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Industry News

July, 2020

CHARTERER’S LIABILITY TOWARDS SHIPPER’S AFFIRMATION ON “APPARENT GOOD ORDER AND CONDITION”


One of the main challenges (or as might say “An Issue”) faced by any Shipping Line is when they have to carry the perishable goods from one port to another. Their main responsibility is to keep the Goods safe from damages due to temperature variance, moisture, ingress of seawater into the containers, etc. This shall mean a series of claims against the Carrier/Shipping Line by the Consignee/Shipper/Insurance Companies etc. To protect themselves from any such cargo claims, the Carrier/Shipping Line relies mostly on the reservations that they have included in the Bill of Lading to state, “Shipper’s Load, Stow and Count.” Including these types of reservations in the Bill of Lading lifted the burden of proof from the Carrier to the Shipper wherein the Shipper has to prove that the Cargo was well packed and was safe for the voyage when it was handed over to the Carrier/Shipping Line for loading. If the Bill of Lading does not have these types of reservation statements, usually, the Shipping Lines are held liable for the damaged cargoes. However, a recent case of 2020 took a slightly different view from the usual practice of holding the Shipping Line or the Carrier liable for the damaged goods, especially when there was no reservation made in the Bill of Lading by the Carrier/Shipping Line.

Joy Thattil
Maritime Lawyer & Partner @ Callidus
Dubai, Singapore & India
joy@calliduscmc.com

In the case, PRIMINDS SHIPPING (HK) CO. LTD Vs. NOBLE CHARTERING INC. TAI PRIZE [2020] EWHC 127 (Comm), the Vessel, “MV TAI PRIZE” was time chartered to M/s Noble Chartering Inc. (hereinafter the “Disponent Owners”), who then sub-voyage chartered the Vessel to M/s Priminds Shipping (HK) Co. Ltd (hereinafter the “Voyage Charterer”) for the carriage of the cargo “Soya Beans” from Brazil to China. The Cargo was loaded by the Shipper, and the Bill of Lading was prepared by the Shipper’s Agent, who described the Cargo as “…… Clean on Board… and Shipped in Apparent Good Order and Condition…” and the said Bill of Lading was executed by the Master’s Agent without any reservations.

At the port of discharge, the Consignee discovered that the Cargo’s portions suffered heat and mold damage. When the Consignee filed a case for the loss and damages incurred by them, the actual Vessel. The owner secured their claim by paying off their claim amount of around US$ 1 million, mainly to avoid the arrest of their Vessel. The actual vessel owners, in turn, brought the claim against the Disponent Owners, under the terms of the Time Charter Party seeking a contribution of half of the sum paid by them to the Consignee and the Disponent Owners settled the claim with the Actual Vessel Owners, by paying them the money. The present appeal was filed by the Voyage Charterer to challenge the impugned arbitral award pronounced in the London Arbitration Proceedings commenced by the Disponent Owners against the Voyage Charterer to recover the amount paid to the actual vessel owners and the costs of defending that claim since the Shipper was the Voyage Charterer’s agent and therefore the Voyage Charterer had impliedly warranted the accuracy of any statement as to the condition contained in the Bill of Lading or had impliedly agreed to indemnify the Disponent owner against the consequences of the inaccuracy of any such statement.

Before going to the Court’s interpretation of the wordings and issues involved in the case and the wordings used in the Bill of Lading, let us first see what is considered to be an “Apparent Order and Condition of the Cargo.” According to the Interpreters, the term refers to the condition of the Goods as would be apparent on reasonable examination, and not the internal condition of the Cargo on the shipment or their quality. Further, when a shipment is said to be in “apparent good order and condition” it also means that the Cargo is properly packed to withstand the ordinary incidents of the voyage. In case if Cargo is not sufficiently packed or if the Carrier or the Master thinks that the Cargo will not withstand the incidents of the voyage, then they must not issue a Bill of Lading, without any reservations. Usually, the reservations are like “Cargo has been shipped at the Port of Loading in apparent good order and condition on board the Vessel for the carriage to the Port of Discharge… Weight, Measure, Quality, Contents, and Value Unknown” OR “All Particulars as furnished by the Shipper but unknown to the Carrier.” These reservations are mentioned to given the Shipper, Consignee, or any party concerned a reasonable notice that there might be some defect or shortage in the goods which is not known to the Carrier. It is also to be noted that these reservations must be made on the front of the Bill of Lading and not elsewhere.

Above being the industry’s usual practice, in the case of PRIMINDS SHIPPING (HK) CO. LTD Vs. NOBLE CHARTERING INC. TAI PRIZE [2020] EWHC 127 (Comm), the Court took a slightly variant view while interpreting the wording by Shipper in the Bill of Lading, “Clean on Board” and “Shipped in apparent good condition” or the issue as to whether the Shipper’s presentation of the Bill of Lading with the aforementioned terms, leads to a representation or warranty by the Shipper as to the apparent good condition of the Cargo observable before the loading OR if it is only an invitation to the Master to make a representation of fact, in accordance with his assessment of the apparent condition of the Cargo. The Court opined that as per Article III Rule 3 of the Hague Rules (incorporated in both the Charter Party as well as the Bill of Lading of the subject case), the information regarding “leading marks necessary for the identification of the Goods” and “the number of packages or pieces or the quantity or weight” of the Goods constituting the Cargo, to which the relevant Bill of Lading is concerned, is the information furnished in writing by the Shipper and as far as this case is concerned this aforementioned provision of the Hague Rules applies to the information “63,366.150 metric tons Brazilian Soya Bean”. Further the Hague Rules also provide the “apparent order and condition of the Goods” but as per the Court, this information is not to be furnished by the Shipper, instead this part should be an exclusive assessment by the Carrier (or The Master) of the Goods at the point of shipment. Therefore while answering the aforementioned issue, the Court said that by presenting the draft Bill of Lading for signature by or on behalf of the Master, in relation to the statement concerning apparent good order and condition, the Shipper was doing no more than inviting the Master to make a representation of fact in accordance with his own assessment of the apparent condition of the Cargo. The Court also noted that The Hague Rules Article III Rule 5 imposes an express indemnity obligation on the Charterer in respect of the information that he “furnishes in writing.” A Charterer has no such obligation however, in relation to statements regarding the “apparent order and condition” of the Cargo. The Court also held that the Disponent Owner was not entitled to an Indemnity from the Voyage Charterers, because the Hague Rules, incorporated into the Voyage Charter Party between the Parties, do not impose on the Shipper in relation to the statement concerning apparent order and condition of Cargo.

Even though this decision is a boon to the Charterers as they will be relieved that a general implied indemnity was not owed to the Disponent Owners in respect of the statement concerning the apparent order and condition of Cargo, made by the Shipper, we are yet to see the outcome of the case, as the Disponent Owners are granted leave to file an appeal.


March, 2020

THE RECYCLING OF SHIPS ACT, 2019: TOWARDS AN ENVIRONMENT FRIENDLY AND SAFE SHIP RECYCLING IN INDIA


Shipbreaking or ship recycling is defined as one of the most hazardous jobs in the world by the International Labour Organisation (ILO). It is the process by which old ships and vessels are taken apart, dismantled, and its components are recycled. As observed by the International Maritime Organisation, the ship recycling process is most productive as nothing from a dismantled ship goes into waste. The equipment and components of a recycled ship can be reused in its entirety in other industries. If done efficiently and economically friendly, it can be turned into a green business by using the recycled components for even building new ships. The darker side of ship breaking is that it creates a variety of pollutions, including air, land, water, and noise due to the generation of hazardous and non-hazardous wastes. As most of the works are done manually, it also leads to many occupational hazards to the manual workers if the working conditions are substandard and not in compliance with international safety standards.

India is in the frontline among the countries that are engaged mainly in the business of ship breaking. Apart from India, South Asian countries like Bangladesh, China, and Pakistan also give massive competition in the ship breaking industry. The ship owners mostly choose these countries due to the relaxed environment regulations and labor standards followed by the Countries in this industry.

Joy Thattil

Maritime Lawyer & Partner @ Callidus

Dubai, Singapore & India

joy@calliduscmc.com

In India, the condition was no different since the Central Government announced the ship breaking industry as a small scale industry. The business started to flourish under minimal regulations concerning environmental protection and labor standards.

The Supreme Court decision in Research Foundation for Science, Technology and Natural Resource Policy v. Union of India (2007) 15 SCC 193, provided an impetus to the legal framework governing ship recycling in India. According to the directions put forth by the Supreme Court in this case, the Central Government formulated the Shipbreaking Code in 2013, providing a comprehensive scheme for regulating shipbreaking in India. But the Code failed to address many provisions contained in the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009, adopted by the International Maritime Organisation. This Convention ensures that ships, when being recycled after the end of their operational lives, do not pose any unnecessary risk to the environment and human health and safety. The Convention details out the procedure to be followed for the survey and certification of ships as well as for the authorization of ship-recycling facilities.

Realising the need for an inclusive legislation on ship recycling, the Indian legislature enacted the ‘The Recycling of Ships Act, 2019’, and on December 13, 2019, the Act came into force after receiving the assent of the President. This Act is an attempt to bring about an environment-friendly shipbreaking practice in India. The object of the Act is to provide for the regulation of recycling of ships by setting certain standards and laying down the statutory mechanism for enforcement of such standards.

The Recycling of Ships Act, 2019, is in tune with the Hong Kong Convention in many aspects, and the Act restricts and prohibits the use or installation of hazardous materials, which is uniformly applicable to all ships in India, irrespective of whether a ship is meant for recycling or not. For new ships, such restriction or prohibition on the use of hazardous materials will be immediate, that is, from the date the legislation came into force. In contrast, the existing ships shall have a period of five years for compliance. However, such a restriction or prohibition on the use of hazardous materials does not apply to warships and non-commercial ships operated by Government.

Under this Act, ship recycling facilities are required to be authorized, and ships shall be recycled only in such authorized ship recycling facilities. This Act also provides that ships shall be recycled following a ship-specific recycling plan. Ships to be recycled in India shall be required to obtain a ‘Ready for Recycling Certificate’ under the Hong Kong Convention.

The Act also imposes a statutory duty on ship recyclers to ensure safe and environmentally sound removal and management of hazardous wastes from ships. Appropriate penal provisions have been introduced in the Act to deter any violation of statutory provisions.

India, being the global leader in ship breaking, aims at boosting its economy as well as the ship recycling industry through the enactment of this legislation by bringing about an environment and labor-friendly regulatory mechanism in the ship breaking process.


May, 2017

New Regulations From Customs To Prevent Corruptions


Recently Indian Customs has done amendment in their Custom Act for filling of Bill of Enrty ( i.e. Custom Import documents filling ) for all Import cargos coming to India effective 1st of April 2017. In this new regulations all Consignee / their agents must have to file Import Bill of Enrty in Customs EDI system within 24 hr of vessel arrival at port, failing which a daily penalty will be imposed on Consignee. This is a very good and corrective measure from Indian Customs to stop all illegal / wrong Customs filling. This will also speed up the import clearance process in all port in India making them competitive in world market. Apart from that, Free time at all ports has been reduced to 24 hrs so that the current backlog of cargo can be eased out from all Ports and ICD(s).  This sudden movement strictly comes into picture due to nationwide NEWS of fake currency and ammunition speads and DRI, SIB, CID stops all works in every major ports and ICD(s).

This New regulation may be called the Bill of Entry (Electronic Integrated Declaration) Amendment Regulations, 2017.

 

Please take a look of the summery of the new regulations….

 

“Regulation 4. (1) The authorised person shall file the bill of entry before the end of the next day following the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing.

The bill of entry shall be deemed to have been filed and self-assessment of duty completed when, after entry of the electronic integrated declaration in the Indian Customs Electronic Data Interchange System either through ICEGATE or by way of data entry through the service centre, a bill of entry number is generated by the Indian Customs Electronic Data Interchange System for the said declaration.

Where the bill of entry is not filed within the time specified in sub-regulation (1) and the proper officer of Customs is satisfied that there was no sufficient cause for such delay, the importer shall be liable to pay charges for late presentation of the bill of entry at the rate of rupees five thousand per day for the initial three days of default and at the rate of rupees ten thousand per day for each day of default thereafter:

Provided that where the proper officer is satisfied with the reasons of delay, he may waive off the charges referred to in the second proviso to sub-section (3) of section 46 of the Customs Act, 1962 (52 of 1962).

No charges for late presentation of Bill of Entry shall be liable to be paid where the entry inwards or arrival of cargo, as the case may be, has taken place before the date on which the Finance Bill, 2017 receives the assent of the President.”

 

This sudden notification has make a lot of consignee’s life miserable suddenly but this will surely purify the current impurity of EXIM Trade and we CSS Delhi welcomes this strict move imposed by Custom for purification of Trade.

Rajesh Arora

Vice President – CSS North India


March, 2017

Training at CSS Mumbai


The staff at CSS Mumbai witnessed a unique training session recently. The pens and pads they carried to the conference room proved to be of no use when the training started. It was all about Martial arts and self-defence techniques. Even though the session brought in surprises and beaming smiles on faces, in the hind sight, everyone agrees that the training they got was one of the most important lessons which the time demands in India.

The training was led by Ganesh Padyachi, Business Development Manager, CSS Mumbai. Ganesh is formally trained in Martial Arts. “Self –defence is a must learned lesson for everyone. As the crime rates are soaring high in our country, we need to equip ourselves to protect our body from abuses” mentioned Ganesh. The training was conducted in two batches and covered areas like personality development, thinking style and self-help techniques as well.


September, 2016

Hapag-Lloyd Merger Reveals UASC’S Huge Net Losses


The United Arab Shipping Company (UASC) suffered an operating loss of US $299-million and a net loss of US $384-million in 2015 off of a revenue of US $3.32-billion.

The figures were revealed by Hapag-Lloyd as part of its obligatory disclosures as a public company before an upcoming Annual General Meeting, scheduled to be held in Hamburg at the end of August.

At the meeting, the German carrier will seek shareholders’ approval to amend its capital structure to complete a planned merger with UASC.

UASC has until now never disclosed its financial results as the shipping line is privately owned by six GCC states. The depth of its underperformance will likely cause some hesitancy among Hapag-Lloyd shareholders.

A negative operating margin of -9.0% makes UASC the worst performer among all main container carriers that have published financial results for 2015.

UASC’s poor financial performance has continued in 2016 with an operating loss of US $132-million and net loss of US $201-million on revenues of US $1.5-billion in the first six months of the year.


September, 2016

Khalifa Port Expansion To Bring The World’S Largest Ships To Abu Dhabi




Nearly four years after it first opened for business, Abu Dhabi’s vast Khalifa Port container terminal is to be expanded to accommodate the world’s largest ships.

Abu Dhabi Ports, the government-owned company that runs the US$7 billion terminal, has announced plans to expand the port’s quay wall so that it can handle more cargo and to dredge the port to make it two metres deeper.

In a statement on Saturday, Abu Dhabi Ports said that it planned to build 1,000 metres of quay wall, adding 600,000 square metres of space for cargo handling and deepen its main channel and basin to 18 metres from the current 16 metres.

The company has signed a contract with the National Marine Dredging Company (NMDC) to start preparatory work on dredging the channels and using this material to build the new quay wall and a yard behind it.

The work, which will involve 250 workers, is scheduled to be completed in mid2018.

The expansion is part of ambitious plans for Khalifa Port, which replaced Abu Dhabi’s 1960s built Port Zayed as the city’s main container port in December 2012 with the capacity to handle 2 million containers a year and is projected to have the capacity to handle 15 million a year by 2030.


September, 2016

Singapore Bunker Market Players Establish New Association


Singapore’s bunker market has formed a new industry association, Association of Bunker Industry (Singapore) (ABIS), to improve and address the needs of the industry.

The new group said its core aims are to focus on working with small and medium-sized bunker firms so as to improve their business services, as well as working with national bodies to raise industry standards, and develop and deliver training programs for its members.

Kwok Fook Sing, honorary secretary of ABIS, said the new bunker association comprises of all bunker-related stakeholders, ranging from suppliers, shipowners, bunker buyers, traders, surveyors, fuel testers, legal counsels and mass flow meter (MFM) vendors.


July, 2016

Expo 2020 Dubai And Dp World Partner To Position The Uae At The Heart Of Future Global Trade


Expo 2020 Dubai today announced DP World as its Premier Global Trade Partner.

The company, which is a leading enabler of global marine and inland trade, owns and operates 77 terminals globally including the Port of Jebel Ali, less than 10 km from the Expo site, and will play a vital role in the supply chain for the Expo, which will bring together over 180 nations and 25 million visitors for what will be the world’s largest event in 2020.

DP World is the third Premier Partner to be announced to date. The signing ceremony was attended by His Highness Sheikh Ahmed Bin Saeed Al Maktoum, His Highness Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of the Expo 2020 Dubai Higher Committee and Chairman of Dubai Airports and Emirates Airline, and His Excellency Mohammed Al Shaibani, Vice Chairman of the Expo 2020 Dubai Higher Committee, Director General of His Highness The Ruler’s Court of Dubai, and CEO and Executive Director of the Investment Corporation of Dubai.

Her Excellency Reem Al Hashimy, UAE Minister of State for International Cooperation and Director General Bureau Expo Dubai 2020, said, “Expo 2020 Dubai will be the first World Expo to take place in the Middle East, Africa or South Asia. Serving an area with a collective population of nearly 3.2 billion people and a GDP of more than US $ 6.5 trillion, Expo 2020 will act as a gateway to one of the most important geo-economic trends shaping our world: the rise of emerging markets, developing countries and South-South trade. The partnership with DP World will play a central role in cementing the UAE’s position at the heart of future global trade.”

HE Al Hashimy added: “Trade and economic diversification are vital to the UAE’s future. Through this agreement with DP World and our other partners, Expo 2020 Dubai will leave an economic legacy in the form of new business generation, GDP growth and job creation across the region.”


July, 2016

Iraq To Invite Foreign Investors To Fund Major New Port


Iraq will invite foreign companies to invest in the construction of the Grant Faw Port in the coming days, to offset the Arab country’s funding shortage, an Iraqi newspaper has reported.

Almada Arabic language daily said Iraq’s transport minister Abdul Hussein Abtan announced the plan during a visit to the Southern Umm Qasr port this week. Abtan said the new investment opportunities would be announced during a conference at Baghdad Airport within the next few days.

The Iraqi government plans for the new port to be fully commissioned within the next two years and contractors will be invited to carry out projects on a post-payment basis or joint operation. The Southern Faw Port will be one of the world’s largest container terminals according to design plans and will eventually have a capacity to handle 99 million tonnes of cargo annually. The port will include a 39km container quay and two km of berths along with a container warehouse and hinterland covering more than one million square metres.

The port is intended to cut sea freight journey times between Asia and Europe, using overland connections through Iraq and Turkey, bypassing the Suez Canal.


July, 2016

Evergreen Marine Gets 20-Year Extended Lease Of Panama’S Colon Terminal


Taiwan’s Evergreen Marine Corp announced it has won an approval to extend its lease of the Colon Container Terminal (CCT) in Panama for another 20 years.

The extended 20-year lease was approved on Wednesday by the government of Panama, ahead of the inauguration of the expanded Panama Canal on 26 June. Evergreen Marine stated in a news release that the extended lease of the container terminal will help improve its service and efficiency and consolidate Panama’s status as a transhipment hub in the Americas.

CCT can accommodate large containerships and it has three wharfs for small to medium sized boxships. With number 4 wharf being expanded to link to number 3 wharf, the entire docking length will be 780 metres, long enough to cater to two large ships of 12,000-14,000 teu. Two other wharves can accommodate ships of up to 5,000 teu.

Evergreen highlighted that with the joining of wharves 3 and 4, the total annual capacity at Colon port will increase to 2.4m teu from 1.5m teu.


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