Charterparty Requirements In Respect Of The Timely Submission Of NOR
In the FOB sale contracts where the delivery period is stated as a vessel presentation period, the buyer`s vessel must tender valid NOR either before the end of such period (i.e. not later than 23:59 hours on the last day of the contract delivery period) or any subsequently declared laycan period.
The FOB buyers should ensure that the sale contract and voyage charterparty have matching provisions in respect of the deadline for the submission of NOR for laycan purposes.
Similarly, the voyage charterers who sub-charter the vessels should ensure that the head charters and the sub-charters have back-to-back provisions in order to avoid a financial loss in the event of a late submission of NOR. An example of such case was the English law case Bilgent Shipping Pte Ltd v. ADM International Sarl1. In that case ADM voyage chartered the vessel "Alpha Harmony" from the shipowners Oldendorff for two voyages from Brazil, Argentina or Uruguay to China.
The vessel was sub-chartered by ADM to Bilgent Shipping for a voyage from Brazil to China.
The head charterparty was on an amended Norgrain form and stated two laycan periods: 1-30 April 2015 and 1-31 May 2015.
The sub-charter was on an amended Baltimore Form C Berth Grain form and stipulated a laycan period between 1-31 May 2015.
Both charters had laycan narrowing provisions stipulating the charterers` obligation to narrow the laycan period to a 10 days` spread. On 2 April 2015 the laycan period was narrowed to 1-10 May 2015 by Bilgent Shipping under the sub-charter and then by ADM under the head charter.
The vessel arrived at loading port at 02:50 hours on 10 May 2015 which was a Sunday and tendered NOR by email at 07:04 hours.
The head charter provided that for laytime purposes the NOR had to be tendered between 08:00 and 17:00 hours on the weekdays and between 08:00 and 11:00 hours on the Saturdays. The laytime was to commence at 08:00 hours on the next working day after a valid NOR had been tendered.
However, for laycan purposes the NOR could be tendered at any time before 23:59 hours on the last day of the laycan (cancelling date).
The sub-charter had different provisions. Similarly to the head charter it stated that the NOR had to be tendered between 08:00 and 17:00 hours on the weekdays and between 08:00 and 11:00 hours on the Saturdays but then it provided that if the NOR had not been delivered within the specified office hours was invalid for the laycan purposes.
Bilgent Shipping cancelled the sub-charter at 20:47 hours on Sunday 10 May 2015 and then ADM cancelled the head charter at 05:55 hours on Monday 11 may 2015. The case reached to the English Commercial Court which was asked to decide whether the cancellations were lawful in circumstances where, although the NOR had been tendered before the relevant time on the cancelling date, it had not been tendered during the specified office hours.
The English Commercial Court held that under the sub-charter the NOR was invalid for the laycan purposes because it was not tendered within the specified office hours. Therefore, the sub-charterers were entitled to cancel the sub-charter when they did. Unlike the sub-charter, the head charter created a different NOR regime for the cancellation purposes than that which applied for laytime purposes. There was no requirement for the NOR to be tendered within the office hours for the cancellation purposes. The NOR could be tendered at any time before 23:59 hours on the cancelling date. Therefore, the head charterers were not entitled to cancel the head charterparty.
An example of voyage charterparty form which provides a different time limit for the submission of valid NOR for cancellation purposes than that which applies for laytime purposes is GTA Voyage Charter – AusGrain 2015. It stipulates in Sub-Clause 19.3 that the Master must tender NOR between 09:00 and 17:00 hours on the weekdays and then in Sub-Clause 20.1 provides that the charterers shall have the option of cancelling the charterparty if the vessel is not able to tender valid NOR before 24:00 hours on the last day of the final laycan (narrowed laycan).
Another example is Synacomex 2000 grain charterparty form which provides that the NOR has to be tendered between 08:00 and 17:00 hours on the weekdays and between 08:00 and 12:00 hours on the Saturdays and that the charterers shall have the option of cancelling the charterparty if the vessel does not tender valid NOR before 09:00 hours on the cancelling date.
by Vlad Cioarec, International Trade Consultant
This article has been published in Commoditylaw`s Grain Trade Review Edition No. 9.
Endnotes:
1. [2019] EWHC 2522 (Comm), [2020] 1 Lloyd`s Rep. 409