Monday, January 24, 2011

Necochea swell clause dispute

The vessel was fixed on amended “GENCON”, English law to apply. Necochea was declared as one of discharge ports.

Port of Necochea is well-known for regular heavy waves preventing entering or leaving the port. If the height of waves is more than 2.10 meters, a vessel is not authorized to enter or leave the port. It may last for an uncertain period of time. In order to save shipowner’s time, and to protect shipowners’ interests against such uncertainty, Necochea swell clause is usually incorporated in the charter party.

The following wording was applied to the fixture:
“If the vessel is unable to enter and/or sail due to swell and/or bad weather, the Master to be permitted to tender notice of readiness at/off the port, and time to count as per Charter party. Any/all time/cost lost due to shifting due to swells to be for Charterers’ account.”

Apparently, the first sentence is purely related to tendering NOR. If the vessel is unable to enter due to swell, the Master tenders NOR at/off the port limit. It is pretty clear. Next, if the vessel is unable to sail, does it mean that the Master is permitted to tender NOR at/off the port limit? Is not it strange and pointless?

The second sentence is even more vague. It says about a kind of “shifting due to swell”, but, again, it does not stipulate whether laytime to count or not if the vessel can not leave the port due to swell.

Strange, as it may seem, the vessel entered the port without any problem.

The swell problem occurred upon completion of discharge operation. From the statement of facts, it follows, the vessel completed discharge operations at Necochea port on Saturday at 14.05. Final draft survey was carried out by P&I surveyor from 14.30 till 16.30. Only at 17.20, the port Authorities informed the height of swell was still 3.00 meters, and, according to port regulations, vessel was not authorized to sail. Vessel remained alongside waiting for weather conditions to improve till the end of Saturday. On Sunday morning, at 06.25, port authorities informed the height of swell was 2.10 meters and the vessel was authorized to sail. However, clearance was not performed until 08.00. Finally, the vessel sailed at 09.15 on Sunday.

Shipowner’s position is that the time from Saturday 14.05 till Sunday 09.15 to count as laytime (with exception of the final draft survey from 14.30 till 16.30).

The Charterers replied: “Indeed, there is a certain clause in the c/p named ‘necochea swell clause’, however, same does not work in owner’s benefit in this respect”. In fact, the clause says: “If the vessel is unable to enter and/or sail due to swell and/or bad weather, the Master to be permitted to tender notice of readiness at/off the port, and time to count as per Charter party. Any/all time/cost lost due to shifting due to swells to be for Charterers’ account.” The first sentence is purely related to tendering N.O.R. while the second is related to shiftings and etc.”

Shipowners became flabbergasted with such interpretation of the clause and seeked for an expert's advise.

The Expert advised: “Unfortunately, the clause is not as clear as one would wish. The problem is the reference to vessel being unable "to sail due to swell or bad weather...the master may give notice of readiness...", which raises the question why should the master give notice if the vessel is prevented from sailing? The context in which the provision appears makes no sense UNLESS the meaning is that the time lost when the vessel is unable to leave because of swell/bad weather will count against the charterers.

The general position would be that, if the C/P is silent on this issue, the vessel's inability to leave the berth/port because of inclement weather after completion of loading or discharge constitutes temporary hindrance pertaining to the navigation of the vessel, which falls within the owners' sphere of risk and responsibility. The owners may argue, however, in the present case that the contract does in fact contain provisions which govern this situation and, as indicated above, the provision would only make sense if it is applied to the situation at hand and that the time lost would, therefore, count against the charteres.”

Owners replied to the Charterers asking if the Charterers are trying to make a profanation of the clause, as the purpose of Necochea clause is to clearly describe the natural phenomenon effecting this particular port, when a vessel is unable to enter and/or leave because of the swell. Owners also wrote: “Necochea swell clause governs this situation, otherwise, it makes no sense to apply/name necochea swell clause as such, unless the meaning of it is that the time lost due to swell shall count against the Charterers to save Owners expenses.”

The Charterers reverted with disagreement. They wrote: “The existence of this clause in the governing c/p,gives a number of rights and immunities to both contractual parties, however same must be in line with the wording of the clause. We do believe that Owners' interpretention is really an exaggerated one and closer to Owners wishes . Eventhough we do entirely disagree with Owners' position , as a good gesture could propose to share half the delay at Necochea.”

Owners had to agree with the Charterer’s proposal.