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Consent of Charterer to Laytime commencing early

Posted on: 05-02-07 06:53:21
Case Notes - Charterparty-Asbatankvoy Terms-Clauses 5 and 6-Laytime-Notice of Readiness
Consent of Charterer to Laytime commencing early
Analysis of the case:

This report is divided into five broad sections:

I. Facts;
II. The Commercial Courtís Approach;
III. Issues;
IV. Decision of the Court of Appeal; and
V. Conclusion

I. Facts

The Appellant shipowner, Tidebrook Maritime Corporation (Owner) appealed against the decision of the Commercial Court that the Respondent Charterer, Vitol SA (Charterer) had not consented to the early commencement of laytime.

The Owner had chartered its tanker Front Commander (the Vessel) to the Charterer on a tanker voyage charterparty on the Asbatankvoy form, as amended, for carriage of a cargo of crude oil from West Africa to Europe. Clause 5 of the Asbatankvoy terms provided that laytime shall not commence before the date stipulated except with Chartererís sanction, and Clause 6 provided that laytime would commence upon the expiration of six hours after receipt of notice of readiness or upon the vesselís arrival in berth, whichever occurred first.

The charterparty incorporated Vitolís general voyage chartering terms with amendments. Clause 31 of the voyage chartering terms provided that the vessel could not tender notices of readiness prior to the earliest layday date specified in the charterparty and that laytime could not commence before 06.00 hours local time on the earliest layday unless the Charterer consented in writing. Clause 33 provided that if the Charterer permitted the vessel to tender notice of readiness and berth prior to commencement of laydays, all time from berthing until commencement of laydays was to be credited to the Charterer against laytime or time on demurrage, with saved time to be split 50/50 between Owner and Charterer.

The laycan or laydays agreed in the charterparty were 9/10 January 2004. Pursuant to the Chartererís orders, the Vessel had proceeded to Escravos in Nigeria, where she had to load a cargo of oil. On 6th and 7th January 2004, the Charterer had sent e-mails to the Owner, via the brokers, to the effect that they wanted the Vessel to tender Notice of Readiness (NOR) on her arrival at Escravos, and to berth/load as soon as instructed by the terminal on 8th January 2004.

The Vessel had arrived at the loadport and had tendered NOR on the day before the first layday. The Vessel berthed at 12.00 hours and loading commenced that day. Demurrage was incurred on the voyage, but the Owner gave the Charterer credit for six hours against the total loading time beginning on berthing, as half the time between berthing and commencement of the first layday. The Charterer had paid the majority of the demurrage claim, but contended that it had never consented to early commencement of laytime and that the credit of six hours should be applied to laytime beginning at 06.00 on the first layday.

The Owner had argued that the tendering of NOR and the commencement of laytime were so linked that consent to one meant consent to the other. The e-mails referring to the tender of NOR were to be taken as the Chartererís consent in writing to the earlier commencement of laytime. The e-mails made it clear that the Charterer had wanted the Vessel to berth/commence loading on 8th January. The Owners had further alleged that it was disingenuous for them to claim that laytime did not start running until six hours after tender of the NOR. Alternatively, the Owner had argued that consent to laytime was implicit in the consent to loading.

II. The Commercial Courtís Approach

The Commercial Court agreed with the Charterer that they had not consented to early commencement of laytime. According to the Court, the charterparty had specified that the laycan was 9/10 January 2004. The Court stated that under Clause 5, laytime was only to commence before the stipulated date with the Chartererís agreement and also Clause 31 required the Chartererís consent to be given in writing. The Court was not satisfied that the e-mails were sufficient to prove that the charterer consented to early commencement of laytime. The Court took the view that the Charterer had neither explicitly nor implicitly given consent to laytime starting early. Rather, they had merely confirmed that NOR was to be tendered on arrival and that the Charterer wanted the vessel to berth/commence loading early. The Court stated that additional Clause 33 expressly provided for what was to happen when there was early loading prior to commencement of laytime. The Court observed that the e-mails had given consent to early loading under Clause 33, but it was not necessary or right to read into them additional consent for laytime to start early under clause 31. Therefore, the Court held that in the absence of a written consent, laytime commenced at 06.00 on 9th January 2004.

Thus, the Owner filed an appeal against this decision of the Commercial Court.

III. Issues

The main issue before the Court of Appeal was regarding the position of the Charterer who received an early NOR, ordered the vessel to load and did in fact load the Vessel, all prior to the commencement of the earliest layday. The issue was whether this was free loading time or whether laytime started to run at the end of the notice period, because the time was in fact used for the purpose of loading the Vessel.

IV. Decision of the Court of Appeal
The Court allowed the appeal and held that subject to the express provisions of charterpartyís Clauses 31 and 33, the combination of Clauses 5 and 6 of the Asbatankvoy terms meant that the start of laytime under Clause 6 was postponed to the beginning of the earliest layday, unless the Charterer had sanctioned otherwise. The Court took the view that the order or request made by the Charterer amounted to a sanction for laytime to commence early, subject to the six hour notice period provision in Clause 6. This was because the Charterer was not obliged to commence loading before the earliest layday if he did not want to load, but if he did, he was entitled to, once the Vessel was presented as ready to load. And since the Charterer had asked or ordered the Vessel to load earlier than it was obliged to load, therefore, the Charterer had sanctioned the earlier commencement of laytime and the protection of the provision regarding the earliest layday was exhausted, and Clause 6 ruled as the clause otherwise governing the commencement of laytime.
The Court, relying on New York arbitratorsí view, stated that if a charterer used a vessel, known to be ready at the time of use, which had been tendered to him by a valid NOR, he had to expect laytime to run against him, allowing for any relevant notice time, and subject to any express contrary agreement.
The Court found that the Charterer had clearly waived its right not to be required to load the Vessel prior to the first layday. The Court observed that the express prohibition, contained in clause 31, on tendering NOR prior to the earliest layday, which would otherwise have overridden Asbatankvoyís Clause 6 obligation to tender NOR on arrival, had been waived. Furthermore, the waiver was made with the Chartererís consent, and, as required by Clause 31, had been done in writing. Therefore, Clause 33 was in operation, since the Charterer had permitted and indeed ordered the vessel to tender NOR and berth prior to the commencement of the laytime. Therefore, according to the Court, in these circumstances no further consent was required for the early commencement of laytime, since NOR was the trigger for the Chartererís accountability for laytime.

The Court stated that the proper construction of Clauses 31 and 33 together was that time used in loading or discharging, from berthing, was prima facie to count against the Charterer but was to be credited back to it to the extent that it occurred before the earliest agreed layday. The provision in the instant case for time saved to be shared meant that the Charterer was credited with only half the time concerned.

Therefore, the Court allowed the appeal and held that the Charterer was liable to pay to the Owner the amount of demurrage due.

V. Conclusion
The decision in this case highlights the point that if a charterer uses a vessel, known to be ready at the time of use, which is tendered to him by a valid NOR, or by an invalid notice whose invalidity is known, he must expect laytime to run against him, allowing for any relevant notice time, and subject to any express contrary agreement.