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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, 05 January 16
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Friday, 01 January 16
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Thursday, 31 December 15
COAL PRICES FELL ON WEAK DEMAND
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 ...
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Showing 2626 to 2630 news of total 6871 |
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- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Aditya Birla Group - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Minerals Council of Australia
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Planning Commission, India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
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