Court decides laytime dispute in favour of charterers

Trans Trade RK SA -v- Sebat Shipping and Trading Company (Sebat) [2026] EWHC 950 (Comm)

The Commercial Court has allowed an appeal against an arbitration award that decided that, absent a valid notice of readiness (NOR), the trigger for laytime to start running was the commencement of cargo operations.

In doing so, the Court revisited the Court of Appeal decisions in ‘The Happy Day’ and ‘The Mexico I’ and confirmed that an invalid NOR is incapable of triggering the commencement of laytime in the absence of a waiver, estoppel or contrary agreement. Furthermore, there must be actual waiver, in the sense that the charterer must be aware of the invalid NOR before it can waive it, there is no principle of “deemed waiver”.

The background facts

The claimant Charterers chartered the M/V Sebat from the defendant Owners for a voyage to carry a cargo of barley from Constanta, Romania to Brake, Germany. The charterparty was evidenced by a recap and on the Synacomex 2000 form, incorporating provisions as to laytime and fumigation.

The vessel loaded her cargo at Constanta, which was fumigated on completion of loading. The allowed laytime for discharge of the cargo was three days 18 hours and 36 minutes.

On arrival at Brake, at the end of sea passage, the vessel’s master tendered a Notice of Readiness (NOR) on 10 May 2022 at Brake pilot station, where the vessel anchored.

The vessel proceeded to berth, where it was discovered that, following the cargo’s fumigation at Constanta, the phosphine fumigant levels were substantially in excess of the levels at which the port would permit discharge.

The vessel was ordered to leave the berth and return to anchorage. Despite ventilation, the fumigant concentration remained high for a considerable period of time. The vessel did not berth again until 78 days after she had arrived at Brake port, until 27 July 2022. She completed her discharge on 30 July 2022.

The dispute

The Owners were the claimants in the arbitration; they claimed for demurrage in the sum of US$844,131.25 (US$4,114.06 at Constanta and US$840,017.19 at Brake) and for discharge port expenses in the sum of €21,616.40.

The loading port demurrage was not in dispute. The issue was whether Owners or Charterers were responsible for the delays at the discharge port, Brake. The parties disagreed as to whether a valid NOR had ever been tendered, whether laytime had commenced, and if yes, how it ran.

The Owners argued that the NOR was validly tendered at Brake pilot station, where the vessel anchored.

The Owners had also presented a claim for an indemnity under the fumigation clause of the charterparty, pursuant to which Charterers undertook to pay all the necessary expenses incurred because of the fumigation. Alternatively, Owners argued the fumigation had been undertaken in breach of the charterparty clause.

The Charterers argued that Owners had not proved that the NOR had been given from a usual waiting place. As such, the NOR was tendered at the same time as the end of sea passage and the relevant log entry recorded the vessel proceeding from the place at which NOR was given to anchorage; it followed that the vessel had not arrived at the time and place where the NOR had been tendered.

The Charterers maintained that this was the end to the demurrage claim, albeit accepting that Owners might have a claim for detention depending upon which party was liable for the delay encountered.

The arbitral award

The Tribunal ruled that the vessel prematurely tendered her NOR at the pilot station, at the same time as ending her sea passage, before anchoring at the agreed or “usual waiting place,” meaning that the vessel was not yet in a position to give a valid notice. This NOR was tendered before the vessel became an arrived ship, from which it followed that NOR as tendered was invalid when served. No further NOR was tendered at Brake.

As such, absent a valid NOR, the trigger for laytime to commence was commencement of cargo operations. The Tribunal accepted Owners’ submissions that laytime commenced when hatches were opened, upon the vessel’s first berthing (around 14 May 2022).

The Tribunal also held that Owners’ indemnity/damages under the fumigation clause was an indemnity/damages claim arising out of the detention of the vessel. This claim failed because it had been liquidated by the demurrage already awarded.

The Owners lodged an application under s.57 of the Arbitration Act 1996 (1996 Act) for clarification of the Award.

In dealing with this application, the Tribunal referenced the Court of Appeal decision in ‘The Happy Day [2002]’ 2 Ll.Rep.487, in which it was held that the commencement of cargo operations amounted to a waiver by a charterer of its right to argue or rely upon the invalidity of the NOR.

The Tribunal clarified the Award to state that absent tender of a valid NOR in circumstances such as here, i.e. where an NOR otherwise valid in form was rendered invalid because it was tendered prior to the arrival of a vessel, the trigger for laytime to commence, as if a valid NOR had been served at that time, was the commencement of cargo operations.

The Tribunal also accepted the Owners’ submission that laytime commenced when hatches were opened at 05:50 on Saturday 14 May, insomuch as this action triggered time to run as if valid NOR had been tendered at that point. The Tribunal found that laytime commenced at 08:00 on Monday 16 May 2022.

The s.69 appeal

The Charterers obtained leave to appeal the Award under s. 69 of the 1996 Act on the basis that the judge granting leave thought the Tribunal had misapplied the decision in ‘The Happy Day’ and had erred as to the appropriate principle to be applied to determining the commencement of laytime.

The questions of law which the Commercial Court had to answer were as follows:

1. Where the owners of a vessel under a voyage charterparty fail to serve a valid NOR at a load or discharge port and there is no agreement, waiver or estoppel having the effect that an invalid notice is treated as valid, when does laytime start to run, if at all?

2. On the facts found by the Tribunal, when (if at all) did laytime start to run at Brake?

Both Owners and Charterers agreed that, in answer to question (1), laytime would not run.

However, they disagreed on whether or not the Tribunal had decided that Charterers had waived the invalidity of the Owners’ NOR, thereby permitting laytime to commence.

The Charterers argued that the Tribunal had mistakenly concluded that laytime commenced even though an invalid NOR was tendered.

The Owners argued that, though the NOR was held to be invalid when tendered, the Tribunal had found that Charterers had waived that invalidity by election or by the principle of “deemed waiver” so that laytime began to run upon the commencement of cargo operations.

The Charterers disagreed, observing that there was nothing in the Award to suggest that the issue of waiver had been raised before the Tribunal.

The Commercial Court decision

The Court allowed the appeal. It held:

1. The Tribunal had decided that, as a matter of law, where an invalid NOR was tendered because it was premature, laytime began to run from the commencement of cargo operations as if a valid NOR had been tendered at that point of time. The Tribunal was not determining an issue of waiver.

2. Owners had not advanced a case based on waiver and the Tribunal had not addressed such a case. Although the Tribunal had referred to ‘The Happy Day’ decision in support of its conclusion, that did not mean it was addressing the issue of waiver. There was no discussion by the Tribunal of the principles discussed and applied by the Court of Appeal in ‘The Happy Day’ or of the doctrine of waiver or its ingredients, there were no findings that the Charterers were aware that the NOR had been served prematurely or of any other circumstances that might have supported a finding of waiver.

3. The Tribunal had held that laytime commenced notwithstanding that the NOR as tendered by the Owners was invalid, without regard to any issue of waiver; this was erroneous, as per ‘The Mexico I [1990]’ 1 Lloyd's Rep 507.

4. There was no principle of "deemed waiver". There had to be actual waiver, the Charterers had to know the NOR was invalid before they could waive its invalidity, thereby allowing laytime to commence.

5. The Tribunal had erred as a matter of law in concluding that laytime began to run upon the commencement of cargo operations even though the NOR was invalid when it was tendered. If the Tribunal had sought to resolve the issue of the commencement of laytime, on the ground of “deemed waiver”, no such legal principle existed in so far as it differed from actual waiver.

The Court proceeded to vary the Award such that Owners recovered only the loading port demurrage and the discharge port expenses. This meant that the Owners’ fumigation claim did not succeed because it was treated as part of the laytime/demurrage regime. Once the Court found that no valid NOR had been given and laytime never started, that mechanism could not apply. As a result, and because no separate claim was established, the Owners could not recover for the delay.

Comment

The decision highlights the importance of tendering valid NORs in strict compliance with the scheme of the charterparty; the commencement of discharge does not mean that laytime runs automatically – as the Court highlighted, relying on ‘The Mexico I’, the NOR is not a delayed-action device, effective to start the laytime automatically when the ship becomes ready to discharge the contractual cargo.

From an Owners’ perspective, the practical lesson is clear: if there is any doubt as to the validity of an NOR (for example, due to questions as to arrival or readiness), a fresh NOR should be tendered promptly once the vessel is indisputably an arrived ship and fully ready in all respects (without prejudice to the initial NOR).

From a Charterers’ perspective, the case highlights the need to scrutinise any NOR and promptly reserve rights if defects are suspected. Charterers should not rely on silence: if they proceed with operations, they should make clear that they do so without waiving their rights.

Our Marine Team can advise on a wide range of charterparty-related issues, including laytime and demurrage dispute. For advice or assistance, please get in touch.