Sediment in Ballast Tanks - Cost of Removal Not Recoverable

May 2001

Anti-pollution laws in Brazil require vessels loading at Munguba to arrive with fresh water ballast as the discharge of salt water ballast is prohibited. The common practice for such vessels on arriving at the River Amazon is to exchange their salt water for fresh water ballast before proceeding to Munguba.

The vessel which was the subject of the arbitration had been chartered under an amended NYPE form for 60 months for world wide trading. The vessel called at Munguba. The owners contended that the ballast water exchange carried out on reaching the River Amazon had caused mud to accumulate in the ballast tanks to such an extent that tank cleaning had been required to restore the vessels ability to lift full cargoes, to allow proper surveying and maintenance of the tanks and to avoid difficulties in ballasting.

The owners claimed reimbursement of the cost of cleaning the tanks. They relied on The Rijn* as authority for this entitlement. (In that case the court held that the vessels bottom fouling arose as a natural consequence of the way in which the charterers chose to employ the ship.) The owners also relied on The Island Archon** to claim that an indemnity could be implied in these circumstances as, on a true construction of the charterparty, they had never agreed to assume responsibility for the cost of cleaning the ship’s ballast tanks in these circumstances. They also referred to line 7 of the charterparty which required that the vessel’s constant weights, together with fresh water, were not to exceed 650 metric tons.

In response, the charterers said it was the owner’s duty to properly maintain the vessel and their responsibility to remove the mud from the ballast tanks in their time and at their expense. The charterers also relied on line 32 of the charterparty by which the owners agreed that the vessels was available for world-wide trading within Institute Limits and clause 1: "… the owners shall provide and pay for all provisions … and keep the vessel in a thoroughly efficient state in hull, machinery and equipment for and during the service."

The tribunal held that line 32 of the charterparty entitled the charterers to send the vessel to river ports in general and to load at Munguba in particular. The tribunal accepted evidence that the fresh water in the Amazon was exceptionally silt-laden and was satisfied that the owners’ had not exaggerated the extent of the problem. However, the charterers were within their rights to order the vessel to load at Munguba and, in order to do so, owners were obliged to comply with the local law.

As in The Rijn, the excess sediment in the ballast tanks constituted a "defect" in the vessel’s hull as a result of the provisions dealing with constant weights. However, the instant case could not be compared with The Rijn: In that case, the owners had sought to put the vessel off-hire for time lost because the vessel’s speed had suffered due to bottom fouling. The owners bore, themselves, the cost of cleaning the vessel’s hull. By contrast, in this case, no time had been lost by the vessel.

The circumstances of The Island Archon, on which the owners also sought to rely, could also be distinguished: In that case, owners had had to bear short-landing claims in Iraq. However, the English arbitrator had held the short-landing evidence to be unreliable. The owners succeeded in recovering their claim from the charterers as it was held that the risk of dubious cargo claims was not one which the owners had agreed to bear. In addition, the risk of such claims was not well known and as such, not one which owners would have been expected to take into account when fixing the terms of the charter.

By contrast, in this case, owners were claiming compensation for additional expenses arising in respect of a task which they were obliged to perform under the terms of the charterparty (to keep the vessel in a thoroughly efficient state in hull, machinery and equipment for and during the service). In The Island Archon there was no contractual obligation on owners to pay dubious cargo claims to third parties.

In this case, the extra expenses would have to be borne where they fell. It was the owners obligation to restrict constant weights to 650 mts and any excess attributable to the ballast water sediment was to be removed as soon as possible at owners expense, just as they would pay the crew to hose down the tanks from time to time as part of normal on-board maintenance, this obligation being, of necessity, more frequent if trading to ports along the river Amazon. Accordingly, the owners’ claim failed.

(London Arbitration 6/01 – LMLN 558, 29.3.01)

* [1981] 2 Lloyd’s Rep 267

** [1993] 2 Lloyd’s Rep 388 and [1994] 2 Lloyd’s Rep 227