Trans Trade RK SA v Sebat Shipping: when an invalid NOR leaves laytime stranded

The Commercial Court has allowed a charterer's appeal against an arbitral award of over US$840,000 in discharge port demurrage, holding that the Tribunal erred in law by treating the commencement of cargo operations as an automatic trigger for laytime where no valid notice of readiness had ever been served.

The dispute arose from a voyage charterparty dated 9 April 2022 for the carriage of Ukrainian barley from Constanta, Romania, to Brake, Germany, aboard the vessel Sebat. On arrival at Brake on 10 May 2022, the Master tendered a notice of readiness (NOR) at the pilot station at 1000 hours — at precisely the moment the vessel ended her sea passage, before she had become an arrived ship. The Tribunal found the NOR invalid on that basis. No further NOR was ever tendered.

The vessel berthed on 13 May. The following morning, hatches were opened in preparation for discharge, but dangerously elevated phosphine levels — a residue of fumigation carried out at the load port — caused the vessel to be ordered back to anchorage. She did not return to berth until 27 July 2022, completing discharge on 30 July.

The Tribunal awarded demurrage of US$840,017.19 for the discharge port, reasoning in its original award that "it is trite law that, absent tender of a valid NOR, the trigger for laytime to commence is the commencement of cargo operations." Following a section 57 application by the owners, the Tribunal amended paragraph 63 of the award to cite The Happy Day [2002] 2 Lloyd's Rep 487 as the authority for this proposition.

The charterers obtained permission to appeal on two questions of law. By the hearing, the owners had conceded the second question (concerning which working day laytime would have begun, had it run at all), leaving only the first: whether, in the absence of a valid NOR and without any agreement, waiver, or estoppel, laytime can commence at all.

MacDonald Eggers KC held that it cannot. Applying the principles in The Mexico I [1990] 1 Lloyd's Rep 507 and The Happy Day, the court confirmed the orthodox position: an invalid NOR is incapable of triggering laytime. Time will not run until a valid NOR is served, unless the invalidity is displaced by agreement, waiver, or estoppel.

Crucially, the court found that the Tribunal had not in fact applied any doctrine of waiver. There was no reference to waiver anywhere in the award, no findings that the charterers were aware of the NOR's invalidity, and no indication the point had been argued before the Tribunal at all. The owners' post-award attempt — via the section 57 application — to recharacterise the Tribunal's reasoning as a finding of "deemed waiver" was rejected as a retrospective reconstruction.

The court further held that no freestanding principle of "deemed waiver" exists that operates on less demanding conditions than actual waiver. The Happy Day does not establish that the mere commencement of cargo operations invariably triggers laytime. Potter LJ's three-stage formulation in paragraph 85 of that judgement remains conditional: it requires the charterers to have knowledge of the underlying facts relevant to their choice, and their conduct must amount to an unequivocal communication of an election not to rely on the invalidity. None of those findings had been made here.

On remedy, the court declined to remit the demurrage question to the Tribunal, varying the award directly to limit the owners' recovery to US$4,114.06 (load port demurrage) and €21,616.40 (discharge port expenses). The owners' alternative claim under clause 11 of the charterparty — relating to fumigation expenses — was not remitted, as no respondent's notice had been filed contending that the award should be upheld on that basis, as required by CPR PD62 paragraph 12.6. The costs of the arbitration were remitted to the Tribunal for fresh consideration.

The judgement underlines that tribunals applying The Happy Day must make express findings on each ingredient of waiver — awareness of the invalidity, unequivocal conduct, and absence of reservation — and that the absence of those findings is fatal to a demurrage claim where the NOR is invalid.