It’s a situation that creates more questions than answers:
- Is the vessel legally ready?
- Is the NOR valid?
- Can the charterer reject the vessel on that basis?
- What happens if there’s a waiver onboard but it wasn’t shared?
We recently consulted on exactly this situation, and it underscores a key truth in tanker operations: context is everything.
So, Can a Vessel Operate with an Expired Annual COC?
Surprisingly often—yes.
When a tanker’s 2-year COC remains valid but the annual inspection is overdue, the U.S. Coast Guard will typically allow operations to begin. In practice, here’s how it often unfolds:
- The vessel arrives and tenders NOR.
- Operations may begin (e.g., pumping starts).
- The Coast Guard boards for inspection.
- Pumping is paused temporarily during inspection.
- Once the annual endorsement is granted, operations resume.
From a demurrage standpoint, time during inspection is typically deducted—but time before or after may still count, depending on the facts.
What About COC Waivers?
Within 90 days of a COC expiration, a vessel can apply for a waiver to operate. These waivers are commonly granted—but not guaranteed.
If granted, a waiver allows the vessel to operate legally, provided the inspection is scheduled before departure. While the waiver should be onboard, it isn’t always standard practice to proactively share it with counterparties. This creates room for disagreement if the waiver isn’t disclosed up front.
Legal Precedent and Industry Practice
Arbitration rulings like SMA 2985 and Chembulk Hong Kong – SMA 4071 support the view that a waiver—if in effect—can preserve the validity of a NOR. In one decision, the tribunal noted that if both parties knowingly fix a vessel with a correctable deficiency, NOR can still be considered valid if the defect is minor and quickly resolved.
In other words: legality and operability matter more than perfection on paper.
The Gray Zone in Practice
Here’s the nuance that often gets overlooked:
- A waiver doesn’t always need to be disclosed, but disclosure strengthens your position.
- If a charterer knew—or should have known—the expiration was close, objections after the fact may carry less weight.
- Detention doesn’t require a valid NOR. If a charterer instructs a vessel to wait while knowing about a pending waiver or inspection, they may still be liable for delay.
Why This Matters
These details can make or break a claim. We’ve seen vessels wrongly rejected, NORs disputed unnecessarily, and delays escalate—all because parties weren’t aligned on operational reality versus documentation technicalities.
Demurrage isn’t always black and white—so your strategy shouldn’t be built on guesswork.
Whether you need one-time guidance on waiver-related NOR disputes or a trusted partner to fully manage your post-deal process, Haugen Consulting is here to help.
We offer case-by-case support as we did in this scenario—or complete outsourcing solutions when you're ready to hand off the complexity.
If you want a reliable expert to turn to when unfamiliar questions arise, trust Haugen Consulting to protect your margin, your contracts, and your credibility.
Contact our team to get started:
