Hold Preparation PRESENTED BY: ANDREW GRAY Introduction The preparation of cargo holds for the next intended carriage is a critical operation, which requires careful planning and execution. A lack of proper preparation may lead to a number of disputes, including off-hire claims. It is essential that those involved understand exactly what is required under the charterparty in terms of cleaning and preparation. Commonly used Charterparty/fixture recap terms to describe cleanliness requirements Independent surveyor Consequences – Off-hire/damages • London Arbitration 14/18 • THE “BUNGA SAGA LIMA” [2005] 2 Lloyd's Rep. 1 • London Arbitration 7/10 Where are the contractual terms found? How Clean is Clean? • “Hospital Clean” is the most stringent and requires all hold surfaces to have 100% intact paint coatings on all surfaces (including the tank top, all ladder rungs and undersides of hatches). • “Grain Clean” requires the holds to be free from insects, odour, residue of previous cargo, lashing material, loose rust scale and paint flakes, etc. Prior to loading the holds must be swept, washed down with fresh water, dried and well ventilated. Most common requirement. • “Normal Clean” requires the holds to be swept to remove all residues of the previous cargo, washed down and dried ready to receive a similar or compatible cargo. • “Shovel Clean” does not require washing but only the removal of the previous cargo by rough hand or mechanical sweeping. • “Load on Top” is when new cargo is loaded on top of existing cargo residues. This is most appropriate in certain long term contracts where a particular vessel is transporting the same commodity to and from the same ports. By when should the holds be cleaned? At what point do Owners have to ensure that the holds are clean? E.g. • “Upon arrival at the first loading port” • “On arrival at load port” (load ports?) • “On delivery” • “On first loading” “…to the independent surveyor’s satisfaction…” What is meant by “Independent”? • Satisfied by showing that the surveyor in question is a firm or organization that operates independently of the owner or charterer or receiver. • See the “Protank Orinoco” [1997] 2 Lloyd's Rep. 42) • “…officially authorised…” • “…final and binding…” Free of Salt - London arbitration 14/18 Clause 11 of fixture recap “VSL’s HOLDS ON DELY OR ARRIVAL AT FIRST L/PORT TB CLEAN SWEPT/WASHED DOWN BY FRESH WATER AND DRIED UP SO AS TO RECVE CHTRS INT CGOS IN ALL RESPECTS, FREE OF SALT, LOOSE RUST SCALE AND PREVIOUS CGO RESIDUE TO THE INDEPENDENT SURVEYOR SATISFACTION IF THE VSL FAILS TO PASS ANY HOLD INSPECTION, THE VESSL TO BE PLACED OFF-HIRE FROM THE TIME OF REJECTION UNTIL THE VSL PASSES THE SAME INSPECTION AND ANY TIME/DIRECTLY RELATED EXPS INCURRED THEREBY TB FOR OWNS’ ACCT” Free of Salt - London arbitration 14/18 Loading port 1 - charterers’ on hire survey found “cleaned, normal condition…” • but decided silver nitrate test in holds • alleged traces of salt - placed off-hire by charterers • under protest master arranged fresh water wash down • cargo loaded Loading port 2 • dripping water from hatch cover/alleged salt • silver nitrate test • again placed off-hire till mopped out Charterers withheld hire Held - Tribunal found in the owners’ favour. • silver nitrate test not customary • not an “independent” surveyor under Clause 11 • “free of salt” - not literal interpretation in a maritime environment • commercially sensible interpretation – “free of any significant traces of salt”. THE “BUNGA SAGA LIMA” [2005] 2 Lloyd's Rep. 1 • Line 21 - “Vessel on her delivery to be ready to receive cargo with clean swept holds and tight, staunch, strong and in every way fitted for the cargo as per clause 29, having water ballast…”. • Clause 46 (amended) – “…it is understood that on dely or upon arrvl 1st loading port, vsel to be clean grain standard up to independent surveyor’s satisfaction” • Clause 13 of fixture note – “Owners warrant that vsl’s 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 the Owners acct” • Clause 92 – Intermediate hold cleaning – “Upon completion of discharge of each cargo, the crew shall render customary assistance in cleaning cargo holds in preparation of next loading…Charterers shall pay the crew US$...” THE “BUNGA SAGA LIMA” [2005] 2 Lloyd's Rep. 1 Vessel chartered on amended NYPE form for short time charter of two or three laden legs. • Delivery at the first loadport - holds dirty with coal residues from a predelivery cargo. • Charterers loaded cargo of iron ore without requiring coal residues to be removed. • Following subsequent discharge, at second loadport a cargo of rapeseed in bulk planned. Coal residues had to be removed - delay while holds cleaned to a ‘grain clean’ standard. • The charterers alleged breach of the cleanliness warranties under the charter, and that they were entitled to place the vessel off-hire until the holds passed ‘grain clean’ . THE “BUNGA SAGA LIMA” [2005] 2 Lloyd's Rep. 1 Held – Tribunal and appeal judge rejected the charterers’ claims • On delivery at the first loadport, both the charterers and the owners knew holds did not comply with the ‘grain clean’ requirement • Under the NYPE and Fixture Note, the only entitlement to place the vessel off-hire in the event of unclean holds was upon delivery or arrival at the first load port, and not thereafter • Clause 46 (amended) – “…it is understood that on dely or upon arrvl 1st loading port, vsel to be clean grain standard up to independent surveyor’s satisfaction • By not insisting on clean holds on delivery, charterers lost right to claim loss of time/expense in cleaning at second loadport. London Arbitration 7/10 Line 22 of NYPE - “…Vessel on her delivery to be ready to receive cargo with clean-swept holds…”. Clause 54 – “Vessel’s holds conditions on arrival at first loading port to be fresh water washed down, clean dry, free from loose rust flakes/scales and residues of previous cargo and in every way ready and suitable to load Charterers’ intended cargo to the satisfaction of the independent surveyor. If vessel is rejected by the independent surveyor at load port, vessel to be off-hire until ready to pass inspection…” Clause 124 – “All intermediate hold cleaning to be in Charterers’ time risk and expense, and vessel to remain always on hire…” London Arbitration 7/10 • Vessel delivered in India with coal stains and sailed in ballast to Thailand to load first cargo (steel). The holds were cleaned by the crew during the ballast voyage. • At loadport, the joint on-hire surveyor found the holds to be in a sound condition but noted dark staining on the bulkheads and sides, caused by the pre-charter coal cargo. • Vessel sailed to the U.S. and was fixed during the voyage to load grain at Vancouver after discharge in Kalama. At Kalama, an NCB surveyor required the removal of the staining. Charterers concerned and Master had holds cleaned with chemicals. • At Vancouver, the NCB inspectors rejected her holds due to the staining. Five days of further cleaning by the crew and shore team before holds passed re-inspection. • Charterers alleged owners were in breach of the charter because the vessel’s holds were not, on delivery in Haldia, in a fit state to receive grain cargo at Vancouver due to the presence of coal residues. London Arbitration 7/10 Held - The tribunal rejected the charterers' claim. • The charterparty was specific about how clean the holds had to be and when. On arrival at the first loadport, the holds had to be sufficiently clean to load the intended cargo (steel). The crew were therefore given the chance to clean the holds properly not before delivery, but during the ballast voyage to the first loadport – after delivery. • Clause 54 – “Vessel’s holds conditions on arrival at first loading port to be fresh water washed down, clean dry, free from loose rust flakes/scales and residues of previous cargo and in every way ready and suitable to load Charterers’ intended cargo to the satisfaction of the independent surveyor • As long as the crew cleaned the holds properly during the ballast voyage to the loadport, owners were not liable if the holds were later rejected. • The owners had complied with their charterparty obligations, the charterers accepted the ship unconditionally, and owners were not liable for the vessel's arrival at the second loadport in a nongrain clean condition. This was consistent with the decision in The Bunga Saga Lima [2005]. Preservation of evidence Initial evidence • Correspondence • Telephone calls • Fixture recap • Charterparty Onboard • Instructions to crew and/or contractors • Weather reports • Attendance of surveyors • Notes of protest • Cleaning records • Note books • Photographs Conclusion • Consider charterparty and fixture recap terms carefully • Comply with the terms • Seek prompt advice if unsure • Preserve all evidence Thank you PRESENTED BY: ANDREW GRAY- ANDREW@CJCLAW.COM
