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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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Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
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- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- The University of Queensland
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- White Energy Company Limited
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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