Completion of Laytime
Laytime may end in one of two ways. It may expire because the agreed Laytime has been fully used, in which case Demurrage starts. Alternatively, it may come to an end because loading or discharging has been completed within the time allowed by the Charterparty. It should not be assumed, however, that the point at which loading or discharging is complete for cargo responsibility purposes, for example under the Hague Rules or comparable statutory regimes, is necessarily the same point at which cargo operations are complete for Laytime purposes.The completion of cargo operations raises different issues in dry cargo and tanker trades. For that reason, the subject is best considered first in relation to dry cargoes and then in relation to liquid cargoes. Before turning to those specific areas, however, several general principles should be noted.
The Laytime provided is given for the Charterers’ advantage. As Lord Denning MR stated in Shipping Developments Corporation SA v. V/O Sojuzneftexport:
“they have bought their laytime and paid for it in the freight, and are entitled to use it in the way which suits them best.”
The consequence is that the Shipowner cannot normally complain merely because cargo work does not begin immediately after the ship is ready to load or discharge, or because the Charterers choose not to work at full speed while Laytime is running. Laytime is part of the bargain purchased by the Charterers through the freight, and they may use that period for their own commercial purposes, subject to the limits of the Charterparty.
Petersen v. Dunn & Co illustrates the point. The ship was chartered to load coal within 12 colliery working days. The Charterparty also stated that loading was to begin “at once, and lay days to count when ship ready and notice given”. In fact, loading did not begin for several days after the ship was ready. A strike then interrupted the operation, and time lost through strikes was excluded from Laytime. Once the strike ended, the cargo was loaded in two colliery working days. If the strike period was deducted, the whole cargo had been loaded within the agreed time. The issue was whether the Charterers had been entitled to delay the start of loading. Mathew J held that they had. Referring to the wording requiring immediate loading, he said:
“The written clause was not intended to qualify the proviso as to “twelve colliery working days”. The main object of the written clause is to show when the lay days begin… The charterparty allowed 12 days for the loading and the plaintiff in effect says that it only allowed seven. The case is perfectly clear, and the defendants are entitled to judgment. The strike broke out after seven days had passed.”
The same principle was applied in Novorossisk Shipping Co v. Neopetro Ltd, known as The Ulyanovsk. In that case, the Charterers expected the market value of the cargo they intended to buy to fall. They therefore instructed the ship to tender Notice of Readiness (NOR) at the Loading Port only to themselves and not to Berth or commence loading until further orders were given. Contrary to those voyage instructions, the Ship Master tendered Notice of Readiness (NOR) to the refinery and the Shippers, Berthed, and began loading shortly after arrival. The cargo purchase price was linked to the date of the Bill of Lading (B/L). After that date, the market continued to fall, causing the Charterers substantial loss.
The owners resisted the Charterers’ claim and argued, among other points, that the Charterers had no right to postpone loading because doing so would have caused the permitted Laytime to be exceeded. That argument was rejected by both the Arbitrators and Steyn J in the High Court. Steyn J stated:
“In terms of the charterparty the charterers were given a total laytime of 72 running hours. They bought that laytime and paid for it in the freight. They are entitled to use that laytime as they wish. Even if they can load in less than the stipulated laytime, they may keep the ship for the whole of the laytime. Their right to the whole of the laytime is not to be abridged by requiring them to commence loading at any particular time.”
The Eurus, however, suggests that there may still be some uncertainty about the extent to which a Charterer may lawfully direct a ship not to load, particularly where the instruction affects the ship’s conduct before or at the point of arrival.
The Charterparty in The Eurus contained Clause 36, headed “Adherence to Voyage Instructions”. Under that clause, owners were liable for losses suffered by Charterers as a consequence of any failure to comply fully with voyage instructions. The ship was repeatedly instructed not to tender Notice of Readiness (NOR) to the loading terminal before 11:00 on 31 January. The Charterers wanted to ensure that loading would not be completed before 1 February, so that a February Bill of Lading (B/L) would be issued. They knew that a February Bill of Lading (B/L) would produce a substantially lower cargo price, but they did not know that local practice required a January Bill of Lading (B/L) to be issued if loading was completed before 08:00 on 1 February.
In fact, the ship Berthed at 03:00 on 31 January and began loading at 06:36. At 11:00, after loading had already been underway for several hours, the Ship Master gave notice to the terminal. Loading was completed at 01:30 on 1 February, but because of the 08:00 rule, January Bill of Lading (B/L) were issued.
The Arbitral Tribunal initially held that the Ship Master had breached the Charterparty by Berthing prematurely. The Tribunal also held that an instruction not to tender Notice of Readiness (NOR) before a particular time was effectively an instruction not to present or Berth before that time. However, the Tribunal found that the 08:00 rule, or the resulting loss, was not foreseeable. It then concluded that Clause 36 operated as an indemnity, so that owners were liable whether or not the loss had been foreseeable.
The main issue before the High Court and the Court of Appeal was whether Clause 36 was truly an indemnity clause. Both courts held that it was not. The result was that Charterers had to prove foreseeability before recovering their loss.
The question whether Charterers were entitled to give the instruction not to Berth was not directly decided, because the owners and the Ship Master had accepted the order, although the Ship Master failed to comply with it. Staughton LJ nevertheless made the following obiter comment:
“I would agree it as open to question whether the charterers were entitled to give those orders, either in the literal sense or with the addition of the arbitrators’ interpretation. The charterparty certainly contemplates that the charterers may give some orders, such as the nomination of loading and discharging ports, the quantity of cargo, and whether it shall comprise one or two grades of oil. There is also an express term (Scanport cl. 6) allowing the charterers to divert the vessel during the voyage—at their expense. No doubt on many occasions a shipowner will be prepared to acquiesce in an order which the charterer could not otherwise insist upon, provided that the shipowner is recompensed. But this was a voyage charterparty not a time charter. The owners contracted for a voyage that was more or less defined in return for the freight specified. I can think of quite a number of reasons why in other circumstances they might not have wished to accept the charterers’ orders—delay to their next engagement, for example, or imminent bad weather on the voyage, war or political interference. The problem does not arise in the present case, and has not been argued before us. The owner acquiesced in the orders that were given; and it was not argued before the arbitrators that the orders were unlawful, save in the narrow point that they were not in accordance with the custom of the trade (cl. 36), as to which Mr Kazantzis dissented. No doubt the parties had regard to the decision of Mr Justice Steyn in Novorossisk Shipping Co v. Neopetro Co Ltd [1990] 1 Lloyd’s Rep 425. Leave to appeal was refused in that case on the ground that the point was “not realistically arguable” and a certificate under s. 1 of the Arbitration Act, 1979 was also refused. I wish only to say that, not having heard argument on this point, I would not lend the authority to this Court in that decision.”
Those remarks show that Staughton LJ had reservations about the reasoning in The Ulyanovsk. The Eurus was fixed on the Asbatankvoy Charterparty Form and was therefore a Port Charterparty. The postponement requested by the Charterers arose after the ship had arrived off the Port and after she had reached the place where she was entitled to tender Notice of Readiness (NOR). The Voyage had therefore already ended, and as between Shipowners and Charterers, Laytime was already running.
An instruction delaying the ship during the Voyage stage would probably not be an order that Charterers could insist upon. Once the ship has arrived and Laytime is running, however, it is difficult to see why Charterers should not be entitled to use the Laytime for which they have paid. Staughton LJ’s observations were plainly obiter. To the extent that they differ from The Ulyanovsk, the latter decision probably remains the better statement of the current law.
The following authorities nevertheless show an important limit. Although Charterers may retain the ship for the whole of the permitted Laytime, they cannot continue to hold her after loading or discharge has actually been completed. What they may do is regulate the pace and timing of cargo operations while those operations remain genuinely incomplete.
Margaronis Navigation Agency Ltd v. Henry W Peabody & Co of London Ltd is an important example. The ship was chartered to load maize at Cape Town. By the close of business on Friday, 29 December, almost the whole cargo had been loaded. The Charterers nevertheless insisted on keeping the ship over the holiday weekend and loading the final small quantity on the following Tuesday. Their purpose was to obtain January Bill of Lading (B/L). The remaining cargo could have been loaded on the Friday or on the Saturday if overtime had been paid.
In the High Court, the owners argued that Mathew J in Petersen v. Dunn & Co could not have intended to decide that Charterers were entitled to keep the ship for the whole of the available Lay Days even where loading could have been completed earlier. Roskill J rejected that argument, holding that this was the necessary implication of the earlier decision. The owners also argued that the ship already had a full and complete cargo by Friday evening and that the principle “de minimis non curat lex” applied to the insignificant balance remaining.
On the question of how the permitted Laytime could be used, and for what purpose, Roskill J stated:
“A charterer is entitled to have that time to load, but once he has loaded, he must not use that time for some other purpose. But, so long as he has not completed loading, that time is his, and he is under no obligation to accelerate that rate of loading so as to shorten the time to which he is otherwise entitled.”
That point was not pursued in the Court of Appeal, although the court did consider whether the de minimis principle could apply to commercial contracts. Diplock LJ held that the real question was whether it was commercially practicable to come closer to the contractual cargo quantity. On that basis, the small remaining quantity could not simply be ignored.
London Arbitration 24/95 provides a further practical illustration. The Charterparty provided for loading at two Ports. No cargo was available at the first Loading Port, and the Tribunal held that time stopped running when the Charterers instructed the ship to proceed to the second Loading Port.
Dry Cargo and Laytime
Loading and Laytime
In Svenssons Travaruaktiebolag v. Cliffe Steamship Co Ltd, the main dispute concerned the seaworthiness of the ship. Before the court could decide whether the Shipowner had breached the obligation to provide a seaworthy ship at the beginning of each leg of the Voyage, it first had to identify whether the earlier stage of the operation, namely loading, had already been completed.The case arose from an accident during the loading of a deck cargo of timber onto the steamship Headcliffe at Burea in Sweden. While the final drafts of timber were being loaded, the ship, which had already developed a slight list to port, suddenly rolled to starboard and then back to port. The movement caused the deck cargo to shift, and a substantial quantity of timber was lost overboard.
Wright J found that the accident occurred when the last sling was being loaded. He then added:
“If it were necessary to decide the matter, but it is not, I should also hold that on the facts of this case the lashing was a necessary part of the operation of loading… the crew were actually engaged in lashing the after-deck cargo when the accident occurred—and I think it is an integral part of the operation of loading in the case of a vessel situated like this and lying with her deck cargo in an exposed roadstead.”
Earlier in the judgment, Wright J had expressed the point in wider terms:
“I think that in a case like this, and, indeed, in most cases, the mere reception or dumping down of the cargo on the ship does not involve the completion of the loading, because I think the operation of loading involves all that is required to put the cargo in a condition in which it can be carried.”
The same broad approach was later applied in Argonaut Navigation Co Ltd v. Ministry of Food. That case concerned a tween-decker loading grain at Sorel on the St Lawrence. Local regulations prevented such a ship from sailing unless the Port Warden had issued a certificate confirming compliance with the applicable safety requirements. Those regulations provided that, for a tween-decker, only the lower holds could be filled with bulk grain, while cargo carried in the tween-decks had to be bagged.
The Charterparty required the ship to carry a full and complete cargo. To load that quantity, some cargo had to be placed in the tween-decks. All cargo was loaded in bulk by elevator. Once the lower holds had been filled, the flow of grain was reduced and the loose grain needed for the tween-decks was bagged by Stevedores employed by the owners. The full permitted quantity of bulk grain had been loaded by 08:45 on 17 October. The additional quantity required for bagging had been loaded by 13:00, and the bagging was completed at 15:00. The dispute was whether loading ended at 08:45, 13:00, or 15:00. The ship was already on Demurrage by 08:45, and a further issue was whether that affected the result.
Both the High Court and the Court of Appeal held that loading was not complete until 15:00. They also held that it made no difference that the ship was already on Demurrage. Sellers J stated:
“In the case of the loading of a general cargo, time is of necessity taken in placing and stowing the cargo as it arrives in the hold. Often the delivery of cargo on board a vessel is slowed down because of the difficulty of stowing certain kinds of cargo or of stowing it in a place particularly difficult of access or by reason of its structure or some obstruction. I have never heard it suggested in such a case that in assessing the time taken in loading for purposes of demurrage an apportionment should take place (on some estimated basis for accuracy would be impossible) between time taken in stowing and time taken in bringing the goods to the hold. I can see no reason why it should be different with bulk cargo, which has to be trimmed, or, to some extent, put into bags, for the purpose of safety or for complying with enforceable regulations, the object of which is safety. It cannot, I think, make any difference that the time so occupied arises from time to time in the course of loading, or at the end when all the cargo is on board, or at any particular stage of the operation.”
Sellers J also made clear that it was irrelevant which party had to pay for loading, or whose part of the combined loading operation had been completed first. In many cases, the Shipper may finish delivering cargo before the ship has fully received it in the legal and operational sense. Loading is not complete simply because the Charterer or Shipper has performed everything required on that side. The ship is not loaded until the cargo has been placed on board and, where required for safety or by enforceable regulation, stowed, trimmed, bagged, secured, or otherwise prepared for carriage. It follows that, if Demurrage is to be avoided, the cargo must be delivered sufficiently early within the Lay Days to allow those additional steps to be completed before Laytime expires.
In the Court of Appeal, Bucknill LJ expressed the principle in a concise form:
“loading is not complete until the cargo is so placed in the ship that the ship can proceed on her voyage in safety."
A different issue arose in Owners of the Steamship Nolisement v. Bunge and Born. The facts require careful attention because the decision can easily be read too broadly. The dispute concerned delay after loading had been completed but before the Bills of Lading (B/L) were submitted by the Charterers for signature by the Ship Master. The delay was caused by the Charterers’ failure to decide where the ship should discharge.
The Charterparty expressly required Bills of Lading (B/L) to be signed by the Ship Master. Several Ports were named, and the ship was to proceed to one of them, at the Ship Master’s choice, for orders. After arrival there, notice was to be given to the Consignees, who then had 24 hours to nominate the actual Discharge Port. Alternatively, the Charterers had the option of nominating the Discharge Port when the Bills of Lading (B/L) were signed. The Charterers sought to exercise that option. Loading had been completed well within the permitted Laytime, but the ship was then delayed for three days. The parties agreed, and the Umpire found, that the Charterers were entitled to retain the ship for 24 hours for settling accounts. The dispute therefore concerned only the additional two days.
At first instance, Atkin J found for the Charterers and said:
“the true view is that the charterer has a stipulated period of lay days during which he may delay the ship at the port of loading without incurring liability for demurrage or for damages; in other words, he commits no breach by detaining the ship for that particular period.”
In the Court of Appeal, Swinfen Eady LJ disagreed with the breadth of that statement. He said:
“Of course, it may well be that if all the lay days are consumed in loading, there is no breach for which the charterer is liable; but in a charterparty in this form, where the ship is loaded at an accelerated rate, the charterer has no right to detain the ship after she is loaded.”
On the more specific question of the time allowed for signing Bills of Lading (B/L), the Court of Appeal approved the approach of Lord Esher MR in Oriental Steamship Co v. Tylor. Lord Esher MR had observed that Bills of Lading (B/L) could only be signed after loading had been completed and before sailing, unless the ship’s Agent had authority to sign on behalf of the Ship Master. He added:
“the time for the signing of these Bills of Lading (B/L) is to be calculated from the time of the loading on board, the charterers ought to have presented that Bills of Lading (B/L) almost immediately.”
The Court of Appeal treated “almost immediately” as meaning within a reasonable time. On the facts, that reasonable time was 24 hours, as the parties had already accepted. One reason that may have made that period acceptable was that the Charterparty itself contemplated a delay of at least that length if the Charterers had used the alternative procedure of sending the ship to one of the named Ports for orders.
It is doubtful that such a long interval would be accepted today. In modern dry cargo practice, the time allowed for presentation and signing of Bills of Lading (B/L) would probably be much shorter, and in many cases little more than an hour may be regarded as reasonable. Even so, London Arbitration 9/99 shows that the position is not always straightforward. There, a cargo-document difficulty delayed the ship from 08:00 until 17:00. The Tribunal appears to have allowed the whole period and did not identify any separate “free period”. Unlike the tanker trade, dry cargo practice does not contain a single general rule on this point.
Where the delay is substantial, the real question is usually whether the period is still part of Laytime, or whether the Shipowner’s remedy is instead a claim for Damages for Detention (DFD).
London Arbitration 16/89 provides an important example. The delay arose because the owners wished to clause a Bill of Lading (B/L) to record that part of the cargo had been loaded in rain on Charterers’ instructions. The owners argued that Laytime continued to run during the resulting delay. The Arbitrators rejected that argument. They held that the delay could not properly be treated as part of the loading operation. It arose from a problem concerning the form of the Bill of Lading (B/L), and more specifically from the inability to secure the Shippers’ agreement. That was not sufficiently connected with loading itself. It did, however, support a claim for Damages for Detention (DFD).
The authorities therefore indicate that Laytime continues until loading has been completed and the ship is ready to proceed safely on the Voyage. By contrast, delays connected with the signing of Bill of Lading (B/L), cargo documentation, or draft surveys generally fall outside the end of Laytime. Such delay may nevertheless give rise to Damages for Detention (DFD) where the Charterers, Shippers, or cargo interests are responsible for preventing the ship from sailing.
London Arbitration 18/05 suggests a practical qualification. The Tribunal held that, strictly speaking, time ended when loading was completed and the Shipowner was then entitled to Damages for Detention (DFD) for any further hindrance to the ship’s departure. However, for reasons of commercial convenience, practice may sometimes treat Laytime or time on Demurrage as extending to cover additional post-loading delay, at least where the delay is not excessive.
A possible exception to the rule that Laytime ends when loading is complete is illustrated by London Arbitration 6/08. In that case, the Charterer ran out of cargo to load but kept the ship at the Loading Port in the hope that further cargo would become available. The Tribunal held that, in those circumstances, Laytime or time on Demurrage continued to run not merely until the last cargo actually loaded had been placed on board, but until the Charterer instructed the ship to proceed to the next Port. In reaching that conclusion, the Tribunal followed London Arbitration 24/95.
Discharge and Laytime
The issue in this part of the law is whether discharge can, in a practical commercial sense, be regarded as complete even though a minor residue of cargo is still left on board. That question arose in Robert Dollar Co v. Blood, Holman & Co Ltd. The dispute concerned a sailing ship that had carried bagged barley from Panama to Sharpness. The ocean passage was uneventful, but after the ship reached Barry Roads, almost every operational difficulty that could arise appears to have done so. Nevertheless, the ship eventually arrived at Sharpness, and by the end of working hours on 2 January 1920, almost the whole cargo, amounting to approximately 4,000 tons, had been discharged.A number of the barley bags had burst. Some had split accidentally, but in many cases the crew had deliberately cut them open during loading in order to improve stowage. After the main cargo had been landed, the crew collected loose barley remaining in corners, recesses, and spaces beneath boards. Part of that residue was damaged. Five tons were recovered on Saturday, 3 January, and a further eight tons on Monday, 5 January. The Shipowners argued that discharge was not complete until 5 January. McCardie J rejected that argument and said:
“I hold otherwise. The question concerned is when the discharge was in substance completed, i.e. in a practical business sense. In my opinion, this completion took place on Jan. 2. It was regarded by both parties as the ship’s duty to collect the grains beneath boards. I think that the ship collected it rather for its own convenience than for the benefit of the defendants, and the matter is so regarded according to the practice at Sharpness.”
The judge’s conclusion was strengthened by his finding that the loose grain beneath the boards had largely resulted from the excessive splitting of the bags by the crew during loading.
In the discharge of bagged cargo or bulk cargo, some sweeping, gathering of residues, and re-bagging of loose remnants for delivery to the Receivers is often unavoidable. As a general rule, time spent on such work counts as Laytime, or, if the ship is already on Demurrage, as Demurrage. Robert Dollar Co v. Blood, Holman & Co Ltd should not be read as weakening that ordinary principle. It is better understood as a decision confined to its particular facts, either because of the specific practice at Sharpness or because the substantial quantity of residue was attributable to Shipowner default through the conduct of the crew during loading.
As with loading, the party responsible for carrying out or paying for discharge should not, by itself, determine when the discharge process is regarded as finished. The correct question is whether the cargo operation has been completed in a practical and commercial sense, having regard to the nature of the cargo, the method of discharge, the Charterparty wording, and any relevant local practice.
There is, however, an important distinction between loading and discharge. In loading cases, the cargo must normally be placed on board in a condition that enables the ship to proceed safely on the voyage. After discharge, by contrast, there is no general requirement that the ship must be left in seaworthy trim for her next voyage, unless the Charterparty expressly says so. Therefore, if the cargo has been fully discharged and the ship must then take ballast, the time spent ballasting does not count as Laytime, nor as Demurrage if the ship is already on Demurrage.
The same principle applies where the ship must be restored to seaworthy trim before proceeding to a second Discharge Port. Laytime at the first Discharge Port ends when all cargo intended for that Port has been discharged. This was the effect of the Court of Appeal’s decision in Chandris v. Government of India. The Evgenia Chandris had been fixed on the Centrocon Charterparty Form for the carriage of wheat from Argentina to India. The Charterparty also incorporated a seaworthy trim provision from the Austral form, which stated in part:
“any expense incurred by the shipowners at the first port of discharge in shifting, discharging and/or reloading any cargo either for the purpose of putting the vessel into seaworthy trim for the passage to the second port or to enable the cargo for discharge at the first port to be conveniently so discharged shall be paid by the charterers.”
At the loading stage, the Ship Master required about 10 per cent of the cargo to be supplied in bags, with the balance loaded loose in bulk. To achieve safe stowage, the bagged grain was placed above the bulk grain because there were no shifting boards fitted.
The Charterers ordered 2,900 tons to be discharged at Cochin, with the remaining cargo to be discharged at Bombay. The Cochin cargo consisted entirely of bulk grain and was fully discharged at 16:30 on Saturday, 27 November 1948. The ship was nevertheless delayed for a further 21 hours because the grain remaining in the lower holds had to be levelled, covered with tarpaulins, and then topped with the bagged wheat. The Port Authorities would not permit the ship to sail until that work was completed.
The owners argued that the reference to expenses in the seaworthy trim clause should also include compensation for the time lost. Devlin J accepted that argument at first instance. The Court of Appeal, by majority, disagreed. The court held that the word “expense” referred to actual outlays or disbursements, not to compensation for delay. Denning LJ stated:
Mr Roskill next contended that the time should count as lay days because it was time occupied in discharging the cargo, in that the discharge could not be said to be completed until the ship was made trim again ready to proceed on her voyage. The answer is, however, that the discharge was completed as soon as the last grain of the 2,900 tons was put off. The time occupied thereafter in trimming the ship is another matter altogether, and must be recovered under the Seaworthy Trim Clause or not at all.
The other members of the court took the same view on that point. Morris LJ observed:
“If the parties had wished to provide that, in the stipulated circumstances, any time occupied at the first port of discharge in shifting cargo for the purpose of putting the vessel into seaworthy trim for passage to the second port should count as part of the lay days, it would have been easy for them so to provide and to use language comparable to that used where in various events they were agreeing that time should for certain purposes count.”
The same principle was later applied by Mocatta J in J C Carras & Sons (Shipbrokers) Ltd v. President of India, known as The Argobeam. The facts were similar, except that the first Discharge Port, Madras, was used as a lightening Port, while final discharge was to take place at Calcutta. After the cargo intended for Madras had been discharged, the Receivers’ Stevedores filled 9,900 bags with grain and stowed them across the surface of the bulk cargo remaining on board in order to avoid a free surface. An Additional Clause required the ship to be left in seaworthy trim for the passage from one Port to the next.
The Charterers argued that the clause did not apply where the ship was merely lightening, or that it made them responsible only for the proper distribution of cargo within the holds, or alternatively that it was declaratory and had no real legal effect. Mocatta J rejected those arguments and stated:
“when all the cargo to be unloaded at a first or lightening port has been landed on the quay, or into lighters when these are used, discharge at such port has, in my judgment, ended and laytime does not continue to run during the time taken to put the vessel in seaworthy trim.”
The owners were therefore entitled to recover the expenses incurred when the ship shifted to buoys to be brought into seaworthy trim, but they were not entitled to recover compensation for the period of time lost.
Because every case depends on its own facts and on the precise contractual wording, an allowance of one or two hours is often granted in practice after completion of discharge for routine matters. That allowance, however, does not amount to Laytime. If the reasonable period is exceeded, the Shipowner’s remedy will normally be a claim for Detention in respect of the additional time, unless the Charterparty provides that the period is to count as Laytime or Demurrage.
The Charterparty Forms under which Laytime may continue after hose disconnection at the end of loading include the following:
- Bimchemvoy — Clause 10
- Intertankvoy 76 — Clause 9
- Finavoy — Clause 15
- Exxonvoy 84 — Clause 13
The remaining two forms in this group, Finavoy and Exxonvoy 84, deal with defined periods of delay. Their wording is not identical, and each must therefore be considered separately.
The closing words of Clause 15 of the Finavoy form provide:
“Time shall continue to count as laytime, or if the vessel is on demurrage, for demurrage, until cargo hoses have been disconnected, and such disconnection shall be effected promptly. Time spent awaiting cargo documents in excess of three hours after disconnection of hoses shall count as laytime, or if the vessel is on demurrage, for demurrage.”
This clause expressly states what happens after the delay exceeds three hours. From that point onward, the effect is similar to the Bimchemvoy and Intertankvoy 76 provisions: the excess period counts as Laytime or Demurrage. The clause does not expressly explain what happens if the delay is less than three hours, or how the first three hours are to be treated where the total delay exceeds three hours. The most likely inference is that the first three hours are intended to be a free period of detention for which no payment is recoverable. It may also be noted that a three-hour allowance for documentation is relatively generous by ordinary commercial standards.
The corresponding Exxonvoy 84 provision is Clause 13(b), which states:
“The laytime specified in Part I(I) shall be allowed free of expense to Charterer for the purpose of loading and discharging cargo and all other Charterer’s purposes. Laytime or, if vessel is on demurrage, time on demurrage, shall continue until all cargo hoses have been completely disconnected upon the final termination of the loading or discharging operation. Disconnection of all cargo hoses shall be promptly effected. If vessel is delayed in excess of two (2) hours after such disconnection of cargo hoses solely for Charterer’s purposes, laytime or, if Vessel is on demurrage, time on demurrage shall be deemed to have continued without interruption from the disconnection of the cargo hoses until the termination of such delay.”
This wording removes part of the uncertainty found in the Finavoy provision because it expressly states what happens to the first two hours if the delay exceeds that limit. If the delay continues beyond two hours and is solely for Charterer’s purposes, Laytime or Demurrage is deemed to have continued without interruption from hose disconnection. The clause still does not expressly state what happens where the delay is no more than two hours. Presumably, that period is again treated as a free spell of Detention.
Unlike the other Charterparty Forms in this category, Exxonvoy 84 does not limit the relevant delay to the production of documents. The wording extends to delay “solely for Charterer’s purposes”. The full scope of that expression has not been finally defined, but in practice cargo paperwork is likely to remain the most common cause of such delay.
London Arbitration 21/07 involved a complicated factual dispute concerning delay while waiting for cargo documents. The Charterparty was based on an amended Asbatankvoy Charterparty Form and expressly provided that Laytime would continue until the cargo documents had been placed on board. The case demonstrates the importance of clear wording where the parties intend post-completion documentation delay to count as Laytime or Demurrage.
It is useful at this point to consider what cargo documentation means in the tanker context. Before doing so, however, certain tanker procedures should be understood.
After loading has ended, the ship’s Chief Officer and the Charterer’s inspector will normally carry out an ullage check of the ship’s tanks. This involves measuring the space between the surface of the liquid cargo and the top of the tank. That measurement, together with cargo temperature and the ship’s trim, is then used with the ship’s calibration tables to calculate the quantity loaded. This produces the ship’s loading figure.
At the same time, the terminal prepares its own shore figure, usually based on before-and-after measurements from the shore tank. The shore figure commonly forms the basis of the Bill of Lading (B/L) quantity. A discrepancy between the ship’s figures and the shore figures is almost unavoidable. Where possible, the terminal will often want to review the ship’s calculated figure before presenting the Bill of Lading (B/L) to the Ship Master for signature. Disputes over such discrepancies mainly belong to the field of cargo claims and are outside the immediate Laytime issue. For present purposes, the important point is that preparation of both ship and shore figures takes time. Where the Charterparty requires the Ship Master to sign the Bill of Lading (B/L), some delay after completion of loading is therefore almost inevitable.
If disagreement between ship and shore figures causes delay, the Shipowner may have a claim for Detention. Unless the Charterparty expressly provides otherwise, however, that delay will not count as Laytime.
In addition to the Bill of Lading (B/L), some or all of the following documents may have to be placed on board before the ship sails:
Certificates of Quantity and Quality, Certificate of Origin of the Cargo, Cargo Manifest Documentation, Customs Clearance Certificate, and Certificate of Discharge.
Most of these documents are self-explanatory. A Certificate of Discharge is particularly associated with cargo loaded in Arab countries. It records the cargo loaded and must be notarised at the Discharge Port to confirm where the cargo has been landed.
Some loading terminals use an “early departure” system. Under that procedure, the Ship Master is required, either by the Charterparty itself, as in STB Voy or Exxonvoy 84, or by a later agreement, to authorise the Charterer’s Agents to sign the Bill of Lading (B/L) on his behalf. This allows the ship to sail as soon as loading is completed. Where early departure is used, documents other than customs clearance papers are not normally placed on board before sailing. Unless the Charterparty provides a specific documentation period, any time allowed for documentation should therefore be very short.
One unusual tanker form in relation to the end of Laytime is STB Voy. The second sentence of Clause 11 provides:
Laytime or, if the vessel is on demurrage, time on demurrage shall continue until the hoses have been connected, or until ballasting begins at the discharge port(s), whichever occurs first.
The final part of that sentence has been considered by London Arbitrators. In the arbitration concerned, the ship began ballasting well before discharge was completed and, in fact, completed ballasting more than 12 hours before discharge ended. The Arbitrators found for the Charterers and held that time stopped when ballasting commenced. They observed:
“Clause 11 was puzzling. It may be that in days of old the clause had some meaning if the shore connection were used for ballasting after completion of discharge, but this did not take place at Mohammedia. There was no doubt that in Roads exposed to adverse weather such as likely to occur in early March, the master felt it safer to increase his draught to avoid having a light ship at the mercy of sudden gusts. Clause 11 was not a sensible clause, but the parties had accepted it. Accordingly, demurrage time stopped when ballasting began, even though the cargo had only partially been discharged.”
There appears to be no principled reason why the same result should not apply to Laytime as well as Demurrage.
Another important decision on the termination of tanker Laytime is Total Transport Corporation of Panama v. Amoco Trading Co, known as The Altus. The Altus loaded crude oil from a barge positioned four miles offshore. A sealine ran from the barge to the base of a buoy 11 miles away, and the Altus was moored to the buoy by chain. Loading hoses ran from a swivelling manifold at the top of the buoy to the ship.
Before loading was completed, the terminal operator asked the Altus to flush the sealine and ballast the loading barge so that the barge could be moved inshore for cleaning. The dispute was whether Laytime ran only until the flushing operation began, or whether it continued until the hoses were disconnected. The Charterparty was on the Exxonvoy form and provided that Laytime should continue until the hoses had been disconnected.
Webster J held without hesitation that Laytime ended when the hoses were disconnected, regardless of whether the flushing operation had been required by the Charterer. The flushing could not sensibly be treated as part of the carrying Voyage, and there was no gap between the start of the carrying Voyage and the end of the loading operation. A further reason was that there had been no default by the Ship Master.
London Arbitration 10/06 also concerned tanker Laytime, although the Charterparty was based on the Asbatankvoy Charterparty Form. The Tribunal allowed a nine-hour delay while awaiting cargo documents to count as Laytime or time on Demurrage. The relevant clause allowed a maximum of three hours for waiting for cargo documents and provided that, if that period was exceeded, no time at all would count. It did not clearly state how any excess period should be classified. The Tribunal treated the delay as Laytime or time on Demurrage, using Clause 13(b) of Exxonvoy 84 as an indication of commercial practice. The Tribunal also deducted 45 minutes from the allowed period, representing the time taken to shift from the loading Berth to the anchorage, thereby reducing the duration of the carrying Voyage by that amount.