MarIus

5.2.1 Initial remarks

In one sense, there is no doubt that a redelivery notice has a legal effect i.e., to ensure that the charterer can redeliver in compliance with the notice obligation. What we are interested in here, however, is whether the notice also has promissory effects or is otherwise binding upon the charterer.

Since the notice is unilateral and responds to a contractual obligation to notify, it can only be understood through the lens of the charter. But the effect is not explicitly regulated therein.^{(1) Except NYPE 2015, see below.} It is therefore not unnatural to seek guidance in the general criteria for legal dispositions adjusted to this context.^{(2)Disposisjonskriterier.} Even if one considers it an agreed matter for notice to be binding, one will have to take account of the specific circumstances. An owner can likely not rely with legal effect on a notice understood to be proforma (i.e., not genuine) any more than a recipient of bad information can rely on it when he knew better.^{(3) Krüger (1989), p. 271: § 13.4 b.}

5.2.2 Is notice binding at all?

The theme underpinning the general criteria for legal dispositions is the recipient’s justified expectation that the disposition is made with binding effect.^{(4) See e.g., HR-2017-971-A. Hov and Høgberg (2009), pp. 85-86.} When the criteria is applied in its ordinary context i.e., formation of agreements, a central indicator is whether the owner could reasonably infer that the charterer intended for his statement to be binding. As the charterer would have little reason to want to bind himself, this approach is not instructive here. A party’s justified expectations is a general principle in the Norwegian law of obligations, including in contractu.^{(5) See e.g., Bjørge and Førland (2007).} In that regard, a better indicator is whether the owner has a justified expectation for notice to be binding in light of the contractual obligation from which it derives. The visible purpose of a notice of redelivery is to allow the owner to prepare for the ship’s further employment. If notice is not binding, the owner cannot well rely on it without e.g., risking a costly conflict of engagements. The owner is justified in expecting otherwise.

In contrast, The Zenovia concluded, that under English law there is no implied term that a redelivery notice is binding on the charterer. The issue was whether the charterer was in his right to retract a 30-day approximate notice after 10 days and issue a new one only because he considered it opportune to squeeze in another voyage in a rising market.^{(6) [2009] 2 Lloyd’s rep. 139 (p. 139)} When the charterer communicated his renewed intention, the owner had already arranged for the vessel’s follow-on employment. The owner decided to withdraw the vessel from service at the conclusion of the original last voyage. For that he was made to pay damages to the charterer.

There are a few reasons why The Zenovia is not instructive in a Norwegian law context. First and foremost, it turned on stringent English doctrines on implication of terms and promissory estoppel. As held in the methodological discussion, a Norwegian arbiter of law would be amiss to import points of view that are at odds with – in the sense of being alien to – Norwegian jurisprudence. Secondly, the decision has faced internal criticism, not least from the authors of Time Charters:

Pending further case law on the point, we respectfully adhere to the view that the gist of a redelivery notice is a statement or promise that there will be no further employment orders under the charter that are inconsistent, when given, with redelivery in accordance with the notice.^{(7) Coghlin et al (2014), Ch. 15. 18. See also Semark and Andrews (2009).}

The Judge sought to alleviate concerns about potential abuse by pointing out that there is a bona fide requirement to the issuance of notice. Yet, that requirement falls short in preventing a charterer from subsequently prioritizing his own interest in disregard of the owner’s. When the charterer is permitted to do so, a redelivery notice may effectively become a trap for the owner. Alone the requirement of loyalty in Norwegian law of contract would likely preclude the charterer from such conduct.

It is a case-specific fact that the notice in question was qualified by no less than six reservations, having an impact on the Judge’s ability to spell a promissory estoppel out of the notice that was in fact given. Accordingly, even if The Zenovia remains good English law, different facts may yield a different outcome.

5.2.3 A redelivery notice is not a promise to redeliver on or about a specific date.

Having concluded that under Norwegian law a redelivery notice is capable of binding the charterer, it remains to determine how. Is the redelivery notice to be treated akin to a promise to redeliver on or around the projected date, or does it have a more limited binding effect? We can observe from the outset that there is a tension between the charterer’s employment rights in the charter period, and the owner’s interest in building on the notice received. We have to balance both parties’ justified expectations.

To illustrate the problem, one may consider a charterer that intends to redeliver when there is one month left of the window of redelivery. Since there will per notice be a month left of the maximum charter period following redelivery, the owner will presumably fix the vessel on a voyage or time charter beginning in a timeframe in which the previous charterer by contract has employment rights. Considering that the charterer has a legitimate interest as well, the proposal is that notice is binding upon the charterer to the extent necessary to secure its purpose, but not further.

If one compares the charterer’s employment rights with the owner’s justified interest in notice, one sees that the collision truly materializes when the charterer overstays notice. This is the period of time where the owner is justified in planning the vessel’s next employment, and this is where the owner risks a potentially costly conflict of engagements. While it may be inconvenient for the owner if the charterer ends up redelivering prior to the announced date, it does not undermine the undertaken effort to re-employ the vessel.

The owner may want to say that if he had been given correct notice at an earlier time, he would have been able to re-fix the vessel sooner; that the gap in-between is wasteful, and that the charterer bears the risk. In that regard, the 1A owner may pursue damages to give effect to his information rights, similarly to the 1B owner. It is still a short notice situation. But the purpose of the notice clause does not justify treating the 1A owner preferentially by giving him a separate ground, which would effectively push the date of redelivery forward. The conclusion is that a redelivery notice does not amount to a promise to redeliver on or around that date. The proposal is that the obligation is negatively oriented and aims to prevent the charterer from overstaying notice.^{(8) A further possible support for this conclusion is the about/approximate qualifier typically permitted in a redelivery notice. When the communication is so qualified, it may appear less like a positively oriented promise. It is, however, not considered necessary to draw upon this point, and it is also questionable whether it is decisive, as many contractual promises do contain a wiggle room.} A further question is whether this obligation is objective or subjective i.e., whether there is breach if the charterer overstays notice through no fault of his own such as an unexpected weather delay. Since the obligation is essentially borne by loyalty, it seems best viewed as a subjective obligation.^{(9) The question is probably not overly practical, as the charterer will typically be exempt from damages when there is no fault.}