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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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Wednesday, 29 June 16
THE DRY BULK INDICES, OPPOSITE TO MOST GLOBAL MARKET INDICES, ROSE END OF LAST WEEK
Last week closed off with a massive shockwave for markets across the world following the British referendum, the result of which will mark the begi ...
Tuesday, 28 June 16
WEEKLY CS COAL INDICES ROSE ON RENEWED DEMAND FROM CHINA
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up by 0.66 percent week over week to averaging $39.65 per ton this past week, sh ...
Tuesday, 28 June 16
CHINA'S IRON ORE IMPORTS: HOW MUCH MORE WORK FOR CAPES? - CLARKSONS
Chinese iron ore imports account for around two thirds of global seaborne iron ore shipments, making it the key driver of Capesize employment. Whil ...
Monday, 27 June 16
LATEST NEWS ON BIMCO'S CONTRACTS AND CLAUSES
BIMCO is currently updating several of its most widely used charter parties including SUPPLYTIME and BARECON. New developments include the Standard ...
Monday, 27 June 16
BREXIT RESULT COULD SEE UK FACING AN EXODUS OF MARITIME TALENT - FASTSTREAM
The UK’s decision to leave the EU has the potential to drive many of its maritime employees away, according to the results of a survey issued ...
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- Planning Commission, India
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- The University of Queensland
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- Bhushan Steel Limited - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
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- Metalloyd Limited - United Kingdom
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- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
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- Pendopo Energi Batubara - Indonesia
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- Sakthi Sugars Limited - India
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- Mjunction Services Limited - India
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- Bangladesh Power Developement Board
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- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
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- The State Trading Corporation of India Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
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- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
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- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
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- Ministry of Transport, Egypt
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- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
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- IEA Clean Coal Centre - UK
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- Economic Council, Georgia
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- Australian Coal Association
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- Africa Commodities Group - South Africa
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- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
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- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
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- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
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- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
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