damage to hull claim - meco quality marine … · gencon 94- “the cargo shall be brought into the...

Damage to Hull Claim

Ashley Xu – Regional ManagerAshley Xu – Regional Manager

DTHContents

DTHContents

Why DTH Claim

In accordance with the Club’s claim records, DTH claims represent about 35% of the total claims reported in the year of 2016.

• Charterers are exposed to the risks of the

physical damage of the vessel, time loss for repairing the vessel, financial loss for the lost of the vessel’s next fixture, etc. This could be substantial and easily build up to tens/millions of dollars.

• Charterers have limited resources to

investigate; Charterers are in a weak position to defend the claim whilst owners have their P&I Club to assist.

1. Stevedore damage

Hull damage commonly occurs during cargo operations, normally as a result of negligence by the stevedore. Such negligence is usually actionable against the Charterers.

Clauses�in�the�Standard�Charterparty

NYPE 46 - “Charterers are to load, stow, and trim the cargo at their expense under the supervision of the Captain”.

NYPE 93 - “Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging, and tallying, at their risk and expense, under the supervision of the Master.”

Gencon 94- “The cargo shall be brought into the holds, loaded, stowed and/or trimmed, tallied, lashed and/or secured and taken from the holds and discharged by the Charterers, free of any risk, liability and expenses whatsoever to the Owners.”

1. Stevedore damage

In the absence of any provision to the contrary in the charterparty, normally the vessel’s rail rule will come into play. In the modern time, CP clauses will commonly stipulate division of the responsibility. Above standard clauses require Charterers to load/stowage/discharge the cargo. If the task is performed negligently by the Charterers’ delegate (the stevedore), the Charterers are in breach.

How to amend the clauses (for commercial consideration): (1) Insert “under the supervision and the responsibility of the master”; (2) When Standard Gencon 94 Clause is incorporated in the recap, you can consider to amend/delete the Clause 5 (a) and (c).

1. Stevedore damage

There is no presumption that the transfer to arrange and pay for the loading will also effect a transfer of responsibility for the proper performance that obligation.

Words�which�have�been�held�not�to�transfer�the�responsibility�from�Owners�to�Charterers:

"Charterers being allowed to appoint a head stevedore at the expense and under the

inspection and responsibility of the Master for proper stowage". ("The Helene". See also Sack v.

Ford; Union Castle v. Borderdale)

"Stevedores to be appointed by the Charterers … but employed and paid for by the Owners

at current rate … ." (Harris v. Best)

"Cargo on delivery alongside to be received by the Master … and to be at vessel’s risk …

shipper for the sum of two dollars per load to appoint and pay any stevedore to load the cargo."

(Anderson v. Crundall)

1. Stevedore damage

In addition, there will often be a clause in the charterparty specifically deal with the stevedore damage (Stevedore Damage Clause in the Riders). Typical clause will provide that charterers are to be responsible for the damage caused by the stevedores’ negligence, however, there are certain arguments that charterers shall be aware of.

Owners shall give the written notice of the claim with a certain period of time -“…provided the Master has notified the Charterers and/or their agents in writing within 24 hours following discovery. However in case of damage which is hidden at the time of occurrence, Master’s notice may be delayed up to completion of discharge at final port.”

1. Stevedore damage

(1) The notice requirement in such clauses are likely to be applied fairly strictly. It is therefore worth considering carefully whether they have been satisfied in each case. For example, if the clause stipulates that written notice of the damage must be sent by the Master to the Charterers or their agents within 24 hours of the occurrence and Master fails to do so within the time, charterers are likely to have a good defence.

(2) The Charterers may also defeat a claim for stevedore damage if, apart from the stevedore negligence, a breach of the Owners was at least an effective cause of the damages. Such as that the crane is poorly maintained and the rope or any vital parts of the crane have been out of their life span. In this event, maintenance log and working condition manual of the crane shall be checked. You need to arrange a surveyor to get on board and collect the documents and preserve the sample of the wire (wire broken).

1. Stevedore damage

Right�to�redelivery�vessel�in�damaged�condition

The fact that a vessel is damaged will not normally prevent Charterers from redelivering her. In other words it will not be a condition precedent to the Charterer’ right to redeliver that the vessel is in good order and condition unless there is a very clear clause to that effect in the charterparty (affect seaworthiness of the vessel).

2. Off‐spec Bunker

Damage�to�the�Main�Engine�arising�from�off-spec�

bunkers

Issues with the quality of the bunker are facts-

based and highly technical. The starting point is

whether the bunker is off-spec. (1) Specifications of the

bunker in the Recap/CP(NYPE Clause9/Riders-

IFO380/ISO 8217). (2) BDN Sample

Even if the bunker turns out to be off-spec, owners

will need to prove that the off-spec bunker cause the

damages to the main engine.


Practical�measures�in�defending�an�off-spec�claim

After receiving Master’s report regarding an engine problem alleging deteriorated

bunker problem.

Firstly, Charterers shall get a copy of the bunker sales contract and the Bunker

Delivery Note(BDN). A notice in pursuant to the sale contract’s requirements,

especially the time bar limit, shall be immediately sent out to the supplier. The time

bar is usually one month, but could be contracted out to be much shorter, such as

15 days or even 7 days.

In Singapore, local bunker regulations(SS600), provides “In the event of any dispute

in respect of the quality of the bunkers delivered, a copy of the complaint with a

copy of the BDN should be lodged with “Executive Director, Singapore Shipping

Association” and the “Officer in-charge, Marine Services Department, Maritime

and Port Authority of Singapore” within 30 days after the bunker delivery.” A sale

contract with a certified supplier in Singapore is subject to this regulation.


Second, Charterers shall identify how many samples are

entered in the BDN. Charterers shall get hold of at least one of

them for future analysis. Usually, one sample is retained at barge,

and two or three are retained on the vessel. Local agent may

have one at their own office.

Third, if the problem continues, Charterers shall dispatch a

competent marine engineer to the vessel at the next port to

further investigate. Charterers and Owners shall agree for a WP

BDN sample test. A bunker expert shall be retained to guide the

investigation. Make sure the test is always reproductive.


In most events, the engine problem falls into the bad

maintenance of engine system other than the quality of the

bunker. As for testing, competent lab shall be retained and all

relevant parties shall attend the seal-breaking. Our attending

surveyor shall at least get a copy of the engine maintenance

log, and photos of the overhaul parts of the engine shall be

properly taken. It would be recommended to take samples

from the tank, pipe, daily tank, and the manifold adjacent to

the engine. This is to compare the bunker at use with the

bunker of the BDN sample, if necessary.


Charterers�’defence�against�the�Owners’�claim:�

Charterers may argue that (depending on the documents/evidence collected):

1. The engine/machinery problems arose due to poor maintenance of the vessel;

2. The engine/machinery problems were caused by bunkers supplied under previous charter; or

the bunker is mixed with other off-spec/on-spec bunkers;

3. The bunker, though off-spec, would not damage the engine as a matter of facts;

4. The engine system is in defect, such as the purifier, circulator, pump, separator, heater is mal-

functioning;

5. The engine is not fit for the type of the bunker ordered, or the engine is of a unique kind;


6. The crew is in fault in consumption the bunker or operation of the vessel;

7. The loss/damage would have been avoided had more rigorous fuel managementprocedures been employed on board;

8. The bunker is further contaminated in the tanker or the pipes;

9. The bunker deteriorated under Owners’ custody;

10. The loss/damage would have been avoided, prevented, mitigated had preventative measures been taken, for instance, Owners promptly stop the using of the bunker once the problem is found.

Charterers will have a defence as illustrated if they could prove the chain of causation is broken either there are other extraneous and contributory causes to the bunker problem or the damage is enlarged because the crew fail to take proper counter-measures after the engine problem.


Steps�to�be�taken�

1. Instead of de-bunkering, if the defect is minor, Charterers could order the Owners to use the bunker following instructions of the expert to minimize losses;

2. Reprocess the bunker on board, using additives, and reduce the intervals for the replace of the filter or the separator;

3. De-bunker the fuel if necessary.

3. Damage to vessel due to double banking/STS operation

• Contractual�agreements�for�STS�operation

1. Charterers are not entitled to order Ship To

Ship operation unless this is allowed under the

charterparty. Master may refuse to double

banking for such operations.

2. The relevant clauses are incorporated in the

charterparty to deal with this issue, namely, the

STS Clause/Double Banking Clause.

3. This issue is intricated with the implied

obligation of indemnity.


BIMCO�Double�Banking�Clause

(a) The Charterers shall have the right, where and when it is customary and

safe for vessels of similar size and type to do so, to order the Vessel to go,

lie or remain alongside another vessel or vessels of any size or description

whatsoever or to order such vessels to come and remain alongside at such

safe dock, wharf, anchorage or other place for transhipment, loading or

discharging of cargo and/or bunkering.

(b) The Charterers shall pay for and provide such assistance and equipment

as may be required to enable any of operations mentioned in this clause

safely to be completed and shall give the Owners such advance notice as

they reasonable can of the details of any such operations.


(c) Without prejudice to the generality of the Charterers' rights under(a) and (b),

it is expressly agreed that the Master shall have the right to refuse to allow the

Vessel to perform as provided in (a) and (b) if in his reasonable opinion it is not

safe so to do.

(d) The Owners shall be entitled to insure any deductible under the Vessel's hull

policy and the Charterers shall reimburse the Owners any additional premium(s)

required by the Vessel's Underwriters and/or the cost of insuring any deductible

under the Vessel's hull policy.

(e) The Charterers shall further indemnify the Owners for any costs, damage and

liabilities resulting from such operation. The Vessel shall remain on hire for any

time lost including periods for repairs as a result of such operation.


London�Arbitration�2/99

The charter incorporated the Bimco Double Banking Clause(first version). The charterers were also required to re-deliver the vessel in like good order and condition as on her delivery.

The Master had moored in the first location against the charterers' advice and without the benefit of local charts (referred to in the voyage instructions). The second and third locations were specified by charterers, however, and the vessel's hull sustained damage in all three locations.

The owners claimed for the cost of repairing the damage to the vessel’s hull, which they said had been caused by the charterers ordering the vessel to go to a place which was "adverse, hazardous and unsafe for loading heavy cargoes using grabs and barges with inadequate fendering". The charterers claimed that the damage had been caused by the owners’ own actions and argued that the Master had not tried to suspend the operation, which he could "if in his reasonable opinion it [was] not safe."


Held , that the owners had specifically agreed to load at a named anchorage in the weeks immediately before the onset of the south-west monsoon, and should therefore be deemed to have reasonably anticipated the conditions experienced. The additional damage[damage at the first anchorage position] was concerned, the evidence indicated that it had been caused at the first anchorage position -a position which had been selected by the Master against the advice of the shippers and stevedores. The additional damage had been caused, to a certain extent, by wear and tear to be expected when loading off-shore on the West Coast of India from shore lighters - an arrangement to which the owners had agreed and contracted for.


Defence�to�STS�operation�claim

Owners’ claim for damages could be based on a few grounds;

1. Charterers’ undertaking under the STS clause or the double banking clause. (Standard Bimco Clause)

2. The express or implied indemnity under the Charterparty following Charterers’ order of STS operation. (the Island Archon case)


Before, the commence of such operation, Master has to consider a few points.

First, have Owners reasonably anticipated the conditions to be experienced at the named anchorage at the time when they entered the charterparty.

Second, is the place of loading a regular or normal place for such kind of operation.

Third, is the place an adverse, hazardous and unsafe loading place for the designated operation.

Fourth, is the Master under any obligation to monitor or supervise the operation, especially is he obligated to call off the operation once the weather not permits.


Once�damage�is�done�to�the�vessel,�Master�shall�do:

∙ ask for Stevedore’s acknowledgement of their liabilities

∙ report this incident to Owners and Charterers in the time limit

∙ report the damage to the Class Surveyor, if it affects the seaworthiness

∙ arrange repair at a proper place if necessary


Charterers’�response�to�the�incident

∙ Charterers will do, is to insist it as Stevedore’s liability and pressurize the Master to get the stevedores to rectify the damage to the vessel

∙ Charterers instruct a surveyor to investigate and coordinate with the temporary repair, if possible

∙ Charterers’ obligation to redeliver the vessel in like good order and condition as on her delivery, except for ordinary wear and tear

∙ Charterers’ presence at the shipyard for permanent repair to monitor

damage to hull claim - meco quality marine … · gencon 94- “the cargo shall be brought into the...

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