UK: Commencement of laytime: common pitfalls and errors

Determining when laytime commences is essential for both owners and charterers. Both need to be aware when laytime starts so that any demurrage claim can be accurately evaluated. It is therefore important that both owners and charterers are able to effectively analyse the terms of the charterparty which deal with the conditions which need to be satisfied before the laytime clock starts running.

In this article, we will review the main conditions that are generally required to be satisfied and indicate some of the common pitfalls and errors which can arise. As the first article in this series discusses, there can be a number of terms which will deal with laytime and demurrage issues throughout the entirety of the charterparty. The importance of carefully reviewing the charterparty when a laytime and demurrage issue arises cannot be overstated.

In general there are three main conditions which need to be met under most charterparties before laytime can commence. These concern the arrival and readiness of the vessel and the tender of the Notice of Readiness ("NOR"). We will consider these in turn.

Arrival

Subject to the express terms of the charterparty, once the vessel has arrived at the agreed destination, it will be an 'arrived ship' for the purposes of calculating when the laytime should start to run. The agreed destination will vary depending on whether the charterparty is a port or a berth charterparty and whether there are additional clauses such as the WIPON ("Whether in Port or Not") or WIBON ("Whether in Berth or Not") amendments which alter the physical place that the vessel needs to reach.

Some tanker charterparties, particularly clause 9 of the ASBATANKVOY form of Charter, will contain an additional promise from the Charterers that the place nominated will be "reachable on arrival". While breach of that promise will not alter the commencement of laytime, it may provide Owners with a claim for detention for any delay to the vessel prior to it reaching the arrival destination.

For commercial reasons it is often in owners' interests to get the laytime clock started as early as possible after reaching destination. Once laytime is running the charterers are under pressure to get the vessel loaded or discharged within the laytime or face a demurrage claim.

In practice, issues can arise where at a port charterparty destination there is no berth available immediately for the vessel. In such cases, the Master may consider the end of sea passage as denoting arrival but in fact the particular configuration or practice of the port may mean that this is incorrect. In 'The Johanna Oldendorff' the House of Lords held that in such cases a ship can only be said to have arrived when it is at the 'immediate and effective disposition of the charterer'. As we discuss below, in relation to the NOR, the issue is an important one as a premature statement concerning arrival can invalidate the NOR and postpone the time at which laytime can commence.

Readiness

The second requirement for the commencement of laytime is that the vessel must be ready to load or discharge the cargo when the agreed destination is reached and the notice of readiness is given.

Readiness can be defined as the vessel being available for use by the charterers and covers the readiness of the holds, equipment and legal documents.

  1. readiness of the holds – a vessel's holds must be clean and dry and without smell and in every way fitted to carry the cargo loaded. If not, then the vessel will not be ready to receive the cargo and laytime will not commence until such time as it is ready.
  2. readiness of the equipment – any equipment which is relevant to loading or discharging must be ready e.g. cranes, hatches, pumps etc. Although it is sufficient that the relevant equipment can be ready when actually required.
  3. Documentary readiness – all necessary papers must be in order so that the vessel can proceed immediately to the loading/discharging place and start work. Before a vessel can start work there are a number of documentary procedures which are owners responsibility including customs clearance, crew clearance and checks on stability. Different ports will often apply different regulations.

As a rule of thumb (and subject to the terms of the particular charterparty) customs clearance and health clearance for the crew will not generally be needed to be granted before this requirement is satisfied, provided that it is a "mere formality" and the Master has no reason to suspect that either will not be given by the port authorities.

A number of standard form tanker charterparties will, however, expressly provide that laytime will not commence unless customs and/or health clearances are obtained within 6 hours of the giving of the NOR. Such a clause will direct that the Master must take an additional step (such as note protest) before laytime can commence. If the Master is unaware of such a requirement and fails to carry out the terms of the charter then there could be a dramatic reduction in any eventual demurrage claim.

Notice of Readiness

A Notice of Readiness ("NOR") is a statement made by the ship to the charterers or their agents that it has arrived at the agreed destination and is ready to load/discharge the cargo.

Charterparties almost always contain express provisions concerning the NOR, which will in general provide for the NOR to be tendered in writing at each load and discharge port to the charterers or their nominated agents.

If the NOR is tendered but the Vessel is either not arrived or not ready (or in some instances both) then the notice will be invalid. The difficulty here arises because the final trigger for the commencement of laytime in most charterparties is the tender of a valid notice of readiness. Without this, arguably laytime may not commence until the vessel begins to perform cargo operations. This could result in a considerable amount of waiting time being at the owners risk rather than at the charterers.

If there is any doubt about the validity of the first NOR, it is sensible for a Master to serve multiple NOR's without prejudice to the validity of the first NOR.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions