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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, 08 January 16
DRY BULK MARKET'S CRISIS DEEPENS AS RATES ARE DROPPING TO NEW RECORD LOWS BY THE DAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Just when you would think that the dry bulk market is reaching its bottom, even as it has long surpassed all-time lows, each day that passes by at ...
Thursday, 07 January 16
FOB NEWCASTLE COAL SWAPS DELIVERY Q1'16 REMAIN FLAT W-O-W; UP M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.23 per ton (3.35%) this past week compared to the sam ...
Thursday, 07 January 16
SHIPPING WILL REMAIN VOLATILE AND INDISPENSABLE IN 2016 - MOORE STEPHENS
The ultimate definition of an optimist has been characterised as an accordion player with an answerphone. Such extreme optimism might be difficult ...
Wednesday, 06 January 16
NEW COAL PRICE PASS-THROUGH REGULATION BENEFITS CHINA IPPS - FITCH RATINGS
Fitch Ratings says the new Coal Price Pass-through Mechanism announced by the National Development and Reform Commission (NDRC) on 31 December ...
Tuesday, 05 January 16
BIG COAL MINERS PLAN HIGHER PRODUCTION THIS YEAR - THE JAKARTA POST
The country’s major coal miners plan to further boost production in 2016 although analysts estimate that an oversupply in the world’s c ...
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Showing 2621 to 2625 news of total 6871 |
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- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Deloitte Consulting - India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- The University of Queensland
- Larsen & Toubro Limited - India
- Minerals Council of Australia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
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