Lloyd's List is part of the Business Intelligence Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK support at +44 (0)20 3377 3996 / APAC support at +65 6508 2430

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

Distinguishing between interruptions and exceptions

Tribunal decision clarifies the terms

A RECENT tribunal decision reinforces the need for practitioners to draft charterparties clearly to ensure that proper distinction is made between items that are intended to be interruptions to laytime and items intended to be exceptions, said Clyde & Co London legal director Simon Jackson.

Mr Jackson said voyage charterparties sometimes contained a promise on the part of charterers that, upon arrival at the loading or discharging port, the vessel will be able to proceed directly to berth.

This promise usually took the form of the stipulation “reachable on arrival” or “always accessible”.

However, it has not always been clear whether owners can claim damages if charterers break their promise and how such a breach would impact the laytime and demurrage provisions in the charterparty.

“As to damages, once the vessel has tendered notice of readiness and so become an arrived ship, no question of damages can arise in relation to the broken promise,” Mr Jackson said.

“Simply, laytime will start running and, if it expires before loading or discharging is completed, owners will be entitled to demurrage.

“Where laytime starts running, and the charterers are still in breach of an always accessible or reachable on arrival warranty, the charterers will, however, not be entitled to rely on any exceptions to laytime whilst the breach persists, even where the exception is traditionally an owners’ risk.”

In London Arbitration 5/124, owners sought to test the limits of these principles.

Mr Jackson said the vessel was chartered on an amended Synacomex form for the carriage of sunflower seed meal in bulk, from Nikolaev, Ukraine, to Tarragona, Spain.

The charterparty contained the notation “always afloat, always accessible”.

The vessel arrived at Nikolaev on March 6, 2012, and tendered NOR. There was then a delay of 11 days before berthing. Owners sought damages for detention and demurrage.

“The claim for damages for detention failed, because the vessel had arrived and so the charterers were entitled to use the laytime that they had paid for with the freight, a straightforward application of The Delian Spirit [1972],” Mr Jackson said.

“However, the calculation of laytime gave rise to difficulty because laytime was not expressed as a period of days or hours, but in weather working days, which did not run when the weather prevented working, Saturdays, Sundays and holidays.”

Owners argued that charterers were not entitled to discount these days because they were an exception to laytime, to which charterers were not entitled, because they were in breach of the “always accessible” warranty.

However, Mr Jackson said the tribunal disagreed and found that the difference between such laytime clauses and exception clauses was that exception clauses stopped time running during periods covered by the clause, whereas with the laytime clauses, time did not run because it was outside the definition of such laytime.

“In the present case, therefore, time when the weather prevented working, Saturdays, Sundays and holidays, were all outside the definition of the laytime allowed, such disallowed time being referred to as interruptions to laytime, rather than exceptions to laytime,” Mr Jackson said.

“So where a charterer failed to meet his obligations to procure a berth that was always accessible and reachable on arrival, time which was outside the agreed definition of laytime, nevertheless, did not count against the charterers.”

The distinction between “exceptions” and “interruptions” is not always obvious and Mr Jackson said the tribunal’s decision reinforced the need for practitioners to draft charterparties clearly to ensure that proper distinction was made between items that were intended to be interruptions to laytime and items intended to be exceptions.

Advertisement

Topics

Advertisement
UsernamePublicRestriction

Register

LL039328

Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel