Since 24 February 2022, most Ukrainian ports have been blocked due to the war started by the Russian Federation. In most cases, existing supply chains are broken, and only a few ports remain active, such as Reni, Izmail, and Kiliia, located on the Danube. From March 2022, vessel congestion at the Sulina channel, which provides access to these ports from the Black Sea, has been gradually increasing. The approximate waiting time to enter the waters of the Danube today is about two weeks. Due to this, the freight rates are at their all-time high, 3-4 times higher compared to the same period last year. Still, the time lost waiting for the passage of the Sulina channel often causes demurrage disputes between the parties.
It is a common occurrence that, when the vessel reaches the Sulina channel, the Master tenders a Notice of Readiness ("NOR") which purports to trigger the commencement of laytime. Then, after the goods are loaded, the owners claim demurrage from the charterers and threaten to lien the cargo.
How can the charterers protect their rights in these circumstances?
Firstly, consider whether the NOR is valid. The NOR’s validity should be checked by reference to the specific terms of your charterparty. Generally, the requirements for a valid NOR are the following:
a) the vessel must have reached the agreed place, i.e. become an "arrived ship";
b) the vessel must be "physically ready"; and
c) the vessel must be "legally ready".
Physical readiness means that the vessel must be in all respects ready to accept, carry and discharge the cargo. Legal readiness means that all necessary documentation must be in order. Whether the vessel can be treated as an "arrived ship" depends on the type of the charterparty, i.e. whether it is a berth charter or a port charter.
Under a berth charter, the Master will be obliged to reach the specific load/discharge berth before tendering the NOR. Under a port charter, the test for an "arrived ship" was set out in E. L. Oldendorff & Co. v Tradax Export S.A. (The Johanna Oldendorff) [1973] 2 Lloyd's Rep 285. According to this test, before a ship can be said to have arrived at a port, if she cannot proceed immediately to a berth: a) the ship must have reached a position within the port which is a usual waiting place; b) the ship must be at the immediate and effective disposition of the charterers.
A WIPON clause ("whether in port or not") included in the charterparty changes the position significantly. It allows the owners to tender a valid NOR if the vessel has reached the port's usual waiting place, even if it is located outside of the port's limits. The WIPON clause allows the owners to tender the NOR even if the vessel has not reached the agreed place, however, the vessel is still to be at the immediate disposition of the charterers.
The average sailing time from Sulina to Reni is 10-14 hours. A vessel that is 10-14 hours away from the loading place can hardly be qualified as being at the immediate disposition of the charterers. Tendering the NOR from Sulina may thus result in the NOR being invalid. If the NOR is invalid, then laytime will not commence and the charterers would be in a position to oppose the demurrage incurred prior to berthing.
As discussed above, however, each case is unique and should be considered on its facts, and in view of the specific provisions of the charterparty.
Fortior Law has vast experience in handling demurrage/detention claims under charterparties and commercial contracts. If you are facing similar issues, get in touch with Dmitry Zagorodnyuk ([email protected]) and Giles Xuereb ([email protected]) or your usual contact at Fortior.
About Fortior Law
Fortior is an international law firm specialising in English litigation, arbitration, and dispute resolution in shipping, international trade and investment law. Fortior’s team consists of English solicitors and lawyers qualified in multiple jurisdictions (New York, Switzerland, Malta, Italy, Georgia, Ukraine, Kyrgyzstan). Fortior has offices in Geneva, Abu-Dhabi and Kyiv. For more information, please visit https://fortiorlaw.com/.
