Commencement of laytime

3.1 Normally three conditions must be satisfied before the charterer can be required to start loading or discharging, as the case may be, and therefore before the laytime allowed starts to run.1 These are that:

  1. The ship must have arrived at the destination specified in the charter.
  2. The ship must be ready and in a fit condition to receive or discharge her cargo.
  3. Where required, notice of her readiness must have been given to the charterer. In the absence of an express provision to the contrary, however, this last requirement applies only at the first load port.

When these conditions have been met, the vessel is an Arrived ship and, subject to the expiry of any period prescribed in the charter, laytime begins to run.

The specified destination

3.2 In The Johanna Oldendorff,2 Lord Diplock analysed the essential characteristics of a voyage charter and divided the adventure into four successive stages:

  • (1) The loading voyage, viz. the voyage of the chartered vessel from wherever she is at the date of the charterparty to the place specified in it as the place of loading.
  • (2) The loading operation, viz. the delivery of the cargo to the vessel at the place of loading and its stowage on board.
  • (3) The carrying voyage, viz. the voyage of the vessel to the place specified in the charterparty as the place of delivery.
  • (4) The discharging operation, viz. the delivery of the cargo from the vessel at the place specified in the charterparty as the place of discharge and its receipt there by the charterer or other consignee.

3.3 Arrival at the specified destination is the point both geographically and in time when the voyage stages end and the loading/discharging operations begin. Fixed laytime charters are traditionally divided into berth, dock and port charters depending on where the voyage stages end and these will be considered in more detail later.3 However, whether a charter is a berth, dock or port charter is not necessarily determinative of the specified destination, because berth and port charters, in particular, may contain provisions advancing this.4 Although the same divisions apply to customary laytime charters and there still therefore comes a point at which laytime begins, it is generally a less significant event in such charters because most of the risk of delay thereafter remains with the shipowner. However, the same principles apply.

3.4 Sometimes, instead of naming a specific berth, dock or port, a charter will specify that the vessel concerned is to proceed to one or more berths, docks or ports within a stated geographical area, e.g.:

  • “one or two safe berths Mississippi River”
  • “one dock London River”
  • “one port German North Sea”.

3.5 Where such a formula is used, the effect is as if the berths, docks or ports, as the case may be, which are subsequently nominated by the charterer, were written into the original fixture. The ship therefore reaches her specified destination, not when she reaches the geographical area named in the charter, but when she reaches the first berth, dock or port named by the charterer and the charter is accordingly a berth, dock or port charter.5

3.6 The option that is thus given is one given by the shipowner for the benefit of the charterer and is a true option. In Tharsis Sulphur & Copper Co Ltd v Morel Brothers & Co and others,6 a vessel was chartered to proceed to the Mersey and deliver her cargo at any safe berth as ordered on arrival in the dock at Garston. On arrival, a berth was ordered by the harbour-master as customary but there was a delay in unloading due to the crowded state of the dock, which prevented the vessel being berthed for some time, and the shipowners claimed demurrage. The principal point at issue was when the vessel became an Arrived ship and on this the Court of Appeal held that the charter was a berth charter so that time did not begin to run until the vessel berthed. In the course of his judgment, however, Bowen LJ dealt with the exercise of an option by a charterer to nominate a berth, dock or port saying:7

3.7 In the absence of a reachable on arrival provision,8 the shipowner has no right to complain if he cannot get into the nominated berth or dock, or indeed port on arrival (nor in the absence of an always accessible provision can he complain about an inability to get into or leave such a berth, dock or port) because of some temporary obstruction, whether natural or man induced, such as lack of water or congestion. Still less can he complain if the port is named in the charter. Dicta in the Reardon Smith case suggest that the only limitation to the charterers’ right to nominate is where the delay caused by the “temporary” obstruction would be so unreasonable as to frustrate the commercial adventure.9 Although largely beyond the scope of this book, where the obstruction is more lasting in nature, there are cases relating to whether the courts will imply a warranty of safety and thus an obligation not to nominate a port that is impossible to access. In comments that were obiter dicta, Thomas J said in The Aegean Sea:10

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 vessel to reach… But beyond that, it is an open question whether any term should be implied into a voyage charter where there is a range of unnamed ports and where there is no express warranty of safety …

However, in The Epaphus,11 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 the nomination of a port that the vessel was too deep to enter was a good one. In that case a named ship (although the position would apparently have been the same under that contract if it had been unnamed) was to discharge at “one main Italian port” nominated by the buyers of the cargo. They nominated Ravenna, which the ship was unable to enter. There was no requirement that the port nominated be a safe one. In the Court of Appeal, Sir John Donaldson distinguished the Reardon Smith case12 and a case he called the Olivebank case,13 where charterers had nominated a Danish port that the ship concerned was unable to enter owing to a prohibition by the British Government applied during the First World War, saying:14

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 contract. But it would be quite otherwise if the term to be implied was that the vessel could be ordered to Vancouver/Aalborg, unless that port should have become impossible subsequently to the making of the contract.

3.8 He continued that in the cases he had mentioned, the “impossibility” arose after the date of the contract, and he concluded that it would have been quite different in the instant case, where a sudden storm had silted the harbour at Ravenna and reduced the maximum permissible draught.

3.9 In the High Court, Staughton J took a view apparently largely shared by the majority in the Court of Appeal:15

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.

3.10 In the Court of Appeal, Sir John Donaldson did however admit16 that, had the contract provided for delivery “at one Italian port” rather than “at one main Italian port”, there would have been scope for considering whether the parties intended to restrict the choice to one suited to the vessel, which he said would have involved no contradiction of the express terms, only their construction.

3.11 It would therefore seem that the more restrictive or qualified the range of ports, the less the courts are likely to interfere with the nomination made by the party having the choice. The distinction between a dock that is blocked on more than a transient basis and a port that is too shallow to enter seems somewhat fine, unless of course one is due to a supervening event, as suggested by Sir John Donaldson. It therefore seems likely that this subject will again come before the courts before very long.

3.12 Once the charterer has made his nomination without reservation, then in the absence of a provision to the contrary in the charter, he has no right to change the nomination,17 unless for some reason the original nomination can be shown to be invalid.18

3.13 Most tanker charters, however, allow the charterer to nominate alternative ports after a first nomination, or to order the vessel to proceed to a holding destination for further instructions to be passed by radio. Thus the Asbatankvoy form specifies Gibraltar or Land’s End for orders and the STB Voy form also adds Quoin Island, Suez and Aruba. Moreover there may become a point after which the right to change the nomination becomes spent. In The Batis,19 charterers sought to change the load port after arrival at the original nominated port. The charter was on an ASBA II form and provided for 1/2 load ports. Owners complied with the change under protest and reserved their rights to claim additional remuneration. In arbitration, the arbitrators held that the right to change the nominated load port had been lost, but compliance with the charterers’ orders deprived the owners from the full remedy sought. Leave to appeal from the finding that the changed orders were illegitimate was refused by the High Court, who held that it was not an order that the charterers were entitled to give. They did, however, hold that the owners were not to be denied their remedy because they had complied with the orders.

3.14 The case may be contrasted with The Jasmine B,20 where the charter provided a special provision 2 for discharge at 1/2 safe ports in three ranges with a maximum of three ports total. A further clause, M1, provided for charterers to have the right to change at any time its nomination of the loading and/or discharging ports subject to special provision 2. The charterers ordered the vessel to discharge at Porto Torres in Sardinia and, after arrival at that port, ordered her in succession to proceed to Houston for orders, which the owners challenged, to wait outside Porto Torres for instructions, to proceed to New York for orders and finally to discharge at Genoa.

3.15 The High Court affirmed the general principle that, in the absence of any special provision in a charterparty, the effect of the nomination of a loading or discharging port by the charterer was that the charterparty was thereafter to be treated as if the nominated port had originally been written in the charter, and the charterer had neither the right nor the obligation to change that nomination.

3.16 The nominations for orders were outside the terms of the charter. The court held that clause M1 was in wide terms and entitled the charterers to change at any time their nomination and there was no reason to imply the words “so long as Notice of Readiness had not been given” or “so long as the vessel is not already on demurrage” into the clause. It was further held that the general principle set out above should not be extended so as to hold that a representation that the nominated port was to be the sole discharging port constituted the exercise of a right of election or selection and that, even if that was wrong, the charterers were entitled to change their nomination under clause M1 of Porto Torres as sole discharge port to Genoa as sole discharge port. If Porto Torres had become an effective port of discharge since the vessel had tendered notice of readiness, then the effect of the order was that the charterers changed their nomination so that Porto Torres became the first port of discharge and Genoa the second.

3.17 In The Batis, the High Court only considered whether the charterers were entitled to change their nomination under the change of load/discharge ports provision, not under any other term of the charter, such as that allowing loading at more than one port, although that argument was rejected in arbitration.

3.18 The relationship between a clause allowing charterers to change a previously nominated port and one giving charterers a right to cancel the charter was one considered by the High Court, on appeal from arbitration, in The Kriti Filoxenia.21 The clauses in question were clauses 17 and 24 of the BP Voy 3 form of charter.

3.19 The ship in question had previously discharged in Santa Panagia in Sicily and then fixed to load at a range of Black Sea ports. The charterers nominated Tuapse in Russia as the intended load port but after sailing asked for ETAs for this and two other ports as well – Sevastopol in Crimea and Batumi in Georgia. At the time, the vessel’s route was common to all three ports. Of the three ports, Sevastopol was nearest to Santa Panagia, then Tuapse and the furthest was Batumi. The day after ETAs were provided, the charterers changed their nomination to Batumi, where the vessel was expected to arrive after the right to cancel arose. If matters had gone according to plan, the vessel would have arrived at Tuapse the port originally nominated, two hours before any right to cancel would have arisen.

3.20 The charterers purported to cancel under the second paragraph of clause 17. However the arbitral tribunal that heard the case originally, which included a retired member of the Court of Appeal, and the High Court held that in exercising their right to change their nomination under clause 24, the charterers lost their right to cancel under clause 17.

3.21 An example of a particularly widely drafted change in a nomination clause is clause 9 (b) of the Exxonvoy 84 form, which provides:

CHANGE OF DESTINATION. After nominating loading and/or discharging port(s) or place(s) pursuant to Paragraph (a) of this Clause, Charterer may nominate new port(s) or place(s), whether or not they are within the range of the previously nominated port(s) or place(s) and/or vary the rotation of any nominated port(s) or place(s) …

3.22 The clause goes on to make it clear that the right to nominate a different loading/discharging port in a different range is lost once notice of readiness is tendered at a nominated loading/discharging port. This leaves open the question as to whether a different port may be nominated within the same range. Probably the answer is that by implication it can.

3.23 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 vessel shall count as used laytime”. Based on the load ports originally nominated, the owners of the Antiparos arranged to bunker at the second load port but when this was changed they had to change their stem to the new nomination. They successfully claimed this additional expense from the charterers, but the High Court held that they did not have a further claim for damages because although the change was in breach of charter, clause 4(c) defined what was recoverable when the owners acceded to the change of instructions.22

3.24 Under the Worldscale system of freight calculation used in virtually all tanker charters, the freight payable depends on the actual load and discharge ports and, furthermore, clause 9 (b) goes on to provide a formula for compensating the shipowner for any time wasted by the change, so the clause is by no means as one-sided as it might at first appear. It does, however, allow the charterer to totally change the agreed voyage at any stage en route.

3.25 What happens if the charterer fails to nominate a discharge port timeously was the question that arose in The Timna, where the vessel concerned was ordered to the River Weser but the charterers failed to specify which of the Weser ports they intended to discharge at in sufficient time to avoid delay. In the High Court, Donaldson J held23 there was no implied term, as had been suggested, that if the charterers failed to nominate the port of discharge within the time limited by the charter or within some further period thereafter, the master could himself make the nomination. As the vessel never became an Arrived ship during the period of delay, the shipowner’s claim for demurrage therefore failed, but he was entitled to claim damages for detention for the delay until the charterers did in fact give orders as to which port to proceed to. This finding was upheld by the Court of Appeal, who also held that to constitute a valid order to proceed to a port of discharge, the order must be a firm one.24

3.26 A failure to nominate the discharge port in sufficient time to avoid delay was one of the many issues that were considered in The Rio Sun,25 which was a dispute not under a charter but under a c.i.f. contract of sale. In that case, Bingham J held that it was implicit in the sale contract that the buyer should nominate the discharge port in sufficient time to enable the vessel to sail to that port without interruption or delay, and that failure to do so was a breach of contract. A different sort of problem arose out of late nomination of discharge ports in London Arbitration 19/89,26 where a failure to nominate the second discharge port before completion of loading meant that the master did not have a chance to load the cargo in such a way so as to avoid lightening at the first port after discharge of the cargo destined for that port in order to reach the second. The charterers’ failure to give timeous orders had caused the loss they had suffered by having to discharge additional cargo at the first port where the price was lower.

3.27 The late nomination of a discharge port may result in the voyage being extended and/or in a delay on arrival at the discharge port,27 e.g. because of local requirements to give notice for tugs, etc.28 The loss that flows from the former is usually quantified by calculating the time lost and multiplying it by the demurrage rate with the addition of the cost of bunkers wasted.

3.28 If, on the other hand, there is a delay at the discharge port then the type of claim will, it is suggested, depend on whether the vessel concerned is an Arrived ship, i.e. it will depend on whether the relevant charter is a berth or port charter. If the vessel is not an Arrived ship, then there will be a claim for detention for the period of delay, quantified at the demurrage rate. If the vessel is an Arrived ship, then laytime will run and any remaining laytime may be used to offset the delay.

3.29 It is important to distinguish between the express right of a charterer to select the loading berth given in the charterparty and his implied right to do so. As already mentioned, the effect of the express right given by such expressions as “one or two safe berths Mississippi River” is to prevent a vessel from becoming an Arrived ship until she gets into the designated berth. However, even if the charter does not expressly give the charterer this right, he still has the implied right to select the berth. In that case, however, the vessel becomes an Arrived ship when she gets within the larger area named in the charter, i.e. the port or dock.29

3.30 Difficult questions of construction can sometimes arise as to whether the parties intended the charterer to have an express or an implied right to nominate the berth. In North River Freighters Ltd v President of India30 Parker LJ decided that the words “one safe berth Dairen” expressly gave the charterer the right to name the loading berth, but went on to suggest that if the charter had said that the vessel was “to proceed to Dairen and then load at one safe berth”, without adding “as ordered by the charterer”, the right would have been implied so that the vessel would become an Arrived ship when she got within the port.

3.31 In Freight Connect (S) Pte Ltd v Paragon Shipping Pte Ltd30a, the Singapore Court of Appeal, upholding the lower court, held that the description of the specified destination as Nanwei port, rather than a berth in Nanwei port, meant that this was a port, rather than a berth charter, with the consequence that tender of notice of readiness on arrival in the port, was valid. In so deciding the court applied what was said in The Finix30b.

3.32 Similarly, in Stag Line Ltd v Board of Trade,31 the Court of Appeal upheld the decision of the lower court that a clause providing that the vessel should “proceed to one or two safe ports East Canada or Newfoundland, place or places as ordered by charterers” was an express right to nominate the berth so that the charter was a berth charter.

3.33 In London Arbitration 1/09,32 the tribunal rejected the charterers’ submission that the charter in question was a berth charter in respect of the load port where it provided for the vessel to load at:

  1. SBP Zhenjiang

taken in conjunction with clauses allowing the vessel to give notice of readiness at the roads, WIBON/WIPON/WCCON/WFPON, one providing for the vessel to have deemed to have arrived on anchoring at one of three anchorages, one providing how time should count after notice was given and one providing for shifting time not to count. Although the heading of this part of the report is: “Whether charter berth charter or port charter”, the tribunal, rightly in the author’s view, did not say it was a port charter. It is more accurately described as a berth charter with one or more provisions advancing the commencement of laytime.33 In The Merida34 the High Court, reversing the arbitral tribunal from which the appeal came, held that a provision providing for loading at “one good and safe chrts’ berth terminal 4” at Xingang was indeed a berth charter, despite a subsequent clause providing for loading at “one good and safe port/one good and safe charterers berth Xingang” and one excluding shifting time from the anchorage.

3.34 There are three exceptions to the general rule that a vessel is not an Arrived ship until she reaches the destination named in the charter or that subsequently selected by the charterer under an express right. These are (a) custom, (b) obstacles created by the charterer and (c) special provisions in the charter, and these will be considered later.35

Berth charters

3.35 Berth charters are probably the oldest form of charter, arrival in berth being the natural completion point of the voyage. The Voylayrules 199336 defined berth in the following terms:

BERTH” shall mean the specific place within a port where the vessel 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.

3.36 The principal change from the Charterparty Laytime Definitions 1980 was the addition of the words “within a port” in the first line. The Laytime Definitions for Charter Parties 2013 define berth as follows:

BERTH shall mean the specific place where the Vessel is to load or discharge and shall include, but not be limited to, any wharf, anchorage, offshore facility or other location used for that purpose.

The commentary issued with them says this about the deletion of the requirement that the berth be within the port:

… consistent with the amendment to PORT, the restrictive reference to “place within a port” has been replaced by an open-ended list of cargo handling locations.

This is a very radical change and unlikely to be commonly adopted, notwithstanding that it reflects the approach in Clause 6c of the Gencon 94 form of charter. Ships are normally fixed for a voyage to or from a particular port. It is not just a question as to from where notice of readiness can be tendered, which with this definition of itself raises problems as to when the voyage stage ends if the vessel cannot proceed directly into berth, there is the whole question as how close to the nominated port the loading/discharging place must be, before it becomes a voyage to somewhere different.

3.37 A berth is an individual loading point on a jetty, wharf or in a dock system. Individual berths are not usually given names but numbers, being referred to as No 1 berth, No 2 berth, etc. In most berth charters, the designation is “one safe berth X port” leaving the charterer free to nominate any berth in that port or more commonly to inform the shipowner which berth he has been allocated by the port authority. Occasionally, however, a charter specifies a particular wharf or jetty, which may have, say, two or three berths on it, but such a charter is usually held to be of the same character as a berth charter.

3.38 The original concept of a berth charter was one in which a particular berth was named in the charter but, as has already been discussed,37 this has been extended to include situations where the vessel is to proceed to a berth at the charterer’s express (as opposed to implied) option within the port.38 An illustration of a slightly unusual provision is provided by London Arbitration 14/07,39 where the charter in question had a “Loading Port” provision that provided for the vessel to load at “1SB OR ANCHORAGE… ALONGSIDE IMPORTER VESSEL… OR BARGES… OR ALONGSIDE WHARF”. In that case, the tribunal held that it was plainly anticipated that the ship would load alongside something, most likely the vessel named in the “Loading Port” provision; and also there or alongside barges, she would probably be at an anchorage. Such a place would, in the context, be a berth for notice purposes, although perhaps not in the usual sense of the word.

3.39 In a berth charter, the specified destination is reached when the vessel is in that berth and does not need to move further to load or discharge. In E L Oldendorff & Co GmbH v Tradax Export SA, Lord Diplock said:40

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 vessel 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 vessel 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.

3.40 In a similar vein, in North River Freighters Ltd v President of India, Jenkins LJ drew a distinction between port and berth charters, saying about the latter:41

Notwithstanding that in the absence of a provision accelerating the commencement of laytime, notice of readiness cannot be tendered before arrival in berth, there is no obligation on a charterer to berth a vessel in strict turn of her arrival.42

3.41 In The Handy Mariner,43 the Court of Appeal held on appeal from a GAFTA tribunal that a sale contract providing for c.i.f. free out Lorient with a discharging rate should be construed as a berth charter provision notwithstanding that, had the contract been construed as a charter, it would have been held to be a port charter.

3.42 Occasionally disputes arise as to when a vessel arrived at a particular berth, usually when there has been some delay between the first line being passed and completion of the mooring process. Clause 14 of the Shellvoy 3 form of charter (which unlike most tanker charterparties is a berth charter) requires the vessel to be securely moored before laytime can commence and this, it is suggested, would be the position in any event.44 Taking the point one stage further, however, what this means is that the vessel must be secured by sufficient mooring lines to enable the safe working of cargo. In some ports at certain times of the year, or when adverse weather is expected, additional heavier lines are added a little while after the vessel’s arrival. These are sometimes referred to as “hurricane hawsers” but normally these are an additional precaution and not part of the usual mooring process. The vessel therefore arrives in berth when the normal mooring lines are secured.

Dock charters

3.43 The Oxford English Dictionary defines 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”. Often there are a series of inter-linked basins with a range of berths and wharves. In one sense, therefore, a dock charter is a hybrid between a berth and a port charter, and like a port charter, it covers a geographical area. In Nelson v Dahl45 in 1879 in the Court of Appeal, dock charters were said to be “a comparatively recent introduction”.

3.44 Dock systems may be either tidal or non-tidal but, since they usually have a clearly defined entrance, there is usually little dispute as to when a vessel arrives in dock, and that will be when she reaches her specified destination.

3.45 In Tapscott v Balfour46 the charterparty concerned specified that the ship should load a cargo of coal at “any Liverpool or Birkenhead dock as ordered by charterers”, and the charterers ordered the vessel to Wellington Dock. However, on arrival, the vessel was unable to enter the dock and, when she did so some days later, there was a further delay before she was able to get into a position where she could commence loading. The charterers argued that they were not responsible for these delays.

3.46 Rejecting this argument, Denman J commented:47

… on the day when the ship arrived in the dock the shipowner had done all that [he] was bound to do.

Of the nomination of the specific dock by the charterers, Bovill CJ said:48

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 vessel should proceed direct to the Wellington Dock …

3.47 Some eight years later, the courts again had to consider the question of responsibility for delay because of congestion in relation to dock charters when the House of Lords held in Dahl v Nelson, Donkin and others49 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”. What had happened was that on arrival in the Thames, the Euxine, the vessel concerned, proceeded to the Surrey Commercial Docks with her cargo of timber, but the dock manager refused it entrance into the docks as they were full and the ship could not be given a discharging berth.50

3.48 However, if a vessel does gain admittance to the docks, for whatever reason, she has nevertheless arrived at the specified destination. This was the result in Compagnie Chemin de Fer du Midi v A Bromage & Co51 where a vessel called the Smut was ordered to discharge her cargo of pit props at Barry Dock. On arrival, although no berth was available, she was allowed to enter the dock as she was short of bunkers. On completion of bunkering, she gave notice of readiness although not in berth. Charterers therefore argued that laytime should not start to run because she was not in berth and/or because the vessel had only been admitted because of her unseaworthiness by reason of being short of bunkers. Both these arguments were rejected by Greer J, who said:52

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.

3.49 A somewhat unusual set of circumstances arose in Kokusai Kisen Kabushiki Kaisha v Flack & Son53 where a ship was ordered to load “in such dock as may be ordered” by the charterers at Delagoa Bay, but there were no docks at Delagoa Bay! The reference to “such dock”, etc., should therefore be ignored, said the Court of Appeal, so that although the charter was a dock charter in form, it took effect as though it were a port charter.

3.50 In Carlton Steamship Co Ltd v Castle Mail Packets Co Ltd,54 a customary laytime charter provided for a vessel to load at a named dock “always afloat”. The vessel proceeded to the dock, which was tidal, but was forced to leave during loading because of steadily falling tides, returning later as the spring tides approached. The main issue was the question of liability for the delay which arose after the vessel became an Arrived ship and on this a majority of the Court of Appeal held, reversing the lower court, that the delay was not unreasonable and therefore, under the normal rules for customary laytime charters, fell to the ship-owner’s account. On the question of when the vessel became an Arrived ship, Smith LJ (who dissented on the main issue) said:55

… 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.

3.51 Similar sentiments were expressed by Hamilton J in Thorman v Dowgate Steamship Co Ltd, where he said:56

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.

Port charters

3.52 Under a port charter, a vessel reaches its specified destination when it arrives within the port and is in such a position as to be at the immediate and effective disposition of the charterer. The current state of the law is succinctly summarised in the following passage from Lord Reid’s speech in The Johanna Oldendorff:57

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 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.

This criterion has become known as “the Reid test”, replacing the earlier “Parker test”, put forward by Parker LJ in The Aello.58

3.53 It will be noted that this test only applies where there is a delay between the vessel’s arrival in the port and her moving to a berth. Where the vessel can proceed direct to its berth then, as with a dock charter,59 she does not reach her specified destination until arrival in berth.60 Even if a berth is not available, she must have “reached a point as close to the loading berth as she might be permitted to approach”.61 The owners cannot artificially bring forward the point of arrival by pausing without anchoring or by anchoring temporarily62 within port limits to pick up a pilot.

3.54 These two requirements, that the vessel must have arrived within the port and be in such a position as to be at the immediate and effective disposition of the charterer, will now be considered in more detail.

Arrival within the port

3.55 What constitutes a port, is the first of the definitions given in The Laytime for Charterparties Definitions 2013 and is as follows:63

1. PORT shall mean any area where vessels load or discharge cargo and shall include, but not be limited to, berths, wharves, anchorages, buoys and offshore facilities as well as places outside the legal, fiscal or administrative area where vessels are ordered to wait for their turn no matter the distance from that area.

3.56 Although the authors purport to say that this definition reflects what the House of Lords decided in The Johanna Oldendorff,64 it is suggested that it goes considerably wider, particularly in the last few words. This definition replaces definitions given in The Charterparty Laytime Definitions 1980 and The Voylayrules 1993 (see previous editions of this book) and although those were probably wider in scope than the definition of a port at common law, this definition is even wider.

3.57 The problem with this latest definition is that it blurs the distinction between the voyage and port stages of the charter. The division of a voyage charter into several stages by Lord Diplock in The Johanna Oldendorff,65 each of which must be completed before the next can begin, and therefore with a clearly defined cut off between stages, was central to what the House of Lords decided in that case and the concept of stages.

3.58 Whilst the courts and arbitrators have tended of late to accept that some anchorages a considerable distance from the areas where cargo operations are carried out are within port limits, as will be seen, there are, at common law, rules that provide for a more restrictive definition of port limits. It by no means follows, in the absence of this definition being specifically incorporated into the relevant charter, that all anchorages where vessels may have to wait will be deemed to be within port limits.66

3.59 There are some ports, e.g. Hull, Glasgow and the Weser ports, where the usual waiting area is recognised as not being within the port and therefore to stretch the definition of the port to encompass them, is at best artificial and likely to give rise to problems. Other parts of the world where there may be difficulties include the various ports on the Parana river, up river from the River Plate, such as San Nicolas, Rosario and San Lorenzo, at all of which there is limited space available for ships waiting to berth, and therefore ships are held at Intersection, some 200 nautical miles away. In The Adolf Leonhardt,67 Staughton J, as he then was, was prepared to hold that notice of readiness could be given at Intersection, which is a common waiting area for all the up river ports, but that was on the basis of a WIPON provision in the charter. This also raises the issue as to whether The Laytime Definitions for Charterparties 2013 definition applies, can the same area of water be considered to be within more than one port? Another area where vessels are held some distance from the port is Sandheads off the mouth of the Hooghly River, where ships can be held for both Calcutta and Haldia, although it is outside the limits of both and to cater for this it has its own Bimco Sandheads clause. The Weser ports have already been mentioned. In The Maratha Envoy,68 the House of Lords firmly rejected an attempt to claim that notice of readiness could be given at the Weser lightship anchorage, which was the anchorage for all four Weser ports, but outside the limits of any of them. Had The Laytime Definitions for Charterparties 2013 definition been applied, this decision would presumably have gone the other way. This definition is certainly inconsistent with that decision, although it is supposed to reflect the law as it currently stands.

3.60 Whether this definition now applies, irrespective of whether it is specifically incorporated into a charter or not, will probably be a lucrative source of business for lawyers and others in the future. It is suggested that far from adding to the clarity of the law, this new definition will cause confusion. The Bimco circular introducing the new clauses (see Appendix) recognised that the previous definitions and rules had rarely been specifically incorporated into charters and there is no reason to believe that this new set of definitions will be more readily incorporated. If this new definition is widely accepted, there would seem to be no need any more for WIPON provisions, but it would be a rash broker who stopped including them. Conversely, brokers using the Gencon 94 form of charter should consider whether to include amending it to restrict tender of notices of readiness to within the port in question.

3.61 The limits of a particular port may vary according to the purpose for which the limits are being defined. Thus port limits may be defined by law or by custom and the extent of the port may be different for administrative, fiscal, geographical and commercial purposes.

3.62 An early explanation of why ports must have limits was given by Lush J in Nicholson v Williams, where he said:69

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.

3.63 In Leonis Steamship Co v Rank (No 1), Kennedy LJ observed:70

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.

3.64 As it was put by Brett MR in the Sailing Ship Garston Co v Hickie:71

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.

3.65 Later in his judgment, having said: “There will never be a port, in the ordinary business sense of the word, unless there is some element of safety in it for the ship and goods”, he went on to say:72

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.

3.66 This question of control was also taken up by Bowen LJ in his judgment in the same case, where he said:73

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”.

3.67 In The Johanna Oldendorff, both Lord Reid and Lord Diplock stressed that in practice it was usually relatively simple to decide whether the normal waiting area was within the port or outside it. Lord Reid put it this way:74

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