Application of the Waiver Doctrine in Laytime when a

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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                                     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.
discharge commenced.
                                                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