Charterparty – Voyage – Demurrage – Risk apportionment under berth and port charters – Effect of "Time lost in waiting for berth" clauses in berth and port charters – When laytime starts if "Arrived ship" unable to reach discharging berth.

this page was last time updated on: 14-Oct-2012

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Cases referring to this case:

Ocean Tramp Tankers Corp. v V/O Sovfracht (The Eugenia) [1964] 2 QB 226

For education purposes only

On December 14, 1972, the appellants chartered the motor vessel Darrah for the voyage from Novorossisk to Tripoli for carriage of some 5,500 tons of cement. The charterparty was a port charterparty. The vessel arrived at Tripoli Roads at 2 a.m. on January 2, 1973, and notice of readiness to discharge was immediately given.
Owing to congestion at the port, the ship was unable to berth until a.m. on January 9. The discharge of her cargo was completed at 8 a.m. on January 24.

Clauses 20 and 21 of the charterparty provided as follows:

20. Cargo to be discharged by receivers at their risk and expense at the rate of 625 metric tons per weather working day of 24 consecutive hours, Fridays and holidays excepted.
21. At discharging port, time from noon Thursday or noon on the day before a legal holiday until 8 a.m. the next working day not to count…

Clause 4 of the charterparty says:

Time to commence at 2 p.m. if notice of readiness to discharge is given before noon, and at 8 a.m. next working day if notice given during office hours after noon. Time lost in waiting for berth to count as laytime. See clauses 35 and 36.

The owners claimed that on authorities (North River Freighters Ltd. v H.E. President of India (The Radnor) [1956] 1 Q.B. 333; Metals & Ropes Co. Ltd. v Filia Compania Limitada (The Vastric) [1966] 2 Lloyd’s Rep. 219 and Ionian Navigation Co. Inc. v Atlantic Shipping Co. S.A. (The Loucas N.) [1971] 1 Lloyd’s Rep. 215) they entitled for the 7 days and 6 hours spent waiting for the berth to be counted without adjustment for the weather working days, Fridays and holidays, thus amounting to just under 14 days’ demurrage was due to them.

In the House of Lords, before Lord Diplock, Viscount Dilhorne, Lord Simon of Glaisdale, Lord Fraser of Tullybelton and Lord Russell of Killowen. 1976 May 24, 25; July 7.

Lord Diplock at pp.162-163:

My Lords, the type of maritime adventure that is the subject of a voyage charter is exposed to risk of delay in its performance from causes that are beyond the control of both shipowner and charterer. Under a voyage charter time is money; so it is of commercial importance to the parties to provide by their contract how any loss occasioned by delay due to such causes is to be allocated between them. …

Some standard forms of voyage charterparty that are in general use contain express provision as to what are to be the financial consequences to the parties if time which would otherwise be available for loading or discharging cargo is wasted because the vessel has been compelled to wait for a berth to become available. Others contain no such express provision but leave the question upon whom the loss shall fall to depend upon whether the charterparty is a berth charter or a port (or dock) charter: see E. L. Oldendorff & Co. G.m.b.H. v Tradax Export S.A. (The Johanna Oldendorff) [1974] A.C. 479.

at pp.164-165:

"Under a berth charter the vessel does not complete the loading or the carrying voyage until the vessel reaches the designated berth. So any time spent waiting for the berth to become available serves only to prolong the voyage stage and in the absence of express provision to the contrary any loss occasioned to the shipowner by reason of the delay falls on him alone. Under a port charter on the other hand the voyage stage is completed upon arrival of the vessel at a usual waiting place within the limits of the port. If because of congestion the charterer cannot designate a berth to which she can proceed immediately, laytime nevertheless starts to run against the charterer and if, as a consequence of her being compelled to wait until a berth becomes available, the charterer is unable to complete the loading or discharge within the stipulated laytime he must pay demurrage for any additional time used to complete it. In the case of a port charter it is only when the carrying vessel is compelled to wait her turn at a place outside the limits of the port that the time spent waiting for a berth would operate to prolong the voyage stage and to cast the loss occasioned by the delay upon the shoulders of the shipowner.

The commercial interest of the shipowner in a voyage charter is to make profitable use of his vessel. Unlike the charterer he is not primarily concerned with the choice of ports between which she is used to carry goods, though it may be to his interest that the loading port in any voyage charter is as near as possible to the discharging port in the immediately preceding charter, and that the discharging port in the new charter is not too remote from potential loading ports for subsequent charters. But his primary concern is that his vessel should earn the stipulated freight in as short a time as possible. To the charterer, on the other hand, the identity of the particular ports between which the cargo is to be carried is vital. So if he wants his cargo to be carried to or from ports where there is risk of delay in loading or unloading cargo owing to congestion, it makes good sense commercially that, irrespective of whether it be a berth charter or a port charter, the charterer should assume the financial burden of that risk and compensate the shipowner for the additional time that his vessel has had to be employed in the adventure in the event of delay resulting from this cause.

"Time lost in waiting for berth" in the context of the adventure contemplated by a voyage charter, as it seems to me, must mean the period during which the vessel would have been in berth and at the disposition of the charterer for carrying out the loading or discharging operation, if she had not been prevented by congestion at the port from reaching a berth at which the operation could be carried out.’

at p.166:

In a berth charter the effect of the clauses is to put the shipowner in the same position financially as he would have been if, instead of being compelled to wait, his vessel had been able to go straight to her berth and the obligations of the charterer to carry out the loading or discharging operation had started then. In a port charter the clauses are superfluous so far as concerns time spent in waiting in turn within the limits of the port. This counts as laytime anyway; it is laytime. The clauses would however have the same effect as in a berth charter in respect of ports like Hull or Glasgow where the usual waiting place is outside the limits of the port.

at p.168:

I have already expressed my own opinion that the construction placed upon the "time lost" clause in the cases which followed on The Radnor [1956] 1 Q.B. 333 to which I have referred was wrong and that in the computation of time lost in waiting for berth there are to be excluded all periods which would have been left out in the computation of permitted laytime used up if the vessel had actually been in berth. So, in the case of an arrived ship under a port charter there is no conflict between the laytime provisions and the time lost provisions. The calculations under both provisions are the same; neither need prevail over the other.’

North River Freighters Ltd. v H.E. President of India (The  Radnor) [1956] 1 Q.B. 333, C.A. explained.
Ionian Navigation Co. Inc. v Atlantic Shipping Co. S.A. (The Loucas N.) [1971] 1 Lloyd’s Rep. 215, C.A. overruled.

Decision of the Court of Appeal [1976] 1 Lloyd’s Rep. 285 affirmed.

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