Six-Hours Notice Time for LPG Charters

February 18, 2013

An interesting question recently arose by a delegate in HC’s Advanced Demurrage training course that I would like to share with my readers: “With regard to the Notice of Readiness (NOR), if a LPG charter requires the Vessel to take product for conditioning/gassing up, when does the six hours free time apply (for conditioning or loading)?”

Normally the Vessel tenders the 1st NOR when ready to take conditioning parcel for gassing up; and, tenders a 2nd NOR when ready for actual loading (after gassing up completed). Under a port charter like ASBATANKVOY, laytime commences after the expiration of six hours at each port, or upon the Vessel’s arrival in berth, whichever first occurs. That said, how is the six hours notice time to be treated when the Vessel tenders twice?

Here’s the comprehensive Presentation Clause that pertains to the fixture in question:

Presentation Clause:

The vessel is to present cargo tanks and lines under n2 with max 0.2 pct (2000 ppm) o2 and dew point not warmer than minus 45 deg c, ready to gas up with ethylene.

The vessel shall prior bringing the cargo tanks under n2 bring the cargo tanks under breathable air and the master is to carry out visual inspection and issue certificate of cleanliness. All time and costs for nitrogen purging to be for Owner’s account.

Charterer shall provide ethylene for gassing-up/cooling down operation, ready and available to the vessel upon arrival alongside load berth. Costs for supply of the product to be for Charterers account. If product for gassing up is not available upon vessels readiness then time waiting for gassing up product to count against laytime. All time used for gassing up to be for owner’s account.

Gassing up to be done at anchorage. Cost and time of shifting from berth to anchorage and back after completion of gassing up is for Owner’s account.

Any product lost during conditioning in excess of 10 MT shall be for Owner’s account and reimbursed to Charterer at Charterer’s documented FOB price. Any product remaining on board after conditioning shall be included in the Bills of Lading quantity.

Without the matter of the six hours notice time expressly defined within the charter clause, in order to reach a conclusion as to how it should be treated, we turn to an arbitration decision on point.

In a case decided by the Society of Maritime Arbitrators in New York, the Panel held that with regard to the Presentation Clause, once the Vessel has been gassed up/cooled down laytime immediately starts to run (the six hours notice time already expired after the first NOR). Following is a recap of this arbitration award:

Cheshire, SMA No. 3146. (ASBATANKVOY)

The panel majority finds in favor of the Owner for the following: 1) The commencement of laytime applicable under the Propylene Presentation Clause is deemed to begin after purging and prior to cooling the cargo (ref. SMA 3129). 2) Clause C states, “…one to two safe berth(s) with Charterer’s option to call second berth at either loadport at no extra costs to Charterers.” Shifting time counts to the second berth due to the phraseology in Clause C drawing a distinction to “costs” thereby separating that issue from the “time” issue covered in Clause 9, Part II. 3) Charterers charge Owners with a 2H 9M delay between the N2 purging and commencement of propylene conditioning to the Vessel’s non-readiness which is denied by the panel on account that the Master’s signed Time Sheet shows that this time was utilized for tank inspections and connecting cargo and vapor lines.

Lastly, Owners properly deduct the time consumed on account of gassing up/cooling down prior to load operations. However, the period prior to commencement of these operations had not been deducted. The panel finds in favor of the Charterer that this time should also be deducted as the Vessel is not in a ready state to load. It is deemed that laytime commences immediately upon completion of Owner’s tank preparation without providing six-hours Notice Time after.

Source: The TANKVOYager Vol. 2 No. 2, Apr/Jun 1996