In the arbitration in question, the vessel was chartered on the Vegoil form to carry a cargo from “one safe port / one safe berth Dumai or Lubuk Gaung, Indonesia, to one safe port / one safe berth Chittagong, Bangladesh”. Owners argued that the vessel had earned demurrage at Lubuk Gaung, while Charterers argued that they had earned despatch.

The vessel tendered notice of readiness when it arrived at the Morong Pilot Station, but the vessel did not actually berth until over two days later. Owners argued that laytime began to run six hours after notice of readiness was tendered at the pilot station, while Charterers argued that it began to run when the vessel arrived in berth. The issue for the tribunal to consider was whether the vessel was an “arrived ship” at the pilot station.

The structure and organisation of the ports was an important consideration. Dumai and Lubuk Gaung were different ports, but Owners submitted that Lubuk Gaung was considered as being within the area of Dumai Port, and therefore part of that port, with both ports being controlled by the Dumai Port Authority. The authority exercised full control over vessels there with sea pilots being taken on board for passage up river to both Dumai and Lubuk Gaung. Owners said that because Morong Pilot Station was where ships usually lie while waiting to proceed to these ports, it therefore satisfied the requirements set down in The Johanna Oldendorff [1973] 2 Lloyd’s Rep 285 for being an “arrived ship” for the purposes of tendering notice of readiness.

Charterers argued that the organisation and structure of the ports was purely administrative, and had no bearing on the jurisdiction and powers of the port authority, and in particular on the commencement of laytime. Lubuk Gaung was acknowledged as a separate port, and so there was no basis for saying that arrival at the pilot station equated to arrival at Lubuk Gaung. The Johanna Oldendorff required the term “arrival” to be interpreted with regard to both the commercial purposes of the parties and the facts and features of each port. Both ports referred to in the charterparty were river ports, and the fact that vessels had to wait at the pilot station for sea pilots to board to guide them to either port did not make the vessels “arrived” for both ports at the pilot station.

Charterers referred to the Admiralty Guide to Port Entry, where Morong Pilot Station was seen to be some way beyond the locations recommended for vessels to anchor if not immediately taken into berth. It was clear, Charterers submitted, that vessels did not move directly from the pilot station to a berth or dock, but first needed to be piloted to the inner anchorage areas for clearance and to obtain free pratique. The pilot station was also several hours from both ports: this made it improbable that it might be considered as a usual waiting place.

The tribunal decided that, looking at the charts, the pilot station could not be regarded as the point where the carrying voyage came to an end: it was merely a staging point. That the Dumai Port Authority had authority over the pilot station did not obscure the fact that the authority it exercised was merely for the purposes of bringing vessels into the river, with the assistance of a sea pilot. The vessel could not be considered to have been more than on its way to Lubuk Gaung when it tendered notice of readiness. The notice of readiness was therefore premature and invalid, and so did not trigger the commencement of laytime. An invalid notice of readiness does not become validated when the vessel becomes an “arrived ship”, and as in this case no further notice of readiness was tendered, laytime only began to count when the vessel berthed.