THE SEBAT: Commercial Court clarifies Commencement of Laytime following Invalid NOR

In the recent decision of Trans Trade RK SA v Sebat Shipping and Trading Company [2026] EWHC 950 (Comm) (“The Sebat”), the Commercial Court considered, in the context of an appeal of an arbitration award, the question of commencement of laytime where a notice of readiness (NOR) is invalid.

The judgment provides important clarification on the limits of The Happy Day [2002] 2 Lloyd’s Rep 487 and confirms that there is no free‑standing principle that cargo operations will cause laytime to start running.

Background

The dispute arose out of a voyage charterparty for the carriage of Ukrainian origin barley from Constanta to Brake. The charterparty incorporated the Synacomex 2000 form, as amended, and required that for laytime to commence a valid NOR had to be tendered during specified office hours.

Furthermore, the NOR had to be tendered when the ship was at the loading or discharging berth and in all respects ready to load or discharge. Only if the berth was unavailable could the Master warrant that the ship was in all respects ready and tender NOR from any usual waiting place.

The ship tendered NOR at Brake on 10^th May, 2022 at the end of her sea passage. She berthed on 13th May and discharge was delayed because of excessive phosphine levels. Discharge operations ultimately completed on 30^th July, 2022. A dispute arose as to responsibility for the delays at the discharge port, whether the NOR tendered was valid and whether laytime ever commenced and, if so, when.

The arbitration

The arbitration tribunal found that the Brake NOR was invalid and that no further NOR was tendered. It went on to find that, as a matter of “trite law” (as per the Happy Day), laytime commenced on 14th May, 2022, when the ship’s hatches were opened, on the basis that, absent tender of a valid NOR, the trigger for laytime to commence as if a valid NOR had been served is the commencement of cargo operations.

Significant demurrage was awarded against the charterer and the charterer appealed under section 69 of the Arbitration Act 1996.

Key issue for consideration

At the appeal, the dispute between the parties centred around the meaning and implications of the judgment in The Happy Day. The parties’ submissions focussed on the question whether the tribunal erred in law by finding that the charterer had waived the invalidity of the NOR so as to allow laytime to commence.

The charterer argued that the tribunal made an error of law in concluding that laytime commenced despite the lack of a valid NOR. It argued that in The Happy Day the court did not establish that the mere commencement of cargo operations invariably triggers the commencement of laytime. Rather, the decision was based on the doctrine of actual waiver by election, which requires awareness of both the right being waived and the underlying facts relevant to the choice. In the present case, the tribunal made no finding of any agreement, waiver, or estoppel that would justify treating the invalid NOR as effective. On that basis, the charterer submitted that time did not start upon commencement of cargo operations or at all.

The owner submitted that it was implausible the tribunal had misunderstood the law, given its experience and express reference to The Happy Day. The owner argued that, in reaching its decision, the tribunal had in mind the principle of law established in that case, namely that in certain circumstances, the commencement of cargo operations can operate as the unequivocal communication of an election not to rely upon the invalidity of the NOR.

Although the owner had not explicitly used the word “waiver” in its submissions, it clearly relied on The Happy Day principle that commencement of cargo operations could constitute a “deemed waiver” by election found to operate as a result of the commencement of cargo operations.

Commercial Court decision

The central question for the Commercial was whether, in the absence of a valid NOR and without any agreement, waiver or estoppel having the effect that an invalid notice is treated as valid, laytime could nevertheless commence simply because cargo‑related operations had begun.

The court held that the tribunal had erred as a matter of law in concluding that laytime commenced upon the opening of the hatches despite the invalid NOR and confirmed that where an NOR is invalid when tendered, laytime does not run at all unless: (i) there is a fresh valid NOR, or (ii) the charterer is bound by a waiver, estoppel, or contrary agreement treating the invalid NOR as effective.

Crucially, the court rejected the idea that there is a general principle of “deemed waiver” operating independently of the well‑established doctrine of waiver by election. Waiver requires, among other things, that the charterer has knowledge of both the relevant facts and the right said to be waived, and then acts unequivocally in a manner inconsistent with that right.

In this case, the tribunal did not address waiver at all, nor did it make findings capable of supporting it. Instead, it proceeded on the erroneous assumption that cargo operations alone could start laytime running in the absence of a valid NOR.

That approach was inconsistent with The Happy Day, which makes clear that commencement of operations is only legally significant where it amounts to an actual waiver, or gives rise to estoppel, on the facts.

Accordingly, the award of discharge port demurrage was set aside and varied so that the owner recovered only modest sums relating to load port demurrage and expenses.

Conclusion

This decision provides helpful clarification for charterers and owners alike. It confirms that (i) an invalid NOR cannot be “cured” simply by the passage of time or by the commencement of cargo‑related activity, and (ii) The Happy Day does not establish a shortcut whereby laytime automatically commences once cargo operations begin.

The orthodox position remains unchanged: no valid NOR means no commencement of laytime, unless the owner can clearly establish waiver, estoppel or agreement on the facts.

The judgment is a timely reminder that findings of waiver require careful analysis and specific factual findings. Therefore, compliance with the contractual NOR requirements remains of the utmost importance to avoid having to consider the conduct of the parties in order to establish commencement of laytime.

If Members have any questions in relation to the above issues they are invited to contact the Club for further information.