Port formalities and laytime

Port formalities and laytime. When a ship “arrives” at the contractual destination before it can be actually ready and before the Notice of Readiness is given and accepted, thus triggering the commencement of the laytime, it must be physically and legally ready. One aspect of legal readiness is related to compliance with all port formalities.

Sometimes a charterparty may contain provisions that will delay the giving of the Notice of Readiness and therefore the commencement or counting of laytime. This may be prevalent in Third World countries where the port infrastructure may be capable of coping with a modern shipping industry. One area in 1990, where this may have created problems, was China and affected charters to that country. The charterparty clause may state:

“Laytime to commence 24 hours after notice of readiness is tendered and accepted within ordinary office hours, whether in berth or not, provided formalities for entering port have been passed by port authorities.”

The port formalities could require, for example, a joint inspection of the vessel’s cargo compartments to be carried out. This could take a long time, especially if the vessel was waiting for a berth. The consignees seemed to be reluctant to allow laytime to commence too early because then, if the vessel was delayed, they could become liable for considerable demurrage.

The port formalities have to be completed before the Notice of Readiness can be tendered. However, even in a port charter, these port formalities could have to wait until the vessel was berthed. This removes the effect of the WIBON provision. Port formalities can include many functions being carried out by various persons, from the port officials to the ship’s agents and the master. For example, free pratique may have to be obtained when the vessel arrives and is not given by radio before arrival, as is done in many modern ports. The end result is that the shipowners may have to bear the risk of delay without compensation in the form of demurrage or possibly even damages for detention.

It may be worth noting advice to shipowners provided by BIMCO on this and similar issues in its very valuable publication, “Check Before Fixing”:

“Beware of terms which impede the process of notification of readiness and, hence, commencement of laytime. Many pitfalls await the unwary. Some classic examples: giving notice contractually allowed โ€˜whether in berth or not… but ‘vessel to be in free pratique’, `vessel also having been entered at Customs House’, or, `vessel’s holds to be cleaned to charterers’ inspector’s satisfaction’. The point is that in many ports โ€˜free pratique’ cannot be obtained before vessel berths and the `charterers’ inspector’ would not dream of inspecting the vessel in the roads. He may be eager to disqualify the vessel after berthing. A balanced solution can be found in … NUVOY-84 Charter, reading:

‘Waiting off port-if the notice of readiness . . . has been tendered while the vessel was off the port, the laytime shall commence counting and shall count as if she were in berth . . . ‘

After berthing the actual time lost until the vessel is in fact ready in all respects to load/discharge (including customs clearance, and free pratique if applicable) shall not count as laytime or time on demurrage. “


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