Voyage Charters. Notice Of Readiness. Last updated 22-Jan-2015

Secondly free pratique is not an exam which one can fail. It is something which, …, is granted or not granted. If Owners apply for the grant of free pratique, it is hardly an abuse of language to say that the Owners "fail … free pratique" until it is granted.
AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] EWCA Civ 713, per Longmore LJ at para 16.

Premature and Invalid NOR

Scenario 3, a berth charter with special provisions

Some berth voyage charters provide for notice sent from waiting place or anchorage to remain valid, under certain criteria, even if no other notice given when the vessel safely moored alongside. That is, for example, a combined effect of cl.13 of Shellvoy5 and of cl. 22 of Shell Additional Clauses(SAC) and cl.13 of new Shellvoy6 form.

In recent case of AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] EWCA Civ 713 the Court of Appeal was invited to decide whether NOR tendered more than 6 hours after the moment when free pratique was obtained is invalid within meaning of cl.13 of Shellvoy5 and of cl. 22 of Shell Additional Clauses(SAC). In that case the vessel dropped anchor around noon time at roads of Escravos and immediately tendered NOR. Next morning port authority officers boarded vessel and granted free pratique. Same day, seven hours later, at 15.39 master re-tendered NOR and confirmed that vessel obtained free pratique. In three days more the vessel went alongside.

The owners contended that laytime began 6 hours after they tendered their first notice of readiness.

SHELL ADDITIONAL CLAUSES - February 1999

22. Clearance Clause
[22.1] If Owners fail
(A) to obtain Customs clearance; and/or
(B) free pratique; and/or
(C) to have onboard all papers/certificates required to perform this Charter, either within the 6 hours after Notice of Readiness originally tendered or when time would otherwise normally commence under this Charter, then the Original Notice of Readiness shall not be valid.
[22.2] A Notice of Readiness may only be tendered when Customs clearance and/or free pratique has been granted and/or all papers/certificates required are in order in accordance with relevant authorities requirements.
[22.3] Laytime or demurrage, if on demurrage, would then commence in accordance with the terms of this Charter.
[22.4] All time, costs and expenses as a result of delays due to any of the foregoing shall be for Owners’ account.
[22.5] The presentation of the notice of readiness and the commencement of laytime shall not be invalid where the authorities do not grant free pratique or customs Clearance at the anchorage or other place but clear the vessel when she berths.
[22.6] Under these conditions the NOR would be valid unless the timely clearance of the vessel for customs or free pratique is caused by the fault of the vessel.

Judge in the High Court upheld owners’ claim on the ground that it would be absurd to think that the phrase "when she berths" in SAC 22.5 excludes clearance before berthing. Therefore the judge decided that history of events brings the vessel within the special provision in 22.5 and 22.6, meaning that if no free pratique granted within 6 hour upon arrival then it did not invalidate the NOR because when she berthed free pratique had been granted.

Shellvoy5

13. Notice of readiness/Running time
(1) Subject to the provisions of Clauses 13(3) and 14, if the vessel loads or discharges cargo other than by transhipment at sea.
(a)Time at each loading or discharging port shall commence to run 6 hours after the vessel is in all respects ready to load or discharge and written notice thereof has been tendered by themaster or Owners’ agents to Charterers or their agents and the vessel is securely moored at the specified loading or discharging berth.  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 area 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 of the cargo).
If Charterers fail to specify a berth at any port, the first berth at which the vessel loads or discharges the cargo or any part thereof shall be deemed to be the specified berth at such port for the purposes of this Clause. Notice shall not be tendered before commencement of laydays and notice tendered by radio shall qualify as written notice provided it is confirmed in writing as soon as reasonably possible.
(b)Time shall continue to run
(i)  until cargo hoses have been disconnected, or
(ii) if the vessel is delayed for Charterers’ purposes for more than one hour after disconnection of cargo hoses, until the termination of such delay provided that if the vessel waits at any place other than the berth, time on passage to such other place, from disconnecting of hoses to remooring/anchorage at such other place, shall not count.
(2) If the vessel loads or discharges cargo by transhipment at sea time shall count from the arrival of the vessel at the transhipment area or from commencement of the laydays, whichever is later, and, subject to Clause 14(c), shall run until transhipment has been completed and the vessels have separated.
(3) Notwithstanding anything else in this Clause 13, if Charterers start loading or discharging the vessel before time would otherwise start to run under this charter, time shall run from commencement of such loading or discharging.
(4) For the purposes of this Clause 13 and of Clause 14 "time" shall mean laytime or time counting for demurrage, as the case may be.

In the Court of Appeal, Longmore LJ, in sharp disagreement with the judge at first instance, held that nothing in wording of cl.13 prevents tender of valid NOR in the absence of free pratique. Being a berth charter Shellvoy5 provides in cl.13(1)(a) for laytime to start when notice tendered and "vessel is securely moored at the specified loading or discharging berth." In cl.13(1)(a)(i)-(iii) contract enumerates requirements for NOR to be valid when the vessel does not proceeds directly to the berth. Clause 13 continues to govern commencement of laytime in cases when free pratique granted within 6 hours upon tender of original notice of readiness.

When, however, free pratique is not granted within 6 hours of the tender of notice this "original" NOR becomes invalid and cl.22 of SAC comes into operation. Clause 22.1-4 allocates to the owners’ side all delays from the moment of tender of "original" NOR and until the moment when free pratique granted and fresh NOR served, as it commonly is under a berth charter. And only in situations where otherwise the owners will be heavily disadvantaged, i.e. when free pratique is only granted when the vessel berths, then cl. 22.5-6 of shifts risks for such delays to the Charterers’ side and consider originally tendered notice as valid.

That may happen because it is the practice of the port only to board a vessel and grant free pratique when she has actually berthed or for any other reason. If, in these circumstances, the only notice of readiness which Owners have been able to tender is invalid, they will (unfairly) have borne the risk of congestion which clause 13 provides they do not have to bear. SAC 22.5 then comes into play because it provides that, in those circumstances, the original notice of readiness is not to be invalid but is to take effect in accordance with the terms of the charter unless (SAC 22.6) the delay is in some way the fault of the Owners.
Per Longmore LJ in AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] EWCA Civ 713 at para.13.

In fact the master tendered fresh NOR next day when the vessel was cleared and free pratique has been granted. This fresh NOR was found to be good and valid, albeit the owners were precluded from relying on it for the purpose of demurrage claim because they failed to submit such demurrage claim "fully and correctly documented" within 90 days – their only claim was based on "original" notice given when no free pratique was granted yet.

See also wording of cl.13 of new Shellvoy6 form below:

Shellvoy6

13.Notice of readiness/ Running time
(1) Subject to the provisions of Part II clauses 13(3) and 14,
(a)Time at each loading or discharging port shall commence to run 6 hours after the vessel is in all respects ready to load or discharge and written notice thereof has been tendered by the master or Owners’ agents to Charterers or their agents and the vessel is securely moored at the specified loading or discharging berth. 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 area 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 of the cargo).
If Charterers fail to specify a berth at any port, the first berth at which the vessel loads or discharges the cargo or any part thereof shall be deemed to be the specified berth at such port for the purposes of this clause. Notice shall not be tendered before commencement of laydays and notice tendered by radio shall qualify as written notice provided it is confirmed in writing as soon as reasonably possible.
Time shall never commence before six hours after commencement of laydays unless loading commences prior to this time as provided in clause 13 (3).
If Owners fail;
(i) to obtain Customs clearance; and/or
(ii) to obtain free pratique unless this is not customary prior to berthing; and/or
(iii) to have on board all papers/certificates required to perform this Charter, either within the 6 hours after notice of readiness originally tendered or when time would otherwise normally commence under this Charter, then the original notice of readiness shall not be valid. A new notice of readiness may only be tendered when Customs clearance and/or free pratique has been granted and/or all papers/certificates required are in order in accordance with relevant authorities’ requirements. Laytime or demurrage, if on demurrage, would then commence in accordance with the terms of this Charter. All time, costs and expenses as a result of delays due to any of the foregoing shall be for Owners’ account.
(b)Time shall:
(i)   continue to run until the cargo hoses have been disconnected.
(ii) recommence two hours after disconnection of hoses if the vessel is delayed for Charterers’ purposes and shall continue until the termination of such delay provided that if the vessel waits at any place other than the berth, any time or part of the time on passage to such other place that occurs after two hours from disconnection of hoses shall not count.
(2) If the vessel loads or discharges cargo by transhipment at sea time shall commence in accordance with Part II clause 13 (I) (a), and run until transhipment has been completed and the vessels have separated, always subject to Part II clause 14.
(3) Notwithstanding anything else in this clause 13, if Charterers start loading or discharging the vessel before time would otherwise start to run under this Charter, time shall run from commencement of such loading or discharging.
(4) For the purposes of this clause 13 and of Part II clause 14 and Part II clause 15 "time" shall mean laytime.

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