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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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Friday, 18 December 15
CHINA GROWTH SHOCK TO HIT ENERGY, SHIPPING, STEEL MOST - FITCH
Energy, shipping and steel would be the hardest-hit sectors in Asia-Pacific (APAC) in the event of a sharp slowdown in Chinese growth, says Fitch R ...
Friday, 18 December 15
WEEKLY U.S. COAL PRODUCTION REMAINS FLAT ACROSS ALL BASINS
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 17 December 15
THE LOW DEMAND AND EXCESS COAL OUTPUT, KEEP THE FOB INDONESIA COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swap for delivery Q1 2016 rose month on month and decline slightly week over week. For the week ended December 11, 20 ...
Thursday, 17 December 15
GLADSTONE PORT COAL RECORD LOOMING, EXPORTS UP 12% - GLADSTONE OBSERVER
COAL exports from Gladstone's port have taken a leap, with more than seven million tonnes leaving the wharves in November.
That increase i ...
Wednesday, 16 December 15
FOB RICHARDS BAY COAL SWAP SLUMP 5.5% FROM LAST MONTH
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 decline month over month and week over week.
The Q1’ 2016 &nbs ...
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- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
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