Shipping Rice to West Africa - Beware!
Steamship Mutual
Published: August 09, 2010
January 2006
Background
The staple diet in many African countries is a maize-based dish sometimes known as "Fufu" or 'Nshima' . However, rice consumption is increasing replacing traditional food sources although rice is not easily cultivated in West Africa. As a result, substantial quantities are imported.
The problems associated with carriage to and discharge of rice in West African ports are well known but, and with a view to loss prevention, nonetheless worth reviewing.
The Problem
Problems at the ports of loading are comparatively rare1. This is so even where bagged cargoes are subject to multiple handlings and the cargo has been brought to anchorage by lighter vessels. There are, though, a number of pre-loading checks that a prudent carrier can perform to comply with the carrier's obligation to care for the cargo properly during the voyage. For example, that the vessel's holds are clean and free of salt residues, that the bilge wells and sounding pipes are clear, that hatch covers have watertight integrity, and that ventilation shafts are not obstructed and flaps are operational.
In addition, independent tallying of the cargo during loading is recommended and moisture levels of the cargo checked. Indeed, if average moisture levels are close to or above the moisture level (usually 14%) set out in the cargo quality certificate this is a reasonable indication of a future problem unless, with the assistance of the Club's local correspondent, steps are taken to investigate the cause and/or replace cargo prior to loading. In this respect reliance on the charterers alone to arrange load tallies and the pre-loading/loss prevention surveys (which include moisture content) may not be sufficient to protect the owner's interests, particularly if the charterers merely instruct their agents to appoint a surveyor. It is frequently the case that the agents are instructed by the charterers on the recommendation of the cargo shipper.
The nature of the stowage of the cargo on board the vessel is also key. Ventilation channels linked to the vessel's ventilation shafts should be constructed. Dunnaging should be clean and dry. In this respect, one of the Club's members has previously reported the benefit and advantage of using dry styro foam sheets, kraft paper and plastic sheets instead of bamboo mats and sticks to combat the risk of condensation damage to the cargo in the holds caused by the changing sea water temperatures during the voyage. The same member is also an advocate of ventilating the cargo by opening the vessel's hatches during the voyage when weather and sea conditions permit*.
The problems associated with rice carriage to West Africa normally begin when the vessel arrives at the port of discharge. Stevedore mis-handing and tearing of bags is often a characteristic of the discharge process. Pilferage is, in varying degrees, common in many ports while tallying disputes can be exacerbated by the tendency of the receivers and their underwriters to appoint local surveyors and tally firms that conduct tallies ashore often in warehouses some distance from the port. It is also not uncommon for the receivers and the recovery agents acting for cargo underwriters to allege significant shortlandings of cargo or damage to the cargo shortly after the commencement of cargo operations and, as a consequence, seek security for claims that are no more than anticipatory and often for wildly exaggerated sums.
Demands for security with the implicit threat of arrest of the vessel also raise jurisdictional issues. Rice cargoes are insured in the commercial market, quite often in France. Not surprisingly, faced with regular claims under their policies the cargo underwriters frequently seek security for claims for loss or damage or the short landing of cargo that is subject to the jurisdiction of the French courts and French law irrespective of the of the fact that disputes under the contract of carriage, as evidenced by the bill of lading, are governed by some other law and subject to the jurisdiction of some other forum (often English law and arbitration in London). There are marked differences between French and English law. In particular, as a matter of English law FIOS2 provisions incorporated from a Charterparty into a bill of lading should exempt the carrier from blame for loss or damaged proven to have been caused by stevedore mishandling** if the charterer or shipper or receiver is responsible for the conduct of the stevedores, and short landing claims can be challenged if the carrier can establish that all the cargo loaded was discharged, notwithstanding a difference between the bill of lading and outturn figures3.
What can be done by Owners and Carriers?
a) Contractual and Jurisdictional Considerations
The nature of this trade and its inherent problems mean that these issues should be anticipated and so far as possible addressed when the contract of carriage is being negotiated as well as by pre-planning at the discharge port. As to the former, and by way of example, the French Courts tend to consider the bill of lading and Charterparty as separate contracts. Therefore, notwithstanding that most common form of bill of lading used for rice carriage to West Africa is the "Congenbill", and that clause 1 on reverse of the Congenbill4 provides that "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration clause, are herewith incorporated", the French Courts are very reluctant to allow a carrier to rely on the FIOS or arbitration provisions of the Charterparty. As a consequence, a carrier may not have the protection, or may be exposed to greater risks than contemplated when the fixture was negotiated. Therefore, an express statement on the face of the bill of Lading as to the governing law and jurisdiction for any claims made under the bill of lading (or if bills are to be issued by charterers, to require that charterers issue bills with such a clause on the face of the bill of lading) should improve the carrier's position if, when faced with a threat of arrest, security is provided that responds to a decision of a competent court, and proceedings are subsequently commenced by cargo claimants in the French Courts. Unfortunately, even in these circumstances, such clause will offer little protection against article 14 of the French Civil Code which gives jurisdiction to the French Courts if the claimant cargo underwriter is French5.
If the French courts or courts of the jurisdiction of discharge are unlikely to decide any claims made under the bills of lading on the basis of the terms and conditions of the contract of carriage that the carrier intended when the negotiating a fixture, express indemnities by charterers may provide protection or a means of recovering sums paid to the cargo claimants. For example an express indemnity against liabilities for short landing of cargo, or loss of or damage to cargo caused by stevedore mishandling of cargo, when the carrier would have had a defence to those claims if brought subject to applicable law of the Charterparty.
b) Practical Solutions - Cargo Appearance, Tallying, Draught Survey and Crew Involvement
These solutions are, however, subject to commercial reality and require careful drafting of the Charterparty terms and conditions. While they are useful tools, the nub of the problem is the (i) appearance of the cargo in the hatches when first opened at the discharge port and (ii) the nature of the discharge operation from the vessel and means by which control can be exercised over that operation both in the sense of supervision and the recording of the quantity and condition of the cargo discharged. Both require practical solutions. In the case of the former, the stowage and ventilation issues discussed above are important, because a cargo that appears to be in a poor condition when the vessels hatches are first opened is an invitation to claim, whereas in the case of the latter the involvement of the vessel's crew can be key. This is particularly so if the crew are able to conduct their own tallies or closely monitor and then approve the tally sheets produced by the receiver's tally firm, provided always that those tallies are conducted ex the vessel's hatches and on the quayside in way of each hatch. Alternatively, a reliable independent tally firm can be instructed on behalf of the carrier and ship and cargo tallies compared at the end of each shift, again, provided always that the tallies undertaken on behalf of cargo are carried out ex ship's hatches and on the quayside in way of each hatch. Making sure that tallies conducted on behalf of the vessel and cargo are undertaken together ex the ship's hatches and cross -hecked at the end of each shift is also a means of managing the evidential problem of differing tallying figures when claims are pursued in the French Courts; If more than two survey reports are available, for example on behalf of the vessel, receiver and stevedores, the French courts tend to favour reports that have "similar findings". It is not unusual that on the completion of cargo discharge the receivers and stevedores tally figures are similar, and at odds with the vessel's figures.
When tallying the cargo a common means of creating a shortlanding is for tally clerks to record each sling as containing 40 bags whereas, in fact, a sling may contain more than 40 bags. Therefore, surveyors and/or the crew should be instructed to and carry out periodic spot-checks of slings to both to manage pilferage of cargo as well as a means of documenting the probable cause of any shortage on completion of discharge.
Although rice discharged in West Africa is a bagged cargo, draught surveys prior to the start and at the conclusion of discharge can also provide useful additional evidence to challenge the accuracy of the allegations of shortages of cargo made by the cargo receiver and underwriters.
Similarly, the crew or surveyors acting for the vessel should ensure the stevedores do not mishandle the bags of rice and where they do so, appropriate and regular protests are issued. However detailed protests should be issued complaining that on a particular date and time, and stating in which holds a specific number of bags were torn, or emptied by the stevedores. If possible photographic evidence of the stevedores' actions should be attached to the protests. The Courts will give greater evidential weight to detailed protests in contrast to general protests or a protest that is issued using ready made stamps to place remarks on the documents signed on behalf of the vessel.
A further problem of varying degrees is theft of the cargo from on board the vessel by stevedores when "private" parcels of variable sizes and weight are taken off the vessel at the end of shifts. Rice is often hidden in the stevedores' clothing or simply by taking bags of cargo, sometimes in full view of the watchmen appointed by the vessel agents. In this respect, at Lagos and Port Harcourt a number of members of the Club have successfully reduced the risk of cargo lost in this way by employing private security guards, but as with cargo mis-handling, if there are thefts detailed protests should be issued.
While shipping rice to West Africa is likely to remain a fruitful ground for claims for the foreseeable future, there are preventative measures that owners and carriers can take to minimise their exposure.
See also Steamship Mutual website articles:
** Liability For Loading Stowing And Discharging Cargo - Owners' Right To Contract Out
1. On a general note there are shortage claims with rice loaded from Vietnam, as well as condensation problems as a consequence of high moisture content, sometimes in excess of the usual 14% allowed. Shipments from China also tend to produce shortage claims while there are often wet damage claims with rice shipped from Pakistan as a result of the use of kraft paper alone to protect the cargo.
2. Free In Out Stowed
3. "A stage must be reached where the discrepancy between cargo actually loaded and cargo alleged to have been loaded is so great that it must be obvious to any master that the bill of lading figure is fallacious" - Phillips J The Sirina (1998) 2 LLR 613.
4. 1994 Edition.
5. There are a limited number of examples of both the French Courts and Maritime Arbitration Chamber of Paris whereby carriers have been able to rely on the FIOS and arbitration provisions of the Charterparty incorporated into a bill of lading.
