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Monday, 04 April 16
THE LOADING, AND SUBSEQUENT DISCHARGE, OF UNSAFE NICKEL ORE - ALL TIME TO 'COUNT' - THE STANDARD CLUB
 KNOWLEDGE TO ELEVATE
In a recent, published, London arbitration award the English tribunal has held that all time lost as a result of loading, and then discharging, a confiscated (unsafe) cargo will be for the charterer’s account.
Background facts
Under a contract of affreightment (CoA), the owner was required to carry eight shipments of nickel ore. The ship promptly arrived at the nominated load, with loading commencing the very next day. Loading stopped two weeks later, however, and the local navy issued a confiscation order, resulting in the ship being compounded in a nearby naval base. The confiscation order was issued due to the cargo being mined outside the parameters of the locally granted permits. Only three months later was the ship released to discharge the cargo already on board the ship, which took two more months to complete.
When the ship was released the charterer emailed the owner requiring it to organise the remaining discharge operation. In addition, the charterer advised that it would not provide any cargo for the next shipment. In response, the owner advised the charterer that it had wrongfully repudiated the CoA and claimed, through London arbitration, demurrage for the entire duration of delay.
The Tribunal’s decision
The arbitration tribunal would only consider the claim for demurrage, not the claim for possible wrongful termination.
The charterer’s primary defense to the demurrage claim was based upon the following CoA clause (our emphasis):
‘In case any acts of God, riots, civil commotions, fire or any other causes comprehend in the Force Majeure terms which may delay or prevent to provide the cargo at the port of loading and load/discharge of the cargo, such time lost is not to count as laytime as neither Charterers nor Shipper nor Suppliers nor Receivers shall be liable for any loss of demurrage, unless vessel already on demurrage. Once on demurrage always on demurrage.’
The tribunal found that the above clause did not aid the charterer in its defence. It was held that the confiscation of the ship by the local navy did not fall within the boundaries of ‘any acts of God, riots, civil commotions, fire or any other causes comprehend in force majeure terms’.
Also, the tribunal found that because the subject cargo had been illegally mined, the charterer had failed to meet its primary contractual obligation under the CoA to provide a safe cargo, which could not be ‘excused’ by other contractual defences.
Finally, as the intervention by the navy was after the ship fell on demurrage, it was found that as per the above wording, ‘once on demurrage always on demurrage’, the charterer remained liable for the entire period of detention and delay.
On the other hand, the tribunal refused to accept that the charterer should not be allowed load time. This was on the basis that cargo had been partially loaded. The charterer was therefore allowed laytime, on a pro rata basis, irrespective of it being considered an unsafe cargo.
Concluding remarks
Following the above decision, members acting in a charterer’s capacity should take all precautions to ensure that the cargo to be loaded on board a ship is safe, legal and that all applicable documentation is in order to best prevent similar situations from arising in the future. It should also be noted that if the subject charter includes the phrase ‘once on demurrage, always on demurrage’ the charterer will remain liable for all time used until the load or discharge operation is completed. Charterer members should, therefore, be proactive and continue to use their best efforts to minimize any time lost.
This article intends to provide general guidance on the issues arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. Members requiring further information on this topic should direct their enquiries to either their usual contact at the club, or to the authors of this article.
Defence cover is, by its very nature, discretionary in that the club must be satisfied as to the merits and quantum of the claim in question and the likelihood of achieving a successful outcome, if it is to lend support.
Source: The Standard Club
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Monday, 04 July 16
BDI ROSE ON STRONGER DEMAND ACROSS ALL VESSEL SEGMENTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 11.16 percent from la ...
Friday, 01 July 16
BREXIT SET TO HURT SHIPPING IN THE LONG-TERM AS IT WILL TAKE ITS TOLL IN THE GLOBAL ECONOMY'S GROWTH - HELLENIC SHIPPING
Setting aside the short-term negative impact of the Brexit, in terms of stock market and currency volatility, it’s more than evident that the ...
Friday, 01 July 16
U.S'S COAL EXPORTS HAVE DECLINED FOR TWELVE QUARTERS IN A ROW - EIA
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.7 million short t ...
Thursday, 30 June 16
CAPE - THIS WEEK'S FREIGHT AND ACTIVITY LEVEL HAVE KEPT STABLE - FEARNLEYS
Cape
This week’s freight and activity level have kept stable. It is support at the present levels and despite a volatile market the freight ...
Thursday, 30 June 16
OIL PRODUCT TANKERS EARNINGS DECLINE AS STOCKBUILDING SLOWS DOWN - BIMCO
BIMCO’s expectations remain as the oil product tanker fleet continues to grow with earnings at the lowest since Q3 in 2014. But there is stil ...
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- CIMB Investment Bank - Malaysia
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- Planning Commission, India
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- Alfred C Toepfer International GmbH - Germany
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- Jindal Steel & Power Ltd - India
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- New Zealand Coal & Carbon
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- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
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- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- White Energy Company Limited
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- Bulk Trading Sa - Switzerland
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- Formosa Plastics Group - Taiwan
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- Commonwealth Bank - Australia
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- Parliament of New Zealand
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- Global Coal Blending Company Limited - Australia
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- Power Finance Corporation Ltd., India
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- Merrill Lynch Commodities Europe
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- Attock Cement Pakistan Limited
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- European Bulk Services B.V. - Netherlands
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- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
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- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
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- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
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- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
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- Sinarmas Energy and Mining - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
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- Petrochimia International Co. Ltd.- Taiwan
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- Goldman Sachs - Singapore
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- Tamil Nadu electricity Board
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- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Miang Besar Coal Terminal - Indonesia
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- The Treasury - Australian Government
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- Wood Mackenzie - Singapore
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- Gujarat Mineral Development Corp Ltd - India
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- Global Green Power PLC Corporation, Philippines
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