Waiver Doctrine in Laytime-Art

8/19/2019 Waiver Doctrine in Laytime-Art

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Application of the Waiver Doctrine in Laytime when a Berth Charterparty contains with a

WIBON Clause

Owen Tang & Lianzi Xu



Introduction

The determination of when laytime

commences in a voyage charterparty has an

important financial impact on maritime

traders. Glencore Grain Ltd v Flaker Shipping Ltd (The Happy Day) is an

important case authority for the assertionthat when an arrived ship commences

discharge without having served a notice of

readiness (NO)! then laytime can still

commence.

The legal concept of laytime

Laytime is the time a charterer can discharge

cargo at a designated port or "erth without

incurring demurrage charges. #or the

commencement of laytime! a port

charterparty has to "e distinguished from

that of a "erth charterparty.

The berth charterparty

#or laytime to commence in a "erth

charterparty! the following factors have tota$e into consideration%

. The vessel must "ecome an arrived

ship! i.e. it must "e within the port at a

place where it is immediately and

effectively at the disposal of the

charterer.

'. The arrived ship "e ready to load.

. NO has to "e served from within the "erth.

Exception of the WIB! cla"#e

*+,ON clause allows a master to give

NO -whether in "erth or not. *hen there

is a *+,ON clause inserted in acharterparty! then laytime will commence

even though the notice is served from

outside the "erth! providing that%

. the vessel is within the port and'. congestion at the "erth is not due to "ad

weather.+t has long "een accepted that a *+,ON

clause puts the ris$ of congrestion on the

charterer.

$ort charterparty

+n contrast! in a port charterparty! the NO

does not have to "e served from within the

"erth. Laytime in a port charterparty will

commence if% (a) the NO is served from

within the port and (") the remainder of the

a"ove conditions are satisfied.i

The facts of the The Happy Day

The facts in The Happy Day present aninteresting scenario for analysis. The

charterpary The Happy Day contained a provision named /0lause 12! which in its

relevant part! provided as follows%

%&t fir#t or #ole di#charging port' notice to

be given to receiver#(agent# d"ring nor)al

local office ho"r# and layti)e to #tart co"nting at *a) next +orking day' +hether

in berth or not' +hether c"#to)# cleared or

not%,

+n other words! 0lause 1 contains "oth%

. a clause re3uires a written (NO)

"efore laytime could commence! and

'. a *+,ON clause which provides that

lay time was to commence irrespective

of whether the vessel was in "erth.

notice to discharge was tendered at the

discharge port on the #riday of 4eptem"er

'5! 667.

8owever! under the rule of a "erthcharterparty! in the a"sence of congestion atthe "erth! the *+,ON clause was not

sufficient to commence laytime when the

NO was given at the port.

The vessel "erthed and discharge

commenced on 4aturday! the day after the

NO was given. No further written NO

was given.

The shipowner purported to e9ercise a lien

for demurrage at the discharge port prior tothe completion of discharge. :ischarge was

not completed until :ecem"er! almost three

months after the vessel "erthed and

discharge commenced.

The ar"itrators decided that laytime

commenced to run as if the notice had "eencorrectly given at the first opportunity. The



case was then appealed where the charterer

argued that in the a"sence of a valid NO!

laytime never "egan to run. ccordingly!

even though the vessel was detained for

some three months! the charterer wasentitled to "e paid despatch money "y the

shipowner.

The court allowed a claim for despatch and

held that laytime could not commence under

a voyage charterparty which re3uires the

service of a valid NO. The court found that

no valid NO was ever served. Then the

case went to the 0ourt of ppeals.

The doctrine of waiver

#or the doctrine of waiver! the following

features must "e considered%

. #irstly! in order to demonstrateawareness of the right waived! it must

generally "e shown that X had

$nowledge of the underlying facts

relevant to his choice or indication of intention.

'. 4econdly! the 0ourt will e9amine any

conduct alleged to "e une3uivocal in its

conte9t! in order to ascertain whether it

is sufficiently clear to give rise to a

waiver.

. Thirdly! the 0ourts will also e9amine

whether there is any agency relationship "etween X and any person alleged to

have made the une3uivocal

communication on his "ehalf. +f that

person lac$ed the actual or ostensi"le

authority to waive the right concerned!

then there will "e no waiver.

&pplication of the +aiver doctrine

+n the present case! the shipowner had

served NO upon the receiver;s agent at atime shortly "efore the ship arrived at "erth.

8aving arrived at "erth! the ship was in factready to commence the cargo operation and

the master did not receive any re<ection or

reservation a"out the validity of the NO.

The 0ourt of ppeals held that the charterer

has $nowledge of the served NO "ecause!

following the arrival of the ship the charterer

received a direct re3uest for a letter of

indemnity! so as to ena"le discharge to ta$e

place.

#urthermore! the charterer has $nowledge

through the receivers agent. =rior to theships arrival at the "erth! a NO had "een

served to the agent of charterers receiver.Thereafter! the agent accepted instructions to

discharge the vessel without any reservation

of the charterer;s position as to the validity

of the NO had earlier received.

On an o"<ective construction of those facts!

the 0ourt concludes that although the

charterer was not under a contractual duty to

re<ect the NO! "y his failure to do so!

coupled with the charterers assent to

commencement of the discharge! a

reasona"le shipowner would have concludedthat the charterer there"y waived reliance

upon any invalidity in the NO and any

re3uirement for a further notice.

The charterer disagreed "y su"mitting that!

the waiver conclusion are derived from the

acts of the agent! and even though the

charterer agrees that the agent had authority

to receive NO! the agents authority to

waive any invalidity should "e a mi9ed

3uestion of fact and law.

The charterer argued that where the

charterparty provides that laytime will

commence only upon a valid NO! the onus

must "e upon the shipowner to prove

whether the agent was authorized to vary

terms for valid NO.

+n other words! the charterer argues that

even if the shipowner could demonstrate that

the conduct of the agent amounted to

acceptance on their part that laytime had

commenced! that particular conduct from theagent may "e insufficient to "ind the

charterer.

The 0ourt of ppeals re<ected the

charterers argument and held that if thecharterparty provides that NO is to "e

served on the agent! then! so far as the

shipowner is concerned! the agent is not



only the charterer;s agent to receive the

NO "ut also the person to whom the

shipowner is entitled to loo$ for a decision

as to the readiness of the vessel for

discharge to "egin. s a matter of commercial practicality! the 0ourt decided

that the receiver>agent must have impliedauthority to waive a condition as to the

commencement of laytime. 8ence! the 0ourt

"elieved that the doctrine of waiver is

availa"le to assist the shipowner in this case

and the 0ourt held in favour of the

shipowner that laytime commenced at 17%11

on Tuesday 4ept. '6! 667.

Conclusion

*hether the 0ourt of ppeals reasoning in

The Happy Day is a sensi"le decision would "e a 3uestion that can only "e answered with

the passage of time. The future could

provide the 0ourt of ppeal with an ample

opportunity to clarify the contentious areasof law surrounding the commencement of

laytime. Therefore! The Happy Day may not

"e the final word on this topic.

+n the meantime! it would "e in the "est

interest of a charterer to une3uivocallycommunicate their intentions to the

shipowner regarding the validity of the NO.

On the other hand! if in dou"t as to the

validity of the NO! the shipowner should

continue to serve a valid NO upon "erthing

until discharge has commenced. n

alternative way to protect the shipowner

may "e the insertion of an e9press term for

an inchoate NO! as in ,=?O@A.

nother method would "e to allow laytime

to commence without a valid tender of NO. #or e9ample! the Bencon form

provides that laytime will start at latest on

loading irrespective of whether or not a

valid NO has "een served.



Owen Tang% BuestCLecturer in Law! 8ong Dong =olytechnic EniversityLianzi Xu% esearch ssistant in Fanagement! 8ong Dong =olytechnic Eniversity



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Waiver Doctrine in Laytime-Art

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