LAYTIME AND DEMURRAGE

RECENT CASES
HOUSTON
March 29, 2007

William J. Honan
Holland & Knight LLP

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Clause 5, Part II, ASBATANKVOY
5. LAYDAYS. Laytime shall
not commence before the date
stipulated in Part I, except with
Charterer's sanction . . .

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Clause 6, Part II, ASBATANKVOY
6. NOTICE OF READINESS. 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 . . .
whichever first occurs. However, irrespective of whether
the berth is reachable on arrival or not where delay is
caused to Vessel getting into berth after giving notice of
readiness for any reason over which Charterer has no
control, such a delay shall not count as used laytime or
demurrage. In any event, Charterer shall be entitled to six
hours notice of readiness at loading and discharging ports,
even if the vessel is on demurrage.

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 Issue No. 1
1. If a vessel arrives prior to
commencement of the laydays
and is ready to load, is the vessel
under an obligation to give its
notice of readiness?

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 Issue No. 2
2. If the vessel gives its
notice of readiness prior to the
commencement of laydays, does
the six hour free period begin
running upon the giving of the
notice of readiness or at
midnight of the first layday?

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 Issue No. 3
3. Does the giving of an
early notice of readiness require
the charterer to commence
loading immediately (or at least 6
hours afterwards)?

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 Issue No. 4
4. If the charterer upon
receipt of the early notice of
readiness, orders the vessel to a
berth, can the vessel refuse?

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 Issue No. 5
5. If the charterer orders the
vessel to its berth upon receipt of
the early notice of readiness and
begins loading the vessel, all
before the commencement of the
laydays, does the time used prior
to the first layday count as
laytime?

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Mr. Justice Langley’s Holding
1. "[Laytime] never started at all,
with the consequence not only that the
owners have earned no demurrage,
but also that they are obliged to pay
the charterers despatch money for the
whole of the laytime."
2. Charterer’s awareness that
discharge had commenced without
protesting or reserving its rights was
not itself a “sufficient happening” to
cause laytime start.

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Free Pratique: General Principles
(assumes ASBATANKVOY form)
1. Free pratique, absent express
language otherwise, is not a
prerequisite for the tendering of a
notice of readiness and
2. Free pratique is considered
granted when it is not denied.
3. If the vessel is continually
available to charterer, no laytime is
excluded between the time a notice of
readiness is given and the time that
free pratique is granted.
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 Clause 6.3.3, BPVOY 4
Notwithstanding tender of a valid NOR by the vessel
such NOR shall not be effective nor become effective, for
the purposes of calculating laytime, or if the vessel is on
demurrage, demurrage unless and until the following
conditions have been met:

6.3.3 free pratique has been granted or is granted

within six (6) hours of the master tendering NOR. If free
pratique is not granted within six (6) hours of the master
tendering NOR, through no fault of owners, agents or those
on board the vessel, the master shall issue a protest in
writing (NOP) to the port authority and the facility at the
port (the terminal) failing which laytime or, if the vessel is
on demurrage, demurrage shall only commence when free
pratique has been granted . . .

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 Clause 7.3.2, BPVOY 4
7.3.2 Laytime, or if the vessel is
on demurrage, demurrage shall
commence, at each loading and
each discharge port, upon the expiry
of six (6) hours after a valid NOR
has become effective as determined
under cl. 6.3, berth or no berth, or
when the vessel commences
loading, or discharging, whichever
first occurs.

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 “Agios Dimitrios”:
Clauses 23(b) and 25
Clause 23(b)

At loading port(s) when tendering notice of readiness,

Vessel's cargo holds and hatch covers shall be clean,
dry of loose rust and otherwise ready and suitable to
receive the intended cargo.

Clause 25

Crew and mechanical failure – time lost at loading

and/discharging port(s) which can be reasonably
attributed to crew and/or ship's mechanical failure,
shall not be counted as laytime or time on demurrage.

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 “Nikmary” Facts Summary
 The vessel arrived at the port of Sikka to load a cargo of gasoil on
December 2 and proceeded immediately to its berth.

 The vessel's tanks were inspected on December 3rd by an independent

surveyor appointed by the charterer and were rejected.

 The supplier, Reliance Petroleum Limited, was prepared to supply the

cargo on December 3rd.

 The vessel's crew cleaned the holds and, on December 5, the two
surveyors, one appointed by the owner and the other appointed by the
charterer passed the holds and the vessel gave its valid NOR to the
receiver.

 No cargo was forthcoming and, on December 9, Reliance notified the

charterer that due to its other commitments, both domestically and to
other vessels, the “Nikmary” would not be loaded until the end of the
month.

 Loading in fact did not commence until January 3.

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 “Nikmary” Clause 30(c)(v)
Owner shall indemnify Charter for
all direct and/or indirect costs and
consequences as a result of the Vessel
not being clean to the satisfaction of
jointly appointed inspector and . . . all
time until connection of hoses, after
the Vessel has been passed as clean to
the satisfaction of jointly appointed
inspector shall not count as laytime or,
if on demurrage, as time on
demurrage.

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Charterer’s Duty to Provide Cargo
A voyage charterer owes an
absolute and non-delegable duty to
provide cargo for loading and

 charter exceptions will normally be

read as protecting a charterer only
in respect of its duty to load, and
not as covering its duty to provide
a cargo.

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 “Cape Equinox”: Clause 9
9. The cargo to be discharged by
the consignee at port of discharge free
of expense and risk to the vessel. If
longer detained, consignee to pay vessel
demurrage at the rate of $10,500 U.S.
Currency per day . . . . In case of
strikes, lockouts, civil commotions, or
other causes or accidents beyond the
control of the consignee which prevent
or delay the discharging, such time is
not count . . . .

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 Clause 20.1, BPVOY 4
20.1 Charterers shall be discharged
and released from all liability in respect
of any claim for demurrage, deviation
or detention which owners may have
under this charter unless a claim in
writing has been presented to
charterers, together with all supporting
documentation substantiating each and
every constituent part o the claim
within ninety (90) days of the
completion of discharge of the car go
carried hereunder.

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 Clause 20.2, BPVOY 4
20.2 Any other claim against charterers for
any and all other amounts which are alleged to
be for charterers' account under this charter
shall be extinguished, and charterers shall be
discharged from all liability whatsoever in
respect thereof, unless such claim is presented
to charterers, together with full supporting
documentation substantiating each and every
constituent part of the claim, within one
hundred and eight (180) days of the completion
of discharge of the cargo carried hereunder.

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 “Bow Cedar” Facts Summary
 On August 27, 2002 at 0130 the vessel tendered its NOR.

 On September 2, while the vessel waited at the load port,

the charterer notified the owner that its attempts to find a
cargo had failed and it was cancelling the charter.

 On September 3, the owner accepted the charterer's

repudiation and, on September 5, the owner chartered the
vessel to a third party in mitigation.

 On July 15, 2003 (i.e., over 180 days thereafter), the

owner's Club presented owner's claim amounting to
$547,468 to charterer.

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“Bow Cedar” Judge’s Holding
1. The time periods of 90 and 180 days run from
the completion of discharge. With no discharge completion
date, the 90 and 180 periods have no date from which to
run. The Court was unwilling to imply language such as
"from the completion of discharge or when the completion
of discharge should have occurred.“

2. A claim for wrongful repudiation is not a claim

"for charterer's account under this charter." The Court
pointed to a number of provisions in the charter that called
for charterer to pay for certain services or time periods.
There as no similar provision for wrongful repudiation of
the charter. The Court stated that time bar clauses, as
they prevent the recovery of monies otherwise rightfully
due, should be construed strictly against the parties which
seek to invoke them.

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 Time Bar General Principles
1. Contractual time bars are enforced.

2. Contractual time bars are construed

strictly against the drafter.

3. Contractual time bars are enforced

even if there is no dispute concerning the
claim in question.

4. Arbitrators require strict compliance

to satisfy contractual time bars. Substantial
compliance probably is insufficient.

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 Time Bar Practice Tips
1. If the Owner:
a) seek to eliminate altogether
b) make the clauses mutually applicable
c) provide as long a period as possible
d) provide training to the persons handling
claims

2. If the Charterer:
a) include all claims not just demurrage and
detention
b) draft the clause so as to avoid obvious
loopholes

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LAYTIME AND DEMURRAGE
RECENT CASES
HOUSTON
March 29, 2007

William J. Honan
Holland & Knight LLP

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