London Arbitration 20/14

Facts

A vessel was chartered on an amended Gencon 94 form, for a part cargo of petcoke. A completion cargo of wheat was also arranged. The petcoke cargo was loaded first, however its receivers had not negotiated a provision that it be discharged first. The wheat cargo was carried on a “last in, first out” basis. Both cargoes were to be discharged at Djibouti.

The charter was a berth charter, but allowed NOR to be tendered on arrival if the intended berth was occupied. When the vessel arrived at Djibouti, both the petcoke and wheat berths were occupied. NOR was tendered for the petcoke cargo on arrival. Although the tribunal was not told that NOR had been tendered for the wheat cargo at the same time, correspondence stated that the “vsl tendered general nor for both cgoes”.

Two days after arrival, the vessel shifted to the petcoke berth, however the Master refused to allow discharge. The vessel then shifted back to anchorage, correspondence stating that “owners decided to discharge wheat cargo first”. The vessel waited at anchorage for the wheat berth to become free. After the wheat cargo was discharged, a second NOR for the petcoke cargo was tendered. The vessel then remained in the wheat berth for several days, with the initial intention being that she would shift directly to the petcoke berth. When that proved not to be possible, the vessel shifted back to the anchorage. Discharge of the petcoke cargo was eventually completed 81 days after the vessel had arrived at Djibouti.

Owners’ demurrage claim and Tribunal’s findings

Owners brought a claim for demurrage. The Tribunal considered two issues:

  1. Was laytime in respect of the petcoke cargo triggered by the first NOR but then suspended (as Charterers contended), or was it triggered by the second NOR after the wheat cargo had been discharged (as Owners contended)?
  2. If the former, did laytime resume following completion of discharge of the wheat cargo (as Owners contended), or when the vessel returned to the petcoke berth (as Charterers contended)?

The Tribunal held that the commencement of laytime was triggered by the first notice. Here they referred to the statement in The Tres Flores [1973] 2 Lloyd’s Rep 247 that “a ship in order to be ready and thus be entitled to give valid notice of readiness must be ready to obey the charterer’s order whenever they are given”. The “readiness” referred to was the physical and legal readiness of the vessel. There was no dispute here about the vessel’s physical readiness. As to legal readiness, when the first NOR was tendered, all her papers were in order, there was no infection, and no permits or consents were not in place or required, so there was no legal impediment to commencement of discharge. The fact that Owners would have been in breach of charter relating to the wheat cargo did not mean that the vessel was not legally ready in respect of the petcoke cargo.

Laytime was suspended during shifting (as per the charter terms), and did not resume when the vessel first berthed at the petcoke berth because the Master refused to commence discharge. This amounted to “fault” on the part of Owners, delay caused by which does not count as laytime or demurrage.

The next question was: when did this period of fault end? The delay and the cause of the delay (i.e. the fault) had to be contemporaneous. When the fault ceased, either laytime or time on demurrage resumed. For laytime or demurrage to run, the vessel had to be continuously available for cargo operations (see The Stolt Spur [2002] 1 Lloyd’s Rep 786). In the absence of some other clause excluding time, therefore, the loss of time was confined to the period when the vessel was not so available. The Tribunal was satisfied that the vessel was at the immediate disposal of the charterers after discharging the wheat cargo, even if she did remain at the wheat berth.

On that basis, Owners were entitled to demurrage from the time when discharge of the wheat cargo was completed.

Comment

This case considered some of the core laytime and demurrage issues, including when laytime commences and in what circumstances and for how long laytime and/or time on demurrage are suspended. Difficulty was caused in this case because the vessel carried two cargoes under separate contractual arrangements. The Tribunal’s findings make clear that, in such cases, each contract will be considered individually and on its own terms.