No discussion on the subject of demurrage would be complete without a few words on the subject of freight.
Freight is the return to the shipowner for undertaking the voyage requested by the voyage charterer. Freight can be contrasted with hire, which is the return paid to the shipowner by the time charterer of a vessel.
In the crude oil and petroleum products trade, freight is payable on discharge, whereas in the parcel and chemical trades a large proportion of the freight is payable in advance.
What does the freight cover? Freight covers the voyage between the load port and the discharge port together with a specified amount of time for the loading and discharging operations, known as laytime.
What does freight not cover? Deviations, stoppages awaiting charterers’ orders, shifting between berths and any unusual time or costs due to charterers’ orders.
Worldscale, or WS as it is sometimes called, stands for the New Worldwide Tanker Nominal Freight and Demurrage Information Pool Scale. It is a schedule of freight rates applying to tankers carrying oil in bulk. The quoted freight rates are nominal ones as they are intended solely as a standard of reference. Freight rates are often fixed as a percentage of Worldscale, e.g. Wordscale 90 means 90% of the published Worldscale rate.
The Worldscale Schedule is published each January and is available on an annual subscription. It is produced by two non-profit organisations, Worldscale Association (London) Ltd. and Worldscale Association (NYC) Inc. As their names suggest the Associations are based in London and New York.
The published rates are based on a nominal tanker of 75,000 mt making a round voyage.
Calculations have been made for over 1000 voyages taking account expenses such as bunker consumption and port costs. Using Worldscale greatly simplifies the negotiation of tanker charters.
This is only a very brief introduction to Worldscale. Should readers require further information they are recommended to read the INTERTANKO publication “New Worldscale” – A New Chartering Tool” published in 1988.
This is the contractual time bought by charterers as part of the freight payment for loading and discharging the vessel. For all fixtures on Worldscale the amount of laytime is 72 hours unless the parties have agreed otherwise in the charterparty.
If the charterers exceed the amount of agreed laytime, then they are in breach of the charterparty.
Demurrage is the agreed amount of compensation payable by the charterer to the shipowner for exceeding the agreed laytime. Demurrage is usually expressed in the form of a daily amount.
Demurrage is of considerable commercial significance to shipowners and can on occasions make the difference between a profit or a loss on a particular fixture. It is for this reason that the master must ensure that the relevant provisions in the charterparty are followed and that the logs and statements of facts are accurate and provide sufficient information.
(e) The charterparty
There are a number of standard charterparty forms that are used. These standard forms are often amended and lengthy additional terms are usually incorporated. The most common forms of charterparty are Asbatankvoy, Shellvoy 5, BPYOY3, Exxonvoy 90 and Mobilvoy 96. Many charterers have adopted their own” standard terms that are used in conjunction with Asbatankvoy. The most recent new form of charterparty is BPVOY4, which replaces its predecessor BPVOY3. Whilst BP have used BPVOY4 for all fixtures made after 1 July 1998, other charterers have the option of using BPVOY3.
Most of the charterparties have been drafted by oil major charterers and are therefore in many respects more favourable to charterers than owners. In addition charterparties have become increasingly detailed with many additional clauses to the printed ones.
Consequently it is important for masters to pay particular attention to the charterparty provisions.
Voyage charterparties can be divided into port and berth charterparties. The distinction between the two is important in relation to who bears the burden of delay. In general, in a port charterparty if there is delay between the vessel arriving at the port and berthing, charterers will bear the risk of this. Whereas in a berth charterparty the risk of delay in getting to the berth will be owners’.
In order to illustrate the issues that the master needs to be aware of in relation to demurrage, we will use the Asbatankvoy form and BPVOY4 as examples of port charterparties and Shellvoy 5 as an example of a berth charterparty. In addition, we will examine some the frequently used amendments and additional terms. The majority of fixtures are based on port charterparties.
We shall now consider the vessel’s stay at the load and discharge ports in relation to the calculation of laytime.
(f) Laydays cancelling (“Laycan”)
The expression “laycan” denotes the range of dates between the earliest date the vessel can commence loading and the latest date, the “laydays” after which the charterer has the option to cancel the fixture.
Asbatankvoy clause 5:
“LAYDAYS. Laytime shall not commence before the date…”
Shellvoy 5 clause 11:
“Should the vessel not be ready to load by noon local time on the termination date set out
in Part 1(C) charterers shall have the option of terminating this charter…”
PART II – COMMENCEMENT OF LAYTIME – STARTING
THE LAYTIME CLOCK AT LOAD/DISCHARGE PORTS
In order for laytime to commence, three requirements must be complied with. These are:
(a) the vessel must have arrived at the destination;
(b) the vessel must be ready to load/discharge;
(c) the vessel must have tendered a valid Notice of Readiness (“NOR”).
We will now deal with each of these requirements in turn.
(a) The vessel must have arrived at the destination
The often used phrase to describe this requirement for the commencement of laytime is that the vessel must have become an “arrived ship”. In order to ascertain whether a vessel has become an arrived ship, it is necessary to ascertain whether the charterparty is a berth or a port charter.
If the charter is a berth charter, then a vessel will only be an arrived ship once the vessel is at the specified berth.
If the charter is a port charter such as Asbatankvoy, the vessel will be an arrived ship if she is unable to proceed directly to a berth but is at the place where waiting ships usually lie.
i.e. the customary anchorage.
The vessel must be an arrived ship before NOR can be tendered.
Example of some cases:-
“Before a ship can be said to have arrived at a port she must, if she cannot proceed immediately to a berth, have reached a position within the port where she is at the immediate disposition of the charterer. If she is at a place where waiting ships lie, she will be in such a position,..”
In that case when the vessel was at the Bar anchorage, she was an arrived ship because this was within the legal, administrative, fiscal areas of the port .
A vessel was ordered to Haldia in India, which although a separate port from Calcutta, came under the control of the Calcutta Port Trust. The vessel gave NOR on her arrival at the Sandheads anchorage some two hours steaming from Haldia. Sandheads was outside the legal limits of the jurisdiction of the Calcutta Port Trust Nevertheless they exercised de facto control of the anchorage giving orders as to the anchorage and arranging pilots.
If the vessel can proceed directly to its berth, then, as with a berth charter, it does not reach its specified destination until arrival in berth.
Often charterparties expressly state where a NOR may be given (see section 3. (c) regarding notices of readiness).
(b) The vessel must be ready to load/discharge
When the vessel has arrived at the specified destination she must then meet the second requirement necessary for the commencement of laytime. She must in all respects be ready to load. Readiness to load encompasses physical and legal readiness.
A tanker will be physically ready to load if all her tanks are fit to receive the particular cargo she is required to load.
A vessel will still be physically ready to load even if she has to discharge slops or dirty tank washings ashore or even to deballast.
In order for a-vessel to be legally ready, she must have all her papers in order i.e/all permits and consents required must have been obtained. The usual clearances required are from the customs, health and immigration authorities, although exactly what is required will vary from port to port. Provided that the master has no reason to believe that such clearances will be withheld, he may declare his vessel ready.
In addition, with the advent of the International Safety Management (“ISM”) Code, the vessel will have to have on board a valid Document of Compliance (“DOC”). Also in practice the vessel will have to have on board a copy of the Safety Management Certificate (“SMC”) as this may have to be produced to port state control.
If the vessel is trading to the United States, there are various regulations which the vessel must comply with, an example of which is the Tank Vessel Examination Letter (“TVEL”) which is issued by the United States Coast Guard. After the vessel has been inspected, a certificate is issued which is valid for one year. The situation may arise where the vessel’s certificate has come up for renewal, so when the vessel tenders NOR the TVEL has expired. Consequently the NOR will not be valid and the vessel will have to re-tender NOR when the TVEL has been granted
The obtaining of free pratique is usually a formality. Therefore, a vessel will be considered ready even if a certificate of free pratique has not been granted.
If after tendering a notice of readiness any of the legal formalities are not obtained, then the vessel will not have been ready and a new notice of readiness will have to be tendered. BPV0Y4 has a specific provision covering free pratique. For an NOR to be valid, clause 63.3 must be complied with, which provides:
“free pratique has been granted or is granted within six (6) hours of the master tendering NOR. If free pratique is not granted within six (6) hours of the master tendering NOR, through no fault of owners, agents or those on board the vessel, the master shall issue a protest in writing (“NOP”) to the port authority and the facility at the port (“Terminal”) failing which laytime or, if the vessel is on demurrage, demurrage shall only commence when free pratique has been granted…”
The obligation on the master to issue a protest in writing if free pratique is not given is mandatory. The master must note the time that he made the request for a certificate of free pratique. It is also important for the master to apply for a certificate of free pratique as soon as possible after the vessel’s arrival at the port.
(c) The vessel must have tendered a valid Notice of Readiness (“NOR”)
Whilst under the general law NOR need only be given at the loadport. Tanker charterparties all require NOR to also be given at the discharge port.
Asbatankvoy clause 6 provides:
“Upon arrival at customary anchorage at each port of loading or discharge…”
The master should take particular care when tendering the NOR to ensure that it is tendered at the correct place and to the correct parties.
Charterparties expressly provide for tendering of NOR, for example
Asbatankvoy clause 6 provides:
“NOTICE OF READINESS”.
Upon arrival at customary anchorage at each port of loading and discharge the Master or his agent shall give the charterer or his agent notice by letter, telegraph, wireless or telephone that the vessel is ready to load or discharge cargo …”
Several points should be noted about this requirement. An NOR must be tendered at the
customary anchorage. This means that the vessel must have come to a complete stop before the NOR is given. The NOR may be given in any of the ways listed. It is also desirable for a master to give the NOR in written form even if it is initially given by telephone or VHF radio.
The requirement is for the NOR to be given and received. It does not have to be accepted unless the charterparty specifies otherwise. The terms of the charterpany should be checked to see if there is the additional requirement of the NOR being accepted.
Since the tendering of the NOR is an essential requirement for the commencement of laytime, the exact time of tender must be noted and there must be proof of it having been done.
Masters often tender the NOR to the vessel’s agent. In the tanker business it would be rare for the agent not to be available 24 hours a day. Therefore, whatever time the vessel arrives, NOR must be tendered. It may be that the voyage instructions will provide that the master also has to tender the NOR to the installation/terminal. Careful note should be taken of the voyage instructions and in particular those sections dealing with the giving of notices.
Often masters give NOR by VHF radio. In such a situation there is no evidence in writing as to the NOR having been given. The master should carefully note the time of the transmission and to whom the NOR was given. He should subsequently prepare and send a written confirmation of NOR having been given.
Wherever possible the master should try to obtain confirmation of receipt of a written NOR. A signature marked “for receipt only” will be acceptable.
If the vessel does not have to wait at the customary anchorage, when should NOR be tendered? In this situation NOR will be tendered upon picking up the pilot or at the pilot station, whichever occurs first provided that the vessel is an arrived ship (see 3(a) above).
If the vessel is not an arrived ship, then to avoid charterers arguing that the NOR was tendered prematurely it will also have to be given when the vessel enters the area under the control of the port authority.
It is important that NOR is given at the correct time: The reason for this is that if an NOR is tendered too early it will not be valid and it will be necessary to re-tender the NOR. The same is true if the vessel fails an inspection. Once the vessel has passed the inspection and is therefore ready for cargo operations, a fresh NOR must be tendered. The time(s) of giving NOR must be accurately noted.
“6. NOTICE OF READINESS (“NOR “)
6.1 “Upon arrival of the vessel at each loading or discharge port the master or agents shall tender NOR to charterers or to their order when the vessel is ready in all respects to carry out charterers orders in accordance with the provisions of this charter. Such NOR may be tendered either by letter, telex, facsimile or telephone (but if NOR is tendered by facsimile or telephone it shall subsequently be confirmed promptly by telex). Owners shall provide charterers with an NOR certificate signed by the master and a terminal representative in respect of each port at which the vessel loads or discharges.” Several points need to be noted about this clause. The master should be aware that if NOR is given by facsimile or telephone, it must subsequently be confirmed promptly by telex. It should also be noted that there is no provision for NOR to be given by VHF radio. In addition, confirmation is required in the form of an NOR certificate, which must be signed by both the master and a terminal representative and then given to the charterers.”
PART III – IMPORTANT ISSUES CONCERNING NOR
(a) It is important that masters tender NOR as soon as possible
The master should tender NOR as soon as possible in order that laytime commences at the earliest possible time. If the master does not tender NOR at the earliest possible time, then potentially the owners’ entitlement to demurrage will be reduced or taken away entirely. The commercial interests of the owners must be balanced against the risk of a premature, invalid NOR being tendered. Therefore, the practice to be followed must be to tender NOR as early as possible, and if the master is in doubt as to its validity, then a second NOR should be tendered which is expressly given without prejudice to the validity of the first NOR.
(b) Can NOR be tendered before the commencement of laydays?
Charterparties vary on this point so it is important to know whether the master is able to tender a-valid NOR if the vessel arrives early, i.e. before the first layday.
For example Shellvoy 5 clause 13 (1) (a) provides
“…Notice shall not be tendered before the commencement of laydays…”,
whereas Asbatankvoy does not place such a restriction on when a valid NOR can be tendered. If the charterparty provided that the vessel was not permitted to tender NOR before the commencement of laydays and the vessel did this, then that NOR would not be valid and a fresh NOR would have to be tendered.
BPVOY4 provides in 6.2
“NOR shall not be tendered, nor shall the vessel proceed to berth, prior to the commencement date stated in section G of part 1 without charterers’ prior agreement in writing.”
Accordingly, the master must pay particular attention to this.
(c) Is it necessary to tender NOR if the vessel is to load or discharge at more than one berth?
Charterparties usually provide that only one NOR has to be given in each port. If the vessel is loading or discharging at more than one berth, it is customary and advisable to tender NOR at each installation. However, this does not bear any relevance to laytime. Once laytime has commenced it runs unaffected by any use of further berths, and shifting between berths is for charterers’ account.
If the vessel is loading/discharging at several berths for different charterers, again NOR should be tendered at each berth. The vessel should proceed to the first available berth. Shifting between berths in this situation will be for owners’ account.
(d) Multiple charterers
If the vessel is carrying cargoes for multiple charterers then NOR should be presented to each individual charterer/receiver/shipper on the vessel’s arrival.
(e) If the vessel is to load at the same berth it has just finished discharging at
Here the vessel would have to tender NOR once the tanks have been inspected and the vessel is in all respects ready to load. If NOR was tendered earlier, i.e. prior to the vessel’s tanks being ready, then such an NOR would be invalid. As stated earlier, if an NOR is not valid when tendered, it does not automatically become valid once the conditions for tendering a valid NOR have been fulfilled.
(f) Port combinations
Occasionally the vessel will load and/or discharge at two ports so closely connected that they are considered as one port by Worldscale for the purpose of freight calculation. Yokohama and Kawasaki are one example of this. The effect of this is that the tender of NOR at the customary anchorage applies for Yokohama and the cost and rime of proceeding from Yokohama to Kawasaki is charterers’, including tugs, pilot, etc. In practice owners’ operations ashore will handle all practicalities so it should not be necessary for the master to know all port combinations.
(g) Notice period
Charterparties usually provide for a period of six hours’ notice, during which laytime does not run. However, if the vessel berths within the six-hour notice period, then time will usually commence to run from when the vessel is all fast.
For example, Asbantankvoy clause 6 provides
“…laytime…shall commence upon the expiration of six (6) hours after receipt of such notice or upon the vessel’s arrival in berth (Le., finished mooring when at a sealoading or discharging terminal and all fast when loading or discharging alongside a wharf), whichever first occurs.”
(h) Shellvoy 5 – Tendering of NOR
As we explained earlier, Shellvoy 5 is an example of a berth charterparty and this has particular consequences for the commencement of laytime. If the vessel proceeds straight to the berth, then the first part of Clause 13 (1) (a) applies.
“Time at each loading or discharging port shall commence to run 6 hours after the vessel is in all respects ready to load or discharge and written notice of readiness thereof has been tendered by the master or owners’ agents to charterers or their agents and the vessel is securely moored at the specified loading or discharging berth…”
Therefore, the master must tender NOR” when the vessel is all fast at the berth.
If the vessel is delayed and cannot proceed direct to the berth, then the second half of clause 13 (1) (a) applies. This states:
“However, if the vessel does not proceed immediately to such berth time shall commence to run 6 hours after
(i) the vessel is lying in the area where she was ordered to wait or, in the absence of any such specific order, in a usual waiting area and
(II) written notice of readiness has been tendered and
(iii) the specified berth is accessible.”
The most difficult aspect of this clause is (iii). The clause goes on to state that a berth shall be deemed inaccessible
“only so long as the vessel is or would be prevented from proceeding to it by bad weather, tidal conditions, ice, awaiting daylight, pilot or tugs, or port traffic control requirements (except those requirements resulting from the unavailability of such berth or the cargo)”.
Therefore, a berth will be accessible if the berth is occupied by another vessel or if the charterers order the vessel to wait due to the terminal’s requirements. In such a situation the master should record accurately the reason for any delay and when that reason started and finished. For example, if there are restrictions on night time berthing at the port and the charterers have ordered the vessel to wait, the master should record when the night time berthing restrictions are lifted as only then will the berth be accessible.
NOR should be tendered by the vessel when she has arrived at the waiting area for the berth. Again, the vessel must have come to a complete stop before the NOR is tendered.
Details of the reasons for the berth being inaccessible will need to be logged.
BPVOY4 provides in clause 63.2
“in the case of the vessel not berthing upon arrival and being instructed to anchor, she has completed anchoring at an anchorage where vessels of her type customarily anchor at the port or, if she has been instructed to wait, she has reached the area within the port where vessels of her type customarily wait”
The master should note on the statement of facts the time that the vessel has completed anchoring rather than the time the vessel has come to a complete stop. It should also be noted that the anchorage must be within the port before the NOR will become effective.
(i) If the vessel proceeds straight to berth
Under Shellvoy 5 NOR can be tendered when the vessel is ready in all respects and the vessel is securely moored.
Some forms of charterparty provide that laytime shall commence after the notice period has expired or when the vessel is “allfast”. Asbatankvoy has this provision. The term “all fast” means that the vessel is securely moored but not that the gangway is also in place.
Exxonvoy 90 specifically states in clause 1 (d),
“Arrival in berth ” means that the vessel shall be
“all fast with gangway down and secure when loading or discharging alongside a wharf/berth “
BPV0Y4 in clause 6.3.1 provides:
“in the case of the vessel proceeding directly to the loading or discharging place, she is securely moored and her gangway, if it is to be used, is in place,”
Therefore the master must note in the statement of facts the time that the gangway is in place if the vessel proceeds straight to berth.
Generally, the master should avoid noting in the statement of facts that the gangway is in place unless this is specifically required under the terms of the charterparty.
EXCEPTIONS TO LAYTIME AND DEMURRAGE
Once the laytime clock starts, time continues to run for charterers’ account until cargo operations have finished.
However, there are exceptions to this general rule.
• The charterparty will contain one or more clauses which set out circumstances in which time will not count towards laytime or demurrage. This covers events which are regarded as being owners’ responsibility, such as a breakdown of the vessel’s equipment.
• Sometimes delay may be caused in circumstances which are not referred to in the charterparty clause but which are still the result of fault on the part of owners.
• Charterers do not normally have to pay for time lost in this way. Once laytime or demurrage starts to run it is always the charterers who must prove that time is interrupted. It is therefore important that the Statement of Facts contains
• a precise description of the events *
• when they started and finished
• what delay (if any) was caused to cargo operations.
A letter of protest should normally also be given concerning such delay.
Since the weather is beyond the control of both owners and charterers, it is common for charterparties to include a sharing of responsibility for time lost.
It is important that weather conditions are recorded fully and accurately. Bad weather will only affect time running if it actually causes delay. If the weather is not bad enough to affect the normal working of the vessel, or if there are other reasons causing the delay, the statement of facts should not refer to the weather or, if it does, it should be clearly stated that the weather was irrelevant to the time which the vessel took to load or discharge.
The standard Asbatankvoy charterparty provides that demurrage incurred by reason of storm is only payable at half rate (Clause 8). The clause does not take effect until the vessel goes on demurrage and would not apply if the weather was bad but did not amount to a “storm “.
Most modem charterparties contain a more widely written clause, such as the Conoco I Weather Clause:
“Delays in berthing for loading or discharging and any delays after berthing which are due to weather conditions shall count as one-half laytime or as time on demurrage, at one-half demurrage rate.”
BPVOY4 provides that one-half laytime or demurrage shall count for delay arising due to adverse weather or adverse sea state conditions (Clause 17). It also includes “adverse tidal conditions which could not reasonably have been predicted “.
Since SHELLVOY 5 is a berth charterparty, time will not usually count before the vessel reaches the berth, even though the delay in berthing is due to bad weather or tidal conditions. However, there is no half-rate provision so that once laytime starts to run or the vessel goes on demurrage, the charterer remains responsible in full.
(b) Shifting from anchorage to berth
The movement of the ship from anchorage to berth is customarily regarded as part of the voyage. Since it is the owners’ responsibility to bring the ship to its destination, time will not count during this inward passage. The statement of facts should therefore accurately record the time when the vessel has weighed anchor and actually departs from the anchorage (which will probably not be at the same as time as the pilot boarded) and when she is all fast alongside the berth. If the charterparty includes a requirement that the gangway is in place (e.g. Exxonvoy 90 clause 1(d)), this should also be noted.
Any unusual delays during the inward voyage should also be noted, for example waiting due to other traffic manoeuvring within the port.
(c) Shifting between berths
Although charterers often have the right to require the vessel to discharge at more than one berth, they must do so at their own time and expense (see for example Asbatankvoy Clause 9 and BPVOY4 Clause 5.3).
(d) Lightering and ship-to-ship transfers
Time continues to run when cargo is loaded or discharged into or from a lighter or another ship. Time will count in the same way as if the vessel was loading or discharging alongside berth. If lightering takes place outside port or if the entire cargo is discharged into lighters, Notice of Readiness is probably necessary (Shellvoy5 Clause 13(2) and BPVOY4 Clause 8).
(e) Ballasting and deballasting
Charterers sometimes try to avoid counting time when the vessel is carrying “out ballasting or deballasting. However, most charterparties contain a clause which only excludes time which is actually lost because of deballasting. The use of segregated ballast tanks (“SBT’) will normally prevent any delay to cargo operations. If this is the case, it is best to avoid reference to ballasting or deballasting. If reference is made to ballasting or deballasting, it should be made clear whether or not delay has been caused and, if so, how much.
Asbatankvoy dates back to the time before SBT and states in Clause 7 that “time consumed by the vessel in … discharging ballast water or slops wilt not count as used laytime”.
The approach in more modern charterparties is to exclude, time but only if there has actually been delay. For example,
Shellvoy 5 provides in Clause 14 (b) that:
“time shall not count …when spent in handling ballast except to the extent that cargo operations are carried on concurrently and are not delayed thereby.”
In BPVOY4, Clause 18.2.3 states that time shall not count when spent or lost
“in, or in connection with, the handling of ballast unless this is carried out concurrently with loading or discharging of cargo such that no loss of t i m e is involved.”
Since these clauses only prevent time counting when ballast handling is concurrent with cargo handling, it is probably best to wait until cargo operations start before ballasting or deballasting, if this can be done without causing any delay.
(f) Vessel problems and owners’ fault
All charterparties contain a clause which prevents time running when time is lost for reasons which are owners’ responsibility. Charterers are not willing to pay for time lost due, for example, to a strike by the crew or breakdown of the vessel’s pumps.
Asbatankvoy Clause 7 mentions delay due to
“the vessel’s condition or breakdown or inability of the vessel’s facilities to load or discharge cargo within the time allowed”.
Clause 8 also excludes
“demurrage for delay caused by strike, lockout, stoppage or restraint of labour for Master, officers and crew of the vessel, or tugboat or pilots”.
The exclusions in’ modem charterparties adopt a similar approach but are more widely worded. Shellvoy5 provides in Clause 14(c) that time shall not count when lost as a result of
(i) breach of this charter by owners; or
(ii) any cause attributable to the vessel, including breakdown or inefficiency of the vessel; or
(iii) strike, lock-out, stoppage or restraint of labour of master, officers or crew of the vessel or tug boats or pilot.
Clause 18.2 of BPVQY4 contains similarly exclusions for time lost or spent
“as a result, whether directly or indirectly, of breakdown, defect, deficiency or inefficiency of, or other cause attributable to the vessel, Master, officers, crew, owners or their servants or agents; or as a result of a labour dispute or strike involving the Master, officers or crew the vessel.”
It is important to remember that even if there is a problem of the kind referred to in these clauses, it is. only relevant if it causes delay to cargo operations- For-instance, a boiler breakdown during loading operations which does not affect the vessel’s ability to receive cargo will not entitle charterers to exclude time counting. If a problem occurs, charterers may try to deduct time when no time has been lost. Alternatively, they may try to deduct the entire period of the duration of the defect when the actual delay to loading or discharging may be shorter. For these reasons, it is very important to keep an accurate record of the nature of the problem and the length of delay (if any) caused.
(g) Shore problems
Just also problems on board are generally owners’ responsibility, problems ashore will usually be for charterers’ account. However, there may be circumstances beyond the control of the charterers, in which case the effects on charterers are reduced by a half-rate demurrage provision.
Clause 8 of Asbatankvoy provides that if demurrage is incurred
“by reason of fire, explosion, storm, or by a strike, lockout, stoppage, or restraint of labor or by breakdown of machinery or equipment in or about the plant of the charterer, supplier, shipper or consignee of the cargo, the rate of demurrage shall be reduced onehalf”
Shellvoy 5 (Clause 15.2) and BPVOY4 (Clause 17) contain similar wording.
It is not always easy for the master to find out exactly what is happening ashore when delays occur. Access to information at many terminals is restricted and operators may be particularly reluctant to give full disclosure when they fear that they will be held responsible for the delay. However, every effort should be made to obtain as much information as possible. The agent represents the master and regular contact must be maintained with the agent to ascertain as much information as possible about these delays. It is the agent’s duty to make these enquiries.
(h) Lining up
After connecting hoses, it is necessary to open both the ship and shore valves. Equally, the valves must be closed before hoses are disconnected. This is often referred to as lining up. Some terminals are in the habit of referring to time spent in.lining up as “delay”. This is not correct as this is a normal part of cargo operations. The statement of facts should therefore avoid reference to lining up. If this is unavoidable, the time spent in actually lining up by both the ship and the terminal should be specified and it should be made clear that this.is not accepted as being “delay”.
COMPLETION OF LAYTIME – STOPPING THE LAYTIME CLOCK
The completion of laytime is comparatively straightforward. Laytime either expires after all the agreed laytime has been used up or upon the completion of cargo operations if these are concluded within the allowed laytime. If the agreed laytime has been used up and cargo operations are still continuing, then the vessel will earn demurrage at the agreed rate.
Most tanker charters contain a specific provision dealing with the end of laytime.
Asbatankvoy clause 11 provides:
“Laytime shall continue until the hoses have been disconnected”.
BPV0Y4 clause 7.33 provides:
” Laytime or, if the vessel is on demurrage, demurrage shall run until the cargo hoses have been finally disconnected upon completion of loading or discharging, and the master shall procure that hose disconnection is effected promptly…”
Most charterers provide for laytime to continue for a short period after the hoses have been disconnected. This is to allow for the necessary documents to be completed.
BPVOY4 clause 73.3 provides:
“…if the vessel is detained solely for the purposes of awaiting cargo documents at loadport for more than three (3) hours beyond the final disconnection of cargo hoses, laytime or if the vessel is on demurrage, demurrage shall recommence after such period of three (3) hours and terminate upon the completion of cargo documentation.”
The master should note the time of final disconnection of cargo hoses. In addition, the master should note the time of presentation of the cargo documents.
If the charter does not expressly provide for a period of time for the cargo documents to be completed at the load port, it is usual for owners to allow a short period for this to be completed. If the vessel is delayed beyond this time, then the owners will have a claim for detention.
Shellvoy5 clause 13 (1) (b) provides:
(i) continue to run until the cargo hoses have been disconnected
(ii) recommence two hours after disconnection of hoses if the vessel is delayed for charterers purposes and shall continue until the termination of such delay provided that if the vessel waits at any place other than the berth, any time or part of the time on passage to such other place that occurs after two hours from disconnection of hoses shall not count”
Clause 13 (4) provides:
“For the purposes of this clause 13…”time” shall mean laytime or time counting for demurrage, as the case may be”.
The effect of this provision is that the charterers are allowed a period of two hours in which to complete the cargo documentation. If this takes more than two hours, then laytime or if the vessel is on demurrage, demurrage shall recommence.
BILLS OF LADING
Bills of lading originated in the fourteenth century as a non-negotiable receipt issued by a shipowner for cargo received. Subsequently the bill of lading also incorporated the terms of the contract of carriage in order to resolve disputes between cargo owners and carrier.
Finally by the eighteenth century the bill of lading acquired its third characteristic, that of being negotiable by endorsement, in order to meet the needs of traders who wished to sell the cargo before it reached its destination. These functions of a bill of lading have given rise to many and varied complex problems. There are specialist texts that deal with these issues, so this guide will confine itself to dealing only with bills of lading as they affect laytime and demurrage.
Bills of Lading are normally prepared by the shipper and are then presented to the master for signature. Three sets of original bills of lading are usually issued.
Very often the ship’s agent will sign the bills of lading. This is where either the “Early Departure Procedure” is in operation or where an error has been discovered in the original bills of lading and a fresh set has to be issued.
(b) The Early Departure Procedure
Where a vessel is delayed leaving the load port due to the bills of lading not being ready, it is possible for the owners and charterers to agree that an Early Departure Procedure shall be adopted. The following is
INTERTANKO’s recommended form of such a clause.
Early Departure Procedure (“EDP”)
“In an effort to minimise time loss, the Master is requested, in appropriate cases, to authorise load port agents to issue Bills of Lading on behalf of the carrier. this authorisation should be limited to the signing and releasing of the Bills of Lading only, and be valid only when all details, including quantity/quality of cargo have been approved by the Master. If possible, agents should be required to telefax a copy of the Bills of Lading for the Master’s approval prior to utilising their authorisation to sign and release.”
It is imperative that load port agents authorised as aforesaid are given the same general instructions as to issuance of bills of lading as the master. The master in this respect is requested to issue all letter of authorisation to the agents, giving permission to issue bills of lading on behalf of the carrier.
It must be emphasised that EDP should only be used when a delay of significant length is
threatened or when otherwise instructed by owners. The master is requested to use his judgement in predicting delays and to act or refrain from acting accordingly in his own discretion.
Such procedures are regularly invoked at some loading locations and give rise to few problems provided the procedure is followed correctly. It should be noted that if the procedure is invoked and, for instance, there is a discrepancy between the shore and the ship’s cargo loaded figures, then the agent must endeavour to use the ship’s figures in the bill of lading and if this is not possible then a letter of protest should be issued.
We wish to emphasise that a master should never sign blank bills of lading under any circumstances. We understand that vessels calling at Zirku Island have in the past been warned that unless the master signs blank bills of lading, the vessel will not be permitted to call there again. Even in these circumstances the master must refuse to sign blank bills of lading.
(c) Delivering a cargo to a US port – SCAC
US regulations provide that all ocean bills of lading covering cargoes entering US ports shall have a “Standard Carrier Alpha Code” (“SCAC”). The SCAC is a unique two to four letter code assigned to transportation companies for identification purposes. The regulations provide that all bills of lading shall contain a unique identifier consisting of up to sixteen characters in length. The first four characters will be the carrier’s SCAC and the remaining element will consist of up to twelve characters in length and may be either alpha and/or numeric.
The numbering requirement is incorporated into Custom’s regulations governing the arrival and entry of vessels. Failure to comply with this requirement may delay the vessel when delivering a cargo to the US port and therefore any time lost due to failure to comply with this regulation would be for owners’ account. For example,
clause 36.1 of BPVOY4 provides:
“If Charterers require the vessel to discharge at a port within the jurisdiction of the US Customs Service, the Master shall insert Owners Unique Identifier on each Bill of Lading accompanying a shipment of imported cargo in accordance with US Customs Regulations (10 CFR Parts 4 and 178). Owners shall provide Charterers and Agents on request with details of their Unique Identifier in respect of any cargo carried hereunder.
36.2 If the Master fails to insert Owners’ Unique Identifier under this Clause 36 Owners shall be liable for any delays resulting therefrom and any time lost thereby shall not count as laytime or, if the Vessel is on demurrage, as demurrage.”
(d) Cargo consignee fails to deliver the original Bills of Lading
In order for the consignee of the cargo to take delivery of the cargo the original Bills of Lading must be presented. Very often this is not possible as the bills are still somewhere in the banking system. It is usual for the charterparty to provide that the charterer will provide the owners with an indemnity. For an example of this see clause 30 in BPVOY4, which appears in Appendix C.
If the bill of lading or an acceptable letter of indemnity is not available at the discharge ” port, then the owners are within their rights to instruct their vessel not to discharge the cargo, with all time counting as used laytime or demurrage.
PUMPING CLAUSES & COW
(a) Some typical clauses
The basic provisions of pumping clauses are quite simple:
Owners warrant that the vessel is capable of discharging her entire cargo within 24 hours or maintaining a pressure of 100 psi at the vessel’s manifold provided shore facilities permit.
Some clauses are much longer. The main principles are the same but there will be more detailed requirements which must be properly observed. If not, owners may lose their right to claim demurrage simply because the specified procedures have not been followed.
An example is Clause 19 of BPVOY4, which is too long to be set out in full here. The most relevant parts of the Clause from- the point of view of those working on board are as follows:
19.3 “Owners undertake that
19.3.2. The Vessel shall discharge cargo at the maximum safe rate and in any event shall, in the case of cargoes of one or more segregated grades/parcels discharged concurrently or consecutively, discharge a full cargo within twenty-four (24) hours, or pro rata in the case of a part cargo, or shall maintain a minimum discharge pressure of seven (7) bar at the Vessel’s manifold throughout the bulk discharge provided always that the cargo is capable of being received within such time or at such pressure. If restrictions are imposed by the Terminal during discharge, or if physical attributes of the Terminal restrict the discharge rate or pressure, Owners shall only be relieved of the aforesaid obligation for the period and to the extent such restrictions or attributes impede the discharge rate or pressure. The Terminal shall have the right to gauge discharge pressure at the Vessel’s manifold.
19.6 If the full cargo cannot be delivered to the Vessel at the rate requested by the Master or within the time allowed in Clause 19.3.1 or if the Terminal is unable to receive the full cargo within twenty-four (24) hours or at a discharge pressure of seven (7) bar measured at the Vessel’s manifold, the Master shall present a Note of Protest (“NOP”) to a Terminal representative detailing any Terminal restrictions and/or deficiencies as soon as they are imposed and/or become apparent and shall use all reasonable endeavours to have the NOP signed by the Terminal representative. If the Master is unable to obtain a signature from the Terminal representative, he shall present a further NOP recording the failure of the Terminal representative to sign the original NOP. In the case of restrictions imposed by the Terminal or arising from physical attributes of the Terminal, the Master shall ensure that such restrictions are clearly recorded in the Vessel’s Pumping Log.
19.7 No claim by Owners in respect of additional time used in the cargo operations carried out under this Clause 19 shall be considered by Charterers unless it is accompanied by the following supporting documentation:
19.7.1 The Vessel’s Pumping Log signed by a senior officer of the Vessel and a Terminal representative showing at hourly intervals the pressure maintained at the Vessel’s manifold throughout the cargo operations; and
19.7.2 Copies of all NOPs issued, or received, by the Master in connection with the cargo operations; and
19.7.3 Copies of all other documentation maintained by those on board the Vessel or by the Terminal in connection with the cargo operations.”
Part I of SHELLVOY5 contains a guarantee by Owners that the vessel can
“discharge a full cargo (whether homogenous or multi grade) within 24 hours or can maintain a back pressure of 100 PSI at the vessel’s manifold and Owners guarantee such minimum performance provided shore facilities permit The discharge guarantee shall only be applicable provided the kinematic viscosity does not exceed 600 centistokes at the discharge temperature required by Charterers. If the kinematic viscosity only exceeds 600 centistokes on part of the cargo or particular grade(s) then the discharge guarantee shall continue to apply to all other cargo/grades”.
These clauses contain two separate warranties: that the vessel is capable of
(a) discharging in 24 hours,
(b) maintaining 100 psi (7kg/cm2) at the vessel’s manifold.
Occasionally, a different figure may be specified. EXXONVOY 90 and VELAVOY 9.4 are unusual in specifying higher figures for larger vessels (lOOpsi under 60,000 mt deadweight, 125psi for 60,000 – 160,000mt~dwt and 150psi greater than 160,000mt dwt.).
(b) Interpretation of the clauses
Although these pumping warranties seem straightforward, they are one of the most common sources of dispute between owners and charterers.
The following points are to be noted.
“the vessel is capable of discharging…”
The warranties are setting down requirements of what the vessel is capable of. The owners are nor giving an absolute warranty that the vessel will discharge in 24 hours or maintain 100 psi in all circumstances. The vessel will still be capable of discharging in 24 hours even if it did not actually do so because, for example, hoses are not supplied in sufficient numbers or sizes, or the terminal requests the master to reduce pressure.
“…in 24 hours or maintain 100psi… “
The vessel need only comply with either of the warranties. If the vessel takes more than 24 hours to discharge but still maintains the required pressure, owners will have fulfilled their obligations and charterers have no grounds for complaint. Often charterers automatically deduct all time in excess of 24 hours but they are wrong to do so. However, if discharge time does exceed 24 hours, it is essential that the owners are in a position to prove that the warranted pressure has been maintained.
“at the vessel’s manifold…”
The relevant pressure is at the discharge manifold at the ship’s rail. The owners’ warranties do not apply to pressures measured ashore.
“…during the entire period of discharge…”
Some clauses require the vessel to maintain the required pressure throughout discharge. This is in practice impossible since there will inevitably be some drop in pressure for operational reasons, for example when stripping, crude oil washing or changing tanks. Some charterers are realistic enough to understand that time cannot be deducted when pressure drops for short periods for routine operational reasons. This is acknowledged in some, charterparties (such as BPVOY4 above) which state that the pressure requirements apply during bulk discharge.
“…provided shore facilities permit”
A particular example of when the vessel is capable of discharging in 24 hours or maintaining 100 psi but does not actually do so is when shore facilities prevent this. This is expressly dealt with by the inclusion of words such as. “provided shore facilities permit.”
Many disputes are over whether slow discharge is the result of deficiencies in the vessel or shore facilities.
Given that many clauses require the vessel to maintain a minimum of 100 psi if the vessel does not discharge in 24 hours, it is important that the master notes and protests on each occasion the shore conditions prevent the vessel from complying with this warranty.
(c) Practical points to watch
There is unlikely to be any dispute as to whether the vessel has managed to discharge in 24 hours. The main problem which owners usually face is proving that the vessel actually maintained or was capable of maintaining the warranted pressure. It is therefore vital that all necessary letters of protest are given and that proper pumping logs are kept.
It is good practice to invite the terminal to observe the manifold pressure so that the receivers can verify the pressure for themselves. Some charterparty clauses give the receivers the right to do this (e.g. BPVOY4).
The pumping logs need to be submitted to charterers with the demurrage claim. The logs must be completed fully and accurately so that owners can prove that pressure has been maintained. If the pressure has fallen below 100 psi, sufficient information must appear in the logs to enable owners to calculate how long discharge would have taken if adequate pressure had been maintained.
The master should avoid any reference to internal stripping. Many charterparties impose a requirement that the pumping logs must be signed by a terminal representative. It is a sensible practice whatever the charterparty says. If the clause is one that does require a signature, it is essential that this formality is complied with. While some terminals will generally co-operate, others will not. If the terminal representative refuses to sign, a letter of protest must be given and a note made in the statement of facts/time sheet.
• Ensure pressure is recorded hourly (at least) and accurately.
• Inform the terminal that their representative will be asked to sign the logs on completion of loading.
• Invite the terminal, to observe and monitor pressure.
• If the terminal representative refuses to sign the logs, deliver a letter of protest.
• Remember that the responsible officer must sign the logs.
Letters of Protest
It is essential for. the master to issue a letter of protest to record any occurrences which may be relevant to the time taken to discharge. This should be delivered to the terminal and to charterers. Some charter parties (such as BPVOY4 Clause 19.6 set out above or Exxonvoy “90 Clause 18 f) expressly require letters of protest to be given in specified cases and, if the master fails to do so, owners will probably be unable to dispute that the vessel is responsible for time lost. If in doubt, issue a protest!
Common examples of circumstances where letters of protest should be issued are as follows:
• insufficient number of hoses
• inadequate hose size
• instructions to discharge grades consecutively
• refusal by the terminal to allow the vessel to maintain full pressure
• terminal conditions which affect the discharge rate, such as the distance from the manifold to shore tanks or shore tanks well above sea level
• refusal by the terminal to sign the pumping logs
• cargo viscosity
• inherent vice, i.e. due to the characteristics of the cargo
Information of this kind should also be recorded in the statement of facts/time sheet. Finally, make sure all relevant documents (pumping logs, letters of protest, statements of fact/time sheets) are sent to owners immediately. Without them, owners will probably be unable to submit their demurrage claim to charterers. The charterparty is likely to contain a time limit within which owners must submit their claim with supporting documents. Unnecessary risks with time limits must be avoided!
(d) COW Clauses
Although all modern charterparty forms contain a clause specifically dealing with crude oil washing (“COW”), there is no standard approach. COW clauses commonly include three main elements: …
• a warranty by owners about the efficiency of the COW system and the ability of the crew to operate it is an obligation on owners to carry out COW
(a) on the instructions of charterers,
(b) on the instructions of any competent authority (such as the port authorities), and
(c) to meet the requirements of the International Convention for the Prevention of Pollution from Ships 1973 and then modified by the Protocol of 1978, all of which is known as “MARPOL 73/78”
• an addition to the period allowed for discharge
BPVOY4 contains the following clause:
19.8 “Owners undertake that the vessel is equipped with a fully functional Crude Oil Washing System and that the officers and crew are properly qualified as. evidenced by appropriate certification) and experienced in the operation of such system. Whilst charterers may instruct Owners to carry out additional crude oil washing in all tanks that contained the cargo the Master shall, in any event, arrange for crude oil washing of the cargo tanks at the discharge port to the MARPOL minimum standard, as set out in the Vessel’s Crude Oil Washing Operation and Equipment Manual. When the Vessel carries out crude oil washing to the MARPOL minimum standard, in the absence of instructions from Charterers to carry out additional crude oil washing, there shall be no increase in the time allowed for discharge of the cargo. If Charterers instruct Owners to carry out additional crude oil washing then the period referred to in Clauses 19.3.2 or 19.5, as the case may be, shall be increased by 25per-cent (25%). Owners shall carry out crude oil washing concurrently with discharge of the cargo and the Master shall provide a crude oil washing log identifying each tank washed, and stating whether such tank has been washed to the MARPOL minimum standard or has been the subject of additional crude oil washing.”
The standard version of SHELLVOY5 contains a simpler clause:
20. “If the vessel is equipped for crude oil washing Charterers shall have the right to require the vessel to crude oil wash those tanks in which the cargo is carried. If crude oil washing is required by Charterers or any competent authority, any additional discharge time thereby incurred shall count against laytime or, if the vessel is on demurrage, for demurrage, and the number of hours specified in Part I(A)(vii) shall be increased by 0.75 hours per cargo tank washed,”
However, later versions of this clause usually reduce the additional allowance to 0.6 hours per tank and cap the extra time allowed by providing that this is
“always subject to a maximum increase of 8 hours”.
The amended wording also goes on to state that if the vessel fails to maintain 100 psi throughout discharge, then any extra time (i.e. in excess of 24 hours plus the additional COW allowance) shall not count. Since crude oil washing is an integral part of discharge operations, the basic principle is that extra time should be for charterers’ account. However, this is subject to a number of provisos, including the following:
• the COW system and the crew must function efficiently
• discharge must still be completed within the extended period allowed (i.e. the time specified in the pumping warranties – usually 24 hours – plus the additional time allowed for COW)
• the vessel may still be expressly required to maintain pressure throughout this extended period
• some clauses do not specify that time in COW will count if undertaken to comply with MARPOL or on instructions from someone other than charterers
It is important that an accurate and detailed record is kept of COW operations. A letter of protest should be issued immediately if any delays are attributable to the terminal. When crude oil washing is carried out on charterers’ instructions, this should be recorded in the statement of facts.
The rate of demurrage is something that is a matter of commercial negotiation between the owners and the charterers. Demurrage is usually expressed as a daily rate and will be payable pro rata.
Demurrage will continue until the vessel is once again at the complete disposal of the owners.
(a) “Once on demurrage always on demurrage”
One of the most often quoted phrases is “once on demurrage always on demurrage”. What does this actually mean? It is usually taken to mean that unless an exceptions clause specifically refers to demurrage, it will only apply during the running of laytime. The reason for this is because by exceeding the agreed amount of laytime, the charterers are in breach of the charter. Demurrage is the agreed amount of damages payable in the event that the charterers exceed the agreed amount of laytime.
– The owners’ shore-based staff will calculate the amount of demurrage payable by the charterers. Owners will base their calculation on the information provided by the vessel, in particular the statement of facts.
The master should ensure that the port log and the pumping logs are sent to the owners offices as soon as practical after the completion of each call at port
(b) Half rate demurrage
Whilst the demurrage rate is agreed by the parties to be a daily rate, the charterparty usually details certain circumstances that give rise to demurrage at half the agreed rate. The reason behind this is that the circumstances giving rise to demurrage accruing at half the normal rate are beyond either owners’ or charterers control. We. will now consider examples of clauses which provide for this.
Asbatankvoy clause 8 provides:
“If, however, demurrage shall be incurred at ports of loading and/or discharge by reason of fire, explosion, storm or by a strike, lockout, stoppage or restraint of labour or by breakdown of machinery or equipment in or about the plant of the charterer, supplier,shipper or consignee of the cargo, the rate of demurrage shall be reduced by one half…”
The half rate demurrage reason which gives rise to most disputes is the term “storm “. Firstly, the delay must be caused by the storm due to the wording “incurred,..by reason of…storm”.
Secondly, the word “storm” is interpreted differently in London and New York. In London arbitrators have taken the view that storm means such weather conditions as are described on the Beaufort scale as storm, i.e. wind force 10 (48-55 knots) and seaconditions of:
“Very high waves with long overhanging crests. The resulting foam, in great patches, is blown in dense white streaks along the direction of the wind. On the whole, the surface of the sea takes on a white appearance. The tumbling of the sea becomes heavy and shock-like. Visibility affected.”
New York arbitrators take a slightly more liberal view of the meaning of storm. They have held that the weather must be violent enough or turbulent enough to have caused something of an unusual commotion or disturbance in port. They have also held that mere bad weather which closes the port for cargo operations was not sufficient.
Consequently, a master should avoid noting down that cargo operations were interrupted by storm.
Shellvoy 5 clause 15 (2) provides:
“If, however, all or part of such demurrage arises out of or results from fire or explosion or strike or failure/breakdown of plant and/or machinery at ports of loading and/or discharging in or about the plant of charterers, shippers or consignees of the cargo (not being afire or explosion caused by the negligence or wilful act or omission of charterers, shippers or consignees of the cargo or their respective servants or agents), act of God, act of war, riot, civil commotion,…, the rate of demurrage shall be reduced by half…”
It is noteworthy that there is no inclusion of delay due to weather conditions.
BPVOY4 clause 17 provides:
“Any delay arising from adverse tidal conditions which could not reasonably have been predicted, adverse weather, adverse sea state conditions, blockage of access to a port due to casualty or wreck, fire, explosion, breakdown or failure of equipment, plant or machinery in or about any loading or discharge port, act of God, act of war, labour strike, riot, civil commotion, or arrest or restraint of princes, rulers or peoples shall count as one half lay time or, if the vessel is on demurrage, at one half of the demurrage rate…”
This clause provides a very comprehensive list of causes of delay that give rise to laytime or demurrage counting at the half rate. Delay due to weather which qualifies for half laytime or demurrage to apply is only in respect of adverse weather or adverse sea state conditions.
One of the additional terms that is often incorporated in the charterparty is the Conoco weather clause, which states:
“Delays in berthing for loading or discharging and any delays after berthing which are due to weather conditions shall count as one half laytime or as time on demurrage at one half demurrage rate”.
This clause covers delays due to weather conditions and does not mention any qualification in regard to the severity of the weather conditions. There must be a causal link between the weather conditions and the delay.
(c) Accompanying documents – time limits
Masters should be aware that many charterparties have terms that include time limits for submitting demurrage claims. It is therefore essential that the master provides documents that are legible and submits them to the owners* office ashore in good time. In addition, some of the clauses specify certain requirements as to signatures that are needed.
BPVOY4 clause 20.1provides: ,
“Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which owners may have under this charter unless a claim in writing has been presented to charterers, together with all supporting documentation substantiating each and every constituent part of the claim, within ninety (90) days of the completion of discharge of the cargo carried hereunder.”
Other charterers terms are more onerous; for instance the Saudi Arabia charterer International Oil Overseas Inc. has the following clause in their standard trading clauses;
“Owners agree that charterers shall be released from all liability for payment of demurrage, unless the claim has been submitted to charterers in writing and fully certified original supporting documents, which shall include but not be limited to original signed notice of readiness submitted and accepted and duly signed time sheets and statement of facts duly countersigned by terminal representatives within (60) days of completion of discharge.”
Unless the requirements of such clauses are strictly followed, owners will not be able to make any claim for demurrage. Therefore, it is good practice for the master to always ensure that all documents are countersigned by terminal representatives.
The majority of charterparties provide that disputes shall be settled by arbitration. Usually this takes place in London or New York. Arbitration in London is conducted under the terms of the London Maritime Arbitrators’ Association. In New York, arbitration is carried out under the terms of the Society of Maritime Arbitrators.
Very often the results of arbitrations concerning demurrage claims turn on documents that are the master’s responsibility to prepare such as NORs. It is important to stress that a master must check carefully the terms of the charterparty concerning laytime and demurrage before undertaking a voyage. If the master is in anyway in doubt he should contact the shore staff and seek guidance.