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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, 24 March 16
NEWBUILDINGS' PRICES HAVE STARTED TO COME DOWN - ALLIED | HELLENIC SHIPPING NEWS
Newbuildings’ prices have started to come down, as demand has remained subdued for quite some time now. In its latest weekly report, shipbrok ...
Wednesday, 23 March 16
THE PANAMA CANAL - WILL THE MELTING OF POLAR ICE CAPS CREATE RIVAL NAVIGATIONAL WATERWAYS THROUGH THE ARCTIC? - INTERMODAL
The Panama Canal, 102 years after its initial opening, is now about to have its expansion completed with a cost of USD5.25 Billion. It is a project ...
Tuesday, 22 March 16
FOUR NEW MARKET MEMBERS HAVE JOINED GLOBALCOAL
globalCOAL® announced yesterday that four new Market Members have joined its international trading community.
Ferrocadia DMCC is an intern ...
Monday, 21 March 16
INDONESIAN 4200 GAR COAL INDEX ROSE $0.12 OR, 0.44% WEEK OVER WEEK; INDEX CLOASED AT $27.19 A TON
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.21 percent week over week to averaging $38.90 per ton on this past Friday, ac ...
Monday, 21 March 16
THE BALTIC DRY INDEX ROSE SLIGHTLY WEEK OVER WEEK; BCI UP 11.93%
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued rose this week helped by higher rates for Cape ...
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Showing 2511 to 2515 news of total 6871 |
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- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- VISA Power Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
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