Application of the Waiver Doctrine in Laytime when a Berth Charterparty contains with a
Owen Tang & Lianzi Xu
Introduction It has long been accepted that a WIBON
The determination of when laytime clause puts the risk of congrestion on the
commences in a voyage charterparty has an charterer.
important financial impact on maritime
traders. Glencore Grain Ltd v Flaker Port charterparty
Shipping Ltd (The Happy Day) is an In contrast, in a port charterparty, the NOR
important case authority for the assertion does not have to be served from within the
that when an arrived ship commences berth. Laytime in a port charterparty will
discharge without having served a notice of commence if: (a) the NOR is served from
readiness (NOR), then laytime can still within the port and (b) the remainder of the
commence. above conditions are satisfied.i
The legal concept of laytime The facts of the "The Happy Day"
Laytime is the time a charterer can discharge The facts in The Happy Day present an
cargo at a designated port or berth without interesting scenario for analysis. The
incurring demurrage charges. For the charterpary The Happy Day contained a
commencement of laytime, a port provision named “Clause 30”, which in its
charterparty has to be distinguished from relevant part, provided as follows:
that of a berth charterparty.
"At first or sole discharging port, notice to
The berth charterparty be given to receivers/agents during normal
For laytime to commence in a berth local office hours and laytime to start
charterparty, the following factors have to counting at 8am next working day, whether
take into consideration: in berth or not, whether customs cleared or
1. The vessel must become an arrived ship, not".
i.e. it must be within the port at a place
where it is immediately and effectively In other words, Clause 30 contains both:
at the disposal of the charterer. 1. a clause requires a written (NOR) before
2. The arrived ship be ready to load. laytime could commence, and
3. A NOR has to be served from within the 2. a WIBON clause which provides that
berth. lay time was to commence irrespective
of whether the vessel was in berth.
Exception of the WIBON clause
A WIBON clause allows a master to give A notice to discharge was tendered at the
NOR „whether in berth or not‟. When there discharge port on the Friday of September
is a WIBON clause inserted in a charterparty, 25, 1998.
then laytime will commence even though the
notice is served from outside the berth, However, under the rule of a berth
providing that: charterparty, in the absence of congestion at
1. the vessel is within the port and the berth, the WIBON clause was not
2. congestion at the berth is not due to bad sufficient to commence laytime when the
weather. NOR was given at the port.
authority to waive the right concerned,
The vessel berthed and discharge then there will be no waiver.
commenced on Saturday, the day after the
NOR was given. No further written NOR Application of the waiver doctrine
was given. In the present case, the shipowner had
served NOR upon the receiver's agent at a
The shipowner purported to exercise a lien time shortly before the ship arrived at berth.
for demurrage at the discharge port prior to Having arrived at berth, the ship was in fact
the completion of discharge. Discharge was ready to commence the cargo operation and
not completed until December, almost three the master did not receive any rejection or
months after the vessel berthed and reservation about the validity of the NOR.
The Court of Appeals held that the charterer
The arbitrators decided that laytime has knowledge of the served NOR because,
commenced to run as if the notice had been following the arrival of the ship the charterer
correctly given at the first opportunity. The received a direct request for a letter of
case was then appealed where the charterer indemnity, so as to enable discharge to take
argued that in the absence of a valid NOR, place.
laytime never began to run. Accordingly,
even though the vessel was detained for Furthermore, the charterer has knowledge
some three months, the charterer was through the receiver‟s agent. Prior to the
entitled to be paid despatch money by the ship‟s arrival at the berth, a NOR had been
shipowner. served to the agent of charterer‟s receiver.
Thereafter, the agent accepted instructions to
The court allowed a claim for despatch and discharge the vessel without any reservation
held that laytime could not commence under of the charterer's position as to the validity
a voyage charterparty which requires the of the NOR had earlier received.
service of a valid NOR. The court found that
no valid NOR was ever served. Then the On an objective construction of those facts,
case went to the Court of Appeals. the Court concludes that although the
charterer was not under a contractual duty to
The doctrine of waiver reject the NOR, by his failure to do so,
For the doctrine of waiver, the following coupled with the charterer‟s assent to
features must be considered: commencement of the discharge, a
1. Firstly, in order to demonstrate reasonable shipowner would have concluded
awareness of the right waived, it must that the charterer thereby waived reliance
generally be shown that X had upon any invalidity in the NOR and any
knowledge of the underlying facts requirement for a further notice.
relevant to his choice or indication of
intention. The charterer disagreed by submitting that,
2. Secondly, the Court will examine any the waiver conclusion are derived from the
conduct alleged to be unequivocal in its acts of the agent, and even though the
context, in order to ascertain whether it charterer agrees that the agent had authority
is sufficiently clear to give rise to a to receive NOR, the agent‟s authority to
waiver. waive any invalidity should be a mixed
3. Thirdly, the Courts will also examine question of fact and law.
whether there is any agency relationship
between X and any person alleged to The charterer argued that where the
have made the unequivocal charterparty provides that laytime will
communication on his behalf. If that commence only upon a valid NOR, the onus
person lacked the actual or ostensible must be upon the shipowner to prove
whether the agent was authorized to vary Conclusion
terms for valid NOR.
Whether the Court of Appeals‟ reasoning in
In other words, the charterer argues that The Happy Day is a sensible decision would
even if the shipowner could demonstrate that be a question that can only be answered with
the conduct of the agent amounted to the passage of time. The future could
acceptance on their part that laytime had provide the Court of Appeal with an ample
commenced, that particular conduct from the opportunity to clarify the contentious areas
agent may be insufficient to bind the of law surrounding the commencement of
charterer. laytime. Therefore, The Happy Day may not
be the final word on this topic.
The Court of Appeals rejected the
charterer‟s argument and held that if the In the meantime, it would be in the best
charterparty provides that NOR is to be interest of a charterer to unequivocally
served on the agent, then, so far as the communicate their intentions to the
shipowner is concerned, the agent is not shipowner regarding the validity of the NOR.
only the charterer's agent to receive the
NOR but also the person to whom the On the other hand, if in doubt as to the
shipowner is entitled to look for a decision validity of the NOR, the shipowner should
as to the readiness of the vessel for continue to serve a valid NOR upon berthing
discharge to begin. As a matter of until discharge has commenced. An
commercial practicality, the Court decided alternative way to protect the shipowner
that the receiver/agent must have implied may be the insertion of an express term for
authority to waive a condition as to the an inchoate NOR, as in BPVOY4.
commencement of laytime. Hence, the Court
believed that the doctrine of waiver is Another method would be to allow laytime
available to assist the shipowner in this case to commence without a valid tender of NOR.
and the Court held in favour of the For example, the Gencon form provides that
shipowner that laytime commenced at 08:00 laytime will start at latest on loading
on Tuesday Sept. 29, 1998. irrespective of whether or not a valid NOR
has been served.
Owen Tang: Guest-Lecturer in Law, Hong Kong Polytechnic University
Lianzi Xu: Research Assistant in Management, Hong Kong Polytechnic University