There was an important announcement last week from BIMCO when they published ‘Laytime Definitions for Charter Parties 2013 (Laytime Definitions)’ which they have produced together with the Comité Maritime International, the UK Chamber of Shipping and FONASBA and the document has been endorsed by each of the mentioned organisations. The definitions together with the Special Circular explaining the new definitions can be found here
https://www.bimco.org/~/media/Chartering/Special_Circulars/SC2013_08.ashx
These definitions are intended to replace and update the ‘Charter Party Laytime Definitions 1980’ and the ‘Voyage Charter Party Laytime Interpretation Rules (Voylayrules) 1993’ which the BIMCO circular admits neither got wide support in the market. As a tanker man I don’t think I have ever seen reference to these terms in a charter party – any dry cargo readers out there care to comment on dry fixtures?
What caught my eye was the definition of ‘Port’ which reads;
1. PORT shall mean any area where vessels load or discharge cargo and should include, but not be limited to, berths, wharves, anchorages, buoys and offshore facilities as well as places outside the legal, fiscal or administrative area where vessels are ordered to wait for their turn no matter the distance from that area
This language is similar to the 1980 Definitions which stated that PORT includes ‘…the usual places where ships wait their turn or are ordered or obliged to wait for their turn no matter the distance from that area’ and is similar to Voylayrules which states that Port shall also include ‘the usual places where vessels wait for their turn or are ordered or obliged to wait their turn no matter the distance from that area.’
All of these phrases appear to be designed to allow the Notice of Readiness to be tendered before the vessel arrives at the port and extends the boundaries beyond the legal, fiscal or administrative area as mentioned in the circular which goes beyond current thinking in our courts as I understand it.
The circular mentions in the commentary that they wanted to reflect the wider concept of the port as given in ’The Johanna Oldendorff (1973)’. I don’t have the full judgement* of that case but looking at the often quoted comments I can see that Lord Reid gave us the Reid test where he stated that ‘Before a ship can be said to have arrived at a port she must, …. have reached a position within the port…’ my emphasis.
I think it is an admirable effort to update these Definitions and I can understand the need to eliminate or reduce the number of disputes we see in this business but I cannot see that adopting this definition of port will do so. The courts have not given such a wide meaning in the past and the real difficulty is that every port is different and to make such general rules will only confuse matters more in my opinion.
I can think of an example when this definition could lead to a dispute:
In times of severe weather conditions, such as the hurricane season in the US, it is impossible for vessels to reach their destination and they may be ‘ordered’ to remain several hundred miles away from the port for safety reasons. Using the ‘Port’ definition above would allow an Owner to tender a valid Notice of Readiness at that waiting place. In my opinion that would be wrong and takes away the obligation for the Owner to navigate the vessel to the agreed destination.
On balance I think I prefer today’s legal interpretation but with additional clauses added for specific situations such as the river clauses we see added to charter parties which allow NORs to be given earlier that would normally be permitted.
I had a quick look at the websites of the groups putting this together and who they represent:
BIMCO https://www.bimco.org/ – ‘global membership of stakeholders… including shipowners, operators, managers brokers and agents’
CMI http://www.comitemaritime.org/Home/0,271,1132,00.html – ‘The voting Members of the Comité Maritime International are national (or multinational) Associations of Maritime Law
FONASBA https://www.fonasba.com/ – ‘.. provides a united voice for the world’s shipbrokers and agents’
UK Chamber of Shipping http://www.ukchamberofshipping.com/ – ‘.. represent around 80 shipowners’ ‘Many professional organisations with a maritime interest, including legal or financial firms, are part of the UK Chamber membership.’ ‘We also offer associate membership to a wide range of companies that provide services to UK shipping. These include local shipping associations, P&I clubs, recruitment and technology firms.’
This got me thinking – Where are the Charterers? I don’t know if any charterers were invited to participate in this exercise but without their input I wonder if this latest initiative will end up like the previous versions and be largely ignored by the industry.
Tell me what you think of the latest Definitions. Let me know your view of the Port definition in particular – is it worth adding to your charter parties? Are the Definitions likely to be taken up by the industry?
* P.S. Thanks to a kind person I was speaking to this week I now have a full copy of the ’The Johanna Oldendorff (1973)’ judgement and I’m off to read all 28 pages!
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3 thoughts on “BIMCO Pushing the (port) Boundary”
I agree with you Phil. One size fits all very rarely works and trying to generalise when there are so many potential exceptions that would need to be considered makes little sense, and I therefore go along with your view that it is unlikely that the industry as a whole would endorse the changes that BIMCO has apparently hammered out. Certainly it is hard to see how they would have reached agreement on such a definition if charterers had been involved. I would have thought that any owner proposing this definition as a part of a negotiation is likely to see it rejected outright by the charterer, or at best amended so that it reflects the particular situations and risks that need to be considered.
The following comments are from someone who prefers to remain anonymous – if you have comments but don't want to disclose your name/company please email me directly and I will post on your behalf
I think the point you make about each port being different is key. One size really does not fit all.
Our day to day head scratching is with regards to West Africa loadings. Often for security reasons the vessel will tender NOR 200 miles or so off shore. Personally, I would think discretion with regards to the validity of the Owners NOR should be exercised. Especially if, under the oil contract we successfully argue or, we have a ‘custom of the trade’ with our counterparty whereby 200 miles offshore is considered the customary waiting area, then let’s all be grown ups & agree this is a practical solution. But a vessel 200 miles offshore is not an arrived ship at all other ports.
Hi Phil ~ I agree with you and John and "Anon" ~ the new Rules cannot (and should not) cover all situations. These new Rules are not yet signed and ratified by all maritime nations and should therefore not be deemed to be all-encompassing nor binding unless parties to a particular contract so agree.
Many of the major cases which have set the standards for Laytime & Demurrage stem from dry cargo situations ~ e.g. "Johanna Oldendorff" (it's good that you now have the opportunity to read the famous judgment !) as well as the MEXICO 1, AELLO, LEONIDAS, AGAMEMNON, HAPPY DAY, MASS GLORY and many others on which we all rely, including their use in interpretation of situations and in many clauses of both dry and tanker voyage C/Ps.
It would indeed be useful to know from BIMCO et al whether they asked any of the prime dry and wet charterers for their opinions and experiences prior to publication of the "Rules" ! Could one of your other readers find out ?