AET Inc. Ltd v Arcadia Petroleum Ltd (The Eagle Valencia)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Richards,Lord Justice Etherton |
| Judgment Date | 23 June 2010 |
| Neutral Citation | [2010] EWCA Civ 713 |
| Docket Number | Case No: A3/2009/2363 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 June 2010 |
[2010] EWCA Civ 713
IN THE HIGH COURT OF JUSTICE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
Before: The Right Honourable Lord Justice Longmore
The Right Honourable Lord Justice Richards
and
The Right Honourable Lord Justice Etherton
THE HONOURABLE MR JUSTICE WALKER
Case No: A3/2009/2363
Mr Simon Croall QC (instructed by Clyde & Co LLP) for the Appellant
Mr Michael Ashcroft (instructed by Thomas Cooper) for the Respondent
Hearing dates : 14th June 2010
Lord Justice Longmore:
Introduction
For over a century shipowners have tried to make charterers responsible for delays at loading and discharging ports. They have done so by aiming to insert well-known clauses in charterparties such as “Time lost in waiting for berth to count as loading/discharging time” or clauses requiring a port or berth to be reachable or accessible on arrival. Time is of course money and, if time allowed in the charterparty for loading or discharging is exceeded, demurrage will be payable. For allowable time (laytime) to begin to run, the shipowner will usually have to serve a notice of readiness indicating that the vessel is ready to load or discharge as the case may be. Under the Shellvoy 5 form on which the EAGLE VALENCIA was chartered in the present case laytime began to run 6 hours after the vessel was ready to load and a written notice of readiness had been tendered by the Master or his owners to the charterers or their agents.
Strictly speaking a vessel will not be ready to load or discharge on arrival unless and until the port authorities have (inter alia) satisfied themselves that the vessel is free from infectious disease and that the crew are thus free to make contact with the shore; that means in the time-honoured phrase that the vessel has to be granted “free pratique”.
The term “free pratique” is something of a term of art. It is defined in one maritime dictionary published online by Asia's online Maritime Centre, and available on Google as:-
“official permission from the port health authorities that the ship is without infectious disease or plague and the crew is allowed to make physical contact with shore; otherwise the ship may be required to wait at quarantine anchorage for clearance.”
Cooke on Voyage Charters (3 rd ed) 2007 page 384 para 15.117 cites the definition given by an American case in 1967:-
“No vessel may communicate with the shore in a foreign port, in the sense of persons leaving the vessel or coming abroad the vessel or loading or unloading cargo or taking on stores, without prior permission of the shore authorities. The grant of this permission is usually under the authority of medical officers, the danger normally apprehended being contagious diseases among passengers or crew. The permission itself is generally called “pratique” or “free pratique”.”
It can thus be seen that the concept of “free pratique” involves (or is at least consistent with) a “grant” of permission.
Nowadays the granting of free pratique is likely to be something of a formality and the need for free pratique will not, at common law, prevent a notice of readiness from being given, see The Delian Spirit [1972] 1QB 103. But the parties can, of course, in their contract make other arrangements e.g. (as in Additional Clauses attached to Shellvoy 5) that time is to begin to run 6 hours after free pratique has been granted.
The Facts
The facts giving rise to the dispute in this appeal in 2007 are brief and most conveniently set out in tabular form:-
The Charterparty
| 15 th January 11.48 | Vessel arrived at Escravos, the second intended loading port and tendered notice of readiness. |
| 16 th January 07.30 | authority representatives arrived on board the vessel. |
| 16 th January 08.30 | Free pratique granted. |
| 16 th January 15.39 | E-mail from Master saying vessel is ready to load, without prejudice to tender of notice of readiness of 15 th January. |
| 16 th January 15.53 | Further e-mail from Master saying free pratique had been granted at 08.30. |
| 19 th January 13.54 | Vessel left anchorage and proceeded to berth. |
| 19 th January 15.42 | Vessel berthed. |
| 19 th January 21.00 | Loading began. |
| 21 st January 08.30 | Loading completed. |
| 11 th February 01.18 | Discharge completed. |
The charter was dated 18 December 2006 and was based on the Shellvoy 5 form. Demurrage was stated to be: “60,000 USD PDPR”. Laytime was 96 running hours. Other express terms of the charter included those falling into 2 categories. The first comprises Part II of the Shellvoy 5 form as amended. The second comprises what were described as “Shell Additional Clauses – February 1999.”
Clause 13 and 15 in Part II of the Shellvoy 5 form as amended have potential relevance. The judge, Walker J, helpfully separated out and numbered parts of these clauses and I adopt his numbering.
“II.13 (1) Subject to the provisions of Clauses 13(3) and 14, …
(a)
[13.1.a1] 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 thereof has been tendered by the master or Owners’ agents to Charterers or their agents or the vessel is securely moored at the specified loading or discharging berth whichever first occurs.
[13.1.a2] 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.
[13.1.a3] A loading or discharging berth shall be deemed inaccessible only for so long as the vessel is or would be prevented from proceeding to it by tidal conditions, awaiting daylight, pilot or tugs, or port traffic control requirements (except those requirements resulting from the unavailability of such berth or of the cargo).
(3) Notwithstanding anything else in this Clause 13, if Charterers start loading or discharging the vessel before time would otherwise start to run under this charter, time shall run from commencement of such loading or discharging.
(4) For the purposes of this Clause 13 and of clause 14 “time” shall mean laytime or time counting for demurrage, as the case may be.
II.15 (1) Charterers shall pay demurrage at the rate specified in Part I(J).
Demurrage shall be paid per running day or pro rata for part thereof for all time which, under the provisions of this charter, counts against laytime or for demurrage and which exceeds the laytime specified in Part I(I). Charterers’ liability for exceeding the laytime shall be absolute ….
(3) Owners shall notify Charterers within 60 days after completion of discharge if demurrage has been incurred and any demurrage claim shall be fully and correctly documented, and received by Charterers, within 90 days after completion of discharge. If Owners fail to give notice of or to submit any such claim with documentation, as required herein, within the limits aforesaid, Charterers’ liability for such demurrage shall be extinguished”.
Of the “Shell Additional Clauses – February 1999” the only relevant clause for present purposes is clause 22. I shall refer to it as “SAC 22.” The judge set it out with typographical corrections and again with sentences numbered in square brackets for ease of reference:
“22. Clearance Clause
[22.1] If Owners fail
(A) to obtain Customs clearance; and/or
(B) free pratique; and/or
(C) to have onboard all papers/certificates required to perform this Charter,
either within the 6 hours after Notice of Readiness originally tendered or when time would otherwise normally commence under this Charter, then the Original Notice of Readiness shall not be valid.
[22.2] A Notice of Readiness may only be tendered when Customs clearance and/or free pratique has been granted and/or all papers/certificates required are in order in accordance with relevant authorities requirements.
[22.3] Laytime or demurrage, if on demurrage, would then commence in accordance with the terms of this Charter.
[22.4] All time, costs and expenses as a result of delays due to any of the foregoing shall be for Owners’ account.
[22.5] The presentation of the notice of readiness and the commencement of laytime shall not be invalid where the authorities do not grant free pratique or customs Clearance at the anchorage or other place but clear the vessel when she berths.
[22.6] Under these conditions the NOR would be valid unless the timely clearance of the vessel for customs or free pratique is caused by the fault of the vessel.”
The Contentions
The Owners contended that laytime began at Escravos 6 hours after they tendered notice of readiness namely at 17.48 hours on 15 th January. On 8 th March 2007 in accordance with clause 15 they forwarded their claim with supporting documents for demurrage calculated on that basis. Charterers did not react until 21 st August 2007 but on that date asserted that laytime did not begin until the vessel berthed at 15.42 on 19 th January since
“free pratique was not obtained within 6 hours per c/p clause 22.”
They maintained this position at the hearing before Walker J relying on SAC 22.1, arguing that the notice of readiness was invalid. Owners relied on SAC 22.5 arguing that NOR was not invalid. It was not until about a fortnight...
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