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Navigating NOR Challenges: Vessel Arrest and Pre-Laycan Complexities

  • Prokopios Krikris
  • Jan 20
  • 6 min read

By a voyage charter party on amended  Asbatankvoy, Owners claimed $553,071 in demurrage allegedly owing under a charterparty for the carriage of various chemical products loaded at Jiangyin and Jingjiang, China and Kaohsiung, Taiwan (the "Load Ports") and discharged the Cargo at Mumbai, Dahej and Kandla, India (the "Discharge Ports").


With respect to demurrage, the dispute between the parties concerns three issues:

 

1.      When did laytime commence at the loadport of Jiangyin?

2.      When did laytime commence and/or count at the discharge port of Kandla?

3.      Should the laytime claimed by Owners for the discharge port of Mumbai be reduced?


Decision


Commencement of laytime at Jiangyin


The Vessel arrived at Jiangyin and tendered its notice of readiness on September 15, 2022 at 20:42LT - i.e. before the "date stipulated in Part I. As per the the "Narrow Down Clause", the parties agreed to narrow the laycan to the period from September 17-19, 2022. Charterers contend, and the Panel agrees, that the effect of this narrowing was to make September 17, 2022 the "date stipulated in Part I", so that laytime could not commence before 00:00 on that date.


Nevertheless, Owners count as laytime and include in their laytime calculation the time from 02:42LT on September 16 to 00:00 on 17 September - a total of 21.3 hours. The Panel found that all time prior to 00:00 on September 17, 2022 should be excluded from laytime.

Charterers contended that laytime at Jiangyin could not commence for at least a further 6 hours after 00:00 on September 17- Clause 6 of ASBATANKVOY. The Panel disagreed. As the authors of a leading treatise have observed:

 

Laytime cannot start running earlier than the time "stipulated in Part I". However, the owner is obliged under clause 6 to give notice of readiness on arrival if the vessel is ready unless the charter specifically precludes the early tender of notice of readiness. The six-hour franchise in clause 6 can count before the stipulated time. The six-hour period is not laytime as such, but rather time before laytime can start. That period can, therefore, run before the time stipulated in Part I.


T. Young, et al, Voyage Charters, 5th Edition, Chapter 38.2 (2022). See also Chapter 38A.7 of the same publication:

The majority view among New York arbitrators is that absent provision to the contrary:

(a) a notice of readiness can be effectively tendered prior to the date stipulated in Part I(B) which will trigger the six-hour "free period" so that laytime commences to run as soon as permissible under the charter, i.e., at 0000 hours on the first layday specified in Part I (B).

 

Night Navigation Restriction

Charterers said that because of a night navigation restriction at Jiangyin, laytime there could not commence until 09:00 local time on September 17. The Panel disagreed. There was nothing in the charter that delays the commencement of laytime beyond 00:00 LT on September 17 and the charter contained no exception to the running of laytime for restrictions on night navigation. Therefore, laytime at Jiangyin commenced at 00:00 LT on September 17, 2022.

 

Commencement of laytime at Kandla

The dispute between the parties about laytime at Kandla concerns the effect of the arrest of the Vessel at that port on the running of laytime. As noted above, The Vessel arrived at Kandla and tendered its NOR on November 2, 2022 at 04:12 LT. There was significant congestion at the port - as of November 5, 2022, the local agents were anticipating a berthing delay of 9-10 days due to the "bunching of waiting & expected vessels". The Vessel was therefore unable to berth or commence discharging operations on arrival. On November 4, 2022, an Order of Arrest of the Vessel was issued at Kandla port due to a balance owed by Owners to local agents for the Vessel for a prior call at the port. As a result of the Arrest, the berthing of the Vessel, scheduled for November 8, was cancelled. Owners paid the outstanding amount, the Vessel was released from Arrest on November 11, 2022 and proceeded to berth and discharged her cargo on November 12.

 

Charterers assert that, because of the arrest, the notice of readiness tendered by the Vessel on November 2, 2022 was invalid. As Charterers put it:

Owner knew that it owed money to its prior port agent who was in a position to arrest the vessel for the overdue funds....Owner knew of the pending claim and that the vessel could not claim to be ready to discharge the cargo. Therefore the NOR was not tendered in good faith and should be considered void.

Charterers did not cite and the Panel was not aware of any authority supporting the foregoing contention. On November 2, 2022, when the Vessel tendered its NOR, it was not under arrest and there was no legal impediment to its proceeding to a berth and discharging its cargo, once a berth became available. Therefore, the NOR tendered at that time was valid.

 

The subsequent order of arrest issued for the Vessel on November 4 did not invalidate the NOR tendered on November 2. If, as it appears, the Arrest Order caused a delay in berthing and discharge of the vessel from November 8 to November 12, the appropriate remedy was to exclude such time from the calculation of laytime at Kandla. In fact, Owners have now revised their demurrage claim to exclude this time.

 

Laytime used at Mumbai


Charterers asserted that "at the discharge port of Mumbai, the pumping and waiting time had to be pro-rated with the other cargo discharged at the port, reducing the laytime used to 1.70675 days." Charterers relied for this contention upon Clause 14A of the Rider Clauses, which provides:


A. Any time waiting for the same berth, or time in berth waiting for cargo handling to commence or recommence, at a port where cargo(es) for other cargo interests are to be loaded/discharged, is to be prorated based on the ratio of the tonnage of Charterer’s affected cargo(es) to the total affected cargo to be loaded /discharged; provided that time will not count if lost solely by reason of a deficiency, difficulty or any other reason involving cargo belonging to others.

 

Owner’s laytime calculation for Mumbai appears to prorate the time used there, subtracting from 84.20 "Total Hours Used" 36:37 hours of "Pro Rata Laytime".

Charterers did not provide any support for their calculation of laytime at Mumbai. As Owners have pointed out, Charterers "have not explained how they have determined which parcels of cargo belong to a third party and how, on account of the same, the laytime used at Mumbai should be 1.70675 days instead of the 1.8875 days used in Owners' calculation for demurrage at Mumbai." Without any such explanation or evidence, the Panel could not accept the Charterers’ figure as correct.

 

Charterers’ counterclaim


Charterers contended that Owners breached Clause 6C by failing to immediately notify Charterers of the Vessel’s arrest or the circumstances giving rise to that arrest and that, as a result of the Owners breach, Charterers’ two notify parties/receivers of cargo at Kandla made claims against Charterers. Charterers asserted that they issued credit notes for a total of $150,000 - $75,000 to each customer - to settle those claims and that they should be entitled to set off that amount against the demurrage claimed by the Owners in this arbitration.


Owners asserted that the alleged conduct which, according to the Charterers, constituted the breach of Clause 6C did not, in fact, come within the scope of that Clause. The Panel agreed with the Owners’ contention. By its express terms, Clause 6C required Owners to inform Charterers immediately only of situations "which may result in tendering later than the cancelling date, or a change of itinerary or change of port rotation which would delay completion of loading or discharging operations of the voyage, or create a risk of damage to the vessel/cargo, or otherwise affect performance of the voyage." Here, there was no situation which might result in a late tender or change of itinerary or change of port rotation. The arrest or the potential arrest of the vessel did not cause or threaten to cause any of those events. Hence, Clause 6C did not apply and there was no breach of that clause by Owners.


The panel awarded Owners $531,501 in demurrage and denied the counter-claim

 


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