Features: - Tanker Operator

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 � TANKEROperator 41