Shipping Update - Court of Appeal Considers Notice of Readiness Under Shellvoy 5

In AET Inc Ltd v Arcadia Petroleum Ltd (The "Eagle Valencia") [2010] EWCA Civ 713, the Court of Appeal has considered the circumstances in which a valid Notice of Readiness can be tendered pending grant of free pratique under the Shellvoy 5 form together with Shell Additional Causes (February 1999). Clyde & Co acted for the successful charterers in this case.

The Facts

The claimant owners entered into a voyage charterparty with the defendant charterers dated 18 December 2006. The wording was based on Part II of the Shellvoy 5 form together with Shell Additional Clauses – February 1999.

For ease of reference the Court subdivided Shell Additional Clause 22 (SAC 22) into numbered sentences and the numbers after the number 22 indicate the relevant section of the original (undivided and un-numbered) SAC 22.

SAC 22.1 provided that if owners failed to obtain free pratique within six hours after notice of readiness was tendered, then the notice would be invalid. However, SAC 22.5 provided that the presentation of the notice of readiness and the commencement of laytime would not be invalid "where the authorities do not grant free pratique or customs clearance at the anchorage or other place but clear the vessel when she berths". Under those conditions the notice of readiness would be valid unless the timely clearance of the vessel was caused by the fault of the vessel (SAC 22.6).

Notice of Readiness was tendered at the second load port, Escravos, at 11.48 on January 15, 2007. At that stage the vessel was required to wait at anchorage since the berth was occupied. The port health authority representatives boarded the vessel at the anchorage at 07.30 on January 16 and free pratique was granted at 08.30 the same day.

Owners contended that laytime began at Escravos 6 hours after they tendered notice of readiness, namely at 17.48 hours on 15th January. Charterers submitted that laytime did not commence at Escravos until the vessel was all fast at the berth since free pratique was not obtained within six hours as required by SAC 22 and the Notice of Readiness was therefore invalid.

The High Court

Before Mr Justice Walker in the High Court, owners argued that the Notice of Readiness was valid given that the purpose of SAC 22.5 and 22.6 was to provide that the original notice of readiness was not invalidated where timely clearance within six hours of tender was unobtainable through no fault of the vessel, in particular where timely clearance was not delayed...