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Wednesday, 06 September 17
LAYTIME - CHARTERERS' RIGHTS & PORT COSTS - NORTH P&I CLUB
KNOWLEDGE TO ELEVATE
In a recent London Arbitration decision (18/17) the Tribunal had to consider whether the owners were entitled to recover additional expenses incurred in complying with charterers’ orders to stop loading operations.
The Facts
The vessel was voyage chartered for a voyage from the USA to Venezuela. Upon arrival at the load port, loading commenced. When charterers became aware of this they ordered the loading to stop. Loading did not then recommence until four days later. Owners claimed from charterers the additional dockage, security and guards’ expenses incurred as a result of the four day interruption to loading.
The Load Port Expenses
In respect of the additional load port expenses, the Tribunal held that the allocation of such expenses would usually fall to owners under the charterparty terms. This was because the charterers were entitled to use the laytime as they wished and so it followed that the associated expenses had to lie where they fell, i.e. with the owners. However, the Tribunal accepted evidence from the owners that an oral agreement had been reached between the owners and the charterers that charterers had agreed to pay the owners’ invoice in full, which included the additional port expenses. It was, therefore, as a result of this additional oral agreement that the Tribunal ordered the charterers to pay the additional port expenses to the owners. Without this oral agreement, which changed the terms of the charterparty, the owners would not have received any compensation for the additional load port expenses incurred as a result of the four day delay.
A Reminder
It is worth reminding owners that charterers do have an absolute right to use the given laytime as they see fit. There is no duty on them to load or discharge faster than the given laytime. Therefore, if a charterer orders the vessel to stop cargo operations when laytime is running, the port expenses incurred during the stop will usually be for owners. This is unless a specific clause (or additional oral or written agreement on this point) can be agreed between the owners and the charterers to the contrary.
Source: North of England P&I Club
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- Merrill Lynch Commodities Europe
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- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
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- European Bulk Services B.V. - Netherlands
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- Gujarat Sidhee Cement - India
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- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
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- Africa Commodities Group - South Africa
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- Kaltim Prima Coal - Indonesia
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- IEA Clean Coal Centre - UK
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- Metalloyd Limited - United Kingdom
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- Sojitz Corporation - Japan
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- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
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- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
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- Mintek Dendrill Indonesia
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- Indonesian Coal Mining Association
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- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Parliament of New Zealand
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- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Independent Power Producers Association of India
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