Wednesday, March 22, 2023

London Arbitration- liability for the cost of escort boat and guards in Nigeria

The costs of escort boat and armed guards for trading in Nigeria were for charterers’ account but not the hull cleaning costs. Likely, this is the only published LMAA award that touches on the BIMCO Bunker non-lien clause. 

The Background

The vessel was chartered under an amended NYPE Form to discharge salt in bulk at Port Harcourt, Nigeria. After completion of the voyage, the owners produced their final hire statement and claimed about 94 k from the charterers. Charterers denied liability and raised various counterclaims.

The parties’ claims and counterclaims related to the costs of armed escort boats and guards while calling Port Harcourt, Nigeria, various off-hires, and hull fouling costs under the Bimco Hull fouling clause. The disputes were referred to arbitration under the LMAA Small Claims Procedure (SCP), and a sole arbitrator made his award in April 2022.

There is a detailed discussion of the proceedings in arbitration and how the parties dealt with procedural matters under the SCP, but this was not added to this post. However, the tribunal considered it to award costs (see the last para).

Armed escort boat

On 25 January 2021, the charterers advised the master that an armed escort boat would meet the vessel at Bonny Fairway Buoy. Per the port agent message, the ship is not needed to drift at 100-250 nm, and “Bonny anchorage is safe”. According to the berthing prospects, the vessel would berth immediately upon arrival.

On 26 January, the vessel’s underwriters advised that this proposal was unacceptable and required an escort from 3° N. The owners made it clear that gunboat escort is from North of 3° N; if that were not accepted, the vessel would remain outside the High-Risk Area, always on hire. Then, as no reply was received from the charterers, the owners advised them that they would arrange for an escort and invoice the charterers accordingly.

On 28 January, the owners received further feedback from the underwriters and passed it to the charterers. Then, the charterers sent a revised message to the master advising that the meeting point with the gunboat changed to 3 degrees North / 7 degrees East. Master responded to this message and asked whether the berth was free to proceed to the meeting point and the ship would not move at the inner anchorage waiting for berthing. Per the agent info, the vessel would stay 24 hours at the inner anchorage.

On 29 January, a berthing meeting took place, and the Harbour Master suspended berthing at the anchorage with immediate effect due to congestion.

The charterers responded to the owners and said the ship would only wait a couple of hours. The berth was due to be vacated on 30 January, and if the vessel did not stay at the inner anchorage, she would lose her turn to berth and be off-hire. Also, the insurers’ view was wrong as no recent piracy incidents existed.

The tribunal held that the owners complied with the strict requirements imposed by the charter party and the vessel’s insurers. Contrary to what the charterers have suggested, the master’s refusal to proceed without a berthing allocation was not an excuse but an explanation for his acting as he did, strictly by the charter party terms. The owners were not required to step outside the terms of the charter party nor to ignore the head owners’ and their underwriters’ requirements.

As to the cost of escorts, these were for the charterers’ account per charter party. As the charterers failed to make arrangements, the owners said they would do so. In the end, the owners agreed to bear one-half of the total costs, and the tribunal followed their lead on that concession.

Underwater inspection-cleaning

The charter party included the BIMCO HULL FOULING CLAUSE FOR TIME CHARTERS. Owners sought to recover USD 7000 for an underwater inspection and cleaning/polishing of the propeller at Takoradi, Ghana, following her redelivery. The parties disagreed on whether the vessel remained in a single location for at least 15 days to trigger the clause. Further, no discussions were made before the vessel’s redelivery to engage para (b) and (c) of the clause.

The tribunal looked at the evidence overall and held that the condition of the vessel’s hull was generally good, with no more than intermittent light growth. The propeller, while more generally affected, exhibited limited growth. There was no significant evidence of the vessel’s performance before, during, or after the vessel’s voyage to Port Harcourt. But there was some evidence that the tribunal accepted that the ship stayed idle for an extended period at Itaqui, Brazil, before her delivery into this charter party, so it was not satisfied that the owners had made a good claim under this head.

Charterers’ counterclaims

  1. The vessel was off-hire as it lost its turn to berth because of the masters’ wrongful refusal to proceed and follow their orders. This was not accepted since the master was fully justified in refusing that order.
  2. The cost of the escort boats for inbound and outbound legs and the cost of the armed guards on board while the ship remained at the inner anchorage are for owners’ account. The owners have given credit for the cost of the outbound transit, but it is for the charterers to bear the cost of the inbound leg as per the owners’ insurers’ requirements. Owners took no responsibility for the cost of the guards remaining on board while at inner anchorage, as the ship also remained on hire for that period.
  3. The vessel is off-hire for 0.18 days due to a dispute concerning documentation that delayed the bunkering. This issue turned on the available evidence and the proper interpretation of the Bimco bunker non-lien clause. The tribunal considered the relevant email exchanges between the parties before the bunkering operation. The tribunal held that even if it is unclear whether the charterers complied with para (b) (ii) that required to notify the owners in writing of the identity and contact details of the bunker supplier, the owners had all the information needed via exchanges between the master and the traders. Of importance, the last-minute requests for compliance with the requirements of the clause affected the owners’ position as this would cause at least some delay. As a result, the vessel was off-hire.
  4. Vessel was off -hire due to crane stoppages supported with a copy of a detailed statement of facts. As suggested, there was no evidence that the stevedores caused this incident and the charterers’ claim succeeded.

Costs and Interest

It is in the tribunal’s discretion how to award interest and costs, subject to the constraints imposed by the SCP. The owners have succeeded in making good by far the more significant part of their claims and defeating many of the Charterers’ challenges. Further, the charterers have failed to engage fully with the procedures, and if they had followed the tribunal’s orders, the reference could have run more smoothly and less costly. The owners were awarded an outstanding balance of about 80k, along with their costs and interest.

Note: This website removes the names of the parties involved in this or other awards. The reader can find more details on Jus Mundihttps://jusmundi.com/en/conflict-checker. These awards mostly come into the public domain through enforcement under the NYC 1958; the operative provisions of the Convention have been transposed into the law of England and Wales by Part III of the Arbitration Act 1996.

For more information about the Bimco Bunker non-lien clause and hull fouling clause, you can visit BIMCO’s website:https://www.bimco.org/

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