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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, 27 June 16
THE BDI UP 3.75 PERCENT ; BCI FELL 1.51% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.75 percent from las ...
Monday, 27 June 16
INDONESIA BANS (AGAIN) SHIPS SAILING TO THE PHILIPPINES FROM INDONESIA
COALspot.com: The Indonesian Transport Ministry strictly prohibited harbour masters issuing permits to all Indonesian-flagged vessels bound for the ...
Friday, 24 June 16
U.S WEEKLY COAL PRODUCTION UP MARGINALLY
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.4 million short tons ...
Wednesday, 22 June 16
SMALL RISE IN SHIPPING CONFIDENCE - MOORE STEPHENS
In May 2016, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). ...
Wednesday, 22 June 16
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Stagnation- With the BDI stuck in the low 600 points for almost a month now, if we had to choose a word to describe the state of the Dry Bulk freig ...
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- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Planning Commission, India
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Australian Coal Association
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
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