Article from Andrew Wilding - Managing Director, Asdem Asia Pte. Ltd.
We have dealt with a number of matters recently where there have been concerns over the quality and quantity of the cargo.
QUANTITY DISPUTES
The quantity of product will be stated on the Bills of Lading. The charterers' right to present bills of lading does not mean that the Master must automatically sign them. A Master who wishes to check the ship and shore figures because he has concerns over the accuracy of the figures provided by a terminal is generally regarded as acting reasonably. He may arrange for a surveyor' report and is entitled to a reasonable time for this. However, a Master who unreasonably refuses to sign or authorise the issue of a bill of lading for the shore figures "as presented" runs the risk of being in breach of charter and may lose the owners' right to claim demurrage. He may also incur liability for a claim for delay arising from an underlying sales contract.
What constitutes a reasonable refusal to issue a bill of lading? The decision in "The Boukadoura" [1989] 1 Lloyd's Rep 393 provides useful guidance. There was a difference between the shore and the vessel figures of about 1%. Two draft surveys by the crew indicated that the ship's figures were different from the shore figures and they sought to issue a bill of lading with both sets on the face of the bill. The shippers required only one set of figures, and insisted on the shore figures. A further 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, after considerable further delay, a bill of lading based on the ship's figures was issued and the cargo was carried to a destination and discharged without any shortage claim. 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 show a bill lading for the quantity of cargo he reasonably believed to have been loaded. The shipowners were successful in their claim for time spent at the anchorage until the issue was resolved.
Overall, there are no clear-cut guidelines to determine when or if a Master can reasonably refuse to issue a bill of lading. Each case will turn on its own facts and circumstances as well as what expert assistance and evidence of quantities are available to the Master. However, irrespective of the law of the charterparty, the law of the country where loading takes place may have to be taken into consideration. Furthermore, some terminals will insist on local custom where the Bills of Lading will automatically be issued using the terminal's shore figures.
Commercially, most impasses can be resolved by a letter of indemnity issued promptly by the charterers.
QUALITY DISPUTES
As far as quality issues are concerned when issuing the bill of lading, the Master does not have to do anything other than provide a general description of the product. He need not state anything about its quality. However, if the Master reasonably believes that the cargo is not in accordance with its description because it appears not to be in apparent good order and condition, he must say so.
Provided he acts reasonably in reaching his conclusions or calls in surveyors where guidance is required, the Master is entitled a reasonable time and opportunity to arrange for surveys. In The "David Agmashenebeli" [2003] 1 Lloyd's Rep 92 the Master was asked to issue bills of lading containing a description of the cargo which he did not believe accurately reflected the actual condition of the cargo. It was later found that the Master was being unreasonable in his description of the quality of the cargo and he should have obtained assistance at the time. The court said the obligation on the Master to issue a bill of lading was not a contractual guarantee of absolute accuracy as to the order and condition of the cargo, nor was there any basis for the implication of any such term.
The ship owners in the High Court case of Falkonera Shipping Company v. Arcadia Energy Pte Ltd. [2012] EWHC 3678 (Comm), referred to in Asdem Newsletter No. 51, were given leave to appeal to the Court of Appeal. The Court of Appeal reference is EWCA Civ 713 2014. Their appeal was rejected. The court held that the charterers had a right to transfer cargo to any vessel, including a VLCC. Although a transfer to a VLCC might be considered non-standard, this was not reasonable grounds for refusal. This finding had been reached by an experienced judge in the High Court. The judge was entitled to reach this conclusion, which was one of fact. His conclusion involved the consideration and weighing of a number of factors. The Court of Appeal would be reluctant to overturn his conclusion unless it was shown that "he had misunderstood or misapplied the relevant legal principles, ignored some relevant, or taken account of some irrelevant, consideration, or reached a conclusion that was clearly erroneous or outside the bounds of what it was open to him to decide. The judge was guilty of none of these things".
Note: In November 2013 OCIMF published Ship to Ship Transfer Guide for Petroleum, Chemicals and Liquefied Gases, First Edition which contains a section dealing with STS transfers involving vessels of a similar length.
Article provided by Phil Stalley, HubSE Ltd.
The outbreak of Ebola is a tragedy for the people of West Africa and I hope the virus can soon be contained and those infected treated effectively. I've been looking at how this may affect laytime and demurrage in our industry and I have to say the more I think about it the less clear I am. Here are links to the relevant pages at Ince and Skuld, just two of a number of organisations that have put out notes on this subject:
Shipping Issues Arising out of the Ebola Outbreak in West Africa
Asbatankvoy at clause 17(a) states "QUARANTINE. Should the Charterer send the Vessel to any port or place where a quarantine exists, any delay thereby caused to the Vessel shall count as used laytime; but should the quarantine not be declared until the Vessel is on passage to such port, the Charterer shall not be liable for any resulting delay."
Other charter parties have similar wording, see ExxonMobil Voy2012 clause 23, Shellvoy6 clause 23 and BPVOY4 clause 29.
What is a port with a quarantine? I found the following definition: Quarantine: "a harbour restriction placed on a ship which has an infectious disease on board or has arrived from a port or country which is notoriously unhealthy", Oxford Companion to Ships and the Sea edited by Peter Kemp, Oxford University Press.
In practice I understand that the restriction placed on a vessel under quarantine is that it would have no physical contact from the shore and therefore would be unable to work cargo until cleared by the health authorities. I have never had experience of a case of quarantine but it would seem to me that quarantine could be declared by ports other than those directly affected by the Ebola virus. I understand that as an example a European port could declare quarantine for all vessels arriving from the infected areas and delays could occur to that vessel irrespective of the state of the health of those on board. The vessel may be free of disease but the authorities may need time to properly establish that. Where does that leave the ship owner?
Under the c/p's quoted above I would say that generally (and check the wording) if the vessel is ordered to a port where quarantine already exists then any delays will count as laytime and/or demurrage. If, on the other hand, the declaration of quarantine is made while the vessel is on passage any delay will be for the Owner. This is my interpretation even in those cases where the c/p requires the vessel to have Free Pratique in order to tender NOR such as Shellvoy6.
What happens if the vessel fails to obtain Free Pratique or granting of Free Pratique is delayed because the vessel has the disease on board? The clauses quoted above do not differentiate between a delay by the port procedure v. a delay actually caused by the vessel and I assume that they must be read as they are printed in that delays fall to the Owners or Charterers according to the timing of the declaration irrespective of whether Free Pratique is granted or not.
Under common law and following the "Delian Spirit" case the granting of Free Pratique has been considered a formality and the delay in granting Free Pratique should not invalidate the NOR. If, however, the vessels fails Free Pratique then there is a good case for alleging the invalidity of the NOR.
In the dry cargo world charters often incorporate WIFPON which means the NOR can be tendered "Whether in Free Pratique or Not". Even this clause has doubters on both sides. On the one hand this could be read literally and the NOR is valid whether or not the vessel is able to get Free Pratique. The counter argument is that the NOR never becomes valid and this seems to be supported by Schofield 6th Edition at 3.187 where he considers WIFPON. He says "It is doubtful whether the phrase would extend to allowing time to commence where pratique was actually refused or where there were grounds for believing that it would be at a later date."
I read this week that some specific agreements between Owners and Charterers are being drafted and this article from IHS Maritime 360 may be of interest.
In summary, I don't feel that the current printed charter party forms cover all eventualities clearly and I would urge both owners and charterers to get some clear wording agreed to avoid costly disputes later. If you have any comments or experiences of delays and how they have been resolved please post them to my blog at www.hubse.com.