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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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Wednesday, 23 December 15
SHIPPING MARKET INSIGHT - PANOS MAKRINOS
As we are heading towards the end of the year we could argue that most of those involved in the shipping industry share mixed feelings for 2015. Th ...
Wednesday, 23 December 15
FOB NEWCASTLE COAL SWAP CLOSES FIRM
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery up $0.45 per ton (1.22%) month over month to US$ 37.20 per ton. The swap wa ...
Tuesday, 22 December 15
3800 GAR INDEX CLOSED AT US$ 22.03 PER TON; DOWN 0.15% W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.03 per ton (-0.07 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 21 December 15
Q3' 2016 CFR SOUTH CHINA COAL SWAP CLOSED SLIGHTLY LOWER COMPARE TO Q1'16 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery up US$ 0.20 (0.48%) per ton month over month.
A commodity swap is a ...
Sunday, 20 December 15
THE FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI facing all time low's this week. The bulk dry index closed at 477 points on 18 December 2015.
The cape index was als ...
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- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- The University of Queensland
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
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