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The Aframax Eos undertook a voyage from Amuay Bay to New York with a cargo of 549,087 barrels of fuel oil under a Shellvoy 5 charter form. During the voyage, the vessel's heating coils leaked and an amount of fresh water was introduced into the fuel oil. The cargo had reportedly been purchased with a maximum sediment & water (S&W) of 1%. The supplier's load port certificate of analysis showed S&W of 0.7%. However, upon arrival at New York, the cargo inspectors found the S&W to be 1.8%. Following an initial partial discharge and considerable subsequent testing and retesting, the charterer ordered the vessel to move from the berth to the anchorage. The vessel remained at anchorage for 18 days before reberthing and completing her discharge. As a result, the charterer lodged a claim for $471,435, primarily for blending stock required to reduce the S&W content to acceptable limits and related tankage costs. The owner counter-claimed for demurrage totalling $1,117,842, including the 18 days spent at the anchorage. The charterer contended that it had proved a prima facie case by establishing that the S&W was 0.7% on loading and 1.8% on discharging. Furthermore, the owner did not dispute that the vessel's heating coils had leaked fresh water into the cargo and therefore the ship was unseaworthy at the commencement of the voyage. According to the US arbitrator, the owner contended that the load port analysis of the cargo used by the charterer was at least suspect, if not erroneous. Moreover, the amount of fresh water which could have entered the cargo through the leaking heating coils was inconsequential and therefore could not and did not cause the considerable increase in S&W content found at New York. He said that the first issue was whether the load port analysis used by the charterer as the basis for its claim fairly represented the condition of the cargo upon loading. The cargo was loaded from a massive open pit identified as open pit 801. Just before the Eos berthed to load her cargo, a vessel loaded fuel oil from pit 801 which had an S&W of 1.4%. The Eos' certificate of analysis was prepared by the supplier's laboratory and not by an independent inspection company. The owner had no involvement with the sampling or analysis of the cargo from pit 801. Further, if - as the charterer contended - the sole cause of the increase in water content from 0.7% to 1.8% was due to the leaky coils, then there would have been a commensurate increase in the volume of the liquid in the ship's tanks. There was an increase of about 1,704 barrels based on the difference between ship's ullages at load and discharge ports. No evidence However, to support an increase in the volume based on a difference of 1.1%, there would have had to be a volumetric increase of about 6,050 barrels. There was no evidence to support this position, the arbitrator said. While load port certificates may be prima facie evidence of the cargo quality as between buyer and seller of the product (and indeed this is often 'final and binding'), the quality certificate does not have the same import as between a charterer and an owner. The sole arbitrator, Jack Berg, concluded that, based on the credible evidence, the cargo on loading likely had a water content of between 1.4% and 1.5% and that the leaky coils added about 0.3%. "The overwhelming bulk of the problem" was the excess water existing in the cargo at loading, for which the owner was not responsible. The result was that the charterer's claim was denied. The arbitrator then considered the owner's INDUSTRY - CHARTERING Charterer’s cargo contamination case not proven The Society of Maritime Arbitrators, New York, has sent a case note on a recent arbitration award dealing with liability for cargo contamination*. demurrage and expenses claim of $1,117,842, of which $324,438 was for loading and discharging operations and $822,066 for time spent at the anchorage. He had no difficulty awarding the former. With respect to the latter, the charterer argued that the high water content caused by the leaky coils made it impossible to discharge the cargo promptly. However, the arbitrator found that this position was not sustained by the evidence. The terminal would have taken the cargo in at any time and ultimately did so. Instead, the arbitrator found that the time spent at the anchorage had less to do with the cargo's S& W content than charterer's decision to use the ship as floating storage in a rapidly rising market from which it "profited enormously". The full amount of the owner's claim was awarded. Each side also claimed legal expenses in excess of $600,000. With very little discussion, the arbitrator awarded the owner, as the prevailing party, $550,000 as being reasonable in the circumstances. (Case - Andorra Services Inc and Chemoil Corp as charterer - and Venfleet Ltd, as owner). The 1993-built 99,440 dwt tanker Eos is owned by Venfleet, a subsidiary of Venezuelan oil concern PDV Marina and managed by Bernhard Schulte Shipmanagement. She is entered with the UK P&I Club and classed by Bureau Veritas, according to Equasis. TO *We are indebted to Maritime Advocate for permission to reproduce this article and to the sole arbitrator, Jack Berg, and the Society of Maritime Arbitrators based in New York for providing the case study. August/September 2008 � TANKER<strong>Operator</strong> 41
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