BIMCO recently promulgated a new document, Laytime Definitions for Charter Parties ("Laytime Definitions") 2013, which defines various terms used in conjunction with calculating the running of laytime and demurrage for the purpose of reducing tramp shipping (voyage charter) disputes. Laytime Definitions was generated through the joint effort of BIMCO, the Baltic Exchange, the Comité Maritime International, and the Federation of National Associations of Shipbrokers and Agents.
Typical voyage charters (ExxonMobilVOY, ASBATANKVOY, and BPVOY) do not expressly define terms such as laytime, demurrage, berth, or port. Instead, courts construe the meaning of these terms from the context used in the charters and as construed by the common law.
In its Laytime Definitions, BIMCO refrained from altering the definition of laytime from BIMCO's previous iteration, Voyage Charter Party Laytime Interpretation Rules ("Voylayrules") 1993. The term still means: "The period of time agreed between the parties during which the owner will make and keep the vessel available for loading and discharging without payment additional to the freight." Courts have generally construed laytime as the "time allowed for the charterer to load or unload," which closely approximates the BIMCO definition.
BIMCO still defines demurrage as "an agreed amount payable to the owner in respect of delay to the vessel once the laytime has expired, for which the owner is not responsible." However, the term has been refined to allow exceptions specifically set forth in the charter agreement, whereas in its earlier form no laytime exceptions were permitted, which likely contributed to the industry's general failure to employ the Voylayrules. In contrast to laytime, the courts have construed demurrage in a variety of ways, such as:
- liquidated penalty or stipulated damages for delay;
- "extended freight and the amount payable for delays by the receiver in loading and unloading cargo;"
- the "sum which is fixed by the contract of carriage...as remuneration to the owner of a ship for the detention of his vessel, beyond the number of days allowed by the charter-party for loading and unloading;"
- "[t]he charge assessed under the charter party to the charterer for detaining a vessel beyond the free time stipulated for loading and unloading;" and
- "[a] fine or payment made by the shipper to the vessel owner if the shipper fails to complete the loading of his cargo within an allowed period of time."
BIMCO hopes its Laytime Definitions, if employed in the marketplace, will serve to narrow the scope of vessel delay disputes by defining "demurrage" and other terms at the heart of such disputes. "These provisions bring much needed clarity to the shipping markets and iron out a good deal of uncertainty," said BIMCO's Jean-Pierre Laffaye (see www.tradewindsnews.com/drycargo/323408/laytime-language-revised). Mr. Laffaye continued: "In a tough market, the amount of time a vessel spends unloading or loading cargo is under great scrutiny, and it is therefore vital that imprecise laytime definitions and subtleties of interpretation do not provide grounds for expensive legal disputes when an interpretation is tested in the courts." (See www.tradewindsnews.com/drycargo/323408/laytime-language-revised.)
BIMCO also defined the terms berth and port. Berth is defined as "the specific place where the vessel is to load or discharge and shall include, but not be limited to, any wharf, anchorage, offshore facility, or other location used for that purpose." Port is defined as "any area where vessels load or discharge cargo and shall include, but not be limited to, berths, wharves, anchorages, buoys, and offshore facilities as places outside the legal, fiscal, or administrative area where vessels are ordered to wait for their turn no matter the distance from that area." Note the expansion of the definition of "port" to areas where the vessel is ordered to wait no matter the distance from the physical terminal, and the narrowing of "berth" to the specific place where loading or discharge is to occur. These refined terms will alter when and where laytime and demurrage run, and presumably will also bear on safe berth or port issues.
In summary, BIMCO hopes its Laytime Definitions will be met with acceptance by both sides of charter party transactions— owner and charterer. What remains to be seen is whether Laytime Definitions fares any better than the Voylayrules in the marketplace. A desire to limit the litigation of vessel delay disputes would presumably lead to greater use of BIMCO's Laytime Definitions.
For a complete copy of BIMCO's Laytime Definitions, please visit: www.blankrome.com/LaytimeDefinitions.pdf.
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