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Ocean Pride Maritime v Qingdao Ocean Shipping
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DMC/SandT/08/31 The
“Shackleford” [1978] 2 Lloyd’s Rep 154 (CA), considered. DMC Category
Rating: Confirmed/Developed Background There were two
issues in the case: (1)
The precise terms of
the charter: the shipowner argued that the charter was fixed on the basis that
NOR could be tendered “WIBON,
WIPON, WCCON, WIFPON”
(“whether in berth or not, whether in port or not, whether customs cleared or
not, whether in free pratique or not”), so that the NOR had been validly
tendered at the outer anchorage; whereas, the charterer argued that the charter
was fixed on the basis that a valid NOR could only be tendered at the outer
anchorage if the vessel could not anchor at the inner anchorage; and (2)
Acceptance, waiver and
estoppel for an invalid NOR: in the alternative, the shipowner argued that the
charterer had waived the defect and/or was estopped from contending that it was
invalid, by reason of the NOR having been accepted by the terminal; whereas, the
charterer argued that the terminal could not accept the NOR on the charterer’s
behalf and that there had been no clear and unequivocal representation by the
charterer and no reliance by the shipowner capable of giving rise to any waiver
or estoppel. This note
focuses primarily on the second issue. The
terms of the charter consisted of the “main terms” in the fixture
confirmation email dated 17 October 2005, which incorporated terms from an
earlier charter dated 27 October 2004 [in which the shipowner was not involved]
made between the Charterer, as shipowner, and Jinan Iron and Steel Co Ltd, as
charterer, for a voyage "from one safe berth, one safe port, Ponta da
Madeira, always accessible always afloat, Brazil" to China,
which served as the Charterer’s pro forma charter. The “main terms” were
based on an earlier fixture which had not involved the Shipowner. Clause 6A was agreed in the following terms (which were
not in dispute): “NOTICES OF ARRIVALS Such information shall be updated fifteen (15) days,
eight (8) days, three (3) days, two (2) days and one (1) day before the
vessel’s expected arrival at port of Guaiba Island Terminal, Brazil or CPBS,
CPBS- COMPANHIA PORTUARIA BAIA DE SEPETIBA, BRAZIL, or at any time upon
seller’s request. Master, Owners and/or Charterers shall, with the eight
(8) days notice, also inform seller about the vessel’s cargo plan and provide
the following details: Clause 6B (as found by the judge) read as follows: On the
shipowner’s case, laytime commenced 12 hours after the NOR was issued and
demurrage of US$449,892 was payable; whereas, on the Charterer’s case, laytime
commenced when the vessel commenced loading and because the laytime had not
expired when loading had completed despatch of US$43,274 was deductible from
freight. Judgment Acceptance,
Waiver & Estoppel The
judge noted that the ETA notices and other information in clause
6A were to be provided "to seller" (and, in the case of the ETAs,
"to seller’s port administration") by "Master, Owners and/or
Charterers". As a result, “owners could comply with the provisions of the
clause by providing the ETAs and other information directly to the seller.”
The judge, importantly, also noted that the seller, shipper and terminal owner
(“MBR”) was, in effect, part of one organisation. Clause 6B of the charter did not identify the intended
recipient of NOR at the loadport or the disport. The judge therefore accepted
the Shipowner’s submission that “the Northgate charter contemplated
the tender of NOR to MBR/the terminal, as well, no doubt, as to charterers
and/or charterers’ agents, and indicated that it was the notification to MBR/the
terminal of the vessel’s arrival and readiness to load that was important. It
was to the ‘seller and to seller’s port administration’ at the terminal to
whom ETAs and (in the case of the ‘seller’) other information pertinent to
loading had to be communicated.” It
followed that, in the circumstances, the judge was “satisfied that a
NOR communicated to MBR and/or the terminal, whether by owners/the master, or by
Brazshipping as charterers’ agents (having received such NOR themselves from
the master/owners), would (if otherwise valid, and subject to any waiver or
estoppel) be good NOR for the purposes of the Northgate charter.” The judge then considered the authorities in order to
determine “whether MBR/the terminal were impliedly authorised by charterers to
waive the defect in the NOR tendered to them arising from the fact that the NOR
had been tendered when Northgate was at the outer anchorage, although she
had not been compelled to wait there for a berth due to unavailability of space
at the inner anchorage”. As to this, the shipowner relied on the decisions in Surrey
Shipping Co Ltd v Compagnie Continentale (France) SA (The “Shackleford”)
[1978] 2 Lloyd’s Rep 154 (CA)1 and Glencore Grain Ltd v Flacker
Shipping Ltd (The “Happy Day”) [2002] 2 Lloyd’s Rep 487 (CA),2
both of which considered the circumstances in which a third party might be
impliedly authorised by charterers to accept an invalid notice of readiness and
thereby waive a condition as to the commencement of laytime. In turn, the
charterer relied on the decision in Transgrain Shipping BV v Global
Transporte Oceanico SA (The “Mexico I”) [1990] 1 Lloyd’s Rep 507 (CA),3
as establishing that, insofar as the shipowner relied on estoppel, the strict
elements of estoppel must be made out, which the charterer submitted they were
not. The
judge was of the opinion that “MBR/the
terminal, as the intended recipient (or at least the intended primary recipient)
of NOR under the Northgate charter, must have been impliedly authorised
by charterers to waive any defect in the NOR... The fact that they were not
identified in the charterparty terms by name is not a valid ground for
distinguishing The Shackleford and The Happy Day... On the
contrary, [like Sir David Cairns considered to be the case in The Shackleford]
… as a matter of commercial practicality, such an intended recipient of the
NOR must have implied authority to waive a condition as to the commencement of
laytime.” The judge continued: “A waiver of a defect in a NOR
will be ineffective unless the recipient knows of the facts which make the NOR
defective, as in The Shackleford but not in The Mexico I. It can,
however, safely be inferred that the terminal/MBR knew that the vessel was at
the outer anchorage - the notices to MBR referred to the vessel’s arrival at
Sepetiba Roads, and the terminal will doubtless have had knowledge of which
waiting vessels were at the inner anchorage, and which were not. There is no
evidence that the terminal or MBR were aware of the charterparty terms, but
charterers of course were so aware. Brazshipping’s email of 4 November 2005…
states the obvious that charterparty terms vary, and thereby indicates that some
charters allow for tender of NOR at the outer anchorage, whilst others do not.
In these circumstances, and in line with what Sir David Cairns said in The
Shackleford…, if charterers did not communicate the Northgate
charter terms to the terminal/MBR and/or give specific instructions that NOR was
not to be accepted from the other anchorage unless the vessel was compelled to
wait there because the inner anchorage was congested, it seems to me that they
took the risk that the terminal/MBR would accept a NOR that could have been
rejected under the Northgate charter, and thereby waive charterers’
right to invoke the invalidity of that NOR.” The judge concluded that “as it seems to me, an
unequivocal representation by the terminal/MBR, as the intended primary
recipients of NOR, communicated to owners via Brazshipping - and indeed by
Brazshipping on behalf of charterers - that the NOR had been accepted at the
time stated, when the terminal would have known (and Brazshipping as charterers’
agents knew) that Northgate was at the outer anchorage. That, on the
authorities, is sufficient, in the circumstances, to constitute a waiver of the
invalidity of the NOR by reason of its having been tendered when the vessel was
at the outer anchorage though not compelled to wait there by reason of
congestion at the inner anchorage. As Potter LJ pointed out in The Happy Day
(supra), in the case of waiver it is not necessary to go further and prove
reliance on the representation.” It followed that the Shipowner’s demurrage claim
succeeded in full. Comment Acceptance, Waiver & Estoppel 1.
In The “Shackleford”, the charterparty provided that NOR at
the discharge port, Constanza, was to be given to the receivers, Agroexport, or
their agents, Navlomar, after the vessel’s entry at the Custom House,
whereupon, on expiry of the prescribed notice period, laytime would commence
WIBON, WIPON, WIFPON. The vessel arrived and anchored at Constanza roads and
immediately gave NOR, addressed to Agroexport c/o Navlomar, although the vessel
had not been entered at the Custom House. Despite this, it was accepted by
Agroexport. The owners and master relied on such acceptance of the NOR in not
making arrangements to procure a berth at which customs entry could have been
obtained. The Court of Appeal dismissed an appeal from the judgment of Donaldson
J, who had upheld the decision of the arbitrator to the effect that laytime
commenced following Agroexport’s acceptance of the NOR, notwithstanding the
charterparty requirement for entry at the Custom House. The Court of Appeal held
the acceptance of the premature NOR was within the receivers’ authority and
that the receivers would have known that customs entry could not be obtained at
Constanza until berthing. There had been no challenge to the arbitrator’s
finding that the owners had relied on receivers’ acceptance of the NOR. The
judge’s decision, that charterers were estopped by conduct from invoking the
fact that the vessel had not been entered at the Customs House as a ground for
challenging the validity of the NOR, was accordingly upheld. 2.
In The “Mexico I”, NOR to discharge had been given, and
apparently also accepted, when the cargo in question was inaccessible, because
it was overstowed by cargo carried under another contract. The NOR was invalid,
as the vessel was not physically ready to discharge the overstowed cargo, and
the acceptance had no effect because it was given on the basis of the master’s
implied assurance that the vessel was ready to discharge the cargo, which the
charterers did not then know was inaccessible. Owners argued that the NOR took
effect when the cargo became accessible, such that a valid notice could then
have been given, or when charterers first knew or had the means and knowledge
that it was ready to discharge. Charterers conceded that laytime commenced when
discharge of the relevant cargo began, but denied it began before then. The
arbitrators had decided that the NOR took effect when the cargo became
accessible. Evans J had upheld their award on this point. The Court of Appeal,
however, rejected owners’ arguments, holding that an invalid NOR did not have
any such “delayed action” effect, and that there was no basis for the
inference of any waiver, estoppel, or agreement to the effect that no fresh NOR
need be given, so that laytime did not commence before commencement of discharge
of the cargo in question (as charterers had conceded it did). 3. In The “Happy Day”, the charterparty in question provided that NOR at the discharge port was “to be given to Receivers/Agents during normal local office hours and laytime to start counting at 8 am next working day [WIBON, WIPON]”. The vessel arrived off the discharge port, Cochin, but missed the tide and so was unable immediately to enter the port. The master nonetheless tendered NOR to the receivers’ agents, who endorsed it “received”. The vessel berthed and commenced discharge the following day. Discharging operations occupied nearly three months. Owners claimed demurrage, contending that laytime commenced no later than the commencement of discharge. Charterers argued that the original NOR was invalid because the delay in berthing was due, not to congestion, but to the vessel missing the tide, and that as no further NOR had been given, laytime had never commenced and so they had earned despatch. The Court of Appeal, allowing an appeal from Langley J and restoring the award of the arbitrators, held that, although the original NOR was indeed invalid, and no fresh NOR had been given, the commencement of discharge by charterers amounted to a waiver of the invalidity of the NOR as from that time, such that laytime commenced thereafter in accordance with the notice regime in the charterparty. Back
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