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Tuesday, 03 March 20
IMPORTANCE OF MASTER'S CARGO CHECKS - BALTIC EXCHANGE
 KNOWLEDGE TO ELEVATE
Adecision in recent High Court case has made it clear that there is no implied indemnity from a charterer to their counterpart owners if cargo shippers present bills of lading that record the cargo as being loaded clean on board, even if the shippers could have ascertained that the cargo was in fact damaged at the time of loading.
Ince partner Jamila Khan and managing associate Natalie Nielsen lay out the facts of the case. Noble Chartering Inc (the disponent owner) timechartered a vessel from the head owner and then sub-voyage chartered the vessel to Priminds Shipping (HK) Co Ltd (the voyage charterer). Under the voyage charterparty, the vessel loaded a cargo of soya beans in bulk at Santos, Argentina, for discharge at Guangzhou, China. The cargo was loaded by the cargo shipper from a silo via mechanical hoppers.
At the discharge port, the cargo receiver discovered that portions of the cargo had suffered heat and mould damage. In order to prevent the arrest of the vessel, the shipowner secured the receiver’s cargo claim and agreed that it would be subject to Chinese law and the jurisdiction of the Chinese courts. The receiver’s cargo claim was litigated in the Chinese courts, who found the shipowner liable to the receiver for $1,086,564.70.
The shipowner in turn brought a claim against the disponent owner under the terms of the time charterparty, seeking a contribution of 50% of the sum paid to the receiver. This claim was settled by the disponent owner paying $500,000 to the shipowner.
The disponent owner then commenced London arbitration against the voyage charterer under the voyage charterparty, seeking to recover the $500,000 paid to the shipowner and the costs of defending that claim. The disponent owner claimed that they were owed an indemnity for these costs, although there was no express provision in the voyage charterparty providing for such an indemnity.
Arbitration findings
Following arbitration, the Tribunal’s Award highlighted the facts that the cargo had been damaged by heating caking and by mould; that both types of damage were pre-existing at the time of loading but were not reasonably visible to the Master during loading, so the Master could not have verified the condition of the cargo; and the damage would have been reasonably visible to the shipper at the time of loading.
The disponent owner argued that the words “Clean on Board” and “SHIPPED at the Port of Loading in apparent good order and condition” in the draft bill of lading that the shipper provided to the Master for his signature amounted to a representation or warranty by the shipper as to the apparent condition of the cargo at the time of loading. The disponent owners pointed out that the shipper was acting as the voyage charterer’s agent in loading the cargo and said that, by presenting the draft bill of lading in those terms, it had represented that the cargo was in good order when it was loaded – although it was not – and so the voyage charterer owed them an indemnity for the losses caused by the cargo damage.
The Court rejected this argument, stating that although the Hague Rules provide an indemnity in respect of information provided by the charterer which is included in the bills of lading (for example, the marks on bales of cargo or the cargo weights), this indemnity did not extend to statements concerning the apparent order and condition of the cargo. The wording relating to the condition of the cargo in the draft bill of lading was not a representation or a warranty by the shipper or voyage charterer, but was instead an invitation to the Master to make a representation of fact about the state of the cargo, in accordance with his own assessment of the cargo’s apparent condition. Accordingly, the Court held that the voyage charterer did not owe an implied indemnity to the disponent owner in relation to the cargo claim.
Viewpoint
Commented Ms Khan and Ms Nielsen: “Industry observers are unlikely to be surprised by the Court’s ruling in this case, as it has long been understood that it is incumbent on a master to perform his own assessment of the apparent state of the cargo during loading and, if necessary, to clause the bill of lading (despite any “clean” wording in the draft provided by the shippers).
“In practice, a master is often not in a position to make an accurate assessment of the condition of the cargo while it is being loaded. Under English law this gives the shipowners a defence under the Hague/Hague-Visby Rules against a claim brought by the cargo receivers. However, due to the global nature of shipping, a shipowner could face a situation where they are obliged to accept the jurisdiction of a local court that does not apply these defences in the same way. In such circumstances, the shipowner will only be able to pass this claim down to their charterers if the charterparty terms permit it, for example by incorporating the terms of the Inter-Club Agreement.
“This decision makes it clear that there is no implied indemnity from a charterer to their counterpart owners if their agents (the cargo shippers) present bills of lading that record the cargo as being loaded clean on board, even if the shippers could have ascertained that the cargo was in fact damaged at the time of loading.”
Source: The Baltic Exchange
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Wednesday, 04 March 20
MARKET INSIGHT - INTERMODAL
As it was expected, the whole world has been focusing on the spread of the Coronavirus, with the fast outbreak being primarily a massive humanitari ...
Wednesday, 04 March 20
CORONAVIRUS: A WILDCARD FOR BULKS DEMAND - WOOD MACKENZIE
The coronavirus is casting a shadow across commodity markets. It has undermined China’s economic sentiment, putting the country’s growt ...
Wednesday, 04 March 20
THERMAL COAL TO 'PHASE OUT', STRONG DEMAND FOR COKING COAL: PLATO - SYDNEY MORNING HERALD
Plato Investments managing director Don Hamson says Australian iron ore producers are set to benefit in the fallout from coronavirus as China will ...
Wednesday, 04 March 20
CHINA PROVINCE TO CLOSE 10 MLN TONNES OF COAL CAPACITY IN 2020 - XINHUA
Southwest China’s Guizhou Province plans to phase out 10 million tonnes of outdated coal production capacity by closing 80 coal mines in 2020 ...
Wednesday, 04 March 20
UKRAINE PRODUCED OVER 2.55 MLN TONNES OF COAL IN FEBRUARY - UKRINFORM
In February 2020, Ukraine produced over 2.55 million tonnes of coal, which is 0.2% less than planned.
The Coal Miners Union of Ukrai ...
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- Rio Tinto Coal - Australia
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- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
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- Ministry of Mines - Canada
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- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
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- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- The University of Queensland
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- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
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- Pendopo Energi Batubara - Indonesia
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- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Mercator Lines Limited - India
- MS Steel International - UAE
- New Zealand Coal & Carbon
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- Chamber of Mines of South Africa
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- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Deloitte Consulting - India
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- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
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- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
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- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
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- The Treasury - Australian Government
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