UK: Tribunal Considers Issues Of Cargo Quantity, Responsibility For Broken Cargo Equipment, Demurrage And The Margin Of Redelivery Bunkers Allowed By The Term "About"

London Arbitration 15/13

The Claimants chartered the Vessel to the Respondents on an amended NYPE form. The Respondents agreed a sub-voyage charter for the carriage of 50,000mt corn in bulk, 10% more or less in the Respondents' option, from Brazil to Indonesia.

In arbitration proceedings between the parties, four key issues were decided:

  1. Were the Claimants in breach due to the Master's failure to properly sign accurate mate's receipts in respect of cargo loaded?
  2. Were the Respondents liable for the cost of replacing a damaged hoisting wire?
  3. Were the Claimants in breach due to the Master's failure to protest the Statement of Facts at the second discharge port, reducing the amount of demurrage which the Respondents could claim under the sub-charter?
  4. Was the appropriate margin for "about" in relation to adjustment of bunkers on redelivery 2% or 5%?

Were the Claimants in breach due to the Master's failure to properly sign accurate mate's receipts in respect of cargo loaded?

After loading finished, the quantity loaded as recorded by the shore scales was 50,299.983mt. This was reflected in the mate's receipts, signed by the Master, in which the quantities were described as "said to be" and qualified by the words "quality, quantity, weight, measure, condition, contents and value unknown". Four draft surveys each showed a load of more than the amount recorded by the shore scales.

No remarks were made on the mate's receipts or the bills of lading regarding the discrepancy, The Master did issue a notice of protest, but the Respondents claimed not to have received any notice of the discrepancy until after clean bills were issued.

The Respondents claimed for deadfreight, on the basis that as a result of the under-recording of the cargo they incurred a loss of freight under the sub-charter. This claim succeeded.

The Tribunal found that the Master did not do all he reasonably could to protect the Respondents' interests. He should have made direct contact to advise them promptly of the discrepancy. He also should not have signed the mate's receipts before obtaining their instructions. The Master was in breach of his duties under clause 7 (making the whole reach and burden of the vessel available to the charterer) and clause 8 (failing to render all customary assistance by not effectively following instructions that should have been obtained from the Respondents).

It is essential that the Master is aware of his duties to all parties under the charter terms. Owners must also remember that the Master is their agent, and so his actions may make them liable in damages. All parties should be in regular contact during cargo operations, to ensure that everyone is fully aware of all potential issues.

Were the Respondents liable for the cost of replacing a damaged hoisting wire?

At the first discharge port, a wire rope used in operation of one of the vessel's cranes snapped. Owners argued that this was caused by rough handling by stevedores for whom Charterers were responsible, and claimed the cost of replacing the wire.

This claim failed. Owners had to prove on the balance of probabilities that the damage occurred due to rough handling, and they failed to do so. No evidence was provided to identify the cause of the failure. It could not be determined whether any pre-existing damage or latent defect would have been revealed by any inspection which the stevedores did or should have carried out.

This highlights the importance of providing sufficient evidence to satisfy the relevant burden of proof.

Were Owners in breach due to the Master's failure to protest the Statement of Facts at the second discharge port, reducing the amount of demurrage which Charterers could claim under the sub-charter?

Charterers argued that, at the second discharge port, the Master signed a Statement of Facts which was incorrect in respect of prevailing weather. Specifically, it was inconsistent with a separate "Statement of Facts for Rain Record". Charterers said that, as a result, they were deprived of the opportunity to contest the SoF and to claim demurrage under the sub-charter. Owners denied that the SoF signed by the Master was incorrect.

This claim failed. There was no obvious inconsistency between the two documents. The SoF recorded only the events which might be expected to impact on discharging operations. The charter terms did not require the Master to sign statements of facts or rain records. In so far as he was induced to do so, he owed a duty of care to ensure that they were accurate. However, he was not under any obligation to record rainfall in such a way as to enable Charterers to maximise their claim for demurrage under the sub-charter.

Was the appropriate margin for "about" in relation to adjustment of bunkers on redelivery 2% or 5%?

The charter terms required redelivery with "about" the same quantities of bunkers as on delivery. Owners allowed a margin of 2% for "about" and Charterers disputed this, arguing that the customary margin was 5%. Owners said there was no standard rule (unlike in speed and performance claims) that the tolerance should be 5%.

The Tribunal agreed with Owners, that a shortfall of no more than 2% was appropriate in this case. Any absolute acceptance of a shortfall of 5% across the board would lead to an unacceptable situation where Charterers would try to save costs by redelivering with a 5% shortfall. The vessel was able to stem bunkers shortly before redelivery. In such cases, there is little to justify allowing a tolerance for, for example, unexpected weather conditions. Sailing conditions might be more relevant where the vessel stems bunkers a considerable distance from the redelivery port.

These findings highlight the importance of the facts. Although the term now has a relatively fixed meaning in respect of a vessel's performance, it takes on a far more subjective meaning when dealing with bunker quantities on redelivery. Charterers must be aware of this, and not simply think they can apply a 5% margin regardless of when and where the vessel takes on bunkers prior to redelivery.

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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