pi_circular Cargo riskOperational risk Skuld
The Yangtze provides a cautionary tale to the charterers who hastily order a time chartered vessel not to discharge and to remain static for long periods of time thus risking the cargo to perish. Although the charterers were not at fault for or in breach of the charter in loading the cargo, their determined decision to keep the cargo on board for a period of over 4 months constituted an "act" for the purposes of Clause 8(d) of ICA. The legal issue before the Tribunal and subsequently on appeal before the High Court was whether or not construction of the word "act" in Clause 8(d) of the Inter-Club Agreement 1996 required fault or negligence of the charterers. Dismissing the charterers' appeal, Teare J upheld the Tribunal's construction of the word "act" should be given its natural meaning and did not require an element of fault. Background The "Yangtze Xing Hua"[1] was chartered from the owners for a time charter trip on the NYPE form to carry soya meal from South America to Iran. The charterers had not received payment for the cargo and rather than discharging the cargo into a bonded warehouse ordered the vessel to wait off BIK for more than 4 months, effectively using the vessel as a floating storage. Claim As soon as the vessel discharged her cargo it was found to be damaged by overheating caused by microbiological and chemical processes. The receivers brought a claim under the bills against the owners for EUR 5 million which was eventually settled for EUR 2,654,238. In turn the owners brought a claim against the charterers pursuant to Inter-Club Agreement 1996 Clause 8(d) for the settled amount plus hire in the sum of USD 1,012,740. Legal questions In the first instance, the Arbitral Tribunal had to consider the cause of the damage and whether the owners were responsible for causing that damage. The Tribunal found that the owners had not failed in their obligation to properly monitor the cargo temperatures and further, that the overheating was ca
Beware of The Yangtze: Charterers don’t be tardy
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