Tendering of the Notice of Readiness (“NOR”) is one area that many owners can so easily slip up.  If the vessel is subsequently delayed, a sloppy tender of the NOR can cost an owner dearly when he calculates laytime and demurrage resulting in not insubstantial losses.

This is what happened to the owners of the “The Happy Day” recently (see Glencore Grain Ltd v Flacker Shipping Ltd - QBD (Com Ct) (Langley J) ) - 25 January 2001).  This High Court decision arose from an appeal to an award in arbitration.  The question was :

“What were the rights of the owners to demurrage and charterers to despatch when a charterparty provided for a notice to be given at the discharge port to trigger the start of laytime but only an invalid notice was given, and yet the vessel commenced and completed discharge over an extended period in circumstances in which a substantial claim to demurrage would otherwise have arisen?”

The vessel was chartered on an amended Synacomex form for the carriage of a cargo of wheat to be discharged at the average rate of 1,500 mt per weather working day of 24 consecutive hours pro rata, laytime to be non-reversible. 

Clause 30 provided that at first or sole discharging port, notice was to be given to receivers/agents during normal local office hours and laytime was to start counting at 8 am next working day whether in berth or not, whether in port or not, whether in free pratique or not, whether in customs cleared or not, time from Friday 5 pm until Monday 8 am not to count even if used.

The vessel completed loading 23,000 mt of wheat at Odessa and on arrival Cochin on 25 September at 1630H was unable to immediately enter the port as she had missed the tide.  Nevertheless, the Master purported to tender NOR at 1630H that day.  

The vessel only entered the port the next day at 1016H, berthing at 1315H.  No further NOR was tendered.  Discharge commenced on 26 September and only completed on 25 December.  The Statement of Facts (“SOF”) was signed by both vessel’s and receiver’s agents which recorded that NOR was tendered and accepted at 1630H on 25 September.

The owners claimed demurrage while the charterers said that lay-time never commenced since NOR was not validly tendered and claimed despatch.  

The arbitrators held among other things, that the NOR was not marked “accepted” but “received” even though the SOF said that NOR was “accepted” and that lay-time did not start unless the charterers conceded otherwise.  Nevertheless, the arbitrators still concluded that lay-time commenced at 0800H on 29 September.

The charterers appealed to the High Court.  Langley J referred to the decision of Mustill LJ in “The Mexico 1” [1990] 1 Lloyd’s Rep 507 and confirmed the position that an invalid notice could not be treated as “inchoate” - becoming effective when the vessel was ready for discharge at some other time from which it was originally contracted to become effective.  In order to do so, one had to look at some kind of bilateral representation and action on the basis that the contractual arrangement had been replaced by something new.  

The fact that the SOF had said that the NOR had been “accepted” was not enough.  There had to be something clearer and unequivocal between the parties to indicate that the terms of the charterparty had been varied by mutual consent.

Just because discharge commenced did not validate an invalid notice to comply with clause 30 since that would be inconsistent with the judgement of Mustill LJ in “The Mexico 1” rejecting the concept of an inchoate notice.  

Neither was it possible to infer any agreement or convention just because discharge had commenced or continued and that the invalid notice was not rejected.  

It would not necessarily follow from that that charterers had chosen to give up their rights to a valid notice in accordance with the terms of the charterparty unless clause 30 had contained additional words like “and in any event, lay-time to commence when discharge starts”.  

In the circumstances, the owners were not entitled to demurrage and the charterers claim for despatch succeeded.

This case very clearly shows that owners must instruct their Masters to follow the provisions with regard to the tender of the NOR set out in the charterparty to the letter.  

Any deviation from those provisions, no matter how slight, could render the NOR invalid.  If there is any doubt whatsoever on the owners part that the tender of the NOR was invalid, it is always safer to re-tender the NOR although one must still be careful that the re-tender does not invalidate what would have otherwise been a valid tender of the earlier NOR.   

Alternatively, owners would be well advised to seek clear written confirmation from the charterers that they accept as valid the tender of the NOR rather than just leaving it to an indication in the SOF.  

This is a minor point and something which an operations or post fixture man in owners office can so easily overlook.  The result may very well cost owners dearly.