Under a voyage charter, the first line of the laytime calculation is the notice of readiness (NOR). As a rule, laytime does not start until a valid NOR has been given. If the notice is invalid, the time the ship spent waiting at anchor may not count at all, however many days it was. That is why the NOR is one of the most frequently disputed points in laytime and demurrage, and one of the most expensive for owners when it goes wrong.

The article on laytime and demurrage touched on the NOR briefly. This one looks at it in detail: the conditions for a valid notice, the tests settled by English case law and the mistakes seen most often in practice.

Key concepts

  • Notice of Readiness (NOR): Written notice, given to the person named in the charter party, that the ship has reached the place of arrival and is ready in all respects to load or discharge.
  • Arrived ship: A ship that has reached the place of arrival agreed in the charter party and can therefore tender NOR. Where that place is depends on the type of charter.
  • Readiness: The ship being physically ready (holds, tanks, equipment) and legally ready (required documents and permissions) to load or discharge.
  • Free pratique: Permission from the port health authorities for the ship to have free contact with the port.
  • Notice time: The period set by the charter party between the tender of NOR and the start of laytime, for example “six hours after NOR” or “the morning of the next working day”.

Three questions for a valid NOR

1. Has the ship reached the place of arrival?

Under a berth charter, the ship has not arrived until it reaches the agreed berth. If the berth is occupied, waiting time is at the owner’s risk unless agreed otherwise. Clauses such as WIBON (whether in berth or not) are used to shift that risk to the charterer. The laytime clause of the Gencon 1994 form likewise allows the ship to give NOR on arrival at or off the port if the berth is not available.

Under a port charter, the test was settled by the House of Lords in The Johanna Oldendorff (1974): the ship must be within the port limits, at the place where waiting ships usually lie, and at the immediate and effective disposition of the charterer. The Agamemnon (1998) shows where that test stops. The usual waiting place lay outside the legal limits of the port, so the ship was held not to have arrived and the NOR given there was invalid. What counts is the legal and administrative limits of the port, not commercial custom.

2. Was the ship ready in all respects?

Readiness has a physical and a legal side. Physically, holds or tanks must be clean, cargo gear must work and the cargo spaces must be accessible. In The Tres Flores (1974) the Court of Appeal held that a ship whose holds were infested and needed fumigation was not ready when it gave NOR, and the notice was invalid.

Legally, the required documents and permissions must be in place. The settled distinction is between deficiencies that actually prevent the ship’s use and steps that are a mere formality. In The Delian Spirit (1972) the Court of Appeal accepted that a NOR could be valid even though free pratique had not yet been granted, where that permission was a formality that could be obtained at any time. The result is not the same in every case. Where health clearance is a real condition at the port, or where the charter party says otherwise (for example, where there is no WIFPON clause), the assessment may change.

3. Was the notice given properly?

Even when the ship has arrived and is ready, the notice must be given in the way the charter party requires. That means checking three points:

  • To whom: The person named in the charter party. Gencon 1994 names the shippers at the loading port and the receivers at the discharging port, or, if they are not known, the charterers or their agents. Notice given to the wrong person is one of the first grounds of challenge in a dispute.
  • How: In writing. Email is common today and generally accepted, and the BIMCO definitions include electronic communication within “in writing”. Sending and receipt must still be provable.
  • When: Within the hours the charter party allows. Many charters say NOR may only be given during office hours or on certain days. Gencon 1994 provides that if NOR is given up to and including 12.00 hours, laytime starts at 13.00 hours, and if given during office hours after 12.00 hours, at 06.00 hours on the next working day.

Common mistakes

1. Assuming an early NOR will become valid later

A NOR given before the ship has arrived or before it is ready is invalid, and it does not become valid by itself once the ship is ready. The Court of Appeal accepted this principle clearly in The Mexico I (1990). A common error in practice is not re-tendering because “we have already given a NOR”.

In The Happy Day (2002), on the other hand, the Court of Appeal held that even where the NOR was invalid, if the charterer let operations begin without objection, laytime started at the latest when discharge began. That decision does not protect the owner from all loss. The waiting time spent at anchor may still not count.

2. Not re-tendering when in doubt

Whenever the validity of the first notice is in doubt, for example when the ship is just outside the port limits, has failed an inspection, or the notice was given outside office hours, the accepted approach is to re-tender NOR once the ship is actually ready, without prejudice to the first notice (“without prejudice to the NOR tendered on …”). Re-tendering does not mean giving up the first NOR. If the first notice is held invalid, it ensures that laytime starts at least from the second one.

3. Relying on the charterer’s silence or the agent’s “acceptance”

In The Shackleford (1978) the Court of Appeal held that where a NOR given before a step required by the charter had been completed was accepted without reservation, the charterer could not later rely on that defect. Such outcomes depend on the facts. Charterers and receivers often accept a NOR “subject to the terms of the charter party” and then challenge its validity at the claim stage. A NOR that appears to have been accepted is not necessarily valid.

4. Missing office hours and notice time clauses

A NOR given on a Saturday afternoon may only take effect on Monday morning because of office hours and weekend clauses in the charter (for example SHEX). Notice time is then added on top. Failing to extract these clauses from the charter and pass them to the ship and the agent before the voyage is one of the easiest mistakes to prevent, and one of the most common.

5. Records that contradict the declaration of readiness

If the NOR declared the ship ready but the statement of facts (SOF) records that it failed a hold inspection, that tanks were re-cleaned or that a missing document was completed later, the charterer will argue the notice was invalid. Some forms deal with the consequence separately. Under Gencon 1994 the master warrants that the ship is ready in all respects. If the ship is found not ready on inspection, time lost from that discovery until the ship is ready again does not count as laytime. Which result applies depends on the wording of the charter.

6. Inconsistent times and records

The time on the NOR often does not match the SOF, the deck log or the timestamp of the email that was sent. Confusing local time with UTC, or overlooking daylight saving time, opens an unnecessary argument about the day and hour the notice was given.

In practice: a checklist as the ship approaches port

  1. Extract the NOR clauses from the charter: berth or port charter, WIBON, WIPON, WCCON and WIFPON clauses, to whom, how and during which hours the notice is to be given, notice time, and preconditions (free pratique, customs, hold inspection).
  2. Send these rules to the ship and the agent in writing before the voyage. The master needs to know in advance under what conditions to tender NOR.
  3. Record the arrival: confirm with the deck log and position (AIS) records whether the anchorage is within the port limits.
  4. Check readiness: hold or tank cleanliness, equipment and documents should be reviewed before NOR is given.
  5. Give the NOR and keep the proof: the email sent, the acknowledgement and the time of notice should be kept in a single file.
  6. Re-tender when in doubt: without prejudice to the earlier notice.
  7. Check the response and the SOF: record the charterer’s or receivers’ acceptance or objection, and check before the ship sails that the NOR time has been entered correctly in the SOF.

Conclusion

The NOR is a one-page notice, yet the whole laytime calculation rests on its validity. A valid notice requires the ship to have arrived, to be ready in all respects and the notice to be given as the charter party requires. English case law has largely settled these conditions. For the owner, the real risk is not uncertainty in the rules but applying them correctly as the ship approaches port, often at night or at the weekend. Extracting the rules before the voyage, giving the notice in a provable way and re-tendering when in doubt prevents most of the loss.

This article is for general information and is not legal advice. In any actual dispute, the terms of the relevant charter party and the applicable law govern.

References

  • BIMCO, Laytime Definitions for Charter Parties 2013.
  • BIMCO et al., Voyage Charter Party Laytime Interpretation Rules 1993 (Voylayrules 93).
  • BIMCO, GENCON 1994, clause 6 (Laytime).
  • Schofield, J., Laytime and Demurrage, 7th edn, Informa Law, 2016.
  • Cooke, J. et al., Voyage Charters, 4th edn, Informa Law, 2014.
  • Shipping Developments Corporation v V/O Sojuzneftexport (The Delian Spirit) [1972] 1 QB 103 (CA).
  • E.L. Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 (HL).
  • Compania de Naviera Nedelka SA v Tradax Internacional SA (The Tres Flores) [1974] QB 264 (CA).
  • Surrey Shipping Co Ltd v Compagnie Continentale (France) SA (The Shackleford) [1978] 2 Lloyd’s Rep 154 (CA).
  • Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico I) [1990] 1 Lloyd’s Rep 507 (CA).
  • Total Transport Corporation v Arcadia Petroleum Ltd (The Agamemnon) [1998] 1 Lloyd’s Rep 675.
  • Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] EWCA Civ 1068.