NOTICE OF READINESS MAY NEED REWRITING, ARBITRATION SUGGESTS

A “Notice of Readiness” is when a shipmaster informs a charterer that a vessel is ready to load according to the terms in the charter party. The concept of tendering a valid notice of readiness is the cornerstone of the voyage charter party trade. Yet, determine how the notice should be tendered can be difficult.

Much of the cargo carried in ocean shipping moves under voyage charter party contracts. In such contracts, the vessel owner places a ship at a charter’s disposal for a single voyage.
The charter is responsible for designating load and discharge ports as well as providing cargo. The shipowner wants to expedite the voyage in order to place its vessel on the spot market for the next voyage with a new charterer.

To speed the voyage, a demurrage (penalty) clause is inserted in the charter to cover loading and discharge delays. The charterer is entitled to a period of free time (laytime) to load and discharge cargo. If laytime is exceeded, the charterer pays demurrage. Frequently the charterer is entitled to a short grace period before laytime commences.

Once the voyage charter is formed the shipowner has an absolute duty to send its vessel to the load port. The vessel must reach the assigned destination before she can be considered an arrived ship.
After the vessel has arrived, it must be ready to load before the notice of readiness is given to the charterer. Most charters outline the manner in which notice must be served in order to start the running of laytime.

The recent New York maritime arbitration of the “M/T Eagle” (S.M.A. 3070) focuses on a potential problem that shipowners may face when chartering tankers under the common Asbatankvoy charter form.

In that arbitration, the vessel was still discharging at an oil termination when the shipowner tendered notice of readiness to the next voyage charterer to load its cargo at another terminal in the same port.

The charterer argued that the place from which the notice was tendered was not the customary anchorage as expressly prescribed in the charter. Therefore, the tender was invalid. The shipowner argued “customary anchorage” should not be limited to the defined anchorage when the vessel is already within port limits discharging previous cargo at another berth.

Two of the three arbitration deciding the case found that the fact that a vessel ends her prior voyage at the same port where she will lift same port where she will lit her next cargo is not something that appeared to be contemplated by the drafter of the charter.

The dissenting arbitrator maintained the Asbatankvoy charter was correctly drafted. It expressly prescribed the location at which the tender must be made, the customary anchorage.

The split decision by three experienced and knowledgeable maritime arbitrators indicates the Asbatankvoy charter party notice of readiness provision may need classification.


[Back]