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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, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- PTC India Limited - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- The University of Queensland
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
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