When Does Laytime Commence?

December 2005

The High Court has recently given some guidance on the important question of when laytime should be regarded as having commenced when a vessel arrives at the loadport and starts loading before the start of the laydays.

The Owners let their vessel "Front Commander" to the Charterers on an amended Asbatankvoy charter. The vessel was to load a cargo of oil at Escravos, Nigeria, and the agreed laycan was 9/10 January 2004. A few days before the vessel's arrival, Charterers managed to secure an earlier stem and were therefore happy for the vessel to arrive at the loadport port early. After Owners had received several emails from Charterers giving notice of their intention to berth the vessel and start loading as soon as possible after the vessel's arrival, the vessel arrived and tendered Notice of Readiness at 00.01 on 8 January. Loading started the same day and was completed 2 days later.

Two clauses in the charter sought to address the situation - one printed clause which stated that laytime was only to commence before the start of the laydays with "charterers' sanction" and an additional clause which required "charterers' consent in writing" before laytime would commence before the start of the laydays.

It was agreed that demurrage was payable but the dispute turned on if or when the NOR given by Owners became effective for the commencement of laytime and whether the email exchange prior to berthing satisfied the charter clauses referred to in the preceding paragraph.

Despite argument from Owners to the contrary, the Court found that the emails exchanged did not amount either to express or implied consent to the early commencement of laytime and merely confirmed that NOR was to be tendered on arrival and that Charterers wanted the vessel to commence loading as soon as possible on arrival.

Laytime therefore did not commence until the first day of the laycan on 9 January.

Interestingly the Court decided that the Court of Appeal decision in the "Happy Day" [2002] 2 Lloyd's Rep 487, on which Owners sought to rely, was irrelevant as the only issue in this dispute was whether or not the requisite consent had been given by Charterers during the email exchange referred to in the preceding paragraphs.

The Court's decision is rather unsatisfactory from a commercial point of view and gives Charterers a windfall profit. It also serves as a harsh lesson to Owners to ensure that there is express compliance with any charterparty provisions dealing with early commencement of laytime before agreeing to start loading prior to the contractual laydays.

It is understood that the Owners have been granted leave to appeal. With other pending cases possibly turning on this decision, it will be interesting to see if the decision of the High Court is reversed.

Court of Appeal decision - Steamship Mutual website article - September 2006