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

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

E S S E N T I A L M A R I T I M E A N D T R A N S P O RT L AW S E R I E S

Bills of Lading: Law and Contracts


by Nicholas Gaskell and
Regina Asariotis, Yvonne Baatz
(2000)
Modern Law of Maritime Insurance, Volume 2
Edited by Professor D. Rhidian Thomas
(2002)
Maritime Fraud
by Paul Todd
(2003)
Port State Control
Second edition

by Dr Z. Oya Ozayir
(2004)
War, Terror and Carriage by Sea
by Keith Michel
(2004)
Freight Forwarding and Multimodal Transport Contracts
by David A. Glass
(2004)
Contracts of Carriage by Land and Air
by Malcolm Clarke and
David Yates
(2004)
Marine Insurance: Law and Practice
by F. D. Rose
(2004)
General Average: Law and Practice
Second edition
by F. D. Rose
(2005)
Marine Insurance Clauses
Fourth edition
by N. Geoffrey Hudson and
Tim Madge
(2005)

COMMENCEMENT
O F L AY T I M E
BY

D O N A L D DAV I E S , R . D. , R . N. R .
of Grays Inn, Barrister, Master Mariner
Fellow of the Institute of Chartered Shipbrokers, the
Chartered Institute of Arbitrators, and the Nautical Institute

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

LONDON

2006

Informa Law
Mortimer House
3741 Mortimer Street
London W1T 3JH
law.enquiries@informa.com
an Informa business
First published 1987
Second edition 1992
Third edition 1998
Fourth edition 2006
Donald Davies 1987, 1992, 1998, 2006
British Library Cataloguing in Publication Data
A catalogue record for this book
is available from the
British Library
ISBN 1843115301
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 or
otherwise, without the prior written permission of Informa Law.
Whilst every effort has been made to ensure that the information
contained in this book is correct, neither the editors and contributors
nor Informa Law can accept any responsibility for any
errors or omissions or for any consequences
resulting therefrom.

Text set in 10/12pt Plantin


by Interactive Sciences Ltd, Gloucester
Printed in Great Britain by
MPG Books,
Bodmin, Cornwall

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 the
subject of the commencement of laytime, to consider criticisms of that law, and to
look at various remedies which may be open to the parties to a charterparty contract
to vary the common law position. For example, many types of clauses have been
introduced into charterparties over the years which compensate shipowners for time
spent 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 contract
which, by allowing shipowners a remedy in damages, provide compensation for the
time that a vessel is waiting off a port when laytime would not otherwise have
commenced.
Commencement of laytime (laytime being the amount of time allowed for loading/discharging vessels over and above which the shipowner is invariably paid
demurrage) is a subject of extreme importance since it applies to every voyage
charterparty and involves large sums of money in the aggregate. In practice, it is
invariably the most important factor in laytime/demurrage disputes. The subject has
led to a great many court cases as well as scores of arbitrationsin fact, arbitrations
on the subject continue to take place in London every year and it seems that the
subject is incapable of exhaustion.
In 1924 Lord Justice Scrutton said that for as long as he could remember there
had been controversy between shipowner and charterer as to who is to bear the risk
of waiting at or off a port. Not only does the controversy remain with us but it would
appear, because of the large number of arbitrations on the subject, that the controversy shows no sign of any significant abatement. Commencement of laytime
must surely be one of the most fertile areas for arbitrators and lawyers within the
wider ambit of carriage of goods by sea.
The fact that, under English law, there is complete freedom of contract regarding
laytime (no statutory provisions whatsoever) leads to new clauses being drawn up to
modify the position in respect of the commencement of laytime; such clauses are not
always clear and/or they conflict with other charterparty clauses with the result that
arbitrators have a staple diet of arbitrations concerning the commencement of
laytime. 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 proceedings
take place in many other maritime nations. While there may be some differences
between the approach of the English judges/arbitrators and those of other maritime
vii

P R E FAC E TO T H E F O U RT H E D I T I O N

countries it is thought that, in the main, such differences are few; it seems that
English common law has been followed to a great extent by judges and arbitrators
in other maritime nations.
The work makes reference to a large number of English judgments (most of which
commenced as arbitrations and proceeded to the courts by way of the special case
procedure or, in more recent times, by way of a reasoned award) as well as by
countless reported London arbitrations which have been reported in Lloyds
Maritime Law Newsletter.
This edition brings the book up to date, the last edition being in 1998. All
chapters of the book have needed revising in view of the many important Court of
Appeal and High Court judgments in addition to the very large number of London
maritime arbitrations which have been reported over the past eight years and which
affect, and illustrate, the legal aspects of commencement of laytime.
Important judgments, such as The Happy Day (commencement of loading and
discharging re waiver and estoppel), The Mass Glory (assessment of damages re
arrival of vessel and setting off the laytime), The Stolt Spur (owners using their
vessel for their own purposes while it waits for a berth), The Nikmary (readiness
and absolute obligation of charterer to provide cargo), The Solon (exceptions), are
considered in depth along with how those judgments have affected and clarified the
law. The Happy Day is very detailed because of its importance regarding a notice
of readiness; the Court of Appeal judgment has dealt with an area which required
clarification to ensure certainty in respect of a topic which can affect all voyage
charterparties and international contracts for the sale of goods.
The much-debated area of the effect of the Conoco Weather Clause in an Asbatankvoy charterparty is dealt with fully, as is the aftermath of The Linardos/Jay
Ganesh judgments (as illustrated by way of the reported arbitrations of London
arbitrators).
New sections have been added to the book to cover important matters which
affect, and are interrelated to, the commencement of laytime, such as the 2004 ISPS
Code and different type clauses to deal with its effects, failures by owners or
charterers regarding the non-production of bills of lading, and the position of
owners 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 full
consideration of the recent Court of Appeal decisions in Fal Oil v. Petronas and
Kronos v. Sempra.
I repeat my previous plea for many more awards of London maritime arbitrators
to be publicised (by way of disguise as in the Lloyds Maritime Law Newsletter and
perhaps a stated minimum period after an award has been published). The fact is
that very few cases are getting through to the courts and, because of the way in
which the right of appeal has been radically diminished by the Arbitration Acts 1979
and 1996 it is imperative that if the maritime world is to get to know what London
maritime arbitrators are deciding there should be a big increase in the publicising of
awards. It is difficult to understand any legitimate grievance, by the users of London
maritime arbitration, to the publicising of awards by way of disguise and a stated
minimum period after an award has been published. After all, most maritime
viii

P R E FAC E TO T H E F O U RT H E D I T I O N

arbitration centres around the world publicise their awards (without disguise) and it
would seem that London would not lose by taking a similar approach, particularly
with the safeguards mentioned above.
I thank many of my colleague arbitrators for their help and advice as I do also
Roger Sepkes of ASDEM, Mike Cohen of New York, and Angelos Pantazatos of
Athens.
It is hoped that the wide-ranging and in-depth examination of the all important
financial 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 and
arbitrators.
The law is stated as it was thought to be as at 1 February 2006.
D O N A L D DAV I E S

ix

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CONTENTS

Preface
Table of Cases
Decisions in LMLN Reports
Bibliography

vii
xiii
xix
xxi

I N T RO D U C T I O N G E N E R A L R E QU I R E M E N T S O F
E N G L I S H L AW

C H A P T E R 1 A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N
Port charterparty, geographicalthe Oldendorff test
Difficulties in the application of the within the port Oldendorff test
At the immediate and effective disposition of the charterer
Sale contract
Berth charterparty
Dock charterparty
Tanker charterparties

3
22
38
45
47
53
54

C H A P T E R 2 S P E C I A L C L AU S E S R E L E VA N T TO A R R I V I N G
AT T H E D E S T I N AT I O N
General
Advancing laytime including whether in berth or not and whether in port or
not
Specific sums for waiting time
Time lost waiting for a berth including the Darrah decision
Other special clauses

57
57
74
76
93

C H A P T E R 3 B R E AC H E S O F C O N T R AC T / DA M AG E S
R E L E VA N T TO A R R I V I N G AT T H E D E S T I N AT I O N : I M P L I E D
TERMS
Reachable on arrival/always accessible including the Laura Prima decision
Damagesimplied terms
Assessment of damages

xi

99
121
135

CONTENTS
CHAPTER 4READINESS
General
Cargo spaces including the Tres Flores decision
Equipment
Documentationlegal readinessincluding the Delian Spirit decision
Draught (Draft)/Lightening
TankersBallasting/deballasting

145
145
172
183
192
196

C H A P T E R 5 S P E C I A L C L AU S E S / B R E AC H E S O F C O N T R AC T /
DA M AG E S R E L E VA N T TO R E A D I N E S S ( I N C L U D I N G
D R AU G H T A N D B I L L S O F L A D I N G A N D FAU LT O F
OW N E R S )
Special clauses
Breach of contract/damages (including draught and bills of lading and fault of
owners)

201
224

C H A P T E R 6 N OT I C E O F R E A D I N E S S I N C L U D I N G
R E L E VA N T S P E C I A L C L AU S E S A N D AC C E P TA N C E O F
N OT I C E O F R E A D I N E S S
Notice of readinesscommon law
Notice of readinessexpress clauses
Correctness of notice
Acceptance of notice of readiness including waiver/estoppel etc.
Elapsed time
Notice of readiness tendered prior to the laydays

237
244
252
268
287
290

C H A P T E R 7 M I S C E L L A N E O U S M AT T E R S
General
Readiness and cancellation
Work before the commencement of laytime
Overchartering and obstacles created by chartering
Exceptions
Estimated time of arrival
Sale contracts
Multiple charters

293
293
296
301
304
312
319
328

Index

331

xii

TABLE OF CASES
All 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, 123
A/S Uglands Rederi v. The President of India. See Danita, The
Achillet, The, 1985 Arbitration, LMLN 18025 September 1986 ............................................. 115
Adolf Leonhardt, The, Pagnan (R) & Fratelli v. Finagrain Compagnie Commerciale Agricole et
Financi`ere SA [1986] 2 Lloyds Rep 395 .................................. 17, 18, 29, 62, 127, 128, 134137
Aello, 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 Lloyds Rep 623; [1961] AC 135; [1960] 3
WLR 145; [1960] 2 All ER 578; 104 SJ 543 (HL) ....................................... 2, 48, 11, 54, 62, 64
Agamemnon, The, 1974 Arbitration ........................................................................................10, 14
Agamemnon, The, TA Shipping Ltd v. Comet Shipping Ltd [1998] 1 Lloyds Rep 675 ........17, 21, 109,
111
Agios Stylianos, The, Agios Stylianos Compania Naviera SA v. Maritime Associates International
Ltd Lagos [1975] 1 Lloyds Rep 426 ......................................................................... 40, 139, 140
Agrimpex Hungarian Trading Co for Agricultural Products v. Sociedad Financiera de Bienes
Raices SA. See Aello, The
Aktieselskabet Inglewood v. Millars Karri (1903) 8 Com Cas 196 ............................................. 125
Alaska, The, New York Arbitration, LMLN 4521 March 1997 ............................................... 53
Albion, The, President of India v. Davenport Marine Panama SA [1987] 2 Lloyds Rep 365; [1987]
2 FTLR 240 .......................................................................................................................... 86
Aldebaran Compania Maritima SA v. Aussenhandel AG. See Darrah, The
Allied Marine Transport Ltd v. Vale Do Rio Doce Navegacao SA. See Leonidas D, The
Amalgamated Investment and Property Co Ltd v. Texas Commerce International Bank Ltd [1982]
1 Lloyds Rep 27 (CA) .......................................................................................................... 116
Amstelmolen, The, NV Reederij Amsterdam v. President of India [1961] 2 Lloyds Rep 1
(CA) ........................................................................................................... 26, 29, 127, 128, 130
Anco Elias, The, 1977 Arbitration ........................................................................................... 1416
Anders Utkilens Rederi A/S v. Compagnie Tunisienne de Navigation of Tunis. See Golfstraum,
The
Angelos Lusis, The [1964] 2 Lloyds Rep 29 ..................................................................... 27, 45, 46
Antclizo, The, Antclizo Shipping Corp v. Food Corporation of India [1992] 1 Lloyds Rep 558
(CA); affirming [1991] 2 Lloyds Rep 485 ...........................................................................79, 86
Apollo, The, Sidermar SpA v. Apollo Corporation [1978] 1 Lloyds Rep 200 ............................. 78
Apollon, The, NZ Michalos v. The Food Corporation of India [1983] 1 Lloyds Rep 409 .......... 80,
86
Armement Adolf Deppe v. John Robinson [1917] 2 KB 204 .................................. 64, 72, 74, 75, 78
Atlantic Sunbeam, The, Sunbeam Shipping Co Ltd v. President of India [1973] 1 Lloyds Rep
482 .......................................................................................................... 56, 57, 62, 98, 118, 126
Austin Friars, The (1894) 71 LT 27 .......................................................................................... 78
Azur Gaz, The, SHV Gas Supply & Trading SAS v. Naftomar Shipping & Trading Co Ltd Inc,
LMLN 6809 December 2005 ............................................................................................. 132
Barque Quilpue v. Brown (1903) 9 Com Cas 13 ....................................................................... 125

xiii

TA B L E O F C A S E S
Para.
Barrett Bros (Taxis) Ltd v. Davies [1966] 2 Lloyds Rep 1; [1966] 1 WLR 1334; [1966] 2 All ER
972; 110 SJ 600 (CA) ............................................................................................................ 100
Blue Anchor Line Ltd v. Alfred C Toepfer International GmbH. See Union Amsterdam, The
Boral Gas, The [1988] 1 Lloyds Rep 342; [1988] FTLR 201 .................................................90, 91
Borg (Owners of SS) v. Darwen Paper Co (1921) 8 Ll L Rep 49; [1921] WN 192 .................... 120
Brereton v. Chapman (1831) 7 Bing 559 ................................................................................... 42
Brown v. Johnson (1842) 10 M & W 331 .................................................................................. 42
Budgett & 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. See
Reardon Smith Line v. Same
Carga Del Sur Compania Naviera SA v. Ross T Smyth & Co Ltd. See Seafort, The
Carlton Steamship Company Ltd and Cambay Steamship Company Ltd v. Ministry of Agriculture,
Fisheries and Food. See Reardon Smith Line v. Same
Cero Navigation Corp v. Jean Lion & Cie. See Solon, The
Cheikh Boutros Selim Elkhoury and Others v. Ceylon Shipping Lines Ltd. See Madeleine, The
Christensen v. Hindustan Steel Ltd. See Maria LF, The
Ciampa v. British India Steam Navigation Co Ltd [1915] 2 KB 774 .......................................... 128
Clerco Compania Naviera SA v. The Food Corporation of India. See Savvas, The
Compania Argentina de Navegacion de Ultramar v. Tradax Export SA. See Puerto Rocca, The
Compania de Naviera Nedelka SA v. Tradax International SA. See Tres Flores, The
Conoco Weather Clause, 2005 Arbitration ................................................................................. 53
Cosmar 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 King
Theras) [1986] 2 Lloyds Rep 68 ........................................................................................... 12
Danita, The, A/S Uglands Rederi v. The President of India [1976] 2 Lloyds Rep 377 ............... 105
Darrah, The, Aldebaran Compania Maritima SA v. Aussenhandel AG [1976] 2 Lloyds Rep 359;
[1977] AC 157; [1976] 3 WLR 320; [1976] 3 All ER 129; 120 SJ 553 (HL) ............... 3541, 140
Delian Leto, The, Food Corporation of India v. Carras Shipping Co Ltd [1983] 2 Lloyds Rep
496 ........................................................................................................................................ 86
Delian Spirit, The, Shipping Developments Corporation SA v. V/O Sojuzneftexport [1971] 1
Lloyds Rep 506; [1972] 1 QB 103; [1971] 2 WLR 1434; [1971] 2 All ER 1067 (CA); reversing
[1971] 1 Lloyds Rep 64 .....................................2, 6, 7, 15, 48, 57, 61, 64, 71, 74, 78, 79, 8385
Democritos, The, Marbienes Compania Naviera SA v. Ferrostaal AG [1976] 2 Lloyds Rep 149
(CA) ...................................................................................................................................... 67
Demosthenes V, The, (No 1), Gerani Compania Naviera SA v. General Organisation for Supply
Goods and Alfred C. Toepfer [1982] 1 Lloyds Rep 275 ........................................ 72, 74, 75, 108
Deppe. See Armement Adolf Deppe v. Robinson
Despina, The, 1980 Arbitration ................................................................................................. 69
Dubhe, The, 1981 Arbitration .................................................................................................68, 82
EL Oldendorff & Co GmbH v. Tradax Export SA. See Johanna Oldendorff, The
Epaphus, The, Eurico SpA v. Philipp Brothers [1987] 2 Lloyds Rep 215; [1987] 2 FTLR 213
(CA); affirming [1986] 2 Lloyds Rep 387 .............................................................................. 64
Etablissements Soules et Cie v. Intertradex SA. See Handy Mariner, The
Eurico SpA v. Philipp Brothers. See Epaphus, The
Eurobreeze, The, 1984 Arbitration ............................................................................................ 103
Eurus, The, LMLN 47320 December 1997 (CA); [1996] 2 Lloyds Rep 408 .......................42, 62
Evera SA Commercial v. North Shipping Co Ltd [1956] 2 Lloyds Rep 367 .............................. 131
Fal Oil Co Ltd v. Petronas Trading Corpn (The Devon) [2004] 2 Lloyds Rep 282 (CA) ... 135, 136, 137
Federal Commerce and Navigation Co Ltd v. Tradax Export SA. See Maratha Envoy, The
Finix, The, Neu Tyhi Maritime Co Ltd of Piraeus v. Compagnie Grainiere SA of Zurich [1975] 2
Lloyds Rep 415 ..................................................................................................................... 21
Fjordass, The [1988] 1 Lloyds Rep 336; [1988] 2 All ER 714 ................................................ 5053
Fontevivo, The, Gem Shipping Co of Monrovia v. Babanaft (Lebanon) Sarl [1975] 1 Lloyds Rep
339 ........................................................................................................................................ 97
Food Corporation of India v. Carras Shipping Co Ltd. See Delian Leto, The
Fornyade Rederiaktiebolaget Commercial v. Blake & Co and Others (1931) 39 Ll L Rep 205
(CA) ...................................................................................................................................... 126

xiv

TA B L E O F C A S E S
Para.
Franco-British Steamship v. Watson and Youell (1921) 9 Ll L Rep 282 ..................................... 100
Freijo, The, Logs & Timber Products (Singapore) Pte Ltd v. Keeley Granite (Pty) Ltd [1978] 2
Lloyds Rep 1 (CA) ............................................................................................................... 30
Front Commander, The, Tidebrook Maritime Corporation v. Vitol SA, LMLN 68211 January
2006 ...................................................................................................................................... 125
Frota Oceanica v. Continental Ore Corporation [1973] AMC 2315, New York .......................... 121
Garibaldi Societa Cooperativa di Navigazione ARL v. President of India. See Reardon Smith Line
v. Ministry of Agriculture, Fisheries and Food
Gem Shipping Co of Monrovia v. Babanaft (Lebanon) Sarl. See Fontevivo, The
Gerani 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 Lloyds Rep 67 ...................................90, 134137
Glencore Grain Ltd v. Flacker Shipping Ltd. See Happy Day, The
Glencore Grain Ltd v. Goldbeam Shipping Inc; Goldbeam Shipping Inc v. Navios International
Inc. See Mass Glory, The
Golfstraum, The, Anders Utkilens Rederi A/S v. Compagnie Tunisienne de Navigation of Tunis
[1976] 2 Lloyds Rep 97 ........................................................................................................ 12
Government of Ceylon v. Societe Franco-Tunisienne dArmementTunis. See Massalia, The
(No 2)
Graigwen (Owners) v. AngloCanadian Shipping Company Ltd [1955] 2 Lloyds Rep 260 ........ 107
Grampian Steamship Co Ltd v. Carver and Co (1893) 9 TLR 210 ............................................ 76
Gundulic, The, 1980 Arbitration ............................................................................................... 15
Handy Mariner, The, Etablissements Soules et Cie v. Intertradex SA [1991] 1 Lloyds Rep 378;
Financial Times, 14 November 1990 (CA) ...................................................................19, 134136
Happy Day, The, Glencore Grain Ltd v. Flacker Shipping Ltd [2002] 1 Lloyds Rep 487 (CA) ... 17, 21,
100, 101, 108, 111, 116119
Helle Skou, The, Sofial SA v. Ove Skou Rederi [1976] 2 Lloyds Rep 205 ...108, 112, 114, 115, 117
Horsley Line Ltd v. Roechling Bros, 1908 SC 866 ..................................................................... 33
Ian Stach Ltd v. Baker Bosley Ltd [1958] 2 QB 130; [1958] 1 Lloyds Rep 127 ........................ 138
Inca Compania Naviera SA and Commercial and Maritime Enterprises Evanghelos P Nomikos SA
v. Mofinol Inc. See President Brand, The
Ingram v. Little [1962] 1 QB 31; [1960] 3 WLR 504; [1960] 3 All ER 332; 104 SJ 704 (CA) ........ 64, 75
Ino, The, 1979 Arbitration ........................................................................................................ 57
Investors Compensation Scheme Ltd v. West Bromwich Building Society, The Times, 24 June
1997 ...................................................................................................................................... 62
Ionian Navigation Company Inc v. Atlantic Shipping Company SA. See Loucas N, The
Irinikos, The, 1977 Arbitration .................................................................................................. 69
Isabelle, The, Cosmar Compania Naviera SA v. Total Transport Corporation [1984] 1 Lloyds Rep
366 (CA); affirming [1982] 2 Lloyds Rep 81; [1982] Com LR 90 .......................................21, 99
Jag Leela, The, LMLN 24211 February 1989 ........................................................................ 86
James Nelson v. Nelson Lines. See Nelson (James) v. Nelson Lines
Jay Ganesh, The [1994] 2 Lloyds Rep 358; Lloyds List, 8 July 1994 ..................................... 71, 130
Johanna Oldendorff, The, EL Oldendorff & Co GmbH v. Tradax Export SA [1973] 2 Lloyds Rep
285; [1974] AC 479; [1973] 2 WLR 382; [1973] 3 All ER 148; 117 SJ 760 (HL); reversing
[1972] 2 Lloyds Rep 292; [1972] 3 WLR 623; [1973] 3 All ER 420; 116 SJ 616 (CA); affirming
[1971] 2 Lloyds Rep 96 ...................................................................... 2, 811, 1318, 20, 22, 23,
2629, 32, 37, 38, 42, 45, 50
Johs Stove, The, Sametiet M/T Johs Stove v. Istanbul Petrol Rafinerisi A/S [1984] 1 Lloyds Rep
38 ..................................................................................................................................... 52, 130
Kell v. Anderson (1842) 10 M & W 498 .................................................................................... 18
King Theras, The. See Damodar General TJ Park, The
Kronos Worldwide Ltd v. Sempra Oil Trading SARL [2004] 1 Lloyds Rep 260 ......................8, 138
Kyzikos, The, Seacrystal Shipping Ltd v. Bulk Transport Group Shipping Co Ltd [1989] 1 Lloyds
Rep 1; [1989] AC 1264; [1988] 3 WLR 858; [1988] 3 All ER 745; 132 SJ 1526 (HL); reversing
[1987] 2 Lloyds Rep 122; [1987] 1 WLR 1565; [1987] 3 All ER 222; [1987] FTLR 171; 131
SJ 1550 (CA); reversing [1987] 1 Lloyds Rep 48 ...............................................................18, 21,
26, 28, 29, 39, 53

xv

TA B L E O F C A S E S
Para.
Laura Prima, The, Nereide SpA de Navigazione v. Bulk Oil International Ltd [1982] 1 Lloyds Rep
1; [1981] 3 All ER 737 (HL) ............................................................................17, 4753, 80, 129
Lee Frances, The, LMLN 25315 July 1989 ............................................................................ 44
Lefthero, The [1992] 2 Lloyds Rep 109 (CA) ...................................................................... 97, 130
Leonidas D, The, Allied Marine Transport Ltd v. Vale Do Rio Doce Navegacao SA [1985] 2
Lloyds 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 ........................................... 24, 8, 15, 123
Linardos, The [1994] 1 Lloyds Rep 28 ........................................................................... 71, 75, 130
Logs & Timber Products (Singapore) Pte Ltd v. Keeley Granite (Pty) Ltd. See Freijo, The
Loucas N, The, Ionian Navigation Company Inc v. Atlantic Shipping Company SA [1971] 1
Lloyds Rep 215 (CA); affirming [1970] 2 Lloyds Rep 482 ................................... 3538, 41, 128
Mackay v. Dick (1881) 6 App Cas 251 ...................................................................................... 56
Madeleine, The, Cheikh Boutros Selim Elkhoury and Others v. Ceylon Shipping Lines Ltd [1967]
2 Lloyds Rep 224 ............................................................................................................. 79, 123
Maratha Envoy, The, Federal Commerce and Navigation Co Ltd v. Tradax Export SA [1977] 2
Lloyds Rep 301; [1978] AC 1; [1977] 3 WLR 126; [1977] 2 All ER 849; 121 SJ 459 (HL);
reversing [1977] 1 Lloyds Rep 217; [1977] QB 324; [1977] 2 WLR 122; [1977] 2 All ER 41;
120 SJ 834 (CA) ......................................................................2, 8, 1014, 17, 23, 26, 28, 29, 39
Marbienes Compania Naviera SA v. Ferrostaal AG. See Democritos, The
Maria LF, The, Christensen v. Hindustan Steel Ltd [1971] 1 Lloyds Rep 395; [1971] 1 WLR
1369; [1971] 2 All ER 811 ..................................................................................................... 108
Mass Glory, The, Glencore Grain Ltd v. Goldbeam Shipping Inc; Goldbeam Shipping Inc v.
Navios International Inc [2002] 2 Lloyds Rep 244 .................................................... 61, 111, 117
Massalia, The, (No 2), Government of Ceylon v. Societe Franco-Tunisienne dArmement
Tunis [1960] 2 Lloyds 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 Lloyds Rep 36 ............................................................................... 99
Metalimex v. Eugenie Maritime Company Ltd [1962] 1 Lloyds Rep 378 .................................. 119
Metals & Ropes Company Ltd v. Filia Compania Limitada. See Vastric, The
Mexico 1, The, Transgrain Shipping BV v. Global Transporte Oceanico SA [1990] 1 Lloyds Rep
507; Financial Times, 7 February 1990 (CA); reversing [1988] 2 Lloyds Rep 149 .................. 21,
67, 70, 71, 74, 75, 80, 100, 101, 106, 108112, 115118, 139
Michalos (NZ) v. The Food Corporation of India. See Apollon, The
Miramar Cia Nav SA v. Government of The Union of South Africa. See Reardon Smith Line v.
Ministry of Agriculture, Fisheries and Food
Mitsui OSK Lines v. Garnac Grain Co Inc. See Myrtos, The
Monroe 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) .............................................................. 131
Moorcock, The (1884) 14 PD 64 .............................................................................................. 54
Mosvolds Rederi A/S v. The Food Corporation of India. See Damodar General TJ Park, The
Mozart, The [1985] 1 Lloyds Rep 239 ..................................................................................... 100
Myrtos, The, Mitsui OSK Lines v. Garnac Grain Co Inc [1984] 2 Lloyds Rep 449 ............ 131, 132
N.V. Reederij Amsterdam v. President of India. See Amstelmolen, The
Navrom v. Callitsis Ship Management SA. See Radauti, The
Nea Tyhi Maritime Co Ltd of Piraeus v. Compagnie Grainiere SA of Zurich. See Finix, The
Nelson (James) v. Nelson Line [1908] AC 108 .......................................................................... 124
Nereide SpA de Navigazione v. Bulk Oil International Ltd. See Laura Prima, The
Nessfield, The [1912] 1 KB 434 ................................................................................................ 26
Nestor, The [1987] 2 Lloyds Rep 649 ...................................................................................... 86
Nikmary, The, Triton Navigation Ltd v. Vitol SA [2004] 1 Lloyds Rep 55 (CA) ....................58, 65
Noemijulia 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 (194950) 83 Ll L Rep
500; 66 TLR (Pt 1) 819 .................................................................................. 64, 72, 73, 75, 123
North King, The, Pacific Carriers Corporation v. Tradax Export SA [1971] 2 Lloyds Rep
460 .................................................................................................................................. 112, 113
Notos, The, Societe Anonyme Marocaine de LIndustrie du Raffinage v. Notos Maritime Corporation [1987] 1 Lloyds Rep 503; [1987] 1 FTLR 519; 84 LS Gaz 1141 (HL) .......................... 129

xvi

TA B L E O F C A S E S
Para.
OK Petroleum AB v. Vitol Energy SA (The Chemical Venture and The Jade) [1995] 2 Lloyds Rep
160 ........................................................................................................................................ 136
Odfjfell Seachem v. Continentale des Petroles et DInvestissements [2005] 1 Lloyds Rep 275 ... 83
Ogmore v. Borner (1901) 6 Com Cas 104 ................................................................................. 125
Oldendorff (EL) & Co GmbH v. Tradax Export SA. See Johanna Oldendorff, The
Orion Insurance Co Plc v. Sphere Drake Insurance Plc [1990] 1 Lloyds Rep 465; The Independent,
1 February 1990; affirmed [1992] 1 Lloyds Rep 239 (CA) .................................................... 116
Pacific Carriers Corporation v. Tradax Export SA. See North King, The
Pagnan (R) & Fratelli v. Finagrain Compagnie Commerciale Agricole et Financi`ere SA. See Adolf
Leonhardt, The
Pan Journey, The, 1986 Arbitration ........................................................................................... 93
Panaghis 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 ....................................................... 126
Panchaud Fr`eres SA v. Etablissements General Grain Co [1970] 1 Lloyds Rep 53 (CA) ........... 112,
114, 116, 134
Pegasus, The, 1975 Arbitration .................................................................................................. 83
Pericles Halcoussis, The, 1985 Arbitration ................................................................................. 58
Petr Schmidt, The [1998] 2 Lloyds Rep 1 (CA); affirming [1997] 1 Lloyds Rep 284 .... 71, 80, 83, 106,
109, 111
Petros Hadjikyriakos, The [1988] 2 Lloyds Rep 56 ................................................................... 80
Plakoura, The [1987] 2 Lloyds Rep 258 ................................................................................... 23
Polyfreedom, The, 1974 New York Arbitration .................................................................. 10, 11, 13
President Brand, The, Inca Compania Naviera SA and Commercial and Maritime Enterprises
Evanghelos P Nomikos SA v. Mofinol Inc [1967] 2 Lloyds Rep 338; 117 New LJ
1192 .............................................................................................................................. 4648, 80
President of India v. Davenport Marine Panama SA. See Albion, The
Pteroti Compania Naviera SA v. National Coal Board [1958] 1 Lloyds Rep 245; [1958] 1 QB 469;
[1958] 2 WLR 505; [1958] 1 All ER 603; 102 SJ 216 ...................................................... 117, 124
Puerto Rocca, The, Compania Argentina de Navegacion de Ultramar v. Tradax Export SA [1978]
1 Lloyds Rep 252 ...............................................................................................................20, 21
Radauti, The, Navrom v. Callitsis Ship Management SA [1988] 2 Lloyds Rep 416 (CA); affirming
[1987] 2 Lloyds Rep 276 ................................................................................................ 127, 128
Radnor, The, North River Freighters Ltd v. President of India [1955] 2 Lloyds 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 and
Cambay Steamship Company Ltd v. Ministry of Agriculture, Fisheries and Food; Cape of Good
Hope Motor Ship Company Ltd v. Ministry of Agriculture, Fisheries and Food; Miramar Cia
Nav SA v. Government of The Union of South Africa (The Vancouver Strike Cases) [1963] 1
Lloyds Rep 12; [1963] AC 691; [1963] 2 WLR 439; [1963] 1 All ER 545; 107 SJ 133 (HL);
reversing in part [1961] 1 Lloyds Rep 385; [1962] 1 QB 42; [1961] 3 WLR 110; [1961] 2 All
ER 577; 105 SJ 567 (CA); affirming [1959] 2 Lloyds Rep 229; [1960] 1 QB 439; [1959] 3 WLR
665; [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 Lloyds Rep 1 (HL); affirming [1996] 2 Lloyds Rep 12 (CA) .... 117
Ropner Shipping Co Ltd v. Cleeves Western Valley Anthracite Collieries Ltd (1927) 27 Ll L Rep
317; [1927] 1 KB 879; [1927] WN 91; 43 TLR 384; 96 LJKB 654; 137 LT 221; 32 Com Cas
259; 17 Asp 245 (CA) ........................................................................................... 39, 75, 97, 140
Sametiet M/T Johs Stove v. Istanbul Petrol Rafinerisi A/S. See Johs Stove, The
San Carlos, The, 2001 Arbitration .............................................................................................
Santa Clara Valley, The, Reardon Smith Line Ltd v. East Asiatic Company (1938) 62 Ll L Rep
23 ..........................................................................................................................................
Sati Rani, The, 1977 Arbitration ................................................................................................
Saturnia, The, Superfos Chartering A/S v. NBR (London) Ltd [1987] 2 Lloyds Rep 43 ...........
Savvas, The, Clerco Compania Naviera SA v. The Food Corporation of India [1982] 1 Lloyds Rep
22 (CA) .................................................................................................................................
Scapdale, The, 1980 Arbitration ................................................................................................

xvii

53
26
84
53
80
21

TA B L E O F C A S E S
Para.
Sea Queen, The [1988] 1 Lloyds Rep 500 .............................................................................. 5053
Seacrystal Shipping Ltd v. Bulk Transport Group Shipping Co Ltd. See Kyzikos, The
Seafort, The, Carga Del Sur Compania Naviera SA v. Ross T Smyth & Co Ltd [1962] 2 Lloyds
Rep 147; 106 SJ 651 ............................................................................................... 26, 27, 29, 34
Seamaster, The, 1988 Arbitration .............................................................................................. 18
Shackleford, The, Surrey Shipping Co Ltd v. Compagnie Continentale (France) SA [1978] 2
Lloyds Rep 154; [1978] 1 WLR 1080; 122 SJ 555 (CA); affirming [1978] 1 Lloyds Rep
191 ...........................................................................................................29, 33, 82, 87, 112116
Shipping Developments Corporation SA v. V/O Sojuzneftexport. See Delian Spirit, The
SHV Gas Supply & Trading SAS v. Naftomar Shipping & Trading Co Ltd Inc. See Azur Gaz,
The ....................................................................................................................................... 132
Sidermar SpA v. Apollo Corporation. See Apollo, The
Sociedad Financiera de Bienes Raices SA v. Agrimpex Hungarian Trading Co for Agricultural
Products. See Aello, The
Societe Anonyme Marocaine de LIndustrie du Raffinage v. Notos Maritime Corporation. See
Notos, The
Sofial SA v. Ove Skou Rederi. See Helle Skou, The
Solon, The, Cero Navigation Corp v. Jean Lion & Cie [2000] 1 Lloyds Rep 292 ...................... 130
Spalmatori, The, Union of India v. Compania Naviera Aeolus SA; sub nom. Compania Naviera
Aeolus SA v. Union of India [1964] AC 868; [1962] 2 Lloyds Rep 175 (HL) ........................ 53
Stanton v. Austin (1872) LR 7 CP 651 ...................................................................................... 100
Steamship Garston Co v. Hickie & Co (1885) 15 QBD 580 ......................................................
8
Stolt Spur, The, Stolt Tankers Inc v. Landmark Chemicals SA [2002] 1 Lloyds Rep 786 .......... 97
Sun Shipping v. Watson and Youell (1926) 24 Ll L Rep 28; 42 TLR 240 ................................72, 75
Sunbeam Shipping Co Ltd v. President of India. See Atlantic Sunbeam, The
Superfos Chartering A/S v. NBR (London) Ltd. See Saturnia, The
Surrey Shipping Co Ltd v. Compagnie Continentale (France) SA. See Shackleford, The
TA Shipping Ltd v. Comet Shipping Ltd. See Agamemnon The
Themistocles, The (1949) 82 Ll L Rep 232 ............................................................................... 43
Tidebrook Maritime Corporation v. Vitol SA. See Front Commander, The ................................ 125
Tielrode, The, 1973 Arbitration ..............................................................................................83, 87
Timna, The, Zim Israel Navigation Company Ltd v. Tradax Export SA [1971] 2 Lloyds Rep 91
(CA); affirming [1970] 2 Lloyds Rep 409 ............................................60, 61, 100, 109, 111, 116
Torm Estrid, The, 1978 Arbitration ......................................................................................... 1416
Transgrain Shipping BV v. Global Transporte Oceanico SA. See Mexico 1, The
Tres Flores, The, Compania de Naviera Nedelka SA v. Tradax International SA [1973] 2 Lloyds
Rep 247; [1974] QB 264; [1973] 3 WLR 545; [1973] 3 All ER 967 (CA); affirming [1972] 2
Lloyds Rep 384 ....................................................................................39, 57, 64, 65, 6875, 78,
79, 81, 82, 86, 92, 107, 108
Triton Navigation Ltd v. Vitol SA. See Vikmary, The
Union Amsterdam, The, Blue Anchor Line Ltd v. Alfred C Toepfer International GmbH [1982] 2
Lloyds Rep 432 .....................................................................................................................
Union of India v. Compania Naviera Aeolus SA; sub nom. Compania Naviera Aeolus SA v. Union
of India. See Spalmatori, The
Universal Cargo Carriers Corp v. Citati (No. 1) [1957] 1 Lloyds Rep 174 ................................

97
58

Valla Giovani & C SpA v. Gebr Van Weelde Scheepvaartkantoor BV. See Chanda, The
Vancouver Strike Cases. See Reardon Smith Line v. Ministry of Agriculture, Fisheries and Food
Vastric, The, Metals & Ropes Company Ltd v. Filia Compania Limitada [1966] 2 Lloyds Rep
219 ................................................................................................................................ 35, 36, 38
Venore, The, Venore Transportation Co v. President of India [1973] 1 Lloyds Rep 494 (US Ct) .... 125
Vikmary, The, Triton Navigation Ltd v. Vitol SA [2004] 1 Lloyds Rep 55 ................................ 58
Virginia M, The [1989] 1 Lloyds Rep 603 ......................................................... 51, 64, 72, 75, 107
Vyse v. Wakefield (1840) 6 M & W 442 .................................................................................... 99
Werrastein, The, Roland-Linie Schiffahrt GmbH v. Spillers Ltd and Others [1956] 2 Lloyds Rep
210 ........................................................................................................................................
Winston, The, 1985 Arbitration .................................................................................................

xviii

34
92

TA B L E O F C A S E S
Para.
Woodhouse AC Israel Cocoa SA v. Nigerian Produce Marketing Co Ltd [1972] 1 Lloyds Rep 439;
[1972] AC 741; [1972] 2 WLR 1090; [1972] 2 All ER 271; 116 SJ 329 (HL) ........................ 114
World Navigator, The [1991] 2 Lloyds Rep 23 (CA) .......................................... 56, 59, 61, 62, 134
Zim Israel Navigation Company Ltd v. Tradax Export SA. See Timna, The

DECISIONS IN LMLN REPORTS


LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN

Para.
1529 May 1980 ......................................................................................................... 105
1810 July 1980 .......................................................................................................... 18
355 March 1981 ......................................................................................................78, 84
449 July 1981 ............................................................................................................ 105
6218 March 1982 ...................................................................................................... 67
7122 July 1982 .............................................................................................. 39, 139, 140
725 August 1982 ....................................................................................................... 81
9014 April 1983 ........................................................................................................ 86
10313 October 1983 .................................................................................................. 121
11415 March 1984 .................................................................................................... 41
11726 April 1984 ....................................................................................................... 51
143 25 April 1985 ...................................................................................................16, 29
15115 August 1985 .................................................................................................... 103
15510 October 1985 .................................................................................................. 16
17911 September 1986 .............................................................................................. 83
18025 September 1986. See Achillet, The
20512 September 1987 .............................................................................................. 99
20626 September 1987 .............................................................................................. 115
23027 August 1988 .................................................................................................... 41
23931 December 1988 ............................................................................................... 67
24211 February 1989. See Jag Leela, The .................................................................. 86
2486 May 1989 ......................................................................................................... 58
25315 July 1989. See Lee Frances, The ...................................................................... 44
26218 November 1989 .............................................................................................. 115
26613 January 1990 ........................................................................................ 82, 87, 115
26727 January 1990 ................................................................................................52, 53
2745 May 1990 ............................................................................................... 16, 84, 118
2856 October 1990 ............................................................................................... 65, 121
29920 April 1991 .............................................................................................. 31, 65, 81
30315 June 1991 ....................................................................................................... 52
30429 June 1991 ....................................................................................................... 81
30513 July 1991 ........................................................................................................ 132
30710 August 1991 .................................................................................................... 121
32830 May 1992 ............................................................................................. 57, 82, 118
32913 June 1992 ....................................................................................................... 61
33225 July 1992 ......................................................................................................57, 67
3373 October 1992 .................................................................................................65, 81
33817 October 1992 .............................................................................................. 57, 118
35117 April 1993 ........................................................................ 39, 40, 51, 75, 139, 140
35626 June 1993 ....................................................................................................... 39
3839 July 1994 .......................................................................................................... 132
3873 September 1994 ................................................................................................ 110
40118 March 1995 .................................................................................................... 42
40824 June 1995 ....................................................................................................... 104
4098 July 1995 ........................................................................................................16, 18
4115 August 1995 ..................................................................................................... 83
41614 October 1995 .................................................................................................. 78
41728 October 1995 .................................................................................................. 83
42123 December 1995 ............................................................................................... 78
43422 June 1996 ............................................................................................. 30, 57, 118

xix

TA B L E O F C A S E S
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN
LMLN

Para.
44523 November 1996 .......................................................................................... 67, 123
4467 December 1996 ................................................................................................ 82
4501 February 1997 .................................................................................................. 124
4521 March 1997. See Alaska, The ............................................................................ 53
4597 June 1997 ..................................................................................................... 57, 118
4632 August 1997 ..................................................................................................... 53
47122 November 1997 .......................................................................................... 18, 139
47320 December 1997. See Agamemnon, The ........................................................... 132
47320 December 1997. See Eurus, The ...................................................................42, 62
48821 July 1998 ......................................................................................................80, 83
4894 August 1998 ..................................................................................................... 52
49329 September 1998 .............................................................................................. 99
51027 May 1999 ....................................................................................................... 94
51110 June 1999 ....................................................................................................... 70
53822 June 2000 ....................................................................................................... 83
54528 September 2000 ............................................................................................71, 78
55912 April 2001 ....................................................................................................... 18
56224 May 2001 ....................................................................................................... 120
56619 July 2001 ......................................................................................................21, 99
58716 May 2002 ....................................................................................................... 95
59422 August 2002 .................................................................................................... 105
61512 June 2003 ............................................................................................... 17, 29, 38
6197 August 2003 ..................................................................................................... 95
62812 December 2003 ............................................................................................... 96
63631 March 2004 .......................................................................................... 17, 71, 130
6471 September 2004 ..............................................................................................17, 80
64815 September 2004 .............................................................................................. 87
65127 October 2004 .................................................................................................. 124
6696 July 2005 .......................................................................................................... 75
67217 August 2005 ......................................................................................... 17, 61, 118
67612 October 2005 .................................................................................................. 65
6809 December 2005 ................................................................................................ 132
68211 January 2006 ................................................................................................... 125

xx

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

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INTRODUCTION

GENERAL REQUIREMENTS OF
ENGLISH LAW

English law is clear and simple when looked at in general terms regarding the
commencement of laytime. It is the application of the general principles to detailed
commercial events, circumstances and activities which results in complications and
difficulties.
In general, there are three requirements which have to be satisfied for laytime to
commence under English common law, as follows:
1. The vessel has arrived at the agreed destination. The destination may be a
port, dock, mooring, berth, etc., or an area coupled with the provision that
the vessel then proceeds to a part of the area nominated by the
charterers.
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 common
law; it is not required for discharging ports unless there is a custom to
such effect; in practice, it is usual for a charterparty to contain an
express clause requiring the tendering of notice of readiness at both
loading and discharging ports and perhaps also at subsequent loading/
discharging ports.
When the three requirements above are satisfied the vessel is considered to be an
arrived ship and, under English law, laytime then commences. In practice charterparties 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) after
the tendering of a notice of readiness and, naturally, such an express provision
governs the precise moment that the laytime clock is triggered off. A good example
of a much-used notice of readiness provision is that in the Asbatankvoy charterparty
form, which reads:
Upon arrival at customary anchorage at each port of loading or discharge, 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 or no berth, and laytime, as
hereinafter provided, shall commence upon the expiration of six (6) hours after receipt of
such notice, or upon the Vessels arrival in berth (i.e., finished mooring when at a sealoading
or discharging terminal and all fast when loading or discharge alongside a wharf), whichever
first occurs.

G E N E R A L R E QU I R E M E N T S O F E N G L I S H L AW

However, there are still some charterparties which do not have such an express
provision, in which case the common law position applies so that laytime commences at the very moment that the notice of readiness is tendered to the charterers
or their agents.
The words arrived ship, emphasised above, are somewhat confusing since they
sometimes lead persons to think that they refer to one requirement only, that is, the
vessel arriving at the agreed destination. While many people talk about the arrival of
vessels, and charterparty clauses often refer to vessels having arrived, the position is
that, under English law, the words arrived ship only come into effect when all
three requirements have been satisfied. The fact that a vessel has arrived at the
agreed destination does not determine that the vessel is an arrived ship within the
context of the commencement of laytime; the other two requirements also have to
be satisfied. Despite what has just been stated, many persons use the words arrived
ship when speaking of the first requirement only; it is commonly used in this way
even by judges and arbitrators so that, when reading judgments and awards,
allowance has to be made for the licence existing therein. Such licence may also
be used in this book when considering the first requirement of reaching the agreed
destination.

CHAPTER ONE

ARRIVING AT THE AGREED


DESTINATION

1. The agreed destination may be a port, dock, mooring, berth, etc., or an area
coupled with the provision that the vessel then proceeds to a part of the area
nominated 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 major
part of this chapter.
In practice, a vast number of port charterparties are made every year; their
importance cannot be under-estimated particularly in the light of the large number
of 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, alternatively the charterparty makes the destination a port to be nominated by the
charterers.

PORT CHARTERPARTY, GEOGRAPHICALTHE


OLDENDORFF TEST
2. Until The Maratha Envoy1 the highest and most recent authority regarding a
port charterparty was The Johanna Oldendorff2 in which the House of Lords gave
full consideration to the arrived ship concept. As will be seen, the Oldendorff
decision has been left untouched. However, before considering these judgments it
is helpful to look at the earlier cases of Leonis v. Rank,3 The Aello4 and The Delian
Spirit5 in order to see how the law has developed since the turn of the century in
respect of a port charterparty.
3. In Leonis v. Rank3 the vessel arrived in the port of Bahia Blanca and lay in the
river outside the pier where the charterers required her to load; the place in which
she lay was the usual place for vessels to be while awaiting a pier berth; there was
evidence that she could have been loaded there. The Court of Appeal decided that
the vessel was an arrived ship because she was within the commercial area of the

1. [1977]
2. [1973]
3. [1908]
4. [1960]
5. [1971]

1
2
1
1
1

Lloyds Rep.
Lloyds Rep.
K.B. 499.
Lloyds Rep.
Lloyds Rep.

217.
285.
623.
506.

Para. 3

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

port and at the disposition of the charterers. The leading judgment of Lord Justice
Kennedy 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 in
the present case, that a question as to the fact of the ships arrival at her destination is likely
to 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 uncertain
because they are not yet defined by any competent authority . . . In the case of a port, and
nothing more, being designated in a charterparty as the point of destination our Courts have
acted in accordance with those dictates of reason and practical expediency which ought to be
paramount especially in the region of mercantile business. Just as a port may have one set of
limits, if viewed geographically, and another for fiscal or for pilotage purposes, so when it is
named in a commercial document, and for commercial purposes, the term is to be construed
in a commercial sense in relation to the objects of the particular transaction . . . But then
comes the question what does the expression the port viewed commercially, or the commercial area in this connection mean? Certainly it does not mean the loading berth, that is
to 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, as
such, entitled to give notice of readiness to load, and at the expiration of the notice to begin
to count lay days, ought, I think to be that area of the named port of destination on arrival
within which the master can effectively place his ship at the disposal of the charterer, the
vessel herself being then, so far as she is concerned, ready to load, and as near as circumstances permit to the actual loading spot . . . be it quay or wharf, or pier, or mooring, and
in a place where ships waiting for access to that spot usually lie, or, if there be more such
loading spots than one, as near as circumstances permit to that one of such spots which the
charterer prefers.

Before leaving this case it is emphasised that the courts disregarded the geographical, 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 commercial matters were to the fore. As will be see, the commercial area remained the test
under 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 more
difficult to delineate the commercial area of a port, particularly so after the
Second World War. Even so, it could be said that a vessel had to get fairly close to
the loading spot for a vessel to come within the commercial area of a port, as
defined in Leonis v. Rank.3 The result caused economic hardship to owners but it
did lead to a considerable amount of certainty. It is doubtful whether the original
draftsmen of proceed to . . . or so near thereto as she may safely get would have
approved 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 being
quite bold in widening the area for a vessel to be an arrived ship. After all, they
did reverse the High Court judge who had held that the vessel was not an arrived
ship when she anchored in the river within the port.
4. The case of The Aello6 was an application of the Leonis v. Rank7 decision to the
port of Buenos Aires. Although the House of Lords had the opportunity to change
the commercial area test they did not do so. However, the case is interesting
because of the application of the commercial area test to a large port in 1961,
6. [1960] 1 Lloyds Rep. 623.

THE OLDENDORFF TEST

Para. 4

some 52 years after the Leonis v. Rank7 decision. It will be seen that the nature of the
cargo played an important part in the decision.
The facts were that the vessel was chartered to load a cargo of maize at the port
of Buenos Aires; she anchored at the intersection (22 miles distant from the dock
area of the port but within the legal and administrative limits of the port) on 12
October and could not enter the inner harbour of the port until 29 October because
of the non-availability of a berth. The House of Lords held, by a majority of three
to 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 applying
Leonis v. Rank7 Lord Jenkins stated (inter alia):
. . . the commercial area of the port, that is to say, the area in which the actual loading spot
is to be found and to which vessels seeking to load cargo of the relevant description usually
go, and in which the business of loading such cargo is usually carried out. The area presumed
to be intended by the hypothetical owner and charterer is further particularised in point of
proximity to the actual loading spot as being the area on arrival within which the master can
effectively place the ship at the disposal of the charterer, and the position of the ship in which
is to be as near as circumstances permit to the actual loading spot and in a place where ships
waiting 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) of
identification on a map. When the given ship enters that area and positions herself within it
in accordance with the requirements just stated, she is (in point of geographical position) an
arrived ship; until she does so, she is not an arrived ship, and lay days and demurrage are to
be calculated accordingly.

The judgment of Lord Morris also put emphasis on the cargo which was to be
loaded/discharged; he said (inter alia):
The phraseology used in Leonis Steamship Co. Ltd. v. Rank Ltd. and other cases shows that
it is no easy matter to employ the appropriate words to describe an area of water which is itself
within a larger area, but Lord Justice Kennedy conveys the conception when he speaks of the
commercial area within the port which is usually occupied by vessels whose obligation and
purpose is to receive a cargo. A vessel may be within that area but may not be actually loading:
she may be waiting to be loadedor 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 to
load has reached the commercial area of the port within which are the loading spots for her
specified cargo, so that she next awaits details as to her particular loading spots and directions
as to proceeding to them, then it can also fairly be said that she has arrived at her
destination.

Lord Keith (the other majority law lord) saw no reason why the question could
not be answered satisfactorily by an application of the principles elaborated in Leonis
v. Rank and tabulated eight reasons for his decision that the Aello was not an arrived
ship 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 when
waiting to load . . . the vessel lay some 22 miles from the dock area and had still to finish her
voyage to Buenos Aires in the sense that she had to be piloted and be assisted with tugs along
a 22 mile channel in order to reach the usual place for loading as distinguished from the
actual loading spot . . . no loading or unloading of grain ships ever took place at the
anchorage 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. 4

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

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

The dissenting judgments of Lord Radcliffe and Lord Cohen were perhaps more in
tune with a simplistic approach which would satisfy commercial instincts. The
former stated (inter alia):
My Lords, applying the principle of the Leonis case as I have tried to explain it, I am of the
opinion that the Aello arrived in the port of Buenos Aires on 12 October. My reason for
thinking so is based on the combination of the following facts. She was under the control of
the port authority at Buenos Aires in the anchorage. She was lying in what was, by the
prevailing 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. She
was at the disposition of the charterers, ready to take up the berth selected by them, as soon
as 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 suggested
alternative. 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, it
is unwise to identify the commercial area too closely with the idea of a fixed geographical
limit.

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 point
of destination, the test of whether a ship had become an arrived ship was whether the ship had
reached the commercial area of the port; he regarded, I think, the question what was the
commercial area in any particular case as one to be decided on the facts of the case. To put
the matter in other words, he was saying that the test to be applied was what would a man of
business, a marine officious bystander, to adapt Lord Justice Mackinnons well-known
phrase, looking at all the facts of the case, including any relevant port regulations, regard as
the commercial area of the port.

In the event, it was to be over a decade before an approach, more simplistic than that
of the majority in The Aello, prevailed.
5. Although The Aello did not change the law regarding the principle to be
applied vis-`a-vis an arrived ship, it did clarify the application of the commercial
area principle in that it militated for a broader area which could constitute the
commercial area than what many had thought to be possible, particularly in the case
of large ports.
Much emphasis was put on the nature of the cargo to be loaded/discharged so as
to lead to the result that parts of a port would not constitute the commercial area
for a particular vessel unless that vessel was within the area of the port which
handled the goods to be loaded/discharged. This led to certainty in many cases so
that shipowners, charterers, arbitrators, maritime lawyers and others were able to
see, at a glance, if the vessel was an arrived ship simply by looking at the nature of
the cargo to be loaded/discharged and the sections of the port which handled
cargoes of such a nature.
6

THE OLDENDORFF TEST

Para. 6

The application of the test could, and did, lead to findings that the commercial
area might be well away from the heart of the port and, in some instances, even
outside 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 arrived
ships when anchoring very close to the loading/discharging berth. What is not so
obvious is how close such vessels had to get to the berth in order to have reached the
commercial area and to be designated arrived ships.
Even though the commercial area test had some flexibility it could lead to
economic unjust results as far as owners were concerned; further, the fact that the
test had flexibility caused some uncertainty when considering some ports and
cargoes.
Before leaving The Aello8 it is worth mentioning that, even though the owners
were denied the commencement of laytime at the intersection anchorage, the House
of Lords allowed them damages for delay because the non-availability of a berth was
due to the failure of the charterers to supply a cargo; this aspect will be considered
later under remedies available to owner (see later paragraph 55).
6. The increase in size of ship led to greater difficulty in applying the commercial
area concept. It also led to commercially unrealistic results in that a vessel reached
a position as close as she could get to the loading port (and could go no further
because of the lack of a berth and/or port authority restrictions) and was still not
considered an arrived ship because her anchorage (invariably the usual waiting
place) was outside the commercial area of the port.
The result was often economic hardship to the owner since his money-making
chattel was getting no compensation for time during which the vessel was lying
doing nothing even though she had completed the sea passage and was as near to the
loading/discharging spot as she could get. Of course, many persons asserted that it
was up to an owner to get a time lost waiting for berth provision, or some other
suitable clause, in the charterparty to take care of a situation, but this may be easier
said than done. This approach complicated an area of shipping law which should be
simple, bearing in mind the large sums of money which can turn on whether or not
time is to score up while a vessel is waiting at an anchorage after her completing her
sea passage; further, the charterparty contract spells out the laytime for loading and
discharging and it would appear to be commercially just that an owner should get
compensation for the time that his vessel is at or off a loading/discharging port and
this exceeds the contractual period laid down for the loading and discharging of
cargo.
Because of the general feeling of sympathy for owners, some judges and arbitrators tended to strain the limits of the commercial area test to decide that a
vessel was an arrived ship when, strictly speaking, she was not. Nowhere was this
more evident than in The Delian Spirit,9 a case which went to the Court of Appeal
in 1971.

8. [1960] 1 Lloyds Rep. 623.


9. [1971] 1 Lloyds Rep. 506.

Para. 7

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

7. In The Delian Spirit9 the vessel was chartered to load a cargo of crude oil at one
or two Black Sea ports. The charterers ordered the vessel to Tuapse, a port of
modest 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 the
roads some one and a quarter miles from the jetty at the anchorage appointed for
ships 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 the
port but that is was not a usual place for the loading of oil and felt constrained to
hold that the ship was not arrived although, in every practical sense, she had
completed her voyage when she came to rest at the anchorage. Both the High Court
and the Court of Appeal reached an opposite conclusion to the umpire. Although
the decision of the courts was in accordance with commonsense it appeared to be
wrong under the application of the commercial area test, the principle which had
been adopted by the House of Lords in The Aello.8
The Delian Spirit9 judgment caused much uncertainty in the shipping sphere and
it was obvious that the concept of the arrived ship required re-canvassing before
the highest of English tribunals. The wish of many persons was soon fulfilled since
The Johanna Oldendorff10 went to the House of Lords within two years of the
Court of Appeals decision in The Delian Spirit.9 The latter case also involved
reachable on arrival; see later Chapter 3.
8. In The Johanna Oldendorff10 the vessel was voyage chartered to carry bulk grain
from the U.S.A. to Liverpool/Birkenhead, the charterparty stipulating: Time to
count from the first working period on the next day following receipt during office
hours 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 at
17.00 hours on 2 January 1968, but no berth was nominated by them. When she
arrived she anchored there. The next day she proceeded to Princes Pier landing
stage, Liverpool, and cleared with the customs. She was then ordered by the port
authority to leave and proceed to anchor at the Bar light-vessel. She did so arriving
at that anchorage at 14.40.
Meanwhile the owners gave to the charterers notice of readiness. This was
received at 14.30 on 3 January. The vessel lay at anchor at the Bar from 3 to 20
January ready, so far as she was concerned, to discharge. Evidence was given that
the Bar anchorage, which was 17 miles from the nearest discharging berth, was the
usual place where grain ships lay awaiting such a berth. A dispute arose as to when
the vessel had become an arrived ship, and was referred to arbitration. The
umpire stated a special case, the question for the court being: Whether laytime for
discharge started (i) at 08.00 hours on 4 January 1968; or (ii) at 08.00 hours on
Monday, 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 at
08.00 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 Lloyds Rep. 285.

THE OLDENDORFF TEST

Para. 8

Bar anchorage; (2) nor was she an arrived ship when she reached the Princes
landing stage because (a) it was not a usual waiting place for grain ships seeking a
discharge place, and (b) she was no longer there when the notice of readiness was
served; (3) the laytime began to count at 08.00 hours on 22 January or at 08.00
hours on 23 January but, as the matter was of academic interest only, no view as
which of these two dates should be preferred need be expressed; (4) that the answer
to the question in the special case was either (ii) or (iii) and that the alternative
award in favour of the charterers was upheld.
On appeal by the shipowners, it was contended that (1) the vessel was an arrived
ship; and (2) the words whether in berth or not had the effect of casting the risk
of delay upon the charterers, it was held by the Court of Appeal (Lord Justices
Buckley 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) the
relevant waiting area must be in the commercial area; and (c) that commercial area
must be that part of the port where she could be discharged (or loaded) when a
berth was available; (2) the application of the words whether in berth or not was
limited to a case where a vessel was already an arrived ship; their use did not
dispense with the necessity for her being an arrived ship before notice of readiness
could be given and the laytime start to count; and only when she had arrived did the
clause operate to make laytime commence even though she was not in berth. The
appeal was dismissed. Both the High Court and the Court of Appeal had held, on
the strength of The Aello,11 that the vessel was not an arrived ship. However, the
House of Lords, after canvassing the topic, produced a unanimous decision that the
Johanna 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 Reid
test) is that a vessel can be said to have arrived at a port if she has reached a position
within 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 immediate and effective disposition of the charterer if she is at a place within the port where
waiting ships usually lie unless the charterer can show circumstances to the contrary; if the vessel is waiting at some other place in the port then it is up to the owner
to prove that the vessel is as fully at the disposition of the charterer as she would have
been if in the vicinity of the berth for loading or discharging. The precise words of
Lord Reid were:
Before a ship can be said to have arrived at a port she must, if she cannot proceed
immediately to a berth, have reached a position within the port where she is at the immediate
and effective disposition of the charterer. If she is at a place where waiting ships lie, she will
be in such a position unless in some extraordinary circumstances proof of which would lie on
the charterer . . .
If the ship is waiting at some other place in the port then it will be for the owner to prove
that she is as fully at the disposition of the charterer as she would have been if in the vicinity
of the berth for loading or discharge.

11. [1960] 1 Lloyds Rep. 623.

Para. 8

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

Apart from Lord Reids speech other speeches which are of help in understanding
the House of Lords decision are those of Viscount Dilhorne and Lord Diplock. The
former summarised his conclusions, as follows:
(1) That under a port charterparty to be an arrived ship, that is to say a ship at a place
where a valid notice of readiness to load or discharge can be given, she must have
ended her voyage at the port named.
(2) The port named in the charterparty must be given the meaning which those
persons 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 as
indeed the pilotage limits, may extend far beyond the limits of what those using it
would 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 refused
permission 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 port
in its commercial sense.
(7) Brett, M.R.s definition in Steamship Garston Co. v. Hickie & Co. and his reference
to port discipline may be useful in determining what are the limits of the port in its
legal sense but port discipline may be exercised and submitted to over a wider area
than 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 or
berth. 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 as
part of the port in its commercial sense.
(9) If within the port though not for some reason at the usual waiting place, a ship may
still be an arrived ship if, at the place where she is, she can be effectively placed
at the disposal of the charterers.
(10) The usual place may be changed by a port authority or by a regulation. If for some
reason due to the conditions of the port and not of the ship, a vessel wishing to wait
at 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 be
regarded as an arrived ship.

Lord Diplock analysed the characteristics of a voyage charterparty in four successive


stages as follows:
(1) The loading or approach voyage, viz. the voyage of the vessel from wherever she
is at the date of the charterparty or the conclusion of her previous fixture, if that is
later, 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 of
loading and its stowage on board.
(3) The carrying or loaded voyage, viz. the voyage of the vessel from the place of
loading 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 place
of 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 again
by the Court of Appeal in a fairly recent decision in Kronos Worldwide Ltd. v. Sempra
10

THE OLDENDORFF TEST

Para. 8

Oil Trading S.A.R.L.,12 see Lord Justice Mance at page 264. This case concerned
a 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 in
saying whether a vessel has arrived in it. As soon as a berth is vacant in the dock a vessel
already moored inside the dock can get there within an interval so short that for the practical
business purpose of loading or discharging cargo it can be ignored. For such purposes she is
as much at the disposal of the charterer when at her mooring as she would be if she were
already at the actual berth at which the charterer will later make or accept delivery of the
cargo, 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 determinable, because of absence of definition of its legal limits or variations between these and the
limits within which the port authority in actual practice exercises control of the movement of
shipping; but I do not believe that in practice it is difficult to discover whether a place where
ships usually wait their turn for a berth is within the limits of a named port; or is outside those
limits as is the case with Glasgow and with Hull. In the days of sailing ships, whose
movements were dependent on favourable wind and weather, and even in the days of
steamships before there was regular radio communication between ship and shore, a ship
prevented by congestion in the port from reaching a berth on her arrival there might be
compelled to moor at some place which, although it was within the limits of the port, was
nevertheless one at which she could not fairly be regarded for business purposes as being
already at the disposition of the charterer, because the interval which would elapse between
the time when a berth did become actually available and the time when the vessel would be
able to reach it in response to directions given by the charterer, might be so long that it would
be 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 for
consideration of the particular circumstances of the adventure contemplated by the charterparty, 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 is
congested so that on arrival within its limits the chartered vessel cannot proceed immediately
to a berth to load or to discharge, it is of no business importance to the charterer where she
waits within those limits, so long as it is a place (1) where she counts for turn if the port is
one where vacant berths are allotted to waiting vessels in order of arrival; (2) where the
charterer can communicate with her as soon as he knows when a berth will become available
for the cargo to be loaded or discharged, and (3) from which the vessel can proceed to the
available berth when she receives the charterers communication, so as to arrive there as soon
as the berth has become vacant or so shortly thereafter as not to be significant for practical
purposes.
The waiting places within the limits of an extensive port which have these characteristics
alter as ships become more manoeuverable, faster or larger, and communications between
ship and shore improve. It was an area of the port which embraced but did not extend beyond
these places that Lord Justice Kennedy in Leonis v. Rank called the commercial area of the
port which the parties to a port charter must be taken to have meant as the area in which the
vessel 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 loaded
or discharged, or usually were at other times, was irrelevant to the business purposes of the
parties 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 and
shippers, that time should not be wasted by leaving berths vacant when they are available for
12. [2004] 1 Lloyds Rep. 260.

11

Para. 8

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

loading or discharging cargo, the usual places for ships to wait their turn for a vacant berth
are those which do possess the three characteristics that I have mentioned, if there are any
such places within the limits of the port. In days of sailing ships close proximity to berths
likely to become vacant may have been necessary in order that a place should possess those
characteristics, but distance from the actual berth becomes of less importance as steam and
diesel power replaces sail and instantaneous radio communication is available between ship
and shore. In modern conditions it is possible for port authorities and charterers to know at
least some hours in advance, when a berth presently occupied by a loading or discharging
vessel will become vacant and available for use by the chartered vessel. Notice of similar
length can be given by the charterer to the waiting vessel so as to enable her to reach the berth
as soon as it becomes vacant, if she can make the journey from her waiting place to the berth
within that time. And if she can she is as effectively at the disposal of the charterer for loading
or discharging while at that waiting place as she would have been if waiting in the immediate
vicinity of the berth.
My Lords, this no doubt is why the Bar anchorage, which is within the legal limits of the
port of Liverpool and included in the area in which the port authority is entitled to control
the movement of shipping, has become the usual place to which vessels are directed by the
port authority to wait their turn for a berth. And the same must generally be true of usual
waiting places within the limits of other ports where congestion is liable to occur, I would
therefore accept as a convenient practical test as to whether a vessel has completed her
loading voyage or her carrying voyage under a port charter so as to cast upon the charterer
the responsibility for subsequent delay in finding a vacant berth at which her cargo can be
loaded 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 and
Lord Diplock, both of them held to that part of the so-called Reid test within the
port notwithstanding that they placed reliance upon the control of the movement
of shipping as a guideline for determining the limits of a port. Neither of them
postulated a situation where the usual waiting place was close to but outside the
legal limits of a port where the port authority had no direct but only inferential
influence in respect of the particular vessel; for example, the port authority only
being able to say to the vessel come in at an appropriate time. It seems that those
law 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 to
sailing ships speak volumes in indicating a conservative approach and it is worth
noting 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 in
paragraph 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 the
decision did not go far enough and this is be to regretted in view of the House of
Lords having had a golden opportunity to simplify an area of law which had become
unnecessarily complicated over the years.
9. The disappointment in the Johanna Oldendorff decision10 is that part of the ratio
decidendi 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 difficulties
because of many ports not having well defined legal limits. Since the Oldendorff
12

THE OLDENDORFF TEST

Para. 10

decision10 arbitrators have been faced with problems regarding whether or not a
usual waiting place is, or is not, within the port, and this runs counter to the words
of 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 real
difficulty in deciding whether at any particular port the usual waiting place was or was not
within the port. The area within which a port authority exercises its various powers can
hardly be difficult to ascertain. Some powers with regard to pilotage and other matters may
extend far beyond the limits of the port. But those which regulate the movements and conduct of
ships would seem to afford a good indication [emphasis supplied]; and in many cases the limits
of the port are defined by law.

There have been arbitrations since the Oldendorff decision10 where there has been
doubt not only concerning the exact legal limits of the port but also as to the extent
and degree of regulation of ships by port authorities. Notable examples have been
some of the Mediterranean ports although other areas of the world have also
produced problems in this respect.
Although a move in the right direction the Oldendorff decision10 did not go
sufficiently far in order to simplify, and remove uncertainty from, the application of
the arrived ship concept. Although it may be illogical to say that a ship has arrived
at a port when she is not within the port, does it really matter whether or not a vessel
has reached certain limits (which can be difficult to ascertain) so long as she has
completed 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 is
well illustrated by two 1974 arbitrations which occurred soon after the Oldendorff
decision, one in London and the other in New York, both of which concerned grain
laden vessels which waited at the usual waiting anchorage off the Hook of Holland
before proceedings to their discharging berths at Rotterdam.
In the London arbitration The Agamemnon,13 the charterparty stipulated:
Notification of vessels readiness to discharge must be delivered to the office of the charterers or their agents, at or before 4 p.m. (or at or before 12 noon if on a Saturday) and the
laydays 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 of
Holland at 01.00 on 18 August 1973 which anchorage was partly outside of Netherlands Territorial Waters; the Agamemnon anchored in that particular part of the
anchorage. While lying at the anchorage the vessel was about 20 miles from the
indicated discharging berth which, at the time, was occupied by another vessel. The
owners made attempts to secure a waiting berth within the port of Rotterdam but
were unsuccessful. It was usual for vessels to lie at the recommended anchorage if
no discharging or waiting berth was available and when the Agamemnon reached the
recommended anchorage she had reached as practically close as circumstances
permitted to the berth nominated by the charterers. The recommended anchorage
was outside of the legal and fiscal limits of the port of Rotterdam and the Port of
13. 1974.

13

Para. 10

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

Rotterdam authorities did not have any control over the vessels at the recommended
anchorage save for that of forbidding them to move into the port although for the
purpose of assisting vessels, Netherlands state authorities exercised duties in relation to pilotage, dredging, buoyage, beaconage and lighting, in areas including and
well to the seaward side of the recommended anchorage. Pilotage was not compulsory insofar as the area traversed by the Agamemnon was concerned, prior to
anchoring.
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 was
tendered at 06.00 on 28 August 1973 and this notice was accepted at 09.00 on 28
August 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 had
reached the agreed destination of Rotterdam, within the rule laid down in the
Oldendorff at the time that the 18 August notice of readiness was tendered. He
decided the special case in favour of the charterers, holding reluctantly that the
vessel had not reached the port of Rotterdam, under the Reid test, when she
anchored 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 the
recommended anchorage off the Hook of Holland in relation to the port of Rotterdam, and
a vessel waiting at anchor off the Bar light-vessel in relation to the port of Liverpool, when
considering the arrived ship concept, except that the former anchorage is outside the legal
limits of the port, whereas the latter anchorage is inside the legal limits of the port. It seems
strange that, in one case, the vessel should be an arrived ship, whereas, in the other case, the
vessel 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 to
be 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 and
other shipping centres around the world, that the Oldendorff decision did not go a little further
so as to embrace places where vessels usually wait off the port when they are prevented from
proceeding 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 arbitrators as to whether a usual waiting place is, or is not, within the port; there are a good many
ports 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 Reids test, in the Oldendorff decision does not appear to be of easy application to
many ports and, in addition, can often lead to considerable time consuming and costly
research in attempting the establishment of the limits of the various powers exercised by port
authorities.
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, the
English 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 advised
that there was no likelihood that the House of Lords would depart from one of its
previous 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 vessel
was an arrived ship when she reached the anchorage off the Hook of Holland.
14. 1974.

14

THE OLDENDORFF TEST

Para. 11

The arbitration panel, agreeing that the ship was outside the legal, fiscal and
geographical limits, posed the question, does this geographical imaginary line
drawn up by the Dutch government authorities for totally different purposes, mean
that under the terms of this particular charterparty, the Polyfreedom had not arrived
at Rotterdam? The majority answered the question in the negative, in favour of the
owners stating (inter alia):
Under a port charterparty containing a whether in berth or not provision, if a vessel has
reached a point as close as she may reasonably arrive to the designated discharging berth, and
can prove that it was not possible or practical to get nearer, then the physical and geographical
location 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 to
the extent required to place the ship and cargo at charterers disposal. Clearly this requires
that 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 that
time.

While the New York arbitrators had the Oldendorff decision put to them it only had
persuasive authority albeit by the highest English tribunal and the majority, quite
rightly, it is submitted, rejected it. The above quotation surely reflects what the law
should be in respect of reaching the agreed destination regarding a port charterparty. Interestingly, the New York Polyfreedom arbitration was referred to a few years
later, by the English Court of Appeal, in The Maratha Envoy15; see later paragraph
11 for discussion of this case.
11. The Maratha Envoy16 was perhaps a bad case on its facts to take to the House
of Lords so relatively soon after the Oldendorff decision, particularly since three of
the five law lords in the Oldendorff sat in the Maratha Envoy case; the leading and
only judgment was given by Lord Diplock (the other four law lords simply concurring) who had delivered a lengthy speech and analysis of the Oldendorff decision (see
above, paragraph 8). It appeared that the chance of the House of Lords departing
from one of its previous decisions, within four to five years, was indeed very slight
even though the Court of Appeal was unanimous in deciding that the vessel had
arrived at Brake when she anchored at the Weser light-ship to wait for a berth, the
anchorage being outside the legal, fiscal and administrative limits of Brake and
about 25 miles from her intended berth.
The facts were that the vessel anchored at the Weser light-vessel at 22.10 on
7 December and on the same day the charterers directed that the vessel should
proceed to Bremen after lightening at Brake. At 03.00 on 8 December, the vessel
sailed 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 was
no berth available for her, there were no waiting places in the port of Brake and
anchoring in the river in or near the area of the port was forbidden. The vessel did
not obtain clearance from either the health or customs authorities. The vessel
turned 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. [1977] 1 Lloyds Rep. 217.
16. [1977] 2 Lloyds Rep. 301.

15

Para. 11

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

On 10 December the charterers nominated the port of Brake as the discharging


port. At 07.30 on 12 December the vessel made a second excursion up the River
Weser. Again there was no available berth but the vessel obtained special health
clearance. No customs clearance was obtained. The vessel turned in the river off
the 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 of
Brake.
The owners contended (i) that Maratha Envoy became an arrived ship at Brake on
8 or 12 December 1970; and (ii) the cost of waiting at the light-vessel was recoverable as damages for failure to give discharging port orders timeously.
The charterers replied that the vessel did not become an arrived ship before 30
December 1970, and, although the discharging port orders were given late, the
owners suffered no damage.
It was held by Mr Justice Donaldson (as he then was) that (i) although in a
commercial and legal sense vessels were within the port of Brake when they were off
the quay, the Maratha Envoy had not arrived on 8 or 12 December because the
voyage had not ended and the vessel was not waiting; her trips to the port of Brake
and back to the light-vessel did not constitute arrival in a commercial or in a legal
sense; (ii) therefore, the failure to nominate a discharging port in time caused no
loss 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 dropped
anchor 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 an
arrived 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 conjunction
with the nomination of a Weser port (Brake) that arrival at the Weser light-ship
should take effect as if it were arrival in the port of Brake.
Lord Denning took the approach of the New York arbitrators in The Polyfreedom and said (inter alia):
I think that, at the present day, a vessel should be held to be an arrived ship when she has
reached the usual waiting place for the port, even though it may be a few miles outside the
limits of the port itself. The reason being that she has completed her carrying voyage and is
at the disposition of the charterers as effectively as if she was inside the port itself in the
vicinity of a berth.

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


If the vessel is ordered to a portand goes therewithin which there is no available berth
and no available waiting area (such as the port of Brake), what is the shipowner to do? Is he
to sail away with the cargo to a distant port? Obviously not. He must go to the appointed area
for waiting outside the port. That must be implied. But who then is to bear the cost and
expense 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 ship
when 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 to
prevent our introducing them. And, if they are necessary to do justice, I think we should
introduce them. It is a legitimate way of getting round the bad interpretation of the past.

16

THE OLDENDORFF TEST

Para. 12

The decisions of the Court of Appeal received short shrift in the House of Lords
where it was held that in a port charterparty the vessel could not be an arrived
ship at any waiting place short of the limits of the named port and, further, there
was no ground for implying a term into the charterparty as proposed by the majority
in 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 wait
outside the port is not an arrived ship. In the course of my own speech I spoke throughout
of a waiting place within the port and this qualification was a necessary consequence of the
analysis of the four stages of the adventure contemplated by a charterparty which led to my
acceptance of the Reid test as correct.

He then went on to say it would be doing a grave disservice to the shipping


community if this House were to allow the legal certainty introduced by the Reid
test 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 the
charterparty to the same effect as the express Weser Lightship clause. Charterparties entered
into upon printed forms and adapted to the particular adventure contemplated by the parties
often contain surplus phrases or clauses; but there is no ground for implying terms which are
not necessary to give business efficiency to the contract and which if incorporated in the
contract would alter the allocation of a misfortune risk in a way for which the parties
themselves 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 such
implication.

It is submitted that the implied term aspect was worthy of greater consideration
there being much sense in equating the charterers obligation to provide a berth
with that of supplying a cargo. After all, the charterer has an absolute obligation to
provide a cargo; see The Aello (see earlier paragraphs 4 and 5 and later paragraphs
54 and 55) where the owners obtained damages for the vessels detention at the
Intersection because the charterers breached their absolute obligation to supply a
cargo and this resulted in the vessel having to wait at the Intersection (where she was
not an arrived ship until the cargo had been supplied and the vessel was granted
permission to move into a berth). The charterer also has to provide a berth for the
cargo to be loaded/discharged; why should the obligation not be of identical nature
under 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 where
they are so closely juxtaposed?
12. Although an implied term is strictly within the field of damages (see later
Chapter 3) it has a bearing on the arrived ship concept because of what has been
stated earlier in paragraph 11. It is of more than passing interest that shortly before
The Maratha Envoy went to the House of Lords it had been decided in the High
Court that in the case of delivery under a time charterparty there was an implied
term that a berth should be available on the vessels arrival. In The Golfstraum17
17. [1976] 2 Lloyds Rep. 97.

17

Para. 12

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

the time charterparty stipulated (clause 1) that the vessel was to be delivered and
placed at the disposal of the charterers at Sfax in such available berth where she
can safely lie always afloat. The Golfstraum arrived at Sfax Roads on 8 March and
at 08.00 hours, the master informed the charterers agents at Sfax by radio that the
vessel was ready to be delivered. Owing to harbour congestion, non-availability of
berth 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 and
the charterers took delivery of her.
In the arbitration the umpire decided, by way of a special case, that the charterers
were under an obligation to direct the vessel on her arrival to an available berth and
there take delivery of her, they were in breach of this obligation and could not rely
for relief from such breach on the fact that they had no control over the port
authority, and that the owners were entitled to damages, based upon the daily
amount of hire, for the 812 March period. The umpires award was upheld in the
High Court by Mr Justice Mocatta who stated:
Clause 1 of the charter does not expressly provide for the time when the charterers must give
directions for the available and safe berth to which the vessel is to go to make her delivery, but
I think the necessary inference is that the directions must be given either on arrival at Sfax or
before arrival. I do not think the clause can be read as imposing no obligation to give the
necessary directions until a berth shall become available.

The Golfstraum was not cited in The Maratha Envoy but it is unlikely that it
would have swayed the conservative-minded Lord Diplock who contended for a
stringent test regarding an implied term in respect of demurrage obligations under
a charterparty. The stringency of the test came up in the later case of The Damodar
General Park and King Theras18 where Mr Justice Steyn (as he then was) decided to
imply a provision into a Sandheads clause which allowed a notice of readiness to be
tendered at a place some 40 miles closer to Calcutta than Sandheads. It was found
necessary to discharge the cargo into lightening vessels and, under the terms and
conditions of the charterparty, time used for discharging from the mother vessel
was to be disregarded, and laytime had to be calculated with reference to the
lightening operation. Clause 38 of the charterparty (the Sandheads Clause)
provided inter alia that, 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 vessels arrival off Sandheads has been given.
The lightening vessels could not proceed straight up to Calcutta, and there give
notice of readiness in the usual way, because of the congestion at that port. Eight of
the nine lightening vessels never reported their readiness on arrival off Sandheads.
Each was loaded from the mother vessel after she had shifted from Sandheads to
Saugor. Then only did they purport to give notice. Sandheads was some 40 miles
off the mouth of the River Hooghli and was the area where vessels would normally
wait if they were unable to proceed directly to Calcutta. Saugor was much closer to
Calcutta 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 Saugor
could not constitute valid notices under clause 38 because what that clause called
18. [1986] 2 Lloyds Rep. 68.

18

THE OLDENDORFF TEST

Para. 12

for was notice of the vessels arrival off Sandheads. It was therefore argued that the
Sandheads Clause had no application, and laytime for eight of the nine vessels only
started to run as and when each vessel, having reached Calcutta and obtained
customs entry and free pratique, gave notice of readiness. The owners of the vessel
made a contrary submission.
The arbitrator decided in favour of the owners of the vessel. In so awarding, the
arbitrator was constrained to comment on the absurdity of a lightening vessel,
loaded at Saugor, having to waste time and money proceeding out to Sandheads in
order to comply with the strict letter of the clause. He then said that there could be
no real doubt as to the basic intention of the shipowners and charterers, namely
that, given a congestion situation, the waiting time should count as laytime as from
the day following upon receipt of advice that the vessel was ready to proceed up to
Calcutta. Also that, in selecting arrival off Sandheads as the turn-key for the
purpose of clause 38, the draftsman plainly overlooked the possibility of transhipment being effected, in the words of clause 35 closer to Calcuttalanguage which
was wide enough to embrace transhipment being carried out, as it was here, at
Saugor.
When the dispute came before the Commercial Court it was held that on no view
could the phrase off Sandheads in clause 38 be given a meaning so extensive as
to cover the vicinity of Saugor, and that the owners position could not therefore be
sustained by any process of construction, the only question being whether it could
be supported on the basis of implying a term in the contract.
In deciding the case of favour of the owners and upholding the arbitrator Mr
Justice Steyn had this to say:
Keeping in mind the stringency of the test applicable to the type of implied term under
consideration, and the approach enunciated by Lord Diplock in The Maratha Envoy, I now
turn 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 from
the 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 rarely
result in a term being implied in commercial contracts, and particularly in the field of
demurrage obligations under a charterparty. The question whether a term as set out in Mr
Eckersleys award or in substantially similar terms ought to be implied is not susceptible of
detailed analysis. It is a matter of first impression. In my judgment, Mr Eckersleys description of the basic purpose of the relevant contractual provision is manifestly sound. The
senselessness and wastefulness of requiring the vessels to return to Sandheads after completion of loading at Saugor in order to give notice at a place substantially further away from the
discharging port is obvious. In my view, reasonable men versed in the shipping business, and
faced in the real commercial world with the question posed in the two arbitrations, would
undoubtedly have said: Yes, of course, the vessels need not undertake an 80 or 100 miles
deviation in order to give notice of readiness; they may give notice of completion of loading
if the transhipment is effected at a place closer to Calcutta. The term implied by Mr
Eckersley is in my judgment so obvious that reasonable men, circumstanced as the parties
were, would without doubt have assented to the overlooked and unexpressed term set out in
Mr Eckersleys award.

The business efficacy approach of the arbitrator and judge was sensible; it may be
that 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

Para. 12

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

provision of a berth by the charterer in a port charterparty, when a vessel gets as


close to the port as she can.
13. It may appear surprising that the courts have been so sluggish and slow regarding 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 judgment
reflect the thoughts of many commercial persons:
An intelligent layman who had occasion to study the long and tortuous history of judicial
wrestling with the legal concept of an arrived ship might be forgiven if he expressed some
wonderment as to what it was that had caused so much difficulty and disputation. If he
ventured to seek an explanation he might come to the conclusion that in applying its
principles to the complexities of maritime commerce the law has been slow to adapt itself to
practical advances in maritime traffic. Thus in times past a trading vessel could offer no
assurance that she would be able to discharge her cargo at a particular port until she had
reached a safe harbourage within the confines of that port. It was reasonable that she should
not be regarded as an arrived ship while substantial hazards still stood between her and the
berth where her cargo was to be discharged. In the present day shipping is not dependent on
fair weather and favourable winds. The master of a vessel can now be confident of making
port 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 doubt
inevitable. It may even be salutary if not too long extended, for changes in legal principles in
their application to practical affairs are likely to result in confusion and doubt as to the rights
and liabilities of those concerned in those affairs. A cautious advance is calculated to preserve
commercial equilibrium, but advance there must be if the law is to operate in conformity with
contemporary conditions.
Inevitably there does come a time when the gap must be closed if incongruities and
artificialities are not to develop and persist so as to give rise to absurdities and injustices. The
courts must then re-examine the concept and formulae which have become entrenched in a
mercantile 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 hitherto
prevailed.

The application of the above surely leads to a conclusion that a vessel becomes an
arrived ship in the case of a port charterparty when she has completed the sea
passage, is at or off the port and at the immediate and effective disposition of the
charterer, it being irrelevant as to whether or not she is in or outside certain
geographical, administrative, legal or fiscal limits of the port. Such a test is the
simplest and easiest to apply when considering if a vessel has arrived. While Lord
Diplock made much about the essential characteristics of a voyage charterparty in
the 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 the
carrying voyage, viz, the voyage of the vessel to the place specified in the charterparty. A coach and four can be driven through Lord Diplocks assertion that the
carrying voyage only terminates in the port; the carrying voyage surely terminates
when the vessel anchors at the usual waiting place when she can go no further
through no failure on her part, it being irrelevant whether some commercially
artificial line (fiscal, legal or administrative port limit) lies a few miles on one side
or the other of the usual waiting place for the port in question.
19. [1977] 2 Lloyds Rep. 301.

20

THE OLDENDORFF TEST

Para. 13

In The Maratha Envoy the reasons given by Lord Diplock for the rejection of
the Oldendorff test were:
(a)
(b)
(c)
(d)

The provision of legal certainty.


Freight rates are, or can be, adjusted to reflect the risk of congestion.
The Johanna Oldendorff test has not proved difficult of application.
The risk of waiting due to congestion can be taken care of by an appropriate type-added clause, many of such now being standard form.

Dealing first with the certainty aspect, there is no doubt that commercial men
wish for this and do not want the law changed that frequently. However, when the
law changed from the commercial area to the Oldendorff test the change tended to
lead to some uncertainty in deciding whether or not ships had arrived, simply
because the Oldendorff decision did not go far enough. Lord Diplock puts it too high
when he states that the commercial area test had turned out to be obscure and
difficult to apply: it may have been commercially unjust but it was sometimes easier
to apply than the test established in the Oldendorff. It is ironic that his lordship stated
that the purpose of the Oldendorff was to replace the commercial area test to provide
greater legal certainty but then baulked at going on to adjust the Oldendorff test to
produce even greater certainty. Even though only a few years separated the Oldendorff and Maratha Envoy decisions, it is a pity that the House of Lords did not have
the vision to follow through and to make the arrived ship test as simple and
certain as reasonably possible.
Regarding the inter-relationship between freight rates and demurrage, his lordship surely took an unrealistic approach. The fact is that both freight and demurrage
rates tend to move together according to the state of the market and cannot be used
in the bargaining manner postulated by Lord Diplock (freight rate up to cover
sufficiently the expense of waiting at the owners risk, and down if the charterer
takes the waiting risk). Owners do not calculate their freight rate on the supposition
that laytime will not count at the loading/discharging ports. Further, as opposed to
liner terms where the owner has to find a berth, a voyage charterparty makes it
incumbent 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 be
better if they took stock of the current realities of commercial life.
The reason regarding the Oldendorff test not having proved difficult of application
has 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 those
disputes, considerable time and expense was expended in searching for and providing evidence in order to attempt to show that the vessel was in or outside of the
port.
In respect of the contention that the risk of congestion be transferred to the
charterer by way of a time lost waiting for berth, or other provision, the answer must
be that, on a principle which applies to every port voyage charterparty, the law
should be simple, certain and commercially just, so as not to necessitate the formulation of special clauses to compensate an owner for the time that his vessel
exceeds 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

Para. 13

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

concept that owners have been forced into seeking special provisions to compensate
them for the time that their money-making chattels are lying idle at anchorages
because charterers are not able to provide loading/discharging berths. It is surely
better that the law should be simple and commercially just, leaving the parties to
contract out if they so desire, rather than the law be commercially unjust with the
parties 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 simple
approach. For example in New York The Polyfreedom has won the day (see
paragraph 10 above) and in Hamburg (now expanding in the maritime arbitration
field) arbitrators have decided that if a vessel has to wait for a loading/discharging
berth it does not matter at all whether she anchors outside or within the limits of a
port, the real importance of which often cannot be realised, provided that the vessel
is able to proceed as quickly as possible to the nominated loading/discharging berth;
see Lloyds Maritime and Commercial Law Quarterly, May 1986, page 251, Laytime
problems and comparison of law by Dr Johannes Trappe. Perhaps, in due course
the 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 WITHIN


THE PORT OLDENDORFF TEST
14. In The Maratha Envoy18 the House of Lords considered that the Oldendorff 10
test had not proved difficult of application. In practice matters have worked the
other 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 posed
difficulties. The Agamemnon arbitration, (see paragraph 10 above),20 although not
a commercially sound decision, was not difficult of resolution because of the legal
limits of the port being capable of definition. However, in the later Anco Elias
arbitration21 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) because
of severe congestion arising from limited discharging facilities. This was the
usual waiting place for vessels awaiting discharging berth when such berths
were 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 administrative
limits.
(c) There were no bye-laws or statutes defining the legal administrative or
fiscal limits of the port of Alexandria.
20. 1974.
21. 1977.

22

D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 14

(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 area
within which the Anco Elias was anchored. Further, there was no rigid
outer limit to this area of control within which vessels could be ordered to
anchor; it varied with the number of vessels waiting for berths.
(f) There were statutory provisions which controlled the movement of vessels
after their arrival. By ministerial decree all ships coming within the 12-mile
territorial limit of Egypt, bound for Alexandria, were subject to control and
inspection by the Alexandria Port Authorities when they came within 10
miles of Great Pass Beacon.
The arbitrator decided that the vessel had arrived at Alexandria when she reached
the outer anchorage, albeit that she was outside the administrative limits as defined
in The Mediterranean Pilot. He relied upon the words of Lord Reid (see paragraph
9, earlier) regarding the area within which a port authority exercises its powers in
coming to his decision that the vessel had reached the agreed destination of
Alexandria.
The decision was commercially sound and one that the arbitrator was able to
make 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 has
arrived at the port so long as she is waiting off the port at the place where vessels
usually 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 the
area in which the vessel lies (as in The Anco Elias arbitration21), then an arbitrator
is 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 control
as exercised by a port authority, bearing in mind factors such as pilotage, anchorages, advice and/or orders to vessels from the port authority, etc. The words of Lord
Reid, that these powers which regulate the movement and conduct of ships afford a good
indication of when the port authority exercises its various powers, for the purpose
of deciding whether or not a vessel is within the port, are not always as clear and
unambiguous as he imagined. It would have been so much simpler if the Oldendorff22 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 portthis time, Leningrad. The charterers
contended 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 commercial
limits of the port, the vessel had not reached the port of Leningrad. However, the
evidence showed that the port authority (Port Control Service) exercised control
and jurisdiction over the area within which the vessel lay to regulate and order the
movements of ships and their conduct, and the arbitrator accepted this as satisfying
22. [1973] 2 Lloyds Rep. 285.
23. 1978.

23

Para. 14

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

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 Authority
exercises 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-governmental powers.

Here again, the arbitrator was able to use the extent of the port authoritys control
to circumvent the argument that the vessel had not arrived because either she was
outside certain limits or the limits were vague and uncertain.
Because The Anco Elias21 and Torm Estrid23 arbitrations appeared to be
decided correctly many persons might think that the Oldendorff22 test is satisfactory.
However, even though the arbitrations were probably decided correctly it has to be
remembered that it is costly and time consuming to get the requisite evidence and
to fight arbitrations. Neither of those arbitrations would have been necessary if the
House of Lords had plumped for the simple test advocated by the vast majority of
shipping commercial persons, namely, completion of the sea passage and at the
immediate and effective disposition of the charterers.
Many other arbitrations have been fought on the same point over the years, some
of them going in favour of the charterers because the vessel was not within the legal
limits of the port; there have been a good many arbitrations which have required
considerable research in order to establish whether or not the vessel was within the
port.
15. The Gundulic24 is an interesting arbitration regarding the Oldendorff22 test; it
concerned the South American port of Necochea. The legal arbitrator (not the
author) was faced with the problem of the vessel being anchored in the place where
vessels normally wait for a berth but there being conflicting evidence regarding port
limits, controls, etc. The relevant factors in favour of the vessel having arrived
were:
(a) There was a defined area, within a radius of 1.5 miles from the southern
breakwater of the harbour entrance, which was recognised by the port
authorities as Necochea Roads, within which pilots embarked and disembarked and from which pilotage into the protected harbour was
compulsory.
(b) When vessels arrived in Necochea Roads they were considered by the port
authorities as on turn for the granting of a berth.
(c) Contrary to what was stated to be the practice in the Centrade Navegacion
Transatlantico (CNT) Year Book for 1973, free pratique was granted to the
vessel by wireless upon her arrival at the anchorage.
(d) Frequent references in the contemporaneous documents to Necochea
Roads or the roads of the port (as being a recognised geographical
area).

24. 1980.

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D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 15

(e) According to the owners local Argentine agents, . . . the anchorage zone
at Necochea Roads was definitely considered by the Port Authorities within
the 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 of
Necochea Roads and the only geographical enclosure was the harbour
within the twin breakwaters.
(b) The local chart did not define or even mention Necochea Roads, but
referred 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 of
Necochea as being protected by two breakwaters, and referred to the fact
that in certain weather conditions it was . . . difficult and sometimes
impossible to enter the port.
(d) No charges were levied by the port authorities on vessels lying at anchor in
the roads, and port services were only available to vessels within the
enclosed harbour.
(e) The CNT Year Book for 1973 described the port as being protected by the
twin breakwaters, and stated (inaccurately as at March 1977) that although
free pratique could be given in the roads it is now given only when
alongside or in the pool, and finally stated that . . . shippers consider the
Outer Roads as open sea and will not accept Notice of Readiness until the
vessel enters the port.
The arbitrator said that he did not find it easy to decide whether or not the
anchorage in Necochea Roads was within the port of Necochea. With some hesitation he concluded that the anchorage was within the port for the purpose of
determining whether the vessel was an arrived ship. He gave little weight to the
expressions of opinion by interested parties or to references to the port in documents where the word may have been used as synonymous with harbour or
docks without the present problem being in mind. He considered the most
important fact to be that there was the required defined area, referred to as Necochea Roads and within which the port authorities exercised a degree of control, on
arrival within which vessels were allocated their berthing turn, where free pratique may be granted, and within which the port pilots will embark for the
purposes of compulsory pilotage into the protected harbour. It seemed to him that
in so deciding the case he was following the approach of Lord Reid in The Johanna
Oldendorff 25 where his lordship considered that the exercise by the port authority
of powers to regulate the movement and conduct of ships afforded a good indication
of the limits of port.
The arbitrator drew some support for his decision from the previous cases of
Leonis Steamship Company Ltd. v. Rank Ltd.26 (the vessel was held to be within the
commercial area of the port of Bahia Blanca while at anchor in the River Parana in
25. [1973] 2 Lloyds Rep. 285.
26. [1908] 1 K.B. 499.

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A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

the usual place where vessels lay while awaiting a berth at the loading pier) and The
Delian Spirit27 (the vessel was within the Black Sea port of Tuapse when anchored
in the roads in a place about one and a quarter miles from the loading berth which
was one of four within a harbour protected by breakwaters).
It is interesting that the legal arbitrator decided as he did since it is thought that
some other legal arbitrators might have decided the case differently. It is submitted
that the arbitrator was correct in deciding that the anchorage was within the port
even though the case could be described as marginal. The fact that the port was
small made it easier for the arbitrator to arrive at his decision and, like the arbitrators in The Anco Elias28 and Torm Estrid,29 he was able to pray in aid the
words, powers which regulate the movement and conduct of ships from The Johanna
Oldendorff 25 in support of his decision.
16. Two arbitrations reported in 1985 were concerned with the problem of the
geographical arrival of a vessel in circumstances where the waiting places were many
hundreds of miles from the actual loading ports. Both related to the Arabian
Gulf.
In the first arbitration30 the vessel loaded a cargo at a European port for discharge
in Iran; the charterparty called for discharge at Bandar Abbas or Bushire and the
latter became the nominated port when the vessel passed Suez. The charterparty
included a Wipon (whether in port or not) provision so that it was not, strictly
speaking, a port charterparty; however the arbitration is of interest, in a port
charterparty context because of the approach of the arbitrators to Wipon and
the usual waiting place as per The Johanna Oldendorff. It also has relevance to
later paragraph 29 which considers Wipon. The vessel arrived at Bandar Abbas in
September 1981, anchored there, and the master cabled an intended notice of
readiness. Eventually, the vessel joined a convoy for Bushire late in November 1981
and she reached Bushire Roads in early December, berthing a few days later and
completing 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 contractual
discharge 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 to
discharge and fully at the disposal of the charterers; therefore, two out of three tests
derived from The Johanna Oldendorff25 were satisfied. The third test (the physical
arrival at the contractual port of discharge) was, according to the owners, displaced
by the operation of clause 22 of the charterparty which stipulated that a notice of
readiness could be tendered whether in port or not (Wipon).
The owners argued that the Wipon stipulation operated in the very special
circumstances extant at Iranian ports at that time to make valid a cabled notice of
readiness tendered by the master in September. They further contended that those
same circumstances made Bandar Abbas the usual waiting place for vessels going
27. [1971] 1 Lloyds Rep. 506.
28. 1977.
29. 1978.
30. LMLN 14325 April 1985.

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D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 16

to Bushire. The owners also argued that there was no evidence put forward by the
charterers to show that the vessel was waiting for a convoy. It was plain, said the
owners, 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 not
described as a safe port in the charterparty) the owners held out that they had made
all proper enquiries on their own initiative as to the navigational and like problems
which would attend the voyage from Europe to Bushire, and that they accepted for
their own account the risks, particularly of delays, arising from such a voyagesave
where protected by exception clauses or if there were a relevant default by the
charterers. The general situation in Iran at that time was well known and the owners
ought to have been aware that some sort of convoy system was in operation. On
proper enquiry, they would or at least should have discovered the edict of the
Iranian Ports and Shipping Organisation which provided:
We hereby nominate Bandar Abbas as Mother Port and it is required that all ships carrying
cargoes for Iranian Ports, on passing Ras al Kuh, contact Bandar Abbas in order that they
may be allocated an anchorage position within Bandar Abbas port limits. The diversion
thereafter of any vessel to Bushire . . . will take place according to Ports and Shipping
Organisation planning and programme schedules.

The arbitrators decided that the wait at Bandar Abbas could only be regarded as
an interruption to the voyage on which the vessel was engaged, a voyage which was
only completed when the vessel arrived at Bushire Roads. A place which was almost
400 miles distant from the port of destination could not possibly be held to be
within the ambit of Wipon. If it were to be the place at which a valid notice could
be given, that could only be achieved by very clear and special wording in the
charterparty.
The main reason for rejecting the owners case turned on the arbitrators analysis
of why the ship waited at Bandar Abbas. The owners statement that the wait was
not for their purpose could not be accepted. The vessel was plainly waiting to join
a convoy to go to Bushire. That was the very convoy system which the owners ought
to have known about, and in all probability did know about. The vessel could not
complete her voyage until she was permitted to join a convoy. That was as much a
hazard of the voyage falling to the owners account as any other awkward navigational impediment which could arise, such as a mishap blocking the Suez Canal
shortly before the vessel intended to transit it. Clause 22, and in particular the
Wipon aspect, related only to the port of Bushire and to the normal waiting place
before entering that port which was Bushire Roads.
In addition, the arbitrators considered that Bandar Abbas, despite the Port and
Shipping Organisations edict, could not be viewed as the usual waiting place for
Bushire in the sense acquired by that particular phrase in The Johanna Oldendorff.31 In colloquial language it would have been natural to have referred to
Bandar Abbas Roads as the required waiting place for a vessel wishing to go to
Bushire when discussing how the Iranian naval convoy system operated. But that
did 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 Lloyds Rep. 285.

27

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A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

purposes. Accordingly the owners claim failed. It is submitted that a different


tribunal might well have taken a different approach when analysing the combination
of usual waiting place, Wipon, and the then edict of the Iranian Ports and
Shipping Organisation.
In the second reported 1985 arbitration32 the vessel was chartered on the Asbatankvoy form in 1982 for the carriage of crude oil from Kharg Island to India. She
tendered 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 at
Kharg Island. The owners contended that the time spent at anchor at Sirri should
count as laytime on the basis that the anchorage at Sirri Island was a customary
anchorage for the loading port in accordance with clause 6 of the charterparty
which read: Upon arrival at customary anchorage at each port of loading . . . the
Master . . . shall give the Charterer . . . notice by . . . and laytime . . . shall commence 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 actual
steaming time between Sirri and Kharg could not count as laytime but that there
was no doubt that the regulations of the Iranian authorities governing the movement
of vessels through the Arabian Gulf to the terminal at Kharg Island rendered the
anchorage at Sirri Island a customary anchorage for Kharg Island so that the
owners were entitled to count the time spent at Sirri Island as laytime after the six
hours notice time had run out. It would appear that the arbitration turned very
much 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 customary
anchorage for another loading port several hundred miles away.
In a much later reported arbitration, LMLN 2745 May 1990, the vessel was
chartered 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 gave
notice of readiness. One of the issues in the arbitration was whether Sandheads was
a place where the vessel could give notice of readiness.
It was held that Haldia was a comparatively new port which was developed during
the 1970s on the banks of the Hooghli and Haldia Rivers. It was some 120 km from
Calcutta by road. Calcutta and Haldia were treated as two separate ports notwithstanding the fact that following a Government of India Notification dated 26
February 1977 the operation of Haldia came under the management of Calcutta
Port Trust (CPT).
The chart indicated a point outside the Haldia lock as Haldia anchorage. The
charterers contended that the Haldia anchorage was that point just outside the lock
gates and that as Sandheads was outside the limit of the jurisdiction of CPT, a vessel
could 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 temporary
purposes, such as waiting to enter the locks, or in cases of emergency such as for
bunkers or supplies or medical assistance. Vessels did not customarily wait there to
enter the port in the event of congestion.
32. LMLN 15510 October 1985.

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D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 16

The evidence showed that on arrival at Sandheads vessels gave notice of readiness
and immediately came under the control of the port authority (CPT), which either
arranged for a pilot to bring the vessel into dock or gave orders regarding
anchoring.
It was not disputed that vessels did customarily wait at Sandheads, but the
charterers had contended that at some ports of the world it was not sufficient for a
vessel 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 Sandheads 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 Haldia
anchorage to be the point just outside the locks. It took about two hours to reach the
port from the anchorage. Accordingly the anchorage had to be where Sandheads
was shown on the chart.
All the evidence indicated that the commercial practice that had developed was
for vessels to arrive at Sandheads and there give notice of readiness.
Accordingly, the vessel was an arrived ship when she gave notice of readiness at
Sandheads.
In LMLN 4098 July 1995 (a 1993 arbitration) the vessel was chartered on the
Euromed form as amended. Notice of readiness was tendered at the first loading
port, Rosario, as soon as the vessel reached the Zona Comun anchorage in the lower
reaches of the river at 14.40 hours on 30 May. The owners submitted that laytime
began to run from 06.00 hours on 3 June. The Zona Comun was the anchorage
where vessels were customarily held awaiting berths when there was congestion at
the up-river loading ports of San Lorenzo and Rosario.
The charterers contended that the NOR as tendered by the vessel whilst in the
Zona Comun was invalid, and that no valid NOR had been tendered at the loading
ports. They argued that at the time NOR was tendered the vessel was outside the
limits of the nominated loading port and thus failed to meet a fundamental requirement of the arrived ship criterion. They also argued that at the time the NOR was
tendered certain essential requirements were absent.
It was held that so far as the charterers first contention was concerned, the fact
that 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 rule
was that, for a vessel to be treated as having arrived at her destination she had to be
within the port limits, that had to be understood as being subject to an exception
where the Port Authorities had designated another area within their administration
where vessels had to wait before proceeding to a berth. Such interpretation of the
law as it stood on that point had been widely accepted in commercial arbitrations
and made good commercial sense where, as in the present case, the vessel became
effectively an arrived ship when waiting off the port at a place where it was
customary for vessels to be held pending the availability of a berth, and when it had
been shown that the designated loading port exercised administrative control over
the waiting area.
This arbitration has relevance to earlier paragraph 9 (Lord ReidSome powers
with regard to pilotage and other matters may extend far beyond the limits of the
29

Para. 16

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

port. But those that regulate the movements and conduct of ships would seem to
afford 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 that
a 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 between
1988 and 1993.
The arbitrations referred to above, also those referred to earlier in paragraphs 14
and 15 above, more than suggest that arbitrators continued to have problems put to
them regarding the geographical arrival of vessels under port charterparties, thus
defying the forecasts of the law lords, in the Johanna Oldendorff and the Maratha
Envoy cases that there should be no real difficulty in deciding whether a usual
waiting place was or was not within the port.
17. In more recent times there has been a reduction in the number of disputes
coming before arbitrators in respect of a port charterparty and reaching the agreed
destination. That results from the clarification of legal limits of ports by local
legislation and/or port authority directions and/or arbitrators decisions and also by
parties to voyage charterparty contracts agreeing to clauses which allow a notice of
readiness 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. Examples
of notice of readiness clauses which allow notices to be given as soon as a vessel
completes her sea passage and has to wait at a place where vessels usually wait
before proceeding inwards to the loading/discharging berth are:
Notice of readiness to be given . . . whether in port or not . . . whether in free pratique or
not . . .

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 63631
March 2004, LMLN 6471 September 2004 and LMLN 67217 August 2005,
all of which were concerned with arrival in the geographical sense in respect of a
port charterparty. In the first arbitration the vessel was chartered on a Voyage Scrap
Form for a voyage with scrap to Masan, Korea. One of the disputes concerned the
notice 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 09.0017.00 Monday
through Friday . . . If because of congestion vessel unable to enter port or designated berth
the 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 charterers
said, first, that at that time the ship was not at a place where notice could properly
be 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 was
that notice of readiness was not, in any event, actually given. The alleged notice was
purportedly tendered before 09.00 and was thus invalid under clause 20. Moreover,
30

D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 17

a valid notice could only be given by cable, and the document in question was
plainly not that.
It was held that, as to the charterers first point, clause 20 only required that a
notice be given from the customary anchorage in the case of congestion. It was
plain, long before the vessels arrival, that she would have to wait some days due to
congestion, and there was clear evidence that the ship was actually ordered to wait
at the anchorage by the port authority due to congestion. In the tribunals view that
anchorage was to be taken as customary for the purposes of clause 20, and the
fact that it might be outside the port was irrelevant.
As to the charterers second point, it overlooked the fact that at almost 09.20 local
time the master had sent, via Inmarsat, a notice of readiness to all concerned. As
previously indicated, an Inmarsat electronic communication satisfied the by cable
requirement in clause 20. Thus notice was given within office hours and in accordance 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 6471 September 2004 is particularly interesting, not least for the unusual contention of the owners that laytime had not
commenced. The vessel was charterered on an amended Sugar Charterparty 1969
for a voyage from Santos or Paranagua to Banjul and Nigeria with a cargo of bagged
sugar. There were two issues relating to the commencement of laytime, one at the
first discharge port of Banjul and the other concerned the second discharge port of
Lagos. The port charterparty provided for notice of readiness to be given from the
customary waiting place in ordinary office hours.
In the first issue the owners case was that a valid notice had been given at 03.50
on 5 September after the vessel had anchored at a position fairly close to the fairway
buoy marking the approach to Banjul. The charterers said that the vessel did not
complete her approach voyage until she arrived in the roads at 12.30 on 5 September and then proceeded to the customary anchorage at the port which appeared
to 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 12.30
on 5 September. The owners gave no explanation as to why the vessel might have
anchored in the vicinity of the fairway buoy for several hours but produced a copy
of the relevant port guide which appeared to suggest that the vessel would have been
able to take a pilot from the point where she first anchored at 03.50 and on that
basis they said that the vessel was an arrived ship. The charterers produced a
statement from the agents at the port which said that the point at which the vessel
purported to tender notice of readiness was 27 nautical miles from the discharging
berths. They also referred to the statement of facts signed by the master which
recorded the time of the vessels arrival at the roads but did not mention the vessel
anchoring at any earlier point.
It was held that the notice of readiness was good at 12.30 on 5 September, which
was the time the vessel arrived at the roads. Even if she did anchor at 03.50 it was
not at the anchorages for Banjul described in the port guide and the agents had said
in a fax addressed to the charterers that the vicinity of the fairway buoy was not the
waiting place for Banjul. Accordingly, if the vessel did anchor for the first time at
03.50, she was not then at the customary place for ships waiting for a berth at
31

Para. 17

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

Banjul, which was the requirement of the charter. The tribunal also pointed out
that, 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 her
proceeding further would serve no useful commercial purpose. In the present case
there was nothing to suggest that the vessel was in any way prevented from proceeding direct to the customary waiting place, whether because of a restriction on night
movements or because of orders from the port authority. In other words, owners
cannot advance the position of arrival artificially by anchoring at any place within
the port limits; the vessel must be at the customary waiting place or as close to the
berth as practically possible, see also later LMLN 61512 June 2003 in Chapter 2,
paragraph 29, regarding this aspect.
The second issue was whether the owners had a claim for detention for the period
the vessel was waiting off Lagos or whether a notice of readiness that was given was
effective and therefore laytime and thereafter demurrage ran during the period of
delay.
Clause 22 of the charterparty provided:
. . . master had the right to tender notice of readiness from the customary waiting place in
ordinary office hours, notice of readiness to be tendered to agents . . . whether in berth or
not.
...
At discharging port(s) in the event of congestion master has the right to tender his notice of
readiness by cable/telex in ordinary office hours to agents, whether in berth or not, whether
in 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 at
destination, owners agree to instruct the master to anchor at any safe place on passage in
international waters or in charterers option at waiting place at discharge port. In respect of
such charterers are to pay owners US$5,500 gross of commission per day or pro rata
excluding bunkers but less commission. However, if the vessel waits at a place where the
vessel is able to tender her notice of readiness, then charterers may elect to commence laytime
as per charterparty.

The figure of US$5,500 payable under clause 24 was considerably higher than the
charterparty demurrage rate. The question was whether the owners were entitled to
rely 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-jerk
reaction by the master and was ineffective to trigger the running of laytime because
the vessel was not at the time in a position where a valid notice could be given. The
charterers said that it was a valid notice which triggered the commencement of
laytime.
After arrival off Lagos the vessel was instructed by port control to drift at a
distance of 10/15 nautical miles offshore pending further instructions. The master
advised that the port of Lagos was very congested, with about 50 vessels waiting
outside the port. That message was passed on to the charterers by the owners who
said that they guessed that the detention rate in the charter should apply for the
delay in berthing. That brought a response from the charterers on 24 September
32

D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 17

saying that they had asked that the vessel tender notice of readiness and that time
would count as laytime.
By 25 October the owners were pointing out that the vessel had been waiting to
berth for more than 30 days which they said could not be considered normal waiting
time, especially as they said the delay did not seem to originate from the port being
congested but from problems on the trading side. The charterers continued to say
that they hoped the vessel would soon berth, but throughout the long delay did not
at the time give any real explanation as to whether the delay was purely due to
congestion or whether there were other factors involved. However, by the end of the
hearing 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 on
11 November and was completed at 13.30 on 21 November. The further delay
between berthing and commencing discharge resulted from a combination of a
strike by truck drivers and no work on a Saturday.
It was held that where the vessel waited was not in international waters and the
charterers gave no specific instruction for the vessel not to proceed to berth.
However, clause 24 could be triggered by implicit instructions by which the tribunal
meant that the charterers either did something or failed to do something which
would have enabled the vessel to proceed to berth. But, even if there were implicit
instructions, the final sentence of clause 24 allowed the charterers to commence
laytime if the vessel was waiting at a place where she was able to tender notice of
readiness.
On 24 September the charterers had pointed out to the owners that they had
asked for notice of readiness to be tendered. Also, the vessel was waiting at a place
where she was able to tender notice of readiness. Clause 22 did not require the
vessel to be at the customary anchorage, but at the customary waiting place, which
was a rather wider term. According to the Africa Pilot, in addition to the two
anchorages also referred to in the Pilot, there was even in 1982 a practice for vessels
to be anchoring over 20 miles off-shore to avoid the attention of well-organised
gangs of pirates. The tribunal was aware from its own experience that there still
remained a serious threat of piracy to vessels waiting off Lagos and that it was
common for vessels not to anchor, which would make them sitting targets, but to
drift off-shore with their engines ready should any threat of attack materialise. In the
present case, the vessel had been ordered to drift 1015 nautical miles off-shore by
Lagos port control. Although that was outside port limits as marked on the chart it
was nevertheless an area where the port control still exercised authority. Accordingly, when notice of readiness was tendered, the vessel was within an area which
could be called the customary waiting place. The vessel had also reached a point
where her proceeding further would serve no useful commercial purpose. It followed that even if clause 24 could be invoked by the owners, nevertheless by virtue
of the final sentence, the charterers were entitled to, and did, elect to have laytime
count in respect of the delay and pay demurrage thereafter. There was nothing
uncommercial or nonsensical about that, and it is what the parties clearly agreed.
The third arbitration, LMLN 67217 August 2005 (also referred to later in
Chapter 6, paragraph 118 regarding estoppel), concerned a number of issues, one
of which was whether notice of readiness was tendered at the discharge port of
33

Para. 17

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

Fujairah where the charterparty described the place of discharge as one safe
anchorage Fujairah. The vessel was chartered on a Asbatankvoy form from Ras
Tanura to Fujairah with a cargo of butane and involved discharge of the cargo into
another vessel by ship to ship transfer. Apart from the standard clauses 6 and 9 of
the Asbatankvoy the charterparty stipulated, by way of Clause M10 (headed Lighterage Clause) that notice of readiness was to be tendered during daylight hours.
The owners submitted that, as far as commencement of laytime at the discharge
port was concerned, the normal laytime regime set out in clause 6 of the charter did
not apply to ship to ship transfers, which they described as lighterage operations.
Instead, they argued that such operations were governed by clause 9 and additional
clause M10.
The vessel had waited for the mother vessel into which she was to discharge her
cargo, at anchorage D, the dedicated LPG/LNG anchorage at Fujairah. There was
no evidence as to where the actual transfer took place, but it was probably at the
same anchorage, which was dedicated to LPG/LNG vessels, with the chartered
vessel, the smaller vessel, coming alongside the larger vessel.
The tribunal did not believe that the parties intended a separate regime for ship
to ship transfers. The charter described the place at which discharge was to take
place as One safe anchorage Fujairah. The tribunal would accept the charterers
submission that commencement of laytime for ship to ship transfers was governed
by clauses 6 and 9 of Part II of the charter in the same way as would apply if the
vessel had discharged alongside. The distinction, which was not applicable in the
present case, was that in respect of ship to ship transfers, notice of readiness could
only be tendered during daylight hours. Accordingly, the owners argument that the
tendering of a notice of readiness and the notice time required by clause 6 was not
required for lighterage or ship to ship transfers would be rejected.
The owners said that NOR was tendered at 10.45 on 1 June. The charterers
denied that NOR was tendered, and said that even if it had been it would have been
premature and thus invalid, since the vessel did not arrive at anchorage D until
12.00 on 1 June.
It was held that although the tribunal had been given a copy of a printed form
dated 1 June, where the blanks had been completed which stated that the vessel was
ready to load/discharge her cargo of butane as from 10.45 on that date, it was signed
as being received at 07.40 on 3 June. The statement of facts for Fujairah recorded
that NOR was tendered at 10.45 and received at 07.40 on 3 June. It was common
ground that at 10.45 on 1 June the chartered vessel was not at any position where
the printed form of notice could be handed over and thus tendered. Nor had the
tribunal been given a copy of any electronically transmitted document, which
announced the arrival of the vessel at 10.45 on 1 June and her readiness to discharge. Nor was there a statement from the master or other evidence from the vessel
that that information was passed orally to the charterers or to anyone, such as the
master of the mother vessel, who might be considered as their agents for the purpose
of receiving notice of readiness. The charterers might have been in contact with the
port authorities at Fujairah about her arrival, but the port authorities were not
the charterers agents for the purpose of receiving such a notice.
34

D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 17

Clause 6 of the charter required notice of readiness to be given when it was


received or at least offered. All the tribunal had was the printed form of notice which
although dated 1 June recorded that it was received on 3 June. Accordingly, the
tribunal found that the owners had failed to prove that a NOR was tendered at
10.45 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 had
submitted (relying on The Johanna Oldendorff33 and The Agamemnon34) that the
carrying voyage did not come to an end until the vessel had finished her voyage and
reached a point as close as possible to where cargo operations were to be carried
out.
In the tribunals experience, the phrase end or commencement of sea passage
as used in a vessels records meant the point in time when the vessel changed her
manning state to or from sea watches to one for entering or leaving harbour. The
phrase full away was sometimes used to indicate when the sea passage had
commenced. In other words it was more to do with who was on the bridge and who
was in the engine room than whether the vessel had reached a particular geographical point. There was nothing in the present case to suggest that the transition
from sea watches was linked to arrival at any particular geographical point. The
documents showed that there was a considerable length of time between the end or
commencement of the sea passage and the arrival/departure from the berth/anchorage of the vessel. Anchorage D at Fujairah was a relatively small geographical area
with only sufficient space for six vessels. The tribunal therefore did not accept that
the 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 arbitrators
reasoning that he had found that the end of the sea passage coincided with the
vessels arrival at the entry buoy to the port in question, which was Ras Tanura. In
the present case, there was no suggestion that the vessel had reached any such
defined 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 and
ended with completion of discharge of the cargo of butane at 10.25 on 4 June. In the
event, no demurrage was due to the owners.
The owners also argued that if they were not entitled to demurrage, they were
entitled to claim damages for detention in a similar sum for a failure by the
charterers to procure a berth reachable upon arrival, as required by clause 9. It
was also held that since the mother vessel was not at Fujairah when the chartered
vessel arrived, there was clearly a breach by the charterers of their obligation under
clause 9. The relationship between the reachable on arrival provision in clause 9
and the commencement of laytime provisions in clause 6 had of course been settled
law since The Laura Prima.36 What the law, as it now stood, said was that if the

33. [1973]
34. [1998]
35. [2002]
36. [1982]

2
1
2
1

Lloyds
Lloyds
Lloyds
Lloyds

Rep.
Rep.
Rep.
Rep.

285.
675.
487.
1.

35

Para. 17

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

ship in question could not give a valid NOR because she could not proceed to her
specified destination, her owners could claim damages. However, if she had arrived
at a place from which NOR could be given, the owners remedy was to give notice
and use their laytime. In those circumstances, the owners did not have the option of
claiming damages instead, but had to give notice.
In the present case, the owners could have given NOR on arrival at anchorage D
at Fujairah, and it was not therefore open to them to claim damages. This issue is
also relevant to Chapter 3 (reachable on arrival/damages) and to Chapter 6
(estoppel).
It is mentioned that Charterparty Laytime Definitions 1980, Voylayrules 1993 and
the Baltic Code 2003 (applicable if incorporated expressly into a charterparty contract) appear to allow the tendering of a notice of readiness in a port charterparty
even 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 definitions
read, port means an area within which ships are loaded with and/or discharged of
cargo and includes the usual places where ships wait for their turn or are ordered or
obliged 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 definition
shall still apply. The rules read, port shall mean an area, within which vessels load
or discharge cargo whether at berths, anchorages, buoys or the like, and shall also
include the usual places where vessels wait for their turn or are ordered or obliged
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 definition shall still
apply; the Baltic Code has similar wording.
While it is thought that virtually all maritime arbitrators would decide that any
place where vessels usually wait for a loading/discharging berth would fall within the
above definition/rule irrespective of whether it was not within the port as per the
Oldendorff/Maratha Envoy decisions the matter is not completely free from doubt so
that parties who do incorporate the definitions/rules into their contracts might well
make it clear, by appropriate wording, that it is in order to tender a notice of
readiness 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 Voylayrules could ensure that the matter is absolutely free from doubt.
A clause which is crystal clear regarding the tendering of a notice of readiness
outside of port limits is clause 17(b) of the Norgrain 89 form which reads:
(b) Waiting for Berth Outside Port Limits
If the vessel is prevented from entering the limits of the loading/discharging port(s) because
the first or sole loading/discharging berth or a lay berth or anchorage is not available within
the port limits, or on the order of the Charterers/Receivers or any competent official body or
authority, and the Master warrants that the vessel is physically ready in all respects to load or
discharge, the Master may tender vessels notice of readiness, by radio if desired, from the
usual anchorage outside the limits of the port, whether in free pratique or not, whether
customs cleared or not. If after entering the limits . . .

This 1989 version of the North America Grain charterparty is an improvement on


the 1973 version of the same form (which reads commercial limits rather than
36

D I F F I C U LT I E S O F W I T H I N T H E P O RT

Para. 17

port limits), see later paragraph 31 for more detailed consideration of the two
forms. 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 disputes
in 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 preferred
to the Wipon provision since apart from its cogency and clarity it may avoid the kind
of argument displayed in The Adolf Leonhardt and an unreported arbitration (both
discussed later in paragraph 18) on account of its wording, usual anchorage
outside the limits of the port. This wording would surely take care of any contention (as made in The Adolf Leonhardt and the unreported arbitration) that the
vessel was not at the immediate and effective disposition of the charterer. Yet
another 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 waiting
berth/place within port limits, or so near thereunto as she may be permitted to approach at
or 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 Vessels arrival at or off the first or sole port of loading
or so near as she may be permitted to approach, the Vessel shall be entitled to give Notice of
Readiness during ordinary office hours on arrival there, with the effect that laytime counts as
if she were in berth and in all respects ready for loading provided that the Master warrants
that she is in fact ready in all respects. Actual time occupied in moving from place of waiting
to loading berth not to count as laytime. If after berthing the Vessel is found not to be ready
in all respects to load, the actual time lost between the time of this discovery to the time that
she is in fact ready to load shall not count as laytime.

In addition to being favourable to owners regarding reaching the agreed destination


in respect of a port charterparty the above wording of the Austwheat 1990 is also
favourable to owners in circumstances where the vessel is later not found ready
when 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 unreadiness and when that is remedied. This appears to be a commercially fair approach in
respect of time which a vessel uses waiting for a loading/discharging berth. The
point just made is, of course, also relevant to Chapter 4 where readiness is covered
in 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 notice
of 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 ordered
to 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 port
so long as the vessel is at a customary anchorage or waiting place the master is
entitled to send a notice of readiness. This is practical and sensible. See also later
paragraph 23, in this chapter, regarding tanker charterparties.
37

Para. 18

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

AT THE IMMEDIATE AND EFFECTIVE DISPOSITION OF


THE CHARTERER
18. As illustrated in previous paragraphs the main problems arising from the Oldendorff test have been in connection with that part of the test relating to within the
port. Not a great deal has arisen in respect of the other limb of the test, at the
immediate and effective disposition of the charterer; one reported arbitration,
obiter dicta in a High Court decision, an unreported arbitration, and the Kyzikos case
which went to the Court of Appeal. These are set out below as in the previous
edition of this book. Two more recent arbitrations have been reported and are
included at the end of and as part of this paragraph 18.
In both the reported arbitration and the Kyzikos case the question was raised as
to whether or not a vessel was at the immediate and effective disposition of the
charterer when, although she was within the port, tidal factors/weather prevented
her from proceeding to a loading/discharging berth. In the arbitration37 the contractual discharge destination was Brest. The vessel arrived off the port and
anchored in the roads, not being able to proceed to her discharge berth because of
lack of water. As a result of neap tides she had to wait a week until she was able to
proceed to a discharge berth. The arbitrators decided that the vessel was within the
port of Brest when she anchored in the roads (within the fiscal limits of the port as
defined by the authorities) so that she satisfied part of the Oldendorff 31 test; however, they then went on to decide the case against the owners on the basis that the
vessel was not at the immediate and effective disposition of the charterers while she
was lying neaped in the roads. They had this to say regarding the second limb of the
Oldendorff 31 test:
No detailed guidance was given by Lord Reid, or the other Lords, regarding the full
meaning of at the immediate and effective disposition of the charterer; however, it is not difficult
to establish what they intended so to mean, by way of considering their remarks in the
Oldendorff case31; these remarks showed that if a vessel had to proceed 17 miles from the
anchorage to the berth such was of no account within the context of immediate and effective
disposition, particularly in this day and age when ships can be contacted on VHF and weigh
anchor rapidly; they remarked that, in such conditions, there was nothing to prevent the
vessel weighing anchor and being in a loading/discharging berth within a few hours; the
implication 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 was
fully at the charterers disposal. What one gleans from the remarks of the Law Lords is that
a vessel would be at the immediate and effective disposition of the charterer when she is
waiting at the usual waiting place and can move to a loading/discharging berth as soon as she
is called to do so by the charterer. This, in no way, equates with the facts of the instant case
where the vessel could not move for several days because of the combination of draught and
tide; 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 the
charterers.

The arbitrators went on to say, by way of emphasis, that it was trite law, in the case
of voyage charterparties, for owners to bear the risk of an delays which occurred
because of low tides preventing the ship from reaching the loading/discharging place
37. LMLN 1810 July 1980.

38

I M M E D I AT E A N D E F F E C T I V E D I S P O S I T I O N

Para. 18

absent, of course, any breach of contract by the charterers or any express wording
in the charterparty to the contrary. It may well be that the arbitrators were wrong in
their conclusions since some other arbitrators have been of the view that, once
having reached the geographical destination, the risks of weather, tides and other
navigational factors pass to the charterers; in fact, the Court of Appeal took the
opposite 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 other
matters such as whether in berth or not and always accessible which are
considered later in Chapters 3 and 4. Suffice it to say that, regarding the present
subject, Mr Justice Webster delivered some obiter dicta in respect of at the immediate and effective disposition of the charterer in circumstances where a vessel, after
arriving within the port limits anchored because she could not move into her
available discharging berth for several days because of fog.
He concluded that even if he was wrong in his decision regarding whether in
berth or not so that he was dealing with a port charterparty, the vessel was not an
arrived ship at the port, within the meaning of Lord Reids test in the Oldendorff,31
until she left her anchorage because she was not, until that time, at the immediate
and 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 anchor
because 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 which
charterers had been held liable for bad weather in the context of bad weather before
laytime began (see below on this particular aspect, paragraph 53).
In the Court of Appeal39 it was decided that Mr Justice Webster was wrong; it was
held that once the ship was in the appropriate geographical area and ready in herself
she was entitled to give a notice of readiness even if she was unable to proceed to a
berth by reason of bad weather. The leading judgment was delivered by Lord Justice
Lloyd who stated (inter alia):
I now turn to the second question. Was the vessel at the immediate and effective disposition
of the charterers when she gave her notice of readiness? If not, then the notice would be
invalid and time would not begin to run. This question seems to have occupied more time in
the court below than it did before us in some ways, however, it is the more important of the
two questions. Mr Eder argues that the vessel could not, as a matter of common sense be said
to be at the immediate and effective disposition of the charterers if she was unable to proceed
by reason of fog. The arbitrator had found that the pilot station had closed down. Without
a pilot the vessel was as much disabled as if her steering gear had broken down or her master
and crew were on strike. Even in a port charter, navigational delays are at the risk of the
owners. So even if, in a port charter, the vessel would otherwise have arrived, nevertheless if
at the moment of arrival she is unable to proceed to her berth by reason of bad weather she
is not entitled to give notice of readiness. In support of his argument Mr Eder relied on Kell
v. Anderson (1842) 10 M. & W. 498, which though an old authority, is, he submits, the only
authority directly in point.
I cannot accept Mr Eders argument. The conditions which must be fulfilled before a vessel
is entitled to give notice of readiness in a port charter are now well-established. First, she

38. [1987] 1 Lloyds Rep. 48.


39. [1987] 2 Lloyds Rep. 122.

39

Para. 18

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

must have arrived at the place within the port where she is at the immediate and effective
disposition of the charterers. Secondly, she must be ready, so far as she is concerned, to load
or discharge her cargo. She need not be absolutely ready, for example, by having all her cargo
gear fixed up and in position. But she must be capable of being made ready, in ordinary
course, 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 she
was incapable of loading or discharging, the second condition would not be fulfilled, and a
purported notice of readiness would be invalid. However it is not suggested in the present
case that the second condition was not fulfilled or that the vessel was not ready in herself. The
suggestion 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 the
immediate and effective disposition of the charterer and that her geographical position is of
secondary importance. But for practical purposes it is so much easier to establish that, if the
ship is at a usual waiting place within the port, it can generally be presumed that she is there
fully at the charterers disposal.
I would therefore state what I would hope to be the true legal position in this way. Before
a ship can be said to have arrived at a port she must, if she cannot proceed immediately to
a berth, have reached a position within the port where she is at the immediate and effective
disposition of the charterer. If she is at a place where waiting ships usually are, she will be in
such a position unless in some extraordinary circumstances proof of which would lie in the
charterer.
...
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, introduced a wholly new factor. If his submission is correct, it is now necessary to consider not just
the place where the vessel is anchored, waiting to get into berth, but also the circumstances
prevailing at the moment of her arrival. If the weather is good when she arrives at the ordinary
place of waiting, so that she could proceed direct to her berth if a berth were available, she
can give a valid notice of readiness. But if the weather is bad, and the pilot station has closed
down, she cannot give a valid notice of readiness until the weather improved even though she
is 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 vessels geographical position being of secondary
importance. But it is still a position which he has in mind. If she is in the place where waiting
ships usually lie, then she will normally be in that position. In exceptional or extraordinary
cases, the proof of which would lie on the charterers, she may be required to be at some other
place. But nothing in Lord Reids speech suggests that if she is where waiting ships usually
lie she may nevertheless not be at the immediate and effective disposition of the charterers
because of the weather. It was conceded by Mr Eder that a vessel could be at the immediate
and effective disposition of the charterers despite a temporary obstruction in the fairway
preventing her getting to her berth when vacant. I can see no difference in principle between
a temporary obstruction of the fairway and the temporary closing down of the pilot station
by reason of fog or by reason of a strike or for any other reason.
Nor does Lord Diplocks speech in The Johanna Oldendorff suggest that he had anything
in mind other than arrival at a place as determining whether a vessel has arrived or not. The
Reid test is, as Lord Diplock says, a convenient and practical test for ascertaining where that
place is. It would be much less convenient and practical if, in addition to ascertaining where
that place is, one had also to enquire as to the circumstances prevailing at the moment when
the 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 the
answer 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

I M M E D I AT E A N D E F F E C T I V E D I S P O S I T I O N

Para. 18

Lord Justice Glidewell did not express any view on the subject (deciding in favour
of the owners on the other point in the case) while Lord Justice Megaw only had a
few words to say:
The issue of substance, as it appears to me, on this appeal is whether, in the now accepted
formula, the position within the port where she is at the immediate and effective disposal of
the charterers, the last nine words are simply part of the definition of the place where the
vessel 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 the
immediate and effective disposition of the charterer since it decided the case in
favour of the charterers on the basis of the application/construction of whether in
berth or not (see below, paragraph 26 et seq.); therefore, the Court of Appeals
decision in The Kyzikos stands in respect of at the immediate and effective
disposition of the charterers, although, strictly speaking, it is obiter dicta only. It is
submitted that the Court of Appeals decision is disappointing since it results in
charterers having to bear risks which traditionally had been borne by the owners of
vessels. Further, it is difficult to see the reasoning about it being much less convenient and practical to enquire as to circumstances prevailing when a vessel arrives at
or off a port, bearing in mind that twentieth-century refinements should obviate
problems in establishing the circumstances which prevail when a vessel arrives off a
port, since it is not that difficult to ascertain whether a vessel is waiting for a berth
or waiting because of weather or because of tides or for some other reason. It seems
that the Court of Appeal laboured the inconvenient/impractical aspects unduly and
unnecessarily and moved perfunctorily to a decision which merged the two limbs of
the Oldendorff test in such a manner that, in reality, the readiness of the vessel (which
is a completely separate element to the commencement of laytime from reaching the
agreed destination) was transposed for at the immediate and effective disposition
of the charterers; this surely runs counter to what was said by the law lords in the
Oldendorff case. Unfortunately, the House of Lords did not give its views on the
subject in The Kyzikos because of its decision in respect of whether in berth or
not. It may be many years before the House of Lords gets another opportunity to
consider at the immediate and effective disposition of the charterer and, in the
meantime, charterers will have to live with the Court of Appeals decision albeit
that, strictly speaking, it is obiter dicta; they may circumvent it, of course, by getting
owners to agree a particular clause in the charterparty whereby laytime does not
commence or run in circumstances where a vessel arrives and anchors at the usual
waiting place when a berth is available for her but is unable to proceed to her berth
because of fog and/or some other weather/navigational factor.
In obiter dicta from a High Court case and an unreported arbitration the judge and
the arbitrator were concerned with the vessel being at one of the usual waiting places
for the loading port Rosario but this place was about 200 miles from the port and
it was the vessels distance/steaming time from the port which was for their consideration; there were no weather factors preventing the vessels moving to their
loading ports, it being a matter of berth congestion per se. In The Adolf Leonhardt40
the vessels destination was Rosario, she anchored at Intersection (some 200 miles
40. [1986] 2 Lloyds Rep. 395.

41

Para. 18

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

from Rosario) and the master gave a notice of readiness from the anchorage. The
charterparty stipulated (inter alia) that laytime could commence whether the vessel
was in port or not. Mr Justice Staughton (as he then was) said, by way of obiter, that
he considered it a difficult point whether or not the vessel was at the immediate and
effective disposition of the charterer in the circumstances in question but he did go
on to say that it seemed to him that a vessel was as effectively at the disposition of
the charterer at Intersection as modern conditions demanded given that she was not
required 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 the
inclusion of the Wipon phrase had some bearing on his lordships obiter.
In the unreported arbitration, The Seamaster,41 the arbitrator, on virtually
identical facts to The Adolf Leonhardt save that there was not a Wipon provision
in the charterparty, also did not have to decide whether or not the vessel was at the
immediate and effective disposition of the charterer because of his decision that the
first limb of the Oldendorff test was not satisfied, i.e. the vessel was not within the
port of Rosario while lying at the Zona Comun anchorage (very close to Intersection) because the anchorage was not within the legal, fiscal or administrative
limits 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 effective
disposition of the charterer, as follows:
The fact that Zona Comun is so far from Rosario (about 200 miles) involving at least 17/18
hours of steaming militates against the vessel being at the immediate and effective disposition
of the charterer while lying at anchor at Zona Comun. It is a far cry from being one or two
hours away from a berth while at anchor (such as was the Johanna Oldendorff regarding
Liverpool) to the facts of the instant case where the Seamaster was lying so far from Rosario
Roads to which roads the vessel had to get before being allocated a berth in circumstances of
congestion at the roads. It seems to me that in order to be at the immediate and effective
disposition of the charterer a vessel must be a relatively short distance from the loading berth
so that she can reach it reasonably rapidly when called upon so to do; I am thinking in terms
of a few hours at most rather than at least 17/18 hours steaming during which time a vessel
may encounter difficulties during an upriver passage. For example, fog is encountered at
times in the River Parana particularly during the time of the year in question; in fact, the
Seamaster was herself delayed by fog on her outward passage; further, the Zarate bridge
apparently cannot be navigated during the hours of darkness so that a passage from Zona
Comun to Rosario can take up to 29/30 hours depending upon what time the vessel leaves
Zona Comun which time, of course, will be dependent upon the party calling on the vessel
to move up river.

He considered what Mr Justice Staughton had said in The Adolf Leonhardt by way
of obiter but felt that he could not follow it particularly since the obiter appeared to
be based on meagre evidence and the Wipon provision in that particular contract.
See also earlier on this aspect paragraph 16 and LMLN 4098 July 1995 where the
arbitrators appeared to accept that the vessel was at the immediate and effective
disposition of the charterers in a Rosario Zono Comun context.
The two further reported arbitrations mentioned at the beginning of this paragraph are those in LMLN 47122 November 1997 and in LMLN 55912 April
2001. In the former arbitration the vessel was chartered on an amended Synacomex
41. 1988.

42

I M M E D I AT E A N D E F F E C T I V E D I S P O S I T I O N

Para. 18

form for the carriage of a part cargo of wheat in bulk to 1 Safe Berth [named
port], at a berth equipped with grabs suitable for discharge bulk wheat and there
discharge cargo.
The vessel ran on a liner service, and she carried a number of parcels of cargo for
different shippers/charterers. She arrived at the named discharge port on 30
November, berthing at berth 11 at 08.30 hours and giving notice of readiness at
09.00 hours. Some work then took place, though not to the wheat cargo with which
the tribunal was concerned. The following morning, 1 December, between 06.30
hours and 07.40 hours, the ship shifted to berth 22 for further discharging. The
wheat 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, if
written notice of readiness . . . is given during usual local office hours before noon, and at
8 am on next working day if written notice of readiness is given during usual office hours after
noon . . .

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

The charterers submitted that the shift between berths had been arranged by or on
behalf of the owners to suit the convenience of other cargo on board, in particular
steel consignments, and contended that until the ship arrived at berth 22 she was
not effectively at their disposal, and that time should not count until she arrived
there, 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 discharging wheat cargo and that, this being a berth charter, once the ship had arrived
at 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. In
liner operations, in practice, they were likely to have very little control over where
and when their cargo was discharged. No doubt it was for that reason that the
parties had included the typewritten requirement that the berth to which the ship
was to be sent be equipped with grabs suitable for discharging bulk wheat. It would
be a strange situation if the charterers agreed to have time counting against them
whilst other cargo was being discharged. Certainly very clear words would be
required 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 question
was 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. There
was the consideration that notice of readiness could plainly be tendered before the
vessel reached the discharging berth, viz the whether in berth or not and related
provisions, and also clause 30.
On a proper analysis there was nothing in the berthing of the vessel on 30
November at berth 11 to invalidate the notice of readiness tendered that day. Berth
11 was a contractual berth for the purpose of the counting of time, and the
43

Para. 18

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

charterers had acknowledged that the cargo could and would have been discharged
there if the vessel had remained at that berth. In such circumstances time counted
from 14.00 hours on 30 November until completion of discharge.
In the later LMLN 559 arbitration the vessel was chartered on the Baltimore
Berth Grain Charter Party form for the carriage of 16,000 tonnes of peas in bulk
from Canada to Mumbai, India. The vessel arrived at the discharge port of Mumbai
on 3 December, tendering notice of readiness at 10.00 hours that day. However, she
did not berth until 17.00 hours on 19 December. The owners said that laytime
commenced at 08.00 hours on 4 December. The charterers contended that laytime
did 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 the
owners did not remit funds to cover port expenses to the agents at Mumbai until 11
December, 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 was
considered ready to discharge by the BPT and a berth allocated to her. The
charterers referred to clause 9 of the charterparty, which provided that customary
port charges including all dockage to be for Owners account, as placing the
responsibility for the prompt remittance of port expenses upon the owners. The
charterers also relied on a BPT Notice to Shipowners, which stated that owners of
vessels who applied for a berth would have to pay, in advance, a deposit equivalent
to the charges calculated on the basis of the expected stay of the vessel at the berth
plus 15% of the amount so calculated before allotment of the berth.
The charterers said that because the port expenses had not been paid the vessel
was not in position to proceed to a berth and consequently had not reached a
position 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 Johanna
Oldendorff.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 tendered
by the owners, the charterers calculated that laytime commenced when discharge
started.
The owners responded that laytime was to be calculated by reference to clause 12
of the charterparty which specified the time permitted for discharge but contained
no exception for any failure to pay port dues. Nor did the notice of readiness
provisions in the charterparty contain any requirement that port dues be paid before
any valid notice could be tendered, consequently, the notice of readiness tendered
on 3 December was valid. They said that the only other course open to the charterers 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 only
effectively been paid to the BPT on 16 December. However, they said that in
making such payment they had complied fully with their obligations under clause 9
of the charterparty.
It was held that, on the evidence, the BPT would not allocate a berth to the vessel
until port dues had been paid, something which the owners had admitted to be their
obligation under clause 9, and which they had also admitted had not been done
42. [1973] 2 Lloyds Rep. 285.

44

I M M E D I AT E A N D E F F E C T I V E D I S P O S I T I O N

Para. 19

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 that
they would not be able or prepared to give any undertakings to the BPT so that a
berth could be allotted unless and until the owners put them in funds. In those
circumstances, the tribunal concluded that the owners had been obligated to place
the agents in funds in sufficient time as to ensure that a berth could be allotted to
the vessel on, or shortly after, her arrival at Mumbai. However, the receipt of funds
by 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 was
intended. Rather, the tribunal considered that the owners failure to place the agents
in funds entitled the charterers to any damages sustained as a result of the breach
of clause 9. To the extent, therefore, that the berthing of the vessel was delayed after
the tender of notice of readiness, such time should not count against the charterers
as laytime or time on demurrage (or was recoverable as damages if it otherwise did
so).
Sale contract
19. In the last edition of this book there was a relatively short section on sale
contracts. Since then there have been some important Court of Appeal decisions in
respect of basic principles attaching to laytime and demurrage in the context of sale
of 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 plus
reference to a Court of Appeal decision (referred to in the previous edition) concerned with the commencement of laytime (in the context of arriving at the agreed
destination) as between sellers and buyers when the c.i.f. contract stipulated, free
out Lorient; did it have the effect of being a port charterparty or a berth
charterparty?
Although this book is concerned with commencement of laytime in the context
of voyage charterparties such charterparties invariably form part of the transactions
between sellers and buyers of goods (the cargo) so that the subject has relevance to
contracts for the sale of goods which incorporate laytime/demurrage provisions. In
those circumstances the laytime/demurrage provisions may well be back to back
with the charterparty provisions so that where, for example, a seller of goods under
a c.i.f. contract becomes liable for demurrage to the shipowner under a voyage
charterparty, that seller will be able to claim against the buyer of the goods for the
demurrage he pays the shipowner because under the laytime/demurrage provisions
of the sale contract, the buyer stands in the equivalent position of the seller/charterer
in the charterparty. The commencement of laytime can be all-important and happily it will coincide for both sale contract and charterparty contract: however, this
may not always be so even if one of the parties to the sale contract thinks this has
been achieved by way of the terms in the sale contract. The Court of Appeal
decision in The Handy Mariner43 evidenced how sellers of goods came unstuck in
respect of their claim for demurrage against buyers under a c.i.f. contract stipulating
43. [1991] 1 Lloyds Rep. 378.

45

Para. 19

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

free out Lorient. The Court of Appeal, in dismissing an appeal from the High
Court, decided that discharging time under a c.i.f. contract began to run when the
vessel berthed, in the absence of clear words to the contrary, if the contract provided
for discharge at a named port at specified rates for discharge, demurrage, and
dispatch, but included a GAFTA 100 term that discharge shall be as fast as the
vessel can deliver in accordance with port custom.
The facts were that by a contract for sale dated 25 June 1987, Intertradax as
sellers and Etablissements Soules as buyers, agreed the sale of a cargo of sweet
potatoes c.i.f. free out Lorientdischarge 400 metric tonnes per hold/whether
working day . . . demurrage $3,500 per day pro rata with half dispatch.
The contract provided that other terms should be in accordance with Form 100
of the Grain and Feed Trade Association (GAFTA).
Clause 16 of GAFTA form 100 provided discharge shall be as fast as the vessel
can 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 the
cargo could be discharged.
The sellers claimed for demurrage against the buyers and their case was that time
started to count when the vessel arrived in port, or at latest, when notice of readiness
was tendered on 1 October. The buyers contended that time could not start to run
until 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 the
High Court, Mr Justice Hobhouse (as he then was) upheld the buyers contention
that time could not start to run until the vessel reached a berth. He substituted an
award in the buyers favour. The sellers appealed.
The leading judgment was given by Lord Justice Staughton. In deciding against
the 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 the
answer. A contract to proceed to Lorient has the effect that the carrying stage of the voyage
ends when the vessel reaches the port. It is for the charterer then to discharge her, and delay
in 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 to
have used the words (c.i.f. free out Lorient) (or rather their French equivalent) in the
charterparty sense. But before one comes to that question there is a point which might have
been, but in the event was not, of some importance. That is whether by the terms of the
contract notes the buyers assumed any obligation at all to the sellers to discharge the cargo
in a given time, or of pay demurrage if they did not do so. . . . Like the judge, I think it right
to start by considering the printed form of GAFTA 100. Clause 3, labelled price, has space
for a figure followed by the words gross weight, cost, insurance and freight to . . . . When the
parties insert a destinationor more probably agree on one in a contract notethey generally name only a port or ports, without any reference to berths . . . where only a port is
named in or pursuant to clause 3, I do not consider that the parties intend the result which
would ensue with a charterparty if only a port is named as the destinationthat time starts
to 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 accordance
with the custom of the port. It is difficult to suppose that this covers a period when the vessel
cannot deliver because she is at anchor in the roads, at all events unless it is the custom of the
port to discharge into lighters, which is not shown to be the case here.

46

B E RT H C H A RT E R PA RT Y

Para. 20

If that be the construction of form 100 when only a port is named in clause 3 and clause
16 is not amended, what is the right interpretation of the contract in this case? Once again
only a port is named; but the parties have amended clause 16, by providing a fixed rate of
discharge, a fixed rate of demurrage for failing to discharge at that rate, and a fixed sum for
dispatch if the date is exceeded.
I find this is a very difficult problem, principally because both trade tribunals have found
in favour of the sellers. They must therefore have considered that the parties to this contract
did indeed intend, when they named the port of Lorient as the destination, that the consequence would be the same as if Lorient had been named as the destination in a charterparty. Although the question is one of law for the court, one should always give weight to the
opinion of trade arbitrators; and this seems to me particularly important when one is
considering 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 alter
what I consider to be the effect of naming a port as the destination in form 100, without
amending clause 16.
To undertake a liability for demurrage while the vessel is in port but waiting for a berth
would be an open-ended commitment in a contract for the purchase of what must probably
be a part cargo. It would also be open-ended for a full cargo, since the receiver cannot
normally control congestion in the port; yet many traders do assume such a commitment. In
the case of a part cargo the problem is worse and the result may be capricious; the buyer does
not know when he makes the contract how much other cargo will be carried on the vessel and
so share his liability pro rataunless 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 a
liability in this case.

The other two Lord Justices took a similar approach so that the Court of Appeal
were unanimous in their decision against the sellers of the goods. The decision
which evidences the different approach taken at times as between commercial
arbitrators and judges, illustrates the care required on occasions to ensure that sale
contracts and charterparties are essentially back to back in respect of laytime/
demurrage provisions, taking the English common law into account. But more
about this in Chapter 7.
BERTH CHARTERPARTY
20. There are still many berth charterparties, albeit that special clauses may, for
commencement of laytime and practical purposes, turn a large number of them into
port charterparties or effectively so. If there is a named berth in the charterparty
then the position is quite clear in that the vessel has to get into that berth before she
reaches her destination and is in a position to give a notice of readiness. The point
was put very clearly by Lord Justice Jenkins in The Radnor44 when he stated:
. . . whereas in the case of a berth charter (that is to say, a charter which requires the vessel
to proceed for loading to a particular berth either specified in the charter or by the express
terms of the charter to be specified by the charterer) lay days do not begin to run until the
vessel has arrived at the particular berth, is ready to load, and has given notice to the charterer
in manner prescribed by the charter of her readiness to load.

In the later Johanna Oldendorff case the words of Lord Diplock were to the
same effect:
44. [1955] 2 Lloyds Rep. 668.

47

Para. 20

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

Where a single berth was specified in the charterparty as being the place of loading or of
discharge, the loading voyage or the carrying voyage did not end until the vessel was at that
very berth. Until then no obligation could lie upon the charterer to load the cargo, or to
receive it, as the case might be. If the specified berth were occupied by other shipping, the
vessel was still at the voyage stage while waiting in the vicinity of the berth until it became
available, and time so spent was at the shipowners expense.

One point in favour of a berth charterparty is certainty since there can be little or
no argument as to when a vessel arrives at a particular berth, the obvious test being
that of the vessel being securely moored alongside the berth in question so that
cargo can be loaded or discharged. This means that the owner has to bear the risk
of any factor which prevents the vessel getting into her berth and because of this
unsatisfactory position for owners it is now common for a berth charterparty to
contain special wording whereby a notice of readiness can be given before the vessel
gets into her berth in order to start the laytime earlier than would otherwise be the
position. Some special wording in use, regarding this aspect, such as whether in
berth or not, will be considered later in Chapter 2.
The word berth means the loading or the discharging berth and not a lay-by
berth. The point came up in The Puerto Rocca45 where the vessel was chartered to
carry 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 day
following vessels customs clearance and receipt of written notice of readiness during ordinary
office 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 of
congestion, vessel is to present notice of readiness in accordance with clause No. 47 from
arrival at Mersey Bar and time is to count accordingly but time from berth becoming
available 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 November and at 16.50 gave notice of readiness to the charterers. The charterers rejected
the notice on the ground that the vessel was not customs cleared in accordance with
clause 47.
The owners, maintaining the validity of the first notice, ordered the vessel to
proceed to a lay-by berth in Seaforth Dock, obtained customs clearance and served
a second notice of readiness on 8 November, at 12.00. The charterers accepted the
notice and time began to run at 08.00 on 9 November.
The dispute between the parties, as to whether the first notice of readiness was
valid or only the second, was referred to arbitration and the arbitrator stated his
award in the form of a special case the question of law for decision of the court
being: whether on the facts found and on the true construction of the charterparty
laytime commenced at 08.00 hours on Friday, 5 or 08.00 hours on Tuesday, 9
November 1976.
It was held by Mr Justice Mocatta that clause 50 had to be read in relation to this
particular charter which provided that the vessel was to discharge a cargo of grain
in bulk at one safe berth Seaforth; and on the natural construction of the clause
in its context in the charter, the words to berth, from berth and arrival in
45. [1978] 1 Lloyds Rep. 252.

48

B E RT H C H A RT E R PA RT Y

Para. 20

berth meant discharging berth; this was a berth charterparty in that the destination
of the vessel was one safe berth Seaforth; and to require a vessel to go to a lay-by
berth and only then give notice of readiness seemed unreasonable and uncommercial; as this was a berth charter and the discharging berth was unavailable owing to
congestion at the time that the vessel reached Mersey Bar, clause 50 came into
operation and the notice of readiness given on 4 November was valid; the question
of 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 charterparty
means the loading or discharging berth; this is consistent with Charterparty Laytime
Definitions 1980 (applicable only if incorporated expressly into a contract) which
defines 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 mean
the 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, this
definition shall still apply.
The Puerto Rocca case also has relevance to later Chapter 2 (special clauses
relevant to arriving at the destination) and would lie comfortably in paragraph
30.
Occasionally disputes arise between owners and charterers regarding the exact
time that a vessel reaches the agreed berth destination and is in a position to tender
a notice of readiness; the differences between the parties tend to be minimal and not
usually worth taking to arbitration although a five or 10-minute difference in the
commencement of laytime may have a knock-on effect whereby the exhausting of
laytime stretches over a holiday and/or other excepted periods because of the
laytime having commenced, say, 10 minutes later than it would otherwise have
done. 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 securely
moored in her berth so that cargo can be loaded or discharged; the exact time that
the vessel is securely moored is invariably cited in the statement of facts and in the
majority of circumstances this time will be taken by owners and charterers as the
trigger time. A charterparty may spell out the obligation of the vessel; e.g. some
tanker charterparties stipulate the vessel is securely moored at the specified loading
or discharging berth, thus leaving no doubt whatsoever as to the position between
the parties.
Queries have been raised about the positioning of access to a vessel, e.g. a
gangway. Many statements of facts now cite the time that access to the vessel is
available and this will usually be a later time than the time the vessel is securely
moored in her berth; charterers sometimes assert that the later time, when access
becomes available to the vessel, is that which should be taken for reaching the
agreed destination, in a berth charterparty, and when the notice of readiness
becomes effective. It is submitted that the better view is that the vessel reaches the
agreed berth destination when she is securely moored in that berth, leaving it for the
charterers to contend, if the facts be apposite, that the vessel was not ready to load
or discharge her cargo because there was no access to the vessel and access was
49

Para. 20

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

required in order to start the loading/discharging operation; if there is a deficiency


in respect of access it seems that this would have relevance to the readiness of the
vessel 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 to
provide access (it may be the charterers in some circumstances) and the loss of time
flowing from a breach of this obligation (more pertinent to a damages situation, see
later Chapter 5). Of course, the matter may be governed by an express clause in the
charterparty 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 or
discharging alongside a wharf/berth.
As mentioned earlier in paragraph 19 the Court of Appeal decided that a c.i.f. sale
contract providing free out Lorient with a discharging rate should be construed as
a berth charterparty despite that, had the contract been construed as a charter, it
would have been a port charterparty.
21. It is not necessary for a berth to be named in a charterparty for it to be a berth
charterparty. It is sufficient if there is an express right to nominate a berth by the
chartererthe charter is a berth charterparty.
It is also now settled that where the destination is an area of wider extent, and
there is an implied right in the charterer to nominate the berth or other discharging
spot, the ship is arrived when she reaches the appropriate part of the wider area
and not when she later reaches the discharging berth or spot.
There was some uncertainty at one time regarding the position where the charterparty 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 charterparty; is the destination London or the berth?
In The Finix46 Mr Justice Donaldson (as he then was) stated, as obiter, that the
first illustration would be a berth charterparty and the second one a port charterparty. He took some support in deciding in this manner by views expressed by two
Lords Justices of Appeal in The Radnor.47 His words were:
But there is a realm of uncertainty where the charterparty provides that discharge shall take
place at, for example, (a) One safe berth, London or (b) London, one safe berth. The test
is undoubtedly whether on the true construction of the charterparty, the destination is
London or the berth. My own view is that in case (a) it is the berth and in case (b) it is
London. This point arose in The Radnor and Lords Justices Singleton and Parker seem to
have inclined to this view.
The matter is further complicated where, as here, the reference to the berth takes the form
of one or two safe berths, one safe port, since it may be saidand it is said in this casethat
this has nothing to do with the destination, but means only that the vessel can be asked to
discharge 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 safe
berths would make London the destination.

Although Lords Justices Singleton and Porter inclined to the view that one safe
berth Dairen indicated that the agreed destination was a berth they did not labour
46. [1975] 2 Lloyds Rep. 415.
47. [1955] 2 Lloyds Rep. 668.

50

B E RT H C H A RT E R PA RT Y

Para. 21

the point and their views were obiter. Likewise, Mr Justice Donaldson (as he then
was) 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 firm
view that one safe berth Seaforth Liverpool was a berth charterparty but no
argument was put to him that it was a port charterparty. It appears that there has
been no further court case which has considered the matter fully (although there has
been at least one arbitration, see below) and this is perhaps unfortunate since it
would be more satisfactory if there had been a definitive ruling in the courts that the
law was as indicated as above, alternatively that the obiter of the above judges need
not be adopted and that one safe berth, London meant the same as London, one
safe berth, both being adjudged as port charterparties.
Many persons find the above distinction illogical and consider that a berth
charterparty should only be one where the berth is actually named in the charterparty 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 of
laytime, should only be a berth where a named berth is expressly contained in the
charterparty.
The matter of the distinction between one safe berth London and London one
safe berth came up for adjudication in The Scapdale48 arbitration. An award was
made in the form of a special case and it was hoped that the matter would get to the
courts in order to get a definitive ruling vis-`a-vis the obiter of Mr Justice Donaldson
and the two earlier Lord Justices.
The charterparty stipulated that the vessel was to proceed to one or two safe
berths Tampa Range, Florida, including Boca Grandeport at Charterers
option. The vessel was ordered to the port of Tampa and arrived at the Seabuoy on
the morning of 4 August 1978. The master gave a written notice of readiness to the
charterers agents at 05.30 on that day and the vessel remained at an anchorage until
she berthed at 18.00 on 26 August, the delay in berthing being due to berth
congestion.
One of the questions for the umpire in the arbitration was whether the charterparty was a port or a berth charterparty. While feeling sympathetic to the owners in
their contention that there should be no distinction between one safe berth London and London one safe berth so that both charterparties should be considered
as port charterparties, the umpire still felt constrained to decide against the owners
and to follow Mr Justice Donaldson because of the identical wording in the two
cases. 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 a
distinction 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 for
guidance in the future so that the legal niceties which have occurred in this case do not occur
again. A few suggestions have been put forward; the first is that if the word berth is
mentioned then the charterparty is automatically a berth charterparty, although this position
is 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

Para. 21

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

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

Unfortunately, the case never reached the courts so that the position remains in that
there is persuasive obiter dicta that the use of the word berth preceding the name
of the port, then describing the destination, makes it a berth charterparty so that,
absent any special provisions appertaining to the advancement of laytime, the vessel
has to get into her loading/discharging berth before a notice of readiness can be
given. The matter was touched upon in The Isabelle49 where Mr Justice Goff (as
he then was) stated, where the wording was, proceed to a berth . . . as ordered by
charterers 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 berth
charterparties the position may be academic in respect of commencement of
laytime because of the propensity of the parties to agree a special provision in the
charterparty whereby a notice of readiness can be given at an earlier time than when
the vessel berths, e.g. Wibon, but even then there may be a factor which prevents the
notice of readiness being effective; see below, paragraph 26 et seq., The Kyzikos.
In LMLN 56619 July 2001 the tribunal had to decide whether it was a port or
a berth charterparty where a rider clause 43 provided:
One safe and suitable ice-free port Black Sea out of Odessa, Novorossisk, Tuapse, Constanza, Bourgas, Varna East and /or Varna West . . . one or two safe berths at discharging
port.

The charterers had contended that the vessel had arrived at Novorossisk on 21
March because the charterparty was a berth charterbecause rider clause 43
provided that the vessel was to discharge at one or two safe berths at discharging
port. Although the vessel did not berth on her arrival because of congestion, clause
22 of the charterparty provided that in the event of congestion the master had
liberty to tender notice of readiness whether in port or not, whether in berth or
not . . . The submission that the vessel had arrived at Novorossisk on 21 March
would be accepted, but not for the reasons put forward by the charterers. The
charterparty was not a berth charter. Rider clause 43 called for the vessel to
discharge at One safe and suitable ice-free port; the reference to port coming
before the reference to one or two safe berths of discharging port in the final
sentence 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 on
Sunday 21 March, irrespective of her subsequent delay in berthing.
The Commercial Court emphasised the importance of a master not giving a
notice of readiness until his vessel had reached the agreed destination (as stipulated
in the charterparty). In The Agamemnon,50 the parties agreed that the vessel was
chartered for a voyage from one good and safe berth Baton Rouge with the following
relevant words:
If the loading . . . berth is not available on vessels arrival at or off the port of loading . . . or
so near thereto as she may be permitted to approach, the vessel should be entitled to give
notice of readiness on arrival there as if she were in berth . . . .
49. [1982] 2 Lloyds Rep. 81.
50. [1998] 1 Lloyds Rep. 675.

52

D O C K C H A RT E R PA RT Y

Para. 22

The vessel arrived at the South West Pass at 23.00 hours on 5 October 1995
and gave notice of readiness. The South West Pass was a customary waiting area
for vessels wishing to enter the Mississippi river and to proceed to one of the
ports in the river. It was about 170 miles from Baton Rouge and was not part
of the port of Baton Rouge. The vessel arrived at the Baton Rouge general
anchorage at 10.25 hours on 7 October. No further notice of readiness was given
then. The vessel eventually berthed at 20.30 hours on Sunday 8 October and
commenced loading at 10.15 hours on 9 October.
The arbitrators held that the Master, having tendered notice of readiness at the
South West Pass, had effectively fulfilled the purpose of tendering notice of readiness by informing the charterers/shippers of the vessels readiness to load the
required cargo. The charterers agents were thereafter in regular contact with the
Master during the up river transit and it followed that they therefore must have
been fully aware of the vessels arrival at the Baton Rouge anchorage. As the
Baton Rouge anchorage was the nearest that the vessel was permitted to
approach the berth, the notice of readiness should have been accepted by the
charterers on her arrival there at 10.25 hours on 7 October 1995. Although the
South West Pass was 170 miles from the anchorage at Baton Rouge, the vessel
was from that time onwards under the effective control of the charterers agents
as regards the organisation of pilots for the transit of the Mississippi and the
charterers agents were, or ought to have been, fully aware of the vessels time of
arrival at the Baton Rouge anchorage.
The charterers appealed to the High Court, contending that the notice of
readiness had been given prematurely and before the vessels arrival at a point as
near to Baton Rouge as she could approach, and that as no notice had been
given when she arrived at that point on 7 October, laytime could not commence
before 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 the
Court of Appeal decision in The Mexico 151 had ruled out the inchoate theory the
notice of readiness given by the master on October 5 was a nullity. This case will be
considered in more detail later in Chapter 6 which deals in depth with the validity
or 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 has
now gone out of fashion. Dock charterparties came to the fore in the latter part of
the nineteenth century with the big upsurge of dock systems but they are almost
unknown in modern-day circumstances. The position, if there is a dock charterparty, is virtually identical to that of a port charterparty. There is no point in
repeating what has been said earlier except to say that it must obviously be the case,
51. [1990] 1 Lloyds Rep. 507.
52. [2002] 2 Lloyds Rep. 487.

53

Para. 22

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

in a dock charterparty, that the vessel has to get into the dock in order to be an
arrived ship. Admittance to the dock is all that is required, it being unnecessary for
the vessel to get into the loading/discharging berth.
Although there are no modern/recent cases directly on the point Lord Diplock
did have the following to say in the Oldendorff case:
A dock encloses a comparatively small area entered through a gate. There is no difficulty in
saying whether a vessel has arrived in it. As soon as a berth is vacant in the dock a vessel
already moored inside the dock can get there within an interval so short for the practical
business purpose of loading or discharging cargo it can be ignored.

He thus endorsed earlier held views that entering the dock and mooring was all that
was required to reach the agreed destination in a dock charterparty, there being no
need 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 in
the bulk oil trade frequently have special clauses regarding the agreed destination
and the time that a notice of readiness can be given. Some of them will be covered
in more detail in later chapters; suffice it to say for the moment that the clauses
regarding the agreed destination are usually more detailed than those seen in dry
cargo bulk voyage charterparties where there is often simply a bald reference to a
particular port or to one safe berth at a particular port. Many standard tanker
voyage charterparties are port charterparties; e.g. the Asbatankvoy and the ASBA II
charterparties state: Upon arrival at customary anchorages at each port of loading
or discharge the master shall give the charterer notice . . . and the Tankervoy 87
states: When the vessel has arrived at a customary anchorage or waiting place for
each loading and discharging port or place . . . notice of readiness . . . shall be given
to charterers . . . .
The Beepeevoy charterparties are also port charterparties but the Shellvoy charterparties are prima facie berth charterparties (vessel securely moored at the specified loading or discharging berth) although they allow a master to give a notice of
readiness at an earlier time in certain circumstances. The Plakoura53 was concerned with the Shellvoy 4 form and whether or not the vessel had reached the
agreed destination. The charterparty stipulated:
3 . . . In this chapter place shall include any berth . . . anchorage . . . or any other place
whatsoever to which charterers are entitled to order the vessel . . .
13(1)(a) . . . laytime at each loading and discharging place shall commence when the vessel
is in all respects ready to load and written notice thereof has been received . . . and the vessel
is securely moored at the loading place. Whether or not the nominated loading or discharging
place is available and accessible, if the vessel is . . . ordered . . . to wait before proceeding
thereto laytime shall commence . . . when written notice of readiness has been received and
the vessel is lying at the place where the charterers have ordered her to wait or . . . at a usual
waiting place.

53. [1987] 2 Lloyds Rep. 258.

54

TA N K E R C H A RT E R PA RT I E S

Para. 23

The vessel arrived off the loading port on 7 February but it was closed owing to bad
weather; she was ordered by the port authorities to anchor and await berthing
instructions. The vessel anchored in the recommended anchorage area and tendered a notice of readiness which was received by the charterers in the early hours
of 8 February. The port reopened on 13 February and the vessel was all fast at her
sea berth mooring at 10.24. The owners contended that the vessel had reached the
agreed destination on 8 February because (inter alia) of the vessel being ordered to
a 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 ships
usually lie. According to them the main issue was whether the charterparty was to
be regarded as a port or berth charter and, if it was the former, whether the vessel
had reached the agreed destination when she had anchored within port limits. The
charterers submitted that the question was not to be decided on the historic distinction between a port and a berth charter but on the wording of the particular
charterparty which called for the vessel to be securely moored at the loading
place. Further, they asserted that securely moored meant tied to a berth, jetty
or buoys or, in the technical sense, anchored with both anchors down; by implication 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 or
buoy where loading was to take place.
Mr Justice Leggatt (as he then was) did not accept the submissions of the
charterers regarding the securely moored aspect per se but still decided the case in
their favour on the construction of clauses 3 and 13(1)(a) so that the vessel had not
reached the agreed destination until she was moored at the actual loading place, this
being the sea berth mooring. He said:
I accept that the expression available and accessible is more apt to refer to the actual point
at which loading or discharging is to occur than to the port as a whole. It seems to me that
in the phrase securely moored at the loading or discharging place, the words loading or
discharging 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, the
phrase securely moored at the loading or discharging place means all fast at the spot where
the actual process of loading or discharging is to occur. It bears the connotation that the
vessel should be so secured at a particular place in the port so as to enable loading or
discharging to occur at that place.

In the Shellvoy 5 charter (which replaced the Shellvoy 4) place has been taken out
of clauses 3 and 13(1)(a) leaving the emphasis very much on berth. The same
holds for the Shellvoy 6 (issued March 2005) where the all important and very
detailed notice of readiness clause 13(1)(a) reads:
Time at each loading or discharging port shall commence to run 6 hours after the vessel is
in all respects ready to load or discharge and written notice thereof has been tendered by the
master or Owners agents to Charterers or their agents and the vessel is securely moored at
the specified loading or discharging berth. However, if the vessel does not proceed immediately to such berth time shall commence to run 6 hours after (i) the vessel is lying in the area
where she was ordered to wait or, in the absence of any such specific order, in a usual waiting
area and (ii) written notice of readiness has been tendered and (iii) the specified berth is
accessible. A loading or discharging berth shall be deemed inaccessible only for so long as the
vessel is or would be prevented from proceeding to it by bad weather, tidal conditions, ice,

55

Para. 23

A R R I V I N G AT T H E AG R E E D D E S T I N AT I O N

awaiting daylight, pilot or tugs, or port traffic control requirements (except those requirements 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 specifies
that unless the owners now obtain customs clearance or free pratique within 6 hours
of the original notice of readiness (or when time would otherwise commence under
the charterparty), the notice of readiness will not be valid and a new one will have
to be tendered when customs clearance or free pratique has been given. There is a
proviso unless this is not customary prior to berthing which applies to free
pratique but not to customs clearance. This proviso may well give owners
problems.
Regarding port charterparties in the bulk oil trade charterers do not appear to
take fine points in respect of within the port as per the Oldendorff/Maratha Envoy
decisions 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 in
question and those in the trade appear to accept that these places may be outside the
strict legal limits of a port on occasions but take no point on it so long as the vessel
is 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 usually
give rise to any problems regarding the commencement of laytime. They usually
specify that laytime commences from the arrival of the vessel at the transhipment
area or from the commencement of the laydays, whichever is the later. But more on
this later.
In recent times, an increasing number of charterers have decided to stop using the
Asbatankvoy form and have switched to other forms such as the ExxonMobil Voy
2000 charterparty (which is a port charter). See, for example, ASDEM News
Update No. 28 of May 2005. As far as notice of readiness is concerned the ExxonMobil Voy 2000 form is simple in that it specifies:
Upon arrival at customary anchorage or waiting place at each loading and discharging port
or place, Master or Vessels agent shall give Charterer or its representative notice by letter,
electronic mail, telex, facsimile, radio or telephone (if radio or telephone, subsequently
confirmed promptly in writing) that Vessel is in all respects ready to load or discharge
cargo . . .
Laytime or time on demurrage, as herein provided, shall commence or resume upon the
expiration of six (6) hours after receipt by Charterer or its representative of Notice of
Readiness or upon Vessels Arrival in Berth, whichever occurs first. Laytime shall not commence before 06.00 hours local time on the Commencing Date specified in Part 1(B) unless
Charterer shall otherwise agree, in which case laytime shall commence upon commencement
of loading.

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

56

CHAPTER TWO

SPECIAL CLAUSES RELEVANT TO


ARRIVING AT THE DESTINATION

GENERAL
24. An owner may avoid the financial rigours which can arise from the application
of the English common law to a vessel waiting at or off a port either by way of special
clauses in the charterparty contract or because the charterer breaches an express or
implied term of the contract which results in the owner obtaining compensation, by
way of damages, for the period which his vessel waits at or off a loading or discharging port. Breach of contract and damages are dealt with in Chapter 3. The express
clauses 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 has
been that which obliges a charterer to provide a berth reachable on the vessels
arrival but this clause, strictly speaking, comes under breach of contract/damages
and will be considered later in Chapter 3.
ADVANCING LAYTIME INCLUDING WHETHER IN BERTH
OR NOT AND WHETHER IN PORT OR NOT
25. Clauses which advance the commencement of laytime in respect of arriving at
a destination can be divided into those which do this directly and those which
achieve the same or a similar result indirectly. An example of the former is laytime
to commence when the vessel anchors off the Hook of Holland in a voyage charterparty
involving the port of Rotterdam while an example of the latter is whether in berth or
not. There is bound to be some overlap between clauses falling into the category of
those advancing laytime and those which cater specifically for time lost waiting for
a berth (see below, paragraph 35 et seq.) but there is some sense in separating out the
clauses, particularly because of the practical importance of a time lost waiting for a
berth 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,
57

Para. 25

S P E C I A L C L AU S E S R E A R R I V I N G

generally speaking, simple of application and do not usually lead to problems. If it


were not for such a clause laytime might not commence under English law until the
vessel moved into the port of Rotterdam, see earlier, paragraph 10. With such a
clause, laytime commences as soon as the vessel anchors on completion of her sea
passage. In practice, adjustments are often made to such clauses whereby laytime
commences at a specific time (say 12 or 24 hours) after the vessel anchors at the
stipulated place but these do not significantly affect their benefit to owners of
vessels.
One tends to see this type of clause in charterparties where vessels are trading to
large and complex ports a considerable distance from the open sea such as Rotterdam, Hamburg, Antwerp, Glasgow and Calcutta; their virtue is their simplicity and,
to owners of vessels, the compensation received for time which would not otherwise
under 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 unable
to berth immediately upon arrival on account of congestion vessel shall be permitted to
present notice of readiness at the anchorage at Walton Bay or Tail-of-Bank or Spurnhead
respectively, and laytime to count accordingly, but time from berth becoming available in
Avonmouth or Glasgow or Hull until vessels arrival at the berth in Avonmouth or Glasgow
or Hull is not to count as laytime.

This clause allows the vessel to tender a notice of readiness outside the port limits
so that the part of the Reid test, within the port, does not militate against the
owners of the vessel. A similar clause for vessels discharging at ports like Bremen or
Bremerhaven is the Weser Lightship clause which states:
If vessel is ordered to anchor at Weser Lightship by Port Authorities, since a vacant berth is
not available, she may tender notice of readiness upon arriving at anchorage near Weser
Lightship, as if she would have arrived at her final loading/discharging port. Steaming time
for 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 paragraph 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 vessels arrival
off Sandheads has been given by radio to Charterers or their agents and received during
ordinary 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 unless
vessel is already on demurrage. Time proceeding from Sandheads (or such other place of
transhipment) is not to count.

The above clauses are, in general, fair to owners of vessels; they compensate an
owner for the time that his vessel is waiting because of the non-availability of a
loading/discharging berth but they do not bite in respect of delays occasioned by
navigational/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 of
advancing the commencement of laytime in a berth charterparty. The words are in
the printed form of many charterparties, alternatively they are incorporated very
frequently by type-added words and are of considerable importance. Until recently
58

A DVA N C I N G L AY T I M E

Para. 26

there was doubt whether the words had the effect of converting a berth charterparty
into a port charterparty; however, the matter came up for adjudication as a main
point (ultimately the main point) in The Kyzikos1 along with at the immediate
and effective disposition of the charterer; see earlier, paragraph 18 (vessel arrived
within the port limits but could not move to her available discharge berth because
of fog).
Mr Justice Webster (later reversed in the Court of Appeal) decided (inter alia) that
the provision did not have the effect of changing the primary obligation of the
owners from being one to carry the cargo to a berth to being one to carry the cargo
to the named port; nor could the provision have the effect of converting what would
otherwise not be an arrived ship, in certain circumstances, into such a vessel, if by
an arrived ship is meant a ship which had reached the agreed destination, was ready
to discharge and had given a notice of readiness to the charterers. The judge
reversed an arbitrator who had decided on well established authority that the
words had the effect of making the charter into a port charter. Although reversed
by the Court of Appeal,2 Mr Justice Webster gave a full and well reasoned judgment
and it is worth considering before looking at the Court of Appeal decision, which
decision was itself later reversed by the House of Lords. He held that there was no
decision of any court which was binding on the point and in so concluding he
considered six authorities (ranging from the High Court to the House of Lords) in
addition to Laytime by Summerskill and Laytime and Demurrage by Schofield. The
brief facts (some of which have already been mentioned earlier) were that the vessel
arrived within the discharge port of Houston at 06.45 on 17 December; at the time
when the notice of readiness was tendered, and at all material times thereafter, the
berth to which the vessel was destined and at which she ultimately discharged was
available, but she could not proceed to it because of fog until 20 December. Mr
Justice Webster said (inter alia):
None of those six authorities are binding on me. In each of them the vessel was unable to
come alongside a berth because none was available; and only two of them related to berth
charterparties, The Nessfield3 and The Amstelmolen.4 But I have cited them at some length
in order, primarily, to try to discover whether (as the arbitrator concluded), they support the
proposition that the Wibon provision has the effect of converting a berth charter into a port
charter and, if I conclude that they do not support that proposition, to try and identify some
other 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 it
cannot 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 berth
charter into a port charter.
Undoubtedly, Lord Justice Roskill, in the passage which I have emphasised in The Johanna
Oldendorff ,5 said expressly that the provision was designed to convert a berth charterparty
into a port charterparty; and the dicta of Lord Justices Ormrod and Upjohn, which I have
emphasised (particularly the former) can be said to support the proposition inferentially.
1. [1987]
2. [1987]
3. [1912]
4. [1961]
5. [1972]

1
2
1
2
2

Lloyds Rep.
Lloyds Rep.
K.B. 434.
Lloyds Rep.
Lloyds Rep.

48.
122.
1.
292.

59

Para. 26

S P E C I A L C L AU S E S R E A R R I V I N G

But the dicta of Mr Justice Branson in The Santa Clara Valley,6 of Mr Justice McNair in
The Seafort,7 and of Lord Justice Buckley in The Johanna Oldendorff ,5 support the more
restricted proposition that the Wibon provision does not override the primary obligation
created by the charterparty, or those obligations as modified by the express exception, and
that it does not affect, in principle as distinct from detail, the question of where the risk is to
fall in the event of delay affecting the vessel. If this more restricted proposition is the right one
to derive from the authorities, and if it is to be applied to the facts of the present case, it would
seem that the arbitrators 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 and
more 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 become
available, ready so far as she is concerned to unload. If that proposition is the correct one,
then there is no question but that the arbitrators conclusion in the present case is wrong. For
the 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 in
the 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 Lord
Justice Upjohn in The Amstelmolen9 that liability for demurrage caused by delay in coming
alongside the berth caused by congestion or other reason is thrown upon the charterer if, as
in my view it can be, a distinction is to be drawn between the impossibility of coming
alongside a berth on the one hand, and the impossibility of leaving an anchorage to shift to
a berth on the other. The application of that dictum, with that distinction, to the facts of the
present case, would also lead to the result that the arbitrators conclusion was wrong because
there was no reason to prevent the vessel coming alongside; it was being prevented from
leaving its anchorage.

In the first edition of this book it was submitted that the judgment of Mr Justice
Webster made sense to many in the overall context of ship operating and chartering
in that charterers bear the risk of congestion and owners bear the risk of bad weather
with a Wibon provision. The words would still afford relief to owners of vessels
in the case of berth congestion which has been traditionally at the risk of charterers
but charterers would not be liable for delay preventing the vessel from getting into
a berth over which they have no control, and in circumstances where a berth is freely
available for the vessel. However, the Court of Appeal thought differently and
decided that a ships right under a berth charterparty to give notice of readiness to
load whether in berth or not, arises as soon as she arrives in port and is ready to
load, in the same way as under a port charterparty, and the ship has arrived if she
has reached a place within the port where she is at the immediate and effective
disposition of the charterers irrespective of whether she is unable to reach an
available 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 delivering the leading judgment, supported the Court of Appeals decision by reference to
three main matters:
6. (1938)
7. [1962]
8. [1977]
9. [1961]

62 Ll.L.Rep. 23.
2 Lloyds Rep. 147.
1 Lloyds Rep. 217.
2 Lloyds Rep. 1.

60

A DVA N C I N G L AY T I M E

Para. 26

1. The absence of any words of qualification in the phrase whether in berth


or 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 the
definition of whether in berth or not contained in the Charterparty Laytime
Definitions 1980 (applicable only if incorporated expressly into a contract) issued
jointly by CMI, GCBS, BIMCO and FONASBA as follows: whether in berth or
not . . . means that if the location named for loading/discharging is a berth and if
the berth is not immediately accessible to the ship a notice of readiness can be given
when 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 is
unavailable. Immediately accessible is wider than immediately available and would appear
to cover a case where the berth is inaccessible through bad weather as well as cases where it
is inaccessible through congestion. The definition is therefore consistent with the view which
I have formed.

In the House of Lords10 the only speech was given by Lord Brandon, the other four
law lords simply concurring with him. Lord Brandon dealt with the above three
points of Lord Justice Lloyd, as follows:
First, as to the absence of any words of qualification. I accept, of course, that the phrase in
berth or not does not of itself indicate that being in berth or not is related to the availability
of a berth. I do not, however, think it possible, when interpreting a phrase which has been
regularly included in berth charterparties over a long period, to disregard long-established
authority as to the purpose intended to be served by it. The authorities to which I referred
earlier show that, since 1912 at least, it has been recognised that the purpose of the phrase
was to deal with the problem of a ship chartered under a berth charterparty arriving at her
port of destination and finding no berth available to her. There is further no reported case
prior to this one in which it has ever been suggested that the phrase was intended to deal with
the problem of a ship chartered under a berth charterparty arriving at a port where a berth
is available for her but being prevented by bad weather from proceeding to it. As I indicated
earlier, 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). The
phrase has been interpreted and applied in that way for so long that I think that it should
continue to be so interpreted and applied.
Secondly, the traditional view of the effect of the phrase. Lord Justice Lloyd said that this
view had always been that the phrase became operative so to enable a valid notice of readiness
to be given as soon as the vessel has arrived in the port provided that the other conditions of
a valid notice are satisfied. I cannot accept this generalisation as correct. So far as cases where
no berth is available when the ship arrives are concerned, that has certainly been the
traditional view. But, so far as cases where a berth is available for the ship on arrival but
unreachable by reason of bad weather are concerned, no traditional view has ever been
established, for the simple reason that the question of the effect of the phrase in that situation
has never previously arisen from decision by any court.
Thirdly, the need for certainty. I accept that certainty of interpretation is a most desirable
characteristic of any contract, especially a commercial contract containing expressions commonly in use. I cannot see, however, that a decision that the phrase whether in berth or not
10. [1989] 1 Lloyds Rep. 1.

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only takes effect when a berth is not available provides any less certainty than a decision that
it 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 Appeal
who agreed with him, I do not consider, in the light of the examination which I have made
of the three main matters relied on by Lord Justice Lloyd, that they provide the support for
his conclusion which he regarded them as providing. On the contrary, I am of opinion, having
regard 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 berth
or not should be interpreted as applying only to cases where a berth is not available and not
also 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 only
applies to cases where a berth is not available and does not apply to cases where a
berth is available for the vessel but unreachable because of weather/navigational
factors. The decision/result was well received by many in the shipping commercial
community albeit that the vast majority of commercial counsel were convinced that
Wibon converted a berth charterparty into a port charterparty in all circumstances absent a breach of contract by the owners.
27. Before leaving the Wibon provision it is emphasised that, even if the provision
bites so as to advance the commencement of laytime the vessel still has to satisfy the
Oldendorff test vis-`a-vis the ingredients regarding a port charterparty. That is, she
has to be within the port and at the immediate and effective disposition of the
charterers. That point was brought out in The Seafort.11 The vessel was chartered
for the carriage of grain from Vancouver to London and Hull and the charterparty
provided (inter alia): . . . Time at second port to count from arrival of the vessel
at second port, whether in berth or not. The second port was Hull and the vessel
anchored at Spurn Head anchorage (the usual place for vessels of this size to wait
for a berth in respect of Hull) but did not berth until 9 February. The anchorage was
22 miles from Hull but was not within the legal, administrative or fiscal limits of
Hull. It was decided by Mr Justice McNair that, by using the words arrival at
second port the parties must be presumed to have intended the normal conditions
determining 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 secured
that time should count whether the vessel was in berth or not provided she had
arrived 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 did
not extend the meaning of arrival at the second port to include a place not within
the 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 Lusis12 in respect of
reachable on arrival) but the Seafort decision remains valid. The perhaps uncommercial interpretation of the Seafort decision may be circumvented by the parties
using the acronym Wipon (whether in port or not) instead of or in addition to

11. [1962] 2 Lloyds Rep. 147.


12. [1964] 2 Lloyds Rep. 29.

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Para. 29

Wibon (whether in berth or not); see below, paragraph 29, for consideration of the
former 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. In
Voylayrules 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 arrival
the vessel, on reaching any usual waiting-place at or off the port, shall be entitled to
tender notice of readiness from it and laytime shall commence in accordance with
the charterparty. Laytime or time on demurrage shall cease to count once the berth
becomes available and shall resume when the vessel is ready to load or discharge at
the berth. There are several differences between the wording of Voylayrules and
Definitions, namely:
(1) Voylayrules refers to the berth being available as compared to the berth
being accessible in the Definitions and reflects the House of Lords decision 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 as
in the Definitions. The obvious intention of the differing words is to allow
a notice of readiness, under Voylayrules, to be given outside of the port
limits (not allowed under the common law, see earlier paragraph 27) so
long as the vessel is at the usual waiting place whereas under the Definitions 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 laytime shall cease to count once a berth becomes available and shall resume
when the vessel is ready to load or discharge at the berth. It appears that
this sentence bites even though the berth may not have become accessible
and therefore it is perhaps unfair to an owner of a vessel because other
circumstances may have arisen after laytime has commenced which later
prevent the vessel moving to a berth even though the berth has become
available.
Baltic Code 2003 has a similar definition to Charterparty Laytime Definitions 1980 since it reads, if the designated loading or discharging berth is
not available on her arrival, the vessel on reaching any usual waiting place
within the port, shall be entitled to tender notice of readiness from it and
laytime 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 incorporated
into a charterparty contract. It may be better to remain with the common law rather
than incorporating the Definitions/Voylayrules into charterparties.
29. Whether in port or not is now seen commonly in voyage charterparties and
the phrase should circumvent the effect of the Seafort decision where the parties use
the 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 considering whether a vessel has reached the agreed destination in order to give notice of
readiness but commercial commonsense dictates that the words should bite in
circumstances where the vessel has not got within the port according to the Oldendorff13 test but has reached the usual waiting place for the port in question and can
go no further because of the non-availability of a berth. If the vessel cannot move to
a berth because of weather/navigational factors (such as the Kyzikos14 circumstances) the position may be different since presumably what Lord Brandon had to
say in The Kyzikos would be germane. In other words, Wipon would allow a
notice of readiness to be tendered at the usual waiting place, even if the vessel was
outside the port limits, so long as the reason for the vessel not moving into the port
was the non-availability of a berth but, where weather/navigational factors prevented
the vessel moving into the port the phrase would not bite and the vessel would have
to get within the port in order to tender a notice of readiness. No doubt the courts
will eventually deliver a binding precedent but in the meantime it will remain
speculative as to the full effect of Wipon.
What has been said above regarding the restrictions on Wipon may conflict with
the Court of Appeals decision in The Kyzikos regarding at the immediate and
effective disposition of the charterers (weather conditions preventing the vessel
from moving to an available berth but not affecting the vessel being at the immediate
and effective disposition of the charterer). It is a pity that the House of Lords did not
give 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 its
decision regarding Wibon. If it had given full consideration to the subject it might
have reversed the Court of Appeal and decided that a vessel could not be at the
immediate and effective disposition of the charterer when she arrived geographically
so as to tender a notice of readiness but could not move further because of a
weather/navigational factor. Such a decision would have parallelled the ultimate
decision in respect of Wibon and provided consistency so that a notice of readiness
could be tendered at the usual waiting place within the port if a berth was not
available but not if a berth was available for the vessel but unreachable because of
weather/navigational factors. The same reasoning should, it is submitted, be applicable to Wipon.
Although there are no binding authorities regarding whether in port or not the
phrase was the subject of some obiter in The Shackleford15 and even more obiter in
The 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 bunkering
or other berth might be at but not in the port of Constanza, and also the possibility of any
change in the regulations allowing customs entry in the roads.

13. [1973]
14. [1989]
15. [1978]
16. [1986]

2
1
1
2

Lloyds
Lloyds
Lloyds
Lloyds

Rep.
Rep.
Rep.
Rep.

285.
1.
191.
395.

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Para. 29

The vessel was in Constanza Roads when notice of readiness was given and it
appeared that the learned judge considered her to be at, but not in, the port. The
case went to the Court of Appeal but no further guidance to this problem materialised 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 sellers
or the buyers of grain were liable for delay (no berth available) at the Intersection
anchorage regarding a vessel bound for Rosario, a port some 200 miles up river from
the Intersection; the Intersection was recognised as a waiting area for Rosario as it
was also for other ports in the rivers Plate and Parana; the master gave a notice of
readiness after he anchored at the Intersection. The sale contract incorporated the
Centrocon 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 the
Centrocon strike clause operated in favour of the sellers as per the binding Court of
Appeal decision in The Amstelmolen17; the cargo could not be loaded by reason of
obstructions beyond the sellers/charterers control. Therefore, there was no need for
him to make a decision regarding Wipon but he considered this point by way of
obiter, as follows:
The contract in this case does have the words whether in port or not. Manifestly the effect
is to avoid in part the rule that a vessel must have arrived at the port before laytime can
commence. But how near to the port must the vessel be, and what hazards can remain to be
overcome, when notice of readiness is given?
If I had to decide the issue, it would be on the basis that the appropriate waiting places for
Rosario are first the roads there, or if they are congested Intersection, or if Intersection is
congested, 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 no
waiting 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 contracts
in the present case were concluded a few months after the decision of the House of Lords in
The Maratha Envoy. . . . It appears to me not unlikely that the use of the words whether in
port or not by these parties, or at least the more general use of those words amongst others
followed by these parties, may have been directed at ports with no waiting area within their
limits. In point of geographical proximity I therefore prefer Mr. Hallgartens solution, which
is 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 usual
waiting area for Rosario although not the only area, and some 200 miles from the
port) ran parallel with his other inclination that the vessel was at the immediate and
effective disposition of the charterer when she was lying at the Intersection anchorage waiting for a berth. There is no doubt that his lordship took a broad, robust and
commercially practical approach to whether in port or not and at the immediate
and effective disposition of the charterer in a berth congestion circumstance; it will
be interesting to see what binding precedent eventually emanates from the courts
17. [1961] 2 Lloyds Rep. 1.

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regarding circumstances like those just described so that the commercial community will know, with more certainty than at present, the full ambit of Wipon in
circumstances where a waiting area (not necessarily the waiting area) is some hundreds 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 sea
in order that they be out of the range of pirate boats. Would Wipon bite in those
circumstances?
The only guidance available from any reported arbitration regarding similar
circumstances is that referred to earlier in paragraph 16 (LMLN 14325 April
1985) where the arbitrators decided that a waiting place some 400 miles distant
from the port of destination could not possibly be held to be within the ambit of
Wipon. In any event, can it really be said that a vessel is at the immediate and
effective disposition of the charterers if it is some hundreds of miles from the
loading/discharging area?
A relatively recent reported arbitration regarding Wipon is that in LMLN
61512 June 2003 where the vessel was chartered on an amended Africanphos
1950 form for the carriage of a cargo of phosphate in bulk from one good and safe
berth always afloat Sfax to one good and safe berth always afloat Setubal. At
11.50 on Wednesday 5 December, at the end of the vessels sea passage to Setubal,
the master tendered notice of readiness. The vessel waited outside Setubal Port until
13.20 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. The
vessel then waited until 09.30 on Saturday 8 December for a second pilot to come
on 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 14.45
the 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 in
port or not (Wipon) and whether in berth or not (Wibon), and (2) on clause
45, which stated that time lost in waiting for berth to count as laytime provided
that 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 vessel
might tender notice of readiness even though not actually in the port of Setubal
itself at the time. That was because the parties had agreed to shift, and allocate to
the charterers, the risk of delay from congestion which would otherwise be for the
owners account under the berth terms of the charterparty. On completion of the
sea voyage and arrival at Setubal, the vessel had been unable to proceed immediately
to berth due to port traffic/congestion and, thus, notice of readiness might be
tendered when the vessel got as near as she could proceed to the berth. The owners
said that when the notice of readiness was tendered the vessel was in all respects at
the immediate and effective disposition of the charterers in that she could have
proceeded to berth without any significant delay if the charterers had called upon
her to do so. That was the case even if the vessel had not then reached what could
be 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 that
notice could only be given upon arrival at the usual waiting place at which the vessel
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Para. 30

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 on
5 December.
It was held that, by comparison to the expression Wibon there were surprisingly
few cases that had considered the meaning of the term Wipon. Parties had a
tendency to attempt to construe the expression too broadly. Whilst it might extend
the range of places at which notice of readiness might be tendered, it did not do so
at the expense of the paramount requirement that the owners should have done as
much as possible to place the vessel at the disposal of the charterers. In the case of
a berth charter, that at very least required that the vessel should have completed the
sea leg of the voyage and reached a point as near as possible to the loading or
discharge berth. At ports where that point was outside port limits, the Wipon
provision would assist the owner by allowing the vessel to tender notice of readiness
there. Where, however, as at Setubal, the vessel merely paused on its passage in to
the port or berth, for example, to pick up a pilot, the requirements of the provision
would not be satisfied.
Although no evidence on the point had been put before the tribunal, the indications were that the requirements of the Wipon provision were not satisfied. It
seemed clear that the master had tendered notice of readiness as soon as the vessel
reached the pilot station outside the port of Setubal. The vessel had only waited
there for 1 hour 30 minutes before a pilot had come out to take the vessel to the
inner anchorage inside the port. That indicated persuasively that the pilot station
was merely a transit point on the voyage and did not properly represent the point at
which the carrying leg of the voyage came to an end and the vessel was as near as
possible to the berth and at the immediate and effective disposition of the charterers. That point was the inner anchorage where the vessel had arrived at 15.15 on
5 December. That was the usual waiting place for a berth at Setubal. Accordingly,
notwithstanding the Wipon provision, the master was only entitled to tender notice
of readiness on arrival at the inner roads and no earlier. Thus, the notice of
readiness tendered by the master was invalid and ineffective to start laytime
counting.
However, the owners had not relied merely on clause 21. They had also relied on
the time lost waiting for berth provision of clause 45, which was a rider clause, and
in which they were successful, see later paragraph 38.
30. Sometimes owners try to advance the commencement of laytime by more
complicated clauses than those referred to in paragraphs 2529, above. For example, in The Freijo18 the charterparty contained (inter alia) the following clauses:
6. Time to count from after the ship has reported as ready and in free pratique whether
in berth or not . . .
26. If through congestion at the port of discharge and loading steamer is kept waiting off
the port lay days are to commence to count as per Clause 6 but not until 36 hours from
arrival . . .

18. [1978] 2 Lloyds Rep. 1.

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The vessel anchored at the discharge port pilot station but could not move into a
berth because of congestion. Free pratique could not be granted until the vessel
moved into the inner anchorage. The charterers contended that when clauses 6 and
26 were taken together it was a condition precedent that, before laytime commenced, the ship had to be reported and to have obtained free pratique. In the High
Court 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) she
was in free pratique; and in this case when the vessel lay at the pilot station
anchorage she was not within the port nor was she in free pratique and
time therefore could not begin to run under clause 6;
(2) clause 26 provided alternative criteria which if met caused laytime to
commence, i.e. the vessel had arrived off the port of Lourenco Marques
and she was kept waiting there by congestion at the port; and laytime
began 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 the
words commence to; and viewed as a commercial point, the parties had
contemplated two possibilities (a) that the vessel might sail straight into
port and thus comply with clause 6 and time would begin to count at most
24 hours later; (b) that the vessel might be kept waiting outside the port
due to congestion and the first 36 hours of delay but no more was to be
to the owners account;
(4) it was the obligation of the shipowner to have the vessel ready to load
cargo including having the vessel in free pratique as soon as the charterer
was ready to load and if he was in breach of this obligation the charterer
would have a cross-claim which would extend the laytime or extinguish
the demurrage for the period of delay.
Judgment was given for the owners. The charterers appealed and, in dismissing
the appeal, the Court of Appeal held that:
(1) on the construction of clauses 6 and 26, the arbitrator and the learned
judge were right in the conclusion which they reached that reporting as
being ready and obtaining free pratique was not a condition precedent to
the operation of clause 26 so as to make laytime count long before the
vessel got to the inner anchorage and could give the relevant notice under
clause 6;
(2) it was plain that the burden of waiting time through congestion, as a result
of which the ship could not get to the inner anchorage to commence
loading was by clause 6 cast upon the charterers;
(3) the parties had chosen to advance the time for the commencement of
laytime and therefore laytime commenced to count notwithstanding that
the ship had neither reported nor was ready nor had received free pratique
under clause 6.
The Freijo case18 is a good illustration of how a departure from simple straightforward wording can lead to complications with attendant high level coststhe
68

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Para. 30

dispute resulted in an arbitration, a High Court action and a hearing in the Court
of Appeal. Another example of special wording, intended to deal with berth congestion, and which finished up in the courts, is that found in The Puerto Rocca (see
paragraph 20 above for the facts and decision); it started as an arbitration but
finished up in the High Court.
In a much later reported London Arbitration LMLN 43422 June 1996 the
vessel was chartered on the C (Ore) 7 Mediterranean Iron form for a voyage to carry
some 25,000 metric tons of bulk sulphur from Aqaba to Constanza. Disputes arose
between the parties regarding the calculation of laytime and demurrage at both
loading and discharging ports. The dispute in respect of the loading port is not
relevant to the present text although it is relevant to the aspect of an implied term
of 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 and
notice accepted (whether in berth or not), Fridays, Holidays excepted and for discharging 24
hours after ship is reported and in every respect ready, and in free pratique, and notice accepted
whether in berth or not Sundays, Holidays excepted. Steamer to be reported during official
hours only . . .
Clause 25
Waiting time for berth to count as loading/discharging time subject to all exceptions agreed for
laytime under this CP.
Clause 26
If through congestion at the port of discharge steamer is kept waiting on the roads laytime to
commence to count as per clause 6, but not until 36 hours from arrival (Sundays and
Holidays 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 08.00
hours 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 it
was at the loading port, in particular because it was not until the ship berthed (at
21.15 hours on 14 August) that she could obtain customs clearance and free
pratique, which she did at 22.35 hours that day. It was not, accordingly, until that
time that the requirements of clause 6 (that she be reported and ready, and in free
pratique) could be said to have been satisfied. In that context, though, clauses 25
and 26 of the charter were relevant.
The problem that arose when, as so often was the case, a ship could not comply
with clause 6 requirements until she was berthed, had been ventilated in arbitrations
on many occasions over the years. It should have been put to rest, as the point had
been clearly decided by the Court of Appeal in The Freijo,18 a decision on the
form of charter in issue in the present case. The Court of Appeal held that reporting
and being ready and obtaining free pratique was not a condition precedent to the
operation of clause 26, so that laytime could count before the ship got to the inner
anchorage and gave the relevant notice under clause 6. If there was any room left for
doubt, it was removed by clause 25 of the present charter.
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The above-mentioned cases and arbitration illustrate the problems which may
evolve where parties depart from a simple approach for advancing the commencement of laytime (by incorporating more complicated clauses) in circumstances
where vessels have to wait off a port for reasons such as congestion.
31. The North American Grain charterparty came into existence in 1973 and has
been widely used in the grain trade since that time; it was amended in 1989
particularly in relation to the commencement of laytime/waiting for a berth. In the
1973 edition of the port charterparty the clause (17b) which may practically
advance the commencement of laytime if the vessel cannot enter the port because
of berth non-availability reads, as follows:
(b) Waiting for Berth
If the vessel is prevented from entering the commercial limits of the loading/discharging
port(s) because the first or sole loading/discharging berth or a lay berth or anchorage is not
available, or on the order of the Charterers/Receivers or any competent official body or
authority, and the Master warrants that the vessel is physically ready in all respects to load or
discharge, the time spent waiting at a usual waiting place outside the commercial limits of the
port or off the port shall count against laytime. Such laytime shall count from vessels arrival
at such usual waiting place and will continue to run. . . . If after entering the commercial
limits of the loading port, vessel fails to pass inspections . . . and requires more than four
hours SHINC to pass such inspections from the time of initial failure to pass the time spent
waiting outside the commercial limits of the port as per lines shall not count . . . but if said
vessel passes inspections within said four hours any delay in commencing loading directly
attributable to its failure to pass initial inspections shall not count as laytime or time on
demurrage.

The above clause has been the subject of arbitrations in London, one of which was
of interest in respect of the application of the clause in circumstances where the
four-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 it
was reported in LMLN 29920 April 1991.
The vessel, an OBO, was chartered on 26 April for the carriage of a cargo of grain
from a Mississippi port. She had previously been carrying a cargo of oil and had to
clean and ballast three holds in order to reach the load port.
On 3 May the charterers informed the owners that there was an anticipated
berthing delay of three to four days. On 5 May, the vessel having completed cleaning
of the holds, the master advised the charterers that the vessel was ready to load. The
vessel anchored at an anchorage which (as the arbitrators found) was a usual waiting
place for vessels loading at the load port although it was about 42 miles down-river
of the loading port, Ama. As at 5 May the earliest berthing date was put at 11
May.
On 6 May, six holds were passed for loading, at the anchorage, by NCB and
USDA inspectors. Holds 3, 5 and 7 were in ballast. The holds passed by the
inspectors 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 hold
was scheduled for loading and had not been inspected and passed. The vessel
deballasted No. 5 hold, and that hold was inspected and passed by NCB and USDA
inspectors on 7 May. The deballasting had taken longer than four hours. A notice
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Para. 31

of readiness was accepted by the charterers on 7 May. The vessel had to reballast
No. 5 hold to pass under a bridge for her eventual passage up-river to the load port
on 14 May.
The vessel was at the anchorage for the whole of the period from 5 May to 14
May. During that time no loading berth was available for the vessel at the load
port.
The laytime allowed under the charterparty for the loading of cargo was five
weather working days of 24 consecutive hours, Sundays and holidays excepted. The
owners claimed that the whole of the time waiting for berth counted as laytime.
They relied on the above clause.
The charterers submitted that the masters warranty required to be given under
clause 17(b) went to the readiness of the vessel to load, and that the validity of the
warranty was dependent upon whether more than four hours was taken at a later
stage to obtain the NCB and USDA certificates. Furthermore, time at the anchorage had to be spent waiting for berth. That was not so if time was utilised obtaining
NCB/USDA certificates and ballasting cargo spaces prior to the inspection of
such.
The owners contended that the scheme of clause 17 was to allow time waiting for
a berth to score as laytime and that, since the vessel was always outside the commercial 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 commercial limits so that, in the present case the inspections had no relevance to waiting
time and the counting of such against laytime.
It was held that the evidence showed that the vessel was prevented from entering
the commercial limits of the load port because the up-river anchorages were congested. The anchorage where the vessel waited was widely known as one of the usual
waiting places for vessels loading grain at the load port. Clause 17(b) did not state
the usual waiting place, but a usual waiting place.
There was no failure by the master when he made his warranty regarding the
readiness of the vessel on 5 May. At that time there was sufficient space available on
the vessel, in the required condition (as proved by the inspections on 6 May), for the
intended 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 regarding
the masters warranty under clause 17(b). There were circumstances where vessels
like OBOs had to retain ballast in cargo spaces at anchorages for safety reasons, and
clause 17(b) could become unworkable if the masters obligation was to have such
cargo 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 cargo
spaces were ballasted.
When the charterers gave instructions that No. 5 hold should be inspected and
passed there were no problems in that respect. All that was required was to deballast
the hold and allow the officials to reboard the vessel and inspect a hold which had
been 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 matters
so that that hold would have been available for inspection on the morning of 6 May,
along with other cargo spaces.
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S P E C I A L C L AU S E S R E A R R I V I N G

Accordingly, the masters warranty on 5 May was valid for the purpose of clause
17(b). Had the warranty not been valid, the charterers might have had a remedy in
damages 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 and
should count against laytime. During part of that time inspections and deballasting
of cargo spaces were taking place, but that did not make any difference. The essence
of the matter was that the vessel was waiting for a berth and clause 17(b) operated
in favour of the owners. The clause was designed to put the risk of waiting time on
the charterers, but the charterers did have safeguards if a vessels cargo spaces were
not 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, for
example, they could lose the whole benefit of time waiting for a berth (which could
be several weeks) if remedial measures, after an inspection, took longer than four
hours. In the present case any remedial measures were completed before the vessel
entered the commercial limits of the load port so that they became irrelevant in the
light of the third sentence of clause 17(b).
Although the arbitration was decided in favour of the owners, on its particular
facts, 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 loading
ports. The draconian aspect of this part of the clause was specifically mentioned by
the arbitrators. The clause is also unsatisfactory in that it refers to the commercial
limits of the port, a phrase which, it was thought, went out of vogue with the
Oldendorff decision. While the Norgrain 1973 may still be used by some organisations it has been replaced by the Norgrain 89 charterparty which radically alters
clause 17(b) regarding the commencement of laytime in the context of waiting for
a berth. The new clause (already referred to earlier in paragraph 17), identified as
18(b) rather than 17(b), reads:
(b) Waiting for Berth Outside Port Limits
If the vessel is prevented from entering the limits of the loading/discharging port(s) because
the first or sole loading/discharging berth or a lay berth or anchorage is not available within
the port limits, or on the order of the Charterers/Receivers or any competent official body or
authority, and the Master warrants that the vessel is physically ready in all respects to load or
discharge, the Master may tender vessels notice of readiness, by radio if desired, from the
usual anchorage outside the limits of the port, whether in free pratique or not, whether
customs cleared or not. If after entering the limits of the loading port, vessel fails to pass
inspections as per Clause 18(e) any time so lost shall not count as laytime or time on
demurrage from the time vessel fails inspections until she is passed, but if this delay in
obtaining said passes exceeds 24 running hours shex all time spent waiting outside the limits
of 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 inspections to 24 running hours Sundays and holidays excepted: however, if the 24-hour
period is exceeded then none of the waiting time outside the port limits will count
so that some harshness remains. The rationale for the four hours harshness in the
1973 charterparty was that if more than that time was required for passing inspections the masters unverified representation that the vessel was ready to load or
72

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Para. 33

discharge might prove inaccurate; the four hours part of the clause was intended to
be a deterrent to the making of such misrepresentations and thus be a safeguard to
charterers. In practice it was found that the four hours time limit was too short
because surveyors/inspectors might not be readily available at all times; thus, while
the rationale still remains, its harshness has been ameliorated by the 24-hours
period and is much more reasonable for owners of vessels.
32. There are a good variety of clauses in existence in the dry bulk cargo world
which are tailor made for advancing the commencement of laytime in circumstances
of berth congestion and a vessel having to wait outside port limits apart from those
already referred to. A good clause for owners which is relatively simple is the Baltic
Conference General Waiting for Berth Clause, 1968 (Genwait), which reads:
(a) If the loading berth is not available on Vessels arrival at or off the port of loading
or so near thereunto as she may be permitted to approach, the vessel shall be
entitled to give notice of readiness on arrival there with the effect that laytime
counts as if she were in berth and in all respects ready for loading provided that the
Master warrants that she is in fact ready in all respects. Actual time occupied in
moving from place of waiting to loading berth not to count as laytime. If after
berthing the Vessel is found not to be ready in all respects to load, the actual time
lost from the discovery thereof until she is in fact ready to load shall not count as
laytime.
(b) If the discharging berth is not available on Vessels arrival at or off the port of
discharge or so near thereunto as she may be permitted to approach, the Vessel
shall be entitled to give notice of readiness on arrival there with the effect that
laytime counts as if she were in berth and in all respects ready for discharging
provided that the Master warrants that she is in fact ready in all respects. Actual
time occupied in moving from place of waiting to discharging berth not to count as
laytime. If after berthing the Vessel is found not to be ready in all respects to
discharge, the actual time lost from the discovery thereof until she is in fact ready
to discharge shall not count as laytime.

The clause allows laytime to commence outside of port limits in a port charterparty because of the wording at or off the port or so near thereunto as she may be
permitted to approach; thus it would appear to cover circumstances of berth
congestion and a vessel waiting for a berth up to hundreds of miles from her berth
because she is not permitted to proceed further, such as are encountered in respect
of ports in the rivers Plate and Parana and waiting places at the Intersection/Zona
Comun. The clause is also advantageous to an owner in that it does not allow a
charterer to contend that laytime does not commence because the vessel was not
ready to load/discharge cargo when she arrived of the port and the notice of
readiness was tendered (which argument may be available to a charterer in a time
lost waiting for a berth to count as laytime clause; see paragraph 39, below on this
aspect); the clause is quite specific in that only the actual time lost because of the
vessel not being ready is not to count as laytime.
33. There are other clauses in use which may have the effect of advancing the
commencement of laytime but they may also have the effect of delaying it; for
example time to commence on being reported at Custom House may allow
laytime to begin, in the case of a port charterparty, when a vessel waits outside the
73

Para. 33

S P E C I A L C L AU S E S R E A R R I V I N G

port but can be reported at the Custom House while at that waiting place. In the
Scottish case Horsley Line Ltd. v. Roechling Bros19 a charterparty for the carriage of
pig-iron from Middlesbrough provided that the ship should proceed to Savona or
Genoa, as ordered . . . and there deliver the same . . . Time for discharging to
commence on being reported at the custom house. The ship anchored in the
Savona Roads and was reported to the Custom House on the same day. The roads
were the usual place for ships to lie while the harbour was full. The parties agreed
that the roads were outside both the geographical limits of the port and what was
known 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 delay
before she could berth there. The shipowners claimed demurrage, contending that
by the custom of the port ships were allotted berths according to the order of
reporting on arrival in the roads. The charterers said that until the ship got within
port limits she was not an arrived ship. The Court of Session held that time began
when the ship was reported, it being put by Lord Ardwall:
. . . although when there is no express stipulation on the subject in the contract, lay-days
will not be held to commence to run till the ship becomes what has been called an arrived
ship, yet the parties may contract otherwise, and as in this case fix the date of arrival in the
Harbour roads as the commencement of the lay-days, thus throwing on the charterers the risk
of the vessel failing to get a harbour berth for some time after arrival in the roadstead off the
port.

Conversely, a time to commence on being reported at Custom House clause will


delay the commencement of laytime in the case of a port charterparty where the
vessel 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 Shackleford20
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 the
discharge port destination in the port charterparty, anchoring at the usual waiting
place within the port limits, but she could not be entered at the Custom House until
she berthed, this being a requirement of the port. It was held that the vessel had to
be entered in the Custom House before a notice of readiness could be given. For
completeness it is mentioned that the case was decided in favour of the owners on
other grounds, see later Chapter 6.

SPECIFIC SUMS FOR WAITING TIME


34. With one exception (see below in this paragraph) intrinsic problems do not
appear to have arisen regarding clauses which spell out that specific payments have
to 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 for
at the demurrage rate. The Austral and Austwheat charterparties are examples of
19. 1908 S.C. 866.
20. [1978] 1 Lloyds Rep. 191.

74

S P E C I F I C S U M S F O R WA I T I N G T I M E

Para. 34

this approach, the wording in such being: Provided always that if such discharging
place is not immediately available, demurrage in respect of all time waiting thereafter 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 (inter
alia) for discharge at any customary dock, wharf or pier, as ordered by the charterers, plus the proviso cited above. The vessel was intended for the King George Dock
at Hull and had to anchor off Spurn Head which was outside the geographical, legal
and physical fiscal limits of the port of Hull, which was a customary anchorage for
vessels awaiting entry to the docks. The vessel had to wait for just over seven days
before moving into a dock and the owners claimed for demurrage in respect of this
period: however, the charterers contended that the proviso of the charterparty had
no application until the vessel was an arrived ship, that is when she got within the
port limits. It was held by Mr Justice Sellers (as he then was) that the proviso dealt
with waiting time due to the discharging place being unavailable before laytime
began to run and provided for just such an occasion as had arisen in the circumstances where the vessel had reached a recognised waiting place for the port and
could 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 to
discharge. She had to wait there because no berth was available. She had, therefore, in the
course of her voyage to Hull reached the place where she had to stop until a berth was
available. The considerations which apply to a vessel which has to wait are obviously different
from those which apply to a vessel which has to load or discharge or may often be so. A vessel
cannot 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 has
arisen here. The loss due to waiting for discharge has to fall on one of the parties to the
adventure and, of course, depends on the terms of their bargain; but provided the vessel has
reached the recognised waiting place for the port, she can do no more than be ready and
available 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 a
berth is incurred it should fall on the charterers or consignees. The ship has to face the
hazards 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 it
would seem that the earliest time, on any view, that she could have become an arrived ship
so that time for discharge would run against the charterers or their agents would be when she
entered the King George Dock, and she could not have done that before she in fact did
enter.

This decision made sense and the judge in question was surely right to take a
fairly broad approach to the matter. It seems that a similar approach could have
been taken in The Seafort22 although it is conceded that the word arrival in the
latter 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 not
directly concern the commencement of laytime) is that the whole of the waiting time
scores up, at the demurrage or other specified rate, for the benefit of the owner
21. [1956] 2 Lloyds Rep. 210.
22. [1962] 2 Lloyds Rep. 147. See para 27, above.

75

Para. 34

S P E C I A L C L AU S E S R E A R R I V I N G

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

TIME LOST WAITING FOR A BERTH INCLUDING


THE 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 other
printed forms have similar words and the words are frequently incorporated into
charterparties by way of type-added clauses. Important judgments concerning these
words took place between 1955 and 1976. The fortunes of owners and charterers
ebbed and flowed through these judgments, charterers for some years suffering
considerable financial hardship because of the manner in which the waiting time
was counted.
The House of Lords canvassed the subject words in The Darrah23 and, to
commercially minded persons, remedied what was an unjust position. Without
going into too much detail, it is worth looking at the judgments in three previous
cases in order to see how the judges had taken the wrong road prior to the Darrah
decision.23
In The Radnor24 the vessel was chartered to carry soya beans from one safe
berth Dairen (Manchuria) to Madras and Calcutta. The charterparty provided, by
clause 17, that lay days should begin 24 hours after notice of readiness to load had
been given. Clause 5 stated: Time lost in waiting for berth to count as loading
time.
When the ship anchored in the quarantine anchorage at Dairen customs and port
officials sealed the radio, took away a number of ships documents, and banned
communication 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 give
notice of readiness. The Court of Appeal held that the shipowners were entitled to
count the eight days although notice had not then been given. Mr Justice Singleton
said:
The clause as to time wasted is independent of clause 17. It is inserted to avoid questions
which have arisen in many cases which have been before the courts. The risk of time wasted
in waiting for a berth is put upon the charterers whose agents are, or ought to be, familiar
with local conditions. The clause might have provided simply that time lost in waiting for a
berth should be paid for at the rate of 600 a day. As drawn, it gives the charterers an
advantage, for they may save on loading time some, or all, of the time lost in waiting for a
berth. The time lost is to count as, or to be added to, loading time in order to ascertain the
position between the parties. . . .
Upon the terms of this contract it is clear, I think, that the risk of time lost through waiting
for a berth is undertaken by the charterers, and there is nothing which deprives the owners
of the right which, on the face of the document, is given to them. Again, it appears to me that
the master could not give the notice envisaged in clause 17 of the charterparty until the vessel

23. [1976] 2 Lloyds Rep. 359.


24. [1955] 2 Lloyds Rep. 668.

76

T I M E L O S T WA I T I N G F O R A B E RT H

Para. 35

arrived at the nominated berth. Upon the charterparty, she had to proceed to one-safe berth
Dairen. . . .
In my opinion, the provision as to notice in clause 17 does not affect the question arising
under clause 5 of the charterparty, and the lack of a notice under that clause does not avoid
the owners rights in regard to time lost through waiting for a berth. The notice is something
which has to be given for the purpose of calculating lay-days. That calculation is independent
of the provision in clause 5, though the one has to be added to the other to reach the true
position under the contract. There was certainly no obligation on the master to give a notice
under clause 17 when the vessel arrived ator perhaps I should say reachedthe port of
Dairen. The charterers knew of her arrival and the next step was for them to nominate the
berth to which they wished her to go. If they failed to do so within a reasonable time, and
without any adequate explanation, time was lost by the ship in waiting for a berth. It was to
meet 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 clause
to the time lost waiting for berth provisions, the time lost provisions are independent
of the laytime provisions and are, therefore, not to affect the independent time lost
code. The Gencon draftsman must have turned in his grave at this adumbration
since, in commercial reality, the two clauses are not really independent. Simply for
convenience and to incorporate longer and more complicated laytime provisions
into the contract the provisions are not inserted in the printed clauses 5 and 6 of the
Gencon charterparty but are type-added with a reference in clauses 5 and 6 as to
where 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 the
Court of Appeal in The Radnor24 to conclude that the time lost waiting for berth
provisions in the charterparty were independent from the laytime provisions; it is
likely that bona fide motivation of the Court of Appeal led it to the above conclusion
so that compensation could be given to owners for the waiting time of their vessels
when compensation could not be given because of the strict interpretation of an
arrived ship vis-`a-vis the commercial area of a port and the tendering of notice of
readiness of the vessel.
It is also strange that the court should think that the words loading and discharging time meant something different to laytime; to commercial men the terms are
synonymous. Whatever the motivation, the result was to allow owners to score up all
the time the vessel was waiting for a berth if the vessel was not an arrived ship. The
laytime exceptions were not applied and this resulted in owners being better off than
if the vessel had been an arrived ship. This led to owners striving to get time lost
waiting for berth provisions into charterparties other than the Gencon (where they
are 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 Radnor24 was emphasised in the case of
The Vastric.25 The vessel arrived off the port on a Saturday afternoon and did not
berth until Monday morning; the whole of the weekend scored up as time lost
waiting for a berth even though the period was excepted under the laytime provisions. In so deciding Mr Justice McNair expressed his reservations regarding the
25. [1966] 2 Lloyds Rep. 219.

77

Para. 35

S P E C I A L C L AU S E S R E A R R I V I N G

effects of the Court of Appeals decision in The Radnor but felt that he had to
apply it because it was binding on him.
The illogicality of the decision can be seen when it paid owners for their vessels
to arrive off a port on a weekend, rather than during a working period when the
vessel might well berth immediately. The result was that owners often got compensated for time which, otherwise, would not be paid for by the charterers. A mitigating factor, as far as charterers were concerned, was that in The Vastric25 the time
lost waiting for a berth was added at the end of the laytime calculation. At least this
had the effect, in many cases, of not allowing the time lost waiting for a berth to
exhaust the laytime and put the vessel on demurrage before the vessel berthed.
However, as far as charterers were concerned, the situation was to deteriorate
further 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 at
both loading and discharging ports in waiting for a berth and the time lost provisions in clauses 5 and 6 of the charterparty (time lost in waiting for berth to count
as loading/discharging time respectively) were independent of the strike clause in
the charterparty (which would otherwise have been effective at the discharging port
to stop laytime commencing). In respect of how to apply the waiting time in the
compilation of time sheets the following questions were posed:
(i) before the commencement of loading or discharge . . . at the port for a
berth 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 discharge at the last discharging port (where the time is lost waiting for a
berth 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 lost
waiting for a berth should be applied moment to moment as it occurred and it has
been the practice to follow this approach. This exacerbated the position for charterers as compared with the Vastric decision25 since it could lead to a situation where
the time lost waiting for a berth exceeded the laytime thus putting the vessel on
demurrage before she berthed, and this by applying all of the time lost waiting for
a berth to the actual laytime. Thus, seven days of straight time waiting for a berth
put the vessel on demurrage for one day if the laytime allowed was six weather
working days, holidays and Sundays excepted; the obvious advantage of the decision
to owners can be seen at a glance.
To add insult to injury, vis-`a-vis charterers, the High Court judge went on to state
by way of obiter:
The fact that a ship is or is not an arrived ship is totally irrelevant to the question of whether
time lost waiting for berth is to count . . . I have already pointed out that a situation can arise
26. [1970] 2 Lloyds Rep. 482.

78

T I M E L O S T WA I T I N G F O R A B E RT H

Para. 37

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

This obiter was, inferentially, approved by the Court of Appeal,27 and applied in the
shipping world until the 1976 decision in The Darrah.28 The effect was that (inter
alia) 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 after
the completion of shifting to a berth scored up immediately, and without reference
to the notice time in the charterparty, assuming, of course, that the notice of
readiness 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 that
the time lost waiting for a berth provision operates; the laytime provision also
operates so as to commence laytime but laytime does not run (in view of the time
lost provision taking priority), but simply remains inchoate until the vessel completes shifting to a berth whereupon the laytime clock is triggered off so as to score
against the laytime remaining after the deduction from the laytime allowed of the
time 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 cases
where there was time lost waiting for berth provisions in the charterparty. If the
vessel had not become an arrived ship when waiting for a berth all the time scored
up 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 time
which they would not normally be compensated for (Sundays, holidays, etc.) without a time lost waiting for berth provision. To this extent, at least, the Loucas N
decision29 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 circumstances when the laytime was swallowed up by the time lost waiting for a berth thus
denying the charterers any benefit whatsoever regarding the notice time.
37. It is ironic that the extension of the arrived ship concept by the Johanna
Oldendorff decision30 (an improvement to owners) did not benefit charterers in cases
where the charterparties contained time lost waiting for berth provisions. It
appeared just that laytime exceptions should be applied to the time lost waiting for
berth provisions but, unfortunately, the Johanna Oldendorff case30 was only concerned with the arrived ship concept and gave no thought whatsoever to the law in
respect of time lost waiting for a berth.

27. [1971]
28. [1976]
29. [1970]
30. [1973]

1
2
2
2

Lloyds
Lloyds
Lloyds
Lloyds

Rep.
Rep.
Rep.
Rep.

215.
359.
482.
285.

79

Para. 37

S P E C I A L C L AU S E S R E A R R I V I N G

Of course, a court will only answer the question put to it and unless many parties
join together and put general principles to the courts on a consolidated basis, the
law tends to develop piecemeal. This is unfortunate since it can lead to unsatisfactory law if problems, which are intrinsically interrelated, are taken in isolation.
There was a strong argument that, when The Johanna Oldendorff30 went to the
House of Lords, the highest court in the land should also have considered the time
lost waiting for a berth aspect but it did not do so. Luckily, only a few years passed
between 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 the
period from 1970 to 1976 (from the Loucas N29 to the Darrah decisions), charterers
must have paid out many millions of dollars demurrage over and above that which
would have been paid if the charterparty exceptions had been applied to the time
lost 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 form
for 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 lost
waiting for berth to count as discharging time. The vessel anchored in Tripoli
Roads, where she was within the port and thus an arrived ship on 2 January, and
gave a notice of readiness. She did not berth until 9 January because of berth
congestion. The owners contended that the whole of the waiting time should score
up with the effect that they should be entitled to 14 days demurrage; the charterers
argued for the laytime exceptions to be applied to the waiting time with the result
that the owners were entitled to demurrage for only just under four days. The
leading maritime arbitrator of the day, Cedric Barclay, took a bold and perhaps
heretical approach in deciding the matter in favour of the charterers whereby the
exceptions applied to the waiting time. Like most other maritime arbitrators of the
time he felt that the Loucas N decision was unfair and commercially wrong and took
the bull by the horns in not following it. His award was in the form of a special case
and it was set down in the courts. In the High Court32 Mr Justice Ackner (as he then
was) reversed the arbitrators decision, deciding that where time was lost waiting for
a berth all the time so lost was to count whenever and wherever the waiting place
and the laytime exceptions only operated once the discharging berth was ready for
the vessel. In other words, he applied the decisions set out earlier in paragraphs 35
and 36. His decision was in turn reversed by the Court of Appeal33 where it was
held, unanimously, that where a ship was an arrived ship, as in the case in
question, and she was waiting for a berth the laytime provisions applied so that
laytime exceptions applied to the time lost waiting for a berth. The case then went
to the House of Lords34 where the Court of Appeals decision was upheld, on
different reasoning, to the effect that:

31. [1976]
32. [1974]
33. [1976]
34. [1976]

2
2
1
2

Lloyds
Lloyds
Lloyds
Lloyds

Rep.
Rep.
Rep.
Rep.

359.
435.
285.
359.

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Para. 38

(a) In the computation of time lost in waiting for a berth the excepted periods
had to be applied just as if the vessel had actually been in berth and laytime
was running.
(b) There was no conflict between the laytime provisions and the time lost
waiting for berth provisions in the case of an arrived ship under a port
charterparty.
(c) The fact that there was an overlap of the time lost waiting for berth
provisions and the laytime provisions did not matter since the time was
counted in the same way and the owner did not gain a greater advantage
from his ship being kept waiting for a berth than he would get from her
being 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 a
much-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 Justice
McNair in The Vastric, I am not unaware of the importance of not disturbing an accepted
meaning of a clause commonly used in commercial contracts upon which the parties to such
contracts have relied in regulating their business affairs. But this is a consideration which in
my view carries little weight in the case of the time lost clauses in the Gencon form of voyage
charters. In the first place, the results of ascribing to the clauses the meaning accepted since
1966 do not make commercial sense; it gives to the shipowner the chance of receiving a bonus
dependent 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 against
permitted laytime if the ship had been in berth. In the second place, I do not think that the
chance of obtaining such a bonus is likely to have influenced the freight or demurrage rates
charged. 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 instant
case, has never previously been the subject of judicial decision. Shipowners and charterers
would 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 sensible
meaning than that which has been ascribed by judicial decision to the clause in its printed
form. For my own part, as I have already said, I do not think that the alteration makes any
difference to the meaning of the clauses, but I have little doubt that if you gave to the clause
in the version which appears in the charter the effect which I have ascribed to it and to the
printed clauses alike your lordships would be carrying out the intentions of the parties when
they 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 it
was also made clear (as from Lord Diplock above) that there was no difference
between time lost waiting for a berth to count as laytime and time lost waiting for
a berth to count as loading/discharging time; they mean the same.
There was a point that The Darrah31 did not expressly consider, with a time
lost waiting for a berth clause: the application of the notice time in the case of a
berth charterparty. However, it must surely be that the approach to take is that of
running the vessel hypothetically into the loading/discharging berth on her arrival at
the port and taking the berthing time as that for a notional tender of the notice of
readiness. This approach should compensate the owner properly on the basis that
this is what would/should have happened if a berth had been available when the
vessel 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 been
the position if the vessel had not been prevented from berthing because of congestion. In the case of a port charterparty the notice of readiness will usually be
effective as from the time the vessel arrives off the port and a notice is given to the
charterers.
In taking their decision the House of Lords overruled The Vastric35 and The
Loucas N.36 Regarding the Radnor decision,37 the court took the view that it had
been misinterpreted over the years and that all that The Radnor37 decided was that
time lost waiting for a berth could start before notice of readiness was given. With
due 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 two
codes. However, it does not really matter, from the overall point of view, as to
whether or not The Radnor37 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 the
world some very large sums of money. The fact that the House of Lords have now
got the time lost waiting for berth aspect correct is perhaps small consolation to
those whose pocket was badly hit over the years.
The Darrah decision38 by the House of Lords is obviously right since it defeats the
startling position which had arisen whereby an owner was enriched simply because
the absence of a berth prevented the charterer from using some of the exceptions
that would have otherwise been available to him. The improved position is that one
makes a calculation as if the vessel had not been prevented from berthing because
of congestion at the port and had moved into a loading or discharging berth
immediately. Unlike its approach in The Johanna Oldendorff39 the House of
Lords, in The Darrah,38 went the whole hog and abrogated the commercial
injustice which had arisen from the earlier decisions; its decision surely reflected the
intention of the original draftsman of the Gencon charterparty.
Since the House of Lords decision in The Darrah there have not been that many
reported arbitrations regarding time lost waiting for a berth although a few are
detailed later in paragraphs 39, 40 and 41 in relation to the application of the words
in particular circumstances. In a general sense, the fairly recent reported arbitration
LMLN 61512 June 2003 (detailed earlier in paragraph 29 regarding Wipon)
concerns circumstances where the owners could not take advantage of Wipon
because the vessel tendered an invalid notice of readiness when she merely paused
on 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 excepted
periods for loading/discharging itself will also apply.

It was decided that the usual effect of such provisions was that where the main
reason why a notice of readiness could not be given (for example, in the case of a
35. [1966]
36. [1970]
37. [1955]
38. [1976]
39. [1973]

2
2
2
2
2

Lloyds
Lloyds
Lloyds
Lloyds
Lloyds

Rep.
Rep.
Rep.
Rep.
Rep.

219.
482.
668.
359.
285.

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Para. 39

berth charter) was that there was no loading or discharging berth available, laytime
would commence to run when the ship started to wait for berth and continued to
run until the ship stopped waiting. When the waiting time ended, time ceased to
count, unless exhausted, and restarted when the vessel reached the loading/discharge berth, tendered notice of readiness and any notice time provided in the
charterparty expired. The provision was independent of the laytime provisions of a
charter, 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 on
5 December she anchored and waited there for a berth until a pilot came on board
to take her into berth at 09.30 on 8 December. The vessel therefore waited for a
berth for 66 hours 15 minutes, which exceeded the allowable laytime of 46 hours 52
minutes. Not all of that time, however, was necessarily to count as laytime, and in
particular time from 17.00 on Fridays until 08.00 on Mondays was excepted by
clause 21. However, since time began to count when the vessel started to wait at
15.15 on Wednesday 5 December the allowable laytime would have been exhausted
by 17.00 on Friday 7 December and the vessel would already have been on demurrage, so that time would run for demurrage, without interruption, during that
otherwise excepted period.
The tribunal was mindful of the fact that laytime did not begin to count whilst the
vessel was waiting for a berth because the master had tendered an invalid notice of
readiness at the pilot station. The tribunal considered whether that should preclude
the owners from seeking the benefit of the time lost waiting for berth provisions of
clause 45. The decided cases were clear, however, that the two provisions were
independent of each other, even though on many occasions where laytime was
running the time lost provision might add nothing to the position. In the present
case, however, it did so, and the tribunal therefore concluded that time waiting
began to count as laytime at 15.15 on 5 December (as per rider clause 45) with the
result that the owners were entitled to demurrage for the period of 4 days 38
minutes (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 be
invaluable to owners in circumstances such as congestion, because of its independent nature, it has to be remembered that the vessel in question still has to reach the
usual waiting place or to get as close as practically possible to the loading/discharging berth which may be or may not be within port limit.
39. Although there have been no further court decisions in respect of time lost
waiting 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 waiting
for a berth to count as laytime clause in a charterparty in circumstances where a
vessel waits for a berth because of berth congestion but is subsequently found not
to be ready to load/discharge and this can be related back to the time when the vessel
arrived at or off the port and a notice of readiness was given, e.g. a few weevils in
one of the holds. One argument is that since the vessel was waiting for a berth the
time lost in that respect should score up as laytime even though the original notice
of readiness was later found to be invalid; the competing contention is that time lost
is 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 so
that 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 the
courts to this set of circumstances (which are more common than is thought) there
is no guarantee of this, particularly, since there appears to have been some narrowing of approach by some commercial judges whereby there is a more literal interpretation of the words used by the parties. There is some support for the purposive
approach 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 voyage
charter, as it seems to me, must mean the period during which the vessel would have been
in berth and at the disposition of the charterer for carrying out the loading or discharging
operation, if she had not been prevented by congestion at the port from reaching a berth at
which the operation could be carried out. The clauses go on to say that that period is to count
as loading time or as discharging time, as the case may be. That means that for the purposes
of those provisions of the charterparty which deal with the time allowed to load or to
discharge the vessel and how it is to be paid for (i.e. laytime and demurrage) the vessel is to
be treated as if during that period she were in fact in berth and at the disposition of the
charterer for carrying out the loading or discharging operation. So whatever portions of the
waiting period would have been taken into account in calculating the permitted laytime used up if the
vessel had in fact then been in berth and at the disposition of the charterer (e.g. weather working
days) are to be treated as if they had been available for loading or discharging cargo, and whatever
portions 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 inclement weather) are not to be treated as if they had been available for loading or discharging cargo.
[authors emphasis]

There is also some support for the approach from what Lord Justice Roskill (as
he 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, even
if the vessel is later found not to have been ready when she tendered a notice of
readiness, subject to an allowance of some kind to the charterer in respect to any time
utilised to make the vessel ready for loading/discharging. A calculation can be made
as to when the vessel would have been ready if she had in fact moved to a berth at the
time of her arrival at or off the port; alternatively there can be a later deduction from
the laytime or demurrage time regarding the time lost in remedying the unreadiness
of the vessel. The former approach is perhaps more reconciled to the above words of
Lord Diplock regarding the period during which the vessel would have been in berth
if she had not been prevented by congestion from reaching a berth and the now
accepted approach of applying time lost waiting for a berth moment to moment as it
occurs; the difference in the two approaches can, naturally, lead to different endresults particularly when the expiry of laytime is close to an excepted period such as a
weekend. 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 Envoy
House of Lords decision:
In the case of both port and berth charters, however, it is the common practice, by the use
of standard clauses, which too have been the subject of judicial exegesis, to provide expressly
for the way in which the risk of delay by congestion at the loading or discharging port is to
40. [1973] 2 Lloyds Rep. 247.

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Para. 39

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

If the pure literal approach is taken to laytime (that is, it cannot commence if
the original notice is found to be invalid) so as to prevent time lost waiting for a
berth to count as laytime when the vessel is waiting for a berth because of congestion, such surely nullifies the intention of the parties, which is to compensate owners
for time spent waiting for a berth. Even further support for the purposive approach
comes from the Charterparty Laytime Definitions 1980 (applicable only if expressly
incorporated 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 no
loading/discharging berth available to the ship the laytime will commence to run when the
ship starts to wait for a berth and will continue to run unless previously exhausted, until the
ship stops waiting. The laytime exceptions apply to the waiting time as if the ship was at the
loading/discharging berth provided the ship is not already on demurrage. When the waiting
time ends time ceases to count and restarts when the ship reaches the loading/discharging
berth subject to the giving of a notice of readiness if one is required by the charterparty and
to any notice time if provided for in the charterparty unless the ship is by then on
demurrage.

This definition must surely have been drafted with the 1976 Darrah38 decision in
mind 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
shall mean that if no loading or discharging berth is available and the vessel is
unable to tender notice of readiness at the waiting-place then any time lost to the vessel shall
count as if laytime were running, or as time on demurrage if laytime has expired. Such time
shall cease to count once the berth becomes available. When the vessel reaches a place where
she is able to tender notice of readiness, laytime or time on demurrage shall resume after such
tender and in respect of laytime, on expiry of any notice time provided in the
charterparty.

LAYTIME

It is surprising that no case has been to the courts regarding the subject although
there have been two reported arbitrations on the topic (see below). No doubt there
will eventually be a judicial ruling on the matter. In the meantime it would appear
that if owners of vessels wish to avoid the possibility of a dispute when their vessels
wait for a berth in circumstances of berth congestion, they should strive for a clause
that is sufficiently clear to ensure that time waiting for a berth scores up for their
benefit 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 earlier
paragraphs 31, 32 and 34.
The first reported arbitration is LMLN 7122 July 1982 which concerned part
cargoes and a time lost waiting for berth clause. The charter was on an amended
Gencon form. Charterers were to load a part cargo of fertiliser. Clause 4 provided
that time lost in waiting for berth was to count as laytime. Clause 11 provided that
85

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charterers were liable for demurrage at the discharge port. The charterparty also
contained the Centrocon Completion Clause, which provided: Owners have the
liberty to complete with other . . . merchandise from port or ports to port or ports
en route for owners risk and benefit, but . . . same not to hinder the . . . discharge
of this cargo. The vessel arrived off the discharge port on 26 January 1978 and
cabled 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. There
were a large number of ships waiting to discharge fertiliserthe average waiting
time before berthing was 40 days.
On 1 February 1978 the vessel shifted to the inner harbour and on the following
day a written notice of readiness to discharge the fertiliser cargo was given by the
vessel and received by the agents of the fertiliser receivers. However, because of
overstowage of other cargoes, the vessel was not in fact ready to discharge fertiliser
until 12 February. The other part cargoes were discharged between 2 February and
4 March when discharge was interrupted. On 7 March, for the first time, a fertiliser
berth became available to this ship and discharge of fertiliser commenced, being
completed on 17 March. Discharge of the remaining part cargo resumed on 13
March and was completed on 17 March. The vessel sailed the next day.
The owners claimed demurrage. Although they could not maintain that a valid
notice of readiness could be given before 12 February, the owners submitted that all
the time from the ships arrival on 26 January until 7 March when a fertiliser berth
became available, was time lost in waiting for berth and should count as laytime
under clause 4 of the charter.
The charterers contended that in a port charter, a time lost clause effectively
added nothing, and did not allow the counting of time which could not be counted
as laytime ordinarily because a ship was unfit for discharge. They contended that
until 2 February, the ship was waiting for a berth at which she could first discharge
the overstowed cargoes, and from 2 February to 7 March she was discharging cargo
other than fertiliser at berths where she was put for that purpose. Therefore she was
not waiting for a fertiliser berth, but was discharging. Also, while the ship was
profitably 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 that
the other cargo here hindered discharge of the fertiliser, and that without it the ship
would have gone straight to a fertiliser berth. To the extent that the ship might have
earned demurrage, that was as a consequence of a breach of this clause and the
charterers were entitled to be indemnified for it and for dispatch which they would
have earned but for the breach.
It was held that the owners were entitled to succeed. If the ship had had the same
cargoes on board on arrival at the discharge port, but none of them had obstructed
access to the fertiliser, the first notice of readiness would have been valid and laytime
would have started at 08.00 on 28 January. Assuming events had thereafter followed
as they did, laytime would have continued to count notwithstanding the ships other
activities, for it would seem that Ropner v. Cleeves41 would have been decided in
41. (1927) 27 Ll.L.Rep. 317.

86

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Para. 39

favour of the owners if it had been shown that the charterers there were unable to
work the ship during her period of unavailability, as was the case here. If that were
right, and if it were also correct (a) that time lost provisions might operate even
when a ship could not give a valid notice of readiness, and (b) that time lost was
to be counted as if it were laytime counting under ordinary laytime provisions, it
followed that all the time should count in this case.
This also seemed a commercially just result since the ship would have waited for
a fertiliser berth as long as she did in any event, and the charterers lost nothing by
her other activities. What the owners might have earned under their other fixtures
appeared 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 the
charterers had thought that the Centrocon Completion Clause gave them inadequate 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 35117 April 1993 which referred
(inter alia) to LMLN 71. The vessel was chartered on the Gencon form for the
carriage of a part-cargo of bagged fishmeal. The fishmeal was loaded in the bottoms
of each of the ships five holds. It was then over-stowed by another similar cargo
which was carried under an entirely separate charter for different charterers. Both
lots had to be discharged at the same berth. On the evidence, the charterers had and
would have had no possibility of discharging the cargo at any other berth even if it
had not been over-stowed.
When the ship arrived at the discharging port on 10 October at 10.00 hours, no
berth 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 17.40
hours that day. If the cargo under the present charter had not been over-stowed, the
ship 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 under
their charter until the cargo covered by it was accessible. They accepted that once
their cargo was available to them, laytime started. The owners did not dispute that
proposition. However, they said that they were entitled to rely on clause 6 of the
charter, 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 been
referred to pages 143/4 of Summerskill on Laytime, pages 278/286 of Schofield on
Laytime and Demurrage, and to the arbitration award reported in Lloyds Maritime
Law Newsletter (LMLN 7122 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 the
berth for the cargo in question, not for some other cargo. That requirement was
satisfied in the present case. Second, another charter covering the same voyage was
not to be taken into account unless it was apparent on a reading of the charters in
question that they did overlap or were intended to impinge on one another. That
87

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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 two
charters should in any way affect one another. Third, the owners contentions led to
a just result in that even if the cargo had not been overstowed, as much time would
have counted against it because there was no berth available for it.
The arbitrators obviously took a purposive approach to the time lost waiting for
a berth clause but there is no guarantee that the courts will do likewise if and when
an identical matter comes before them.
The tribunal also took a purposive approval in the arbitration cited in LMLN
35626 June 1993. The vessel was chartered on the Gencon form. The vessel was
to proceed to one safe berth . . . always afloat/always accessible . . . to load
bulk cement clinker. Clause 5 provided:
Time to commence at 2.30 pm if notice of readiness to load is given in writing/by cable
upon vessels arrival at pilot station before noon and at 8 am next working day if notice
given 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 on
arrival, Master right to tender NOR WIPON, WIBON; however, vessel to be customs 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. The
anchorage was within the port limits. At 05.30 the ship purported to give notice of
readiness. There was then no berth available for her, and she waited at the anchorage until the early hours of 10 September. She berthed at 07.50 that day. Free
pratique was granted at 08.35 and customs clearance at 09.30. Loading only started
at 14.00, at which time the charterers purported to accept the notice of
readiness.
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 readiness
and start ordinary laytime counting provided she could comply with the requirements 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. The
fundamental 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 purposes
unless the master exercised his right (not an obligation) to tender notice at anchorage. On the evidence, it was not in fact possible for the master to tender notice
whilst at the anchorage, for free pratique and customs clearance could only be
obtained in cases of urgency, and the present case was not one such. Contrary to the
charterers submission, the decision in The Kyzikos42 did not mean that Wibon

42. [1989] 1 Lloyds Rep. 1.

88

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Para. 39

converted a berth charter into a port charter. That case decided just the
opposite.
In the present case there was a clear provision that time lost in waiting for a berth
or for cargo (the latter by specific amendment) was to count, and effect ought to be
given to that in the circumstances prevailing, i.e. the ship actually having to wait for
a berth. Had she not been able to enter the port but for reasons other than those of
awaiting a berth or cargo, then the master would have had the right to avail himself
of the special notice inserted into clause 5 if he had been able to get pratique and
clearance at the anchorage. Failing that, the risk of the waiting time would have
fallen upon owners. That was a perfectly understandable bargain for the parties to
have made, since it meant that delay caused by the charterers failure to perform
their part of the bargaingetting cargo and a berth for the ship ready for her
arrivalfell on them, whereas other delays, for example, those caused by weather,
tug strikes and similar matters, fell on the owners. That also disposed of the
charterers other argument, that the time lost provisions were in some way to be
overridden by the other typed insertions in clause 5.
It is mentioned that the incorporation of Definitions/Voylayrules/Baltic Code into
a charterparty may lead to a different conclusion to the common law regarding the
laytime/demurrage computation because of the last sentence under each of them in
that any notice time is not brought into the computation until the vessel reaches the
place where she can tender a notice of readiness. Usually there will be no problem
in respect of a port charterparty but in a berth charterparty there is a different
approach to the calculation of laytime/demurrage as between the Definitions/
Voylayrules/Baltic Code and what the author considers to be the common law in
respect of this matter. Under the Definitions/Voylayrules/Baltic Code the notice
time is applied when the vessel gets into the berth whereas under the common law
(at least in the authors opinion) the notice time should be applied at the moment
when the vessel would have arrived in her berth if the berth had been available, see
earlier paragraph 39 as to what Lord Diplock had to say in The Darrah. The
difference in approach can lead to a materially different end result. For example, on
the basis that there is a six hours notice time clause (very usual), an excepted
laytime period of 17.00 Friday/08.00 Monday, laytime is exhausted at 13.00 on
Friday under the Definitions/Voylayrules/Baltic Code, the berth becomes available
at 07.00 on a Monday and the vessel berths and tenders a notice of readiness at
08.00 on the Monday. By the application of the notice time when the vessel should
have berthed (under the common law) laytime is exhausted at 10.00 on the Monday
(two hours after the excepted period of 17.00 Friday08.00 Monday since 4 hours
of the 6 hours notice time would have been available to the charterers prior to the
weekend excepted period) and the vessel comes on demurrage at that time whereas
under the Definitions/Voylayrules/Baltic Code (mentioned already) the vessel would
have been on demurrage from 13.00 on the Friday right through the weekend
period with demurrage simply ceasing for the period from 08.00 until 14.00 on the
Monday. Therefore, a very clear advantage to the shipowner and a good example of
the Definitions/Voylayrules/Baltic Code being less advantageous to the charterers
than the common law in certain circumstances.
89

Para. 40

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40. A time lost waiting for berth clause and overstowed cargo arose for adjudication
in The Agios Stylianos43 (that is before the Darrah decision) where the owners of
the vessel entered into two separate charterparties for carriage of cargoes from
Constanza to Lagos. One was in respect of 450 tons of vehicles and the other in
respect 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 discharging
time.
The vessel arrived at Lagos at 12.20 hours on 15 May 1971, and waited for a
berth until 20.00 hours on 29 May 1971. Discharge of the vehicles was completed
on 1 June 1971, at 13.00 hours and discharge of cement began immediately
thereafter.
The owners were awarded demurrage from the vehicle charterers at the agreed rate
for the period spent in waiting for a berth between 15 and 29 May. In arbitration
proceedings the owners sought to recover a similar amount from the cement charterers. The arbitrators dismissed their claim and stated their award in the form of a
special 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 purpose
of laytime and demurrage calculations should start running from 12.20 on 15 May, when the
vessel arrived off Lagos and waited for a berth or from 08.00 on 2 June, when the vessel was
able 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 meant
time lost waiting for the cement berth;
(ii) none of the time lost or wasted before the vehicles had been discharged
was spent lost or wasted waiting for the cement berth and that once the
vehicles had been discharged the cement charterers had the right and duty
to 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 of
laytime and demurrage calculation time started to run from 08.00 hours
on 2 June 1971, and the award would be upheld.
See also LMLN 35117 April 1993 detailed earlier in paragraph 39 for a similar
approach by arbitrators where there were two part cargoes, one overstowing the
other.
41. An issue arose in arbitration LMLN 11415 March 1984 regarding whether
the charterparty laytime exceptions should be applied to the time spent waiting for
a berth where the printed words discharging time had been replaced by count in
full.
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. next
working day if notice given during office hours after noon unless commenced earlier . . . Any
time lost in waiting for berth whether in free pratique or not to count in full.
43. [1975] 1 Lloyds Rep. 426.

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Para. 41

(The last two words had been inserted in place of the printed words as discharging
time, which had been deleted.)
29. . . . Cargo to be discharged at the rate of . . . weather permitting, and time from
Saturday noon to 8 a.m. on Monday and holidays excluded, even if used, unless vessel
already on demurrage. Laytime reversible at loading/discharging port.

The owners argued that the words time lost in waiting for berth whether in free
pratique or not to count in full had the effect of ensuring that all time spent by the
vessel in waiting for a berth at the discharge port should count without the application of any charterparty exceptions. They place heavy reliance on the words in
full. The charterers contended that time meant laytime. Therefore, clause 4 had
to be construed as meaning that any laytime lost in waiting for berth was to count
in full. Charterers also argued that the exceptions should apply to the time lost
waiting for a berth unless it was abundantly clear that the position should be
otherwise.
It was held that the charterers construction was correct. The first two words of
the sentence Any time lost in waiting for a berth . . . to count in full were most
important in giving meaning to the later words in the same sentence. There was no
doubt that the words any time lost meant any laytime lost.44 The parties had
therefore intended, by way of the first words in that sentence, that laytime was the
all-important aspect. There was an onus on the owners to show why the words to
count in full should derogate from laytime so that every minute of time that the
vessel was waiting for a berth should score in full for the owners benefit. The
owners had not satisfied that burden. If the owners intention had been to derogate
from the opening words of the sentence so as to strike at the core of established
laytime computations, they should have ensured that sufficiently cogent language
was used in the all-important sentence so that it was clear that all time waiting for
a berth should score up without the application of the laytime exceptions. (For
example, wording such as: Any time lost in waiting for berth to count in full, with
all exceptions excluded.) The owners claim for balance of demurrage therefore
failed.
References have been made earlier to the counting of laytime with a time lost
waiting for a berth provision and to the favoured view that the time should be
applied moment to moment as it occurs. There is some judicial support for this, see
The Loucas N (already referred to earlier in paragraph 35 on the principal argument) where Mr Justice Donaldson (as he then was) decided that the time lost
should be brought into the account as and when the delay occurs and this view
appears to be adopted by London arbitrators. Of course, the position may be
different if the parties have expressly agreed as to how the time lost waiting is to
count, as in the North American Grain Charterparty 1989 (referred to earlier in
paragraph 31) where clause 17(b) of the form provides for time waiting for a berth
to be added to laytime or time on demurrage. An issue came up in LMLN 23027
August 1988 where clause 17(b) of the Norgrain form read:

44. The Darrah [1976] 2 Lloyds Rep. 359.

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S P E C I A L C L AU S E S R E A R R I V I N G

If the vessel is prevented from entering the commercial limits of the . . . port . . . on the
order of the charterers . . . and the Master warrants that the vessel is physically ready in all
respects to . . . discharge, the time spent waiting at a usual waiting place outside the commercial limits of the port or off the port shall count from vessels arrival at such waiting place and
will continue to run as per clause 18 until . . .
Time so used is to be added to laytime (or time on demurrage) used for . . . discharging the
entire 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 the
ship to enter Saudi territorial waters immediately, and accordingly they gave orders
that the ship was to wait outside until they said otherwise. The ship anchored off
Jeddah on 26 April and gave notice of arrival. She moved into port, pursuant to the
charterers instructions, on 7 May when she anchored in the roads. She berthed on
13 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 ports
commercial 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 the
present case should be counted against the available laytime as and when it
occurred. That view might seem to be reinforced by the reference in the following
sentence 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 lines
149/152. There, the Norgrain form provided that time so used (in this case
waiting 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 to
be added it could not already have been counted against laytime as and when it
occurred, and more so since it was to be added to laytime which had been used, thus
suggesting that it was brought in at the end of the calculation.
The conclusion that, under lines 149/150 waiting time was to be brought into
account after ordinary laytime, was reinforced by the reference to time on
demurrage and the entire cargo. The latter certainly suggested an end of the
day calculation, but the former made anything else inconceivable. By definition,
where there was separate laytime for loading and discharging operations (as in the
present case) a ship that was prevented from entering her discharging port could not
arrive on demurrage, and so waiting time could not be added to demurrage time
unless it was treated separately and account of it was only taken at the end of the
ordinary laytime/demurrage calculation.
The proper way to read lines 142/3 was as though they only provided for waiting
time to be calculated as if it were laytime. So, once the ship entered the port and
gave notice of readiness, ordinary laytime started to count and run until its expiry,
whatever might have happened earlier. A laytime/demurrage statement was then
prepared starting with the calculation of time used within the port, and there was
added to that the out-of-port waiting time.
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Para. 42

The calculation of that waiting time was a simple matter. It started from the
arrival at the usual waiting place (line 143) and then counted subject to laytime
exceptions (as per clause 18line 143). If whatever laytime was permitted by
clause 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 the
end of the ordinary laytime/demurrage calculation. If that calculation had
resulted in some of the available laytime being left unused, then the waiting time
would simply be applied against that amount of unused time. If the waiting time
exceeded that time, demurrage would be due for the difference. If the unused
laytime exceeded the waiting time, dispatch would be due for the difference, and if
the 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 something
of a comeback in certain trades and should be considered.
If the parties have agreed a custom of the port clause evidence will be admissible to show that there is a recognised and established custom of the port which has
a bearing upon when a vessel becomes an arrived ship. By custom it may be
necessary for a vessel to reach a particular part of the port or to be in some
particular place before she can be an arrived ship. The English cases which have
relevance 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 an
inlet of the sea the entrance to which was very distant from the quay where ships
were unloaded. It was proved that, by a custom of the port, laytime for discharging
did not commence until the vessel was at the unloading quay and that this would be
applicable to the charterparty in question.
Brown v. Johnson46 concerned the port of Hull where the vessel was ordered to
discharge. She arrived and was reported on 1 February, entered the discharging dock
on 2 February and moved into the discharging berth on 4 February. By custom the
usual place of discharge was the dock and laytime therefore commenced on 2 February
and 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 ship
reaching the agreed destination. In some ports in the Far East it may well be that a
vessel 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 considered
to 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.

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S P E C I A L C L AU S E S R E A R R I V I N G

inner anchorage where inspections take place, rather than anchoring at an outer
anchorage within the port where she would otherwise satisfy the Oldendorff test and
be an arrived ship.
It has to be emphasised that a party who attempts to show a binding custom has
a heavy duty to discharge, the more so in the modern context of substantially
extended and diverse commercial activity. The difficulty is all the more apparent
when it is sought to show that words, which are fairly capable of having a perfectly
comprehensible meaning on an ordinary reading, have a particular meaning by
virtue of some custom.
It was normal to prove a custom by adducing expert evidence and frequently by
collecting statements from a large number of people in the relevant industry as to an
alleged custom. To succeed on a custom argument a party has to show that there
is a custom which is notorious, certain and reasonable and while a party might be
able to satisfy the last two ingredients fairly easily there are obvious problems in
showing that there is a custom which is notorious. See for example LMLN 40118
March 1995 which concerned the quality of low pour fuel oil from Nigeria. In that
arbitration the respondent buyers argued that in a contract for the sale of inter alia
a cargo of low pour fuel oil from Nigeria, the phrase . . . grade . . . as per usual
Nigerian export quality meant, in particular, that the cargo had to have a sulphur
content of not greater than 0.37% by weight. The claimant sellers contended that
the phrase had to be given its ordinary, everyday meaning, i.e. the quality of oil
usually lifted out of Nigeria, and that saidwhich was hardly disputedthat the
sulphur 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 heavy
duty to discharge, the more so in these days of substantially extended and diverse
commercial activity. This difficulty was all the more apparent when it was sought to
show that words, which were fairly capable of having a perfectly comprehensible
meaning on an ordinary reading, had a particular meaning by virtue of some
custom. It might not be without significance that of the half dozen cases which postdate 1952 listed under the heading Custom in Lloyds Law Reports Subject
Index for 19191986, a custom was only successfully shown in one, and that was in
relation to a custom of a port.
It was normal to prove a custom by adducing expert evidence and frequently by
collecting statements from a large number of people in the relevant industry as to
the alleged custom. To succeed on the custom argument, the buyers had to show
that there was a custom which was notorious, certain and reasonable. There could
be no argument about the certainty and reasonableness of the custom they sought
to 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 said
that for the past 212 years or so he had been involved in purchasing about 80% of all
Nigerian fuel oil cargos, always from intermediate buyers. He had said that it was
standard 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 a
particular specification provided by Nigerian exporters which included a maximum
of 0.37% sulphur content. The buyers had also relied on some contract documentation, but this was certainly not complete, and there was no documentation relating
94

OT H E R S P E C I A L C L AU S E S

Para. 43

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 provisions
to cover the eventuality that the content might be higher. In another, that was also
true, and there were provisions for the content to be determined on the basis of a
sample 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 price
provisions were not included in the papers) a particular testing method was actually
spelt out.
Moreover, although the buyers said that they purchased some 80% or so of
Nigerian fuel oil cargoes, that still left 20% unaccounted for. It would have been
helpful 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 such
cargoes to the buyers. It was also curious that there should be a custom as to a
specific sulphur content when the Nigerian sellers themselves sold on the basis of a
specified content, but with a price adjustment provision to cover the eventuality that
the sulphur content was higher, and when as a matter of fact the range of sulphur
contents of Nigerian fuel oil varied between 0.30 and 0.40%, with a not insubstantial proportion exceeding 0.37 as the evidence clearly showed. It could not be
safely 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 meaning
and 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 Eurus47 there was a finding by the arbitrators that the 8 oclock
rule (any oil shipment in Nigeria which was completed before 0800 on the first day
of any month was treated as though it had been completed on the last day of the
proceeding month) was a custom of the Nigerian oil export trade. See later paragraph 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 the
use of a specified turn time is seen in some voyage charterparties. In some trades a
voyage 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 for
loading 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 period
from the vessels arrival until she is brought forward to a loading or discharging
berth. It therefore has the effect of delaying the running of laytime for 12 hours in
circumstances 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 what
may in that it should always bite after the vessel reaches her destination. This would
appear to be a fallacy since turn time should only be applicable if a vessel waits to
be called in to her loading or discharging berth; otherwise it should not be applicable. For example, if a vessel reaches her destination in a port charterparty and
proceeds straight to her berth then turn time is irrelevant and the charterers are not
47. [1996] 2 Lloyds Rep. 408.

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S P E C I A L C L AU S E S R E A R R I V I N G

entitled to a delay in the running of laytime because of this factor. The same should
apply in the case of a berth charterparty where the vessel moves straight to a berth
without any wait. In The Themistocles48 clause 6 of the charterparty stipulated that
the vessel be loaded at Sfax and Casablanca in the customary manner alongside the
wharf 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 commenced at 1 p.m. on Friday, 24 October (the day before a local holiday) no time
being lost in awaiting turn. The charterers contended that they were entitled to the
full period allowed for turn even if the vessel in fact berthed before the expiration of
that period. Mr Justice Morris (as he then was) decided the matter against the
charterers, and had this to say:
In my judgment, the contentions of the charterers lead to an unnatural result and give no
sufficient or reasonable meaning to the words employed. If the charterers are correct, there
would seem to be no reason for the employment of the word turn. The period might be
continuing to run when the vessel was in no sense being keep waiting. Nor would any
meaning 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 must
not be kept waiting for more than 48 hours for her turn to be at the particular loading berth
indicated to the vessel by the shippers. Such period of 48 hours may, however, be extended
on account of holidays or Sundays. When the vessel has in fact occupied the loading berth
indicated by the shippers, and, being in free pratique, is ready in all respects to load, and with
her 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 25315 July 1989 is reported as an
arbitration and a Commercial Court decision but it does not appear to have entered
the Law Reports. However, it does have some interest and it also has some relevance
because of its construction of a charterparty guarantee clause in the context of a
berth charterparty and the time when the vessel was considered to have arrived in
order to activate the guarantee clause in the charterparty. The charterparty was on
the Gencon form. It provided that the discharging port or place was to be one good
safe 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 and
subject to mechanical breakdowns.

The vessel arrived at Cork on 22 December 1986. Notice of readiness was tendered
and accepted at 06.25 that same day. The vessel only received orders to proceed to
berth on 29 December. Discharge commenced on 30 December and was completed
at 20.30 that day.
The owners commenced arbitration proceedings claiming damages in respect of
the delay at Cork. The issues were (1) whether the vessel arrived at Cork in time to
trigger the Guarantee Clause in the charterparty; (2) if it did, whether demurrage 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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OT H E R S P E C I A L C L AU S E S

Para. 44

The arbitrators held that the vessel did arrive in time to trigger the Guarantee
Clause and that the owners were entitled to recover damages at large. The
arbitrators found that the vessel, having arrived at the anchorage at 06.25, was ready
in 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 to
proceed to a berth were given by the charterers on 22 December, which was why the
vessel 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 to
discharge her cargo by the deadline. The Guarantee provision does not require the vessel to
be at the discharging berth by that time; the requirement is only that she should at that time
be an arrived ship in the accepted charterparty sense, and be operationally ready to discharge 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 be
nominated by the charterers. The vessel could therefore only become an arrived
ship when she reached the berth.
The owners contended that this was a port charter, and that the vessel was an
arrived ship by 06.25 on 22 December. Alternatively, even if the charterparty was a
berth charter, the owners argued that on a proper construction of the guarantee
clause or by necessary implication, the guarantee clause was activated when the
vessel arrived at the anchorage at 06.25 hours on 22 December.
It was held that the laytime/demurrage provisions were standard provisions in a
voyage charterparty. The rationale was that for a shipowner time was money. He
wanted a quick turn-round. Conventionally, therefore, he stipulated for laytime and
demurrage and dispatch provisions. They afforded him protection in the event of
delay, albeit that the demurrage rate set a ceiling on his recovery. The correlative
was that the charterers were entitled to keep the vessel substantially beyond the lay
days at the expense of paying demurrage, provided that the delay did not frustrate
the commercial object of the adventure.
In the present case the shipowners wanted far greater protection. Plainly, the
owners concern was the usual delays experienced in ports, the main one being port
congestion. That seemed to be the contextual scene against which the guarantee
had to be viewed.
The owners had sought and obtained rights under the guarantee provision which
were intended to be separate and more extensive than those conferred by the laytime
and demurrage code.
The first question was whether the vessel arrived in Cork in time to trigger the
guarantee. In the Courts view, the guarantee was intended to be a separate and
absolute undertaking by the charterers. It ought to be interpreted in a purposive
way. The concept of an arrived ship, and the distinction between berth and port
charterparties, was a recondite [abstruse] part of English law. It abounded with
artificial distinctions and qualifications. That body of law had developed in the
context of laytime and demurrage provisions. There was no reason whatever why
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S P E C I A L C L AU S E S R E A R R I V I N G

that approach should be extended to the interpretation of an entirely separate clause


such 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 as
understood in a conventional laytime and demurrage code. It was sufficient that the
arbitrators had found that the vessel arrived at the anchorage of the port; that it was
at the effective disposition of the charterers; and that it probably would have reached
the berth before 08.00 hours on 22 December if the charterers had given such
orders. The vessel was, therefore, ready for discharge in all respects in every
relevant sense of the word.
Accordingly, the arbitrators rightly concluded that the guarantee had been triggered, and it was unnecessary to express any view on the question whether this was
a port or berth charter.
As to the second question, namely, whether the owners remedy for breach of the
guarantee was confined to the recovery of demurrage, the broad purpose of the
guarantee was plainly to confer on the owners rights in respect of delay over and
above the rights contained in the conventional laytime and demurrage code. There
was no hint in the language of the guarantee or elsewhere in the charterparty, that
the 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.

98

CHAPTER THREE

BREACHES OF CONTRACT/DAMAGES
RELEVANT TO ARRIVING AT THE
DESTINATION: IMPLIED TERMS

REACHABLE ON ARRIVAL/ALWAYS ACCESSIBLE INCLUDING


THE 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 charterparties) was not fully realised until the 1960s. An always accessible provision (seen
more in bulk dry cargo charterparties) is considered to have the same meaning
as reachable on arrival: see later paragraph 53. The modern interpretation of
the words by the courts has been very favourable to owners whereby they receive
compensation (damages), usually based upon the demurrage rate but not necessarily so, in respect of delays in berthing because of charterers not providing a
berth which is reachable at the time of the vessels arrival at or off the port.
The first important case before the courts concerned port congestion. It started
as an arbitration and then went to the High Court as a special caseThe Angelos
Lusis.1 The charterparty stipulated (inter alia) that: . . . a voyage from Constanza
to . . . . The vessel shall load and discharge at a place or at a dock or alongside
lighters 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 28
January 1962. She was not permitted by the port authorities to enter the port until
a berth was available and this occurred on 2 February. Cargo was ready at all times
for loading but loading by lighters was impracticable in the surrounding weather
conditions. The owners claimed against the charterers for damages in respect of the
time that the vessel was delayed in the roads waiting for a berth. They alleged that
there was an absolute obligation on the charterers to have a place for loading
reachable on the arrival of the vessel at Constanza; further, even though the vessel
might not have been an arrived vessel for laytime purposes she had arrived within
the meaning of the above-mentioned clause.
The charterers contended that the charterparty was a port charter and the risk of
any loss of time, before the vessel became an arrived vessel, was on the owners
unless either (a) there was a clear provision in the charterparty to the contrary or (b)
the vessels inability to enter the port and become an arrived vessel was caused by
the charterers breach of contract. Reachable on arrival meant arrival in the port
and the charterers were not obliged to nominate a loading berth until the vessel
1. [1964] 2 Lloyds Rep. 29.

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B R E AC H E S O F C O N T R AC T / DA M AG E S R E A R R I V I N G

entered the commercial area of the port on 2 February (at this time the Oldendorff
case had not even commenced its voyage through the courts).
In the arbitration, the umpire decided the case in favour of the owners subject to
the opinion of the court on a question of law as to whether the charterers were in
breach of contract in failing to provide a reachable berth for the vessel when she
arrived off Constanza on 28 January. It was held by Mr Justice Megaw (as he then
was) that the charterparty provisions referred to above were intended to impose on
the 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 berth
which the vessel, proceeding normally, would be able to reach and occupy), at the
point, whether within or outside the fiscal or commercial limits of the port, where
in 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 in
breach of contract in failing to provide a reachable berth for the vessel (occasioned
by port congestion) when she required such on her arrival. In deciding as above, the
judge emphasised:
(a) The roads were the normal and proper place for a vessel to lie while
awaiting permission to enter the port and that the words in the charterparty
on her arrival did not have the technical meaning of arrival in respect
of an arrived vessel in a port charterparty. The words denoted the
physical arrival of the vessel at a point, wherever it might be, whether
within or outside the fiscal or commercial limits of the port, where the
indication or nomination of a particular loading place became relevant if
the 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 nominate
a reachable place, which meant 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.
(c) The time of the vessels arrival, within the above-mentioned charterparty
words, had come when the vessel had gone as far as she could go, whether
to the verge of or within the port, in the absence of a nomination by the
charterers 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 congestion
and the reachable on arrival provision of the charterparty. It appeared to be a
sensible decision bearing in mind that it was port congestion which prevented the
vessel from moving into a berth when she arrived off the port; historically, port
congestion 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 has
not become an arrived ship when she arrives off the port so that laytime cannot
commence; however, with the inclusion of the important words reachable on
arrival, owners may be compensated on the basis of damages for breach of contract, 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. 46

words, so long as the vessel has got as far as she can get, without the nomination of
a 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 the
High Court on an agreed statement of facts which stated (inter alia) that:
(a) The vessel was voyage chartered to proceed from one safe port Persian
Gulf to one or two safe ports on the Mombasa/Capetown range.
(b) Clause 6 of the charterparty stipulated that the vessel shall load and discharge at a place or at a dock or alongside lighters reachable on her arrival
which shall be indicated by the charterers.
(c) Under the charterparty the owners guaranteed that the vessel would arrive
at Lourenco Marques with a maximum draught of 32 5 with no deadweight for the charterers account.
(d) After loading a cargo of crude oil the vessel was ordered by the charterers
to discharge at Lourenco Marques.
(e) At Lourenco Marques there were only two berths suitable for the discharge
of oil cargoes from vessels of the size of the President Brand; the vessel on
her arrival draught of 32 3 could have lain safely afloat at all states of the
tide at either of these berths but was not able to cross the bar and proceed
up the estuary to these berths because of a shortage of water.
The owners adopted the same arguments which had been used in The Angelos
Lusis.3 According to them, there should be the same result albeit that the Angelos
Lusis case3 involved port congestion whereas the circumstances in The President
Brand2 concerned a vessel which was prevented from crossing the bar at the
entrance 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, although
the berth was not reachable because of a shortage of water at the bar, the charterers
were in breach of their obligation to nominate a berth which the vessel could reach
on her arrival. He said (inter alia):
Reachable as a matter of grammar means able to be reached. There may be many reasons
why a particular berth or discharging place cannot be reached. It may be because another
ship is occupying it; it may be because there is an obstruction between where the ship is and
where she wishes to go; it may be because there is not a sufficiency of water to enable her to
get there. The existence of any of those obstacles can prevent a particular berth or dock being
reachable and in my judgment a particular berth or dock is just as much not reachable if there
is not enough water to enable the vessel to traverse the distance from where she is to that place
as 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 and
they were in breach of that obligation if they are unable so to do.

2. [1967] 2 Lloyds Rep. 338.


3. [1964] 2 Lloyds Rep. 29.

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The charterers sought to distinguish the facts in this case from The Angelos
Lusis3 (shortage of water on the bar as opposed to port congestion) so as to assert
that there was no causation factor regarding reachable on arrival since the vessel
would have ground to a halt in any event, not because of the want of a berth but
because of insufficiency of water. On this aspect the judge went on to say that it was
true, as a matter of causation, that the reason why the vessel could not cross the bar
was a shortage of water but that was not the crucial consideration; the crucial
consideration was that, because of a shortage of water, there was not a place or a
dock reachable on the vessels arrival at Lourenco Marques and therefore the
resulting loss of time had to be borne by the charterers.
Some exception was taken to this decision because tide/shortage of water had
been, 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 a
Mombasa/Capetown range, the discharge port to which the vessel was eventually
ordered was named in the charterparty (clause 25Owners undertake the vessel
will arrive at Lourenco Marques with a maximum draught of 32 5 with no
deadweight for charterers account). Therefore, it appeared that the owners took
the risk of their vessel, with maximum cargo, being delayed because of known tidal
problems. Like The Angelos Lusis,4 The President Brand5 was not concerned with
the counting of laytime but with damages for breach of contract: however, unlike
The 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 Lusis4
regarding the words emphasised earlier in paragraph 45, at that point of time a berth
which the vessel, proceeding normally, would be able to reach and occupy.
47. The application of the President Brand decision5 is that owners get compensated
for loss of time because of a reachable on arrival provision in a charterparty in
circumstances when otherwise they might not be so fortunate. Further, they can get
the benefit of time lost in respect of delay factors which, traditionally, have been at
the risk of owners; for example, insufficiency of water. It logically follows that if a
vessel cannot get into a berth because of bad weather (traditionally at the risk of
owners) owners get the benefit of the clause since, according to the reasoning of the
judge in the President Brand case,5 the crucial consideration would be that, because
of the bad weather, there was not a place or a berth reachable on the vessels
arrival.
Although there were no reported English cases regarding the application of the
words reachable on arrival to a bad weather situation until 1988 (see paragraph
50, below) there were arbitrations where, it was understood, some arbitrators
allowed the words to bite in favour of the owners when bad weather prevented the
vessel, after her arrival at the port, from proceeding into a berth. Other arbitrators
found it objectionable that owners should get the benefit of time lost waiting to
enter a port when a vessel was delayed because of factors which, in the past, had
been traditionally at the risk of owners; they thought that the words should only bite
4. [1964] 2 Lloyds Rep. 29.
5. [1967] 2 Lloyds Rep. 338.

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Para. 48

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; delays
which, in the past, had been traditionally borne by owners should not be switched
to the risk of charterers simply by way of a reachable on arrival clause. While The
Laura Prima6 did not resolve the conflict between London maritime arbitrators in
respect of the application of The President Brand to bad weather circumstances
when a vessel arrived at or off a loading/discharging port, it resulted (inter alia) in
parties and arbitrators focusing upon the application of reachable on arrival to
bad weather arrival circumstances in the context of clauses 6 and 9 of the then much
used Asbatankvoy charterparty; further, the House of Lords decision ultimately led
to a resolution of the divergent approach taken by different arbitrators to the same
facts and problems.
48. The words reachable on arrival were not considered by the courts between
1967 and late 1979 when The Laura Prima was heard in the High Court save for
The Delian Spirit7 which case, in any event, was more concerned with the assessment of laytime/damages in the context of a breach, by the charterers of their
obligation (see later in this chapter, paragraph 61). The Laura Prima concerned
port congestion and important standard clauses in tanker charterparties vis-`a-vis
the counting of laytime. The standard clauses 6 and 9 of the Asbatankvoy charterparty were as follows:
6. NOTICE OF READINESS. Upon arrival at customary anchorage at each port of loading or
discharge 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 or
no berth, and laytime, as hereinafter provided, shall commence upon the expiration of six (6)
hours after receipt of such notice, or upon the Vessels arrival in berth (i.e. finished mooring
when at a sealoading or discharging terminal and all fast when loading or discharging
alongside a wharf), whichever first occurs. However, where delay is caused to Vessel getting
into 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 BERTHINGSHIFTING. The Vessel shall load and 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, provided the Vessel can proceed thereto, lie at, and depart
therefrom always safely afloat, any lighterage being at the expense, risk and peril of the
Charterer . . .

It was decided by the House of Lords that:


(1) clauses in charterparties as in other contracts had to be construed as a
whole and it was impossible to ignore the opening words of clause 9 in
construing the penultimate line of clause 6 and the reference in clause 7
to loading and discharging berth meant designated and procured berth
for it was to that berth the vessel would be moving, the time occupied by
such movement being excluded from the laytime calculation;
(2) reachable on arrival was a well-known phrase and meant precisely what
it said; if a berth could not be reached on arrival the warranty was broken
6. [1982] 1 Lloyds Rep. 1.
7. [1971] 1 Lloyds Rep. 64 and 506.

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unless there was some relevant protecting exception and the berth was
required to have two characteristics: it had to be safe and it also had to be
reachable on arrival;
(3) although the finding by the umpire that the sole cause of the delay to the
vessel getting into berth was the unavailability of a berth due to the
presence of other vessels over which the charterers had no control was
unequivocal, this fact did not avail the charterers unless the berth which
the vessel was prevented from reaching by reasons over which they had no
control was one which had already been designated and procured by the
charterers 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 shipping
commercial world, not necessarily because of the reasoning set out in the speech of
Lord 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 congestion had been traditionally at the risk of charterers and there was no case to displace
this risk by the words of the second sentence of clause 6 of the charterparty. That
is, the words should not bite in favour of the charterers in respect of port congestion
but would be free to do so regarding bad weather or some other cause of delay
outside the control of the charterers, this view turned out to be wrong, see below at
paragraph 50. However, the House of Lords decision in The Laura Prima8 threw
considerable doubt on whether or not charterers could take any benefit from the last
sentence of clause 6 in such circumstances; many lawyers were of the view that the
decision of the House of Lords prevented charterers from taking any intrinsic
benefit from the last sentence of clause 6.
49. For some years maritime arbitrators differed as between themselves regarding
the application of reachable on arrival to bad weather circumstances preventing a
vessel berthing vis-`a-vis an Asbatankvoy charterparty. The result of an arbitration
could depend on which arbitrators were deciding whether or not the last sentence
of 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 paragraphs
48 and 49) but such is now a matter of history in view of the courts decisions in
1988, see paragraph 50 below.
50. The divergency between London maritime arbitrators continued throughout
1986 and 1987. In the latter year two arbitration awards were made regarding the
effect of the Laura Prima decision in circumstances of bad weather, prohibition of
night navigation, and the unavailability of tugs when a vessel arrived at or off the
loading/discharging ports; both awards (The Sea Queen and The Fjordass)
became the subject of appeals.

8. [1982] 1 Lloyds Rep. 1.

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Para. 50

In The Sea Queen the vessel was chartered on the Asbatankvoy form. She
arrived off the loading port at 06.55 on 1 January 1985 and tendered notice of
readiness. There were two berths capable of accommodating the vessel and both
were unoccupied at 06.55 on 1 January when the charterers designated one of those
berths for the vessel.
The vessel could not, however, be berthed without the assistance of tugs. Between
06.55 and 14.00 on 1 January, the only two tugs available at the port were occupied
in berthing two other ships and were unavailable to assist the vessel. The tugs in
question were owned by companies separate from the charterers and the charterers
had no control over them and had no control over the day to day running of the port
installation.
From 14.00 on 1 January until 22.15 on 3 January the berthing of the vessel was
delayed by bad weather (strong winds and swell). Throughout that period, however,
the berth which had been designated by the charterers for the vessel remained
vacant. The vessel finally berthed at 00.36 on 4 January.
The owners claimed demurrage, contending that laytime commenced at 12.55 on
1 January and continued to run while the vessel was delayed. The charterers argued
that 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 and
9 of the Asbatankvoy charterparty to circumstances where the non-availability of
tugs and/or wind/swell (referred to as bad weather) prevented a vessel getting into
a loading/discharging berth when she arrived off a loading/discharging port, prior to
the commencement of laytime, had not been considered by the courts. They
thought that the circumstances of no tugs being available to berth the vessel was
even more compelling than bad weather particularly when the responsibility for
obtaining tugs was on the owners of the vessel.
In the High Court Mr Justice Saville (as he then was) had few doubts whatsoever
in reversing the majority arbitrators in The Sea Queen.9 He held that it was clear
from The Laura Prima8 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 the
vessel reachable on her arrival designated or procured by the charterers in accordance with clause 9.
The majority of the arbitrators in the present case had taken the view that a
distinction should be drawn between reasons for delay in berthing traditionally
regarded 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 that
if every reason for delay were to be at charterers risk, the result would be very
unreasonable. They accordingly concluded that the charterers were protected by
the 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 being
reasonable or unreasonable, could not be the starting point for construing a contract of the present kind. The starting point had to be the phrases the parties had

9. [1988] 1 Lloyds Rep. 500.

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chosen to use. It was not a permissible method of construction to propound a


generally accepted principle for sharing the risk of delay between owners and
charterers or seeking in the abstract to determine a reasonable allocation of risk of
delay and then to seek to force the provisions of the charter into the straitjacket of
that principle or into that concept of reasonableness. To do so would be to rewrite
the bargain that the parties must be taken to have made by the words that they had
chosen to use.
Secondly, there were in any event great difficulties in trying to propound some
general 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 bad
weather?
Thirdly, there was nothing in the case which qualified the ambit of the obligation
imposed upon the charterers to designate and procure a berth which the vessel was
able to reach upon her arrival. Clearly, if there had been some relevant protecting
exemption the charterers could take advantage of it. Equally, if the reason the berth
could not be reached was some breach of charter by the owners, then the charterers
would also be protectedeither on the basis that their obligation only extended to
finding a berth for a vessel conforming to the charter, or on the basis that any claim
by the owners with regard to the delay would be defeated by a cross-claim based on
the owners breach. Short of such cases, however, or where the contract could be
said to be frustrated, the charterers had warranted in clear and simple words that
there 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 the
House of Lords had held that the word berth in clause 6 meant a berth duly
nominated in accordance with clause 9. However, the Laura Prima decision was
binding on the court and there were no grounds for distinguishing between the
various causes which might make a berth unreachable for the vessel, unless the
particular cause was specifically exempted elsewhere in the charter or was a consequence of the owners breach of the charter or was such as to frustrate the
adventure as a whole. Accordingly, the appeal would be allowed. The charterers
were 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 berth
which the vessel, proceeding normally, would be able to reach, there was no breach in the
present case, for the vessel would not normally proceed to berth in this port without tugs or
in the weather conditions that prevailed. To my mind this argument too is unsustainable. The
phrase proceeding normally is taken from the judgment of Mr Justice Megaw in The Angelos
Lusis. To my mind the phrase in context simply means that the berth nominated must be one
which the vessel can reach by proceeding without waiting [to go] into the port in the ordinary
way. Were this not so, then in no case would the charterers be in breach of clause 9, for in the
sense for which they contend no vessel would proceed normally if the berth was not reachable
for any reason, including congestion.

(The words in square brackets are inserted by the author as the words are missing
in the law report.)
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Para. 50

At about the same time The Fjordass arbitration reached the High Court.10 The
same charter terms were applicable (Asbatankvoy clauses 6 and 9) in circumstances
where at the discharge port, Mohammedia, the vessels size made it impossible for
her to berth and discharge anywhere but at Sealine No. 3. The vessel tendered
notice of readiness at 00.45 on 8 April 1985 but was unable to proceed immediately
to her designated berth due to combination of a prohibition of night navigation
coupled with a requirement of compulsory pilotage. Pilotage was not available until
9 a.m.
At 10.55 on 8 April a pilot came on board. Until 14.02 attempts were made to
bring the vessel to the discharging line but eventually the attempts were abandoned
due to bad weather. Until 16 April bad weather continued to prevent the vessel from
berthing. Thereafter, on 16 and 17 April a strike by tug officers operated to prevent
berthing. 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 the
decision in The Laura Prima11 only applied in cases where the berth was congested. The present case was distinguishable because the primary cause of delay had
been the combination of the prohibition of night navigation coupled with compulsory pilotage. Both those restrictions had been imposed by the local port authority.
The berth designated by the receiving installation had been available on the vessels
arrival at the discharging port. Accordingly, the charterers were entitled to take
advantage of the exception in the last part of clause 6. The owners appealed. It was
held by Mr Justice Steyn (as he then was) that the approach of the majority was
wrong. They had failed to give the words reachable on arrival their ordinary
meaning. Instead, they had started from the premise that in relation to voyage
charterparties responsibility for navigational matters rested on the shoulders of
owners and not charterers. That was referred to as the owners traditional
responsibility.
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 into
which the adventure was divided. However, Lord Diplocks general observations
were never intended to lay down a special rule of construction, or to require that one
should approach a special clause such as a reachable on arrival provision with a
predisposition in favour of the traditional allocation of risk. On the contrary, Lord
Roskill made clear in his opening observations in The Laura Prima that such an
approach would be wrong.
Adopting the reasoning of the dissenting arbitrator, most charterparty disputes
and 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 Lloyds Rep. 336.


11. [1982] 1 Lloyds Rep. 1.
12. [1973] 2 Lloyds Rep. 285.

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being the fault of the owners or the charterers. However, the terms of the charterparty specified that the charterers should bear the risk of the delays that actually
occurred.
The charterers had argued that the Laura Prima decision covered only physical
causes of obstruction which rendered the place in question not reachable, and
therefore did not apply in the present case. However, it would be wrong to approach
the reachable on arrival clause with a predisposition in favour of a restrictive
interpretation. The charterers argument involved interpreting the relevant words as
reachable on arrival without delay due to physical causes. That ignored the fact that
Mr Justice Mocatta and the House of Lords contemplated that a non-physical cause
such 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 in
conflict with the interpretation of the reachable on arrival clause in The President
Brand.13 The report of The Laura Prima did not mention that The President
Brand had been cited in argument, but counsel had informed the court that it had
been cited.
The distinction between physical causes of obstruction and non-physical causes
rendering a designated place unreachable was not supported by the language of the
contract or by common sense. It was in conflict with the reasoning in The Laura
Prima and was unsupportable on the interpretation given to that provision in The
President Brand. Quite independently of authority, the court believed it to be
wrong. The interpretation which found favour with the dissenting arbitrator had
moreover the merit of avoiding disputes as to different causes of delay in reaching
a designated berth.
The appeal would be allowed. The charterers had not designated a berth which
was reachable on arrival and could therefore not take advantage of the clause 6
exception.
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 the
vessel, proceeding normally, would be able to reach and occupy. Consequently, in the present
case, it is submitted that until the impediment of a prohibition on night navigation, absence
of tugs, and bad weather, disappeared, the charterers were under no obligation to designate
a berth. The phrase proceeding normally comes from the judgment of Mr Justice Megaw in
The Angelos Lusis,14 at p. 34 (col. 1). It was in my view not used, or intended, as a general
guide as to which causes may or may not rank for consideration under the reachable on
arrival provision. Reachability of a berth may involve practical considerations as to what can
fairly be expected of a vessel. In that sense the idea of a vessel proceeding normally is
relevant. But, if I have correctly interpreted the reachable on arrival provision, there is no
merit in this alternative argument.

Although Mr Justice Steyn and Mr Justice Saville differed in their reasoning regarding proceeding normally the end results were the same.
If charterers wish to avoid the rigours of a reachable on arrival provision in a
charterparty, as now interpreted and well enshrined in the English common law,
13. [1967] 2 Lloyds Rep. 338.
14. [1964] 2 Lloyds Rep. 28.

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Para. 51

they should use a different charterparty to the Asbatankvoy such as the ExxonMobil
Voy 2000 (no reachable on arrival provision) alternatively to ensure appropriate
wording in a charterparty so that risks of circumstances such as bad weather are
transferred to the owners or, alternatively, they are shared. See for example the
Conoco Weather Clause which reads:
Delays in berthing for loading or discharging and any delays after berthing which are due to
weather conditions shall count as one-half laytime, or, if on demurrage, at one-half demurrage rate.

That clause, often type-added in standard form charterparties, should have the
effect of sharing the bad weather risks which may affect the berthing of a vessel so
that if the charterers are in breach of a reachable arrivable provision due to bad
weather the laytime will commence but it will only run on a half-time basis. There
has been some deabte on this subject which is considered later in paragraphs 52
and 53.
51. There are circumstances other than those considered in earlier paragraphs
which may be affected by a reachable on arrival provision and where that provision affords an advantage to owners when laytime would not otherwise commence.
For example, in LMLN 11726 April 1984 the relevant charterparty clauses
provided:
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 fault
of 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 not
get out to the anchorage due to bad weather, the Gas Free Certificate was not
obtained until 15.00 on 3 August. Furthermore, because of congestion, the vessel
did not actually berth until 13 August.
The owners contended that laytime commenced at 10.30 on 31 July. The charterers argued that the obtaining of the Gas Free Certificate was a condition precedent
regarding the commencement of laytime and that therefore laytime did not commence until 21.00 on 3 August.
It was held that because the Gas Free Certificate was not obtained until 15.00 on
3 August, the notice of readiness did not become good until that time, and accordingly laytime commenced at 21.00 on 3 August. However, the charterers were in
breach of charter because they had failed to designate a berth reachable on arrival
when the vessel arrived off the discharge port (The Laura Prima11). It followed
that 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 for
the vessel when she arrived off the discharge port.
If a berth had been available for the vessel on her arrival on 31 July then the
arbitrators assumed she would have berthed by about 08.00 on that day. The
evidence did not point to the vessel not being able to berth on 31 July, because of
bad weather, or any physical reason. It was simply a matter of a berth not being
available. The weather, although preventing small boats coming out to the anchorage at the discharge port, did not close the port for larger vessels. On the basis that
the Gas Free Certificate would have been given by 10.00 on 31 July, laytime would
have commenced at 16.00 on that date. The result was that the owners timesheet
was 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 not
really complain that they should compensate owners on the basis as if the contract
had been performed. It was a fundamental principle that parties should carry out
their obligations under the contract; that overrode the other factors such as the
terms regarding commencement of laytime. The charterers were, however, entitled
to set off the amount of laytime against the delay arising from the breach of
contract.
Accordingly, the charterers were liable to pay demurrage for the period from
16.00 on 31 July to 21.00 on 3 August.
Yet another example of a reachable on arrival provision affording an advantage
to owners in circumstances where there was a breakdown of a vessels windlass
which delayed the berthing of the vessel is the arbitration reported in LMLN
35117 April 1993 (cited in paragraphs 39 and 40 regarding other matters and also
later in paragraph 75).
The vessel was chartered on the Asbatankvoy form. When the ship arrived at the
discharge port (when she was already on demurrage) she was not able to reach a
berth because of weather conditions. She accordingly gave notice of readiness and
anchored at that time. But for the weather conditions she would have been able to
go straight into port and anchor at the multi-buoy mooring to which she was
destined to go.
It had been indicated to the ship that she might move from anchorage to that
berth early in the morning of 18 July, but when attempts were made to raise her port
anchor, the motor of the port windlass, which had just been tested in both directions, broke down. It was subsequently discovered that that breakdown was due to
the defective manufacture of certain steel parts of the motor. That amounted to a
latent defect not discoverable by the exercise of due diligence.
The receivers of the cargo refused to accept a proposal by the owners that the ship
should moor without her port anchor, being held in place by a tug. There was no
positive evidence to indicate that a tug would have been available, and such evidence
as there was led the tribunal to conclude that one would not have been available in
any event.
In the event, the ship was unable to berth until a new windlass motor had been
obtained and fitted in the evening of 24 July. The motor was fully operational at
20.20 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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Para. 51

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 the
anchorage, and she would have been able to moor at it, using two anchors without
any difficulty, just as in the event she moored safely at the anchorage on 17 July. No
doubt the port windlass motor would have given up the ghost when attempts were
made to raise the anchor after the completion of discharging, but that would have
led 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 hours
after giving notice of readiness. The charterers principal submission was that time
did not start until 15.50 hours on 25 July. They said that the ship was not in fact
ready to discharge when the notice of readiness was given, the notice was therefore
invalid and time could not start counting until she berthed. However, the ship was
ready in the sense that she could have gone to her berth, moored safely and
discharged without difficulties at the relevant time. Indeed, she could then have left
the berth, though that would have involved slipping the port anchor and having it
raised by a special operation.
The charterers argued, second, that the delay in berthing which apparently
resulted from the problem with the windlass motor was not caused by any breach of
the laytime provisions or of the obligation upon them to provide a berth reachable
on arrival. There was, they said, a break in the chain of causation, or the consequence was too remote in the sense of not being foreseeable as a result of the
laytime or reachable on arrival breaches.
Third, the charterers contended that the owners were in breach of Special Provision (i) in Part I, M of the charter, which read:
Further vessels characteristics:
...
Vessel . . . is in compliance with usual discharge ports mooring requirements/restrictions for
discharge fuel oil . . .

It was held that the ship was ready when she gave notice of readiness, and that
notice was valid. The fact that she became unready subsequently (as a result only of
having to anchor because of the charterers breach) did not affect that position. The
case was quite different from that of The Virginia M (see later paragraphs 64 and
75) in that there, at the time notice was given, the facts were such that the ship was
not able to complete her discharging operation. Here, the contrary was the case.
The vessel only became unable to discharge because the charterers breach led to
the last straw being placed on the camels back significantly earlier than it would
have been but for that breach.
There was no doubt that there was such a breach, for under clause 9 of the charter
the charterers were bound to designate and procure a berth reachable on the ships
arrival (in the sense which had been given to that word in cases such as The Laura
Prima15). Whilst that breach in effect allowed a valid notice to be given and
demurrage 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 from
it, subject to the ordinary rules on causation and remoteness.
15. [1982] 1 Lloyds Rep. 1.

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It was totally foreseeable that if a charterer failed to provide a reachable berth in


circumstances such as the present, other matters might later intervene and cause
delay to the ship beyond that which was created by the simple unavailability of the
berth in question. It might be, for example, that a berth was occupied but that when
it became free the weather was such as to prevent berthing, or there was a strike of
relevant operatives which had the same effect, or any one of a number of other
possibilities might manifest.
The charterers therefore remained responsible for all the time following their
original breach subject to any relevant charterparty exceptions (of which there were
none in the present case) or a relevant breach or fault on the part of the owners, for
all 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. The
provision as to compliance with usual discharge ports mooring requirements was
a warranty as to the ships description which applied either at the date of the charter
or at the start of the voyage, but was not a continuing warranty any more than any
of 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 protected
by the General Exceptions Clause, clause 19 of Part II, in the particular circumstances 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 voyage
charterparty if there are other clauses in the charterparty which bear on the commencement of laytime in a breach/damages situation and there is no wording like
that in the last sentence of the Asbatankvoy clause 6. In a 1991 reported arbitration,
LMLN 30315 June 1991, the vessel was delayed by bad weather after arrival at
the loading port. Clause 6 of the Tanker Motor Vessel Voyage form charter provided
that the ship was to load . . . at a place or at a dock or alongside lighters reachable
on her arrival, which shall be indicated by charterers . . . and by clause 7 the
laytime 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 services
such as pilotage and towage shall not count as laytime at ports of loading and
discharging.

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, loading
or 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 the
interruption or delay is removed.

The shipowners contended that the charterers were in breach of their obligation
under clause 6 and were accordingly not entitled to rely on either clause 28 or clause
46. The charterers said that the present case was not like The Laura Prima,16
16. [1982] 1 Lloyds Rep. 1.

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Para. 52

which was concerned with the effect, if any, to be given to the exception in the last
sentence of clause 6 in the charter there under consideration, an exception which
did not appear in the present case.
It was held that the charterers argument was correct. The charterers were entitled to the benefit of the bad weather exception in clause 28 (or, if necessary, the
general exceptions in clause 46) and were accordingly entitled to succeed on that
issue.
A later arbitration, LMLN 4894 August 1998, involved consideration of an
Asbatankvoy 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 demurrage
as demurrage, when spent or lost:
(a) for and on an inward passage moving from anchorage to first berth, including
awaiting 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 her
arrival the berth to which she was destined to go was empty. However, the charterers had also chartered another ship (the other vessel) which had arrived at the
same discharge port the previous day, and they wanted to berth her first. Unfortunately, the other vessel could not berth on 31 December because of bad weather
during the first part of the day and because, from 17.00 onwards until 08.00 on 2
January tugs were not available due to holidays. The other vessel berthed in the
morning of 2 January and sailed on 3 January, thereafter the subject vessel berthed
and discharged. The owners contended that time counted from 19.45 on 31
December (6 hours after notice of readiness) while the charterers said that time did
not start counting until 08.00 on 2 January.
The charterers said that they were protected because there was a berth available
when the subject vessel arrived. In any event, they said, The Laura Prima16 only
applied to cases where there was congestion, i.e. not the present case. Thus, if the
ship was not able to proceed because of weather or other risks traditionally borne by
owners, then laytime could not count. In addition, they relied on clause 13 and said
that plainly time was here spent or lost awaiting tugs. Therefore, the proximate
cause preventing berthing was not congestion, but was adverse weather and the
unavailability of tugs, and time could only start counting once those impediments
had ceased.
It was held that the charterers were wrong. The position in English law was
perfectly clear. The Laura Prima did not simply apply to congestion as had been
made more than clear in the subsequent decisions of The Sea Queen17 and The
Fjordass.18
The only question was whether clause 13 affected the position in any way. In the
view of the majority of the tribunal it did not. The time that the subject vessel spent
waiting was not spent awaiting tugs. (Indeed, for the first few hours even that
could not be argued since it was heavy weather which originally prevented the other
17. [1988] 1 Lloyds Rep. 500.
18. [1988] 1 Lloyds Rep. 336.

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vessel from berthing.) The simple fact was that the charterers had failed to designate
and procure a berth that was reachable upon the vessels arrival, and all the time she
spent until she did berth was time spent in waiting for a reachable berth to be
procured. Even if there had been no bad weather and no tug strike there would have
been no reachable berth for the vessel because the other vessel would have occupied
it. The fact that the other vessel was delayed (inter alia) by the tugs holiday did not
enable the charterers to rely upon clause 13 because it was the other vessel that was
awaiting tugs and not the subject vessel. The exception to laytime in clause 13 had
to 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 obligation
to designate and procure a berth reachable on that ships arrival. Accordingly, the
majority of the tribunal concluded that the owners claim succeeded in full.
Although not directly on the point of commencement of laytime, but more to
do with the commencement of demurrage, a 1990 reported arbitration, LMLN
26727 January 1990, is of interest for its consideration of reachable on arrival
and the Laura Prima decision. A vessel chartered on the Asbatankvoy form was
ordered to discharge at a port where, at the time of her arrival, a tug strike was in
progress. A discharging berth was available but the vessel was unable to be berthed
due to the tug strike.
The arbitrator held that the laytime remaining available for discharge started to
count 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 obligation under clause 9 to provide a berth reachable on arrival: The Laura
Prima.
On the following day the laytime expired, so that in the ordinary course the vessel
would have gone onto demurrage. But the tug strike was still going on and, as the
arbitrator 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 last
sentence of the demurrage clause excuse them from liability until the vessel was able
to berth and commence discharge?
The demurrage clause (clause 8) provided as follows: The Charterer shall not be
liable for any demurrage for delay caused by strike, lockout, stoppage or restraint of
labour for [sic] Master, officers and crew of the Vessel or tugboat or pilots.
Was this exception available to the charterers notwithstanding that they were in
continuing breach of their obligation under clause 9 to provide a berth reachable
on arrival? It was a different problem from that posed in The Laura Prima, where
the only question was whether breach of the clause 9 obligation operated to prevent
reliance upon the last sentence of clause 6 ( . . . where delay is caused to vessel
getting into berth after giving notice of readiness for any reason over which Charterer 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 same
impact upon the demurrage exception in clause 8 as it was held to have upon the
laytime exception in clause 6. He decided that the charterers were excused from
liability for demurrage.
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Para. 53

The arbitrator observed that a not dissimilar argument had been raised in The
Johs Stove19 in relation to the half-demurrage provision contained in the second
sentence of clause 8. Although the argument failed because the arbitrator in that
case had found as a fact that the relevant delay had been caused by congestion and
not (as the charterers had sought to argue) by the shore labour dispute, there was
no suggestion that the argument would have been rejected if, on the facts, the
charterers 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 whether
breach of the reachable on arrival obligation was of any materiality where a vessel
was already on demurrage on her arrival at the discharge port and there existed a
situation falling within either the second or third sentences of clause 8.
Both of the above arbitrations, LMLN 303 and LMLN 267, support the premise
that a reachable on arrival provision in a charterparty may not be as favourable to
shipowners as owners imagine and where an exceptions clause is sufficiently clear
arbitrators may apply it so as to suspend the running of laytime or the time on
demurrage in circumstances where the berth is not reachable on the vessels 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 be
synonymous. That was the view of Mr Justice Webster in The Kyzikos.20 Charterparty 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 there
will 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 or
discharging berth be provided to the vessel on her arrival at the port which she can
reach safely without delay in the absence of normal occurrence. However, Baltic
Code 2003 reads, REACHABLE ON HER ARRIVAL OR ALWAYS ACCESSIBLEmeans that
the charterer undertakes that an available and accessible loading or discharging
berth will be provided to the vessel on her arrival at or off the port which she can
reach safely without delay proceeding normally. Where the charterer undertakes the
berth will be ALWAYS ACCESSIBLE, he additionally undertakes that the vessel will be
able to depart safely from the berth without delay at any time during or on completion of loading or discharging. As illustrated in the previous paragraphs reachable
on arrival/always accessible provisions in a voyage charterparty have considerable
advantages for owners of vessels; there may yet be further advantages in respect of
the assessment of damages (see paragraph 61 et seq. on this aspect) since it has to be
remembered that the provisions do not deal directly with the commencement of
laytime but allow owners damages because of the breach by charterers in not

19. [1984] 1 Lloyds Rep. 38.


20. [1987] 1 Lloyds Rep. 48.

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providing a berth reachable on arrival or always accessible at the time of the


vessels arrival at or off the loading/discharging port; it follows that the principles
relating to damages are applicable.
Because of the decisions of the English courts and arbitrators regarding reachable on arrival many charterers will not agree such a provision in their charterparties; they sometimes go further in that they will not warrant the safety of the
loading/discharging place (not necessarily relevant to the commencement of laytime
in 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 of
a Pyrrhic nature with charterers switching from the Asbatankvoy form to other
charterparties 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. See
ASDEM UPDATEMay 2005 for evidence regarding companies moving away
from using the Asbatankvoy form.
It is mentioned that the word accessible can be used to advantage by charterers
regarding the commencement of laytime. For example, in the Shellvoy 5 and the
Shellvoy 6 charterparties it is stipulated:
Time at each loading or discharging port shall commence to run 6 hours after the vessel is
in all respects ready to load or discharge and written notice thereof has been tendered by the
master or Owners agents to Charterers or their agents and the vessel is securely moored at
the specified loading or discharging berth. However, if the vessel does not proceed immediately to such berth time shall commence to run 6 hours after (i) the vessel is lying in the area
where she was ordered to wait or, in the absence of any such specific order, in a usual waiting
area and (ii) written notice of readiness has been tendered and (iii) the specified berth is
accessible. A loading or discharging berth shall be deemed inaccessible only for so long as the
vessel 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 requirements 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 the
loading/discharging port laytime will not commence if the inaccessibility arises from
bad weather, tidal conditions, ice, awaiting daylight, pilot or tugs or port traffic
control requirements save for those requirements resulting from the unavailability of
a berth or cargo. What this wording does is to restore to the owners the risk of what
was thought to be theirs in times past but the charterers retain the risk of berth
congestion which, again traditionally, was thought to be theirs.
In arbitration LMLN 4632 August 1997 an interesting point came up regarding whether always accessible also meant always leavable. It was an unsafe port
case where after completion of loading the vessel had to wait nine hours 30 minutes
for a high tide in order to unberth. Thereafter the vessel dropped anchor in the inner
port and had to wait a further 21 hours 42 minutes for the high tide in order to sail
out of the port. The owners contended that those delays were caused by the
charterers breach of contract where the relevant charterparty clause read:
That the vessel . . . shall . . . proceed to one safe port and there load at one safe loading
berth in charterers opinion, always accessible, always afloat, a full and complete cargo in bulk
of . . .

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Para. 53

One of the contentions of the owners was that the berth was not always accessible
and that the charterers should have ordered the vessel to a berth where there would
be access to and from the berth at all times. In other words, access to the berth for
the vessel to reach it and access from the berth to the open sea. In the event, the
berth 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 possible
application to departing from the berth appeared to have been ignored entirely.
Similarly, the Voylayrules 1993 only explained that reachable on arrival of always
accessible meant that the charterer undertook that when the ship arrived at the
port there would be loading/discharging berth for her to which she could proceed
without delay. They made no reference to a ship leaving a berth or a port.
The inference was that charterers agreeing always accessible terms were under
an obligation to provide a berth which was available immediately on arrival, but that
that particular regime did not apply after the ship was actually in the berth, when
the 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 within
reach, or easy to reach or to get into, or a way or means of approach, and none
had 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. In
the present case, it was simply the state of the tide. The rise and fall of the tide was
such an everyday occurrence that it could in no sense be viewed as abnormal or
phenomenal. Since this was a berth charterparty, where the vessels obligation was
to reach the berth, and any weather or navigational hazards en route were to be
borne by the owners, it seemed to the tribunal that exactly the same conditions
should apply when leaving the berth. Consequently, even if the warranty extended
to departure from the berth, waiting for the tide to flood sufficiently for the vessel
to leave the berth was a delay for which the charterers could not be held
responsible.
There have been no further reported arbitrations on the subject and also no
judgments. The decision of the tribunal is, perhaps, arguable, but appears to be the
only 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 the
benefit of seeing Baltic Code 2003 which specifies that always accessible additionally undertakes that the vessel will be able to depart safely from the berth without
delay at any time during or on completion of loading or discharging (see earlier in
this 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 was
cited in full. The opinion was ventured that if the clause was a later type-added
clause to a reachable on arrival provision it would have the effect of halving the
laytime 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 taken
place in London regarding the subject since the last edition (detailed later in this
paragraph) they have not, as yet, been reported in the LMLN reports. It appears
that there has only been one arbitration in New York in respect of the subject and
this was reported many years ago in LMLN 4521 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 approach
to the majority arbitrators in the reported New York arbitration (see below).
The vessel Alaska was chartered on the Asbatankvoy form for a voyage from
Skikda, Algeria, to one or two safe US Atlantic, Gulf or Caribbean ports. A dispute
arose as to demurrage at the loading port.
The charterers claimed that on the disputed days, they were required to pay only
one-half demurrage because of the wording of the Conoco Weather Clause, which
read:
Delays in berthing for loading or discharging and any delays after berthing which are due to
weather conditions shall count as one-half laytime, or, if on demurrage, at one-half demurrage rate.

The owners contended that that clause should be narrowly construed to apply
only to delays in getting into a berth which had already been designated by the
charterer in accordance with the charterers obligations under clause 9 of the
Asbatankvoy form. The owners also argued that the clause did not apply where
the charterer had not as yet met its overriding obligation to procure a cargo for
the 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 interfere
with some operations in the port. However, it was not at all clear that those weather
conditions were responsible for the delays experienced by the Alaska.
The first delay occurred before the vessels turn to berth had arrived, and before
a berth had been designated and procured by the charterer. The intended berth was
occupied when NOR was tendered and the Alaska was third in the lineup for that
berth. This was an Asbatankvoy form of charter, the same form as in The Laura
Prima.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 designate 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 spoke
of berthing rather than getting into berth, but that distinction was not enough
to excuse the charterer from its duty to designate and procure a berth reachable on
her arrival under clause 9.
The dissenting arbitrator (whose view the writer thinks is to be preferred) had this
to say regarding the initial period of delay when the port was closed due to bad
weather and no berth was available for the vessel:
The panel majority concludes it is inappropriate to apply the clear and relevant provisions
of Special Clause 9Conoco Weather Clausebecause Charterer failed to designate and
procure a berth reachable on arrival as per Clause 9. First of all, Clause 9 is not a berth
availability clause, although Laura Prima, supra, has considered it so in determining whether
a charterer may invoke the last sentence of Clause 6. It cannot and should not be considered
as a bar to Charterers right to apply the one-half laytime/demurrage of the Conoco Weather

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Para. 53

Clause to weather related delays in berthing and after berthing. There is no language in the
Conoco Weather Clause to suggest that it is in any way tied to Clause 9 and the alleged
obligation to provide a berth reachable on arrival. Nor does it make commercial sense to
condition the Conoco Weather Clause, or for that matter a number of other laytime exception
clauses, to the berth availability provision of Clause 9.
The Conoco Weather Clause is a special rider provision to the charter party designed to
simplify and clarify the one-half storm severity requirement of Clause 8 and to expressly
provide for its application to waiting time and time getting into berth. It is nothing more than
a bargained for allocation of risk for weather related delays. Simply stated, the Conoco
Weather Clause provides for an alternative one-half laytime/demurrage application when
adverse weather periods are encountered. However, the panel has declined to apply the
Conoco Weather Clause, not because there were no weather related port closures, which
there were, but because of the Clause 9 berth availability concept. That interpretation reads
a condition into the Conoco Weather Clause which is simply not there.

Although there have been no reported London arbitrations there have been a
number of unreported arbitrations regarding the Asbatankvoy form with an added
Conoco Weather Clause. It appears that the majority of London arbitrators have
applied the clause to bad weather circumstances which prevent a vessel berthing
when there is no berth reachable on arrival because of the bad weather. Further,
there have been arbitrations where London arbitrators have applied the demurrage
clause 8 of the Asbatankvoy in a reachable on arrival context, see earlier LMLN
26727 January 1990 in paragraph 52 and the later 2005 arbitration below.
In the 2001 San Carlos arbitration three well known London arbitrators had no
hesitation in concluding that if the vessel was delayed from berthing because of bad
weather (thus a breach of clause 9 of the Asbatankvoy) that fell within the agreed
Conoco Weather Clause and the clause would be applicable so that laytime would
count on a half time basis. They said that the decision in The Laura Prima did not
override express exceptions to laytime such as the added Conoco Weather
Clause.
In a more recent, 2005 arbitration, it was common ground that the loading berth
was not reachable on arrival because of another ship being on the berth so that the
charterers were in breach of clause 9 of the charter. The question was whether or
not the charterers were precluded from relying on the laytime/demurrage exceptions
in clauses 8 and 42 of the charterparty and in circumstances where the vessel had
berthed and by which time she was on demurrage. Clause 8 read:
DEMURRAGE . . . if, . . . . Demurrage shall be incurred at ports of loading and/or discharging 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 the
plant of the Charterer, supplier, shipper or consignee of the cargo, the rate of demurrage shall
be reduced one-half of the amount stated in Part 1 per running hour or pro rata for part of
an hour for demurrage so incurred. . . . (The words Bad Weather did not appear in the
standard form version of the charterparty and were inserted electronically into the actual
charterparty, 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 to
weather conditions shall count as one half laytime or, if on demurrage, at one half demurrage
rate.

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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 and
should only count half time for demurrage. In reaching their conclusion the majority considered the owners contention that, since the berth was not reachable on
arrival, as it clearly was not, the charterers were in breach of charter and thus could
not rely on the bad weather half demurrage/laytime exceptions in clauses 8 and 42
of the charterparty. The central premise of their argument was that the bad weather
was only encountered because the vessel could not berth on arrival and therefore the
charterers were relying on their own breach. The owners relied on the decision of
the House of Lords in The Laura Prima. The majority said that The Laura
Prima was not concerned with a demurrage exception, which necessarily would
assume a breach of charter, but an exception to the running of laytime. It was
concerned 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 affected
by the duty in clause 9 to procure a berth that was reachable on arrival; clauses 6
and 9 had to be read together as a coherent scheme. The House of Lords held
merely that a delay in getting into berth required the berth to have been one which
was reachable on arrival in the first place. It went no further than that and, importantly, Lord Roskill made it plain that the decision did not generally affect the
operation of other laytime exceptions or a fortiori demurrage exceptions. This
approach appeared to be reinforced in the two subsequent judicial decisions in The
Fjordass21 and The Sea Queen.22
The majority also said that the owners contention might have confused the above
principle with the similar but analytically very different one that unless an exception
is very clearly applicable to demurrage as well as to laytime, it should not apply to
demurrage since it is only because of the excess over the laydays (itself a breach) that
the vessel is exposed to the relevant peril; hence the often-misleading mantra Once
on demurrage always on demurrage. As is clear from The Spalmatori23 and The
Saturnia,24 it is a principle of construction of charterparties, not a principle
governing how one approaches exceptions which are expressly and plainly demurrage 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 or
discharging within the agreed laytime. The application of the relevant exceptions is
not concerned with the reason why the laytime has been exceeded but why there is
relevant delay during the time on demurrage. They tested their conclusion by
supposing that the berth had been reachable on arrival and the vessel had gone
straight in but the terminal had thereafter been very slow in loading and thus
exposed the vessel to the delaying bad weather. There could then be no question of
the half-demurrage provision not applying. There was no good reason for assuming
that 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 Lloyds Rep. 336.


22. [1988] 1 Lloyds Rep. 500.
23. [1964] A.C. 868.
24. [1987] 2 Lloyds Rep. 43.

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Although there was a dissent it is submitted that the majority arbitrators were
correct and in line with other leading London maritime arbitrators.
Before leaving this paragraph and moving to damages and implied terms mention
is made of an interesting unreported 1997 arbitration regarding reachable on arrival, the Conoco Weather Clause, and circumstances where a vessel waited in a
queue for a particular berth. The vessel arrived off the port early on 17 December
and 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 a
combination of the effects of congestion and adverse weather on the ships ahead in
the queue for berthing. Because of the vessels deadweight, there was only one berth
which could accommodate her and that was occupied on her arrival. In addition to
the vessel that was alongside, there were a further seven vessels ahead waiting for the
berth.
The arbitrators said it was necessary to look at clauses 6 and 9 of the Asbatankvoy
form plus the negotiated additional Conoco Weather Clause. It was common
ground that once the vessel berthed delays due to weather should count as half time
but the parties differed as to the application of the clause to delays prior to berthing
where the vessel was not at the front of the queue. The question was whether all
time lost until she did come to the head of the queue was delay due to congestion
or whether for the periods sought to be excluded by the charterers, the proximate
cause was weather and not congestion.
It was decided that:
(a) The Conoco clause refers to delays in berthing and therefore those periods
when berthing was prevented by bad weather rather than bad weather
preventing the vessel currently in berth from loading.
(b) There was no conflict between the Conoco added clause and the printed
clauses in the charterparty. They could be read together in such a way as
to make sense and it was a rule of construction that if that is possible that
is the way the charter should be construed.
(c) The clause should be construed contra proferentem the charterers and, as a
matter of causation, the only delays in berthing that would count against
the owners, for which time would run at half rate, were those that occurred
while the vessel was at the head of the queue and therefore the next vessel
to berth. Once the vessel had reached that situation the clause would
protect the charterers either where the weather prevented her from berthing or prevented the vessel then in berth from leaving the berth. In either
case 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 change
while in the queue, from congestion to adverse weather, even though there
may still be several ships ahead of her, was not accepted.
DAMAGESIMPLIED TERMS
54. While reachable on arrival and always accessible provisions are express
clauses in charterparties which invoke principles of breach of contract/damages they
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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 at
within the context of the principles relating to damages so that the party breached
against is put in the same position as if the contract had been performed, but more
about that later in this chapter under ASSESSMENT OF DAMAGES.
While some express clauses which impinge upon the geographical arrival of a
vessel will be mentioned in the following paragraphs the major consideration will
attach to implied terms which bear upon the commencement of laytime, such as the
obligation of a charterer to provide a cargo and the obligation to act with reasonable
dispatch to enable a vessel to become an arrived ship both of which concern
readiness as well as reaching the agreed destination. Before going further it is
emphasised that in the past a fairly stringent approach has been applied in respect
of implied terms and laytime/demurrage provisions in a charterparty (see above,
paragraph 12); however, as stated by Mr Justice Steyn (above, paragraph 12) such
provisions are not immune from the application of general principles of contract law
regarding the implication of terms. The general principle is that a term will be
implied if it is necessary, in the business sense, to give efficacy to the contract. It was
thus stated by Lord Justice Bowen in The Moorcock25where it was decided that
a term should be implied into a contract for the use of a wharf that it was safe for
the ship to be at the wharf:
Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from an
express contract or express warranty, really is in all cases founded upon the presumed
intention of the parties, and upon reason. The implication which the law draws from what
must obviously have been the intention of the parties, the law draws with the object of giving
efficacy to the transaction and preventing such a failure of consideration as cannot have been
within the contemplation of either side; and I believe if one were to take all the cases, and
there are many, of implied warranties or covenants in law, it will be found that in all of them
the law is raising an implication from the presumed intention of the parties with the object of
giving to the transaction such efficacy as both parties must have intended that at all events it
should have.

A term will not be implied merely because it would have been reasonable to have
inserted it in the contract or because it would make the carrying out of the contract
more convenient, nor will it be implied if the contract is effective without the
proposed term and it is not obvious that it was the intention of the parties at the
time. 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 the
contract; that is, if it is such a term that it can confidently be said that if at the time the
contract was being negotiated someone had said to the parties, What will happen in such a
case? they would both have replied: Of course, so and so will happen; we did not trouble to
say 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 duty


of the charterer to furnish a cargo so long as he can do so legally. This had been
established before The Aello26 but this House of Lords decision affirmed the

25. (1884) 14 P.D. 64.


26. [1960] 1 Lloyds Rep. 623.

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general principle and applied it to arrived ship circumstances (see earlier, Chapter
1, for its relevance to reaching the agreed destination).
55. The vessel, bound for Buenos Aires to load a cargo of maize, anchored at the
Intersection (22 miles from the dock area) and waited there from 12 October until
29 October. At the date of the charterparty the system of traffic control operating in
the port of Buenos Aires did not permit vessels arriving to load maize to enter the
commercial area of the port until they had obtained a giro or permit. This was
issued by the customs authority on the ships application only when the shipper had
obtained from the Grain Board a certificate to the effect that cargo had been
allocated. 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 berth
became available.
At the relevant time supplies of maize were coming down to the port so slowly
that, by August, there was a congestion of vessels arriving to load maize. On 1
September, to meet the temporary emergency, the port authority changed the
previous system of traffic control by passing a resolution that, before a giro could be
issued, not only must the Grain Boards certificate be obtained, but also a cargo
ready to be loaded must be available. The charterers did not have a cargo ready to
be loaded when the vessel arrived at the Intersection; therefore, they could not
obtain a giro and the vessel could not become an arrived ship. The House of Lords
held that the charterers were not relieved of their absolute obligation to provide a
cargo by showing that they had taken all reasonable steps to provide it. There were
no facts known to both parties which modified the charterers obligation; the
material factor which prevented the ship from becoming an arrived ship was the
resolution of 1 September which, at the date of the charterparty, was not known to
either party. Accordingly, the shipowners were entitled to counterclaim against the
charterers by way of damages in respect of demurrage lost by the failure of the ship
to become an arrived ship.
The principle to be derived is that, if the provision of a cargo is necessary to
enable the ship to perform its obligation, namely, to become an arrived ship, the
implied absolute obligation of the charterer is to provide the cargo, or at any rate a
reasonable part of it, in time to enable the ship to perform its obligation. It is
absolute in the sense that, although the charterer has exercised reasonable diligence
to provide the cargo, that does not excuse him unless he can pray in aid such
vitiating elements of contract law as frustration or illegality.
What has been stated above regarding the charterers absolute obligation does
not, in practice, help owners as much as one would think. While there may be
occasions when a vessel has to wait off a port and, in reality, the waiting is because
of cargo not being available, owners cannot always prove this. The evidence is more
frequently that the vessel is simply waiting for a berth because of congestion and not
because of the non-availability of cargo, so that the absolute obligation of the
charterer does not come into effect on that many occasions. Further, in many
loading areas involving bulk cargoes it is very difficult to get appropriate and
detailed evidence showing the availability of a cargo for a vessel from a time point
of 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, including
grain elevators; there have been arbitrations where owners have been able to show
that no cargo was available for the vessel when she arrived at or off the loading port
and 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 inconsistency between the position as between providing a cargo and providing a berth.
This aspect was raised in Chapter 1 (above, paragraph 10). It certainly seems
sensible to line up the obligations to supply a cargo and a berth on the same basis
since one is inextricably bound up with the other. Further, absolute obligations are
useful in that they reduce the area of argument as compared to the test of reasonableness. This, in turn, leads to simplicity.
56. It is well established law that, as a general rule, where in the written contract it
appears that both parties have agreed that something shall be done which cannot
effectually be done unless both concur in doing it, the construction of the contract
is that each agrees to do all that is necessary to be done on his part for the carrying
out of that thing, though there may be no express words to that effect; see the classic
statement of Lord Blackburn in Mackay v. Dick.27 From that classic statement can
be derived an implied term that both parties to a contract act with reasonable
dispatch in co-operating with the other party and performing their part of the
contract.
The principle has relevance to the commencement of laytime as was illustrated in
the case of The Atlantic Sunbeam.28 The vessel was chartered for a voyage from the
United States to one or two safe berths or ports on the east coast of India. The
charterers directed the vessel to Calcutta where she could not become an arrived
ship unless (a) prior entry had been obtained by the owners and (b) a document
called a jetty challan had been obtained by the charterers from the port commissioners. The prior entry was obtained by the owners but four days were wasted in
obtaining the jetty challan. A dispute arose between the parties and was referred to
arbitrators who held that the charterers were liable in damages to the owners for the
delay. The award was in the form of a special case and the question for the court was
whether upon the facts found and the true construction of the charter (including
any implied term thereof) the charterers were in breach of their contractual obligations to the owners. Mr Justice Kerr (as he then was) decided that the term to be
implied into the charterparty was that the charterers were bound to act with
reasonable dispatch and in accordance with the ordinary practice of the port of
Calcutta in doing those acts which had to be done by the charterers to enable the
vessel to become an arrived ship and the burden of proving that the charterers
were 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 unexplained
periods of delay or inactivity.
The principles adumbrated above are frequently applied to disputes between
owners and charterers. However, it is emphasised that the test is only one of
27. (1881) 6 App. Cas. 251.
28. [1973] 1 Lloyds Rep. 482.

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reasonableness. However much one would like to see it, there is no requirement of
a 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 vessels documentation can be
dealt with, one on paying an expedition fee or taking some special steps, and the
other one the ordinary procedure, then it appears that the charterers would be
under no implied obligation to use the speedier and unusual procedure; see what
Mr Justice Kerr had to say at page 488. If owners want charterers to be obliged to
a speedier and different procedure then such has to be obtained by way of an express
term in the charterparty contract.
The difference between the absolute obligation in respect of supplying a cargo
and 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 World
Navigator29; see below, paragraph 62.
57. Circumstances which arise frequently regarding the obligation to exercise reasonable dispatch and the commencement of laytime are those in relation to the
inspection of a vessel when she arrives off a port. It is common for a vessel to arrive
off a port but laytime cannot commence until an express provision in the charterparty regarding the inspection of the vessels cargo spaces has been satisfied (more
about this under later sections dealing with readiness and notice of readiness).
Obviously, in some circumstances it is in the charterers interests to delay inspecting the vessel whereas, from the owners point of view, an inspection should take
place as soon as possible in order that laytime can commence. In such circumstances the obligation of the charterers already referred to in the previous paragraph
should apply so that they exercise reasonable dispatch in carrying out the inspection. In many circumstances, this will result in an inspection as soon as the vessel
arrives off the port so that, so long as the vessels cargo spaces are in order, laytime
will commence. However, there are sometimes delays in the inspection of a vessel
and, if the charterers cannot show good reason for the delay, the owners may be
compensated 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 a
vessel 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 conditions
are so poor that a small boat cannot get to the anchorage in order to put an inspector
on board the vessel. On the other hand, there have been cases where no great efforts
have been made by the charterers to put an inspector on board in conditions where
the weather is inclement but, perhaps, not sufficiently poor to prevent a boat getting
out to the vessel if real efforts had been made so to do. If the owners can produce
evidence that a boat could and should have moved to the vessel then a tribunal will
accept that the charterers did not act with reasonable dispatch. Unfortunately,
owners representatives do not always think about obtaining this evidence at the
relevant time so that when a dispute comes to arbitration the tribunal is left with
inconclusive evidence as to whether or not a boat could have reached the vessel in
29. [1991] 2 Lloyds Rep. 23.

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the conditions which were in existence, in which case the charterers get the benefit
of the doubt because of the onus of proof being on the owners (see above, paragraph
56). In The Ino 1979 arbitration, the vessel was not inspected at the outer
anchorage (where she lay for four days) with the result that the notice of readiness
did 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 the
face of it any contract term requiring both the parties to play their part in bringing about the
desired result obligates both the parties to co-operate and to act reasonably and diligently in
so achieving the desired result. In other words, did the charterers act reasonably and with due
diligence in accepting the notice tendered on 3 May only on 8 May? Again, there is a
lamentable lack of evidence. The only evidence there is (which was not rebutted by owners
in any way) was that it was physically impossible for any surveyor to reach and inspect the
vessel before it passed from the outer into the inner anchorage. I strongly suspect that in view
of the ports congestion and the knowledge that many days would pass before loading could
commence, the charterers sense of urgency was somewhat blunted and that they found it
convenient 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 basis
I am reluctantly obliged to hold that there was no breach of charterers obligations to use due
diligence in effecting the vessels inspection and that therefore the notice was effectively
accepted at 10.00 hrs on Monday, 8 May.

In a later arbitration LMLN 32830 May 1992, the owners were successful
regarding an implied term as applied to the facts of the case. The charterparty
stipulated, Ships holds to be odourless and free from insects, properly swept,
cleaned and dried to the satisfaction of shippers or charterers agents before loading . . . . The vessel arrived at the loading port on 6 October and tendered a notice
of readiness at 19.00. The charterers did not arrange to survey the holds until 10.00
on 8 October. It was held (inter alia) that unless there was a good reason why the
survey could not have been held earlier, it was incumbent on the charterers to play
their part by arranging prompt inspection on arrival, which had not been done in
the present case. Accordingly, the notice of readiness should have been accepted on
the opening of offices on 7 October.
In yet a later reported arbitration, LMLN 4597 June 1997 the implied obligation regarding a prompt inspection was dealt with more thoroughly and although it
was a time charterparty arbitration it has much relevance to the inspection of a
vessel by charterers within the context of commencement of laytime and the implied
obligation of reasonable dispatch. The owners claimed time charter hire or damages
equivalent to hire arising out of the alleged inordinate amount of time taken by the
charterers to carry out an inspection at the commencement of the charterparty. The
vessel had previously been on charter to the charterers for a period of 12 months
prior to the present charter. Redelivery under the previous charter had taken place
on 8 January 1992 and it had been agreed prior to redelivery that the vessel would
be fitted with new cargo pumps to improve her performance prior to entering into
the present charter.
The vessel arrived at Rio de Janeiro on 28 January. It was the owners intention
to drydock her for her annual drydocking survey and to attend to outstanding items
from 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 and
repairs then continued at a layby berth. The laycan under the charterparty was
27/29 February, but on 24 February the owners requested an extension beyond 29
February because of unforeseen delays.
The owners case was that all repairs were completed to the satisfaction of the
Class (Lloyds Register) surveyor on 27 February, and that the yard allowed the
vessel to remain at the layby berth whilst the crew continued to carry out routine
maintenance awaiting delivery to the charterers under the new charterparty. However, 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 the
vessel was ready for inspection by the charterers. On 5 March two ABS surveyors
inspected the vessel on behalf of the charterers. They returned on 6 March to
continue the inspection, and again on 7 March, when they completed their inspection. ABS sent their report to the charterers on 9 March, but that report was not
forwarded to the owners until 13 March.
The owners case was that nothing further was heard from the charterers or ABS
between 7 March and 12 March, when the charterers sent a fax setting out alleged
deficiencies found during the ABS inspection which the charterers requested should
be remedied before the vessel was accepted under the charter. The owners carried
out the necessary work, which was completed on 15 March to the satisfaction of the
Class surveyor.
A further complication arose on 16 March when the charterers informed the
owners that the Diretoria de Portos e Costas (DPC) had determined on the basis
of the ABS report that the vessel was not in a safe condition to operate in Brazilian
waters. The ABS surveyor visited the vessel for a further inspection on 17 March
and confirmed that the repairs had been carried out properly. However, it was not
until 19 March that the DPC confirmed that the vessel was approved for operation
in Brazilian waters. At 17.00 hours on 19 March, the vessel was approved by the
Port Captaincy.
The charterparty was on the Shelltime 3 form, and provided:
Clause 3Owners agree to let and charterers agree to hire the vessel for a period of 12
months . . . 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 by
Petrobras and regular inspection by Port Captaincy . . .
Clause 43DrydockingOwners warrant that the vessel will not drydock during c/p period
and will comply with all requirements with class society and/or Brazilian port authorities . . .
Clause 75InspectionBefore the vessel is delivered to charterers all tanks/lining/piping
pumping arrangements and other vessel specifications laid down in the charterparty shall be
inspected by owners, charterers and Port-Captaincy. When it is jointly agreed that the vessel
satisfies the above mentioned requirements the vessel will be considered on hire at delivery
port specified in clause 3. Each party shall pay for their own costs for such survey but time
required for the above inspection shall be for owners account.

The owners submitted that they had presented the vessel for delivery at 11.00
hours 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 allowance for the periods of actual inspection. They also claimed for the cost of bunkers
consumed during that period.
It was held that the words of clause 75 were so clear that there could be no doubt
that inspections by the charterers and the Port Captaincy were a condition precedent to the due delivery of the vessel under clause 3. However, the rigour of that
construction was mitigated by implying terms that the charterers should co-operate
in carrying out their inspection as quickly as possible after the vessel had been
tendered for delivery, and that the charterers should not interfere with any arrangements which the owners might have made with the Port Captaincy, and that the
charterers 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 those
implied terms, and that that breach had resulted in the delay complained of. The
absence of any attempt on the part of the charterers to explain the steps which they
had taken to carry out the inspections and the reasons for what was clearly on its
face an inordinate period of delay (having regard to the equivalent inspection under
the previous charterparty) was bound to lead the tribunal to the conclusion that
there 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 new
charter until 10 March. However, the report of the ABS surveyor instructed on
behalf of the DPC which had been sent to the charterers on 9 March was not
forwarded to the owners until 13 March. The charterers obligation was to pass on
that report immediately they received it on 9 March. The owners could have
remedied the defects noted in the ABS report by 12 March had the report been
passed on to them promptly. It was therefore likely that the owners would have been
able to deliver the vessel into service in accordance with the requirements of the
charterparty by 17.00 local time on 13 March, six days earlier than in fact
happened.
Accordingly, the owners were entitled to damages equivalent to the daily rate of
hire for the period of six days during which delivery was delayed as a result of the
charterers breach of their implied obligation. See also later paragraphs 62 and 126
for more on the implied obligation of reasonable dispatch.
At one time it was postulated whether or not the charterers should be under an
absolute obligation to put an inspector on board the vessel timeously. In The Tres
Flores30 the tribunal, on an alternative basis, decided that there was an absolute
obligation on the charterers to inspect the vessel timeously. This case will also be
referred to later under readiness but suffice it to say at the moment that the vessel
arrived off Varna on 22 November; no berth was available for several days and she
was not inspected by the port authorities until 27 November, at which time pests
were found in the cargo spaces and fumigation was ordered. On 1 December the
charterers accepted the notice of readiness. The reason for the delay in the inspection was the bad weather which prevented an inspector getting out, in a boat, to the

30. [1973] 2 Lloyds Rep. 247.

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vessel. The owners claimed for the time that the vessel was waiting from 22 November to 27 November (in that laytime commenced) but failed on the grounds that the
vessel was not ready to load cargo when she arrived off Varna.
On the alternative argument by the owners for damages for detention because of
the failure of the charterers to inspect the cargo spaces timeously the courts reversed
the tribunal and decided that any obligation to inspect the cargo spaces was not an
absolute one; since bad weather prevented the inspection of the cargo spaces
between 22 November and 27 November there was no breach of any obligation by
the charterers so that the owners were not entitled to damages for detention.
An implied term may also arise regarding a charterers obligation to accept a
notice of readiness within a reasonable time, see later Chapter 6, LMLN 43422
June 1996 (also referred to earlier in paragraph 30 regarding another aspect) and
LMLN 33817 October 1992. Both of these arbitrations are detailed later in
paragraph 118.
Such a term as above will only be implied if necessary to give business efficacy to
the contract and, in any event, the charterers will be able to set-off the laytime in any
damages computation, if the carrying voyage has been completed. In LMLN
32913 June 1992 the owners claimed damages for detention at the discharge port.
The vessel arrived on 9 November and waited until 26 November before the
receivers accepted the notice of readiness. The delay arose as a result of a dispute
over the sale of the cargo. The charterers had sold the cargo to purchasers who in
turn had sold it on to other purchasers. However, some difficulty had arisen as
between the first and second purchasers which led to the delay in the acceptance of
the 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 charterers were under an obligation to act with reasonable diligence in carrying out their
part of the contract. That they had failed to do in arranging for a party to be
available at the port of discharge capable of accepting the notice of readiness and
procuring the discharge of the cargo. They contended that the charterers were
therefore in breach of an independent obligation in respect of which the owners
were entitled to a separate cause of action for damages.
It was held that that was an attractive argument, but it was inconsistent with legal
precedent. The freight paid by the charterers included the privilege of using a
certain number of laydays without incurring liability for delay. The laydays were
available 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 obtain
acceptance from the receivers. However, the fact that notice of readiness was not
accepted by the receivers was not relevant to consideration of whether or not a vessel
was an arrived ship. This was a case where the approach voyage had been
completed.
In The Delian Spirit,32 it had been held that if the charterers were guilty of a
breach causing delay to a vessel that had completed her voyage, they were entitled
to apply their laytime so as to diminish or extinguish any claim for delay. That
31. [1973] 1 Lloyds Rep. 482.
32. [1971] 1 Lloyds Rep. 506.

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principle was applicable to the present case. Accordingly, the charterers were entitled to laytime being counted during the period of the delay.
58. It appears that the only implied absolute obligation of the charterers which has
relevance to the commencement of laytime is that in respect of providing a cargo, all
other obligations appeared to revolve around the test of reasonableness.
An interesting recent case concerning the absolute obligation of the charterers
and the unreadiness of the vessel to load cargo when she arrived at the loading port
is that of the Court of Appeal in The Nikmary,33 where the decision of the
commercial judge was upheld; he had decided that the charterers were liable to the
owners for a sizable sum of demurrage in respect of the detention of the vessel. The
vessel was charterered on the Asbatankvoy form with the standard notice of readiness clause and the standard cleanliness clause. An amended operations clause 30
stipulated:
. . .
(i) The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of the
Charterers Inspector who shall inspect the Vessel as per local and/or Charterers requirements prevailing at the time.
...
(v) Owner shall indemnify Charterer for all direct and/or indirect costs and consequences as
a result of the Vessel not being clean to the satisfaction of jointly appointed Inspector and
should the Charter not be cancelled all time until connection of hoses, after the Vessel has
been passed as clean to the satisfaction of jointly appointed Inspector, shall not count as
laytime, or if on demurrage, as time on demurrage.

On 2 December 2000 the vessel arrived at the Indian port of Sikka and gave
readiness to load a cargo of gasoil. She entered berth on 3 December where her
tanks were inspected by a surveyor (Caleb Brett) on behalf of charterers Vitol and
the shippers Reliance Petroleum Ltd. (Reliance).
The vessel was rejected on the ground that the tanks were unfit to load gasoil. The
vessel shifted to the anchorage to carry out further cleaning. On 5 December the
vessels tanks were passed fit for loading and the master gave notice at 19.30 that
day.
From 5 December until 2 January 2001 the vessel remained at the anchorage
waiting for a cargo. On 2 January the vessel entered berth at 15.00 and loading was
completed 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 charterers
submitted that the vessel had simply lost her turn in the queue as a result of the time
taken to carry out additional cleaning and had been forced to wait while cargo was
supplied 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 spent
waiting at Sikka counted for the purpose of calculating laytime and demurrage. The
delay of the vessel was caused by the fault of the owners themselves and the
charterers were relieved of liability to pay demurrage.
It was held by the Court of Appeal (inter alia) that:
33. [2004] 1 Lloyds Rep. 55.

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(1) A voyage charterer owed an absolute and non-delegable duty to provide a


cargo for loading, and charterparty exceptions would normally be read as
protecting a charterer only in respect of its duty to load, and not as
covering its duty to provide cargo, although they might cover the latter if
sufficiently clear and distinct words were used.
(2) The charterers duty was to provide the cargo for loading within the
stipulated 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 the
Nikmary was not permitted to berth was not that the other vessels were
occupying the shippers berth or had arrived first at the anchorage, to wait
their turn to do so; it was a contractual reason, namely that, in so far as
the charterers had any continuing contractual right to cargo at all, it was
one which was postponed to all those other buyers to whom the charterers
had or incurred December commitments; the shippers problem was a
contractual procurement problem which related to the charterers business and arrangements and meant in effect that the charterers had no
cargo available until early January 2001 for loading.
(4) The delay in getting into berth could not be delay caused for a reason over
which the charterers had no control.
(5) Clause 30(v) could not assist the charterers. Despite the unqualified
language of the clause it could not extend to circumstances of delay
caused by a charterers failure to provide a cargo ready for loading. The
charterers were in breach of charter in failing to have cargo available for
loading when or six hours after the vessel became ready to load at 22.00
on 5 December 2000 or at any later time until 2 January 2001. In that
situation, clause 30(v) did not apply.
(6) The delay was not caused by anything which could properly be regarded
as 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 fail
to do as much as they could have done during the voyage to clean her; nor
could the vessel with reasonable efforts have been made ready to load
before 5 December; the fact that she presented after the cancelling date
was not a breach; it merely gave the charterers a right to cancel which they
chose not to exercise; rejection by the jointly appointed inspector under
clause 30 would have had a similar effect; all that happened was that the
vessel gave an (ineffective) notice of readiness and presented before cleaning had been completed; that was not a breach but even if it were to be
regarded as involving a breach or a fault it caused no delay in loading. The
appeal would be dismissed.
If ever a case emphasises the importance of the absolute obligation of a voyage
charterer to provide a cargo for shipment it must surely be this decision by the
34. [1957] 1 Lloyds 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 charterers
but, in practice, the implied obligation is a sword more frequently used by owners
to attack charterers rather than the reverse. However, the implied obligation was
tried by a charterer in The Pericles Halcoussis35 arbitration where the main dispute
between the parties concerned the commencement of laytime and the loading port
of Dumai and/or whether or not the owners were in breach of contract because of
the absence of an SKU certificate at the relevant time. The salient facts, as far as the
latter point was concerned, were:
(a) The vessel arrived off Dumai at 05.00 on Thursday, 11 August; an appropriate notice of readiness was tendered at that time by the master but was
not accepted by the shippers until 15 August.
(b) An SKU permit was issued at Jakarta on Friday, 12 August valid from 10
August until 10 November 1983. An urgent cable to this effect was sent
from the owners agents in Jakarta to agents in Dumai on Friday, 12
August.
(c) The vessel did not berth until 03.45 on Monday, 15 August; pratique was
granted at 03.55 and cargo lines were connected at 05.30. The notice of
readiness was accepted by the shippers at 03.45 on 15 August, the time that
the vessel berthed.
(d) There was no express clause in the charterparty about an SKU
certificate.
On the alleged breaches of contract that the vessel did not have an SKU certificate
at 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, although
there was no valid SKU certificate for the vessel at the date of the fixture, the owners
wasted no time in getting one so that, in the event, it was effective as from the time
that the vessel arrived off the port; even if it were not, the owners had still acted with
reasonable dispatch in obtaining the SKU certificate. This according to the tribunal,
substantiated that there was no breach of contract by the owners regarding their
obligation to exercise the utmost dispatch to obtain an SKU certificate.
In another arbitration, LMLN 2486 May 1989, the charterers prayed in aid an
implied term in respect of the master of the vessel. The ship was chartered on the
Asbatankvoy form containing a reachable on arrival provision and the usual
clause 6 which provided:
Upon arrival at customary anchorage at each port . . . 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 . . . discharge cargo, berth or no berth, and laytime, as hereinunder provided, shall commence upon the expiration of six hours after receipt of such notice, or upon the vessels
arrival in berth . . . whichever first occurs. However, where delay is caused to vessel getting
into 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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Para. 59

The vessel arrived off the discharge port at 23.00 on Saturday, 2 February. At
23.50 a cable was sent to the official agents advising them of the fact and that the
ship was ready to discharge. That cable was not received by the charterers agents
until 08.42 on 3 February.
The charterers submitted that that notice was invalid. They argued that there was
an implied term of the charter that the master and/or crew would do as soon as
practically possible any and all the things necessary or customary to be done by
them on arrival at the discharging port in order to facilitate the prompt berthing of
the ship and the discharge of her cargo. The charterers maintained that the ship
should have called the Port Control by VHF immediately on her arrival so as to
register.
The point was that the master (as the tribunal found) had not registered the vessel
with the port authority, so that by the time the vessel was in a position to get into
an available berth a subsequent vessel, which had registered in the early hours of 3
February, 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 to
be implied. It was not necessary to give business efficacy to the contract, and it was
not even reasonable.
The officious bystander, if asked, would say that the detailed arrangements for
berthing the shipincluding the giving of any necessary notice to the authorities so
as to allow prompt berthing arrangements to be madewas something that fell
within the sphere of responsibility of the charterers. That was all the more so when
a particular port had or might have special requirements, knowledge of which was
unlikely to be at all widespread, especially because such requirements might be
changed without notice or might be more or less rigorously enforced according to
whim. Masters were normally entitled to expect that agents would deal with formalities 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 implication
of any term such as that contended for. The burden was expressly put on the
charterers to designate and procure a berth reachable on the ships arrival. There
were detailed provisions for the giving of notice and the running of laytime. Shortly
after the charter was fixed, the charterers had provided detailed voyage orders,
including particulars as to the giving of various notices. Yet they said nothing about
the 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 proved
that the master had failed to do anything that he ought reasonably to have known
was required by regulations, custom or practice. Accordingly, the notice of readiness
was valid.
The implied term ploy of the charterers appeared to have been made to get
around the reachable on arrival provision of the charterparty but failed in principle and on the facts.
59. Although, as stated above (paragraph 54) there is a stringent test in respect of
implying a term into laytime/demurrage provisions, the principle is adopted and
tried 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 circumstances
which may arise on an ad hoc basis which give rise to consideration of the principle
by maritime arbitrators. For example, it sometimes happens that charterers as
sellers/buyers of goods, have not satisfied certain requirements under their sale
contracts and this has a knock-on-effect whereby laytime does not commence for
the vessel carrying the goods; in such circumstances charterers may be liable to
owners because of breach of their obligation to exercise reasonable dispatch to
enable the vessel to become an arrival ship. See The World Navigator,36 below,
paragraph 62, for an illustration of a sellers implied obligation in respect of co-operation/reasonable dispatch in the context of documentation.
Yet another area where the implied term principle may be relevant is that in
relation to the appointment of agents; this may apply to both owners and charterers
in respect of an implied term to appoint a competent agent to fulfil the duties
ordinarily required of agents at the loading/discharging ports in circumstances
where the agent fails to act reasonably in ensuring that a vessel becomes an arrived
ship. In any event, the party appointing an agent will usually be responsible for any
failure by that agent in respect of exercising reasonable dispatch. If there is a failure
by the agent appointed on behalf of the charterers the owners may be entitled to
damages for the delay. Conversely, if there has been a failure regarding the agent
appointed on behalf of the owners, which prevents the vessel becoming an arrived
ship, the owners will of course have no claim against the charterers for the delay
and may be liable to them under a counterclaim for e.g. extra expenses relating to
storage/transportation of the cargo.
It is possible, although unlikely in modern times, for a term to be implied into a
charterparty 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 this
topic are of nineteenth century vintage when custom/usage was much more
relevant.
60. From time to time charterers fall foul of their obligation to exercise reasonable
dispatch in the context of nominating a port in sufficient time to avoid delay and this
affects the commencement of laytime. If a charterparty provides for a vessel to
proceed to a port as ordered and for discharging port orders to be given in the
course of the vessels passage from the loading port, it is the obligation of the
charterer 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 obligation
regarding a reasonable time can give rise to a claim for damages by the owner.
In The Timna37 the vessel was chartered for a voyage carrying grain from
Virginia to European ports. Part of the cargo was for delivery at Bremen and part
for an unspecified destination. At the time the vessel passed Lands End, Bremen
was intended as a second discharge port but the charterers instructed the vessel to
proceed to the River Weser and said that they would name the first discharging port
later. On reaching the mouth of the Weser firm orders had not been given to those
36. [1991] 2 Lloyds Rep. 23.
37. [1970] 2 Lloyds Rep. 409.

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on the vessel by the charterers. The following day the master took the vessel up river
to Bremerhaven but the charterers refused to accept the notice of readiness tendered there by the master, telling him that the vessel was intended for Brake which
was a port further up river. The owners did not consider this an order to proceed
to Brake and the vessel remained at Bremerhaven waiting for orders for some 16
days. The owners claimed demurrage and/or detention.
It was decided by Mr Justice Donaldson (as he then was) that the vessel was never
an arrived ship at Bremerhaven (so that laytime could not commence) but that the
detention claim succeeded on the basis that the charterers were in breach of their
reasonable dispatch obligation to give orders for the first discharging port and that
the message given to the master regarding the intention for Brake did not amount
to an order to go to Brake. The charterers were liable in damages from the time
when the orders should have been given (3 January) until the time when they were
in fact given (19 January). The charterers contended that no damages should be
awarded to the owners because the vessel would have waited in any event outside the
port, without laytime commencing, and, therefore, no loss was suffered. However,
they were unable to prove that no loss was suffered and the owners were awarded
damages, on the basis of the vessels demurrage rate for the whole of the period that
the vessel was delayed, no set-off being made in respect of the allowed laytime (see
the 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 contract
situation. The basic principle is that a party should be put, as far as is reasonably
possible, in the same position as if the contract had been performed subject of
course to the rules relating to remoteness and mitigation. By and large there should
be no windfall for the party breached against but simply a true measure of the loss
which has been suffered by that party. In The Timna (see paragraph 60, above) Mr
Justice 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 a
profit-earning chattel, and in the case of this ship it is agreed that the measure of loss for the
vessels detention is U.S. $2,500 per day or pro rata, i.e., the same rate as that agreed between
the parties as applicable to demurrage claims. If, therefore, the owners prove that the ship was
detained in a non-profit-earning state by the need to await orders, they establish a prima facie
loss 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 if
she had not been so detained, the prima facie loss is rebutted. I see no reason to infer that the
vessel could not have become an arrived ship at an earlier point of time than was in fact the
case, just because no berth regularly used for the discharge of the type of cargo concerned was
available. The absence of such a berth no doubt induced the charterers to delay nominating
the first port of discharge, since it ensured that the vessel could not become an arrived ship
at what, from their point of view, might be a premature moment, but that is quite another
matter and involved a breach of their obligations under the charterparty. On the existing state
of the evidence, I find the loss proved.

As stated already he awarded damages for the whole of the 16 days that the vessel
was out of orders from the charterers without any set-off in respect of the allowed
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laytime (which would of course become relevant when laytime actually commenced). The award of damages was affirmed in the Court of Appeal,38 Lord
Denning adding (page 94 of the law report):
In any case, I think that Mr Goff was wrong in putting the burden of proof on the
shipowners. It was the charterers who were in breach. It was for them to nominate a port. It
does not lie in their mouth to say: If we had nominated a port, the vessel could not have got
there as an arrived ship. The matter was never put to the test, and it was their fault it was
not put to the test. If they wished to say that there was no damage, they ought to have proved
that there was no port at all to which the vessel could get as an arrived ship. They got
nowhere near proving it.

The judgments of the High Court and Court of Appeal made no reference to
setting off laytime in respect of a damages computation; the emphasis was very
much on proving the loss and the onus of proof. Whether or not laytime should be
set off in a damages calculation was touched upon in The Delian Spirit, see
below.
In The Delian Spirit39 (referred to on other matters in Chapters 1 and 2) the
owners appeared to get a windfall from the High Court. It was decided that the
vessel was waiting for a berth within the limits of the port so that, on the face of
things, laytime commenced but also that the charterers were in breach of the
reachable on arrival provision in the charterparty. Originally, the shipowners
claimed 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 demurrage
in the alternative, the damage being based upon a delay of four and a half days while
the vessel was waiting in the roads. The charterers maintained that no damages were
payable because the vessel was an arrived ship as soon as she had arrived in the
roads and an award of damages would deprive them of the benefit of 120 running
hours of laytime which would have had the effect of more than exhausting the time
that the vessel was waiting for a berth.
It was held by Mr Justice Donaldson (as he then was) that the charterers had two
quite distinct obligations, one under the reachable on arrival provision and the
other one to load and discharge the vessel within the laytime. In point of time these
two obligations may or may not overlap wholly or partly but a breach of either must
be considered separately from a breach of the other save in so far as it can be shown
that the interaction of the clauses presents a situation in which no losses flowed from
the 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 and
their liability to compensate the owners for any loss occasioned thereby does not
deprive them of the benefit of the laytime. It is true that the laytime is wasted if the
vessel is not at her berth but this flows from the charterers failure or inability to
secure a berth for her and may well involve them in a further breach of contract in
failing to complete loading and discharging within the laytime (indeed, it did in the
present case). It does not flow as such from the operation of the reachable on
38. [1971] 2 Lloyds Rep. 91.
39. [1971] 1 Lloyds Rep. 64; [1971] 1 Lloyds Rep. 506 (C.A.).

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arrival provision and is not a case of their being deprived of the benefit of the
laytime by the operation of that clause.
Mr Justice Donaldson went on to decide that the owners were entitled to damages
for four and a half days of delay even though the laytime, if applied, would have
extinguished any claim by the owners. His lordship was motivated, to a certain
extent, by the overwhelming probability that, if a berth had been available and there
had in consequence been no breach of contract by the charterers, the vessel would
have gone straight in to a berth and would have completed loading and have sailed
as expeditiously as she did four and a half days earlier. The charterparty did not
provide for the payment of dispatch money so the owners would have had the use
of their vessel four and a half days earlier than in fact occurred, without cost to
them.
The Court of Appeal reversed Mr Justice Donaldson, deciding that the charterers
were entitled to their full laytime as from when the vessel arrived and gave notice
and it was only after using up that laytime that they were liable to demurrage at the
agreed rate and they were not additionally liable for damages for delay under the
reachable on arrival provision of the charterparty. Lord Denning (the then Master
of the Rolls) said that he could not agree with the High Court judge since it would
be most unjust that the charterers should be made liable twice over. He stated that
the answer was given by a long line of cases which had established that where
charterers had been guilty of a breach causing delay they were entitled to apply their
laytime so as to diminish or extinguish any claim for the delay leaving the owners to
claim for demurrage at the agreed rate for any extra delay over and above the
laytime. The reason is because they have bought their laytime and paid for it in the
freight and are entitled to use it in the way which suits them best and in particular
to use it so as to wipe out or lessen any delay for which they would otherwise be
responsible.
The position is now clear enough on the authorities that if a vessel has arrived at
her destination then the charterers will be entitled to set off any laytime against the
time that a vessel is waiting off a port when a breach of contract by them has
occasioned that delay. If the vessel has not arrived at her destination then the
position appeared to be open at one time. Sir Gordon Willmer, in The Delian
Spirit40 had this to say:
I prefer to say no more upon the difficult question which might have arisen if the vessel had
not been found to be an arrived ship at the time when she was lying in the roads. But I
certainly do not wish to be taken as accepting that, even in that situation, the owners would
necessarily be entitled to prosecute an independent claim for damages, without giving credit
for the laytime to which the charterers were entitled, and for which, as we have been
reminded, they paid when they paid the freight.

In the same case Lord Denning delivered obiter that the laytime should be applied
against the time the vessel is waiting in respect of a damages computation. He
said:
The answer is given by a long line of cases which establish that where the charterers have
been guilty of a breach causing delay, they are entitled to apply their laytime so as to diminish
40. [1971] 1 Lloyds Rep. 506.

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or extinguish any claim for the delay, leaving the shipowners to claim for demurrage at the
agreed rate for any extra delay over and above the laytime. The reason is because they have
bought their laytime and paid for it in the freight, and are entitled to use it in the way which
suits them best, and in particular to use it so as to wipe out or lessen any delay for which they
would otherwise be responsible.

Lord Denning appeared to be putting it very wide in that a charterer would always
be entitled to set off the laytime vis-`a-vis the waiting time in any damages computation irrespective of whether or not the vessel had reached the exact geographical
destination.
The matter is no longer open since it came up for consideration in The Mass
Glory,41 which was an appeal from a decision by London arbitrators. The case
concerned a number of issues, including the setting off of laytime aspect.
The vessel entered Xiamen on Sunday, 14 June 1998 and passed the normal
inward inspection later that day. She was then ready to berth and a berth was
available for her, but she was unable to occupy it because the cargo documents were
not in order and because the sellers of the cargo ordered the vessel not to allow
anyone to have access to the vessel without production of an original bill of
lading.
The master gave notice of readiness at 08.00 hours on Monday, 15 June but it was
common ground that both voyage charters were berth charters and that since the
vessel was not prevented by congestion from reaching her berth the notice of
readiness 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 then
or at any time after she reached her berth. Discharge was completed on 19 August
and the vessel left for Nantong to discharge the remainder of her cargo. The owners
under each charterparty claimed damages for detention from the charterers in
respect of the time lost while the vessel was kept waiting at Xiamen.
The disputes were referred to arbitration. The arbitrators held that the delay to
the vessel at Xiamen was caused by the charterers breach of contract, that since the
notice of readiness given on 15 June was invalid time did not start to count and the
laytime exceptions did not apply while the vessel was waiting at the anchorage, and
the whole of the time was to be taken into account in calculating damages for
detention.
This decision of the arbitrators was upheld in the Commercial Court by Mr
Justice 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 in
the adventure, not least because it marks the point at which the charterers obligation to
co-operate with the owner in discharging the goods begins. For this reason it is usually also
the point at which notice of readiness can be given in order to bring into operation the laytime
and demurrage provisions of the charter and at which the risk of delay to the vessel passes
from the owner to the charterer. The purpose of a notice of readiness in this context is
twofold: to inform the charterer that the vessel has completed the carrying voyage and is at
his disposal for the discharging of cargo; and to start the running of laytime. Unless the

41. [2002] 2 Lloyds Rep. 244.

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Para. 62

parties have agreed otherwise a valid notice of readiness cannot be given until the vessel had
reached her agreed destination, whether that be the port, berth or some other place identified
in the charter.

He declined to adopt Lord Dennings obiter (see above) and he also distinguished
the 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 be
set off regarding the damages claim.
While we now have some authority on the subject the author feels some disquiet
about the result for the simple reason that a charterer buys the laytime and yet
cannot 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 off
something which has not yet commenced it is surely artificial to allow this somewhat
theoretical 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 of
a port charterparty) is anchored a few hundred metres within the port limits but not
to do so if the vessel is anchored a few hundred metres the other way and just
outside the port limits, after the completion of the sea voyage. The breach of
contract, and the resulting delay, is the same whether or not the vessel is a little one
side or the other of a line which, to a certain extent, may be somewhat artificial. Of
course, the author realises that the Mass Glory case was concerned with a berth
charterparty but it does not see why that should obfuscate a practical and fair
application whereby a charterer is allowed what appears to be a sensible and just
approach to a damages computation which would, in the event, appear to be in line
with the general principles relating to damages. Surely, a charterer should be
allowed to set-off the laytime which is bought in the contract in respect of a claim
against him for damages where the vessel he has chartered waits at or off a port for
a loading/discharging berth, after the completion of the sea voyage. Otherwise the
owners of a vessel may obtain a windfall, as they did in The Delian Spirit, prior to
the appeal to the Court of Appeal (see above).
Having said the above, the fact is that we now have judicial authority on the
matter and, since the Mass Glory decision was never appealed, we have to wait for
an appeal to the Court of Appeal or to the House of Lords for any change in this
aspect of maritime law. The judgment is, perhaps, another example of too much
respect being paid to Lord Diplocks four stages, in particular the carrying voyage; after all, there is a sound argument that, practically speaking the carrying
voyage 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 from
which notice of readiness can be given the owners remedy is not to claim for
damages but to give a notice of readiness and use the laytime as a set-off, see for
example LMLN 67217 August 2005 in Chapter 1 and LMLN 32913 June
1992 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 being
concerned with a sale contract rather than a voyage charterparty, the Court of
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Appeal decision in The World Navigator42 is of interest in how damages were dealt
with by that court also, in respect of an implied term; although it was a contract
appertaining to the sale of goods it was concerned with laytime/demurrage. Roplack
Enterprises 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 64
and the Argentine Centro conditions.
Clause 7 of GAFTA 64 provided:
7. Delivery . . . Vessel to load in accordance with the custom at port of loading unless
otherwise stipulated . . .

The Argentine Centro conditions provided:


Loading Rate: . . . sellers guarantee provided vessel is able to receive, a minimum average
loading rate of 500 tonnes per weather working day . . . Buyers to give sellers at least 15 days
notice of readiness of vessel to load . . .

The buyers nominated the vessel World Navigator to load the maize. She arrived at
Zona Comun and tendered notice of readiness. The authorities instructed her to
remain at Zona Comun because of congestion at Rosario Roads. Since the shippers
documentation was not in order the World Navigator lost her place in the loading
schedule and was overtaken by other vessels. The vessel following the World Navigator moored at 06.10 on 25 June 1985. World Navigator eventually moored at
03.00 on 18 July 1985. She loaded a total of 24,000 tonnes and finished loading on
22 July 1985.
The buyers claimed that the sellers had the obligation to deliver the goods by
loading them when the vessel was ready to receive them, and that the delay in
loading the 12,000 tonnes fell squarely on the sellers. The sellers were accordingly
liable for the additional demurrage the vessel incurred.
The GAFTA Board of Appeal rejected the buyers claim on the ground that
although the sellers were in breach of contract the buyers had suffered no loss. The
vessel 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 without
the co-operation of the sellers in providing appropriate loading documentation and
it was common ground that it was necessary to imply into the f.o.b. contract a term
requiring the sellers to provide that co-operation; there was an implied obligation on
the sellers to act with reasonable dispatch and in accordance with ordinary practice
in doing those acts which were necessary to enable the buyers to present their vessel
for loading at the berth; if availability of goods sold was necessary to enable the
buyers vessel to berth there was an absolute obligation on the sellers to have the
goods available when the vessel arrived provided 15 days notice had been given; it
might be that this obligation could be extended to cover the procurement of documentation if this was something solely within the control of the sellers;

42. [1991] 2 Lloyds Rep. 23.

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Para. 62

(2) if the sellers were in breach of the duty that they were under, the immediate
consequence of their breach was that the World Navigator was detained for a period
which on the boards findings was about 17 days before being permitted to berth;
when assessing the damages the board should not have proceeded on the premise
that had the vessel berthed promptly the sellers would have loaded so slowly that
they would have used all the available laytime; the boards task was to ask how long
loading would have taken had the World Navigator berthed promptly without losing
her place in the queue; if the sellers were in a position to influence the loading rate
then the board ought to have considered how they would have done so and that
question fell to be answered by considering all the factors that would have been
likely to influence their conduct; both appeals would be allowed and the awards
remitted to the board for reconsideration of the buyers claim for damages for
detention.
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 after
having received a valid notice of readiness? (2) What was the sellers obligation with
regard to the rate of loading once the vessel had berthed and was able to receive the
cargo? (3) On what basis should damages be assessed if the sellers were in breach of
an obligation under (1) above?
It was held by the Court of Appeal (Lord Justices Parker and Staughton and Sir
David Croom-Johnson), that (1) there was an obligation to do all that was necessary
to enable the vessel to berth on the expiry of the 15 days notice; it was probably
impossible and undesirable to define the precise ambit of the obligation for in all
cases what was to be implied would or might be dependent on both the terms of the
contract and the surrounding circumstances:
(2) the GAFTA provision was that the vessel was to load in accordance with the
custom of the port unless otherwise stipulated; the Centro clause did otherwise
stipulate and under that clause the sellers would not be in breach if they maintained
an average of at least 500 tonnes a day; the clause was intended to be a comprehensive clause providing as it did for exceptions from laytime; and the sellers were
entitled once the vessel was in berth to take up to 48 counting days to load the
complete 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 June
and the sellers obligation would have been to load in the number of counting days
arrived at by the application of the Centro terms but no more; a defendant in
performing his contractual obligations was assumed to have chosen to perform them
in the way least beneficial to the plaintiff; there was no question of looking at the
extraneous events and therefore no question of it being permissible to look at the
probabilities; the rate at which the sellers had chosen to load was not in any sense
an event extraneous to the contract; it was expressly provided that they should load
at a minimum average rate of 500 tonnes per day and they were entitled to load
faster; there was nothing in the award to show that loading in the customary manner
at Rosario would have prevented the sellers using all the time which the contract
allowed; the buyers were not entitled to damages and the appeal would be
allowed.
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While there was no direct consideration of setting off laytime in a damages


computation the parties appeared to accept that this principle was operative in the
circumstances 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 that
no point was ever taken with the actual owners in respect of the vessel not having
reached the agreed destination of Rasario and that the parties proceeded on the
basis that a valid notice of readiness could be given at Zona Comun (thus obviating
an argument that since the vessel had not reached the agreed destination a claim in
damages 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 reasonable
dispatch) as in The Aello, whereas, otherwise, the obligation is only one of reasonable dispatch, as in The Atlantic Sunbeam. Lord Justice Staughton had this to
say:
It may well be that the cases can be reconciled if one has regard to the precise task which
remained 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 their
concern, and they must bear the responsibility for lack of a cargo even though their best
endeavours had failed to find one. In The Atlantic Sunbeam, on the other hand, the obstacle
was delay in obtaining a jetty challan, which required the co-operation not only of the
consignees or receivers but also of the port authority and the customs. It was at least possible
that 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 be
decided in this case, having regard to our conclusion as to damages if there was any breach
of an implied term.

The Court of Appeal decision emphasised the benefit to a defendant of the least
burdensome obligation (see (3) above) in addition to airing some views and doubts
in respect of implied obligations as related to absolute/reasonable dispatch
obligations.
On a final note regarding damages in general it is emphasised that while in
practice the daily rate used is usually the demurrage rate of the vessel it does not
necessarily follow that this is so for all damages computations. The true measure of
damages may result in owners being entitled to more than the demurrage rate
(market rises sharply and rapidly); alternatively there can be reverse circumstances
where they are entitled to less than that rate.
It is also mentioned that principles of causation, mitigation, and remoteness of
damage are applicable to any assessment of damages although in practice these
principles rarely produce problems in respect of laytime/demurrage disputes. However, the case of The Eurus43 raised interesting matters in relation to foreseeability
and remoteness of damage. The case is also referred to earlier in paragraph 42 in
relation to custom.
The vessel Eurus was chartered on the Asbatankvoy for a voyage to carry a
minimum cargo of 122,000 metric tons of Forcados crude oil from Nigeria to a
range of possible discharging ports. The charterers wanted loading to be completed
43. [1996] 2 Lloyds Rep. 408 (Com. Ct.) and LMLN 47320 December 1997 (C.A.).

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in February 1992 so that they could obtain a February bill of lading. This was
because the February 1992 price of Forcados crude was US$0.60 per barrel
cheaper than the January price. Under the charter the vessel was not due to arrive
and give notice of readiness until 31 January. To ensure completion of loading in
February the charterers, on 24 January, sent instructions by telex that notice of
readiness was not to be tendered to the terminal at Forcados before 11.00 on 31
January at the earliest. Because of a misunderstanding by the Master, the vessel
moved into berth at 00.30 on 31 January without waiting to tender notice of
readiness. Loading commenced at 06.36. At 12.00 the Master gave an estimated
time of completion of 01.00 on 1 February. The charterers gave instructions to the
owners to request the vessel to slow down to ensure a bill of lading dated 1
February. Loading was completed at 01.30 on 1 February.
Neither the charterers nor the owners knew that there was a rule in Nigeria (the
8 oclock rule) that any oil shipment which was completed before 8 am on the first
day of any month was treated as though it had been completed on the last day of the
preceding month. Because of the 8 oclock rule, the Master was compelled to sign
a bill of lading dated 31 January, notwithstanding that loading had in fact been
completed at 01.30 on 1 February.
As a result of the loading being completed before 8 am on 1 February the
charterers had to pay an extra US$681,934 for their oil to their suppliers. The
charterers brought arbitration proceedings against the owners claiming damages or
an indemnity under clause 36 of the charterparty which provided:
Owners shall be responsible for any time, costs, delays or loss suffered by charterers due to
failure to comply fully with charterers voyage instructions provided such instructions are in
accordance with the charterparty and custom of trade.

The arbitrators held that the charterers instructions to the vessel not to tender a
notice of readiness amounted to an instruction not to present or berth for loading
prior to that time. They went on to hold (by a majority) that the claim in damages
failed because the 8 oclock rule was not foreseeable and the damages were therefore
too remote, but that the claim for an indemnity succeeded because that was a pure
question of causation, and the Masters failure to follow his instructions had indeed
caused 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 term
which required the owners to comply with charterers voyage instructions, provided
such instructions were in accordance with the charter and custom.
The charterers appealed to the Court of Appeal. It was held that the case for the
charterers was that clause 36 was an indemnity clause, although damages were an
alternative remedy. In its role as an indemnity clause, it required proof that the loss
was caused by failure to obey the charterers orders, but not that the loss should be
within the reasonable contemplation of the parties. That was the route which the
arbitrators had adopted.
The problem was to be treated as a question of interpretation of the contract. Did
clause 36 provide that the charterers could recover even if the loss suffered was not
within the reasonable contemplation of the parties?
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B R E AC H E S O F C O N T R AC T / DA M AG E S R E A R R I V I N G

What was the purpose with which clause 36 was intended to fulfil? It had been
common ground before the arbitrators that clause 36 contained an implied term
requiring the owners to comply with the charterers voyage instructions. However,
there was such a term without clause 36. On the face of the charterparty the
charterers had an option to nominate the loading port, the discharging port(s) and
the quantity and grades of cargo. If the charterers had that right the owners must
have had a corresponding duty to obey. The extent of the charterers right to give
other orders was not clear; but whatever it was, the owners must again have had a
duty to obey. The words provided such instructions are in accordance with the
charterparty and custom of the trade showed that clause 36 was not intended to
increase the scope of the charterers right to give orders. Any implied term derived
from clause 36 would therefore be surplusage.
As to the purpose of clause 36, the Court of Appeal could not see why the parties
would have wished to provide that, for some breaches of contract by the owners, the
charterers loss would be recoverable whether or not it was within the reasonable
contemplation of the parties, whilst for all other breaches the ordinary rule as to
damages in a contract case would apply.
It was not the intention of the parties to provide, by clause 36, that a particular
kind of breach of contract by the owners should attract liability even for unforeseeable consequences, whilst in the case of all other breaches of contract the ordinary
rule of remoteness would apply. That could not be extracted from the wording of
clause 36; and even if it arguably could be, the Court was now enjoined to have
regard to the purpose or aim of contractual provisions as well as to the actual words
usedsee Investors Compensation Scheme Ltd v West Bromwich Building Society,44 per
Lord 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 commence
loading prior to tendering a notice of readiness) was based upon the particular facts
of the case since the charterers had given express instructions that a notice of
readiness was not to be tendered before a specific time and that the owners were in
breach of this instruction. The arbitrators did not even suggest that the common law
functions of a notice of readiness had an additional general potential function in that
a vessel could not berth and commence loading prior to tendering a notice of
readiness, as mooted in [1997] LMCLQ at pages 486/7.

44. The Times, 24 June 1997.

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GENERAL
63. The second requirement to be satisfied in order for laytime to commence under
the common law is that the vessel must be ready to load or discharge the whole of
her cargo when she has reached her destination and/or when a notice of readiness
is tendered. Under English common law a notice of readiness is only required at the
first 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 clause
which requires the tendering of a notice of readiness at both the loading and the
discharging ports and frequently also at second or subsequent loading and discharging ports.
Readiness involves the vessel being available to the charterers for use by them and
this, in turn, requires that:
(a) the vessels 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 gives
the most problems in respect of readiness and which prevents the laytime clock from
starting to tick. The common law position has been set out in several cases over the
years but was emphasised in the much-publicised case of The Tres Flores.1 The
case is worth looking at in detail since it is the leading case on the subject, being
referred to time and time again in arbitrations. The facts were that by a charterparty
on a Synacomex form the owners of the vessel chartered her for a voyage from Varna
to Famagusta and Beirut to carry a cargo of bulk maize. The charterparty provided
(inter alia):

1. [1972] 2 Lloyds Rep. 384; [1973] 2 Lloyds Rep. 247 (C.A.); cited above, paragraphs 39 and 57,
on other matters.

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Para. 64

READINESS

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 satisfaction. . . .
21 . . . At loading port, time to commence whether the vessel be in berth or not . . . at 2
p.m. if written notice is given during usual local office hours before noon and at 8 a.m. next
working day if notice is given during usual office hours after noon. Master is allowed to give
notice 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 the
vessels holds prior to tendering notice of readiness (which in the event militated
against the owners), the standard required under this clause was virtually synonymous with the common law; in fact, all the judges involved in the case (High Court
and Court of Appeal) laid stress on the common law position in respect of cargo
spaces.
The further facts were that the vessel arrived at Varna at 05.00 on Sunday, 22
November, and anchored on account of no berth being available. Notice of readiness was declared by the master and delivered to the agents at Varna at 10.00 on the
Sunday. Owing to heavy weather the vessel could not be inspected while at anchor
until 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 make
the vessel ready for loading maize. Fumigation took place between 15.00 and 19.30
on Monday, 30 November, and cost $170.94; at the latter time the vessel was in all
respects ready for loading and her notice of readiness was accepted by the agents at
11.00 on Tuesday, 1 December. The vessel berthed on 7 December and completed
loading on 13 December. Evidence was adduced by the charterers to show that the
cargo was in the loading port on 23 November.
The owners contended that, in view of the type-added clause 21 of the charterparty, laytime should commence at 14.00 on Monday, 23 November. The vessel
had reached the agreed destination and, as far as the master was aware, the vessel was ready for loading; the fact that the vessel could not be inspected for five days
after 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 apply
the laytime calculations to laytime spent waiting off the port. They further contended that they should not, at the very least, be worse off than if an inspection had
taken place at the time or soon after the arrival of their vessel off the port. According
to the owners, if an inspection had taken place when the vessel arrived at the agreed
destination, fumigation would have been effected soon afterwards and laytime
would have commenced. The charterers submitted that, in view of the conditions to
be satisfied under the law in order for laytime to commence, and the fact that the
vessel was not ready when she arrived at the agreed destination, laytime could not
commence until 14.00 on 1 December.
The two arbitrators (they did not call in an umpire) published a joint award in
favour 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 port
after reaching the agreed destination was to enter into the laytime calculation. It
seemed to them that the type-added clause was tailor-made for the situation which
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Para. 64

occurred at the loading port, a situation not uncommon, namely, that, through no
fault 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 would
not have been of much help to the owners. While they were mindful of the strictness
of the common law relating to an arrived ship they were also mindful of the words
of Lord Justice Devlin (as he then was) in Ingram v. Little2 when he stated: The
great virtue of the common law is that it sets out to solve legal problems by the
application to them of principles which the ordinary man is expected to recognise
as sensible and just. The true spirit of the common law is to override theoretical
distinctions when they stand in the way of doing practical justice.
The arbitrators were obviously sympathetic to the owners in the situation which
had arisen and decided for them on the basis that laytime commenced. In the
alternative, they decided in favour of the owners that there was an absolute obligation to inspect the vessel by the charterers after she had arrived at Varna and, since
this obligation was breached, the owners should get damages for the delay to their
vessel.
In the High Court, Mr Justice Mocatta decided on the evidence that the vessel
was not ready to load on Sunday, 22 November, and could not give a notice of
readiness to load on that day because her holds were infested; this was a serious
matter when one was contemplating the loading of a grain cargo, even though it only
took four and a half hours and no very great expenditure of money to rid the vessel
of the pests. On the aspect relating to the type-added clause, his lordship stated that
although the clause contained words which sought to protect the shipowner as
regards the initiation of laytime, it was only so in respect of geographical requirements and it did not lessen the requirement regarding the state of the vessels cargo
spaces. 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 does
not do this, he is not in a position, as long as his ship is unfit, to give a valid notice of
readiness. No doubt to certain facts, as in all branches of the law, the maxim de minimis would
apply, 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 did


also 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 are
now embodied in English maritime commercial law and which are frequently
referred 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 at
the time the notice is given, and not at a time in the future. Readiness is a preliminary existing
fact 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 I
am ready at the moment you want me, whenever that may be, and any necessary preliminaries 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.

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Para. 64

READINESS

that notice of readiness can be given even though there are some further preliminaries to be
done, or routine matters to be carried on, or formalities observed. If those things are not such
as to give any reason to suppose that they will cause any delay, and it is apparent that the ship
will be ready when the appropriate time arrives, then notice of readiness can be given. In the
present 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 an
essential step which had to be taken before any cargo could be received at all. Until the vessel
had been fumigated, notice of readiness could not be given. It has always been held that, for
a notice of readiness to be given, the vessel must be completely ready in all her holds to
receive 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 at
a loading port must be in a position to give the charterer unrestricted access to all her cargo
spaces before she can give a valid notice of readiness. This state of readiness must be
unqualified. It is not open to the shipowner to say: Here is my ship; she is not quite ready
but I confidently expect to be able to make her ready by such time as I consider it likely that
you will in fact need her. The charterer has contracted for the exclusive and unrestricted use
of the whole of the vessels available cargo space, and he is entitled to expect that that space
will be placed at his disposal before he can be called upon to accept the vessel as having
arrived 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 in
Deppe. . . . In my judgment the essential distinction between the present case, on the one
hand, and Deppe and The Delian Spirit on the other, is that in those latter cases the matters
which remained to be done before the vessel could begin to discharge or load were in the
nature 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 unwelcome
element of uncertainty into this area of the law. In a case such as Deppe, some slight delay may
occur after the vessel has berthed and before cargo operations can begin, but it is delay which
is to be expected as normal and is predictable within narrow limits. The charterer can safely
accept the vessels notice of readiness knowing that he can act upon it because, apart from the
usual preliminaries, the vessel will be fully available to him as soon as she berths. Such a
position would not obtain if Mr Mustills proposition were accepted. In a case such as the
present a statement in the notice of readiness that the ship was ready would be factually
incorrect and that statement could only become correct (if at all) at some future date which
could not be accurately predicted and of which a shipowners honest prediction might well be
subsequently falsified by intervening events.
A ship in order to be ready and thus entitled to give valid notice of readiness must be ready
to obey the charterers orders whenever they are given. In the present case the ship was not
in a position to do this since at the time when she gave notice she could only be made ready
by 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, during
yesterdays argument when he said that if the argument be right, a charterer might have to pay
demurrage 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 Scrutton
on Charterparties, 17th ed. (1964):
The degree of necessary readiness of the ship for her part is relative to that of the
charterers or consignees for theirs. Therefore the ship need not be absolutely ready (e.g. by
having all her gear fixed up for the work) at a time when the charterers or consignees are
not in a position to do any of their part of the work, so long as the ship can be absolutely
ready as soon as they are.

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I would qualify this statement in only two respects. First, a short delay after berthing while
the vessel carries out the usual preliminaries for loading or discharging will not affect her
readiness if she is otherwise readythat is clear from the Deppe case. Secondly, I venture to
think that there might usefully be added in the next edition of Scrutton at the end of the
passage I have quoted, the words suggested this morning by Mr MacCrindle, whenever that
may be. That addition would I think put the position beyond all doubt and is in accord not
only with Deppe but also with the judgments of Mr Justice Devlin and of Lord Justices Tucker
and Cohen in the Noemijulia case.
If it be said that the maintenance of an absolute rule of this kind (subject only to questions
of de minimis) may work hardship on shipowners or lead to unjust results, the answer is that
the parties are always free to modify the common law rule. In the present case that rule might
have been modified by a time lost waiting for berth provision. But in this class of case, where
not only questions of laytime and demurrage arise, but also the right of a charterer to cancel
because a ship is not ready by a stated date, it is of crucial importance that the basic principle
must be able to be simply applied to the given facts of a particular case. Certainly it is
essential in commercial matters and certainly is more important than that there may be
hardship in a particular case because the application of the principle may cast the incidence
of liability one way rather than the other. . . .

It is mentioned, for the sake of completeness, that the amendment referred to by


Lord 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 ready
to load unless her holds are free of other cargo and free from any contamination which would
make her unsuitable for loading with the cargo in question . . . I do not consider this strict
rule as to holds is limited to cases where the place of arrival is the place where loading is to
be effected. If a few remnants have been left in the hold or if some cleaning remains to be
done, that will be taken care of by the de minimis rule. In The Aello3 and The Delian Spirit4
it was accepted that mere formalities need not necessarily be carried out in order to make a
ship ready to load; and in the Noemijulia case5 it was recognised again as being a completely
strict rule in relation to holds.

The Aello3 and Delian Spirit4 judgments have already been referred to on other
matters (see Chapters 1, 2 and 3) and The Delian Spirit4 will be referred to again
later in this chapter (see paragraphs 78 and 79, below) as will the Deppe and
Noemijulia5 judgments (see paragraphs 7274, below). The above judgments
emphasise the strictness of the English common law in respect of a vessels cargo
spaces vis-`a-vis the giving of a notice of readiness. This is something which owners
of vessels have to live with and the principles can have serious repercussions for
them in situations where only very minor cleaning is required to put the holds in a
condition required by those who are going to load the vessel. Of course, in some
circumstances, the de minimis rule will give some help to shipowners since arbitrators may tend to take a sympathetic view of circumstances where the amount of
cleaning is very slight and causes no intrinsic delay. While a vessel will not be ready
to load/discharge cargo if her cargo spaces are unready because of infestation (as in
The Tres Flores) the position will be otherwise if the infestation lies within the
3. [1960] 1 Lloyds Rep. 623.
4. [1971] 1 Lloyds Rep. 506.
5. Noemijulia v. Minister of Food, (194950) 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 Epaphus6 the vessel was unable to enter Ravenna since her draught
exceeded the allowable maximum and it was arranged that the vessel should go to
Ancona.
She arrived there and berthed at 13.40 on 22 May having presented a notice of
readiness at 07.37 that day. About 688,150 tonnes of cargo was discharged. The
vessel returned to Ravenna where she arrived on 27 May 1981, awaiting a berth. A
further notice of readiness was presented on 28 May 1981, at 09.40 and the vessel
finally berthed on 30 May 1981.
It was then found on opening the hatches that the cargo was slightly infested with
live insects and the cargo had to be fumigated; a disinfestation certificate was not
received until 11 June.
The vessel commenced discharge on Friday, 12 June at 08.00 and completed
discharge on Thursday, 16 July at 10.00.
The buyers of the cargo, standing in the shoes of charterers, contended that the
vessel was not ready to discharge cargo when she presented a notice of readiness on
22 May; an effective notice could not be given until 11 June. It was held by Mr
Justice Staughton (as he then was) that: on 28 May the vessel was fit and ready to
discharge her cargo; the problem was the presence of insects in the cargo and since
there was no finding that the insects were the fault of the vessel, the vessel was ready
to discharge and time started to count at 8.00 a.m. on 29 May following the notice
of readiness given in Ravenna on 28 May; the submission that the risk of deterioration in the condition of the rice was by the sale contract, if not by the charter, placed
on the buyers would be rejected. On appeal it was held by the Court of Appeal that
the infestation affected only the readiness of the cargo to be discharged not the
readiness of the vessel to discharge that cargo and the learned judge was plainly right
in holding that any infestation of the cargo did not affect the readiness of the vessel
as a vessel to do her part in the discharge of the cargo; the buyers contention that
the vessel was not ready to discharge and could not give an effective notice of
readiness before 11 June would be rejected. It was put by Lord Justice Donaldson
M.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 in
discharge when the vessel eventually entered Ravenna after lightening. The award finds that
the vessel gave notice of readiness at 09.40 hours on 28 May 1981, and that the infestation
was detected when the hatches were opened after she had berthed on Saturday, 30 May. On
Monday, 1 June, application was made for the fumigation of the cargo and a disinfestation
certificate was received on Thursday, 11 June. Thereupon discharge began.
On these facts Mr Merriman argued here and below that the vessel was not ready to
discharge, and could not therefore give an effective notice of readiness, before 11 June. The
learned judge rejected this contention, holding that any infestation of the cargo did not affect
the readiness of the vessel, as a vessel, to do her part in the discharge of the cargo, this having
always been the test applied. This is plainly right. The infestation affected only the readiness
of the cargo to be discharged, not the readiness of the vessel to discharge that cargo which is
quite different. The appeal on this point therefore fails.

6. [1986] 2 Lloyds Rep. 387; [1987] 2 Lloyds Rep. 215.

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The Tres Flores decision was applied in the more recent case of The Virginia M7
which related to whether a vessel was ready to discharge her cargo when she only
had 15 tons of fresh water remaining on board and this amount of fresh water would
not have permitted her steam driven winches to have discharged all the cargo
because of the amount of fresh water required for the auxiliary boiler to provide
steam 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 was
not ready to discharge her cargo when she tendered a notice of readiness, with the
result that laytime did not run during the period that the vessel was waiting for a
berth with an insufficiency of water; there was no clause in the charterparty which
provided compensation to the owners for time lost waiting for a berth so that the
unreadiness of the vessel, because of a lack of fresh water, had a disadvantageous
effect as far as the owners were concerned. Although the case was concerned with
matters 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 a
considerable time for a berth (without an appropriate compensatory clause) and the
unreadiness relates back to the time that a notice of readiness was given, thus
making it a nullity, with the result that laytime does not commence and run during
the 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 readiness
to be given the vessel must be completely ready in all her holds to receive the cargo
at any moment when she is required to receive it (see earlier paragraph 64) this must
be in the context of the contractual cargo for the port in question.
In LMLN 3373 October 1992 a tribunal decided that a valid notice of readiness could be given in circumstances where the vessel had slops of a previous cargo
in one tank (No. 4C) where the charterers had exercised their option to load at two
ports and the tank in which the slops were contained was not originally required for
the first loading port. It was held that although The Tres Flores made it clear that
the whole of the vessels available cargo-space had to be available to the charterers
at the time a notice of readiness was given the situation was clearly different in the
context of the exercise of an option to load at two ports. This was not a case of
future 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 that
the charterers subsequently changed their minds and decided to load all the cargo
at one port could not retrospectively invalidate the notice of readiness. It was clear
that, had the original nomination been maintained, the original notice of readiness
would have been unassailable since the vessel would have loaded and proceeded to
the second loading port with the slops in No. 4C tank as envisaged by the
owners.
It was common for tankers to arrive at loading ports with cargo tanks filled with
ballast and to discharge that ballast during loading. In such a case, or in circumstances where a master retained ballast in some tanks to enable a vessel to sail
7. [1989] 1 Lloyds Rep. 603.

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between loading ports with a part cargo, it could not thereafter be said that the
vessel was not ready because all the tanks were not available for loading at the first
port. On this last mentioned aspect see also earlier paragraph 31, in particular
LMLN 29920 April, 1991.
Again, in the recent LMLN 67612 October 2005, the vessel was chartered on
an amended Asbatankvoy form for the carriage of a cargo of paraxylene from Haifa
to two safe ports Taiwan. After the fixture was concluded, the charterers obtained
an option from the owners to load at Haifa and Iskenderun, and in due course
exercise that option, such that when the ship arrived at Haifa she was intended to
load at both ports. Two days after arrival at Haifa and the tendering of notice of
readiness the charterers said that they only wanted to load at Haifa, and not at
Iskenderun.
Meanwhile, the ship had not berthed. That was because the charterers had
problems with the shippers. Another ship took the berth to which the vessel would
otherwise have gone.
After tendering notice of readiness the vessel was inspected on behalf of the
charterers. 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 then
intended, the ship was to load at two ports.
The charterers said that the ship was not ready to load, and therefore the notice
of readiness was not valid. Accordingly, they disputed the owners entitlement to
demurrage 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 those
tanks that would have been required for loading at Haifa alonehad the charterers
not subsequently reneged on the exercise of their optionwere ready for loading.
In principle, a notice of readiness had to be read in the context of the circumstances prevailing at the time it was given. In the present case, the relevant circumstances were the fact that the ship was destined to load at two ports, and that the
tanks required for the first were in fact ready. On that basis, and subject to the terms
of the charter, the notice was valid. What was required of the ship at the time notice
was given was that she load at Haifa a limited quantity of cargo into certain tanks
which were then ready.
Did the provisions of the charter relating to notice of readiness affect the default
position 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 upon
the expiration of six hours after receipt of such notice, or upon the vessels 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 to
load . . . and written notice thereof has been tendered . . .

In addition, Interchem clause 11 provided:


Vessel to clean . . . to the charterers inspectors satisfaction. If the vessel is not accepted
after first inspection the vessel to continue cleaning for owners time and account . . .

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Para. 66

It was not commercially sensible to read words such as in all respects in Interchem clause 2 as meaning that, at the time notice was given, the ship had to be ready
to load all her cargo, wherever it might be destined to be loaded. What was required
was that she was ready to do what the charterers at that time and place wanted her
to do. In the present case, that was to load a part cargo at Haifa, and the vessel was
perfectly capable of doing that.
Nor did Interchem clause 11 affect the position. Again, the cleanliness required
had 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 LMLN
3373 October 1992. The recent decision in The Nikmary8 was of no relevance.
The owners claim for demurrage succeeded.
In LMLN 2856 October 1990 a question arose as to whether a notice of
readiness 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 for
up 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 the
discharge port acting as a storage facility. The owners gave a notice of readiness to
discharge while the vessel was still lying off the discharge port acting as a storage
facility and she remained at anchor for another five days or so. The owners submitted that the six hour period ran from the giving of the notice and that once the
storage period ended the ship went straight onto demurrage, having arrived from
the loading port on demurrage. The charterers contended that the notice period
could not run until the storage period had come to an end and that they were
entitled to credit for an additional six hours. It was held that the charterers contention would be rejected. There was nothing in the charter to prevent the ship giving
a valid notice of readiness while she was still performing storage services. The
purpose of the period of grace was to allow the charterers an opportunity to make
preparations when they did not or might not know exactly the ships position. In the
present case, they were more than aware of the ships precise position so there was
no commercial reason for them to be given any further period of grace.
66. Readiness in respect of cargo spaces includes readiness regarding cargo which
is overstowed where different parcels are carried on the same voyage with different
charterers. In such circumstances the cargo which is overstowed is not considered
ready for discharge until it becomes accessible and it is at that moment of time that
the 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 be
discharged. The dangers of not giving a notice of readiness at that time are considered 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 given
when the vessel is ready to discharge; if a notice of readiness has been given at an
earlier time (which may not have been valid) a further notice should be given when
8. [2004] 1 Lloyds Rep. 55.

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the vessel is truly ready. Vessels often have to wait for a berth with overstowed
cargoes and this can give rise to problems in respect of compensation for time lost
waiting for a berth (see paragraphs 39 and 40, above); since a vessel will not be
ready until the overstowed cargo is accessible owners require very clearly worded
clauses if they wish to obtain compensation for the period during which the vessel
waits for a berth but is not ready to discharge the overstowed cargo during that
period. As mentioned in paragraphs 39 and 40, there may be drawbacks in a time
lost waiting for berth to count as laytime clause although in paragraph 39 a 1982
reported arbitration is detailed where the arbitrators solved the problem by way of
a purposive approach in circumstances of overstowed cargo.
67. The degree of cleanliness required in a vessels cargo spaces will vary very much
depending upon the cargo and trade in question. For many cargoes only minimal
cleaning may be necessary but for other cargoes a high degree of cleaning may be
required, e.g. carriage of grain and foodstuffs and clean liquid cargoes such as
naphtha and aviation spirit. For some cargoes there may be specific and very
detailed cleaning clauses in the charterparties, some of which will be mentioned
later. Since it is invariably a question of fact whether cargo spaces are sufficiently
clean for the intended cargo very little gets reported by way of court decisions and
reported arbitrations. (Each case turns on its own facts so that, usually, there are not
issues of principle and in any event arbitrators are the final arbiters on facts.) One
reported arbitration is LMLN 23931 December 1988 where the vessel was
chartered under Asbatankvoy form for the carriage of a cargo of fuel oil, having
previously carried cargoes of crude. One of the issues in the arbitration concerned
the commencement of laytime. The parties had agreed that time was to count as
soon as the owners gave a valid notice of readiness.
At 10.00 on 29 June the master tendered notice of readiness. However, the
arbitrators found that the vessel was not in fact ready to load at that time since the
cargo tanks had not been fully cleaned. Butterworth machinery was still being used
intermittently until about midday on 1 July, and the pumps were used there-after
from time to time.
On 5 July at 08.30 the master filed cables to the agents and the cargo receivers
which read:
[Vessel] has collected all the remain cargo on board after wash tanks amounting 300 M3 in
No 2C ready give ashore when ship berthed for loading in compensation for the quantity
reported 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 notice
of readiness when her tanks had been cleaned and the water and crude slops
collected into separate tanks. The Chief Officers evidence was to the effect that the
whole operation had been completed by the evening of 28 June. However, that
evidence would be rejected. The ship was not in fact ready to load the fuel oil cargo
until shortly before the cables of 5 July were sent. The notice of readiness given on
29 June was accordingly invalid. However, from that time on the charterers, the
shippers and the agents knew that the ship was at anchorage cleaning her tanks prior
to the intended loading under the charter. On a number of occasions between 30
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Para. 67

June and 4 July the master had advised the charterers (who had known of the
purported 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 also
receivers of the previous crude cargo) the cables already quoted. In the context of
the knowledge which all relevant parties then had, and of the cable notices of 29
June and the subsequent cables from the master, the 5 July cables should be treated
as valid notices. Alternatively, at about the time they were sent the ship became
ready, and the notices previously given became valid. On the basis that the first
approach was correct, and allowing time for the cables to be received, laytime stated
to count at 10.30 on 5 July.
In the light of the Mexico 1 Court of Appeal decision (see later Chapter 6) it
may be that the arbitrators conclusion was incorrect regarding the validity of the 5
July notice of readiness although it would appear, on the brief reported facts, that
there may have been an estoppel by convention because of the communications
between the parties during the period 30 June to 5 July whereby the charterers were
estopped from denying the validity of the 5 July notice of readiness.
The degree of the cleanliness required to make the vessel ready, for the purpose
of tendering a valid notice of readiness and the terms of the charterparty, may
depend upon what is known to the parties in addition to the surrounding circumstances. For example, in LMLN 6218 March 1982 the vessel was chartered to
load a cargo of heavy grain, sorghum or soyas from a U.S. gulf port to North African
ports. The ship arrived at the loading port on 13 July 1979 and was inspected by the
National Cargo Bureau Surveyor and by the U.S. Department of Agriculture Surveyor. The NCB Surveyor passed holds 1, 2, 3 and 5 on 14 July and hold 6 on 16
July. The USDA Surveyor however rejected all 6 holds on 14 July on account of
paint and rust scale and did not pass the holds until 10.00 on 17 July, after cleaning
by shore contractors. Notice of readiness was given on that day and the owners
contended that laytime began at 08.00 on 18 July, and that on this basis 2 days 20
hours 10 minutes demurrage was earned at the loading port.
The charterers contended that as the vessel was not clean on arrival at the loading
port the owners were in breach of lines 11 and 12 of the charterparty and were
therefore liable in damages. The relevant charterparty lines read as follows:
The . . . now discharging at . . . where expected to complete discharge . . . and sail in ballast
18.00 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 during
the 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 dated
10 July, subject to a penalty for later bills and that they had already cancelled one
vessel as she was too late as a result of having dirty holds. The present vessel in fact
had to wait for a berth for some 8 days after being passed by the surveyor as there
was congestion at the loading port. Furthermore, while the vessel was being
cleaned, several other vessels had entered the loading port and had taken turn ahead
of her. The charterers claimed that had the vessel been ready on arrival, the period
of waiting for berth would have been avoided. On this basis the charterers submitted
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READINESS

that they were entitled to deduct that period from the time used and calculated that
despatch 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 charterparty
as expected ready to load, basis [name of loading port], 13 July was hedged by the
proviso all going well. In the light of what occurred, the arbitrators could not
consider that that estimate was given recklessly by the owners, in such a manner as
to give risk to liability. According to the evidence both deck and cabin crew had been
engaged 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 imposing on owners the obligation to have paint and rust scale removed from the holds in
time 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 had
simply undertaken to make the holds clean. There was no undertaking that the
vessel, within the short time available, would be ready to meet the stringent requirements of the USDA Surveyor.
It is possible that owners may put themselves under a particularly heavy burden
in respect of cleaning because of what they agree with charterers. See for example
LMLN 44523 November 1996. No charterparty had been signed but the agreement between the owners and the charterers was set out in two telexes. The
described cargo was bulk rice and clause 26 of an earlier charterparty was
incorporated into the agreement and read:
. . . vessel to present at loading port with holds clean dry and able to pass NCB/USDA
Inspection for loading bulk edible milled rice.

It was held that clause 26 was not inconsistent with the description of the cargo and
that it should not be struck out (as contended for by the owners). There was a world
of difference between, on the one hand, the description of a cargo to be carried, and
on the other hand the standard to which a ship might be required, contractually, to
clean. Further, the phrase bulk rice was capable of covering any type of rice from
the coarsest to the most refined, from that requiring minimal cleaning to that
requiring the highest possible standards. There was thus no inconsistency between
the 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 where
entitled to cancel and to recover damages.
This arbitration also has relevance to readiness/cancellation, see later paragraph 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 the
owners unless they comply with the cleanliness required in the context of what may
be difficult circumstances. In LMLN 33225 July 1992 the vessel was chartered on
the Sugar Charterparty. She arrived at the loading port and gave notice of readiness
at 13.48 on 12 February. The following day, the holds were inspected by surveyors
appointed by the charterers agents, who rejected her as she was undergoing cleaning by the crew from a previous cargo of fishmeal.
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Para. 67

The vessel was subsequently inspected and rejected on 17 and 21 February on


account of the presence of fishmeal odour. From 17 February onwards the owners
vigorously protested against the vessels rejection, contending that she was to all
intents and purposes clean. On 23 February, a joint survey was held, attended
among others by a surveyor appointed by the owners P & I Club and a surveyor
appointed by Lloyds agents at the request of the charterers. Traces of fishmeal were
found in the holds. The charterers surveyor rejected the vessel again on account of
the smell of fishmeal and bleach in the holds, and the Lloyds surveyor concurred
that the vessel could not be considered clean or odour free.
The P & I Clubs surveyor disagreed. He considered the holds were clean and
traces of fishmeal negligible. In his view, the faint odour in the holds would not have
affected the shipment of sugar, particularly in view of the fact that this was packed
in polypropylene bags lined with polythene. He considered that the charterers
surveyor was unreasonably cautious because of instructions from the ultimate purchasers that holds should be exhaustively free from odour.
The vessel was finally accepted on 26 February, when a second notice of readiness was given.
The charterers contended that laytime commenced at 14.00 on 26 February. The
owners submitted that it should be treated as having commenced at 14.00 on 12
February, following the issue of the first notice of readiness. They said that the
charterers agents judgment as to the condition of the holds had to be exercised
reasonably, and that their decision as to the suitability of the holds was
unreasonable.
It was held that there was an obligation on the charterers agents to judge the
condition of the holds on proper and reasonable grounds. Their decision had to be
exercised on the basis of an objective assessment of the vessels holds. The evidence
of the P & I Clubs surveyor, who did not see the vessel prior to the survey on 23
February, was of comparatively little help in judging the condition of the vessel
when the first notice of readiness was given. It was incontrovertible that the vessel
was not fit to load the sugar cargo prior to 22 February.
The continued refusal to accept the readiness of the holds between 22 and 26
February could not be regarded as improper or unreasonable. It was accepted that
absolute cleanliness and absolute freedom from odour could not reasonably be
achieved in a ships holds. The degree of cleanliness acceptable had to some extent
be a subjective assessment which took into account the nature of the previous cargo
and of that to be loaded. Minor residues of an odoriferous cargo would obviously be
of more consequence when loading foodstuffs than would say, ore.
The charterers had claimed damages inter alia on the basis that the owners had
failed to take reasonable steps to ensure they presented an acceptable and fit vessel
for the carriage of the cargo. It was accepted, following dicta in the Democritos9 that
the owners were under an obligation to use reasonable despatch in tendering the
vessel in a fit condition to load the cargo.
The problems of cleaning a vessel from fishmeal were notorious. There was no
real chance of getting the ship ready in time unless the owners had checked what
9. [1976] 2 Lloyds Rep. 149.

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was required in order to clean after fishmeal and arranged for a professional team to
clean at the previous discharge port as and when each hold became ready. They
should at least have had arranged for professional help with the necessary equipment and chemicals to be ready on the vessels arrival at the loading port under the
present charterparty.
In the event, the initial efforts of the crew were not very effective. It could not be
said that the owners had used reasonable diligence to get the vessel ready within a
reasonable time when there were still residues of cargo in the cargo spaces on 22
February. Accordingly, the owners were in breach, and were liable to the charterers
in damages.
A good illustration of what may occur in practice, in respect of cleanliness, is set
out in the next paragraph by way of a one-time typical arbitration. The subject
matter overlaps Chapter 5 because of the specific clause in the charterparty but it
relates to a situation which occurs frequently in U.S.A. grain loading ports in
respect of cargo spaces; further, and in any event, the standard of cleaning required
under the specific clause probably equates with that required under the common
law for a grain-type cargo.
68. In The Dubhe10 arbitration the relevant parts of the charterparty were, as
follows:
Vessel to load under inspection of National Cargo Bureau, Inc., and a United States
Department of Agriculture Grain Inspector and/or a Grain Inspector holding a licence issued
by 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 vessels readiness must be delivered at the office of the charterers or
their agents during ordinary office hours (Sundays and holidays excluded) at or before 16.00
hours or at 12.00 if on Saturday, the vessel also having been entered at the Custom House,
accompanied by pass of the Inspectors attesting to the fact that the vessel is clean-swept and
ready in all compartments without the use of artificial linings and the laydays will then
commence at 07.00 hours on the next business day whether in berth or not. (Lines
63/66.)

The facts were that the vessel arrived at Mobil anchorage at 07.30 on 16 November. There was infestation in some of the holds and they had to be cleaned but, by
14.45 on Sunday, 19 November, all the holds had been passed by the National
Cargo Bureau (NCB) and the United States Department of Agriculture (USDA).
A notice of readiness was tendered at 09.00 on 20 November but the vessel
remained at anchor waiting for a berth until 1 December. She berthed at 07.10 on
1 December alongside the grain elevator and, between 08.00 and 09.00 the USDA
made a further inspection of the holds. They failed to pass holds Nos. 2 and 5 as two
live insects were found in these spaces. These holds were sprayed between 14.00
and 16.00 on 1 December and at 20.30 the holds were inspected by USDA and
were passed. Some of the other holds had begun loading earlier in the day, one as
early as 09.15.
The owners contended that laytime should commence at 07.00 on Tuesday, 21
November. According to them, the vessel had been passed by both NCB and USDA
10. 1981.

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Para. 68

on Sunday, 19 November, so that notice of readiness tendered on 20 November was


good. Their primary case was that the charterparty provisions, in respect of readiness 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 not
in fact ready to load, and the original notice of readiness did not reflect the true
facts; the re-inspection on 1 December proved that the vessel was not ready in all
compartments 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 express
clause in the charterparty. In an overall general conclusion the charterers submitted
that, if all the requirements of readiness, subject to minimal qualifications, are not
satisfied when a notice is given, or if subsequently it is found that notice does not
reflect 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 one
should look first at the laytime code in the charterparty in order to see if the laytime
clock had started and then to consider if the clock was prevented from running
because of a breach of contract whereby an assessment of damages could be
reflected 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 that
the 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 NCB
passed the vessel for loading on November 18 and USDA on November 19. At 14.45 on
November 19 both authorities had passed the vessel; the NCB certificate stated that the holds
had been passed to load and the USDA certificates stated, stowage space examined and
found to be substantially clean and dry, and ready to receive grain on the above date. If the
charterers 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, in
compliance with lines 63/66 of the charterparty, in that there was an Inspectors pass attesting
to the fact that the vessel was clean-swept and ready to load in all relevant compartments. The
notice 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 the
charterers in this, particularly as they only accepted the notice subject to the terms of
the charterparty so that their rights, in respect of any breach of contract coming to light as a
later stage, were being preserved and could, if relevant, have the effect of clawing back, by
way of damages, any time allowed unjustifiably to the owners through the running of the
laytime 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 of
readiness invalid. I do not think that this can be so in view of what I have already stated, the
notice being good at the relevant time. Neither do I consider that The Tres Flores11 case helps
the charterers since that case was concerned with the inspection of a vessel days after her
arrival 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 which
were discovered on December 1 the charterers do have a case that the vessel was not in every
way fitted for the voyage. Anyway, I shall assume such so that the charterers are entitled to
damages 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 Lloyds Rep. 247.

159

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READINESS

occasioned by the vessels holds being sprayed and re-passed. The statement of facts shows
that Nos. 2 and 5 holds were failed by 09.00 on December 1 and were not ready, to the
charterers, until 20.30 on that day. It does seem that this did not affect loading in other holds
and 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 the
words of Lord Denning from The Tres Flores9 that all cargo spaces should be accessible to the
charterers. Therefore as I see it the maximum loss to the charterers was the loss of time from
09.00 to 20.30 on December 1; therefore, in order to compensate the charterers in respect
of the owners breach of contract the time from 09.00 to 20.30 on December 1 cannot count
as time on demurrage.

The circumstances which arose in The Dubhe12 arbitration are relatively common
particularly in grain loading ports. It is emphasised that other arbitrators might well
have taken a different approach to the Dubhe12 arbitrator on similar facts and
concluded that the Tres Flores11 principle was applicable so that the notice of
readiness could not be valid until after the work required, as a result of the further
inspection at the loading terminal, had been performed. The problem is sometimes
taken care of by way of the following added words to a Dubhe style notice of
readiness clause: If after berthing the vessel is found not ready in all respects for
loading the actual time lost from the discovery thereof until she is in fact ready to
load will not count as laytime. Those words have much to commend them in that
they are fair to both parties.
69. As mentioned in paragraph 64, above (Lord Justice Roskill and Lord Justice
Cairns), the de minimis principle may be of help to shipowners in some circumstances but such are likely to be limited in number. What degree of uncleanliness
falls under the de minimis rule is a matter of conjecture and it is thought that, in
practice, the uncleanliness would have to be very minor to be adjudged of no
account in order to invoke the de minimis principle. In The Tres Flores11 the
arbitrators did not apply their minds to the de minimis principle but the High Court
judge was convinced that it could not avail the owners even though it only took four
and a half hours and $170.94 to clear up the infestation. Further, if an express
clause in the charterparty specifies that the vessel can only be ready after being
passed by a named authority then that appears to be the end of the matter since the
express requirement becomes a condition precedent to the tendering of notice of
readiness.
In The Despina13 an arbitrator did apply the de minimis principle in circumstances where the vessel had been failed initially by inspectors but then passed after
the cargo spaces had been cleaned. The vessel had to wait for a berth (no time lost
waiting for a berth provision in the charterparty) and did not go alongside until
seven days later at which time loading of all holds commenced except for one hold
which was sprayed for one hour on account of larva. The arbitrator decided that the
small amount of infestation and spraying was of a trifling nature and could be
disregarded under the de minimis principle; he also found that the rejection of the

12. 1981.
13. 1980.

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Para. 70

hold caused no delay to the completion of the loading since the hold in question was
one of the earlier holds to complete loading.
Again, in The Irinikos14 arbitration an arbitrator applied the de minimis principle
in circumstances where there was a conflict of evidence concerning the dryness of
the vessels cargo spaces late one afternoon. The vessel moved into berth in the early
hours of the next morning and commenced loading at 06.00; he decided that the
vessel was ready at 16.00 but, if there was any further drying of cargo spaces to take
place, such was of a minor nature and could be disregarded under the de minimis
principle.
70. The previous paragraphs have referred mainly to grain or grain-type cargoes
not only because of their propensity to problems but also because of the large
number of arbitrations which have taken place over the years concerning uncleanliness/infestation of hold and the commencement of laytime with such cargoes. The
subject is also of importance in the carriage of bulk liquid cargoes although it does
not appear to show in so many arbitrations, probably because the loading of crude
oil (which forms the major amount of bulk liquid carried) does not demand the
same standard of cargo space cleaning, also because of the particular cleaning
clauses 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 far
between since a vessel usually has to satisfy the charterers or an independent
inspector at the loading port so that, in the event, the inspector becomes something
of a quasi-arbitrator.
A common type clause in a tanker voyage charterparty is: Master to clean
vessels tanks, pipes and pumps, to Charterers satisfaction. A very simply worded
clause but sufficient to allow the charterers representatives to press for as much
cleaning as can reasonably be demanded. The owners do have a safeguard in that,
if the charterers or their representatives are unreasonable in their demands concerning the amount of cleaning, they may be in breach of the implied term to exercise
reasonable dispatch (see above, paragraphs 5657) so that the owners would be
entitled to damages for delay resulting from such a breach. In most cases the
damages would be based on allowing the laytime to commence in accordance with
the time when the vessels tanks had been sufficiently cleaned for the loading of the
cargo in question. In practice, it is difficult for owners to go behind the charterers
inspector, because of lack of proof. There may be no surveyors available to call in
quickly to provide an assessment of the state of the vessels tanks to convince the
charterers representatives that the tanks are sufficiently clean; further, even if a
surveyor can be found, the result can often be a conflict of evidence between two
surveyors 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 as
frequently 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 Lloyds Rep. 247.

161

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READINESS

the period that the vessel is not available to them for the loading of cargo because
of the unreadiness of the cargo tanksa very fair approach in circumstances where,
on occasions, they have a valid argument that laytime need not commence until the
tanks are clean and a further notice of readiness has been tendered.
In some instances, the specific laytime provisions will bite so as to trigger off
laytime leaving it that laytime will be suspended for the time that the cargo spaces
have to be cleaned as appears to be the case with the Beepeevoy 3 and similar-type
cleaning clauses. If there is a reachable on arrival clause in the charterparty and
the charterers are in breach regarding this provision, then a damages situation
results so that the owners get compensation for the delay arising from the breach
which may not include time spent cleaning the cargo spaces to make the vessel
ready.
A 1999 reported arbitration, LMLN 51110 June 1999, illustrates the kind of
problem which can arise with a clean type bulk liquid cargo. The vessel was
chartered on the Asbatankvoy form for the carriage of a cargo of benzene. She
arrived at the loading port pilot station at 07.30 on 12 August, and the master
tendered notice of readiness. At 20.42 the same day the vessel shifted into the inner
anchorage where she remained at anchor for six days. Surveyors attending on behalf
of the charterers had boarded the vessel at 17.00 on 18 August to carry out an
internal cargo tanks inspection. At 21.00 the surveyors rejected the cargo tanks
because wall wash tests showed an unacceptable quantity of chlorides in all cargo
tanks. The master was asked to steam wash all tanks for a period of 6 hours prior
to each inspection. The master immediately started to steam-clean #1C in compliance with the surveyors request and informed the disponent owners. The disponent owners contended that the level of chlorides present would not damage the
benzene. They told the master to complete the steaming cycle in #1C tank but not
to carry out any further cleaning. They called in their own surveyor who carried out
an inspection at the inner anchorage at 11.00 on 19 August. The surveyor carried
out a visual check on the condition of the tanks and found them clean, apart from
a few small stains on the tank ladders and sounding pipes. He did not carry out wall
wash 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 a
second inspection and the vessel successfully passed her second wall wash tests at
07.00 on 20 August. The cargo hoses were connected at 08.30 the same day and
sufficient cargo was loaded to enable the taking of samples of the first foot of cargo
in #2C tank at 09.15. Thereafter, the first foot cargo quantity was circulated
through lines, pumps and tanks before accumulating in #3P at 1230, following
which a tank cleanliness certificate was issued by the surveyors.
Loading of cargo commenced at 18.30 on 21 August and completed at 03.20 on
23 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 contended
that laytime was used and the vessel entered demurrage at 17.55 on 17 August and
that demurrage then ran continuously through to disconnection of cargo hoses at
04.00 on 23 August.
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It was held that the evidence showed that apart from 1C, none of the tanks had
been 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 were
in the same condition as during their earlier inspection. It was therefore clear that
one or other of the wall wash tests was unreliable. In such circumstances had there
been no other relevant evidence, it would have been reasonable for the tribunal to
conclude that the vessel was probably ready in every respect to load her cargo on the
occasion of the master tendering notice of readiness on 12 August.
However, during the submission process, evidence was adduced to the effect that
a surveyor from SGS attended the vessel on 15 August whilst she was anchored at
the inner anchorage. The master reported to the disponent owners on 15 August
that the SGS surveyor had found the centre tanks ok but had suggested that the
four 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, that
cleaning process took the form of 5/6 hours washing of each of the four tanks with
hot 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 15
August even though washing of the wing tanks was still in progress at that time, and
a third notice of readiness was tendered at 10.48 on 16 August stating that the vessel
had arrived at the pilot station at 07.30 on 12 August and is ready in all respect to
load her cargo since then . . . . The information contained in the third notice of
readiness was misleading because it was clear that at the time it was tendered, tank
washing was still in progress. It followed that neither the first, second nor third
notice 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 vessel
was 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. No
subsequent notice of readiness was tendered.
Since the master did not tender a valid notice of readiness between the vessels
arrival on 12 August and her eventual commencement of loading, the tribunal had
to decide when, if at all, laytime commenced at the loading port. Both sides had
referred to The Mexico 1.16 The disponent owners had submitted that laytime
should start at latest upon commencement of cargo operations which, they said, was
when cargo hoses connected prior to pumping cargo into the vesseli.e. at 08.30 on
20 August. The charterers had contended that loading commenced properly only at
18.30 on 21 August.
The evidence was that the reason for the substantial delay between the taking of
samples of the first foot of cargo (09.15 on 20 August) and the issuance by the
charterers surveyors of the tank cleanliness certificate (12.30 on 20 August) on the
one hand, and the commencement of loading of the main body of cargo at 18.30 on
21 August on the other hand, was due to problems with the cargo not being within
contract specification and was not due to any problems with the vessel. Accordingly,
the candidates for the commencement of laytime were:

16. [1990] 1 Lloyds Rep. 507.

163

Para. 70

20 August

READINESS

08.30 Hoses connected


08.42 Commencement of first foot test
12.30 Completion of first foot test
Issuance of cleanliness certificate

In the tribunals view, provided that the subsequent first foot test was passed
successfully, which in the present case it was, laytime should be deemed to have
commenced with the connection of cargo hoses in readiness to commence loading
operations. Accordingly, time would be counted from 08.30 on 20 August through
to 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 later
discovered unreadiness of the vessel in circumstances where vessels have to wait for
a berth and the charterparty does not contain an appropriate congestion type
clause.
71. It has already been mentioned that in practice it is very common for cargo
spaces to be found not ready some considerable time after a vessel arrives at or off
a port/terminal and has to wait for a berth. The situation is so common that owners
should attempt to get particular clauses in their charterparty contracts so that they
get compensation for time actually lost waiting for a berth; some usual clauses have
been 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 waiting
for a berth provision or something similar.
Two decisions by the same commercial judge illustrated the continuing problem
and they also evidenced his purposive approach to the construction of the relevant
charterparty clauses in circumstances where the cargo spaces were found insufficiently clean after the tendering of a notice of readiness. In The Linardos17 the
owners chartered their vessel Linardos to the charterers for the carriage of coal from
Richards Bay, South Africa to Antwerp on the terms of the Standard Form Richards
Bay Coal Charter (RBCT) the laydays/cancelling days being 1 October and 10
October 1991.
On arrival at Richards Bay, no berth was available for docking. The vessel
nevertheless 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, and
was inspected by the marine surveyor who found water and rust in her hatches and
failed her for loading. She was not finally accepted as ready until 06.30 on 8
October. A dispute later arose under the charterparty as to whether the 4 October
notice was valid given that at the time of tender the vessel was not in truth ready for
loading.
The material provisions of the charterparty were as follows:
Clause 4 Lines 6778:
Time commencing, subject always to the undermentioned provisos, 18 hours after Notice
of Readiness has been give by the Master, certifying that the vessel has arrived and is in all
respects ready to load, whether in berth or not . . . Any time lost subsequently by vessel not
17. [1994] 1 Lloyds Rep. 28.

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Para. 71

fulfilling requirements for Free Pratique or readiness to load in all respects, including Marine
Surveyors Certificate . . . or for any other reason for which the vessel is responsible, shall
NOT 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 then
Notice 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 Masters certificate that the holds have been washed and
dried 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 berth
and will lose their loading turn. The Notice of Readiness will only be accepted after receipt
of an independent marine surveyor . . . that the vessel is clean, dry and free of
contaminants.

The reference to RBCT Regulations was to Richards Bay Coal Terminal


Regulations.
The charterers challenged the validity of the notice of readiness, the arbitrator
found that the notice of readiness was valid and awarded the owners the full amount
of 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 to
ameliorate the black or white effect of the principle by express provisions to the
contrary;
(2) the express provision in clause 4 lines 75 to 78 as to what was to happen in the
event of time lost subsequently by vessel not fulfilling requirements for . . .
readiness to load in all respect, including Marine Surveyors Certificate contemplated loss of time due to the occurrence of surveyor declaring the holds unfit after
the master had already presented what on the face of it was a perfectly valid notice
of readiness; the argument that lines 75 to 78 should be construed as confined to
loss of time due to events occurring after the giving of notice of readiness would be
rejected; and the effect of clause 4 was to contract out of the normal rule that the
vessel 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 the
knowledge that it was untrue i.e. in the knowledge that the vessel was not then ready
would be ineffective to start time running; there had to be by implication a requirement of good faith;
(4) the RBCT regulations and clause 2.12.1 in particular contained nothing to
suggest that presentation of the masters certificate that the holds had been washed
and dried prior to tendering notice of readiness was to have any other function than
165

Para. 71

READINESS

part of the requirements in respect of the Notice of Readiness which the regulations required to be satisfied before the vessel would be allocated to a berth; the
general incorporation in clause 24 of the general requirement in clause 2.12.1 did
not make that requirement a condition precedent to the commencement of time;
the arbitrator was right in his conclusion that the regulations did not supplement the
effect of clause 4 and the appeal would be dismissed.
In The Jay Ganesh18 the owners chartered their vessel to the charterers for the
carriage 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 Master
to the Charterers . . . when the vessel is in the loading or discharging berth and has obtained
customs 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 that
all holds . . . are clean, dry and free from smell and in all respects suitable to receive the
cargo to the . . . Charterers satisfaction.
(c) If a loading/discharging berth . . . is not available upon the vessels arrival at or off the
port, notice of readiness may be given upon arrival at the customary waiting place at or off
the port, whether cleared at Customs or not and whether in free pratique or not.
However if upon the vessels arrival at or off the port she is prevented from proceeding to
the loading/discharging berth by her inefficiency . . . notice of readiness may only be given
when 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 the
vessel were in berth . . .
(e) If after berthing the Vessel is found not to be ready in all respects to load/discharge, the
actual time lost until the Vessel is in fact ready to load/discharge (including customs clearance
and 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 gave
notice of readiness on 10/11 August 1990. There was no berth available. On 28
August the vessel was inspected by the charterers representative and the master was
instructed to clean the holds and remove the infestation of insects.
On 7 September the vessel shifted from the anchorage into berth. On 8 September
the 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 commenced on 10 September.
The owners claimed demurrage and the dispute was referred to arbitration. The
arbitrators found that when the master gave notice of readiness to load on 10/11
August he believed that the vessel was physically ready to load but in truth she was
at that time unknown to the master infested with insects and mites. The arbitrators
held that the shipowners were entitled to recover demurrage and that a valid notice
had been given.
There was an appeal. The issue for decision was whether the notice of readiness
given on 10/11 August was a nullity because the vessels holds were then infested so
18. [1994] 2 Lloyds Rep. 358.

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Para. 71

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 the
running of laytime from 10/11 August but subject to the deduction of about 212 days
from 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 physical
readiness of the cargo spaces which he would have had at common law; to make sure before
giving notice of readiness that they were in all respects fit to receive the cargo and only to give
notice if he had ensured that; just as the effect of clause 9(e) in relation to free pratique was
to deal with additional delay arising from the fact that the master gave the notice of readiness
under a misapprehension as to the medical condition of the crew, so must its effect in relation
to physical unreadiness be to deal with additional delay which the master gave notice contrary
to the owners duty at common law and under clause 8(b) under a misapprehension as to the
physical condition of the cargo spaces; time being thrown away in both cases it was the
scheme 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 the
charterers 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 then
ready 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 analogous to the failure to obtain a marine surveyors certificate and it was no less unrealistic to
distinguish between delay cause by unreadiness attributable to events existing when the
notice was given and delay caused by subsequent events; the purpose of the clause was to
make the owners pay for the loss because the master, albeit innocently, gave notice that his
vessel was ready when in truth it was not and to make the charterers pay for the delay caused
by their failure to provide a berth; the appeal would be dismissed.
The Linardos [1994],17 applied.

In a much later arbitration LMLN 63631 March 2004 (already referred to in


Chapter 1 regarding geographical arrival and also later in Chapter 7 regarding
exceptions), one of the issues was whether, as the owners argued, the notice of
readiness given on 29 July was valid, and only the period following the refusal of the
local inspector at the loading port to be satisfied as to the cleanliness of the vessels
holds for loading until he passed them should be regarded as:
. . . all time lost due to the vessels holds not being ready to receive the cargo until vessels
holds are ready to receive the cargo not to count as laytime . . . (Recap clause 11);

or whether, as the charterers argued, the vessels uncleanliness prevented a valid


notice of readiness being given so that laytime did not commence until the surveyor
was satisfied.
The owners relied on the decisions of Mr Justice Colman in The Linardos17 and
The Jay Ganesh.18 The charterers contended that those decisions should be
distinguished on the facts and/or that they should be regarded as clearly out of step
with other judgments which stressed the importance of the accuracy of the facts
stated in the notice of readiness before it could be effected. They said that in the
present case the notice of readiness was clearly inaccurate in stating that the vessel
was ready to load.
It was held that, it was true that in the present charter the recap clause 11 was
quite separate from the notice of readiness provisions in clause 24, whereas in The
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Para. 71

READINESS

Linardos the notice of readiness and requirement for a Marine Surveyors certificate as part of the vessels readiness were both in clause 4 of that charter. However,
in The Jay Ganesh the two aspects (giving of NOR and cleanliness, and loss of
time due to the vessel being found not to be ready) were in separate clauses (8 and
9). Mr Justice Colman said, at page 362:
The overall effect of clauses 8 and 9 is accordingly, that this form of charterparty requires
that the charterers must pay for waiting time at the anchorage when they have not provided
a berth but if the vessel then causes delay after arrival in berth because she was not in truth
then ready to load or discharge, that loss of time is to be borne by the owners. That is an
entirely logical division of the risk of delay between the parties.

Accordingly, the tribunal considered that it had to follow the guidance so provided
by Mr Justice Colman as the wording and layout of the present charter could not be
distinguished from The Jay Ganesh provisions.
Nor was there a sufficient, if indeed any, distinction that could be drawn between
the facts of the present case and the two previous cases. The charterers had submitted that Mr Justice Colman regarded it as being necessary that there had to be
a requirement of good faith in the giving of the NOR, without which it would not
be effective to start time running. The charterers asserted that extensive cleaning,
descaling and preparation of the holds was required before they were ready. The
owners had challenged that assertion. The tribunals finding was that, whatever was
the exact cleaning that was required (and there were few facts about that), there was
no evidence that the notice of readiness was given in anything other than good
faith.
As to the charterers submission that the decision in The Linardos and The Jay
Ganesh were out of step, both decisions originated from awards by extremely
experienced LMAA tribunals, and the judge in question (Mr Justice Colman) had
spent his career frequently involved in charterparty cases. Far from being out of step
with shipping law and decision in this area of maritime jurisprudence, the tribunal
considered that those decisions represented a wholly logical and commercial exception to the readiness requirement in a notice of readiness, and was one which
followed from the language used in the charter.
Accordingly, the wording of recap clause 11 was sufficient to qualify the normal
readiness requirement of the notice of readiness. The plain and ordinary meaning
of the words all time lost . . . , when included in a clause dealing with the
satisfaction of local inspectors as to the readiness of the holds, could only be that
where there was dissatisfaction, then the time involved from the inspection to the
satisfaction of the inspector was excluded from laytime which was otherwise running from the expiry of the notice of readiness. The issue would be decided in favour
of the owners.
The above cases and arbitration are very good examples of charterparty clauses not
being sufficiently clear regarding what happens in respect of the very common type
circumstances of a vessel having to wait for a berth and subsequently cargo spaces
failing to pass the required standards of readiness. While the decisions by Mr Justice
Colman were eminently sensible and showed a purposive approach to the interpretation of the charterparty clauses in question there would have been no necessity
for the arbitrations and the court proceedings if the parties had agreed simple and
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Para. 71

clear wording which left it in no doubt that the owners would have received compensation for the period that their vessels were waiting for berths and subsequently
were found to be not ready to load/discharge their cargoes. Before suggesting an
appropriate clause to cover the situation, the commercial justice of such a clause was
put 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 the
anchorage, then had to wait for a period of several days or even weeks because no berth was
available, was found on getting into berth to need one final washing of one or more of her
cargo spaces, perhaps only a few hours work, could lose the benefit of all time lost at the
anchorage. The printed form of this charterparty avoids that very commercially unbalanced
result. (Emphasis by the author.)

The commercial judge surely hit the nail on the head regarding a commercially
unbalanced result so that, in the context of commercial justice, it makes sense to
have a simple and clear clause in a voyage charterparty which leaves it in no doubt
that when a vessel is waiting for a berth, particularly in respect of congestion which
results 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 being
applicable. Such a clause could read:
If a loading/discharging berth is not immediately available at the time of the vessels arrival
at or off the loading/and discharging port/terminal laytime shall commence . . . and shall run
subject to the laytime exceptions irrespective of whether the vessel is subsequently found not
to have been ready to load/discharge cargo. Laytime, or time on demurrage, will not run
during any periods when the vessel has to be cleaned in order for the vessel to load/discharge
her cargo.

A sentence could also be inserted in such a clause to the effect that any notice of
readiness given by the master had to be given in good faith although this will be
implied, 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 gave
his notice of readiness but in the motion before this Court no alternative case was put forward
founded upon the allegation that the master did act in bad faith or indeed was negligent when
he did give the notice of readiness. It is therefore unnecessary for the purpose of this appeal to
determine that issue. It is sufficient to say for present purposes that a notice of readiness proved
to be given by the master or chief officer with knowledge that it was untrue, that is to say in the
knowledge that the vessel was not then ready would be ineffective to start time running. There
must 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 time
of the vessels arrival at or off the loading/discharging port all time waiting thereafter for a
berth 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 above
clauses in simple and clear language so as to remove any doubts as to what the
parties intended in the common type circumstances cited above.
The failure to do so can result in owners losing out despite having a congestion
type clause in respect of tendering a notice of readiness. In LMLN 54528 September 2000, a case concerned more with documentation and legal readiness (see
169

Para. 71

READINESS

also later paragraph 78 and onwards) than cargo space readiness, the owners
submitted that laytime commenced at 13.00 on 28 May whereas the charterers
contended that the laytime clock did not start running until 07.00 on 10 June. The
difference arose out of the position taken by the charterers that the vessels initial
notice of readiness was bad in that the master and three other crew members did not
have valid vaccination certificates when the vessel arrived off the loading port, and
that that amounted to the unreadiness of the vessel to load, which was not cured
until late on 9 June when the vessel obtained free pratique and the port authority
authorised the vessel to berth.
The vessel was chartered on the Sugar Charter Party form. The relevant clauses
were, as follows:
19. At . . . loading port, laytime . . . to begin at the next regular working period commencing before 3pm after written/cables/telexed notice of readiness to receive cargo has been
tendered 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 his
notice of readiness by cable/radio from customary anchorage, whether in port or not, whether
in berth or not, whether entered customs or not, whether in free pratique or not, and time to
commence as per Charter Party.

The vessel arrived off the loading port at 19.30 on 27 May and tendered a notice of
readiness. No berth was available for her and no port health officials boarded the
vessel, because of bad weather. Port agents advised the charterers on 28 May (copy
to 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 the
berthing prospect for the vessel was 4 June if the cargo/documents were ready, and
they further advised that the vessel would be inspected by port health authorities on
that day, at the outer roads, if weather permitted. On 3 June the agents advised that
the port health authorities had discovered crew members without valid vaccination
certificates for yellow fever and that the crew members would have to be vaccinated
with the vessel remaining in quarantine for a period of 10 days. The affected crew
members were the master, 2nd engineer, 3rd engineer and the chief cook. In the
event, it was not until 9 June that the agents advised that the port health authorities
had authorised the berthing of the vessel as from 17.00 hours that day and the vessel
berthed at 20.20. Free pratique was granted at 20.45 and loading commenced
at 22.05.
The owners submitted that laytime commenced at 13.00 on 28 May and ran
continuously thereafter. They said that clauses 19 and 45 of the charterparty were
unambiguous in providing for a valid notice of readiness to be tendered whether or
not the vessel was in free pratique. The NOR tendered at 19.30 on 27 May was valid
in that the obtaining of the necessary vaccination certificates was a pure formality
which did not cause any delay to the vessel so that it did not invalidate the 1930
NORsee The Delian Spirit.19 They said that the real cause of the delay was the
charterers failure to supply the cargo at the relevant time. They also cited The
Linardos20 and said that their submissions accorded with an objective view of
19. [1971] 1 Lloyds Rep. 506.
20. [1994] 1 Lloyds Rep. 28.

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Para. 71

fairness between parties, and were consistent with the approach taken by Mr Justice
Colman in that case.
The charterers contended that the clear inference of clause 19 was that, although
the vessel did not require free pratique on arrival, the vessel should obtain free
pratique at the first opportunity and not at any stage in the future. The owners had
to ensure that the vessel and crew were in the best possible position to be granted
free 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 arrived
at the loading port from an infected area amounted to failure by the owners to
present a vessel which satisfied a valid notice of readiness. For the whole of the time
that the vessel did not satisfy the port health authorities she was not at the full and
immediate 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. The
master and three of the other crew members did not have valid vaccination certificates, and free pratique could not be granted until vaccination had taken place and
the port health authorities granted free pratique.
It was the decisions in The Tres Flores and The Linardos, which were relevant
to the present case, as well as The Petr Schmidt22 and The Agamemnon LMLN
47320 December 1997, where fundamental principles regarding the commencement of laytime (as set out in The Mexico 123) were emphasised.
In The Tres Flores there was nothing like the present clause 45 which referred
specifically to congestion and permitted the master to tender a notice of readiness
when he arrived off the loading port whether in free pratique or not in the circumstances of congestion.
There was no problem in distinguishing the cases so as to give effect to clause 45
of the present charterparty. Clause 45 was tailor-made for congestion, and on the
assumption that the clause did bite when the vessel arrived off the loading port, it
had to follow that the master had been right to tender a notice of readiness at that
time. 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 owners
on the basis of the wording in the commencement of laytime clause 4 of the
charterparty, at lines 7578, any time lost subsequently by vessel not fulfilling
requirement for . . . . He said that those words contemplated that subsequent to
the giving of a notice of readiness the loading of the vessel would be delayed, and
further contemplated that the causes of such delay might be failure to obtain free
pratique or unreadiness to load in all respects or other reasons for which the vessel
was responsible. Those words were not in the charterparty in the present case, so
The Linardos could be distinguished. However, The Linardos charterparty did
have a clause (clause 25) which was almost identical to the present clause 45, and
while Mr Justice Colman did not decide The Linardos by invoking clause 25, he
21. [1973] 2 Lloyds Rep. 247.
22. [1997] 1 Lloyds Rep. 284.
23. [1990] 1 Lloyds Rep. 507.

171

Para. 71

READINESS

did have something important to say about itsee the two paragraphs of his
judgment in the left-hand column on page 32 of the report beginning The arbitrator came to the same conclusion and ending that very commercially unbalanced result. Those paragraphs in Mr Justice Colmans judgment made it clear
that unless there were particular words in a charterparty which contracted out of the
normal rule regarding the vessel to be ready at the time of the giving of a notice of
readiness, the normal rule would be applicable albeit that it might lead to a very
commercially-unbalanced result.
That was the result for the owners in the present case since, because of the
tribunals finding that obtaining free pratique was not a pure formality, the notice of
readiness which was tendered on 27 May was invalid and of no effect. Further, there
were no particular words in the present charterparty which contracted out of the
normal rule requiring a vessel to be ready at the time that a notice of readiness was
tendered. While clause 45 of the charterparty might incline an arbitrator to the view
that the normal requirements should not apply (as did the arbitrator in The Linardos with a similar worded clause) it was clear from the judgment of Mr Justice
Colman in that case that such a view was not permitted.
The facts of the case emphasised that if owners wanted compensation for when
their vessels had to wait for a berth, they should ensure that their charterparties
contained clear and appropriate clauses to reflect that. Since the port authorities did
not authorise the berthing of the vessel until the evening of 9 June, and free pratique
was not granted until 20.45 of that day, it followed that laytime commenced at
07.00 on 10 June. The owners claim would be dismissed.
The arbitrators took a strict approach in distinguishing their case so as not to
apply The Linardos judgment in favour of the owners; much importance was
attached to the words any time lost subsequently by vessel not fulfilling requirements for . . . in The Linardos. Their decision contrasts with that of the arbitrators in the later arbitration LMLN 63631 March 2004 (already detailed earlier
in 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 congestion type clause in their charterparties.
The contents of this paragraph are also relevant to Chapter 5 which covers special
clauses in the context of readiness.

EQUIPMENT
72. Any equipment which has relevance to the loading/discharging operations has
to be in a state of readiness; such equipment may include derricks, cranes, winches,
hatches, pumps, crude oil washing machines, shifting boards, vacuvators, etc. The
state of readiness only has to be such that the equipment can be made ready and
available for use when actually required. Not only is it a pointless exercise to have
equipment such as derricks rigged to work while waiting at an anchorage but, in
some circumstances, it might even be dangerous. On the other hand, if the relevant
equipment is not ready and available for use when required, after the vessel has
reached the agreed destination, then the vessel will not be ready so as to satisfy the
172

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Para. 72

second requirement needed for the commencement of laytime; further, it would


appear 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 is
tendered. The cases Armement Adolf Deppe v. Robinson,24 Sun Shipping v. Watson and
Youell,25 Noemijulia v. Minister of Food,26 The Demosthenes V (No. 1)27 and The
Virginia M28 are important cases to look at in order to see the approach of the
courts over the years regarding the required degree of readiness for a vessels
equipment. The recent Virginia M case is considered since it indirectly concerned
equipment, albeit that the case focused upon the lack of fresh water to supply steam
for the vessels 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 discharging
berth was available, she moored at buoys. Discharge could have been carried out at
the buoys but the consignees of the cargo did not want this. The hatches had not
been removed nor had the owners stevedores brought all their discharging gear on
board. The Court of Appeal held, reversing the High Court judge, that the vessel
was ready to discharge and that the laydays began to run on 28 October. Lord
Justice Swinfen Eady in his judgment said:
It is the duty of the merchants to co-operate with the owners in the receipt of cargo, and
upon the facts I am satisfied that the only reason why the ship did not take on board the gang
and rig the gear to fulfil the owners duty in discharging was that the receivers were not
desirous of receiving the cargo at the buoys and were so not willing to co-operate in her
discharge 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 hatches
and make other preparations at the buoys when there was no desire or intention of the
merchants to receive cargo until the ship was berthed at the quay. The ship was ready to
discharge in a business and mercantile sense, and the idle formality of incurring useless
expense was not necessary as a condition precedent to the commencement of the lay
days.

The judgment is full of common sense; the only surprising thing about the case is
that the High Court decided the matter in the reverse way. The case is to be
contrasted very much with that of Sun Shipping v. Watson and Youell25 where the
court was concerned with shifting boards and the loading of grain in bulk. The
vessel had to load a cargo of grain at certain Danube ports and she arrived at Braila
on 4 June where a portion of the cargo was loaded; she then went to Galatz and
continued the loading which was completed on 20 June. The charterers claimed
that laytime should not count on 5, 6 and 7 June because the vessel was not ready
in all holds as work was in progress on the erection of shifting boards. At the time
that the notice of readiness was given the vessel had not finished putting up her
shifting 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. (194950) 83 Ll.L.Rep. 500, and (1950) 84 Ll.L.Rep. 354 (C.A.).
27. [1982] 1 Lloyds Rep. 275.
28. [1989] 1 Lloyds Rep. 603.

173

Para. 72

READINESS

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; if
that was so, and though she may be ready to load when some, but not all, of the boards were
put in, you get into the case a question of degree and fact and I think that the construction
should be adopted that the shifting boards have got to be ready and fitted before the ship could
be said to be ready. Further, it is said that there is no evidence that the Charterers were
prevented from loading; that probably is the case but, as far as I know, that has nothing to do
with 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 Flores29 but,
of course, the decision is very much different, in principle, to that of the Court of
Appeal 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 the
main mast due to steps taken in extinguishing a fire in a storeroom. Temporary
repairs were effected and the ship was given a certificate of seaworthiness for her
voyage homewards with grain. No. 3 hold (tween and lower) was occupied by
bunker coal. Notice of readiness was given by the shipowners in accordance with the
charterparty but was refused by the charterers on the grounds (inter alia) that the
ship had no main mast or after derricks and that No. 3 hold still contained bunker
coal. The umpire found that No. 3 hold was designed as reserve bunker space and
that No. 3 tween deck and No. 3 lower hold, if not used for reserved bunkers, were
capable of carrying cargo; that, in order to proceed to the nearest bunkering port on
the homeward voyage, sufficient reserve bunkers could have been carried in No. 3
tween deck leaving No. 3 lower hold free for grain and that the ship was not ready
to load by her cancelling time in that she was without main mast or after derricks
and 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 the
umpire. He decided against the charterers on the point relating to bunkers/No. 3
hold (on this he was upheld by the Court of Appeal in that the master was entitled
to take bunkers for the whole of the voyage and not just the nearest bunkering
station) and, in deciding on the other aspect of the case, he held that the charterer
was entitled to no more than the reasonable co-operation of the shipowners in
selecting and working the most convenient method of loading, and that the evidence
of the absence of a main mast and after derricks (which defects could probably have
been remedied in time if the method of loading required their use) was inadequate
to discharge the onus upon the charterer of showing that the defects in the ships
equipment were such that she would probably be unready or unable to employ or
assist in any reasonable method of loading which might be decided upon.
Before going further, it is stressed that this case was really concerned with the
cancellation of the vessel, also that the charterer had no express right to use any part
of the ships gear and the charterparty did not prescribe any particular method of
29. [1973] 2 Lloyds Rep. 247.
30. (194950) 83 Ll.L.Rep. 500; (1950) 84 Ll.L.Rep. 354 (C.A.).

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Para. 74

loading or allow the charterer to select such a method. Having said that, the
following words of Mr Justice Devlin are pertinent:
The lack of main mast and after derricks meant a deficiency in the ships gear which might
have interfered with the loading of Nos. 4 and 5 holds. The extent of the possible interference
is dependent upon the method of loading and is detailed in the case. The authorities on
readiness to load mostly deal with the condition of the holds. But it is not disputed that the
principle in some form must be applied to the ships gear, where it has to be used; for it would
be pointless to insist on the space being available if the ship was in no condition to play her
part in filling it. But it does not follow that the principle is to be applied with the same
stringency . . . it would be unsatisfactory if the work of making ready had to be chased by the
work of loading; the shipper wants to know all is in readiness before he begins, and it is best
to make a firm rule. The ships gear is different; some of it may not be required at all; some
of it may not be needed until an advanced stage of loading, and the keeping of it in constant
readiness from the first moment to the last may involve labour and expense unnecessarily. I
think, that outside the clear rule about the condition of the holds, some elasticity is permissible. In particular, Lord Justice Swinfen Eady lays down the test of readiness in a business
and mercantile sense and deprecates the idle formality of incurring useless expense. Apart
from useless expense, I find it hard to believe that if, for example, a winch, which would not
be needed for some days after loading began, required an hour or twos overhaul, the
cancellation of the charter would be justified. Examples of this sort could be multiplied and
would serve to show that a test which produces a sensible result in the case of the holds may
not work equally well in respect of gear.

He went on to say that if the charterparty expressly gave to the charterer the right
to use any part of the ships gear the end result might be different, as it also could
be with a charterparty which prescribed a particular method of loading or allowed
the charterer to select a method of loading where the ships gear was required for
such methods.
The decision of Mr Justice Devlin was taken to appeal but the Court of Appeal
upheld the judgment. Lord Justice Tucker stated: It seems to me that there is a real
distinction to be drawn between the cargo space and the gear. The charterer is
entitled 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 a
difference, if not in principle, at least in the application of the principle, between
space in the hold and readiness of ships gear.
There is perhaps, a fine point of distinction between Lord Justice Tucker and
Lord Justice Cohen/Mr Justice Devlin but in practice the distinction between them
appears to be of no practical significance; so long as there is a difference in the
application of the principle regarding readiness, to equipment as compared to
the cleanliness of cargo spaces, that should suffice to ensure that the strictness of the
Tres Flores19 decision does not impinge in such a way regarding the equipment of
the 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 marginal
than in the previous cases adverted to in respect of equipment. The facts were that
the vessel arrived at Alexandria at 15.30 on 26 May with a cargo of grain and she
anchored in the inner port giving a notice of readiness at 11.40 on the following day,
31. [1982] 1 Lloyds Rep. 275.

175

Para. 74

READINESS

27 May. That notice was rejected on the ground that the vessel was not equipped
with the necessary vacuvators for the discharge of cargo in accordance with clause
18 of the charterparty so that, consequently, the vessel was not ready for the
discharge of cargo. No vacuvators were put on board the vessel until 12.00 on 29
May when three of them were put on to the ship. It was doubtful whether any
vacuvators could have been put on board the vessel before that time and the three
vacuvators that were put on board the vessel were capable of discharging cargo at a
greater rate than that specified in the charterparty. The charterparty provided that
there should be six vacuvators and three more vacuvators could have been obtained
within a matter of hours. Three more vacuvators were obtained at 11.30 on 15 June
at which time the vessel was still waiting in the inner port without having starting the
discharge of cargo. There was a finding by the arbitrator that any lack of vacuvators
between the arrival of the vessel at Alexandria and 15 June was not causative of any
delay in the berthing of the vessel. The relevant provisions of the charterparty
were:
Notification of the vessels readiness must be delivered at the office of Charterers . . . at or
before 4 p.m. . . . laydays will then commence at . . . 8 a.m. on the next business day whether
in 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 at
charterparty rate of discharge. Cargo to be discharged by Receivers . . . at the average rate of
1,500 tons per weather working day of 24 consecutive hours provided vessel can deliver at this
rate . . . .

By an addendum it was agreed that the discharging rate be amended to 1,000 metric
tons per weather working day and for the owners to guarantee minimum six vacuvators 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 those
requirements as to vacuvators; all that was required before notice of readiness was given was that the vessel ought to be ready; and that had no
connection with vacuvators which the owners would supply for the operation of discharging. The vacuvators were essentially equipment which was
to emerge from the shore when the operation of discharge was to commence. The vessel as a vessel was ready and all that had not been done was
to supply the equipment which the owners were to supply for the purpose
of discharge. In the circumstances, the notice of readiness which was given
on 27 May was a valid notice.
(2) However, if the vessel had not been, in point of a physical state, ready to
discharge on 27 May and the vacuvators were an essential part of the
vessels readiness, the vessel would still have been ready at any rate from 29
May because at that time there were three vacuvators on board and a
further 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 the
vessel became ready a further notice period was necessary; here the court
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Para. 75

would have required a great deal of persuading to reach the view that the
charterers, who had had notice of the vessels arrival, were entitled to allow
her to sit there for a period of just over two weeks and not pay demurrage
or bear the cost of the time that had elapsed merely on the ground that they
had not received notice from the owners that another three vacuvators
could be obtained within hours.
The judges decision in fact upheld the award of the arbitrator. In making his
decision Mr Justice Staughton did not have to give a ruling between the competing
principles in The Tres Flores32 and Armement Adolf Deppe33 (because of what he
decided in (1) above) but he did consider it just in case he was found to be wrong
on appeal in respect of his decision in (1) above (in fact the case never went to
appeal). He considered, by way of obiter, the more difficult issue which was, if the
ship was not, in point of her physical state, ready to discharge on 27 May, whether
the notice was still valid because she could have been made fit within such time as
the charterers could conceivably have required for her to start discharging. His
lordship appeared to think that it was a marginal point but, at the end of the day, he
rejected the application of the Tres Flores32 approach and was of the opinion that the
facts of the instant case fell within the Armement Adolf Deppe33 principle. In coming
to this conclusion he relied (inter alia) on the words of Lord Justice Roskill (as he
then was) in The Tres Flores32:
In my judgment the essential distinction between the present case, on the one hand, and
Armement Adolf Deppe and The Delian Spirit . . . on the other, is that in those latter cases the
matters which remained to be done before the vessel could begin to discharge or load were
in the nature 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.

Mr Justice Staughton said that he would be prepared to describe the supply of


vacuvators in the present case as normal and usual preliminaries, at any rate in the
case of a vessel which has to be discharged in that way, in contrast with the
fumigation in the Tres Flores32 case.
Mr Justice Staughton also has some obiter dicta regarding the giving of a further
notice of readiness (see decision (3) earlier in this paragraph) but, since this aspect
will be considered later in Chapter 6 (see paragraph 107 et seq.), no further mention
will 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 Constanza
to one safe port in Nigeria, charterers option, with a cargo of bagged calcium
ammonium nitrate. The laytime allowed at the discharge port was in excess of 15
weather working days and the charterparty provided for notice of readiness to be
given at the discharge port. After several changes of destination the vessel was finally
ordered to Lagos where she arrived at 08.30 on 8 March with about 15 tons of fresh
32. [1973] 2 Lloyds Rep. 247.
33. [1917] 2 K.B. 204.

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Para. 75

READINESS

water remaining on board. The vessels main propulsion was a four-cylinder Doxford engine but her auxiliaries and in particular her steam winches were steam
driven, the steam being provided by an auxiliary boiler; subject to using salt water
in an emergency she was dependent upon having a supply of fresh water (about 20
tons per day) to feed her boiler and provide the steam necessary to run her auxiliaries. A notice of readiness was tendered by the vessel at 10.00 on 8 March and a
dispute arose as to whether this notice was valid. The arbitrators found that the
vessel could have proceeded to a discharging berth when she arrived at Lagos if one
had been available and she could have commenced discharge of cargo but this could
not have lasted for more than a day at most with the fresh water then on board. In
fact the vessel waited for a berth until late March but she received a supply of fresh
water on 13 March.
The majority of the arbitrators held, in deciding for the owners, that in order to
give a valid notice of readiness the vessel had to be ready, apart from routine
formalities, to discharge or load at the time of giving notice. She did not have to
sustain her readiness for any length of time. Provided that notice was given in
accordance with charterparty stipulations, that would be good notice. Thereafter,
the laytime provisions of the charterparty took over and governed what was to
happen after notice had been given. If at some time later the vessel had to cease
discharge due to the fault of the owner/vessel then the laytime ceased to count
against the charterer.
Before Mr Justice Hobhouse (as he then was), in the High Court, the rival
contentions concerned whether or not the readiness must relate to the whole of the
cargo or only some part of it and whether or not the readiness need only be
readiness to start discharging cargo as opposed to readiness to continue to discharge
it once started. He considered that the majority arbitrators approach was not
proper or sound in law and decided that the readiness required was readiness to
discharge the whole of the cargo that was the subject matter of the charterparty; it
did not suffice that the vessel was ready to discharge some of the cargo if she was not
ready to discharge the remainder. It was not enough for the shipowner to say: True
I 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 Sun
Shipping v. Watson and Youell34 and Armement Adolf Deppe v. John Robinson35 but not
to Noemijulia v. Minister of Food36 and The Desmosthenes V .37 He also gave
consideration to what Mr Justice Diplock had to say in The Massalia (No. 2)38 and
the obiter dicta of Mr Justice Evans in The Mexico 139; both of these cases concerned overstowage of cargo and the latter judgment stated:
It is also well established, subject always to express argument in a particular case, that notice
of readiness cannot be given until the vessel in question is ready to load or to discharge the
whole of the cargo in question [emphasis supplied].
34. (1926) 24 Ll.L.Rep. 28.
35. [1917] 2 K.B. 204.
36. (194950) 83 Ll.L.Rep. 500.
37. [1982] 1 Lloyds Rep. 275.
38. [1960] 2 Lloyds Rep. 352.
39. [1988] 2 Lloyds Rep. 149.

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Para. 75

Further, Mr Justice Hobhouse gave particular consideration to the Tres Flores


Court of Appeal decision and, while it is difficult to reconcile some of his reasoning
in relation to the usual preliminaries for loading/discharging and routine formalities
on the one hand, and something which would prevent the vessel from being absolutely ready to load or discharge the cargo whenever the charterers might order her
so to do, the fact is that the recent judicial inclination appears to be for a stringent
approach to readiness of a vessels equipment (which may be caused by way of a lack
of 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 was
drawn between the application of the principle regarding readiness, to equipment,
as compared to the cleanliness of cargo spaces. Mr Justice Hobhouse obviously
adhered to the more stringent Tres Flores approach even though he was not dealing
with the readiness of cargo spaces but inferentially, at least, with the readiness of
equipment. The narrowing of approach was disappointing to some and not in
accord 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 sets
out to solve legal problems by the application to them of principles which the
ordinary man is expected to recognise as sensible and just. The true spirit of the
common law is to override theoretical distinctions when they stand in the way of
doing practical justice. Further, some elasticity is permissible as in Noemijulia v.
Minister of Food (see above, paragraph 73) appears to have gone by the board
although owners may still have the benefit of preliminaries in certain
circumstances.
In The Virginia M it may well have been that practical justice militated for the
approach 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 being
wholly divorced from what may subsequently happen after laytime has begun to run. Events
may occur after laytime has started which gave rise to laytime exceptions and therefore
interrupt laytime or events may occur which amount to breaches of charterparty by the
shipowners. He submitted that such considerations are distinct from and in contrast to what
the 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 the
vessel 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 his
argument once it is also accepted that readiness to load or discharge refers to readiness to
load or discharge the whole of the relevant cargo. It is absurd, and would be wholly unbusinesslike, to say that laytime must be treated as starting even though, within a matter of
minutes or hours of its doing so, laytime is interrupted owing to the incapacity of the ship to
continue. If the vessel having proceeded into berth and having discharged some cargo has to
stop and take on fresh water or bunkers either at that berth or another berth, that is not
consistent with the vessel having been ready to discharge nor is it consistent with the criteria
laid 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 laytime
commencing and then being suspended a matter of minutes or hours later; this is
always 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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Para. 75

READINESS

weather. What is the difference in principle between an interruption of laytime


because of a breakdown of a vessels equipment and an incidence of weather? In
practice, laytime is often interrupted soon after commencing, not just by an incidence of weather but also perhaps because of breakdown of equipment such as
winches or cranes. However, it obviously behoves parties to be mindful of the
judicial climate and to draw up their contracts accordingly.
Leave to appeal the decision of Mr Justice Hobhouse was given but the parties
settled the case before the appeal was due to be heard (thus indicating some doubts
regarding the decision) so that the shipping community were denied the benefit of
any erudition from the Court of Appeal or the House of Lords in respect of the
points raised in the High Court. The decision of Mr Justice Hobhouse stands on the
particular facts of the case; as his lordship himself stated, the burden of proof is
upon the owners to prove the preliminary existing fact which must exist before a
valid 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 water
at a discharging berth may be a mere formality which will in no way impede or hold
up the discharge of the cargo and will not prevent the vessel from being ready to
discharge the whole cargo as soon as the charterers may wish and at the rate that
they may wish.
By analogy, what was decided in The Virginia M must also have relevance to
equipment which is dependent upon electric power produced by a vessels generator, e.g. electric winches or pumps. It can therefore be a matter of some importance as to what defect is discovered in respect of a vessels equipment and the
timing of such, in the context of a vessel waiting for a berth without an appropriate
compensatory clause. It may be that charterers will be able to take considerable
benefit from The Virginia M, as applied to a vessels equipment, in circumstances
where the evidence shows that a vessels equipment was not ready to load/discharge
the 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 fact
that a windlass motor failed due to a latent defect subsequent to the vessels arrival,
which delayed her from shifting to her loading berth, did not invalidate the notice
of readiness which was given by the vessel on her arrival.
Navigational equipment, charts and the trim of the vessel may all be aspects
which relate to readiness to load/discharge cargo in the context of a valid notice of
readiness. In LMLN 6696 July 2005 the vessel was chartered on an amended
Gencon form for the carriage of 60,000 metric tons of bulk phosphate from Aqaba
to 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 may
be.

Clause 20
Breakdown of Equipment
Anytime actually lost through lack of ships power breakdown or inefficiency of equipment or
any neglect on the part of the vessel, its Owners, Master or crew or their Agents affecting the
loading or discharging operation shall not count as laytime.

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E QU I P M E N T

Para. 75

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, provided
that the vessel being in free pratique.
Laytime to commence 12 hours after the Notice of Readiness has been given, unless sooner
commenced.

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 remained
at the roads.
On 15 July the Harbour Master and a pilot boarded the vessel to take her into
berth, but they refused to berth her, alleging five deficiencies, namely; the gyro
compass was not working, the engines were not able to operate at their rated RPM
and generate enough speed to manoeuvre in monsoon weather, the vessel did not
have a proper chart for approaches to Paradip on board, the vessel had declared
a draught of 12.5 metres in even keel in salt water whereas the maximum permissible draught in the port was 12.5 metres in dock water, and the vessel was drawing
more than the draught declared and was trimmed down by the head and not
responding to the engines and helm properly.
As a result of the vessels rejection by the Harbour Master, the cargo receivers
informed the owners that the vessel would only be berthed after the deficiencies
complained of had been rectified.
On 25 July the Harbour Master inspected the vessel again and on the 26 July he
approved her entry into the port. However, the vessel did not berth immediately
because of congestion. The vessel eventually berthed at 08.42 on 30 July, commenced 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 said
that laytime did not begin to count until the commencement of discharging operations at 15.30 on 30 July. They said that because of the deficiencies noted by the
Harbour Master on 15 July the vessel was neither physically nor legally ready to
discharge her cargo until cleared by the Harbour Master on 26 July; that whether or
not there had been congestion at the berth the vessel would still not have been
permitted by the Harbour Master to proceed from the roads without remedying the
deficiencies.
The owners maintained that the notice of readiness tendered on 9 July was valid
and that the delay in berthing was attributable only to congestion. They also said
that the combined effect of clauses 6(c) and 20 of the charterparty was that time was
to count when the vessel was waiting for a berth and that, if there was any breakdown or inefficiency of equipment or any neglect or default of the vessel, only the
time actually lost as a result of that would be excluded from laytime counting. The
present case was similar to The Linardos.42 The vessel was simply waiting for a
berth up until 15 July and no time had been lost before the pilot boarded, so that
time counted in full. The vessel would not have discharged until the freight had
been paid, which had only been on 12 July and between 12 July and 15 July the

42. [1994] 1 Lloyds Rep. 28.

181

Para. 75

READINESS

berth had been occupied by another vessel. Consequently, laytime expired at 17.50
on 13 July before any attempt had been made to berth the vessel.
The charterers accepted that the prima facie effect of the WIBON provisions of
clause 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 at
their immediate and effective disposal at the time that the notice of readiness was
tendered and that that was not the case by reason of the defects noted by the
Harbour Master. Clause 6(c) was only effective to make time count before the vessel
had arrived at a point from which notice of readiness could be tendered. If then a
valid notice of readiness could not be tendered for any reason, and laytime did not
therefore 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 the
berth. Even if there had been no congestion at the berth the Harbour Master would
still not have permitted the vessel to proceed from the roads without remedying the
deficiencies noted on 15 July.
It was held that the first question was whether the notice of readiness tendered on
9 July was valid or not. It was a puzzling feature of the dispute that several of the
concerns expressed by the Harbour Master on 15 July (and specifically those
concerning the main engine operation and draught) evaporated when he attended
the vessel again on 25 July even though nothing had been done by the owners and
the crew in the meantime to alter the position.
It could not be said with any certainty whether, if the Harbour Master had
attended the vessel on 9 July, he would have adopted his view of 15 July (and
rejected the vessel) or that of 26 July (and approved it for berthing). The only
difference of note in the condition of the vessel between 9 and 26 July seemed to
have been the problem with the gyro compass listed by the Harbour Master on 15
July. There was, however, no evidence or suggestion that the gyro compass had not
been 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 impediments to berthing, the notice of readiness tendered on 9 July was valid and effective
to trigger the commencement of laytime.
While on this occasion the tribunal did not accept the evidence submitted by the
charterers the arbitration illustrates the kind of readiness or unreadiness which may
arise in practice regarding causation and a vessels notice of readiness.
76. Little need be said regarding the provision of dunnage and mats since it is now
the charterers who invariably organise the loading and discharging of cargo and see
to the provision of dunnage, mats, etc. However, if the charterparty contractual
position between the parties be that the owners are to provide dunnage and mats
these do not have to be laid in order to satisfy the condition of readiness unless, of
course, the contract expressly so states; all that is required is that the relevant
materials 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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D O C U M E N TAT I O N L E G A L R E A D I N E S S

Para. 78

77. It was mentioned earlier in paragraph 20, when considering a berth charterparty, that the time of access to a vessel might have relevance to the commencement
of laytime. If it be the ships obligation to provide access for shore personnel
involved in the loading/discharging operations then a failure to provide the access
may mean that the vessel is not ready to load/discharge cargo at the time she gives
a notice of readiness under a berth charterparty and the condition of readiness will
not 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 for
a berth and laytime has commenced, then the failure to provide access at a later date
may amount to a breach situation so that laytime will be suspended for the delay in
providing the access assuming, of course, a legal failure by the owners in not
providing access.

DOCUMENTATIONLEGAL READINESSINCLUDING THE


DELIAN SPIRIT DECISION
78. In order for a vessel to be ready all necessary papers have to be in order whereby
the vessel, if required by the charterers, can proceed immediately to her loading or
discharging place. There can be an exception to this whereby a mere formality is
required at the behest of a port authority or some other organisation and this does
not turn out to be a legal impediment to the commencement of the loading or
discharging of the cargo. The papers which are usually required are those needed for
the port authorities but there can be documentation appertaining to the cargo itself
which might prevent the vessel being ready. In the latter case the responsibility for
obtaining such may fall within the sphere of the charterers rather than the owners
and, if the charterers fail to obtain the appropriate documentation, the owners may
be compensated by damages for delay because of a breach of the implied term of
reasonable dispatch by the charterers, see earlier The Atlantic Sunbeam.44
Taking first free pratique (the vessel having a clean bill of health and probably the
most 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 required
in respect of the commencement of laytime.
The all-important cases on the subject of free pratique are The Austin Friars45
and The Delian Spirit46 (the latter already cited on other matters in Chapters 1, 2
and 3).
In The Austin Friars45 the facts were that the vessel had sailed from Constantinople in ballast on an approach voyage to Galatz and on this voyage collided
with another vessel which caused her to go back to Constantinople for temporary
repairs. After these repairs were completed she sailed again for Galatz arriving there
at 23.00 on 10 October. Nobody could board or leave the vessel until pratique was
given after the ship had been visited by the port doctor. The doctor boarded the
44. Para. 56, above; [1973] 1 Lloyds Rep. 482.
45. (1894) 71 L.T. 27.
46. [1971] 1 Lloyds Rep. 64; [1971] 1 Lloyds Rep. 506 (C.A.).

183

Para. 78

READINESS

vessel the following morning and gave her a clean bill of health. Unfortunately, the
charterparty provided that the charterers could cancel the charter if the vessel was
not 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 to
cancel the vessel and this, in turn, depended upon whether the vessel was ready in
time. It was decided in the High Court that the vessel was not ready by midnight on
10 October so that the charterers were entitled to cancel the vessel. The judge saw
no distinction between a medical officer in authority ordering a ship into quarantine
and his prohibiting access to her until he can examine her. In both cases, a superior
authority, in pursuance of regulations, disqualifies a ship from taking cargo on
board. The decision appeared harsh but it emphasised the strictness of the common
law in respect of the conditions to be satisfied for laytime to commence, at least in
1894. The Austin Friars45 led to the proposition that a notice of readiness was not
valid without free pratique.
In the later case of The Delian Spirit46 the subject of free pratique came to the
fore (as did other matters which have been discussed in earlier chapters). The
charterers directed the vessel to Tuapse and she reached the roads at that port on
19 February at 01.00. On the morning of that day the master gave a written notice
of readiness to load which was accepted by the charterers agents. The vessel lay in
the roads until 08.00 on 24 February when she was ordered by the charterers to go
alongside a loading berth. She arrived in the loading berth at 13.20 and free
pratique was granted at 16.00. One of the points at issue in the case was whether or
not 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 that
free 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 of
delaying the loading and that, in the present case, the obtaining of free pratique had
no effect on when the loading began. (In fact, the loading did not begin until 21.50
and the obtaining of free pratique had no bearing on loading not commencing until
that time.) His lordship considered The Austin Friars.45 He stated that difficulties
flowed from the decision in that case but that, unless constrained by authority
binding upon him, he would hold that a vessel is ready to load and can be an arrived
ship if she is in such a state of physical and legal readiness that there was nothing to
prevent her being made ready at once if required. He relied upon the Armement
Adolf Deppe47 case in coming to this conclusion. He cited the words of Lord Justice
Swinfen Eady (already referred to in paragraph 72) but he went further and
stated:
It is an idle exercise to obtain free pratique before the time for loading unless it be required
for ships purposes, and if it is a fact that it can be obtained at any time without the possibility
of delaying the loading, the mere fact that it has not been obtained does not prevent the ship
from becoming an arrived ship.

The case went to the Court of Appeal where the decision of Mr Justice Donaldson, 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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D O C U M E N TAT I O N L E G A L R E A D I N E S S

Para. 78

It was said that the vessel was not ready to load until free pratique was given . . . in support
of that proposition the case of The Austin Friars45 was cited. I do not think that case warrants
that proposition. It was a very special case. I can understand that, if a ship is known to be
infected by disease such as to prevent her getting her pratique, she would not be ready to load
or discharge. But if she has apparently a clean bill of health, such that there is no reason to
fear delay, then even though she has not been given her pratique, she is entitled to give notice
of 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 Spirit48 the judges took a practical common sense approach to
bring 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 a
requirement before a ship can be considered ready. The position will be different if
the charterparty contains an express clause making the obtaining of free pratique a
condition precedent to the tendering of a notice of readiness but this aspect will be
considered later (see Chapter 5).
Despite the sensible decision in The Delian Spirit48 a vessel will not be ready at
common law if pratique has been refused. The Delian Spirit was only concerned
with a vessel which had not obtained free pratique and the obtaining of such was a
mere formality in the circumstances. If the inspection by the port authority had not
been a mere formality but had resulted in the vessel being refused pratique then, of
course, she would not be ready under common law and, presumably, could not have
been ready at an earlier moment of time. Although not a commencement of laytime
case The Apollo49 is a good illustration of the action of health officials being more
than 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 to
hospital with suspected typhus. She then sailed to Lower Buchanan to load. On
arrival off that port she was met by health officials who, upon being told of what had
happened at Naples, inspected the crew and the ship. Although no evidence of
typhus was found, the officials disinfected parts of the ship before granting free
pratique. The delay in obtaining free pratique because of the inspection and disinfection caused nearly 30 hours loss of time to the charterers. They claimed they
were entitled to put the ship off-hire under clause 15. It was held by Mr Justice
Mocatta that the action of the health officials was more than a mere formality in the
circumstances, that it prevented the full working of the vessel and she was off-hire
during the time which was lost. Obviously, the same approach would have been
taken if the circumstances had been a voyage charterparty and readiness in the
context of commencement of laytime. Therefore, if a vessel has been waiting for a
berth and some days later pratique is refused then any notice of readiness given
when the vessel arrived must surely be invalid so that laytime cannot commence.
Here again, special charterparty clauses such as those relating to waiting for a
berth and a berth reachable on arrival may have relevance. For an interesting
arbitration relating to free pratique and special clauses see the reported arbitration
LMLN 54528 September 2000 which is detailed earlier in paragraph 71 and
readiness and cargo spaces.
48. [1971] 1 Lloyds Rep. 64; [1971] 1 Lloyds Rep. 506 (C.A.).
49. [1978] 1 Lloyds Rep. 200.

185

Para. 78

READINESS

In different ports of the world there are different approaches regarding inspections by port health and other authorities. The principle enunciated in The Delian
Spirit48 in relation to pratique is also applicable to other types of inspections which
take place in various ports of the world.
In a London arbitration, LMLN 355 March 1981, the owners claimed for
balance of demurrage, the dispute being concerned with the commencement of
laytime. 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 the
charterers submitted that it did not commence until 14.45 on 13 May; the difference between the parties concerned the effect of the inspection of the vessel by
Chinese harbour authorities on 12 May, the charterers arguing that such was a
condition precedent to the commencement of laytime. The owners took the view
that the inspection was a mere formality which should have no effect on the
commencement of laytime. The inspection itself took 40 minutes and there was no
evidence to show that this was other than the approximate usual time for this type
of inspection. The inspection did not find anything untoward with the vessel and
was not causative of any delay to her since, after the inspection, the vessel waited for
a discharge berth for about a week.
The arbitrator decided the case in favour of the owners. He considered that a
fairly broad approach should be taken to preliminaries which have to be carried out
when vessels arrive at a port and such preliminaries cannot be carried out for some
time after the vessel has arrived, assuming no failure by those on the vessel in
presenting the vessel for the preliminaries. He accepted the owners argument that
a routine inspection is a mere formality which can be ignored for the purpose of the
commencement of laytime and that it is not a condition precedent or something of
such substance that it prevented the triggering of the laytime clock. In support of his
decision the arbitrator relied upon part of Lord Dennings judgment in The Tres
Flores,50 as follows:
. . . notice of readiness can be given even though there are some further preliminaries to be
done, or routine matters to be carried on, or formalities observed. If those things are not such
as to give any reason to suppose that they will cause any delay, and it is apparent that the ship
will be ready when the appropriate time arrives, then notice of readiness can be given.

In a later reported arbitration LMLN 42123 December, 1995 the vessel was
chartered on the Gencon form for the carriage of a cargo of bagged fertilisers. After
the vessel had berthed at the discharge port a period was spent obtaining Port
Authorities clearance. The charterers contended that this period should be discounted from the computation of laytime. It was held that the clearance was to be
regarded as a formality. There was no evidence that time was lost during it. It
accordingly counted against laytime.
An important document in relation to the legal readiness of a tanker, vis-`a-vis
United States waters, is the US Coast Guard tank vessel examination letter
(TVEL). In a New York arbitration, LMLN 41614 October 1995 (no English
arbitration as yet to the writers knowledge) the sole arbitrator had to decide (inter
alia) whether or not the obtaining of a TVEL was a mere formality in relation to the
50. [1973] 2 Lloyds Rep. 247.

186

D O C U M E N TAT I O N L E G A L R E A D I N E S S

Para. 78

tendering of a notice of readiness. The OBO vessel Permeke was chartered on the
Exxonvoy 84 form for the carriage of a cargo of crude oil from Mongstad to New
York. After loading cargo at Mongstad the vessel sailed for New York, arriving at the
pilot station on the morning of 1 April 1994. The vessel tendered NOR for discharge at 12.12 hours.
At the time NOR was tendered the vessel did not have a valid US Coast Guard tank
vessel examination letter (TVEL) (not obtainable until after first arrival in the
USA following an inspection by the Coast Guard). US law prohibited foreign flag
vessels from off-loading oil on US waters without a TVEL. Accordingly, at the
owners request the US Coast Guard boarded the vessel at 09.25 hours on 2 April
1994 for the purposes of carrying out a detailed examination of the vessel and its
intentional trading and safety certificates. No deficiencies were found, and at 13.00
hours that same day the US Coast Guard issued a TVEL to the vessel. The
programmed discharge of part cargo into the barges began at 01.25 hours on 3 April
1994.
The dispute concerned when laytime at New York began. The owners relied on
the fact that the TVEL inspection was completed with no time having been lost to
the charterers, and submitted that laytime commenced at 18.12 hours on 1 April
1994, or six hours after the vessel tendered its NOR. The charterers contended that
in the absence of the required TVEL the vessel was not ready for discharge and
its NOR was both premature and invalid so that laytime could not commence until
19.00 on 2 April. The charterparty did not specifically refer to the vessel having a
TVEL but it did contain a clause which required the vessel to have on board all
certificates or other documents required by the laws of the countries to which the
vessel might be ordered.
The sole arbitrator rejected the owners contentions and held (inter alia) that the
fact that the TVEL was issued without difficulty was evidence that the vessel was
well maintained and did comply with international safety requirements. That might
account for the owners confidence in making the representations they did. However, the issue was not the physical condition of the vessel but what effect the
absence 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 19.00
hours on 2 April 1994. Other New York arbitrators have taken a similar approach
in later aribtrations.
It may well be that London arbitrators would take a similar approach to that taken
in New York so as to decide that the obtaining of a TVEL is more than a mere
formality. Owners can get round the problem by way of an agreed charterparty
clause which is tailor-made for the circumstances, such as:
In the event that the vessel requires a TVEL inspection prior to the commencement of cargo
operation at any United States port, NOR may be tendered upon arrival, prior to the
inspection by the US Coastguards. Provided that the inspection commences within the six
hours 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 and
cannot re-tendered until the vessel has passed the examination and a TVEL is issued. All time
lost 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.

187

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READINESS

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, have
been mainly concerned with pratique/health and inspections by port authorities
under the common law. The principles involved can, of course, also be applied to
other areas (not covered by express provisions in the charterparty) which affect legal
readiness. Examples are certificates appertaining to deratisation and stability as
required under international regulations, also documentation which has to be
lodged with customs in order for a vessel to obtain customs clearance.
A deratisation certificate, or the lack of it, figured prominently in The Madeleine.52 Although this case was concerned with the cancelling of a charterparty it
drove home the importance of documentation required under international/national
regulations. The charterers were held entitled to cancel the charterparty in circumstances where the vessels deratisation certificate expired a few days before the
cancelling 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 the
context of the commencement of laytime, the vessel would not be deemed ready if
she did not have a valid deratisation certificate at the time that notice of readiness
was tendered.
There have been a good many disputes over the years in circumstances where
vessels tendering for the loading of grain have not been properly documented in
respect of stability information/calculations, as required under international legislation, and this has been causative of the delay at the loading port. Arbitrators have no
compunction whatsoever in deciding that a vessel is not ready in such
circumstances.
Regarding clearance by customs, the regulations appertaining to such may vary
from country to country and from port to port. It is up to owners to know the
relevant regulations, when involved in voyage charterparties, so that they are not
penalised because vessels are not cleared through customs timeously thus preventing the commencement and running of laytime. The problem can be acute in some
ports of the world where customs clearance cannot be obtained until after a vessel
gets into a berth so that the vessel cannot satisfy legal readiness until that time which
may, 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 losers
unless 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, at
others, 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 in
paragraph 86), prior entry at the Custom House was effected for the vessel before
51. LLP Limited, 1998.
52. [1967] 2 Lloyds Rep. 224.
53. [1971] 1 Lloyds Rep. 64; [1971] 1 Lloyds Rep. 506 (C.A.).
54. [1991] 2 Lloyds Rep. 485; [1992] 1 Lloyds Rep. 558 (C.A.).

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she arrived and customs permission to discharge at the inner anchorage, i.e. to
break bulk in stream, was obtained, but actual completion of final entry was not
effective until after a notice of readiness had been tendered by the vessel soon after
she arrived off the port. The charterers took the point that even if the special clause
regarding entry at the Custom House was satisfied at the time the notice of
readiness was tendered (by way of the prior entry), the vessel was not at that time
ready to discharge her cargo, in that strict legal discharge could not have commenced until some time later; therefore, the notice of readiness was not valid. It was
held by Mr Justice Hirst, adopting the findings of the umpire in the arbitration, that
the vessel satisfied the readiness at once test when the notice of readiness was
tendered; he applied the criteria of Mr Justice Donaldson and Lord Justice Roskill
from the Delian Spirit and Tres Flores cases; see earlier in this paragraph, also
paragraph 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 of
critical importance to the instant case) and also the passage from Scrutton set out
earlier in paragraph 64. He then went on to say:
How then does the present case stand in the light of the authorities? Clearly the charterers
could not have required the vessel to discharge until she reached the Inner Anchorage. As she
had already been given permission to discharge there she could, if the receiver had had
lighters waiting, have been required to discharge. On the arbitrators findings had that
happened there would have been no material delay. Either the preventive officer would have
been present and granted inwards entry or if he was not available discharge would have
commenced. There is, it is true, a possibility that if a preventive officer had been there and
become suspicious there would have been a delay but in The Delian Spirit there was a
possibility that at an inspection some reason might have been found not to grant free
pratique. Furthermore, in the case of the ships tackle or hatches there is always the possibility
that some unforeseen accident will occur which will result in a delay. Those possibilities
cannot in my judgment affect the validity of a notice of readiness. If they do, no notice of
readiness 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 while
the vessel was in berth had any bearing on the time taken to begin and carry out the
operation of loading.
In the present case, not only is there no evidence that the inward entry requirements had any
bearing on the operations of discharging, there are the specific findings of the arbitrator
which I have already cited.
In my judgment the case is covered by The Delian Spirit and I therefore conclude that the
notice 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 charterer
or the consignees for theirs. Therefore the ship need not be absolutely ready (e.g. by having
all her gear fixed up for the work) at a time when the charterer or consignees are not in a
position to do any of their part of the work, so long as the ship can be absolutely ready as soon
as they are, whenever that may be. Nor apparently need the ship have obtained free pratique
provided that the practice in the port and the actual medical condition of the crew are such
that pratique can subsequently be obtained without delaying the loading or discharge. Similarly, the ship can be ready to load for the purpose of starting laytime, even if she has not yet
complied 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 suggest
that 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 given
whether in berth or not it can be given when the vessel has arrived at the port notwithstanding
that it may take many hours steaming before she can reach a berth and in fact be physically
ready to load or discharge as the case may be. Equally, as pointed out in the article, if her
loading or discharging tackle is not rigged a valid notice can be given notwithstanding that the
vessel is not then in fact ready to discharge. Mr Hamilton rightly stresses the words whenever
that may be which appear in the article and which plainly indicate that when the notice is
given the situation must be such that at the earliest time that the charterers or consignees can
be ready to perform their part in loading or discharging, the vessel will, barring accidents, be
ready at once to perform her part in such operations. Mr Hamilton further submitted that a
notice will be premature and invalid if when given there is even a possibility that she will not
be ready at the earliest moment that the charterers or consignees can require loading or
discharge. I cannot accept this. It is in my view contrary to the authorities to which I now
turn.

It is submitted that the Court of Appeals decision is sound in the light of practical
and commercial common sense and militates for customs clearance being mere
formalities in very many ports: however, it in no way watered down the vessels
obligation that when the notice of readiness is given the situation must be such that
at the earliest time that the charterers or consignees can be ready to perform their
part in loading/discharging, the vessel will, barring accidents, be ready at once to
perform her part in the loading/discharging operations.
Other factors which are relevant to the readiness of a vessel are the various
regulations which have come into force over the years such as port state control
(PSC), the international safety management code (ISM) and the international
ship and port security code (ISPS). Obviously, if a vessel fails any of these
regulatory features this will, in many instances, affect the readiness of the vessel to
load or discharge cargo when she arrives at a port.
PSC has been in operation since 1982 in Europe and has expanded to cover most
of the world (save for the USA which has its own strict control measures). A large
number of vessels have been detained over the years although there seems to have
been improvements in recent times: for example the detentions in Europe in 2004
had reduced to 1,187, down from 1,764 five years previously.
The ISM code came into effect in 1998 and provides that every company to
which it applies has to obtain a Document of Compliance (DOC) and a Safety
Management System (SMS). A designated person (having access to top management in the company) has to be appointed in order to ensure that the companys
SMS is operated effectively. The combination of the ISM code and increasing PSC
has resulted in fewer sub-standard ships being operated. Parties do agree special
ISM clauses albeit that such may not be necessary in view of the code being very
much an owners responsibility. BIMCO has produced a standard clause which
reads:
From the date of coming into force of the International Safety Management (ISM) Code in
relation to the vessel and thereafter during the currency of this Charter Party, the Owners
shall procure that both the vessel and The Company (as defined by the ISM Code) shall
comply with the requirements of the ISM Code. Upon request the Owners shall provide a

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Para. 79

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 caused
by the failure on the part of the Owners or The Company to comply with the ISM Code
shall be for the Owners account.

The ISPS code came into force on 1 July 2004 and vessels run the risk of being
refused entry into ports if they do not have their security plans in order; ports face
financial consequences if they fail to comply with the code. The implementation of
the 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 been
resultant delays to vessels and this is likely to be a continuing fact of life with
disputes arising between owners and charterers regarding delays and expenses
which arise from the implementation of the code. BIMCO has produced ISPS
clauses for both time and voyage charterparties. The last mentioned, which has
relevance to the commencement of laytime, and which was revised in June 2005 in
the light of earlier criticisms, states:
(a)

(i) The Owners shall comply with the requirements of the International Code for
the Security of Ships and of Port facilities and the relevant amendments to
Chapter 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 or
passing through United States waters, the Owners shall also comply with the
requirements 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 the
relevant International Ship Security Certificate (or the Interim International
Ship Security Certificate) and the full style contact details of the Company
Security 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 Company/Owner to comply with the requirements of the ISPS Code/MTSA or
this Clause shall be for the Owners account, except as otherwise provided in
this Charter Party.
(b) (i) The Charterers shall provide the Owners and the Master with their full style
contact details and, upon request, any other information the Owners require
to 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 shall
be for the Charterers account, except as otherwise provided in this Charter
Party, and any delay caused by such failure shall count as laytime or time on
demurrage.
(c)
Provided that the delay is not caused by the Owners failure to comply with
their obligations under the ISPS Code/MTSA, the following shall apply:
(i) Notwithstanding anything to the contrary provided in this Charter Party, the
Vessel shall be entitled to tender Notice of Readiness even if not cleared due
to applicable security regulations or measures imposed by a port facility or any
relevant authority under the ISPS Code/MTSA.
(ii) Any delay resulting from measures imposed by a port facility or by any
relevant authority under the ISPS Code/MTSA shall count as laytime or time
on demurrage, unless such measures result solely from the negligence of the
Owners, Master or crew or the previous trading of the Vessel, the nationality
of the crew or the identity of the Owners managers.
. . . .

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READINESS

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 to
tender a notice of readiness and laytime will run during any delay periods arising
from measures imposed by any authority under the code save where they arise solely
from 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 original
BIMCO clause it remains not unfavourable to owners.
Parties are, of course, free to agree their own ISPS clauses and many of them are
so doing by varying the BIMCO ISPS clause. For example, the VITOL ISPS clause
varies (c)(ii) above so that any delay resulting from measures imposed by an authority under the code shall count only as half laytime or half time on demurrage absent
any failure by the owners. The LUKOIL ISPS clause (based on BIMCO with
CHEVTEX 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 arbitration
process and to see how arbitrators deal with problems which will undoubtedly arise
from the application of the ISPS code. It appears that some owners have been trying
to 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 UPDATEMay 2005). This must surely be untenable in view of
what has been said earlier in Chapter 3 (paragraph 53) regarding reachable on
arrival and exception clauses.
Much of what has been said above regarding ISPS clauses is also relevant to
Chapter 5 where special clauses regarding readiness are considered.

DRAUGHT (DRAFT)/LIGHTENING
80. No mention of a vessels draught has yet been made in this chapter and this
factor may have relevance to a vessels readiness and also to lightening. If the owners
are aware or should have been aware, of any draught restrictions regarding the
named port in the voyage charterparty then the risk of not complying with these
restrictions may fall upon them. A vessel may be delayed in proceeding to a berth
because 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 tidal
effects as governed by the phases of the Moon. In those circumstances, a vessel can
be delayed in being ready to load or discharge and this may prevent the commencement of laytime.
Owners may be able to claim compensation for delay because a berth is not
reachable on arrival55 on account of a lack of water but that will usually be in
circumstances where the charterparty contains an express clause regarding the
maximum draught of the vessel when she arrives at a port and she arrives within that
maximum (see The President Brand56). Since special clauses usually govern the
55. See above, paragraph 45 et seq.
56. [1967] 2 Lloyds 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 special
clauses 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 in
the charterparty to this effect. On the other hand, if a vessel has become an arrived
ship 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 discharging
berth, by reason of her draught, in a berth charterparty and requires lightening and
where the vessel is in all other respects ready to discharge the cargo. In those
circumstances can a notice of readiness be tendered before the vessel berths? Absent
any particular clauses in the charterparty detailing the position regarding the tendering of a notice of readiness in those circumstances the judicial authority is on the
side of owners in that where a berth charterparty states expressly that the vessel
might require lightening a notice of readiness may be given before the berth is
reached and when lightening is due to take place, see The Petros Hadjikyriakos,57
The Apollon58 and The Savvas,59 in particular the reasoning of Mr Justice
Bingham (as he then was) in The Appollon at page 414:
Clearly the parties to this charterparty contemplated that two kinds of discharge might be
involved: lightening by discharge into barges and discharge alongside a berth. I find in the
language of the charterparty no indication that notice of readiness could be given only when
the vessel was ready for the second stage and not when it was ready for the beginning of the
first stage. In any port where lightening is necessary or may be necessary to enter a berth it
must be foreseeable that there may be delay before the extent of the lightening needed is
known. 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 a
draught in excess of the agreed charterparty maximum draught. The charterers will
be entitled to claim damages for breach of contract by the owners so that would
allow them to claw back any time lost to them arising from the breach of contractsee later paragraphs 92 and 93 regarding arbitrations concerned with this
aspect.
A question may arise, what is the position if a berth charterparty makes no
express reference to lightening? On the assumption that the port of discharge is
named and that there is no berth in the named port which the vessel can get into
without lightening, it appears that a valid notice of readiness cannot be tendered
until 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, also
accepts that the vessel will be able to get into the port with the contractual cargo in
the conditions to be expected for the relevant time of the year.
Many charterparties make express provisions for lightening in order to detail the
position between the parties regarding the tendering of a notice of readiness. Those
provisions may be very detailed, particularly in tanker voyage charterparties. For
example, clause 15 of the ExxonMobil VOY 2000 states:
57. [1988] 2 Lloyds Rep. 56.
58. [1983] 1 Lloyds Rep. 409.
59. [1982] 1 Lloyds Rep. 22.

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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 or
discharge 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 is
on demurrage, time on demurrage shall commence when Vessel arrives at the
lightering site designated by Charterer and shall end when disconnecting of the
cargo 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 Vessel
is 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 when
Vessel 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 has
been completed.
. . .

Although a different charterparty was under consideration in LMLN 48821 July


1998 (Asbatankvoy) the arbitration is of interest since it concerned (inter alia) the
effect of a lightering provision in a rider clause to the charterparty which read:
27. Lightering/STS
If lightering/STS is required at any designated port, safe place, or anchorage, time, costs
consumed performing this operation (including back loading) shall count as laytime or time
on demurrage. In either event, time shall commence six hours after anchoring or whenever
the lightering/STS craft is all secure alongside, whichever occurs first. The anchorage, STS
or lighterage area shall not be considered as an additional port or berth. Any running time
from 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 discharge
port, it was indicated to the master from the charterers that there would be lighterage in the roads that should commence at the end of the next week. On 8
February it was indicated from the charterers that at the moment there were no
berthing prospects available and the vessel would have to lighter to reach an appropriate draft for berthing, which would take about 30 hours. At 18.30 on 10 February the vessel anchored off the discharge port and gave notice of readiness
indicating that the vessel was now waiting for lightening/discharging. On 12 February the owners managers were informed by the charterers that the receivers had
advised that due to port traffic about three vessels were engaged for lightering so
that the lightering for the subject vessel was not expected before 15 February. In the
event, after further updates, the vessel berthed on 4 March. Hoses were disconnected at 17.30 on 6 March.
The owners submitted that laytime recommenced at the discharge port at 00.30
on 11 February. The charterers contended that the notice of readiness tendered at
18.30 on 10 February was invalid, due to it being tendered outside the time
specified for the tendering of notice of readiness by clause 16 of the Rider. They said
that the only laytime, which ran at the discharge port, was during the lightering
period on 2224 February and upon the vessels arrival at the permanent berth on
4 March. They further contended that under clause 27 of the Rider dealing with
lightering, it was implicit that laytime only commenced 6 hours after tendering a
valid notice of readiness at the customary anchorage, or when a lighter was secure
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Para. 80

alongside, whichever first occurred. No notice of readiness having been validly


tendered, laytime could only commence once a lighter was alongside on 22 February. Alternatively, if clause 27 of the Rider did not depend on notice of readiness
being tendered in accordance with clause 16 of the Rider they argued that they were
entitled to rely upon the last sentence of clause 6 of the Asbatankvoy form as the
berth referred to in that sentence could only equate to the lighters being alongside
ready to receive cargo from the vessel. The charterers said that they were not in
breach of the reachable on arrival warranty because they had provided a place
reachable on arrival where lightening was to take place and did take place and which
was part of the discharge operation.
It was held, that the charterers arguments would be rejected. Clause 27 of the
Rider had no requirement for the giving of notice of readiness before time commenced when lightering was required, and clearly provided for a separate regime to
that in clause 16. It was not implicit that under that clause laytime only commenced
6 hours after tendering a valid notice of readiness.
Nor did the laytime, which commenced in accordance with clause 27 of the Rider
only run until lightening was concluded. Once started, laytime continued (although
by the conclusion of lightening the vessel was on demurrage). In any event, on the
basis of The Petr Schmidt and the reasoning of Lord Justice Mustill in The Mexico
1,60 by the termination of lightening the charterers were under no doubt that the
vessel had arrived and was ready to discharge so that the notice of readiness given
outside the prescribed time on 10 February would, either by the end of lightening
have taken effect, or there was an estoppel by convention based on the conduct of
the parties that precluded the charterers from taking any point regarding the giving
of an invalid notice of readiness.
Even if the owners had not been entitled to rely on clause 27 of the Rider, because
an 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, but
simply non-contractual and therefore, as said by Justice Longmore in The Petr
Schmidt at page 287: There is in my view no good reason why the notice should
not be effective as at the time when the contract fixes for it to be tendered. (This
would have been 00.01 on 11 February so time would have commenced at 06.01 on
11 February.) The present case, like The Petr Schmidt, was not a case where (as
in 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 masters messages to all interested parties on 7 February, as the vessel was approaching the
discharge port, that her ETA was 18.00 that day and from the repetition of the
notice of readiness message to other interested parties around 18.30 on 10 February
that the vessel had now anchored, and that the vessel was indeed arrived at the
discharge port. As early as 12 February the receivers were advising the prospects of
lightering 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 the
vessels arrival. Nor could the tribunal accept the charterers argument that, in the
alternative if laytime had commenced in accordance with clause 27 of the Rider
60. [1990] 1 Lloyds Rep. 507.

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Para. 80

READINESS

then, in accordance with the last sentence of clause 6, as there was delay in the vessel
getting into berth after giving notice of readiness for a reason over which the
charterer had no control, such delay should not count as used laytime. The anchorage position where the lightering took place did not constitute a berth within the
meaning of clause 9 of the charterparty so that the charterers were in breach of the
opening sentence of that clause whereby they were obligated to designate and
procure a discharge place or alongside vessels or lighters reachable on her
arrival.
The vessel was at the place where lightering ultimately took place for some two
days between 22 and 24 February, but on the true construction of the charterparty
the discharge place intended by clause 9 was clearly not an intermediate lightening
point when the vessel subsequently performed her discharge elsewhere at berth.
That was underlined by clause 27 of the Rider. The charterparty drew a distinction
between a lighterage area simply for the purpose of lightening the vessel, and a place
where a substantial discharge took place, whether that be by lighterage or in berth.
In those circumstances, the charterers were precluded by The Laura Prima61 from
relying upon the protection of the last sentence of clause 6 of the charterparty. The
owners laytime calculation at the discharge port was correct.
In a later arbitration, LMLN 6471 September 2004 (also referred to in Chapter
1 regarding geographical arrival), the parties had agreed that the discharge of cargo
would be at Qingdao, without lightening. In the event it was agreed that the
discharge port would be changed to Yantai where it would be necessary for the
vessel to lighten. It was further agreed that the lightening would be carried out in
safe conditions under the masters supervision and approval and that if the master
considered it was unsafe to commence or to continue discharge he would remove his
vessel from alongside and laytime was to count. The vessel had to wait about five
days 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 to
take place, lightening had to be interrupted for almost a day, again because of strong
winds and rough weather. The charterers said that time did not run during these
periods. It was held that the periods in question fell within the terms of the
addendum and such weather as fell within the terms of the addendum was to count
for laytime purposes.

TANKERSBALLASTING/DEBALLASTING
81. Virtually all tankers arrive off their loading port containing ballast water and
this 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 the
problem is correspondingly reduced. The ballast is a necessity for safety purposes so
that it should not prevent the master from tendering a good notice of readiness. In
fact, it appears to be the accepted practice in the tanker trade that a good notice of
readiness can be tendered even though some of the cargo spaces contain ballast. It
61. [1982] 1 Lloyds Rep. 1.

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also appears to be tanker practice that the time taken in deballasting, while the
vessel is alongside a loading terminal, does not count for laytime purposes if it
delays/interrupts the loading operation. This is a sensible and practical approach
albeit 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 into
effect. In the event, most tanker charterparties contain special clauses regarding
ballast and some of these are considered later.
One might analogise, to a certain extent, between the removal of ballast water and
preliminaries as explained by Lord Denning in The Tres Flores,62 although there
are obvious weaknesses in such an analogy. One day there may be a judicial ruling
regarding the effect on the commencement of laytime by ballast in a tankers cargo
spaces (absent a special clause in the charterparty) but no doubt, in the meantime,
owners and charterers will continue their sensible and practical practice of ballast
water in cargo spaces not interfering with the giving of a notice of readiness when
a tanker arrives at or off a port. This practice appears to have been adopted by many
maritime arbitrators in London although there is little in respect of reported arbitrations regarding the subject. There is one reported arbitration, LMLN 3373
October 1992 (also cited earlier in paragraph 65) where the tribunal took what
appeared to be a sensible and commercially correct approach and held (inter
alia):
It was common for tankers to arrive at loadports with cargo tanks filled with ballast and to
discharge that ballast during loading. In such a case, or in circumstances where a Master
retained ballast in some tanks to enable a vessel to sail between loading ports with a part
cargo, it could not therefore be said that the vessel was not ready because all the tanks were
not available for loading at the first port.

There is also the arbitration cited earlier in paragraph 31 (LMLN 29920 April
1991) where the tribunal held (inter alia) that a valid notice of readiness could be
tendered where one of the vessels holds (she was an OBO) was ballasted.
There are other reported arbitrations where the tribunals do not appear to have
taken such a commercially sensible approach but this may have been because of the
constraints of the wording agreed between the parties and that the deballasting/
ballasting caused delay in respect of the cargo operation. An example of the former
is the arbitration reported in LMLN 725 August 1982.
Owners chartered their vessel on an STB VOY form for the carriage of a cargo of
crude oil from Das Island to Mohammedia. The ship had utilised all the laytime
available to her before arrival at the discharge port. Notice of readiness was accepted
at Mohammedia at 09.30 on 10 March 1981; the ship was in berth at 12.45; hoses
were connected at 14.40, and pumping commenced at 15.25.
At 08.00 on 11 March 1981 the ship started to ballast, and ballasting continued
until 05.00 on 12 March. Meanwhile, discharge continued through one 12in. hose
until 18.25 on 12 March. Hoses were disconnected at 18.40.
The owners submitted that time on demurrage continued until discharge of cargo
was completed and hoses were disconnected. The charterers contended that time
62. [1973] 2 Lloyds Rep. 247; above, paragraph 64.

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READINESS

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. They
relied on lines 173175 of clause 11 of the Charterparty, which provided:
Laytime, or if the vessel is on demurrage, time on demurrage shall continue until the hoses
have been disconnected or until ballasting begins at the discharge port(s), whichever occurs
first.

The owners argued that this could not be the intention of the clause. The ship might
have started to ballast for safety reasons. Mohammedia was an open roadstead and
the master was being cautious. Furthermore, the ship might have been freshening
up her permanent ballast and not ballasting for the purpose of increasing her draft
prior to sailing. The ship might have had two ballasting systems, one constituting
permanent ballast and the other being ballast for the unladen voyage.
It was held that there was no evidence of the existence of permanent water ballast
or of ballast water being freshened up during operations commencing at 08.00 on
11 March. Clause 11 was puzzling. It may be that in days of old the clause had some
meaning if the shore connection were used for ballasting after completion of discharge, but this did not take place at Mohammedia. There was no doubt that in
roads exposed to adverse weather such as is likely to occur in early March, the
master felt it safer to increase his draft to avoid having a light ship at the mercy of
sudden gusts. Clause 11 was not a sensible clause, but the parties had accepted it.
Accordingly, demurrage time stopped when ballasting began, even though the cargo
had only partially been discharged. Judgment for the charterers.
The arbitrators took a very literal interpretation to clause 11 of the charterparty
and it seems that no consideration was given to the fact that a vessel might start
taking on ballast before all her cargo has been discharged. It is mentioned, for the
sake of completeness, that although it did not appear to have been put forward in
this particular arbitration there would seem to be no valid reason why the owners
could not have put forward a claim for detention during the period in question since
the vessel was being detained for the charterers purpose which was the discharge of
cargo.
While, strictly speaking, particular clauses relating to deballasting should be
considered in Chapter 5 it makes sense to consider them now when dealing with
tanker deballasting. Before citing the more common type of deballasting clauses,
mention is made of a reported arbitration LMLN 30429 June 1991 which,
although concerned with demurrage rather than the commencement of laytime, is
of interest because of the tribunals approach to the application of a wide exemption
clause to a deballasting period. Typewritten clause 46 read:
Neither owner nor charterers shall be responsible if, in the event of strikes of workmen, lockout, riots or floods or any accident or cause beyond the control of either party, loading or
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 the interruption or
delay is removed.

One issue in the arbitration was whether the owners demurrage claim should be
reduced in respect of a period of 3 hours deballasting at the loading port. The
charterers sought to rely on clause 46, emphasising that the ship was bound to arrive
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Para. 81

in ballast, so that the need to deballast her was a cause beyond the control of either
party. They said it was a self-evident fact that loading was delayed whilst deballasting was carried out. Alternatively, they suggested that they should not be liable for
the time spent deballasting because during it the ship was not available to them for
loading. It was also the case that if the ship had gone straight to her berth, she could
not 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 tribunal
was prepared to infer that loading could not take place until deballasting had been
completed, 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 of
clause 46 (no express mention of time on demurrage) it is assumed that the tribunal
was influenced by the deballasting affecting the loading operation so that the owners
should not get the benefit of time counting for demurrage purposes when the
loading operation could not take place. The arbitrators would obviously have been
on much stronger ground, in the application of the type-added clause 46 if the
circumstances had been either that laytime was about to commence or that laytime
was running prior to the vessel going on demurrage.
Turning now to tailor made clauses in respect of the commencement of laytime
and deballasting the Vegoilvoy tanker voyage charterparty contains a notice of
readiness and commencement of laytime clause which reads:
When the vessel has arrived at the port of loading or discharge and is ready to load or
discharge, a notice of readiness shall be tendered. . . . The vessel shall be deemed ready
within the meaning of this clause . . . whether or not she has ballast water or slops in her
tanks. Laytime shall commence . . . .

The clause makes it abundantly clear that the vessel is ready in respect of the
commencement of laytime, even though there is ballast water in the cargo tanks.
Further, this particular charterparty does not suspend the running of laytime for
normal deballasting operations even if they interfere with the loading of cargo so
that the charterparty is advantageous for owners of tankers.
The majority of tanker voyage charterparties differ from the Vegoilvoy in that they
do not contain a deemed ready provision regarding ballast water in cargo tanks
and, further, they usually include an express exception in respect of time lost in
handling ballast. For example, Tankervoy 87, while permitting a notice of readiness
to be tendered at a customary anchorage or waiting place (when many tankers will
invariably 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 handling
ballast unless carried out concurrently with cargo operations such that no time is lost
thereby . . .

Beepeevoy 4 and Shellvoy 6 charterparties take a similar approach but the Asbatankvoy charterparty (applicable to deballasting and not ballasting), while permitting 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 as
used laytime.

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The result is that under the Asbatankvoy charterparty causation regarding the loss
of time has no relevance since, according to the wording of the clause, laytime will
not run during deballasting operations even if such are not causative of any loss of
time to the charterers in the loading operations.
To sum up in respect of ballasting/deballasting there appears to be no judicial
authority which has considered the matter in detail under the common law. Absent
a special clause in the charterparty which deals with the matter expressly (such as
cited above and to be recommended in order to remove doubt) different tribunals
have taken different approaches when applying the common law. It can perhaps be
said that, under the common law in respect of readiness, some arbitrators will
consider that a vessel is ready to load with ballast in some of the vessels tanks
(necessary for safety purposes) so that a valid notice of readiness can be tendered
and this, in any event, is what the majority of organisations in the tanker trade
appear to accept. A practical and sensible approach is that if deballasting is taking
place concurrently with the cargo operations commencement of laytime should not
be affected. But if it does interfere with cargo operations then this will affect the
running of laytime save perhaps for circumstances where deballasting/ballasting are
carried out as a necessity in respect of the vessel.

200

CHAPTER FIVE

SPECIAL CLAUSES/BREACHES OF
CONTRACT DAMAGES RELEVANT TO
READINESS (INCLUDING DRAUGHT AND
BILLS 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 provisions. For such a clause, in a short and simple form, see earlier The Tres Flores1;
for a more comprehensive clause, see The Dubhe2 arbitration, both of which were
concerned with dry bulk cargoes. These clauses, although eminently sensible to
have 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 Flores1 even
without the special clause and the owners also would have failed under the common
law in The Dubhe2 arbitration regarding the time before the vessel was first passed
by the NCB and the USDA). In areas other than dry bulk cargoes, cleaning clauses
may be more comprehensive although it is questionable whether they add more to
the requirement of readiness which would in any event be applied to a particular
cargo under the common law.
In the bulk oil trade a good example of a cleaning clause is that in the Beepeevoy
4 charterparty which reads:
Without prejudice to Clause 1, Owners shall use due diligence to ensure that the Vessel
presents for loading with her tanks, pumps and pipelines properly cleaned to the satisfaction
of any inspector appointed by Charterers and ready for loading the cargo described in
Sections C and D of PART 1. Any time used in cleaning tanks, pumps and pipelines to
Charterers inspectors satisfaction shall not count as laytime or, if the Vessel is on demurrage, as demurrage and shall, together with any costs incurred in the foregoing operations, be
for Owners account.

For completeness clause 1 of the Beepeevoy 4 states:


Owners shall, before, at the commencement of, and throughout the voyage carried out
hereunder, exercise due diligence to make and maintain the Vessel, her tanks, pumps, valves
and pipelines tight, staunch, strong, in good order and condition, in every way fit for the
voyage and fit to carry the cargo stated in Sections C and D of PART 1, with the Vessels
machinery, boilers and hull in a fully efficient state, and with a complement of Master,
1. [1973] 2 Lloyds Rep. 247; paragraph 64, above.
2. 1981; paragraph 68, above.

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C L AU S E S / B R E AC H E S R E R E A D I N E S S

officers and crew who are fully qualified as evidenced by internationally recognised certification (and endorsements where applicable) and are experienced and competent to serve in the
capacity for which they are hired.

The charterers, by linking the above clauses, ensure that the seaworthiness clause is
in no way prejudiced by the cleaning clause.
There are many other tanker voyage charterparties which contain identical or
very similar clauses.
What has been stated above at paragraph 54 et seq. and paragraph 67 et seq.
regarding cleaning to charterers satisfaction or charterers inspectors satisfaction has relevance in that there may be a safeguard to owners (by way of an implied
term of reasonable co-operation) in circumstances where the charterers inspector
may be over-fastidious: however, it may be much better and fairer if the parties
agree a cleaning clause such as seen in a standard charterparty for the carriage of
chemicals (Bimchemvoy), and some ad hoc charterparties, which reads:
Owners shall clean Vessels tanks pipes and pumps at their expense and in their time and
unless the Master certifies that Vessels coils have been tested and found tight, shall test
tightness 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, then
an independent inspector shall be appointed whose decision shall be final. If the independent
inspector considers that the tanks are insufficiently clean to receive the cargo, then they shall
be further cleaned at Owners expense and time to the satisfaction of the independent
inspector whose fees and expenses shall be paid by the Owners. If the independent inspector
considers that the tanks are sufficiently clean to receive the cargo his fees and expenses plus
any loss of time and expenses incurred by Owners shall be borne by Charterers.

Special clauses regarding a vessels equipment do not usually impose a more


stringent position than that under the common law although, here again, they can
be 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 special
clauses regarding crude oil washing and inert gas systems and while some of these
may appear stringent at first sight they, in general, reflect what the common law
would probably say regarding equipment which, under the contractual terms
(express or implied), are required for the loading/discharging of cargo. Examples of
these clauses are seen in clauses 12 and 19 Part B of the Beepeevoy 4 which
reads:
12.1 Owners undertake that the Vessel is equipped with a fully functional IGS which is
fully operational or, if not in use, capable of being fully operational on the date hereof, that
they shall so maintain the IGS for the duration of this Charter, and that the Master, officers
and crew are properly qualified (as evidenced by appropriate certification) and experienced
in the operation of the IGS. Owners further undertake that the Vessel shall arrive at the
loading port with her cargo tanks fully inerted and that such tanks shall remain so inerted
throughout the voyage and the subsequent discharging of the cargo. Any time lost owing to
deficient or improper operation of the IGS shall not count as laytime or, if the Vessel is on
demurrage, as demurrage.
12.2 The Vessels IGS shall fully comply with Regulation 62, Chapter II2 of the SOLAS
Convention 1974 as modified by its Protocol of 1978 and any subsequent amendments and
Owners undertake that the IGS shall be operated by the Master, officers and crew in
accordance with the operational procedures as set out in the IMO publication entitled Inert
Gas Systems 1990 (IMO 860E) as same may, from time to time, be amended.

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12.3 If Charterers so require, Owners shall arrange for the Vessels tanks to be de-pressurised to facilitate gauging and sampling or to be de-inerted or gas freed to facilitate
inspection, in each case in accordance with the operational procedures referred to in Clause
12.2. Any time taken to de-pressurise, gauge, sample and re-pressurise, or to de-inert or gas
free, 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 Oil
Washing System and that the officers and crew are properly qualified (as evidenced by
appropriate certification) and experienced in the operation of such system. Whilst Charterers
may instruct Owners to carry out additional crude oil washing in all tanks which contained
the cargo the Master shall, in any event, arrange for crude oil washing of the cargo tanks at
the discharge port to the MARPOL minimum standard, as set out in the Vessels Crude Oil
Washing Operation and Equipment Manual.
When the Vessel carries out crude oil washing to the MARPOL minimum standard, in the
absence of instructions from Charterers to carry out additional crude oil washing, there shall
be no increase in the time allowed for discharge of the cargo. If Charterers instruct Owners
to carry out additional crude oil washing then the period referred to in Clause 19.3.2, 19.4
or 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 the
Master shall provide a crude oil washing log identifying each tank washed, and stating
whether such tank has been washed to the MARPOL minimum standard or has been the
subject of additional crude oil washing.

In the area of documentation/legal readiness, express clauses (as compared to the


common law) may make the position difficult for shipowners, particularly those
clauses which relate to pratique and customs entry/clearance and other documentation (considered in the following paragraphs). It is emphasised that, if parties have
agreed special words to cover certain circumstances then they are bound by such so
that, unless relief can be found under ambiguity or the de minimis rule or estoppel
or some other principle, courts, and tribunals, will hold the parties to what they
have agreed. The clauses relating to cleanliness and documentation are invariably
conditions precedent to the tendering of a notice of readiness so that the notice will
not be valid unless the clauses have been complied with. For example, in the
arbitration reported in LMLN 32830 May 1992 (also cited in paragraphs 57, 82
and 118 regarding other matters) the facts were that on 15 May the vessel was subchartered by disponent owners on the Sugar Charterparty, clause 17 of which
provided:
Ships holds to be odourless and free from insects, properly swept, cleaned and dried to the
satisfaction of shippers or charterers agents before loading. Ships holds to be washed down
only if cargo injurious to sugar carried previously, and if done, holds to be completely dry
before tendering notice of readiness.

The vessel tendered notice of readiness under the voyage charterparty at 08.00 on
26 May. The vessel had not, as at that date, been delivered by the registered owner
to the disponent owners. Delivery under the head charter did not take place until 28
May, on which date SGS carried out a survey in respect of the head charter. The
certificate of delivery recorded that the hatches required more cleaning and removal
of peeled paints. The holds were eventually passed clean at 18.00 on 3 June.
The disponent owners brought arbitration proceedings against the voyage charterers, claiming demurrage. The charterers contended that the notice of readiness
was not valid because, when it was tendered, the vessel had not been in a condition
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C L AU S E S / B R E AC H E S R E R E A D I N E S S

to load cargo. The disponent owners accepted that the period between the time
when the holds were failed on 31 May and eventually passed on 3 June should not
count. However, they argued that the notice of readiness was valid because the
vessel was available and ready in the legal sense. They argued that clause 17 was
not a condition precedent that had to be fulfilled before a valid notice of readiness
could be tendered. It only imposed a requirement that had to be fulfilled prior to
loading and it was not worded so that it could be construed as a condition precedent.
It was held, that although there was no specific reference in the survey reports to
previous cargo residues, it was to be assumed that they would have been injurious
to sugar since otherwise the presence of the cargo residues would have been a
matter of indifference to the surveyors. If that assumption was correct, the obligation that the holds should be washed down and dry was one that applied before the
notice of readiness could be tendered. The obvious intention of the parties, as well
as the need to give a business efficacy to the clause would require one to imply a
term that the washing down had to be carried out effectively. That had not been
done until 3 June.
Even if it was assumed that only the first part of the clause was applicable, the
owners argument would be rejected. Although clause 17 was not flagged condition
precedent, it was difficult to see how the clause could be construed as anything
else. The entitlement of a charterer to have presented to him holds that were in
sufficiently good condition to avoid a serious danger of contamination or damage to
the cargo was an extremely important entitlement. If a charterer faced problems
under his sale contracts with purchasers of the cargo because the cargo had become
damaged or contaminated because of the condition of the holds, possible indemnity
rights against the owners, even if they turned out to be enforceable, would not
provide adequate protection to a charterer, whose commercial reputation might
suffer 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 been
the intention of the parties that it should be fulfilled before the vessel could be
considered ready to load. In other words, it did constitute a condition precedent.
The notice of readiness was accordingly invalid when tendered, and laytime did not
commence until 18.00 on 3 June. The disponent owners claim would be
dismissed.
The condition precedent approach will, in general, only be applicable if the
charterparty clause in question, regarding readiness, is sufficiently clear. In LMLN
4467 December 1996 the vessel was chartered on the Gencon form for the
carriage of a part cargo of 10,000 metric tons of 12M DEBAR IN BUNDLES OF
ABOUT 2.5 MTS. The owners claimed demurrage. The charterers contended
that the delay at the loading port which gave rise to the demurrage claim was caused
by the owners breaches of contract. The charterers argued that the difficulties at
the loading port arose due (1) to the fact that the master had not prepared an
adequate stowage plan, and (2) to various characteristics of the ship which were said
to constitute breaches of charter by the owners.
So far as the stowage plan point was concerned, clause 24 of the charter provided
for notice of readiness to be tendered, and concluded:
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Para. 83

Owners upon fixing to present intended stowage plan 24 hours prior arrival latest prior
tendering notice of readiness, Owners/Master to tender final stowage plan.

It was held that the charterers submission that the presentation of a proper
stowage plan was a condition precedent to the ships entitlement to give a valid
notice of readiness would be rejected. That was not what clause 24 said, either
expressly or by implication. The obligations upon the owners set out by that clause
were quite distinct, and breach of them might have consequences, but one of those
was not the invalidation of any notice of readiness given. See also later paragraph 87
regarding a condition precedent, in particular The Shackleford and LMLN 266.
83. The obtaining of free pratique in the context of special clauses and the commencement of laytime have been the subject of several arbitrations over the years. In
The Tielrode3 arbitration, the argument concerned the exact date of the commencement of laytime at Riga, the port of discharge. The vessel arrived in Riga
Roads on 29 February at 06.00 but, because of congestion, could only berth on 13
March. Free pratique was granted after berthing on the same day, at 10.30. The
relevant charterparty clause stipulated: Notice of readiness to be delivered by the
vessel during official working hours after receiving free pratique, whether in berth or
not, whether in port or not, whether entered Customs or not . . . . Notice of
readiness was given by the vessel on 29 February at 10.00 while she lay in the roads
but, at the same time, the ship had not received free pratique.
The arbitrator decided in favour of the charterers in that the notice of readiness
was not good until after the vessel had received free pratique because of the express
words in the contract which had been agreed between the parties. He said that it was
unfortunate that at Riga pratique could not be obtained by radio before arrival, as
was the practice at many other ports but, since pratique could not be given until
after the ship had berthed, that was the end of the matter. Although the obtaining
of 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, the
express term won the day. Free pratique was included in the contract and its terms
must be respected and given their intended meaning. The arbitrator did not think
that the terms whether in berth or not, whether in port or not superseded the
primary pratique condition.
In the later Pegasus4 arbitration, a different arbitrator came to the same conclusion
regarding a charterparty which contained (inter alia) the words time to count 6
hours from . . . and in free pratique whether in berth or not . . . . The vessel arrived
at the Tyne Roads on 21 October at 21.18 and the master immediately gave a notice
of readiness. This notice was refused by the charterers on account of the vessel not
having obtained free pratique; consequently, the vessel moved to a position where
pratique could be obtained and, as soon as it was effected, the charterers accepted
the notice of readiness.

3. 1973.
4. 1975.

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The owners relied upon The Delian Spirit5 (no express clause in the charterparty relating to pratique and the court decided it was a mere formality to obtain
such) in support of their contention that the notice of readiness given on 21 October
was a valid notice. However, the arbitrator took the same approach as the previous
arbitrator and decided the case against the owners. He stated that, since the parties
had agreed an express clause in respect of the matter he had no alternative but to
decide the commencement of the laytime aspect in favour of the charterers, the
parties having specially agreed that time was not to count until after the vessel was
in free pratique so that that amounted to a condition precedent to the commencement of laytime.
At least, in this case, the owners were able to mitigate the position to a certain
extent because of the early refusal of the charterers to accept the notice of readiness
so that the master moved his vessel into a position whereby he could obtain free
pratique and then tendered a valid notice of readiness.
The two arbitrations mentioned above were decisions made many years ago and
it was thought that there would be no more arbitrations concerning the obtaining of
free pratique/commencement of laytime when the charterparty contained an
express clause amounting to a condition precedent. However, in a 1986 arbitration6, the facts were virtually identical to the two arbitrations cited above in that
there 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 a
formality since it was granted immediately. Again, the owners relied on The Delian
Spirit5 in support of their argument. The arbitrator decided that it was clearly
distinguishable from The Delian Spirit5 since there was no express requirement in
that case that the vessel be in free pratique at all. In the present case, there were
clear, unambiguous, express terms that the vessel had to be in free pratique before
notice of readiness could be given. That requirement was a condition precedent so
that 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 to
above and where the obtaining of free pratique is mentioned expressly in a clause
which also includes other factors and options and the interpretation of such leads to
difficulties and arbitrations. In LMLN 4115 August 1995 the vessel was chartered to carry a cargo of iron ore pellets in bulk from one safe berth/port at a named
Chilean port to one safe berth/port at another named port. Clause 52 of the charter
provided:
Laytime for loading shall commence 12 hours after notice of readiness is tendered, whether
vessel is in berth or not, or when loading commences whichever is sooner. Notice of readiness
to load shall be tendered with clean holds, hatches open and in all respects ready to load, at
any time day or night Sundays, Holidays included after the vessel has duly arrived at the port
of loading subject to free pratique being granted prior to or on arrival in berth of loading
provided however that if free pratique is not granted prior to or on arrival in berth of loading
due to causes attributable to the vessel then such notice of readiness shall be tendered if and
when vessel is in free pratique with clean holds, hatches open and in all respects ready to
load.
5. [1971] 1 Lloyds Rep. 506; see above, paragraph 78 et seq.
6. LMLN 17911 September 1986.

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Para. 83

The vessel arrived at the loading port on 16 July at 06.00 hours. Notice of
readiness was tendered simultaneously. She took her pilot at 06.47 hours and she
reached the loading berth at 07.20 hours, mooring operations commenced at 07.25
hours and were completed at 09.08 hours. The authorities boarded at 09.00 hours
and free pratique was granted at 09.45 hours. The vessel commenced loading at
10.20 hours and completed loading on 17 July at 14.10 hours.
The owners submitted that time started to count upon commencement of loading
at 10.20 hours on 17 July. The charterers contended that time started to count 12
hours after free pratique had been granted, i.e. from 21.45 hours on 17 July. They
argued that the Masters notice of readiness had no effect and should have been
re-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 loading
commenced before the notice time elapsed then laytime commenced at the moment
that loading commenced, and any conditions attaching to the notice of readiness
regarding pratique or other matters became irrelevant. It was an alternative option,
available to the owners, of commencing laytime at the very moment that loading
commenced, irrespective if details relating to the notice of readiness such as obtaining free pratique. In fact, the clause had the effect of a waiver regarding notice of
readiness details once loading had commenced. That was understandable since
once loading had commenced the notice of readiness usually became irrelevant
regarding the commencement of laytime although it might still be relevant if it
eventually transpired that the vessel was not in fact ready to load all hatches at the
time that loading commenced and the charterers claimed damages from the owners
for breach of contract in not tendering a vessel which was in fact ready to load cargo
in all hatches at the time that loading commenced. But the charterers would in any
event have a sound claim against the owners for damages under the common law
irrespective of the status of the notice of readiness, if indeed the facts were that the
vessel was not ready to load the cargo in all hatches and that that was the causative
of loss of time to the charterers.
Since loading commenced at 10.20 hours on 16 July laytime commenced at that
time. Accordingly, the charterers argument would be rejected.
However, in LMLN 41728 October 1995 the charterers succeeded in an
arbitration before a sole arbitrator where the charterparty clauses were more
complicated.
The vessel was chartered on the Stemmor form as amended. She arrived at the
loading 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 started
at 14.30 hours on 31 May, free pratique not having been obtained until 13.00 hours
on 29 May.
The charterers referred to clause 6 of the charterparty and contended that laytime
could only start at 08.00 hours on 30 May, being 08.00 hours on the day following
the obtaining of free pratique, since free pratique had been obtainable at the
anchorage. The owners said that laytime started counting at 08.00 hours on 28
May.
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 respects
ready . . . Prior to tendering Notice the vessels holds are to be washed, swept and cleaned and
dry and free of loose rust scale . . . If after berthing any cleaning or drying . . . is to
be carried out, then same to be at owners expense and time. If upon vessels hold
inspection she is found unsuitable and consequently loses her turn for berthing, then
laytime is not to count until such time as vessel is actually berthed. However, time
lost waiting for berth prior to first inspection to be counted as laytime if vessel is kept
waiting 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 and
ready, and in free pratique provided free pratique obtainable at anchorage and written
notice tendered (whether in berth or not) whether in port or not, whether customs
cleared or not, whether in free pratique or not . . . steamer to be reported during official
hours only.

It was held that at first sight, it appeared that there was a conflict between the
words inserted at the beginning of clause 6 (provided free pratique obtainable at
anchorage) and those inserted later on which included the phrase whether in free
pratique or not. If there had been such a conflict, the tribunal would have concluded that the first insertion should prevail because it was focused on a particular
set of circumstances (being a proviso that pratique was obtainable at the anchorage)
whereas the latter words were general.
However, on further reflection, the tribunals view was that the charterers
approach to the interpretation of the clause was correct, and that the first insertion
concerned the condition the ship had to be in, in order for time to start counting on
the next working day, whereas the later insertion related to the condition she might
be in when giving a notice of readiness. Either way, the construction of the clause
favoured the charterers. Free pratique was obtainable at the anchorage and it was
obtainable upon the ships arrival if appropriate arrangements were made, so that
time could not count until 8 a.m. on the next working day after the ship was actually
in free pratique. If the tribunals preliminary view of the clause had been correct
(which view had been rejected), a valid notice could not be given until the ship was
actually in the free pratique.
The owners had also said that more weight should be given to the second
insertion because the words in free pratique in line 52 appeared in print. The
answer to that was that the insertion following the words and in free pratique was
typewritten and could not be read separately from the preceding printed words, so
no 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 been
accepted by the shippers at 08.00 hours on 27 May. One answer to that, on the
construction of clause 6 preferred by the tribunal, was that all the requirements spelt
out 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 been
tendered. In addition, there were none of the ingredients required for an argument
of waiver or estoppel to succeed. That was all the more so since the printed
requirement that notice of readiness should also be accepted had been deleted. It
was 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 acceptance
or non-acceptance of the notice of readiness should have no effect on the counting
of laytime.
The owners claim for demurrage accordingly failed.
A few years later an arbitration, LMLN 48821 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 all
ports . . .
Free Pratique (clause 22)
If free pratique is not granted promptly upon arrival, Master will immediately protest in
writing by cable/telex to port authorities, and owners must attach such protest to the demurrage 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 notice
of 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 vessel
commenced loading at 11.20 and hoses were disconnected at 19.50 on 5
February.
The owners submitted that laytime ran from 08.30 on 4 February, when the
vessel actually berthed, until 19.50 on 5 February. The charterers contended that
laytime should not commence until 11.00 on 4 February, being the time at which
free pratique was granted. They contended that that was the case under the general
law or alternatively by virtue of the specific terms of clause 22 of the Rider to the
charterparty 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 of
free pratique until 11.00 of 4 February did not nullify the notice of readiness given
at 02.30. The obtaining of free pratique was merely a formality and did not prevent
a valid notice of readiness being given at 02.30 (see The Delian Spirit7). 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 free
pratique a condition precedent to the giving of a valid notice of readiness. As Mr
Justice Longmore (as he then was) had commented in The Petr Schmidt8 in the
absence of express wording, courts generally lean against constraint clauses as
conditions precedent to liability. Clause 22 of the Rider was not so drafted. Rather
it was a time so lost clause requiring a party seeking to rely upon it to assert and
establish what time was lost by the absence of free pratique. No such attempt had
been made in the present case, and it was clear to the tribunal that no time was in
fact lost. The owners laytime calculation at the loading port was correct.
A later arbitration, LMLN 53822 June 2000 concerned a notice of readiness
clause 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

7. [1971] 1 Lloyds Rep. 506.


8. [1997] 1 Lloyds Rep. 284.

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wireless notice of readiness is to be tendered by . . . Laytime . . . shall commence at 13.00


hours 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 owners
submitted that laytime began at 13.00 on 18 March. The charterers contended that
since the vessel did not obtain free pratique until 19.00 on 20 March laytime did not
commence until 13.00 on 21 March. The owners responded that the fact that free
pratique was only granted on 20 March did not mean that the ship was not in free
pratique for the purpose of clause 22 of charter on giving notice of readiness on 18
March. The ship in fact had a free bill of health. She was, on 18 March, in a fit state
to obtain free pratique on first inspection. It was a pure formality, they said, that the
ship could not be inspected for the purpose of free pratique until she arrived at the
inner anchorage, which she did on 20 March. The owners relied on The Delian
Spirit.7
It was held that The Delian Spirit was concerned with a different issue, namely
whether 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 but
whether she complied with the explicit requirement that the ship should be in free
pratique. The ship did not comply until 19.00 on 20 March, when she was given
free pratique. Laytime could not therefore commence until 13.00 on 21 March.
The above arbitration affords a good illustration of obtaining free pratique being
a condition precedent, as opposed to the wording in the earlier arbitration above,
LMLN 48821 July 1998. It is emphasised that any requirement for free pratique
has to be clearly expressed in order to be considered as a condition precedent. As
mentioned in the earlier arbitration, the courts generally lean against constraint
clause as conditions precedent to liability.
An interesting point of construction came before the courts in Odfjfell Seachem v.
Continentale des Petroles et DInvestissements9 where the charterparty was on the terms
of an amended BPVOY 4 form. One of the disputes related to the commencement
of laytime at the loading port. The charterparty provided:
Notwithstanding tender of a valid NOR by the vessel such NOR shall not be effective nor
become 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 master
tendering NOR. If free pratique is not granted within six (6) hours of the master tendering
NOR, through no fault of owners, agents or those on board the vessel, the master shall issue
a 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 when
free pratique has been granted . . .
7.3.2 Laytime, or if the vessel is on demurrage, demurrage, shall commence, at each loading
and each discharge port, upon the expiry of six (6) hours after a valid NOR has become
effective as determined under cl. 6.3, berth or no berth, or when the vessel commences
loading, or discharging, whichever first occurs.

Notice of readiness was given at 01.30 on 27 September. Free pratique was not
obtained until 10.30. The owners said that laytime commenced at 10.30 but the

9. [2005] 1 Lloyds Rep. 275.

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charterers said that it commenced at 16.30, i.e. six hours after free pratique was
granted.
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 hours
after a valid NOR had become effective or when the vessel commenced loading,
whichever first occurred. When a valid NOR became effective it was governed by
clause 6.3. One requirement was that free pratique had been granted. If it had been
granted before NOR was given that requirement was satisfied and the NOR was
effective when it is given. If free pratique was granted within six hours of NOR being
given it was common ground between the parties that the NOR was effective
immediately the NOR was given. (It was not argued that in such case the NOR only
became effective once free pratique was granted.) In such cases laytime commenced
upon the expiry of six hours from the NOR becoming effective. If free pratique was
not granted through no fault of the ship and the master issued a protest then it
seemed 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 shall
commence when free pratique has been granted. Having regard to the purpose of
cl. 6.3 this was odd because clause 6.3 was intended to state when a NOR becomes
effective not when laytime commenced running. However, I do not consider it
permissible to read the words at the end of clause 6.3.3 as stating merely that the
NOR becomes effective once free pratique has been given; for the words state in
terms that laytime shall commence when free pratique has been granted. Clauses
6.3.3 and 7.3.2 have to be read together and the way to do so which does least
violence to the language of each clause is to regard clause 6.3.3 as stating when
laytime commences in the event that free pratique is granted more than six hours
after issue of the NOR and to regard clause 7.3.2 as being impliedly subject to any
contrary provision in clause 6.3.3.
For these reasons the charterers do not have a real prospect of showing that
laytime commenced at 16.30 on 27 August. Upon the true construction of the
charterparty laytime commenced at 10.30 on 27 August.
The decision has some importance since the type of clauses in issue has similarity
to many which are used in the tanker trade.
The above arbitrations illustrate the economic loss which may fall upon owners of
vessels if a charterparty contains an express clause regarding the obtaining of free
pratique before notice of readiness can be tendered. A vessel may have to wait for
several weeks because of port congestion in circumstances where the charterparty
does not contain a compensatory type clause for waiting for a berth. There are still
quite a few ports in the world where a vessel cannot obtain free pratique until she
actually gets into a berth in the port or, alternatively can only obtain free pratique
by waiting for a small vessel with port health authorities on board to visit the vessel
at an outer anchorage. In the latter circumstances heavy weather may prevent the
vessel being visited for days.
84. LMLN 2745 May 1990 illustrated the application and effect of a condition
precedent 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 anchorage
of the discharge port at 07.20 on 20 April and tendered a notice of readiness which
was not accepted until 08.00 on 6 May (by which time the vessel had berthed). The
vessel had waited at the anchorage (some 60 miles from the discharge port) from 20
April until 14.20 on 4 May when she started to proceed up river. The prolonged
waiting time was due to berth congestion.
Clause 52 of the charterparty provided:
Laytime shall commence 24 hours after masters notice of readiness to discharge has been
accepted within ordinary business hours . . . whether in berth or not provided formalities for
entering port have been passed by Port Authorities.

The charterers contended that the vessel had not been passed by the port authorities regarding formalities for entering the port until 5 May so that clause 52 of the
charterparty was not satisfied at the outer anchorage. The charterers said that clause
52 was not satisfied until the completion of the Entry Joint Inspection which took
place between 21.10 and 22.00 on 5 May.
It was held that it was probably the case that the joint inspection was a mere
formality so that, in the absence of other considerations, the charterers contention
would have no merit (see The Delian Spirit5). The inspection in the present case
lasted some 50 minutes and would have been a mere formality having no effect on
the commencement of laytime were it not for the important words in clause 52
provided formalities for entering port have been passed by Port Authorities. Those
express 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 legally
within the port at the outer anchorage, all formalities for entering the port had been
passed. Vessels were forever entering the legal limits of the port and then anchoring
before later moving into the heart of the port to undertake the commercial operations of loading/discharging, and this often required formalities or further formalities to be completed. It was unrealistic to say that all formalities to enter a port had
been complied with when certain formalities still had to be completed before the
vessel could move into the loading/discharging area of the port albeit that she had
got within the legal limits of the port where, as in the present case, no formalities
had to be carried out to allow the further progress of the vessel in to the heart of the
port.
The Guide to Port Entry made it clear that formalities had to be undertaken
when a vessel got close to the heart of the port (some 60 miles up-river from the
outer 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 formalities to be completed for entering the port, in the practical/commercial sense, while
the vessel was at the outer anchorage.
The owners had agreed an express clause that formalities for entering the port
had to be passed in order to present a valid notice of readiness. Therefore, the
passing of the formalities became a condition precedent for the tendering of a notice
of readiness under clause 52. While the joint inspection might well have been a mere
formality, it was still a formality which fell within the ambit of the express clause of
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Para. 85

the charterparty and had to be satisfied before a valid notice of readiness could be
tendered.
The charterers argument was correct. A valid notice of readiness could not be
tendered until ordinary business hours on 6 May, so that laytime did not commence
until the morning of 7 May.
The arbitration should be compared with that set out earlier in paragraph 78,
LMLN 355 March 1981, where it was decided that the 40-minute inspection was
a mere formality which had no effect on the commencement of laytime: however,
there was no express clause relating to port authority formalities in the earlier
arbitration.
85. Although conditions precedent are to be applied strictly, their harsh and commercially unrealistic results may be avoided by way of the de minimis principle or by
an estoppel or by construing the words in a broader sense. In The Sati Rani10
arbitration the charterparty stipulated:
Time for loading shall commence to count 24 hours after the written notice, and a certificate from a Marine Surveyor approved by the Charterers certifying the vessels readiness in
all cargo spaces, whether in berth or not, has been given by the Master or agents . . . that the
steamer is ready to receive cargo.

The vessel arrived at the outer anchorage on 30 May at 12.48 and gave a notice of
readiness. She berthed on Monday, 2 June at 14.00 and the notice of readiness was
accepted by the charterers at 15.30 on that day. The vessel commenced loading at
16.40. On 3 June the marine surveyors certificate was issued following inspection
of the holds at 09.30 on that day. The charterers contended that laytime should not
commence 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 good
notice, its reasoning being as follows:
It appears to us that, in view of loading having commenced on June 2 at 16.40, the survey
on June 3 turned out to be a mere formality. The survey showed that the vessels compartments were ready in all respects and had no effect on the loading operation which had
commenced the previous day. Since the survey turned out to be a mere formality, and did not
lead to any interruption in the loading process, it should have no effect on the laytime
computation. Where there is a mere formality to be effected, which does not affect the
position in any way, the tendency is to disregard the formality, see The Delian Spirit11; we
realise 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 be
taken to wording in a clause which turns out to have no intrinsic relevance when the facts and
charterparty 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 the
application of de minimis principle they were wrong in their other reasoning: after all
the clause was specific in that time could not commence until after a surveyors
certificate was issued. They could have come to a less favourable decision to the
owners perhaps by way of the application of estoppel, the basis being that, by
10. 1977.
11. [1971] 1 Lloyds Rep. 506.

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commencing to load the vessel at 16.40 on 2 June, the charterers impliedly accepted
the notice of readiness to load at that time (but see later on this aspect in Chapter
6); however, this would have resulted in the laytime commencing at a later time than
that 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 to
survey the vessel with reasonable dispatch if there were facts to support this, thus
allowing the owners a claim in damages for the time lost by a delayed certificate.
86. Problems regarding the commencement of laytime have arisen, particularly in
Indian ports, regarding customs clearance. LMLN 9014 April 1983 illustrated
such a problem. The vessel was chartered on a Baltimore Grain form to carry a
cargo 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 the
ordinary office hours on a weekday before 4 pm, similarly before noon if on a Saturday, vessel
having been entered at the Custom House and in free pratique and ready in all respects to
discharge 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 of
readiness to discharge at 10.00 on Saturday, 23 October by which time she had filed
a prior to entry with the customs. Charterers endorsed the notice received
subject to relevant charterparty terms and confirmation from concerned authorities
regarding the time of arrival, entry and grant of free pratique. The vessel commenced discharging at 21.15 on 27 October.
The issue between the owners and charterers depended on whether the notice of
readiness was valid when given and received at 10.00 on 23 October, or whether it
only became valid at 10.45 on Monday, 25 October, which was when inward entry
was obtained.
The arbitrators found that when notice of readiness was tendered and received at
10.00 on 23 October:
(a)
(b)
(c)
(d)

the
the
the
the

vessel
vessel
vessel
vessel

was
was
was
was

an arrived ship;
entered at the Custom House;
in free pratique since 17.30 on 22 October;
ready to discharge cargo.

The charterers contended, however, that with regard to (b), prior actual entry had
not been made at the time of tendering notice of readiness since the vessel did not
obtain inward entry until 25 October; therefore she did not have break bulk permission 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 lodge
prior entry to a vessels arrival. A prior entry manifest was filed with customs to
enable the receivers to process the documents required for receiving and clearing
the goods. Final entry was a routine matter which had nothing to do with receivers
and did not prohibit discharge by the receivers. Although final entry might be
applied for over the weekend it could not be granted until the following business
day. If a vessel arrived after business hours on Friday, final entry might not be
obtained until the following Monday morning. This is what happened in the present
case.
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If the vessel had been required to discharge cargo before 10.45 on 25 October she
would have needed the break bulk authorisation. However, as she only berthed and
commenced operations on 27 October the authorisation was not required on the
23rd.
Furthermore, the real test when tendering notice of readiness was that propounded by Lord Denning M.R. in The Tres Flores,12 namely that the master can
say:
I am ready at the moment you want me when ever that may be, and any necessary
preliminaries on my part to the loading will not be such as to delay you. . . . Applying this test
it is apparent that notice of readiness can be given even though there are some further
preliminaries to be done, or routine matters to be carried on, or for formalities to be
observed. If those things are not such as to give any reason to suppose that they will cause any
delay, and it is apparent that the ship will be ready when the appropriate time arrives, then
notice of readiness can be given.

In the present case, evidence showed that once prior entry had been filed with
customs, 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 break
bulk.
Accordingly, the notice of readiness tendered at 10.00 on 23 October was valid at
the time of service, and laytime started running at 00.00 on Monday, 25
October.
Soon after this arbitration two cases went to the High Court, on similar facts, The
Apollon and The Delian Leto.
In The Apollon13 and in The Delian Leto14 each of the laytime clauses contained a condition precedent that the vessel concerned should have been entered at
the 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 necessary
for the full customs procedure to be followed before a valid notice of readiness could
be given or whether it would be sufficient for the first or prior to entry stage to
have been completed. Both High Court judges decided that the initial stage would
be sufficient.
In his Apollon13 judgment Mr Justice Bingham (as he then was) had this to say
about the charterers contention that entry of the vessel under prior to entry rules
did not satisfy the charterparty which referred to the entry of the vessel at the
Customs House.
In my judgment this is a point of quite unreasonable technicality and one which cannot
prevail 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 that
mattered was the entry that occurred on September 19, that being, so far as customs were
concerned, the formal prelude to discharge. Although the language of the charterparty did
not expressly refer to entry under the prior to entry rules, it was, in my judgment, both the
correct and the commercial construction of this contract that the vessel was indeed entered
at the time when entry was necessary and required in order to permit discharge.

12. [1973] 2 Lloyds Rep. 247.


13. [1983] 1 Lloyds Rep. 409.
14. [1983] 2 Lloyds Rep. 496.

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Both High Court judges took the same approach as the arbitrators in not being
too technical. The decisions show that the judges and arbitrators often adopt a
commercial approach where possible to reflect not only the practicalities of a
situation but also common sense.
In the later cases of The Albion15 and The Nestor16 both Mr Justice Webster
and Mr Justice Leggatt (as he then was) decided, on the facts found by the arbitrators, 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 the
time of the final customs entry. Both judges were influenced by sections 30 and 31
of 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 considered in depth since they, along with The Apollon and The Delian Leto were
cited in the later The Antclizo17 where the Court of Appeal upheld Mr Justice
Hirst 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 High
Court at Bombay in The Jag Leela18 (judgment December 1988). On the same
condition precedent the charterers argued that the commercial interpretation of the
charterparty had to be considered as superseded by the general law, and that since
section 31 of the Customs Act did not permit the master to discharge the cargo at
an Indian port until entry inwards or final entry, laytime commenced 24 hours
after final entry was granted and notice of readiness to discharge was served on the
charterers. The charterers cited The Apollon19 and The Delian Leto20 and relied
on The Albion21 and The Nestor.22
The shipowners contended that entry inwards or final entry could not be
imported into the charterparty contract, and that once the conditions of the charterparty had been complied with, notice of readiness on the charterers would be
sufficient compliance for laytime to commence 24 hours after service of such
notice.
The shipowners argued that the charterparty should be interpreted uninfluenced
by the provisions of the Customs Act, because the terms of the charterparty, which
was a commercial document, had to be interpreted in accordance with their ordinary commercial connotation. Entered at Custom House was a term of art used
in any standard charterparty but not found in the Customs Act.
Therefore, the words entry inwards in section 31 of the Customs Act had to be
construed in the sense it was used in the Act, and was nothing to do with the
charterparty. Accordingly, once the customs authorities had granted prior entry,
that should be considered as entered at Custom House as contemplated under
the charterparty.
15. [1987] 2 Lloyds Rep. 365.
16. [1987] 2 Lloyds Rep. 649.
17. [1991] 2 Lloyds Rep. 485; [1992] 1 Lloyds Rep. 558.
18. LMLN 24211 February 1989.
19. [1983] 1 Lloyds Rep. 409.
20. [1983] 2 Lloyds Rep. 496.
21. [1987] 2 Lloyds Rep. 365.
22. [1987] 2 Lloyds Rep. 649.

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It was held that the court was concerned with the words entered at Custom
House as set out in the charterparty. Although those exact words were not found
in the Customs Act, the phrase which came nearest was to be found in section
30(1), which provided that a ships agent shall, within 24 hours after arrival thereof
at a customs station, deliver to the proper officer . . . an import manifest . . . in the
prescribed form. That was nothing but entering at Custom House. That was the
one thing the ships agent had to do for entering the customs area. The rest was for
the proper officer. The charterparty could not provide for what the customs officer
had to do. It could only provide for what the parties to the agreement had to do. It
had, therefore, to follow that on a prior entry being made, and a notice of
readiness being given, 24 hours thereafter laytime should necessarily begin. That
was 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 a
contrary view. The Indian court was not bound by those decisions. It had respect for
them, but that should not and could not overawe the courts sense of judgment. For
the English judges, the Indian law was essentially a question of fact, but for the
Indian court it was otherwise. It was a living instrument operating within the
parameters of actual experience. The English courts had missed the significance of
section 30 of the Act, and also the role of the proper officer, and above all the object
of the Act. It could not be said, even remotely, that the Customs Act purported to
regulate in any manner the jural relations or obligations of the parties arising under
the charterparty. Accordingly, the shipowners submissions would be upheld.
The decision of the Indian High Court (since upheld in the Bombay Court of
Appeal) made sense in the context of commencement of laytime. Although
having no binding precedent it had persuasive cogency and it was referred to later
in The Antclizo.
The Antclizo (also relevant in another context, see above, paragraph 79) was
chartered for a voyage to Bombay with a clause in the charterparty that laytime was
to count from 24 hours after receipt of masters notice of readiness to discharge . . .
vessel also having been entered at Customs House and in free pratique whether in
berth or not.
An issue arose as to when the vessel was entered at Custom House. By section
31(1) of the Indian Customs Act 1962 the master could not permit unloading until
customs had granted entry inwards to the vessel. No such order would be given
until an import manifest had been delivered.
The learned umpire, having considered the 1962 Act and the Central