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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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Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
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- Sindya Power Generating Company Private Ltd
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Thiess Contractors Indonesia
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
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