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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 March 16
OUTLOOK ON GLOBAL SHIPPING SECTOR TURNS NEGATIVE AS SUPPLY-DEMAND GAP WIDENS AND EBITDA DECLINES - MOODY'S
Moody’s Investors Service (Moody’s) has changed its outlook on the global shipping sector to negative as it expects supply growth to ou ...
Friday, 18 March 16
DRY BULK MARKET HAS LITTLE TO LOOK FORWARD TO FROM CHINA AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s rebound is long overdue, but when it comes, it won’t be because of China’s strong demand for commodities, o ...
Friday, 18 March 16
COAL PRODUCTION IN THE UNITED STATES SLIGHTLY DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.5 million shor ...
Thursday, 17 March 16
THE PANAMAX MARKET SEEMS TO BE A BIT TOPPISH THIS WEEK - FEARNLEYS
Cape
There are challenging days with rates or less unchanged from last week; West Australia to China still below US$ 3 pmt, and Tuarao to China i ...
Wednesday, 16 March 16
OIL SUPPLY OUTPACES DEMAND ON ANY GIVEN DAY, AND BILLIONS OF BARRELS OF OIL ARE BEING STORED RATHER THAN CONSUMED - CHRISTOPHER
Oil producers have turned to the concept of limiting their output to January levels as a certain form of action to boost prices that have fallen mo ...
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Showing 2516 to 2520 news of total 6871 |
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- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Planning Commission, India
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
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