EYES WIDE EYES WIDE OPENOPEN

Recent Developments in Recent Developments in Tanker Voyage CharteringTanker Voyage Chartering

Singapore, March 2006

MOVING THE GOALPOSTSMOVING THE GOALPOSTS

• The development of house The development of house charterparties:charterparties:

– Early loading clauseEarly loading clause

Shellvoy 5 v. Shellvoy 6Shellvoy 5 v. Shellvoy 6

London Arbitration 27/04London Arbitration 27/04

• Shellvoy 5, Cl. 4 of the 1999 Shellvoy 5, Cl. 4 of the 1999 Additional Clauses:Additional Clauses:

““If, with Charterers prior consent and If, with Charterers prior consent and agreement, the vessel loads earlier than agreement, the vessel loads earlier than commencement of laydays then charterers commencement of laydays then charterers shall have the benefit of such time saved when shall have the benefit of such time saved when calculating laytime and/or demurrage at calculating laytime and/or demurrage at subsequent ports…subsequent ports… ” ”

MOVING THE GOALPOSTSMOVING THE GOALPOSTS

Loading completes two days before Loading completes two days before the commencement of laydays.the commencement of laydays.

Owners: Only time spent loading should be credited to the Owners: Only time spent loading should be credited to the charterers.charterers.

Charterers: All time up to the commencement of laydays Charterers: All time up to the commencement of laydays should be credited to the Charterersshould be credited to the Charterers

MOVING THE GOALPOSTSMOVING THE GOALPOSTS

HELD:HELD:

– The time between the completion of The time between the completion of loading and the commencement of the loading and the commencement of the original laydays could not be credited to original laydays could not be credited to the charterers as it would not have the charterers as it would not have counted as laytime under normal counted as laytime under normal circumstancescircumstances

MOVING THE GOALPOSTSMOVING THE GOALPOSTS

The Shellvoy 6 effectively overturns this The Shellvoy 6 effectively overturns this arbitration. arbitration.

Cl. 12 (2): Cl. 12 (2):

““Charterer shall have the benefit of such Charterer shall have the benefit of such time saved by way of offset from any time saved by way of offset from any demurrage incurred. demurrage incurred. Such benefit shall be Such benefit shall be the time between the commencement of the time between the commencement of loading until the commencement of the loading until the commencement of the original laydaysoriginal laydays”.”.

MOVING THE GOALPOSTSMOVING THE GOALPOSTS

NOTICESNOTICES

Part I (B) of the Shellvoy 6:Part I (B) of the Shellvoy 6:

the owners undertake not to “the owners undertake not to “negotiate or negotiate or enter into any business or give the current enter into any business or give the current Charterers any further options that may Charterers any further options that may affect or alter the programme of the affect or alter the programme of the vessel as given in this clausevessel as given in this clause“ “ unless it is unless it is ““with Charterers’ prior consentwith Charterers’ prior consent””

Shell’s Explanatory Note:Shell’s Explanatory Note:

““New wording inserted to ensure the New wording inserted to ensure the Owner keeps Charterers informed of Owner keeps Charterers informed of the schedule of the vessel prior to the schedule of the vessel prior to loadingloading”.”.

And so much more…And so much more…

NOTICESNOTICES

Preceding voyages…Preceding voyages…

Obligations under preceding charterparties:Obligations under preceding charterparties:

e.g. Asbatankvoy option to renegotiate.e.g. Asbatankvoy option to renegotiate.

(No such provision under the Exxonmobilvoy (No such provision under the Exxonmobilvoy 2005)2005)

NOTICESNOTICES

Part II Cl. 11:Part II Cl. 11:

““As soon as Owners become aware that the vessel will not be As soon as Owners become aware that the vessel will not be ready to load by noon on the terminating date, Owners will give ready to load by noon on the terminating date, Owners will give notice to Charterers declaring a new readiness date and ask notice to Charterers declaring a new readiness date and ask Charterers to elect whether or not to terminate this Charter.Charterers to elect whether or not to terminate this Charter.

Within 4 days after such notice, Charterers shall either :Within 4 days after such notice, Charterers shall either :(i) declare this charter terminated or(i) declare this charter terminated or

(ii) confirm a revised set of laydays which shall be (ii) confirm a revised set of laydays which shall be amended such that the new readiness date stated shall be the amended such that the new readiness date stated shall be the commencement date and the second day thereafter shall be commencement date and the second day thereafter shall be the termination date orthe termination date or

(iii) agree a new set of laydays or an extension to the (iii) agree a new set of laydays or an extension to the laydays mutually acceptable to Owners and Charterers.”laydays mutually acceptable to Owners and Charterers.”

CANCELLATIONCANCELLATION

And if the charterer does not And if the charterer does not exercise its options under Cl. 11???exercise its options under Cl. 11???

– Breach?Breach?

– Waiver of right to cancel?Waiver of right to cancel?

CANCELLATIONCANCELLATION

Obligation to notify charterers:Obligation to notify charterers:

Shellvoy 5:Shellvoy 5:

““If Owners If Owners reasonably concludereasonably conclude that, despite the exercise of due that, despite the exercise of due diligence, the vessel will not be ready to load by noon on the termination diligence, the vessel will not be ready to load by noon on the termination date, Owners date, Owners maymay, as soon as they are able to state with reasonable , as soon as they are able to state with reasonable certainty a new date when the vessel will be ready, give notice to certainty a new date when the vessel will be ready, give notice to Charterers declaring the new readiness date and asking Charterers to elect Charterers declaring the new readiness date and asking Charterers to elect whether or not to terminate the charterwhether or not to terminate the charter

Shellvoy 6: Shellvoy 6:

““AsAs soon as Owners soon as Owners become awarebecome aware that the vessel will not be ready to that the vessel will not be ready to load by noon on the terminating date, Owners load by noon on the terminating date, Owners willwill give notice to give notice to Charterers declaring a new readiness date and ask Charterers to elect Charterers declaring a new readiness date and ask Charterers to elect whether or not to terminate this Charter.”whether or not to terminate this Charter.”

CANCELLATIONCANCELLATION

Exxonmobilvoy 2005:Exxonmobilvoy 2005:

““laytime shall commence no earlier laytime shall commence no earlier than 48 hours after the tender of than 48 hours after the tender of NOR or on the commencement of NOR or on the commencement of loading, whichever occurs firstloading, whichever occurs first ” ”

CANCELLATIONCANCELLATION

NOTICE OF READINESSNOTICE OF READINESS

Shellvoy 6, Cl. 13(1)(a)(ii):Shellvoy 6, Cl. 13(1)(a)(ii):

““If owners fail…If owners fail…

to obtain free pratique to obtain free pratique unless this is not unless this is not customary prior to berthingcustomary prior to berthing……

……then the original notice of readiness then the original notice of readiness shall not be valid.shall not be valid.””

Shellvoy 6, Cl. 13(1)(a)(iii):Shellvoy 6, Cl. 13(1)(a)(iii):

The owners have on board “The owners have on board “all all papers/certificates required to perform this papers/certificates required to perform this Charter, either within 6 hours after notice Charter, either within 6 hours after notice of readiness or when time would otherwise of readiness or when time would otherwise normally commence under this Charternormally commence under this Charter” ” failing which the original NOR becomes failing which the original NOR becomes invalidinvalid..

NOTICE OF READINESSNOTICE OF READINESS

Shellvoy 6, Cl. 13(1)(a)(iii):Shellvoy 6, Cl. 13(1)(a)(iii):

Valid documentation a condition subsequent Valid documentation a condition subsequent to the tender of a valid NORto the tender of a valid NOR

London Arbitration 6/84 – Gas free London Arbitration 6/84 – Gas free certificatescertificates

Shellvoy 6, Cl. 13(3) - “THE HAPPY DAY” Shellvoy 6, Cl. 13(3) - “THE HAPPY DAY”

NOTICE OF READINESSNOTICE OF READINESS

Exxonmobilvoy 2005, Cl. 11:Exxonmobilvoy 2005, Cl. 11:

““At each load port or place, the Vessel At each load port or place, the Vessel shall be fully bunkered for the intended shall be fully bunkered for the intended voyage and the Notice of Readiness shall, voyage and the Notice of Readiness shall, without limitation, confirm such without limitation, confirm such bunkering.bunkering.””

– Practical difficultiesPractical difficulties

NOTICE OF READINESSNOTICE OF READINESS

CHANGE OF ORDERSCHANGE OF ORDERS

Cl. 26 Shellvoy 6 v. Cl. 26 Shellvoy 6 v. Shellvoy 5Shellvoy 5::

““If after loading and/or discharging ports have been If after loading and/or discharging ports have been nominated, Charterers wish to vary such ports or thei rotation, nominated, Charterers wish to vary such ports or thei rotation, Charterers may give revised orders… as the case may be. Charterers may give revised orders… as the case may be. Charterers shall reimburse Owners at the demurrage rate for Charterers shall reimburse Owners at the demurrage rate for any deviation or delay which may result therefrom and shall any deviation or delay which may result therefrom and shall pay at replacement cost for any bunkers consumed. Charterers pay at replacement cost for any bunkers consumed. Charterers shall not be liable for any other loss or expense which is shall not be liable for any other loss or expense which is caused by such variation caused by such variation unless promptly on receipt of the unless promptly on receipt of the revised orders Owners notify Charterers of the expectation of revised orders Owners notify Charterers of the expectation of such loss or expense in which case unless Charterers promptly such loss or expense in which case unless Charterers promptly revoke such orders, Charterers shall be liable to reimburse revoke such orders, Charterers shall be liable to reimburse Owners for any such loss or expense proven.Owners for any such loss or expense proven.””

cf. Exxonmobilvoy 2000/2005cf. Exxonmobilvoy 2000/2005

PUMPING WARRANTIESPUMPING WARRANTIES

Part I (A)(I)(vii) of the Shellvoy 6:Part I (A)(I)(vii) of the Shellvoy 6:

““Owners warrant that the vesselOwners warrant that the vessel

(vii) Can discharge a full cargo (whether (vii) Can discharge a full cargo (whether homogenous or multi grade) either within 24 homogenous or multi grade) either within 24 hours, or can maintain a back pressure of 100 PSI hours, or can maintain a back pressure of 100 PSI at the vessel’s manifold and Owners warrant such at the vessel’s manifold and Owners warrant such minimum performance provided receiving minimum performance provided receiving facilities permit and facilities permit and subject always to the subject always to the obligation of utmost despatchobligation of utmost despatch......””

Exxonmobilvoy 2005:Exxonmobilvoy 2005:

““Owner warrants that the vessel shall Owner warrants that the vessel shall discharge entire cargo (be it one or more discharge entire cargo (be it one or more grade) within 24 hours pumping time or grade) within 24 hours pumping time or maintain the maximum safe pressure at the maintain the maximum safe pressure at the vessel’s rail that the vessel can discharge vessel’s rail that the vessel can discharge at, butat, but always at a minimum of 100psi… always at a minimum of 100psi…””

PUMPING WARRANTIESPUMPING WARRANTIES

LAYTIME & DEMURRAGELAYTIME & DEMURRAGE

Little ChangeLittle Change

CONCLUSIONCONCLUSION