Not Logged In, Login,

Wednesday, September 19, 2018

CHARTER PARTY INFORMATION

NORSK HYDRO ASA ISSUES NEW TANKER SHIPPING TERMS EFFECTIVE OCTOBER 2000

Norsk Hydro ASA have issued a set of new terms for chartering tankers plus standard amendments to the Shellvoy 5 form of charterparty. We would like to comment on the following clauses included in the Norsk Hydro special provisions:

Clause 1 – Indemnity

This clause provides  that charterers may request owners to discharge a quantity of cargo without production of the original bill of lading and/or at a port other than that stated in the bill of lading. The clause sets out three forms of standard letters of indemnity (A, B, C). Forms A & C relate to respectively discharge without an original bill of lading and discharge without an original bill of lading at a port other than that named in the bill of lading. These forms include the provision that the owners shall deliver to the party named in the letter of indemnity. The difficulty with such a provision is that where a vessel discharges at an SBM or other facility it may be difficult if not impossible for owners to verify to which party they are delivering the cargo. To protect owners in such a situation it is preferable if the letters of indemnity include the following provision:

“… we request you to deliver the said cargo to [insert name of party to whom delivery is to be made] at [insert place where delivery is to be made] without production of the original bill of lading.”

“If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.”

These provisions are in the current draft letters of indemnity prepared by the International group of P&I Clubs. Members are advised to discuss these letters of indemnity with their P&I Club.

Clause 9 – Early loading

This clause states:

“If, with charterers’ prior consent and agreement, the vessel loads earlier than commencement of laydays then charterers shall have the benefit of such time saved when calculating laytime and/or demurrage at the load port and/or at subsequent ports of call, and/or waiting places en route between ports. Such benefit shall be from the time laytime starts until commencement of laydays.”

It is helpful that Norsk Hydro have specified the period which they will be allowed to apply to their benefit when calculating laytime/demurrage in the event that they exercise the option available under this clause.

Clause 22 – Speed

This clause states:

“The vessel shall perform the ballast passage with utmost despatch and the laden passage at…knots weather and safe navigation permitting.

Charterers shall have the option to request the vessel to increase speed with charterers reimbursing owners for the additional bunkers consumed at original purchase price.

Charterers shall also have the option to request the vessel to reduce speed on laden passage. Additional voyage time shall count against laytime or demurrage, if on demurrage, and the value of any bunkers saved shall be deducted from any demurrage claim owners may have under this charter with the value being calculated at original purchase price.

Owners shall provide documentation to fully support the claims and calculations under this clause.”

The provision concerning the speed at which the vessel is to perform the laden passage may give rise to unexpected problems from an owner’s perspective.  Owners may be exposed to a claim if the vessel proceeds too slowly, and also if the vessel proceeds too fast. If the vessel proceeds too fast and therefore arrives at the discharge port too early, laytime or time on demurrage will still count. However, charterers may be entitled to claim damages for the consequences of owners’ breach. The losses thereby suffered by charterers may be equivalent to the demurrage rate for the time in question. No loss will be suffered, for instance, if the delay would have been the same if the vessel had arrived later. Also, it may be that charterers will suffer a loss due to the terms of the contract for the sale of the cargo. In any event charterers should be put to strict proof of their alleged losses.

The other provisions of this clause concerning charterers’ options to require the vessel to either speed up or slow steam are relatively balanced.

Clause 31 – Warranties

This clause provides:

“Any warranty undertaken by the owners under this charter shall be in effect at the date hereof and shall remain in effect during the term of this charter.”

The effect of this clause is that all warranties in the charter are continuing warranties and not just given at the date of the charter. This makes them considerably more onerous and therefore careful note should be taken of this provision.

Should you wish to receive a complete set of the new Norsk Hydro terms please contact john.fawcett-ellis@intertanko.com

If you would like to receive a copy of Norsk Hydro’s new chartering terms please contact john.fawcett-ellis@intertanko.com 

 

RECENT LONDON ARBITRATION DECISION – HULL FOULING – OWNERS FOUND NOT IN BREACH OF OBLIGATION TO PROCEED WITH DESPATCH

Although this case did not concern a tanker it is nevertheless interesting from a tanker perspective and is an example of a decision on the standard owners must adhere to when prosecuting a voyage with reasonable despatch.

The facts of the case can be summarised briefly. The vessel was chartered on the Synacomex form of charter for the carriage of a cargo of agricultural products from Paranagua to Europe. The vessel arrived off Paranagua on 3 April, but due to congestion was unable to berth until 11 May. On 21 April charterers informed owners that almost all vessels were “having hull/rudder/chests/propeller fouled and some heavily covered with marine growth which no doubt we believe to be due to stay in Paranagua outer roads” and that vessel’s speed was being reduced by about 3 or 4 knots. The charterers urged owners to have the vessel’s hull etc cleaned. Furthermore they offered to pay for an underwater inspection of the hull and any cleaning required. Owners declined these requests. The vessel loaded her cargo and sailed on 16 May, 43 days after her arrival there. Her speed on the voyage was reduced due to the hull fouling together with bad weather en route and she maintained an average of about 8.5 knots.

Owners commenced proceedings to recover the balance of freight due and demurrage together with the costs of cleaning the hull. Charterers cross-claimed for the loss suffered due to the late arrival of the vessel.

It was common ground that owners were under an obligation to prosecute the voyage with reasonable despatch and that the charterers’ cross-claim would only succeed if they could demonstrate a failure on the part of the vessel to proceed as fast as she was able. It was agreed that if the vessel had deliberately slow steamed to save fuel then owners would be in breach of their obligation. Charterers argued that in effect that had occurred on this voyage as owners had refused charterers’ offer to inspect the hull and to pay for any cleaning required and that owners’ refusal was unreasonable. The master was aware that the bottom had been fouled by the adhesion of small shells.

The owners contended that the obligation to proceed with reasonable despatch meant no more than to proceed reasonably fast with the vessel they had, by a reasonable route and with the engines doing the best they could. They said they could not be in breach due to the state of the hull as their obligation in that respect was defined solely by the seaworthiness provisions in the charter. There was no allegation that the vessel was unseaworthy and there was no authority to suggest that failure to clean a fouled bottom amounted to a failure of the duty to proceed with reasonable despatch. Furthermore, the vessel was not under a duty to maintain an average reasonable speed.

The tribunal found that no question had been raised in the pre-fixture negotiations as to the vessel’s speed; nor had the charterers given any indication to owners that time was of the essence and that the cargo had to reach its destination by a specified date. When charterers raised the matter of the bottom cleaning they did not intimate a date the cargo had to arrive by. Therefore, charterers could not hold owners accountable in the same way as they could have done if a speed warranty had been included in the charter or an arrival date agreed for the discharge port. The owners should have expected that the prolonged stay at Paranagua would have resulted in hull fouling by marine growth. However, owners could not be expected to accurately access its impact on the vessel’s speed until the vessel had departed from the port. Although it was possible that a decision could have been taken to clean the vessel’s hull before sailing, the tribunal did not believe that the majority of owners would have done so.

In finding for the owners the tribunal found that there was no agreement that time was of the essence, nor was there a speed warranty, nor was there clear evidence that the vessel’s speed was likely to be seriously affected by the marine growth on the vessel’s hull. (Source: LMLN 545, 28 September 2000)