Two Minute Case-Law: The “Alpha Harmony”

The “Alpha Harmony” was a lesson in paying close attention to the Laycan provisions in voyage charterparties. The Vessel tendered NOR on a Sunday morning. Charterers under both a Head Charter and a Sub-Charter had a right to cancel later on the Sunday (12:00 under the sub-charter; 23:59 under the head charter). Charterers under each Charterparty purported to cancel.

Analysis under the Sub-Charter

Clause 14 of the CP provided for  NOR to be tendered during certain hours on weekdays or Saturdays. NOR could not be tendered on Sundays. The cancelling clause provided that if  NOR was not tendered “per Cl. 14” by the cancelling date, Charterers were entitled to cancel.

Owners tendered NOR on Sunday morning. The cancelling date was 12:00 on the same day. Charterers cancelled, arguing that the NOR was not tendered “per Cl. 14” because Clause 14 required that the NOR could not be tendered on a Sunday.

Held: Charterers were entitled to cancel.

Analysis under the Head Charter

Charterers under the Head Charter (i.e. Disponent Owners under the Sub-Charter) purported to terminate. Under the Head Charter, the cancelling date was 23:59 on the Sunday. Clause 17 contained some administrative formalities for NOR, including an express reference to Clause 70, which stated that Laytime was to run from business opening on the next day if NOR served outside of the stated hours.

Owners argued that the Cancelling provision allowing up to 23:59 was inconsistent with a requirement to serve during office hours. Owners argued that the CP anticipated that the NOR was valid for one purpose (avoiding triggering cancellation) but not for another (commencement of laytime).

Held: Charterers were not entitled to cancel.

Key takeaway

The Courts are continuing to apply a “literal” approach to the terms of contracts. In this case, overturning the back-to-back and (arguably) more “commercial” approach of the arbitrator.

As ever, being back-to-back is critical for disponent owners. For everyone else, make sure you check your contracts. If the laycan includes a weekend, set out expressly what happens if NOR is served outside office hours.