Free Pratique in BPVOY4 Charterparties – Whether a Formality or Condition Precedent?

Deeksha Sahni & Bodhisattwa Majumder*

Introduction

The Voyage Charterparties often stipulate the mandatory requirement of tendering an effective Notice of Readiness (hereinafter “NOR”) for the calculation of laytime. The failure to provide such notice impediments the commencement of laytime, delays it to the period when a valid NOR was tendered. Among other criteria in an NOR, one of the criteria is granting “free pratique” to the vessel by the local authorities to enter a port. Free Pratique is an official permission from the port health authorities that the ship is without infectious disease or plague and the crew is allowed to make physical contact with shore, otherwise, the ship may be required to wait at quarantine anchorage for clearance.[1]  According to WHO, “free pratique” means permission for a ship to enter a port, disembark and commence operation, or for an aircraft, after landing, to disembark and commence its operation.[2] While it is true that obtaining free pratique is usually a formality and the fact that the loading and discharge operations can commence without the vessel being in free pratique does not substantiate anything, nevertheless where the parties have expressly required free pratique to be obtained for the laytime to commence, it must hold its ground.[3]

In absence of a free pratique, the vessel would be an arrived ship in name only, but not in reality so far as regarded the charterer whose duty and obligation-the loading or unloading-should begin on arrival.[4] The charterer might be quite ready to unload, or ready with cargo waiting to load the vessel, but the disqualification of the ship would prevent this and indeed would lead to the ship being sent away from the place of loading or discharge. She would thus never be at the disposal of the charterer so as to enable him to fulfill his obligation.[5]

Free Pratique- A Formality

In the absence of express wording, courts have generally leaned against constraint clauses as conditions precedent to liability.[6] In London Arbitration 9/98[7], where the clause in question merely required the master to immediately protest in writing if free pratique was not granted promptly, the tribunal rejected the suggestion that the granting of free pratique was a condition precedent to a valid notice of readiness being given held that it was merely a formality. The Voyage Charterparty does not stipulate any condition that the free pratique shall be obtained before tendering a valid NOR. The loading or discharging operation can commence even if the vessel is not in free pratique. Free pratique is essential merely to make NOR effective for the purposes of commencing laytime where the vessel has not yet commenced the loading/discharging operations.  It is merely an obstruction[8] to commence laytime which does not in any way invalidates an ineffective NOR which is still valid when the preliminary, routine matters or formalities[9] are pending such as obtaining free pratique which can be obtained at any time without causing delay to the loading/discharge[10].

It may also be argued that fulfilling the condition of free pratique shall be de minims and the de-minimis principle, (instead of strict application of condition precedents)shall be used in the absence of express clauses to obtain realistic and commercially viable results which are not harsh to the parties.[11] The balance of probabilities and the application of principles which a common man would recognize in order to solve legal problems[12] would suggest that the laytime shall commence when such Notice of Protest is issued by the master. Therefore, tendering of free pratique when such Notice of Protest has already been issued by the master shall not be the condition precedent to make the NOR effective for the laytime to commence where the clause is not sufficiently clear[13] for, the approach of the courts shall be not only to reflect upon the practicalities of a situation but also common sense[14].

Free Pratique- A necessary Condition Precedent

In the arbitration of “The Apollon”,[15] the Charterer in question provided that NOR could be tendered whether in free pratique or not. It subsequently transpired that four crew members did not have valid vaccination certificates, delaying the granting of free pratique for 13 days. The tribunal held that the owners were responsible for the delay because the provision that allowed for notice to be presented on the basis of the vessel being in free pratique or not was predicated on the basis that this would be a mere formality, which it clearly was not. If free pratique was incorporated as a condition precedent, its terms must be respected and given their intended meaning.[16] Whilst it is true that obtaining free pratique is usually a formality and the fact that the loading and discharge operations can commence without the vessel being in free pratique does not add anything, nevertheless where the parties have expressly required free pratique to be obtained for the laytime to commence, it must mean something.[17]

The vessel would be an arrived ship in name only, but not in reality, so far as regarded the charterer whose duty and obligation-the loading or unloading-should begin on arrival.[18] The charterer might be quite ready to unload, or ready with cargo waiting to load the vessel, but the disqualification of the ship would prevent this and indeed would lead to the ship being sent away from the place of loading or discharge. She would thus never be at the disposal of the charterer so as to enable him to fulfill his obligation.[19] In presence of a condition precedent, free pratique is not seen as a “mere formality”, as the doctrine has been overridden by an expressed clause.[20] A condition precedent emphasized the strictness of the common law with respect to the compliance of the free pratique clause for tendering a valid notice of readiness.[21]

The requirement of Free Pratique in BPVOY4 Charter-party

According to Clause 6.3 of the BPVOY4 form Charter-party

6.3 “Notwithstanding tender of a valid NOR by the Vessel such NOR shall not be effective, or become effective, for the purposes of calculating laytime, or if the Vessel is on demurrage, demurrage unless and until the following conditions have been met…

6.3.3 Free pratique has been granted or is granted within six (6) hours of the Master tendering NOR. If free pratique is not granted within six (6) hours of the Master tendering NOR, through no fault of Owners, Agents, or those on board the Vessel, the Master shall issue a protest in writing (“NOP”) to the port authority and the facility at the port (“Terminal”) failing which laytime or, if the Vessel is on demurrage, demurrage shall only commence when free pratique has been granted; and…”

And clause 7.3.2 states:

‘Laytime or, if the Vessel is on demurrage, demurrage shall commence…upon the expiry of six (6) hours after a valid NOR has become effective as determined under Clause 6…’

The BPVOY4 voyage charter-party thus stipulates the mandatory requirement of tendering an effective NOR for the calculation of laytime, failure to which will impediment the commencement of laytime from the period when a valid NOR was tendered[22] A valid NOR shall become effective for the purposes of calculating laytime when the free pratique has been granted or is granted within six hours of the Master tendering NOR.[23] If free pratique is not granted in this period, owners can protect themselves from being penalized under Clause 6.3 by issuing the appropriate Letter of Protest.  Clause 7 of the Charterparty governs the commencement of laytime. It states that the laytime shall start 6 hours after a valid NOR has become effective or when the vessel commenced loading, whichever occurs first.[24]

For a vessel not being in free pratique, the charter-party effectively marks the distinction between; (i) tendering an NOR with Notice of Protest and, (ii) tendering a NOR without Notice of Protest. The Charterparty sufficiently lays down when does the laytime commence in the second case when neither the free pratique nor the Notice of Protest is obtained but is silent upon the fact when does the laytime shall commence when the vessel though is not in free pratique but the master issues the Letter of Protest. Thus, the question of whether the issue of a letter of protest along with a NOR makes it effective for the purpose of commencement of laytime is left unanswered by the charter-party. There has also not been any judicial precedent on the question till date. However, the question was answered in obiter by the High Court of England and Wales in the case of Bow Cedar[25].

The Court while considering the question of the commencement of laytime in The Bow Cedar[26]held obiter that an NOR becomes effective on the master issuing a protest in these words, “If free pratique is not granted through no fault of the ship and the master issues a protest then it seems that the NOR becomes effective on the issue of his protest.” If it were not so (tendering Notice of Protest would not make the NOR effective), the owners would land into trouble and a huge economic loss would befall upon them.[27] The Court further was of the opinion that clauses 6.3.3 and 7.3.2 of the BPVOY4 Charterparty shall be read together for the purposes of providing when the laytime commences running as the words, “laytime shall commence when free pratique has been granted” at the end of clause 6.3.3 suggests that the purpose of clause 6.3 is not merely to state when does a valid NOR becomes effective. Therefore, both the aforementioned clauses shall be read harmoniously, clause 6.3.3 as stating when laytime commences in the event that free pratique is granted more than 6 hours after the issue of the NOR and to regard clause 7.3.2 as being impliedly subject to any contrary provision in clause 6.3.3.

Conclusion

Every Voyage Charterparty stipulates a period of laytime free of any charge for loading/unloading the cargo. Laytime commences when the vessel has arrived withan effective notice of readiness and the vessel ready to be loaded. Many jurisdictions, however, allow the commencement of laytime the moment the ship is berthed to the charterers physically. Proceeding with the general practice, taking the hypothesis of a compulsory NOR, practice dictates that the free pratique has to be obtained prior to tendering an NOR in order to make it valid. Free pratique indicates that the port health authorities have certified that the ship is without infectious disease or plague and the crew is allowed to make physical contact with shore. In cases when the stipulation mandates a free pratique, the vessel would be an arrived ship in name only, but not in reality because it is legally not yet ready. The prime reason while maritime jurisprudence faces a huge number of conflicts related to free pratique regulations stems from the reason of non-uniformity of clauses related to NOR or free pratique. The Courts have dealt regarding the nature of free pratique time and again, arriving at different rationales in each case. The only way ahead lies with organizations to have harmonized uniform statutes for the trading parties. The legislators of the world need to fill in the lacunae present in this area for lessening the disputes arising and also need to find commercially viable procedures. In absence of such a position, a need arises to have at least prior agreements or improved formats which cover every possible conflict arising out of a dispute due to difference in territorial law.

*Deeksha Sahni and Bodhisattwa Majumder are penultimate year students at National Law University, Mumbai with specialization in Maritime Law. 


[1] AET Inc Ltd v. Arcadia Petroleum Ltd (The” Eagle Valencia”) [2010] EWCA Civ 713.

[2] Article 1, International Health Regulations 1969, World Health Organisation.

[3] B.C. Mitra, Law relating to Bills of Lading, Charterparties and Contract of Affreightment, Universal Law, (5th Edn., 2018)

[4] John Wilson, Carriage of Goods by Sea, Pearson, (7th Edn., 2010)

[5] John and James White v. The Steamship Winchester Co, (1886) 23 SLR 342.

[6] Galaxy Energy International Ltd v. Novorossiysk Shipping Co (The ‘‘Petr Schmidt’’) [1997] 1 Lloyd’s Rep. 284

[7] London Arbitration 9/98—LMLN 488, 21 July 1998, Supra Note 27 at pp. 115; Clare Ambrose & Karen Maxwell & Michael Collett, London Maritime Arbitration, Informa Routledge, (4th Edn., 2018)

[8] Christopher Hill,  Lloyd’s Shipping Guide, Informa Law from Routledge, ( 6th Edn 2016), at pp. 216

[9] Compania De Naviera Nedelka S.A. v Tradax International S.A. (The “Tres Flores”) [1973] 2 Lloyd’s Rep 247.

[10] Richard Aikens & Richard Lord & Michael Bools, Bills of Lading, Informa Routledge, (2nd Edn., 2016); Shipping Developments Corporation S.A. v. V/O Sojuzneftexport (The “Delian Spirit”,) (1971) 1 Lloyd’s Rep. 64

[11] Michael Bundock, Shipping Law Handbook, Informa, (5th Edn., 2011); The Sati Rani Arbitration, 1977

[12] Lord Denning J, Ingram v. Little [1962] 1 Q.B. 31.

[13] LMLN 446—7 December 1996

[14] N.Z. Michalos v. The Food Corporation of India (The “Apollon”) [1983] 1 Lloyd’s Rep. 409

[15] London Arbitration 11/00—LMLN 545, 28 September 2000, John Schoefiled, Laytime and Demurrage,  Informa, (6th Edn., 2016) at pp. 116.

[16] The ‘‘Tielrode’’ Arbitration (1973); The “Pegasus” Arbitration (1975).

[17] B.C. Mitra, Law relating to Bills of Lading, Charterparties and Contract of Affreightment, Universal Law, (5th Edn., 2018)

[18] John Wilson, Carriage of Goods by Sea, Pearson, (7th Edn., 2010)

[19] John and James White v. The Steamship Winchester Co, (1886) 23 SLR 342.

[20] LMLN 488 – 21 July, 1998

[21] Armement Adolf Deppe v. John Robinson & Co Ltd (“The Austin Friars”) [1917] 2 K.B. 204

[22] Clause 6.3, BPVOY4 Voyage Charter-party.

[23] Clause 6.3.3,BPVOY4 Voyage Charter-party.

[24] Clause 7.3.2,BPVOY4 Voyage Charter-party.

[25] Odfjfell Seachem A/S v. Continentale Des P´etroles et D’Investissements and Anr (The “Bow Cedar”) LMLN 656, 12 January 2005 at ¶49; Donald Davies, Commencement of Laytime, Informa Routledge (4th Edn., 2016), at  pp.211

[26] Ibid.

[27] Donald Davies, Commencement of Laytime, Informa Routledge (4th Edn 2016),  at p.211

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