AGA Partners successfully represented a large agricultural company in London arbitration under the 2017 LMAA Rules in the dispute against a shipowner. The dispute arose under the voyage charterparty concluded for carriage of the goods to Egypt.
The case was initiated by the shipowner who claimed the demurrage in the amount of about USD 100,000 from our client. The shipowner’s claim was based on the allegation that our client utilized the vessel in excess of the agreed laytime and incurred demurrage in the port of discharge.
After 1.5 years of the proceedings, the arbitral tribunal found that the shipowner’s claim shall fail in its totality, thereby supporting our client’s position and awarding the client his legal costs in defending the shipowner’s claim.
In the present case the performing vessel failed to issue a valid notice of readiness (NOR) and, therefore, the laytime had not started and no demurrage had been earned.
Under English law applicable to this dispute, the following requirements shall be met for laytime to start running:
- the vessel must arrive at a place specified by the parties in the charterparty (port or berth as the case may be);
- the vessel has to be physically and legally ready to commence loading/discharging operations;
- the shipowner must give a valid NOR.
Partner Ivan Kasynyuk commented on the case at hand:
“In the present case, the parties concluded a berth charterparty. That is, firstly, the vessel had to arrive at the berth. Then (upon arrival of the vessel) the shipowner had to give a valid NOR.
However, the master issued NOR prematurely, when the vessel just arrived at the port, not at berth. So, the NOR was invalid. When the vessel finally arrived at the berth, no valid NOR was given. Since there was no valid NOR, the laytime did not start and, accordingly, no demurrage had been earned by the shipowner”.