Incorporation of Bulk Terminal Terms into Charter. Effect on Laytime and Demurrage Regime.

In London Arbitration 15/21 the Tribunal considered the effect, if any, of the incorporation into the fixture of what were referred to as UBT (United Bulk Terminal) Rules, which were rules imposed contractually by the berth operators on users of the berth. These provided:

 “2.2 NOTICE OF READINESS

In the case of an Ocean Vessel to be loaded, issuance of the Notice of Readiness shall mean that the Ocean Vessel (1) has obtained all requisite governmental approvals, inspections and clearances, including, but not limited to, those required by the US Customs Service and the Immigration and Naturalization Service; and (2) is located at the Berth or Closest Available Anchorage (as defined in section 2.5 below); and (3) is ready and suitable in all respects to receive the Cargo in all holds to be loaded; and (4) has confirmed with the Terminal that the Cargo is to be loaded to Vessel is in storage at the Terminal or, if Cargo is to be direct transferred, is in barges in the Terminal’s fleet; and (5) has determined that the Cargo is in a condition satisfactory to the Vessel Party and all regulatory authorities for shipment. Notice of Readiness shall be considered invalid unless the aforementioned five conditions are met…”

By contrast the recap setting out the fixture provided

“- SHOULD THE BERTH BE OCCUPIED OR SHOULD THE VESSEL BE PREVENTED FROM PROCEEDING TO THE BERTH AFTER HER ARRIVAL AT OR OFF THE PORT NOTICE OF READINESS MAY BE TENDERED BY TELEX, FAX WWWW (an acronym for “wibon, wccon, wifpon, wipon”, ie “whether in berth or not, whether customs cleared or not, whether in free pratique or not, whether in port or not”).

– AT BOTH ENDS PORT LAYTIME SHALL COMMENCE TO  COUNT 12 HRS AFTER VALID NOR IS TENDERED UNLESS OPERATIONS SOONER COMMENCED.  IN CASE SOONER COMMENCED, ACTUAL TIME USED TO COUNT.”

Clause 6 of the charter in effect confirmed what was agreed in the recap.

Owners gave notice of readiness at the port of Davant on the Mississippi on arrival at the South West Anchorage, having to wait there due to congestion at the berths. The tribunal held that there was no requirement in the contract for the vessel to have passed any inspections, etc before giving a valid notice of readiness. Nor was there any requirement in the contract that notice be accepted by the charterers or their agents. Similarly it contained no requirement that notice be given within the laycan.

Under English law was that where an incorporated document conflicted with the terms of the primary agreement entered into by parties, the conflicting terms had to give way to those in that primary agreement with which they were inconsistent, as had been held in a similar case The Linardos [1994] 1 Lloyd’s Rep 28.

Accordingly the aspects of the UBT Rules relied on by the charterers conflicted with the terms of the fundamental agreement as found in the recap, and reinforced by the incorporated charter terms. As in The Linardos, the UBT Rules were designed to govern contractual relationships between the terminal and users of the berth so, when reading them into a charterparty, great caution had to be exercised in interpreting them in the charterparty context so as to ensure that only those provisions in the Rules that were truly relevant to and compatible with the charter agreement were given effect to.

In the light of the charter provisions agreed in the recap, the vessel was entitled to give notice of readiness at the Southwest Pass as that was the nearest available anchorage off the port at the time she arrived there, and the UBT Rules did not affect that position. Accordingly the owners’ demurrage claim succeeded, and they would be awarded the claimed amount of US$109,495.83 plus interest and costs.

Leave a Reply