UK: The "Hang Ta" - Sales Contract, NORs And WIBON

Last Updated: 19 July 2011
Article by Linda Jacques

Demurrage cases in the context of Sale Contracts are rarely reported. The English High Court has recently had an opportunity to consider whether a Notice of Readiness (NOR) was valid notwithstanding an exceptions clause in a Sale Contract.

The seller Suek AG had agreed to sell 390,000 metric tonnes + or - 10% at the seller's option to the buyer, Glencore of unclean coal in 6 shipments across 4 quarters of 2010 on a CIF basis. The sale contract provided that the shipment of the coal from the load port to the discharge port was to be the responsibility of the seller. The buyer was to notify the seller by fax/email of the final discharge port and the seller was to nominate the carrying vessel to the buyer by fax or email at the latest 7 days prior to the start of the laycan at the loading port. The NOR clause stated that the seller was to instruct the Master to give the Port Agents 5 days then 3 days, 48 hours and 24 hours notice of arrival at the discharge port. On arrival at the discharge berth the Master was to give NOR to discharge any time during the day or night SSHINC whether in free pratique or not and whether customs cleared or not.

In Addition :-

  • Laytime was to commence 12 hours after the NOR had been tendered. In case the berth was occupied on arrival the vessel could tender NOR at the usual waiting place, WIBON [whether in berth or port or not] and whether free pratique/customs had been cleared.
  • The time taken waiting for the first available tide after the vessel's arrival or a shift from the pilot station or anchorage to berth and the opening up of the hatch covers was not to count as laytime.
  • Periods of bad weather should not count as laytime, subject to these being recorded in the statement of facts and signed by all parties.
  • Once the laytime period had expired the contract provided that demurrage was to be paid by the buyer.

One of the shipments carried on board the vessel "Hang Ta" arrived at the discharge port, but the discharging berth was occupied by another vessel. The "Hang Ta" was therefore unable to reach the berth. In addition to that the tidal conditions in the port also meant that the vessel could not reach the berth, in any event. The Master therefore gave NOR at the usual waiting place.

Both parties were in agreement that the reason the vessel could not berth was because the unavailability of the berth, but also because of the tidal conditions. The buyer argued that the seller was not entitled to give NOR at the usual waiting place because of the tidal conditions which meant the vessel could not be considered ready. The seller for his part said that the berth was occupied on arrival and therefore under the exceptions clause in the contract the Master was entitled to give NOR at the usual waiting place.

The English Court focused on the interpretation of WIBON when looking at these competing claims. From their perspective that phrase meant whether the vessel was in berth (a berth being available) or not in berth (a berth not being available). The buyers argued that the seller's obligation was to carry the cargo to the berth and on that basis the exception reventing laytime should be read restrictively. The exception should only operate if the only cause of delay was the unavailability of the berth, rather than it being one of the factors in the delay. The seller argued that while they could not do anything about the tide and the weather, there was no foundation for applying the construction of the contract in such a way that the seller bore the heavier responsibility for ensuring arrival at the berth.

The Court's view was that the matter deserved a simplistic approach. The buyers were asking the Court to rewrite the exceptions clause. As a result, it was the inaccessibility of the berth because of the other ship in it which entitled the Master of the Hang Ta to give NOR

Case: (Suek AG v Glencore International AG ("The Hang Ta")
QBD (Com CT) (Burton J) 19 May 2011.

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.

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