It is accepted as a matter of English law that once loading of cargo has been completed, both the owner and charterer are under an obligation to ensure that the vessel can be promptly despatched upon her voyage. From the owner’s perspective, the vessel must be made ready to sail. From the charterer’s perspective, they must ensure that the those formalities to which they are required to attend, such as presenting bills of lading for signature, are so attended without unreasonable delay. For the sake of commercial efficacy both parties will be allowed a reasonable time to complete those formalities.
In a recent case referred to arbitration in London, the Tribunal was asked to consider which party was responsible for delays that ensued after cargo had been loaded in India for carriage to Vietnam.
Delay arose as a result of three broadly distinct causes – (i) time spent resolving a dispute as to the description of the condition of the cargo to be inserted into the bills of lading, (ii) time during which owners considered charterers’ request for the issuance of ante-dated bills of lading, and (iii) delay releasing “freight prepaid” bills of lading pending receipt of freight into owners’ account.
As to the first, charterers had insisted that clean bills of lading should be issued. Owners did not wish to issue clean bills owing to the fact that P&I surveyors who surveyed the cargo after loading had indicated the presence of live weevils and other foreign matter such as jute threads, twine and mud. To issue clean bills in such circumstances could have caused prejudice to the owners P&I cover and rendered them defenceless in case of claims brought by innocent buyers of the cargo.
Charterers’ position was that whilst they did not object to remarks being made on the Statement of Facts, the bills and mates receipts had to be clean. Charterers presented no evidence to indicate the cargo was in fact clean.
On the evidence the Tribunal found that there was clear evidence of infestation which charterers had failed to challenge. In the circumstances, owners were not only entitled to demand suitable clausing to be inserted into the bills of lading, but also obliged to do so in fulfilment of their duties to subsequent third party holders of the bills of lading. Charterers offered a letter of indemnity, which under the terms of the charterparty contract the owners were not obliged to accept. In the circumstances owners were entitled to maintain their position and charterers would be responsible for the ensuing delay. Eventually owners agreed to issue clean bills of lading against a letter of indemnity on the condition that the Mates Receipts would be claused.
Turning to delay whilst owners considered charterers’ request to issuance of ante-dated bills of lading, the position was analogous to the delay over the description of the condition of the cargo. Owners were not obliged to comply with charterers’ request, which again could have had the effect of prejudicing their P&I cover, and rendered them defenceless against claims arising as a consequence. Eventually the owners agreed to cooperate, however, to the extent that the vessel’s sailing from Kakinada had been delayed whilst this second issue was debated, the owners were held not responsible.
Finally, delay had also resulted from owners having to wait for freight to be received before they released “freight prepaid” bills of lading. The charterparty did not require owners to release the bills before freight had been received, and therefore any delay in paying freight once the obligation arose would be for charterers’ account.
In this case the owners were well-protected by the terms upon which they had contracted their vessel out. Owners were not obliged to issue clean bills of lading against a letter of indemnity, and the Tribunal accordingly held that delay caused by charterers’ insistence on clean bills would be for charterers’ account. Likewise, owners were entitled to refuse charterers’ request for issuance of ante dated bills and were entitled to delay sailing until freight that was overdue had been received.
This case demonstrates that if owners charter out on sensible terms which do not give charterers rights they would not otherwise have, the owners’ position will be protected. In the event that members find themselves unsure as to what to do in similar circumstances, they are encouraged to seek advice from the Club.
(2007) 719 LMLN 3
