The Commercial Court in Trans Trade RK SA v Sebat Shipping and Trading Company[1] reaffirmed the position that, absent a valid notice of readiness (NOR), laytime does not commence unless there is:
- an agreement suggesting otherwise; or
- a waiver or an estoppel.
In doing so, the Court rejected an attempt by the owners to derive a broader “deemed waiver” principle from The Happy Day that cargo operations alone can start laytime despite an invalid NOR.[2]
Background
The dispute concerned a voyage charterparty concluded in April 2022 for the carriage of a cargo of Ukrainian barley from Constanta, Romania to Brake, Germany on the vessel MV Sebat.
At Brake, on 10 May 2022, the vessel’s master tendered a NOR at the pilot station. No other NORs were served. The vessel subsequently berthed on 13 May. On 14 May the hatches were opened in preparation for discharge. However, gas testing revealed phosphine levels substantially above those permitted by the port authorities. The vessel was ordered to leave berth and return to anchorage. Discharge did not recommence until late July 2022.
The arbitral tribunal (the Tribunal) found that the NOR was invalid because it had been tendered before the vessel became an “arrived ship”, as it was given at the pilot station before the vessel had reached the contractual destination, namely the discharge berth at Brake.[3]
The Arbitral Award
The owners claimed more than US$840,000 in discharge port demurrage. The Tribunal accepted that the NOR was invalid but nevertheless held that laytime commenced when the hatches were opened, describing it as “trite law” that, absent a valid NOR, the commencement of cargo operations triggered laytime. The Tribunal later amended its award under section 57 (correction of award) of the Arbitration Act 1996 (the Act) and cited The Happy Day as authority for that proposition.
The charterers appealed under section 69 of the Act (appeal on point of law), arguing that the Tribunal incorrectly determined laytime to have commenced despite the invalid NOR.
Issues on Appeal
The appeal centred on two questions:
- Where no valid NOR has been served and there is no agreement, waiver or estoppel, when does laytime begin to run?
- Did laytime begin running at Brake on the facts found by the Tribunal?
Appeal Upheld
The Court held that the Tribunal had erred in law. The charterers were not liable for discharge port demurrage because the Tribunal had found that the NOR was invalid and there had been no finding of agreement, waiver or estoppel capable of curing the defect.
The award was varied to remove the discharge port demurrage award of approximately US$840,000, leaving a modest load port demurrage claim and discharge expenses.
The Court declined to remit the issue of waiver to the Tribunal. Since waiver had not formed part of the Tribunal’s reasoning, remission could not be used to give the owners a second opportunity to advance a case that had not been argued before the Tribunal initially. This is further explained below.
Decision
The Tribunal Applied the Wrong Legal Principle
The Tribunal had concluded that where an NOR is invalid because it was tendered prematurely, laytime automatically begins when cargo operations commence. The High Court held that this proposition was incorrect in law.
The Court emphasised the principles in the long-established authorities of The Mexico I and The Happy Day. An invalid NOR cannot later become effective simply because the vessel subsequently becomes ready or cargo operations begin.[4] Time does not start running unless a new NOR is given, or there is some agreement, waiver or estoppel excusing compliance with that requirement.[5]
No Independent Doctrine of “Deemed Waiver”
The owners argued that The Happy Day recognised a principle of “deemed waiver” arising automatically from the commencement of cargo operations.
The Court rejected that submission. If the Tribunal had relied upon such a doctrine, it would still have erred in law because no separate principle of “deemed waiver” exists. Rather, The Happy Day was a conventional waiver by election case requiring satisfaction of the established elements of waiver, which require knowledge of the facts, and an unequivocal decision to not rely on the invalid NOR.[6] The Court of Appeal in The Happy Day found that the charterers had waived their rights to rely on the invalid NOR, aware that the NOR was served before the ship arrived at the contractual destination.
In contrast, the Court in this case held that the Tribunal had made no findings that:
- the charterers knew the NOR was invalid and elected not to rely on that defect;
- the charterers appreciated the relevant underlying facts; or
- the issue of waiver had even been argued before it at all.
The Court therefore rejected the suggestion that the award could be upheld by construing it as a finding of waiver in accordance with The Happy Day. It further emphasised that section 69 appeals are concerned with errors of law appearing from the award itself. A successful respondent cannot preserve an award by inviting the court to consider an issue (of waiver in this case) that was neither expressed in the Tribunal’s reasoning nor argued before it.
Implications for Shipowners and Charterers
This case confirms that an invalid NOR does not automatically start laytime merely because cargo operations commenced; a valid NOR, an express agreement, waiver or estoppel is still required.
This judgment is a useful intervention to broad readings of The Happy Day. It confirms that The Happy Day did not create an expansive “deemed waiver” rule that cargo operations automatically validate an otherwise invalid NOR. However, it does not offer analysis on the most difficult part of The Happy Day, that accepting cargo was unequivocal conduct in relation to an invalid NOR.
For shipowners, the practical lesson remains straightforward. If there is any doubt about the validity of a NOR, a fresh NOR should be tendered once the vessel is, without question, an “arrived ship”. A fresh NOR can be tendered without prejudice to the validity of an earlier notice. Doing so can preserve alternative laytime commencement arguments while avoiding disputes over whether the later notice amounts to an admission that the first was invalid.
Owners and charterers should also note that where biosecurity requirements, including fumigation and biofouling compliance, remain outstanding, a NOR tendered before their completion may create difficulties. It is not uncommon for vessels to be ordered from berth for hull cleaning. Owners should therefore ensure that readiness requirements are satisfied before relying on a NOR to commence laytime. Equally, charterers with concerns about outstanding biosecurity requirements should pay close attention as to whether laytime has commenced.
If you have any questions about notices of readiness, laytime, or demurrage, please get in touch with our Trade and Transport Team or your usual contact at Hesketh Henry.
[1] Trans Trade RK SA v Sebat Shipping and Trading Company [2026] EWHC 950 (Comm).
[2] Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] EWCA Civ 1068.
[3] For a vessel to be considered an “arrived ship”, it must a) have reached the agreed location, b) be physically ready, and c) be legally ready.
[4] Transgrain Shipping BV v Global Transporte Oceanico S.A. (The “Mexico 1”) [1990] 1 Lloyd’s Rep 507.
[5] The Happy Day, para. 38; Trans Trade, para. 65.
[6] Trans Trade, para. 71.
