Port Sudan claims
Over the last year, British Marine and its Assureds have noticed an increase in the number of difficulties arising in Port Sudan. The number of voyages to this area is on the increase and we are now starting to see an upsurge in the volume of claims and a trend in the type of claims presented. Whilst we would expect to see a small percentage rise in the amount of claims presented at any one port based on the voyage growth to this area, the trend is such that, every voyage, where we are notified in advance of the vessel arriving, ends up with a shortage claim. Certain receivers are more troublesome than others. Our data analysis has shown that the Sugar Charterparty and bagged sugar cargoes are the common factor in these issues experienced.
One particular receiver insists on rolling out the same format of “Commercial Invoice” that it has been using for the last number of years. Always with the same Dubai company as the seller and always for the same inflated per tonne price of sugar. However, without charterers providing owners with a copy of the commercial invoice at the outset of the voyage, we have little grounds on challenging this. There are serious doubts as to the genuineness of the this invoice, but proving that it is fraudulent is difficult. If anyone has any suggestions then please put them in the comments section. Short of having access to a copy of the commercial invoice from the original issuing party, the shipper (usually someone like ED&F Man, Cofco or Louis Dreyfus), there is little we can do to challenge this successfully. However, as these shippers are usually owners’ contractual party, by virtue of them being the charterer as well as the shipper, there is a potential for owners to ask for sight of the commercial invoice and perhaps this could be included as a contractual term? In addition, if the owners could obtain the “Shipping Bill for Export of Duty Free Goods” from the Loading Port, this would give an indication of the value of the cargo. Having a charterparty clause which states “Charterers are to provide the “Shipping Bill for Export of Duty Free Goods” and the Commercial invoice for this cargo upon shipment” may assist owners.
This brings us to the Sugar CP. Obviously this is a charterparty which is completely stacked against owners. We would recommend that owners try to fix the vessel on GENCON 1994 terms instead of SUGAR CP terms. BIMCO have some very helpful advice on the Sugar Charterparty 1999 terms (comment below, if you would like us to send you a copy). It is clear from this just how one sided the Sugar Charterparty is. We appreciate that the commercial reality of fixing on something other than the Sugar Charterparty is not always practicable. Do owners, in charterparty negotiations, actually make endeavours to contract on a GENCON 1994 basis? Or do they merely accept the terms that the sugar charterers propose? Please comment below if you have any insight in to this.
Further, given the disproportionate rate of vessel arrests that we are seeing Port Sudan in respect of shortage claims (actual and perceived) and noting the familiar way in which these arrests play out with owners and their insurers having to either settle the claim commercially on an urgent basis or having to put up security so that the vessel is not detained, we think that it would be advisable for owners to include the following clause in their pro forma charterparty terms, so that the obligation is on charterers and their Club to deal with any cargo claims and resulting arrests in the first instance under the CP. We suggest that the following (or a variation thereof) be considered:
When trading to [West] African [and/or Sudanese] ports, Charterers confirm that they accept responsibility for cargo claims for shortage from third parties. Such responsibility includes, but is not limited to including, Charterers putting up security as soon as possible in the first instance, if necessary, to prevent any actual or threatened arrest/detention of the vessel and/or to release the vessel from arrest or detention or to providing countersecurity to owners’ P&I. All time actually lost thereby shall count as laytime or, if the vessel is on demurrage, as demurrage. All costs and expenses arising from such delays relating to cargo claims also to be for Charterers’ account.
While the clause above will not assist in instances where, for example, the vessel has been arrested in respect of cargo claims relating to cargo carried on different vessels in the same ownership and will be limited to applying to cargo claims relating to cargo carried by the named vessel under the charterparty in question. Nevertheless we are of the view that it is worthwhile trying to include such a clause in future charterparties to protect owners’ interests in relation to spurious cargo claims and any future vessel arrests there.