Different treatment of NOR for cancellation and for laytime purposes. Fine, if that’s what the parties agree.

 

The “strange result” condemned by Roskill J. in The Madeleine [1967] 2 Lloyd’s Rep. 224, namely, that a notice of readiness may be valid for one purpose (avoiding the option to cancel) but invalid for another purpose (the commencement of laytime), can arise if the parties choose to agree upon different regimes. This is what happened in Bilgent Shipping PTE Ltd.and ADM International SARL v. Oldendorff Carriers (The Alpha Harmony) [2019] EWHC 2522 (Comm) – a tale of a chain of two voyage charters, with the same provisions for tender of NOR to commence laytime but with different cancellation clauses. The laycan period under both initially ended on 31 May 2015 but was narrowed to end on 10 May 2015. The vessel tendered notice of readiness by email at 0704 on 10 May 2015 which was a Sunday. The email stated that the vessel had arrived at 0250 – outside normal working hours. Both charters provided for notice of readiness to be delivered between 0800 and 1700 on a weekday and between 0800 and 1100 on a Saturday, with laytime to commence at 0800 on the next working day after a valid notice of readiness had been tendered.  No express provision was made for delivery of a notice of readiness on a Sunday. However, the head charter contained an additional clause dealing with service of NOR that made no reference to service within working hours.

The vessel tendered notice of readiness by email at 0704 on  Sunday10 May 2015. The email stated that the vessel had arrived at 0250. Sub charterers cancelled at 2047 on Sunday 10 May 2015 and head charters followed suit at 0555 on Monday 11 May 2015. The question was whether the cancellations were lawful in circumstances where, although notice of readiness had been tendered before the relevant time on the cancelling date, it had not been tendered during the permitted hours. The arbitration panel in both arbitrations held that the cancellations were not valid.

Teare J allowed the appeal under the sub charter, but dismissed that under the head charter.

Under the sub charter cl16, the cancellation clause  provided: “Should the Notice of Readiness at loading port not be delivered as per Clause 14 by twelve o’clock noon on the 31st day of May 2015, the Charterers or their Agents shall at said hour and at any time thereafter, but not later than the presentation of Notice of Readiness together with the required certificates at said office, have the option of cancelling this Charter Party…” Teare J held that  the words “as per clause 14” meant that the Notice of Readiness must be in accordance with the requirements of clause 14 which required NOR to be served within stated office hours.

By contrast the cancellation clause in the head charter cl.4 provided as follows:

“… Should the vessel’s notice of readiness not be tendered and accepted as per Clause 17 before 2359 on the 30th/31st day of April/May of 2015, the Charterers or their Agents shall at any time thereafter, but not later than one hour after the notice of readiness is tendered, have the option of cancelling this Charterparty. … ”

There were two charter provisions relating to NOR. Clause 17 provided:

“(a) Notice of readiness and Commencement of Laytime See also Clause 70

Notice of vessel’s readiness to load and/or discharge at the first or sole loading and/or discharging port, shall be delivered in writing or by cable/telex/email to Charterers/Receivers (or their Agents). See also Clause 70. Such notice of readiness shall be delivered when vessel is in the loading or discharging port and is in all respects ready to load/discharge in case loading/discharging berth is occupied vessel to be allowed to tender Notice of readiness whether in port or not, whether in berth or not, whether customs cleared to not, whether in free pratique or not.”

Cl.70 contained provisions regarding the start of laytime and the requirement as to service of NOR within stated.

For cancellation purposes, it was cl.17 that was the relevant clause dealing with NOR and under that clause there was no time restriction on the service of NOR. The words in cl.17 “See also Clause 70”, were not sufficient to incorporate in clause 17, and hence in clause 4, the office hours requirement for the delivery of a notice of readiness. The combined effect of clauses 4 and 17 as amended showed, for the purposes of the cancelling clause, that there was no requirement that the notice of readiness be delivered within office hours. Accordingly, for cancellation purposes NOR had been served before the cancelling deadline of 2359 on 10 May 2015 and the head charterers had no option to cancel the charter.

2 thoughts on “Different treatment of NOR for cancellation and for laytime purposes. Fine, if that’s what the parties agree.

  1. Possibly mistakes in drafting with unexpected results? Hard to disagree with the point that the provisions were different but was one CP so clear that the result was the one Lord Roskill didn’t like?

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