Conditions for Lay Time to Commence - Term Paper Example

Conditions for Lay Time to commence Student’s Name Course/Number Instructor’s Name Introduction This essay is going to take a look at the conditions to satisfy for Lay time to commence and reveal the important differences between berth, dock and port voyage characters by defining these three charters. It will start by giving a brief definition of lay time. Lay time can also be referred to as lay days. Lay time is the time when a carrier presents a vessel for loading cargo. It keeps the loading of cargo without any form of payment additional to freight charges. This is normally agreed upon by the parties involved. This determination gives a reflection of the essence of lay time although it does not completely reflect its content and importance. Conditions on lay time impose obligations to both the owner of the ship and also the charterer. The conditions guarantee the interests of these two parties. The owner of the ship is obligated to present his ship for loading and discharge for a certain period of time without any additional payments. This is because payment for all actions has been included in the freight charges when the contract has been made. However, the owner of the ship has every right to demand and collect a certain amount of money if the charterer has exceeded the limits of lay time. This can be referred to as demurrage.1 Additionally, the charterer is also obligated to conduct the process of loading and discharging of the vessel within the period agreed upon. When the process of loading or discharging of the shipping vessel has been completed before the stipulated lay time has expired the charterer has every right to remuneration. This is referred to as dispatch .2 The main purpose of the institute of lay time is to distribute the risks that are involved in the postponements of loading or discharging operations between the charterer and the owner of the ship. Lay time is based on the fact that the regulation of the conditions of the time frame given for loading or discharging depends on the agreement of the charterer and the owner of the ship. The norms of common regular laws are of paramount importance in regulating the conditions of lay time. From the merchant shipping code, article 131 states that in the absence of agreement between the parties concerned, the demurrage time is determined by dates which are acceptable in the port of loading. When regulating lay time, the activities of international organizations such as the international Maritime Committee, the Federation of National Associations of Ship’s Brokers and Agents, and the International Marine Conference are very important. These organizations are responsible for working out standard proforma charters which contain the conditions required for regulation of lay time, dispatch and demurrage. These proformas are not obligatory and have room for change. As a result of their prevalence and conveniences, the participants of merchant ships often seek help from such proformas. Lay times in charters may sometimes be exactly determined or inexactly determined. Lay time is stipulated by showing the number of days and hours which include; days, days with duration of twenty four hours, days with duration of twenty four consecutive hours, days with duration of twenty four running hours, running days, weather working days, working days and running working days.3 Disputes that may arise depend on the interpretation of clauses and terms which were used in the charter. The above mentioned organizations work out the rules of interpreting definitions which are used in the charters.4 These clauses may at times be met by various combinations of characteristics of hours or days in which lay time is counted. If a day is not coinciding with customs and special conditions, it can be included in the lay time. Days such as holidays, Sundays or Saturdays are never included in the lay time because in most countries of the world, work is only done from Monday through to Friday. Charters only recognize working days. Working days therefore means that they do not occur during resting periods. Working days must consist of twenty four hours. Work that involves the handling of shipping vessels must continue to take place round-the-clock. Running days are beneficial to most ship owners because they permit inclusion of holidays and resting days into the lay time. This term is used for the main purpose of distinguishing working days from calendar days. Clauses such as “Working days with duration of twenty four hours” can be interpreted differently by different people .5 This may be interpreted as a single day that has twenty four working hour. It may also be interpreted as three working days for those ports that have eight working hours in a single day. When this is used in calculating the lay time, the interests of the ship owner may not be considered. This day can also be assumed to be a usual calendar day excluding days of resting. As a means to eliminate similar situations like this, the phrase “Days with duration of twenty four consecutive hours or twenty four running hours” is used because it is able to differentiate a day that has eight working hours from a day that has twenty four working hours. Conditions on the lay time must also include the condition of the weather. This allows the inclusion of periods within the lay time when the condition of the weather does not allow loading and discharging operations to continue smoothly. The interests of the owner’s of the ships can be included in the lay time order to make it better for them by applying the clause “the cargo shall be discharged/loaded within…running days of twenty four consecutive hours, weather permitting” 6 The rate at which loading or discharging must also be indicated. The lay time is normally calculated on the basis of working days starting from the next day after presentation of a notice of readiness of the vessel by the owner of the ship for loading of cargo. The time at which this notice is given by the owner depends on the type of charter. The types of charters that regulate the lay time include, port, berth and dock charters. In the port charter, the name of the port is given as a place for loading or discharging operations. In this charter, the shipping vessel is considered to have arrived at its destination only when it has arrived at the commercial zone of the named port. This is the area where the shipping vessels wait their turn in loading and discharging operations.7 If the vessel has not arrived in the area where the loading and discharging operations are done, it is still considered as arrived provided it is within the commercial zone of the port at the stipulated time. According to the case law of The Johanna Oldendorff and in accordance to the judgement of Kennedy L.J., a port is the point which parties have chosen to designate as the destination . This point is also termed to be a dock with a berth .8 The commercial area s defines as the area within port where waiting vessels lie but should not be at any great distance from the berths Lord Reid.9 However according to Lord Diplock of The Johanna Oldendorf, it should be known in advance how the loss from any cause is to be borne and by who. The standard forms of a charter party do not include a clause for delays caused by a vessel being unable to load or discharge due to congestion of a place. Therefore, any loss arising from such a scenario is borne by the party who prevented the execution under the terms of the charter party.10 In modern times, notice of when berths will fall vacant for use is done through instantaneous voice communication. When a pier or berth is indicated in a charter, there is an important clause that appointment should be done later. The shipping vessel is considered to have arrived starting from the time when it is placed at the pier. Before the shipping vessel is placed at the pier, the risks of delay are placed on the owner of the ship. As per Lord Diplock in the Maratha Envoy, the time to count is from the next day after receipt of written notice of readiness to discharge whether the vessel is in berth or not. Therefore, time starts to run when the vessel is within the port of destination.11The other type of charter is the dock charter. In this charter, the shipping vessel is considered to have arrived starting from the time of docking provided that the destination that was stipulated in the in the charter is a dock. 12 Wibon (whether in berth or not) is to be included in a charter party and should be interpreted to apply in those cases where a berth is not available and not to cases where it is available but unreachable due to bad weather.13 Another provision for it to have arrived is the presence of a special clause in the charter.14 Difficulties arise while trying to determine the moment at which the shipping vessel reached its destination. In normal court practice, a number of important reasons have been attached to the definition of a commercial zone. A commercial zone is an area where the captain of the shipping vessel can effectively present a vessel to the charter’s disposal for loading and discharging operations and also to be as close as possible to the place of loading as long as the circumstances are favourable.15The charter must have a clause that shows how closer to it a shipping vessel is allowed to come. With such clauses, the owner of the ship is given the right to choose his/her preferred destination since it is often impossible to arrive at a destined place that was chosen by the charters without wastage of time. This is because obstacles such as icebergs, rise and fall of tides, congestion of vessels or blockades may be present more often than not. Therefore, applying such clauses leads to disputes between the captains or ship owners and the charters because it is difficult to prove that such obstacles exist and cause wastage of time.16 Clauses that show the time that has been lost in waiting for berth as the time for loading and discharging operations must be included in the charters in order to protect the interests of the owner of the shipping vessel. Conclusion In order for lay time to commence to run, the condition of the vessel or its readiness both physically and legally must be provided. Physical readiness of the vessel refers to the actual readiness for loading and discharging operations. Legal readiness refers to the absence of any legal or administrative procedures that act as obstacles that prevent the loading and discharging operations from beginning. Some ship owners who are willing to protect themselves from the consequences of applying clauses that are exceptional have strived for the inclusion of non working holidays in the charter clause. The main essence of such clauses is that during holidays or resting days, the operations of handling vessels in the port by the official institutions are carried out. Therefore, holidays and resting days are also included in the lay time. It is common practice for clauses to be included in the charters to show the time that was lost is as a result of reasons that the charter cannot be able to control. A meditore is a list of such reasons which must be provided by the charter. References Case Law Quotes: Bulk Transport Ltd. v Seacrystal Ltd. (The Kyzikos, AC 1265, 1989.p.1278-9. Case Law Quotes: E. L. Oldendorff & Co. GmbH v Tradax Export S.A. (The Johanna Oldendorff), AC 479, 1974.P 556-557 Case Law Quotes: Federal Commerce and Navigation Co Ltd v Tradax Export SA (The Maratha Envoy), All ER 849, 1977(2). p.857 Davies, M., and Dickey, A., Shipping law. Sydney, Law Book Co,1990. Gold, E., Chircop, A. E., and Kindred, H., M., Maritime law. Toronto, Irwin Law,2003. John F. Wilson, Carriage of Goods by Sea, Pearson,2010 Nicholas Ryder, Margaret Griffiths and Lachmi Singh, Commercial Law:principles and policy. Cambridge, Cambridge University Press, 2012. Paul Todd, Cases and Materials on International Trade Law. London, Sweet and Maxwell,2003. Read More