Notice of Readiness - Late Payment of Port Dues

May 2001

The vessel was chartered for the carriage of peas in bulk from Canada to Mumbai, India, on a Baltimore Berth Grain Charterparty. The dispute arose over the question of validity of the tendered notice of readiness (NOR) in circumstances where port dues had not been paid.

The schedule of events was as follows:

3 December

Vessel arrives at Mumbai and tenders NOR at 10.00 hours

4 December

Owners contend laytime commenced at 08.00 hours

11 December

Owners submit funds to agents to cover port expenses

16 December

Funds for port expenses received by Bombay Port Trust (BPT)

19 December

Vessel Berths at 17.00 hours

The charterers referred to clause 9 of the charterparty which provided that "customary port charges including all dockage to be for the Owners account". They claimed that this placed a responsibility on the owners to remit port dues promptly. They also referred to a BPT Notice which specified that owners requiring a berth must pay in advance a deposit in respect of anticipated charges calculated by a given formula.

The charterers argued that the vessel was not at their immediate and effective disposition and she was not in a position to proceed to berth as port expenses has not been paid. Accordingly, she was not an arrived ship within the test laid down by the Joanna Oldendorff*. As the NOR tendered on 3 December was therefore invalid and as there was no evidence that a second NOR had been tendered by the owners, the charterers claimed that laytime commenced when discharge started.

The owners claimed that there was no exception for failure to pay port dues in the charterparty provision for calculating laytime (clause 12). Neither did the NOR provisions state that port dues must be paid before NOR could be tendered. Accordingly, the NOR tendered on 3 December was valid. The owners admitted their obligation to pay port dues under clause 9 and agreed that these had not been paid until 16 December. However, they said that in making payment they had complied with these obligations.

The tribunal held that the owners had been obliged to place the agents in funds in sufficient time so as to ensure that a berth could be allotted on or shortly after arrival at Mumbai. However, the receipt of funds by the agents was not a precondition for the tender of a valid NOR. Instead, the charterers’ remedy lay in damages for owners’ breach of clause 9; to the extent that berthing was delayed after tender of NOR, such time would not count against charterers as laytime or demurrage (or was recoverable as damages of it otherwise did so).

Had port dues been paid promptly, the vessel would have berthed by 10 December. The owners delay in payment of the port dues delayed the vessel in berthing from 11 to 19 December and accordingly, time should not count (or the charterers might claim as damages the value of time lost) between 08.00 hours on 11 December, when work was likely to have commenced after berthing on 10 December, and 17.00 hours on 19 December, when the vessel actually berthed.

 

(London Arbitration 7/01 - LMLN 559, 12.4.01)

 * [1973] 2 Lloyd’s Rep 285