the charterers could not, thereafter, say that thenotice of readiness was invalid so as to prevent the running of the laytime clock?

Even if the laytime clock started in such circumstances the charterers may be ableto claim damages against the owners (and so recover the demurrage which wouldotherwise fall upon them) if there was a breach of contract by the owners, e.g. vesselrequired by an express provision to be presented with holds clean and, after thecommencement of loading, one of them is found to be dirty and this causes somedelay in the loading operation. Therefore, in some circumstances, it may not matterif the notice of readiness is accepted since charterers will be able to claw back timeostensibly lost to them under the breach/damages principle.

However, there can be other circumstances where notice of readiness is accepted(not just received) and the vessel is delayed in berthing by way of a cause which doesnot amount to a breach of contract by the owners such as bad weather. Alternatively,a condition precedent such as entry at the Custom House is not satisfied. In suchcircumstances, does laytime commence? Before going further it is worth mentioningthat Mr Justice Donaldson (as he then was) did say, in The ‘‘Helle Skou’’,47 that if anotice of readiness was accepted by the charterers they could not resile from this(see earlier, paragraph 108), save upon grounds of fraud. In that case the facts werethat, by a provision in the charterparty the vessel was to be presented for loadingwith holds clean and dry and free from smell. The vessel arrived at Antwerp on 22January to load a cargo of skim milk in bags. Notice of readiness was given on 23January and the charterers made no attempt to inspect the vessel prior to thecommencement of loading. Stevedores boarded the vessel at 08.00 on 24 Januaryand loading commenced at 08.30; later on 24 January there was a reported smell offishmeal in some of the holds. In the event the partially loaded cargo had to bedischarged so that the vessel could be cleaned; she reberthed on 28 January andreloading commenced on 29 January.


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In deciding that the charterers had accepted the notice of readiness and could notlater claim to reject it (save upon grounds of fraud which were in any event absent)the judge stated what has already been set out earlier in paragraph 108 and thenwent on to hold, in respect of the breach by the owners and damages, that thecharterers would suffer no loss if laytime was taken to commence when the vesselreturned to the loading berth (13.30 on 28 January) and on the assumption that thecost of the abortive loading and discharging of cargo had been met in some otherway. The decision made sense from a practical/commercial viewpoint but it may notlie easily with the Court of Appeal’s decision in The ‘‘Mexico 1’’48; see earlierparagraph 109 and later paragraph 116.

The cases dealing directly with the subject are The ‘‘North King’’,49 The ‘‘Shackle-ford’’50 and The ‘‘Mexico 1’’48 but, indirectly the Court of Appeal decision in Pan-chaud Freres S.A. v. Etablissements General Grain Co.51 which case has, in the writer’sopinion, relevance to the subject.

113. In The ‘‘North King’’49 the vessel arrived at the loading port at 22.30 on Friday,31 October, and anchored. On Saturday, 1 November, at 09.00 the owners’ agentsat the port tendered to the charterers’ agents a notice of readiness and, below thesignature of the owners’ agents, there was typewritten: ‘‘The notice of readiness wastendered and accepted at 09.00 on November 1 as per charterparty, time to com-mence as per charterparty dated . . . ’’ This typed sentence was followed by thesignature of the charterers’ agents. The case went to arbitration and the umpirefound that the charterers’ agents, with actual or ostensible authority of the charter-ers, agreed to accept the notice of readiness on 1 November and, pursuant to thatagreement, they so accepted it. He also found that the charterers were estoppedfrom objecting to the notice which had been given.

When the case arrived in the High Court, under the special case procedure, MrJustice Mocatta decided the case on the basis that the charterers’ agents, acting withthe authority of their principals, had accepted the vessel’s notice of readiness on aSaturday which was a holiday, when arguably under the charterparty they shouldnot have done so, in pursuance of an agreement with the owners’ agents. In view ofthis decision, he did not have to decide on the estoppel point but he did go on andhave this to say about estoppel as an independent argument:

‘‘I have no doubt that the proper inference of fact is that a representation was made to theeffect that if a proper notice, in the sense that the ship was then ready physically was given onNovember 1, before noon, it would be treated as having the same effect as a similar noticegiven on any other Saturday. The question, however, whether the owners acted upon thatrepresentation in a way in which they would not otherwise have acted is, perhaps, moredifficult. Accordingly, although it may be that on the point of estoppel, if it had stood alone,I would have reached the conclusion that the owners were entitled to succeed, I think it bestnot to base my judgment in the alternative upon that, but to restrict it to the firm ground withwhich I have already dealt, namely, that there was an agreement between the parties the effect

48. [1990] 1 Lloyd’s Rep. 507.49. [1971] 2 Lloyd’s Rep. 460.50. [1978] 1 Lloyd’s Rep. 191 and [1978] 2 Lloyd’s Rep. 154; above, para. 87, regarding special

clauses having relevance to readiness.51. [1970] 1 Lloyd’s Rep. 53.

Para. 113ACCEPTANCE OF NOTICE OF READINESS

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of which was to treat Saturday, November 1, in the same way as any other Saturday for thepurposes of the giving of a notice of readiness.’’

It appears, from the obiter dicta of Mr Justice Mocatta that he would have wantedto have seen some reliance by the owners on the representation by the charterersbefore deciding that the owners were entitled to an estoppel because of the accep-tance of the notice of readiness by the charterers. Reliance can form an essentialpart of the doctrine of estoppel and will be referred to again later in this chapter.

Before leaving The ‘‘North King’’49 mention is made of what the learned umpire(the author of Summerskill on Laytime) had to say in respect of the charterers’contention that, since the acceptance was based upon ‘‘as per charterparty time tocommence as per charterparty . . . ’’, this was a qualification to the acceptance ofthe notice of readiness so that the notice of readiness could not be effective untilMonday, 3 November in view of the charterparty requirement that notice of readi-ness could not be given on the Saturday. The learned umpire had this to say:

‘‘I do not read the words ‘as per C/Party’ as a qualification to their acceptance, but rather asan acknowledgement that the Notice of Readiness was in all respects in accordance with therequirements of the Charterparty. Their acceptance that time was to commence ‘as perCharterparty’ similarly in my view acknowledged that laydays would commence on the nextbusiness day thereafter.’’

It is pointed out that there has been no judicial ruling regarding what the learnedumpire stated above save that Sir David Cairns did say, in the Court of Appeal inThe ‘‘Shackleford ’’,52 that ‘‘acceptance of a notice of any kind usually means accep-tance of the notice as an effective notice’’; see later paragraph 114.

Estoppel, vis-a-vis a notice of readiness, did not raise its head in the courts againfor something like seven years after The ‘‘North King’’.49 During that time manymaritime arbitrators in the City of London were reluctant to decide against charter-ers on an estoppel point simply because of a naked acceptance of a notice ofreadiness by the charterers or their agents. It was not until the Shackleford50 decisionthat the spotlight once again focused upon the subject in the courts.

114. The ‘‘Shackleford ’’50 tended to have special circumstances which allowed it tobe distinguished from the run of the mill circumstances (notice of readiness ten-dered by the master and simply endorsed ‘‘accepted’’) for an estoppel to operate infavour of the owners. Some of the facts have already been set out earlier (seeparagraph 87) in that the vessel had to wait at an anchorage for some considerabletime before moving into a discharging berth. The all-important facts, vis-a-visestoppel, were that notice of readiness was immediately given after the vessel arrivedat Constanza Roads on 15 October and was accepted at that time by the receivers.The receivers endorsed their acceptance on a notice of readiness. Some days later,on 23 October, the receivers’ agents cabled the master stating that they had con-tacted the receivers and that time should count as per charterparty terms fromarrival. On 28 October the receivers’ agents cabled the owners’ agents in Londonagain stating that time was counting from arrival at Constanza Roads according to

52. [1978] 2 Lloyd’s Rep. 154.

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the charterparty. The vessel did not obtain customs clearance until 26 Novemberwhen she went to a berth to bunker.

In the arbitration the arbitrator decided that the charterers were estopped fromdenying that they had accepted a notice of readiness and his decision on this aspectwas upheld in the High Court. The arbitrator did make a finding that the ownersand/or master relied upon the receivers’ acceptance of the notice of readinessinasmuch as they made no attempt to procure an earlier berth, for example, abunkering or watering berth, so that customs entry might be obtained at an earlierdate.

In his judgment, Mr Justice Donaldson (as he then was) stated that the notice ofreadiness could have been rejected for prematurity or it could have been ignored. Infact, it was expressly formally accepted on no less than three occasions. He referredto his earlier decision in The ‘‘Helle Skou’’.53 In his judgment, acceptance of thenotice created an estoppel by conduct within the doctrine propounded in PanchaudFreres S.A. v. Etablissements General Grain Co.54 and the charterers could not beheard to allege that the notice was premature.

In respect of the charterers’ argument that any plea of estoppel involved a findingthat the person putting forward the plea relied upon the conduct of representationand did so to his detriment, his lordship did not wholly agree. He cited what LordDenning said in the Panchaud Freres case54 in that the basis of estoppel by conductis that a man has so conducted himself that it would be unfair or unjust to allow himto depart from a particular state of affairs which another has taken to be settled orcorrect. In other words, you cannot blow hot and cold. He also cited what LordJustice Winn had to say in the same case:

‘‘ . . . what one has here is something perhaps in our law not yet wholly developed as aseparate doctrine—which is more in the nature of a requirement of fair conduct—a criterionof what is fair conduct between the parties. There may be an inchoate doctrine stemmingfrom the manifest convenience of consistency in pragmatic affairs, negativing any liberty toblow hot and cold in commercial conduct.’’

Mr Justice Donaldson then went on to say:

‘‘I do not understand these judgments as any evidence of positive reliance. If a man soconducts himself that another can reasonably regard a particular state of affairs as existing orsettled, the only question is whether or not in all the circumstances it would be unfair to allowhim to resile. It was in this context that the position of the other party had to be considered:deliberate action or inaction and reliance upon the alleging estoppel conduct will providegood, and probably overwhelming, reason for holding that it would be unfair and unjust toallow any resilement; evidence that the conduct was unnoticed or disregarded, or treated as of noimportance, might well lead to the opposite conclusion.’’

The decision of Mr Justice Donaldson regarding estoppel was upheld by theCourt of Appeal. Giving the leading judgment, Sir David Cairns stated that thereceivers had to have authority to make some commercial decisions on behalf of thecharterers and as a matter of commercial practicality they must have had impliedauthority to waive a condition regarding the commencement of laytime. Almost

53. [1976] 2 Lloyd’s Rep. 205; earlier, para. 108.54. [1970] 1 Lloyd’s Rep. 53.


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nothing was said regarding the Panchaud Freres case54 save that the case was one ofestoppel between buyer and seller and simply gave a general account of the circum-stances in which estoppel by conduct could arise. In more detail in respect of theestoppel point the charterers submitted five reasons why there was no estoppel, twoof which were: (1) that charterers got no benefit from accepting the notice ofreadiness and it was relevant to take into account the unlikelihood of their surren-dering the protection of clause 13; (2) that there was no express surrender of thecondition as to customs entry.

Sir David Cairns had this to say:

‘‘Now it is clear that in construing a contract it is right to take into account all the surround-ing circumstances. I think that the same is true in the realm of estoppel: what is said or writtenis to be interpreted in the light of the circumstances, and words should not be given ameaning which obviously could not be intended in those circumstances. But a clear meaningcannot be rejected because it involves the surrender of rights; the surrender may have resultedfrom generosity, from carelessness or from the lack of communication between principal andagent. If what is said is sufficiently clear and is relied on it can make no difference that whatwas said was not in the best interest of the person on whose behalf it was said.

Now to found an estoppel there must be a clear representation: Woodhouse A.C. Israel CocoaS.A. v. Nigerian Produce Marketing Co. Ltd.55 The speeches in the House of Lords, however,show that reasonable clarity is sufficient: see per Lord Pearson at pp. 450 and 762C and perLord Salmon at pp. 457 and 771D. Now it is true that in this case there was no expresssurrender of the condition as to customs entry and that the only endorsement made on thenotice of readiness was the signature and stamp of Agroexport against the words ‘timeaccepted’ in print and ‘15th October 1976 at 08.26’ in handwriting. I have no doubt that thatwas sufficient to constitute ‘acceptance’—whatever acceptance may mean. The wording ofthe two cables is puzzling because of the words ‘as per charter-party terms’ in the one and‘according to the charter-party’ in the other. But the words ‘your time should count . . . from arrival’ and ‘time counting from arrival on roads’ can only refer to laytime and are onlyconsistent with the notice of readiness having been accepted as a valid notice of readiness soas to start the laytime clock running.

Mr Rix contends that the endorsement might mean merely ‘received’ or ‘accepted as a truestatement that the vessel is in a state of readiness to discharge’. Either of these seems to mea strained meaning. Acceptance of a notice of any kind usually means acceptance of thenotice as an effective notice. The experienced arbitrator and the experienced commercialjudge so interpreted this acceptance without any indication that it had occurred to them thatit could have any other meaning. In my judgment they were right to do so.’’

The above gives support to the premise that if charterers or their agents accept anotice of readiness, simply by the endorsement ‘‘accepted’’, and this is relied upon,that will be binding upon the charterers as an effective notice of readiness savewhere the notice is shown to be bad and, of course, where there has been fraud.

115. Despite the Shackleford56 decision some arbitrators continued to be reluctantto allow owners the benefit of an estoppel when charterers or charterers’ agentssimply endorsed a notice of readiness with ‘‘accepted’’ so that the acceptanceappeared to be something of a formality. For many arbitrators there had to be, ingeneral, something more than a mere acceptance of a notice of readiness (oftenlooked upon as nothing more than a receipt), such as the circumstances in The

55. [1972] 1 Lloyd’s Rep. 439; [1972] A.C. 741.56. [1978] 1 Lloyd’s Rep. 191 and [1978] 2 Lloyd’s Rep. 154; see para. 114, above.

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‘‘Shackleford ’’.56 For example, in The ‘‘Achillet’’57 arbitration58 the vessel arrived offthe loading port on 21 March and tendered her notice of readiness which wasaccepted by the charterers’ agents on 22 March. In the meantime, the vesselremained at anchor awaiting berthing instructions. The vessel berthed late on 22March and inspection of the cargo tanks occurred at 04.30 on 23 March; the tankswere found unsuitable for the intended cargo and it was not until 25 March thatloading the vessel commenced. The owners contended that laytime was com-menced by the acceptance of the notice of readiness by the charterers’ agents on 22March but the tribunal, in a unanimous award, decided against them on thiscontention. The arbitrators had this (inter alia) to say:

‘‘The owners relied upon the Shackleford decision in support of their contention that therefinery, by way of the acceptance of the notice of readiness of March 22, estopped thecharterers from denying the validity of the notice of readiness. The Shackleford56 case had itsown special facts which supported an estoppel argument; further, there was no question ofthe Shackleford being rejected on account of the state of her cargo spaces after she hadberthed, as in the present case. While we might well like to find a way to allow the owners thebenefit of the time while the vessel was waiting off Aden we do not think that an estoppel canbe established where mere acceptance of the notice of readiness on the evening of March 22was followed by a rejection of the vessel not many hours later; further, there was no relianceby the owners on the acceptance of the notice neither did they suffer any detriment onaccount of the acceptance of the notice. The mere acceptance of the notice of readiness couldnot, in the context of all the relevant circumstances, be considered as a surrender by thecharterers of their fundamental right to reject the notice of readiness when it became clearthat the vessel was not ready to load the intended cargo. Much more was required from thecharterers’ camp in order for an estoppel to be founded whereby there was a clear meaningthat laytime would commence irrespective of the result of an inspection of the cargo tankswhich was due to take place in the near future. It is worth mentioning that the notice ofreadiness which was passed to the refinery read ‘please acknowledge receipt by signing andreturning to me the attached three copies’ and was followed by the typed, ‘accepted on’; wethink that the refinery were making more of an acknowledgment of a receipt than a bindingacceptance of a notice of readiness. The owners’ estoppel argument fails.’’

The above case could, in the light of The ‘‘Mexico 1’’ and earlier decisions, havebeen decided, with the same end result, by the application of the premise that anotice of readiness, which is bad when given, is a nullity and therefore of no effectso that, absent waiver/estoppel, a further notice of readiness had to be tenderedwhen the vessel was ready to load/discharge.

Other arbitrations involving a premature notice of readiness and acceptance of anotice of readiness/waiver/estoppel were reported in 1987, 1989, 1990 (all of whichare considered below). In LMLN 262—18 November 1989 the vessel was charteredunder the Vegetable Oil Charterparty form (‘‘Vegoil’’). The owners tendered noticeof readiness to load at 08.30 on 30 November. At that time the vessel was stilloutside the commercial limits of the port and was therefore not an arrived ship. Thevessel did not come within the limits of the port until 18.50 on 30 November.

57. 1985.58. Also cited in LMLN 180—25 September 1986.


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There was a dispute as to when laytime commenced. It was held that the effect ofThe ‘‘Massalia (No. 2)’’59 and The ‘‘Mexico 1’’60 was that there was no general rulethat premature notice of readiness became automatically effective when a vesselbecame ready. The general rule was that a notice had to be valid when tendered andif it was invalid it was ineffective. Once the conditions for a valid notice of readinesshad been tendered, a fresh notice had to be tendered. If it was not tendered, theoriginal notice could only be considered to have become effective in the event of thecharterers having waived their contractual entitlement to a valid notice (whichwould in fact be a second or further notice).

In the present case although the notice was premature and invalid, the chartererstreated the notice as being effective because in reliance upon it they had the cargoavailable for immediate loading when the vessel berthed. The owners’ agents weregiven no reasons to suspect that the charterers were treating the original notice asanything other than valid and effective. The charterers therefore waived their rightto a fresh notice. Arrival at the deep water anchorage at 18.50 on 30 Novembertherefore triggered the running of laytime.

In the above arbitration the tribunal had The ‘‘Mexico 1’’ High Court decisionbefore it but it did not have the benefit of the Court of Appeal’s judgment regardingestoppel (see later paragraph 112); it might have made a different decision if it hadapplied, strictly, what the Court of Appeal had to say in respect of waiver/estoppelin the context of a notice of readiness.

However, in LMLN 206—26 September 1987 the vessel was chartered on theBaltimore Form C charter for a voyage from the U.S. Gulf to the Arabian Gulf.Printed lines 63 to 66 of the charterparty provided that notice of readiness to loadhad to be ‘‘accompanied by pass of the Inspectors attesting to the fact that the vesselis clean-swept and ready in all compartments . . . ’’

The vessel tendered notice of readiness which was not accompanied by therequisite inspectors’ pass. The charterers’ agents accepted that notice of readiness.It was not until a day later that the requisite pass was issued.

The charterers contended that the notice of readiness was invalid because it wasnot accompanied by the requisite pass. The owners argued that even if the initialnotice of readiness was defective, the fact that the charterers’ agents accepted thenotice precluded the charterers from relying upon any defect in it.

It was held that it was sometimes unclear whether the obligations listed before avalid notice of readiness could be given constituted conditions precedent or whetherthey constituted obligations whose breach gave rise only to the right to recoverdamages. A close reading of lines 63 to 66 showed that the obligation to have a passaccompanying the notification was one that was closely bound up with the giving ofthe notification. It could not be treated as an independent obligation. Accordingly,the obligation to obtain the appropriate pass was a condition precedent and thenotice of readiness that was tendered was invalid.

However, that initial notice of readiness had been accepted by the charterers’agents some two hours after it had been tendered. The owners had argued that as


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a result of the acceptance of the notice of readiness and/or the fact that the vesselwas subsequently prepared for the loading of cargo, the charterers had waived orwere estopped from relying upon any defect in the notice of readiness.

The general rule was that before a valid notice of readiness could be tendered allthe requirements imposed by the charterparty had to have been satisfied. However,in certain circumstances, a charterer might be estopped from relying upon a defectin a notice—see The ‘‘Shackleford’’.61 Two of the main factual considerations under-lying the Shackleford decision were the difficulty faced by the owner in establishingthe true position and the closely connected identity of the charterers and theiragents.

Such considerations might be very significant when one was considering a port inEastern Europe. However, they could scarcely apply to a port in the United States.The owners could have been in no doubt about the fact that the U.S. Departmentof Agriculture inspection had not taken place at the time when the initial notice ofreadiness was tendered. Furthermore, although from a strict legal point of view anagent could act in such a way as to bind his principal, the owners would have hadno reason to assume that the agents in question could be identified more closelywith their principals than any other apparently independent port agent.

In addition, there was no evidence that the owners had in any way acted to theirprejudice as a result of the charterers’ agents having accepted the notice ofreadiness.

Consequently, the arguments of waiver and/or estoppel would be rejected. Lay-time commenced at 08.00 on the day after the requisite pass had been issued.

And again in LMLN 266—13 January 1990 (also referred to earlier in paragraph87, Chapter 5 regarding special clauses applicable to readiness) the owners failed inan acceptance of readiness contention. The vessel was chartered under the Asba-tankvoy as amended to carry a cargo of crude oil from Africa to the U.S. fordischarge into lighters. The charterparty provided that the vessel was to complywith all U.S. Coast Guard regulations and contained a warranty by the owner thatat all necessary times the vessel would have on board all certificates required forservice in the United States.

The charterparty further provided that laytime should commence six hours afterreceipt of notice of readiness by charterers or when the first lighter arrived along-side, whichever occurred first.

United States law required that a ‘‘certificate of compliance’’ had to be issuedbefore foreign vessels could operate in navigable waters of the United States orcould carry out the function of transferring oil. Such certificate was issued only afterthe vessel had been examined and found to be in compliance with the prescribedregulations.

The vessel arrived at the lightering anchorage at 16.30 on 4 August. Despite thefact that the vessel had no certificate of compliance on board the owners gave anotice of readiness. The cargo interests, not realising that a certificate of compliancehad not been issued, accepted and signed the notice of readiness. The certificate of

61. [1978] 1 Lloyd’s Rep. 191.


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compliance was eventually issued at 16.00 on 5 August. The lighter made fastalongside at 11.00 on 6 August and discharge commenced thereafter.

There was a dispute about laytime. The owners said that laytime commenced at22.30 on 4 August. The charterers said that laytime commenced at 11.00 on 6August when the lighter made fast alongside.

The charterers contended that because of the absence of a certificate of com-pliance on board the vessel at the time when the owners gave their notice ofreadiness at 16.30 on 4 August, that notice was premature and wholly ineffective.The owners were entitled to give a new notice of readiness at 16.00 on 5 Augustwhen the certificate came to hand, but, having failed to do so, the owners were notentitled to count the commencement of laytime until the lighter was all fast along-side, which was 11.00 on 6 August.

The owners said that the notice of readiness was validly given as there was noprovision in the charterparty that the procurement of a valid certificate of com-pliance was a condition precedent to the giving of notice of readiness; that thecertificate was secured before the arrival of the lighter so that no time was lost; thatthe vessel was ‘‘ready’’ both in a physical and a legal sense when the notice ofreadiness was tendered at 16.30 on 4 August; that the charterers had accepted thenotice and were therefore estopped from arguing its effectiveness; and that, alter-natively, if a valid notice of readiness was not tendered and/or accepted at 16.30 on4 August, the charterers were liable to the owners in damages for any demurrage lostby the owners since clause 9 of the charterparty provided that the charterers had todesignate and procure a berth which was reachable on arrival.

It was held that although the cargo interests had signed the notice of readiness asaccepted, they did not learn about the absence of the certificate of compliance untilsome time later. When the cargo interests signed the notice they were entitled tobelieve that it conveyed an accurate statement of the vessel’s readiness to discharge.It did not. It was deficient in one vital element, namely a statutory requirementpermitting the discharge to take place.

The ‘‘acceptance’’ by cargo interests of what was in fact a nullity did not invest itwith ratification unless the charterers expressly or impliedly subsequently waivedtheir right to reject an ineffective notice when they became aware of the trueposition. That did not happen in the present case. The notice should have beenre-served after the vessel had been issued with the certificate of compliance whichwas at 16.00 on 5 August. It was not re-served. The good working rule for mastersto go on giving notices was not observed.

The cases of The ‘‘Helle Skou’’62 and The Shackleford’’63 cited by the owners, weredifferent. In the former, there had been acceptance of the notice of readiness andloading had started, so that the notice was far from being a nullity and it wasconsidered that the charterers could not resile from such a position. In the latter, thenotice of readiness had been formally accepted on three occasions by receivers andthey were estopped by their conduct from alleging otherwise. In the present case


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there was no ‘‘acceptance’’ of that kind and therefore nothing on which the ownerscould rely to base a submission of estoppel.

A legal and contractual requirement that the vessel should have on board allcertificates without which she could not operate on the navigable waters of theUnited States or transfer oil could hardly be more clearly a condition precedent tothe giving of a notice of readiness indicating her readiness to discharge. It was notsufficient that the vessel was physically ready. She had to be legally ready as well.

This decision accords more with what the Court of Appeal had to say in The‘‘Mexico 1’’, see below. Further, the arbitration is a good illustration of legal readi-ness and so has relevance to the earlier paragraph 78 in respect of documentationand legal readiness.

116. The arbitrations referred to earlier in paragraph 115 illustrate the approach ofsome arbitrators in the past to the acceptance of a notice of readiness by charterers,within the context of waiver/estoppel. Arbitrators have often used the doctrine ofestoppel in order to achieve what they considered to be a fair result to the facts ofa particular case and thus reflect the wider approach of Lord Justice Winn in thePanchaud Freres case,64 (see earlier paragraph 114) and of Mr Justice Donaldson (ashe then was) in the Shackleford case (see earlier paragraph 114). In other words, theytook a flexible approach in order to come up with what they thought to be acommercially just decision. However, in The ‘‘Mexico 1’’ the Court of Appealconsidered waiver/estoppel in connection with the acceptance of a notice of readi-ness by charterers and took a more conservative approach to the subject than thattaken in some of the earlier cases. The decision of the High Court judge in that casein respect of waiver/estoppel has already been set out earlier in paragraph 109 buthis decision was reversed in the Court of Appeal, Lord Justice Mustill (as he thenwas) having this to say in respect of waiver/estoppel:

‘‘Now I am not sure that I quite agree with the learned judge that it is unnecessary to enquireinto the way in which the conduct of the parties might turn a contract that laytime would starton the happening of one event into a contract that it would start on another. For my part Iam sceptical about the deployment of the elusive concept of waiver, and would prefer to lookfor conduct from which one could infer either a bilateral agreement to vary the charter, or theexistence of what has come to be called ‘estoppel by convention’: namely, a situation in whichthe parties, having conducted themselves on the mutual assumption that their legal relationstake a certain shape, cannot afterwards be heard to assert the contrary. I do not for a momentdoubt that such a state of affairs, if proved to exist, could justify the conclusion that laytimebegan, after the giving of an invalid notice, but before the moment of actual discharge. Onemust, however, ask whether this is what the arbitrators found, in the light of the undisputedfacts.

First as to the facts. Whatever precisely the doctrine, one would be looking for some kindof bilateral representation and action, on the basis that the contractual arrangement aboutlaytime had been replaced by something new. What do we find here? A notice invalidly given.The arbitrators have found, via the statement of facts, that it was ‘accepted’. (Often thiswould be by countersignature of a document. Since the notice here was rendered by telex, wedo not know the form of the acceptance.) However, since, as the arbitrators point out, theacceptance must have been given in reliance upon the master’s implied assurance that theship was ready for discharge, it cannot have any value. What else? Nothing, so far as the award

64. [1970] 1 Lloyd’s Rep. 53.


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is concerned. When the ship was ready to discharge the contractual cargo, there was nonotification to the charterers or their agents. Nor is anything found in the award by way of anintimation on the part of the charterers they accepted that the laytime could now begin. Itseems that the moment when the ship became ready for discharge passed in completesilence.

These are thin materials indeed for the inference of any waiver, estoppel or agreement. Sothin that if I had understood the arbitrators as finding that there was a second ground of thiskind quite distinct from the decision founded on the ‘inchoate’ notice for identifying thecommencement of discharge with the commencement of laytime it would have been forserious consideration whether the award should be remitted, to enable the arbitrators to statewhether there were facts omitted from their notably full and clear reasons which justified theinference of a variation from the regime established by the contract. I do not, however, readthe reasons in this sense. Certainly the passage quoted above might give this impression, readout of context. It is, however, incorporated into a treatment of the decision based on the ideaof an inchoate notice, of which I believe it to form part. As it seems to me, the arbitrators aredoing no more than saying that the concept of the notice as having the capacity to maturewhen the ship was ready to discharge was consistent with the conduct of those on the spot.If this idea is set aside, as in company with the judge I consider that it must be, then there isno other basis in the award for finding that the laytime began before the operation ofdischarge actually commenced.’’

It now seems clear that conduct inferring a bilateral agreement to vary thecharterparty, or the existence of estoppel by convention is what parties have to focusupon if the laytime clock is to start in circumstances where there is no valid noticeof readiness. Estoppel by convention is, according to Lord Justice Mustill (nowLord Mustill), a situation in which the parties, having conducted themselves on themutual assumption that their legal relations take a certain shape, cannot afterwardsbe heard to assert the contrary. This phraseology may not be of much practical helpto those persons at the sharp end of shipping operations such as ships’ masters andagents who are dealing on the spot with notices of readiness and related matterssuch as the readiness of the vessel and the commencement of loading/dischargingoperations; it serves to emphasise the cardinal point that a master of a vessel should,as advocated by Mr Justice Donaldson in The ‘‘Timna’’ (see earlier paragraph 100),go on giving notices of readiness at appropriate moments of time so that one of thenotices will later be found to be valid thus avoiding arguments in relation to waiver/estoppel. If the concept of waiver is considered elusive by the Court of Appeal thenit must appear to be tenfold so to a ship’s master.

Apart from the adumbration of ‘‘estoppel by convention’’ as above, the subjectwas considered (inter alia) in Amalgamated Investment and Property Co. Ltd. v. TexasCommerce International Bank Ltd.65 and Orion Insurance Co. Plc v. Sphere DrakeInsurance Plc.66 In the former case, Lord Justice Brandon (as he then was) had thisto say in the Court of Appeal:

‘‘The kind of estoppel which is relevant in this case is not the usual kind of estoppel in paisbased on a representation made by A. to B. and acted on by B. to his detriment. It is ratherthe kind of estoppel which is described in Spencer Bower & Turner on Estoppel by Representa-tion, 3rd ed. (1977), at pp. 157 to 160, as estoppel by convention.

The learned authors of that work say of this kind of estoppel at p. 157:


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‘This form of estoppel is founded, not on a representation of fact made by a representorand believed by a representee, but on an agreed statement of facts the truth of which hasbeen assumed, by the convention of the parties, as the basis of a transaction into which theyare about to enter. When the parties have acted in their transaction upon the agreedassumption that a given state of facts is to be accepted between them as true, then asregards that transaction each will be estopped as against the other from questioning thetruth of the statement of facts so assumed.’ ’’

and in the latter case Mr Justice Hirst (as he then was), after citing the above passagefrom Spencer Bower and Turner stated:

‘‘Thus the defendants must establish: (i) An agreed statement of facts the truth of which isassumed as forming the basis of future transactions between them; and (ii) Actual subsequenttransactions in which the parties acted on the agreed assumption.’’

It is very doubtful whether these further words of wisdom will be of help to thoseengaged in day to day shipping operations but they are included for the sake ofanalysis and completeness. What seems certain is that in the future parties mightnot find it easy to establish appropriate facts before arbitrators to get within ‘‘estop-pel by convention’’ in circumstances relating to the tendering/accepting of notices ofreadiness and loading/discharging operations.

The subject of waiver/estoppel came to the fore again in The ‘‘Happy Day’’67

where the Court of Appeal gave full consideration to waiver/estoppel in the contextof an invalid notice of readiness (plus no further notice given) and whether or notlaytime commenced at, or soon after, the commencement of the discharge of cargo.The case is detailed and considered in the next paragraph.

117. In The ‘‘Mexico 1’’68 the Court of Appeal was not even prepared to concedethat, by commencing discharge of cargo, the charterers waived any entitlement to afresh notice of readiness. Lord Justice Mustill said:

‘‘I confess to some difficulty in finding the necessary elements of a waiver in the bare fact thata discharge was carried out. For example, in Pteroti Compania Naviera S.A. v. National CoalBoard,69 where the charter provided that time would commence 24 hours after the vessel wasready to unload and written notice given, and where discharge began before the vessel hadgiven notice of readiness it was held that laytime did not run until the expiry of 24 hours fromthe notice. The owners argued that—

‘ . . . the charterers by requiring delivery earlier are waiving their right to notice ofreadiness before they start to unload . . . ’

and alternatively that an agreement was to be implied that laytime was to start from the timeat which unloading in fact commenced. Each argument was summarily rejected. Since,however, counsel in the present case are at one in stating that Pteroti sheds no light on theproblem now before us I say no more about it, and I am content to accept the charterers’concession without further scrutiny, reserving the point for detailed exploration if it shouldrise in the future.’’

It is indeed surprising that such a negative attitude should have been taken by hislordship regarding the waiver of a right to notice of readiness when loading or

67. [2002] 2 Lloyd’s Rep. 487.68. [1990] 1 Lloyd’s Rep. 507.69. [1958] 1 Lloyd’s Rep. 245; [1958] 1 Q.B. 469.


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unloading has commenced. If that cannot be a waiver or an estoppel it is difficult toenvisage what can be. The application of no waiver/estoppel in those circumstanceswould lead to the commercially absurd result that laytime never started with theconsequence that the owners would be obliged to pay the charterers dispatch moneyfor the whole of the laytime. There is no problem in distinguishing the Pteroti casesince it was concerned with cargo operations taking place before the time thatlaytime could in any event commence, because of the notice provisions in thecharterparty; all that Pteroti decided (see also Chapter 7) was that waiver/estoppelhad no application to circumstances where cargo work commenced before thecommencement of laytime under the provisions of the charterparty, it being noauthority for the proposition that laytime could never commence in circumstancesof there being no valid notice of readiness but loading/discharging operations havingcommenced and continued. It is submitted that the charterers were correct toconcede, in The ‘‘Mexico 1’’, that there was no need to give another notice ofreadiness when discharge of cargo commenced. If, as submitted, the commence-ment of loading/discharging acts as a waiver to the tendering of a notice of readi-ness, charterers still get the benefit of the notice time if, as appears to be thecommercial analysis, the commencement of loading/discharging becomes a sub-stitute for the tendering of a notice of readiness.

The above paragraph remains exactly as it stood in the previous edition of thisbook. Attention now focuses on the important Court of Appeal decision in The‘‘Happy Day’’.70 In that case the relevant findings of fact made by the arbitratorswere as follows. The vessel completed loading 23,000 tonnes of wheat at Odessa on6 September 1998, departing for Cochin where she arrived off the port on Friday25 September 1998 at 16.30 hours. At the time of her arrival off the port the vesselcould not immediately enter port in order to berth because she had missed the tide.Nonetheless, the master purported to give NOR by cable at 16.30 hours on 25September 1998. Because the charterparty was a berth charter and there was nocongestion at the berth, the NOR was premature and was thus invalid when given.The vessel was able to enter the port on the morning tide of Saturday 26 September,berthing at 13.15 hours. No further NOR was ever given. However, dischargecommenced on 26 September and as a result of various delays was not completeduntil 25 December, 1998.

Despite the invalid notice of readiness, and no further notice being tendered, thearbitrators decided that laytime commenced on the first occasion on which it couldhave commenced if a valid notice of readiness had been tendered. The charterersappealed and in the High Court Mr Justice Langley held (inter alia) that:

(1) It was not possible to infer any agreement or convention from the merefacts of commencement and continuation of discharge and that an invalidnotice was not rejected; it did not necessarily follow that charterers musthave agreed to give up their right to a notice, particularly when dischargecommenced at a time when a valid notice could not have been given; andif such an inference were possible then it would be in effect to rewriteclause 30 so that it contained additional words such as ‘‘and in any event

70. [2002] 2 Lloyd’s Rep. 487.

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laytime to commence when discharge commences’’; something more wasrequired to establish an agreement or estoppel;

(2) There was no finding which would enable it to be concluded that thereceivers were or were authorized to act on behalf of the charterers tomake any variations of the charter or to establish any convention; animplication of agency as regards an express statement as to the running oflaytime may more readily be drawn than an inference of agency to makean agreement derived only from the fact of commencing discharge; theappeal would be allowed; the owners’ claim for demurrage failed and thecharterers’ claim for despatch succeeded.

The owners appealed and in the Court of Appeal the main judgment was deliv-ered by Lord Justice Potter. Shortly before, the same question had arisen in The‘‘Mass Glory’’ where Mr Justice Moore-Bick (as he then was) made an identicaldecision to Mr Justice Langley; both of them had been influenced by the obiter dictaof Lord Justice Mustill in The ‘‘Mexico 1’’ (see earlier in this paragraph). However,the Court of Appeal took a different approach. The question to be decided was putsuccinctly by Lord Justice Potter in the early part of his judgment:

‘‘As the Judge put it below, subject to a number of important procedural points, the caseraises in stark circumstances a question which Lord Justice Mustill (as he then was), in The‘Mexico 1’71 at p. 510, left open for ‘detailed exploration’ should it arise in the future, namelywhat are the rights of owners to demurrage and charterers to despatch when, under acharterparty which provides for a notice of readiness (‘NOR’) to be given at the dischargeport to trigger the start of laytime, the owners give NOR which is invalid for prematurity, yetthe vessel thereafter, and without further NOR being given, commences and completesdischarge over a period well in excess of the number of laydays provided for.’’

It was held, in conclusion as to the question of law, that laytime can commenceunder a voyage charterparty requiring service of a notice of readiness when no validnotice of readiness has been served in circumstances where (a) a notice of readinessvalid in form is served upon the charterers or receivers as required under thecharterparty prior to the arrival of the vessel; (b) the vessel thereafter arrives and is,or is accepted to be, ready to discharge to the knowledge of the charterers; (c)discharge thereafter commences to the order of the charterers or receivers withouteither having given any intimation of rejection or reservation in respect of the noticeof readiness previously served or any indication that a further notice of readiness isrequired before laytime commences. In such circumstances, the charterers may bedeemed to have waived reliance upon the invalidity of the original notice as from thetime of commencement of discharge and laytime will commence in accordance withthe regime provided for in the charterparty as if a valid notice of readiness had beenserved at that time. By answering the question in that way, I should not be thoughtto doubt that, in appropriate circumstances, the same result may follow by applica-tion of the doctrines of variation and estoppel.

There is no doubt that the decision of the Court of Appeal was welcomed verymuch by those in the commercial world and satisfies the criticisms made earlier in

71. [1990] 1 Lloyd’s Rep. 507.


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this paragraph in respect of the obiter dicta of Lord Justice Mustill in The ‘‘Mexico1’’.

Regarding the waiver aspect, Lord Justice Potter had this to say:

‘‘For the reasons which I have set out, I consider the doctrine of waiver may be invoked andapplied in such a case and that the commencement of loading by the charterer or receiverwithout rejection of or reservation regarding the NOR can properly be treated as the ‘some-thing else’ which Lord Justice Mustill indicated was required to be added to mere knowledgeof readiness on the part of the charterers, in order for a finding of waiver or estoppel to bejustified. Not only does the commencement of loading manifest an acceptance of the vessel’sreadiness to load, it also meets the concern of Lord Justice Mustill that to argue (as it was inThe ‘Mexico 1’) that laytime should begin at the point when the charterers or their agentsbecame aware that the cargo was ready, would give rise to uncertainty and substitute a basisfor the computation of laytime which would be a fertile source of dispute. I therefore disagreewith the view expressed by Mr Justice Langley that he could see no basis on which a differentconclusion from that reached in The ‘Mexico 1’ could be justified by substituting the timewhen discharge actually commenced for the charterers to be ready to discharge. For the samereason I disagree with the Judge when he expressed the view that the reasoning of Mr JusticeDonaldson in The ‘Helle Skou’ could not stand with that in The ‘Mexico 1’, in that itrepresented an application of the inchoate notice concept which did not survive that lattercase. As already indicated, I do not read The ‘Helle Skou’ (which was not referred to in thejudgment of Lord Justice Mustill in The ‘Mexico 1’) as involving an application of the inchoatenotice doctrine. Rather, I consider it to be an authority supportive of the view that thedoctrine of waiver is available to assist the owners in the circumstances of this case. I wouldhold that the arbitrators were correct to find in favour of the owners that laytime commencedat 08.00 on Tuesday 29 September 1998.’’

In his earlier reasoning Lord Justice Potter considered the argument, often made,that silence could not amount to waiver; this was one of the arguments deployed bythe charterers in The ‘‘Happy Day’’. He said:

‘‘Thus, it is clear that whether or not the party entitled to notice has waived a defect uponwhich he subsequently seeks to rely, will depend upon the effect of the communications orconduct of the parties, the intention of the party alleged to have waived his rights beingjudged by objective standards. This being so, it seems to me clear that, in an appropriatecommercial context, silence in the sense of a failure to intimate rejection of it, may, at leastin combination with some other step taken or assented to under the contract, amount to awaiver of the invalidity or, put another way, may amount to acceptance of the notice ascomplying with the contract pursuant to which it is given.’’

This statement was also welcomed by those in the commercial world.Although not necessary because of the decision on waiver, Lord Justice Potter still

considered an alternative argument put forward by the owners regarding an estop-pel by convention (see earlier, paragraph 116 for Lord Justice Mustill on thisdoctrine in The ‘‘Mexico 1’’). In principle he stated that the doctrine may be held toarise where both parties to a transaction act on an assumed state of facts or law, theassumption being either shared by both or made by one and acquiesced in by theother: see Republic of India SS Co. Ltd. (No. 2).72 The effect of an estoppel byconvention is to preclude a party from denying the assumed facts of law if it wouldbe unjust to allow them to go back on the assumption. He went on:

72. [1998] A.C. 878 at 913 (H.L.).

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‘‘For the doctrine to operate, there must be some mutually manifest conduct by the parties,which is based on a common assumption which the parties have agreed on, and for thatpurpose ‘Agreement need not be expressed, but may be inferred from conduct or evensilence,’ per Lord Justice Staughton, giving the judgment of the Court of Appeal in Republicof India Steamship Co. Ltd. (The ‘Indian Grace’) (No. 2)73.’’

Having said the above, Lord Justice Potter went on to say that the facts in The‘‘Happy Day’’ did not support an estoppel by convention. In particular:

‘‘Given that the approach of a tribunal of first instance to any question of estoppel byconvention must be to examine and make findings as to the actual state of mind of the partiesconcerned (and for this purpose the charterers’ state of mind and knowledge may call forseparate examination from that of the receivers/agents) it seems to me that, contrary to theposition on waiver, the findings of the arbitrators are inadequate to sustain their decision onthe basis of (an inferred) estoppel by convention.’’

The above supports the point made earlier that estoppel by convention is not adoctrine which can be invoked easily in the context of a notice of readiness. In orderfor it to succeed there has to be appropriate findings of fact by the arbitrators whichevidence and support the requirements set out by Lord Justice Potter regarding thestate of mind of the parties.

118. Of some interest in the context of estoppel is LMLN 274—5 May 1990(already referred to regarding another aspect of the commencement of laytime, seeearlier paragraph 84) where one of the arguments raised by owners was whether thecharterers were estopped from contending that the notice was invalid by reason oftheir conduct in making no comment for a month and a half after they had receivedthe notice.

In the event, the arbitrator held that the notice was valid, so that his decision onthis point was unnecessary. However, he accepted the evidence of the owners’broker that if there was any irregularity in a notice of readiness, the agents, charter-ers or receivers, would be quick to draw attention to it. Had the owners in any waybeen alerted to a problem in accepting the notice of readiness when given, theywould have done something about it.

The notice of readiness had been received by the charterers on 2 September. On11 October the vessel proceeded from the anchorage at Sandheads to the discharg-ing berth. On 14 October the charterers’ agents returned the notice of readinessendorsed with the words that notice of readiness was accepted at 10.00 hours on 11October. Discharge was finally completed on 18 November.

The owners contended that the agents’ silence was significant if there were anyirregularities at the time of tendering notice. The charterers maintained that thewell-known requirements of estoppel were not fulfilled, and the simple law thatsilence could not be a representation. They relied on The ‘‘Leonidas D’’74 that ‘‘aparty who invokes that principle has to establish that the other made, by words orconduct, an unequivocal representation . . . Silence and inaction are of their natureequivocal . . . ’’

73. [1996] 2 Lloyd’s Rep. 12 at p. 20 (C.A.).74. [1985] 2 Lloyd’s Rep. 18.


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The arbitrator held that silence might be equivocal on occasions, but in thecircumstances of the present case it was highly improbable that an experiencedship’s agent would not reject a notice of readiness immediately if it was invalid or inany way unacceptable. A reasonable man, especially one experienced generally inchartering and shipping matters, would expect an immediate objection to a faultynotice of readiness. There would inevitably be a reliance by the owners on theactions or inactions of the agent. Accordingly, the charterers were estopped fromcontending that the original notice of readiness was invalid.

It may be arguable as to whether the arbitrator’s decision would now be correctin the light of The ‘‘Mexico 1’’ albeit that, from a practical and commercial view-point, it made sense. However, the more relaxed approach of the Court of Appealto waiver/estoppel in The ‘‘Happy Day’’ gives support to the decision. But delay inaccepting a notice of readiness may amount to a breach by the charterers of animplied obligation regarding reasonable dispatch/co-operation, see earlier para-graph 56 for what is often referred to as an ‘‘Atlantic Sunbeam’’ point and alsoLMLN 328 and LMLN 459 (see also earlier paragraph 57 in respect of impliedterms) in respect of the charterers being obliged to arrange a prompt inspection ofa vessel. A more recent arbitration in respect of this aspect was reported in LMLN434—22 June 1996 (also referred to earlier in paragraph 30 regarding the advancingof laytime at the discharge port). At the loading port notice of readiness was validlyserved at 09.35 on 15 June but was not accepted by the shippers until 08.00 on 20June. No explanation for that delay was given.

It was held that in the absence of authority, the tribunal would have had no doubtthat there was to be implied into clause 6 a term obliging the shippers to acceptnotice of readiness reasonably promptly, if not immediately. Otherwise, the ownerswould be in an impossible situation, being entirely at the mercy of the shippers (andindeed the receivers at the discharging port) as to when laytime should startcounting.

However, the position was not entirely free of authority. In The ‘‘Atlantic Sun-beam’’75 Mr Justice Kerr said:

‘‘It therefore follows that in my view the term to be implied in this case is to the effect thatthe charterers were bound to act with reasonable dispatch and in accordance with theordinary practice of the port of Calcutta in doing those acts which had to be done by themas consignees to enable the ship to become an arrived ship . . . ’’

The owners had contended that the notice having been given on a Friday, it becamevalid on Saturday 16 June, and that time accordingly counted from 08.00 hours onSunday 17 June. On the basis of the term that the tribunal thought ought to beimplied in the present case, the owners were plainly right.

Again, in LMLN 338—17 October 1992 the charterers lost out in an arbitrationregarding a delay of six days between the tendering of a notice of readiness andacceptance of such.

Clause 18(i) of the charterparty provided:

75. [1973] 1 Lloyd’s Rep. 482.

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‘‘ . . . laytime shall . . . commence at the expiry of six hours after Notice of Readiness . . .which may be given either by letter, telegram, telex, radio or telephone (and if given by radioor telephone shall subsequently be confirmed in writing), has been received from the Masteror his agent by charterers or their agents, berth or no berth, or when the vessel commencesto load or discharge at the berth . . . whichever first occurs;’’

The owners submitted that notice had been tendered to the charterers’ agents at10.27 hours on 25 September. The evidence supporting that contention wascontained in the form of the notice itself which purported to give notice at that timeand on that date (although it had been endorsed as being accepted for the charterersonly at 22.50 hours on 1 October), the ship’s own port log and the statement offacts prepared by the local agents and signed by the master and the shippers.

The charterers contended that the fact that the notice had been ‘‘accepted’’ on 1October might reasonably be inferred to mean that it had been received then.

It was held that the charterers’ contention would be rejected. Commonly, noticesof readiness were (i) tendered, (ii) received, and (iii) accepted, all at different timesbut in that order. Tendering and receipt were often simultaneous. Receipt andacceptance were frequently not. The latter activities should not be confused. Wherea charter referred to receipt of a notice, regard had to be had to that and not to thetime of its acceptance. Accordingly, the notice of readiness had been properly givenat 10.27 hours on 25 September, and laytime started to count at 16.27 hours thatday.

A recent arbitration LMLN 672—17 August 2005 (also referred to earlier inChapter 1, paragraph 17 regarding arrival and where the notice of readiness wasfound to be invalid) involved a dispute as to whether the charterers were estoppedfrom challenging the validity of the notice of readiness.

Agreement had been reached between the parties on the issues raised in thereference as part of a larger package of settlement between the parties, but as thelarger settlement was never finalised, the parties now sought a determination of theissues raised in the reference.

A number of disputes arose, including whether the charterers were estopped fromchallenging the validity of the notice of readiness. The owners contended that thecharterers were ‘‘estopped from challenging the validity of the notice of readiness orhave in the event waived any entitlement to challenge the validity of the same havingalready agreed to settle part of the demurrage claimed by owners on the basis of avalid notice of readiness’’. The charterers said that the matter had not been con-cluded between the parties by virtue of any settlement.

It was held that the owners’ estoppel argument would be rejected. There was nobasis for any estoppel. The owners had not in any way been put in a worse positionby reason of the tentative agreement, which in the end failed. Nor had the chartererswaived their rights under the charter.

119. While the waiver decision in The ‘‘Happy Day’’ is welcomed in the context ofloading or discharging cargo it does not necessarily follow that in all future casesthere will be a waiver of the tendering of a notice of readiness on the commence-ment of cargo operations. In the conclusion regarding the question of law set out


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earlier in paragraph 118 it is clear that the waiver only applies where there has beenno intimation of rejection or reservation in respect of the notice of readiness whichhas been tendered or where there has been no indication that a further notice ofreadiness is required before laytime commences. Therefore, what happens (in iden-tical or similar circumstances) if the charterers or the receivers intimate that a noticeof readiness is rejected or indicate that a further notice of readiness is required, priorto the commencement of the loading or the discharging of cargo? This may not arisefrequently in practice but if it does an owner will have to ensure that another noticeof readiness is tendered otherwise laytime will not commence and the charterers willbe entitled to despatch money. This brings me back to the point (made by me overthe years and mentioned earlier in paragraph 111) that shipowners should giveserious consideration to making a radical approach to the tendering of a NOR andshould be thinking of a notice of arrival (NOA) clause in their charterpartieswhereby laytime commences as soon as the vessel arrives at or off the pilotage areaof the port or, at least, to get it agreed in the charterparty that the charterers will bedeemed to have accepted the notice of readiness and that laytime commences oncethe loading or the discharging of cargo commences.

It is worth mentioning, partly in summary regarding waiver and The ‘‘HappyDay’’, that:

(a) The case only related to where a notice of readiness was invalid becauseit was tendered before the arrival of the vessel at the agreed destination. Itdid not deal with the invalidity of a notice of readiness for other reasonsalthough it is submitted that, in general, the end result should be thesame.

(b) Where the notice is not to be served upon the charterers, but upon thereceivers/agents through whom the charterers perform their obligations,those parties may be deemed to have implied authority not only to receivethe notice, but to waive that invalidity, although the issue should beaddressed by the tribunal of fact dealing with the case in the first instance.In The ‘‘Happy Day’’ the charterers did not take the point in the arbitra-tion that the agents lacked authority. Had they done so it may well havebeen necessary for them to have shown not only that those parties did nothave actual authority but that they did not have implied or ostensibleauthority either to receive a notice of readiness or to waive an invalidnotice of readiness.

(c) Waiver of the invalidity of the original notice will be deemed to take effectat the commencement of loading or discharging, as the case may be. Theposition will then be as if a valid notice had been tendered at that time oras soon thereafter as the charterparty provides and time will commenceaccording to the terms of the charterparty.

While the judgment in The ‘‘Happy Day’’ may not satisfy the legal purist, forreasons which will not be explored, it has been well received in the maritimecommercial field (already mentioned earlier) and this surely speaks for itself.

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ELAPSED TIME

120. As has been seen, it is common for a charterparty to make provision thatlaytime does not commence when all three common law requirements are satisfiedbut at a later time. There are a variety of clauses in this respect such as straight time(for example, laytime to commence 24 hours after tendering notice of readiness)and fixed time (for example, time to commence 8 a.m. next working day aftertendering notice of readiness). The result of the charterparty provisions may be toprevent laytime running for some considerable time after the tendering of a noticeof readiness because of intervening excepted periods such as holidays and week-ends. The question has arisen as to how the time elapsing between the notice ofreadiness and the starting of laytime is affected by the laytime exceptions when theelapsed time is straight time.

In Owners of ‘‘Borg’’ v. Darwin Paper Co.76 the charterparty provided that time wasto count 24 hours after arrival at or off the port, also that the vessel had to dischargeduring ordinary working hours, Sundays and holidays excepted. The vessel arrivedoff Grimsby at 7 p.m. on 1 August and the owners contended that laytime shouldcommence at 7 p.m. on 2 August; 2 August was a Bank Holiday and the charterersargued for time to commence on the next morning at 8 a.m. The issue between theparties was not whether, if notice began to run, any of the charterparty exceptionswere applicable to the running of the notice time of 24 hours but simply whether ornot the 24 hours had to take effect on a working day. Mr Justice Rowlatt decidedthat time commenced at 8 a.m. on 3 August and, in elaborating on the point,said:

‘‘Now the time which has to elapse before the time of discharge begins is a totally differentmatter from the rate of discharge and is not the time which has to be counted after thedischarge has begun, and I do not see why, if the 24 hours are to be qualified, it should notbe expressly done. Now how it is sought to be done is to get it in some sort of way throughthe hours of discharge after such discharge has begun.

I cannot see how it is possible to import a qualification that it must be a 24 hours workingday, any more than that the hours are to be workable hours or hours not on holidays oranything of that sort. I think the plain course for me is to say that what is meant is that theconsignee shall have 24 hours of ordinary time before his time for discharge begins.

If at the moment discharge begins you find yourself in the middle of the night or a holidaythe work does not naturally begin until the ordinary working hours come round. I think thatis simple and is the result of it.’’

Although the judgment was not worded as clearly as it might have been, the effectof it is clearly that, where a charterparty makes an express provision for a period oftime to elapse between the tendering of the notice of readiness and the commence-ment of laytime, the notice time scores from the time when the notice of readinessis tendered (unless not permitted by an express provision in the charterparty) butthat laytime cannot commence during an excepted period; the laytime will begin atthe end of the excepted period unless, of course, the charterparty provides other-wise. Notice of readiness itself can be tendered during excepted periods unless the

76. (1921) 8 Ll.L.Rep. 49.

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charterparty provision states otherwise as is the case in some charterparties—forexample, see the clause earlier at the beginning of paragraph 103.

An interesting point regarding elapsed time came up in Metalimex v. EugenieMaritime Company.77 The relevant charterparty provision stipulated: ‘‘Time forloading to count from 8 a.m. 48 hours after the ship has reported and ready, and infree pratique and notice accepted.’’

The notice of readiness was accepted at 9 a.m. on 24 September and the charter-ers claimed that the laytime started at 8 a.m. on Friday, 27 September, that beingthe first time at which the clock had shown 8 a.m. after the expiry of the 48 hoursfrom 9 a.m. on 24 September; this meant that the charterers in effect got 71 hoursafter accepting the notice of readiness before time started to count against them.The ship’s contention was that, notice of readiness having been accepted at 9 a.m.on 24 September, time commenced 48 hours thereafter, not at 8 a.m. but at 9 a.m.the result being that the charterers get 48 hours before the time begins to countagainst them, but, in order to meet the point that the charterers cannot be expectedto start work at midnight or in non-working hours, and that the 48 hours mightexpire during non-working hours, some protection was given to them by the words‘‘from 8 a.m.’’, in this sense, that they should mean, or be taken to mean, not earlierthan 8 a.m. on the day on which the 48 hours expire.

Mr Justice McNair, obiter, decided in favour of the owners of the vessel. In hisjudgment it was a point that could not be elaborated on in any way but it seemedto him that proper business effect would be given to the position of the respectiveparties if one said that the purpose of the clause was quite clearly to secure that thecharterers got the dual protection suggested by the owners, namely, 48 hours clearbefore the loading time shall start, and that the expiry of the 48 hours shall not startat some inconvenient time and one should, accordingly, read ‘‘from 8 a.m.’’ as ‘‘notearlier than 8 a.m.’’ He thought that, on the whole, it seemed to be a reasonableconstruction which did not do undue violence to any of the language or figures usedin the clause.

The decision of Mr Justice McNair evidenced the application of commercialcommon sense. It may be that a strict constructionist judge would have decided thecase in favour of the charterers but Mr Justice McNair filled a supposed small gapin the wording of the relevant clause so as to make a construction which accordedwith commercial/practical sense.

It is emphasised that the charterers are entitled to the notice time from theparticular moment that the notice of readiness becomes good. While Mr JusticeDiplock (as he then was) did not allow the charterers the notice time in The‘‘Massalia’’ (No. 2),78 (he started laytime as soon as the overstowed flour cargobecame available for discharge, see earlier, paragraph 108), it may well be that hewas wrong on this aspect albeit that flour, in other holds, had been discharging forsome time. Strictly speaking, the charterers were entitled to the notice period afterthe notice became good (which it could not until all the overstowed flour becameavailable for discharge) although one can see how the special facts might well have


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influenced the judge to start laytime right away. Although not argued in the case,estoppel on the wide fair conduct approach might have been relevant to not allowingthe charterers the notice time on the basis of the special facts, the purpose of noticetime and fair conduct.

If a charterparty provision states that laytime is to commence at a stipulated timeafter a notice of readiness is tendered then the charterers should have the benefit ofthat period from the time that a notice of readiness is good, absent any argumentsin relation to estoppel. This can result in no laytime scoring up whatsoever in a portwhere the notice of readiness does not become good until part way through theloading/discharging of a vessel. For example, the charterparty may call for laytimeto commence 24 hours after a notice of readiness is tendered; the vessel berths andcommences loading at 8 a.m. but the notice of readiness does not become gooduntil 4 p.m. because of the state of some of the cargo spaces and loading iscompleted at 8 a.m. the next morning, some eight hours before laytime can start.

An interesting point regarding elapsed time came up in a reasonably recentarbitration which was reported in LMLN 562—24 May 2001. The vessel waschartered on the Sugar Charterparty 1969 form for the carriage of 14,000 tonnes ofbagged sugar. The charterparty contained the following provision:

‘‘Clause 19—At each loading port, even if loading commences earlier, laytime for loading tobegin at the next regular working period commencing before 3 pm after written or cablednotice of readiness to receive cargo has been tendered to Agents in ordinary office hours,Saturdays after noon, Sundays and holidays excepted, whether in berth or not . . . ’’

The vessel arrived at the loading port and tendered notice of readiness at 00.53 onWednesday 9 October. On 24 October she moved to the berth, made fast at 19.40hours, and loading commenced on 28 October at 08.10 hours. Loading was com-pleted on 13 November at 09.15 hours.

The owners said that the notice of readiness was deemed to have been acceptedat 08.00 hours on 9 October and therefore, upon the true construction of clause 19,‘‘the next regular working period commencing before 3 pm’’, began at 13.00 hourson 9 October when the stevedores returned from their meal break. The chartererssaid that the 11.00–13.00 hours meal break was merely an interruption in thenormal working period of 07.00–17.00 hours, and that the next working period was17.00–19.00 hours, which in any case was overtime. Moreover, the charterers said,if the owners’ contention was correct, in order for work to start at 13.00 hours gangswould have to be ordered for 07.00, which would be before the tendering of thenotice itself. That would be contrary to the intention and sense of such a noticeclause, the purpose of which was to give the charterers/shippers time to set upworking gangs. Accordingly, the charterers said that laytime commenced to count at07.00 hours on 10 October.

It was held that the charterers’ argument would be rejected. It failed to takesufficient account of the words actually used, namely ‘‘next regular working period’’.Plainly the first regular working period of the day started at 07.00, ending at 11.00when the gangs knocked off for the meal break, and the next regular working periodstarted at 13.00, when the gangs resumed work, ending at 17.00 when the firstovertime period started. If the charterers’ intention was that they should have the

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benefit of the entire day in which to order gangs before laytime started to count theycould simply have stipulated for laytime to commence at 07.00 or 08.00 on thefollowing day, a provision which was frequently encountered in other charterparties.As it was, the wording of the clause in the present case was unambiguous and borethe construction advanced by the owners.

NOTICE OF READINESS TENDEREDPRIOR TO THE LAYDAYS

121. There appears to be no reported English authority regarding the effect of anotice of readiness which is tendered prior to the earliest time that laytime cancommence under the charterparty provisions. However, the practice of arbitratorsappears to be to allow the notice of readiness to take effect when presented prior tothe laydays but with the obvious result that laytime cannot commence until theearliest time permissible under the charterparty.

The matter has been the subject of arbitrations in New York, one of which wasreported in the American law reports, Frota Oceanica v. Continental Ore Corpora-tion.79 The charterparty stipulated that laytime was not to begin before 15 Novem-ber, also that laytime should count from 8 a.m. on the day after the ship wasreported and was in free pratique. The vessel arrived at the port on 11 Novemberat 24.00, was granted free pratique and tendered a notice of readiness at that time;and 15 November was a Sunday. The owners contended that, after allowing for 15November being an excepted day, laytime should commence at 8 a.m. on 16November. The charterers submitted that notice of readiness could not be givenuntil 16 November so that laytime commenced at 8 a.m. on 17 November. Thetribunal decided the matter in favour of the owners on the basis that a notice ofreadiness could take effect prior to the laydays so as to result in laytime commencingat the earliest possible time under the laydays provisions.

It seems that the majority of City of London arbitrators take the same generalapproach, no exception being known to the writer. There are two reported deci-sions. In LMLN 103—13 October 1983 the charterparty called for laydays not tocommence before 22 July. The ship arrived and tendered a notice of readiness at theloading port at 08.00 on 21 July. The arbitrators stated that laytime could not startbefore 22 July but this did not mean that no valid notice could be given before thatdate. While it had, in the past, often been thought that notice of readiness could notbe given before the commencement of laydays, that was incorrect unless there wasan express provision to that effect; in the absence of such a provision, a valid noticeof readiness might be given at any time but the laytime itself could not commencebefore the date given in the charterparty. The result in the instant case was that thenotice given on 21 July was valid but laytime could not start before 22 July. In thelater LMLN 307—10 August 1991 the vessel was chartered on the Gencon formwith an expected ready to load date of about 26 August 1985 and a laycan of 26–31August 1985. The charterparty provided that laydays were not to commence before

79. [1973] A.M.C. 2315.

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26 August 1985, and an amendment to the printed laytime clause, clause 6 (whichwas itself deleted) read:

‘‘Commencement of laytime (loading and discharging)Written notice of readiness at the port(s) of loading to be given by vessel’s agents in shippers’office within office hours during working days of week—laytime to commence next workingday 08.00 hours whether in berth or not . . .

At loading port time from noon Saturday to 8.00 a.m. Monday and from 5.00 p.m. daypreceding a holiday until 8.00 a.m. next working day not to count unless used. If used onlyactual time used to count.’’

The vessel arrived at the loading port and gave notice of readiness at 08.30 on 22August. The notice was valid, subject to the point which the arbitrators had todecide.

The charterers submitted that the owners were not entitled to give a valid noticeof readiness until after midnight on 25/26 August. They said that laytime did notstart counting until 08.00 on 27 August.

The owners contended that the notice given on 22 August was valid, but that timeonly started to count at 08.00 on 26 August.

It was held that the owners were clearly right. In the absence of any provision ina charter prohibiting the giving of a notice before the laydays, there was no reasonwhy such a notice should not be given and be valid, and many reasons why it should.The purpose of a notice of readiness was to warn the shippers that the ship wasavailable and ready to start receiving cargo. The fact that they might get thatinformation before the laytime clock started to tick was irrelevant. That had beenheld to be the position in a number of arbitrations both in New York andLondon.

Also, in LMLN 285—6 October 1990 (cited earlier paragraph 65) it was held bya tribunal that a notice of readiness could be tendered while the vessel was stillperforming storage services prior to the discharge of her cargo. The charterers wereentitled to the charterparty six hour period of grace only.

Para. 121NOR TENDERED PRIOR TO THE LAYDAYS

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CHAPTER SEVEN

MISCELLANEOUS MATTERS

GENERAL

122. There are various matters which have not yet been covered, or not sufficiently,and which have relevance to the commencement of laytime either directly or indi-rectly. These matters do not necessarily fit neatly into the earlier sections/headingsso will be taken together in this chapter although there may be no genus betweenthem save that they have a bearing on the commencement of laytime. The followingwill be considered:

(a) Readiness and cancellation.(b) Work before the commencement of laytime.(c) Overchartering and obstacles created by charterers.(d) Exceptions.(e) Estimated time of arrival (ETA).(f) Sale contracts.(g) Multiple charters.

READINESS AND CANCELLATION

123. In Chapter 4 reference was made to cases which related, almost exclusively, tothe readiness of the vessel for the purpose of a notice of readiness provision; havingsaid that, Noemijulia v. Minister of Food1 was concerned with the cancellation of acharterparty. There is an obvious interrelation between readiness for a laytimeprovision and readiness for a cancellation provision (see, for example, The ‘‘Made-leine’’2); however, there can be a distinction in that a notice of readiness is not acondition precedent to the charterers’ right to cancel the contract unless, of course,the cancellation clause so stipulates, as some do; for example the Norgrain charter-party stipulates, ‘‘should the vessel’s notice of readiness not be tendered andaccepted as per clause . . . before 12.00 on . . . the Charterers or their agents shallat any time thereafter, but not later than one hour after the notice of readiness istendered, have the option of cancelling this charterparty’’.

1. (1949–50) 83 Ll.L.Rep. 500; above, paragraph 73.2. [1967] 2 Lloyd’s Rep. 224; above, paragraph 79.

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A vessel may not be ready for the purpose of tendering a good notice of readinessbut still may be ready in the sense that the charterers are not able to cancel herunder the cancellation clause. In Leonis v. Rank3 Lord Justice Kennedy contrastedthe two types of readiness when he said:

‘‘The Charterer has an option to cancel should the vessel not be ready to load by 6 p.m. onMarch 15. She did not in fact reach the berth at the pier until March 30. On March 29 shefirst left her anchorage to go alongside another vessel which had the inner berth alongside thepier. Could the Charterers at any time between March 15 and March 28, whilst the Leoniswas laying at her anchorage, have said to the Owners, ‘your ship is not ready to load, and,therefore, we cancel the charterparty?’. It appears to me very difficult, if not impossible, tosuppose that such a thing could be within the intention of the parties.’’

It was decided that the charterers could not have cancelled the vessel.The Court of Appeal decision in A/B Nordiska Lloyd v. J. Brownlie4 is the leading

case concerning a distinction between the two types of readiness. The vessel wasordered to Hull to load on a berth charter and time was to count when writtennotice of readiness was received in business hours. Other provisions of the charter-party provided that if the steamer was prevented from entering docks or fromarriving at or off the loading place by reason of congestion she was to be treated asa ready steamer from the first high water on or after her arrival and entitledthereupon to give a written notice of readiness; the charterers also had the option tocancel the charterparty if the vessel was not ready from any cause on or before 06.00on 3 April.

The vessel arrived off Hull on Saturday, 31 March, and the port was so congestedthat she could not enter the docks. In view of Monday, 2 April, being EasterMonday, notice of readiness could not be given until 09.00 on 3 April. The charter-ers contended that they had the right to cancel the charterparty as notice had notbeen given for 06.00 but the Court of Appeal decided against them holding thatnotice of readiness to load was irrelevant to the cancelling clause. The test was theactual readiness of the vessel; it was stressed that the particular wording of thecharterparty, by which the ship was to be treated as a ready ship in certain circum-stances, precluded cancellation; whether the readiness was constructive or actual itwas not necessarily the same as the readiness required to entitle shipowners toobtain a notice of readiness. Lord Justice Atkin had this to say:

‘‘I think it is important to observe the distinction between the obligation of the charterer toload, which is generally stated in an express clause fixing a time at which his obligation is tostart—and in nearly every case, unless it is excluded, a notice of readiness on the part of theship is required before the charterer’s obligation arises—and the right of the charterer tocancel the whole contract. Now, while a notice of readiness given by the ship may be acondition precedent, whether express or implied, to the duty of the charterer to load, as atpresent advised I see no reason for assuming that it is a condition precedent to his right—avery far-reaching right—to put the contract to an end if the ship is not ready or does not arriveby a particular date. In the cancelling clause there is no express provision that notice ofreadiness must be given. All that is provided in this contract is that if she is not ready fromany cause before April 3 the charterers are to have the option of cancelling. In this particularcharterparty I think the draftsman has provided his own dictionary, because I think by

3. [1908] 1 K.B. 499; see, on other matters, earlier paragraphs 2 et seq.4. (1925) 30 Com. Cas. 307; see earlier, on other matters, paragraph 100.

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Para. 123 MISCELLANEOUS MATTERS

another clause he has provided that when the ship is ready . . . she is to be treated as a readysteamer from the first high water, and is to be entitled thereon to give notice of readiness. Forthese reasons it appears to me that in this charterparty it is plain that what is needed tosupport the right to cancel is that the ship should not be ready. Here she was ready; andnotice of readiness does not begin to count at all. Therefore, I reserve any questions that mayarise on other charterparties except to say this, that it appears to me that notice of readinessis a different and distinct act and a later act than the act of being ready; and for my part I findit difficult to see how you can give a notice of readiness until there is a preliminary existingfact, namely, readiness and therefore the mere fact that you are required or asked to givenotice of readiness seems to me to assume that there is something in existence of which youare giving notice, namely, that the ship is ready which would appear to be a condition theexistence of which, one way or the other, is necessary for determining the right of thecharterer to cancel . . . .

Of course, if the cancelling clause does state (as some do) that a notice of readiness has tobe given then such becomes a condition precedent in that the charterer has to await the expirytime for the notice of readiness before cancelling the vessel even though the vessel may notbe ready at an earlier time than the cancelling day with no chance whatsoever of becomingready by the expiry time limit.’’

In the Noemijulia case5 the Court of Appeal had to decide whether a ship was readyfor the purpose of the cancellation clause. It was decided that it was for thecharterers to show, if they claimed that the reserve bunker space should be madeavailable to them for cargo, that the space could not reasonably be required forbunkers and in this they failed. They also failed to show that at the date of cancella-tion the owners were unable to comply with their obligation to load such cargo asthey were entitled to call to be loaded. As put by Lord Justice Tucker, it was notenough for the charterer to show that, at the cancelling date, the shipowner may beunable to load some particular cargo; he must prove that he could not do so.

For an arbitration regarding readiness and cancellation see earlier paragraph 67,LMLN 445—23 November 1996, where it was decided that the ship was notsufficiently clean by the cancelling date and the charterers were entitled to cancelthe charterparty and to claim for damages.

Many charterparties link the tendering of a notice of readiness and cancellation.For example, ExxonMobil VOY 2000 states:

‘‘If Vessel has not tendered a valid Notice of Readiness by 16.00 hours local time onthe Cancelling Date specified in Part 1 (B), Charterer shall have the right to cancel thisCharter . . . ’’

While Norgrain—South 2000 (the modern successor to the obsolete CentroconCharterparty) states:

‘‘Should the vessel’s notice of readiness not be tendered and accepted as per Clause 18 before12.00 on the . . . day of . . . 20 . . . the Charterers have the option of cancelling this Charter-party any time thereafter, but not later than one hour after the tender of notice of readinessas per Clause 18.’’

5. (1949–50) 83 Ll.L.Rep. 500; detailed earlier in paragraph 73.

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WORK BEFORE THE COMMENCEMENT OF LAYTIME

124. It is established and trite law that, absent any special considerations such asvariation or estoppel, work in loading/discharging a vessel prior to the commence-ment of laytime as per the provisions of the charterparty has no effect on the laytimecomputation. There is House of Lords authority on the subject. In James Nelson v.Nelson Line6 the question was whether loading during holiday periods but with themaster’s consent overrode the express provision ‘‘Sundays and holidays excepted’’.It was held that the mere fact of such working did not vary the express term of thecharterparty. The House of Lords refused to accept that working in an exceptedperiod meant that both sides had agreed to count such time. Lord Loreburn, theLord Chancellor, had this to say:

‘‘In my view, it is a question, not of law but of fact, whether or not there was an agreementvarying the terms of the charterparty in providing that the holiday in question should countas laydays. I am unable to see any evidence of such an agreement. Very likely it wasconvenient to both sides to do what was done. I do not believe it entered into the heads ofeither that they were making such an agreement as is suggested. At all events, there is no proofof it, and therefore the charterparty, which excludes holidays, must prevail.’’

Nothing could be clearer on the point. However, the matter came into the courtsagain in Pteroti Compania Naviera v. National Coal Board7 where the vessel berthedat 02.00, began discharging cargo at 02.30, and tendered a notice of readiness at09.00. The charterparty provided for laytime to commence 24 hours after writtennotice of readiness was tendered. The shipowners contended that laytime beganwhen discharging began on the basis that the object of the notice of readiness wasto give the charterers time to prepare but that the charterers were ready many hoursbefore the notice, in the circumstances. Mr Justice Diplock (as he then was) decidedagainst the owners relying (inter alia) on the judgment of Lord Justice FletcherMoulton in the Court of Appeal in the Nelson case6 which emphasised the principleon which a court should be prepared to infer agreements between parties and whichalso contained a warning against an easy inference of such agreements. Mr JusticeDiplock said:

‘‘I can see no ground whatever on which I could infer an agreement here that, because theCharterers started to unload, and the shipowners’ servants assisted in doing so, at 02.30,there was an agreement between the parties that laytime should start then . . . . Equally, I cansee no ground upon which I should be entitled to hold that it had been waived by theCharterers.’’

He also said that the provisions relating to the commencement of laytime and thatrelating to notice were not ones which were put in the charterparty solely for thebenefit of the charterer (gets his cargo quicker and gets dispatch money or pays lessdemurrage) and said:

‘‘It seems to me that there is also an advantage to the shipowner in getting his vesseldischarged as early as possible because he gets the use of his vessel. Whether one advantageoutweighs the other in any particular case I do not know, and I do not think it matters. As I

6. [1908] A.C. 108.7. [1958] 1 Lloyd’s Rep. 245.

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say, I think that there are advantages to both sides; and in those circumstances I am notprepared to infer any waiver of what I think are the plain terms of the clause itself.’’

Therefore, if owners wish to get any benefit (vis-a-vis the commencement oflaytime) from work performed before the commencement of laytime they have toshow a variation of the contract (not easy) in order to get around the two judgmentsjust referred to. It would appear difficult for owners to get around the judgments onthe basis of an estoppel operating in their favour since, if the facts were so unequiv-ocal as to amount to an estoppel, then it would seem that they would also constitutea variation of the contract.

It may be that the charterparty contains an early loading clause to benefit theowners. In LMLN 450—1 February 1997 the vessel was chartered on a BaltimoreBerth Form C Charter. Lines 34 to 38 of the charter provided:

‘‘Time for loading, if required by charterers, not to commence before 08.00 the 5th day ofJuly 1995. Should the vessel not be fully passed . . . as ready for cargo . . . before 12 o’clocknoon on the 14th day of July 1995 . . . the charterers . . . shall have the option of cancellingthis charterparty. Owners option to tender prior to Laydays but time to commence as percharterparty. Prior time used to count as laytime.’’

The ship arrived at the loading port and tendered notice of readiness at 09.50 hourson 6 July 1995, having then been entered at the Custom House and having passedthe relevant inspections. Loading started at 17.00 hours that day.

The owners submitted that laytime started to count at 17.00 hours on 6 July. Thecharterers contended that laytime did not start until 08.00 hours on 7 July and thatthe reference to ‘‘prior time’’ had to be read in the context of the immediatelypreceding provision concerning tendering before the laydays, and thus referred toany time that might be used before the commencement of the laydays, i.e. before 5July, but not any time that might be used before the commencement of thelaytime.

It was held, that the owners’ construction was to be preferred. It was normal touse ‘‘prior time’’ as meaning time before the laytime would otherwise commence,and not time before the laydays/cancelling period started. Moreover, it would be acurious result if any time that was used prior to the start of the laydays/cancellingperiod could count, and yet any time used once the ship arrived within laydays/cancelling and gave notice but before laytime would not count.

As an alternative to their primary argument, the charterers had relied upon theposition in the charter in which the relevant words were to be found. They had saidthat if the parties had intended the owners’ approach to apply the provision inquestion would have been inserted adjacent to lines 29/32 which dealt with laytimeproper. Although there was some force in that argument it was rather legalistic andwas of the type that should only be resorted to in a case of ultimate need. Chartersof the present kind, based on printed forms which were themselves not altogethersatisfactory, and with numerous typewritten amendments, were not works of art norof skilful legal drafting, and always had to be looked at (at least in the first instance)with a view to ascertaining their commercial meaning. There could really be nodoubt that the intention in the present case was quite simply that if the charterers

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used the ship prior to the commencement of laytime, whether that was before orduring the laydays/cancelling period, such time should count.

Early loading clauses are common in tanker charter parties and LMLN 651—27October 2004 was concerned with the Shellvoy 5 form early loading clause whichread:

‘‘If, with Charterers’ prior consent and agreement, the vessel loads earlier than commence-ment of laydays then Charterers shall have the benefit of such time saved which counts underthe c/p terms when calculating laytime and/or demurrage at load port and/or subsequentports of call, and/or waiting places en route between ports. Such benefit shall be from thetime laytime commences until commencement of laydays.’’

The laydays were to commence at 00.01 on 8 May at the earliest. The ship in factarrived at the loading port before that time. The charterers agreed to load her beforethe laydays and she duly gave notice of readiness at 08.18 on 5 May. Loading startedat 14.30 on 6 May and completed at 06.00 on 7 May.

The issue was whether the time prior to the laydays, the benefit of which was tobe given to the charterers, should cease when loading completed or only at the startof the laydays, i.e. at 06.00 on 7 May or at 00.01 on 8 May.

The owners said that only such time as would count under the charter laytimeprovisions was to be credited to the charterers. The charterers contended that thelast sentence of the Early Loading Clause made it plain that all time until the startof the laydays was to count, and the inserted words added nothing.

It was held, that one had to try to give, wherever possible, a sensible meaning toall words in a contract, and not to ‘‘blue pencil’’ any on the grounds of redundancy,or to look for ambiguity if a sensible meaning could be found without resort to suchtactics. In the present case, the words ‘‘such time saved which counts under the c/pterms’’ could only really mean that in order to compute the time ‘‘saved’’ one hadto have regard only to the charter laytime provisions, such that any excepted periodsdid not count to the charterers’ credit, and similarly that in the present case the timeceased when loading stopped. To argue, as the charterers had done, that in the lightof the words ‘‘under the c/p terms’’ it was necessary to have regard to the whole ofthe charter, including the rest of the Early Loading Clause, was circular and got onenowhere unless one started from the presumption that the words were indeedsurplusage. However, that was not a permissible approach.

In the tribunal’s view there was no conflict between its view of the inserted wordsand the last sentence of the clause. The last sentence could perfectly well be read asmeaning that, whatever circumstances might arise, the ‘‘benefit’’ to the chartererscould not run beyond the start of the charter laydays. In other words, it establisheda limit to the charterers’ entitlement to a credit. Thus if, for example, loading wereto have continued after 00.01 on 8 May, the charterers would not have been entitledto claim credit for such additional time. On that basis there was no conflict and noambiguity. Both parts of the clause could be given perfectly sensible meanings.Accordingly, the owners’ argument was correct.

The above early loading clause is hardly a model of clarity and parties arerecommended to agree simpler early loading clauses such as that in the ExxonMobilVOY 2000 form, which reads:

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‘‘In the event Charterer agrees to load Vessel prior to commencement of laydays, laytime willbegin at commencement of loading and the amount of time from commencement of loadinguntil 06.00 hours local time on the commencement date specified in Part 1(B), shall beadded to the laytime specified in Part 1(I).’’

Such a clause is clear regarding how the extra time is to be computed andapplied.

With a clause as above there is always the possibility that an event may occur,during the period of the added time, which interrupts loading with the result thatthe owners cannot claim for the interrupted time, or only claim for it at half rate.The charterers will still get the benefit of the whole of the additional time from thestart of loading until when the laytime would otherwise commence under thecharterparty. Sometimes, parties agree an additional clause in order to take a fairerapproach, such as, for example, time saved in loading prior to the commencementof laytime under the charterparty to be added to the allowable laytime. Thus, if avessel starts loading 24 hours early and during that period loading is interrupted for8 hours the time saved (to be added to the laytime allowed), is 16 hours.

Voylayrules 1993 and Baltic Code 2000 (only applicable if expressly incorporatedinto the charterparty) also cover early loading and such are favourable to owners.They state:

‘‘ ‘UNLESS SOONER COMMENCED’ ;’’ shall mean that if laytime has not commencedbut loading or discharging is carried out, time used shall count against laytime.’’

This should result in the shortening of any notice time which has to elapse after thenotice of readiness has been given.

A very recent decision by Judge Mackie QC (sitting as a Judge of the Queen’sBench Division) in Tidebrook Maritime v. Vitol (The ‘‘Front Commander’’) is ofinterest in respect of early loading and exchange of e-mails before the arrival of thevessel at the loading port. At present it is reported in LMLN 682—1 January 2006,as follows. By a charterparty dated 17 December 2003 the claimant owners char-tered their vessel Front Commander to the defendant charterers on an Asbatankvoyform as amended. The printed form clauses, as amended, together with additionalclauses, included the following:

‘‘5. LAYDAYS. Laytime shall not commence before the date stipulated in Part 1 except withthe charterers’ sanction. . . . 6. NOTICE OF READINESS. Upon arrival . . . the master . . . shall give the charterer . . .notice . . . that the vessel is ready to load . . . and laytime . . . shall commence upon theexpiration of six (6) hours after receipt of such notice, or upon the vessel’s arrival in berth . . .whichever first occurs. . . . 31. Operational Compliance Clause. . .

The vessel shall not tender notice of readiness prior to the earliest layday date specified in thischarterparty and laytime shall not commence before 0600 local time on the earliest laydayunless charterer consents in writing.33. Early Loading Clause.If charterer permits vessel to tender NOR and berth prior to commencement of laydays, alltime from berthing until commencement of laydays to be credited to charterer against laytimeand/or time on demurrage. Saved time to be split 50/50 owners/charterers.’’

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The laycan agreed in the charterparty was 9–10 January 2004. The vessel proceededto Escravos in Nigeria, where she was to load a cargo of oil. On 6 January 2004 thecharterers sent the following e-mail to the owners:

‘‘Charterers confirm NOR to be tendered on arrival Escravos, and to berth/load as soon asinstructed thereafter by terminal.’’

On 7 January 2004 the charterers sent the following e-mail to the owners:

‘‘Charterers reconfirm the Front Commander to tender NOR on arrival Escravos.’’

On 7 January 2004 the charterers sent a further e-mail to the owners saying:

‘‘Front Commander will tender NOR on arrival ie 8 January 00.30 and we want her to berth/commence loading 8 January.’’

The vessel arrived at Escravos and tendered NOR at 00.01 on 8 January, prior to thefirst day of the laycan which was 9 January 2004. She initially anchored but she wasinstructed by the terminal to proceed to berth to load. She weighed anchor at 10.18the same day and was all fast at her loading berth at 12.00. Hoses were connectedat 13.12 and loading commenced at 16.48 on 8 January. Loading was completed at07.36 on 10 January; hoses were disconnected at 08.42 and the vessel sailed fromEscravos at 13.06 on 10 January.

The owners contended that laytime commenced early. They argued that since thetendering of NOR and the commencement of laytime were linked, the three e-mailsreferring to the tender of NOR were to be taken as consenting in writing to earliercommencement of laytime. Consent to laytime was implicit in the consent toloading. Alternatively, laytime commenced on berthing pursuant to clause 6. Byproviding the vessel with a berth and ordering her to proceed to it, the charterersconsented under clause 5 to the commencement of laytime.

The charterers said that laytime did not start to count prior to 06.00 on the firstday of the laydays, which was 9 January 2004.

It was held that the question was whether the owners had shown that the e-mailsamounted to consent in writing (clause 31). In the Court’s view, they did not. Nordid they give consent implicitly. The e-mails confirmed that NOR was to be ten-dered on arrival and that the charterers wanted the vessel to berth/commenceloading early.

Clause 33 provided expressly for what was to happen when there was earlyloading prior to commencement of laytime. It was not necessary to read into e-mailswhich consented to the situation for which clause 33 provided consent in additionthat laytime started early under clause 31. There was no room for the implicationof terms as suggested by the owners. Their point on berthing failed because ofclauses 31 and 33. Accordingly, laytime commenced at 06.00 on 9 January 2004 asprovided by clause 31 of the charterparty.

By the date of publication of this book the case will have been reported in Lloyd’sLaw Reports and, further, it may be the subject of an appeal later in 2006.

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OVERCHARTERING AND OBSTACLESCREATED BY CHARTERERS

125. Sometimes congestion arises because of the charterers’ various commitments,particularly in the case of large chartering organisations. It may be that a vessel isdelayed in getting into a berth because of the charterers’ other commitments and,in such circumstances, the owners may be able to get compensation from thecharterers, for the delay to their vessel, on a damages basis. In practice, the remedyis not that frequently available to owners either because the appropriate circum-stances do not often arise or because of difficulty in raising the evidence that therehas been a breach by the charterers. Further, if a vessel has become an arrived shipand laytime has commenced then the owners may not be that interested/worriedabout any delay to their vessel.

The general principle has been put that shipowners must accept as reasonable anydelay which results from the normal business of shippers, consignees or charterers,but that, if there is such delay that cannot reasonably be said to have been contem-plated by the parties when the charterparty was concluded, it constitutes a breachof the charterparty unless it results from the shipowners’ own actions or from theactions of consignees to whom the charterers have sold the cargo. With moreparticularity it was put by Mr Justice Gorell Barnes, in Ogmore v. Borner,8 asfollows:

‘‘If the charterers have other vessels which they have to discharge, and have arranged todischarge, in the dock before the vessel which by the charter is to proceed to the dock and bythe practice of the Port will not be admitted into the dock while the charterers have the othervessels in the way, the charterers do prevent the shipowners from performing their contractuntil the charterers have cleared away the impediments.’’

In Aktieselskabet Inglewood v. Millar’s Karri9 the vessel could not proceed to aloading berth to which she had been ordered by the charterers because all fourberths which could have accommodated the vessel were occupied, three of them byvessels which the charterers were loading and which could have been completed atan anchorage (this being the normal practice at the time). Mr Justice Kennedydecided that it was the charterers’ own obligations which prevented the ship frombecoming an arrived ship. He said (inter alia):

‘‘If a ship is prevented from going to the loading place, which the charterer has the right toname, by obstacles caused by the charterer or in consequence of the engagements of thecharter, the lay days commence to count as soon as the ship is ready to load, and would, butfor such obstacles or engagements, begin to load at that place.’’

Strictly speaking, the owners’ remedy is in damages but this usually has the sameeffect as commencing the laytime.

The principle enunciated above is not applicable where the delay was such that itshould have been within the contemplation of the parties to the contract at the time

8. (1901) 6 Com. Cas. 104.9. (1903) 8 Com. Cas. 196.

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that the charterparty was concluded. The Court of Appeal had something to sayregarding this aspect in Barque Quilpue v. Brown,10 Lord Justice Williams stating:

‘‘I do not think that a delay which arose from a contingency, the probability of which musthave been perfectly well-known to and contemplated by the shipowners when they enteredinto the charterparty, can be considered unreasonable. In the present case I think it is clearthat when the shipowners entered into the charterparty to load in regular turn, that is, regularcolliery return, they must have known that the charterers would have prior engagementswhich would delay the colliery return of this particular ship, and they must also have knownthat a delay of the ship for loading for a number of days, certainly between forty and fifty days,was not an impossible or even an unusual thing under the conditions of this port.’’

In the more recent American case of The ‘‘Venore’’11 the vessels could not bearrived ships in respect of Calcutta because they were not entered at the CustomsHouse—they had to wait for about 38 days for berths as none were available due tocongestion. The owners claimed (inter alia) that the delay to the vessels was causedby other engagements of the charterers.

It was decided by the United States District Court judge that the owners failed onthis aspect. As part of his judgment, he assumed that other engagements of thecharterers (the President of India) were a significant cause of delay. Even so, he wenton to conclude that, when the contracts were executed, the owners either knew orshould have known of the extent of the charterers’ other grain fixtures. They mustor should have been aware not only of the general congestion at Calcutta but alsoof the effect that the charterers’ grain charters would be likely to have on thatalready overburdened port: such knowledge could be imputed from numerousshipping publications and schedules available to the owners.

Further, he stated that some provisions of the charterparty appear to have beendrafted to cope with the very problem that arose. To illustrate, of the total price ofUS$29/30 per ton for shipment to Calcutta, approximately US$21–22 was allocatedfor carriage to Madras, the remaining US$7 being payment by the charterers for theexpense of the lightening operations. There was further evidence that under opti-mum conditions, the cost of the lightening operations to the owners would havebeen approximately US$3.7 per ton leaving the owners a handsome profit ofbetween US$3.3 and US$4.3 per ton on this phase of the voyage alone. The factthat the owners sought such a price (cushion) and that the charterers agreed to itstrongly supported the conclusion that the owners, aware of the possibility of delay,bargained for and received compensation to cover this eventuality.

Although this was a decision by an American judge it is submitted that, on theapplication of the principle, English judges/arbitrators would probably have taken asimilar approach on the same facts.

It is emphasised that the principle is only applicable where the other vessels arechartered to the same charterer so that it is not applicable to situations where cargois sold by charterers to receivers and they decide to bring in other vessels, before thevessel in question, at the berth which is going to be worked. Further, the principlewill not be applicable where charterers have sold cargo to receivers and vessels

10. (1903) 9 Com. Cas. 13.11. [1973] 1 Lloyd’s Rep. 494.

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under charter to different charterers but discharging cargo for the same receiversoccupy all the available berths.

126. It is a common sense principle that where a vessel is prevented or delayed frombecoming an arrived ship by obstacles created by charterers or those for whom thecharterers are responsible (overchartering described in paragraph 125, above, sim-ply being one kind of example which falls within the principle), the charterersbecome liable for the delay: this is all part of the wider general principle that it is theordinary natural implication that neither party should prevent the other from per-forming that part of the contract which falls to be performed by that other. If thecharterers, or their agents acting within the scope of their authority, have placedimpediments in the way of shipowners bringing their vessels into dock, the charter-ers ought to be responsible for the delays so caused as if the vessel had, in fact,arrived at her berth.

The principle lines up with that already detailed regarding an implied term thata charterer must exercise reasonable dispatch (see earlier, The ‘‘Atlantic Sun-beam’’).12 A further example of the application of the principle is seen in Owners ofPanaghis Vergottis v. Cory,13 where a vessel was delayed in getting into a dock in adock charterparty because the charterers had not complied with a local regulationthat no vessel would be ordered to the loading tip unless there was sufficient coal inhand to ensure continuous loading. Mr Justice Greer decided that the chartererswere liable for the delay, having this to say:

‘‘I think there is an implied term in the charterparty that the defendants would do whateverwas reasonable in order to enable the plaintiffs’ ship to get into the dock and become anarrived ship . . . in refusing to assist the plaintiffs’ ship to get into the dock by complying withthe requirement of the dock authority, the charterers broke their contract and are liable to paydamages.’’

Mr Justice Greer awarded damages and this is the correct approach in a breach ofcontract situation. There appeared to be some doubt at this time as to whether thecharterers’ measure of liability was arrived at by giving to the shipowners damagesfor delay or whether the laydays were to be ante-dated to that when they should havebegun.

The point was taken care of by the Court of Appeal in Fornyade v. Blake,14 wherethe charterers failed to comply with a dock company notification in respect ofdischarge into certain wagons; delay occurred prior to the vessel becoming an‘‘arrived ship’’. It was held that damages for the delay was the appropriate remedy,Lord Justice Scrutton stating: ‘‘The result, in my view, would not be demurragetechnically, but it would be damages for preventing the ship from reaching her placeof discharge—which would have practically the same result as if there were a claimfor demurrage.’’

As mentioned by Scrutton there will usually be no difference to the end resultwhether it be a laytime or damage calculation but it is important as a matter of

12. [1973] 1 Lloyd’s Rep. 482; above, paragraph 56.13. (1926) 25 Ll.L.Rep. 64.14. (1931) 39 Ll.L.Rep. 205.

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analysis because there may be circumstances where a calculation of damages willlead to a larger sum than a pure laytime calculation. For example, if the vessel is nottechnically an ‘‘arrived ship’’ and the Schofield approach is adopted (see earlier,paragraph 61) the laytime will not be worked into the delay period with, perhaps, aresulting bonus to the owners.

EXCEPTIONS

127. This book is concerned essentially with the commencement of laytime and notwith the running of laytime, so that the laytime exceptions are, prima facie, outsideof its considerations. However, there are certain exceptions which are extremelyimportant and relevant to the commencement of laytime because of their effectwhen a vessel is waiting off a port and cannot berth because of reasons such ascongestion or bad weather.

The latter circumstances have already been the subject of considerable debate anddiscussion in Chapter 3 and they may be interwoven with the charterparty excep-tions so that the ultimate effect is to stop the laytime clock even before it startsticking although, in theory, laytime has commenced; the theoretical commencementof laytime is not translated into a practical commencement of laytime because of thecombined effect of the exceptions/circumstances which have a neutralising effect.Because of their importance in everyday shipping commercial life it is thoughtdesirable to say something about port congestion and bad weather in thiscontext.

A well-known and highly criticised decision regarding congestion is The ‘‘Amstel-molen’’.15 The Court of Appeal upheld that congestion in the port by reason ofwhich a berth was not available constituted an ‘‘obstruction’’ for the purpose of theCentrocon strike clause which reads (inter alia): ‘‘If the cargo cannot be loaded/discharged by reason of . . . obstructions . . . beyond the control of the charter-ers . . . the time for loading or discharging . . . shall not count.’’

In The ‘‘Loucas N’’16 the Court of Appeal adverted to the unsatisfactory Amstelmo-len15 decision but did nothing about it so that the authority is still very much withus and has to be applied with the result that it can negate the effect of a ‘‘time lostwaiting for a berth’’ clause when port congestion prevails. Since the Darrah17

decision the ‘‘time lost’’ provision starts the laytime clock so that, if there is aCentrocon strike clause in the charterparty, laytime will cease immediately if thereis an ‘‘obstruction’’ because of port congestion.

The question is sometimes asked, ‘‘will this still be the answer if port congestionis endemic and notorious and that this was known, or should have been known, atthe time the charterparty was concluded?’’. The answer is ‘‘Yes’’; see the decision ofMr Justice Staughton (as he then was) in The ‘‘Adolf Leonhardt’’18 where it was

15. [1961] 2 Lloyd’s Rep. 1.16. [1970] 2 Lloyd’s Rep. 482; already referred to above on other matters, see earlier paragraphs

35–36.17. [1976] 2 Lloyd’s Rep. 359; see above, on other matters, earlier paragraphs 36–39.18. [1986] 2 Lloyd’s Rep. 395.

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decided that any congestion, whether it be normal or usual or endemic or notorious,was caught within ‘‘obstructions’’, also the decision of the Court of Appeal in The‘‘Radauti’’19 which case is detailed later in paragraph 128. In the former case(already referred to earlier in Chapters 1 and 2 regarding a port charterparty, andWIPON) there were several issues for decision, one of which was the effect of theCentrocon strike clause in circumstances where it was decided that the vessel hadarrived at the loading port, on the application of WIPON, and was then subject todelay by congestion. The Amstelmolen Court of Appeal decision, which was binding,resulted in ‘‘obstruction’’ covered congestion but the buyers sought to distinguishthat case on the grounds that there was an express finding that the congestion atNew Orleans was neither normal nor unusual whereas, in the present case, thecongestion in the River Parana was endemic and notorious. On the different kindsof congestion, Mr Justice Staughton had this to say:

‘‘For my part I cannot see that it makes any difference, or that the word ‘‘obstructions’’ is anyless apt to cover ordinary congestion than extraordinary congestion. All three Lords Justicesnoted in their judgments that the congestion was unusual; but I regard that as merelynarrative, for I cannot detect that they attached any importance to it.’’

The judge also said that he was bound by The ‘‘Amstelmolen’’ albeit that the Courtof Appeal decision had proved unpopular in commercial circles.

In respect of the knowledge or the presumed knowledge of the parties at theinception of the charterparty contract it appears that there is no binding principlewhich forbids the charterers from relying upon an exception relating to congestionbecause they knew or ought to have known that the vessel was inevitably doomed tomeet with congestion; see Scrutton on Charterparties, 19th edn, page 220 and The‘‘Radauti’’ (detailed in paragraph 128).

128. The ‘‘Radauti’’20 started as an interesting maritime arbitration. The voyagecharterparty contained a printed ‘‘time lost waiting for a berth’’ provision (clause 6)and also contained a headed force majeure (type-added) clause 33 whichstipulated:

‘‘ . . . or other unavoidable hindrances in transportation, loading discharging or receiving thegoods, . . . and any other causes or hindrances happening without the fault of the Charter-ers . . . preventing or delaying the discharging or receiving of the cargo excepted and neithercharterers nor shippers shall be liable for any loss or damage resulting from any such exceptedcauses and time lost by reason thereof shall not count as laydays or days on demurrage . . . .’’

The owners contended that the above clause did not apply to the set of circum-stances which delayed the discharge of the cargo at Tripoli where port congestionwas in existence, and had been in existence for some considerable time. Further, theexception ‘‘hindrances’’ should not be equated with ‘‘obstruction’’ so as to makesimple port congestion one of the exceptions within the clause. The umpire decidedthe case against them on the following grounds:

19. [1988] 2 Lloyd’s Rep. 416.20. [1987] 2 Lloyd’s Rep. 276 and [1988] 2 Lloyd’s Rep. 416.

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(1) The owners could get no benefit from the rubric ‘‘force majeure’’ sincemany of the events in the clause were not within the accepted definitionof force majeure.

(2) ‘‘Hindrances’’ have an identical meaning to ‘‘obstructions’’ since ‘‘hin-drances’’ were just as capable of covering delay due to congestion at a portas ‘‘obstructions’’ in accordance with the decision of the Court of Appealin The ‘‘Amstelmolen’’.21 Further, in the Oxford Dictionary, the word‘‘obstruction’’ is equated with ‘‘hindrance’’ amongst other meanings and,similarly, the word ‘‘hindrance’’ is equated with ‘‘obstruction’’. If any-thing, the word ‘‘hindrance’’ was wider than ‘‘obstruction’’. Therefore,‘‘hindrances’’ covered congestion of the port just as much as‘‘obstructions’’.

(3) Whether or not an exception can be relied upon, even though the eventwhich prevented performance is operating at the date of the contract,depends upon the facts and relevant circumstances of the case. It may notbe relied upon where the excepted cause is something exceptional andwhere confined to specific events, for example, a particular strike, but thisdoes not apply to general matters which occur in the ordinary course ofbusiness such as port congestion. It was well known to those engaged inthe international shipping business at the time that Tripoli had sufferedfrom congestion for a number of years and it would not be unreasonableto infer that both the owners and the charterers either knew or ought tohave known when concluding the contract that Tripoli was congested. Inmodern times delay in discharging is so frequently caused by congestionin ports that the event of congestion has come to be recognised as some-thing which occurs in the ordinary course of business and not somethingwhich is exceptional.

The decision appeared harsh but the learned umpire had no alternative but toapply the Amstelmolen decision21 and what appeared to be the law in respect of theknowledge or presumed knowledge of the parties at the inception of the contractregarding an excepted event.

On appeal to the High Court it was decided by Mr Justice Staughton (as he thenwas) that:

(1) clause 6 was for the most part in printed form and it was well establishedthat in case of conflict it must yield to clause 33 which was speciallyagreed by the parties; and although the words ‘‘time lost in waiting for aberth to count’’ had a different effect for some purposes there was nosignificant difference so far as concerned this case or that one phraseshould have any greater weight than the other as an indication that timewas to run when all berths were occupied and the port was congested;clause 6 did not override clause 33; if on a fair reading of clause 33 the

21. [1961] 2 Lloyd’s Rep. 1.

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charterers were exempted from liability for the consequences of conges-tion in the port it might well be that the printed clause 6 had little or nocontent;

(2) the authorities did not decide that the obstacles which prevented thevessel reaching a berth could not, if provided for in the exceptions clause,stop waiting time from running; The ‘‘Darrah’’22 considered andapplied;

(3) it would be wrong to conclude that because obstructions had in the pastbeen held to include congestion which prevented a vessel reaching aberth, the word ‘‘hindrances’’ in clause 33 also included congestion; thatcould only be justified by reasoning that, although the parties used differ-ent language, they must have intended to make a contract to the sameeffect as others had done in the past; the parties intended that the charter-ers were not to be liable for delay caused by events outside their controlor occurring without fault on their part and there was no reason to restrictthe ordinary meaning of ‘‘hindrances’’;

(4) the title ‘‘force majeure’’ to clause 33 was not sufficient to exclude conges-tion from being within the word ‘‘hindrances’’ even though as the umpirefound it was well known that Tripoli had suffered from congestion for anumber of years; and the umpire’s conclusion would be upheld;

(5) the umpire was entitled to make the findings he did without expresslystating that he was relying on his own knowledge or experience to theparties; the owners’ motion failed.

The above decision was upheld in the Court of Appeal where Lord Justice Lloydgave the leading judgment, stating (inter alia):

‘‘Mr Young drew attention to the fact that congestion was endemic in the port of Tripoliduring 1977. There was nothing unusual in vessels having to wait in the roads. In The‘Amstelmolen’, by contrast, there was a finding of fact that it was neither normal nor usual atNew Orleans for all the berths to be occupied. Lord Justice Ormerod, giving the leadingjudgment, referred to the ‘unusual set of circumstances’; and Lord Justice Upjohn alsoreferred to the ‘unusual congestion due to commercial reasons’.

But if, as we are bound to hold, the word ‘obstructions’ covers the inability of a vessel toget to her berth because of congestion, I can see no difference in principle whether there wasone vessel in front of Radauti or a 100. The degree of congestion is clearly irrelevant. So also,in my view, is the likelihood of congestion. That was the view of Mr Justice Staughton in The‘Adolf Leonhardt’.23 It was his view in the present case. I share his view. The phrase ‘hin-drances . . . delaying . . . the discharging of the cargo’ should be given its ordinary meaning,even though on the facts some degree of hindrance was inevitable. The foreseeability of thecongestion does not justify attaching an unusual or restricted meaning to the word‘hindrances’.

In the notice of appeal there is reference to Ciampa v. British India Steam Navigation Co.Ltd.24 in support of the proposition that exceptions should not be construed as applying toevents or states of fact existing at the date of the contract. There must be something whichsupervenes. Though the point is similar to the point just considered, it was not developedseparately by Mr Young. Indeed, he did not refer us to the Ciampa case at all. If the point had

22. [1976] 2 Lloyd’s Rep. 359.23. [1986] 2 Lloyd’s Rep. 395.24. [1915] 2 K.B. 774.

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been developed, Mr Young would have had to meet the argument that the vessel might havebeen ordered to Benghazi, where, so far as we know, there was no congestion. The charter-party gave the charterers the right to order the vessel to Tripoli. I can see no principle ofconstruction which would enable us to apply the exception to one port but not the other. InScrutton on Charterparties 19th edn at p. 220 it is said:

‘Exceptions can be successfully relied upon even though the event preventing performanceis operating at the date of the contract.’

The editors cite as authority Reardon Smith Line v. Ministry of Agriculture Fisheries and Food25

in the Court of Appeal. The point did not arise when that case was considered in the Houseof Lords26; but, in the light of what was said in the Court of Appeal in the Reardon Smith case,Mr Young would have had great difficulty in persuading me to take a different view.

Finally, Mr Young relied on the fact that clause 33 is headed ‘Force Majeure’. This means,he says, that ‘hindrances happening without the fault of the charterers’ should be limited tohindrances which were unpredictable as well as unavoidable. It is sufficient to say that I cansee no justification for so limiting the ordinary meaning of the words by reference to theheading. ‘Force Majeure’ is clearly used as an omnibus description for a variety of differentcauses. The rubric does not affect the meaning of each individual cause.

I would therefore answer the question of law the same way as the Judge and, like him,would uphold the umpire’s conclusion. It is said that The ‘Amstelmolen’ is an unpopulardecision. But it is binding on this Court and cannot, in my judgment, be distinguished.’’

The case did not go the House of Lords, regrettably perhaps, so that the Amstelmolendecision remains as a binding Court of Appeal authority, which court is generallybound by its own decisions.

For more details regarding exceptions and their effect see Schofield on Laytime andDemurrage (5th edn, 2005).

129. An exceptions clause may prevent the laytime clock starting to tick in circum-stances such as bad weather. See, for example, the much-used exception in clause6 of the Asbatankvoy and ASBA II charterparties which reads:

‘‘ . . . the Master or his agent shall give . . . notice . . . that the vessel is ready to load ordischarge cargo, berth or no berth, and laytime, as hereinafter provided, shall commenceupon the expiration of 6 hours after receipt of such notice, or upon the vessel’s arrival inberth, whichever first occurs. However, where delay is caused to the vessel getting into berthafter giving notice of readiness for any reason over which the Charterer has no control, suchdelay shall not count as used laytime.’’

It follows that, if delay is caused to the vessel after giving the notice, oversomething of which the charterer has no control, before the six-hour period expires,the laytime clock will not start; it will only start when the delay to the vessel, overwhich the charterer has no control, ceases. There can be a good many events whichcause delay to a vessel when she arrives off a port and over which the charterer hasno control, e.g. wind, swell, fog, breakdown of port authority equipment, etc. It maybe that argument can be developed as to what comes within the ambit of thecharterers’ control but there is no doubt that weather conditions do fall outside oftheir control. For example, in The ‘‘Notos’’27 the arbitrators and the courts were

25. [1961] 1 Lloyd’s Rep. 385; [1962] 1 Q.B. 42 (C.A.).26. [1963] 1 Lloyd’s Rep. 12 (H.L.).27. [1987] 1 Lloyd’s Rep. 503.

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concerned with (inter alia) the effect of swell on the discharging sea-line for thetanker in question. The vessel arrived at the port of discharge on 5 February 1982at 12.45 and gave notice of readiness. She anchored at the customary anchoragebecause she could not, in any event, discharge at the sea-line on account of swell,which swell did not abate until 25 February at about 11.50. The charterpartycontained a virtually identical clause to that cited above so that all tribunals werefaced with (inter alia) whether or not time counted during the period from 12.45 on5 February to 11.50 on 25 February. It was held by the arbitrators, the High Court,the Court of Appeal and the House of Lords that since no vessel of the relevant sizecould use the sea-line during the relevant period, it was that which prevented thedischarge of the vessel, rather than the presence of another vessel ahead of her, sothat the charterer got the benefit of the wide exception: ‘‘for any reason whatsoeverover which Charterer has no control’’. In the House of Lords it was stated by LordGoff:

‘‘There is no evidence that the sea-line was unsafe, because it appears that a vessel discharg-ing at the sea-line could safely be ordered temporarily away from the sea-line if swelldeveloped; and I cannot see why the mere fact that the sea-line in question was in theownership and under the control of the charterers prevented the incidence of swellfrom being a cause over which the charterers had no control within the last sentence ofclause 6.’’

Further, in relation to the clause 8 exception, ‘‘ . . . demurrage shall not accrue forany delay . . . or any other cause over which the charterer has no control’’, he saidthat once the conclusion is reached that the exception in clause 6 is wide enough toembrace swell, it is inevitable that the exception in clause 8 should likewise be soconstrued. Mr Rix struggled to convince your Lordships that, despite the presenceof the word ‘‘whatsoever’’ in the exception, a limited meaning should be placedupon it, derived from the events expressly excepted in the last sentence, restrictedto causes relating to the vessel or her owners or those for whom they are responsible.I can only say that I can see no basis for so limiting an exception which is expressedto exclude delay caused by . . . any other cause of whatsoever nature or kind overwhich the charterer has no control.

Bad weather, which prevents a vessel berthing when she arrives off a port, is a verycommon occurrence, particularly in the tanker trade. The exception will bite infavour of the charterers so that laytime cannot commence until after the weather hasabated. Having said that, the charterparty may also contain a ‘‘reachable on arrival’’provision (as in the standard Asbatankvoy charterparty) in which case the effect ofthe Laura Prima decision28 will be that the charterers will get no benefit from theexception in respect of bad weather and other factors which prevent the vesselgetting to her berth (see earlier, Chapter 3, paragraphs 45 et seq.).

130. It is emphasised that the exceptions referred to in paragraphs 127, 128 and129 above are exceptions which refer directly to laytime. A general exceptions clauseis in a different category and will not usually apply to laytime or the commencementof such.

28. [1982] 1 Lloyd’s Rep. 1.

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The point came up in The ‘‘Johs Stove’’29 where by a charterparty dated 30November 1978, the owners let their vessel Johs Stove to the charterers for thecarriage of a cargo of crude oil from the Persian Gulf to Turkey. The charterprovided inter alia:

‘‘6. Notice of readiness. Upon arrival at . . . port of loading . . . the master . . . shall givethe Charterer . . . notice . . . that the Vessel is ready to load . . . berth or no berth andlaytime . . . shall commence upon the expiration of six . . . hours after receipt of suchnotice . . . where delay is caused to Vessel getting into berth after giving notice of readinessfor any reason over which Charterer has no control, such delay shall not count as usedlaytime.

8. Demurrage . . . If . . . demurrage shall be incurred at ports of loading . . . by a strike . . .the rate of demurrage shall be reduced one-half of the amount . . .

19. General Exceptions Clauses . . . neither the . . . Owner nor the Charterer . . . beresponsible for any delay . . . arising or resulting from . . . strike.’’

The vessel arrived off the loading place at Kharg Island on 15 December 1978,and gave notice of readiness the same day. There had been unrest in Iran through-out 1978. At the end of October there was a mass strike of oil employees but by thetime the vessel arrived the terminal was working normally. However, the strikeaction caused serious congestion; there were many vessels waiting to berth and on26 December there was a complete ban on the export of crude oil from KhargIsland which lasted until 5 March 1979.

The dispute between the owners and the charterers was referred to arbitration.The arbitrator found as a fact that the effective cause of the charterers’ failure to

nominate a berth on arrival was congestion at Kharg Island.The owners contended that the vessel came on demurrage on 18 December at

20.50, remained on full demurrage until 26 December at 06.00 and thereafter onhalf demurrage until the vessel sailed away. The charterers argued that the vesselnever came on demurrage at all but that if she did demurrage ran at half ratethroughout the period from 18 December. The arbitrator found in favour of theowners on both issues and that the charter was frustrated on 18 January 1979, whenthe vessel sailed away but stated his award in the form of a special case for theopinion of the court.

The arbitrator was upheld in the High Court by Mr Justice Lloyd (as he then was)who decided (inter alia):

(1) a general exceptions clause such as clause 19 would not normally be readas applying to provisions for laytime and demurrage unless the languagewas precise and clear and clause 19 was not a direct exception on clause6;

(2) since there was a clear finding by the arbitrator that the effective cause ofthe failure to procure a berth for the vessel on arrival was congestion, notthe strike, and that was not one of the causes enumerated in clause 8,demurrage ran at full rate from 18 December to 26 December.

In upholding the sole arbitrator in that a general exceptions clause did not applyto the laytime provisions the learned judge stated: ‘‘I agree with the arbitrator that

29. [1984] 1 Lloyd’s Rep. 38.

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a general exception clause such as clause 19 will not normally be read as applyingto provisions for laytime and demurrage, unless the language is very precise andclear.’’

In a later decision of the Court of Appeal in The ‘‘Lefthero’’30 Lord Justice Lloydsaid (when considering a similar clause to that in The ‘‘Johs Stove’’29 but in adifferent context):

‘‘As for The ‘Johs Stove’, the clause is virtually identical save for the omission of strikes fromthe list of excepted perils, and for some sloppy drafting. The decision has only stood for tenyears, or less. Even so, I see no reason to disturb it.’’

The Court of Appeal, which was not bound by The ‘‘Johs Stove’’, chose not todisturb the position, thus affirming that a general exception clause will not normallybe read as applying to provisions for laytime and demurrage unless the language ofthe exception clause is very precise and clear.

Of course, one does sometimes see a general exceptions clause which makes itabundantly clear that the exceptions are to apply to the laytime code, for example,the Centrocon strike clause as in The ‘‘Amstelmolen’’ (see earlier paragraph127).31

In a more recent decision, The ‘‘Solon’’,32 Mr Justice Thomas (as he then was)considered the following exceptions clause 28 in the charterparty:

‘‘Strikes or lockouts of men, or any accidents or stoppages on railway and/or Canal and/orRiver by ice or frost, or any other force majeure clauses including Government interference,occurring beyond the control of the Shippers or Consignees which may prevent or delay theloading and discharging of the vessel always excepted.’’

The charterers contended that the clause operated to interrupt laytime if the strikeprevented or delayed the loading of the vessel during the laydays. The sole arbitratordecided that the clause did so but his decision was appealed.

The appellant owners contended that it was clear from the decisions in The‘‘Kalliopi A’’, The ‘‘Forum Craftsman’’ and The ‘‘Lefthero’’ that as a matter of princi-ple, general exceptions clauses which were claimed to operate as exceptions clausesfor laytime and demurrage had to be clearly expressed if they were to have thateffect; they were subject to the principle that an ambiguous clause was no protectionwhether the issue was interruption of laytime or liability for demurrage. The ownersfurther submitted that the clauses considered in those cases were materially similarto the clauses in the present charter and it followed from those decisions that laytimewas not interrupted.

Mr Justice Thomas accepted the owners’ contention and allowed the appeal. Hestated (inter alia):

‘‘In my view content can sensibly be given to clause 28 without it including an exception tothe obligation to load within the laydays. Given the clear words used where the partiesintended to provide for a laytime exception and the terms of clause 28, I do not consider thewords of clause 28 make clear that it is intended to provide an exception to laytime.

30. [1992] 2 Lloyd’s Rep. 109.31. [1961] 2 Lloyd’s Rep. 1; see above, paragraphs 127 and 128.32. [2000] 1 Lloyd’s Rep. 292.

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However, quite apart from the wording of this charterparty, it is also necessary to haveregard to the authorities on similar clauses which I have set out and particularly The ‘Lefthero’.In The ‘Lefthero’, the Court of Appeal decided that a similarly-worded clause did not exceptthe charterer from his liability to pay demurrage when the exception which was claimed toexcuse the obligation to pay demurrage had begun during laytime. For the reasons I have setout, the effect of this decision must be that the exception also did not operate to preventlaytime running. I cannot see any material distinction between that clause and clause 28 inthe charterparty for this vessel. It is also clear that the Court of Appeal in that case consideredthat The ‘Forum Craftsman’ could not be distinguished from The ‘Kalliopi A’ on the basis thatin The ‘Forum Craftsman’ the period which was claimed to be excepted had begun only afterthe vessel was on demurrage. Thus, apart from the view I have formed on the language of thecharter-party and clause 28, as a matter of authority, the present clause 28 (which is insubstance similar to the clause in The ‘Lefthero’) does not provide an exception to the runningof laytime.’’

For completion, mention is made of LMLN 636—31 March 2004 (already referredto in Chapter 4, paragraph 71 regarding readiness and a Linardos/Jay Ganesh typeclause), which was concerned with whether, as the charterers had argued in thealternative, the periods excepted from their laytime calculations were also excludedby clause 39.

It was held, that the charterers’ argument would be rejected. Insofar as ‘‘ . . . therestraints of rulers Princes and people . . . ’’ was concerned, the tribunal would holdthat that exception only being ‘‘mutually excepted’’, the language was insufficiently‘‘precise and clear’’ to make it apply to laytime (see The ‘‘Johs Stove’’).33

ESTIMATED TIME OF ARRIVAL

131. The giving of an estimated time of arrival for a loading or a discharging port,although not directly concerned with the commencement of laytime, may indirectlyhave a bearing on the subject in that if there is a breach of contract by the ownersin respect of the giving of an ETA the resultant damages may effectively prevent thelaytime clock from starting to tick when the vessel reaches the agreed destinationand is in a position to tender a notice of readiness. The common law obligationregarding the giving of an ETA is well established as being analogous to an‘‘expected ready to load’’ provision in that any ETA has to be given honestly andreasonably; see The ‘‘Myrtos’’34 and the earlier cases referred to in that judgment. InThe ‘‘Myrtos’’ the charterparty was made on 14 May 1980 and in its preamble itprovided that the owners were to nominate a vessel 20 days prior to the vessel’sETA.

On 11 June 1980, the owners nominated the vessel Myrtos to perform the charter.On 1 July the period of 20 days elapsed. The cancelling date was 15 July but thevessel did not arrive at the loading port until 21 July and it was declared ready toload on 24 July.


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The charterers contended that because the vessel failed to arrive at the loadingport on the due date, i.e. 1 July 1980, they suffered damages in the course of theperiod from 15 July to 24 July.

The dispute was referred to arbitration and the arbitrators found in favour of thecharterers. The owners appealed against that award.

It was held by Mr Justice Leggatt (as he then was) that:

(1) it was plain that the phrase ‘‘vessel to be nominated 20 days prior to thevessel’s ETA’’ constituted a provision analogous with the expected readi-ness clause; Evera S.A. Comercial v. North Shipping Co. Ltd.35

considered;(2) here the owner’s obligation was to proceed with all convenient speed and

there was nothing in the drafting of this charter which detracted from thatobligation;

(3) under this charterparty what the owners accepted was an absolute obliga-tion for the vessel to sail on the date on which, when proceeding with allconvenient speed, it would normally be necessary to sail in order to reacha port in the load port range on or about the estimated date of arrival, i.e.20 days after the date of nomination;

(4) there was no reason why the owners should not be absolutely obliged toset sail on a particular date being a date which was calculated with nomore than reasonable certainty and the arbitrators’ award would beupheld.

Mr Justice Leggatt had this to say (inter alia):

‘‘Looking at the words with which I am concerned, it seems to me plain that the phrase,‘vessel to be nominated 20 days prior to the vessel’s ETA’ constitutes a provision analogouswith the expected readiness clause to be found not only in the Evera case itself, but in theother cases cited in it. In deciding the effect of the clause, it appears to me that I am boundby the decision of the Court of Appeal in Monroe Brothers Ltd. v. Ryan, and that I shouldfollow Mr Justice Devlin in the Evera case, unless they are distinguishable. I have alreadyreferred to the suggested distinction between an estimated time of arrival and an estimateddate of readiness to load, but in my judgment that does not constitute any distinction inprinciple. It is true that it is less directly helpful to charterers to know when a vessel is to arrivethan when she is to present ready, but they will nonetheless benefit in a way contemplated inthe Evera case if they have a statement of position in the form of a stipulated arrival timebecause, for example, if the arrival time were not fulfilled, it would entitle the charterers toimpugn the reasonableness of the estimate of time of arrival.

The other possible distinction between the present case and the Evera case and those citedin it, is that whereas they were concerned with specific vessels, the parties here were contract-ing in relation to a vessel to be nominated. Here again, I do not consider that the distinctionis one which will avail the owners. Once the nomination had occurred, the contractual vesselwas identified. There is no reason why the owners should not, upon nomination, assume anabsolute obligation to sail the vessel, from wheresoever she then might be, to the port ofloading; and to do so, moreover, at such date as was necessary for her to arrive at the port ofloading on the date estimated. It was suggested in argument that the reasoning is circular,because there cannot be an absolute obligation for a vessel to reach the port of loading untilshe has been nominated, and until she has been nominated it cannot be known how long itwill take her to reach the port of loading from wherever she may happen to be. But the owners

35. [1956] 2 Lloyd’s Rep. 367.

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know that they must have a vessel available to reach the loading port in 20 days fromnomination or, more accurately, as here, the loading port range, or area, since at the date ofnomination the specific port of loading had not itself yet been identified. Before nominationthe charterers know that they can expect the vessel to arrive on a date which will be specified.I can see no reason, in practice or in principle, why the absolute obligation of the ownersshould not crystallise on nomination. When that is to occur, it is no doubt commerciallysensible to provide (as was provided here) that the charterer should have a period of threeweeks or so in which to conclude the loading arrangements and thereafter monitor thevessel’s progress by reference to such notices of expected readiness to load, and notices ofactual time of arrival, as were required by clause 20 of the charterparty.

. . . I should remark that in par. 9 of their reasons for the award, the arbitrators stated the

owners’ obligation as being more onerous than they need have and indeed as being moreonerous than, in my judgment, it is. In that paragraph they referred to the owners’ absoluteobligation to have the vessel arrive at the load port by 1 July. In my judgment, under thischarterparty what the owners accepted was an absolute obligation for the vessel to sail on thedate on which, when proceeding with all convenient speed, it would normally be necessaryto sail in order to reach a port, in the load port range, on or about the estimated date ofarrival; that is to say, 20 days after the date of nomination.’’

132. The Myrtos case34 illustrates the care required by owners/masters regardingETA communications. While there appears to be only three reported arbitrations inrespect of the topic (all of which were decided in favour of the owners) there havebeen a considerable number of arbitrations over the years where the point has beensuccessfully advocated by charterers with the result that a breach of the obligationby the owners caused delay and the damages arising were reflected by delaying therunning of the laytime clock. The first reported arbitration, LMLN 305—13 July1991, went against the charterers in their contention that the owners breached theETA provision in the charterparty.

The owners of the vessel chartered her on the Norgrain 1973 form for thecarriage of goods from a South American port to the Soviet Black Sea or Baltic.Whilst the ship was loading in Argentina the charterers requested the owners to loadan additional cargo of soya pellets from Paranagua. An agreement was reachedwhich was set out in an Addendum which provided for the ship to complete atParanagua after Buenos Aires. The agreement contained the following provision:

‘‘according to present position, owners reckon vessel will have an ETA basis Paranagua April6/8 1987, however depending how the despatch in loading will run in Buenos Aires wherevessel is completing for the Argentine cargo’’.

Despite the ETA given for Paranagua (6/8 April) the ship was in fact delayed atBuenos Aires and did not leave there until 28 April, arriving at Paranagua on 2 May.She was unable then to berth due to congestion, and it was only on 23 May that shewas able to go to a berth, completing loading on 25 May.

The shipowners advanced a claim for $90,284 demurrage. The charterers deniedliability because, they said, the ETA was not honestly and reasonably given. Theirfirst point was that when the Addendum was entered into the ship was still waitingfor a berth at her first loading port, San Lorenzo, and after loading there she had togo to Buenos Aires. In answer to that, the owners produced a telex from the

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charterers’ agents of 23 March advising that the ship was expected to sail from SanLorenzo on 27 March. On that basis, the owners said, and on the basis of theirprevious experience, they calculated an ETA in Paranagua of 6/8 April.

The charterers then said that in order to calculate the time likely to have beentaken at San Lorenzo, the owners should have divided the quantity to be loaded(31,000 tonnes) by the charter rate of 2,500 tonnes per weather working day, andon that basis, they said, it should have been expected that at least 12 days would berequired for San Lorenzo. The owners said, and the tribunal accepted, that was anincorrect approach. For the purpose of deciding whether an estimate was reasonablyand honestly given regard must be had not to negotiated laytime provisions, but towhat could reasonably be expected to happen in fact. In the present case, as alreadypointed out, the charterers’ own agents advised that loading at San Lorenzo shouldbe completed by 27 March. As it happened, the ship was by-passed by anotherbecause the charterers’ cargo was not available and it was as a result of that that shedid not start loading until 28 March, completing on 4 April. The loading periodincluded one day’s holiday, together with rain and shippers’ delays of about 1 day5 hours. In net terms, therefore, loading took about six days. The charterers’ agentsthemselves had estimated less than four days.

Next, the charterers pointed to the fact that the ship still had to load at BuenosAires, and suggested that that operation, including sailing time, would take a furtherfive days. In fact the sailing time was 21 hours, and when loading actually com-menced it took only 11

2 days. Unfortunately, loading did not in fact commence until21 April, and it appeared that the delay was caused by the effects of the Pope’s visitto Buenos Aires and the after-effects of the Easter holidays. Had the ship not beendelayed at San Lorenzo, she would not have suffered those problems at BuenosAires. They were clearly unforeseeable when the owners gave their estimate.

When the tribunal bore in mind, in addition to all the above factors, that the ETAin the agreement was given on the basis that it was dependent on ‘‘how the despatchin loading will run in Buenos Aires’’, the tribunal did not think that it could possiblybe said that the owners’ estimate was given other than honestly and on reasonablegrounds.

The owners’ claim for demurrage succeeded.The arbitration illustrated that charterers may not always have an easy task in

being able to show that the owners acted unreasonably in giving an ETA; further itis emphasised that the initial burden of proof is on the charterers although theburden of proof may swing if the charterers show a prima facie unexplainable gapbetween the ETA and the time that the vessel arrives at or off the loading/discharg-ing port.

The next reported arbitration is LMLN 383—9 July 1994. The charterers con-tended that they could add a further day to laytime under clause 19, which providedfor the master to give the discharging port agents and the charterers 15, 10, seven,five days and 72, 48 and 24 hours’ notice of expected date and time of arrival atdischarging port and continued:

‘‘In the event of owners or master failing to give the aforementioned notices, charterers areto be allowed 24 hours’ extra laytime for loading or discharging.’’


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The master gave the discharging port agents all but the 15 days notice, and theowners gave the charterers all but the seven and five day notices and the 72 hours’notice.

It was held, that from a practical point of view, the charterers were kept veryadequately informed of the ship’s ETA. To read the closing words of clause 19 as thecharterers had contended would mean construing them as if they referred to afailure to give ‘‘any of the aforementioned notices’’ rather than simply a failure togive ‘‘the aforementioned notices’’. That was commercially wholly unrealistic, andindeed not in accordance with the tenor of the words used. It was not to besuggested that there had to be total failure (i.e. that no notices at all would have tobe given) in order for the charterers to have the benefit of the 24 hours referred to,but there would have to be a substantial failure which, arguably, might have to beshown to have or to have been likely to have had some effect on the operations of theship at the discharging port. There was no such evidence in the present case, notsurprisingly, since the owners’ master’s failures were relatively minimal. The chart-erers’ contentions would be dismissed.

In the last reported arbitration, LMLN 473—20 December 1997 the vessel waschartered on the Asbatankvoy form. The owners claimed demurrage. The charter-ers counterclaimed that the owners were in breach of charter in that they failed togive ETAs as required by the charter. The charterers said that in consequence thereceivers failed to make berthing arrangements for the ship and the ship wasdelayed, thereby triggering the demurrage liability sought to be enforced by theowners. The charterers counterclaimed damages in the amount of demurrage nowclaimed by the owners.

It was held, that the only evidence produced by the charterers in support of theircounterclaim was a telex from the receivers dated 6 March. That said that as themaster had applied to the local authorities only on 5 March, while the ship hadarrived on 3 March without giving any ETAs, ‘‘therefore and with this in mind andin conformity with our contract vessel will be accepted for berthing’’. The charter-ers had also produced the sale contract, but it was far from plain that that contractallowed the receivers to postpone berthing on the basis of late or non-existent ETAs.Quite apart from that, however, given the ship’s laycan which was undoubtedlyknown to the receivers, the shortness of the voyage, the closure of the port and thefact that the master reported a large number of other ships waiting, the tribunalwould need far more persuasive evidence if it were to be satisfied that there was acausal connection between any breach of the ETA provisions and the delay inberthing.

In any event, the tribunal was satisfied that there was no breach by the owners.Such ETAs as could be given were given timeously by the ship, using her own telex,to the receivers or their agents. If those were not received, that was not the owners’fault. The only evidence that they were not received was in the receivers’ telex of 6March. Against that were the telexes themselves which showed full answerbacks.Some messages could not be sent because there was no response when the ship triedto transmit. That was not the owners’ fault.

The above-reported arbitrations substantiate what has been stated earlier in thatit may not be easy, on the evidence available, for charterers to show that the master/

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owners acted unreasonably in giving an ETA. Charterers may be on safer ground ifthe charterparty contains a detailed ETA provision, see the next paragraph 133.Having said that, the very recent decision by Mr Justice Christopher Clarke in SHVGas Supply & Trading SAS v. Naftomar Shipping & Trading Co Ltd Inc (The ‘‘AzurGaz’’) went the other way in that the ETAs were found not to be based on reason-able grounds. At present it is reported in LMLN 680—9 December 2005, asfollows. On 17 February 2003 the claimant sellers (‘‘SHV’’) agreed to sell to thedefendant buyers (‘‘Naftomar’’) 2,700 ml +/− 5% at sellers’ option commercialbutane meeting Melilli specifications cif Tunisia Port–La Goulette or Gabes. Melilliwas a port on the east of Sicily. The contract contained the following clauses:

‘‘Vessel Azur Gaz Accepted by the BuyerLaycan Feb 17–19 2003 consequently ETA Gabes Feb 20 am LaGoulette Feb 19 pm. . .

Force Majeure Neither Seller nor Buyer shall be liable . . . for any failure or delay in theperformance of any obligation hereunder other than the obligation to make payment, wheresuch failure or delay is caused by force majeure or any event occurrence or circumstancereasonably beyond the control of that party including . . . Acts of God, strikes, fires, floods,wars (whether declared or undeclared), riots, boycotts, restrictions imposed by governmentauthorities including allocations, priorities, requisitions, quotas and price controls.

Commercial Terms Where not in conflict with the above. Incoterms 2000 for cif salesplus latest amendments to apply.

Maritime Terms The Asbatankvoy charterparty amended for LPG attached to this con-tract where not in conflict with terms of the main body of this contract shall apply’’.

Incoterms 2000 provided that the seller had to deliver the goods on board the vesselat the port of shipment on the date or within the agreed period.

The Asbatankvoy charterparty referred to was a voyage charter date 31 January2003 between Gas Marine of Tunisia and SHV which provided for the carriage onAzur Gaz of 2,700 mt of butane or LPG mix for carriage from Melilli to one safe/berth/port West or East Med, limited to a small number of discharging port optionswhich were later agreed to include Gabes and La Goulette. The laydays were tocommence on 16 February and the cancelling date was 19 February.

In February 2003 Melilli experienced an unusually long spell of bad weather,which prevented vessels from loading, and the port was substantially inoperativebetween 15 February and 2 March, save for three periods on 19, 24 and 26February when larger vessels were able to berth.

Azur Gaz arrived at Melilli on 17 February and tendered notice of readiness.However, because of the bad weather she was not able to berth until 3 March. On25 February Naftomar cancelled the contract relying on the failure of the SHV toship ‘‘within the agreed period’’, which they treated as 17–19 February.

SHV alleged that by cancelling the contract Naftomar was in repudiatory breachand claimed damages. Naftomar contended that it was entitled to terminate thecontract on one or other of three grounds, namely (a) that the reference to ‘‘LaycanFeb 17–19 2003’’ was to be construed as a reference to a shipment period, and SHVwas in breach of its obligation to ship within that period, alternately (b) that therewas an implied term that the goods would be shipped within a reasonable time,which had expired by 27 February, alternatively (c) that SHV was in breach of its


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undertaking that the ETAs given were reached honestly and on reasonablegrounds.

It was held that Naftomar’s submissions in relation to grounds (a) and (b) wouldbe rejected. As to ground (a) the word ‘‘laycan’’ in the contract did not mean‘‘shipment’’. It applied in its ordinary sense and was consistent with the incorpora-tion of the charterparty. Since there was no expressly agreed shipment period it wasan implied term of the contract that SHV would ship the goods within a reasonabletime. As to ground (b) SHV was not in breach of the implied term. It could not beblamed for the weather or for the berthing difficulties and there was no evidencethat it was in any way dilatory in shipping the cargo. That conclusion was notaffected by the existence of the force majeure clause.

However, Naftomar’s submissions in relation to ground (c) would be accepted.An estimated time of arrival had to be given honestly and on reasonable grounds. Anestimate was not given on reasonable grounds if an inquiry which ought to havebeen made was not made and the answer would have invalidated the estimate.SHV’s estimate of the time of the vessel’s arrival at the discharge port was not basedon reasonable grounds in the absence of any information as to the berthing pros-pects at the loading port. Bad weather, port closure and berthing difficulties couldand did occur at Melilli and other ports in winter. It was not reasonably to beassumed that in February there would be no problem. An inquiry with someonewith knowledge of what was happening at Melilli would have revealed that the portwas, on account of bad weather, substantially inoperative on 15, 16 and 17 Feb-ruary and that there was no prospect of Azur Gaz berthing immediately upon arrivalon 17 February.

Accordingly, since the ETAs were not based on reasonable grounds SHV was inbreach of condition and Naftomar was entitled to terminate at it did. The claimwould be dismissed.

The court went on to hold that, even if, contrary to its view, the ETAs were nota condition of the contract but should be regarded as an innominate term, the resultwould be the same because the consequences of the breach were sufficiently serious.Furthermore, the ETAs constituted a misrepresentation which also entitled Nafto-mar to cancel the contract.

The case concerned a sale contract and has relevance to the later section on Saleof Goods. By the date of the publication of this book the case will have beenreported in Lloyd’s Law Reports.

133. In general, tanker charterparties contain much more detailed ETA clausesthan dry cargo charterparties, a good example of such being that in ExxonMobilVOY 2000, which reads:

‘‘(a) Unless otherwise instructed, the following Estimated Time of Arrival (ETA) notifica-tions shall be given. As soon as commencing the voyage to the nominated loading port(s) orplace(s), Master shall advise Charterer and Vessel’s agent of Vessel’s estimated date and timeof arrival at the nominated loading port(s) or place(s). Further, provided the length of thevoyage permits, Master shall confirm or amend such advice seventy-two (72), forty-eight (48)and twenty-four (24) hours prior to Vessel’s arrival at the loading port(s) or place(s). Onleaving the final loading port or place, Master shall advise Charterer and Vessel’s agent ofVessel’s estimated date and hour of arrival at the nominated discharging port(s) or place(s).

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Further, provided the length of the voyage permits, Master shall confirm or amend suchadvice seventy-two (72), forty-eight (48) and twenty-four (24) hours prior to Vessel’s arrivalat the discharging port(s) or place(s). In addition, on leaving the final loading port or place,Master shall advise Charterer of expected maximum draft at arrival and, provided the lengthof voyage permits, shall confirm or amend such advice no later than seventy-two (72) hoursprior to Vessel’s arrival at the discharging port(s) or place(s).

(b) An alteration of more than three (3) hours in the twenty-four (24) hour notice or analteration of more than twelve (12) hours in any other advice given pursuant to Paragraph (a)of this Clause shall be advised by Master to Charterer and Vessel’s agent.

(c) If, for any reason, Vessel is unable to trim to even keel for arrival at the dischargingport(s) or place(s), Master shall give notice of this to Charterer as soon as possible afterreceiving such loading instructions but no later than sailing from the final loading port orplace. Such notice shall include Vessel’s estimated arrival draft forward and aft.

(d) If Master fails to comply with the requirements of Paragraphs (a), (b) and/or (c) of thisClause, any delay resulting therefrom at loading and/or discharging port(s) or place(s) shallnot count as laytime or, if Vessel is on demurrage, as time on demurrage.

(e) At each loading and discharging port or place, Master or Vessel’s agent shall promptlynotify Charterer of the dates and times the following events occurred:

u Notice of Readiness to load/discharge tendered;u All fast;u Hoses connected;u Hoses disconnected;u All cargo documents on board; andu Vessel sailed.

(f) All advices and notifications required by this Clause shall be made by electronic mail,telex, facsimile or radio (if radio, subsequently confirmed in writing).’’

This clause does refer to ‘‘delay resulting therefrom’’ thus showing that there has tobe a causal connection between failure by the master and any delay; this, of course,identifies with the position under the common law so that unless there is causativepotency the charterers have no valid claim for breach of an ETA.

SALE CONTRACTS

134. While this book relates, in the main, to the commencement of laytime undervoyage charterparties, it should be remembered that the vast majority of voyagecharters are made to implement an international contract for the sale of goods. Theresult is that voyage charters and international sale contracts are invariably linkedand both contracts will contain laytime and demurrage provisions. That in the salecontract (usually in position before the charterparty contract) should spell out theliability of one of the parties to the shipowner under any voyage charterparty. Theusual main sale contracts are c.i.f. or c.& f. (where the seller of the goods will bechartering in a vessel) and f.o.b. contracts (where the buyer of the goods willbe chartering); the party which charters in the vessel will have potential liability tothe owner of the vessel for demurrage and hence the importance of the commence-ment of laytime to a seller or a buyer of goods carried under a sale contract. Further,that party may, or will, wish to transfer any liability for demurrage to the other partyby way of the agreed sale contract terms. Much of what has gone before in this

Para. 134SALE CONTRACTS

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edition has relevance to sale contracts in relation to arriving at the agreed destina-tion, readiness, notice of readiness, implied terms, damages, etc. In fact, some of theimportant cases detailed earlier concern sale of goods contracts and their attendantcircumstances. For example, The ‘‘Handy Mariner’’, detailed earlier in Chapter 1;The ‘‘Adolf Leonhardt’’, cited in Chapter 1 (arriving and at the immediate andeffective disposition of the charterer) and in Chapter 2 (Wipon) and also earlier inthis chapter under exceptions and the Centrocon strike clause; custom in Chapter2; The ‘‘World Navigator’’, cited in Chapter 3 (implied terms and damages); Gill &Duffus S.A. v. Rionda Futures Ltd., cited in Chapter 5 (readiness and exercising alien); Panchaud Freres S.A. v. Establissements General Grain Co., cited in Chapter 6 (estoppel between buyer and seller); The ‘‘Azur Gaz’’, cited earlier in Chapter 7(ETAs).

Sale contracts have already been mentioned in Chapter 1, paragraph 19, but onlyin relation to arriving at the agreed destination; the sale of goods case EstablishmentsSoules et Cie v. Intertradex S.A. (The ‘‘Handy Mariner’’).36 In that case the Court ofAppeal did not take the charterparty interpretation approach regarding arriving atLorient (as contended for by the sellers) but decided that under a c.i.f. contract timebegan to run when the vessel berthed in the absence of clear words to the contrary.Part of the Court of Appeal judgment (Lord Justice Staughton) stated:

‘‘To undertake a liability for demurrage while the vessel is in port but waiting for a berthwould be an open-ended commitment in a contract for the purchase of what must probablybe a part cargo. It would also be open-ended for a full cargo, since the receiver cannotnormally control congestion in the port: yet many traders do assume such a commitment. Inthe case of a part cargo the problem is worse and the result may be capricious; the buyer doesnot know when he makes the contract how much other cargo will be carried on the vessel andso share his liability pro rata—unless some or all of it has been discharged at a previous port.I would require rather clearer words before holding that the buyers had assumed such aliability in this case.’’

It follows, if sellers and buyers wish to have a back-to-back arrangement regardinglaytime/demurrage charterparty provisions, under the English common law, theyhave to make sure that this is reflected in what they have agreed in their salecontract. This can be effected by an appropriate laytime/demurrage provisionwhich, to all intents and purposes, has an indemnity effect regarding demurrageincurred under the charterparty. The alternative is for the sale contract to have anindependent laytime and demurrage provision (as many do) so that it is entirelyindependent of the charterparty laytime provisions albeit that, for example, thecharterparty demurrage rate may be incorporated into it. Even with an independentprovision in the sale contract much of what has been set out earlier regarding thecommencement of laytime will be relevant by way of English common law unless,of course, the parties have expressly agreed something to the contrary. Further,there are a variety of GAFTA contracts which buyers and sellers of goods can utilisein their business relations.

135. There have been disputes between sellers and buyers where one of the mainissues has been whether the laytime and demurrage provisions in the sale contract

36. [1991] 1 Lloyd’s Rep. 378.

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operate as an indemnity or give rise to independent obligations. This can be amatter of some importance regarding financial implications. It was one of the issuesin The ‘‘Adolf Leonhardt’’37 (already referred to in Chapters 1 and 2 and alsoadverted to earlier in this chapter in paragraphs 127 and 134), which case is a goodillustration of what can occur in practice in respect of the relationship between a salecontract and a voyage charterparty.

On 17 January 1978 the plaintiff sellers agreed to sell to the defendant buyers25,000 tonnes of Argentine flint maize for shipment f.o.b. in April 1978. Shipmentwas to be two thirds from one up river port not above San Lorenzo and one thirdfrom Buenos Aires. The contract incorporated the provisions of GAFTA 64 and 125and provided inter alia:

‘‘Special conditions . . . Time to count as per Centrocon charterparty, WIBON, WIPON,WIFPON. Demurrage/Despatch as per C/P . . . Other Conditions as per Centro Exporta-dores terms . . .

The Centro terms provided inter alia:Loading Rate: Once vessel is berthed alongside berth suitable to Sellers and ready to load

this parcel, Sellers guarantee . . . according Centrocon, but Sellers shall not be responsiblefor anytime lost due to . . . strikes . . . or any other cause of force majeure.’’

The sellers did not intend to ship the goods themselves nor did the buyers intend toreceive the goods at their destination.

On 1 February 1978, the buyers agreed to sell 500,000 tonnes of Argentine flintmaize to V/O Exportkhleb of Moscow for shipment between March and July 1978.The contract provided that the sellers were to pay demurrage as per charterpartyrate.

The charterparty made by V/O Exportkhleb provided inter alia:

‘‘30 . . . if the Cargo cannot be loaded by reason of . . . a strike . . . or by reason . . . ofobstructions . . . . Beyond the control of the Charterers . . . time for loading . . . shall notcount during the continuance of such causes . . . In the case of any delay by reasons of theabove mentioned causes no claim for . . . demurrage shall be made by the Charterers . . . orowners of the Steamer . . . ’’

The buyers nominated The ‘‘Adolf Leonhardt’’ for performance of the voyage charteras nominated by V/O Exportkhleb as the owners pursuant to the sale contract. Thesellers nominated Rosario as the up-river port where the vessel would load two-thirds of the contract quantity. The vessel had to wait at the Intersection for alengthy period because of congestion. The buyers claimed that the period of timeallowed for loading had been exceeded by some 50 days and they claimed demur-rage of $204,510.30.

The dispute was referred to arbitration and both the first tier arbitrators and theBoard of Appeal of GAFTA allowed the claim in full, but stated their award in theform of a special case, the issues being whether the strike clause of the Centroconcharterparty exempted the sellers from liability for demurrage since the cargo couldnot be loaded by reason of obstructions beyond their control and whether the sellerswere only liable to indemnify the buyers against their liability to V/OExportkhleb.

37. [1986] 2 Lloyd’s Rep. 395.


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It was held by Mr Justice Staughton (as he then was) that ‘‘Time to count as perCentrocon Charterparty’’ in the contract of sale between the buyers and the sellersreferred to the printed form and not to any particular charterparty concludedbetween any two persons; and the words referred to all those provisions in theCentrocon form which determined when time should and when it should not countincluding clause 30 (strikes). As between the buyers and the sellers the liability fordelay due to congestion was not placed on the sellers because of the strike clauseand obstructions and the sellers were not liable for any of the periods of delay at theIntersection. Regarding the other issue, Mr Justice Staughton had this to say:

‘‘Issue (3) is whether the sellers have an independent obligation to pay demurrage to thebuyers, or whether they are only obliged to indemnify the buyers against liability to V/OExportkhleb. This was discussed at length. My answer would be that the sellers have anindependent obligation, as the Board of Appeal held. I do not find it surprising that a buyershould contract to receive demurrage at a different rate, or on different conditions, than thosegoverning his liability to pay a shipowner or a sub-buyer. Normally one might perhaps expectthe terms to be the same but they may be different. What persuades me that an independentobligation was intended here is the reference in the sale contract to the Centrocon charter-party, scilicet in its printed form. Whatever terms might be agreed between the buyers anda shipowner, or their sub-buyers, it was all Lombard Street to a china orange that they wouldnot be precisely the printed terms of the Centrocon form. The buyers had not, when theycontracted with the sellers, concluded their sub-sale, at any rate in point of form; it makesgood sense that they should bargain for an independent obligation in the terms of the printedform, if only as an approximation to what they might agree with their sub-buyers.’’

The underlying thinking was that it is not surprising to find a party, who maybecome liable to demurrage (either directly under a charterparty or indirectly byreason of a sub-contract), stipulating not for an indemnity, but for provisions ofindependent operation which approximate to (or represent a ‘‘genuine pre-esti-mate’’ of) what he anticipates is likely to be his own liability.

The words and underlying thinking of Mr Justice Staughton were referred to, andfound to be useful, by Lord Justice Mance when giving the judgment of the Courtof Appeal in Fal Oil v. Petronas,38 which case is considered in detail later in para-graph 137.

136. There have been other cases, concerning laytime/demurrage provisions beingan indemnity or creating an independent obligation, between The ‘‘Adolf Leonhardt’’and Fal Oil v. Petronas, all of which were cited by Lord Justice Mance in Fal v.Petronas. Two of them have already been mentioned on other matters in this book,The ‘‘Handy Mariner’’ (Chapter 1, arriving at the agreed destination) and Gill &Duffus v. Rionda (Chapter 5, readiness and exercising a lien). In both of them it wasdecided, on their facts, that the sale contract laytime and demurrage provisionamounted to an independent obligation.

In The ‘‘Handy Mariner’’ the sale contract contained both a laytime provision andan expressly stated rate of demurrage (US$3,000 per day pro rata with halfdespatch). Mr Justice Hobhouse pointed out that there was no cross reference to

38. [2004] 2 Lloyd’s Rep. 282.

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any charter, and so no question of the demurrage provision being drafted on somebasis of indemnity.

In Gill & Duffus v. Rionda the sale contract contained detailed provisions regard-ing laytime and notice of readiness and went on:

‘‘Despatch and demurrage at discharge to be for buyer’s account. Demurrage as per C/P halfdespatch . . . Demurrage to be settled as incurred by buyers every 15 days.’’

Mr Justice Clarke (as he then was) was influenced by the detailed provisionsregarding laytime and notice of readiness, and concluded that in that context theexpression ‘‘demurrage as per C/P’’ meant no more than that the rate of demurragein the relevant charterparty should be the rate of demurrage for the purpose of thecontract of sale. He said that:

‘‘Whatever inference might be drawn from the use of the words ‘for buyer’s account’ if theystood alone, here they do not. In this contract, . . . there are both detailed provisions for thecommencement and calculation of laytime and an express provision that demurrage was tobe ‘settled as incurred by buyers every 15 days’. In these circumstances the parties cannot inmy judgement have intended that the limit of the buyers’ obligations was whatever was paidby the buyers.’’

In a later case, OK Petroleum A.B. v. Vitol Energy S.A.39 two sale contracts eachprovided for laytime consisting of a specified number of hours SHINC, and (in theone case) for ‘‘Demurrage as per charter-party’’ and (in the other) for ‘‘Demurrage,as per charterparty rate, terms, and conditions pro rata for part cargo’’. The twocharters (entered into in each case after the relevant sale contract) incorporatedstandard terms, which included a time bar provision excluding charterers’ liabilityfor demurrage unless a claim was notified within 90 days of discharge. Mr JusticeColman ultimately concluded that the incorporation of demurrage as per charter-party or as per charterparty terms and conditions could not in any event embracea collateral provision like a time bar. But in the course of his analysis he endorsedcounsel’s concession that the demurrage provisions in the sale contracts should notbe read as indemnity provisions. He gave as his reason the inconsistency betweenthe sale contract and charterparty regimes, the latter aggregated load and dischargeport laytime and the former allowing half the total charterparty laytime fordischarging.

137. The subject of indemnity/independent obligations came to the fore and wasexhaustively dealt with in the fairly recent Court of Appeal decision in Fal Oil Co.Ltd. v. Petronas Trading Corporation (The ‘‘Devon’’)40 where one of the main issueswas whether the demurrage provisions in the sale contract operated by way of anindemnity or gave rise to independent obligations.

The defendants (Petronas) purchased from the claimants (Fal Oil) four cargoes of80,000 metric tons . . . of cracked fuel oil 700 CST of ‘‘ex-Yanbu Standard Quality’’c. & f. one/two safe port(s) Singapore/Pasir Gudang range. The contract alsocontained the following provisions relating to demurrage:



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‘‘10. LaytimeLaytime allowed shall be a total of 36 hours SHINC to commence six hours after Notice ofReadiness is tendered or upon berthing whichever is earlier and time shall cease counting atdisconnection of hoses.

11. Demurrage. As per charter-party per day pro rata.’’

One of the main issues in the case related to the sellers, Fal Oil, claiming fordemurrage and the nature of any contractual ability for demurrage by Petronastowards Fal Oil. The Court of Appeal had to decide whether the demurrage provi-sions in the sale contract operated by way of indemnity or gave rise to independentobligations. After examining the authorities in a very comprehensive manner (goingback as far as 1863), Lord Justice Mance (as he then was) summarised the conclu-sions of the Court of Appeal, as follows:

‘‘(i) Provisions in a sale contract regarding laytime and demurrage should beapproached without any pre-conceptions or presumption as to their likelynature.

(ii) The scope and effect of such provisions is a question of construction.(iii) The underlying rationale of any sale contract demurrage provision is that the

receiving party may suffer loss under a charter or other third party contract.However, this is consistent with the provision operating either by way of indemnityor independently. An independent provision can, subject to the law on penalties, bejustified as a genuine pre-estimate of the receiving party’s exposure.

(iv) Although the authorities distinguish generally between (a) provisions operating asan indemnity and (b) independent provisions, the precise nature and effect of anydemurrage provision depends upon the context and wording of the particularprovisions, including the scope of any reference to or incorporation of the demur-rage provisions of any charterparty or other third party contract.

(v) In the absence of any cross-reference in the sale contract provisions to a charter-party or other contract under which demurrage liability may arise, the naturalinference is that the sale contract falls within category (b).

(vi) In cases where there is some form of cross-reference to a charterparty or other thirdparty contract under which demurrage liability may arise, the nature, purpose andeffect of the cross-reference becomes critical. There are two broad situations,corresponding with categories (a) and (b) mentioned in conclusion (iv) above. Inthe first, the sale contract creates a liability for demurrage by way of ‘indemnity’,that is to pay only if and so far as such a liability exists under the charter or otherthird party contract. It would no doubt also be conceptually possible for salecontract provisions to operate by way of ‘indemnity’, but subject to the additionalqualification or precondition that any liability for demurrage can and should onlyarise so far as consistent with other sale contract terms (e.g. as to the length ofpermissible laytime). But such a construction is likely to lead to practical problemsand the authorities provide no positive example of it. The second situation (exem-plified by a number of authorities) is one where the sale contract provisions simplyrefer to or incorporate provisions of a charterparty or other third party contract (orat least one of such provisions, e.g. as to the rate of demurrage) in an otherwiseindependent sale contract scheme. The extent of any such reference or incorpora-tion is then itself of course a matter of construction.

(vii) Thus, for example (although it is unnecessary to express a view on the correctnessor otherwise of the actual construction put on any previous contract differentlyworded to the present), in Suzuki the words ‘demurrage as per charter-party orfreight agreement’ were interpreted as meaning that the case fell within category(a). In contrast, in Gill & Dufus Mr Justice Clarke considered that the particularprovisions for demurrage there in view brought the sale contract within category

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(b). It is also unnecessary to comment on Mr Justice Staughton’s obiter view in The‘Adolf Leonhardt’ that the obligation ‘Demurrage/Despatch as per C/P’ in theparticular contract there in issue was also to be construed as being independent.However, the existence in a sale contract of its own laytime code is clearly arelevant factor, and I find useful Mr Justice Staughton’s general explanation as towhy it may be appropriate to treat sale contract laytime and demurrage provisionsas an independent code.’’

Applying the above principles to the present case Lord Justice Mance concludedthat the sale contract provisions constituted an independent code falling withincategory (b), and for the following reasons:

‘‘1. The sale contract was made independently of, and without knowledge of the terms of, anycharterparty. Since the sale contract covered four shipments, there might well have been fourvery different charterparties. The sale contract contained a specific laytime code (clause 10),which would not necessarily coincide with whatever charterparty had been or might in futurebe made. The two did not coincide in the case of the first shipment with which we areconcerned, since laytime was under the charterparty reversible and so allowed a total of 72hours for loading (with which Petronas were not concerned at all) and discharging.

2. As soon as one has a situation where the laytime provisions may not coincide, problemsarise about treating sale contract demurrage provisions as operating by way of indemnity inrespect of charterparty liability.

3. Most importantly, the present sale contract demurrage clause (clause 11) clearly incor-porates a rate, and no more.

4. Once it is concluded that the express words of the laytime and demurrage provisions dono more than refer to the charterparty rate, their natural reading and effect is as an independ-ent obligation. So read, they have an understandable and acceptable rationale as a codecontaining an agreed approximation or pre-estimate of the loss which the sellers, Fal Oil,would be likely to suffer in the event of delay in discharging. There is no need to force theminto category (a). We have not heard or been concerned with any suggestion that the presentsale contract provisions were not, as and when agreed, a genuine pre-estimate of the seller’slikely exposure.’’

The appeal of Fal regarding demurrage (Mr Justice Morison had decided againstthem on the basis that the demurrage obligation in the sale contract was an indem-nity) succeeded so that Fal were entitled to demurrage from Petronas even where nodemurrage was due to the owners from Fal under the charterparty. While it isdifficult to criticise the decision by the Court of Appeal it does illustrate the pitfallswhich await the traders of goods and militates against speedy and ill thought outlaytime and demurrage provisions in sale contracts. Further, it must, at least forsome time, be considered the definitive ruling regarding the subject of indemnity/independent obligations in respect of an international sale contract involving lay-time and demurrage provisions which may be interrelated to a voyage charterpartywith its own laytime and demurrage provisions.

138. Another fairly recent Court of Appeal decision, Kronos World Wide Ltd. v.Sempra Oil Trading S.A.R.L.,41 was very much concerned with a sale contract andthe commencement of laytime. It involved the failure to open a letter of credit bySempra (buyer) while, at the same time, Kronos (seller) requested a postponement

41. [2004] 1 Lloyd’s Rep. 260.


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of shipment. Sempra sought an entitlement to demurrage in respect of the loadingport, Constanza.

Under the sale contract Kronos agreed to sell Sempra either one or two cargoesof gas oil per month ‘‘FOB one safe port/berth Constanza by buyer’s m/t TBN overthe period 1st June/31st December 2001’’. The price was to be secured by a letterof credit. The preliminary issue for the Court was whether (subject to waiver)laytime did not run under this contract until after a letter of credit had beenopened.

In the Commercial Court Judge Nicholas Chambers, QC determined this issueagainst Kronos, holding that laytime could run prior to the opening of a letter ofcredit by Sempra. The appeal was allowed to the effect that laytime did not beginto run under the sale contract until the letter of credit had been opened.

The sale contract also provided:

‘‘PAYMENT

. . . PAYMENT TO BE SECURED BY AN IRREVOCABLE LETTER OF CREDIT TOBE OPENED PROMPTLY THROUGH A FIRST CLASS BANK . . .

LAYTIME

AS PER CHARTER PARTY AND TO BE DIVIDED BY TWO PLUS 6 HOURS NORSHINC, BOTH PRORATA FOR PART CARGO, UNLESS SOONER BERTHED, BOTHSHINC, OTHERWISE CALCULATED AS PER CHARTER PARTY TERMS, CONDI-TIONS AND EXCEPTIONS.

DEMURRAGE

IF ANY, WILL BE CALCULATED IN ACCORDANCE WITH THE CHARTER PARTYRATE, TERMS CONDITIONS AND EXCEPTIONS (EXCEPT AS INDICATEDUNDER ABOVE CLAUSE) . . . ’’

Sempra’s demurrage claim related to a second cargo which Kronos on 8 Maydeclared that it would supply in June 2001. The loading range was 20–30 June,narrowed on 29 May to 25–30 June. On 15 June Kronos asked to postpone theshipment to 1–5 July, because of slippage in the refinery schedule. In response on18 June Sempra nominated the Spear I (a vessel in fact chartered by Sempra’s sub-buyer by a fixture dated 22 May 2001). Sempra did not agree Kronos’s request forpostponement, but stated that it intended to narrow the vessel’s arrival to 28–30June. Kronos maintained its request and Sempra repeated its stance on the sameday.

The Spear I arrived at Constanza early on 28 June 2001. Loading commenced onMonday, 9 July and was completed on 11 July. Sempra claimed that the vessel, afterher arrival in Constanza, anchored at the customary anchorage and tendered noticeof readiness at 09.34 hours, that laytime commenced 6 hours thereafter at 15.34hours on 30 June after which the vessel was on demurrage for 11 days 1 hour 16minutes, earning US$160,265.26. No letter of credit was issued until 5 July orpossibly 6 July, when Kronos called for one and it was opened immediately.Whether Kronos waived the provision of any letter of credit before that date was anissue outside the scope of the preliminary issue.

The appeal was argued on the basis that a separate letter of credit was to be orcould be issued in respect of each shipment. Kronos claimed that laytime did not

326


commence until a reasonable time after provision of a letter of credit, and on thisbasis not before 9 July 2001, after which the vessel loaded within the permittedlaytime, so that no demurrage was due to Sempra.

The Court of Appeal decided that the provision of a letter of credit should beregarded as a condition precedent to any obligation on the part of the seller toperform any aspect of the loading operation which is the sellers’ responsibility. So,if the contract had been one under which notice of readiness could only be given inberth and the vessel had berthed, the seller could not have been obligated, forexample, to connect the hoses, before refusing to pump gas oil through them. Here,notice of readiness could be given and laytime could begin to run after arrival inport, but it would make no commercial sense to treat the seller as obliged to berththe vessel, in circumstances where there could be no duty to load cargo once thevessel was in berth. Berthing a vessel costs money, because of towage and/orberthing fees. If a vessel is berthed but not loaded because of the absence of a letterof credit, problems on the seller’s part and disputes with the berth owner (ifdifferent from the seller) will also be likely.

In enlarging on the judgment of the Court of Appeal Lord Justice Mance (as hethen was), adopted what Mr Justice Diplock (later Lord Diplock) said in Ian StachLtd. v. Baker Bosley Ltd.42 in that a letter of credit had to be opened either within areasonable time prior to, or latest, by the earliest shipping date of the contractualagreed shipping period. Mr Justice Diplock described the condition precedent ingeneral terms, as follows:

‘‘It seems to me that, particularly in a trade of this kind, where, as is known to all partiesparticipating, there may well be a string of contracts all of which are financed by, and can onlybe financed by, the credit opened by the ultimate user which goes down the string getting lessand less until it comes to the ultimate supplier, the business sense of the arrangement requiresthat by the time the shipping period starts each of the sellers should receive the assurancefrom the banker that if he performs his part of the contract he will receive payment. Thatseems to me at least to have the advantage of providing a definite date by which the partiesknow they have to fulfil the obligation of opening a credit.’’

Lord Justice Mance emphasised the need for a clear rule regarding situations suchas those above and that the rule should be that laytime is the time allowed for theloading operation, while the provision of a letter of credit is a condition precedentto the seller’s duty to perform any part of the loading operation. The two, in otherwords, bear on the same subject matter. To try to distinguish the physical partingwith possession of the cargo from other aspects of the loading operation such asberthing, as Sempra does, is artificial and wrong in principle. Until the appropriateletter of credit is to hand a seller is not obligated to perform any part of the loadingoperation.

He went on to say that the running of laytime under a sale contract depends onthe provision of a letter of credit whereas the running of laytime under the charter-party does not; this derives from the differences between the nature and terms of thetwo types of contract having regard in particular to the protection for the sellerintended to be provided by the letter of credit.

42. [1958] 2 Q.B. 130.


327

The case emphasises the importance of a letter of credit being in position prior toa seller proceeding (understandably) and thus avoiding delay. The decision is,perhaps, not that surprising in the context of the nature of string international salecontracts; the words of Lord Diplock (cited earlier in this paragraph) appear to beparticularly appropriate and to the point.

MULTIPLE CHARTERS

139. This section will be relatively brief since all that has been said in previouschapters can have relevance to multiple charters regarding commencement of lay-time (arriving at the agreed destination, readiness, giving notice of readiness, etc.).In general, the principles and rules which have been established in respect ofcommencement of laytime apply to multiple charters. Further, some of the subjectmatter, cases and arbitrations cited earlier involve multiple charters and/or partcargoes. For example, Chapter 1, paragraph 18, LMLN 471—22 November 1997(part cargoes and at the immediate and effective disposition of the charter), Chapter2, paragraphs 39 and 40, LMLN 71—22 July 1982, LMLN 351—17 April 1993and The ‘‘Agios Stylianos’’43 (all concerned with overstowed cargo and time lostwaiting for a berth), Chapter 4, paragraph 66 (overstowed cargo with differentparcels), Chapter 6, paragraphs 108 and 109, The ‘‘Massalia’’ and The ‘‘Mexico 1’’judgments (overstowed cargo and notice of readiness). Regarding overstowed cargo,the position is that laytime will not commence unless or until a particular cargo isaccessible absent any particular wording to the contrary. In The ‘‘Massalia’’ thevessel was chartered to carry a part cargo of flour from Europe to Colombo and hadliberty to complete the cargo en route with other goods in the same holds as theflour. Some of the flour became overstowed by general cargo. When the vesselberthed at Colombo discharge commenced in respect of some of the flour but it wasnot until three days later that all the flour cargo became accessible. It was held byMr Justice Diplock (as he then was) that notice of readiness to discharge referred toreadiness to discharge the flour cargo in the particular charterparty and that,although given at a time when the ship was not ready to discharge all of the flourcargo, it took effect as soon as all the flour was available for discharge so that it wasunnecessary to serve a new notice of readiness at that time. His lordship did not giveany detailed reasoning for this decision; perhaps there was no need to since itaccorded so much with commercial common sense. However, the part of his deci-sion regarding when the notice of readiness took effect is obviously wrong in viewof the later ‘‘Mexico 1’’ decision.

The same approach regarding overstowed cargo was taken by the Court of Appealin The ‘‘Mexico 1’’ (detailed earlier in paragraph 109). The vessel loaded partcargoes of maize and beans for the charterers and the owners also loaded variouscargoes for their own account. At the final discharge port of Luanda the mastercabled a notice of readiness to the agents on 20 January when he arrived at the portand he telexed a further notice to the receivers on the following day. At that time the

43. [1975] 1 Lloyd’s Rep. 426.

328


cargo of maize was partially overstowed with beans and with cargo carried for theowner’s account. Unloading of cargo commenced on 28 January and it was not until6 February that the maize cargo was cleared of overstowed cargo and accessible. Nofurther notice of readiness was tendered at that time. Discharge of the maize was notthen begun because the vessel was put out of berth to give priority to another vessel.After a delay of eight days the vessel reberthed and commenced discharging themaize cargo. It was decided that a notice of readiness could not be given regardingmaize cargo while it was overstowed and, further, the notice of readiness givenearlier was invalid and of no effect (as detailed earlier in paragraph 109).

The result is that owners may lose out in circumstances where a vessel waits fora berth with more than one cargo. Because of the overstowage the owners cannotassert against the charterers of the overstowed cargo, in a port charterparty, thatlaytime commenced when the vessel reached the usual waiting place for a berth.That is, unless there is time lost waiting for a berth clause in the charterparty andthis subject is considered later in paragraph 140.

140. There is some controversy regarding a time lost waiting for a berth provisionin a charterparty and part cargos where one of the cargos is overstowed. In thiscontext, London arbitrations LMLN 71 and LMLN 351 have relevance, as doesThe ‘‘Agios Stylianos’’ judgment (all cited earlier in Chapter 2, paragraphs 39 and40); they evidenced a different approach in respect of causation. Although partlyrepetitive, LMLN 71 is worth citing again since it has been adopted by otherarbitrators and gets support in Schofield on Laytime and Demurrage, 5th edn, page331 and onwards. The detailed facts are set out earlier in paragraph 39 but sufficeto say that the case revolved around a part cargo of fertiliser, the ship tendering anotice of readiness to several receivers when she arrived, and a time lost waiting fora berth provision in the charterparty. The part cargo of fertiliser was not accessibleat that time but it was when the other cargoes were discharged and the fertiliserberth became available (and discharge commenced).

The charterers contended that in a ‘‘port’’ charter, a ‘‘time lost’’ clause effectivelyadded nothing, and did not allow the counting of time which could not be countedas laytime ordinarily because a ship was unfit for discharge. They contended thatuntil 2 February, the ship was waiting for a berth at which she could first dischargethe overstowed cargoes, and from 2 February to 7 March she was discharging cargoother than fertiliser at berths where she was put for that purpose. Therefore she wasnot waiting for fertiliser berth, but was discharging. Also, while the ship was profit-ably employed in performing other contracts, it could not be said that she was‘‘losing’’ time.

It was held that the owners were entitled to succeed. If the ship had had the samecargoes on board on arrival at the discharge port, but none of them had obstructedaccess to the fertiliser, the first notice of readiness would have been valid and laytimewould have started at 08.00 on 28 January. Assuming events had thereafter followedas they did, laytime would have continued to count notwithstanding the ship’s otheractivities, for it would seem that Ropner v. Cleeves would have been decided in favourof the owners if it had been shown that the charterers there were unable to work theship during her period of unavailability, as was the case here. If that were right, and

Para. 140MULTIPLE CHARTERS

329

if it were also correct (a) that ‘‘time lost’’ provisions might operate even when a shipcould not give a valid notice of readiness, and (b) that ‘‘time lost’’ was to be countedas if were laytime counting under ordinary laytime provisions, it followed that all thetime should count in this case. This also seemed a commercially just result since theship would have waited for a fertiliser berth as long as she did in any event, and thecharterers lost nothing by her other activities. What the owners might have earnedunder their other fixtures appeared irrelevant, for the charterers knew they wereonly getting part of the ship, and they gave express permission for completioncargoes to be loaded.

In the earlier court case, The ‘‘Agios Stylianos’’ (detailed in paragraph 40) MrJustice Donaldson (as he then was) took a different approach in that he decided:

(a) The words ‘‘time lost waiting for berth’’ in the cement charterparty meanttime lost waiting for the cement berth.

(b) None of the time lost or wasted before the vehicles had been dischargedwas spent lost or wasted waiting for the cement berth and that once thevehicles had been discharged the cement charterers had the right and dutyto nominate a berth and this did not arise at any earlier point of time.

The judge took a fairly narrow approach by putting the emphasis on when thecharterer’s duty to nominate a berth arose (when the vessel became an arrived ship)and that time could not be lost before then. In LMLN 71 the arbitrators took theapproach of looking at the operative cause of the delay to the vessel (see above) andlooked into whether the overstowage of the cargo caused any delay; in the event, itwas the congestion which was the cause of the delay. Support for the arbitrators’approach comes from The ‘‘Darrah’’44 and what Lord Diplock had to say:

‘‘ ‘Time lost in waiting for berth’ in the context of the adventure contemplated by a voyagecharter, as it seems to me, must mean the period during which the vessel would have beenin berth and at the disposition of the charterer for carrying out the loading or dischargingoperation, if she had not been prevented by congestion from reaching a berth at which theoperation could be carried out.’’

It may well be that this area will be considered again, judicially, at a later date. In themeantime, owners and charterers in the dry bulk trades will have to live with whatis a degree of uncertainty in circumstances of the overstowage of cargo and a timelost waiting for a berth provision in a charterparty.

In the tanker parcel trade there should be no problems regarding the commence-ment of laytime and a time lost waiting for a berth provision regarding what hasbeen discussed earlier in this paragraph. Overstowage does not arise in that allcompartments are invariably accessible at any time.

44. [1976] 2 Lloyd’s Rep. 359.


330

INDEX(all references are to paragraph number)

‘‘A/B Nordiska Lloyd’’notice of readiness, and, 100

Acceptancenotice of readiness, and, 112–119

‘‘Achillet’’notice of readiness, and, 115

‘‘Adolf Leonhardt’’at the immediate and effective disposition of

the charterer, and, 18congestion, and, 127sale contracts, and, 135whether in berth/port or not, and, 29

Advancing laytimeCharterparty Laytime Definitions, and, 28‘‘Freijo’’, 30generally, 25–33Genwait, and, 32‘‘Kyzikos’’, 26Norgrain, and, 31Sandheads Clause, 25‘‘Seafort’’, 27Voylayrules, and, 28whether in berth or not, 26–28whether in port or not, 29

‘‘Aello’’arriving at agreed destination, and, 4–5cleanliness, and, 64

‘‘Agamemnon’’arriving at agreed destination, and, 10berth charterparty, and, 20–21notice of readiness, and, 111

‘‘Agios Stylianos’’multiple charters, and, 139–140time lost waiting for berth, and, 40

Agreed destinationand see Arriving at agreed destinationgenerally, 1

‘‘Alaska’’always accessible, and, 53

‘‘Albion’’special readiness clauses, and, 86

Always accessiblearriving at agreed destination, and, 53

Always leavablearriving at agreed destination, and, 53

‘‘Amstelmolen’’congestion, and, 127whether in berth/port or not, and, 29

Anchorageadvancing laytime, and, 26–31arriving at agreed destination, and

‘‘Agamemnon’’, 10‘‘Delian Spirit’’, 7generally, 4‘‘Johanna Oldendorff’’, 8‘‘Maratha Envoy’’, 11‘‘Polyfreedom’’, 10

assessment of damages, and, 61ballasting, and, 81berth charterparty, and, 21cancellation, and, 123cargo spaces, and

‘‘Dubhe’’, 68‘‘Jay Ganesh’’, 71‘‘Linardos’’, 71miscellaneous, 67, 70

damages for breach of contract (arrival), and‘‘Ino’’, 57‘‘Nikmary’’, 58

damages for breach of contract (readiness),and

‘‘Boral Gas’’, 91‘‘Pan Journey’’, 93‘‘Winston’’, 92

custom of the port, and, 42dock charterparty, and, 22equipment, 72exception clauses, and, 129guarantee clause, and, 44immediate and effective disposition, and, 18legal readiness, and, 79lightening, and, 80notice of readiness, and acceptance, 114–115,

118common law, 99correctness, 111express clauses, 105

overchartering, and, 125reachable on arrival, and, 51sale contracts, and, 138

331

Anchorage—cont.special readiness clauses, and

‘‘Antclizo’’, 86miscellaneous, 83–85‘‘Tielrode’’, 87

tanker charterparty, and, 23time lost waiting for berth, and miscellaneous,

39‘‘Radnor’’, 35

within the port, and, 15–17‘‘Anco Elias’’

‘‘Oldendorff’’ test and, 14‘‘Angelos Lusis’’

reachable on arrival, and, 45–46‘‘Antclizo’’

special readiness clauses, and, 86‘‘Apollon’’

special readiness clauses, and, 86Argentine Centro conditions

assessment of damages (arriving), and, 62‘‘Armement Adolf Deppe’’

equipment, and, 72Arrived ship

and see Arriving at agreed destinationgenerally, Intro

Arriving at agreed destinationadvancing laytime, 25–33always accessible, 53anchorage, and

‘‘Agamemnon’’, 10‘‘Delian Spirit’’, 7generally, 4‘‘Johanna Oldendorff’’, 8‘‘Maratha Envoy’’, 11‘‘Polyfreedom’’, 10

berth charterparty, 20–21breach of contract, and

always accessible, 53assessment of damages, 61–62implied terms, 54–60introduction, 24reachable on arrival, 45–53

commercial area concept, 3–6custom of the port, 42damages, and

assessment, 61–62express terms, 45–53implied terms, 54–60introduction, 24

dock charterparty, 22immediate and effective disposition of

charterergeneral, 18sale contract, 19

introduction, 1lightening, and, 80‘‘Oldendorff’’ test

background, 3–7generally, 8–10immediate and effective disposition of

charterer, 18–19

Arriving at agreed destination—cont.‘‘Oldendorff’’ test—cont.

introduction, 2subsequent case law, 11–13within the port, 14–17

port charterparty‘‘Aello’’, 4–5‘‘Agamemnon’’, 10commercial area concept, 3–6‘‘Delian Spirit’’, 6–7difficulties of Oldendorff test, 14–17‘‘Golfstraum’’, 12immediate and effective disposition of

charterer, 18–19introduction, 2Leonis v Rank, 3‘‘Maratha Envoy’’, 11–13Oldendorff, 8–10‘‘Polyfreedom’’, 10sale contract, 19

reachable on arrival, 45–53sale contract, 19special clauses

advancing laytime, 25–33custom of the port, 42general, 24in regular turn, 43other, 42–44sums for waiting time, 34time lost waiting for berth, 35–41

sums for waiting time, 34tanker charterparty, 23time lost waiting for berth, 35–41‘‘whether in berth/port or not’’, 25–33within the port, 14–17

ASBA IIarriving at agreed destination, and, 23exceptions clauses, and, 128tanker charterparty, and, 23

Asbatankvoyalways accessible, and, 53arriving at agreed destination, and, 23ballasting/deballasting, and, 81cargo spaces, and, 70estimated time of arrival, and, 131–132exceptions clauses, and, 128ISPS clause, and, 79lightening, and, 80notice of readiness, Intro‘‘Oldendorff’’ test and, 16–17reachable on arrival, and, 48–51tanker charterparty, and, 23

‘‘Atlantic Sunbeam’’damages for breach of contract (arrival), and,

56‘‘Austin Friars’’

free pratique, and, 78Austral

specific sums for waiting time, and, 34Austwheat 1990

arriving at agreed destination, and, 17

332

INDEX

Austwheat 1990—cont.specific sums for waiting time, and, 34

‘‘Azur Gaz’’estimated time of arrival, and, 132sale contracts, and, 134

Bad weatherberth charterparty, and, 20cargo spaces, and, 71Conoco weather clause, 50–53damages for breach of contract, and

arriving, 57readiness, 94

estimated time of arrival, and, 132generally, 129immediate and effective disposition of

charterer, and, 18notice of readiness, and, 112reachable on arrival, and, 47–53special arrival clauses, and, 26tanker charterparty, and, 23

Ballastingreadiness, and, 81

Baltic Code 2003advancing laytime, and, 28always accessible, and, 53arriving at agreed destination, and

advancing laytime, 28port charterparty, 17time lost waiting for berth, 39

early loading clause, 124notice of readiness, and

common law, 99express clauses, 103

‘‘Oldendorff’’ test and, 17reachable on arrival, and, 53time lost waiting for berth, and, 39whether in berth/port or not, and, 28

Baltimore Grain formspecial readiness clauses, and, 86

‘‘Bandar Abbas’’‘‘Oldendorff’’ test and, 16

Beepeevoyarriving at agreed destination, and, 23ballasting/deballasting, and, 81special readiness clauses, and, 82–83tanker charterparty, and, 23

Berth always accessible, 53meaning, 20time lost waiting for berth

cargo spaces, 70generally, 35–41

whether in berth or notequipment, 75generally, 25–33

Berth charterpartyarriving at agreed destination, and, 20–21

Bills of ladingdamages for breach of contract (readiness),

and, 95–96

Bimchemvoyspecial readiness clauses, and, 82

BIMCOsee also Charterparty Laytime DefinitionsISPS clause, and, 79

‘‘Boral Gas’’damages for breach of contract (readiness),

and, 91‘‘Borg’’

elapsed time, and, 120Breach of contract

arriving at agreed destination, andalways accessible, 53assessment of damages, 61–62implied terms, 54–60introduction, 24reachable on arrival, 45–53

readiness, and, 89–98‘‘Brereton v Chapman’’

custom of the port, and, 42‘‘Brown v Johnson’’

custom of the port, and, 42Bunkering

damages for breach of contract (readiness),and, 97

Business hoursnotice of readiness, and, 104

C (Ore) 7 Mediterranean Ironadvancing laytime, and, 30

C.&f. contractssale contracts, and, 134

Cancellationreadiness, and, 123

Cargo spacesanchorage, and

‘‘Dubhe’’, 68‘‘Jay Ganesh’’, 71‘‘Linardos’’, 71miscellaneous, 67, 70

cleanliness, 64–71de minimis principle, and, 69general, 64–71infestation, 68–70overstowage, 66Tres Flores, 64 –77

Centrocon Completion Clausetime lost waiting for berth, and, 39

Charterers’ breachdamages (readiness), and, 94

Charterers’ satisfactionreadiness, and, 82

Charterparty formsASBA II

arriving at agreed destination, 23exceptions clauses, 128tanker charterparty, 23

Asbatankvoyalways accessible, 53arriving at agreed destination, 23ballasting/deballasting, 81

INDEX

333

Charterparty forms—cont.Asbatankvoy—cont.

cargo spaces, 70estimated time of arrival, 132exceptions clauses, 128ISPS clause, 79lightening, 80notice of readiness, Intro‘‘Oldendorff’’ test, 16–17reachable on arrival, 48–51tanker charterparty, 23

Australspecific sums for waiting time, 34

Austwheat 1990arriving at agreed destination, 17specific sums for waiting time, 34

Baltic Code 2003advancing laytime, 28always accessible, 53early loading clause, 124notice of readiness, 99, 103‘‘Oldendorff’’ test, 17port charterparty, 17reachable on arrival, 53time lost waiting for berth, 39whether in berth/port or not, 28

Baltimore Grain formspecial readiness clauses, 86

Beepeevoyarriving at agreed destination, 23ballasting/deballasting, 81special readiness clauses, 82–83tanker charterparty, 23

C (Ore) 7 Mediterranean Ironadvancing laytime, 30

Centrocon Completion Clausetime lost waiting for berth, 39

Charterparty Laytime Definitions 1980advancing laytime, 28always accessible, 53notice of readiness, 99, 103‘‘Oldendorff’’ test, 17port charterparty, 17reachable on arrival, 53time lost waiting for berth, 39whether in berth/port or not, 28

Conoco Weather clausealways accessible, 53reachable on arrival, 50

ExxonMobilVoy 2000arriving at agreed destination, 23berth charterparty, 20estimated time of arrival, 133lightening, 80reachable on arrival, 50tanker charterparty, 23

GAFTAassessment of damages, 62sale contracts, 135

Genconcharterparty guarantee clause, 44

Charterparty forms—cont.Gencon—cont.

equipment, 75time lost waiting for berth, 35

Genwait 1968advancing laytime, 31

Incoterms 2000estimated time of arrival, 132

Interchemreadiness, 65

Norgrain 89advancing laytime, 31‘‘Oldendorff’’ test, 17port charterparty, 17time lost waiting for berth, 41

Shelltime 3, 57Shellvoy 4

arriving at agreed destination, 23tanker charterparty, 23

Shellvoy 5always accessible, 53arriving at agreed destination, 23early loading clause, 124reachable on arrival, 50tanker charterparty, 23

Shellvoy 6always accessible, 53arriving at agreed destination, 23ballasting/deballasting, 81reachable on arrival, 53tanker charterparty, 23

Sugar Charterparty 1969cargo spaces, 71‘‘Oldendorff’’ test 17special readiness clauses, 82

Synacomexcargo spaces, 64immediate and effective disposition, 18

Tankervoy 87arriving at agreed destination, 23ballasting/deballasting, 81tanker charterparty, 23

Voylayrules 1993advancing laytime, 28always accessible, 53early loading clause, 124notice of readiness, 99, 103‘‘Oldendorff’’ test, 17port charterparty, 17reachable on arrival, 53time lost waiting for berth, 39whether in berth/port or not, 28

Charterparty guarantee clausearriving at agreed destination, and, 44

Charterparty Laytime Definitions 1980advancing laytime, and, 26always accessible, and, 53arriving at agreed destination, and

advancing laytime, 26berth charterparty, 20port charterparty, 17

334

INDEX

Charterparty Laytime Definitions 1980—cont.arriving at agreed destination, and—cont.

time lost waiting for berth, 39notice of readiness, and


‘‘Oldendorff’’ test and, 17reachable on arrival, and, 53time lost waiting for berth, and, 39whether in berth/port or not, and, 28

‘‘Christensen v Hindustan Steel’’notice of readiness, and, 108

C.i.f. contractsBerth/port charterparty/’’Handy Mariner’’, 19sale contracts, and, 134

Clean bill of healthreadiness, and, 78

Cleanliness of holds‘‘Despina’’, 69‘‘Dubhe’’, 68generally, 64–71‘‘Irinikos’’, 69special readiness clauses, and, 82‘‘Tres Flores’’, 64–65

Coalcargo spaces, and, 71

Commercial area concept‘‘Aello’’, 4application, 5–6‘‘Dalian Spirit’’, 7generally, 3‘‘Johanna Oldendorff ’’, 8

Commencement of laytimearrival at destination

berth charterparty, 20–21breach of contract, and, 45–60dock charterparty, 22introduction, 1port charterparty, 2–19special clauses, 24–44tanker charterparty, 23

general requirements, Introlegal readiness, 78–79letter of credit, 138notice of readiness

acceptance, 112–119common law, 99–102correctness, 107–111early loading clause, 124–125elapsed time, 120express clauses, 103–106tender prior to laydays, 121

prior work, 124readiness

ballasting, 81breach of contract, and, 89–98cargo spaces, 64–71draught, 80documentation, 78–79general, 63lightening, 80

Commencement of laytime—cont.readiness—cont.

notice, 99–121proper equipment, 72–77special clauses, 82–88

Conditions precedentspecial readiness clauses, and, 82–85

Congestionadvancing laytime, 25–33always accessible, 53cancellation, and, 123cargo spaces, and, 67, 71damages for breach of contract, and

arriving, 54readiness, 92, 96

equipment, and, 75estimated time of arrival, and, 131generally, 127–130immediate and effective disposition, 18–21multiple charters, and, 140notice of readiness, and

acceptance, 117common law, 99

‘‘Oldendorff’’ test, 8, 12–13overchartering, and, 125reachable on arrival, 45–52sale contracts, and, 134time lost waiting for berth, 38–39within the port, 14–17

Conoco Weather clausealways accessible, and, 53reachable on arrival, and, 50

Contractssee also Breach of contractsee also Charterparty formstypes, 134

Co-operationdamages for breach of contract (readiness),

and, 98Custom

readiness, and, 63Custom of the port

arriving at agreed destination, and, 42assessment of damages, and, 62sale contracts, and, 19

Customary anchorageballasting, and, 81dock charterparty, and, 22exceptions clause, and, 130lightening, and, 80notice of readiness, and, 99port charterparty, and, 16–17reachable on arrival, and, 48sale contracts, and, 138specified sums for waiting time, and, 34tanker charterparty, and, 23

Customary dockspecified sums for waiting time, and, 34

Customary waiting placedock charterparty, and, 22port charterparty, and, 17

INDEX

335

Customary waiting place—cont.tanker charterparty, and, 23

Customs clearanceadvancing laytime, and, 30damages for breach of contract (readiness),

and, 86–88legal readiness, and, 79‘‘Maratha Envoy’’, and, 11notice of readiness, and


readiness, and, 79special readiness clauses, and, 82–86tanker charterparty, and, 23

Customs Housesand see Customs clearanceadvancing laytime, and, 30legal readiness, and, 79

DamagesAbsolute obligation to provide cargo, 58anchorage, and

‘‘Boral Gas’’, 91‘‘Ino’’, 57‘‘Nikmary’’, 58‘‘Pan Journey’’, 93‘‘Winston’’, 92

arriving at agreed destination, andassessment, 61–62express terms, 45–53implied terms, 54–60introduction, 24

readiness, and, 89–98‘‘Danita’’

notice of readiness, and, 103‘‘Darrah’’

time lost waiting for berth, and, 35–43De minimis principle

cargo spaces, 69damages for breach of contract, 93special clauses, 82

Deballastingreadiness, and, 81

Deemed ready clauseballasting/deballasting, and, 81

‘‘Delian Leto’’special readiness clauses, and, 86

‘‘Delian Spirit’’arriving at agreed destination, and, 6–7cleanliness, and, 64commercial area concept, and, 7damages for breach of contract (arrival), and

assessment, 61general, 57

free pratique, and, 78readiness, and, 64special readiness clauses, and, 83

‘‘Demosthenes V’’ (No.1)equipment, and, 74notice of readiness, and, 108

Demurrageadvancing laytime, and, 28–33always accessible, and, 53arriving at agreed destination, and, 12ballasting, and, 81cleanliness, and, 66damages for breach of contract (arriving), and

assessment, 61–62implied terms, 54–60

damages for breach of contract (readiness),and, 91–93, 96™97

delay, and, 17draught, and, 80equipment, and, 75estimated time of arrival, and, 132exceptions clauses, and, 130–131freight rates, and, 13generally, 34–41guarantee clauses, and, 43immediate and effective disposition, and, 18legal readiness, and, 78lightening, and, 80notice of readiness, and

acceptance, 112common law, 99correctness, 109express clauses, 103

overcharting, and, 126pre-commencement work, and, 124reachable on arrival, and, 45–52sale contracts, and, 134–138special clauses, and

arriving, 44readiness, 82–83

specific sums for waiting time, and, 34–41Deratisation certificate

readiness, and, 79‘‘Despina’’

readiness of cargo spaces, and, 69‘‘Devon’’

sale contracts, and, 137Discharging

see also Loadingberth charterparty, and, 20‘‘Oldendorff’’ test, and, 3–8overchartering, and, 125pre-commencement work, and, 124

Dock charterpartyarriving at agreed destination, and, 22

Document of Compliancereadiness, and, 79

Documentationcustoms clearance, 79deratisation certificate, 79free pratique, 78special clauses, 82

Draughtdamages for breach of contract, 92–93generally, 80

‘‘Dubhe’’readiness of cargo spaces, and, 68

336

INDEX

‘‘Dubhe’’ —cont.special readiness clauses, and, 82

Dunnagereadiness, and, 76

Early loading clauseShellvoy 5 and ExxonMobilVoy 2000 forms,

124‘‘Front Commander’’

Economic lossspecial readiness clauses, and, 83

Elapsed timenotice of readiness, and, 120

‘‘Epaphus’’cleanliness, and, 64

Equipmentreadiness, and, 72–77

Estimated time of arrivalgenerally, 131–133

Estoppel of notice of readinessacceptance of notice, 112–119correctness of notice, 109

‘‘Eurobreeze’’notice of readiness, and, 103

‘‘Eurus’’assessment of damages, and, 62custom of the port, and, 42

Exceptions clausesgenerally, 127–130

Express termsdamages for breach of contract (arrival), and,

45–53ExxonMobilVoy 2000

arriving at agreed destination, and, 23berth charterparty, and, 20early loading clause, 124estimated time of arrival, and, 133lightening, and, 80reachable on arrival, and, 50tanker charterparty, and, 23

‘‘Fal Oil Co’’sale contracts, and, 137

‘‘Finix’’berth charterparty, and, 21

‘‘Fjordass’’reachable on arrival, and, 50

F.o.b. contractssale contracts, and, 134

Force majeurecongestion, and, 128estimated time of arrival, and, 132sale contracts, and, 135

‘‘Franco-British Steamship v Watson and Youell’’notice of readiness, and, 100

Free pratiqueadvancing laytime, and, 29–30cargo spaces, and, 71elapsed time, and, 120legal readiness, and, 78

Free pratique—cont.notice of readiness, and

elapsed time, 120tender prior to laydays, 121

‘‘Oldendorff’’ test, and, 12readiness, and, 78special clauses, and


tanker charterparty, and, 23time lost waiting for berth, and, 41within the port, and, 15

Freight rates‘‘Oldendorff’’ test, and, 13

‘‘Freijo’’whether in berth/port or not, and, 30

‘‘Front Commander’’early loading clause, 125

‘‘Frota Oceanica v Continental Ore’’notice of readiness tendered prior to laydays,

and, 121Fumigation

cargo spaces, and, 64damages for breach of contract (arriving), and,

57legal readiness, and, 79

GAFTAassessment of damages, and, 62c.i.f. contract berth/port charterparty/‘‘Handy

Mariner’’, 19sale contracts, and, 135

Gangwayberth charterparty, and, 20

Gas Free Certificatesreachable on arrival, and, 51

Genconcharterparty guarantee clause, and, 44equipment, and, 75time lost waiting for berth, and, 35

Genwait 1968advancing laytime, and, 31

‘‘Gill & Dufus v Rionda Futures’’damages for breach of contract (readiness),

and, 90sale contracts, and, 134

‘‘Golfstraum’’arriving at agreed destination, and, 12

Guarantee clausearriving at agreed destination, and, 44

‘‘Gundulic’’‘‘Oldendorff’’ test and, 14

‘‘Handy Mariner’’immediate and effective disposiation, and, 19c.i.f. contract berth/port charterparty, 19sale contracts, and, 134, 136

‘‘Happy Day’’berth charterparty, and, 21notice of readiness, and

acceptance, 117–119

INDEX

337

‘‘Happy Day’’ —cont.notice of readiness, and—cont.

common law, 100correctness, 111

‘‘Helle Skou’’notice of readiness, and

acceptance, 112correctness, 108

Health and inspectionsreadiness, and, 78

Hindrancesand see Congestiongenerally, 128

Hold cleanliness‘‘Despina’’, 69‘‘Dubhe’’, 68generally, 64–71‘‘Irinikos’’, 69special readiness clauses, and, 82‘‘Tres Flores’’, 64–65

Immediate and effective disposition of charterergeneral, 18sale contract, 19

Implied termsacceptance of notice of readiness, and, 118damages for breach of contract (arrival), and,

54–60sale contracts, and, 134

In regular turnarriving at agreed destination, and, 43

Incoterms 2000estimated time of arrival, and, 132

Infestationcargo spaces, and, 68–70

‘‘Ino’’damages for breach of contract (arrival), and,

57Insurance

notice of readiness, and, 99Interchem

readiness, and, 65‘‘Irinikos’’

readiness of cargo spaces, and, 68‘‘Isabelle’’

berth charterparty, and, 21notice of readiness, and, 99

ISM Codereadiness, and, 79

ISPS Codereadiness, and, 79

‘‘Jay Ganesh’’cargo spaces, and, 71

‘‘Johanna Oldendorff’’and see ‘‘Oldendorff’’ testbackground, 3–7generally, 8–10immediate and effective disposition of

charterer, 18–19introduction, 2

‘‘Johanna Oldendorff’’—cont.subsequent case law, 11–13within the port, 14–17

‘‘Johs Stove’’exceptions clauses, and, 130

‘‘Kronos Worldwide v Sempra Oil’’arriving at agreed destination, and, 8sale contracts, and, 138

‘‘Kyzikos’’always accessible, and, 53at the immediate and effective disposition of

the charterer, and, 18berth charterparty, and, 21reachable on arrival, and, 53whether in berth/port or not, and, 26–29

‘‘Laura Prima’’lightening, and, 80‘‘Oldendorff’’ test and, 17reachable on arrival, and, 48–52

Laytimeexceptions, 127–130meaning, vii

‘‘Lee Frances’’in regular turn, and, 44

Legal certainty‘‘Oldendorff’’ test and, 13

Legal readinessgenerally, 78–79special clauses, 82

Leonis v Rankarriving at agreed destination, and, 3‘‘Oldendorff’’ test and, 15

Letter of creditSale contract commencement of laytime, 138

Liendamages for breach of contract (readiness),

and, 90Lightening

readiness, and, 80‘‘Linardos’’

readiness of cargo spaces, and, 71Loading

advancing laytime, and, 29–32always accessible, and, 53ballasting, and, 81berth charterparty, and, 20cancellation, and, 123cargo spaces, and, 64–71damages for breach of contract (arriving), and

assessment, 61–62implied terms, 58–60

damages for breach of contract (readiness),and, 89–91

dock charterparty, and, 22equipment, and, 72–74estimated time of arrival, and, 131–133exception clauses, and, 127–138immediate and effective disposition, and, 18legal readiness, and, 78–79

338

INDEX

Loading—cont.multiple charters, and, 139–140notice of readiness, and

acceptance, 112–119common law, 99–101correctness, 107–111elapsed time, 120–121express clauses, 103–104

‘‘Oldendorff’’ test, and, 3–8overchartering, and, 125pre-commencement work, and, 124reachable on arrival, and, 45–52readiness, and, 63sale contracts, and, 134–138special clauses, and


tanker charterparty, and, 23time lost waiting for berth, and, 35–43

‘‘Loucas N’’congestion, and, 127time lost waiting for berth, and, 36

LukoilISPS clause, and, 79

‘‘Maratha Envoy’’arriving at agreed destination, and, 11–13tanker charterparty, and, 23

‘‘Mass Glory’’assessment of damages, and, 61notice of readiness, and, 111

‘‘Massalia’’ (No.2)multiple charters, and, 139notice of readiness, and, 108–109

‘‘Master to clean vessel’s tanks, pipes andpumps’’

cargo spaces, and, 70Mats

readiness, and, 76‘‘Mediolanum’’

notice of readiness, and, 99‘‘Mediterranean Pilot’’

‘‘Oldendorff’’ test and, 14‘‘Metalimex v Eugenie Maritime’’

elapsed time, and, 120‘‘Mexico I’’

berth charterparty, and, 21cargo spaces, and, 677multiple charters, and, 139notice of readiness, and

acceptance, 117–118correctness, 109–111

‘‘Moorcock’’damages for breach of contract (arrival), and,

54–55Mooring

dock charterparty, and, 22introduction, 1reachable on arrival, and, 51special readiness clauses, and, 83tanker charterparty, and, 23

Multiple chartersgenerally, 139–140

‘‘Myrtos’’estimated time of arrival, and, 131–132

‘‘Nestor’’special readiness clauses, and, 86

‘‘Nikmary’’absolute obligation to provide cargo, 58damages for breach of contract (arrival), and,

58‘‘Noemijulia v Minister of Food’’

equipment, and, 73Norgrain 89

arriving at agreed destination, andadvancing laytime, 31port charterparty, 17time lost waiting for berth, 41

‘‘Oldendorff’’ test, and, 17‘‘North King’’

notice of readiness, and, 113Notice of arrival

see also Notice of readinessgenerally, 99

Notice of readinessacceptance, 112–119anchorage, and

acceptance, 114–115, 118common law, 99correctness, 111express clauses, 105

bad weather, and, 112ballasting, and, 81‘business hours’, 104common law, 99–102congestion, and


correctness, 107–111early loading clause, 124–125elapsed time, 120estoppel, and, 112–119express clauses, 103–106form, 99generally, Introrecipients, 99tender prior to laydays, 121timing, 102waiver, and, 112–119

‘‘Notos’’bad weather, and, 129

Obstructionand see Congestiongenerally, 127

‘‘Odfifell Seachem v CPDI’’special readiness clauses, and, 83

‘‘Oldendorff’’ testbackground

‘‘Aello’’, 4application, 5–6

INDEX

339

‘‘Oldendorff’’ test—cont.background—cont.

‘‘Dalian Spirit’’, 7generally, 3

berth charterparty, and, 20dock charterparty, and, 22generally, 8–10immediate and effective disposition of

charterer, 18–19introduction, 2reachable on arrival, and, 50subsequent case law, 11–13time lost waiting for berth, and, 37whether in berth/port or not, and, 26within the port, 14–17

One safe berthberth charterparty, and, 21

Ordinary office hoursnotice of readiness, and, 105

Overcharteringgenerally, 125–126

Overstowagecargo spaces, and, 66equipment, and, 75multiple charters, and, 139–140notice of readiness, and, 109special arriving clauses, and, 39

‘‘Pan Journey’’damages for breach of contract (readiness),

and, 93‘‘Panchaud Freres’’

acceptance of notice of readiness, and, 114sale contracts, and, 134

‘‘Pegasus’’special readiness clauses, and, 83

‘‘Pericles Halcoussis’’damages for breach of contract (arrival), and,

58‘‘Petr Schmidt’’

lightening, and, 80notice of readiness, and, 106, 110–111

‘‘Plakoura’’tanker charterparty, and, 23

‘‘Polyfreedom’’arriving at agreed destination, and, 10

Portagreed destination, and, 1

Port charterparty‘‘Aello’’, 4–5‘‘Agamemnon’’, 10commercial area concept, 3–6‘‘Delian Spirit’’, 6–7difficulties of Oldendorff test, 14–17‘‘Golfstraum’’, 12immediate and effective disposition of

charterergeneral, 18sale contract, 19

introduction, 2Leonis v Rank, 3‘‘Maratha Envoy’’, 11–13

Port charterparty—cont.‘‘Oldendorff’’ test

background, 3–7difficulties, 14–17generally, 8–10immediate and effective disposition of

charterer, 18–19introduction, 2subsequent case law, 11–13

‘‘Polyfreedom’’, 10sale contract, 19

Port limitswhether in berth/port or not, and, 31

Port state controlreadiness, and, 79

Pre-commencement workgenerally, 124

‘‘President Brand’’reachable on arrival, and, 46–47

‘‘Proceeding normally’’reachable on arrival, and, 45–50

‘‘Puerto Rocca’’berth charterparty, and, 20

‘‘Radnor’’berth charterparty, and, 21time lost waiting for berth, and, 35

‘‘Radauti’’hindrances, and, 128

RBCT Regulationscargo spaces, and, 70

Reachable on arrivalalways accessible, and, 53‘‘Angelos Lusis’’, 45cargo spaces, and, 70‘‘Fjordass’’, 50generally, 45–52‘‘Laura Prima’’, 48‘‘President Brand’’, 46–47‘‘Sea Queen’’, 49

Readinessballasting, 81breach of contract, and, 89–98cancellation, and, 123cargo spaces

cleanliness, 64–71de minimis principle, and, 69general, 64–71infestation, 68–70overstowage, 66Tres Flores, 64

customs clearance, 79deratisation certificate, 79Document of Compliance, 79documentation

customs clearance, 79deratisation certificate, 79free pratique, 78

draught, 80equipment, 72–77free pratique, 78

340

INDEX

Readiness—cont.general, 63ISM Code, and, 79ISPS Code, and, 79legal readiness, 78–79lightening, 80notice of readiness

and see Notice of readinessacceptance, 112–119common law, 99–102correctness, 107–111elapsed time, 120express clauses, 103–106tender prior to laydays, 121

port state control, and, 79safety management, and, 79Safety Management System, 79ship and port security, and, 79special clauses, 82–88Tres Flores, 64

Reasonable dispatchdamages for breach of contract (readiness),

and, 98Reid test

arriving at agreed destination, and, 8Richards Bay Coal Terminal Regulations

cargo spaces, and, 71

Safety managementreadiness, and, 79

Safety Management Systemreadiness, and, 79

Sale contractsat the immediate and effective disposition of

the charterer, and, 19generally, 134–138

Sandheads clausearriving at agreed destination, and, 25

‘‘Sati Rani’’special readiness clauses, and, 85

‘‘Scapdale’’berth charterparty, and, 21

‘‘Sea Queen’’reachable on arrival, and, 50

‘‘Seafort’’whether in berth/port or not, and, 27–29

‘‘Seamaster’’at the immediate and effective disposition of

the charterer, and, 18‘‘Shackleford’’

notice of readiness, and, 114–115special readiness clauses, and, 86–87whether in berth/port or not, and, 33

Shelltime 3damages for breach of contract (arrival), and,

57Shellvoy 4

arriving at agreed destination, and, 23tanker charterparty, and, 23

Shellvoy 5always accessible, and, 53

Shellvoy 5—cont.arriving at agreed destination, and, 23early loading clause, 124reachable on arrival, and, 53tanker charterparty, and, 23

Shellvoy 6always accessible, and, 53arriving at agreed destination, and, 23ballasting/deballasting, and, 81reachable on arrival, and, 53tanker charterparty, and, 23

Ship and port securityreadiness, and, 79

SKU certificatesdamages for breach of implied terms, and, 58

‘‘Solon’’exceptions clauses, and, 130

Specific sums for waiting timearriving at agreed destination, and, 34

STBVoyballasting/deballasting, and, 81

‘‘Stolt Spur’’damages for breach of contract (readiness),

and, 97Stowage

and see Overstowagecargo spaces, and, 68special readiness clauses, and, 82voyage charterparty, and, 8

Sugar Charterparty 1969cargo spaces, and, 71‘‘Oldendorff’’ test and, 17special readiness clauses, and, 82

Sums for waiting timearriving at agreed destination, and, 34

‘‘Sun Shipping v Watson and Youell’’equipment, and, 72

Survey(ors)advancing laytime, and, 31cargo spaces, and, 65, 67, 70–71damages for breach of contract, and


special readiness clauses, and, 82, 85Synacomex form

cargo spaces, and, 64immediate and effective disposition, and, 18

Tank vessel examination letter (TVEL)legal readiness, and, 78

Tanker charterpartyarriving at agreed destination, and, 23

Tanker Motor Vessel Voyage formreachable on arrival, and, 52

Tankersballasting/deballasting, and, 81

Tankervoy 87arriving at agreed destination, and, 23ballasting/deballasting, and, 81tanker charterparty, and, 23

INDEX

341

Tender prior to laydaysnotice of readiness, and, 121

‘‘Themistocles’’in regular turn, and, 43

‘‘Tielrode’’special readiness clauses, and, 83, 87

Time lost waiting for berth‘‘Agios Stylianos’’, 40anchorage, and

miscellaneous, 39‘‘Radnor’’, 35

Baltic Code, and, 39cargo spaces, and, 70Charterparty Laytime Definitions, and, 39‘‘Darrah’’, 38–41Gencon, and, 35generally, 35–41‘‘Johanna Oldendorff’’, 37‘‘Vastric’’, 36‘‘Loucas N’’, 35‘‘Vastric’’, 35Voylayrules, and, 39

‘‘Timna’’damages for breach of contract (arrival), and

assessment, 61general, 60

notice of readiness, andacceptance, 116common law, 100

‘‘Torm Estrid’’‘‘Oldendorff’’ test and, 14

Transhipmentadvancing laytime, and, 25‘‘Oldendorff’’ test and, 12port charterparty, and, 12tanker charterparty, and, 23

‘‘Tres Flores’’ballasting/deballasting, and, 81damages for breach of contract (arrival), and,

57readiness, and

general, 64–71notice of readiness, 107special clauses, 82

time lost waiting for berth, and, 39‘‘Turn time’’

arriving at agreed destination, and, 43

Unloadingsee Loading

‘‘Vastric’’time lost waiting for berth, and, 35

Vegoilvoyballasting/deballasting, and, 81

‘‘Virginia M’’equipment, and, 75notice of readiness, and, 107reachable on arrival, and, 51

VITOLISPS clause, and, 79

Voyage charterpartycharacteristics, 8

Voylayrules 1993advancing laytime, and, 28always accessible, and, 53arriving at agreed destination, and

advancing laytime, 28berth charterparty, 20port charterparty, 17time lost waiting for berth, 39

early loading clause, 124notice of readiness, and


‘‘Oldendorff’’ test, and, 17reachable on arrival, and, 53time lost waiting for berth, and, 39whether in berth/port or not, and, 27

‘‘Vyse v Wakefield’’notice of readiness, and, 99

Waiting timearriving at agreed destination, and, 34

Waiver of notice of readinessacceptance of notice, 112–119correctness of notice, 109

Weatherberth charterparty, and, 20cargo spaces, and, 71damages for breach of contract, and


estimated time of arrival, and, 132generally, 129immediate and effective disposition by

charterer, and, 18notice of readiness, and, 112reachable on arrival, and, 47–53special arrival clauses, and, 26tanker charterparty, and, 23

‘‘Werrastein’’specific sums for waiting time, and, 34

Weser Lightship clausearriving at agreed destination, and, 25‘‘Oldendorff’’ test, and, 11

‘‘Whether in berth or not’’Charterparty Laytime Definitions, and, 28equipment, and, 75generally, 26–28‘‘Kyzikos’’, 26‘‘Seafort’’, 27Voyulayrules, and, 28

‘‘Whether in port or not’’generally, 29

‘‘Wibon’’ clauseCharterparty Laytime Definitions, and, 28equipment, and, 75generally, 26–28‘‘Kyzikos’’, 26‘‘Seafort’’, 27Voyulayrules, and, 28

342

INDEX

‘‘Winston’’damages for breach of contract (readiness),

and, 92‘‘Wipon’’ clause

generally, 29‘‘Within the port’’ test

background‘‘Aello’’, 4application, 5–6‘‘Dalian Spirit’’, 7generally, 3‘‘Johanna Oldendorff ’’, 8

difficulties, 14–17

‘‘Within the port’’ test—cont.generally, 8–10immediate and effective disposition of

charterer, 18–19introduction, 2reachable on arrival, and, 50subsequent case law, 11–13

Work before commencement of laytimeShellvoy and ExxonMobilVoy 2000 forms, 124‘‘Front Commander’’, 125

‘‘World Navigator’’assessment of damages, and, 62sale contracts, and, 134

INDEX

343

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