Notes from the Bar: Ahoy there! Your ship has arrived!

We look briefly at the concept of an arrived ship and the importance of defining it properly in charterparties.

What is an arrived ship?

The concept of an arrived ship is important to determine when laytime commences in a voyage charter. It is also important for traders who incorporate charterparty terms into their contract of sale for the purposes of ascertaining demurrage.

Laytime ordinarily commences within a certain period after Notice of Readiness (NOR) is tendered. If a vessel tenders NOR before she reaches the place where NOR could be given, the NOR tendered would be invalid and laytime would not commence until after a valid NOR is tendered.

Once the vessel reaches the place where a valid NOR could be tendered, the vessel is regarded as an arrived ship.

The place to tender NOR

Ordinarily the charterparty would prescribe the place where NOR could be tendered.

If the charterparty is a port charter, NOR could be tendered once the vessel reaches the port. If it is a berth charter, NOR could only be tendered once the vessel reaches the berth.

If the berth is not available, the vessel could tender NOR once she reach a position within the port where waiting ships usually lie.

In the case of The Johanna Oldendorff [1973], the test of whether the vessel is an arrived ship is she has reached “… a position within the port where she is at the immediate and effective disposition of the charterer.  If she is at a place where waiting ships usually lie, she will be in such a position unless in some extraordinary circumstances…

And absent any contrary provisions in the charterparty, the usual waiting place must be within the port.

The Arundel Castle [2017]

In the case of the Arundel Castle, the charterparty was on an amended GENCON 94 form. The load port was Krishnapatnam.

When the vessel arrived at the load port, it was congested and the port authority ordered the vessel to anchor at a position that was outside of the port limits. The vessel tendered NOR once she reached the position as ordered by the port authority.

In a claim by the owners for demurrage, the charterers contended that the vessel was not within port limits and therefore the NOR was invalid.

The owners argued that the term 'port limits' should include any area within which vessels were customarily asked to wait by the port authorities and over which the port authorities exercised authority or control over the movement of ships.

The alternative argument relied on the definition of 'port' in the Laytime Definitions for Charterparties 2013 to include any areas outside the legal, fiscal or administrative area where vessels were ordered to wait for their turn no matter the distance from that area.

The difficulty for the owners in this case is that neither party provided any evidence to show that there was any local or national law that defined the port limits of Krishnapatnam.

There was also no evidence adduced to show the area of exercise by the port authority of its powers to regulate the movements and conduct of ships.

The only evidence adduced was an Admiralty chart with an area on the chart described as 'Limit of Port of Krishnapatnam'. It was not disputed that the vessel was anchored outside the area marked out on the Admiralty chart.

Given the limited evidence adduced, it was held that the vessel was not an arrived ship as she was outside port limit notwithstanding the fact that she was ordered there by the port authority.

As for the owners’ argument on the definition of port based on the Laytime Definitions 2013, the Court held that the parties did not incorporate the Laytime Definitions 2013 into the charterparty.

The Laytime Definitions 2013 was stated by BIMCO as being intended to reflect the wider concept of port area explained in The Johanna Oldendorff. The Court in The Arundel Castle held that since the Laytime Definitions 2013 departed from general law, it would not be appropriate to rely on it for the meaning of 'port' unless the Laytime Definitions 2013 is specifically incorporated into the charterparty.

Key Lessons Learnt

  • The place where NOR can be tendered is essentially a contractual allocation of risks between owners and charterers as to who bears the risk for delays.
  • Unless there are provisions in the charterparty to tender NOR outside of port limits, the owners would not be able to tender a valid NOR even though the vessel is ordered by the port authority to wait outside port limits.
  • Owners and charterers should consider incorporating the BIMCO definitions into charterparties for added certainty.
  • Your case is only as good as the evidence that you are able to adduce.