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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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Tuesday, 15 March 16
PORT OF NEWCASTLE SHIPPED 12.78 MMT OF COAL IN FEBRUARY 2016
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped AU$1,110.5 mi ...
Tuesday, 15 March 16
ADARO ENERGY LOWERED ITS COAL CASH COST BY 16% TO US$ 27.98 PER TONE IN 2015
Difficult Coal Market Condition Persists in 2015, Adaro Lowers Costs, Reduces Capital Spending and Maintains Solid Liquidity.
PT Adaro E ...
Monday, 14 March 16
THE CS 50 INDEX ROSE $0.16 OR, 0.41% TO $38.82 A TON
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.41 percent week over week to averaging $38.82 per ton on this past Friday, ac ...
Monday, 14 March 16
THE BALTIC EXCHANGE CONTINUED TO ROSE THIS PAST WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rise this week helped by higher rates for pa ...
Saturday, 12 March 16
PLN, COAL COMPANIES IN TALKS ABOUT PRICES - THE JAKARTA POST
Following a study that predicted that Indonesia would struggle to provide coal for its power stations in the near future, the government will facil ...
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Showing 2521 to 2525 news of total 6871 |
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- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Planning Commission, India
- Ministry of Transport, Egypt
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Economic Council, Georgia
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
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