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Legal news 05/05

The Bunga Saga Lima case - [2005] EWHC 244 QBD (Com Ct) - 4 February 2005
The Bunga Saga Lima was time chartered pursuant to a NYPE C/P as amended
stipulating inter alia as follows:
Line 21:
Vessel on her delivery to be ready to receive cargo with clean swept holds and
tight, staunch and in every way fitted for the cargo as per clause 29
Clause 46 Cleaning clause:
On arrival at the first load port Vessels holds to be clean and suitable to load
Charterers intended cargo to Shippers surveyors satisfaction.
Amendment 5: Clause 46:
Cleaning clause, add at end: It is understood that on delivery or upon arrival 1st
loading port vessel to be clean per grain standard up to independent surveyors
satisfaction.
Clause 13 Fixture Note:
Owners warrant that vessels holds on delivery or arrival first load port to be
cleaned, swept washed down with freshwater, dried up free from rust leaks, scale,
free from salt and free from residue of previous cargo and in every respects ready to
load up to the satisfaction of the local surveyor. Should vessel fail to pass hold
inspection Owners to arrange cleaning at their time and expense and the vessel to
be off-hire from the time of failure until survey passed in all holds and any extra or
directly related expenses incurred to be for Owners account.
When the vessel was delivered, the holds were dirty with coal residues which would
have precluded grain from being loaded.
However, the time charterers first cargo to be loaded was iron ore, but the coal
residues had to be removed before the vessel could load her second cargo,
rapeseed in bulk, in consequence of which the vessel was delayed in the second
loading and costs were incurred to have the holds cleaned.
Various disputes arose between the owners and the time charterers including inter
alia that the time charterers alleged that they could place the vessel off hire while the
vessel was cleaned for the second loading and further that they could deduct the
cleaning expenses from the hire.
The arbitrators found that at the time of delivery both the time charterers and the
/ THE BUNGA SAGA LIMA CASE GRAIN CLEAN
ON ARRIVAL
By Stig Gregersen, Vice President, Syndicate 1, Copenhagen
Published 15 April 2005
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owners knew that the holds were dirty and did not comply with the grain clean
requirement.
The charterers claims were rejected by the arbitrators who in effect did decide that
when the charterers had not insisted on cleaning being performed at the first load
port (even though iron ore could be loaded without any cleaning), the time charterers
had lost the right to claim for the loss of time and expense at the second load port.
The charterers sought leave to appeal and it was held by the court that the
charterers submission that the arbitrators conclusion on the construction of the C/P
was obviously wrong would be rejected. Actually, the court confirmed that the
arbitrators were correct in their conclusion. The only entitlement to place the vessel
off-hire provided by the Fixture Note, clause 13, was to do so in the event that the
holds were not clean upon delivery or arrival at the first load port. No other right was
provided to the charterers to place the vessel off-hire at a subsequent load port, and
even if the vessels holds were not clean upon arrival at the second load port (as in
the present matter) there was no default on the part of the owners, like neither of the
other off-hire clauses of the C/P were applicable. The allocation of responsibility for
presenting the vessel with clean holds was fairly and squarely addressed by the
Fixture Note, clause 13, as was the entitlement to place the vessel off-hire.
It is thus recommended that when a vessel is time chartered pursuant to terms
similar to the Fixture Note, clause 13, in the Bunga Saga Lima, the time charterers
should always require the vessel to be grain clean upon arrival/delivery at the first
load port even if the actual cargo to be loaded at the first load port should not require
such cleaning; alternatively the time charterers should expressly reserve their rights
to the owners and most importantly obtain the owners agreement hereto.
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