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Friday, 18 December 15
WHEN IS A MASTER ENTITLED TO REFUSE DAMAGED CARGO? A REMINDER - THE STANDARD CLUB
 KNOWLEDGE TO ELEVATE
A master’s authority to clause bills of lading issued by or on his behalf can sometimes become the cause of disagreement between shippers, charterers and carriers.
Under Article III Rule 3 of the Hague/Hague Visby Rules after receiving the cargo, and on the demand of the shipper, the master is obliged to issue a bill of lading evidencing the quantity and apparent order and condition of goods to be carried.
The buyer of cargo, the consignee in an international trade, will want the subject bill of lading to be accurate and contain unambiguous remarks as to the quantity, quality and condition of the said cargo – so he knows exactly what he is purchasing. Conversely, the shipper/seller will primarily want a clean bill of lading to be issued, in order to trigger payment under the subject letter of credit.
On the other hand the master/carrier, to protect himself, may very well want to insert a clause in the subject bill of lading that better describes the condition of the cargo; otherwise he may be concerned that he will be subject to a claim by the lawful holder of the bill for ‘damaged’ goods at destination.
The master’s rights / obligations
Whilst under many time charterers there is usually a contractual provision which states the master is obliged to sign bills ‘as presented’, where the master is presented with a bill of lading, for signing, which the master has reasonable grounds for suspecting contains factual inaccuracies as to the subject cargo, such as an incorrect description as to the cargo’s condition, the master is generally under no obligation to sign it.
However, and practically speaking, he will often be under extreme commercial pressure to issue clean bills in exchange for a letter of indemnity (LOI) from his charterer. The problem the master/carrier has in these circumstances is that such a LOI may well be unenforceable, as a court could consider the indemnity to be perpetrating a fraud against the lawful bill of lading holder – certainly if the bill of lading inaccurately records the apparent order and condition of the cargo.
It should also be mentioned that there will be club cover implications where a master or member issues a bill of lading with knowledge that it contains an incorrect statement as to the quantity, quality or condition of cargo loaded on board the ship.
In these circumstances, provided the master has reasonable grounds for suspecting the quantity, quality or condition of the cargo loaded on board the ship and described in the bill is inaccurate, he may refuse to sign the bill of lading ‘as presented’. However, if the master unreasonably refuses to sign or authorise the issue of such a bill of lading he runs the risk of being in breach of Article III of the Hague/Hague-Visby Rules and possibly also liable to his charterer (under the subject charter) for any delay and consequent costs/losses down the chain.
What constitutes a reasonable refusal will, as with all things, turn on the particular facts of the case. However, the English courts handed down some useful guidance in The Boukadoura.
Here there was a difference between the shore and ship figures of about 1%. The master was prepared to put both the ship and the shore figures on the bill of lading, but the shippers refused and insisted on the shore figures being so inserted. In an attempt to resolve the dispute a second draft survey was carried out by an independent surveyor. This confirmed the ship’s figures, but the shippers nonetheless refused to accept a bill of lading showing the ship’s figures. Ultimately, and after considerable delay, a bill of lading based on the ship’s figures was issued and the cargo was carried to its destination and discharged, without any shortage claim. The charterer however subsequently claimed for the time lost due to the delay at the load port. Although the charterparty provided for bills of lading to be issued by the master ‘as presented’ the court agreed that the master was only obliged to issue a bill lading for the quantity of cargo he reasonably believed to have been so loaded.
Concluding remarks
There are no clear-cut guidelines to determine when, or if, a master can reasonably refuse to issue a bill of lading if he considers the quantity (or quality, condition) of cargo as shown on the bill to be inaccurate. Each case will turn on its own facts and also largely depend on expert evidence. Further, and somewhat irrespective of the law of the subject charterparty, the location and law of the load port will play an important role in any ‘budding’ dispute. Therefore, as soon as a master is aware of a problem in this respect, it is vital that he contacts the club and/or club’s local correspondent for advice and guidance (ideally with personal attendance of an expert surveyor on board) before any dispute escalates.
On a slightly different point, the charterparty may provide for the issuance of a clean bill of lading and/or give the master the right to reject any cargo that is subject to ‘clausing’ . This was the case in The Sea Success.
The ship here was under an amended NYPE timecharter according to which the master had the right to reject ‘any cargo that is subject to clausing of the bills of lading’.
The shippers tendered damaged steel cargo and the master rejected the same on the basis that it was subject to clausing of the bills. The charterers argued that the bills, as presented to the master, contained a complete and accurate description of the (damaged) cargo according to the findings of a preloading steel survey report and this didn’t amount to ‘clausing’. Indeed, in this case there was no dispute between the owners, charterers and shippers as to the apparent order and condition of the subject cargo, or the appropriate description of the cargo to be included in the bill of lading by the shipper.
The English High Court in this case held that the word ‘clausing’ meant a notation on the bill of lading by the master or his agents, which qualified already existing statements on the bill of lading as to the quality, quantity and apparent condition of the goods. Therefore, only if the master had to make an additional notation on the bill, to reconcile the description of the goods with the statements already on the bill as to its apparent good order and condition, then the same cargo was subject to ‘clausing’ and the master would be entitled and obliged to reject the same – as per the terms of this subject charter.
This article intends to provide general guidance on the issues arising. It is not intended to provide legal advice in relation to any specific query. The law is also not static. If in doubt, The Standard Club is always on hand to assist.
Source: The Standard Club
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Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
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- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Minerals Council of Australia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- The Treasury - Australian Government
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- PTC India Limited - India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Commonwealth Bank - Australia
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