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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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Thursday, 03 December 15
PANAMAX BUSINESS REMAINED UNDER PRESSURE LAST WEEK
COALspot.com: Following the new record lows the Dry Bulk market witnessed the week prior, the BDI took a much needed breath during the past days.
...
Wednesday, 02 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SLIGHTLY UP FOR THE THIRD STRAIGHT WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up month over month and fell week over week.
The Q1’ 2016 &nbs ...
Wednesday, 02 December 15
MARKET INSIGHT - VASSILIS LOGOTHETIS
Boom and bust cycles in commodity prices are not something rare, yet they have important implications both for the world economy in general and for ...
Tuesday, 01 December 15
FOB NEWCASTLE COAL SWAP UP THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.75 per ton (9.26%) month over month to US$ 36.75 per ton. The swap ...
Tuesday, 01 December 15
TANKERS VERSUS BULKERS - JUST PLAYING CATCH UP? - CLARKSONS
It’s now more than a year since the tanker market took off. In mid-2014 tanker earnings picked up and since then have been in the $30-$40,000 ...
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- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
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