7.1 Despatch1 is the money that a shipowner is sometimes required under a charter to pay to the charterer for completing loading or discharging in less than the allowed laytime. It only arises where the charter expressly so provides and is virtually unknown in tanker charters.
7.2 Since the full amount of laytime has been paid for in the freight,2 despatch is sometimes referred to as a rebate on freight. It is the opposite of demurrage. As Devlin J said in Compania de Navigación Zita SA v Louis Dreyfus & Cie:3
The shipowner’s desire is to achieve a quick turnround; time is money for him. The object of fixing lay days and providing for demurrage and dispatch money is to penalize dilatoriness in loading and to reward promptitude.
The Laytime Definitions for Charter Parties 20134 provide as follows:
“DESPATCH MONEY” or “DESPATCH” shall mean an agreed amount payable by the owner if the vessel completes loading or discharging before the laytime has expired. “DESPATCH ON (ALL) WORKING TIME SAVED” (WTS) or “ON (ALL) LAYTIME SAVED” shall mean that despatch money shall be payable for the time from the completion of loading or discharging to the expiry of the laytime excluding any period excepted from the laytime.
“DESPATCH ON ALL TIME SAVED” (ATS) shall mean that despatch money shall be payable for the time from the completion of loading or discharging to the expiry of the laytime including any periods excepted from the laytime.
Where despatch is payable, the rate is almost always half the demurrage rate.
7.3 The most common interpretation given to despatch clauses is to say that the clause provides for the shipowner to pay for all time saved to the ship, rather than working time saved, calculated in the way in which demurrage would be calculated, namely without taking any account of the laytime exceptions. The alternative, but less common, meaning is to allow for such exceptions.
7.4 The difference between “all time saved” and “working time saved” can be illustrated as follows. If a charter allows ten working days for loading and the operation actually takes five working days ending on a Wednesday, a projection of when laytime would have expired if the full amount of time allowed had been taken would show that laytime would end the following Tuesday, i.e. a further five days excluding Sunday, a nonworking day. The time therefore saved is six days on an “all time saved” basis and five days on a “working time saved” basis. Another way of expressing the same thing would be to say that six actual days or five working days have been saved.
7.5 Despatch clauses often require separate calculations for loading and discharging. However, where there are more than one load or discharge ports, the time taken at all the load ports or all the discharge ports must first be added together. Separate calculations are not normally made for each port, although where each port has a different loading (or discharging) rate, this may not be so.5
7.6 A useful summary of the principles involved in construing despatch clauses was given by Bailhache J in Mawson Steamship Co v Beyer, where he said:6
Accepting, however, as I must and do, the authorities as they stand, I think I may safely say that the conclusions to be drawn from them are: 1. Prima facie the presumption is that the object and intention of these despatch clauses is that the shipowner shall pay to the charterer for all time saved to the ship, calculated in the way in which, in the converse case, demurrage would be calculated: that is taking no account of the lay day exceptions … 2. This prima facie presumption may be displaced, and it is displaced where either (a) lay days and time saved by despatch are dealt with in one clause and demurrage in another clause; or (b) lay days, time saved by despatch and demurrage are dealt with in the same clause, but upon the construction of that clause the court is of opinion, from the collocation of the words, or other reason, that the days saved are referable to and used in the same sense as the lay days as described in the clause, and are not referable to or used in the same sense as days lost by demurrage.
7.7 The authorities cited by the judge in support of proposition 1 were: Laing v Holloway7 and Re Royal Mail Steam Packet Co and River Plate Steamship Co;8 in support of 2(a): The Glendevon;9 and for 2(b): Nelson & Sons Ltd v Nelson Line.10 These will now be considered further.
7.8 Laing v Holloway11 is usually taken as the start point for any consideration of despatch. In that case demurrage and despatch money were dealt with in one clause and, omitting unnecessary words, the clause ran “demurrage, if any at the rate of 20s per hour … Despatch money, 10s per hour on any time saved in loading and/or discharging”. By an earlier clause the cargo was to be loaded “at the rate of 200 tons per running day (Sundays and holidays excepted), and to be discharged as fast as ship can deliver, not exceeding 200 tons per working day, weather permitting”. Four days were saved in loading and five days in discharging. No one suggested that a Sunday did not count for despatch but the shipowners contended that a lay or working day was a day of 12 hours, and that what had been saved was nine working days of 12 hours each, equal to 108 hours. The charterers, on the other hand, contended that they had saved the ship nine days of 24 hours each, equal to 216 hours. The court held that there was no ground for the suggestion that the length of a day should be the working portion of the day, i.e. 12 hours,12 and that “time saved” meant time saved to the ship. Judgment was therefore given to the charterers. Bramwell LJ said, in delivering the judgment of the court:13
It is admitted on both sides, and it is clear, that “time saved” means if the ship is ready earlier than she would be if the charterers worked up to their maximum obligation only all the time by which she is the sooner ready is “time saved” within the meaning of the charterparty. The question is by how much time is she sooner ready? The answer is, nine times twenty four hours. Really the reason of the thing is that way. The owner would sail away, by what has happened, 216 hours sooner than he would have done but for the defendant’s despatch.
The judge also pointed out that it was admitted that demurrage would be payable on this basis, so why not despatch, he asked.
7.9 It was suggested by Bray J in Re Royal Mail Steam Packet Co14 that the general principle laid down by Bramwell LJ was obiter, but in Mawson Steamship Co v Beyer, Bailhache J said of this comment:15
It may be so, but the judgment is a reasoned judgment on the construction and objects of the clause and purports to lay down a principle.
7.10 The next case chronologically where despatch was considered was a decision of the Divisional Court in Admiralty, The Glendevon.16 There, discharging and despatch were dealt with in the same clause, which provided: “Steamer to be discharged at the rate of 200 tons per day, weather permitting (Sundays and fête days excepted) … and if sooner despatched to pay at the rate of … for every hour saved.” In the time saved were a fête day and a Sunday, and the charterers claimed despatch money in respect of them. The court held they were wrong, accepting the owners’ argument that because weather was an exception, if there was persistent bad weather then laytime would be indefinitely extended and the charterers would be able to claim despatch money until the weather improved. This point was also dealt with by Fletcher Moulton LJ in Nelson & Sons Ltd v Nelson Line,17 where he suggested that the way around what clearly would be an absurdity would be to say that the projection forward of when laytime would have expired must be carried out at the moment when loading or discharging, as the case may be, is completed and any unforeseeable extensions of laytime beyond that point should be ignored. This view was also shared by Bailhache J in the Mawson Steamship case.18
7.11 Another point taken by the President, Sir Francis Jeune, in The Glendevon was that the demurrage clause was a separate clause containing no exceptions, and that as the lay day and despatch clauses were one clause, which did contain exceptions, those exceptions must be taken as equally applying to despatch days. As will be seen shortly, the decision in The Glendevon has been the subject of some criticism in the later cases.
7.12 The next case was Nelson & Sons Ltd v Nelson Line, where, although the case went to the House of Lords,19 the question of despatch was dealt with by the Court of Appeal.20 In that case the lay days, demurrage and despatch were all dealt with in the same clause, which stated: “Seven weather working days (Sundays and holidays excepted) to be allowed by owners to charterers for loading … For any time beyond the periods above provided the charterers shall pay to the owners demurrage … For each clear day saved in loading the charterers shall be paid or allowed by the owners …” The days saved included a Sunday but the charterers’ claim in respect of it was disallowed by the Court of Appeal, Fletcher Moulton LJ dissenting. The judgment of the court was given by Buckley LJ, who held that The Glendevon21 was rightly decided and that Laing v Holloway22 was also rightly decided, but had no bearing upon the point raised in that case. In his judgment, Buckley LJ said:23
They (the charterers) say, and quite truly, that the departure of the ship has been accelerated, not by three days but by four, because she got the benefit of Sunday … If this contract had been that the charterers should have so much a day for each day saved to the ship, this would have been right, but it does not so provide. The provision is that they shall have so much for each clear day saved in loading … the relevant words are “seven days to be allowed for loading” and “for each clear day saved in loading” the charterers shall be paid. In this language no trace is to be found of saving delay to the ship. The payment is to be made for any saving effected in the seven days allowed for loading.
In his dissenting judgment, Fletcher Moulton LJ suggested that The Glendevon24 was wrongly decided and that, in the present case, the general presumption should apply so that what mattered was the time saved to the ship. As already mentioned, he did, however, say that even on that basis, the effect of weather should be discounted in calculating when laytime would have expired so that only Sundays and holidays would be taken into account. In two later cases, which will shortly be considered,25 the judges also expressed their doubts on the finding in The Glendevon and expressed support for Fletcher Moulton LJ’s views. This support, however, appears to be limited to how the principles set out at the start of this section should be applied to particular clauses, rather than any criticism of the principles themselves.
7.13 In the Re Royal Mail case,26 loading, demurrage and despatch were again dealt with in the same clause, which, having provided for the laytime and demur-rage allowed, then continued with a similar provision for discharging. After that the clause went on: “The owners of the ship to pay £10 per day despatch money for each running day saved. Parts of days to count as parts of days, and demurrage or despatch money to be paid pro rata.” The issue between the parties concerned weekends between 1 p.m. on Saturdays and 7 a.m. on Mondays, the charterers claiming payment and the owners resisting. Bray J held that the charterers were right.
7.14 It is worth noting that, although the form of the clause and the collocation of words were the same as in the Nelson case,27 in the last part of the clause, dealing with pro rata payment, demurrage and despatch are treated as being on the same footing. The judge therefore concluded that as demurrage ran on an uninterrupted basis so should despatch money.