Laytime.Damages for detention and demurrage. Last updated 27-Sep-2014

I do not feel able to accept this submission, for the simple reason that I do not think that it reflects the express words of cl 6 of the charter. In truth, Mr Rix was propounding a principle upon which responsibility for delay at the discharging port might fairly be shared between shipowners and charterers, and then seeking to force the provisions of the charter into the straitjacket of that principle. … I need only add that I do not think that The Laura Prima is of assistance in the present case, since the charter-party in that case was in materially different terms, containing as it did an express warranty by the charterers that loading and discharging places for the vessel would be "reachable on her arrival".
Per Lord Goff of Chieveley in Societe Anonyme Marocaine De L'industrie Du Raffinage v Notos Maritime Corporation (The Notos), [1987] 1 Lloyd’s Rep 503.

Damages for detention versus liquidated damages

The owners’ point in The Angelos Lusis [1964] 2 Lloyd’s Rep. 28, The President Brand [1967] 2 Lloyd’s Rep 338 and The Delian Spirit [1971] 1 Lloyd’s Rep 506 cases mentioned on Duty to procure the berth ‘reachable on arrival’ page, was that the resultant financial loss caused by delay in loading or discharging was to be borne by the charterers because of their failure to satisfy requirements of an absolute undertaking stipulated in cl.6 of Exxonvoy69, i.e. to provide a reachable berth where the cargo operation could take place at the time vessel arrived at or off the port. The owners furthermore contended that only physical arrival of the vessel is sufficient to trigger ‘reachable on arrival’ provision since that was the Charterers’ breach of contract which prevented her from becoming an ‘arrived ship’ for the purpose of laytime and demurrage.

It is notable that if in The Angelos Lusis there was no question on the quantum but of liability only, in The President Brand the vessel discharged with nearly 55 hours of laytime remaining, but since she was not an ‘arrived ship’ during almost 97 hours of waiting at roads, the charterers lost the benefit of said 55 hours of unused laytime and the owners successfully claimed all 97 hours as damages for detention. Thus, operation of ‘reachable on arrival’ clause before any laytime provisions can take effect, makes all time lost waiting for the berth a clear surplusage to the hypothetical demurrage claim which, moreover, can not be reduced for the account of unused laytime.

Another important consequence of Charterers’ failure to procure berth reachable on arrival is that the owners’ claim for detention does not fall under the category of liquidated damages anymore. Unlike demurrage, which is agreed on signing the charterparty, damages for detention are influenced by the freight rate at the time of delay and may be considerably higher than demurrage rate on a rising market. Recognition of such wide opportunities for extending the monetary value of the claim leads to rather unusual situation when it became advantageous to the shipowners to invalidate their NOR, tendered in due time, and circumvent limitations of laytime and demurrage provisions!

However, as decision in The Delian Spirit case shows, the court was not prepared to adopt the practice to question NOR validity each time when it suits to the owner. Moreover, after decision of the House of Lords in The Johanna Oldendorff [1974] A.C. 479 it is sufficient to reach a place where waiting ships usually lie to become ‘an arrived ship’. Such state of law has significantly reduced the number of occasions when situation might offer the owners a chance to claim additional damages for detention.

It is necessary to underline, that application of cl. 6 of Asbatankvoy alone, in the absence of any provision in the charterparty requiring the charterers to designate and procure a berth ‘reachable on her arrival’ gives to the charterers all required defence containing in the last sentence of cl. 6 against any delays caused by reasons over which they have no control.

In The Notos, [1987] 1 Lloyd’s Rep 503 case for example, thevessel was chartered under an STBVoy form, with wording of Clause 6, ‘Notice of Readiness’ (below) almost identical to cl.6 of Asbatankvoy.

6. Upon arrival at customary anchorages at each port of loading or discharge the Master shall give the Charterer notice by letter, telegraph, wireless or telephone that the Vessel is ready to load or discharge cargo, berth or no berth, and laytime or, if the Vessel is on demurrage, time on demurrage shall commence upon the expiration of six (6) hours after receipt of such notice, or upon the Vessel’s arrival in berth (ie finished mooring when at a sea loading or discharging terminal and all fast when loading or discharging alongside a wharf or when barge lighter or lightening vessel is alongside when lightening), whichever first occurs. However, where delay is caused to Vessel getting into berth after giving notice of readiness for any reason whatsoever over which Charterer has no control such delay shall not count as laytime or as time on demurrage.

However, cl. 9of STB Voy did not impose on charterers an obligation to nominate and procure berth reachable on arrival. Its wording related to ‘loading/discharge place’ and contained no ‘reachable on arrival’ provision such as was the subject of discussion in The Laura Prima, [1982] 1 Lloyd’s Rep 1. Clause 1 of STB Voy provided:

1(b) The Vessel shall proceed with utmost dispatch to a berth as ordered by Charterer in one or more of the ports or places specified in one or more of the ports or places specified in Part 1(C) hereof and there load a cargo of crude oil and shall then proceed to a submarine line as ordered by Charterer in one or more ports or places specified in Part 1(D) hereof and there deliver said cargo.

It was held that provisions of cl. 1(b) do ‘not produce, in that particular context, an effect analogous with cl 9 of the Exxonvoy form’. The House of Lords also upheld this position and pointed out that charterparty in question lacks an express warranty by the charterers that loading and discharging places for the vessel would be ‘reachable on her arrival’.

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