The Commercial Court had to consider whether, under two separate but related charterparties, a valid Notice of Readiness had been given under each charter such that the charterers were not entitled to exercise their options to cancel, writes Caroline Stewart.
Whilst a Notice of Readiness (NOR) is most commonly associated with its role in the commencement of laytime and demurrage, the case of The Alpha Harmony serves as a reminder that it is important to be aware of all the roles of an NOR.
In this case, the Commercial Court had to consider whether, under two separate but related charterparties, a valid NOR had been given under each charter such that the charterers were not entitled to exercise their options to cancel.
The head charter was between the owner, Oldendorff, and ADM who then in turn sub-chartered to Biligent. The head charter was on amended Norgrain terms and the sub-charter on an amended Baltimore Form C berth grain form. The relevant laycan period in both charterparties was 31 May which was subsequently narrowed to end on 10 May, with 10 May being a Sunday. The vessel tendered NOR at 0704 on 10 May.
Both charterparties provided express requirement for the times at which NORs could be delivered, between 0800-1700 on weekdays and between 0800-1100 on Saturday, but neither made any provision for delivery on a Sunday. Both Biligent and ADM cancelled their respective charterparties.
Cancellation ruled valid
The cancellation provisions were on different terms. For Biligent the right to cancel arose in circumstances were the NOR was not delivered in accordance with clause 14. Clause 14 set out the office hours requirements as discussed above. Mr Justice Teare did not agree with the Tribunals’ views and ruled that the cancellation under this charterparty was valid. In his opinion the provisions in both clause 14 and clause 16 were consistent with each other and when read together they produced one simple and clear meaning. The NOR had to be tendered within office hours by a certain date. If this was not done then the right to cancel arose.
In the head charter, clause 4 was amended to provide a cancellation option if the notice was not tendered and accepted before 2359 on 10 May. In addition the wording setting out the requirements for the notice being within office hours was deleted and instead “see also clause 70” were added. Clause 70 did contain the office hours requirements but was silent as to the position on a Sunday. ADM argued that the office hours requirements were incorporated into the cancellation provisions due to the words “see also” and therefore allowing them to cancel.
Mr Justice Teare disagreed. He felt the position was clear and that the parties had not intended to go any further than reading clause 4 together with the notice requirements in clause 17. Clause 70 was not relevant for cancellation it was merely incorporated in the charterparty to assist with laytime.
Therefore the notice had been given in time and ADM had no right to cancel.
Whilst this decision may appear to be very uncommercial, the analysis of the different terms and contractual regimes is logical and therefore serves as a stark reminder of the importance to achieve back-to-back terms where the rights to cancel are of key importance in a charterparty chain.
Biligent Shipping Pte Ltd and ADM International SARL v Oldendorff Carriers (The “ALPHA HARMONY”) [2019] EWHC 2522 (Comm)