I took another look at the case of The Petr Schmidt (note 1) after discussing it with Andrew Keates of Keates Ferris who was chairing a seminar where I presented a laytime and demurrage module. Andrew ran the Petr Schmidt case for the charterers and even after all this time he is still a little disappointed with the outcome and I think I can understand why.
For an NOR to be valid the vessel must be in the right place and be legally and physically ready. If an NOR is tendered and one of those conditions is not met the NOR is invalid and a subsequent NOR must be tendered to trigger the commencement of laytime absent any other trigger such as berthing or commencement of cargo.
The Petr Schmidt leaves an exception to this rule where the NOR has been tendered earlier than the time specified in the charter party. In the case of the Petr Schmidt the c/p stipulated that NOR must be tendered “within 0600 and 1700 local time”. The NOR was tendered outside these hours, during the preceding evening, and the Court of Appeal ruled that the NOR was correct in every other sense, i.e. the vessel was in the right place and physically and legally ready, and although the Owners had not adhered to the timing of the clause the court deemed the notice to be tendered at 0600hrs the next day which was the earliest opportunity under the charter party.
In the case of the Petr Schimdt we get no guidance for the following situations: Assuming that the vessel was ready in all respects but gave an early NOR, say at 2100hrs the previous evening, that NOR becomes valid at 0600hrs the next day. What happens if the condition of the vessel changes between 2100hrs and 0600hrs the next day? For example
A) The vessel breaks down at 0100hrs but is repaired at 0500hrs
or
B) The vessel breaks down at 0100hrs but is repaired at 1000hrs
In each of these cases is the original NOR valid and does it become effective at 0600hrs and 1000hrs respectively, or does a second NOR have to be tendered?
Thinking about early NORs there must be some implications in today’s trading where in most tanker c/ps there is a clause that states that NOR cannot be given before commencement of laydays. Does the Petr Schmidt make such clauses superfluous?
Charterers want control over when the NOR can be tendered as oil is often priced on the Bill of Lading date. What happens if an NOR is tendered ahead of laydays, the vessel is called to berth by an eager loading terminal and the master agrees to load early resulting in an earlier dated bill of lading.
Does the Petr Schimdt protect the owners on laytime and demurrage? This is probably irrelevant as an early loading clause is usually added giving the Charterers credit for the period of early loading.
What about the pricing? If the Charterer has to pay more for his oil as a result of the early loading is this a breach of charter on the part of the owners and is the owner liable for damages? I would think so and any damages suffered by the Charterer would outweigh any demurrage costs by a significant margin. I base this view on The Ulyanovsk (Note 2) – in this case the Charterers instructed the vessel not to tender NOR or berth on arrival but to await further instruction. The master ignored the voyage orders and the vessel loaded earlier than the Charterers wanted resulting in a higher price paid for the oil. Charterers were successful in recovering damages from Owners.
What is your view on early NORs? What is your view on the Petr Schmidt decision? Have you had any interesting disputes on this point? Please add your comments here.
Note 1: Galaxy Energy International ltd v Novorossiysk Shipping co (The Petr Schmidt) [1997] 1 Lloyd’s Rep 284; [1998] 2 Lloyd’s Rep 1 (CA)
Note 2: Novorossisk Shipping v Neopetro Co. (The Ulyanovsk) [1990] 1 Lloyd’s Rep 425
4 thoughts on “Early NORs and the Petr Schmidt revisited”
Hi Phil
I just saw your post on this interesting point of early tendering of NOR. In fact, I have had interesting discussions with my colleagues and delegates at seminars on laytime and demurrage on this particular issue over the years. We had a lengthy debate on of the LinkedIn groups last year with some interesting view points.
I personally feel reading the C/P clause/s is of utmost important and we should be careful what we agree to whilst drafting it?…..If the NOR clause is not qualified with any restriction of not tendering it before laydays (most tanker C/P actually do not allow this) then it only makes commercial good sense for the shipowner to tender the NOR on arrival….it is also imp to note if the laytime will commence on tender, receipt or acceptance of the NOR.
If the C/P is silent on early tendering of NOR and if the v/l tenders a valid NOR before laydays, then laytime should start running on the 1st hour of the 1st layday, subject to the notice period/turn time (if any) having run and expired prior to the 1st layday.
Only ignore the actual wording of the C/P to your peril!
Note: Tidebrook Maritime Corporation v Vitol SA of Geneva (The "Front Commander")
Good day to all
With regard to the above, I have bee trying to find an answer on the below question:
When does laytime commence under Asbatankvoy Clause 6:
6 hours after tendering a valid NOR (as per the relevant clause)?
or
6 hours after anchoring (as per charterers' usual responses)?
It is obvious that the Asbatankvoy does not specify that vessel has to have anchored, unlike other c/p formats.
It would be interesting to hear some colleagues views on the above.
Thanks
Petros
Hi Petros
You raise an interesting point which is always coming up. Strictly speaking the requirements of Asbatankvoy only require the vessel to be at the anchorage – it does not require the vessel to have actually anchored. The problem arises when masters tender NOR much earlier than the time the vessel anchored and it is this that raises charterers suspicions.
I would say that if there is only 15 or 20 mins between NOR and anchoring there is a fair chance that the vessel is at the anchorage and is in the process of anchoring. Much more than this time would make me suspicious too. Clearly the Owner must show that the vessel is at the anchorage when she tenders NOR.
I like the quote from Lord Diplock in the Johanna Oldendorff when he said that[i] '… the shipowner does not complete the approach or the carrying voyage until the vessel has come to a stop at a place within the larger area whence her proceeding further would serve no business purpose'[/i]. I don't know whether this case was an Asbatankvoy c/p or not but I feel it supports the argument that the vessel does not have to anchor to enable the vessel to tender a valid NOR.
I hope this helps
best regards
Phil
Dear Phil good day and thank you for your kind response.
I had also come across the Johanna Oldendorff case and the Reid test, during my research on this case recently and in the past.
Therefore, as I understand the following should take place for the NOR to be valid:
1) Vessel to have arrived within the limits of the port
2) Vessel to have come to a stop
3) Vessel to be actually ready
Your above answer really clarifies things and besides we are now only talking about 15 to 20 minutes difference and not 2-3 hours for example (since the vessel anchors soon after she comes to a stop).
However, the NOR should be tendered when vessel comes to a stop or a little bit later / when she has anchored in order to be valid, as per the above / as per my understanding.
Thank you very much
Petros