Port Authority Interference - Detention or Laytime?

December 2001

(Sea Venture Volume 20)

The effect of interference by a Port Authority on hire under a time charter party was considered in "Sea Venture" Vol.s 17 and 19 in the light of the "Laconian Confidence" and "Jalagouri" cases respectively. In a recent case¹ London Arbitrators considered what effect such interference had under a voyage charter party and the running of laytime.

A ship was chartered for the carriage of sugar from Brazil to the Black Sea. The required practice of the Port Authorities at the discharge port was that ships would not be allowed to berth until all paperwork is in order; this required original documentation being cleared through Customs and the necessary payments being made. Essential for this process was the availability of original bills of lading.

On arrival at the discharge port, the original bills of lading were not available to enable the commencement of paperwork formalities and therefore the ship was unable to berth. Consequently, with the ship at anchorage, the Master tendered a Notice of Arrival which stated that "it should not be taken as purporting laytime to commence by any concerned party and any time waiting for receivers to present original bills of lading as per port regulations to complete cargo documentation will count as detention time". This was done to enable Owners to request Charterers to pay detention at $6,000 per day, as provided by the charter party.²

The bills of lading were presented seven days after the ship arrived and the paperwork formalities were completed four days after that, whereupon the Master tendered a Notice of Readiness. Three days later a berth became available.

The question arose as to whether Charterers were liable to pay damages for detention while the ship waited to berth at the discharge port.

The Owners argued that the Notice of Arrival had been given to the agents and Charterers and that it was ineffective to start laytime running because the ship was not an "arrived ship" under the charter party provisions as (a) no berth had been nominated by the Charterers and (b) in any event, the ship could not berth because the documentation formalities had not been completed (due to the absence of the original bills of lading as required by the Port Authorities). The Notice of Arrival made it clear that laytime would not commence and that any delay would count as detention. The Owners claimed damages for detention for the period between tendering the Notice of Arrival and completion of the documentation formalities - a period of almost eleven days.

The Charterers countered these assertions by arguing that, on her arrival, the ship entered a berthing queue, whether the original bills of lading were available or not, and moved up that queue until a berth became available. The absence of the bills of lading did not cause any delay in the ship berthing.

The tribunal stated in their award that for laytime to commence three considerations had to be satisfied:

1. The ship had to have arrived at the discharge port as specified in the charter party. The Charterers contended that the ship had "arrived" when the Master tendered the Notice of Arrival because, even though the charter party was a berth charter party ("1/2 safe berths at discharging port"), clause 22 of the charter party provided that, in the event of congestion, the Master had liberty to tender Notice of Readiness WIPON WIBON. The tribunal accepted that the ship had arrived when the Notice of Arrival was tendered, but not for the reasons argued by the Charterers as the charter party was not, in fact, a berth charter party. The tribunal stated that clause 43 of the charter party called for the ship to discharge at "one safe and suitable ice-free port", the reference to "port" coming before the reference to "one or two safe berths" at discharging ports. The charter was a port charter and the ship had "arrived" when the Notice of Arrival was tendered.
   

2. The ship had to be ready and able to discharge. The tribunal found that the Owner’s own evidence was that the ship was in a fit condition to discharge.
   

3. Notice of Readiness must have been tendered. In order to avail themselves of the detention clause, Owners had intentionally instructed the Master to tender a Notice of Arrival as opposed to a Notice of Readiness. The Charterers had relied on the words in the Notice of Arrival to the effect that "it should not be taken as purporting laytime to commence" and consequently argued that they did not have to count laytime until after a valid Notice of Readiness had been property served. This argument was rejected by the Tribunal who held that, whatever terminology had been used, what was tendered when the ship first arrived was in fact a Notice of Readiness because it fulfilled all the functions of a proper Notice of Readiness. The only reason for the delay in discharging (other than berth congestion) was the unavailability of the original bills of lading and the incompletion of the documentation formalities which were not the responsibility of the Owners but of the Receivers.

The Tribunal concluded therefore that, while the Owners were wrong to try to utilise the provisions of the detention clause, the Charterers were equally wrong not to count laytime from the tendering of the "Notice of Arrival" when the ship first arrived at the discharge port. Accordingly, although Charterers were not liable to pay damages for detention, in accordance with the charter party terms, laytime did start to count 24 hours after the ship first arrived.

¹ LMLN 566
² The charter party gave Charterers the option of detaining the ship at a safe anchorage on payment of $6,000 per day.