UK: Unsafe Berths – Demurrage and Damages Issues

Last Updated: 4 October 2010
Article by Linda Jacques

London arbitrators and an English High Court Judge have recently had to unpick the legal issues surrounding considerable delays caused by berthing at Itaguai in Brazil.

The owners of the "Vine", a Capesize bulk carrier had been chartered from its owners, Emeraldian Ltd by Wellmix Shipping, to carry 120,000 mts of iron ore between one or two safe berths, one safe port Itaguai Brazil to China. Within the port of Itaguai (also known as Sepetiba) there are separate terminals for loading containers, alumina, coal, iron ore and solid and liquid bulk cargoes. The charterers, Wellmix, had nominated a loading berth in Itaguai which was operated by Compannia Portuaria Baia de Sepetiba ("CPBS") who are a subsidiary of Vale S.A.

The CPBS berth had 3 berthing dolphins, D1, D2 and D3. In order to berth, any visiting vessels were required to berth starboard side so that D3 was the dolphin furthest forward and D1 was the dolphin furthest aft. D2 was midships and had been designed to have 50% of the energy absorption capacity of D1 and D3.

In July 2007 the vessel "Pacific Fortune" caused damage to D3. As a result of the incident, the Port Authority put a contingency plan in place for berthing to avoid vessels touching D3. Four tugs were to be used for berthing operations. A vessel's portside anchor had to be used as an aid in the berthing operation in order to limit the distance from the dolphin and reduce the approach speed during berthing. Vessels were expected to be at an angle by the stern to permit the vessel's starboard side aft to contact D1 first. The vessel then had to manoeuvre the starboard side to contact D2 and the vessel would then be securely moored. The intended repairs to D3 do not appear to have taken place or, were proceeding at an extremely slow pace. Some 73 vessels berthed in 2007 under the contingency plan and 46 of these vessels were Capesizes.

On 8 December 2007 the vessel "Nordstar" caused damage to D2. The owners of the vessel claimed that the damage had been caused by the unsafety of the berth and not by the actions of the master of that vessel. The accident to D2 meant that the CPBS/Vale berth could not be used at all. Understandably, work on finalising repairs to D2 and D3 was commenced immediately.

The "Vine" arrived at the port of Itaguai on 8 January 2008 whilst repairs to the damaged dolphins were still underway. It was unable to berth until 15 February because of the repairs. As a consequence of that the owners of the "Vine" claimed USD5.0 million in demurrage from their charterers, Wellmix.

Various issues arose out of the claim for demurrage. The two most interesting issues centred on the questions of whether:-

  1. The charterers could interrupt laytime by relying upon the exception "partial or total interruptions on railway or port". The same charter clause also included the words "time lost as a result of all or any ... causes beyond the control of the seller, preventing cargo preparation, loading or berthing of the vessel". The owners claimed this term had to be read into the words "partial or total interruptions on railways or ports". The delay in repairing had been caused by CPBS, who were a subsidiary of the seller of the iron ore – Vale S.A. The owners tried to persuade the arbitrators that the delays were therefore not beyond the control of the seller. This was rejected.
  2. CPBS' failure to complete the repairs to D3 was obviously not something in the charterers' control. They were therefore entitled to rely on the exception "partial or total interruption on port".
  3. The arbitrators/Judge then turned their attention to the owner's allegation that the berth at Itaguai was unsafe. If the delay had been caused by an unsafe berth, it would entitle the owners to damages "at the demurrage rate". The arbitrator/Judge found the CPBS berth at Itaguai was unsafe. On 3/4 December the charterer's, Wellmix, warranted the berth was safe to use, but on the evidence the CPBS berth was unsafe. The need to berth by the stern at a slight angle by contacting D1 first required more then ordinary seamanship and navigation, in order to avoid contact with D3. The absence of a system for informing masters and pilots of all of the information they required meant that it was more likely than not that a risk of damage would arise. This is a little surprising bearing in mind that only one vessel had damaged D2, whilst 72 others had been able to enter and leave the berth without damaging D1 or D2. The charterers were therefore responsible for the demurrage that had been claimed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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