Knowing your contract is key to success in the chartering business, in this Charterers' bulletin, the Association will set out some of the key issues relating to port and berth charterparties.
Introduction
There are essentially two kinds of voyage charters – port charters and berth charters. Usually the provisions in a charterparty make it clear whether a charter is a port charter or a berth charter. If the charterparty specifically names a berth or provides that a berth will be nominated on the arrival at a port, it is considered a berth charter. The following description, in the House of Lords decision of The Kyzikos [1989] 1 Lloyd's Rep. 1, explains the distinction:
"The characteristics of a port charterparty are these. First, the contractual destination of the chartered ship is a named port. Secondly, the ship, in order to qualify as having arrived at the port, and therefore entitled to give notice of readiness to discharge, must satisfy two conditions. The first condition is that, if she cannot immediately proceed to a berth, she has reached a position within the port where waiting ships usually lie. The second condition is that she is at the immediate and effective disposition of the charterers.
By contrast, the characteristics of a berth charterparty are these. First, the contractual destination of the chartered ship is a berth designated by the charterers within a named port. Secondly, the ship, in order to qualify as an arrived ship, and therefore entitled to give notice of readiness to discharge, must (unless the charterparty otherwise provides) have reached the berth and be ready to begin discharging."
The distinction between a berth and port charter becomes relevant when considering the allocation of risks between the Owners and Charterer. The case, The Merida, provides an example of the importance of clearly specifying in the charterparty whether a charter is a port or berth charter.
Novologistics SARL v Five Ocean Corporation (The Merida) [2009] EWC 3046 (Comm), [2010] 1 Lloyd's Rep. 274
Facts
Owners contended that a voyage charterparty was a port charter, claimed USD 502,267.24 in demurrage from Charterers after delays to the vessel Merida at load port. The vessel was to undertake a voyage from Xingang to Cadiz and Bilbao. She arrived in Xingang and tendered NOR at 04:00 hours 10 March 2007. The vessel anchored awaiting berth and was all fast at an available berth at 19:50 hours 30 March. The overall question in the dispute was which party was to bear the risk for the delay at load port.
Owners were holding that the charter was a port charter and consequently that the vessel was entitled to give NOR upon arrival at Xingang. Delay was therefore to be for Charterer's account. Charterers were of the opinion that the charter was a berth charter and that the tendered NOR was premature. Their opinion was that the delay was for Owner's account.
Arbitration
The subject matter was arbitrated on documents in front of two arbitrators giving their final award in favour of Owners in holding that the subject charterparty was a port charterparty. The arbitration award was appealed by Charterers and placed before Mr Justice Gross at Commercial Court.
Decision
The Charterers' appeal was allowed with the consequence that Owners' claim for demurrage failed. The learned judge referred to The Radnor[1], The Finix[2] and The Puerto Rocca[3] in holding that the opening term reading "one good and safe ... berth ... Xingang" was to be construed as stipulating a berth charterparty. Further to this it was also in the view of the learned judge that "chrts' berth" was enough to stipulate that the charterers were given express right to nominate a berth thus meeting the condition to be a berth charter as seen previously in Stag Line Ltd v Board of Trade[4] and The Isabelle[5].
With respect to clause 2 in the "details to the C/P" the judge held that this clause was not connected to the allocation of risk of delay, but was an alone-standing clause imposing a safe berth obligation on Charterers. See Skuld Charterer Bulletin on Safe Port Warranties.
Sections of Charterparty in question
"Opening Term"
one good and safe chrts' berth terminal 4 stevedores Xingang to one good and safe berth Cadiz and one good and safe berth Bilbao
...
nor/time-counting as per below c/p terms
...
"Details to the C/P clause 2"
[1] The vessel to load at one good and safe port/one good and safe charterers' berths Xingang and to discharge at one good and safe port/one good and safe charterers' berth Cadiz and at one good and safe port/one good and safe charterers' berth Bilbao.
[2] Shifting from anchorage/warping along the berth at port of load and at ports of discharge to be for owners' account, while all time used to count as lay time.
Lesson learnt
It is important to actively keep in mind during the fixing of a voyage charterparty the difference between Port and Berth charterparties and use clear wording in allocating the risk for delay of the vessel.
"Berth Charterparty"
When the Charterparty states a) a given berth; or b) expressly provides the Charterer with the option to nominate berth. Time spent before arriving at the nominated berth will likely be for Owners' account.
[1] North River Freighters Ltd v President of India (The Radnor) (CA) [1955] 2 Lloyd's Rep 668
[2] Nea Tyhi Maritime Co Ltd of Piraeus v Compagnie Grainiere SA of Zurich (The Finix) [1975] 2 Lloyd's Rep 415
[3] Compania Argentina de Navegacion de Ultramar v Tradax Export SA (The Puerto Rocca) [1978] 1 Lloyd's Rep 252
[4] Stag Line Ltd v Board of Trade (1949) 83 Ll L Rep 356
[5] Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1982] 2 Lloyd's Rep 81