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Delay and demurrage in tanker charters




* Institute of International Shipping and Trade Law, Swansea University.


1The precursor of ASBATANKVOY was the Essovoy 1969 form, subsequently the Exxonvoy 1969 form. This was succeeded in 1974 by the STBVOY form, as the result of a formal request by EXXON. Some brokers considered that the STBVOY form, which did not contain a reachable on arrival clause, imposed too many obligations upon shipowners. As a result the Association of Ship Brokers and Agents (USA) Inc., or ASBA, issued the ASBATANKVOY 1977 form, which was essentially the same as the Exxonvoy 1969 form.


2[1974] AC 479.


3[1974] AC 479 at 556.


4BPVOY5 is a port charter with NOR becoming effective once the vessel has completed anchoring at an anchorage where vessels of her type customarily anchor at the port or, if she has been instructed to wait, she has reached the area where vessels of her type customarily wait (clause 10.4). EXXONMOBILVOY 2012 is a port charter with clause 11 providing for NOR to be given ‘upon arrival at customary anchorage or waiting place at each loading and discharging port or place’. SHELLVOY6 provides for NOR to be given at berth but provides: ‘However, if the vessel does not proceed immediately to such berth time shall commence to run 6 hours after (i) the vessel is lying in the area where she was ordered to wait or, in the absence of any such specific order, in a usual waiting place and (ii) written notice of readiness has been tendered and (iii) the specified berth is accessible. A loading or discharging berth shall be deemed inaccessible only for so long as the vessel is or would be prevented from proceeding to it by bad weather, tidal conditions, ice, awaiting daylight, pilot or tugs, or port traffic control requirements (except those requirements resulting from the unavailability of such berth or the cargo)’ (cl 13(a)).


5‘Upon arrival at customary anchorage at each port of loading or discharge, the Master or his agent shall give the Charterer or his agent notice by letter, telegraph, wireless or telephone that the Vessel is ready to load or discharge cargo, berth or no berth, and laytime, as hereinafter provided, shall commence upon the expiration of six (6) hours after receipt of such notice, or upon the Vessel’s arrival in berth (i.e., finished mooring when at a sealoading or discharging terminal and all fast when loading or discharging alongside a wharf), whichever first occurs. However, where delay is caused to Vessel getting into berth after giving notice or readiness for any reason over which Charterer has no control, such delay shall not count as used laytime.’


6See The Port Russel [2013] EWHC 490 (Comm); [2013] 2 Lloyd’s Rep 57. The NOR clause there read: ‘Such Notice of Readiness may be given either by letter, facsimile transmission, telegram, telex, radio or telephone (and if given by radio or telephone shall subsequently be confirmed in writing and if given by facsimile transmission confirmed by telex).’ Its language was held mandatory not permissive, and therefore an NOR given by email was not valid.


7See Roland-Linie Schiffahrt GmbH v Spillers Ltd, The Werrastein [1957] 1 QB 109, where the vessel was ordered by the port authorities to anchor at Spurn Head, 22 miles from, and outside the geographical, legal and fiscal limits of, the port of Hull, but which was one of three customary waiting places for large ships to anchor while awaiting entry to the docks. The shipowners successfully claimed demurrage in respect of the week spent waiting at anchorage by reason of a clause providing ‘demurrage in respect of all time waiting’. Sellers J stated (at 121–2): ‘In my view, the proviso deals with waiting time (due to the discharging place being unavailable) before the lay days commence to run, and provides for just such an occasion as has arisen here …The ship has to face the hazards of the voyage whereby she may be delayed by storm, fog, tides and many other events. But for clause 2 the waiting at the anchorage would likewise have fallen on the ship, for it would seem that the earliest time, on any view, that she could have become an arrived ship so that time for discharge would run against the Charterers or their agents would be when she entered the King George Dock, and she could not have done that before she in fact did enter.’


8(1985) 155 LMLN 4.


9(2006) 698 LMLN 1.


10[1974] AC 479, 557.


11London Arbitration 21/07 (2007) 725 LMLN 2.


12A similar finding was made in London Arbitration 16/04 (2004) 647 LMLN 2 where a port charter provided for notice of readiness to be given ‘from the customary waiting place in ordinary office hours’ which the tribunal found to be a rather wider term than ‘customary anchorage’. After arrival off Lagos the vessel was instructed by port control to drift at a distance of 10–15 nautical miles offshore pending further instructions and the Master gave NOR. Due to congestion the vessel had to wait there some considerable time. The tribunal held that a valid NOR had been given by the Master. See, too, London Arbitration 11/95 (1995) 409 LMLN 3. The tribunal held that there was an exception to the general rule that a vessel had to be within the port limits to be arrived, and that was where the port authorities had designated another area within their administration where vessels had to wait before proceeding to a berth. No hint of such exception is to be found in the judgments of the House of Lords in The Johanna Oldendorff and The Maratha Envoy [1978] AC 1.


13In Mosvolds Rederi A/S v Food Corp of India [1982] 2 Lloyd’s Rep 569, where Staughton J said, at 573: ‘Counsel are agreed that a notice period is like an exception and does not apply to a vessel already on demurrage.’ That result, he added, was said to flow from Pagnan & Fratelli v Tradax Export SA [1969] 1 Lloyd’s Rep 150.


14[1979] 1 Lloyd’s Rep 459.


15[1985] 1 Lloyd’s Rep 423.


16(1985) 160 LMLN 2(3).


17[2003] EWHC 1904 (Comm); [2003] 2 Lloyd’s Rep 671.


18[1987] 1 Lloyd’s Rep 503.


19Following the decision of the House of Lords in the House of Lords in The Laura Prima [1982] 1 Lloyd’s Rep 1, the Charterer cannot rely on this clause if they are in breach of their obligation to nominate a berth reachable on the vessel’s arrival, pursuant to clause 9. If the nominated berth is reachable on the vessel’s arrival, then the clause will take effect in respect of delays in getting into berth thereafter. In the instant case, shipowners referred to what they called the similar provisions in The Laura Prima but this contention was rejected as the STB form does not contain the ‘reachable on arrival’ provision contained in clause 9 of the Exxonvoy charter.


20[1987] 1 Lloyd’s Rep 503, 507.


21[1987] 1 Lloyd’s Rep 503, 507.


22[2003] EWHC 46 (Comm); [2003] 1 Lloyd’s Rep 151.


23‘HOURS FOR LOADING AND DISCHARGING. The number of running hours specified as laytime in Part I shall be permitted the Charterer as laytime for loading and discharging cargo; but any delay due to the Vessel’s condition or breakdown or inability of the Vessel’s facilities to load or discharge cargo within the time allowed shall not count as used laytime. If regulations of the Owner or port authorities prohibit loading or discharging of the cargo at night, time so lost shall not count as used laytime; if the Charterer, shipper or consignee prohibits loading or discharging at night, time so lost shall count as used laytime. Time consumed by the vessel in moving from loading or discharge port anchorage to her loading or discharge berth, discharging ballast water or slops, will not count as used laytime.’


24[2003] EWHC 1904 (Comm); [2003] 2 Lloyd’s Rep 671.


25‘DEMURRAGE. Charterer shall pay demurrage per running hour and pro rata for a part thereof at the rate specified in Part I for all time that loading and discharging and used laytime as elsewhere herein provided exceeds the allowed laytime elsewhere herein specified. If, however, demurrage shall be incurred at ports of loading and/or discharge by reason of fire, explosion, storm or by a strike, lockout, stoppage or restraint of labor or by breakdown of machinery or equipment in or about the plant of the Charterer, supplier, shipper or consignee of the cargo, the rate of demurrage shall be reduced one-half of the amount stated in Part I per running hour or pro rata for part of an hour for demurrage so incurred. The Charterer shall not be liable for any demurrage for delay caused by strike, lockout, stoppage or restraint of labor for Master, officers and crew of the Vessel or tugboat or pilots.’


26London Arbitration 18/04 (2004) 647 LMLN 4.


27[2004] EWCA Civ 864; [2004] 1 WLR 3111; [2004] 2 All ER (Comm) 578.


28[2003] EWHC 1904 (Comm); [2003] 2 Lloyd’s Rep 671.


29The second sentence of clause 8 was amended as indicated by the emphasised words: ‘If, however, delays occur and/or demurrage shall be incurred at ports of loading and/or discharge by reason of fire, explosion, storm, or by a strike, lockout, stoppage or restraint of labour, or by a breakdown of machinery or equipment in or about the plant of the Charterer, supplier, shipper or consignee of the cargo, such delays shall count as half laytime or, if on demurrage, the rate of demurrage shall be reduced one half of the amount stated in Part I per running hour or pro rata for part of an hour for demurrage so incurred.’ The third sentence was amended as indicated by the emphasised words. ‘The Charterer shall not be liable for any demurrage or delay caused by strike, lockout, stoppage or restraint of labour for Master, officers and crew of the vessel or tugboats or pilots and/or awaiting tide and/or awaiting daylight and/or awaiting pilot(s) and/or awaiting tug(s).’


30Unreported 22 March 1982. The case was decided by Robert Goff J As it happens, Tomlinson J was counsel for the appellant Charterers on the appeal from an arbitration award.


31[2004] EWCA Civ 864; [2004] 1 WLR 3111; [2004] 2 All ER (Comm) 578 at [22].


32[2004] EWCA Civ 864; [2004] 1 WLR 3111; [2004] 2 All ER (Comm) 578 at [34].


33‘SAFE BERTHING – SHIFTING. The vessel shall load and discharge at any safe place or wharf, or alongside vessels or lighters reachable on her arrival, which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage being at the expense, risk and peril of the Charterer. The Charterer shall have the right of shifting the Vessel at ports of loading and/or discharge from one safe berth to another on payment of all towage and pilotage shifting to next berth, charges for running lines on arrival at and leaving that berth, additional agency charges and expense, customs overtime and fees, and any other extra port charges or port expenses incurred by reason of using more than one berth. Time consumed on account of shifting shall count as used laytime except as otherwise provided in Clause 15.’


34[1964] 2 Lloyd’s Rep 28.


35[1964] 2 Lloyd’s Rep 28, 33–34.


36[1967] 2 Lloyd’s Rep 338 at 347.


37See p. 349 of the report. The judge concluded, on the agreed facts, that the pilot station was outside the commercial limits, but stressed that he should not be taken as determining what were the commercial limits.


38If the berth is ‘reachable’ on the vessel’s arrival, there is no further obligation that the vessel must be ordered to the berth at any particular time: see The Ulyanovsk [1990] 1 Lloyd’s Rep 425, where Charterers recovered damages from Owners for failing to comply with their orders to delay going into berth.


39(1993) 351 LMLN 3.


40However, the findings about breach of clause 9 are somewhat otiose given that the tribunal held that the ship was ready when she gave notice of readiness, and that notice was valid. From the time the vessel became arrived time spent waiting to berth would fall under the laytime and demurrage provisions of the charter, rather than under clause 9. See The Delian Spirit, below.


41[1971] 1 Lloyd’s Rep 506.


42His Lordship here cited the earlier cases on the issue, starting with Petersen v Dunn (1895] 1 Com Cas 8 and ending with The President Brand [1967] 2 Lloyd’s Rep 338.


43See [1971] 1 Lloyd’s Rep 506, 509.


44See [1971] 1 Lloyd’s Rep 506, 510–511.


45See [1971] 1 Lloyd’s Rep 506, 512.


46[2007] EWHC 2796 (Comm); [2010] 1 CLC 953.


47[2007] EWHC 2796 (Comm); [2010] 1 CLC 953 at [120]. See too London Arbitration 16/05 (2005) 672 LMLN 3.


48[1988] 1 Lloyd’s Rep 500. Saville J repeated his views on the ‘reachable’ clause in obiter dicta in The Amiral Fahri Engin [1993] 1 Lloyd’s Rep 75.


49[1988] 1 Lloyd’s Rep 500, 502. Saville J also rejected the argument that ‘reachable’ was an adjectival description of the berth, so that a vacant berth to which the vessel could not proceed because of bad weather or unavailability of tugs remained reachable in itself, albeit the vessel could not for the time being approach it.


50[1988] 1 Lloyd’s Rep 336. The decision was followed in London Arbitration 16/05 (2005) 672 LMLN 3, in respect of delay due to restrictions on berthing at night.


51[1988] 1 Lloyd’s Rep 336, 342.


52Steyn J referred back to Roskill J’s decision in The President Brand in which he had given three examples of a non-reachable place, the third being insufficiency of water. It was difficult to see how this could be described as a case of a physical obstruction and if insufficiency of water could amount to a breach of the clause so, too, could bad weather.


53However, the Baltic Code 2007 provides ‘Where the Charterer undertakes the berth will be ALWAYS ACCESSIBLE the Charterer additionally undertakes that the vessel will be able to arrive and depart safely from the berth without delay at any time before, during or on completion of loading or discharging’ (author’s italics). This is also the position under the definition of the clause set out in BIMCO’s Laytime Definitions for Charterparties 2013.


54(1997) 463 LMLN 3(2).


55[1987] 1 Lloyd’s Rep 57. This was not in issue on appeal at [1989] AC 1264.


56[1982] 1 Lloyd’s Rep 1.


57The same clauses were considered in Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S [1984] 1 Lloyd’s Rep 38 (The Johs Stove), where The Laura Prima was applied, despite an attempt by Charterers to rely on a general exceptions clause. Steyn J held that the exceptions clause did not qualify Charterers’ obligation to nominate a berth reachable on arrival.


58See [1980] 1 Lloyd’s Rep 466.


59[1980] 1 Lloyd’s Rep 466, 468.


60See [1981] 2 Lloyd’s Rep 24.


61See [1982] 1 Lloyd’s Rep 1.


62[1982] 1 Lloyd’s Rep 1, 6.


63(1990) 267 LMLN 4.


64The arbitrator noted that a similar argument had been raised in The Johs Stove [1984] 1 Lloyd’s Rep 18 in relation to the half-demurrage provision contained in the second sentence of clause 8. Although the argument failed because the arbitrator in that case had found as a fact that the relevant delay had been caused by congestion and not by the shore labour dispute, there was no suggestion that the argument would have been rejected if, on the facts, the Charterers could have brought themselves within clause8


65(1991) 303 LMLN 4. The tribunal also held that the Charterers could rely on the general exceptions clause in clause 46 but this is inconsistent with the decision in The Johs Stove [1984] 1 Lloyd’s Rep 18.


66A contrary decision was reached in a majority decision of new York arbitrators in The Alaska, 1997 (SMA no.3290) (1997) 452 LMLN 2, in finding that Charterers could not rely on the Conoco Weather Clause because of their breach of clause 9.


67(2012) 857 LMLN (September).


68Bulk tankers of any size should be able to discharge within 18 to 24 hours with no shore restriction.


69The Eternity [2008] EWHC 2480 (Comm) at [37] and [38]; [2009] 1 Lloyd’s Rep 107.


70Clause 14.4a provides a version of the warranty with reference to loading of the cargo: ‘the Vessel shall load cargo at the maximum safe rate and in any event shall load a full cargo within a maximum period of 24 hours, or pro rata in the case of a part cargo, provided always that the cargo can be supplied within such time …’.


71Clause 14.6.


72Clause 18.2.


73Clause 18.3.


74ASDEM is an independent oil industry consultancy, set up in 1988.


75Under which the discharge rate that would be achieved at the warranted pumping pressure is Q1 x √ (H2 / H1), where: Q1 = Average discharge rate achieved by the vessel during bulk discharge; H1 = Average pumping pressure achieved by the vessel during bulk discharge as measured at the manifold; H2 = Pumping pressure warranted in the charterparty or lower maximum pressure required by the terminal.


76In The Adventure [2015] EWHC 318 (Comm); [2015] 1 Lloyd’s Rep 473 Hamblen J gave the following guidance as to what the previous version of this clause, clause 19.7.3 of BPVOY4, entailed. This would be contemporaneous records kept by the vessel relating to the cargo operation of which the pumping log would be the most obvious example. However, the clause did not require the Owners to provide copies of all documents which they would be required to disclose in an arbitration reference, but focussed on documents that were required to be kept or compiled on an ongoing, rather than a ‘one-off’ basis.


77See archive.onlinedmc.co.uk/niki_maritime_v__global_companies.htm (accessed 19 December 2016).


78For a criticism of the accuracy of the ASDEM formula see Nick Adamopoulos ‘Pumping Calculations and Under-Performance Evaluation in Crude Oil Tankers’, SNAME Greek Section, 4th International Symposium on Ship Operations, Management and Economics 2012.


79In BPVOY5 this provision is to be found in clause 14.8 which reads: No claim by Owners in respect of additional time used in the cargo operations carried out under this Clause 14 shall be considered by Charterers unless it is accompanied by the following supporting documentation:


a) the Vessel’s Pumping Log signed by a senior officer of the Vessel and a Terminal representative (if such a signature can be obtained) showing at hourly intervals the pressure maintained at the Vessel’s manifold throughout the cargo operations; and


b) copies of all LOPs issued, or received, by the Master in connection with the cargo operations; and


c) copies of all other documentation, maintained by those on board the Vessel, or (to the extent such can be obtained) by the Terminal, in connection with the cargo operations.


80[2007] EWHC 2482 (Comm); [2008] 1 Lloyd’s Rep 286.


81(2015) 932 LMLN 3.


82Asdem News Update – No. 60: January 2016. See asdemasia.com/index.php?cmd=005010&issue=60 (accessed 28 December 2016).


83(1990) 285 LMLN 3.


84(2001) 574 LMLN 2.


85The tribunal were of the view that the probable cause of the slow pumping at discharge was improper heating of the cargo by Owners and /or improper operation of the ship’s pump.


86(1999) 511 LMLN 3(2).


87(1999) 511 LMLN 1(2).


88(1993) 363 LMLN 6.


89(1998) 481 LMLN 2.


90[1982] 1 Lloyd’s Rep 448.


91The power to grant extensions of time in arbitrations is now to be found in s 12 of the Arbitration Act 1996 which is more restricted than s 27, so the same result would follow today.


92[2011] EWHC 152 (Comm); [2011] 1 Lloyd’s Rep 694.


93London Arbitration 8/01 (2001) 560 LMLN 2. The tribunal rejected the Owners’ argument that the requirements of the clause had been varied by reason of the fact that the Charterers’ voyage instructions had made no mention of a requirement for original documents, but only asked that there be sent from the discharging port ‘all cargo documents … to include but not limited to copies of NORs, SOF duly signed by terminal reps/all concerned along with ullage reports, dry tank certificates, pumping logs, copies of letters of protest given and received and other relevant documents’. Such voyage instructions could not in any way be said to vary the contractual provisions already agreed in respect of demurrage claims.


94In Mira Oil Resources of Tortola v Bocimar NV [1999] 1 All ER 732; [1999] 2 Lloyd’s Rep 101; [1999] CLC 819 one of the requirements was that Owners were to provide a signed copy of the charterparty within five days of completion of discharge. The term ‘signed copy’ meant a copy which the Owners had signed regardless of whether it had first been signed by Charterers and there was no express condition requiring that the copy of the charter provided to the Owners had first been signed by the Charterers. The Owners had failed to sign and forward the copy as a document in support of their claim for demurrage within the specified period so that the claim was time barred.


95(1989) 254 LMLN 4.


96(1990) 285 LMLN 3(2).


97(2001) 560 LMLN 2.


98(1992) 321 LMLN 4(2).


99[2010] EWCA Civ 713; [2010] 2 Lloyd’s Rep 257.


100Which read: ‘Owners shall notify Charterers within 60 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully and correctly documented, and received by Charterers, within 90 days after completion of discharge. If Owners fail to give notice of or to submit any such claim with documentation, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished.’


101[2015] EWHC 318 (Comm); [2015] 1 Lloyd’s Rep 473.


102The Eagle Valencia [2010] EWCA Civ 713; [2010] 2 Lloyd’s Rep 257.


103[2007] EWHC 2482 (Comm); [2008] 1 Lloyd’s Rep 286.


104[2007] EWHC 2482 (Comm); [2008] 1 Lloyd’s Rep 286 at [30]. Gloster J distinguished the previous, unreported, decision of HHJ Knight QC in The Minerva on the grounds that the wording in the relevant time bar clause there was much less clear than that in the instant case provisions of clause 23, but also because the case appeared to have been treated as one where more than one claim for demurrage had been made (in respect of the loadport and the two different discharge ports).


105[2008] EWHC 2480 (Comm); [2009] 1 Lloyd’s Rep 107.


106[2008] EWHC 2480 (Comm); [2009] 1 Lloyd’s Rep 107 at [38]. In The Adventure [2015] EWHC 318 (Comm); [2015] 1 Lloyd’s Rep 473, Hamblen J inclined to the view expressed by Steel J, stating at [45]: ‘These are powerful observations and some support for them is to be derived from Tomlinson LJ’s caution in The Abqaiq against an approach of strict compliance. Although David Steel J did not explain precisely how he reached his conclusion as a matter of construction of the wording of clause 20.1, it was presumably on the basis that where the demurrage claim can be divided into ‘constituent’ parts and it is only a part of such claim which is not substantiated by the requisite documentation, then it is ‘all liability’ in respect of the ‘claim for demurrage’ for that part rather than the claim as a whole which is discharged. If it had been necessary to determine this question I would have held that this is the preferable construction and that the general position is as stated in Cooke, Voyage Charters, at para 16.21(4): ‘If the required documentation relating to one part of the claim is incomplete the owner will … not be barred from recovery of another part of the claim, where the two parts are unrelated’.


107(1992) 337 LMLN 2.


108[1989] 1 Lloyd’s Rep 131.


109(1991) 308 LMLN (August).


110The tribunal also found that the Owners were not estopped from increasing their claim as there had been no prejudice or alteration of the Charterers’ position in the present case. The Charterers had been given full supporting documentation within time, and when they had to be regarded as being as capable as the Owners of correctly interpreting the charter provisions and thus having the chance of being aware, from an early stage, of just how much demurrage the Owners were entitled to, whether or not they were claiming it at that stage.


111[2011] EWCA Civ 1127; [2012] 1 Lloyd’s Rep 18, on appeal from [2010] EWHC 3043 (Comm).


112[2011] EWCA Civ 1127; [2012] 1 Lloyd’s Rep 18 at [65].


113(1991) 304 LMLN (June).

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