Detainable deficiencies pointed out by AMSA in 2020

Ships calling at ports in Australia continue to be detained for the following deficiencies during PSC inspections by AMSA.

(1) ISM Related: (No report to Flag and Port State on EGCS malfunctions, Insufficient familiarization with key equipment such as ECDIS/OWS, Not having latest version of ENC, etc.)

Ø  Crew were found to have insufficient familiarization with abandon ship drills and fire drills, as well as failed to demonstrate appropriate and necessary operation for voyage such as ECDIS. It is recommended that training should be carried out for all crew at appropriate intervals and the training records should be kept on board.

Ø  It has been determined that non-reporting of deficiencies relating to key equipment to the Flag and Port State is an ISM related detainable deficiency. It is recommended that Incident Reports should be submitted to AMSA prior to entering any Australian port.

Although deficiencies relating to Safety of Navigation are generally not directly considered in themselves to be detainable deficiencies in Australia, they are considered as ISM related detainable deficiencies since they are regarded as being ISM related.

(2) Emergency Generators Failure of an emergency generator to automatically connect to the emergency switchboard (ESB) is considered as a detainable deficiency. It is recommended that tests to ensure automatic starting as well as connecting of the emergency generator to the ESB should be carried out at appropriate intervals using the test switch on the ESB, and that test records should be kept on board together with pictures.

(3) Fire Dampers for Engine Room Ventilation: Seized/wasted/holed dampers have been pointed out as detainable deficiencies. It is recommended that operational tests and internal inspection of dampers should be carried out at appropriate intervals.

(4) Air Pipe Heads for Water Ballast Tanks: Defective closing devises in air pipe heads that are seized, damaged, missing floats, missing or have deteriorated packing, etc. have been pointed out as detainable deficiencies. It is recommended that opening up and internal inspection of air pipe heads should be carried out at appropriate intervals. For reference, please be advised that the Marshall Islands Administration urges owners to open and inspect air pipe heads every three months, as per Marine Safety Advisory No.07-19.

(5) Emergency Fire Pump and its pipe: Insufficient pressure of jets and defective isolation valves have been pointed out as detainable deficiencies. It is recommended that maintenance of pumps, opening up of related valves, and hose tests should be carried out at appropriate intervals.

(6) Lifeboat and Rescue Boats:

Ø Failure of engines to start has been pointed out as a detainable deficiency. It is recommended that operational tests should be carried out at appropriate intervals and, especially, spare battery levels (No.2 battery) should be confirmed without fail.

Ø Seized and inadequate resetting of on-load release gears have also been pointed out as detainable deficiencies. It is strongly recommended to confirm that on-load release gears are maintained during abandon ship drills, and that resetting positions are adjusted correctly when the boats are launched and maneuvered in the water.

(7) Sewage Treatment Plants: Holed sewage treatment plants with associated piping, defective air blower and 3-way valves, as well as insufficient quantities of tablets have been pointed out as detainable deficiencies. It is recommended that sewage treatment plants together with related equipment should be maintained at appropriate intervals.

(8) Hatch Covers: Missing/deformed rubber, seized/wasted clamping devices (cleats) and wasted/damaged seats of clamping devices (crutches) have been pointed out as detainable deficiencies. It is recommended that careful inspection of such items should be carried out at appropriate intervals to ensure weather tightness. For reference, please be advised that each hatch cover for bulk carriers is required to be inspected every week, as per Para. 3.3 of IMO Res. MSC.169(79).

(9) MLC related: In addition to expiry of the seafarer’s employment agreement (SEA), no Flag State approval of the seafarer’s repatriation plan and postponement of the SEA have been pointed out as detainable deficiencies. Please refer to item (A) below.

Furthermore, please be aware of the following whenever a vessel enters an Australian port.

(A) Plan for the seafarer’s repatriation (Marine Notice 04/2020) AMSA does not allow seafarers to work continuously on-board ship without taking leave for more than 14 months. Further, in case seafarers have served continuously on board a vessel for more than 11 months but less than 14 months without taking leave, the master is required to submit a seafarer’s repatriation plan approved by the Flag State to AMSA. When it is anticipated that seafarers will serve more than 11 months onboard, it is strongly recommended that an approved repatriation plan should be prepared in advance.

(B) Cargo securing devices (Marine Notice 05/2020) Focused inspection campaigns for cargo securing devices have been implemented by AMSA between 1 August and 31 October 2020 in response to several incidents where containers have been lost or fallen into the sea. It is recommended that the securing condition of all containers be carefully confirmed before commencing voyage and prior to entering port.

Index of AMSA Marine Notice (For (A) & (B)) at

https://www.amsa.gov.au/about/regulations-and-standards/index-marine-notices

Importance of Checking BDN Before Signing

Vessel had bunkered a few thousand tons of VLSFO at its last port. A few days after departure, analysis results were sent to the vessel by the testing laboratory and the fuel seemed to be on spec for all ISO 8217 parameters except for Total Sediment Potential (TSP). The result for TSP was 0.15% whereas the maximum limit in table 2 was 0.10%.

The vessel operator’s technical department advised the vessel to consume this batch of bunkers and report any operational difficulties faced. Some technical guidelines on operational adjustments to be made were also given to the crew.

Within hours of starting to consume the new batch of bunkers, the vessel experienced excessive purifier sludging.

Charterers were informed and they agreed to test the ‘vessel’ sample whose seal number was mentioned in the Bunker Delivery Note (BDN). Owners did not see any reason to object as they thought the samples were taken at the receiving ship’s manifold. The vessel was instructed to land the sample at the next port. The Master acknowledged the message and asked the office in return if the vessel should also land its own samples at the same time since the samples mentioned in the BDN were taken at the bunker barge’s manifold and not their own ship. Owners informed charterers of this as they were now concerned that the samples from bunker barge may not be representative of the fuel bunkered.

Charterers expressed their dissatisfaction as the information provided on the BDN did not reflect what the crew or the owners were saying. Charterers independently went ahead with the testing of the ‘vessel’ sample mentioned in the BDN. The result for TSP was 0.10% and therefore on spec. Under the charter party, this test result was binding on owners. To avoid a repeat of this incident, owners investigated the practice of signing BDNs across their fleet. The main findings from their investigation were:

Ø  During the pre-bunker meeting with the bunker barge representatives, the sampling protocols were not discussed.

Ø  It was common practice for Masters and Chief Engineers to sign BDNs without verifying the information entered therein.

Ø  No fleet vessel had ever issued a protest to the bunker barge for such practices, or refused to sign the BDN, or informed the owners or charterers.

Ø  The majority of crew assigned bunkering related duties were not aware that they had to oversee and continuously monitor the sampling procedures adopted by the barge in order to ensure the sample is truly representative.

Ø  The crew did not fully understand the repercussions of signing such BDNs as no formal training had been provided by the shore management.

Ø  The company’s SMS did not clearly highlight how the vessel should act where the bunker barge refuses to enter the seal numbers of the samples taken at the receiving ship’s manifold on the BDN.

IBC/BGH Codes Ammendments Effective 01 January 2021

 Amendments to the IBC Code (MSC460(101) / MEPC318(74), BCH Code MSC 463(101) MEPC 319 (74)) and MARPOL 73/78 Annex II MEPC 315(74) will enter into force on 1 January 2021.

All ships carrying dangerous chemicals and/or noxious liquid substances in bulk shall keep the revised certificates (i.e. Certificate of fitness for the carriage of dangerous chemicals in bulk or NLS certificate) based on the new amendments on and after the date of entry.

Ammendments may be read at,

https://www.mardep.gov.hk/en/msnote/pdf/msin1925anx1.pdf

https://www.classnk.or.jp/hp/pdf/tech_info/tech_img/T1192e.pdf

https://www.crclass.org/chinese/download/ti-tc/105/1-5%20MSC.460(101).pdf

https://www.mardep.gov.hk/en/msnote/pdf/msin1924anx1.pdf

https://ltsa.lrv.lt/uploads/ltsa/documents/files/Naudinga%20informacija/aktualus-TJO-pakeitimai/MSC_463(101).pdf

ENC accuracy – and a grounding

 A report by the Germany Federal Bureau of Maritime Casualty Investigation (BSU) of the grounding of 42,000 dwt chemical tanker PAZIFIK in Indonesia in July 2018, published in January 2020, gives interesting insights into the importance of crew understanding the quality of official electronic navigation chart (ENC) data accuracy.

The root cause of the accident could be described as the vessel hitting a rock. The rock was shown on the ECDIS display with a note “underwater rock (always underwater / submerged 1 MAR 2017)”.

From this, they assumed that the rock was not a hazard, since surrounding water was a comfortable 100m depth.

The crew also thought the vessel was at a safe distance from the underwater rock, since the electronic chart display had a “cross track distance” of 182m either side of the vessel, and the rock was much further away than 182m, according to the ECDIS display. (The cross track distance is a system on ECDIS displays where vessels are given a safe corridor shown by red and green lines, rather than a specific course, taking uncertainty into account).

But in reality, the rock was only 9m below the water surface, and located 400m away from where it was stated to be on the ENC. The ENC’s stated accuracy was +/- 500m. The rock’s location was also shown accurately on a small-scale paper chart mapped in a 1904 Dutch survey, and warnings were published in “Sailing Directions” available onboard. BSU heard from local sources that several other ships have ran aground on the same rock.

The route chosen was recommended by the vessel’s passage planning software. The vessel’s master was familiar with a route through the Lombok Strait, which would have added 200 nautical miles to the voyage.

He decided to take the route recommended by the software to save the 200nm, the Selat Snape strait between Komodo and Banta.

The vessel was loaded with 18,000 tonnes of ammonia – although no cargo escaped because only the forepeak / ballast water tanks were damaged.

It was able to refloat 5 days later after transferring cargo and ballast water to other tanks, and could proceed to a shipyard in Singapore under its own power, supported by a tug. The repair included renewing 50m of the double bottom.

The company has decided that the vessel will avoid the Selat Sape passage from now on.

Navigation background

In its original plan (which was changed due to fishing vessels), the vessel had planned to pass the rock at a distance of 0.7 nautical miles (1300m).

Its ENC was classified as “Zone of Confidence Category C”, which means a position accuracy of +/- 500m horizontally, and “full area search not achieved”.

But the ECDIS was set to a cross track distance of 0.1nm (180m) on each side.

This fits company procedures, where it recommends to keep a “cross track distance setting” of 2 x the vessel’s beam in confined waters, or just 64.4m, and this passage is considered “confined waters” in the procedural specifications, so the 0.1m (180m) cross track was considered within limits.

There could have been an alarm in the ECDIS that the cross track was set to 180m, while the chart had an accuracy of 500m.

The crew could have brought up data about the chart accuracy on the ECDIS display, including both horizontal and vertical accuracy, such as for submerged rocks. But it was quite hard to understand how to use it, BSU says.

If the vessel had been navigating with paper charts, the crew would probably have been more considerate of possible inaccuracies in the chart, and looked up all the “Sailing Directions” if the vessel was going to an area the master was not familiar with.

Or concerns about using paper charts in an unknown area may have led the crew to take on a pilot, who may have had his own accurate soundings map, or had better local knowledge, BSU said.

Sailing directions

The relevant section of Sailing Directions for the strait between Komodo and Banta states “The passage E of Pulau Banta is navigable but is seldom used, other than by ferries and other local craft, as tidal streams are strong and fewer anchorages are available.”

The Sailing Direction for the island of Tokohgilibanta states, “a drying rock, 1 mile farther NNW, is small and dangerous; the breakers on it being indistinguishable from the normal overalls and sea conditions in the area.”

(Confusingly, on the ENC, the name of the island changes from Tokohgilibanta to Nisabedi when the viewer zooms in). This description reflects the location of the rock where the vessel ran aground.

A digital version of these sailing directions would have been available onboard, but without any reference to the ENC, which would be required for the computer to connect them.

BSU says that the ECDIS could be described as “not fully engineered” - since it displaces sources of information such as paper sailing directions, without being a consistent replacement for them.

“There are significant differences between traditional voyage planning using paper charts and digital voyage planning using ENCs.

Planning a voyage using paper charts often entails referring to sailing directions, the list of lights and pilot charts with proposed routes plotted.”

“Besides drawing on their experience, officers of the navigational watch therefore refer to sources of data other than the navigational chart. Paper charts and sailing directions have developed over centuries and became more accurate in many areas.”

“Most of the world’s sea areas are looked upon as being inaccurately surveyed, while paper charts only provide an indication of the data of a survey.”

“The accident is therefore attributable to the ECDIS and settings specified,” BSU says.

More details

The vessel ran aground on a shoal between the islands of Komodo and Banta, Indonesia.

It was using a Transas ECDIS, with Passage Manager software from ChartCo, with ENCs supplied by ChartCo using data from the Indonesian Hydrographic Office. It was using voyage planning software “BonVoyage System” (BVS) from StormGeo.

The ChartCo software proposed a route via Selat Sape, passing between Banta and Komodo, going between the tiny islands of Nisabedi and Lubuhtare, which have only 1.5nm between them. The master and officer decided not to take this route, but instead take a route between the islands of Nisabedi and Banta, which have 2.5nm between them.

BSU looked at the Indonesian and UK Hydrographic paper charts of the region. TheUKHO charts (1:500,000) show a “rock awash” symbol, meaning a rock submerged at high tide or temporarily.

The Indonesian smaller scale chart (1:200,000) shows a rock symbol without specifying whether it is sometimes submerged, while the larger scale Indonesian chart (1:50,000) shows a shallow area with water depth of 9m. This chart was drawn from Dutch surveys carried out in 1904.

The ENC shows the shoal 2 cable lengths (400m) from the scene of the accident, with a note saying, “underwater rock (always underwater/ submerged 1 MAR 2017)”. The general water depth around the rock is about 100m.

The reason for the discrepancy between the ENC and paper chart is not clear.

The ENC has a “Zone of Confidence Category C” (CATZOC) which means “a position accuracy of +/- 500m horizontally, and “full area search not achieved”. This data could be fed into the ECDIS to illustrate the range of “cross track distance” needed.

IHO has a Data Quality Working Group looking at options for improve user awareness and presentation of quality data.

Full report may be read at

https://www.bsu-bund.de/SharedDocs/pdf/EN/Investigation_Report/2020/Investigation_Report_241_18.pdf?__blob=publicationFile&v=3

Ship-to-ship transfers and withholding consent – the Falkonera (The Standard P+I Club)

When an owner withholds consent for a proposed ship to receive cargo, the refusal must have reasonable grounds, to avoid a claim. Each case will be decided on its individual facts, but this article explores some of the factors that will be taken into account by the courts when deciding if the owner’s decision is reasonable or not.

The facts

In November 2010, the VLCC Falkonera was chartered by Falkonera Shipping Company (the owner) to Arcadia Energy Pte Ltd (the charterer) to perform a single voyage carrying crude oil from Yemen to ‘1-2 ports Far East’.

The charterer nominated two VLCC storage vessels to receive the cargo by way of ship-to-ship (STS) transfer at Pasir Gudang, Malaysia. The owner withheld its approval of the proposed VLCCs and therefore the cargo was discharged into smaller vessels.

The owner claimed demurrage, but the charterer denied liability for demurrage and instead advanced a counterclaim on the basis that the withholding of consent by the owner was a breach of the charterparty which led to delay and increased costs.

The charterparty terms

Part 2 of the standard BPVOY4 form (clause 8) provided:

‘8.1 Charterers shall have the option of transferring the whole or part of the cargo… to or from any other vessel including, but not limited to, an oceangoing vessel, barge and/or lighter (the “Transfer Vessel”)… All transfers of cargo to or from Transfer Vessels shall be carried out in accordance with the recommendations set out in the latest edition of the “ICS/OCIMF Ship to Ship Transfer Guide (Petroleum).”

Owners undertake that the Vessel and her crew shall comply with such recommendations, and similarly Charterers undertake that the Transfer Vessel and her crew shall comply with such recommendations. Charterers shall provide and pay for all necessary equipment including suitable fenders and cargo hoses. Charterers shall have the right, at their expense, to appoint supervisory personnel to attend on board the Vessel, including a mooring master, to assist in such transfers of cargo.’

By way of specific addition to Part 1, the charterparty contained the following clauses headed ‘STS lightering clause’:

‘If charterers require a ship-to-ship transfer operation or lightering by lightering barges to be performed then all tankers and/or lightering barges to be used in the transhipment/lightering shall be subject to prior approval of owners, which are not to be unreasonably withheld… all ship-to-ship transfer operations shall be conducted in accordance with the recommendations set out in the latest edition of the ics/ocimf shipto- ship transfer guide (petroleum).’

The Commercial Court’s decision

The owner argued that, on a true construction of the above clauses, VLCC-to-VLCC transfers were not permitted; therefore, it had acted reasonably in withholding its approval, because VLCC-to-VLCC transfers were non-standard and they had concerns about the STS operation itself. The Commercial Court, however, decided that the owner had withheld its consent unreasonably.

The court decided that the wording in clause 8.1 was wide enough to permit a VLCC-to-VLCC transfer. From past experience, the owner had concerns about VLCC-to-VLCC transfers and, as a company policy, did not allow it.

The charterer’s expert had, however, been able to demonstrate that the owner’s objections were specific to the previous incident and were not sufficient grounds for a reasonable shipowner to decline approval in the present case. The owner’s right of approval was limited to the right to review the details of the nominated vessel and to decide whether or not she was suitable for the proposed STS operation rather than approval of the STS operation itself.

The court also held that the absence of a section in the OCIMF Guide (in its then form) dealing with VLCC-to-VLCC transfers did not mean that such operations could not (with advance planning) be conducted in accordance with the Guide.

The Court of Appeal

The owner appealed the Commercial Court’s decision, but the Court of Appeal agreed with the previous judge’s findings. The Court of Appeal accepted that a VLCC-to-VLCC transfer may not have been a standard operation, but this did not mean that the owner’s refusal was reasonable.

The owner was required to approve the vessel and not the STS operation itself. Such an approval was not to be considered in isolation, but in the context of the operation contemplated.

However, the above clauses did not allow owners to vet the plans for the STS operation before deciding whether to approve the nominated vessel.

Case comment

Since the first trial, a new edition of the OCIMF Guide has been published dealing with STS transfers involving vessels of a similar length. What is apparent from this decision is that owners must act reasonably in considering any requests to perform STS transfers. This case will be welcomed by charterers, but each case will be decided on its individual facts. The case gives owners some guidance as to what factors will be taken into account by the courts when deciding if an owner’s decision is reasonable or not.

Demurrage time bars: ‘Less is not always more!’ (The Standard P+I Club)

Voyage charters often include additional rider clauses requiring an owner to submit any claim they may have for demurrage within a prescribed period following completion of loading/discharge operations. This article explains why, where a charterparty makes clear provision as to how demurrage claims are to be submitted by an owner, it is essential that such provisions are strictly complied with.

Introduction

It is common to find additional rider clauses in voyage charters requiring an owner to submit any claim they may have for demurrage within a prescribed period following completion of loading/discharge operations, often within 90 days, failing which the claim is ‘deemed to have been waived and forever time barred’.

The prescribed time bars for the submission of demurrage claims are usually the most onerous and time-sensitive an owner will have to comply with, when compared with the time bars otherwise applicable for contractual claims under voyage charters – the default position is six years under English Law.

The reason behind these clauses is that there are often similar provisions in the underlying contract(s) of sale for the cargo, requiring the charterer to submit their own claim(s) for demurrage within similar, prescribed, tight time frames. Generally, the English courts and arbitration tribunals will uphold these time bar provisions, so long as the wording of the clause is clear and unambiguous. However, the approach has shifted over the years as discussed later in this article.

Earlier case law Strict compliance with the clause

One of the earliest cases on the subject of demurrage time bars is The Oltenia3. The relevant rider clause required the demurrage claim to be submitted in writing with ‘all available supporting documents. The judge held: ‘I cannot regard the expression “all available supporting documents” as in any way ambiguous…the owners are in my view shut out from enforcing a claim the substance of which and the supporting documents of which (subject always to de minimis exceptions) have not been presented in time.’

In The Sabrewing4 the owner had failed to produce copies of signed pumping logs within the prescribed 90 days and this was held by the English court to be fatal to the whole of their claim, not just to the parts of their demurrage claim to which the logs related. Here, the judge concluded:

‘Clause 23 required owners to present “a claim in writing” within 90 days of discharge of cargo, “together with supporting documentation substantiating each and every constituent part of the claim”.

Unless such a claim, with supporting documentation, is presented within the relevant time period, charterers are released “from all liability in respect of any claim for demurrage”, i.e. not merely that constituent part of the claim that is not supported by relevant documentation.

Accordingly, if, as here, only one composite claim for demurrage was made, owners are time-barred in respect of the entirety of the claim, notwithstanding that the absence of documents only relates to one constituent part of the claim.’

Some have criticized the trend of the above cases, where the courts seem to have taken an overly literal interpretation of the subject time bar clause, without true regard to issues such as materiality.

Conversely, it is difficult for a judge or arbitrator to find to the contrary where the wording of a time bar clause is clear and unambiguous and, after all, has been entered into between two commercial parties.

A more flexible approach

An example of the English courts taking a more flexible (and, thus, a more ‘owner friendly’ approach) can be found in The Eternity, where the judge held:

‘I confess that I find the proposition that a claim put in on time but in respect of part of which the accompanying documents are non-contractual gives rise to a bar to the entire claim is a commercially surprising construction.

I am not persuaded that on its proper construction the effect of clause 20 was such that the failure to provide “all supporting documentation” (whether needed by reason of the requirements of clause 19 or otherwise) for one constituent part of the claim discharged liability for the entire demurrage claim.’

In The Abqaiq, the owner submitted a demurrage invoice, together with ‘all supporting documents’ within the 90 days prescribed in the charter.

However, a dispute arose in relation to an earlier invoice submitted by the owner for bunkers and time consumed at the load port. The charterer argued that the first invoice had to be brought as a clearly stated demurrage claim and that the owner had failed to do so within the 90-day limit. Although the charterer succeeded at first instance, the Court of Appeal overturned the decision on the grounds that the charterer had been put in possession (within the 90-day time frame) of all the factual material which they required in order to satisfy themselves that each and every part of the claim was well founded. They were able to satisfy themselves as to the extent of their liability without the need for the invoice to be marked expressly as a ‘demurrage invoice’.

In reaching this conclusion in The Abqaiq, the Court of Appeal disagreed with the court in The Sabrewing that the requirements under a demurrage time bar clause dictate strict, and absolute, compliance.

Recent case law

The most recent case on demurrage time bars is Kassiopi Maritime Co v Fal Shipping Co Ltd (M/T Adventure). In this case, the ship was chartered on an amended BPVOY4 form. The relevant charterparty provisions read as follows (our emphasis):

‘19.7 No claim by owners in respect of additional time used in the cargo operations carried out

under this clause 19 shall be considered by charterers unless it is accompanied by the following

supporting documentation:

19.7.1 the vessel’s pumping log signed by a senior officer of the vessel and a terminal representative showing at hourly intervals the pressure maintained at the vessel’s manifold throughout the cargo operations; and

19.7.2 copies of all NOPs issued, or received, by the Master in connection with the cargo operation; and

19.7.3 copies of all other documentation maintained by those onboard the vessel or by the terminal in connection with the cargo operations.

20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which owners may have under this charter unless a claim in writing has been presented to charterers, together with all supporting documentation supporting each and every constituent part of the claim, within 90 days of the completion of discharge of the cargo carried hereunder.’

The owner submitted a formal demurrage claim and provided the following documentation in support of the same: a demurrage invoice; a laytime/demurrage calculation for both the load and discharge ports; a Notice of Readiness, a statement of facts and four letters of protest issued at the load port; and a Notice of Readiness, a pumping record, a statement of facts, four letters of protest and an empty tank certificate issued at the discharge port.

However, the arbitration tribunal found in favour of the charterer, holding that the owner’s claim was time-barred as they had failed to provide the following documents:

(a) the port log and time sheets referred to in the letters of protest; and

(b) a manuscript note from the master, indicating that he had received ‘free pratique’ at the discharge port.

The owner appealed to the English High Court, on the basis that the proper construction of clause 20.1 required the owner to provide only ‘essential’ supporting documentation and not ‘all’ relevant supporting documentation.

The court dismissed the appeal and agreed with the charterer that the claim was time-barred. In particular, the judge ruled that clause 19.7.3 did not require the owner to disclose all relevant

documents upfront, as this would place a too far-reaching and commercially impracticable obligation upon the owner. The purpose behind this clause was to focus on ‘contemporaneous records kept by vessel relating to the cargo operation’, which had not been otherwise covered by clauses 19.7.1 and 19.7.2.

The judge indicated that the case of The Abqaiq provided clear guidance as to which documents

should be presented in support of a demurrage claim. The judge referred to ‘documents which objectively the charterers would or could have appreciated substantiated each and every part of the claim’ and by which they ‘were thereby put in possession of the factual material which they

required in order to satisfy themselves that the claim was well-founded’.

However, clause 20.1 laid an obligation upon the owner to provide ‘all supporting documents’

in their possession. In this case, the port logs and time sheets were considered ‘primary documents containing factual material which should be made available to the charterers so that they may satisfy themselves that the claim is well founded, consistent with the purpose of the clause’.

Conclusion

While some English High Court cases have indicated a shift towards a more relaxed judicial approach, when it comes to compliance with demurrage time bar provisions, perhaps also more

in line with commercial practice, the most recent case of The Adventure serves as a timely reminder that where a charterparty makes clear provision as to how demurrage claims are to be submitted by an owner, it is essential that such provisions be strictly complied with. Failure to do so could be fatal to the claim. It further underlines the importance of carefully considering and submitting all available documentary material that could be considered evidence, supporting various aspects of a demurrage claim. Overall, when it comes to submitting demurrage claims, the general rule of thumb for an owner should be ‘the more documentation

you serve in support, the better’.

Vessel delays due to COVID-19: Who bears the costs?

Introduction

On 26 March 2020 President Muhammadu Buhari announced that only cargo vessels which have been at sea for more than 14 days can dock in Nigerian ports. Following this announcement, some commentators have expressed fears of a tightening of supplies. Although most cargo originates from the Far East and the United States, it trans-ships at intermediate ports before arriving in Nigeria.

Far East-originating cargo will traverse the Indian Ocean, stopping at Durban, Port Louis, Cape Town, Luanda, Tema and Cotonou, among other ports. US East Coast-originating cargo is often trans-shipped at hubs such as Algericas before continuing to the West African ports of Abidjan, Tema and Cotonou en route to Nigeria.

The 14 days referred to by the president will start from the last port of call, which means that vessels trans-shipping in Tema or Cotonou (one to two days sailing time) before arriving in Nigeria will be subject to delays of at least 12 days before berthing.

Demurrage and liability for delay

The implications of this measure concern demurrage and liability for delay. Although the Nigerian Ports Authority asked terminal operators to suspend demurrage charges for 21 days (which expired in the third week of April 2020), this luxury was not available in carrier-shipper transactions, which are largely guided by contractual arrangement. The latter is straightforward, as the bill of lading terms often favour the owners. However, owners of liner ships must deal with added delay costs. Ships on charter will issue a notice of readiness (NOR) on arriving in a port, thus activating the calculation of laytime and attendant demurrage.

One element that can invalidate a NOR is 'free pratique' (i.e. a confirmation from port authorities that a vessel is free from infectious diseases and can enter a port). Vessels usually obtain free pratique on arriving at a berth as a matter of course and thus a valid NOR is issued before inspection. However, where a vessel has called at a port affected by COVID-19, free pratique ceases to be a mere formality and a valid NOR cannot be issued on arrival. If a valid NOR cannot be issued until free pratique has been granted, significant delays may occur. These must be borne by the shipowner unless the charterparty provides otherwise.

Container ships will most likely bear the costs of a delay, with a surcharge likely imposed on shippers. For chartered ships, disputes will arise as to the validity of the NOR and the commencement of laytime occasioning demurrage unless a bail-out is forthcoming for cargo owners. Notably, if a vessel or any of its crew are quarantined and this causes delays in loading or discharge operations, the vessel may be prevented from obtaining a valid NOR.

In a time charter, delays are generally borne by the charterer unless it can rely on an off-hire clause in the charterparty. If crewmembers are found to be COVID-19 positive or the vessel is detained or quarantined, the working of the vessel may be affected. This may enable charterers to place the vessel off-hire for the time lost, but this will depend on the off-hire clause.

Laytime and demurrage disputes will be determined by reference to the charterparty. Charterers will seek to rely on exceptions to laytime and demurrage to minimise or absolve themselves from liability for demurrage. Laytime exceptions generally do not apply once a vessel is on demurrage, and general provisions excepting delays do not apply to laytime and demurrage unless expressly provided by way of an agreement.

Force majeure

Although force majeure has been a hot topic during the COVID-19 pandemic, its consideration is subject to a force majeure provision being included in the relevant charterparty and will be considered along with a determination of whether the contract has been frustrated. Where the contract contains a force majeure provision, the occurrence of a force majeure event may alter the parties' obligations and liabilities under the contract. Where no such express provision exists, a contract may, subject to express provisions to the contrary, be deemed frustrated where an event occurs without the default of either party, the effect of which is to destroy the identity of the charter service or render it, as a matter of business, completely different to the service contemplated by the parties.

Comment

Most shipowners have drafted clauses to excuse themselves and their ship from any liability arising from delays caused by COVID-19. Parties must conduct due diligence to ensure that such clauses cover all relevant circumstances.