Glencore Grain Ltd v Flacker Shipping Ltd (Happy Day)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Potter,Lady Justice Arden,Sir Denis Henry
Judgment Date15 Jul 2002
Neutral Citation[2002] EWCA Civ 1068
Docket NumberCase No: A3/2001/0436

[2002] EWCA Civ 1068

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION COMMERCIAL COURT

(Mr Justice Langley)

Before

Lord Justice Potter

Lady Justice Arden and

Sir Denis Henry

Case No: A3/2001/0436

Between
Flacker Shipping Limited
Appellant
and
Glencore Grain Limited
Respondent

Bernard Eder QC and Michael Ashcrot (instructed by Ince & Co, London) for the appellant

Siobán Healy (instructed by Richards Butler, London) for the respondents.

Lord Justice Potter

INTRODUCTION

1

This is an appeal by Flacker Shipping Limited ("owners"), the owners of the M.V. "Happy Day" from a decision of Langley J handed down in the Commercial Court on 25 January 2001 in respect of an appeal by Glencore Grain Limited ("charterers") against an interim final arbitration award in favour of owners in relation to their claim for inter alia demurrage under a voyage charterparty, the charterers having taken a period of some three months to discharge the vessel's cargo of wheat at the port of Cochin. The decision is reported under the name Glencore Grain Ltd v Flacker Shipping Ltd ('The Happy Day') at [2001] 1 Lloyds Rep 754.

2

As the judge put it below, subject to a number of important procedural points, the case raises in stark circumstances a question which Mustill LJ (as he then was), in The Mexico 1 [1990] 1 Lloyd's Rep 507 at 510, left open for 'detailed exploration' should it arise in the future, namely what are the rights of owners to demurrage and charterers to despatch when, under a charterparty which provides for a Notice of Readiness ("NOR") to be given at the discharge port to trigger the start of laytime, the owners give NOR which is invalid for prematurity, yet the vessel thereafter, and without further NOR being given, commences and completes discharge over a period well in excess of the number of laydays provided for. The arbitrators decided that laytime commenced to run as if the notice had been correctly given at the time when loading commenced. The question of law in respect of which permission to appeal was granted was 'Can laytime commence under a voyage charterparty requiring service of a notice of readiness when no valid notice of readiness is ever served? If so, when does it commence?' The charterers contended on appeal to the judge that the arbitrators were wrong in their decision and that, as no valid NOR had ever been given, no demurrage ever became payable; indeed, to the contrary, they made a claim for despatch. The judge allowed the charterers' appeal.

THE CHARTER PARTY

3

The vessel was a voyage charter on an amended Synacomex form containing the following relevant clauses:

3. Being so loaded, the vessel shall proceed direct to 1–2 safe berth(s) anchorage(s) [various named ports] in Charterers' option

[An addendum to the charterparty added the port of Cochin, India, to the list of discharge ports]

5. Cargo to be … discharged at the expense and risk of … charterers … Discharging to be effected at the average rate of 1,500 metric tonnes per weather working day of 24 consecutive hours pro rata. Laytime to be non-reversible …

6. Laytime at loading … port shall commence … if written notice of readiness to load is given …

7. Demurrage is payable at the rate of US$ 4,500 per day … Owners to pay Charterers Despatch money for working time saved in loading/discharging at the rate of US$ 2,250 per day of 24 consecutive hours or pro rata …

10. … At discharging port Owners to appoint agents nominated by Charterers.

23. The freight is payable as follows: 95% less commission, brokerage, estimated despatch in loading, if any and Owner's contribution towards extra insurance payable within three banking days after signing all the required number clean Bills of Lading … Balance plus demurrage or less despatch as the case may be payable after completion of discharge against Timesheets, Statements of Facts and Notices of Readiness …

28. If by reason of congestion the vessel is unable to enter the loading/discharging ports, Master has the privilege to tender Notice of Readiness in accordance with the Charter Party by cable radio and laytime is to commence as per clause 6, 30 and 31, whether in berth or not, whether in port or not, whether in free pratique or not, whether entered customs or not, provided vessel has arrived in the commercial area of the port or any anchorage designated by Port Authorities. Shifting time from anchorage or place of waiting to loading/discharging berths not to count …

30. At first or sole discharging port notice to be given to Receivers/Agents during normal local office hours and laytime to start counting at 8am next working day whether in berth or not, whether in port or not, whether in free pratique or not, whether customs cleared or not.

Time from Friday 5pm until Monday 8am … not to count even if used.

4

In the light of Clause 3, the arbitrators found that the charterparty was a berth charter, rejecting an argument to the contrary which owners had advanced in relation to the port of Cochin. That finding was not the subject of any appeal.

RELEVANT HISTORY

5

The relevant findings of fact made by the arbitrators were as follows. The vessel completed loading 23,000 mts of wheat at Odessa on 6 September 1998, departing for Cochin where she arrived off the port on Friday 25 September 1998 at 1630 hours. At the time of her arrival off the port the vessel could not immediately enter port in order to berth because she had missed the tide. Nonetheless, the Master purported to give NOR by cable at 1630 hours on 25 September 1998. Because the charterparty was a berth charter and there was no congestion at the berth, the NOR was premature and was thus invalid when given: see The Kyzikos [1989] AC 1264.

6

The vessel was able to enter the port on the morning tide of Saturday 26 September, berthing at 1315 hours.

7

No further NOR was ever given. However, discharge commenced on Saturday 26 September and as a result of various delays was not completed until 25 December 1998.

8

The major part of those delays, which gave rise to what the arbitrators described as the 'major issue' between the parties arose because of the non-availability of the original bills of lading at Cochin. The arbitrators found at paragraphs 7–11 of their award that, following arrival of the vessel, the original bills were not available when the vessel was ready to discharge. As it was the owners' responsibility to see that the cargo was delivered to its rightful owners, they requested a Letter of Indemnity ("LOI") from charterers to enable discharge and delivery to the receivers without production of the original bills. The charterers refused, saying that, having sold the cargo to receivers, responsibility for the bills did not lie with the charterers and the owners should obtain security from the receivers. The owners then instructed the agents at Cochin, N. Bhasmer-Kimi, who were both the receiver's agents and the sub-agents of Galaxy Mumbai, the agents appointed by the owners on the nomination of the charterers pursuant to Clause 10 of the charter, to discharge the cargo into a warehouse under the custody of the port authority until presentation of the original bills. The original bills were slow in being presented so that the customs sheds became full and no more space was available. The arbitrators found against the charterers on this issue, holding that they were under a continuing obligation to procure the presentation of the original bills of lading. The arbitrators concluded paragraph 11 of their award by stating:

"it follows that any time lost as a consequence counts against the charterers as either laytime or demurrage, subject to what we say further below." (emphasis added)

9

When, later in their award, the arbitrators turned to deal with the question of NOR at Cochin, they found that, at the time it was tendered, the NOR was marked 'received'. In summarising the contentions of the parties, the arbitrators referred to the fact that there was a Statement of Facts 'signed by all parties' which noted that NOR had been 'accepted'. That was in fact a reference to the Statement of Facts which had been signed by the vessel's agents, M. Bhasmer-Kimi, as 'receiver's agents', and the Master on 25 December. That Statement recorded, so far as material:

5. Vessel berthed at (Q.6): 1315 hrs on 26/09/98

6. NOR tendered: 1630 hrs on 25/09/98

7. NOR accepted 1630 hrs on 25/09/98

8. Discharge commenced: 1700 hrs on 26/09/98

THE AWARD

10

The award, dated 22 February 2000, was that of two arbitrators, Alan Burbridge esquire and Michael Baskerville esquire. It was made following the exchange of written submissions and documents, no oral attended hearing having been requested. The material paragraphs of the award are at paragraphs 30–33 which read as follows. Having summarised the facts briefly as I have done (but without at that stage having referred to the Statement of Facts) the award continued:

"30. … the charterers submitted that as it was a berth charter the vessel should have completed the voyage i.e. reached the berth, before tendering the NOR, and that as she was not at the immediate and effective disposition of the charterers the NOR then tendered was invalid. Moreover, since a fresh NOR was not tendered on arrival at the berth, laytime never actually commenced and therefore no time counted against the charterers. In the alternative, if the tribunal held that the timing should count, the proper calculation would be that NOR would not have been effective at the time of berthing since this was outside office hours being a...

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