Author: nlnnpc-mashinaki

Demurrage will often be incurred when delays arise due to cargo damage being alleged in the discharge port. Ordinarily it is the responsibility of the receiver to take delivery of the cargo and to arrange the necessary onward transportation or storage. In the event however that the cargo is damaged, the receiver suspends discharge operations in order to appoint a surveyor to inspect the cargo or may simply does not have sufficient storage capacity to separate the damaged cargo.

Any condition issues may result in additional laytime and demurrage and the question is whether or not the Owner can claim this additional time, despite the fact that it has caused the damage as a result of which operations have been delayed. After all, the carrier is entitled to the agreed demurrage in the event the receiver is unable to discharge the cargo within the agreed time-frame but the receiver also has a duty to take delivery and to mitigate any losses regardless of whether or not the cargo is alleged to have been damaged. In addition, an owner will often appeal to the “once on demurrage always on demurrage” principle to argue that he should be paid for the entire duration of the delay.

We recently had to deal with a case where a vessel transported a cargo of wheat in bulk from France to the Netherlands when during discharging operations part of the cargo was observed to be wet. According to the receiver it was not possible to find a suitable solution for the 50 Mts of wet cargo within reasonable time and the damaged cargo therefore remained on board of the vessel. Subsequently the vessel had to wait several days until she was completely discharged which resulted in a considerable amount of demurrage. The Charterers of the vessel stated that the vessel was not entitled to claim for demurrage because the delay was caused by the wet cargo which was delivered by the vessel. On behalf of the Owners we took the position that the receivers had a duty to receive the cargo and to find a solution for the damaged part in order to avoid delay as much as possible which fell outside the scope of the charterers responsibilities under the Charterparty. In addition, we argued that it was not reasonable that the vessel had to wait for several days before 50 Mts of cargo could been unloaded. Furthermore, it appeared that the economic loss of the cargo was even less than the demurrage of the vessel. Fortunately, a commercial solution was found between the Owners and the Charterers.

In summary, it is important to keep in mind that a claim for cargo damage under a bill of lading concerns a different interest than demurrage under a charter party even if the demurrage is a consequence of the cargo damage. As such, the Owners would be entitled to calculate the demurrage under the Charterparty without being prejudiced by the receivers failure to take delivery or failure to mitigate their losses.

Waterway obstructions in inland shipping are unfortunately a regular occurrence. The causes vary from regular maintenance work to bridges or locks, due to collisions or as a result of low water levels. Whatever the reason, it is an inconvenience for every shipowner and may result in significant delay and expenses. We are regularly asked to advise in such circumstances with regards to whether the shipowner is entitled to compensation. By means of this article we hope to provide some clarity on this subject:

• The first thing we need to clarify is the cause of the obstruction. Based on the cause we can in turn assess whether any third party or government authority can be held liable and will often be determinative of the prospects of recovery. An obstruction caused by a collision is more likely to involve third party liability than an unexpected breakdown of a bridge.
• The second point of consideration is whether a civil party or an authority has caused the obstruction. This will often determine whether any recovery will be subject to private or public law and the prospects of a successful recovery. We also recommend checking with your brokers or underwriters whether you are insured for obstruction under your insurance policies.
• In the event that the obstruction has been caused by a civil party who can be held liable, it will be necessary to substantiate the claim. The shipowner will need to show that the delay was caused by the obstruction and provide evidence of their loss. It is also necessary to particularize the loss by disclosing the hire rate earned by the vessel or the average income earned in a period before and after the incident
• In relation to instances where the authorities have acted lawfully, for example when the obstruction has been caused due to regular maintenance, it may be possible to seek compensation under particular regulations. We refer in this regard to our newsletter Volume 2018/22.

As set out above, whether or not a shipowner can seek compensation for delay caused by obstruction will depend on the particular facts and circumstances of each case. We recommend contacting us as soon as you have suffered delays due to an obstruction to allow us to assess your legal position and assist in gathering the necessary evidence.

Within the MARPOL Convention (the International Convention for the Prevention of Pollution from vessels), one of the most important elements is the requirement to record the hazardous substances on board of the vessel and when and where these substances are disposed of. From 1 October 2020, a number of changes will be made to MARPOL Annex I, II, V, VI and to the Nox Technical Code that allow the use of electronic record books.

These changes will apply to:

• Oil record book part 1 and 2;
• Cargo record book;
• Garbage record book part 1 and 2;
• Ozone-depleting Substance record book;
• Recording of the tier and on/off status of marine diesel engines;
• Record of Fuel Oil Changeover;
• Record book of engine parameters.

The digital logbook must be assessed by the “Flag Administration”, after which a written confirmation (Declaration of Marpol Electronic Record Book) will be issued. A copy of this declaration must be kept on board. In addition, the books must be properly archived in case the data is needed, to avoid errors of loss of date. The absence of such data may led to detention of the vessel by Port State Control or monetary fines.

We recommend the following guidance in relation to the correct completion of electronic logbooks:

• IMO Guidelines for Recording Operations in the Oil Record Book, Part I – Machine Room Operations (All Ships);INTERTANKO – A Guide to Correct Oil Journal Entry (Part I – Machine Room Operations);
• INTERTANKO – A Guide to Correct Oil Journal Entry (Part II – Cargo / Ballast Operations).

Shipowners are being warned for the increased risk of hull fouling due to prolonged periods of inactivity of ships due the economic consequences of the COVID 19 pandemic.

Many shipowners have seen their charter parties cancelled, suspended or the delivery delayed, causing significant loss of time, whilst in a number of sectors vessels are being used as floating storage. As a result, an increased number of ships worldwide are currently anchored, and more likely to suffer from hull fouling as a consequence.

It should be noted that owners have a legal responsibility to maintain the vessel and will therefore in most cases be responsible for cleaning the hull. In the absence of express contractual provisions, owners are unlikely to place this burden on their charterers where the ship has been inactive as a result of the ordinary and expected course of trading in accordance with charterers’ legitimate orders. The additional fouling is therefore causing additional maintenance costs for shipowners and will also affect the performance of ships in terms of speed and fuel consumption. This in turn may lead to performance claims by charterers under the charter party. The success of such claims by charterers will depend on whether owners have assumed the risk of speed and performance issues caused by hull fouling, which will require an assessment of the specific charterparty wording.

We recommend that members consider including the BIMCO Hull Fouling Clause into their charterparties, which can be found through the following link.

The clause avoids ambiguity on the division of responsibility, which will hopefully reduce the number of disputes requiring litigation. In addition, we also draw our members’ attention to the existence of national regulations relating to hull cleanliness standards, which are usually enacted to prevent invasive foreign marine organisms from entering into and damaging a local ecosystem. Such regulations may result in vessels being delayed or refused entry until the authorities are satisfied that local conditions are met.

We therefore recommend that members take measures to minimise hull fouling whenever the vessel remains at anchor for extended periods of time. We also recommend observing IMO guidelines for bio-fouling management. In the event that new contracts or extensions are negotiated we recommend to ensure that appropriate wording is included as described above.

Should our assistance be required, or in case of specific questions or issues relating to this matter, members are invited to contact us at claims@nnpc.nl .

The current PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes prohibits the import, dumping and disposal of both solid wastes, unless subject to a specific import license, and hazardous wastes.

This law has been in effect in the PRC since 1 August 2011 and will be revised as per 01 September 2020. It imposes joint and several liability on both the carrier and importer for the return and disposal of the solid waste where the solid waste is prohibited and/or proper license has not been obtained, and significantly increases the fines that can be imposed for violations.

The solid wastes that are prohibited from import, dumping and disposal in the PRC and/or are subject to import licensing are set out in catalogues of solid waste products as published and adjusted by the competent departments under the State Council of the PRC in 2017 and 2018. They are annexed to this circular as follows:

• Annex I – Catalogue of Solid Wastes Prohibited from Importation into the PRC and that cannot be imported;
• Annex II – Catalogue of Solid Wastes that can be used as raw materials under Import Restrictions and that can be imported with an Import License of the PRC for Restricted Solid Wastes that Can be Used as Raw Materials, but will be prohibited from import from 1st January 2021;
• Annex III – Catalogue of Solid Wastes that can be used as raw materials and that are not under Import Restrictions, but will be prohibited from import from 1st January 2021;
• Annex IV – Catalogue of Hazardous Wastes that are already, and will continue to be, prohibited from importation into the PRC.

Members should also be aware that the PRC intends to reduce the import of solid wastes during the latter half of 2020 and that all solid wastes will be prohibited from import into the PRC from 1 January 2021. As a result, from this date the licensing regime will no longer be in place for the import of solid wastes.

Members trading in this region are encouraged to exercise caution and remain vigilant for any activity which may fall within the scope of the PRC Law on the Prevention and Control of Environmental Pollution by Solid Wastes. Customs are expected to increase the inspections of cargo and the quarantine of the imported solid waste in an effort to enforce the new law. Members are also advised to conduct thorough due diligence, carefully checking a request to transport any kind of waste into China in order to avoid being suspected of smuggling and therefore avoid potential fines for violations of the law.

Dear members,

A number of members have informed us that there appears to be a spike in apparently fraudulent offers for non-existent shipments, where the shipowner is asked to transfer the agency costs in advance to the alleged loadport agent. These offers appear to be focussed primarily on the Turkish market, whereby it is unclear if the cargoes actually exists or whether the parties involved have an interest in the cargo in question.

We recommend that when members are offered cargoes involving advance payment to an agent and/or unknown parties, they verify the existence of the cargo and the veracity of the offer.

In the event that you have concerns about any specific incident, we invite you to contact the NNPC.

A considerable number of our insureds have employees on board. We have recently dealt with several cases where an insured had dismissed their employee with immediate effect without giving notice and the employee had challenged that dismissal. In many of these cases we unfortunately had to conclude that the dismissal had been unlawful as it did not comply with the relevant legal requirements. Based on these cases we would like to bring a few points to your attention.

Under Dutch law immediate dismissal without giving notice is only allowed under specific circumstances:

• The reason for dismissal must be immediate and urgent (for example theft, abuse or refusal of work);
• The employee must be dismissed immediately after the reason is brought to the attention of the employer; and
• The employee must be informed of the urgent reason (preferably both verbally and in writing).

The reason for immediate dismissal must be such that it is impossible to continue the employment contract. Whether this is the case varies per situation and it may therefore mean that, for example, theft in one case is grounds for immediate dismissal, but in another case it is not.

As an employer you have to keep in mind that you must be able to prove the urgent reason for immediate dismissal. Since the burden of proof in relation to urgency is high, it is important to keep a personnel file, to conduct appraisal and performance reviews and to raise any problems and put them in writing. Any official warnings should also be put in writing and signed by the employee. In the event that an immediate dismissal becomes necessary at a later stage, the personnel file will constitute important evidence that the reason for dismissal was not an isolated case, but one of poor performance for a longer period of time. In exceptional cases, immediate dismissal may be possible even without evidence of previous poor performance or issues, however such cases are the exceptions rather than the rule.

Immediate dismissal has far-reaching consequences for the employee: the employment contract ends immediately, the employee loses the right to certain unemployment benefits and the employee is not entitled to transition compensation. The court therefore considers immediate dismissal to be an extreme remedy. As an employer, you run the risk of being ordered by the court to pay compensation to the employee (e.g. in the form of continued payment of wages and expenses), should the employee contest the immediate dismissal. You may also be required to reinstate the employee.

Do you have questions regarding the situation with your employee? Feel free to contact us.

BIMCO has published a COVID-19 crew change clause for time charter parties 2020, in response to the extraordinary circumstances faced by ship owners. Many crew members are still on board as a result of the COVID-19 measures, while their employment contracts have already expired.

The clause is intended for use in time charter parties, where it is not known in advance which countries the ship will call and what the possibilities are for changing crew members. Under the clause, the shipowner is given the option to deviate under certain circumstances for crew changes.

‘’Although the cost of crew changes are usually borne by the owners under a time charter party, the extraordinary and unusual circumstances caused by COVID-19 have resulted in some owners not being able to perform crew changes on the ship’s trade route. Now that the crew is on board for a period beyond their employment contract, owners should have the opportunity to stray to an alternative location if the crew cannot be changed in locations where the ship is under contract by charterers.

The clause can be downloaded from the BIMCO website at https://www.bimco.org/contracts-and-clauses/bimco-clauses/current/covid-19-crew-change-clause-for-time-charter-parties-2020.

Members should, however, take into account that in certain circumstances a deviation may constitute an unjustified deviation within the meaning of Rule 17 paragraph 4. In case of doubt, we recommend contacting us to confirm whether the deviation will have any implications for insurance cover. Of course we are also available to advise in the formulation of your agreements or to give specific advice about a new destination or cargo. Our members can always contact us at claims@nnpc.nl.

After the droughts in recent years, it is expected that Europe will again face a period of unusual low rainfall in the coming summer as well. As a result, lower water levels are expected in European rivers and waterways during the summer.

Lower water levels result in narrower fairways and less draught, which reduces the navigable water surface area and increases the traffic density on the waterway. On the one hand, there is simply less space; on the other hand, ships can carry less cargo and therefore perform more voyages. In addition, authorities may impose limits or bans on overtaking.

Anyone who does not take sufficient account of low water levels may be faced with unpleasant surprises. In the past, we have assisted insured parties who had to unload part of the cargo prematurely halfway through a voyage. That part of the cargo was then transported by lorries to the port of discharge. A time-consuming but also an expensive as the costs for alternative transport in such a case are often borne by the carrier.

Delays in your journey can also have unpleasant consequences for the options available to discharge the cargo or commencing a subsequent journey. In addition, vessels may suffer damage and delay running aground due to insufficient draft due to overloading.

We recommend that you take at least the following measures:

• Check the water levels and government imposed limits per voyage at different times:
  • before accepting a voyage;
  • before you start loading;
  • on longer journeys, also during the journey.
• If the water levels or government imposed limits are expected to cause problems, contact your charterer and, if necessary, take appropriate measures.
• Allow for additional travel time due to congestion on the waterways and at critical points such as locks and port entrances.
• Prepare thorough calculations of the maximum permissible load weight for your vessel. Also check the cargo’s characteristics to ensure that the weight is consistent with the specification agreed, e.g. check the stowage factor, the compactness of the cargo or possible contamination with water or other products that may affect the weight.

When dealing with laytime related disputes we are often asked to comment on the differences between “Weather Working Day” (WWD), “Weather Working Day of 24 consecutive hours” (WWD 24 hours) and “Weather Permitting” (WP). In this article we hope to provide some guidance on the distinctions of these terms and how they can impact laytime calculations.

By way of guidance we refer to the BIMCO definitions of these terms:

WEATHER WORKING DAY shall mean a Working Day or part of a Working Day during which it is or, if the Vessel is still waiting for her turn, it would be possible to load/discharge the cargo without interruption due to the weather. If such interruption occurs (or would have occurred if work had been in progress), there shall be excluded from the Laytime a period calculated by reference to the ratio which the duration of the interruption bears to the time which would have or could have been worked but for the interruption.

WEATHER WORKING DAY OF 24 CONSECUTIVE HOURS shall mean a Working Day or part of a Working Day of 24 consecutive hours during which it is or, if the vessel is still waiting for her turn, it would be possible to load/discharge the cargo without interruption due to the weather. If such interruption occurs (or would have occurred if work had been in progress) there shall be excluded from the Laytime the period during which the weather interrupted or would have interrupted work.

WEATHER PERMITTING shall have the same meaning as WEATHER WORKING DAY OF 24 CONSECUTIVE HOURS.

As you will see, the differences are limited in the case of a port where it is customary to perform work continuously over 24 hours, whereas WP is considered to have the same meaning as WWD 24 hours. In the definitions of both WWD and WWD 24 hours periods of rain preventing cargo operations need to be excluded from the laytime calculations.

Things become a little bit more tricky when it is customary in a port to work only certain parts of the day. By way of example, let’s take a look at a situation where the vessel is in a port where the working hours are from 01.00 hours to 07.00, 08.00 to 15.00 and from 16.00 to 23.00, and rain preventing operations occurred from 06.30 to 09.30 and again from 14.00 to 18.00 hours.

1. If the parties have agreed WWD, the time saved for the charterer should be calculated as follows:

   Working day/total working hours = 20 hours
   Rain interference during working hours = 5 hours
   Rain interference outside working hours = 2 hours
   “Lost” = 5/20 of a “working” day (or 1/4)

   This results in 5/20 of a “working” day being lost. This ratio is then applied to the actual length of a day i.e. 24 hours. As 5/20 of the day has been “lost” due to rain interference 6 hours, being 5/20 of 24 hours, will not count for the purposes of the laytime calculation.

2. However, whenas previously explained parties have agreed on WWD 24 hours or WP, no ratio is required. The actual time lost due to rain interruptions does not count as laytime and is simply deducted from laytime for that day. Therefore, in the example given above, there were 7 hours of rain, 17 hours will count as laytime with 7 hours to be excluded.

Whereas the underlying intention of these definitions is the same, the application will depend on the actual working hours of a specific port. We therefore always recommend checking the working hours of the port in question before agreeing to WWD terms and otherwise to always insist on time being calculated on the basis of WWD 24 hours.

We trust that this is of assistance, however members can always contact the NNPC for follow-up questions on this matter and/or to assist in specific laytime related discussions.