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Asbatankvoy Clauses 6 7 8 AND 9

Published:23 February 2006 14:56
Updated: 03 November 2009 12:58

It is our experience that problems of interpretation frequently arise in relation to Clauses 6-9 of
the Asbatankvoy charter.

These interrelated clauses, which, just to mention a few issues, govern Notice of Readiness,
Laytime and Demurrage as well as the important Reachable on Arrival warranty, direct the
allocation of substantial dollar amounts between owners and charterers.

Mr. E.C. Coulson, F.I.C.S., in his book “A Guide For Tanker Brokers” explains the working of
these clauses, which even today, six years after the 2nd edition was published, provides an
excellent guide practitioners may use when working with the Asbatankvoy charter form.

INTERTANKO has with the kind permission of Clarkson Research Studies, London, been
allowed to print a synopsis of Mr. E.C. Coulson’s excellent analysis of the Asbatankvoy charter
form.

Clarkson Reaseach Studies is the research subsidiary of H. Clarkson Shipbrokers, which amongst
its activites include oil, chemical and gas tanker brokerage.

H. Clarkson is an associate member of INTERTANKO.

We hope you make good use of this guidance and look forward to comments and questions you
may have.

Clause 6 - Notice of Readiness.

The six hour notice period is often likely to be a kind of “free laytime” to which the charterer is
always entitled.  This is not the case.  It is time permitted to the charterer to make the necessary
arrangements and is allowable under certain conditions.  As the Clause specifies, if the vessel
should berth and/or commences loading and/or discharge before the six hours has elapsed, then
laytime commences from the time of berthing and/or commencement of load and discharge.  If
all the laytime is used at the loading port and, on arrival at discharge port, the vessel is therefore
on demurrage, the charterer would not then be entitled to a six hour notice period as the principle
once on demurrage, would apply.  The six hours are for commencement of laytime at load and
discharge port(s).  If there is no laytime left, the charterer cannot have six hours notice of
something the charterer no longer has.  As will be seen later, it is common today to add a clause
stating that the charterer is entitled to six hours’ notice whether the vessel is on demurrage or not.

Another common error is to assume that the vessel cannot tender notice of readiness prior to the
commencement of the laydays, which, if correct, would mean the charterer could always rely

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upon the six hours’ allowance (unless, of course, vessel berths before the expire of the six
hours).  However, the Clause makes no reference as to the date of notice of readiness can be
tendered, quite the opposite, it clearly states that “upon arrival at customary anchorage ...” and it
means what it says.

Let it be assumed that vessel is fixed for laydays commencing 15th October, but that vessel
arrives at the customary anchorage on 12th October.  Laytime cannot commence until 15th
October, but the owner would be perfectly entitled to tender notice of readiness on the 12th
October and the six hours’ notice period will commence accordingly and, unless the charterer
could or wished to commence loading earlier, it is obvious that the six hours notice period would
expire before the laytime commenced, but laytime would start counting at 00:01 hours 15th
October and not at 06:00 hours 15th October.  Therefore, if a charterer wishes to be protected in
this respect, the charterer must add an express clause that states the vessel cannot tender until the
first of the laydays.

The last line of Clause 6:

“However, where delay is caused to vessel getting into berth after giving notice of readiness for
any reason over which charterer has no control, such delay shall not count as used laytime”.

This line has given rise to many disputes and legal rulings which will be touched upon later.  It is
important to note it refers to laytime and not to demurrage.

An argument often put forward by charterers and, at first sight, a seemingly logical one, is that if
an outside delay arises beyond charterers’ control, owner accepts, under Clause 6, that the time is
borne by the owner. The same situation should exist when the vessel is on demurrage.  This is
not correct.  Again the adage - “Once on demurrage, always on demurrage” - comes into play,
the reasoning being that if the charterer had not been in breach by exceeding the laytime at
previous load and/or discharge port, the vessel may have arrived earlier and thus avoided the
delay which occurred.

Clause 7 - Hours for loading and discharging.

This Clause states that laytime shall run continuously unless interrupted for the reasons set out in
the Clause.  The Clause states that time “moving from loading or discharge port anchorage to her
loading or discharging berth ...”, shall not count as laytime.

As in Clause 6 it refers only to laytime, not to demurrage.  Again the argument mentioned with
reference to Clause 6 can be advanced perhaps with even more logic, namely that it is a fact that
a vessel has to move from an anchorage to a berth and is something the owner has to face under
any circumstances.  If an owner accepts such shifting time when laytime exists, why should it
count as demurrage time, if the vessel is on demurrage.

The reason it counts as demurrage has been explained.  Demurrage is damages for a technical
breach of the charter, i.e. the charterer exceeding the laytime allowed, and the charterer cannot

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be relieved from liability for agreed damages because of some fortuitous situation which exists
or arises outside charterer or owner’s control, unless the relief is expressly agreed elsewhere in
the charter.  Again “once on demurrage, always on demurrage”.

Clause 8 - Demurrage

Before embarking on an explanation of Clause 8 and its effect, it needs to be emphasised again
that Clauses 6 and 7 are concerned with laytime and not demurrage and that Clause 8 is
concerned with demurrage, not laytime.  This should be self-evident but there is frequent
confusion about this when attempting to interpret these Clauses.

Clause 8 states that the agreed amount of demurrage is payable for each hour by which the
allowed laytime is exceeded and pro rata for part of an hour.  The second sentence sets out
certain circumstances which, if they arise, entitle the charterer to pay only half the agreed
demurrage rate, often referred to as “half breakdown”.  The final part of the Clause sets out
situations where the charterer shall not be liable for demurrage, even though the laytime may
have been exceeded.  “Once on demurrage, always on demurrage”, i.e. demurrage runs
continuously unless there are express agreements to the contrary.

There is a great deal of misunderstanding about the effect of the second sentence or so called
“half breakdown”.  Disputes arise about the definition of the words used, for example, “storm”
and “lockout” etc.  It is not the purpose here to go into such minutiae, important though it may
be.  The most common misinterpretation arises where a vessel arrives at the port and, because all
the laytime has been used at her previous port(s), is on demurrage on arrival.  The vessel, due to
bad weather, is unable to get to the berth, or may have to leave the berth because of weather
conditions.  Remember the last line of Clause 6 (that delays beyond charterer’s control not to
count as laytime) does not apply here because the vessel is on demurrage.  The charterer then
argues that delay getting to the berth or caused by having to leave the berth comes within the
provisions of the “half breakdown” part of Clause 8, the delay being caused by “storm”.

Recently, it has not been unusual for an owner to accept this argument or, in principle accept it,
but argue the conditions did not come within the legal definition of “storm”.  The fact an owner
may so accept the argument does not, however, mean the argument is valid.

For the “half breakdown” to come into force, certain criteria have to exist, namely:

A. The conditions set out in this part of the Clause must apply to the installation itself, its
equipment, personnel and immediate environs.  For example, a storm must damage the
installation and/or its equipment, e.g. the installation may be flooded or the storage tanks
damaged.  High winds pressing the vessel onto the berth and damaging it or rough water in the
approaches to the berth, do not come within “in or about the plant of the charterer, supplier,
shipper or consignee ...” and therefore would not qualify.

B. The events mentioned in the “half breakdown” must arise after the ship has arrived and cannot

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be relied upon if they arose before the vessel arrived at the port in question.

The last part of the Clause can also often be misread as the charterer not being liable for
demurrage caused by any strike, lockout or restraint of labour, but careful reading will make it
clear that this exclusion from liability for demurrage applies only where these events are directly
attributable to the master, crew, tugboats or pilots.

Clause 9 - Safe berth shifting.

“Safe” has been dealt with earlier.  The Clause, bearing in mind the definition and
responsibilities concerning “safe”, is self-explanatory.  Three points must be borne in mind:

A. The Clause gives the charterer the right to load and/or discharge alongside other vessels or
lighters.

B. The charterer must procure and designate the berth, etc.

C. The load and discharge place must be “reachable on her arrival”, a phrase of considerable
significance.

No apology is made to repeating that all clauses, and in particular Clauses 6, 7, 8 and 9, are
interconnected in that the obligations, benefits and penalties of one Clause may be dependent on
the proper compliance with other clauses contained elsewhere in the charter.

As said before, the last line of Clause 6 reads:  “However, where delay is caused to vessel
getting into berth after giving notice of readiness for any reason over which charterer has no
control such delay shall not count as used laytime”

and might give an impression that a charterer is given a wide protection.  An umpire held in an
arbitration concerning a vessel called the “Laura prima”, that this provision protected charterers
in that another vessel occupying the berth where the “Laura Prima” was to berth, was a “reason
over which charterers has no control”.  This decision was directly opposed to the interpretation
accepted by the industry for a number of years and caused consternation amongst those involved
in tanker chartering.  The kernel of the decision was that in present times, charterers frequently
used berths which were controlled or owned by outside parties who had no association or direct
link with the charterer, and thus the charterer  had no say in berthing priorities or arrangements
which are solely in the hands of the berth operator, whereas in the past vessels usually loaded
and discharged at berths controlled by the charterer or its subsidiaries.  The arbitration decision
was contested through the Courts, finally reaching the House of Lords, who reinstated the
previously held view that berth occupancy is within the control of the charterer.  The judgements
given in the various Courts are well worth study by any interested student.  The main concern
here is not so much the final decision, important though it is, but the reasons given by Law Lords
for their decision, and it is these stated reasons which have given rise to certain implications
concerning the last line of Clause 6.

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When giving their reasons, their Lordships referred to the provisions of Clause 9, safe berth -
shifting, in particular, the words “... reachable on her arrival which shall be designated and
procured by the charterer ....”.  They stated the words “reachable on her arrival” meant precisely
what they said. They further stated that “designated and procured by the charterer" placed upon
the charterer the duty to secure a suitable and available berth for the vessel and could not seek to
delegate that duty to a third party or plead no responsibility because the berth was controlled by
some outside agency over whom the charterer had no authority.  Thus the charterer could only
obtain the protection of the last line of Clause 6 if charterer procured an available berth which
the vessel could reach on arrival and if after the vessel arrived a circumstance arose beyond the
charterer’s control which delayed the vessel.  If the circumstances arose before the vessels
arrived and/or the berth was unavailable, it was not “reachable on her arrival” and the charterer
had failed to carry out the obligations under Clause 9 and could not seek to avoid the
consequences of this failure by pleading the last line of Clause 6.

This explanation relating to “reachable on arrival” and the consequences of the legal rulings were
made in the first edition of this book not too long a time after the rulings were made.  Since that
time there have been several arbitrations and court cases where parties have sought in special
circumstances to mitigate or avoid the consequences of not being able to comply with “reachable
on arrival” but, in the main, the interpretation as made by the House of Lords has been rigidly
upheld and in the process elaborated upon what does or does not constitute “reachable on
arrival”.  Despite this it seems that many in the industry still do not understand the preciseness
which the phrase carries, of course, as always, in the context of other clauses which may be
added.  This difficulty in understanding springs, perhaps, more from regarding certain
circumstances from the point of view of what an affected party sees as unfair rather than
accepting the concept as seen by the law.  All the various arbitration and legal decisions cannot
be gone into here, but a summary of the attitudes which have been tested would, in essence, be
that where operational difficulties, or outside factors delay a vessel and traditionally such factors
were accepted by shipowners, and were nothing to do with the charterer, or in the past
considered both a charterer’s risk, then the precise interpretation of “reachable on arrival” should
be modified.  All, albeit reluctantly, accept that if the berth is not procured and designated by the
charterer and/or is occupied by another vessel then it is not “reachable on arrival”, but where the
vessel could not get  to the berth anyway due to, for example, bad weather, strike of tugboats, or
pilots, there is nothing a charterer can do about this and the industry would accept that these are
the kind of risks owners experience and bear as part of a marine venture.  In addition, where such
delays existed or arose, the question of whether the berth is free or occupied, is academic, as the
vessel could not get to the berth anyway.

These views, from the point of view of fairness at least, would seem persuasive and, indeed, have
been supported by decisions in arbitration.  However, these decisions have been overruled by the
courts who have reiterated that “reachable on arrival” has a precise meaning and that where the
vessel cannot get to the berth when she arrives, then, unless there is some contributory  cause by
the vessel or its owners, it is not reachable on arrival and charterer is not protected by the last
line of Asbatankvoy Part II, Clause 6, and laytime counts.

An attempt to codify circumstances which do or not constitute “reachable on arrival” is fraught

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with danger.  The warning contained in the preface of this book that things change, arbitration
and court decisions get reversed or amended, must be kept very much in mind and the particular
circumstances of each situation carefully considered.  However, as a general guide the following
might assist in a better understanding of this important phrase:

1. Vessel arrives at the anchorage, the berth is nominated and is unoccupied and there is nothing
preventing the vessel proceeding to the berth - the berth is reachable on arrival.

2. The circumstances described in 1. above, exist but after vessel’s arrival, bad weather
preventing the vessel moving to the berth occurs, or a tug strike commences or there is a strike of
pilots which prevents the vessel proceeding to the berth.  In this situation, charterer has complied
with the provisions of Clause 9, the berth was available on arrival and there was no impediment
to vessel on  arrival but afterwards a condition has arisen beyond charterer’s control and thus
charterer has the protection of the last line of Clause 6, i.e. delayed getting to the berth for
reasons beyond charterer’s control, thus delays would not count as laytime.  It must be
remembered Clause 6 excepts laytime; it says nothing about demurrage.

3. Vessel arrives at the port, the berth is occupied but just after the vessel’s arrival bad weather
etc., arises, so that even if the berth was free the vessel could not have proceeded to it and the
reasons why she cannot proceed arose after she arrived.  In this situation the berth is not
“reachable on arrival” because it was occupied and the fact the vessel could not get to it anyway
does not relieve the charterer.

4. Vessel is ordered to a port.  At the time the vessel is so ordered there are bad weather delays or
a tugboat strike at the port and these circumstances still exist when the vessel arrives at the port. 
The berth is not “reachable on arrival” whether or not the berth is free.

5. Charterer has not designated a berth and/or the berth is occupied, therefore it is not “reachable
on her arrival”.

It follows that any clause added to the charter, which seeks to protect the charterer or to equitably
share the delay between owner and charterer must be very carefully worded.  It should make
particular reference to the printed charter party clause it seeks to amend, it should specify the
conditions which are to be excepted, it should state if the exceptions are to apply even if at the
time they exist the berth is occupied and finally, if it is intended to apply to demurrage as well as
laytime, then it should clearly say so.

The foregoing with regard to Clauses 6, 7, 8 and 9, is, of necessity, somewhat involved and it
may be useful to recapitulate some of the points made and add some general observations:

A. A charter will almost certainly have special clauses added which expressly change or qualify
the printed clauses.

B. Before Clause 6, 7, 8 and 9 come into effect, notice of readiness must be tendered.

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C. The six hours’ notice may not be allowed the charterer if:

i) the vessel is permitted to tender notice before the commencement of the agreed layday;

ii) the vessel berths before the six hours has expired; and

iii) the vessel is already on demurrage on arrival.

D. If laytime has not expired and the vessel is prevented from proceeding to the berth for a
reason outside the charterer’s control, such delay will not count as used laytime provided that the
berth was free and available on the vessel’s arrival and the reasons preventing her proceeding to
the berth arose after the vessel arrived.  If laytime has expired prior to the vessel’s arrival then,
unless expressly agreed otherwise, vessel will be on demurrage on arrival and any delay and/or
time getting to the berth will count as time on demurrage.

E. If the laytime has not expired, time proceeding from the anchorage to the berth will not count
as used laytime, but if laytime has expired and the vessel is on demurrage, the time proceeding to
the berth would count as time on demurrage.

F. Half demurrage is payable by the charterer when the situations specified in Clause 8 arise,
there being a specific agreement to reduce demurrage, but the situations described must arise
after the vessel has arrived and must affect cargo handling in the port, port facilities, installation
etc.

G. Delays directly attributable to the vessel, its crew or the other causes set out in the last line of
Clause 8 will, generally, not count as used laytime or as time on demurrage.

Laytime and demurrage provisions do not apply after loading and discharge have been
completed and they do not permit the charterer against paying demurrage to detain the vessel
after the completion of cargo handling operations.  For example, a charterer is not entitled to
require the vessel, having loaded cargo, to wait outside the loading port for discharge orders.  A
delay of this nature would constitute “detention” for which the owner would be entitled to
damages. Although for convenience the “time” damages may be based on the demurrage rate, the
owner would be entitled to claim under other heads e.g. for bunkers consumed whilst the vessel
is detained, the consequences of missing a convoy (e.g. Suez Canal transit), possibly the loss of
income due to a following charter being cancelled because the vessel missed the cancelling date
for her next voyage due to detention.