When Laytime Starts?

As a general rule, three conditions must be satisfied before the Charterer can be required to begin loading or discharging, and before the agreed Laytime starts to run. These requirements are central to the operation of Voyage Charterparties because they mark the point at which the ship passes from the voyage stage into the cargo-working stage.

1. The ship must have Arrived (Arrived Ship) at the destination named or identified in the Charterparty.
2. The ship must be Ready and in a Fit Condition to load or discharge the cargo.
3. Where the Charterparty or the law requires it, Notice of Readiness (NOR) must have been validly tendered to the Charterer. Unless there is an Express Provision to the contrary, this requirement normally applies only at the first Loading Port.

Once these requirements have been fulfilled, and subject to any waiting period or time bar provided in the Charterparty, Laytime begins to count. The exact timing may have considerable commercial importance because it determines when the risk of delay shifts from the Shipowner to the Charterer.

Specified Destination in Charterparty

In The Johanna Oldendorff, Lord Diplock analysed the structure of a Voyage Charter and divided the contractual adventure into four separate and consecutive stages:

(1) Loading Voyage, meaning the voyage of the chartered ship from her position at the date of the Charterparty to the place identified in the Charterparty as the place of loading.

(2) Loading Operation, meaning the delivery of the cargo to the ship at the loading place and the proper stowage of that cargo on board.

(3) Carrying Voyage, meaning the voyage of the ship to the place identified in the Charterparty as the place of delivery.

(4) Discharging Operation, meaning the delivery of the cargo from the ship at the place named in the Charterparty as the place of discharge and the acceptance of that cargo by the Charterer, Consignee, Receiver, or other party entitled to receive it.

Arrival at the specified destination is both the geographical and chronological point at which the voyage stage ends and the loading or discharging stage begins. Fixed Laytime Charters are commonly classified as Berth Charters, Dock Charters, or Port Charters according to where the relevant voyage stage is intended to terminate. However, this classification is not always conclusive in identifying the contractual destination, particularly where Berth Charters or Port Charters contain clauses that advance or modify the point at which Laytime may begin.

The same broad classifications also apply to Customary Laytime Charters. Even in those charters, there must come a point at which the ship has arrived for the purpose of the cargo operation. The point may be less decisive than in a Fixed Laytime Charter because much of the delay risk after arrival may still remain with the Shipowner, depending on the circumstances and the custom of the port. Nevertheless, the same legal principles concerning arrival remain relevant.

Sometimes a Voyage Charterparty does not name a single Berth, Dock, or Port. Instead, it may require the ship to proceed to one or more Berths, Docks, or Ports within a wider geographical area. Typical wording may include:

‘‘one or two Safe Berths Orinoco River’’

‘‘one Dock London River’’

‘‘one Port Marmara Sea’’

Where this type of wording is used, the legal effect is generally the same as if the Berth, Dock, or Port later nominated by the Charterer had been written into the Original Fixture from the beginning. The ship does not arrive merely by entering the geographical area mentioned in the Charterparty. She arrives at the contractual destination only when she reaches the first Berth, Dock, or Port validly nominated by the Charterer. Depending on what has been nominated, the charter will then operate as a Berth Charter, Dock Charter, or Port Charter.

The power to nominate a Berth, Dock, or Port in this way is an option granted by the Shipowner for the benefit of the Charterer. It is a genuine contractual option. In Tharsis Sulphur & Copper Co Ltd v. Morel Brothers & Co and others, the ship was chartered to proceed to the Mersey and discharge at any Safe Berth (SB) as directed on arrival in the Dock at Garston. On arrival, a Berth was allocated by the Harbor Master according to the custom of the port, but discharge was delayed because congestion prevented the ship from being Berthed for some time. The Shipowners claimed Demurrage.

The main question was when the ship became an Arrived Ship. The Court of Appeal held that the Charterparty was a Berth Charterparty. Accordingly, time did not begin to run until the ship had actually reached the Berth. However, Bowen LJ also considered the nature of the Charterer’s option to nominate a Berth, Dock, or Port and stated:

“Then we were told that an option was given to the Charterer, and that it was not properly exercised unless a Berth was chosen that was empty. But I think there was a confusion in this argument also. The option is given for the benefit of the person who was to exercise it. He is bound to exercise it in a reasonable time, but is not bound in exercising it to consider the benefit or otherwise of the other party. The option is to choose a Port or Berth or Dock, that is one that is reasonably fit for the purpose of delivery. It will not do, for instance, to choose a Dock the entrance to which is blocked—that would be practically no exercise at all of the option. To limit the option of the Charterer by saying that, in the choice of a Berth, he is to consider the convenience of the Shipowner, is to deprive him of the benefit of his option. The most that can be said is that the Charterer does not exercise his option at all unless he chooses a Berth that is free or is likely to be so in a reasonable time.”

In the absence of a “Reachable On Arrival” clause, the Shipowner cannot normally object merely because the ship cannot immediately enter the Nominated Berth, Dock, or Port on arrival. Nor, unless an Always Accessible (AA) provision has been included, can the Shipowner usually complain simply because the ship cannot immediately enter or leave the nominated destination due to a temporary obstruction. Such an obstruction may be natural or human in origin, including insufficient water, congestion, temporary port restrictions, or similar conditions. This is particularly so where the Charterparty itself names the Port.

Dicta in Reardon Smith suggest that the Charterer’s right to nominate is restricted only where the delay caused by the ‘‘temporary’’ obstruction would be so excessive that it would Frustrate the commercial adventure. Where the obstruction is more permanent or enduring, a different issue may arise: whether the court should imply a warranty that the nominated Port must be one that the ship can physically reach. In The Aegean Sea, Thomas J observed, by way of Obiter Dicta:

“I would accept that in the case of a Voyage Charterparty there must be an implied warranty that any Port Nominated must be one that it is possible for a ship to reach. But beyond that, it is an open question whether any term should be implied into a Voyage Charterparty where there is a range of Unnamed Ports and where there is no Express Warranty of Safety.”

The issue was considered from a different angle in The Epaphus, a commodity sale and purchase case. Staughton J in the High Court, and a majority of the Court of Appeal led by Sir John Donaldson MR, held that a nomination of a Port which the ship was too deep to enter could still be valid. The contract provided for discharge at ‘‘one main Italian Port’’ to be nominated by the Buyers of the cargo. The Buyers nominated Ravenna, but the ship could not enter because of her draught. There was no requirement that the Port Nominated should be a Safe Port (SP).

In the Court of Appeal, Sir John Donaldson distinguished Reardon Smith and the case referred to as the Olivebank case, where Charterers had nominated a Danish Port that the relevant ship could not enter because of a prohibition imposed by the British Government during the First World War. Sir John Donaldson stated:

“Any implication that orders could never be given to go to Vancouver (in the Vancouver Strikes case) or to Aalborg (in the Olivebank case) would have contradicted the Express Terms of the Charterparty. But it would be quite otherwise if the term to be implied was that the ship could be ordered to Vancouver/Aalborg, unless that Port should have become impossible subsequently to the making of the Charterparty”.

Sir John Donaldson further explained that, in the authorities he discussed, the relevant ‘‘impossibility’’ had arisen after the date of the Charterparty. He indicated that the position would have been different if a sudden storm had silted the harbour at Ravenna after the contract was made and thereby reduced the maximum permissible Draught (Draft).

In the High Court, Staughton J expressed a view that appears to have been broadly shared by the majority in the Court of Appeal:

“In my judgment, if a Shipowner contracts to go to one out of a number of named Ports, such as the Charterer shall Nominate, and does not qualify that choice with the word ‘‘Safe’’, there is a good deal to be said for the view that he takes upon himself the task of ascertaining that his ship is of a size that can enter all those Ports.”

Sir John Donaldson also accepted that a different question might arise if the contract had referred to delivery ‘‘at one Italian Port’’ rather than ‘‘at one main Italian Port’’. In that situation, it might be open to examine whether the parties intended to limit the choice to a Port suitable for the ship. That would not contradict the express terms of the contract, but would involve interpreting their scope.

The result appears to be that the narrower and more clearly defined the range of Ports, the less willing the courts may be to interfere with the nomination made by the party holding the option. The distinction between a Dock blocked for more than a temporary period and a Port too shallow for the ship to enter is not always easy to justify, unless the decisive difference is that one situation has arisen from a supervening event after the Charterparty was made. The point remains difficult and may well require further judicial consideration.

Once the Charterer has made an unqualified nomination, the Charterer normally has no right to change that nomination unless the original nomination is invalid or the Charterparty contains an express clause permitting a change. In the absence of such wording, the nominated Port, Dock, or Berth is treated as if it had been inserted into the Charterparty from the outset.

Tanker Charterparties often adopt a more flexible approach. Many Tanker Charters allow the Charterer to Nominate Alternative Ports after an initial nomination, or to instruct the ship to proceed to an intermediate position and await further orders by radio. For example, the ASBATANKVOY form includes Gibraltar or Land’s End as places for orders, while the STB Voy form also refers to Quoin Island, Suez, and Aruba. Even so, there may come a point at which the right to alter the nomination has been exhausted.

In The Batis, the Charterers attempted to change the Loading Port after the ship had arrived at the original Nominated Port. The charter was on an ASBA II Charterparty Form and provided for 1/2 Loading Ports. The Shipowners complied with the revised instructions under protest and reserved their rights to claim additional remuneration. In arbitration, the Arbitrators held that the right to change the Nominated Loading Port had already been lost. However, because the Shipowners complied with the instructions, their full remedy was affected. The High Court refused leave to appeal from the finding that the changed orders were illegitimate, holding that the Charterers were not entitled to give that order. The court also held, however, that the Shipowners were not deprived of their remedy merely because they had complied with the Charterers’ instructions.

The decision may be contrasted with The Jasmine B. In that case, the Charterparty contained a special provision allowing discharge at 1/2 Safe Ports (SP) in three ranges, with a maximum of three Ports in total. A further clause, M1, stated that the Charterers had the right at any time to change their nomination of Loading Ports and/or Discharging Ports, subject to the special provision. The Charterers first ordered the ship to discharge at Porto Torres in Sardinia. After the ship arrived at that Port, they successively ordered her to proceed to Houston for orders, to wait outside Porto Torres for instructions, to proceed to New York for orders, and finally to discharge at Genoa.

The High Court confirmed the general rule that, unless the Charterparty contains a special provision, nomination of a Loading Port or Discharging Port by the Charterer means that the Charterparty is thereafter treated as though the nominated Port had originally been inserted in the contract. Once that has occurred, the Charterer has neither a right nor a duty to alter the nomination.

The nominations for orders were outside the terms of the Charterparty. However, the court held that Clause M1 was drafted in broad language and gave the Charterers the right to change their nomination at any time. There was no basis for implying limitations such as ‘‘so long as Notice of Readiness (NOR) had not been given’’ or ‘‘so long as the ship is not already on Demurrage’’ into the clause. The court also refused to enlarge the general rule so that a representation that the Nominated Port would be the sole Discharging Port became an irreversible election. Even if that analysis had been wrong, the Charterers were entitled under Clause M1 to alter their nomination from Porto Torres as sole discharge Port to Genoa as sole discharge Port.

If Porto Torres had already become an effective Port of Discharge because the ship had tendered Notice of Readiness (NOR), then the effect of the later order was that the Charterers altered their nomination so that Porto Torres became the first Port of discharge and Genoa became the second.

In The Batis, the High Court considered only whether the Charterers had a right to change the nomination under the change of Load Port/Discharge Port provision. It did not decide the issue under any other term of the charter, such as a clause permitting loading at more than one Port, although that argument had been rejected in arbitration.

The following principles may therefore be drawn:

A. A Charterparty may allow the Charterer to make an alteration of Loading Ports or Discharging Ports even after arrival at the Port concerned, but very clear wording is required to produce that result.

B. In ordinary circumstances, a contractual right to alter Loading Ports or Discharging Ports will be lost after Notice of Readiness (NOR) has been tendered, unless the Charterparty clearly provides otherwise.

C. Even where the right to alter an existing nomination has been lost, the Charterer may still retain the right to nominate additional Loading Ports or Discharging Ports, provided the additional nomination remains within the number and range of Ports permitted by the Charterparty, even if the original nomination was described as the sole Port.

The practical importance of these rules is substantial. The specified destination determines when the ship has arrived, when Notice of Readiness (NOR) may be tendered, and when Laytime may begin. It also affects responsibility for congestion, waiting, inaccessibility, changes of order, and the consequences of a nomination that later proves commercially inconvenient. For that reason, Shipowners and Charterers should draft nomination clauses, range clauses, Reachable On Arrival provisions, Always Accessible (AA) provisions, and change-of-port clauses with particular care.

A broad example of a Nomination Clause allowing changes can be found in Clause 9(b) of the EXXONVOY 84 form, which provides:

CHANGE OF DESTINATION. After Nominating Loading Port and/or Discharging Port or Place pursuant to Paragraph (a) of this Clause, Charterer may Nominate new Port or Place, whether or not they are within the range of the previously Nominated Port or Place and/or vary the rotation of any Nominated Port or Place.

The clause then expressly states that the right to Nominate a different Loading Port or Discharging Port in another range ends once Notice of Readiness (NOR) has been tendered at a Nominated Loading Port or Discharging Port. The wording does not directly answer whether another Port within the same range may still be nominated after that point. The better inference is that such a nomination may remain possible by implication, unless the structure of the Charterparty or the circumstances point to a different conclusion.

Clause 4(c) of Part II of the ASBATANKVOY form provides that “any extra expense in connection with any change in Loading or Discharging Ports (so named) shall be paid by the Charterer and any time thereby lost to the ship shall count as used Laytime”. In the Antiparos matter, the Shipowners had arranged to bunker at the second Load Port on the basis of the Ports originally nominated. When the nomination was changed, the Shipowners had to alter their bunker stem to match the revised orders. They recovered the additional expense from the Charterers. However, the High Court held that they had no further claim in damages because, although the change amounted to a breach of charter, Clause 4(c) governed the compensation recoverable once the owners accepted the revised instructions.

Under the Worldscale System (WS) of Freight Calculation, which is used in most tanker charters, the Freight payable is calculated by reference to the actual loading and discharging Ports. Clause 9(b) also contains a formula for compensating the Shipowner for time lost as a result of the change. For that reason, the clause is not as one-sided as it might initially appear. It does, however, give the Charterer a wide commercial power to change the agreed Voyage while the ship is still en route.

The consequences of a failure to nominate a Discharge Port in time were examined in The Timna. In that case, the ship was ordered to the River Weser, but the Charterers failed to identify early enough which Weser Port was to be used for discharge, causing delay. Donaldson J held in the High Court that there was no implied term entitling the Ship Master to make the nomination himself if the Charterers failed to nominate the Discharge Port within the time required by the Charterparty or within some further reasonable period. Because the ship never became an Arrived Ship during the period of delay, the Shipowner’s claim for Demurrage failed. However, the Shipowner was entitled to damages for Detention for the delay until the Charterers finally gave firm orders identifying the Port to which the ship should proceed. The Court of Appeal upheld that result and also confirmed that an order to proceed to a Port of Discharge must be firm in order to be valid.

A similar issue arose in The Rio Sun, although that case concerned a CIF (Cost, Insurance, Freight) Contract of Sale rather than a Charterparty. Bingham J held that the Sale Contract contained an implied obligation requiring the Buyer to nominate the Discharge Port in sufficient time to allow the ship to proceed there without interruption or delay. Failure to do so amounted to a Breach of Contract. A different problem caused by late nomination arose in London Arbitration 19/89. There, the Charterers failed to nominate the second Discharge Port before loading was completed. As a result, the Ship Master had no opportunity to arrange the stowage so as to avoid lightening at the first Port after the cargo for that Port had been discharged, in order to reach the second Port. The loss suffered by the Charterers, including the need to discharge extra cargo at the first Port where the price was lower, resulted from their own failure to give timely orders.

A delayed nomination of the Discharge Port may lengthen the Voyage, or it may cause delay after arrival at or near the Discharge Port. For example, local rules may require advance notice to tugs, pilots, terminals, or other services. Where the loss consists of an extended voyage, it is generally assessed by identifying the time lost and applying the Demurrage Rate to that period, together with the cost of Bunkers (Fuel) unnecessarily consumed.

Where the delay occurs at the Discharge Port, the nature of the claim will usually depend on whether the ship has become an Arrived Ship. This, in turn, depends on whether the relevant Charterparty is a Berth Charterparty or a Port Charterparty. If the ship has not yet become an Arrived Ship, the claim will normally be one for Detention, measured by reference to the Demurrage Rate. If the ship has become an Arrived Ship, Laytime will run, and any unused Laytime balance may have to be taken into account against the delay.

It is important to distinguish between an express right of the Charterer to choose the loading or discharging Berth and an implied right to do so. Where the Charterparty uses wording such as “one or two safe Berths Mississippi River,” the Charterer has an express right to select the Berth. The consequence is that the ship will not become an Arrived Ship until she reaches the nominated Berth. Where the Charterparty does not expressly give such a right, the Charterer may still have an implied right to select the Berth, but in that situation the ship may become an Arrived Ship once she reaches the broader destination identified in the Charterparty, such as the Port or Dock.

Difficult questions of interpretation can arise where it is unclear whether the Charterer’s right to nominate the Berth is express or merely implied. In North River Freighters Ltd v. President of India, Parker LJ held that the words “One Safe Berth Dairen” expressly gave the Charterer the right to identify the loading Berth. Parker LJ also suggested that if the Charterparty had instead required the ship “to proceed to Dairen and then load at One Safe Berth,” without the further words “as ordered by the Charterer,” the right would only have been implied. In that situation, the ship would have become an Arrived Ship upon entering the Port.

A comparable approach was taken in Stag Line Ltd v. Board of Trade, where the Court of Appeal upheld the lower court’s finding that a clause requiring the ship to “proceed to one or two safe Ports East Canada or Newfoundland, place or places as ordered by Charterers” granted the Charterers an express right to nominate the Berth. The result was that the Charterparty was treated as a Berth Charterparty.

In London Arbitration 1/09, the Tribunal rejected the Charterers’ argument that the Charterparty was a Berth Charterparty at the Loading Port merely because it referred to loading at:

1 SBP ZHENJIANG

That wording had to be read together with several other clauses. These included provisions allowing the ship to give Notice of Readiness (NOR) at the roads, clauses containing WIBON/WIPON/WCCON/WFPON wording, a clause deeming the ship to have arrived when anchored at one of three specified anchorages, a clause governing how time would count after Notice of Readiness (NOR), and a clause excluding shifting time. Although the report was headed as a dispute over whether the Charterparty was a Berth Charterparty or Port Charterparty, the Tribunal did not simply describe it as a Port Charterparty. A more accurate analysis is that it was a Berth Charterparty containing clauses that advanced the commencement of Laytime.

In The Merida, the High Court reversed the Arbitral Tribunal and held that a provision for loading at “one good and safe Chrts’ Berth terminal 4” at Xingang created a Berth Charterparty. This conclusion was reached despite later wording referring to loading at “One Good and Safe Port/One Good and Safe Charterers Berth Xingang” and despite another clause excluding shifting time from anchorage. The decision underlines the importance of identifying the contractual destination by reference to the whole Charterparty, not by focusing on one phrase in isolation.

There are three main exceptions to the general rule that a ship does not become an Arrived Ship until she reaches the destination named in the Charterparty or later selected by the Charterer under an express right:

(a) Custom;

(b) Obstacles created by the Charterer;

(c) Special provisions in the Charterparty.

Berth Charter

Berth Charters are probably the earliest form of Charterparty, since arrival at the Berth is the natural commercial endpoint of the voyage. The VOYLAYRULES 1993 define Berth in the following terms:

‘‘BERTH’’ shall mean the specific place within a Port where the ship 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 principal difference from the Charterparty Laytime Definitions 1980 is the addition of the words ‘‘within a Port’’ in the opening part of the definition. This emphasizes that a Berth is not merely any physical place at which cargo can be handled, but a particular loading or discharging location within the wider port area.

A Berth is a particular loading location on a Jetty, Wharf or within a Dock system. Individual Berths are often identified by number rather than by name, such as No 1 Berth, No 2 Berth, or similar designations. In many Berth Charters, the clause will refer to ‘‘One Safe Berth (SB) X Port’’. This gives the Charterer the right to nominate any suitable Berth within that Port, or more commonly to notify the Shipowner of the Berth assigned by the Port Authority (PA). Sometimes a Charterparty names a specific Wharf or Jetty containing two or more Berths. Such wording is generally treated as having the character of a Berth Charter.

The original concept of a Berth Charter involved a specific Berth being named in the Charterparty. Over time, the concept expanded to include cases where the ship is to proceed to a Berth selected by the Charterer under an express option within the Port. An unusual example appeared in London Arbitration 14/07, where the Charterparty’s “Loading Port (LP)” provision required the ship to load at “1SB OR ANCHORAGE… ALONGSIDE IMPORTER VESSEL . . . OR BARGES . . . OR ALONGSIDE WHARF”. The Tribunal held that the contract clearly contemplated loading alongside something, most probably the ship identified in the “Loading Port (LP)” provision. If the ship loaded there, or alongside barges at anchorage, that place could amount to a Berth for notice purposes, even if it did not fit the ordinary meaning of the term Berth.

In a Berth Charter, the ship reaches the specified destination only when she has arrived at the Berth and is not required to proceed farther in order to load or discharge. In EL Oldendorff & Co GmbH v. Tradax Export SA, Lord Diplock explained:

“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 ship 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 ship 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 Shipowner’s expense.”

Similarly, in North River Freighters Ltd v. President of India, Jenkins LJ distinguished Port Charters from Berth Charters and stated of the latter:

“whereas in the case of a Berth Charter (that is to say, a charter which requires the ship 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 ship 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 absence of wording advancing the commencement of Laytime, Notice of Readiness (NOR) cannot normally be tendered before the ship has reached the Berth. The Charterer is not, however, under an automatic duty to Berth ships strictly in the order in which they arrive, unless the Charterparty, port regulations, or applicable custom creates such an obligation.

In The Handy Mariner, the Court of Appeal considered the issue in the context of a sale contract rather than a Charterparty. The dispute came on appeal from a GAFTA Tribunal. The contract was for CIF (Cost Insurance Freight) Free Out Lorient and included a discharging rate. The Court of Appeal interpreted the provision as having the effect of a Berth Charter clause, even though, if the wording had been examined as a Charterparty, it might have been treated as a Port Charter. The decision shows that concepts derived from Charterparty law can also influence the interpretation of sale contracts where loading or discharge obligations are incorporated into the sale terms.

Disputes sometimes arise over the exact moment when the ship has arrived at the Berth, especially where some time passes between the first line being ashore and completion of the mooring operation. Clause 14 of the Shellvoy 3 Charterparty Form, which is unusual among tanker forms because it operates as a Berth Charter, requires the ship to be securely moored before Laytime can begin. That requirement is commercially sensible and would usually reflect the correct position even without express wording.

The ship should be regarded as arrived in Berth only when she has been made fast with enough mooring lines to permit cargo handling to begin safely. In some ports, particularly in certain seasons or where heavy weather is expected, additional heavier lines may be put out shortly after arrival. These are sometimes described as “hurricane hawsers.” Ordinarily, however, they are an additional precaution rather than part of the normal mooring process. The ship will therefore normally be treated as having arrived in Berth once the usual mooring lines have been properly secured and she is safely positioned for cargo operations.

Dock Charter

The Collins English Dictionary describes a Dock as “an artificial basin excavated, built round with masonry and fitted with flood gates, into which ships are received for purposes of loading and unloading or for repair”. In commercial shipping practice, a Dock may consist of more than one connected basin and may contain several Berths, Wharves, or cargo-working areas. For that reason, a Dock Charter may be regarded as lying somewhere between a Berth Charter and a Port Charter. Like a Port Charter, it covers a geographical area; but, unlike many Ports, a Dock will usually have a clearly identifiable entrance and a more defined physical boundary.

In Nelson v. Dahl, decided in 1879, the Court of Appeal described Dock Charters as “a comparatively recent introduction”. Dock systems may be tidal or non-tidal, but because the point of entry is usually identifiable, disputes about the moment of arrival are generally less common than in Port Charter cases. In ordinary circumstances, once the ship has entered the nominated Dock, she has reached the contractual destination.

The principle can be seen in Tapscott v. Balfour. The Charterparty required the ship to load coal at “any Liverpool or Birkenhead Dock as ordered by Charterers”. The Charterers nominated Wellington Dock. When the ship arrived, she could not immediately enter the Dock, and after she eventually entered, further delay occurred before she reached a position where loading could begin. The Charterers argued that they were not liable for those delays.

Denman J rejected that argument, stating:

“on the day when the ship arrived in the Dock the Shipowner had done all that [he] was bound to do.”

On the effect of the Charterers’ nomination of the specific Dock, Bovill CJ explained:

“It seems to me that the effect of such selection was precisely as if that Dock had been expressly named in the Charterparty originally and the agreement had been that the ship should proceed direct to the Wellington Dock”

This reasoning treats the nominated Dock as though it had been written into the Charterparty from the outset. Once the Charterer exercises the right of nomination, the contractual destination becomes the selected Dock, and the ship reaches that destination when she enters it, unless the Charterparty provides otherwise.

A few years later, the House of Lords considered the effect of congestion in relation to Dock Charters in Dahl v. Nelson, Donkin and others. The House of Lords held that “the ship did not fulfil the engagement in the Charterparty to proceed to the Surrey Commercial Docks by merely going to the gates of the Docks”. The ship, Euxine, had arrived in the Thames with timber cargo and proceeded toward the Surrey Commercial Docks, but the Dock manager refused entry because the Docks were full and no discharging Berth could be allocated. The decision confirms that mere arrival at the Dock gates is not enough. The ship must actually enter the Dock before the Dock destination is reached.

Where the ship does succeed in entering the Dock, however, she has reached the specified destination, even if she has not yet reached a Berth. This was the result in Compagnie Chemin de Fer du Midi v. A Bromage & Co. The ship Smut was ordered to discharge pit props at Barry Dock. On arrival, no Berth was available, but the ship was allowed to enter the Dock because she was short of Bunkers (Fuel). After bunkering, she tendered Notice of Readiness (NOR), although she was still not in Berth. The Charterers argued that Laytime could not begin because the ship was not in Berth and because she had only entered the Dock due to unseaworthiness caused by insufficient Bunkers (Fuel).

Greer J rejected both arguments, explaining:

“It seems to me there are many reasons which may expedite or delay the arrival of a ship in the place from which her time was to count. The fact that the arrival was expedited in this case by the good nature of the Dock Authorities in letting her in in order to prevent her from lying in the roads without sufficient coal, is one of the circumstances that have in fact resulted in her being an Arrived Ship before she would otherwise have been.”

The decision shows that the reason why the ship was admitted into the Dock is not normally decisive. If the Dock is the contractual destination and the ship enters it, she becomes an Arrived Ship, even if entry was permitted for reasons unrelated to immediate cargo operations.

An unusual situation arose in Kokusai Kisen Kabushiki Kaisha v. Flack & Son. The Charterparty required the ship to load “in such Dock as may be ordered” by the Charterers at Delagoa Bay, although no Docks existed at Delagoa Bay. The Court of Appeal held that the reference to “such Dock” and similar wording had to be disregarded. The result was that, although the Charterparty was drafted in the form of a Dock Charter, it operated in substance as a Port Charter.

In Carlton Steamship Co Ltd v. Castle Mail Packets Co Ltd, a Customary Laytime Charter required the ship to load at a named Dock ‘‘Always Afloat (AA)’’. The ship proceeded to the tidal Dock, began loading, but later had to leave because falling tides prevented her from remaining safely afloat. She returned when spring tides approached and completed loading. The main issue was liability for delay after the ship had already become an Arrived Ship. The majority of the Court of Appeal held that the delay was not unreasonable and therefore, under the ordinary rules of Customary Laytime, fell on the Shipowner. On the point of arrival, Smith LJ, dissenting on the main issue, stated:

“here the ship was an arrived ship when she got to Senhouse Dock, MaryPort. The owners had done their part in bringing her to Senhouse Dock, MaryPort.”

A similar approach was adopted by Hamilton J in Thorman v. Dowgate Steamship Co Ltd, where Hamilton J said:

“The Charterparty itself is a charter to proceed to a named Dock in a Named Port and under the ordinary rule applicable to Charterparties she would be arrived at her destination when she was in the Dock.”

There is, however, an important qualification to the general rule that the specified destination is reached on arrival in Dock and not in Berth. This qualification also applies to Port Charters. Where a Berth is immediately available on the ship’s arrival, and the ship can proceed directly to that Berth, the Voyage ends upon arrival in Berth, not merely upon entry into the Dock or Port. Lord Diplock explained the commercial reasoning in The Johanna Oldendorff:

“Since the business purpose of the Voyage stages is to bring the ship to a Berth at which the cargo can be loaded or discharged, the Shipowner does not complete the loading or the Carrying Voyage until the ship has come to a stop at a place within the larger area whence her proceeding further would serve no business purpose. If on her arrival within the Dock or Port there is a Berth available at which the Charterer is willing and able to load or discharge the cargo, the ship must proceed straight there and her loading or Carrying Voyage will not be completed until she reaches it. But if no Berth is available, the Voyage stage ends when she is moored at any convenient place from which she can get to a Berth as soon as one is vacant. The subsequent delay while waiting for a Berth does not fall within the Voyage stage under a Dock Charter or Port Charter, but in the loading or discharging stage.”

This distinction reflects the business purpose of the voyage. If the ship can proceed directly to the Berth, there is no commercial reason for treating the voyage as completed at some earlier stopping point. If no Berth is available, however, the voyage ends once the ship has reached a convenient waiting position within the Dock or Port from which she can proceed to the Berth when it becomes free.

In London Arbitration 16/05, the Tribunal held that an entry in the ship’s records referring to EOSP (end of the sea passage) did not, by itself, determine when the Carrying Voyage had ended. The voyage did not end until the ship had completed the voyage stage and reached the closest practical point to the place where cargo operations were to take place. In the Tribunal’s experience, the end or commencement of sea passage usually referred to the moment when the ship changed from sea watches to harbour watches for entering or leaving port, or vice versa. That operational entry did not necessarily coincide with legal arrival for Laytime purposes.

Port Charters

Under a Port Charter, the ship reaches her specified destination when she has arrived within the Port and is positioned so that she is at the immediate and effective disposal of the Charterer. The modern statement of the rule is found in Lord Reid’s speech in The Johanna Oldendorff, where Lord Reid said:

“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 Shipowner 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.”

This formulation has become known as the ‘‘Reid Test’’. It replaced the earlier ‘‘Parker Test’’ stated by Parker LJ in The Aello. The Reid Test focuses on two main elements: the ship must be within the Port, and she must be in a position where she is immediately and effectively available to the Charterer for the cargo operation.

The test applies only where there is a gap between the ship’s arrival within the Port and her later movement to the Berth. If the ship can proceed directly to the Berth, the position is the same as in a Dock Charter: the specified destination is not reached until the ship actually arrives in Berth. If no Berth is available, the ship must reach a position as close to the Loading Berth or Discharging Berth as she is permitted to go. The Shipowner cannot artificially bring forward the time of arrival by stopping without anchoring, or by anchoring temporarily within Port Limits merely to pick up a pilot.

The first requirement is geographical: the ship must have arrived within the Port. This may require attention to the legal or commercial limits of the Port, the position of recognized anchorages, port authority control, customary waiting places, and the particular practice of the trade. A ship waiting outside the Port will not normally be an Arrived Ship under a Port Charter unless the Charterparty contains special wording such as WIPON or another provision extending the arrival point.

The second requirement is commercial and operational: the ship must be at the immediate and effective disposal of the Charterer. If the ship is at the customary waiting place for ships of her type within the Port, the starting assumption is that she satisfies this requirement. If she waits elsewhere within the Port, the Shipowner must show that she is just as available to the Charterer as she would have been if she were waiting near the Berth. The question is not merely whether the ship is physically inside the Port, but whether she is genuinely available for the loading or discharging operation when the Berth becomes free.

The Reid Test therefore prevents both extremes. It prevents the Charterer from arguing that a ship can never arrive until she reaches the Berth in a Port Charter, where the contractual destination is the Port itself. At the same time, it prevents the Shipowner from claiming arrival merely because the ship has entered some outer area of the Port when she is not yet practically available for the cargo operation. The test links legal arrival with commercial readiness and operational availability.

The practical significance of this distinction is substantial. In a Port Charter, once the ship has arrived within the Port and is at the Charterer’s immediate and effective disposal, the voyage stage has ended. If the other requirements are also satisfied, such as readiness and valid Notice of Readiness (NOR), Laytime may begin subject to the terms of the Charterparty. If the ship is still outside the Port, or is within the Port but not effectively available to the Charterer, the voyage stage has not yet ended and the risk of delay generally remains with the Shipowner unless the contract provides otherwise.

These two requirements—arrival within the Port and effective availability to the Charterer—must therefore be considered carefully in every Port Charter. The answer will depend on the Charterparty wording, the geography of the Port, the location of the waiting place, port authority rules, the nature of the ship and cargo, the availability of the Berth, and whether any special clauses accelerate or modify the commencement of Laytime.

Arrival within the Port

The first definition contained in the Charterparty Laytime Definitions 1980 concerns the meaning of Port. It provides:

‘‘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 Voylayrules 1993 adopt a similar approach and define Port as follows:

‘‘PORT’’ shall mean an area, within which ships load or discharge cargo whether at Berths, anchorages, buoys or the like, and shall also include 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.

These definitions are commercially broad. They may include not only the places where cargo is actually loaded or discharged, but also the usual waiting places where ships must remain until a Berth becomes available. However, the position at common law is narrower. Unless these definitions are expressly incorporated into the relevant Charterparty, it does not automatically follow that every anchorage where ships may be ordered or required to wait will be treated as lying within Port Limits.

There are several Ports, including Hull, Glasgow, and the Weser Ports, where the ordinary waiting place may lie outside the Port. In such cases, the broad wording of the Charterparty Laytime Definitions 1980 or the Voylayrules 1993 may not reflect the common law position unless the parties have expressly adopted those rules.

The limits of a Port may also vary depending on the purpose for which the limits are being considered. Port Limits may be defined by law, by custom, by administrative practice, by fiscal regulations, by pilotage rules, by geographical understanding, or by commercial usage. A Port may therefore have one boundary for customs purposes, another for pilotage purposes, and another for determining whether a ship has arrived under a commercial contract.

An early explanation of why Ports must have limits was given by Lush J in Nicholson v. Williams:

“Ports and havens are not merely geographical expressions; they are places appointed by the Crown ‘‘for persons and merchandises to pass into and out of the realm’’ and at such places only is it lawful for ships to load and discharge cargo. The assignment of such places to be ‘‘the inlets and gates’’ of the realm is, and always has been, a branch of the prerogative resting, as Blackstone remarks, partly upon a fiscal foundation in order to secure the King’s marine revenue. Their limits and bounds are necessarily defined by the authority which creates them, and the area embraced within those limits constitutes the Port.”

In Leonis Steamship Co v. Rank (No 1), Kennedy LJ emphasized that the meaning of Port may differ according to the context in which the word is used:

“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 not yet defined by any competent authority for any purpose. Just as a Port may have one set of limits, if viewed geographically, and another set of limits for fiscal or 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 commercial transaction.”

This commercial approach was also expressed by Brett MR in Sailing Ship Garston Co v. Hickie:

“The word ‘‘Port’’ in a Charterparty does not necessarily mean an Act of Parliament pilotage Port, or, which is the better word, ‘‘pilotage district’’. Therefore, when you are trying to define the Port with regard to which persons who enter into a Charterparty are contracting, you endeavour to find words which will shut out those things which you know they do not intend.”

Brett MR later explained that a Port in the business sense must contain some element of safety for the ship and cargo. Where there is only comparative safety, rather than a fully protected harbour, the inquiry becomes more fact-sensitive. He stated:

“Now sometimes you have only a place of comparative safety, a place in which neither the natural configuration of the land with regard to the sea, nor the artificial walls make a perfectly Safe Port, but only a place of comparative safety. Then you have not such easy means of ascertaining what the parties to a Charterparty must have meant by ‘‘the Port’’, and you must find out where, in fact, people have had their ships loaded and unloaded. The moment you can find that the loading and unloading of ships takes place at a particular spot, you may safely infer that the parties understood that spot to be within ‘‘the Port’’, because as a general rule people do not load or unload goods outside the Port… But the Port may extend beyond the place of loading and unloading. Then, if you want to find out how far the Port extends beyond the place of loading and unloading, what is the next test you would apply? If you find that the authorities, who are known in commercial business language as ‘‘the Port authorities’’, are exercising authority over ships within a certain space of water, and that the Shipowners and Shippers who have ships within that space of water are submitting to the jurisdiction which is claimed by those authorities, whether legally or not, whether according to Act of Parliament or not, if you find what are called ‘‘the Port authorities’’ exercising Port discipline, and the ships which frequent that water submitting to the Port discipline so exercised, that seems to be the strongest possible evidence that the Shipowners, the Shippers and the Port authorities have all come to the conclusion to accept that space of water in which the authority is so exercised as ‘‘the Port’’ of the place.”

Bowen LJ addressed the same issue of practical control in the same case, emphasizing that the authority exercised over ships is highly relevant:

“Another matter which ought to be considered is the authority exercised, and the limits within which that authority is exercised, not for fiscal purposes, but for purposes connected with the loading and unloading, the arrival and departure of ships; the mode in which the business of loading and unloading is done, and the general usage of the place. Taking all these things together, you must make up your mind in each particular case as to the sense in which Shipowners and Charterers would be likely to intend to employ the term ‘‘Port’’.”

In The Johanna Oldendorff, both Lord Reid and Lord Diplock considered that, in most cases, it should not be difficult to determine whether the usual waiting place is within or outside the Port. Lord Reid stated:

“Then it was argued that the limits of many Ports are so indefinite that it would introduce confusion to hold that a ship is an arrived ship on anchoring at a usual waiting place within the Port. 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. And in many cases the limits of the Port are defined by law. In the present case the umpire has found as a fact (par. 19) that the ship was ‘‘at the Bar anchorage, within the legal, administrative and fiscal areas of Liverpool/Birkenhead’’.”

Lord Diplock contrasted a Dock with a Port and explained that the boundaries of a Port may be larger and sometimes less certain:

“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.”

The relatively small number of reported disputes about whether a waiting place lies within a Port tends to support the practical view taken by Lord Reid and Lord Diplock. Even in Logs & Timber Products (Singapore) Pte Ltd v. Keeley Granite (Pty) Ltd, known as The Freijo, which concerned the Port of Lourenco Marques and apparently involved no clearly defined fiscal or commercial limits, the Arbitrator appears to have had no difficulty deciding that the waiting area was within the Port.

At the Immediate and Effective Disposition of the Charterer:

For a ship to be an Arrived Ship under a Port Charter, it is not enough that she has entered the nominated Port. She must also be located in a part of the Port where she is at the immediate and effective disposition of the Charterer. The precise meaning of that requirement has evolved over time and has occasionally produced disagreement in the cases.

The development of the law reflects the development of shipping itself. The transition from sail to steam, the growth of Port systems, the expansion of commercial anchorages, and improvements in communication through telephones and later radio all affected the point at which a ship could realistically be regarded as available to the Charterer. In earlier periods, particularly during the first half of the nineteenth century, Customary Laytime was more common than Fixed Laytime. Under Customary Laytime, many ordinary delays after arrival, such as congestion, usually remained for the Shipowner’s account. For that reason, the exact moment at which the ship became an Arrived Ship was less commercially decisive than it later became under Fixed Laytime.

In the nineteenth century, custom played a much more important role in deciding when a ship was sufficiently at the Charterer’s disposal. Many early cases turned on the established practice of the particular Port or trade. In Brereton v. Chapman, for example, it was proved that the custom of the Port of Wells was that a ship did not become an Arrived Ship until she reached the quay. In the absence of such a custom, the destination was usually reached when the ship arrived at the normal place of loading or discharging within the Port for that particular trade. Depending on the trade, that place could be a Berth, a Dock, or an anchorage where cargo was handled by lighters. Evidence was required to show that loading or discharging at that place, and in that manner, was the usual practice.

In Randall v. Lynch, the Charterparty described the end of the carrying voyage as follows: the ship was to “proceed direct to the said Port of London, and upon arrival there, that is to say at the London Docks, to make discharge and faithful delivery of the said homeward cargo, and there end and complete both out and homeward Voyages”. The ship reached the London Docks but discharge was delayed because the Docks were crowded. On the question of when Laytime began, Lord Ellenborough stated that “when she was brought into the Docks, all had been done which depended on the plaintiff”, meaning the Shipowner.

Kell v. Anderson provides an important contrast. The case concerned a sailing ship chartered to carry coal to the Port of London. The usual discharge place for coal was the Pool of London. Because the Pool was congested, the harbour master instructed the ship to moor off Gravesend and wait until space became available. Gravesend was within the legal limits of the Port of London and was the normal waiting place for colliers when the Pool was congested, but it was about 22 miles downriver from the Pool. The Court of Exchequer held that Laytime did not begin when the ship moored at Gravesend.

Lord Diplock later explained the reasoning in The Johanna Oldendorff:

“A sailing ship’s journey upriver from Gravesend would be dependent upon favourable wind and weather. There was no knowing how long it would take her to reach the Pool after she had notice that there was room to discharge her cargo there. So she was not, while at her moorings, at the disposal of the Charterer for discharging her cargo.”

The decision illustrates that physical presence within the legal Port Limits was not enough. The ship had to be practically available to the Charterer for the cargo operation. A sailing ship waiting 22 miles away, dependent on wind and weather to reach the discharge place, was not immediately and effectively at the Charterer’s disposal.

Brown v. Johnson, decided in the same year as Kell v. Anderson, reached a different result on different facts. A sailing ship was chartered to proceed to a Port in the United Kingdom, and Hull was later nominated. The Charterparty allowed 15 days for discharge. The ship arrived within Port Limits on 1 February, entered Dock on 2 February, but did not reach the actual unloading place within the Dock until 4 February because of congestion. Alderson B held in the Court of Exchequer that Laytime began when the ship arrived in Dock, not when she reached the Berth inside the Dock. Brett LJ later commented that it must have been assumed or proved that the usual unloading place for all ships in the Port of Hull was in a Dock.

In The Johanna Oldendorff, Lord Diplock explained the difference between Brown v. Johnson and Kell v. Anderson. In Brown v. Johnson, the waiting place was inside the Dock and close to the discharge Berths. Once a Berth became available, the ship could be warped from her moorings without any significant delay. She was therefore at the immediate disposal of the Charterer. By contrast, the ship in Kell v. Anderson was still a substantial distance from the discharge place and could not be treated as immediately available.

As already discussed, Dock Charters became a distinct and common category of Charterparty during the third quarter of the nineteenth century, as expanding trade led to the development of large Dock systems in major Ports. By 1872, it was accepted that, in a Dock Charter, the contractual destination was reached once the ship entered the Dock, even if she had not yet reached the specific place where cargo operations would begin.

In Tapscott v. Balfour, Bovill CJ was prepared to apply a similar rule to a Port Charter, although it was not until the Court of Appeal’s decision in Leonis Steamship Co v. Rank (No 1), 37 years later, that the point was finally settled. Bovill CJ stated that where a Port was named in the Charterparty as the place to which the ship was to proceed, Lay Days did not begin merely upon arrival somewhere within the Port, but upon arrival at the usual place of loading within the Port. This did not mean the actual Berth, but rather the Dock or roadstead where loading ordinarily took place.

In Nelson v. Dahl, Brett LJ gave a detailed review of earlier authorities dealing with the arrival of ships under Berth, Dock, and Port Charters. Speaking of Dock and Port Charters, Brett LJ said:

“If it describes a larger place, as a Port or Dock, the Shipowner may place his ship at the disposition of the Charterer when the ship arrives at that named place, and, so far as she is concerned, is ready to load, though she is not then in the particular part of the Port or Dock in which the particular cargo is to be loaded.”

Another important authority on arrival under a Port Charter is Pyman Brothers v. Dreyfus Brothers & Co. In that case, the ship was chartered to proceed to Odessa “or as near thereunto as she might safely get”. Odessa had an outer harbour and an inner harbour, both with quays. The quays were the only places where cargo could practically be loaded. The cargo for the Lizzie English was stored at a quay in the inner harbour, and the Charterers’ Agents were unwilling to load elsewhere. On arrival, the ship anchored in the outer harbour while waiting for a Berth in the inner harbour. Congestion delayed her movement into the inner harbour for 17 days. She could not have obtained a quay Berth in either harbour any earlier. There was also a finding that no custom of the Port required a ship to be moored alongside a quay before she became an Arrived Ship.

Both the Arbitrator and the High Court held that the Lizzie English became an Arrived Ship when she arrived in the outer harbour. Mathew J explained:

“Here the ship arrived on December 22 at a point she was at the disposition of the Charterers. They had only to indicate the place to which she was to go for her cargo, and she would have been there immediately.”

The significance of the decision lies in the ship’s practical availability. Although the cargo was intended to be loaded in the inner harbour, the ship was already within the Port and at a place from which she could proceed to the loading place immediately once directed and once congestion allowed. She was therefore at the Charterer’s effective disposal for the purposes of a Port Charter.

The overall development of the law shows that arrival within the Port is not a purely geographical inquiry. The ship must be within the Port in the relevant commercial sense, and she must be in a position where the Charterer can effectively use her for the contemplated cargo operation. The legal boundary, the customary waiting area, the place where cargo is normally handled, the control exercised by Port Authorities, the type of ship, the nature of the cargo, and the practical ability to move promptly to the Berth all contribute to the analysis.

The modern Reid Test therefore reflects a long historical development. A ship under a Port Charter becomes an Arrived Ship when she is within the Port and at the immediate and effective disposition of the Charterer. If she is at the usual waiting place within the Port, that requirement will usually be satisfied. If she is waiting elsewhere, the Shipowner must show that she is just as effectively available as she would have been at the usual waiting place. If she remains outside the Port, or if she is within the Port but not practically available for cargo operations, the voyage stage has not yet ended, unless the Charterparty contains special wording changing the ordinary rule.

In Hulthen v. Stewart & Co, which ultimately reached the House of Lords, the principal issue was whether the Charterparty was based on Customary Laytime or Fixed Laytime. All courts agreed that it was a Customary Laytime Charter. Even so, both the judge at first instance and the Court of Appeal considered when the ship became an Arrived Ship. The case concerned the steamship Anton, which was fixed to carry timber to London. The Anton reached Gravesend and was ordered to discharge at the Surrey Commercial Docks. Because of congestion, she was delayed before entering the Docks and was then delayed again after entry before reaching a Berth alongside the quay. Evidence showed that approximately 98 per cent of similar timber cargoes were discharged in the Surrey Commercial Docks, while a small part of the remainder was discharged at river tiers and the balance at other Docks within the Port. Discharge could take place either onto the quay or into lighters, and it was proved that, at the relevant time, there was no other place within the Port where the Anton could have discharged sooner.

At first instance, Phillimore J asked the essential question:

When was the Anton an arrived ship?

Phillimore J answered:

“In my opinion she was an arrived ship only when she reached a place at which she could discharge. Therefore when the ship was at Gravesend, she had not arrived in London within the meaning of the Charterparty, because it is not usual to discharge ships at Gravesend.”

In the Court of Appeal, Collins MR expressed the matter differently:

“this ship got, we will assume, to the Surrey Commercial Docks gate, the place where 98 per cent of the timber cargoes are discharged. If there had been an absolute obligation to discharge, with named days, I think she would then have been in a position to say that she was an arrived ship and that her lay days must begin to count. But here we are not tied to a specific number of days: so that she is an arrived ship on the day after she got into the Port of London, then we have to consider whether, in these circumstances, she has been detained beyond a reasonable time.”

In the later decision of Van Nievelt Goudriaan Stoomvaart Maatschappij v. C A Forslind & Son Ltd, Atkin LJ observed that in Hulthen v. Stewart & Co, Phillimore J had found that the Charterer’s obligation to discharge did not arise until the Anton had actually reached her Berth. However, the point at which the ship reaches the specified destination and the point at which the Charterer’s obligation to load or discharge becomes practically enforceable do not necessarily coincide in a Charterparty governed by Customary Laytime. The reason is that, under such a Charterparty, ordinary delay between arrival at the contractual destination and the place where cargo operations can physically begin will often remain for the Shipowner’s account.

The evidence in Hulthen v. Stewart & Co showed that the usual place of discharge for a ship such as the Anton was within the Surrey Commercial Docks, either alongside a quay or into lighters. On that basis, Phillimore J’s test would probably have been satisfied once the ship entered the Dock, because the Dock was the commercial place where this type of cargo was ordinarily discharged.

Collins MR’s statement is more difficult to interpret. It appears to suggest a possible distinction between the moment at which a ship becomes an Arrived Ship under a Customary Laytime Charter and under a Fixed Laytime Charter. Interestingly, neither of the points referred to by Collins MR appears to correspond exactly with the point selected by Phillimore J. It may be that, when Collins MR referred to the Dock gate, Collins MR meant after the ship had passed through the Dock gate. Alternatively, Collins MR may have had in mind the argument accepted by the Court of Appeal in Nelson v. Dahl, where a distinction was drawn between entry into a privately controlled Dock, such as the Surrey Commercial Docks, and arrival within the wider area of the Port.

In Nelson v. Dahl, James LJ stated:

“There is, in my mind, a marked and broad distinction between the Port of discharge, the usual public place of discharge in that Port, which it is the Shipowner’s business at all events and at his own risk to reach and the private quay, wharf or warehouse, or private Dock, adjoining or near the Port, on which or in which he is to co-operate with the merchant in the delivery of the cargo.”

James LJ also said:

“In my opinion it is more reasonable to hold that the Voyage, qua Voyage, ends where the public highway ends, and that everything afterwards is part of the mutual and correlative obligations of the Shipowner and merchant”

It should be remembered that the precise moment when the Anton became an Arrived Ship was not the central issue in Hulthen v. Stewart & Co. Nevertheless, the case shows that, even in the early years of the twentieth century, the law had not yet settled the question of when the specified destination was reached under a Port Charter. That issue came directly before the court in Leonis Steamship Co v. Rank (No 1), where the Court of Appeal finally decided whether a ship under a Port Charter had to reach a place where loading or discharge could physically take place before she could be treated as having arrived at the specified destination.

The answer given in Leonis Steamship Co v. Rank (No 1) was that this was not necessary. The decision marked the beginning of a further debate: if a ship did not have to reach the actual loading or discharging place, where within the Port did she have to be in order to become an Arrived Ship?

The facts of Leonis Steamship Co v. Rank (No 1) were straightforward. Under a Voyage Charter, the steamship Leonis was ordered to Bahia Blanca in the River Parana to load cargo. When she arrived, she could not go alongside the railway pier, which was the intended loading place, because all Berths were occupied. She therefore anchored about three ship lengths from the pier and waited for a Berth. No Berth became available for approximately one month. The Charterparty provided that Laytime would begin 12 hours after written notice had been given that the ship had reached her destination.

At first instance, Channell J held that the place where the Leonis anchored was a possible loading place, although not the usual one. On that basis, Channell J concluded that Laytime did not begin until the ship arrived in Berth. The Court of Appeal unanimously reversed that decision. The Court of Appeal held that Laytime began 12 hours after Notice of Readiness (NOR) had been given by the Ship Master when the ship anchored off the pier after arriving within the Port.

In the Court of Appeal, Buckley LJ and Kennedy LJ delivered judgments, with Lord Alverstone CJ agreeing with both. In The Johanna Oldendorff, Lord Reid later observed of the Leonis judgments:

“It has always been held that the Court of Appeal in Leonis laid down general principles which must be followed: The difficulty has been to find out what those principles are. Buckley and Kennedy LJJ each delivered long judgments and Lord Alverstone CJ agreed with both. So he must have thought that there was no substantial difference between them. And that has been the view of almost all the many judges who have since then had to consider the matter. The judgment of Kennedy LJ has generally been regarded as the leading judgment, perhaps because it is rather less obscure than that of Buckley LJ. The Charterers in this case invited us to concentrate on the judgment of Buckley LJ. I would agree that it is capable of being read as being more favourable to the Charterers than that of Kennedy LJ. But I am far from being satisfied that it ought to be so read, and I would adopt the general view hitherto held that there is no substantial difference between them.”

Both Buckley LJ and Kennedy LJ reviewed the earlier authorities in detail. Buckley LJ stated:

“The true proposition, I think, is that, where the charter is to discharge in a named place which is a large area in some part or in several parts of which the ship can discharge, the laydays commence so soon as the Shipowner has placed the ship at the disposal of the Charterer in that named place as a ship ready, so far as she is concerned, to discharge, notwithstanding that the Charterer has not named, or has been unable owing to the crowded state of the Port to name, a Berth at which, in fact, the discharge can take place.”

Buckley LJ then explained that, by the word “Berth,” he included “a Berth or a Wharf or a Quay, or a place where by the use of lighters or other means a ship can load or discharge.” Later in the judgment, Buckley LJ referred to the commercial ambit of the Port, as distinct from the entire Port in a geographical or maritime sense. This commercial ambit covered “such part of the Port as is a proper place for discharging.” Buckley LJ emphasized that this referred to an area of the Port and not merely to a particular Berth. Arrival within the commercial ambit of the Port marked the end of the Voyage.

Buckley LJ had earlier noted that, in a Dock Charter, arrival in the Dock marked the commencement of Lay Days. Buckley LJ continued:

“If this is so it is difficult to grasp any ground of principle differentiating a Dock from that part of a Port at which the ship would be as closely proximate to a Berth as she would be in a Dock. What logical difference can exist? The ship either is not or is an arrived ship when she has not reached a Berth. If she is when the named place is a Dock, why is she not when the named place is a Port, and she is at a place as closely proximate to a Berth as she would be in a Dock?”

These references to geographical nearness between the Berth and the place where the ship could become an Arrived Ship later created difficulty. It must be kept in mind, however, that the Leonis had anchored very close to the pier. The court was not required to decide how far from the pier the ship could be while still qualifying as an Arrived Ship. The question was only whether she had to reach the pier itself.

Kennedy LJ also emphasized the importance of identifying the commercial area of the Port. Kennedy LJ stated:

“If, then, we find a Charterparty naming a Port simply and without further particularity or qualification, as the destination for the purpose of loading or unloading, we must construe it in regard to the arrival of the ship at that destination as meaning that Port in its commercial sense—that is to say, as it would be understood by the persons engaged in shipping business and entering into the Charterparty in regard to the arrival of the ship there for the purposes of the Charterparty. In the case of a small Port it may or may not mean the whole of the geographical Port. In the case of a widely extended area, such as London, Liverpool, or Hull, it certainly means some area which is less than the geographical Port, and which may, I think, not unfitly be called the commercial area.”

Kennedy LJ returned to the same idea later in the judgment:

“ the commercial area of a Port, arrival within which makes the ship an arrived ship, and as such entitled to give Notice of Readiness (NOR) 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 ship herself being then, so far as she is concerned, ready to load, and as near as circumstances permit to the actual loading spot.”

At the conclusion of the judgment, Kennedy LJ observed:

“If as she then lay [off the pier] she was an arrived ship and at the Charterers’ disposal and ready to load it is, under such a Charterparty as the Charterparty of the Leonis, quite immaterial whether she was in a place in which the physical act of loading was possible or impossible.”

Leonis Steamship Co v. Rank (No 1) concerned a Fixed Laytime Charter, and the judgments did not expressly discuss whether the same principles applied to Customary Laytime Charters. However, many of the authorities considered in the case were Customary Laytime cases. Later, in Van Nievelt Goudriaan Stoomvaart Maatschappij v. C A Forslind & Son Ltd, Bankes LJ said that in a claim for Demurrage two questions had to be answered:

The first question is this: when did the ship become an arrived ship?; and the second: having fixed the date when she became an arrived ship, does the Charterparty provide for a discharge within a fixed number of days after the date of arrival, or for a discharge within a reasonable time after the date of arrival?

The order in which Bankes LJ framed the questions strongly suggests that the point of arrival is the same under a Fixed Laytime Port Charter and under a Customary Laytime Port Charter. There is no obvious logical reason why the specified destination should be reached at a different point merely because the time allowed for loading or discharging is fixed in one case and reasonable in the other.

In United States Shipping Board v. Strick & Co Ltd, the House of Lords approved Leonis Steamship Co v. Rank (No 1). However, approximately 34 years later, the House of Lords reconsidered the Leonis decision in Agrimpex Hungarian Trading Co for Agricultural Products v. Sociedad Financiera de Bienes Raices SA, better known as The Aello. The facts of The Aello were unusual.

The Aello was chartered on a Centrocon Charterparty Form to carry maize to Hamburg. After loading part cargo at Rosario, she was ordered to complete loading at Buenos Aires. The usual waiting place for ships arriving at Buenos Aires was near the loading Berths. However, because of temporary congestion, the Port Authority (PA) had issued a decree a few weeks before the Aello arrived requiring ships waiting for both Berth and cargo to remain near Intersection, approximately 22 miles or three hours’ steaming from the loading Berths. The restriction was intended to be temporary while congestion remained serious, but it was still in force when the Aello arrived. The Intersection anchorage was within the limits of the Port of Buenos Aires.

On those facts, Ashworth J, the Court of Appeal, and the majority of the House of Lords held that the Aello was not an Arrived Ship while she remained at the anchorage.

In the Court of Appeal, Parker LJ delivered the judgment and treated Kennedy LJ’s reasoning in Leonis as the starting point. Parker LJ stated that Kennedy LJ had required the ship to reach the commercial area of the Port in order to become an Arrived Ship. Parker LJ then explained:

“In Leonis Steamship Co Ltd v. Rank Ltd, supra, the ship in question was not 22 miles away from the Dock area—she was anchored but a few ship lengths off the pier alongside which loading took place. I agree, of course, that distance is not a conclusive factor, but what Kennedy LJ was, I think, contrasting throughout his judgment was an area where loading takes place as opposed to the actual loading spot. The commercial area was intended to be that part of the Port where a ship can be loaded when a Berth is available.”

This requirement—that the ship must be in an area where loading or discharging takes place before she can be treated as an Arrived Ship—became known as the ‘‘Parker Test’’. When The Aello reached the House of Lords, the majority accepted Parker LJ’s interpretation of the Leonis test. Lord Jenkins stated:

“The judgments (in the Leonis case), 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.”

Lord Morris also appears to have viewed the commercial area as one lying in close geographical proximity to the cargo Berths. Lord Morris said that a ship could become an Arrived Ship:

“even if she is at anchor at a place where the Charterer does not intend to load her, or even could not load her provided that the place bears a relationship to the actual or probable loading spot comparable with that which would exist between presence in a Dock and presence at a particular Berth in a Dock”

Lords Radcliffe and Cohen dissented. Lord Radcliffe criticized the Parker Test as:

“altogether too imprecise as a general guide for identifying the relevant area: it is also in my opinion a misunderstanding of the true significance of the Leonis v. Rank decision to seek to treat the “commercial area” for the purposes of any particular Charterparty as if it were a fixed area of defined geographical limits which the ship must be treated as reaching or failing to reach without regard to the actual circumstances that prevailed at the time when the obligations of the particular Voyage matured.”

Lord Radcliffe appears to have contemplated that the boundaries of the commercial area could vary according to the actual circumstances, for example where a temporary Port Authority restriction prevented a ship from proceeding farther into the Port, as had happened in The Aello.

In the years following The Aello, the problems caused by the Parker Test became increasingly clear. In The Johanna Oldendorff, Roskill LJ said in the Court of Appeal:

“It is now over 12 years since The Aello was finally decided. It is widely known that it was not a popular decision either in St Mary Axe or in the Temple. It is also widely known that its application has from time to time caused difficulty not only to brokers but also to Arbitrators and Umpires and indeed to Judges”

In the same case, Lord Reid later said of the Parker Test:

“Although Kennedy LJ clearly based his judgment on what he thought was commercial good sense, I do not find the judgment of Parker LJ any consideration of that matter.”

A striking illustration of the difficulty produced by the Parker Test appears in Shipping Developments Corporation SA v. V/O Sojuzneftexport, known as The Delian Spirit. The Delian Spirit was ordered to load crude oil at the Soviet Black Sea Port of Tuapse. The Charterparty was a Port Charter. Because all four Berths in the harbour were occupied, the ship anchored in the roads outside the harbour, approximately 4 miles from the Berth. The anchorage was within the administrative, pilotage, and fiscal limits of the Port of Tuapse. The Delian Spirit remained there for about five days until a Berth became available. One question was whether she was an Arrived Ship while lying at the anchorage.

Donaldson J began the High Court judgment with the following observation:

“The argument upon this award in the form of a special case has a looking-glass quality which would have delighted Lewis Carroll, for the claimant Shipowners have been busily contending that the motor tanker Delian Spirit was not an arrived ship before she Berthed at Tuapse, whereas the Charterers contend that she became an Arrived Ship several days earlier when she anchored in the roads. Alas, this is not a practical expression of the spirit of Christmas but a belief on the part of the Shipowners that they will recover more by way of Damages for the Detention of the ship than by way of Demurrage”

On the question whether the Delian Spirit was an Arrived Ship, Donaldson J deliberately declined to apply the Parker Test strictly. Donaldson J stated:

Here, say the Shipowners, the Berth was in the Harbour, whereas the ship lay in the roads, which is manifestly a different part of the Port. I agree that physically this is so. Nevertheless, I do not think that either Lord Parker or the House of Lords had in mind a small Port such as Tuapse. What they had in mind was a Large Port, such as London, in which there are many Ports each bigger than Tuapse, and the Port in effect consists of separate Ports within a larger Port. In my judgment, the ship when in the roads lay within the Commercial Area of the Port of Tuapse.

The Court of Appeal agreed with Donaldson J on that point. However, in The Johanna Oldendorff, Viscount Dilhorne later described the decision as “bold” and stated that the majority interpretation of Leonis adopted by the House of Lords in The Aello had not been followed. If judged strictly by the Parker Test, The Delian Spirit would have been wrongly decided. From a commercial perspective, however, the decision was plainly sensible.

Because of the continuing criticism of the Parker Test, the House of Lords reconsidered the issue in The Johanna Oldendorff. The question was whether the Johanna Oldendorff became an Arrived Ship when she anchored at the Mersey Bar, having been ordered to Liverpool/Birkenhead with a cargo of grain. The Mersey Bar anchorage was the usual waiting place for grain ships intending to proceed upriver and was within Port Limits. It was, however, approximately 17 miles from the nearest Discharging Berth.

The House of Lords had no doubt that the Johanna Oldendorff was an Arrived Ship. Their Lordships also held that the Parker Test was wrong because it placed an unjustified gloss on Leonis Steamship Co v. Rank (No 1). The House of Lords replaced it with what has since become known as the “Reid Test”. Lord Reid stated:

“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 lie, she will be in such a position unless in some extraordinary circumstances, proof of which would lie in the Charterer. For as Mr Justice Donaldson [1971] 2 Lloyd’s Rep 96, at p. 100, points out:

‘‘In this context a delay of two or three hours between the nomination of a Berth and the ship reaching it is wholly immaterial because there will be at least this much notice before the Berth becomes free’’

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.”

Lord Diplock explained why the area of a Port in which a ship may become an Arrived Ship is now much wider than it was in the sailing ship era. After identifying the important features of a waiting place within the Port—namely that ships waiting there should rank for a Berth in order of arrival, that the Charterer should be able to communicate with the ship, and that there should be no material delay in the ship proceeding into Berth once one becomes available—Lord Diplock stated:

“The waiting places within the limits of an extensive Port which have these characteristics alter as ships become more manoeuvrable, faster or larger, and communications between ship and shore improve. 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.”

Viscount Dilhorne summarized the legal position in the following terms:

(1) Under a Port Charterparty, for a ship to qualify as an Arrived Ship, and therefore for a valid Notice of Readiness (NOR) to be given, the ship must have completed her Voyage at the named Port.

(2) The Port named in the Charterparty must be understood in the sense in which those using it as a Port—Shippers of goods, Charterers of ships, and Shipowners—would understand it.

(3) The physical boundaries of a Port are not a reliable guide, because those boundaries, and even pilotage limits, may extend well beyond the area that commercial users would regard as the Port.

(4) The area of some Ports may be fixed by law.

(5) A ship has not reached her Port of destination until she has completed her Voyage within the Port, whether in the legal sense or, where different, in the commercial sense. If she is refused permission and ordered by the Port Authority to wait outside the Port, she is not an ‘‘Arrived Ship’’.

(6) The fact that a ship is within the Port in the legal sense does not necessarily mean that she is within the Port in the commercial sense.

(7) Brett MR’s definition in Steamship Garston Co v. Hickie & Co, and the reference to Port discipline, may help identify the legal limits of a Port. However, Port discipline may be exercised over an area larger than the Port in the commercial sense.

(8) Under a Port Charterparty, a ship has arrived when:

(i) if she can proceed straight to a Berth or Dock, she has reached it; and

(ii) if she cannot proceed straight to a Berth or Dock, she has reached that part of the Port where ships waiting to load or discharge ordinarily lie before moving directly to a Dock or Berth. At that place, she can effectively be put at the Charterer’s disposal for loading or discharge, and that place is treated as part of the Port in its commercial sense.

(9) If a ship is within the Port but not, for some reason, at the usual waiting place, she may still be an Arrived Ship if she can effectively be placed at the Charterer’s disposal from the place where she lies.

(10) The “usual place” may be altered by a Port Authority (PA) or by regulation. If, because of a condition of the Port and not because of the condition of the ship, a ship wishing to wait at the usual waiting place is directed by the Port Authority to lie elsewhere, Viscount Dilhorne suggested that she should be treated as an Arrived Ship, although the point did not arise for decision in that case.

In Federal Commerce & Navigation Co Ltd v. Tradax Export SA, known as The Maratha Envoy, the House of Lords rejected an attempt to extend the Reid Test so far that a ship anchored at the usual waiting place would always be treated as an Arrived Ship under a Port Charterparty, even where that waiting place lay outside Port Limits.

The Maratha Envoy had been ordered to Bremen after lightening at Brake on the River Weser. The issue was whether she became an Arrived Ship for Brake when she anchored at the Weser lightship. That anchorage was the ordinary waiting place for the four Weser Ports, but it was outside the Port limits of Brake. While waiting, the ship proceeded upriver to Brake on the flood tide, turned in the river off Brake, and then returned to the anchorage because anchoring in or near the Port area was prohibited. Lord Diplock noted that this manoeuvre had been described as “showing her chimney,” “a charade,” and “a Voyage of Convenience.”

At first instance, Donaldson J held that the Voyage of Convenience did not make the Maratha Envoy an Arrived Ship at Brake. The essential feature of an Arrived Ship was that the Voyage must have ended and that the ship must then be waiting. That never occurred.

In the Court of Appeal, it was argued for the first time that arrival at the Weser lightship itself constituted arrival at Brake, despite the fact that approximately 25 miles separated the lightship from Brake and the Lightship Anchorage lay outside the legal, fiscal, and administrative limits of the Port. The majority accepted that argument. They treated the rationale of The Johanna Oldendorff as depending on whether the ship was as effectively at the Charterer’s disposal at the waiting place as she would have been if waiting near the Berth.

The House of Lords rejected that approach. Lord Diplock accepted that such a solution might have been attractive if chartering were a modern commercial invention. However, chartering is one of the oldest forms of commercial contract, and legal certainty as to the end of the Voyage Stage had to be preserved. Lord Diplock stated that, although before The Johanna Oldendorff there had been uncertainty over where within the named Port the ship had to be in order to complete the Voyage Stage, there had always been legal certainty that neither under a Port Charter nor under a Berth Charter was the Voyage Stage ended by arrival at a waiting place outside the limits of the named Port. Lord Diplock continued:

“Where Charterers and Shipowners as part of their bargain have desired to alter the allocation of the risk of delay from congestion at the named Port which would otherwise follow from the basic nature of their contract, they have not sought to do so by undermining whatever legal certainty had been attained as to when a Voyage Stage ends. Instead, they have achieved the same result without altering the basic nature of the contract, by inserting additional clauses to provide that time should begin to run for the purposes of Laytime or Demurrage if, although the Voyage Stage is not yet ended, the ship is compelled to wait at some place outside the named Port of destination until a Berth falls vacant in that Port.”

London Arbitration 5/90 provides an instructive example of the factors identified by Viscount Dilhorne in The Johanna Oldendorff. The ship was ordered to Haldia in India. Although Haldia was a separate Port, it was within the authority of the Calcutta Port Trust. Notice of Readiness (NOR) was tendered when the ship arrived at the Sandheads anchorage, approximately two hours’ steaming from Haldia, in accordance with commercial practice. Sandheads was outside the legal limits of the Calcutta Port Trust’s jurisdiction, but the Trust exercised de facto control over the anchorage by giving anchoring directions and arranging pilots. The Arbitrator held that this was sufficient and that the ship was an Arrived Ship.

A different issue arose in London Arbitration 17/97. The ship was fixed under a Berth Charterparty and carried several separate parcels for different Shippers and Charterers. On arrival at the Discharge Port, she Berthed at a Berth where the cargo could have been discharged, and Notice of Readiness (NOR) was tendered. The next morning, however, she shifted to another Berth where the cargo was actually discharged. The Charterers argued that the shift had been arranged by or on behalf of the Shipowners for the convenience of other cargo, and that the ship was not effectively at their disposal until she reached the second Berth.

The Tribunal had some sympathy with the Charterers’ argument, but the Charterparty contained a “Whether in Berth or Not” (WIBON) provision and expressly excluded shifting time. These clauses clearly contemplated that Notice of Readiness (NOR) could be tendered before the ship reached the final Discharging Berth. Although there was no specific clause dealing with shifting between Berths, the Tribunal held that there was no basis on which the shifting of the ship could invalidate a previously valid Notice of Readiness (NOR).

London Arbitration 7/01 raised a separate question concerning the expression “immediate and effective disposition of the Charterer”. The ship arrived within the Port and tendered Notice of Readiness (NOR). However, Berthing was substantially delayed because the Shipowners had failed to place the Agents in funds. The Charterers argued that, because the Port Expenses had not been paid, the ship was not in a position to proceed to a Berth and therefore was not at their immediate and effective disposition. The Tribunal accepted that argument. Although the notice clause did not expressly depend on the Agents being funded, the Tribunal held that time did not run during the period of delay.

The Kyzikos raised a different argument about the meaning of “at the immediate and effective disposition of the Charterer.” The argument was based not on the ship’s geographical position, but on her inability to enter Berth because of weather. On arrival at Houston, the ship anchored because of fog. She later attempted to enter Berth but was again forced to anchor. In the High Court, after holding that a “Whether in Berth or Not” (WIBON) provision did not protect owners against delay caused by weather, Webster J added:

“Finally, even if contrary to my conclusion the “Whether in Berth or Not” (WIBON) provision has the effect of converting a Berth Charter to a Port Charter, I would conclude that the ship was an Arrived Ship at the Port within the meaning of Lord Reid’s Test in The Johanna Oldendorff, until she left her second anchorage there, because she was not until that time ‘‘at the immediate and effective disposition of the Charterers’’, even though, as the Arbitrator found, she was not being used for the owners’ purpose.”

In the Court of Appeal, Lloyd LJ disagreed with that part of the analysis. Lloyd LJ stated:

“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 ship’s 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 Reid’s 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.”

The case later went to the House of Lords, which restored the High Court decision on the “Whether in Berth or Not” (WIBON) issue after the Court of Appeal had reversed that part. However, the House of Lords did not find it necessary to decide whether weather could affect whether the ship was at the immediate and effective disposition of the Charterers. The present law is therefore best reflected in the Court of Appeal’s reasoning: weather does not affect the readiness of the ship merely because it temporarily prevents entry to Berth. The Reid Test is concerned primarily with the ship’s position within the Port and her effective availability in the commercial and operational sense, not with every temporary weather condition preventing immediate movement to Berth.

Ship’s Readiness to Load and Discharge

London Arbitration 19/10 raised an issue similar to The Maratha Envoy, namely whether a Notice of Readiness (NOR) tendered at a Pilot Station could be effective for upriver Ports. The Tribunal held that Notice of Readiness (NOR) given at Morong Pilot Station was not effective for a later call at Lubuk Gaung.

Once the ship has reached the destination specified in the Charterparty, whether for loading or discharging, the second requirement for the Commencement of Laytime must be satisfied. The ship must be, so far as the ship herself is concerned, fully and properly ready in every respect to load or discharge the relevant cargo.

Although the general rule requires complete readiness, Clarke J held in Gill & Duffus SA v. Rionda Futures Ltd that a lawful and reasonable exercise by the Shipowners of a Lien, in that case a Lien for General Average (GA), did not prevent the ship from being ready. A valid Notice of Readiness (NOR) could therefore still be tendered. For loading, readiness means that all cargo spaces required for the cargo must be available, prepared, and placed at the Charterers’ disposal. The ship must also be properly fitted and equipped for the cargo to be received safely. In addition, the ship must have obtained all documents and permits necessary for loading.

In London Arbitration 4/05, one of the issues was whether Notice of Readiness (NOR) could be validly tendered by a ship under arrest following proceedings brought by the ship’s previous Charterers. The arrest terms did not prevent the ship from shifting within the Port, nor did they prevent cargo operations from being carried out. At the time the Notice of Readiness (NOR) was tendered, the Loading Berth was not expected to become available for six days and did not in fact become available until then. By that time, the arrest had been lifted. Since the arrest was a temporary problem that was likely to be resolved in time for the ship to sail after loading, the Tribunal held that the Notice of Readiness (NOR) tendered while the ship was under arrest was valid.

It is not necessary, however, for the ship to be ready in every respect to sail before a valid Notice of Readiness (NOR) to load can be given. It is sufficient that the ship is in a condition in which the cargo can safely be received and that the ship is expected to be ready to sail by the time loading has been completed. For example, engine repairs may still be required. Provided those repairs will not interfere with loading and are expected to be completed before loading is finished, the ship may still be considered in a state of Readiness for loading purposes.

At the Port of Discharge, the same broad principle applies. The ship must be ready to discharge before Laytime can begin. In The Massalia (No 2), Diplock J explained:

“It seems to me common sense that the same principle as regards availability of holds would apply to discharging as to loading”

The principles of Legal Readiness are therefore equally applicable at the discharge stage. A ship must be legally and physically in a condition that allows the cargo operation to proceed in the manner contemplated by the Charterparty.

It is usual to analyse readiness under two separate headings: physical readiness and legal readiness. The same approach is followed here.

Ship’s Physical Readiness

In Groves, Maclean & Co v. Volkart Brothers, Lopes J stated:

“A ship to be ready to load must be completely ready in all her holds so as to afford the Merchant/Charterer complete control of every Portion of the ship available for cargo.”

A similar view was expressed in Weir v. Union SS Co Ltd, where Lord Davey said:

“you must read such expressions as ‘‘with clear holds’’ or ‘‘the whole reach or burthen of the ship’’ as meaning the full space of the ship proper to be filled with cargo”

One of the issues in Noemijulia Steamship Co Ltd v. Minister of Food was which parts of the ship had to be made available for cargo. When the ship arrived at Buenos Aires to load grain, the Charterers found bunker coal in No 3 Hold, including both the Tween Deck and the Lower Hold. The Charterparty, based on the Centrocon Charterparty Form, provided that the Charterers were “to have the full reach and burthen of the steamer including ’tween and shelter decks, bridges, poop, etc. (provided same are not occupied by bunker coals and/or stores)”. The Charterers rejected the Notice of Readiness (NOR) on four grounds and sought to cancel the Charterparty.

One of the Charterers’ arguments was that bunker coal in No 3 Lower Hold meant that the ship was not ready, because the proviso, according to them, applied only to No 3 Tween Deck. The Court of Appeal rejected that contention. Both No 3 Tween Deck and No 3 Lower Hold were reserve bunker spaces, and both were reasonably required for bunkers for the voyage. The presence of bunker coal did not therefore prevent the Shipowners from placing the “full reach and burthen” of the steamer at the Charterers’ disposal.

There was once an exception to the rule requiring all inward cargo to be discharged before a ship could be ready to load outward cargo. The exception arose in relation to sailing ships. When empty of cargo and ballast, sailing ships were comparatively unstable. It was therefore customary, during discharge, to take on enough fresh cargo or ballast to keep the ship upright and stable once inward discharge was completed. Since there was nowhere else to place that cargo or ballast, it had to be stowed in the holds. In Sailing Ship Lyderhorn Co v. Duncan, Fox & Co, Cozens Hardy MR stated:

“I think that the authorities really decide that a ship is not ready to load unless she is discharged and ready in all her Holds so as to give the Charterers complete control of every portion of the ship available for cargo, except so much as is reasonably required to keep her upright.”

Although most modern tankers are fitted with Segregated Ballast Tanks, it was until relatively recent times common for tankers to use cargo tanks to carry ballast during the non-carrying voyage. The presence of Ballast in the cargo tanks did not prevent Notice of Readiness (NOR) from being tendered at the Load Port. However, most Tanker Charterparties commonly provide that time spent Deballasting is excluded from Laytime.

Subject to such exceptions, the cargo spaces must be empty, available, and capable of receiving the contracted cargo. Kennedy LJ explained the reason for this rule in Sailing Ship Lyderhorn Co v. Duncan, Fox & Co:

“it is impossible to say that a ship is at the disposal of the Shipper who is to load her when there is still in the ship’s holds a quantity of cargo for a Consignee who is engaged in discharging. It is impossible to suppose that the thing can be done without friction and without arrangement between two persons who have no connection with one another, the receiver of the inward cargo and the loader of the outward cargo.”

Phillimore LJ may have had a special arrangement of that kind in mind in London Traders Shipping Co Ltd v. General Mercantile Shipping Co Ltd, where he said:

“the decision of the court must not be deemed to whittle down the general duty of the Shipowner to have all outward cargo discharged when he presented his ship to receive the homeward cargo, unless in special circumstances, or when dealing with a particular cargo the loading and unloading could continue simultaneously.”

In that case, a large quantity of coal from the Previous Voyage remained on deck because the Shipowner had purchased it as bunkers for the Homeward Voyage. The Court of Appeal held that this did not prevent the ship from being ready to load maize. Although the coal had previously been cargo, it was no longer cargo at the material time and had become bunkers.

The importance of readiness at the exact time Notice of Readiness (NOR) is tendered was emphasized by the Court of Appeal in The Tres Flores. Roskill LJ stated:

“it has long been accepted in this branch of the law that a ship 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 (NOR). 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 yet 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 ship’s 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 ship as having arrived and thereafter being at his risk and expense as regards time.”

Lord Denning expressed the same principle in clear terms:

“One thing is clear. In order for a Notice of Readiness (NOR) to be good, the ship must be ready at the time that 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 (NOR)”

Lord Denning continued:

“In order to be a good Notice of Readiness (NOR), the Ship 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 that Notice of Readiness (NOR) 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 (NOR) can be given.”

London Arbitration 27/92 shows that the rule may operate flexibly in particular factual circumstances. There, a valid Notice of Readiness (NOR) was held to have been tendered even though the ship still had slops from a previous cargo on board. The Charterers had previously indicated an intention to load at a second Load Port, and the tank containing the slops was not originally needed at the first Load Port. It became necessary only after the Charterers changed their position and decided to load two parcels at the first Load Port.

The same approach was taken in London Arbitration 19/05. The Charterers first intended to load at two Ports, but later changed their plan and sought to use cargo tanks originally allocated for the second Port. Those tanks required additional cleaning before they could be used at the first Port. The Tribunal held that the Notice of Readiness (NOR) was valid in relation to the tanks originally intended for loading at the First Port.

In The Tres Flores, the dispute arose because the ship’s holds were inspected by the Port Authorities (PA) before loading maize and were found to be infested. The Port Authorities directed that the ship be fumigated. The courts held that the ship was not ready until fumigation had been completed.

The Tres Flores also involved an additional clause stating:

‘‘Before tendering Notice of Readiness (NOR) Ship 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.’’

The Court of Appeal held that this wording created a condition precedent to the validity of Notice of Readiness (NOR) to load. The infestation that required fumigation amounted to a breach of both the specific clause and the Shipowners’ Common Law obligation as to the condition of the holds. A distinction should be drawn, however, between infestation before loading and infestation discovered after loading but before discharge. Unless evidence shows otherwise, infestation discovered after loading is likely to have entered the ship with the cargo. In that situation, the problem concerns the readiness of the cargo for discharge rather than the readiness of the ship to discharge.

Where there is no specific clause dealing with hold condition, the required level of cleanliness is a question of fact. It depends on the practice of the relevant trade and on how precisely the cargo has been described in the Charterparty. The more specific the cargo description, the more precise the Shipowner’s obligation may become. Conversely, where the Charterparty permits a broad class of cargoes, the Shipowner’s duty concerning the degree of hold cleanliness may be more general. If the holds remain damp after cleaning and the intended cargo is likely to be damaged if loaded, the ship will not be ready.

Where the cargo description is broad, the Shipowner must prepare the ship to carry any cargo falling within that description. London Arbitration 12/96 illustrates the point. The Charterparty was concluded through an exchange of telexes. In the first telex, described as a “Recap Agreement”, the cargo was described as “full and complete bulk rice”. The final lines of the recap stated that the fixture was to be based on an earlier Charterparty, “Logically Amended”. The reply Lifting Subjects referred to the Main Terms already agreed and to Charterparty details based on the earlier charter, logically amended.

The dispute was whether the Charterers were entitled to cancel because the ship was not ready by the Cancelling Date to load edible milled rice. Much of the argument concerned the meaning of the broking expressions used and whether the reference to edible milled rice in the earlier Charterparty should be deleted. The Tribunal ultimately held that the required standard of cleanliness was the standard necessary to load any rice cargo, and not the lower standard that the owners associated with an ordinary grain standard.

In one American case, the Charterparty provided that the holds had to be cleaned to the satisfaction of the Charterers, who were the US Government. The court held that the only restriction on the Charterers’ judgment was that they had to act in good faith. It was not appropriate to impose an objective reasonable test where the contract had expressly made the Charterers’ satisfaction the governing standard.

One factor that may be relevant when assessing the extent of cleaning reasonably required is the period that both parties knew would be available between discharging one cargo and loading the next. A London Arbitration Award reported in Lloyd’s Maritime Law Newsletter provides an example. The Charterparty contemplated approximately three days, “all going well,” between completion of discharge at one Port and arrival at the next Port ready to load. The Charterparty also required the owners to “instruct the Ship Master to thoroughly wash the holds and hatches during the Ballast Voyage to Load Port so as to be clean on arrival”. The crew performed the washing.

The ship was fixed to load heavy grain, sorghum, or soyas. On arrival, a USDA surveyor rejected the ship because of paint and rust scale. After further cleaning by shore contractors, the ship was accepted. The Charterers argued that, had the ship met the required standard on arrival, she would have Berthed without delay, and they calculated Despatch on that basis. The Arbitrators rejected the argument. They held that the Charterparty could not be construed as requiring the Shipowner to remove all paint and rust scale from the holds within the short interval that both parties knew was available. The owners had undertaken to make the holds clean, and that obligation had been performed.

London Arbitration 7/88 concerned a ship that purported to tender Notice of Readiness (NOR) while still Butterworthing her tanks. The Arbitrators held that the ship was not ready to load until her tanks had been cleaned and the water and crude slops had been placed into separate tanks.

In the parcel tanker trade, the risk of contamination is greater, and the parties usually specify the required tank-cleaning standard in more detail. Part II of the Bimchemvoy Charterparty contains several provisions dealing with the condition of the tanks before loading:

1. Condition of Vessel

. . . The Owners shall

(a) before and at the commencement of the loaded Voyage exercise due diligence to make the Vessel seaworthy and in every respect fit for the Voyage, with her tanks, valves, pumps and pipelines tight, staunch, strong and in good order and condition…

2. Last Cargo

Last cargo(es) as stated in Box 11 but the last cargo carried shall, to the best of Owners’ knowledge, not be harmful to the carriage of the contracted cargo.

8. Inspection of Cargo Tanks

Charterers’ inspection of tanks, pipes and pumps nominated for the contracted cargo as specified in Box 21 to take place as soon as possible after Vessel tenders notice but latest on Vessel’s arrival at loading Berth, otherwise any time lost shall count as Laytime.

9. Cleaning

Owners shall clean Vessel’s tanks pipes and pumps at their expense and in their time and unless the Master certifies that Vessel’s 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 cleaned again 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 expense incurred by Owners shall be borne by Charterers.

Upon acceptance of tanks, the inspector shall issue the Vessel with a Clean Tank Certificate.

In addition to the formal tank inspection, it is customary in chemical and parcel tanker practice to take a first foot sample from each tank at the beginning of loading. This procedure helps identify contamination risk at an early stage and provides evidence if a later dispute arises about the condition of the tank, the cargo, or the loading system.

The strict rule requiring the ship’s holds or tanks to be ready before Notice of Readiness (NOR) is tendered appears to apply not only where the place of arrival is also the loading place, but also where the ship becomes an Arrived Ship before proceeding into Berth. Nevertheless, London Arbitration 10/06 shows that the requirement remains connected to the cargo operation actually contemplated at that stage. In that case, an LPG tanker was presented to load a quantity of cargo as coolant to complete the gassing up and cooling down process under her own generated inert gas. Traces of ammonia and very small quantities of fluorides existed in certain tanks, but not in the tanks required for the coolant. The Tribunal held that those traces did not invalidate the Notice of Readiness (NOR) tendered by the Ship Master.

Despite the strict Common Law rules regarding the physical condition of holds or tanks at the time Notice of Readiness (NOR) is given, the parties may agree different standards. Colman J explained this in The Linardos:

“one must not lose sight of the fact that, although in general a valid Notice of Readiness (NOR) cannot be given unless and until the ship is in truth ready to load, it is always open to the parties to ameliorate the black or white effect of this principle by express provisions to the contrary, as recognised by Roskill LJ in The Tres Flores”

The Linardos concerned a standard Richards Bay coal charter. Clause 4 provided:

“Time commencing 18 hours after Notice of Readiness (NOR) has been given by the Master, certifying that the ship has arrived and is in all respects ready to load whether in Berth or not.

Any time lost subsequently by ship not fulfilling requirements for readiness to load in all respects, including Marine Surveyor’s Certificate or for any other reason for which the ship is responsible, shall not count as notice time or as time allowed for loading”

The Charterparty also incorporated the Richards Bay Coal Terminal Regulations.

The ship tendered Notice of Readiness (NOR), but three days later, after Berthing, a local Marine Surveyor rejected her because of water and rust in her hatches. A little less than one day later, the ship was approved for loading. The Arbitrator found for the Shipowners, holding that the presumed intention of the parties must have been that, where congestion prevented immediate Berthing, Notice of Readiness (NOR) could be tendered in good faith even if the ship later failed inspection. Colman J, on appeal, referred to lines 75/78, which provided that any time lost after tendering Notice of Readiness (NOR) because the ship did not fulfil free pratique or readiness requirements, including Marine Surveyor’s certificate, would not count as notice time or Laytime. Colman J stated:

“If it were not for lines 75/78, owners whose ship having given Notice of Readiness (NOR) 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.”

A similar result was reached in The Jay Ganesh, another decision of Colman J involving a Worldfood Charter. The same reasoning was also applied in London Arbitration 17/92, which concerned a sugar Charterparty. In that case, the clause required the holds to be washed and dried if a cargo harmful to sugar had previously been carried. If no such cargo had been carried, the holds only had to be cleaned before loading. By implication, that cleaning could be completed after Notice of Readiness (NOR) had been tendered, although any time lost for that purpose would be for the Shipowners’ Account.

These authorities were followed in London Arbitration 7/04. However, London Arbitration 14/05 reached a different conclusion on different wording. The Tribunal held that a clause excluding from Laytime any time lost “through lack of ship’s power, breakdown or insufficiency of equipment or any neglect on the part of the ship, its Shipowners, Ship Master or Crew or their Agents affecting the loading or discharging operation” did not have the same effect as the clauses considered in The Linardos and The Jay Ganesh. Unlike those clauses, it made no reference to Notice of Readiness (NOR) or to the state of the ship’s readiness for loading. The Tribunal stated that more explicit wording would be required, specifically referring to readiness to load, if the clause were to produce the effect argued for by the Shipowner.

Most of the authorities discussed above concern the physical condition of the holds or tanks. However, physical readiness is not limited to cargo space cleanliness. London Arbitration 8/05 provides an example. The Tribunal held that a ship arriving at the second discharge Port without anchors was not capable of tendering a valid Notice of Readiness (NOR). A ship lacking essential equipment required for safe Port operations may not be physically ready, even if her cargo spaces are otherwise suitable.

In London Arbitration 14/05, although the Tribunal found that the clause did not fall within the principles of The Linardos and The Jay Ganesh, the Tribunal was not persuaded that the Notice of Readiness (NOR) was invalid in any event. The ship had initially been refused permission to Berth by the Harbour Master because of ship-related defects rather than hold condition. Later, the ship was approved, although the owners and crew had done nothing between the two inspections. On those facts, the Tribunal was not satisfied that the earlier Notice of Readiness (NOR) should be treated as invalid.

The overall principle is that physical readiness must be judged at the moment Notice of Readiness (NOR) is tendered, unless the Charterparty clearly modifies that rule. The ship must be able to receive or deliver the cargo without causing delay attributable to the ship. Holds, tanks, gear, documents, permits, access, safety equipment, and any cargo-specific requirements may all be relevant. However, the parties are free to soften the strict Common Law position by express wording, especially in trades where inspection can only realistically occur after the ship has reached the Berth. In such cases, the Charterparty may allow Notice of Readiness (NOR) to be tendered earlier while ensuring that any time actually lost because the ship is not ready remains for the Shipowners’ Account.

Overstowed Cargo

Situations sometimes arise where different parcels of cargo are carried on the same Voyage in the same ship, but under separate contractual arrangements made directly by the Shipowner. This may occur where several charters are involved, or where one charter allows the Shipowner to complete the ship with additional cargo for the Shipowner’s own account. A common example is the Centrocon Completion Clause, which in substance provides:

“Owners have the liberty to complete with other merchandise from Port to Ports en route for Shipowners’ risk and benefit, but same not to hinder the discharging of this cargo.”

Where cargo has been overstowed by another parcel, a valid Notice of Readiness (NOR) cannot normally be tendered for the overstowed cargo until that cargo is accessible. It is not necessary that every item of cargo lying above it has already been fully discharged. What matters is whether the relevant cargo can in fact be reached and discharged when required.

In The Massalia (No 2), Diplock J held, on the particular facts, that although Notice of Readiness (NOR) had been tendered prematurely, no further Notice of Readiness (NOR) was required once the overstowed cargo became accessible. The Charterers had already begun discharging from the hatches where their cargo was available. In those circumstances, Diplock J considered that it would be unnecessary to require a fresh Notice of Readiness (NOR) and a further waiting period before Laytime could begin. That reasoning has, however, been questioned in later authority, and the safer position remains that readiness must exist at the time Notice of Readiness (NOR) is tendered unless the Charterparty or the conduct of the parties clearly produces a different result.

Equipment

Although the cargo spaces must be ready to receive or deliver cargo once the ship has reached the specified destination, the same strict rule does not necessarily apply to loading or discharging gear and related equipment. The gear does not have to be fully rigged and ready for immediate use at the instant Notice of Readiness (NOR) is tendered. It is sufficient if the equipment can be prepared and made available for use when actually needed.

In Noemijulia Steamship Co Ltd v. Minister of Food, Tucker LJ explained the distinction between cargo space and gear:

“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 the control of the whole of the cargo space from the outset of the Voyage. The loading gear had not got to be placed at his disposal and he had no rights with regard thereto save in so far as it was necessary to enable the Shipowner to perform his contractual obligations under the Charterparty. Providing the Shipowner was able, when required, to load any cargo which the Charterer was entitled to tender to him alongside, it was a matter for him to decide by what means he would carry out his contractual obligations.”

In that case, loading and discharging were the responsibility of the Shipowner. However, even where a Charterparty places cargo operations on the Charterer, the same general approach should usually apply. The equipment must be capable of being made ready when the operation requires it, but it need not be fully deployed at a waiting place where no cargo work is yet intended or possible.

The same reasoning applies to the opening of hatches. In Armement Adolf Deppe v. John Robinson & Co Ltd, Swinfen Eady LJ said:

“The ship was lying at a waiting Berth, her Voyage being ended; it would have been an idle form to take on board men 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.”

Swinfen Eady LJ continued:

“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.”

Scrutton LJ made a similar point. He observed that, once Leonis Steamship Co v. Rank (No 1) established that Laytime under a Port Charterparty could begin while the ship was still at a waiting Berth, the question naturally arose whether hatches had to be opened and equipment rigged before the ship reached the working Berth. Scrutton LJ concluded:

“And I cannot bring myself to hold that it was necessary for such a ship before her time would begin to make preparations for discharging at a place where on the hypothesis discharging will not take place.”

Greer J expressed the same commercial approach in J Glynn & Son Ltd v. Consorzio Approvvigionamenti Fra Meccanici Ed Affini:

“With reference to the question whether she was ready, it is clear that those words do not mean that she is to be when she gives notice in a position to start the discharge immediately the minute after the notice has been given. What it means is ready in a commercial sense to discharge, that is to say, in such a position that the tackle can be got ready for use as soon as the receivers are in the ordinary course to do their part of the discharge. The hatches were not off, but matters of that sort do not prevent a ship being ready to discharge, providing that she is in such a condition that her tackle and apparatus can be readily put in order to commence her discharge. ‘‘Ready to Discharge’’ means having the tackle ready to be put into operation.”

What equipment must be ready will depend on the wording of the Charterparty and on the cargo that the Charterer is entitled to load or discharge. In Noemijulia Steamship Co Ltd v. Minister of Food, one question was whether the San George was capable of loading the cargo required by the Charterers. The Charterparty allowed a full and complete cargo of wheat and/or maize and/or rye, in bags and/or bulk, and also gave the Charterers the option to ship other lawful merchandise. While the previous cargo was being discharged, a fire occurred and, after it was extinguished, the main mast collapsed, breaking two wooden derricks. Temporary repairs were carried out and an interim certificate of class was issued for the intended Voyage. The Charterers argued that the ship was not ready because she lacked a mainmast and after derricks.

In arbitration, the umpire found that two holds could not have been loaded by ship’s gear. However, the Charterers intended to load bulk grain, for which the derricks would not have been needed. Although some cargo had to be shipped in bags for safety reasons, it could have been loaded by alternative means. Devlin J held in the High Court that the strict rule applicable to cargo spaces should not be applied with the same severity to loading gear. On the facts found by the umpire, the ship had not been shown to be unready in a business sense. The Court of Appeal agreed.

The case indicates that, where equipment is concerned, the burden lies on the Charterer to show that the ship was not ready. If the Charterer contends that the ship’s gear or equipment made her unready, the Charterer must prove that the ship was incapable of loading cargo that the Charterer was entitled to tender under the Charterparty.

In Sun Shipping Co Ltd v. Watson & Youell Shipping Agency Ltd, Rowlatt J held that a ship fixed to load grain was not ready when she reached the loading position because only part of the shifting boards required in the holds had been installed. This was not a case of gear that could conveniently be prepared later. The missing shifting boards were part of the necessary arrangement for carrying the cargo safely.

In Vaughan and others v. Campbell, Heatley & Co, the Charterparty provided for shipment of a full and complete cargo of wheat and/or flour in bags, or other lawful merchandise. By the cancelling date, the ship had not been lined in the manner normally required to protect wheat or flour. The Charterers cancelled on the ground that the ship was not ready. The Court of Appeal held that they were not entitled to cancel. The report is brief, but Lord Esher MR appears to have reasoned that the Charterparty required the ship to be ready to load, not necessarily fit to load a particular cargo at that moment. Cotton and Lindley LJJ also observed that the Charterers were free to load other cargoes, many of which would not require lining. Since there was no evidence of the cargo actually intended, the Shipowner was not required at the outset to be prepared for every possible cargo permitted under the Charterparty.

In Grampian Steamship Co Ltd v. Carver & Co, the Charterparty required the Shipowner to provide mats for a cargo of cottonseed, wheat, beans, maize, or other grain. Laurence J held that the Shipowners did not need to have the mats already laid down in order for the ship to be ready. It was sufficient that the mats were available and could be laid when required.

The Demosthenes V (No 1) drew an important distinction between the readiness of the ship herself and the readiness of equipment that was to be supplied from shore. The ship was to discharge grain at Alexandria. An additional clause required the owners to guarantee at least six vacuators at the discharge Port. When the ship arrived, Notice of Readiness (NOR) was rejected because no vacuators were on board. Three days later, three vacuators were supplied, and those three were capable of discharging at a rate greater than the contractual rate. Three more were later supplied, and by the time the ship could Berth, all six were available.

Staughton J held that the absence of vacuators on arrival did not prevent the ship from being ready. He said:

“The vacuators were essentially, as I see it, equipment which was to emerge from the shore when the operation of discharge was to commence. The ship, as a ship, was ready. All that had not been done was to supply the equipment which the owners were to supply for the purposes of discharge.”

Staughton J therefore held that the vacuator requirement was not a condition precedent to the tender of Notice of Readiness (NOR). Even if the vacuators were an essential component of the ship’s readiness, the ship would have been ready once three vacuators had been supplied, because the remaining three could have been obtained at short notice and the available equipment was already sufficient to meet the contractual discharge rate.

In London Arbitration 4/93, the Tribunal held that the failure of a windlass motor due to a latent defect after the ship’s arrival did not invalidate the Notice of Readiness (NOR) that had already been tendered. The later breakdown delayed the ship’s movement from the anchorage to the loading Berth, but it did not retrospectively make the earlier Notice of Readiness (NOR) invalid.

Other Physical Matters

In The Virginia M, Hobhouse J considered whether a Notice of Readiness (NOR) tendered at Lagos for discharge was valid. The ship was fitted with steam winches and arrived with only about 15 tons of Fresh Water (FW), while her daily consumption was about 20 tons. Since the Laytime allowed for discharge exceeded 15 Weather Working Days (WWD), the ship would not have been capable of discharging the whole cargo with the Fresh Water (FW) on board.

The Arbitrators held that the Notice of Readiness (NOR) was valid, but Hobhouse J reached the opposite conclusion. Hobhouse J stated:

“If the ship 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 ship having been ready to discharge”

Hobhouse J also recognized that the result may depend on the facilities available at the particular Port:

“In some Ports, maybe even in most Ports in 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 ship from being ready to discharge the whole cargo as soon as the Charterers may wish and at the rate at which they may wish.”

The same reasoning would likely apply to Bunkers (Fuel). Whether inadequate water or Bunkers (Fuel) will invalidate a Notice of Readiness (NOR) therefore depends heavily on the facts of the Port and the operation. If additional supplies can be taken without interrupting cargo work, the deficiency may not affect readiness. If cargo work would have to stop while the ship takes water or Bunkers (Fuel), the ship may not be ready.

Legal Readiness

Just as a ship must be physically ready to load or discharge, she must also be legally ready. At common law, legal readiness means that the ship must have her papers in order, must not be affected by contagious illness on board, and must have obtained the usual licences, permits, approvals, or clearances required before loading or discharging can begin. The test is whether there is likely to be any legal or administrative obstacle preventing cargo operations when the Charterers or cargo interests are ready to proceed.

If a licence or approval is customarily obtained by the Charterers, Consignees, Receivers, or parties for whom they are responsible, the position depends on where the ship is at the relevant time. If the licence is needed to allow the ship to move from an anchorage where she has not yet reached her named destination to a place where she can become an Arrived Ship, the Charterers or cargo interests must act with reasonable promptness to obtain it. If, however, the ship has already reached her named destination and the licence is needed only for her to proceed farther, then, unless the Charterparty provides otherwise, the absence of the licence does not ordinarily prevent the ship from being an Arrived Ship.

The first important authority is The Atlantic Sunbeam, decided by Kerr J. The Atlantic Sunbeam was to complete discharge at Calcutta, but she could not proceed beyond Sandheads anchorage, which lay outside the Port, until a document known as a “jetty challan” had been obtained from the Port Authorities. That document allowed the ship to proceed up the River Hooghly to Calcutta.

Kerr J described the procedure as follows:

“The first step which is required has to be taken by the owners. This is the lodgment with the Calcutta Customs of the lodging of the ship’s manifest. Once that has been done, certain steps have to be taken, first by the Consignee s or receivers, secondly by the Port authority, and thirdly by the Customs authorities…. Once the Port authority and the Customs have gone through all the documentary procedures which are required in any particular case, the Consignee s obtain a document called a “jetty challan” from the Port commissioners. Once that document has been obtained and presumably passed over to the owners’ Agents, the ship is free to come up the River Hooghly.”

After the ship reached Sandheads, several days passed before the “jetty challan” was granted. The Shipowner argued that the Charterers should be responsible only for delay caused by themselves or by the Consignees, who were effectively the same parties, and not for delay caused by the Port Authorities or Customs Authorities. Kerr J considered the level of diligence required from the Charterers and stated:

“A requirement of a high standard of initiative, let alone any excessive zeal, cannot be implied in a situation of this nature, however much one would like to see it used. Something of that kind would require an express term. If, for instance, there were two procedures in a certain Port whereby a ship’s 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 seems to me that the Charterers would be under no implied obligation to use the speedier and unusual procedure. It therefore follows that in my view the term to be implied in this case is to the effect that the Charterers were bound to act with reasonable dispatch and in accordance with the practice of the Port of Calcutta in doing those acts which had to be done by them as Consignee s to enable the ship to become an Arrived Ship.”

Kerr J also stated that the burden of proving excessive delay rested on the Shipowner. However, the Arbitrators were entitled to draw an inference against the Charterers where there were unexplained periods of inactivity. Since it was unclear whether the Arbitrators had applied the correct approach, or how they had calculated the period of excessive delay, the matter was remitted for reconsideration. In a case of this kind, the Shipowner can recover only for the period exceeding what was reasonable, not for the whole period of delay.

The second relevant authority is The Aello, considered earlier in relation to arrival under a Port Charter. One subsidiary issue concerned a Customs permit known as a “Giro”. At the time, the Giro was required before a ship could move beyond Intersection, the temporary waiting place about 22 miles from Buenos Aires. The practice was for the Shipper to obtain a certificate from the Grain Board confirming that cargo was available. A Giro would then be granted when the cargo was ready for loading. Until that occurred, the ship had to remain at Intersection.

In the House of Lords, Lord Radcliffe, dissenting on the main issue of whether the Aello had reached her specified destination at Intersection, addressed the effect of the Giro. Lord Radcliffe stated:

“It is, of course, possible to take the view that until the Giro was granted the Aello had not arrived because she had not got into the required area of the Port. That is one thing. But, if you do not take that view and think that she was in the Port within the meaning of the Charterparty, the Giro became, under the prevailing conditions, nothing but official permission to enter a loading Berth. If the absence of such permission prevents an Arrived Ship from claiming that its lay days have begun, the distinction between Port Charters and Berth Charters established by Leonis Steamship Co Ltd v. Rank Ltd [1908] 1 KB 499 disappears again and every ship waiting for a Berth, however correct its standard of propinquity, must also be waiting for its lay days to begin. In my opinion this point is unmaintainable.”

The principle is therefore that legal readiness must be assessed according to the nature of the missing permission and the stage reached by the ship. If the missing document prevents the ship from reaching the contractual destination at all, the party responsible for obtaining it must act with reasonable dispatch. If the ship has already arrived within the meaning of the Charterparty, a later permission needed to enter the Berth will not necessarily prevent Laytime from beginning, unless the Charterparty clearly makes that permission a condition of readiness.

Common Law

The ordinary permissions that a ship is expected to obtain on arrival are usually issued by the Customs, Immigration and Health Authorities. The documents required for inspection may include the Ship’s Certificate of Registry, Cargo Manifest, Official Log Book, List of Dutiable Stores, Crew List and Ship’s Articles. Particular Ports or jurisdictions may require a wider range of documents, depending on local law, administrative practice, and established port custom. The ship is responsible for carrying the documents that are normally required at the relevant Port.

At Common Law, provided the Ship Master has no reason to believe that the necessary authorizations will be refused, the ship may be declared ready once she has reached the specified destination, even though the relevant clearance has not yet been formally issued. In that situation, such authorizations are generally treated as part of the ordinary preliminaries, routine matters, or formalities referred to by Lord Denning in The Tres Flores, where Lord Denning stated:

“Notice of Readiness (NOR) 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 (NOR) can be given.”

In addition to the authorizations normally issued by Customs, Immigration, and Health Authorities, certain Ports may require clearance or inspection by other local bodies. A useful example appears in a London Arbitration Award reported in Lloyd’s Maritime Law Newsletter No 35. The dispute concerned a routine inspection carried out by local Harbour Authorities when the ship arrived at a Chinese Port. The issue was whether clearance by those Harbour Authorities was required before Laytime could start.

The inspection lasted approximately 40 minutes, and there was no evidence that this was longer than the usual time required for that procedure. Nothing was found to be wrong with the ship, and the inspection caused no real delay. After the inspection, the ship waited for about one week for a discharge Berth. The Arbitrator found in favour of the Shipowner. The Arbitrator accepted that a broad and practical interpretation should be given to ordinary arrival formalities, especially where such formalities can only be completed after the ship has reached the Port and where there has been no default by the ship or crew in presenting the ship for inspection.

On that basis, a normal Harbour Authority inspection was treated as a formality rather than a condition precedent to the commencement of Laytime. It was not something sufficiently substantial to prevent the Laytime Clock from starting, provided that the ship was otherwise ready and no delay was caused by any defect or failure on the part of the ship.

Customs Clearance

London Arbitration 19/04 concerned an Additional Clause dealing specifically with Customs Clearance. The clause provided that if the Shipowners failed to obtain Customs Clearance within six hours after Notice of Readiness (NOR) had been tendered and before Laytime began, the Notice of Readiness (NOR) would not be treated as valid. However, the clause also stated that the ship would only be regarded as not cleared if Customs inspectors failed the ship following an inspection.

On the facts, the Tribunal accepted that there had been a delay in obtaining Customs Clearance. However, the delay was not caused by any fault of the ship. More importantly, there was no question of the ship having failed a Customs inspection. The Tribunal therefore held that the Notice of Readiness (NOR) originally tendered remained valid.

The decision illustrates the importance of reading clearance clauses carefully. A delay in the administrative granting of Customs Clearance will not necessarily invalidate Notice of Readiness (NOR), especially where the wording links invalidity to a failure by the ship on inspection and no such failure has occurred. If Charterers wish Customs Clearance to operate as an absolute condition precedent to a valid Notice of Readiness (NOR), the Charterparty should say so in clear and direct language.

Free Pratique and Quarantine

Free Pratique and quarantine are closely connected but opposite concepts. A ship that obtains Free Pratique is permitted to communicate with the shore. A ship that is refused Free Pratique may be subjected to quarantine restrictions. Pratique is a permission or licence normally granted by the Port Medical Authorities to a ship arriving from a foreign Port, allowing crew members to go ashore and shore personnel to board the ship.

In The Eagle Valencia, Longmore LJ described “Free Pratique” as a maritime term of art and referred to the following definition:

“The term “Free Pratique” is something of a term of art. It is defined in one maritime dictionary published online by Asia’s online Maritime Centre as: “official permission from the Port Health Authorities that the ship is without infectious disease or plague and the crew is allowed to make physical contact with shore, otherwise the ship may be required to wait at quarantine anchorage for clearance.”

Longmore LJ also referred to the definition cited in Cooke on Voyage Charters from an American case:

“No ship may communicate with the shore in a Foreign Port, in the sense of persons leaving the ship or coming aboard the ship or loading or unloading cargo or taking on stores, without prior permission of the shore authorities. The grant of this permission is usually under the authority of medical officers, the danger normally apprehended being contagious diseases among passengers or crew. The permission itself is generally called “Pratique” or “Free Pratique”.”

If a ship is unable to obtain Pratique because of a serious infectious disease on board, or because she has arrived from a place where such disease is prevalent, quarantine restrictions may be imposed. Many Ports have a quarantine anchorage, often located in a more remote part of the Port area. Traditionally, a ship under quarantine signals that status by flying a Yellow Flag, also known as Flag Q under the international signal flag system. Historically, quarantine could last for 40 days, although modern quarantine periods are determined by the applicable order or health regulation.

Where quarantine restrictions are imposed, the ship cannot normally be treated as ready. The reason is straightforward: quarantine prevents access to the ship and obstructs the cargo operation. The Charterers do not have unrestricted access to the ship, and loading or discharging cannot proceed in the ordinary way.

In Smith v. Dart & Son, a ship was chartered to carry oranges from Spain to England. Severe weather delayed the ship during the approach Voyage, and she was not ready, Free of Pratique, at the first Loading Port by the Cancelling Date as required by the Charterparty. The Charterers cancelled the Charterparty. The issue was whether the delay was excused by an Exceptions Clause dealing with heavy weather. The court rejected that argument and held that the obligation to arrive and be ready before the Cancelling Date was absolute. The Charterers were therefore entitled to cancel. In that case, the ship was Physically Ready, but she was not Free of Pratique. It should be noted, however, that Free Pratique was an express requirement of the Charterparty.

The Scottish case of John and James White v. The Steamship Winchester Co also concerned quarantine restrictions. The Winchester arrived to load cargo after calling at Port Said. Because of her previous Port of Call, quarantine restrictions were imposed and access to the ship was prevented. In the Court of Session, Lord Shand stated:

“The ship would be an Arrived Ship in name only, but not in reality, so far as regarded the Charterer, whose duty and obligation—the loading or unloading—should begin on arrival. The Charterer might be quite ready to unload, or ready with a cargo waiting to load the ship, but the disqualification of the ship would prevent this, and indeed, would lead to the ship being sent away from the place of loading or discharge. She would thus never be at the disposal of the Charterer so as to enable him to fulfil his obligation.”

A third important authority is The Austin Friars, a case that arose in the High Court as part of a collision claim. Austin Friars sailed from Constantinople in Ballast on an approach Voyage to Galatz. During the voyage, she collided with another steamship and returned to Constantinople for temporary repairs. After repairs were completed, she sailed again and arrived at Galatz at 11 p.m. on 10 October 1893. On arrival, nobody was permitted to board or leave the ship until Pratique had been granted after inspection by the Port doctor. The inspection and grant of Pratique took place the following morning. Unfortunately, the Charterparty entitled the Charterers to cancel if the ship was not ready by midnight on 10 October, and they cancelled.

In the collision claim, the owners of Austin Friars sought damages from the other ship for losses caused by the Cancellation of the Charterparty. The central issue was whether the Charterers were entitled to cancel, which depended on whether Austin Friars had been ready in time.

Sir Francis Jeune, President of the PDA Division of the High Court, considered the earlier authorities and stated:

“It was argued before me that the present is not a case of quarantine, nor in strictness is it. But there seems to me no distinction for this purpose between a medical officer in authority ordering a ship into quarantine, and his prohibiting access to her till he can examine into her conditions. In both cases a superior authority, in pursuance of sanitary regulations, disqualifies a ship from taking cargo on board. It was also argued that some Charterparties (for example that in Smith v. Dart) add “Free of Pratique” to the words “ready to load”. This, of course, shows that those who framed the Charterparty doubted if it were sufficiently clear that readiness to load included the absence of sanitary disqualifications, but I do not think that the practice of adding these words has been so usual or so authoritative as to show such a doubt is well founded. I think, therefore, that the damages in this case must include damages by reason of the loss of the Charterparty.”

Although it does not appear to have been decisive, Austin Friars was also not practically ready to load because, due to Port Health Restrictions, the Ship Master could not go ashore to serve Notice of Readiness (NOR) until after the Charterers’ entitlement to cancel had already arisen. In The Delian Spirit, Lord Denning later described Austin Friars as “a very special case” and said that it did not establish a general rule that Notice of Readiness (NOR) is invalid merely because Free Pratique has not yet been granted.

A distinction must therefore be made between a ship that has not yet obtained Free Pratique and a ship that has actually been refused Free Pratique. In The Delian Spirit, Lord Denning stated:

“I can understand that, if a ship is known to be infected by a 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 (NOR), and Laytime will begin to run.”

At first instance in The Delian Spirit, Donaldson J expressed the same practical approach:

“It is an idle exercise to obtain Free Pratique before the time for loading unless it be required for ship’s purposes, and if it is a fact that it can be obtained at any time and 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.”

In British Ports, Free Pratique is commonly obtained through a certificate issued by the Medical Officer of Health for the Port after a declaration by the Ship Master, or by the ship’s medical officer if one is carried, confirming that no crew member or passenger is suffering from a notifiable disease. In the United States, certain ships, such as cruise liners, may obtain radio pratique by transmitting the necessary health details before arrival.

The modern position is therefore that actual receipt of Free Pratique is no longer a requirement at Common Law before a ship can be treated as ready, provided there is no real reason to believe that Free Pratique will be refused or that its absence will delay cargo operations. Nevertheless, Charterparties frequently include the expression WIFPON (Whether in Free Pratique or Not) in readiness clauses. Since Free Pratique is not ordinarily a Common Law condition precedent, this wording may add little where there is no realistic obstacle to Free Pratique being granted. It is doubtful, however, that WIFPON would allow time to run where Free Pratique has actually been refused or where there are reasonable grounds to believe that it will be refused.

The Voylayrules 1993 provide:

“VESSEL BEING IN FREE PRATIQUE” and/or “HAVING BEEN ENTERED AT THE CUSTOM HOUSE” shall mean that the completion of these formalities shall not be a condition precedent to tendering Notice of Readiness (NOR), but any time lost by reason of the delay in the ship’s completion of either of these formalities shall not count as Laytime or Time on Demurrage.

The Eagle Valencia, mentioned above in relation to the meaning of “Free Pratique”, concerned the interpretation of Shell Charterparty Additional Clause 22 together with a Shelltime 5 provision dealing with Customs Clearance and Free Pratique. On Free Pratique, the court held that where the ship was unable to Berth, and Free Pratique had not been granted within six (6) hours after Notice of Readiness (NOR) was tendered or by the time Laytime would otherwise have started, the original Notice of Readiness (NOR) became ineffective. However, if Free Pratique was later granted before the ship Berthed, there was nothing to prevent the ship from serving a further Notice of Readiness (NOR).

The court also held that if Free Pratique could not be secured at the anchorage and was granted only after the ship Berthed, the original Notice of Readiness (NOR) was not treated as ineffective but was effectively restored. For the purpose of the Demurrage Time Bar, which was the central issue in that case, the Shipowner had to submit a valid Notice of Readiness (NOR) in time. On the facts, the Shipowner failed to do so.

Although Free Pratique is ordinarily a mere formality and WIFPON will often add little, the position changes where Shipowner and Charterer expressly provide that Free Pratique must be obtained before Notice of Readiness (NOR) is tendered. Such wording must be given effect. Unless the VOYLAYRULES are expressly incorporated into the Charterparty, an express Free Pratique requirement will usually be treated as a Condition precedent to a valid Notice of Readiness (NOR).

That said, any such requirement must be stated clearly. In London Arbitration 9/98, the relevant clause merely required the Ship Master to make an immediate written protest if Free Pratique was not promptly granted and to attach that protest to any Demurrage claim. The Tribunal rejected the argument that Free Pratique was a Condition precedent to a valid Notice of Readiness (NOR). The Tribunal treated the requirement as a formality and relied on Longmore J’s dictum in The Petr Schmidt:

“in the absence of express wording, courts generally lean against constraint clauses as conditions precedent to liability.”

Two further examples are found in London Arbitration 1/00 and London Arbitration 11/00. In London Arbitration 1/00, the Charterparty required the ship to be “Always In Free Pratique” after arrival at the time Notice of Readiness (NOR) was tendered. Free Pratique was granted only about two days after Notice of Readiness (NOR), after the ship had shifted to an inner anchorage. The Shipowner relied on The Delian Spirit and argued that, since there was no reason to expect refusal of Free Pratique, time should run from the original Notice of Readiness (NOR). The Tribunal rejected that argument, holding that the Charterparty clearly required the ship to be in Free Pratique when Notice of Readiness (NOR) was tendered.

In London Arbitration 11/00, the Charterparty allowed Notice of Readiness (NOR) to be tendered WIFPON (Whether in Free Pratique or Not). It later emerged that four crew members did not have valid vaccination certificates, and this delayed the grant of Free Pratique for 13 days. The Tribunal held that the Shipowner was liable for the delay. The WIFPON wording assumed that Free Pratique would be a mere formality. It did not protect the Shipowner where Free Pratique was delayed because of a real deficiency attributable to the ship.

In The Bow Cedar, the High Court considered Free Pratique provisions in the BPvoy 4 Charterparty Form. The court held that Laytime began when Free Pratique was granted, where that occurred more than six (6) hours after Notice of Readiness (NOR) was tendered and where the Ship Master had issued no protest about the delay in obtaining Free Pratique. In London Arbitration 11/08, the Tribunal held that Free Pratique was a Condition precedent to the tendering of Notice of Readiness (NOR). However, because Free Pratique had not been obtained, the Notice of Readiness (NOR) became effective 12 hours later. The Shippers’ acceptance of the defective Notice of Readiness (NOR) did not waive the original requirement.

Although Free Pratique normally refers to medical clearance, the phrase has a wider meaning in some Ports. In The Freijo, the Arbitrator found:

“At Lourenco Marques Free Pratique is granted only when a ship has reached the limits of the inner anchorage, at which time Health, Customs and Immigration Authorities are brought on board by launch by the local Agent. According to local ruling, Free Pratique covers clearance by all Authorities including immigration. A ship is adjudged in Free Pratique only after compliance with the usual inward formalities by the Authorities concerned. This is at variance with custom in other parts of the world but it was the custom in the former territories of Mozambique and Angola.”

This demonstrates that the meaning and practical effect of Free Pratique may differ from Port to Port. In some places, it is a narrow medical clearance. In others, it may include Customs, Immigration, and other inward formalities. The effect will depend on the Charterparty wording, the local practice, and whether the absence of Free Pratique creates a real obstacle to cargo operations.

In The Aello, another subsidiary point concerned a police permit required before shore personnel could board the ship. The House of Lords treated this as a mere formality, particularly because the Aello had arrived from another Argentinian Port. The absence of such a permit did not, on the facts, prevent the ship from being treated as ready in the relevant legal sense.

The practical conclusion is that, at Common Law, ordinary administrative clearances, Customs formalities, Immigration formalities, and Free Pratique will not usually prevent Notice of Readiness (NOR) from being validly tendered if they are routine, expected to be granted, and unlikely to delay cargo operations. The position is different where clearance is refused, where the ship is under quarantine, where a real defect exists, or where the Charterparty clearly makes the relevant clearance a condition precedent. Clear drafting is therefore essential. If Shipowners and Charterers intend Free Pratique, Customs Clearance, or other formalities to control the validity of Notice of Readiness (NOR), the Charterparty must state that intention directly.

Additional Requirements

Shipowner and Charterer are free to agree that further conditions must be satisfied before the ship can be treated as legally ready. The difficulty with such provisions is that the additional requirement may only be capable of being fulfilled at a particular place within the Port, even though the ship may have otherwise reached the point where Laytime would normally begin. The cases in this area show how carefully the courts and tribunals examine the interaction between the principal Laytime Clause, special clauses, port formalities, and commercial practicality.

In The Freijo, the main clause governing the commencement of Laytime required the ship to be in Free Pratique. As already noted, at that Port Free Pratique could only be obtained at the inner anchorage. However, an Additional Clause provided that if the ship was kept waiting off the Port because of congestion, Lay Days would begin under the Principal Clause, but only after 36 hours from arrival.

The ship was delayed off the Port because of congestion, and the dispute was whether the grant of Free Pratique remained a condition precedent to the commencement of Laytime under the Additional Clause. The Arbitrator, the High Court, and the Court of Appeal all held that it did not. The Charterparty contemplated two different situations. If the ship could proceed at least to the inner anchorage, Free Pratique would be a Condition precedent. If, however, the ship was delayed off the Port, the Additional Clause applied, and the only requirement was that 36 hours should pass before Laytime began. The reference to the Principal Clause in the Additional Clause was not intended to incorporate every condition in the main Laytime provision.

A similar issue arose in The Puerto Rocca, this time in relation to Customs Clearance. Puerto Rocca was bound for Liverpool with grain under a Berth Charterparty containing a clause that time would count “Whether in Berth or Not (WIBON)”. On arrival at the Mersey Bar anchorage, no grain Berth was available, and the ship did not initially proceed farther. The Charterparty provided that time was to count after Customs Clearance, but Customs Clearance could not be obtained at the anchorage.

An Additional Clause stated that, if the ship could not Berth immediately on arrival because of congestion, the ship was to tender Notice of Readiness (NOR) at the Mersey Bar anchorage in accordance with the principal clause dealing with the commencement of Laytime. When the first Notice of Readiness (NOR) tendered at the anchorage was rejected by the Charterers, the Shipowner ordered the ship to proceed to a Lay-By Berth in the Dock, where a second Notice of Readiness (NOR) was tendered and accepted.

The dispute was whether the first Notice of Readiness (NOR) was valid, or whether only the second notice was effective. Mocatta J held without difficulty that the first Notice of Readiness (NOR) was valid. The word “Berth” in the Additional Clause referred to the discharging Berth. To require the ship to move to a Lay-By Berth merely for the purpose of tendering Notice of Readiness (NOR) was considered unreasonable and uncommercial in the context of a Berth Charterparty.

London Arbitration 6/84 provides an interesting example of the relationship between an additional readiness requirement and a Reachable on Arrival clause. The Additional Clause stated that, “At discharging before tendering Notice of Readiness (NOR) the ship to comply with all Port Formalities including Gas Free Certificate.” Although the brief report does not say so expressly, the ship was presumably a combination carrier and was carrying dry cargo at the time.

On arrival at the Discharge Port, bad weather prevented small boats from reaching the ship at the anchorage, and the ship therefore had to wait three and a half days before a ship inspector could board her. The same weather would not have prevented the ship from Berthing if a Berth had been available. In fact, because of congestion, the ship did not Berth until 13 days after arrival. The Charterers argued that Laytime could not begin until the Gas Free Certificate had been obtained. The Shipowner argued that time should run six hours after arrival, relying on another provision to that effect.

The Arbitrators held that the Charterers were in breach of the Reachable on Arrival Clause. If a Berth had been available when the ship arrived, she would probably have Berthed within a few hours, the Gas Free Inspection would then have been carried out, and the certificate would have been issued about two hours later. The Arbitrators therefore calculated the Shipowner’s Demurrage claim by reference to that hypothetical timetable. In other words, the Charterers could not rely on the absence of the certificate where their own breach of the Reachable on Arrival obligation prevented the inspection from being carried out in the ordinary way.

If there had been no specific clause requiring a Gas Free Certificate, an inspection of that kind might well have been treated as a routine step or formality, particularly where the ship was carrying dry cargo or had not recently carried liquid cargo. In such a case, the absence of the certificate might not have prevented the tender of Notice of Readiness (NOR). The position may be contrasted with The Permeke, a New York Arbitration concerning an OBO (ore/bulk/oil carrier) carrying crude oil.

The ship in The Permeke arrived off New York and tendered Notice of Readiness (NOR). United States law prohibited foreign flag ships from discharging oil in United States waters unless they held a Tank Vessel Examination Letter (TVEL). The Tank Vessel Examination Letter (TVEL) could only be obtained on the ship’s first arrival in the United States after inspection by the US Coast Guard (USCG). In that case, the inspection lasted approximately three and a half hours from the time the US Coast Guard (USCG) boarded until the Tank Vessel Examination Letter (TVEL) was issued. No defects were found.

The Charterparty did not expressly refer to a Tank Vessel Examination Letter (TVEL), but it did require the ship to carry all necessary certificates on board. In addition, at the time of fixing, the Shipowner warranted that the ship was fit to trade to the United States. No time was in fact lost to the Charterer because of the absence of the certificate, and the Shipowner argued that the production of the Tank Vessel Examination Letter (TVEL) was only a formality. The Tribunal rejected that argument and held that time did not begin to run until six hours after the Tank Vessel Examination Letter (TVEL) had been issued. The same result would probably have been reached in a London Arbitration.

In The Amiral Fahri Engin, Time Charterers sought recovery from Head Owners on the basis that the Ship Master had failed to obtain Free Pratique from the customs, sanitary, and Port Authorities (PA) at Tuapse on arrival, or had failed to protest against any failure to grant Free Pratique. The sub-charter also provided that, if Free Pratique was not promptly granted on arrival, the Ship Master had to protest and, in the absence of such protest, Laytime would commence at the earliest “upon receipt of Free Pratique”.

The sanitary authority granted Free Pratique by radio on 1 January 1989 when the ship arrived, but the ship was not Berthed until 8 January. It was argued that Laytime therefore did not begin until 8 January. Saville J rejected that contention. As a matter of local custom, the only authority competent to grant Free Pratique was the medical authority, and that authority had granted Free Pratique on the ship’s arrival.

Other examples of conditions precedent include a Certificate of Compliance with US Coast Guard (USCG) regulations for oil transfer, a requirement that Port entry formalities be completed before the Port Authorities (PA), and a requirement that the ship be securely moored at the loading or discharging place. Each such provision must be examined according to its precise wording and commercial purpose.

Not every document or operational step will amount to an additional requirement. In London Arbitration 14/96, the provision of a Stowage Plan was held not to be an additional condition. By contrast, in London Arbitration 19/07, the Tribunal held that because the ship was more than 20 years old and therefore required special permission from the authorities to enter a Libyan Port, failure to ensure that the permission had been granted before Notice of Readiness (NOR) was tendered made the notice invalid. The Shipowner had applied for permission before arrival, but permission was granted only after arrival. Although the lack of permission did not cause the Berthing delay, which resulted from congestion and bad weather, the Shipowner’s argument that the permission was merely a formality was rejected.

Contracts of Sale

Kronos Worldwide Ltd v. Sempra Oil Trading SARL, known as The Spear I, shows how a Contract of Sale and the associated Charterparty may produce different results even where both arise from the same shipment.

Kronos Worldwide Ltd entered into a contract with Sempra Oil Trading SARL for the supply of up to 14 oil cargoes. The dispute concerned the second shipment, which was to be carried on board the Spear I. The ship arrived at Constantza for loading and tendered Notice of Readiness (NOR). A Berth was available, but the ship did not proceed into Berth because no cargo was available. No Letter of Credit (LC) had been furnished or requested under the Sale Contract. About one week later, when the cargo became available, Kronos Worldwide Ltd requested the Letter of Credit (LC). It was not disputed that, as between Sempra Oil Trading SARL and the shipowners, time ran in the usual way after the arrival of the Spear I.

The Court of Appeal overturned the first instance decision and held that the tender of Notice of Readiness (NOR) did not cause time to run under the Sale Contract. Sempra Oil Trading SARL had been asked to postpone the shipment until the cargo was likely to be available but had declined to do so. The Court of Appeal held that Sempra Oil Trading SARL was in breach of the obligation to provide a Letter of Credit (LC) in advance of the shipment dates, the Spear I having arrived within those dates.

Although Kronos Worldwide Ltd had no cargo available when the Spear I arrived, the Court of Appeal held that the furnishing of a Letter of Credit (LC) was a Condition Precedent to the Sellers’ obligation to perform any part of the loading operation. The fact that Laytime ran under the Charterparty but did not run under the Sale Contract reflected the different nature and wording of the two contracts. In the Sale Contract, the Letter of Credit (LC) served as an essential protection for the seller, and the obligation to load did not arise until that protection had been provided.

The case is a useful reminder that Laytime language in sale contracts cannot always be treated in exactly the same way as Laytime language in Charterparties. The commercial function of the clause, the identity of the parties, and the contractual obligations surrounding payment and delivery may lead to a different result.

Implied Requirements

In London Arbitration 11/89, the Charterers unsuccessfully argued that an Asbatankvoy Charterparty Form contained an Implied Term requiring the Ship Master to ensure that all necessary or customary steps were taken on arrival at the discharge Port to promote prompt Berthing. The argument was likely an attempt to avoid the effect of the Reachable on Arrival provision.

The ship arrived at the Port late in the evening and the Ship Master sent Notice of Readiness (NOR) by cable to the Charterers’ Agents (CA). The cable took just under nine hours to reach them. In the meantime, another ship arrived and reported her arrival to Port Control by VHF. The first ship had not done so, and the second ship obtained priority for Berthing.

The Charterers contended that the Charterparty contained an implied term that “the Ship Master and/or Crew would do as soon as practically possible any and all things necessary or customary to facilitate the prompt berthing of the ship and the discharge of her cargo.” They argued that this required the ship to register with the Port Authority (PA).

The Arbitrators rejected the argument. No such term should be implied. The Charterers were under an obligation to nominate and provide a Berth that was Reachable on Arrival. They had issued detailed Voyage Instructions, but those instructions did not direct the Ship Master to register with the Port Authority (PA). The Charterers could not impose an additional implied obligation on the Shipowner where the express structure of the Charterparty placed the relevant Berthing obligation on the Charterers.

Indian Cases

A number of reported decisions concern specific requirements under Indian Customs Law and their effect on the commencement of Laytime. The Atlantic Sunbeam has already been considered. That case involved the requirement to obtain a “jetty challan” before the ship could proceed up the River Hooghly to Calcutta. Although the document was issued by the Port commissioners, it also involved a Customs element.

At Indian Ports, several procedural steps must usually be completed before Customs Clearance is obtained. The normal practice is for the Shipowners or their Agents to file a “prior entry” document or documents with Customs before the ship arrives. This filing normally includes the Ship’s Manifest. Once prior entry is filed, the receivers can process the papers required for receiving and clearing the cargo.

After arrival at an inner anchorage, if discharge is to take place at anchorage, or after arrival at a Berth, if discharge is to take place alongside, the final Customs procedures are then carried out. These involve re-submitting the Cargo Manifest together with documents such as the Ship’s Register (SR), Port Clearance from the last Port of call, the list of ship’s stores, and the list of crew’s private property. When these documents are received, “inward entry” is usually granted on the next business day. In some cases, “inward entry” is also referred to as “Final Entry”, and it gives the ship Customs permission to break bulk.

In a London Arbitration reported in Lloyd’s Maritime Law Newsletter No 90, and in The Apollon and The Delian Leto, each of the Laytime clauses required, as a condition precedent, that the ship should have been entered at the Custom House before Laytime could begin. In each case, the question was whether the entire Customs procedure had to be completed, or whether completion of the first or “prior to entry” stage was sufficient. In each case, it was held that the initial stage was enough.

In The Apollon, Bingham J stated:

“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 commercial construction of this contract that the ship was indeed entered at the time when entry was necessary and required in order to permit discharge.”

However, in The Albion and The Nestor, Webster J and Leggatt J took the view that entry at the Custom House meant final entry rather than prior entry. It appears that in both cases the judges accepted the Arbitrators’ finding that discharge before final entry was unlawful under sections 30 and 31 of the Indian Customs Act 1962. The practical effect of those decisions was to treat many such charters almost as Berth Charters, shifting the congestion risk back to the Shipowners.

The Indian High Court in Bombay later reached a different conclusion in The Jag Leela. The court held that prior entry, rather than final entry, should be the relevant standard. The court declined to follow the then most recent English High Court decisions and observed that the expression “entered at the Customs House” did not appear in the Indian Act. The words “Entry Inwards” in section 31 of the Act were not concerned with regulating the contractual relationship between the parties under the Charterparty. The Ship’s Agents were required to take the steps leading to prior entry, but after that the remaining procedure was for the proper officer of Customs and did not form part of the parties’ obligations under the Charterparty.

In The Antclizo (No 2), Hirst J reviewed all four earlier English decisions and concluded that the decisions in The Albion and The Nestor should not be followed. Hirst J held that completion of prior entry satisfied the relevant Charterparty requirements concerning Customs Clearance, which required the ship to have been entered at the Custom House and to be in Free Pratique. The Court of Appeal upheld that decision. As a result, under both Indian law and English law, completion of prior entry is now sufficient for this purpose.

It is important to note, however, that The Antclizo (No 2) did not decide that prior entry was merely a formality or that entry at the Custom House was not a condition precedent to the tender of Notice of Readiness (NOR). It decided only that, where such a requirement exists, prior entry is enough to satisfy it.

This position should be contrasted with the Voylayrules 1993 definition, which provides:

“Vessel Being In Free Pratique” and/or “Having Been Entered At The Cust Om House” shall mean that the completion of these formalities shall not be a condition precedent to tendering Notice of Readiness (NOR), but any time lost by reason of delay in the ship’s completion of either of these formalities shall not count as Laytime or time on Demurrage.

This definition applies only where the Voylayrules 1993 are expressly incorporated into the Charterparty. Without incorporation, the effect of Customs entry, Free Pratique, or any other additional requirement depends on the wording of the Charterparty, the applicable law, the port practice, and whether the requirement has been framed as a true condition precedent or merely as an administrative formality.

Notice of Readiness (NOR)

The Voylayrules 1993 define Notice of Readiness (NOR) as follows:

“Notice of Readiness (NOR) shall mean the notice to the Charterer, Shipper, Receiver or other person as required by the Charterparty that the ship has arrived at the Port or Berth as the case may be and is ready to load or discharge.”

A slightly different definition appears in the Baltic Code 2007:

“Notice of Readiness (NOR) —the notice to Charterer, Shipper, Receiver or other person as required by the Charterparty that the ship has arrived at the Port or Berth, as the case may be, and is ready to load or discharge. Alternatively: the Notice of Readiness (NOR) may be specified to relate to the ship arriving at/off the Port or Berth.”

The alternative wording is arguably closer to a Notice of Arrival than to a true Notice of Readiness (NOR). Such a notice may be useful where the Shipowner wishes to support a claim for Detention, rather than to trigger the running of Laytime. However, in London Arbitration 15/01, Shipowners unsuccessfully argued that a Notice of Arrival was not a Notice of Readiness (NOR) in order to obtain a more favourable Detention Rate. The only possible causes of delay in discharge, apart from Berth Congestion, were the absence of the Original Bill of Lading (B/L), the completion of inward cargo documentation, and payment of import duties and railway charges. Those matters were outside the Shipowners’ control and were matters for the Receivers.

An unusual issue arose in London Arbitration 14/87. The Charterers relied on Clause 4 of the Vegoil Charterparty Form, which required Notice of Readiness (NOR) to be given “to the Charterer or its Agent”. Notice of Readiness (NOR) was not served directly on the Charterers, but on the Shippers, Consignees, or Forwarding Agents who were in practice responsible for arranging loading and discharge. The Charterers had not appointed any separate Agents. Since the Charterers raised no objection at the time, the Arbitrators held that the persons who received the notices should be treated as “Agents” for the purposes of Clause 4. The Notices of Readiness (NOR) were therefore valid.

A similar argument was raised in London Arbitration 20/98 under Clause 6 of the Asbatankvoy Charterparty Form, which required Notice of Readiness (NOR) to be given to the Charterer. In that case, Notice of Readiness (NOR) was given to the Shippers and to the local Agents. The evidence showed that the local Agents were the only Agents at the Port and acted for both the ship and the Shippers. The Tribunal held that, unless the Charterparty identified different Agents, the Shippers and their local Agents could properly be regarded as though they were “Charterers’ Agents” for the purpose of receiving Notice of Readiness (NOR).

The important point is that, where Notice of Readiness (NOR) is tendered to Agents, those Agents must be Agents of the Shippers or Charterers. Notice served only on the Shipowners’ own Agents will not normally be sufficient unless the Charterparty or the conduct of the parties supports that conclusion.

Notice of Readiness (NOR) When and How to Be Given

The practical advice usually given to a Ship Master is simple:

“It is a good working rule to give Notice of Readiness (NOR) and to go on giving such notices in order that, when later the lawyers are brought in, no one shall be able to say: ‘‘If only the Ship Master had given Notice of Readiness (NOR), Laytime would have begun and the owners would now be able to claim Demurrage’’.

There is an equally practical rule for those whom these Notice of Readiness (NOR) are served:

“Just as it is a good working rule for a Ship Master, when in doubt, to give notices of readiness, it is an equally good working rule for Charterers’ Agents to reject them if there is any conceivable doubt as to their validity.”

At Common Law, Notice of Readiness (NOR) may be given orally or in written form. If no Notice of Readiness (NOR) is given, the Shipowner must prove that the Charterer knew that the ship had reached the specified destination at the First Load Port and was ready to load. Unless the Charterparty contains express provisions requiring otherwise, Notice of Readiness (NOR) does not need to be served at later Load Ports or at Discharge Ports.

The reasoning is practical. When the ship arrives at the First Load Port, she may still be carrying cargo from an earlier charter that has to be discharged at that Port. The new Charterers, even if they know that the ship has arrived, may not know when the previous discharge has been completed and when the ship is actually at their disposal. In that respect, the position resembles the delivery of a ship under a Time Charter (TC).

Once the Charterers know that the ship is available, they may order her to load and proceed to later Load Ports or Discharge Ports. Their Agents at those later Ports, knowing that the ship is proceeding under Charterers’ instructions, may normally be expected to monitor her arrival and take the necessary steps when she reaches the Port.

In commercial practice, however, Charterparties rarely leave the matter to Common Law alone. Additional Notice of Readiness (NOR) requirements are almost invariably inserted into Charterparties, particularly in modern dry bulk and tanker forms, where the precise timing of Laytime and Demurrage can have substantial financial consequences.

In Fairbridge v. Pace, where the Shipowner complained that the Charterer had failed to provide cargo, Rolfe B explained:

“Of the arrival of the ship the Agents of the defendant may have been bound to take Notice of Readiness (NOR); but of the time at which the cargo discharged they could know nothing, and they were, therefore, entitled to Notice of Readiness (NOR) of that fact from the captain.”

A similar issue arose in Stanton v. Austin, involving a charter for coal from Sunderland to India. No Notice of Readiness (NOR) was served at the Load Port, and the court held that the Shipowner could not maintain that the Shippers had failed to provide cargo. However, in A/B Nordiska Lloyd v. J Brownlie & Co (Hull) Ltd, Scrutton LJ observed:

“whether it is enough that the Charterer knows of the presence of the ship from other circumstances, although he has no Notice of Readiness (NOR) from the Shipowner is not decided by Stanton v. Austin and remains open for decision in some other case”

In Franco-British Steamship Co v. Watson & Youell, known as the City of Amiens case, the ship completed discharge of inward cargo at Braila and tendered Notice of Readiness (NOR) to load to the new Charterers, who had an office at Braila. The Charterparty provided for loading at Braila and/or Galatz. After several days, because no cargo was available at Braila, the Charterers ordered the ship to Galatz, where they also maintained an office and where they also acted as Ship’s Agents for the City of Amiens. No written Notice of Readiness (NOR) was served by the Ship Master on arrival at Galatz. Horridge J nevertheless held that the circumstances were sufficient:

“There is no request that Notice of Readiness (NOR) in writing should be given and, therefore, verbal notice would be sufficient. One of the two houses of the Charterers, the one at Braila, had Notice of Readiness (NOR) that the ship was ready to load. When she came to Galatz, the captain would have to see the Charterers, as the Ship’s Agents, with reference to passing her through the Custom House and other matters, and under these circumstances it seems to me impossible to say there was no material on which the umpire could find that the Charterers had Notice of Readiness (NOR) of the ship to load. I cannot say time did not run because the Ship Master did not go up into the office and say formally: “I give you notice my ship is ready to load”.”

Where written Notice of Readiness (NOR) is not required and none is tendered, the Shipowner will usually need to prove either that the Charterer or Shipper actually knew the ship was ready, or that they ought to have known from facts already within their knowledge. This will be much easier where a ship arrives in ballast at a small Port than where she arrives at a large and complex Port while still completing discharge under a previous employment.

The question whether fresh Notices of Readiness (NOR) are required at later Loading Ports was considered in Burnett Steamship Co Ltd v. Olivier & Co Ltd. The steamship Burnhope was fixed to load at several Ports in Crete and at Alexandria. The Charterparty stated that “Lay Days to commence on the day following Notice of Readiness (NOR) to load”. Branson J considered the commercial position and stated:

“On the other hand, it is said that though the Charterparty only speaks of one notice, as you find that the ship is chartered to go from Port to Port and not as an empty ship at the disposal of the Charterers, the business of the contract makes it necessary to imply an obligation to give Notice of Readiness (NOR) at each Port to which the Charterers are entitled to order the ship. It seems to me, if I have to assume what is the business of the matter, that the Charterers should know near enough without a fresh Notice of Readiness (NOR) at what time they are to have their cargo ready at the Port to which they have ordered the ship to go.”

Branson J therefore concluded that further Notices of Readiness (NOR) were not required at the subsequent Loading Ports.

Although loading is usually the responsibility of the Charterer, many Charterparties contain a Cesser Clause making the Receivers liable for what occurs at the Discharge Port. Whether the party liable for discharge Port Demurrage is the Receiver or the Charterer, Notice of Readiness (NOR) does not normally need to be tendered at the Discharge Port unless the Bill of Lading (B/L), the Charterparty, or the custom of the Port expressly requires it. In relation to Charterers, Brett LJ stated in Nelson v. Dahl:

“the ship is ready so far as she is concerned to unload. The Shipowner, however, is not bound to give notice that this ship is so arrived and is ready.”

A series of earlier cases applied similar reasoning as between Shipowners and Bills of Lading (B/L) Holders.

In Akties Laboremus v. Steaua Française, one objection was that the Notice of Readiness (NOR) was invalid because it did not appear to be signed by the Ship Master. Roche J rejected that argument, stating:

“I am not prepared to dispose of the case on that ground either. I do not decide it, but unless something emerges to the contrary my impression is that that which the captain is required to do he may do by an Agent as well as by himself. There would seem to be good reason for that. When a captain is in a Foreign Port—a Norwegian in a Romanian Port—he may require to give notice in a foreign language, and there is good reason why he should do it by means of an Agent. It must be a notice given while the ship is there, and given on behalf of the captain.”

The general principle is therefore that Notice of Readiness (NOR) may be given by the Ship Master or by an Agent acting on the Ship Master’s behalf, provided it is given while the ship is at the relevant place and is given as a notice from or on behalf of the ship.

Express Provisions of Charterparty

Modern Charterparties commonly contain express clauses governing the manner, timing, and recipient of Notice of Readiness (NOR). One frequently encountered example is Clause 11 of the Exxonvoy 84 Charterparty Form, which provides:

“Notice of Readiness (NOR): Upon arrival at customary anchorage or waiting place at each loading and discharging Port or place, Master or Vessel’s Agent shall give Charterer or its representative notice by letter, telegraph, telex, radio or telephone (if radio or telephone, subsequently confirmed promptly in writing) that Vessel is in all respects ready to load or discharge cargo, Berth or no Berth.”

The Voylayrules 1993 also define written communication broadly:

“IN WRITING” shall mean any visibly expressed form of reproducing words; the medium of transmission shall include electronic communications such as radiocommunications and telecommunications.”

In The Adolf Leonhardt, Staughton J held that a Notice of Readiness (NOR) first transmitted by radio, but received by the Charterers’ Agents in written form, amounted to written Notice of Readiness (NOR) under Clause 13 of the Centrocon Charterparty Form. The decision reflects a commercial approach to the requirement of writing. The important question is whether the notice is received in a visible and recordable form, not necessarily the original method by which the words were sent.

A common express requirement is that Notice of Readiness (NOR) must be tendered during office hours. Two London Arbitration decisions provide useful guidance on this point, both dealing with whether Saturday morning could be treated as ordinary office hours where the office receiving the notice was in fact closed.

In the first matter, the Shipowner tendered Notice of Readiness (NOR) at 08:50 on a Saturday morning in Lisbon. The Arbitrator considered both local conditions and other Laytime provisions in the Charterparty. The evidence showed that the Port was open on Saturday mornings, Port Authorities were available, stevedoring could be performed at premium rates, shipping Agents were generally closed except when attending ships, and most importers and exporters were also closed. The Charterparty excluded Saturday afternoon and Sunday from Laytime. The Arbitrator gave greater weight to the evidence concerning ordinary business offices than to the working hours of Port Authorities and Stevedores. Since the Receivers’ office was closed on Saturday, written Notice of Readiness (NOR) could not be received until Monday morning.

The second matter concerned a ship that reached the Mersey Bar at 03:09 on a Saturday. Notice of Readiness (NOR) was sent by telex to the Charterers’ Agents at 09:55 and to the Charterers at 10:00. Neither the Charterers’ office nor the Agents’ office was open. The Charterparty contained two clauses concerning Notice of Readiness (NOR). One permitted Notice of Readiness (NOR) to be tendered before 12:00 on Saturday if the ship had been entered at the Custom House. The other stated more generally that Notice of Readiness (NOR) had to be tendered during ordinary office hours, whether or not the ship had been entered at the Custom House. The dispute was whether the first clause defined ordinary office hours for the purposes of the second clause, or whether the two provisions created separate tests depending on whether Customs entry had been completed. The Charterparty also contained a clause requiring the ship to give Notice of Readiness (NOR) when approaching Land’s End, after which the Charterers were to provide discharge orders.

These arbitration decisions show that “office hours” is not necessarily the same as Port working hours or stevedoring hours. The expression normally refers to the hours during which the relevant commercial office is open to receive business communications. If the office is closed, a notice sent by telex, cable, email, or other written method may not be treated as received until the next time when the office is open, unless the Charterparty clearly provides otherwise.

For Shipowners, the practical lesson is to tender Notice of Readiness (NOR) promptly and repeatedly where any doubt exists, while ensuring that the notice is sent to the correct party, in the required form, and within the permitted time window. For Charterers and their Agents, the practical lesson is to examine each notice carefully, because acceptance or failure to object may later become important in deciding whether Laytime has started. The validity of Notice of Readiness (NOR) depends not only on the ship’s arrival and readiness, but also on compliance with the procedural requirements of the Charterparty.

On those facts, the Arbitrators held that the Notice of Readiness (NOR) tendered on Saturday morning was a valid Notice of Readiness (NOR). The wording of the clause dealing with Notice of Readiness (NOR) after the ship had been entered at the Custom House, read together with the clause concerning Notice of Readiness (NOR) off Land’s End, showed that the Charterers themselves had treated Saturday morning as a permissible period for the tendering of Notice of Readiness (NOR).

A different issue arose in London Arbitration 8/95, where the Charterparty referred to Notice of Readiness (NOR) being tendered during business hours between 00:01 and 24:00. The Tribunal interpreted the wording literally. Since the stated period covered the whole day, Notice of Readiness (NOR) could validly be tendered at any time, including Saturday 26 December, which was not an official holiday at the relevant Port.

Another example of the meaning of “Ordinary Office Hours” appears in London Arbitration 13/02. In that case, the Tribunal held that the relevant office hours were the office hours generally observed by Port Agents at Lagos, which was the Port concerned, rather than the office hours of the particular ship’s Agents, who happened to open half an hour earlier than most other Agents at the Port.

In Pacific Carriers Corporation v. Tradax Export SA, known as The North King, the ship was chartered for a Voyage from one safe United States Port, with Baton Rouge, Louisiana, later nominated by the Charterers as the Loading Port. The Notice of Readiness (NOR) clause required the notice of the ship’s readiness to be delivered at the office of the Charterers or their Agents “at or before 4 p.m. (or at or before 12 noon if on Saturday).” The Shipowners’ Agents tendered Notice of Readiness (NOR) at 09:00 on Saturday 1 November. That Saturday was All Saints’ Day and a Public Holiday, and the Charterers argued that the Notice of Readiness (NOR) should only take effect on the following Monday.

Both the Umpire in the arbitration and Mocatta J in the High Court avoided deciding the broader question whether the Notice of Readiness (NOR) clause allowed notice to be tendered on a Public Holiday or other excepted period. They found that the parties had separately agreed that Notice of Readiness (NOR) for the ship would be accepted on the Saturday morning. The Umpire also noted that there was no evidence that business could not lawfully be conducted under Louisiana law on All Saints’ Day or on any other public holiday. He found that it was not unlawful for the Notice of Readiness (NOR) to be tendered or accepted on that day.

It follows that, apart from the specific Notice of Readiness (NOR) clause in the Charterparty, a notice tendered on a holiday or other excepted period may still be valid if there is no legal or contractual prohibition against its tender or acceptance. The more difficult question is whether the wording of a particular Charterparty restricts the tender of notice to business days only.

As to the construction of the particular Notice of Readiness (NOR) provision, the Umpire indicated that he was inclined to the view that, by necessary implication from the express wording of the Clause, a valid Notice of Readiness (NOR) could not ordinarily be tendered on a Sunday, holiday, or other non-business day. Mocatta J did not decide that point, stating only that, if the separate agreement between the parties had not existed, the case would have raised interesting questions of interpretation concerning the Clauses of the Charterparty.

The leading authority on Notice of Readiness (NOR) tendered outside the hours stipulated in the Charterparty is The Petr Schmidt. The relevant clause required notices to be tendered “within 06:00 and 17:00 local time”.

After considering The Mexico I, Longmore J stated:

“Mr Hamblen’s submission requires as its foundation that the notices of readiness in the present case were invalid and a nullity in the sense used in the decided cases. I do not think that they were. In the present case the ship was ready when the notices of readiness were given. They were notices which stated the truth viz. that the ship was ready to load or discharge as the case might be. The only thing wrong about the notices was the time that they were tendered, which was outside the contractual hours as specified in the contract. To say that such notices were invalid and must therefore be nullities begs the question. They were accurate but non-contractual in the sense that they were tendered outside the contractual hours. To my mind that does not make them invalid notices in the sense of being nullities; timing provisions have nothing to do with whether notices are nullities. It is only if a notice is untrue that it makes sense to say that it is invalid in the sense of being a nullity. An “invalid” Notice of Readiness (NOR) is an expression of doubtful meaning. It makes sense to describe an untrue or inaccurate notice as invalid. It is hardly surprising that the courts have held that such a notice has no legal effect and must be treated as a nullity. It may, in one sense, be right to describe a notice served outside the contractual hours as invalid, but only in the sense that it fails to comply with the contract. It does not follow that the courts should treat a premature Notice of Readiness (NOR) as a nullity and as having no effect. The fact that there are strong reasons for treating an inaccurate notice as ineffective, namely that the Charterer cannot know when it will become accurate, does not of itself mean that there are equally strong reasons for treating an untimely notice as ineffective. In my view, there is no good reason why the notice should not become effective at the time fixed by the contract for it to be served.”

The Charterers appealed unsuccessfully to the Court of Appeal. Evans LJ delivered the leading judgment. His principal reason for dismissing the appeal was that, on the facts, the notice was tendered at 06:00 when the office opened. After referring to Longmore J’s reasoning, Evans LJ considered the distinction between a notice that is substantively wrong and a notice that is correct but tendered outside the permitted time. Evans LJ stated:

“Mr Hamblen (for the Charterers) submitted to us that the Judge was wrong to introduce the distinction between invalidity for what may be called a substantive reason i.e. because the notice is incorrect in a material respect and a notice which although valid in itself is tendered in breach of some ‘‘time provision’’ as to when a valid notice may be tendered.”

Evans LJ later continued:

“I am inclined to agree with Mr Hamblen that a notice which is tendered outside the hours permitted by Clause 30 is non-contractual and cannot be relied upon as a ‘‘valid’’ notice, meaning effective to start the time clock running for loading or discharge as the case may be. If a notice was taken to the Charterers’ offices at (say) 18:00 and then taken away, then I would not regard that as a tender which became effective on the following day. If Mr Justice Longmore intended to cover such a case when he said that ‘‘the only thing wrong about the notices was the time that they were tendered’’, yet such notices were valid at that time, then I would disagree with him, but I do not think that he did. Notices outside the permitted hours were non-contractual and therefore ‘‘wrong’’. I do not see how they can be relied upon as having contractual effect at the time of tender. Whether the defect is ‘‘cured’’ by the passage of time is a question of fact rather than law. The answer to the submission in the present case therefore depends on the facts that the notice was given in writing and by means which were equivalent to leaving it in the offices to be attended to at 06:00 on the following day. This is essentially the same reason as I have given for rejecting the first submission. Here, there was a tender at 06:00 whether or not there was previously a tender at the time when the telex or fax message was sent.”

Peter Gibson LJ agreed with Evans LJ and rejected the argument that, because breach of the time limits for tendering Notice of Readiness (NOR) did not give rise to a damages claim, those limits had to be treated as strictly essential. Peter Gibson LJ stated:

“That simply does not follow. For example, the failure to adhere to a rent review time table may be a breach of contract not compensatable in damages, but that does not make that timetable of the essence of the contract (United Scientific Holdings Ltd v. Burnley Borough Council [1978] AC 904). A notice given outside the period provided for contractually may be “uncontractual”, but it does not follow that it is a nullity, unless the circumstances of the contract or the subject-matter make it essential that the notice should be given within that period.’’

Sir Christopher Slade also agreed and added:

“Laytime under this Charterparty was pressed to begin on the expiration of six hours after receipt of the Notice of Readiness (NOR). The commercial purpose of the second sentence of Clause 30, as I would infer, must have been to ensure that the Charterers or their Agents should not be saddled with the receipt of a Notice of Readiness (NOR), and the consequent commencement of Laytime, between 17:00 hours and 06:00 hours, that is to say outside what might be regarded as office hours. The primary conclusion reached by Lord Justice Evans namely that on the facts of the present case there was a ‘‘tender’’ at 06:00, is in my judgment entirely consistent not only with this commercial purpose but also with the wording of cl. 6 and 30, which I think should be read together. The wording of cl. 6 makes it clear that the time of the giving of the notice plus the receipt thereof are the relevant factors for the purpose of the clause. On this basis, I do not regard the notices of readiness in the present case as “non-contractual” (i.e. as having been originally ‘‘tendered’’ outside the permitted hours). But even if they did not comply with the strict wording of cl. 30, I think that they still fall to be treated as valid notices for the reasons given by Lord Justice Evans and Lord Justice Peter Gibson. I would therefore concur in dismissing this appeal and upholding the Arbitrators’ Award.”

The practical effect of The Petr Schmidt is that where a Written Notice of Readiness (NOR) is delivered to the Charterers or their Agents outside office hours, and the Charterparty requires tender during office hours, the notice may be treated as tendered at the beginning of office hours on the next working day, provided the notice remains available to be acted upon at that time. The same approach was adopted in London Arbitration 11/08.

Notice of Readiness (NOR) in Advance of Arrival

Charterparties sometimes require the Shipowner or Ship Master to give one or more notices before arrival. A ship may, for example, be required to give her ETA at the Discharge Port when sailing from the Load Port and then again at intervals such as 72, 48 and 24 hours before arrival. These advance notices serve a practical commercial purpose. They allow Charterers, Shippers, Receivers, terminals, Stevedores, Port Agents, and other parties involved in the cargo operation to prepare for the ship’s arrival.

Failure to give any of these notices will not prevent the ship from tendering Notice of Readiness (NOR) upon arrival. However, if delay is later caused and that delay can be shown to have resulted from the failure to give the required advance notice, the Charterer may recover Damages for Breach of the Notice of Readiness (NOR) provision. The measure of those damages will commonly correspond to the sum that the Shipowner would otherwise have claimed as Demurrage for the period of delay.

London Arbitration 1/94 provides a useful example, particularly because the Charterparty contained an express provision specifying the consequence of breach. The Charterparty required seven notices to be given at stated intervals between 15 days and 24 hours before arrival. These notices had to be sent both to the discharging Port Agents and to the Charterers. The clause further provided that if the Shipowners or Ship Master failed to give the required notices, an additional 24 Hours of Laytime would be allowed.

In fact, the Discharging Port Agents received all the notices except the 15-day notice. The Charterers received three notices, the closest to arrival being the 72-hour notice. Despite this, the Charterers claimed a further 24 Hours of Laytime. The Tribunal rejected the claim. From a practical perspective, the Charterers had been kept sufficiently informed of the ship’s ETA. The Tribunal declined to interpret the clause as meaning that any single missing notice, regardless of its practical effect, automatically produced an additional 24 Hours of Laytime.

For the Charterers to succeed, there would have had to be a substantial failure to provide the required notices, and that failure would need to be capable of affecting the ship’s operations at the Discharge Port. A purely technical failure, where the Charterers and Port Agents had in substance received sufficient information to prepare for arrival, was not enough.

The commercial effect of the clause was that, where a substantial breach occurred, the Charterparty itself supplied the remedy by increasing the Laytime allowance. Without such an express provision, the Charterer’s remedy would ordinarily have been a claim for damages at large, requiring proof that the failure to give the advance notice caused actual loss or delay.

The broader principle is that advance ETA and arrival notices are distinct from the formal Notice of Readiness (NOR) that starts Laytime. They are operational notices intended to help the receiving side prepare. Failure to give them does not normally invalidate the later Notice of Readiness (NOR), but it may expose the Shipowner to a claim where the failure causes measurable delay. Where the Charterparty provides a specific consequence, such as additional Laytime, that agreed consequence will usually govern the parties’ rights.

Time Lapse between Readiness and Commencement of Laytime

It is common for a Charterparty to provide that a certain period must elapse before Laytime begins. This period may run from the time when the ship is in fact ready to load or discharge after reaching the specified destination, or from the time when Notice of Readiness (NOR) is tendered. The purpose of this interval is commercial and practical: it gives the Charterer, Shipper, Receiver, terminal, Stevedores, Port Agents, and other parties involved in the cargo operation time to make the necessary arrangements before Laytime starts to count.

The period may be expressed as a fixed number of hours, or it may be linked to a particular time of day or to an external event. An example of the latter appears in John Sadd & Sons Ltd v. Bertram Ratcliffe & Co, where the clause provided: “Time for discharging to count from first high water on or after arrival providing sufficient water at the Berth”. In that type of clause, Laytime does not simply begin after a fixed waiting period; it begins only when the contractual event occurs.

Most Tanker Charterparties contain a clause providing that Laytime begins six (6) hours after Notice of Readiness (NOR) has been tendered, or when the ship is all fast in Berth, whichever occurs first. This wording reflects tanker practice, where the ship may be waiting at anchorage or outside a terminal, but where the parties usually want a predictable mechanism for starting the Laytime clock once the ship has arrived and declared readiness.

In Owners of Borg v. Darwen Paper Co, the Charterparty provided that time would begin 24 hours after arrival at or off the Port. One of the questions before the court was how that 24-hour period should be calculated. Rowlatt J summarized the argument as follows:

“It is not contended that if the hours began to run they are not interrupted because a non-working day intervenes. It is not contended that they are not to be interrupted if wet weather intervenes, or that if the non-working hours at night intervene, but it is said the 24 hours must begin upon a working day.”

Rowlatt J then drew an important distinction between the waiting period before Laytime begins and the Laytime calculation after cargo operations have commenced or after Laytime has started. Rowlatt J stated:

“I think the plain course for me is to say that what is meant is that the Consignee shall have 24 hours of ordinary time, from Monday to Tuesday, or Tuesday to Wednesday, or whatever it may be before his time for discharge begins. If at the moment discharge begins you find yourself in the middle of the night or a holiday, the work does not naturally begin until the ordinary working hours come round.”

The effect is that a contractual waiting period, such as 24 hours after arrival or after Notice of Readiness (NOR), normally runs as ordinary consecutive time unless the Charterparty provides otherwise. However, if the expiry of that period falls during a time that would be excepted from Laytime, such as a holiday, night period, or other excluded time, Laytime will not effectively begin until the excepted period has ended.

In Metalimex Foreign Trade Corporation v. Eugenie Maritime Co Ltd, the court had to construe the following clause:

“6. Time for loading to count from 8 a.m. 48 hours after the ship is reported and ready . . . and for discharging from 8 a.m. 24 hours after ship is reported”

At both the Loading Port and the Discharging Port, notice was tendered at 09:00. The Shipowners argued that time began at 09:00 two days later at the Loading Port and one day later at the Discharging Port. The Charterers argued that time should begin at 08:00 on the next day after the relevant period had expired, meaning three days later at the Loading Port and two days later at the Discharging Port.

McNair J accepted the Shipowners’ construction. McNair J stated:

“It seems to me that proper business effect is given to the position of the respective parties if one says that the purpose of this is quite clearly to secure that the Charterers get the dual protection suggested by the Shipowners, namely 48 hours clear before the loading time shall start and that the expiry of the 48 hours shall not start at some inconvenient time, and one should accordingly, read: ‘‘from 8 a.m.’’ as ‘‘not earlier than 8 a.m.’’. Well, on the whole, that seems to me to be a reasonable construction which does not do undue violence to any of the language or figures used in the clause.”

In London Arbitration 12/01, the Charterparty, based on the Sugar Charterparty 1969 form, provided that Laytime was to begin at the next regular working period starting before 15:00 after receipt of Notice of Readiness (NOR). The Tribunal held that Laytime began at 13:00, when the Stevedores returned from their meal interval. The Charterers had argued for 17:00, the start of the first overtime period, but that argument was rejected. A regular working period could begin in the middle of the day, even after a meal break, and did not have to be the beginning of a full shift or the beginning of overtime.

Gencon Charterparty Form and Laytime

The Gencon Charterparty Form 1994 deals with the commencement of Laytime in Clause 6(c) of Part II, which provides:

“Laytime for loading and discharging shall commence at 13.00 hours, if Notice of Readiness (NOR) is given up to and including 12.00 hours, and at 06.00 hours next working day if notice given during office hours after 12.00 hours”

The Gencon Charterparty Form 1976 uses similar wording, although it does not use the 24-hour clock. Under these forms, if Notice of Readiness (NOR) is given after noon but during office hours, Laytime starts at 06:00 on the next working day.

Several points should be noted. First, the clause refers to office hours, not working hours. Secondly, the reference to office hours must be understood as office hours on a working day if Laytime is to start at 06:00 on the following working day. Thirdly, there is no general rule in the clause that Notice of Readiness (NOR) may only be given during office hours on a working day.

If Notice of Readiness (NOR) is given outside office hours, whether because the port office is already closed, because the day is not a working day, or because it is given at any time up to 12:00 on the following day, the normal result is that Laytime starts at 13:00. However, if the day on which Notice of Readiness (NOR) takes effect is not a working day, Laytime will immediately be suspended until it resumes under the Charterparty, usually at 06:00 on the next working day.

The practical construction is therefore that Laytime will generally start at 13:00 if Notice of Readiness (NOR) is given up to and including 12:00. By exception, where Notice of Readiness (NOR) is given during office hours after 12:00 on a working day, Laytime starts at 06:00 on the following working day. This construction gives effect to the wording without implying an unnecessary restriction that Notice of Readiness (NOR) can only be tendered during office hours on a working day.

Notice of Readiness (NOR) Given before Commencement Date for Laytime

Charterparties commonly specify two dates, usually referred to as the cancelling spread or Laycan Spread. The first date indicates the earliest point at which Laytime may begin. The second date gives the Charterers an option to cancel if the ship is not ready by that date. However, the date when Laytime may begin and the date when Notice of Readiness (NOR) may be tendered are not the same thing.

As stated in one London Arbitration:

“It was often thought that a Notice of Readiness (NOR) could not be given before the commencement of lay days under a charter, but that was incorrect unless there was an express provision to that effect. In the absence of such a provision, a valid notice might be given at any time, but the Laytime could not commence before the date given in the charter.”

This principle was later confirmed by Rix LJ in The Front Commander. A Notice of Readiness (NOR) may therefore be validly tendered before the first Layday, unless the Charterparty expressly prevents this. However, Laytime itself cannot begin before the date and time permitted by the Charterparty.

This does not mean that other contractual requirements can be ignored. If the Charterparty requires Notice of Readiness (NOR) to be tendered during office hours, that requirement must still be observed. If the Charterparty provides that Laytime begins at a specified time, Laytime will begin at that time after the opening of the Laycan Spread, provided that any other applicable condition, such as the day being a Working Day (WD), has also been satisfied.

A comparable situation arose in London Arbitration 9/90. The Charterers were entitled to use the ship as floating storage between loading and discharging. The Tribunal held that the Shipowners were still entitled to tender Notice of Readiness (NOR) for discharge while the ship remained engaged in the storage service. The fact that the ship was being used for storage did not, by itself, prevent a valid notice from being given for the later discharge operation, provided the contractual requirements were otherwise met.

Correctness of Notice of Readiness (NOR)

Where Notice of Readiness (NOR) is required either at Common Law, at the first Load Port, or by the express wording of the Charterparty, the facts stated in the notice must be true at the time it is tendered. The ship must have reached the specified destination, or must have satisfied any clause that advances the commencement of Laytime. The ship must also be ready to load or discharge and must have complied with any additional requirements, such as entry at the Custom House, where such requirements are conditions of the notice.

In Graigwen (Owners) v. Anglo-Canadian Shipping Co Ltd, McNair J considered a Laytime Clause providing:

“Lay days at first loading Port to commence twenty-hours, Sundays and holidays excepted, after receipt by Charterers or their Agents of master’s written notice during ordinary working hours, that steamer is entered at the Custom House and in all respects ready to load.”

McNair J stated the principle succinctly:

“Clearly, although the clause only relates the commencement of the lay days to the giving of Notice of Readiness (NOR), the facts stated in the Notice of Readiness (NOR), namely the entry at the Custom House and readiness, must also be true at the time the notice is given.”

The ship must therefore be where the notice says she is, and more importantly, where the Charterparty requires her to be before Notice of Readiness (NOR) can be tendered. If the geographical condition has not been satisfied, the notice will usually be invalid.

In Government of Ceylon v. Societe Franco-Tunisienne d’Armement-Tunis, known as The Massalia (No 2), Diplock J was prepared to hold that a Notice of Readiness (NOR) tendered before the relevant cargo could be discharged became effective once that cargo became accessible. Diplock J also held that the timing provision in the Notice of Readiness (NOR) clause did not need to be applied in the ordinary way, because the Charterers were already discharging other cargo from other Hatches.

The facts were unusual. The ship carried a part cargo of flour from Antwerp and Bordeaux to Colombo. The Shipowners had liberty to complete with other cargo and did so, with the result that the flour was overstowed in most holds. The discharge Laytime clause provided: “Time to commence at 2 p.m. if Notice of Readiness (NOR) to discharge is given before noon, and at 08:00 next working day if notice given during office hours after noon.” The ship tendered notice at 09:00 on the day of arrival. Six days later, discharge of both the flour and overstowed cargo began. The flour became fully accessible three days after that. Diplock J held that Laytime began only when the flour became accessible, because the notice contemplated by the clause was a Notice of Readiness (NOR) to discharge flour.

In Christensen v. Hindustan Steel Ltd, Donaldson J later treated The Massalia (No 2) as a decision turning on special facts. Donaldson J stated:

“In reaching this decision that learned judge relied upon an unidentified authority which no one has been able to trace. He was also much influenced by the fact that the Charterers were apparently the Consignee s of the over-stowed cargo and so needed no Notice of Readiness (NOR). In my judgment, this decision turned upon very special facts and does not cast doubt upon the general rule that a Notice of Readiness (NOR) is wholly ineffective if, subject to minimal qualifications, the ship is not ready to discharge at the time at which it is given.”

Christensen v. Hindustan Steel Ltd itself is unusual, although commercially understandable. The dispute concerned the commencement of Laytime at Vizagapatam, the Loading Port. The Charterparty provided that, at the Load Port, “Time to commence at 24 hours after 1 p.m. if Notice of Readiness (NOR) to load is given before noon and at 24 hours after 8 a.m. next working day if Notice of Readiness (NOR) given during office hours after noon.” Other clauses stated that Notice of Readiness (NOR) could only be tendered during office hours and that the Ship Master was to give three days’ and 24 hours’ Notice of Readiness (NOR) to load.

The Charterers argued that three Notices of Readiness (NOR) were required: one three days before readiness, one 24 hours before readiness, and one when the ship was actually ready. The notice that was given on Saturday morning did not state that the ship was then ready. It stated that she would be ready at 00:00 on Sunday. The ship had previously been discharging inward cargo. The Arbitrators found that, at the relevant time, the ship was ready to load, and Donaldson J considered that this probably meant she was ready when Notice of Readiness (NOR) was tendered.

Even so, Donaldson J held that the notice could not be treated as a notice of actual readiness because, on its face, it reported anticipated readiness:

“In the present case the notice was on its face one of anticipated readiness and impliedly reported to the Charterers that the ship was not ready at the time at which it was given. Accordingly, it cannot be relied upon as a notice of actual readiness, even if in fact the ship was ready.”

The case therefore suggests that Notice of Readiness (NOR) must not only be factually correct if it states that the ship is ready; it must also not understate the position by saying merely that the ship will be ready in the future when she is already ready. However, once the facts stated in Notice of Readiness (NOR) are true at the time of tender, the notice does not normally contain a continuing warranty that those facts will remain true indefinitely. A later change of circumstances does not automatically make the notice retrospectively invalid.

Donaldson J ultimately held that the Shipowners were correct on the construction of the Charterparty. The Charterparty did not require a separate notice of actual readiness in addition to the advance notices. Only two notices were required. Even if the Saturday morning notice gave 15 hours rather than 24 hours’ notice of anticipated readiness, the Charterers suffered no prejudice because Laytime could not begin before Monday morning in any event. Donaldson J summarized the commercial reasoning as follows:

“Which is right? The Charterers can suggest no business reason for the curious arrangement which they suggest was agreed. The Shipowner, on the other hand, can point with force to the fact that when the Charterparty was concluded, the ship was already at Vitzagapatam to the knowledge of the Charterers and that accordingly one would expect less rather than more notice than usual. In these circumstances, I have no real doubt that the owners’ construction is to be preferred.”

The effect of an incorrect Notice of Readiness (NOR) was considered in detail by the Court of Appeal in Transgrain Shipping BV v. Global Transporte Oceanico SA, known as The Mexico I. Mustill LJ delivered the only reasoned judgment on this issue.

The facts were straightforward. The Mexico I arrived off Luanda carrying a part cargo of bagged maize. A completion cargo had been stowed over the maize, making the maize inaccessible on arrival. Despite this, the Ship Master tendered Notice of Readiness (NOR) for the maize. The maize did not become accessible for about two weeks, and discharge did not begin until about two more weeks later. No further Notice of Readiness (NOR) was tendered.

In arbitration, the Arbitrators held that the original Notice of Readiness (NOR) became effective when the maize became accessible. The High Court took the same view. The Court of Appeal disagreed. The Court held that Laytime began when discharge actually began, because counsel for the Charterers conceded that this was the latest possible time at which Laytime could have started. The Court therefore did not have to decide whether, in the absence of a second valid Notice of Readiness (NOR), Laytime would ever have begun at all, although Mustill LJ indicated that this was a real possibility.

Mustill LJ reviewed the earlier authorities and expressed reservations about The Massalia (No 2), noting that the effect of the premature Notice of Readiness (NOR) had not been fully argued in that case. Mustill LJ considered the idea of an inchoate Notice of Readiness (NOR). In its strict form, this concept would allow a premature notice to take effect automatically when the ship later became ready. The principal objection is that the Charterer would not know when that point had been reached. A modified version would allow the notice to take effect when the Charterer knew, or had the means of knowing, that the ship had become ready. Mustill LJ considered that approach likely to create further disputes.

Mustill LJ therefore concluded that the original Notice of Readiness (NOR) was wholly ineffective. The Court then considered whether there were findings that could support waiver, estoppel, or a separate agreement. Since there were no such findings, the notice could not be treated as effective on that basis. Mustill LJ added that, if the inchoate notice theory had been accepted, he would have allowed notice time. If Laytime began instead by waiver, estoppel, or agreement, the precise moment of commencement would depend on the facts giving rise to that conclusion.

London Arbitration 10/94 provides an example of how a defective notice may be treated as effectively re-tendered in the right circumstances. Two written Notices of Readiness (NOR) were prepared, both stating that they had been tendered on the same date and at the same time, but both also recorded events that occurred after the time when the notices were said to have been tendered. A copy of the second Notice of Readiness (NOR) was returned to the ship at a time when a valid Notice of Readiness (NOR) could have been tendered. The Tribunal held that the notice should be treated either as re-tendered or as a fresh notice tendered at that later time. The second Notice of Readiness (NOR) was therefore valid despite the incorrect date and time stated on its face.

As a general rule, where Notice of Readiness (NOR) is required, the ship must have reached the contractual destination when the notice is tendered. This geographical requirement was emphasized in The Agamemnon. The ship was fixed to load at Baton Rouge on the Mississippi but tendered Notice of Readiness (NOR) prematurely at the South West Pass, an anchorage used by ships awaiting entry into the Mississippi. The ship had earlier anchored at South West Pass but had been forced to proceed to sea because of Hurricane Opal. When the weather improved and she returned, the Ship Master tendered Notice of Readiness (NOR), which was later held to be premature and invalid.

The report suggests that the Ship Master may have tendered Notice of Readiness (NOR) while the ship was still underway, although no point was taken on that issue. The judge referred to the arbitral tribunal’s finding that the ship had not “reached a point as close to the loading Berth as she might be permitted to approach”. The judge then stated:

“when considering the condition as to the geographical position the ship has reached, the statement in the Notice of Readiness (NOR) may or may not be true as to the geographical position of the ship or whether she has reached the point that is nearest to the Port or Berth (as the case may be); what matters however, is whether the condition in the Charterparty for the giving of notice has been met and the ship is, at the time the notice is given, at the point stipulated in the Charterparty where notice can be given. That is the test for validity”

The rule that emerges from these authorities is strict but commercially important. Notice of Readiness (NOR) must be true when given. The ship must have arrived at the place where notice may properly be tendered, must be ready in the contractual sense, and must have satisfied any additional conditions required by the Charterparty. A notice that is merely early because it is tendered outside office hours may sometimes take effect at the next permitted time. A notice that is substantively untrue because the ship has not arrived or is not ready is different. It is normally ineffective unless the Charterers waive the defect, are estopped from relying on it, or the parties by conduct or agreement treat the notice as effective. Following The Mexico I, the consequences of an invalid Notice of Readiness (NOR) remain potentially severe where no fresh valid notice is later tendered.

The Effect of an Invalid Notice of Readiness (NOR)

In January 2001, The Happy Day came before the High Court, followed in January 2002 by The Mass Glory. The Happy Day later proceeded to the Court of Appeal in July 2002 and became a leading authority on the consequences of an invalid Notice of Readiness (NOR) where cargo operations subsequently begin without objection.

The Happy Day arrived off Cochin with a wheat cargo. When the ship reached the area off the Port, she could not immediately enter because she had missed the tide. Despite this, the Ship Master purported to tender Notice of Readiness (NOR). The ship entered the Port on the next tide the following morning, Berthed, and discharge began that same day. No further Notice of Readiness (NOR) was tendered. Discharge then proceeded very slowly and took exactly three months from the date of arrival off the Port.

The dispute was referred to arbitration. The Tribunal held that the Charterparty was a Berth Charterparty. As a result, the Notice of Readiness (NOR) tendered off the Port was invalid because the ship had not yet reached the contractual destination. Nevertheless, the Tribunal also held that Laytime began at the first moment when it could have begun if a Valid Notice of Readiness (NOR) had been tendered.

The Charterers appealed. They argued that, since the Notice of Readiness (NOR) was invalid, Laytime never began at all. On that basis, they claimed they were entitled to Despatch for the full amount of Laytime allowed under the Charterparty. This was the same possibility that had been left open in The Mexico I.

In the High Court, Langley J accepted the Charterers’ argument. Langley J held that the Invalid Notice of Readiness (NOR) had not been “accepted” in any legally effective sense upon which the Shipowners could rely. He also held that no agreement or convention could be inferred merely because discharge had begun and continued. It did not necessarily follow that the Charterers had surrendered their right to insist on a valid Notice of Readiness (NOR) simply because the invalid notice had not been rejected. The Charterers’ appeal was therefore allowed, and their claim for Despatch succeeded.

A year later, The Mass Glory came before Moore-Bick J. The case again involved a Berth Charterparty. A Berth was available, and the ship passed an inward inspection shortly after arrival. However, the ship did not Berth and discharge did not begin because the cargo documents were not in order. The Charterers, who were also the sellers of the cargo, instructed the ship not to allow anyone access without production of an Original Bill of Lading (B/L).

The Ship Master tendered Notice of Readiness (NOR) on the day after arrival, but all parties accepted that the notice was premature and therefore invalid. The difficulties concerning the cargo documents took almost two months to resolve. Once the documentation problem was cleared, discharge started immediately. No fresh Notice of Readiness (NOR) was tendered.

The Arbitrators held by a majority that Laytime began when discharge commenced and that the Shipowners were entitled to Damages for Detention (DFD) for the earlier delay. The Charterers appealed to the High Court. Although the Shipowners attempted to distinguish The Happy Day, Moore-Bick J reached the same conclusion as Langley J had reached in the earlier case. The Charterers’ appeal succeeded, and the Charterers were held entitled to Despatch.

Although leave to appeal appears to have been granted in The Mass Glory, the matter did not proceed to the Court of Appeal, most likely because the principle had already been considered by that court in The Happy Day. In the Court of Appeal, Potter LJ delivered the only judgment, with Lady Justice Arden and Sir Denis Henry agreeing.

After reviewing the earlier authorities and the arguments advanced by both sides, Potter LJ stated the principle in the following terms:

“Laytime can commence under a Voyage Charterparty requiring service of a Notice of Readiness (NOR) when no valid Notice of Readiness (NOR) has been served in circumstances where (a) a Notice of Readiness (NOR) valid in form is served upon the Charterers or receivers as required under the Charterparty prior to the arrival of the ship; (b) the ship thereafter arrives and is, or is accepted to be, ready to discharge to the knowledge of the Charterers; (c) discharge thereafter commences to the order of the Charterers or receivers without either having given any intimation of rejection or reservation in respect of the Notice of Readiness (NOR) previously served or any indication that further notice is required before Laytime commences. In such circumstances, the Charterers may be deemed to have waived reliance upon the invalidity of the original notice as from the time of commencement of discharge and Laytime will commence in accordance with the regime provided for in the Charterparty.”

Earlier in the judgment, Potter LJ explained why the commencement of cargo operations was important. Potter LJ stated:

“For the reasons which I have set out, I consider the doctrine of waiver may be invoked and applied in such a case and that the commencement of loading by the Charterer or receiver without rejection of or reservation regarding the Notice of Readiness (NOR) can properly be treated as the ‘‘something else’’ which Lord Justice Mustill indicated (in The Mexico I) was required to be added to mere knowledge of readiness on the part of the Charterers for a finding of waiver or estoppel to be justified. Not only does the commencement of loading manifest an acceptance of the ship’s readiness to load, it also meets the concern of Lord Justice Mustill that to argue (as it was in The Mexico I) that Laytime should begin at the point when the Charterers or their Agents became aware that the cargo was ready, would give rise to uncertainty and substitute a basis for the computation of Laytime which would be a fertile source of dispute.”

The Shipowners ultimately succeeded on the basis of waiver. Several important points follow from Potter LJ’s reasoning.

First, The Happy Day dealt with a particular type of invalid Notice of Readiness (NOR), namely one that was invalid because it had been tendered before the ship had reached the contractual destination. The judgment was not intended to deal with every possible defect in a Notice of Readiness (NOR).

Second, the original Notice of Readiness (NOR) must be valid in form and must be served on the person designated by the Charterparty to receive it. A notice served on the wrong party, or in a form not permitted by the Charterparty, may raise different issues.

Third, the notice may be marked as received, but it must not be rejected. The party receiving the notice must also know the material facts needed to decide whether to reject the notice, reserve rights, or proceed without objection.

Fourth, where Notice of Readiness (NOR) is served not directly on Charterers but on Receivers or Agents through whom Charterers perform their obligations, those parties may have implied authority not only to receive the notice but also to waive the defect. Whether such authority exists is a question for the Tribunal of fact. In The Happy Day, the Charterers did not argue in arbitration that the Agents lacked authority. Had they done so, the Shipowners would presumably have had to show actual authority, Implied Authority, or Ostensible Authority.

Fifth, Waiver of the Invalidity of the Original Notice of Readiness (NOR) takes effect at the commencement of loading or discharging. The position is then treated as though a valid Notice of Readiness (NOR) had been tendered at that time, or as soon thereafter as the Charterparty provides. Laytime then begins according to the Laytime regime in the Charterparty. The Happy Day is not authority for the proposition that Laytime always begins at the exact moment loading or discharging starts. In that case, discharge began on a Saturday, which was an excluded day. Laytime therefore began on the following Tuesday, as though notice had been tendered on Monday after the weekend exclusion.

In addition to waiver, questions of Estoppel were also raised in The Happy Day. The Shipowners had argued before the Arbitrators that the original Notice of Readiness (NOR) had been “accepted” and that the Charterers were therefore estopped from disputing its validity. The Arbitrators found that the notice had merely been marked “received”. They also found that the Statement of Facts incorrectly recorded that the Notice of Readiness (NOR) had been accepted, but the Shipowners had not relied on that incorrect statement. The estoppel argument was therefore rejected.

In The Mexico I, Mustill LJ had expressed doubt about the value of an acceptance of an invalid Notice of Readiness (NOR), saying:

“However, since as the Arbitrators point out, the acceptance must have been given in reliance upon the master’s implied assurance that the ship was ready for discharge, it cannot have any value.”

That observation was made in the context of over-stowed cargo, where the Agents would not necessarily know when the relevant cargo had become accessible. The position may therefore differ where the defect concerns geography and the ship later arrives, discharges, and is treated by the receiving side as available for cargo operations.

Potter LJ also considered the Shipowners’ alternative argument based on estoppel by convention, stating:

“Since I am of that opinion (i.e. that the owners should succeed on the basis of waiver), it is not strictly necessary to consider Mr Eder’s alternative submission, namely that at, or as from, the time of commencement of discharge, the parties were operating upon a common assumption that the Notice of Readiness (NOR) was valid and/or that it was unnecessary for the owners to serve a further Notice of Readiness (NOR) to start Laytime running, so that an estoppel by convention arose whereby the Charterers were precluded from later asserting that the Notice of Readiness (NOR) served was invalid.”

Estoppel by Convention may arise where both parties to a transaction act on an assumed state of fact or law, whether that assumption is shared by both or made by one party and acquiesced in by the other. Its effect is to prevent a party from denying the assumed state of affairs where it would be unjust to allow that party to go back on it.

For the doctrine to apply, there must be mutually manifested conduct by the parties based on a common assumption. That agreement need not be express. It may be inferred from conduct, and in some cases from silence. However, the Tribunal must make findings about the actual state of mind and knowledge of the parties concerned.

The Shipowners’ argument on estoppel by convention relied mainly on the Statement of Facts and on the inference said to arise from two matters: first, that the Notice of Readiness (NOR) was recorded as “accepted”; and second, that both parties had signed a timetable of events that appeared to proceed on the assumption that the Laytime provisions applied.

Potter LJ reviewed the arbitral findings and concluded that they were insufficient to support estoppel by convention. Potter LJ stated:

“Given that the approach of a Tribunal of first instance to any question of estoppel by convention must be to examine and make findings as to the actual state of mind of the parties concerned (and for this purpose the Charterers’ state of mind and knowledge may call for separate examination from that of the Receivers/Agents) it seems to me that, contrary to the position on waiver, the findings of the Arbitrators are inadequate to sustain their decision on the basis of (an inferred) estoppel by convention.”

The Court of Appeal also rejected an argument based on futility. The fact that a further Notice of Readiness (NOR) might have seemed unnecessary did not, by itself, remove the need for a valid notice or justify disregarding the contractual notice regime.

Notice of Readiness (NOR) and Clause 6 of the Asbatankvoy Charterparty Form

The Asbatankvoy Charterparty Form, formerly known as Exxonvoy 69, is one of the most widely used tanker charter forms. Clause 6 of Part II deals with Notice of Readiness (NOR) and provides:

“Notice of Readiness (NOR): Upon arrival at customary anchorage at each Port of loading or discharge, the Ship 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 Vessel’s arrival in Berth (i.e. finished mooring when at a sea-loading or discharging terminal and all fast when loading or discharging alongside a wharf), whichever first occurs.”

This wording has caused practical difficulty. If “arrival” in the opening words means anchoring at the customary anchorage, what happens where the ship proceeds directly to Berth? The latter part of the clause provides that Laytime starts on arrival in Berth, but that appears after the requirement for Notice of Readiness (NOR) to be given at the customary anchorage.

This has led some Ship Masters and Shipowners to believe that Notice of Readiness (NOR) may be tendered while the ship is still underway, either while passing through a customary anchorage or while briefly stopping, for example to embark a pilot.

Over the last century, many important decisions have considered when Notice of Readiness (NOR) may be tendered under a Port Charterparty. In most of those cases, the ship had anchored when the notice was given. The main exception is The Maratha Envoy. In that case, the ship first anchored at the Weser lightship at the mouth of the River Weser, then proceeded upriver to Brake on the flood tide, tendered Notice of Readiness (NOR), turned in the river, and returned to the anchorage. Lord Diplock described that manoeuvre in the House of Lords as “showing the chimney”, “a charade”, and “a Voyage of Convenience”. The Notice of Readiness (NOR) tendered upriver was held to be invalid.

In The Johanna Oldendorff, Viscount Dilhorne stated:

“that under a Port Charterparty, a ship to be an Arrived Ship, that is to say a ship at a place where a valid Notice of Readiness (NOR) to load or discharge can be given, she must have ended her Voyage at the Port named.”

Lord Diplock expressed the point even more clearly by dividing the Voyage Charter adventure into four consecutive stages: the approach Voyage, the loading operation, the carrying Voyage, and the discharge operation. The stages are consecutive and cannot overlap. Arrival at the specified destination is the point, both geographically and temporally, at which the Voyage stage ends and the cargo operation stage begins.

Lord Diplock explained:

“Since the business purpose of the Voyage stages is to bring the ship to a Berth at which the cargo can be loaded or discharged, the Shipowner does not complete the Loading or the Carrying Voyage until the ship has come to a stop at a place within the larger area whence her proceeding further would serve no business purpose. If on her arrival within the Dock or Port, there is a Berth available at which the Charterer is willing and able to load or discharge the cargo, the ship must proceed straight there and her Loading or Carrying Voyage will not be completed until she reaches it. But if no Berth is available the Voyage stage ends when she is moored at any convenient place from which she can get to a Berth as soon as one is vacant.”

This final sentence explains what is meant by a ship being at the immediate and effective disposition of the Charterer. If no Berth is available, the ship must have ended the Voyage and be waiting from a position where she can proceed when a Berth becomes free. The same idea appears in The Maratha Envoy, where Lord Diplock approved Donaldson J’s statement at first instance:

“He applied the Reid test from The Johanna Oldendorff. ‘‘The essential feature’’, he said [1975] 1 WLR 1372, 1378 is that the Voyage shall have ended and the ship be waiting.”

The structure of a Voyage Charterparty therefore requires a clear separation between the Voyage Stages and the loading or discharging stages. The Voyage Stage does not end until the ship has come to rest by anchoring, mooring, or, if she can proceed directly, by reaching the designated Berth.

It follows that at Common Law, Notice of Readiness (NOR) cannot ordinarily be tendered while the ship is underway, whether the ship is making way or merely temporarily stopped in the water.

The question is whether Clause 6 of the Asbatankvoy Charterparty Form changes that Common Law position. One possible construction is to read the opening part of the clause as if it said:

“Upon arrival at customary anchorage or in Berth (as hereinafter defined) if proceeding direct to Berth.”

On that approach, Common Law principles continue to apply. The ship does not reach the specified destination until she has reached a place where further movement would serve no business purpose, meaning that she has anchored, moored, or arrived in Berth.

The alternative construction is to give the words “upon arrival” a wider meaning and allow Notice of Readiness (NOR) to be tendered before the ship comes to rest by anchoring or Berthing. That construction is less satisfactory because it creates practical uncertainty. Must the ship pause to pick up a pilot? Must the Tribunal investigate the limits of the anchorage? What if there is more than one anchorage? What if the ship does not pass through any of the anchorages but proceeds directly to Berth? Such questions show why a broader reading may create more uncertainty than it resolves.

London Arbitration 12/06 illustrates the difficulty. The ship was due to load at Ras Tanura and tendered Notice of Readiness (NOR) at the entry buoy, which was some distance from either of the two anchorages where she might have been instructed to wait and where she did later wait for a Berth. The Charterers challenged the Validity of the Notice of Readiness (NOR) on the basis that Clause 6 of the Asbatankvoy Charterparty Form required notice to be given “upon arrival at customary anchorage”. The challenge was not apparently advanced on the ground that the notice had been given while the ship was still underway and before the Voyage had ended. The Tribunal adopted a broad approach and held that Notice of Readiness (NOR) tendered at the entry buoy was valid.

London Arbitration 21/07 adopted a similarly broad reading of “customary anchorage” under Clause 6 of Part II of the Asbatankvoy Charterparty Form. The ship was to discharge at Lagos. The Tribunal recognized that ships unable to proceed directly to Berth were exposed to piracy risk. Knowing that no Berth was available, the Shipowners arranged to bunker on arrival at a position about 50 miles south of the Lagos pilot station, outside the Port limits of Lagos and outside Nigerian territorial waters.

The Tribunal held that, where it was notorious that a ship could not safely anchor and instead had to drift and alter position, the expression “customary anchorage” could be given a broader commercial meaning. The Notice of Readiness (NOR) tendered at the bunkering position well outside Port Limits was held to satisfy Clause 6.

These arbitration decisions show the commercial flexibility sometimes applied to tanker practice, particularly where safety risks, piracy, or port operating conditions make conventional anchoring impractical. However, they should be approached carefully. The broader the interpretation of “customary anchorage,” the greater the risk of uncertainty over when the Voyage Stage has actually ended and whether the ship has reached the place contemplated by the Charterparty.

Acceptance of Notice of Readiness (NOR)

Where Notice of Readiness (NOR) is tendered in writing, the usual practice is for the Ship Master or Agent to present at least two copies. One copy is retained by the recipient, and the other is returned with an acknowledgment of receipt, including the time of receipt.

London Arbitration 31/92 explained the distinction between tender, receipt, and acceptance:

“Commonly Notices of Readiness (NOR) were (i) tendered, (ii) received, and (iii) accepted, all at different times but in that order. Tendering and receipt were often simultaneous. Receipt and acceptance were frequently not. The latter activities should not be confused. Where a charter referred to receipt of a notice, regard had to be had to that and not to the time of its acceptance.”

This distinction is commercially important. A Charterparty may make Laytime run from the tender or receipt of Notice of Readiness (NOR), while another Charterparty may refer to acceptance. If the Charterparty speaks of receipt, the later time of acceptance is generally irrelevant. If the Charterparty expressly requires acceptance, different questions arise.

Some Charterparties expressly require Notice of Readiness (NOR) to be accepted, and not merely tendered or received. The difficulty is obvious: if acceptance is required, can the recipient delay acceptance and thereby prevent Laytime from starting?

That issue arose in London Arbitration 9/96. Clause 6 of the C(Ore) 7 Mediterranean Iron Ore Form, as amended, required acceptance of Notice of Readiness (NOR) before the Laytime clock began. Notice of Readiness (NOR) was validly served on 15 June but was not accepted by the Shippers until 20 June. No explanation for the delay was provided.

The Tribunal held that, if the matter were approached without authority, it would imply a term requiring the Shippers to accept Notice of Readiness (NOR) with reasonable promptness, if not immediately. Otherwise, the Shipowners would be placed in an impossible position and would be entirely at the mercy of the Shippers. The Tribunal also relied on The Atlantic Sunbeam and held that the Shippers were required to act with reasonable dispatch and in accordance with ordinary port practice.

On the facts, the Tribunal accepted the Shipowner’s submission that the notice served on 15 June should have been accepted no later than 08:00 on 16 June.

A similar conclusion was reached in London Arbitration 8/08. The Charterparty provided that Notice of Readiness (NOR) should be tendered after the ship had arrived and was in all respects ready, with time to begin after tendering and acceptance by the Charterers. The Charterers argued that the Notice of Readiness (NOR) had never been accepted. The Tribunal held that parties to a contract must co-operate with each other. If a Charterer could prevent Laytime from running simply by refusing to accept a valid Notice of Readiness (NOR), the Shipowner’s right to have the ship discharged within Laytime would be defeated. The Tribunal therefore held that “accepted” probably meant “not rejected”.

In Pacific Carriers Corporation v. Tradax Export SA, known as The North King, the judge and the Umpire resolved the dispute on the basis that the Charterers’ Agents, acting with the authority of their principals, had agreed with the Shipowners’ Agents to accept the ship’s Notice of Readiness (NOR) on a Saturday that was a holiday. The Umpire was also prepared to hold that the Charterers were estopped by that acceptance from disputing the validity and effectiveness of the notice.

Mocatta J dealt with the estoppel point cautiously:

“ it is not strictly necessary for me to consider whether the owners can also support the conclusion at which the umpire arrived on the basis of estoppel as distinct from that of agreement. I have no doubt that the proper inference of fact is that a representation was made to the effect that if a proper notice, in the sense that the ship was then ready physically, was given on Nov. 1, before noon, it would be treated as having the same effect as a similar notice given on any other Saturday. The question, however, whether the owners acted upon that representation in a way in which they would not otherwise have acted is, perhaps more difficult. Accordingly, although it may be that on the point of estoppel, if it had stood alone, I would have reached the conclusion that the owners were entitled to succeed, I think it best not to base my judgment in the alternative upon that, but to restrict it to the firm ground with which I have already dealt, namely, that there was an agreement between the parties, the effect of which was to treat Saturday Nov. 1 in the same way as any other Saturday for the purposes of the giving of a Notice of Readiness (NOR).”

The issue of whether an Estoppel could arise from the wrongful acceptance of Notice of Readiness (NOR) by Receivers’ Agents was central in Surrey Shipping Co Ltd v. Compagnie Continentale (France) SA, known as The Shackleford. The Charterparty required Notice of Readiness (NOR) to be given to the Receivers or their Agents at or before 16:00 on official Working Days (WD), and the ship also had to have been entered at the Custom House. Entry at the Custom House was therefore a condition precedent to the tender of Notice of Readiness (NOR). The difficulty for the Shipowners was that the ship could only be entered at the Custom House once she had Berthed. It did not matter what kind of Berth she occupied, provided she was alongside; it could be a Bunkering Berth rather than the Discharging Berth.

When the Shackleford reached the usual anchorage, Notice of Readiness (NOR) was tendered even though the ship had not yet been entered at the Custom House. The Receivers’ Agents accepted the notice and informed the owners that time would count from arrival in the roads off the Port. Congestion caused delay before the ship could Berth. The first Berth reached was a Bunkering Berth. Customs entry was completed there, after which the ship moved to a Lay-By Berth and eventually to the Discharging Berth.

The Shipowners argued that, because the Receivers’ Agents had accepted Notice of Readiness (NOR) and had sent the later message, the Shipowners did not attempt to obtain an earlier Berth merely to complete Customs entry.

In the High Court, Donaldson J held that the Notice of Readiness (NOR) tendered on arrival was a good notice in the sense that the ship had arrived at Constantza, the Discharging Port, and was ready to discharge. However, it was premature because Customs entry had not yet been obtained. Under the Charterparty, the Receivers could have rejected or ignored the notice. Instead, they accepted it. That acceptance created an estoppel by conduct, preventing the Charterers from later arguing that the Notice of Readiness (NOR) was premature.

In the Court of Appeal, one of the main questions was whether the Receivers were acting within their authority when they accepted a Premature Notice of Readiness (NOR). The Court accepted that it was open to the Arbitrator, relying on his own experience and in the absence of evidence either way, to find that this fell within the Receivers’ usual authority. Potter LJ later gave support to that approach in The Happy Day.

On the estoppel issue, Sir David Cairns stated:

“An important issue at the Arbitration and before the judge was whether the acceptance was relied on by the Shipowners. The Arbitrator found that it was. The judge held that he was bound by that finding and Charterers have not challenged that part of the judge’s decision in this court.”

Another important case concerning acceptance of Notice of Readiness (NOR) is Sofial SA v. Ove Skou Rederi, known as The Helle Skou. The ship was chartered to carry skimmed milk in bags. Her previous cargo had been fishmeal in bags. The Charterparty required the ship to be presented with holds clean, dry and free from smell. On presentation, the Charterers accepted the ship without checking the condition of the holds and began loading.

In fact, the holds were not free from smell. It was later decided that the cargo already loaded had to be discharged so that the ship could be cleaned. Approximately four days were lost. The Shipowners admitted that Notice of Readiness (NOR) ought not to have been tendered, but denied that the Charterers were entitled to reject the Notice of Readiness (NOR) after loading had already begun. It was not disputed that damages were payable.

The case illustrates a broader practical point. Acceptance of Notice of Readiness (NOR), or conduct consistent with treating the ship as ready, may have important consequences. However, acceptance does not necessarily eliminate all remedies. If the ship was in fact unready and loss is caused, damages may still be recoverable. The question is whether the accepting party is prevented from denying the effectiveness of the notice for Laytime purposes, and that will depend on the wording of the Charterparty, the facts known to the parties, the authority of the recipient, reliance, waiver, estoppel, and the conduct of loading or discharging after the notice was given.

In upholding the Shipowner’s argument, Donaldson J stated:

“There have been many cases of Notice of Readiness (NOR) being rejected as premature and subsequently accepted: see, for example, Compania de Naviera Nedelka SA v. Tradax International SA (The Tres Flores) [1973] 2 Lloyd’s Rep 247, but I think that this is the first case in which Charterers have accepted such a notice and later claimed to reject it. I do not think that they can do so. As Mr Hallgarten pointed out, the contrary view would enable a Charterer to reject a Notice of Readiness (NOR) and to start Laytime all over again if he discovered some lack of readiness in the ship at a late stage in loading. And this would be the case even if the cargo did not have to be discharged. A Notice of Readiness (NOR) which is rightly rejected is a nullity, save to the extent that with the express or implied agreement of the Charterers, it may be left with them instead of being re-served and will then take effect when it truly represents the facts. But this notice was far from being a nullity. It was the key which unlocked the holds of the ship and allowed loading to begin. And it was the Charterers’ act which created this position. Whether it is labelled as waiver or estoppel or something else, I do not consider that the Charterers can resile from this position, save upon grounds of fraud.”

In The Shackleford, the Court of Appeal noted that Donaldson J had partly relied on Donaldson J’s own earlier decision in The Helle Skou, although the Court of Appeal did not consider it necessary to examine that earlier decision in detail.

The following arbitration decisions show how tribunals have approached the acceptance of defective notices. As Donaldson J observed in The Helle Skou, it is common in commercial practice for a defective Notice of Readiness (NOR) to be left with the recipient on the understanding that it may become effective once the ship later satisfies the necessary requirements. That practice is convenient, but it is also risky. The Court of Appeal’s decision in The Mexico I shows the danger of assuming that a premature or defective notice will automatically become effective. The later decision in The Happy Day reduced some of that risk, but only in particular circumstances.

In London Arbitration 15/86, a tanker tendered Notice of Readiness (NOR) before Berthing. The notice was accepted by the refinery at about 20:15 on the day when the ship came alongside. Approximately eight hours later, the tanks were inspected and found unsuitable for the intended kerosene cargo, the specification for which had been included in the Charterparty. The Charterers then rejected the Notice of Readiness (NOR), and the Shipowners argued that the Charterers were estopped from disputing its validity.

The Tribunal rejected the Shipowners’ argument. An Estoppel could not be established merely because the notice had been accepted and then rejected only a few hours later. The Shipowners had not relied on the acceptance in any meaningful way and had suffered no detriment as a result of it. The case demonstrates that acceptance alone will not always prevent a later rejection if the defect is quickly discovered and no reliance has occurred.

In London Arbitration 15/87, the ship was fixed to load grain in the US Gulf (USG). The Charterparty required Notice of Readiness (NOR) to be accompanied by a pass issued by the USDA. The pass was not issued until one day after the Notice of Readiness (NOR) had been accepted by the Charterers’ Agents. The notice had been accepted about two hours after it was tendered. The Shipowners argued that, because the notice had been accepted and because the ship was later made ready for loading, the Charterers had waived the defect or were estopped from relying on it.

The Arbitrators rejected that argument. They compared the facts with The Shackleford and noted that two important elements present in The Shackleford were absent: the difficulty for the Shipowners in discovering the true position and the close relationship between the Charterers and their Agents. In the arbitration before them, there was no basis for treating the Agents as more closely identified with the Charterers than ordinary independent Port Agents. However, the Tribunal held that Laytime began after the contractual notice period had expired once the USDA pass had been issued.

London Arbitration 26/89 produced a result favourable to Shipowners, but it must be treated with caution because it was decided before The Mexico I reached the Court of Appeal and long before The Happy Day. At the time Notice of Readiness (NOR) was tendered, the ship was still outside the commercial limits of the Port and was therefore not an Arrived Ship. No fresh Notice of Readiness (NOR) was tendered after the ship later came within Port limits.

The Tribunal stated the general rule in the following terms:

“There was no general rule that premature Notice of Readiness (NOR) became automatically effective when a ship became ready. The general rule was that a notice had to be valid when tendered and if it was invalid it was ineffective. Once the conditions for a Valid Notice of Readiness (NOR) had been met, a fresh notice had to be tendered. If it was not, the Original Notice of Readiness (NOR) could only be considered to have become effective in the event of the Charterers having waived their contractual entitlement to a valid notice (which would in fact be a second or further Notice of Readiness (NOR)).”

That statement remains broadly correct. However, in addition to waiver, Laytime may also begin as a result of a bilateral agreement varying the Charterparty, an Estoppel by Convention, or possibly an Estoppel by Representation or Estoppel by Conduct, depending on the facts.

The Arbitrators in London Arbitration 26/89 found that the Charterers had treated the Notice of Readiness (NOR) as effective. Acting in reliance on it, the Charterers had cargo ready for immediate loading when the ship Berthed, and the Shipowners’ Agents were given no reason to suspect that anything was wrong. The Tribunal therefore held that Laytime began when the ship entered the Port. After The Mexico I, it is uncertain whether the same conclusion would be reached. Whether preparing cargo for loading amounts to sufficient evidence of a bilateral agreement, and whether the failure to tender a new Notice of Readiness (NOR) can support an estoppel, remain fact-sensitive and difficult questions.

A related point was considered in London Arbitration 6/90. In that case, the Arbitrator held that the Original Notice of Readiness (NOR) was valid. However, the Shipowners also argued that, if the notice was invalid, the Charterers were estopped from challenging it because they had remained silent for approximately one and a half months after receiving it. The Arbitrator accepted evidence from the Shipowners’ shipbroker that, in normal practice, Agents, Charterers or receivers would promptly raise any irregularity in a Notice of Readiness (NOR). Had the Shipowners been alerted to any difficulty, they would have taken steps to correct it.

The Charterers argued that silence and inaction are equivocal and relied on The Leonidas D. The Arbitrator accepted that silence may be equivocal in some cases, but considered the circumstances before him different. In his view, it was highly unlikely that an experienced Ship’s Agent would fail to reject a Notice of Readiness (NOR) immediately if it was invalid or unacceptable. A reasonable person experienced in chartering and shipping would expect a prompt objection to a defective notice. The Arbitrator therefore held that the Charterers would be estopped from disputing the Validity of the Notice of Readiness (NOR).

Although that reasoning is commercially understandable, it is doubtful whether a court would readily find an estoppel on those facts. In The Mexico I, the Notice of Readiness (NOR) had been accepted and not rejected, and a substantial period passed before discharge began, yet the Court of Appeal held that there was insufficient material to infer waiver, Estoppel or agreement.

The leading authorities on defective notices are now The Mexico I and The Happy Day. The facts of The Mexico I have already been outlined. After rejecting both the strict and modified versions of the inchoate Notice of Readiness (NOR) theory, Mustill LJ considered whether the same result could be reached through waiver, estoppel, or a contractual agreement varying the Charterparty. Mustill LJ stated:

“For my part I am sceptical about the deployment of the elusive concept of waiver, and would prefer to look for conduct from which one could infer either a bilateral agreement to vary the charter, or the existence of what has come to be called ‘‘estoppel by convention’’: namely, a situation in which the parties, having conducted themselves on the mutual assumption that their legal relations take a certain shape, cannot afterwards be heard to assert the contrary. I do not for a moment doubt that such a state of affairs, if proved to exist, could justify the conclusion that Laytime began, after the giving of an invalid notice, but before the moment of actual discharge.”

Mustill LJ then examined whether the facts supported such a conclusion:

“First as to the facts. Whatever precisely the doctrine, one would be looking for some kind of bilateral representation and action, on the basis that the contractual arrangement about Laytime had been replaced by something new. What do we find here? A notice invalidly given. The Arbitrators have found, via the statement of facts, that it was ‘‘accepted’’. (Often this would be by countersignature of a document. Since the notice here was rendered by telex, we do not know the form of the acceptance.) However, since, as the Arbitrators point out, the acceptance must have been given in reliance upon the master’s implied assurance that the ship was ready for discharge, it cannot have any value. What else? Nothing, so far as the award is concerned. When the ship was ready to discharge the contractual cargo, there was no notification to the Charterers or their Agents. Nor is anything found in the award by way of an intimation on the part of the Charterers they accepted that the Laytime could now begin. It seems that the moment when the ship became ready for discharge passed in complete silence.”

Mustill LJ therefore concluded that the evidence was too weak to support any inference of waiver, Estoppel or agreement. The Court of Appeal held that Laytime did not begin before discharge commenced. It appears that, if the parties had not accepted that discharge was the latest possible point at which Laytime could begin, the Court of Appeal might have been prepared to consider the argument that Laytime never began at all in the absence of a valid Notice of Readiness (NOR) or some bilateral agreement, waiver or estoppel. Such a result could have required the Shipowners to pay Despatch on the whole Laytime allowance.

In The Happy Day, Potter LJ adopted a more favourable approach to waiver than Mustill LJ had adopted in The Mexico I. Potter LJ held that, on the facts of The Happy Day, waiver had occurred, and the Shipowners were therefore not liable to pay Despatch on the whole amount of Laytime allowed.

The factual differences between the two cases are important. In The Mexico I, the ship had reached the specified destination, but the Notice of Readiness (NOR) was invalid because the cargo covered by the charter was overstowed and inaccessible. From outside the ship, the Charterers or their Agents had no obvious way of knowing exactly when the overstowed cargo had been cleared and the contractual cargo was ready for discharge. The Notice of Readiness (NOR) had been sent by telex when the ship first arrived at the Discharge Port, apparently some two weeks before the cargo became accessible and four weeks before discharge began.

In The Happy Day, by contrast, the defect was geographical. The ship had not reached the specified destination when Notice of Readiness (NOR) was tendered. Once the ship did reach the contractual destination, she was in all respects ready to discharge. It is much easier for an Agent ashore to know when a ship has arrived at the relevant destination than to know when an overstowed cargo has become accessible. Had the notice in The Happy Day been accepted with full knowledge of the original defect and after that defect had been cured to the knowledge of the Agents, it is possible that the Shipowners might also have succeeded on some form of Estoppel.

In The Northgate, the ship anchored at the outer anchorage at Sepetiba while waiting for a Berth. She did so because, although she could have anchored at the inner anchorage, using the inner anchorage would have increased the owners’ costs. Notice of Readiness (NOR) was tendered to and accepted by the loading terminal, which the court held was the proper party to receive it. The notice was accepted unconditionally. However, the court held that the notice was invalid because, under the Charterparty, Notice of Readiness (NOR) could only be tendered at the outer anchorage if it could not be tendered at the inner anchorage. The terminal was not aware of that Charterparty requirement.

The court held that the terminal had implied authority from the Charterers to waive defects in the Notice of Readiness (NOR). The terminal must have known which ships were at which anchorage. On the day after the ship arrived, the Shipowners asked the terminal through the Charterers’ Agents to confirm the date and time of acceptance of the Ship Master’s Notice of Readiness (NOR), and the terminal did so. The court held that this amounted to an unequivocal representation by the terminal or Shippers that the Notice of Readiness (NOR) had been accepted with knowledge that the ship was at the outer anchorage. The defect in the Notice of Readiness (NOR) had therefore been waived, and the Shipowners’ Demurrage claim succeeded.

The Vine raised a comparable issue, again involving waiver and again arising from the same Load Port. In that case, the Charterparty required clearance from the Port Authorities (PA) before Notice of Readiness (NOR) could be tendered. The clearance was not granted until four days after Notice of Readiness (NOR) had been accepted by the loading terminal. The Statement of Facts signed by the terminal recorded both the time when Notice of Readiness (NOR) was accepted and the time when clearance was granted. Following The Northgate, the judge held that there was clear evidence that the requirement for Port clearance had been waived by the terminal acting on behalf of the Charterers.

The present law may be summarized as follows:

A. A Defective Notice of Readiness (NOR), whether defective because the ship has not yet reached her specified destination or because the ship is not ready to load or discharge the relevant cargo, is prima facie ineffective for all purposes.

B. There is no doctrine of inchoate Notice of Readiness (NOR), either in its strict form, where the notice automatically takes effect when the ship becomes ready, or in its modified form, where it takes effect when the recipient knows or has the means of knowing that readiness has been achieved. The parties may agree that an ineffective notice can be left with the recipient and become operative when the ship is ready, but that normally requires some overt act by the ship indicating when readiness occurs.

C. Even without express authority, Agents may have Implied Authority or Ostensible Authority to waive Charterparty requirements concerning the tender of Notice of Readiness (NOR), as well as authority to receive Notice of Readiness (NOR). Whether such authority exists depends on the facts, the role of the Agent, port practice, and the conduct of the parties.

D. Even where no valid Notice of Readiness (NOR) has been tendered, Laytime may nonetheless commence through a bilateral agreement varying the Charterparty, through waiver, or through Estoppel by Convention, Estoppel by Representation, or Estoppel by Conduct. The point at which Laytime begins will depend on which doctrine applies and on the facts supporting it.

E. If no valid Notice of Readiness (NOR) is ever tendered and there is no agreement, Waiver or Estoppel, the commencement of cargo operations alone will not automatically start Laytime.

Although it may not be strictly necessary, because time lost through the Shipowner’s default would not normally count as Laytime in any event, Charterers may still be well advised to include an express protective clause. Clause 7 of Part II of the Bimchemvoy Charterparty provides an example:

“If after Berthing the vessel is found not to be ready in all respects to load or discharge, the actual time lost from the discovery thereof until she is in fact ready to load or discharge, shall not count as Laytime.”

This type of clause reduces uncertainty. It allows Laytime machinery to operate while protecting the Charterer against actual time lost because the ship is later found not to be ready. It is especially useful in trades where inspection can only be completed after Berthing, or where tank, hold, equipment, or certificate issues may not be fully apparent at anchorage.

Ship Readiness

Many of the authorities considered earlier, especially those dealing with Physical Readiness, arose in the context of a Cancellation Clause rather than the tendering of Notice of Readiness (NOR) for the purpose of starting Laytime. The same practical issues often arise in both situations, but there is an important distinction. Unless the Charterparty provides otherwise, no Notice of Readiness (NOR) need be given at the First Load Port in order to prevent the Charterer from cancelling the Charterparty. For cancellation purposes, it is normally enough that the ship has reached the specified destination and is in all respects ready to load. By contrast, for Laytime to begin, a valid Notice of Readiness (NOR) will usually also be required.

The leading authority on this distinction is A/B Nordiska Lloyd v. J Brownlie & Co (Hull) Ltd, a Court of Appeal decision involving the Gevalia. The ship had been ordered to Hull to load under a Berth Charterparty. The Charterparty provided that time would begin when written Notice of Readiness (NOR) was received during business hours.

Other clauses in the Charterparty provided:

“7. If steamer be prevented from entering… Docks or from arriving at or off loading place by reason of congestion… she is to be treated as a ready steamer from first high water on or after arrival… and entitled there-upon to give written Notice of Readiness (NOR)”

“11. . . . Charterers to have the option of cancelling this charter . . . if she is not ready from any cause on or before Apr. 3 at 6 am.”

The Gevalia arrived off Hull on Easter Saturday, 31 March, but congestion prevented her from entering the Docks. Because the following Monday was Easter Monday and therefore a Bank Holiday, the earliest time at which written Notice of Readiness (NOR) could have been tendered under Clause 7 was the start of business on 3 April. By then, the Charterers argued that their cancellation right had already arisen, and they attempted to exercise it.

The Court of Appeal held that the Charterers were not entitled to cancel. The relevant test under the Cancellation Clause was the ship’s actual readiness, not whether Notice of Readiness (NOR) had already been tendered. Scrutton LJ stated:

“In my view, if the Charterers wished to put an additional provision into the (cancellation) clause as to giving notice they must say so.”

Atkin LJ expressed the distinction in these terms:

“It is necessary to distinguish between the obligation on the Charterers and the right of the Charterers to cancel the contract. I see no reason to assume that the giving of a Notice of Readiness (NOR) is a condition precedent to the Charterers’ right to put the contract at an end. In the Cancelling Clause there is no express provision that Notice of Readiness (NOR) must be given. All that is provided is that if the ship is not ready from any cause on or before Apr. 3 the Charterers have the option to cancel. In clause 7 it is said that the ship is to be treated as ready even if she is prevented from entering the harbour by congestion or other cause and Notice of Readiness (NOR) may then be given, but that does not apply to the Cancelling Clause.”

Many modern Charterparty Forms now avoid this uncertainty by connecting the cancellation right directly to the tendering of Notice of Readiness (NOR), rather than to readiness alone. Clause 12 of Part II of the Exxonvoy 84 Charterparty Form provides:

“CANCELLATION OF CHARTERPARTY. If vessel has not tendered a valid Notice of Readiness (NOR) by 16 00 hours local time on the Cancelling Date specified in Part I(B), Charterer shall have the right to cancel this Charter by notifying Owner or Owner’s Agent by telegraph, telex or radio (if radio, subsequently confirmed promptly in writing) of such cancellation within forty-eight (48) hours local time after expiration of the said Cancelling Date, failing which this Charter shall remain in full force and effect. Charterer’s said option shall continue to apply even if vessel tenders Notice of Readiness (NOR) within the just mentioned forty-eight hour period”

Similarly, Clause 4 of Part II of the Bimchemvoy Charterparty Form, under the heading Charterers’ Option of Cancelling, states:

“If the vessel has not given a valid Notice of Readiness (NOR) as provided in Clause 7 by 12 midnight (24 00 hours) local time on the cancelling date specified in Box 16 Charterers shall have the option of cancelling this Charter Party”

Where the Charterparty expressly allows the Charterer to cancel unless Notice of Readiness (NOR) is tendered by the Cancelling Date, the position is comparatively clear. If the required notice is not validly tendered within the contractual time, the right to cancel arises. If, however, the Charterparty does not make Notice of Readiness (NOR) part of the cancellation machinery, and the ship has reached the specified destination and is actually ready, the Charterer cannot rely merely on the absence of Notice of Readiness (NOR) to cancel.

The difficulty in such cases is evidential. If no Notice of Readiness (NOR) has been tendered, the Charterer may not know whether the ship is ready unless the position is confirmed by the Shipowner or the ship’s Agents. The only situation in which the Charterer can usually be certain is where the ship has not reached her specified destination by the Cancelling Date.

An American arbitration concerning the Luctor illustrates a related point. The Charterers argued that, where a ship arrived after the Cancelling Date but the Charterers failed to cancel, the late arrival should deprive the Shipowners of the right to claim Demurrage. The Arbitration Tribunal rejected that argument. The Charterers could not unilaterally rewrite the Charterparty by refusing to cancel and then denying the operation of the Laytime provisions. The same conclusion would almost certainly be reached under English law.

Ship Readiness under GAFTA FOB (Free On Board) Contracts

A different form of readiness was considered in Soufflet Negoce v. Bunge SA, a case that ultimately reached the Court of Appeal. The dispute arose under Clause 6 of GAFTA Form 49, which required the Buyers to nominate a ship within a specified period. The Buyers nominated the ship on the final permissible day, but a dispute then arose as to whether the ship’s holds were ready for loading.

The issue was whether the Buyers were required to nominate a ship capable of tendering a valid Notice of Readiness (NOR), or whether their obligation was simply to nominate a ship within the delivery period. The GAFTA Board of Appeal, the High Court, and the Court of Appeal all held that the Buyers’ obligation was limited to nominating a ship within the contractual delivery period. The fact that any Notice of Readiness (NOR) tendered might be invalid did not entitle the Sellers to repudiate the Sale Contract.

The decision is important because it shows that readiness under a Sale Contract may not operate in the same way as readiness under a Charterparty. A nomination obligation under an FOB (Free On Board) sale is not automatically transformed into an obligation to present a ship that can immediately tender a valid Notice of Readiness (NOR), unless the contract clearly says so.

Work Before Laytime Commences

Charterparties often provide that Laytime begins only after a stated period has expired following the tender of Notice of Readiness (NOR). Sometimes, however, cargo operations begin before that waiting period has expired. In other cases, cargo work may begin even before the Commencing Date for Laytime under the Charterparty.

Although Notice of Readiness (NOR) may sometimes be tendered before the opening of the Laycan Spread, the courts will not readily find that the parties have agreed to vary the contractual time for the commencement of Laytime. Clear evidence is required before a court or Tribunal will conclude that the parties intended to bring forward the Laytime Commencement Date or shorten the agreed interval after Notice of Readiness (NOR). Similar principles apply where cargo work is performed on holidays or during other excepted periods.

The mere fact that cargo work has been carried out is not, by itself, enough to prove a variation of the Charterparty. An early example pointing in a different direction is The Katy, although the issue there was whether work performed during part of a day should make the whole day count. The Charterparty allowed 14 Running Days (RD) for loading and discharging but did not specify when Laytime would begin. It was usual for Laytime to count from the first full day. In The Katy, the ship Berthed at 10 a.m., and cargo operations continued during the afternoon. The Court of Appeal held that, by working the ship, the Charterers had agreed that the whole day should count as one of the Lay Days. Lord Esher stated:

“The captain said ‘‘Come—agree with me to take delivery’’; and they did agree to take delivery, and they did it. Is that, or is that not, agreeing to treat Saturday as one of the Lay Days?”

Later authority adopted a more cautious approach. In Nelson & Sons v. Nelson Line Liverpool Ltd (No 3), the House of Lords refused to infer that work carried out during an Excepted Period meant that the parties had agreed that such time should count as Laytime. Lord Loreburn LC stated:

“In my view it is a question, not of law, but of fact, whether or not there was an agreement varying the terms of the Charterparty and providing that the holidays in question should count as lay days. I am unable to see any evidence of such an agreement.”

The same restrictive approach was applied in Pteroti Compania Naviera SA v. National Coal Board, known as The Khios Breeze. The Charterparty provided that Laytime was to start 24 hours after Written Notice of Readiness (NOR) had been given. In fact, discharge began only half an hour after the ship’s arrival, before Notice of Readiness (NOR) had been given and before the contractual 24-hour period had even started.

Diplock J refused to infer any agreement varying the Charterparty. Referring to Nelson & Sons v. Nelson Line Liverpool Ltd (No 3) and to the dissenting judgment of Fletcher Moulton LJ in the Court of Appeal in that case, Diplock J emphasized that courts should be slow to infer such variations merely from the fact that work was performed. Diplock J stated:

“I can see no ground whatever on which I could infer an agreement here that, because the Charterers started to unload, and the Shipowners’ servants assisted in doing so, at 2.30 in the morning, there was an agreement between the parties that Laytime should start then. Equally, I can see no ground upon which I should be entitled to hold that it had been waived by the Charterers.”

Diplock J also observed that the clause dealing with the commencement of time and the Clause relating to Notice of Readiness (NOR) were not provisions inserted solely for the benefit of the Charterers. They formed part of the agreed contractual machinery and were not provisions that could simply be waived in the ordinary way.

London Arbitration 1/97 considered a clause in a Baltimore Berth Form C Charterparty that had been amended to state:

“Owners option to tender prior to Laydays but time to commence as per Charterparty. Prior time used to count as Laytime.”

The ship arrived after the opening of the Laycan Spread and tendered Notice of Readiness (NOR) at 09:50. Loading began at 17:00 on the same day. The Charterers argued that Laytime began at 08:00 the following day, as provided elsewhere in the Charterparty. The Shipowners argued successfully that time should count from the moment loading began. The Tribunal held that “prior time” meant time before Laytime would otherwise begin under the Charterparty, not merely time before the opening of the Laydays/Cancelling (LAYCAN) period.

Tanker Charterparties often contain an Early Loading Clause, under which Charterers may be permitted to load before the commencement of Laydays and, in return, may receive the benefit of the time saved. The Shellvoy 5 Charterparty Form is one example of a form containing such a provision.

In London Arbitration 27/04, the printed Charterparty Form had been amended to provide that the time saved was to be calculated according to the Charterparty terms. The Charterers argued that, because loading had been completed before the start of Laydays, they were entitled to the entire period from the actual completion of loading until the contractual commencement of Laydays. The Tribunal criticized the drafting but accepted the Shipowners’ construction. The benefit of time saved was limited to the period before the Laydays up to the completion of loading. It did not extend to a windfall period after cargo operations had already been completed.

The overall principle is that early work does not automatically advance the commencement of Laytime. The parties may agree that time used before the ordinary Laytime commencement point is to count, but such an agreement must be found in the Charterparty wording or clearly inferred from the facts. Without clear language or clear agreement, the contractual machinery governing Notice of Readiness (NOR), waiting periods, Laycan Spread, exceptions, and Laytime commencement remains in force.

In The Front Commander, the Court of Appeal overturned the High Court and held that, where loading took place before the Laytime Commencement Date, the Charterers had, on the facts, agreed that Laytime should begin earlier than the date stated in the Charterparty. The Charterers had confirmed that Notice of Readiness (NOR) should be tendered when the ship arrived at the Load Port and that the ship should Berth and load as soon as instructed. Their main argument was that, although they had agreed to early tender of Notice of Readiness (NOR) and to early Berthing and loading, a separate written consent was still required before Laytime could start early. The Court of Appeal rejected that argument.

The Charterers relied on The Khios Breeze, but Rix LJ, delivering the leading judgment, held that The Khios Breeze did not assist in the different contractual and factual setting before the court. Rix LJ stated:

“At most it says that the Charterer’s use of the ship prior to the giving of a Notice of Readiness (NOR) and the expiry of the contractual notice time is not, without more, in the Charterer’s time. An agreement contrary to the terms of the charter could not be inferred, nor could a waiver.”

The Court of Appeal also clarified several important points. If a ship arrives before the Laytime Commencement Date, the Charterer cannot require her to load early, and Clause 1 of Part II of the Asbatankvoy Charterparty Form does not change that position. However, Clause 6 of the Asbatankvoy Charterparty Form requires the Shipowner to tender Notice of Readiness (NOR) on arrival. There is no automatic breach if the ship is not ready to load immediately upon early arrival, but if the ship is ready, the Shipowner must tender Notice of Readiness (NOR), even though the ship has arrived before the opening of Laydays.

The Court of Appeal further held that Notice of Readiness (NOR) may be tendered before the earliest Layday so that the notice period can expire before Laytime is contractually permitted to begin. However, once the Shipowner has tendered Notice of Readiness (NOR), the Shipowner cannot refuse to load early if so ordered by the Charterer. The commercial effect is that early tender does not itself start Laytime before the Charterparty allows it, but it may place the ship in a position where early loading can lawfully proceed if the Charterer gives the order and the contractual wording supports that result.

The Voylayrules 1993 provide:

“UNLESS SOONER COMMENCED’’ shall mean that if Laytime has not commenced but Loading or Discharging is carried out, time used shall count against Laytime.

This phrase is normally expected to appear in or near the clause dealing with the Commencement or Recommencement of Laytime. Its practical purpose is to shorten or override the remaining notice period where cargo operations begin before Laytime would otherwise have started. If loading or discharging is actually carried out, the time used is charged against the Laytime allowance, even though the ordinary Laytime commencement mechanism has not yet fully operated.

Changes to the Beginning of Laytime

The usual requirements for Laytime to begin are well established. The ship must have reached the specified destination, the ship must be ready to load or discharge, and, where required by Common Law or by the Charterparty, a valid Notice of Readiness (NOR) must have been tendered. Once those conditions have been satisfied and any contractual waiting period has expired, Laytime starts to run.

These requirements, however, are not immutable. They may be modified by Express Terms or, in more limited situations, by Implied Terms. Such clauses may either accelerate the commencement of Laytime, postpone it, or alter the risk allocation for waiting time before the ship reaches the ordinary point of arrival. This is particularly important in Berth Charters, Port Charters, congested Ports, tanker Charterparties, and Charterparties involving anchorage clauses or special waiting-time provisions.

The main clauses and expressions requiring consideration include:

‘‘Whether in Berth or Not’’ (WIBON)

‘‘Whether in Port or Not’’ (WIPON)

‘‘Time lost in waiting for Berth to count as Laytime’’

‘‘Time lost in waiting for Berth to count in Full’’

‘‘Reachable on Arrival’’

‘‘Always Accessible’’ (AA)

‘‘So near thereto as she may safely get’’

‘‘In regular turn’’/‘‘in usual turn’’

‘‘Demurrage in respect of waiting time’’

‘‘Time to commence on being reported at the Custom House’’

‘‘To be loaded as per colliery guarantee’’

Each of these expressions has its own commercial function. Some are designed to protect Shipowners against congestion. Others preserve the Charterer’s right to have the ship wait in turn. Some clauses allow Notice of Readiness (NOR) to be tendered before the ship reaches the Berth, while others deal with time lost before Berthing or with whether a Berth must be physically reachable when the ship arrives. The precise wording of the Charterparty remains decisive.

Custom of the Port

The influence of custom in modern Charterparties is generally more limited than it once was, because most Charterparties now contain detailed express provisions stating when Laytime is to commence. For a Custom to affect the parties’ rights, it must not conflict with the Express Terms of the Charterparty. If the contract has already dealt with the point clearly, custom cannot be used to rewrite the bargain.

In Postlethwaite v. Freeland, Lord Blackburn explained the meaning of custom in this context:

“The jurors were told, and I think quite correctly, that ‘‘Custom’’ in the Charterparty did not mean Custom in the sense in which the word is sometimes used by lawyers, but meant a settled and established practice of the Port.”

To establish any Custom is difficult. The party relying on it must prove that the practice is reasonable, certain, and uniformly recognized by ships, merchants, Shipowners, Charterers, Shippers, Receivers, Port Agents, and other commercial users of the relevant Port. A mere local habit, preference, or informal arrangement is not enough.

A proven Custom may either bring forward or postpone the moment when Laytime Commences. In Norrkopings Rederiaktiebolag v. Wulfsberg & Co, the ship was fixed to carry pitprops to Hull under a Fixed Laytime Port Charterparty. The dispute concerned when Laytime began. Greer J accepted that a Custom of the Port could be reduced into writing for the convenience of Shipowners and merchants, and then considered the relevant written statement of port practice:

“Looking at the statement of the Custom and Practice of the Port there are the words: ‘‘When a wood laden ship is chartered for the Port of Hull simply and without prescribing any particular Dock for discharge the receiver has the right to order her on or before arrival to any available Dock, which she can forthwith enter and deliver her cargo.’’ In my judgment that means that the ship is not an arrived ship until she enters the Dock to which she has been ordered for the purpose of discharge by the receiver of the cargo. I think that extends her carrying Voyage up to the time she gets into the Dock to which she is ordered for the purpose of discharge.”

Norden Steamship Co v. Dempsey provides another example of custom delaying the beginning of Laytime. The Charterparty provided that the cargo was to be discharged at a particular Dock. The Shipowners argued that the ship could tender Notice of Readiness (NOR) and Commence Laytime once she arrived in Dock. However, a Custom at that Port provided that time did not begin until the ship was in Berth. That custom was held to govern the position.

Custom may also operate because the Charterparty expressly refers to it. In one case, where the Charterparty required the ship to ‘‘deliver according to the Custom of the Port’’, the wording was held to refer not only to the method of delivery but also to a port custom under which Laytime did not begin until the ship had Berthed under the supervision of the Harbour Master.

The practical lesson is that custom can still matter, especially in trades or Ports where long-established local practices govern the order, manner, or location of cargo operations. However, the party relying on custom must prove it strictly, and the custom must yield to clear Charterparty wording.

Obstacles Created by the Charterer

Where a ship is prevented or delayed from becoming an Arrived Ship by an obstruction created by the Charterer, or by persons for whom the Charterer is responsible, the general rule is that the Charterer is liable for the resulting delay. The same principle may apply where the Charterer did not create the obstruction but was under a duty to remove it and failed to do so.

Gorell Barnes J stated the principle in Ogmore v. Borner:

“It is the ordinary and natural implication that neither party should prevent the other from performing that part of the contract which falls to be performed by that other; and if the Charterers by themselves, or by their Agents acting within the scope of their authority, have placed impediments in the way of Shipowners bringing their ship into Dock, the Charterers ought to be responsible for the delay so caused, as if the ship had in fact arrived in Dock.”

There is an Implied Term that the Charterer must act with Reasonable Despatch and in accordance with the Ordinary Practice of the Port so as to enable the ship to become an Arrived Ship. The burden of proving breach of that implied obligation rests on the Shipowner. The Shipowner must show not merely that delay occurred, but that the delay was caused by the Charterer’s failure to do what the Charterer was contractually or commercially required to do.

Where the Charterer is in breach, the precise remedy is not always straightforward. In some cases, the proper remedy may be damages. In others, the effect may be that Laytime is treated as having commenced earlier than it otherwise would have done. Where the obstacle consists of delay in the acceptance of Notice of Readiness (NOR), at least one London Arbitral Tribunal has been prepared to accelerate the Commencement of Laytime. The better view is that the remedy depends on the nature of the obligation breached, the wording of the Charterparty, and whether the contract provides an agreed rate or mechanism for the relevant delay.

The authorities concerning Charterer-created obstacles broadly fall into two categories. The first category concerns cases where cargo is not ready for loading, or railway wagons or other discharge arrangements are not available, and the Port Authority will not allocate a Berth until those matters are in place. The second category concerns cases where a Berth is refused or delayed because of the number of other ships already under charter to the same Charterer or cargo interest.

Failure to Make Cargo Ready or Put in Place Discharge Arrangements

Owners of Panaghis Vergottis v. William Cory & Son concerned a ship delayed in entering the Dock at Barry to load under a Dock Charterparty. The Shipowner argued that the delay occurred because the Charterers had failed to comply with a Dock company requirement that approximately one-third of the cargo had to be ready before the ship would be allowed into the Dock.

Greer J held the Charterers liable. Greer J stated:

“But I think that Shipowners and Shippers of coal doing business at the South Wales Ports would regard it as reasonable in times of congestion that the Dock authority should require at least one-third of the ship’s cargo to be ready before she was admitted to the Dock; and I think, in refusing to assist the plaintiff’s ship to get into the Dock by complying with the requirements of the Dock authority, that the Charterers broke their contract, and are liable to pay the agreed damages.”

The decision shows that where a Port Authority imposes a commercially reasonable requirement before allowing the ship to enter, and the Charterer’s failure to satisfy that requirement prevents the ship from reaching her contractual destination, the Charterer may be liable for the resulting delay. The delay is then not merely ordinary congestion or port procedure; it is delay caused by the Charterer’s failure to put the cargo operation in a condition in which the Port Authority will allow the ship to proceed.

A similar failure occurred in Samuel Crawford Hogarth v. Cory Brothers & Co Ltd, before the Privy Council. The Charterers failed to have sufficient coal ready at Calcutta, and because of that failure, a Berth could not be obtained. Lord Phillimore, delivering the opinion of the tribunal, restated the general principle and then considered the remedy:

“Whether the latter’s [i.e. Charterer’s] measure of liability is arrived at by giving to the Shipowner damages for the delay, or whether the lay days are ante-dated to that date when they ought to have begun, and the Charterer pays for them at the agreed rate of Demurrage, does not seem to have been determined. But no point as to which of these two measures of payment should prevail has been made by the parties in this case.”

The Privy Council therefore left open whether the Shipowner’s recovery should be framed as damages for delay or by treating Laytime as having started when it would have started but for the Charterer’s breach. The issue has remained important because the two approaches may produce different financial consequences, especially where the Demurrage Rate does not correspond exactly to the Shipowner’s actual loss.

In Fornyade Rederiaktiebolaget Commercial v. Blake & Co and others, the Court of Appeal dealt with a dispute involving the type of railway wagons to be supplied for discharge. The Dock company refused to allow the ship to enter the Dock until the issue concerning wagons had been resolved. The Court of Appeal held that the proper remedy was damages, not Demurrage in the strict sense. Scrutton LJ explained:

“She is not entitled to Demurrage properly so called, because after she got to the place of discharge she was discharged within the contract time. But what she is entitled to is Damages for Detention during the four days in which she was prevented, by the wrongful attitude taken up by the receivers, from getting to the place of discharge.”

This distinction is commercially significant. Demurrage is payable when Laytime has been exhausted and the ship is detained beyond the agreed allowance. Damages for Detention may be recoverable where the ship is wrongfully prevented from reaching the place where Laytime would begin, even though, once she arrives, cargo operations are completed within the contractual time. Where the Charterer’s conduct delays arrival itself, the claim may therefore be for Detention rather than Demurrage, unless the Charterparty clearly provides otherwise.

Congestion Caused by the Charterer’s Other Obligations

The principle was stated clearly by Gorell Barnes J in Ogmore v. Borner:

“if the Charterers have other ships which they have to discharge, and have arranged to discharge, in the Dock before the ship which by the charter is to proceed to the Dock and by the practice of the Port will not be admitted into the Dock while the Charterers have the other ships in the way, the Charterers do prevent the Shipowners from performing their contract until the Charterers have cleared away the impediments.”

However, this rule is subject to two important limitations, both of which substantially reduce its practical reach. The first limitation is that the principle applies only where the other ships occupying or blocking the Berth are under Charterparty to the same Charterer. It does not apply where the Shipowner’s claim is brought against a Charterer who has transferred the cargo to a Consignee and all usable Berths are occupied by ships under Charterparty with different Charterers, even if those ships are discharging cargo for the same Consignee.

The same reasoning applies where the cargo has passed to a Consignee who, for independent commercial reasons, chooses to give Berth priority to ships that arrived later. If the Shipowner’s claim is against the original Charterer, the Charterer will not necessarily be responsible merely because the Consignee could have allocated the Berth differently, even where the Charterer may have had contractual rights against the Consignee under the sale contract.

The rule does, however, apply where the obstruction arises from the Charterer’s own arrangements rather than from the Port Authority. Aktieselskabet Inglewood v. Millar’s Karri and Jarrah Forests Ltd provides a useful example. The ship was ordered to Fremantle for loading. On arrival, she could not move to the jetty nominated by the Charterers because all four workable Berths were already occupied, three of them by ships being loaded by the same Charterers. The loading of those other ships could apparently have been completed at anchorage, and that was in fact the usual practice, partly because water depth alongside was restricted.

Kennedy J held that the Charterers’ own engagements had prevented the ship from becoming an Arrived Ship. Kennedy J expressed the rule in these terms:

“If a ship is prevented from going to the loading place, which the Charterer has the right to name, by obstacles caused by the Charterer or in consequence of the engagements of the Charterer, the Lay Days commence to count as soon as the ship is ready to load, and would, but for such obstacles or engagements, begin to load at that place.”

The second limitation is equally important. The rule does not apply where the relevant delay was of a kind that both Shipowner and Charterer must be taken to have contemplated when the Charterparty was concluded. If the risk of delay was part of the commercial background against which the parties fixed the ship, the Shipowner cannot later treat that anticipated delay as a breach by the Charterer.

This qualification was applied in Harrowing v. Dupre. The ship waited 20 days before obtaining a Berth. If four other ships under charter to the same Charterer had not been ahead of her, she would have obtained a Berth seven days earlier. Even so, Bigham J held that the delay was not legally attributable to the Charterer. Under that Berth Charterparty, the delay was of a kind that should have been within the contemplation of both Shipowner and Charterer when the Charterparty was made, and no separate cause of action arose.

The Court of Appeal reached a similar conclusion in Barque Quilpue Ltd v. Brown, another coal Charterparty case. Vaughan Williams LJ approved a dictum of Rigby LJ in Carlton Steamship Co v. Castle Mail Packets Co, where Rigby LJ had said:

“I do not think that a delay which arose from a contingency, the probability of which must have been perfectly well known to and contemplated by the Shipowners when they entered into the Charterparty, can be considered unreasonable.”

Vaughan Williams LJ then applied that reasoning to the facts before the court:

“In the present case I think it is clear that when the Shipowners entered into the Charterparty to load in regular turn, that is, regular colliery turn, they must have known that the Charterers would have prior engagements which would delay the colliery turn of this particular ship, and they must also have known that a delay of the ship for loading for a number of days—certainly between 40 and 50 days—was not an impossible or even an unusual thing under the conditions of this Port.”

A comparable approach was taken in the American decision The Venore. Even if the Shipowner had proved that the Charterer’s other commitments were a major cause of delay, the evidence showed that, when the contract was made, the Shipowner either knew or ought to have known of the Charterer’s other grain fixtures. The court also held that, where the delay resulted from a circumstance already reflected in the Freight Rate, the Shipowner could not later object. In English practice, such a factor would probably also be taken into account, particularly by Commercial Arbitrators.

Charterer’s Responsibility to Take Steps Enabling a Ship to Qualify as an Arrived Ship

The leading authority on the Charterer’s duty to take steps enabling a ship to become an Arrived Ship is Sunbeam Shipping Co Ltd v. President of India, known as The Atlantic Sunbeam. That case has already been considered in relation to legal readiness and documentary formalities. The dispute concerned a delay of about four days connected with the steps required to obtain Customs Clearance for discharge. One of those steps had to be carried out by the Charterer, and the issue was the degree of diligence required from the Charterer in seeing that the step was performed.

After considering the possible approaches, Kerr J held that the implied obligation was not one requiring extraordinary initiative or exceptional urgency. Kerr J stated:

“A requirement of a high standard of initiative, let alone any excessive zeal, cannot be implied in a situation of this nature, however much one would like to see it used. Something of that kind would require an express term. If, for instance, there were two procedures in a certain Port whereby a ship’s 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 seems to me that the Charterers would be under no implied obligation to use the speedier and unusual procedure.”

In the arbitration from which The Atlantic Sunbeam arose, the Arbitrators had found that there had been a Breach of Duty and that damages were recoverable. Kerr J did not directly decide what remedy should follow from such a breach, but by not disturbing the Arbitrators’ approach, he appears to have accepted that damages could be the proper remedy.

The point was touched on again in The Delian Spirit, which concerned a “reachable on arrival” provision. Sir Gordon Willmer said:

“I prefer to say no more upon the difficult question which might have arisen if the ship 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.”

If that approach is correct in a “reachable upon arrival” situation, the position may still be unresolved in a case like The Atlantic Sunbeam. Nevertheless, the better commercial view is that damages for Detention should be recoverable where the Charterer’s breach prevents the ship from reaching the point at which Laytime could begin. Charterers should not usually be entitled to solve the problem by bringing forward Laytime if the ship has not yet become an Arrived Ship.

The Boral Gas raised a related question concerning liability for providing pre-coolant required before the carriage of liquid ammonia. Under the Charterparty, the Shippers were to supply the pre-coolant. The ship could not tender a Valid Notice of Readiness (NOR) until her tanks had been pre-cooled. It later emerged that the Charterers had not instructed the Shippers to supply the pre-coolant until some time after the ship had arrived.

The Charterers argued that the reference to Shippers supplying the pre-coolant did not impose any duty on them and that the Shipowners should have made their own arrangements directly with the Shippers. Evans J rejected that argument. On the express wording of the Charterparty, the duty rested on the Charterers. At the end of this part of the judgment, Evans J added:

“The majority of Arbitrators referred to The Atlantic Sunbeam [1973] 1 Lloyd’s Rep 482, as authority for an alternative approach leading to the same conclusion by reference to an implied duty upon the Charterers to co-operate in enabling the ship to become an arrived ship.”

Because Evans J had already found an express duty, it was unnecessary to decide the implied duty point further.

The Atlantic Sunbeam was also considered in The World Navigator, a case involving a FOB (Free On Board) sale of maize. Under the Charterparty, Laytime did not begin until the ship reached Berth, although Notice of Readiness (NOR) had already been served. Before the ship could be allowed to Berth, the Sellers’ documentation had to be in proper order. The missing documentation therefore affected not the service of Notice of Readiness (NOR), but the commencement of Laytime. Even so, it appears to have been accepted that the same broad principles applied.

In the Court of Appeal, Staughton LJ considered the implied obligation arising in these circumstances. Staughton LJ stated:

“It seems a fair inference from the award that the ship nominated by the buyers could not proceed to a Berth until some documentation required by the Sellers was in order. In those circumstances there was to my mind plainly an implied obligation of some kind upon the Sellers. The general nature of such an obligation was described by Lord Blackburn in Mackay v. Dick (1881) 6 App Case 251 at p. 263:

‘‘I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectively 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.’’

“That seems to me to be exactly applicable to this case. The Buyers cannot arrange for their ship to be available for loading until the Sellers’ documentation is in order. It is therefore implied that the sellers will do all that is necessary to secure that it is in order. As to the time for performance of the obligation, I can see no difficulty. By the Centro terms the buyers were to give at least 15 days’ pre-advice of the ship’s readiness to load. That was evidentally considered a reasonable time for the sellers to make the necessary arrangements. Having received such a notice, they were obliged to do so within such time as would enable the ship to be ready to load after fifteen days.”

The difficult question is whether the implied obligation is one of reasonable diligence, or best endeavours, or whether it is absolute. There appears to be some tension between the House of Lords decision in Sociedad Financiera de Bienes Raices v. Agrimpex, known as The Aello, and Kerr J’s decision in The Atlantic Sunbeam.

In The Aello, the majority treated the obligation as absolute. In The Atlantic Sunbeam, Kerr J stated that:

“The term to be implied in this case is to the effect that the Charterers were bound to act with reasonable despatch and in accordance with the ordinary practice of the Port of Calcutta in doing those acts which had to be done by them as Consignee s to enable the ship to become an arrived ship.’’

The two lines of authority may be capable of reconciliation by examining the particular act that remained unperformed. In The Aello, the Charterers failed to obtain a giro permit because they had no cargo ready for loading. That was entirely their own commercial responsibility, and they had to bear the consequences even though their best endeavours had failed to find cargo. In The Atlantic Sunbeam, by contrast, the impediment was delay in obtaining a jetty challan, a process requiring cooperation not only from the Consignees or Receivers but also from the Port Authority and Customs. It was at least possible that the Port Authority or Customs had caused the delay.

Staughton LJ ultimately considered that it was unnecessary to decide the precise nature of the implied term because of the Court of Appeal’s conclusion on damages. The exact legal character of the implied obligation therefore remains open for further judicial consideration.

What is WIBON? Whether in Berth or Not (WIBON)

Whether in Berth or Not (WIBON) is one of the most widely used special clauses designed to advance the Commencement of Laytime from the point at which it would otherwise begin under ordinary common law principles. Its main function is to protect the Shipowner from delay caused by the absence of an available Berth in a Berth Charterparty.

Where the Charterparty identifies a Berth as the contractual destination, or gives the Charterer an express right to nominate the Berth, Whether in Berth or Not (WIBON) means that, if no Berth is Available, Laytime may begin after the expiry of any contractual notice period once the ship has reached “a position within the Port where she is at the immediate and effective disposition of the Charterer”.

The authorities make clear that the ship must still be within the Port Limits. The clause does not normally permit Laytime to begin while the ship is outside the Port, unless other wording, such as WIPON, also applies. It is therefore unnecessary for the ship to reach the nominated Berth before Laytime begins, provided that the Berth is not Available. However, the word “Available” is not synonymous with Accessible. A Berth may be physically difficult or temporarily impossible to reach without necessarily being unavailable in the legal sense required by the clause.

Although Whether in Berth or Not (WIBON) is also sometimes included in Port Charterparties, its practical effect there is usually limited. In a Port Charterparty, the ship can often become an Arrived Ship without being in Berth, provided she is within the Port and at the immediate and effective disposition of the Charterer. The real significance of WIBON is therefore found mainly in Berth Charterparties.

The leading authority on the meaning of the phrase is the House of Lords decision in The Kyzikos. Before considering that decision, however, it is helpful to examine earlier authority. The first significant judicial discussion of the expression appears in Northfield Steamship Co Ltd v. Compagnie L’Union des Gaz, a Court of Appeal decision. The Charterparty in that case was a Berth Charterparty and contained an Additional Clause stating: “Time to commence when steamer is ready to unload and Written Notice of Readiness (NOR) given, Whether in Berth or Not (WIBON)”.

Farwell LJ explained the commercial purpose of the clause:

“Want of space to Berth is of very frequent occurrence, and the parties appear to me to have expressly provided for it, and this disposes also of the contention that the ship was not ready to unload. She was ready so far as she was concerned, and the fact that she was not in a Berth is rendered immaterial by this clause.”

The effect of this reasoning is that WIBON removes, in appropriate circumstances, the need for the ship actually to be in Berth before Laytime can begin. If the ship has otherwise arrived at the relevant waiting place within the Port and is ready to load or discharge, the absence of a free Berth will not prevent Notice of Readiness (NOR) from operating. The clause therefore changes the ordinary rule of a Berth Charterparty by treating the ship as sufficiently arrived for Laytime purposes when the lack of Berth space is the obstacle.

Commercially, WIBON is designed to prevent a Charterer from obtaining the benefit of a Berth Charterparty’s strict arrival rule where the only reason the ship cannot reach the Berth is that no Berth is available. It does not, however, remove every other requirement for the commencement of Laytime. The ship must still be at the contractually relevant waiting place or within the relevant Port, must be ready in the ordinary physical and legal sense, must tender Notice of Readiness (NOR) if required, and must satisfy any additional conditions imposed by the Charterparty.

A later judicial consideration of this issue appears in Carga del Sur Compania Naviera SA v. Ross T Smyth & Co Ltd, known as The Seafort, a decision of McNair J. In that case, the Seafort was chartered to carry grain from Vancouver to London and Hull under a Baltimore Berth grain charter. Clause 9 provided that “Time at second Port to count from arrival of ship at second Port, whether in Berth or not.” Hull was the second Port. The usual practice for ships of the Seafort’s size was to wait for a Berth at Spurn Head Anchorage, approximately 22 miles from Hull, until a Berth became available. That anchorage was outside the legal, administrative and fiscal limits of Hull.

The Shipowners argued that time started to run when the ship reached Spurn Head. McNair J rejected that argument and held that the phrase “arrival at second Port” required the ordinary rules of arrival at a Port to be satisfied. McNair J stated:

“By using the words ‘‘arrival… at second Port’’ in this Charterparty the parties must, I think, be presumed to have intended that the normal conditions which determine whether a ship has ‘‘arrived’’ at or in a Port should apply. In my judgment, the true effect of the last sentence of Clause 9 is to provide that time which has started to run at the First Discharge Port shall start to run again after the passage between the first and second Discharging Ports has been completed by arrival at the second discharging Port.”

The point was also considered by the Court of Appeal in The Johanna Oldendorff before that case reached the House of Lords. After reviewing the authorities, Roskill LJ concluded:

“upon the true construction of this phrase its application is, and the phrase has for 50 years always been regarded as, limited to a case where the ship is already an Arrived Ship and that its use does not dispense with the necessity for the ship being an arrived ship before Notice of Readiness (NOR) can be given and time start to count. Only when the ship has arrived does the clause operate to make Laytime Commence even though the ship is not in Berth.”

Roskill LJ also observed that, on the facts of that case, the result would have been the same even without the phrase, because the Charterparty was a Port Charterparty.

Buckley LJ also dealt with the expression and explained its effect in Berth Charters:

“In the case of a Berth charter the ship does not reach her destination until she is Berthed. In the case of such a charter the insertion of the words ‘‘Whether in Berth or Not (WIBON)’’ makes Lay Days run from a time when the ship has not yet Berthed. Whether it is right to say that the effect of the insertion in such a case is to make the operation of the charter the same as a Port Charter, so that the ship should be treated as ‘‘Arrived’’ although she has not Berthed, or whether the insertion merely advances the time from which lay days run notwithstanding that the ship may not technically have arrived, perhaps does not much matter. The latter seems to me to be probably the more correct view. The purpose of inserting the same words in a Port Charter is likely to be more obscure, because in such a case the commencement of lay days will not normally depend on whether the ship has Berthed or not.”

Lord Diplock later expressed a similar view in The Maratha Envoy:

“The effect of this well-known phrase in Berth Charters has been settled for more than half a century. Under it time starts to run when the ship is waiting within the named Port of destination for a Berth there to become vacant. In effect it makes the Lord Reid Test applicable to a Berth Charter. It has no effect in a Port Charter; the Lord Reid Test is applicable anyway.”

In the earlier authorities, no Berth was open when Notice of Readiness (NOR) was tendered. The Kyzikos raised a different and more difficult question. In that case, a Berth was available, but the ship could not reach it because of adverse weather. The ship arrived off Houston for discharge and anchored because of fog. She later attempted to enter Berth but had to anchor again until the fog cleared. The courts therefore had to consider not only the meaning of Whether in Berth or Not (WIBON), but also whether the ship was at the immediate and effective disposition of the Charterers and how an “Always Accessible (AA)” clause, said to be equivalent to a “Reachable on Arrival” provision, should operate.

In the Arbitration, the Arbitrator found for the Shipowners and held that the phrase was not limited in the way contended by the Charterers. Webster J in the High Court disagreed. Webster J held that a Whether in Berth or Not (WIBON) clause did not transform the Shipowners’ primary obligation from carrying the cargo to a Berth into carrying it merely to a named Port. Webster J therefore did not accept Roskill LJ’s earlier statement in The Johanna Oldendorff that:

“The phrase ‘‘Whether in Berth or Not (WIBON)’’ was designed to convert a Berth Charterparty into a Port Charterparty and to ensure that under a Berth Charterparty Notice of Readiness (NOR) could be given as soon as the ship had arrived within the commercial area of the Port concerned so that Laytime would start to run on its expiry.”

After considering the earlier authorities, Webster J concluded that they did not clearly support the proposition that a Whether in Berth or Not (WIBON) clause actually converts a Berth Charter into a Port Charter as a matter of law. Webster J stated:

“I recognise that, when the ship is unable to come alongside because no Berth is available, the ‘‘Whether in Berth or Not (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.”

Webster J therefore held:

“in the present case, time did not begin to run until the ship 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.”

The Court of Appeal reversed that decision. Lloyd LJ delivered the leading judgment, with the other members of the Court agreeing. Lloyd LJ referred to the earlier authorities, including The Shackleford, where Buckley LJ had indicated that there was no real distinction between Buckley LJ’s own view and Roskill LJ’s view in The Johanna Oldendorff. Lloyd LJ rejected the narrow construction adopted by Webster J and stated:

“I do not doubt that the reason why the provision was originally included in Berth Charters was to cater for the case where the Port is congested and a Berth unavailable. But there is nothing in the wording of the provision which limits its operation to such a case. The wording is quite general. Notice of Readiness (NOR) may be given whether in Berth or not. Ex hypothesi, therefore, Notice of Readiness (NOR) may be given before the ship has reached its contractual destination.”

The matter then reached the House of Lords. Lord Brandon delivered the principal speech and summarized the competing interpretations in this way:

“The views have been advanced, at each stage of the proceedings, with regard to the meaning of the phrase ‘‘Whether in Berth or Not (WIBON)” in a Berth Charterparty. One view, put forward by the Charterers and accepted by Mr Justice Webster, is that the phrase covers cases where the reason for the ship not being in Berth is that no Berth is available but does not cover cases where a Berth is available and the only reason why the ship cannot proceed to it is that she is prevented by bad weather such as fog. The other view, put forward by the owners and accepted by the Arbitrator and the Court of Appeal, is that the phrase covers cases where a ship is unable to proceed to a Berth either because none is available or because, although a Berth is available, the ship is prevented by bad weather, such as fog, from proceeding to it.”

Lord Brandon noted that the exact issue had not previously arisen for decision. After reviewing the authorities and the Charterparty context, Lord Brandon held in favour of the Charterers:

“I am of opinion, having regard to the authorities to which I referred earlier and the context in which the acronym ‘‘Whether in Berth or Not (WIBON)” is to be found in the Charterparty here concerned, that the phrase “Whether in Berth or Not (WIBON)” 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 effect of The Kyzikos is that Whether in Berth or Not (WIBON) is concerned with the availability of the Berth, not with every reason why a ship may be unable to reach it. If a Berth is vacant but cannot be reached because of fog, bad weather, insufficient water, or possibly a navigation restriction imposed by the Port Authority, the clause will not necessarily assist the Shipowner. Some difficult questions may still arise, especially where the cause of the obstruction makes it unclear whether the Berth is truly “available” or merely physically unoccupied.

The effect of Whether in Berth or Not (WIBON) in a Dock Charterparty has not been directly examined in the authorities. In ordinary circumstances, the phrase is unlikely to add much, because Laytime in a Dock Charter usually begins from arrival in Dock, subject to the terms of the Charterparty.

Even in a Berth Charterparty, the effect of Whether in Berth or Not (WIBON) may be displaced or limited by a properly drafted Exception Clause. The Amstelmolen provides an important example. The ship was unable to Berth because of congestion. The Court of Appeal held that Laytime ran because of the “Whether in Berth or Not (WIBON)” provision, but there was also an obstruction within the meaning of the Centrocon Strike Clause. As a result, time did not count for as long as the obstruction continued.

The Voylayrules 1993 stipulate:

22. ‘‘Whether in Berth or Not (WIBON)” or ‘‘BERTH OR NO BERTH’’ shall mean that if no loading or discharging Berth is available on her arrival the ship, on reaching any usual waiting-place at or off the Port, shall be entitled to tender Notice of Readiness (NOR) 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 ship is ready to load or discharge at the Berth.

This differs in important respects from the Charterparty Laytime Definitions 1980, which provide:

26. ‘‘Whether in Berth or Not (WIBON)” or ‘‘BERTH NO BERTH’’—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 (NOR) can be given when the ship has arrived at the Port in which the Berth is situated.

A comparable definition is also found in Baltic Code 2007:

WHETHER IN BERTH OR NOT (WIBON) or BERTH OR NO BERTH—if the designated loading or discharging Berth is not available on her arrival, the ship on reaching any usual waiting place within the Port, shall be entitled to tender Notice of Readiness (NOR) from it and Laytime shall commence as provided under the Charterparty.

It is important to stress that these definitions apply only where they are expressly incorporated into the Charterparty. Without incorporation, the meaning of the phrase is governed by the ordinary law and the decided authorities.

There are several important differences between the Voylayrules 1993 definition, the Charterparty Laytime Definitions 1980 definition, and the judicial meaning of the phrase. The Voylayrules 1993 definition permits Notice of Readiness (NOR) to be tendered on reaching a usual waiting place “at or off the Port”. This wording appears intended to allow notice to be tendered outside the Port Limits where that is the usual waiting place. That is not the common law position. At Common Law, Whether in Berth or Not (WIBON) accelerates the Commencement of Laytime only after the ship has arrived within the Port Limits.

The second and more significant distinction is that the Voylayrules 1993 refer to the Berth being “available”, whereas the Charterparty Laytime Definitions 1980 referred to the Berth being “accessible”. This change was plainly intended to reflect the House of Lords decision in The Kyzikos. Under that decision, a Berth may be available even if the ship cannot reach it because of bad weather.

The third and most controversial change appears in the final sentence of the Voylayrules 1993 definition. It provides that Laytime or Time on Demurrage stops running once the Berth becomes available, even if the ship still cannot reach the Berth.

Where the Voylayrules are expressly incorporated, that provision must be applied. Where they are not incorporated, however, there are strong legal and commercial reasons for saying that the final sentence should not govern the position.

Commercially, a Shipowner includes Whether in Berth or Not (WIBON) in a Berth Charterparty to protect against delay caused by congestion and lack of Berth availability. It would be commercially harsh if time began to run when the ship arrived and no Berth was available, but then stopped merely because a Berth later became vacant, even though the ship still could not reach it for some other reason. That situation resembles the broader debate over whether a Laytime Strike Clause continues to protect the Charterer after the ship has already gone on Demurrage.

The legal reasoning is also important. Whether in Berth or Not (WIBON) usually appears in a clause concerned with the Commencement of Laytime. It is not normally drafted as an exception or interruption clause governing the running of Laytime after it has started. Although Lord Brandon in The Kyzikos referred to availability in the present tense, there is no reason to treat that language as extending the clause beyond the commencement stage into a continuing mechanism for stopping and restarting Laytime or Demurrage.

The drafters of the Voylayrules 1993 may have been influenced by the expression “Time Lost Waiting for Berth”, which also turns on the availability of a Berth. But that phrase normally appears in a separate provision, or at least in a separate sentence, and the words “Time Lost” naturally suggest a continuing factual inquiry. Whether in Berth or Not (WIBON), by contrast, is primarily concerned with when Laytime starts.

There is also a general principle that once Laytime or time on Demurrage has begun, it continues to run without interruption unless a specific exception or interruption clause applies. Accordingly, at Common Law, the better view is that Whether in Berth or Not (WIBON) is confined to the Commencement of Laytime. Once time has begun, it continues to run until cargo operations are completed, unless another clause in the Charterparty suspends or interrupts it.

The practical result is that Whether in Berth or Not (WIBON) should not be treated as a complete waiting-time code unless the Charterparty clearly makes it one. Its primary role is to enable Notice of Readiness (NOR) and Laytime to operate before the ship reaches the Berth, but only where no Berth is available and the ship has reached the required waiting place. Its effect after Laytime has begun depends on the Charterparty wording and on whether any separate exception, interruption, strike, congestion, or waiting-time clause applies.

What is WIPON? Whether in Port or Not (WIPON)

The expression Whether in Port or Not (WIPON) is commonly used together with Whether in Berth or Not (WIBON). The two phrases operate on broadly similar principles, although the relevant comparison is between Port and Berth. In practical terms, WIPON is intended to allow Notice of Readiness (NOR) to be tendered before the ship has physically entered the named Port, provided the ship has reached the recognized waiting place for that Port and is otherwise at the effective disposal of the Charterer.

The clause does not mean that a ship can tender Notice of Readiness (NOR) at any place, however distant, simply because the ship is on her way to the Port. The ship must still have reached a position that is commercially connected with the named Port and that can properly be regarded as the waiting place for ships bound for that Port. The requirement of readiness also remains important. WIPON may relax the requirement of physical presence inside the Port, but it does not remove the need for the ship to be ready or the need to comply with other contractual conditions for tendering Notice of Readiness (NOR).

An unusual example arose before London Arbitrators in connection with the convoy system then operating for ships carrying cargo to Iranian Ports. Under the Charterparty, the ship was ordered to proceed to Bandar Bushire. In order to reach that destination, she had to join a convoy at Bandar Abbas, where she arrived in September 1981. The Ship Master sent Notice of Readiness (NOR) by cable. The ship did not join a convoy until late November, reached Bandar Bushire in early December, Berthed a few days later, and completed discharge near the end of December.

The Shipowner argued that the ship became an Arrived Ship for Bandar Bushire when she reached Bandar Abbas, even though Bandar Abbas was about 400 miles away. The Shipowner contended that the ship was ready to discharge and entirely at the disposal of the Charterers. On that basis, the Shipowner argued that two of the three requirements identified in The Johanna Oldendorff had been satisfied, while the third requirement, physical arrival, had been displaced by Clause 22, which permitted Notice of Readiness (NOR) to be tendered Whether in Port or Not (WIPON). The Shipowner therefore maintained that the cabled Notice of Readiness (NOR) sent by the Ship Master in September was valid.

The Arbitrators rejected that argument. They held that the delay at Bandar Abbas formed part of the continuing Voyage to Bandar Bushire. The Voyage did not end until the ship reached the roads off Bandar Bushire. A place nearly 400 miles from the named Discharge Port could not sensibly fall within the scope of WIPON. If the parties intended Notice of Readiness (NOR) to be tendered at such a remote location, very clear and special wording would have been required. The convoy system was treated as a navigational risk of the Voyage falling on the Shipowners’ Account, not as a waiting period at the destination Port. Bandar Abbas was not the Usual Waiting Place for Bandar Bushire.

The meaning of WIPON was also considered in The Adolf Leonhardt. Staughton J had to decide whether Notice of Readiness (NOR) for Rosario could validly be tendered at Intersection, about 200 miles downriver. Staughton J considered that the phrase may have been intended for Ports that do not have a waiting area inside their own limits. In his view, the ship still had to reach the usual waiting area for the Port concerned and had to be at the immediate and effective disposition of the Charterers. Staughton J concluded:

“It seems to me that a ship is as effectively at the disposition of the Charterer at Intersection as modern conditions demand, given that she is not required to be in the Port of Rosario by reason of the use of the words ‘‘Whether in Port or Not (WIPON)’’. Accordingly I would have upheld the conclusion of the Board of Appeal that Notice of Readiness (NOR) could be given there.”

However, Staughton J also held that, as with WIBON, the practical effect of WIPON could be neutralized by a properly drafted exception clause, such as the Centrocon Strike Clause. The clause may therefore advance the point at which Notice of Readiness (NOR) can be tendered, but it does not necessarily override other exceptions or interruptions that apply under the Charterparty.

In London Arbitration 8/03, the Tribunal considered a WIPON provision in the context of a Berth Charterparty. The Tribunal stated:

“In the case of a Berth Charter, that at very least required that the ship should have completed the sea leg of the Voyage and reached a point as near as possible to the Loading or Discharging Berth. At Ports where that Port was outside Port Limits, the Whether in Port or Not (WIPON) provision would assist the owner by allowing the ship to tender Notice of Readiness (NOR) there. Where however, as at Setubal, the ship 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.”

These decisions show that WIPON may operate even where the ship is some distance from the named Port, but only where the waiting place is recognized as the relevant waiting place for that Port and where the ship has gone as far as she can reasonably go in the circumstances. The clause does not assist where the ship merely pauses during the approach Voyage, for example to pick up a pilot, without having reached the proper waiting place for the Port or without having completed the sea leg of the Voyage in the commercial sense.

Time Lost in Waiting for Berth to Count as Laytime

The effect of a clause providing that time lost in waiting for Berth is to count as Laytime is that the period spent waiting for a Berth is charged against Laytime. The clause is similar in commercial purpose to a Whether in Berth or Not (WIBON) provision, but there is an important difference. The waiting place does not necessarily have to be within the Port Limits. It must, however, be sufficiently close to the Port and sufficiently connected with the Port operation for the ship to say, in substance, “we have gone as far as we can” and are now waiting for a Berth.

Where the ship is outside Port Limits, the Reid Test from The Johanna Oldendorff may be adapted for practical purposes. If the ship is at a place where waiting ships customarily remain, that will normally be enough. If the ship waits somewhere else, the Shipowner will need to show that the ship was genuinely ready and able to proceed to Berth when one became available.

If the waiting place lies within Port Limits, the clause may have limited effect in a Port Charterparty, because time spent waiting within the Port may already count as Laytime once the ship is an Arrived Ship and the other requirements have been met. In a Berth Charterparty, however, the clause is commercially important because it brings forward the financial consequences of waiting for Berth, even though the ship has not yet reached the Berth.

The expression originated in the Gencon Charterparty. In the 1922 version, the wording appeared in separate provisions: one referring to time counting as loading time, and the other to time counting as discharging time. The 1976 revision combined the two into the phrase “Time lost in waiting for Berth to count as loading or discharging time, as the case may be”. The wording considered in The Darrah was a variation of this formulation. In practical terms, the Gencon Charterparty wording up to and including the 1976 revision produces the same general effect. The Gencon Charterparty Form 1994, however, replaced the “Time Lost” wording with a different provision, which requires separate treatment.

The Charterparty Laytime Definitions 1980 provide:

‘‘TIME LOST WAITING FOR BERTH TO COUNT AS LOADING/DISCHARGING TIME OR AS LAYTIME: means that if the principal reason why a Notice of Readiness (NOR) cannot be tendered is that no loading/discharging Berth is available to the ship, Laytime will begin to run when the ship commences waiting for a Berth and will continue to run, unless previously used up, until the ship ceases waiting. The Laytime exceptions apply to the waiting period as though the ship were at the loading/discharging Berth provided the ship is not already on Demurrage. When the waiting period ends, time stops counting and begins again when the ship arrives at the loading/discharging Berth subject to the tendering of a Notice of Readiness (NOR) if one is required by the Charterparty and to any notice time if stipulated in the Charterparty, unless the ship is by then on Demurrage.”

The Voylayrules 1993 define the expression in similar but not identical terms:

‘‘TIME LOST WAITING FOR BERTH TO COUNT AS LOADING OR DISCHARGING TIME’’ or ‘‘AS LAYTIME: shall mean that if no loading or discharging Berth is obtainable and the ship is unable to tender Notice of Readiness (NOR) at the waiting-place then any time lost to the ship shall be treated as if Laytime were running, or as time on Demurrage if Laytime has expired. Such time shall stop counting once the Berth becomes obtainable. When the ship reaches a place where she is able to tender Notice of Readiness (NOR), Laytime or time on Demurrage shall recommence after such tender and, in respect of Laytime, upon expiry of any notice time provided in the Charterparty.”

The definitions emphasize Berth availability. The clause therefore operates where the ship cannot enter Berth because no Berth is available, normally because of congestion. It does not automatically apply where the ship is waiting because of weather, navigational restrictions, or other causes unrelated to Berth availability. Support for this view is found in Lord Diplock’s speech in The Darrah, where Lord Diplock stated:

“‘‘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 ship 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.”

Before The Johanna Oldendorff, this kind of clause was especially important in Port Charterparties because The Aello had narrowed the circumstances in which a ship could be treated as having arrived within the Port. After The Johanna Oldendorff, the clause became less important where the ship waits within Port Limits at the usual waiting place. It remains important in Berth Charters and at Ports such as Hull or Glasgow, where the usual waiting place may be outside Port Limits.

The commercial rationale was explained by Lord Diplock in The Darrah:

“In a Berth Charter the effect of the clause is to put the Shipowner in the same position financially as he would have been if, instead of being compelled to wait, his ship had been able to go straight to her Berth and the obligations of the Charterer to carry out the loading or discharging operation had started then. In a Port Charter the Clauses are superfluous so far as concerns time spent in waiting in turn within the limits of the Port. This counts as Laytime anyway; it is Laytime. The clauses would, however, have the same effect as in a Berth Charter in respect of Ports like Hull or Glasgow where the usual waiting place is outside the limits of the Port.”

The judicial history of this clause begins with North River Freighters Ltd v. President of India, known as The Radnor. That case concerned a Berth Charterparty. The Charterer argued that loading time did not begin under the Gencon Charterparty Form “Time Lost” clause until Notice of Readiness (NOR) had been tendered. The Court of Appeal rejected that argument and reversed McNair J. Singleton LJ stated:

“The Time Lost is to count as, or to be added to, loading time in order to ascertain the position between the parties. I am unable to accept the view that under the words in Line 67 time is not lost until notice has been given under Clause 17.”

Lord Diplock later commented on The Radnor in The Darrah:

“The correctness of the actual decision in The Radnor is not in doubt. It cannot have been intended that Notice of Readiness (NOR) is required to start time running under the Time Lost Clause, for if it were the Clause could have no application in a Berth Charter, for which it is primarily designed, since Notice of Readiness (NOR) under such a charter could never be given until the period of waiting was over and the ship was already in Berth.”

In The Radnor, Singleton LJ and Parker LJ treated the “Time Lost” clause as separate from the ordinary Laytime Clause. The court did not expressly decide how Demurrage should be calculated under the original arbitration award, but that award had been calculated on the basis that the ordinary Laytime Exceptions did not apply to the waiting period.

The next major case was Metals & Ropes Co Ltd v. Filia Compania Limitada, known as The Vastric, again before McNair J. The issue was whether periods that would have been excluded from Laytime if the ship had been in Berth should nevertheless count under the waiting-time provision. McNair J indicated that, commercially, he would have preferred to ask how much worse off the Shipowners were because the Berth was unavailable. On that basis, only a limited amount of time would have been lost, because much of the waiting period would not have counted as Laytime had the ship been in Berth. McNair J observed:

“It seems to me that there is a very great commercial sense in that result.”

However, McNair J considered himself bound by the earlier Court of Appeal authority and held that time which would have been excluded from Laytime if the ship had been in Berth had to be counted under the waiting time provision.

The issue arose again in Ionian Navigation Co Inc v. Atlantic Shipping Co SA, known as The Loucas N. The question was whether the Centrocon Strike Clause applied to waiting time. The ship was fixed from Caen and Antwerp to Houston, New Orleans and Tampa. She was delayed off Caen for slightly more than a day because of congestion and off Houston by a combination of a strike and post-strike congestion.

The Court of Appeal rejected the Charterers’ appeal and held that time had been lost at both Ports while waiting for a Berth. The “Time Lost” clauses were treated as distinct from the Centrocon Charterparty Form Strike Clause. Had the ship been in Berth, both the strike delay and the congestion resulting from the strike would have been excused. However, the waiting-time clause operated independently. Lord Denning explained:

“On this point Mr Rokison stressed the words ‘‘lost in waiting’’, which show, he said, that you had to look for the damage which the owners had suffered by the ship being delayed outside. I cannot accept this contention. If anyone had asked the master of this ship, when she was waiting outside Houston, ‘‘What are you waiting for?’’, he would say: ‘‘I am waiting for a Berth.’’ No matter what was the cause of the waiting; no matter whether it was a strike or congestion or anything else at the Port, he would say that he was waiting for a Berth. That simple illustration shows that the time lost was lost in waiting for a Berth.”

This reasoning gives the clause a broad practical operation. Once the ship is waiting for a Berth, the time lost may count under the waiting-time provision even though the underlying reason for the unavailability of the Berth includes matters such as strike, congestion, or the after-effects of strike. The clause therefore needs to be read carefully alongside strike clauses, congestion clauses, Laytime exceptions, and Demurrage provisions.

The practical conclusion is that “Time Lost Waiting for Berth to Count as Laytime” is not merely another way of saying WIBON. WIBON generally allows Notice of Readiness (NOR) to be tendered and Laytime to start when no Berth is available, subject to the ship being at the required waiting place. A Time Lost clause may operate even where Notice of Readiness (NOR) cannot yet be tendered and may charge waiting time against Laytime or Demurrage by its own mechanism. The clause can therefore have significant financial consequences, particularly where the waiting place lies outside Port Limits or where ordinary Laytime exceptions might otherwise have protected the Charterer.

Roskill LJ explained the operation of this kind of clause in The Johanna Oldendorff in the Court of Appeal in the following terms:

“the sole question would be what the length of time was during which the ship was waiting for Berth and that (on the authorities) would be determined by reference to the calendar time so occupied. The exceptions in the Laytime Clause would not exclude from such calendar time Sundays, Holidays and other periods excepted from Laytime.”

In the High Court in The Loucas N, Donaldson J had expressed a similar view. Donaldson J considered that, even in a Port Charterparty, where the ship’s waiting period would otherwise fall within the period during which Laytime was running, the separate “Time Lost” machinery took priority over the ordinary Laytime provisions. On that reasoning, periods that would otherwise be excluded from Laytime were not excluded when calculating time lost while waiting for Berth. Donaldson J reached a comparable conclusion at first instance in The Finix.

Those earlier authorities were later reconsidered in The Darrah, which eventually came before the House of Lords. The Darrah concerned a Port Charterparty for the carriage of cement from Novorossisk to Tripoli. The dispute related to the period during which the ship waited for a Berth at Tripoli, and the waiting took place within the Port limits.

Under the ordinary rules applicable to a Port Charterparty, Laytime had already begun to run. The issue was whether periods of adverse weather, weekends, and holidays, which would normally be excluded from Laytime under the Laytime provisions, should also be excluded when calculating time lost while waiting for Berth. At first instance, Ackner J followed the earlier line of authority and held that none of those periods was excluded from waiting time.

The Court of Appeal reversed that decision and drew a distinction between two situations: first, where the ship was already an Arrived Ship; and second, where she had not yet reached her contractual destination. In the first situation, the Laytime Exceptions were to apply. In the second, they were not.

When the case reached the House of Lords, their Lordships went further and held that Laytime Exceptions applied in both situations. In other words, whether the ship had already reached her specified destination or was still waiting outside it under a “Time Lost” provision, the waiting time had to be calculated in the same manner as Laytime, including the relevant exceptions.

Lord Diplock explained why the earlier approach needed correction. One of the reasons was that the previous interpretation produced an uncommercial result:

“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.”

Viscount Dilhorne adopted the same commercial reasoning:

“So in the present case it does not look right that there should be deducted from the permitted discharging time by virtue of the time lost provision periods of time which would not be counted under the discharging provision. If my conclusion is correct, the fact that there is an overlap of the time lost and the discharging or loading provisions will not matter, for the time will be counted in the same way and a Shipowner will not gain a greater advantage from his ship being kept waiting for a Berth from her being kept at her Berth.”

After the House of Lords gave judgment in The Darrah, the Court of Appeal reconsidered an appeal from Donaldson J’s decision in The Finix. This point occupied only a small part of the appeal, and Lord Denning simply stated that the earlier decision of the Umpire and the judge was wrong.

London Arbitration 8/03 later showed that a time lost waiting for Berth provision remained operative even though the Tribunal had also found that a Notice of Readiness (NOR) previously tendered under a Whether in Port or Not (WIPON) provision was invalid. By contrast, in London Arbitration 14/05, the Tribunal held that where a ship had reached a place at which a valid Notice of Readiness (NOR) could have been tendered, but no valid notice was in fact tendered, the “Time Lost” provision did not allow time to continue counting in the absence of a valid Notice of Readiness (NOR).

Where more than one Charterparty is involved, or where the Shipowner is permitted to complete the ship with other cargo, the waiting must relate to the cargo governed by the particular Charterparty. A Shipowner cannot rely on waiting caused by another parcel or another contractual employment unless the waiting is properly connected with the cargo to which the relevant clause applies.

How Time Lost Should Be Counted

A further question is whether time lost while waiting for Berth should be inserted at the beginning of the Laytime calculation or added at the end. Two cases have considered the issue and reached different conclusions. The better view is the later approach, namely that the waiting time should be brought into account when it actually accrues.

The first case was Government of Ceylon v. Societe Franco-Tunisienne d’Armement-Tunis, known as The Massalia (No 2). Diplock J stated:

“The last matter which I have to decide is whether one adds the time lost in waiting for a Berth at the beginning or at the end of the lay days. That sounds to an arithmetician as if the sum must come to the same, but in this particular case I understand that it makes a difference of a day, because, if one adds it at the beginning, the Sunday, October 28, is excluded from the Laytime and therefore counts as Demurrage. If, on the other hand, one adds it at the end, then the Sunday comes during Laytime, and does not count. So it does make a difference of 24 hours. Without giving any reason, I hold that it should be added at the end.”

The second case was Ionian Navigation Co Inc v. Atlantic Shipping Company SA, known as The Loucas N. At first instance, Donaldson J said:

“I consider that it should be brought into account as and when the delay occurs. It is, of course, quite separate from the time allowed for loading and discharging but the extent of the delay in waiting for a Berth affects the yardstick which has to be applied in determining how much chronological time remains available for the completion of these processes.”

At the time Donaldson J gave that judgment, the law proceeded on the assumption that Laytime Exceptions did not apply to waiting time. That explains why he described waiting time as separate. After The Darrah, however, Laytime Exceptions do apply to waiting time. This makes it even more logical that waiting time should be taken into account as it occurs, rather than artificially inserted at the beginning or added at the end of the Laytime calculation.

Time Lost in Waiting for Berth to Count in Full

A variation of the standard phrase has been examined in London Arbitration. The Shipowner argued that the words “Time Lost in waiting for Berth whether in Free Pratique or not to count in full” meant that all time spent waiting for a Berth at the Discharge Port should count without the benefit of any Charterparty exceptions. The Shipowner relied heavily on the words “in full”.

The Charterers argued that “time” in this context meant Laytime, so that the Charterparty exceptions applied in the same way as they would have applied if the ship had already been in Berth.

The Arbitrators accepted the Charterers’ argument. Following The Darrah, they held that “Any Time Lost” meant any Laytime lost. If the parties intended to depart from the ordinary method of Laytime calculation and exclude all exceptions, much clearer wording was required. The Arbitrators suggested that language such as “Any time lost in waiting for Berth to count in full, with all exceptions excluded” would have been sufficient. Because no such wording had been used, the Shipowners’ claim for additional Demurrage failed.

The decision confirms that even emphatic words such as “in full” may not be enough to displace the normal operation of Laytime exceptions. If Shipowners want waiting time to count continuously without exceptions, the Charterparty must say so expressly and unambiguously.

Norgrain Charterparty—Waiting for Berth

The Norgrain Charterparty contains a specific provision in Clause 17 dealing with the situation where the ship is prevented from entering the commercial limits of the Port. The clause provides that time used in the stated circumstances is to count against Laytime and is to be added to Laytime or Demurrage.

In London Arbitration 5/88, the Arbitrators held that this wording operated differently from the ordinary “Time Lost Waiting for Berth” clause. Under the Norgrain wording, waiting time was to be added after the main Laytime calculation had been completed. The reference to waiting time counting as Laytime meant that it had to be calculated in the same way as Laytime.

The result was practical. If some allowed Laytime remained after calculating the time used within the Port, that remaining Laytime could be set off against the waiting period. If no Laytime remained, the waiting period was calculated as Demurrage. If the remaining Laytime was insufficient to absorb the whole waiting period, the time counted partly as Laytime and partly as Demurrage.

Gencon Charterparty Form 1994—Waiting for Berth

The “Time Lost waiting for Berth” wording found in Clause 6(c) of earlier versions of the Gencon Charterparty Form was replaced in the 1994 version by a new provision at lines 109–119:

“If the Loading/Discharging Berth is not available on the vessel’s arrival at or off the Port of loading/ discharging, the vessel shall be entitled to give Notice of Readiness (NOR) within ordinary office hours on arrival there, whether in free pratique or not, whether customs cleared or not. Laytime or time on Demurrage shall then count as if she were in Berth and in all respects ready for loading/discharging provided that the Master warrants that she is in fact ready in all respects. Time used in moving from the place of waiting to the loading/discharging Berth shall not count as Laytime. If, after inspection, the vessel is found not to be ready to load/discharge time lost after the discovery thereof until the vessel is again ready to load/discharge shall not count as Laytime.”

The first part of this provision deals with the place and circumstances in which Notice of Readiness (NOR) may be given where a Berth is not available. The word used is “available”, not “accessible”. That distinction is important. The use of “available” suggests that the clause is aimed mainly at non-availability caused by congestion or occupation of the Berth, rather than a situation where the Berth exists but cannot be reached because of weather, lack of water, or other navigational difficulty.

Although the clause uses permissive language by stating that the ship “shall be entitled” to give Notice of Readiness (NOR), the remaining wording proceeds on the assumption that the notice has in fact been tendered. Once the notice is validly given under the clause, Laytime or time on Demurrage counts as if the ship were in Berth and ready for loading or discharging, provided the Ship Master’s warranty of readiness is true.

A difficulty may arise in a Berth Charterparty where the Berth is available when the ship arrives but cannot be reached. If there is no other clause allowing Notice of Readiness (NOR) to be tendered before arrival in Berth, and the Gencon 1994 provision does not apply because the Berth is “available”, the Charterparty may provide no mechanism for notice to be tendered until the ship actually reaches Berth. That remains so even if, by the time the Berth becomes reachable, it is no longer available.

Under the Gencon 1994 wording, time once started counts as if the ship were already in Berth. Therefore, only exceptions that would apply if the ship were physically in Berth will apply. The provision also expressly states that shifting time from the waiting place to the loading or discharging Berth does not count as Laytime, although time on Demurrage will continue to run unless the Charterparty provides otherwise. The final part of the clause appears to reflect the reasoning in The Linardos and The Jay Ganesh, by preserving the notice while excluding time lost after inspection if the ship is found not to be ready.

Reachable on Arrival / Always Accessible (AA)

Strictly speaking, a Reachable on Arrival clause or an Always Accessible (AA) clause does not itself alter the point at which Laytime Commences. If the Charterparty contains such a clause, Laytime still begins when the ship reaches the specified destination, after any required Notice of Readiness (NOR) has been tendered and any contractual waiting period has expired.

The commercial importance of these clauses lies elsewhere. They may give the Shipowner a claim for Detention where the ship is delayed before reaching the specified destination because the nominated Berth, Dock, or place is not reachable or accessible on arrival. They may also affect the interpretation of clauses such as Clause 6 of the Exxonvoy Charterparty Form 69/Asbatankvoy Charterparty Form, under which Charterers may otherwise seek relief from liability for delay in the ship getting into Berth after Notice of Readiness (NOR) has been given.

The leading authorities on these expressions mainly concern tankers. The phrase “Reachable on Arrival” is more commonly found in tanker Charterparties, while “Always Accessible (AA)” is more frequently encountered in dry cargo Charterparties. In the High Court in The Kyzikos, the two expressions were said to be equivalent, at least in relation to entry into Berth.

The first major case on “Reachable on Arrival” was Sociedad Carga Oceanica SA v. Idolinoele Vertriebsgesellschaft mbH, known as The Angelos Lusis. The motor tanker Angelos Lusis was fixed to load at Constantza. On reaching the Load Port, she had to anchor in the roads because the Port Authorities would not allow her to proceed until a Berth became available. While waiting in the roads, the ship was not an Arrived Ship.

The Shipowners argued that the Charterers were under an absolute obligation to provide a loading place that was reachable on the ship’s arrival. The Charterers argued that the Charterparty was a Port Charterparty, so the risk of delay before the ship became an Arrived Ship remained with the Shipowners. The Charterers also argued that “arrival” in the phrase “Reachable on Arrival” meant arrival in the Port in the technical sense, and that their obligation to provide a reachable Berth arose only after the ship had become an Arrived Ship.

Megaw J accepted the Shipowners’ argument. The clause was intended to give the Shipowners a real contractual benefit. The Charterers’ obligation was to nominate a reachable place for loading, meaning a Berth that the ship, proceeding normally on arrival, could reach and occupy without delay, whether inside or outside the fiscal or commercial limits of the Port. Because the Charterers failed to provide such a place, the Shipowners recovered damages for the delay in the roads.

A few years later, the same phrase was considered in Inca Compania Naviera SA and Commercial and Maritime Enterprises Evanghelos P Nomikos SA v. Mofinol Inc, known as The President Brand. The Discharge Port was Lourenco Marques. On arrival, the President Brand could not cross the bar and enter the Port for four days because of her draught. When there was enough water, she crossed the bar, anchored again within the Port to await a Berth, and later shifted to Berth. A valid Notice of Readiness (NOR) was tendered after she had anchored inside the Port. An earlier Notice of Readiness (NOR) had been held invalid because it was tendered off the Port before the ship had become an Arrived Ship.

Roskill J identified the central question:

“The central issue in the case is this: Who bears the risk of the time between Apr. 19 and Apr. 23. when the ship was unable to cross the bar owing to lack of sufficiency of water?”

The Charterers argued that “arrival” meant arrival as an Arrived Ship. Roskill J rejected that submission. He held that the word was used in its ordinary commercial sense, not in the technical Laytime sense. Roskill J stated:

“I think as a matter of ordinary common sense if one asked two businessmen if a ship had arrived at Lourenco Marques when she reported at the pilot station in that way and in those circumstances they would answer: ‘‘Yes, she has arrived there’’, notwithstanding that she had not yet got within the commercial limits of the Port.”

Roskill J then considered the meaning of “reachable”:

“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 ship 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 ship could reach on arrival and they are in breach of that obligation if they are unable so to do.”

Roskill J also emphasized that breach of a Reachable on Arrival obligation may arise even without fault by either party. The clause allocates the risk of delay. If the nominated Berth cannot be reached on arrival, the resulting loss of time falls on the Charterers, not on the Shipowners.

The question then became when the Charterers’ liability came to an end. On the day when the ship could cross the bar, she began moving at 01:30, anchored again within the Port at 04:00, and tendered Notice of Readiness (NOR) at 11:00. The Charterers argued that, even if they were liable for the earlier delay, their liability should stop at 04:00 when the ship re-anchored inside the Port to await a Berth.

Roskill J rejected that argument. The owners had not delayed unreasonably in tendering Notice of Readiness (NOR). Roskill J added:

“I am not saying that if in another case it could be shown that the owners or the master has wrongly delayed giving Notice of Readiness (NOR) the position might not be otherwise. That does not arise in the present case.”

The combined effect of The Angelos Lusis and The President Brand is that Reachable on Arrival is a risk-allocation clause of real commercial importance. It is not merely a statement about when Laytime begins. It obliges the Charterer to nominate or provide a Berth that the ship can reach on arrival in the ordinary commercial sense. If the ship is delayed outside the Port, in roads, at a bar, or at another waiting position because the nominated Berth cannot be reached, the Charterer may be liable for Detention even though the ship has not yet become an Arrived Ship and even though Laytime has not yet begun.

Roskill J therefore concluded that the President Brand had been delayed from the time of her arrival at the Pilot Station at 08:00 on 19 April until 11:00 on 23 April because the Charterers had failed to provide a Berth that was Reachable on Arrival. For that delay, the Shipowners were entitled to recover Damages for Detention measured at the Demurrage Rate. However, the period between 01:30 and 04:00 on 23 April, when the ship crossed the bar and proceeded into the Port, had to be deducted. That period was not, according to Roskill J, time lost as a result of the Charterers’ Breach. It was time that would necessarily have been spent entering the Port even if the ship had not previously been delayed outside the bar.

The Court of Appeal later had to consider this type of clause in Shipping Developments Corporation SA v. V/O Sojuzneftexport, known as The Delian Spirit. In that case, the Delian Spirit arrived off Tuapse to load crude oil. Because no Berth was available due to congestion, the ship anchored in the roads and tendered Notice of Readiness (NOR). She remained there for five days before a Berth became available.

In the arbitration, the Umpire held that the ship was not an Arrived Ship while lying in the roads. Donaldson J, in the High Court, disagreed and held that the ship was technically an Arrived Ship, a conclusion later accepted by the Court of Appeal. Despite that finding, Donaldson J held that Laytime ran under the Laytime provisions and that the Shipowners were also entitled to claim Damages for Detention for the same period because of a breach of the “Reachable on Arrival” provision.

The Court of Appeal rejected that approach and preferred the reasoning of Roskill J in The President Brand. Lord Denning explained the point in practical terms:

“So it is said the Charterers are liable in damagesand are also liable to Demurrage after the Laytime expired. The judge accepted that submission, but I cannot agree with it. It would be most unjust that the Charterers should be made liable twice over. 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 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.”

Fenton Atkinson LJ reached the same conclusion and stated:

“While in certain circumstances which I do not think it is necessary to attempt to define on the facts of this case you can have an arrival of a ship before that ship becomes technically an Arrived Ship for Laytime purposes, and therefore the Charterer who has failed to provide a Berth at the time of such arrival will become liable for damages for Detention, once the ship becomes an arrived ship in the technical sense the position is different, and in my judgment the Charterer gets the advantage of the Laytime provided by the Charterparty”

The distinction is important. If the ship is delayed before becoming an Arrived Ship, the Shipowner may have a claim for Detention arising from breach of the Reachable on Arrival obligation. However, once the ship has become an Arrived Ship in the technical Laytime sense, the Charterer is ordinarily entitled to rely on the Laytime allowance for which freight has been agreed. The Charterer should not be charged twice for the same period by being exposed both to running Laytime and to a separate detention claim covering the same delay.

In Nereide SpA di Navigazione v. Bulk Oil International Ltd, known as The Laura Prima, the House of Lords considered the relationship between a “Reachable on Arrival” provision and a clause excluding delay beyond the Charterers’ control in the ship getting into Berth after Notice of Readiness (NOR) had been given. That issue raises a separate and important question. In the lower courts in The Laura Prima, the earlier authorities were reviewed, but there was no substantial reconsideration of the meaning of the “Reachable on Arrival” wording by itself.

After The President Brand and The Delian Spirit, commercial Arbitrators made several attempts to limit the scope of “Reachable on Arrival” clauses to cases where ships were unable to Berth because of congestion, or because of physical obstacles such as congestion and insufficient water, while excluding weather. Three first-instance judicial decisions also considered similar arguments.

The first of these was The Kyzikos. Although the case later reached the House of Lords, this particular issue was considered only at first instance. The Charterparty required the discharging Berth to be “Always Accessible (AA)”, which the court treated as equivalent to “Reachable on Arrival” for the purposes of entry into Berth. The Kyzikos could not Berth on arrival because of fog, although the Berth itself was unoccupied. After referring to Roskill J’s explanation of “Reachable” in The President Brand, Webster J stated:

“I note that all the examples of circumstances preventing a Berth being reachable, given by Mr Justice Roskill, are examples of physical obstruction preventing access to the Berth, and I have no doubt that that decision is authority for the general proposition that a Berth is not accessible or reachable if there is something which physically obstructs access to it. But fog, or any other bad weather, is not in my view to be regarded as a physical obstruction and, even if it is to be so regarded, it is certainly not an obstruction sui generis with the obstacles of which examples are given in that dictum.”

Webster J therefore held that the Charterers were not in Breach of their obligation to supply an Always Accessible (AA) Berth.

The second case was The Sea Queen, decided by Saville J. In that case, delay resulted from a combination of bad weather and the absence of tugs. The Charterers advanced arguments similar to those in The Kyzikos. They contended that “Reachable” referred to the general character of the Berth rather than to the ship’s ability to reach it at the relevant time. They also argued that the Charterers’ obligation was to provide a Berth that a ship proceeding normally could reach, and that “proceeding normally” meant proceeding in good weather and with tugs available. Saville J rejected these arguments and refused to narrow the meaning of “reachable” in that way.

The third decision was The Fjordaas, where the delay was again caused by bad weather and a shortage of tugs, this time combined with a prohibition on night navigation. The same general arguments were advanced and rejected. Steyn J addressed the proposed distinction between physical and non-physical causes of obstruction in these terms:

“In my judgment the distinction between physical causes of obstruction and non physical causes rendering a designated place unreachable is not supported by the language of the contract or common sense; it is in conflict with the reasoning in The Laura Prima; and it is insupportable on the interpretation given to that provision in The President Brand. Quite independently of authority I believe it to be wrong.”

In The Amiral Fahri Engin, Saville J again confirmed that delay caused by bad weather, congestion, or a combination of both could amount to a Breach of a “Reachable on Arrival” provision. In London Arbitration 10/06, the Charterers argued unsuccessfully that a delay caused by night-time Berthing restrictions was protected by the final sentence of Clause 6 of Part II of the Asbatankvoy Charterparty Form. The Tribunal rejected that argument and held that the Charterers were in breach of Clause 9 because they had failed to provide a Berth that was reachable on arrival.

London Arbitration 16/98 provides a further illustration. The Charterers had fixed two ships to discharge at the same Berth. When the second ship arrived, the Berth was physically unoccupied, but the first ship, which the Charterers intended to discharge first, had arrived the previous day and was waiting to Berth. The first ship had initially been prevented from Berthing by weather and later by the unavailability of tugs during the New Year holiday period. After the holiday, the first ship Berthed and discharged, and only after that did the second ship use the Berth.

The Charterers argued that the Berth was vacant when the second ship arrived and that The Laura Prima did not apply. They also relied on another clause providing that time was not to count “on an inward passage moving from anchorage to first Berth, including awaiting tugs, pilot”. The Tribunal held that The Laura Prima did apply. It then examined the additional clause and concluded that, although the first few hours of delay were caused by weather, the later delay was not delay to the second ship while awaiting tugs. The delay was caused by the first ship’s inability to Berth and by the Charterers’ decision to give priority to that first ship.

On the authorities as they now stand, where there is a Breach of a “Reachable on Arrival” clause and the ship is delayed before reaching her specified destination and before becoming an Arrived Ship, the Shipowner will generally be entitled to recover Detention at the Demurrage Rate. Laytime exceptions or interruptions do not normally apply to such a detention claim. This appears to follow from The President Brand, where the ship arrived off the Port on a Sunday and the Sunday counted in the detention period, even though, had the time been Laytime, it would not have started until Monday because Sunday was an excepted period. Once the ship becomes an Arrived Ship, however, Laytime provisions, exceptions, and interruptions will ordinarily apply.

A particular difficulty arises where a “Reachable on Arrival/Always Accessible (AA)” clause appears in the same Charterparty as a clause accelerating the commencement of Laytime, such as a “Whether in Berth or Not (WIBON)” provision. In such a case, the better approach is first to apply the accelerating clause. If that clause allows Laytime to commence at the place the ship has reached, the Reachable on Arrival clause will probably have a more limited role, mainly in determining whether exceptions such as Clause 6 of the Asbatankvoy Charterparty Form protect the Charterers before the ship reaches Berth.

On the facts of The Kyzikos, the ship could not Berth because of fog. The Whether in Berth or Not (WIBON) provision was ineffective to bring forward Laytime before the ship arrived in Berth, because the Berth was available but unreachable due to weather. On that reasoning, the Shipowners should have had a claim for Damages for Detention before Berthing under the “Always Accessible (AA)” clause. If the delay had been caused by congestion instead, the WIBON provision would have accelerated the commencement of Laytime on arrival at the Port, and the effect of the “Always Accessible (AA)” clause would have been more limited.

The Voylayrules 1993 define the expression as follows:

“REACHABLE ON ARRIVAL or ALWAYS ACCESSIBLE (AA) shall mean that the Charterer undertakes that an available loading or discharging Berth be provided to the ship on her arrival at the Port which she can reach safely without delay in the absence of an abnormal occurrence.”

This definition applies only where the Voylayrules 1993 are expressly incorporated into the Charterparty. It differs from the common law position in two important respects. First, it uses the word “Available” rather than “Accessible”. Secondly, it introduces the phrase “in the absence of an abnormal occurrence”.

The first difference is significant because cases such as The Fjordaas and The Sea Queen show that the Berth must not merely be available in the sense of being unoccupied; it must also be accessible to the ship. The second difference raises uncertainty. It is not clear what events qualify as an abnormal occurrence, or when such an occurrence must arise in order to excuse the Charterer from the Reachable on Arrival or Always Accessible (AA) undertaking.

The Shipowners’ successful argument in The Angelos Lusis was that the Charterers’ obligation was absolute. It is true that in The Laura Prima, Mocatta J made a dictum, later expressly approved by the House of Lords, suggesting that Charterers might be protected where they had procured a reachable Berth on arrival but an intervening event beyond their control then occurred, such as an embargo or insufficiency of water. However, that protection arose from the exception in Clause 6 of the Charterparty, not from the meaning of the Reachable on Arrival phrase itself.

A Reachable on Arrival or Always Accessible (AA) clause may therefore give the Shipowner a real advantage where the ship is delayed before reaching the specified destination, whether that destination is a Port or a Berth. That advantage explains why Lord Diplock, in The Darrah, considered that it was wrong to draw an artificial distinction between waiting time and loading or discharging time under a different type of clause. The Darrah concerned “time lost waiting for Berth” provisions, which provide their own measure of recovery by counting time as Laytime. A “Reachable on Arrival” provision is different because damages must be assessed separately. Even so, the commercial concern is similar.

That may be what Sir Gordon Willmer had in mind in The Delian Spirit when he stated:

“I prefer to say no more upon the difficult question which might have arisen if the ship 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.”

Baltic Code 2007

The Baltic Code 2007 contains a combined definition of Reachable on Arrival and Always Accessible (AA):

REACHABLE ON ARRIVAL or ALWAYS ACCESSIBLE (AA) —means that the Charterer undertakes that an available and accessible loading or discharging Berth will be provided to the ship 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 (AA), he further undertakes that the ship will be able to depart safely from the Berth without delay at any time during or upon completion of loading or discharging.

This definition is broader than the Voylayrules 1993 definition in one important respect. It expressly refers to a Berth that is both available and accessible. It also gives Always Accessible (AA) an additional meaning by extending the undertaking to safe and delay-free departure from the Berth during or upon completion of loading or discharging.

Always Accessible (AA)—For How Long Must the Berth Be Accessible?

Where a Charterparty contains a Reachable on Arrival clause, the question whether the Berth is reachable is normally tested at the time of the ship’s arrival. The practical effect of that warranty comes to an end, at the latest, when the ship has Berthed. The more difficult question is whether the same is true of an Always Accessible (AA) clause.

As noted earlier, Always Accessible (AA) clauses are more common in Dry Cargo Charterparties, while Reachable on Arrival clauses are more frequently found in Tanker Charterparties. That distinction probably has no decisive legal significance. Always Accessible (AA) can appear in any Charterparty, but it is often found in Gencon Charterparty Forms, particularly in Part I where the loading or discharging destination is identified. It frequently appears alongside an Always Afloat (AA) provision. The abbreviation “AAAA” is commonly used to mean “Always Afloat, Always Accessible”.

When these expressions are used in connection with a Loading Berth or Discharging Berth, they may be understood as describing the characteristics of the Berth. The Berth is one at which the ship can remain always afloat and which is always accessible.

The question whether the Berth must remain accessible throughout cargo operations, including the period after the ship has Berthed, arose in London Arbitration 11/97. In that case, after loading was completed, the ship had to wait more than nine hours for the next high tide before she could unberth.

The Shipowners argued that the Berth was not “Always Accessible (AA)” and that, applying common law, equity and commercial common sense, the Charterers were in breach. They submitted that “Always Accessible (AA)” meant what an ordinary commercial person would understand it to mean: that the ship must have access to and from the Berth at all times. In other words, the Berth had to be accessible both for entry and for departure to the open sea.

The Tribunal observed that textbooks offered little assistance and tended to treat Always Accessible (AA) as identical to Reachable on Arrival, without considering whether the phrase might also apply to departure from the Berth. The same was true of the Voylayrules 1993. From this, the Tribunal concluded that an Always Accessible (AA) term imposed on Charterers an obligation to provide a Berth that was immediately available on arrival, but that this regime ended once the ship had actually Berthed. After that point, ordinary Charterparty provisions governing Laytime applied.

That reasoning is open to question. The absence of detailed discussion in textbooks or drafting rules is not a strong basis for concluding that the phrase has no relevance after Berthing. The Tribunal also considered dictionary meanings of “accessible” and concluded that they referred to access to a place, not access from it. However, the Tribunal does not appear to have examined fully the effect of the word “Always”.

In The Forum Craftsman, Hobhouse J observed:

“The word ‘‘Always’’ imports an absence of qualification and is often used for that purpose in the drafting of Exceptions Clauses.”

Applied to “Always Accessible (AA)”, the question becomes whether the Berth must remain capable of being approached by a ship of the relevant size throughout loading or discharging, or whether the phrase is narrower and refers only to the ability of the particular ship to reach the Berth when she first wishes to do so. If the latter view is correct, the word “Always” adds little. If the former view is correct, the Charterer’s undertaking may continue while the ship remains at the Berth and may also cover departure.

The Tribunal in London Arbitration 11/97 had a further reason for its decision. It relied on the High Court decision in The Kyzikos, where Webster J held that “Always Accessible (AA)” did not cover a situation where fog or other weather conditions prevented the ship from safely approaching the Berth. However, later decisions in The Fjordaas and The Sea Queen took the opposite approach in relation to Reachable on Arrival and held that bad weather fell within the protection of that phrase. There is no obvious reason why a different approach should apply to Always Accessible (AA). The better view is that The Fjordaas and The Sea Queen should also guide the interpretation of Always Accessible (AA).

The remaining question is whether the Arbitrators in London Arbitration 11/97 were correct to confine “Accessible” to being “able to get into” but not extending to “able to get out of” the Berth, and to limit the warranty to the ship herself. If that interpretation is correct, the function of the word “Always” remains uncertain. The point will probably require further arbitral or judicial clarification.

A separate issue in London Arbitration 11/97 concerned delay after the ship had left the Berth and anchored in the inner Port, but could not leave the Port until the next high tide. On that issue, the Tribunal was plainly right to hold that Always Accessible (AA) gave no protection to the Shipowners. The phrase describes the Berth, not the Port. Once the ship has departed the Berth and is delayed elsewhere within the Port, the Always Accessible (AA) warranty cannot normally be invoked.

If the Always Accessible (AA) warranty does extend to departure from the Berth, the Shipowner’s claim will be one for Detention. Laytime or time on Demurrage ordinarily ends when loading or discharging is completed. Therefore, any delay after completion of cargo operations caused by inability to leave the Berth would need to be claimed as damages, unless the Charterparty contains a specific provision dealing with post-completion delay.

What is “Always Afloat (AA)” in Ship Chartering?

The phrase Always Afloat (AA) is frequently used together with Always Accessible (AA). Both expressions raise a similar question: at what point does the warranty stop operating? If the phrase forms part of the description of the Berth, then the better view is that it continues to apply until the ship departs from that Berth. The wording is not merely concerned with the moment of arrival. It describes the physical and operational character of the place to which the ship has been ordered.

London Arbitration 1/09 provides a useful illustration, although the short report leaves some uncertainty. In that case, the ship grounded after leaving the Berth but while still inside the harbour. On the facts, the Tribunal held that no time had been lost by the Shipowners. However, the Tribunal did not reject, as a matter of law, the possibility that an Always Afloat (AA) provision could continue to have relevance after departure from the Berth. The report does not make clear whether the Always Afloat (AA) wording related to the Port or to the Berth. If the Shipowners had succeeded, the claim would presumably have been framed as damages for Breach of Warranty or as a Claim for Detention.

So Near Thereto As She May Safely Get

Unlike Whether in Berth or Not (WIBON), Whether in Port or Not (WIPON), Reachable on Arrival, and Always Accessible (AA), the phrase “or so near thereto as she may safely get” operates in a different way. It does not merely accelerate Laytime or create a claim for Detention. Instead, it may substitute an alternative contractual destination where the ship cannot safely or reasonably proceed to the primary destination named in the Charterparty.

The two leading authorities are Dahl v. Nelson, Donkin & Co, a House of Lords decision, and The Athamas (Owners) v. Dig Vijay Cement Co Ltd, a Court of Appeal decision. In The Athamas, Sellers LJ described the historical importance of the phrase:

“The words in that clause vitally affecting this case, ‘‘or so near thereto as she may safely get’’, go back possibly some 150 years to the days of sailing ships and have been in current use in relation to the carriage of goods by sea throughout the era of steamships and their modern successors.”

Although the phrase has a long commercial history, its judicial development began in 1855 with a case that continued to create interpretative difficulty more than a century later.

The governing principle was stated by Brett LJ in Nelson v. Dahl:

“Laydays do not begin to run, either for the purpose of loading or unloading, until the Shipowner has brought his ship to the primary destination named in the Charterparty, so as to be ready, so far as the ship is concerned, to receive or deliver there, unless he is prevented from getting his ship to that destination by some obstruction or disability of such a character that it cannot be overcome by the Shipowner by any reasonable means, except within such a time as, having regard to the object of the adventure of both the Shipowner and Charterer, is as a matter of business wholly unreasonable.”

The central question is therefore whether it remains reasonable for the Shipowner to continue waiting until the obstruction is removed and then proceed to the primary destination, or whether the time has come, both geographically and commercially, for the ship to load or discharge at an alternative place. The answer is usually a question of fact. General principles can be drawn from the cases, but each dispute depends on its own commercial circumstances.

In assessing what is reasonable, the following factors are particularly important:

A. Nature of the obstacle;

B. Period of time actually spent waiting;

C. Expected duration of the delay;

D. Extent of the risk known to both parties when the Charterparty was made;

E. How close the ship can get to the intended Port, not merely in miles but also in relation to the overall Voyage;

F. Proportion of cargo to be loaded or discharged at the obstructed Port.

Another way of expressing the test is that reasonableness depends on both the nature of the obstruction and the nature of the commercial adventure. These factors interact with one another, and their relative weight will differ from case to case.

The first general point is that the obstruction must prevent the ship, not merely the cargo, from reaching the primary destination. Nobel’s Explosives Co Ltd v. Jenkins & Co illustrates the distinction. The case concerned explosives to be delivered at Yokohama. While the ship was at Hong Kong, war had broken out between China and Japan. Since explosives were contraband of war, the Ship Master reasonably believed that the ship would be seized if she proceeded farther with the explosives on board. He discharged the explosives at Hong Kong and then continued safely to Yokohama with the remaining cargo.

The Ship Master was protected by a “restraint of princes” clause and by an additional clause allowing him to land the goods at the nearest safe and convenient Port in such circumstances. However, Mathew J held that the “so near thereto as she may safely get” wording did not apply. Mathew J stated:

“For the defendant reliance was placed on the terms of the Bill of Lading (B/L) that the steamer should proceed to Yokohama, ‘‘or so near thereunto as she might safely get’’. It was argued that at Hong Kong she was as near to Yokohama as she could safely get within the meaning of the Bill of Lading (B/L). But the contract was not to carry the goods to the nearest place to which the goods could safely get, but to deliver the goods at Yokohama or as near thereto as the ship could safely get. She did get to Yokohama and the obligation to deliver the goods under the clause in question thereupon became complete. This ground of defence seems to me untenable.”

There is a clear connection between this type of clause and the doctrine of frustration. In Dahl v. Nelson, Lord Watson considered cases in which the commercial adventure had been frustrated before performance and then stated:

“No doubt in these cases the contract had not passed the executory stage; but seeing that unreasonable delay in reaching the place of loading, when occasioned by no fault of either of the parties, is effectual to discharge such a contract altogether, I conceive that, a fortiori, a similar delay in reaching the primary place of discharge ought to have the effect of enabling the ship to complete her voyage by proceeding to the alternative destination.”

Lord Blackburn also considered the word “Safely”. Without that word, he said, a Charterer might have argued that the ship had to go as far as physically possible, even if doing so was dangerous. Although Lord Blackburn doubted whether such an argument would have succeeded, he explained that the insertion of the word “Safely” removed any possible ambiguity.

A- Nature of the Obstacle

The obstacle preventing the ship from reaching the primary destination may be political, legal, or physical. Physical obstacles may in turn be divided into natural obstacles and congestion.

Castel and Latta v. Trechman is an example of a political obstacle. The case concerned a blockade imposed by the Turkish Government on Russian Ports in the Black Sea. On the facts, however, the ship was not entitled to proceed to Constantinople instead of the two remaining Russian Ports that formed the primary destination.

The Athamas provides an example of a legal obstacle. The shipowners were held entitled not to proceed to the primary destination because the compulsory pilotage authority refused permission for the ship to continue through the relevant area.

Natural obstacles are treated with more caution. In The Robert Dollar Co v. Blood, Holman & Co Ltd, McCardie J said:

“I conceive that all ships must take the risks of wind or storm or tide ere reaching the appointed Port. These risks may, of course, be greater with a sailing ship than a steamer, but they are risks which fall on the Shipowners and not on the Charterer. As to tides, e.g., it was concisely put by a learned judge as follows:

‘‘If the cause of the Detention be the arrival of the ship during low tides, her having to wait for the tide to increase is one of the ordinary incidents of navigation, and the Shipowner must submit to the delay so occasioned.’’”

Accordingly, where a Natural Obstacle prevents the ship from reaching the named destination, the Shipowner will usually find it harder to rely on the clause unless the delay is substantial or the other circumstances strongly justify resort to an alternative place. Natural obstacles are often temporary, and temporary navigational delay is normally treated as part of the Shipowner’s risk.

Two cases where a natural obstacle was sufficient are Capper & Co v. Wallace Brothers and Hayton v. Irwin. In both cases, the ship’s draught prevented her from proceeding to the specified destination. These were not cases where the problem could be solved simply by waiting for spring tides.

Dahl v. Nelson itself is an example of congestion being serious enough to justify discharge at an alternative place. The obstruction was congestion at the Surrey Commercial Docks, which were the usual discharge place for timber cargoes.

B- Length of Time Actually Spent Waiting

Scrutton LJ explained the requirement to wait a reasonable time in Fornyade Rederiaktiebolaget Commercial v. Blake & Co and others:

“When you are chartered to go to a discharging place and cannot get there, first of all you are bound to wait a reasonable time before having recourse to the clause ‘‘or so near thereunto as she may safely get’’. You cannot arrive, and when you find you cannot get in at the exact minute, or on the exact day you desire, you immediately go off to a place which you describe as ‘‘so near thereunto as she may safely get’’. When a reasonable time has elapsed, and when there is no chance of your getting in to your discharging place within a reasonable time, the ship is at liberty to go to a reasonable discharging place”

However, if during the Voyage it becomes clear that the ship will be unable to reach the primary destination for an indefinite or commercially unreasonable period, common sense may justify immediate diversion to an Alternative Port, particularly during the carrying Voyage. The obstruction must be one that will plainly not be removed before the commercial object of the Voyage is undermined.

The Athamas supports this approach. That case involved discharge at two Ports. On arrival at the first Port, it became apparent that the ship could not proceed to the Second Port. The ship therefore gave notice of an intention to treat the first Discharge Port also as the second destination under the clause. In practical terms, she diverted directly to the alternative discharge location. The reason she could not continue was that the pilotage authority refused permission because the ship could not maintain the minimum speed required for safe passage during the low-water season.

C- Length of Expected Delay

The expected duration of the obstruction is closely connected with the time actually spent waiting. If the anticipated delay is short or uncertain, the Shipowner will normally be expected to wait. If, however, the likely delay is clearly lengthy from the outset, the Shipowner may be justified in giving Notice of Readiness (NOR) of an intention to proceed to another suitable place at an earlier stage.

In Dahl v. Nelson, the congestion was expected to last at least one month and possibly much longer. In The Athamas, the expected delay was five months. In both cases, the delay was sufficient to justify proceeding to an alternative place.

By contrast, in Parker v. Winslow and Bastifell v. Lloyd, a delay of about two weeks was regarded as insufficient. In both cases, the delay arose from waiting for spring tides, and the courts treated such delay as part of the ordinary navigational risk borne by the Shipowner. Although no rigid time rule can be stated, a delay approaching one month is more likely to support reliance on the clause, especially where the obstruction is not merely an ordinary incident of navigation.

D- Degree of Risk Known to Exist

If both parties, meaning Shipowner and Charterer, were aware of circumstances existing at the time of making the Charterparty, or of circumstances likely to exist when the Charterparty was performed, the court will be less willing to hold that the ship was entitled to proceed elsewhere.

Metcalfe v. Britannia Ironworks Co illustrates the point. A cargo of railway bars was shipped from England to Taganrog in the Sea of Azov, or so near thereto as the ship could safely get. When the ship arrived at Kertch, in the straits between the Black Sea and the Sea of Azov, it was found that the Sea of Azov was blocked by ice and would probably remain so until the following spring. The cargo was discharged at Kertch. Lord Coleridge upheld the decision against the Shipowner and stated:

“It is not necessary to say more than that the obstruction was only temporary, and is such as must be incident to every contract for a voyage to a frozen sea, and it cannot be said that in all these contracts the words ‘‘at that time,’’ or ‘‘then and there’’, are to be inserted after the words ‘‘as near thereto as the ship can safely get’’.”

The reasoning is commercially important. Where the risk is inherent in the contemplated Voyage, known to the parties, and reflected in the bargain, the Shipowner cannot easily convert that risk into a right to discharge elsewhere.

E- How Close to the Intended Port the Ship Can Get

Proximity was a central issue in The Athamas. The difficulty originated with the early case of Schilizzi v. Derry. In that case, a ship was chartered from London to Galatz or Ibrail, or so near thereto as she might safely get, and there load. Galatz and Ibrail were respectively 95 and 115 miles upriver from Sulina at the mouth of the Danube. The ship reached Sulina on 5 November but could not proceed upriver because there was insufficient water over the bar. After waiting at Sulina until 11 December, she proceeded to Odessa, about 100 miles away, and loaded cargo there. Had she remained at Sulina until 7 January, she would have been able to cross the bar.

The court held that the ship had not completed her Voyage and that the obstruction was only temporary. Lord Campbell CJ stated:

“the meaning of the Charterparty must be that the ship is to get within the ambit of the Port, though she may not reach the actual harbour. Nor could it be said that the ship, if she was obstructed in entering the Dardanelles, had completed her Voyage. There can therefore be no doubt as to the first issue.”

Lord Blackburn later expressed doubt in Dahl v. Nelson about whether the phrase “the ambit of the Port” was the most accurate way to express the idea.

In The Athamas, McNair J reformulated the issue in terms of reasonable proximity:

“The limit of the word ‘‘ambit’’ clearly did not arise for consideration or discussion in Dahl v. Nelson, Donkin and others, supra. The use of the word ‘‘near’’ clearly connotes some idea of proximity. But, just as Lord Blackburn and Lord Watson, when considering the question whether an obstacle is temporary or permanent, import the element of reasonableness in relation to time, so here it seems to me that, in considering whether a substitute discharging place or Port is within the phrase ‘‘so near thereto as she may safely get’’, the court should apply the conception of reasonableness in relation to distance. There clearly will come a point at which the Substituted Port cannot properly be said to be near or within the ambit of the Primary Port, but is to be held to be at such a distance that it cannot be assumed to be within the contemplation of the parties as fair and reasonable men. What is a reasonable distance clearly has to be determined in the light of all the circumstances and of the particular adventure.”

The Court of Appeal agreed. Pearson LJ stated:

“This examination of the authorities has not yielded any precise definition of the range of proximity or vicinity within which the substitute destination must lie in order to be, in relation to the named destination for the ship, ‘‘as near thereto as she may safely get’’. I do, however, derive from these authorities an impression that the range is fairly narrow, and that in an ordinary case a substitute destination 250 miles by water from the named destination would be outside the range of proximity. This, however, is an extraordinary case in that Saigon, though 250 miles by water away from Phnom-Penh, is nevertheless the nearest Port to Phnom-Penh, at any rate for the purpose of unloading the cargo concerned.”

The longer the principal Voyage and the more unusual the geography of the trade, the wider the practical “ambit” of the intended Port may become. However, the substitute destination must still be sufficiently close in a commercial sense. The test is not merely mathematical distance, but whether the alternative location could reasonably have been within the contemplation of the parties when the Charterparty was made.

F- Proportion of Cargo to Be Loaded or Discharged at the Obstructed Port

The proportion of cargo concerned may also affect what is reasonable. In The Athamas, the Arbitrators stated in their special case:

“We find (if this be a matter of fact) that it would be wholly unreasonable to expect that the Athamas should, with 2,100 tons (or any quantity) of cargo for Phnom Penh on board, wait from 21 March to mid-August in order to proceed to Phnom Penh and there discharge it.”

The higher courts accepted that assessment. It follows that if the quantity of cargo to be delivered at the obstructed Port is small, a shorter period of waiting may be considered reasonable before the Shipowner may resort to the alternative destination clause. If the whole cargo is to be discharged at that Port, a longer waiting period may be required before the same conclusion is reached.

The factors listed above are not exhaustive. Sellers LJ in The Athamas referred to additional commercial considerations:

“In the present case the Arbitrators were clearly of the opinion that the Athamas could not get to Phnom-Penh within a reasonable time. This was based on the Arbitrators’ knowledge of the nature of the adventure and of all the factors involved, the period of time, the carrying and earning capacity of the ship and the expense of the delay to both the Charterers, who presumably wanted their cargo, and the Shipowners, who would lose if their ship were idle.”

The test is therefore broad, commercial, and fact-sensitive. The court or Tribunal considers the obstruction, the delay, the distance, the cargo, the known risks, and the overall business purpose of the Voyage.

In Regular Turn/In Usual Turn

Expressions such as “In Regular Turn” and “In Usual Turn” have the practical effect of postponing the commencement of Laytime until the ship’s turn for a Berth has arrived. In some situations, they may make what would otherwise appear to be a Port Charterparty operate, for Laytime purposes, more like a Berth Charterparty.

The phrase “In Regular Turn” appears in the Chamber of Shipping Welsh Coal Charterparty, which explains why many of the reported cases concern coal cargoes. The “turn” referred to is the Ship’s Turn for a Berth on Arrival at the Load Port or Discharge Port.

At many Ports, ships are normally handled in the order in which they arrive. Depending on local facilities and usage, there may be one general waiting list or separate lists for different trades or cargoes. A ship’s position may depend on arrival at the pilot station, reporting at the Custom House, readiness to load, or another local practice.

Because handling ships in turn is such a common port practice, it may seem surprising that a phrase such as “the cargo to be loaded in regular turn at the rate of…” can postpone the commencement of Laytime until the ship’s turn actually arrives, meaning until she reaches the Berth. This is partly a historical survival, but it is firmly established by authority.

The opposite expression is Free of Turn. Where the Charterparty provides that the ship is free of turn, time runs while the ship is waiting for her turn, provided the ship has reached the specified destination, is ready, and has complied with any Notice of Readiness (NOR) requirements.

An early authority is Robertson v. Jackson, where the discharge rate was to be calculated “from the time of the ship being ready to unload and in turn to deliver”. The court held that the words “in turn to deliver” had to be interpreted by reference to the regulations in force at the Discharge Port.

In Leidemann v. Schultz, the Charterparty required the ship to proceed to Newcastle and, on arrival, be ready “forthwith in regular turns of loading” to take coal and coke by spout or keel as directed. The ship was able to load the coal immediately but had to wait more than one month for her turn to load coke. In a claim for Detention, the court held that the phrase “in regular turns of loading” pointed to a course of dealing and that evidence should have been admitted as to the practice of the Port.

In Lawson v. Burness, the Charterparty required the ship to proceed to a named Dock and load coke “in regular turn”. The court held that the words referred to the order of readiness to load, not to the order of entry in a book kept by the colliery company. It was nevertheless assumed that, if the ship had been loaded in her order of readiness, even though not immediately, no Demurrage would have been payable.

The Cordelia concerned a ship ordered to the Nob on the River Exe to deliver cargo “in regular turn with other seagoing ships at an average rate of 30 tons per weather working day”. On arrival, the ship was delayed because another ship consigned to the same Charterers was ahead of her and was being discharged by lighters. Gorell Barnes P rejected the Shipowner’s Demurrage claim and stated:

“It looks to me as if the plaintiff (the Shipowner) expected that his ship would find a string of barges when she got to the Nob. I am afraid the plaintiff could not reasonably expect more than that he should have his ship discharged in regular turn with other seagoing ships which were being discharged in turn with the usual dispatch. The terms of the Charterparty do not justify the plaintiff in expecting more than that.”

In Miguel de Larrinaga Steamship Co v. Flack, a case mainly concerned with cancellation, Roche J drew a distinction between the point at which the ship became an Arrived Ship and the point at which the Charterers’ obligation to load began. Roche J stated:

“In the ordinary case she would not be an arrived ship until she got into Dock, but having regard to the particular provision of the Charterparty the contention was open to the Charterers, and was availed of by them and accepted by the umpire, that, though an arrival might have been fixed and stipulated… the obligation to load at a certain specified rate per day did not arise until the ship was ‘‘in turn’’, that is to say, was at the pier “

The majority of the House of Lords adopted the same distinction in United States Shipping Board v. Strick & Co Ltd. Viscount Cave, the Lord Chancellor, stated:

“our courts have uniformly given effect to those expressions (i.e. ‘‘in turn’’ or ‘‘in regular turn’’) as having a bearing on the question of lay days. In most, if not all, of the cases the ship in question was an arrived ship and ready to load, but it was nevertheless held or assumed that the commencement of the loading or unloading days was by the terms of the contract postponed until the ship’s ‘‘turn’’ arrived.”

Lords Atkinson and Shaw agreed. Lord Sumner, with Viscount Haldane, dissented. The minority considered that in a Fixed Laytime Charterparty, the obligation to load or discharge within a fixed period left no room for uncertainty created by phrases such as “Regular Turn or Ready Berths”. They also considered such phrases difficult to reconcile with the rules on commencement of Laytime in Port Charters established in Leonis Steamship Co v. Rank. The majority rejected that approach.

Viscount Cave explained the majority position:

In other words, to the three conditions for the commencement of the lay days enumerated by Kennedy LJ, in Leonis v. Rank . . . viz., arrival of the ship, readiness to load and notice of such readiness, there is added by the terms of the Charterparty a fourth condition, namely the arrival of the turn. If the Loading Berth had been empty when the ship arrived in Port, the time would not have commenced to run until Notice of Readiness (NOR) had been given; and if Notice of Readiness (NOR) is given before the Berth is empty and ready to receive the ship, then the time does not run until the regular turn for loading arrives.

The inclusion of “In Regular Turn” or similar wording does not change the point at which the ship becomes an Arrived Ship. Instead, it adds an additional condition to the commencement of Laytime. The difference from an ordinary waiting-period clause is that the period is not fixed in hours or days. It depends on the number of ships waiting and on the applicable local turn system.

An exception appears in Moor Line Ltd v. Manganexport GmbH, a decision of Branson J. The Charterparty contained two clauses that appeared to pull in different directions. Clause 2 referred to loading “in usual turn with other steamers loading ore for account of same Charterers”. Clause 6 provided that “Time for loading to count from 6 a.m. after the ship is reported and ready and in free pratique (whether in Berth or not) in accordance with Clause 2”.

The case differed from United States Shipping Board v. Strick & Co Ltd in two important respects. First, the Charterparty also contained “Whether in Berth or Not (WIBON)” wording. Secondly, in United States Shipping Board v. Strick & Co Ltd, the turn provision and the time commencement provision appeared in the same clause. Branson J held in favour of the Shipowner and treated Clause 6 as the controlling clause. He said that, if the parties had intended “In Usual Turn” to govern the commencement of loading time, those words would have been expected to appear in Clause 6. Whether the decision has wider application beyond its particular facts is uncertain.

Limits of Delay

There is no reason why the parties cannot agree that delay while the ship waits for her turn must not exceed a specified period. That was the effect of Themistocles (Owners) v. Compagnie Intercontinentale de L’Hyperphosphate of Tangier. The relevant clause provided:

‘‘The ship to be loaded… 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 running hours not including (Sundays and holidays).’’

Morris J held that the meaning was clear:

“the ship must not be kept waiting from more than 48 hours for her turn to be at the particular loading Berth indicated to the ship by the Shippers. Such period of 48 hours may, however, be extended on account of holidays or Sundays.

One example, merely by way of illustration, may be given of the manner in which the clause may operate. The ship might arrive at the wharf reserved to Shippers, might be admitted in free pratique and give notice that she is ready to load, and might then have to wait to be told at which precise Berth she is to load. The ship would then be in turn.”

The effect of such a provision is to preserve the turn system while preventing the ship from being held indefinitely before reaching the nominated Berth.

Custom and Practice

The method by which a ship’s turn is determined varies from Port to Port and sometimes between different trades within the same Port. In Barque Quilpue v. Brown, the Charterparty provided that the ship should proceed to “Newcastle and there in the usual and customary manner, load in regular turn from Brown’s Duckenfield Colliery or any of the collieries that the Freighters may name”. Vaughan Williams LJ explained:

“Mr. Carver has contended that ‘‘regular turn’’ means ‘‘in the order of arrival of the ships’’. I do not agree with him. The authorities he has cited show that ‘‘in regular turn’’ prima facie, and unless there is something to lead to a different conclusion, does mean ‘‘in regular Port Turn’’, but not that the words cannot refer to colliery turn as distinguished from Port turn; and here, I think, the words used do refer to colliery turn as distinguished from Port turn.”

King v. Hinde provides another example. A sailing ship was fixed to load coal at Whitehaven, but under the custom of the Port, steam ships had priority. The sailing ship was delayed as a result. The Shipowners’ claim for Demurrage failed because the Charterparty referred to “Regular Turn”, and the meaning of that phrase had to be determined according to the Custom of the Particular Port.

Loss of Turn

If a ship loses her turn because she is not ready, or because of some other fault attributable to the ship, the Shipowner cannot say that her turn has arrived. Any additional delay caused by the loss of turn must be borne by the Shipowner.

If, however, the delay is caused by the Charterer, the Charterer must bear the responsibility. Once the ship has been assigned her turn, or would have been assigned it but for the Charterer’s omission, the turn clause has done its work. Thereafter, under the ordinary rules applicable to Fixed Laytime, time runs continuously unless some further exception applies.

Jones v. Adamson illustrates the point. The Charterparty required the ship to load in regular turn. When her turn arrived, she could not load because of the Charterer’s default. She was then delayed for 11 days before receiving another turn, by which time everything was ready, and for a further three days because of an adverse wind. The Charterer was held liable for the entire delay.

Delay After Berthing

The expression “Turn”, including its variations, has no effect on events after the ship has Berthed. Once the ship’s turn has arrived and she is in Berth, the turn clause is exhausted.

The Sheila illustrates this principle. The ship was chartered to load at the Great Western Railway jetties at Fowey. Loading was to be “in the customary manner (of) a full and complete cargo of china clay and china stone in bulk, customary turn by Great Western Railway as for steamers at Fowey to be allowed”. Delay occurred because the railway failed to supply enough trucks to the jetties.

The Charterers resisted a Demurrage claim by arguing that “Customary Turn by Great Western Railway” governed not only the ship’s turn to reach the loading jetty but also the manner and rate of loading after she had Berthed. Bucknill J rejected that argument:

“The word ‘‘Customary’’ does not seem to me to apply at all to the mode of loading which they choose to adopt in loading ships which come to their jetty, but in my opinion it applies only to the ships getting to the loading place—the customary turn for loading.”

The result is that turn clauses regulate priority and access to the Berth. They do not usually regulate the actual loading or discharging process after the ship has reached the Berth, unless the Charterparty contains very clear wording to that effect.

Demurrage in Respect of Waiting Time

The Australian Grain Charterparties 1928 and 1972 contain an Express Provision allowing Demurrage for waiting time in certain circumstances before the ship has become an Arrived Ship. The principal authority on the operation of this type of clause is Roland-Linie Schiffahrt GmbH v. Spillers Ltd and others, a decision of Sellers J.

The relevant wording appeared in Clause 2, which provided:

“2. Being so loaded, the ship shall proceed… to discharge at one safe Port… or so near thereunto as the ship can safely get, always afloat, and there deliver the cargo… at any customary Dock, wharf or pier as ordered by the Charterers or their Agents…

. . . 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… “

In The Werrastein, the ship arrived off Hull carrying grain from Australia. Because of congestion, she could not proceed to King George Dock, which was then the only Dock used for discharging bulk grain at Hull. She was therefore ordered to wait at Spurn Head, the customary anchorage for ships of that type. Spurn Head was about 22 miles from Hull and outside the Port Limits. The ship remained there for one week before she was allowed to enter the Dock.

The Receivers argued that the clause did not apply. Their position was that the ship had not yet arrived within the Port Limits, and that the proviso could only operate after a discharging place had been nominated. They further argued that they had no duty to nominate a discharging place until the ship had arrived.

Sellers J rejected those arguments. In his view, the proviso was intended to deal precisely with waiting time caused by the unavailability of the discharging place before Lay Days began to run. Sellers J stated:

“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 ship has reached the recognized 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 Consignee s. 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”

The decision is important because it recognises that the parties may, by clear wording, allocate the financial burden of waiting at a customary anchorage outside the Port to the Charterers or Receivers. The ship had gone as far as she reasonably could in the circumstances. She was at the recognised waiting place for the Port and was available for discharge once the discharging place became open.

However, Sellers J also made clear that the clause was not a general protection against every delay before arrival. It applied to delay caused by the unavailability of the discharging place, especially congestion. He explained:

“An incoming ship may go to one of the anchorages for various reasons. She may go to await the tide or a tug or because of damage or breakdown, illness of crew, etc. In any such case it could not be said that she had completed her Voyage to Hull when she was still 22 miles away.”

The distinction is therefore between waiting because the discharging place is unavailable and waiting because of ordinary navigational, operational, or ship-related reasons. The former may fall within a waiting-time Demurrage provision. The latter will normally remain part of the Voyage risk unless the Charterparty clearly provides otherwise.

Sellers J also rejected the idea that the ship should have been required to sail inside the Port Limits and then return to Spurn Head simply to preserve her contractual rights. That would have been an empty and wasteful formality. The commercial reality was that the ship had reached the recognised waiting place and could do nothing more until the discharge Dock became available.

Time to Commence on Being Reported at the Custom House

In ordinary commercial language, it is common to say that a ship obtains Customs Clearance when she arrives at a Port. Strictly speaking, however, that expression is not precise. A ship reports to Customs on Arrival and normally obtains clearance when departing from the Port.

A clause stating that time is to commence when the ship is reported at the Custom House may operate in two different ways. It may be an additional condition that must be satisfied before Laytime begins. Alternatively, if the wording is clear enough, it may replace the ordinary arrival rules and bring forward the Commencement of Laytime.

In Macbeth v. Wild, the ship was ordered to proceed “to a Safe Berth at Middlesbrough-on-Tees as directed”. Another clause stated: “Lay days shall commence when the steamer is reported at the Custom House, and in free pratique—unless the loading or delivery has sooner commenced.” Bigham J held that Laytime began when the ship had arrived in the Port, was in Free Pratique, and had been reported at the Custom House, even though she had not yet reached the Berth.

The clause therefore had the effect of advancing the start of Laytime from arrival in Berth to an earlier point. The ship still had to be in the Port and satisfy the stated formalities, but she did not have to be physically alongside the loading or discharging Berth before time could begin.

A similar issue arose in the Scottish case of Horsley Line Ltd v. Roechling Brothers. The Charterparty required the ship to “proceed to Savona or Genoa, as ordered… and there deliver the same… Time for discharging to commence on being reported at the Custom House”. When the ship arrived at Savona, she anchored in the roads because of congestion and was reported at the Custom House on the same day. The roads were outside the Port limits and were not a place where the ship would ordinarily have been expected to discharge.

The Court of Session nevertheless held that time began when the ship was reported at the Custom House, although the reasoning in the judgments was not entirely uniform. The case shows that a reporting-at-Custom-House clause may be capable of accelerating the commencement of Laytime even where the ship has not reached the place at which discharge will physically take place, provided the wording is strong enough to produce that effect.

The practical lesson is that clauses of this kind require careful drafting. If the parties intend Customs reporting to be only one additional formality, the Charterparty should say so. If they intend Customs reporting to replace the ordinary requirement of arrival at Berth, Dock, or Port, that intention should be expressed clearly.

Ship To Be Loaded as per Colliery Guarantee

The phrase “to be loaded as per colliery guarantee” operates by incorporating the relevant Colliery Guarantee into the Charterparty, including any terms dealing with the commencement and calculation of Laytime. In the coal trade, such guarantees historically played an important commercial role because they linked the Charterer’s liability to the Shipowner with the Charterer’s corresponding rights against the colliery.

The purpose of a colliery guarantee was explained by Smith LJ in Monsen v. Macfarlane, McCrindell & Co:

“It is a document which is obtained by a Charterer who is about to load a ship under a Charterparty with coals from a colliery, in order that the Charterer may obtain from the colliery a guarantee that it will load the ship with coal within a given time, that is within a given time of Laydays.”

Smith LJ further explained that the Charterer would naturally want such a guarantee incorporated into the Charterparty. The reason is commercial fairness. The Charterer would not want to be liable to the Shipowner on terms broader or more onerous than those recoverable from the colliery responsible for supplying and loading the coal.

In Monsen v. Macfarlane, McCrindell & Co, the Charterparty required the ship to “proceed to a customary loading place in Royal Dock Grimsby” and there load a cargo of coal “as customary at Grimsby as per colliery guarantee in 15 colliery working days”. It was accepted that, without incorporation of the guarantee, the Charterparty would have operated as a Berth Charterparty. Lay Days would therefore have begun only when the ship reached the Berth under the spout and was ready to load.

The Court of Appeal, by majority, held that the Colliery Guarantee had been incorporated. Under its terms, Laytime was advanced to arrival in Dock. This meant that the guarantee altered the ordinary operation of the Charterparty and brought forward the point at which time began to count.

One factor that appears to have influenced the decision was the length of the allowed period. The actual loading took only three days, while the guarantee allowed 15 days. That suggested that the 15-day period was not intended merely to cover the physical loading operation under the spout. It must also have been intended to cover delay in getting the ship into position for loading.

Lord Esher MR expressed the commercial reasoning in direct terms:

“It is ridiculous to suppose that, as a matter of business, the harbour master would put a ship under the spout if the cargo was not ready, because he would be keeping other ships from loading.”

The effect of the decision is that a Colliery Guarantee may substantially alter the commencement of Laytime. If incorporated, it may move the starting point from arrival at the precise loading Berth to an earlier stage, such as arrival in Dock. The result depends on the wording of the Charterparty, the terms of the guarantee, and the commercial purpose of incorporating it.

For Shipowners and Charterers, the key drafting point is clear. If a Colliery Guarantee is intended only to regulate the loading rate after the ship reaches the loading position, the Charterparty should say so. If it is intended to govern the whole period from arrival in Dock or another earlier point, that should also be made explicit. Otherwise, disputes may arise over whether the guarantee changes the ordinary Berth Charterparty rule for the commencement of Laytime.

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