A REVIEW OF SOME RECENT CHANGES IN TANKER CHARTERING LAW AND PRACTICE

1. A REVIEW OF SOME RECENT CHANGES IN TANKER CHARTERING LAW AND PRACTICE By Mr Lim Tean Singapore, Rajah & Tann 27 March 2006

2. Two areas to be touched on are :- I. Commencement of laytime; II. Attachment of assets for the purpose of foreign arbitration – the Singapore position

3. Commencement of laytime Tidebrook Maritime Corporation v Vitol SA (The “FRONT COMMANDER”) [2005] EWHC 2582 Facts By a fixture concluded in December 2003, the claimant owners let their vessel ‘Front Commander’ to the defendant charterers on an Asbatankvoy form including the defendant’s voyage chartering terms. Clause 5 of the Asbatankvoy form provided that ‘Laytime shall not commence before the date stipulated in Part 1 except with the Charterer’s sanction’.

4. Clause 31, a standard term of the charterers’, required laytime to commence before the stipulated date only where ‘ charterer consents in writing’. The laycan agreed in the charter was 9-10 January 2004. Pursuant to the charterers’ orders, the vessel proceeded to Escravos in Nigeria, where she was to load a cargo of oil. On 6 January, charterers emailed the owners stating ‘Charterers confirm NOR to be tendered on arrival Escravos, and to berth/load as soon as instructed thereafter by terminal.’ They sent a similar email the next day, followed by another email stating that the vessel would ‘tender nor on arrival i.e. 08 January 0030 and we want her to berth/commence loading 08 January’. The vessel arrived at Escravos and tendered NOR at 0001 hours on 8 January.

5. She initially anchored but was instructed by the terminal to proceed in to berth to load. She weighed anchor at 1018 hours the same day and was all fast at her loading berth at 12 hours. Loading commenced at 1648 hours and was finished at 0736 hours on 10 January. She sailed later that day. Demurrage was incurred on the voyage, in respect of which owners sent charterers a claim. In their calculation of the laytime used at the port of Escravos, the owners gave the charterers credit for 50% of the time between 1200 hours on 8 January (when the vessel was made all fast at her berth at Escravos) and 0001 hours on 9 January (being the commencement of the laydays and the time at which the owners considered laytime would otherwise have begun). A dispute arose after the charterers contended that, pursuant to the charter, laytime should not start to count prior to 0600 on the first day of the laydays, which was 9 January. The owners issued proceedings, contending that such consent had been given, expressly or impliedly, pursuant to cll 5 and 31, by the emails sent to the charterers, or by loading having commenced with the knowledge and consent of the charterers.

6. The following additional clauses forming part of the Standard Vitol Voyage Chartering Terms were also incorporated – Clause 31 : Operational Compliance Clause “The vessel shall not tender NOR prior to the earliest layday date specified in this Charterparty and laytime shall not commence before 0600 hours local time on the earliest layday unless Charterer consents in writing”. Clause 33 : Early Loading Clause “If charterer permits vessel to tender NOR and berth prior to commencement of laydays, all time from berthing until commencement of laydays to be credited to Charterer against laytime and/or time on demurrage. Saved time to be split 50/50 Owners/Charterers.”

7. The issues for the court’s determination were • if or when the NOR given at 0100 on 8 January became effective for the purpose of commencement of laytime; • At what time and date laytime began; and • Whether the charterers by their emails had consented to laytime commencing earlier than the first day of the laycan.

8. Owners submitted that Charterers’ consent to the tendering of the NOR meant consent also to the commencement of laytime. Owners submitted that where charterers in their emails made it clear that they wanted the vessel to berth/commence loading on 8 January, it is disingenuous for them to claim that laytime was not to start running 6 hours after the tender of the NOR at 0600 on 8 January. Owners’ second ground is that consent to laytime was implicit in the consent to loading. Laytime is the time for loading and a reasonable business person would have seen it as obvious that the parties intended laytime to commence. Owners’ Arguments

9. Owners had a variation to their second ground which is that laytime commenced on berthing since under Clause 6 “laytime …. shall commence upon the Vessel’s arrival in berth …”. They argued that by providing the vessel with a berth and ordering her to proceed to it charterers consented under clause 5 to the commencement of laytime.

10. Submissions of Charterers Charterers argued that since they never gave their agreement to laytime commencing early it should not start before 0600 on 9 January. Additional clauses prevail over the printed clauses and the only question is whether the charterer consented in writing under additional clause 31. Charterers also argued that there is no room for the implication of the term that laytime would commence following the tendering of NOR and that since clause 6 is subject to and overridden by additional clauses 31 and 33 there is nothing in the Owner’s point about berthing. Since additional clause 33 deals expressly with early loading and the situation which arose in this case where NOR had been tendered and the vessel berthed before the laydays began, there was no justification for implying a term or loosening the wording of the requirement for consent.

11. Laytime commenced at 0600 hours on 9 January 2004, as provided by additional clause 31 of the Charterparty. The charterers did not either by their emails or by commencing loading consent to earlier commencement of laytime. Additional Clause 33 entitled “Early Loading” provides expressly for what is to happen when there is early loading prior to commencement of laytime. It is not necessary or right to read into emails which consent to the situation for which additional Clause 33 provides consent in addition that laytime start early under additional Clause 31. Decision

12. The case in point is Swift-Fortune Ltd v Magnifica Marine SA [2006] SGHC 36 Facts Defendant is a Panamanian company which owned 1 vessel, the “Capas Duckling”. It entered into an MOA with the Plaintiff, a Liberian company to sell the vessel for US$9.5million. Legal completion was to take place in Singapore and the purchase price paid into a Singapore bank account. The MOA provided that it was governed by English law and that any dispute arising out of it would be referred to Arbitration in London. II. Attachment of assets for the purpose of foreign arbitration – the Singapore position

13. It was agreed under the MOA that the defendant would deliver the vessel by 6 December 2004. The vessel was not delivered by 6 December 2004 and the delivery date was extended 4 times at the request of the defendant. The plaintiff acceded to all these extensions on the basis that such agreement was without prejudice to the plaintiffs’ rights to make claims for compensation for late delivery of the vessel. The ”Closing Meeting” was scheduled for 9 March 2005, On 8 March 2005, the Plaintiff commenced action in the High Court of Singapore against the defendant and obtained a mareva injunction to prevent the defendant from removing US$2.5million of the purchase price from Singapore. The plaintiff got leave to withhold service of notice of the injunction on the defendant until after the “Closing Meeting” was finished. The defendant applied, inter alia, for the mareva injunction to be discharged.

14. Decision The Court has no power to make orders to assist a foreign international arbitration except in the limited situations where an action could be started within the jurisdiction because the defendant or the vessel concerned was amenable to the court’s jurisdiction.

15. The judge went on to say:- “Thus, having considered the various authorities cited by the plaintiff, it does not appear to me that there is marked trend among foreign jurisdictions to permit their courts to issue injunctive orders to assist proceedings taking place elsewhere. The courts that are most in favour of extending such help are the English courts but, even there, it has been noted that the ability to assist is limited by the necessity of the dispute or disputants having such connection with England that the English courts would be able to exercise a residual jurisdiction over it. I do not consider therefore that the conclusion that I have come to on the inability of the Singapore courts to help in such situations would point to the Singapore courts being insular in their approach as the plaintiff has suggested.”

16. THE END