Anti-Technicality Clause

Anti-Technicality Clause (ATC)

Anti-Technicality Clause is designed to moderate the severity of the Withdrawal Clause. NYPE (New York Produce Exchange) 1993 Time Charterparty form includes an anti-technicality clause as standard. Therefore, one the most popular Time Charterparty forms among charterers.

Grace Period: where there is a failure to make punctual and regular payment of hire due to oversight, negligence, errors or omissions on the part of the charterers or their bankers, the charterers shall be given by the Owners …..clear banking days (as recognized at the agreed place of payment) written notice to rectify the failure, and when so rectified within those ….. days following the Owners’ notice, the payment shall stand as regular and punctual. Failure by the Charterers to pay the hire within …. days of their receiving Owners’ notice as provided herein, shall entitle the Owners to withdraw as set forth in Sub-clause above.

Anti-Technicality Clause is stipulated in NYPE (New York Produce Exchange) 1993 Time Charterparty form as standard. On the other hand, NYPE (New York Produce Exchange) 1946 and BALTIME Time Charterparty forms do not stipulate Anti-Technicality Clause. So, charterers and shipowners should add an Anti-Technicality Clause into Time Charterparty during charter negotiations.

Under an Anti-Technicality Clause, a valid notice cannot be given until after midnight on the due day. After midnight on the due day charterer becomes in default. In Afovos case, Bingham J expressed that “it makes evidence of banking hours and practice irrelevant to the question when notice may lawfully be given”.

Up to now, which time zone should be taken for banking hours purposes has not been decided in any case. Feasibly, most appropriate time zone is the time zone of the country where the shipowners’ bank account is located.

In order to be and the safe side and to be as cautious as possible, shipowner should take whichever is the latest time zone before sending an Anti-Technicality Notice.

In Pamela case, Anti-Technicality Notice was telexed shortly before midnight on a Friday of the day hire was due and was held by the court not to be premature because it would only be read by charterers on Monday morning.

Wording of an Anti-Technicality Notice must be:

  • Clear
  • Unambiguous
  • Absolute Terms

A valid Anti-Technicality Notice must make clear that hire has not been paid punctually and that shipowners are giving an ultimatum that unless it is paid within the relevant period shipowners will withdraw their ship.

What is Anti-Technicality Clause (ATC) in Ship Chartering?

In ship chartering, an Anti-Technicality Clause (ATC) is a provision included in the charter party agreement to protect the parties, particularly the charterer, from the consequences of minor or technical breaches. The purpose of this clause is to prevent one party from taking advantage of the other due to insignificant or inadvertent mistakes, which may not have a substantial impact on the overall performance of the contract.

The Anti-Technicality Clause typically addresses issues related to payment of hire, laytime, and other contractual obligations, where a minor error or delay might otherwise trigger a default or termination of the agreement. This clause usually specifies a grace period or a notice requirement before any punitive action can be taken.

For example, if a charterer fails to make a payment on the due date, the ship owner might be entitled to withdraw the vessel, terminate the charter, or claim damages. However, if an Anti-Technicality Clause is included in the agreement, the ship owner must first provide a notice to the charterer, giving them an opportunity to rectify the issue within a specified grace period, such as 24 or 48 hours. If the charterer makes the payment within the grace period, no further action is taken, and the breach is considered to have been remedied.

The presence of an Anti-Technicality Clause in a charter party agreement helps maintain a fair and balanced relationship between the charterer and the ship owner, by ensuring that minor errors or delays do not lead to severe consequences. It encourages cooperation and communication between the parties and fosters a more amicable resolution to potential disputes.

However, it is important to note that the Anti-Technicality Clause does not protect parties from significant breaches or persistent failures to meet contractual obligations. In cases where the breach is substantial, or if the charterer repeatedly fails to meet their obligations despite the grace period, the ship owner may still be entitled to pursue remedies under the terms of the charter party agreement.

 

What is Grace Period in Ship Chartering?

In ship chartering, a grace period refers to a specified timeframe allowed for a party to fulfill their contractual obligations or rectify any minor breaches without facing penalties or consequences. Grace periods are typically included in charter party agreements to ensure fairness and maintain a balanced relationship between the charterer and the ship owner. They provide flexibility for the parties to address any inadvertent errors or delays that might occur during the course of the charter.

Grace periods can be applied to various aspects of the charter party agreement, such as payment of hire, laytime, demurrage, or other performance obligations. The duration of the grace period may vary depending on the specific terms agreed upon by the parties.

For example, in the context of payment of hire, a grace period might be included to accommodate any delays that may occur due to bank holidays, weekends, or other unforeseen circumstances. If the charterer fails to make the payment on the due date, the ship owner must provide a notice, allowing the charterer a specified grace period (e.g., 24 or 48 hours) to make the payment. If the charterer fulfills the payment within the grace period, no further action is taken, and the breach is considered to have been remedied.

Similarly, grace periods can also be applied to laytime calculations, giving the charterer additional time to load or discharge the cargo without incurring demurrage charges. This can be particularly useful in cases where unexpected delays occur, such as adverse weather conditions, port congestion, or other operational issues.

It is important to note that grace periods are not meant to protect parties from significant breaches or persistent failures to meet contractual obligations. If a party repeatedly fails to fulfill their responsibilities despite the grace period, or if the breach is substantial, the other party may still be entitled to pursue remedies under the terms of the charter party agreement.

Grace Periods in ship chartering provide flexibility and fairness for both the charterer and the ship owner, allowing them to address minor breaches or delays without facing immediate penalties or consequences. These periods foster better communication and cooperation between the parties and can lead to more amicable resolutions of potential disputes.

 

Anti-Technicality Notice (ATN) in Ship Chartering

In ship chartering, an Anti-Technicality Notice (ATN) is a formal written communication issued by one party to another, usually from the ship owner to the charterer, in response to a minor or technical breach of the charter party agreement. The purpose of the Anti-Technicality Notice is to provide the charterer with an opportunity to rectify the breach within a specified grace period, without immediately facing penalties or consequences.

The Anti-Technicality Notice is often used in conjunction with an Anti-Technicality Clause (ATC) included in the charter party agreement. The ATC protects the parties, particularly the charterer, from the consequences of minor or technical breaches and aims to prevent one party from taking advantage of the other due to insignificant or inadvertent mistakes.

Common scenarios where an Anti-Technicality Notice may be issued include:

  1. Late payment of hire: If the charterer fails to make the payment on the due date, the ship owner can issue an ATN, allowing the charterer a specified grace period (e.g., 24 or 48 hours) to make the payment. If the charterer makes the payment within the grace period, no further action is taken, and the breach is considered to have been remedied.
  2. Exceeding laytime: If the charterer exceeds the allowed laytime for loading or discharging cargo, the ship owner may issue an ATN, giving the charterer an opportunity to complete the operation within a specified grace period, without immediately incurring demurrage charges.

It is important to note that an Anti-Technicality Notice does not protect parties from significant breaches or persistent failures to meet contractual obligations. If the charterer repeatedly fails to fulfill their responsibilities despite the grace period, or if the breach is substantial, the ship owner may still be entitled to pursue remedies under the terms of the charter party agreement.

The Anti-Technicality Notice in ship chartering serves as a formal communication to address minor or technical breaches of the charter party agreement, providing the charterer with an opportunity to rectify the issue within a specified grace period. This approach fosters better communication and cooperation between the parties and can lead to more amicable resolutions of potential disputes.

 

Anti-Technicality Notice (ATN) Example

Below is an example of an Anti-Technicality Notice (ATN) that a ship owner might send to a charterer in response to a late payment of hire:

Subject: Anti-Technicality Notice – Late Payment of Hire – MV Example Ship

[Date]

[Charterer’s Name] [Charterer’s Address]

Dear [Charterer’s Representative],

Re: Voyage Charter Party Agreement dated [Date of Agreement], MV Example Ship

We are writing to inform you that, as of [Date and Time], we have not received the payment of hire for the MV Example Ship, which was due on [Due Date]. As per Clause [Number] of the Voyage Charter Party Agreement, the payment should have been made by the due date mentioned above.

Pursuant to the Anti-Technicality Clause (Clause [Number]) of the Voyage Charter Party Agreement, we are issuing this Anti-Technicality Notice to provide you with an opportunity to rectify this breach. You are granted a grace period of [e.g., 48 hours] from the receipt of this notice to make the outstanding payment.

Please note that if the payment is not received within the specified grace period, we may exercise our rights under the Charter Party Agreement, which may include, but are not limited to, withdrawing the vessel from your service, terminating the agreement, or claiming damages.

We kindly request that you make the outstanding payment promptly to avoid any further consequences. Please provide confirmation of the payment and the transaction details once the payment has been made.

Should you have any questions or concerns, please do not hesitate to contact us.

Thank you for your prompt attention to this matter.

Yours sincerely,

[Ship Owner’s Representative] [Ship Owner’s Name] [Ship Owner’s Address] [Contact Information]

Please note that this example is for illustrative purposes only and should not be considered legal advice. You should consult with a legal professional to draft an Anti-Technicality Notice that is appropriate for your specific situation and complies with the terms and conditions of the charter party agreement.

Where can I find more information about Anti-Technicality Notice (ATN)?

We kindly suggest that you visit the web page of BIMCO (Baltic and International Maritime Council) to obtain the Anti-Technicality Notice (ATN) forms and documents. www.bimco.org

 

 

Anti-Technicality Clause (ATC) Clause in NYPE 93 and NYPE 2015

The NYPE 93 (New York Produce Exchange 1993) is a widely-used standardized time charter form. It does not have an express Anti-Technicality Clause (ATC) included in its standard wording. However, parties may choose to negotiate and incorporate an Anti-Technicality Clause as an additional rider clause to address minor or technical breaches, such as late payment of hire, and provide a specified grace period for the charterer to remedy the breach.

An example of an Anti-Technicality Clause that could be added to the NYPE 93 form is as follows:

Anti-Technicality Clause (ATC):

“In the event of any delay in the payment of hire, the Owners shall give the Charterers written notice specifying the amount of hire overdue and the Charterers shall have a grace period of [e.g., 48] hours from receipt of such notice to make the payment. If the outstanding hire is paid within the grace period, no further action shall be taken, and the breach shall be considered remedied. The Owners shall not be entitled to withdraw the vessel from the service of the Charterers, suspend the performance of their obligations, or exercise any other rights arising from the non-payment of hire unless the outstanding hire remains unpaid after the expiration of the grace period. This clause shall not apply in cases of repeated or persistent late payment of hire or in cases where the Charterers are in breach of any other material terms and conditions of this Charter Party.”

Please note that this example is for illustrative purposes only and should not be considered legal advice. You should consult with a legal professional to draft an Anti-Technicality Clause that is appropriate for your specific situation and complies with the terms and conditions of the NYPE 93 form or any other applicable charter party agreement.

The NYPE 2015 (New York Produce Exchange 2015) is an updated version of the standardized time charter form. Similar to the NYPE 93, it does not contain an express Anti-Technicality Clause (ATC) in its standard wording. However, parties can negotiate and incorporate an Anti-Technicality Clause as an additional rider clause to address minor or technical breaches, such as late payment of hire, and provide a specified grace period for the charterer to remedy the breach.

Anti-Technicality Clause (ATC) Clause in BALTIME 2001

The BALTIME 2001 is a standardized time charter form that, like the NYPE 93 and NYPE 2015, does not include an express Anti-Technicality Clause (ATC) in its standard wording. However, parties can negotiate and incorporate an Anti-Technicality Clause as an additional rider clause to address minor or technical breaches, such as late payment of hire, and provide a specified grace period for the charterer to remedy the breach.

An example of an Anti-Technicality Clause that could be added to the BALTIME 2001 form is as follows:

Anti-Technicality Clause (ATC):

“In the event of any delay in the payment of hire, the Owners shall give the Charterers written notice specifying the amount of hire overdue and the Charterers shall have a grace period of [e.g., 48] hours from receipt of such notice to make the payment. If the outstanding hire is paid within the grace period, no further action shall be taken, and the breach shall be considered remedied. The Owners shall not be entitled to withdraw the vessel from the service of the Charterers, suspend the performance of their obligations, or exercise any other rights arising from the non-payment of hire unless the outstanding hire remains unpaid after the expiration of the grace period. This clause shall not apply in cases of repeated or persistent late payment of hire or in cases where the Charterers are in breach of any other material terms and conditions of this Charter Party.”

Please note that this example is for illustrative purposes only and should not be considered legal advice. You should consult with a legal professional to draft an Anti-Technicality Clause that is appropriate for your specific situation and complies with the terms and conditions of the BALTIME 2001 form or any other applicable charter party agreement.