London Arbitration 14/23 

A vessel was chartered for an 80-90 day one-way trip from the US Gulf to China under an amended NYPE 1946 form with additional clauses. Berthing in New Orleans/Mississippi River was delayed by Hurricane Ida, leading to a 34-day wait at Alliance Anchorage. After loading bulk corn, the vessel sailed on September 27, 2021, and was redelivered in China on December 7, 2021. Arbitration was sought to resolve disputes over final hire accounts, grounding of the vessel, fouling of the hull, and alleged negligence of the master.

Background

In August 2021, the vessel arrived at Southwest Pass, Mississippi River, anchoring at Alliance Anchorage on August 19 after tendering notice of readiness. Photos submitted to the tribunal, reportedly captured on August 21, depicted calm and sunny weather, with the vessel positioned on its port side, parallel to the riverbank, at a distance less than the length of a ship.

While awaiting berth, the master, concerned about Hurricane Ida, urgently sought instructions from charterers regarding berthing plans before the storm hit and inquired about the availability of tug assistance to safeguard the vessel while anchored. The charterers’ agents relayed warnings from the port authority to the master and supplied a list of precautionary measures.  Despite the master’s recommendations to shift or leave the river, the vessel remained at anchor during the storm, touching the bottom on multiple occasions.

After the hurricane passed, the vessel’s port quarter was found aground about 7 meters from the riverbank. Photographs showed the vessel at an angle to the riverbank, rather than parallel, and with its port quarter close to the bank and the partially submerged trees that lined it.

Shifting and re-anchoring occurred on August 31, but complications with fouled anchor chains delayed berthing. Tug assistance was paid for by the charterers in the amount of US$12,320 and later deducted from hire. The vessel finally berthed on September 22 in New Orleans.

After loading, the vessel proceeded to China via the Cape of Good Hope where significant fouling on the hull was discovered. The owners, concerned about potential damage, asked for an underwater survey, but the charterers declined, citing no direct evidence of bottom touching and no fouling in fresh water. Owners commissioned an inspection in Singapore on November 18 which confirmed substantial fouling, but no damage attributed to the hurricane-related grounding.

Owners’ Claims

The owners asserted claims for the following:

(a) US$17,165.40, representing the cost of tug assistance on August 31 at Alliance Anchorage for refloating, shifting, and re-anchoring the vessel;

(b) US$12,320 for tug assistance on September 22 at Alliance Anchorage to untangle anchor cables, along with deductions of US$118,738.76 from hire due to delayed berthing and related expenses and an alleged off-hire claim of US$13,980.82 for time lost during the tug operation; and

(c) US$32,414.82 for hull inspection and cleaning on November 28 in Singapore.

Tug assistance on 31 August

The owners contended that the charterers were responsible for this item based on the following reasons:

(i) the unsafe nature of the anchorage;

(ii) clause 2 of the charterparty assigning port charges, recommended pilotages, and other standard expenses, including tug costs, to the charterers;

(iii) the implied indemnity under clause 8, obligating the charterers to indemnify the owners for consequences arising from the master’s compliance with their orders on vessel employment; and

(iv) the charterers’ breach of the warranty ensuring the vessel’s continuous floatation. 

The charterers refuted these claims, asserting that the port’s characteristics and conditions did not expose the vessel to unavoidable risks, and that any need for tug assistance resulted from the master’s shortcomings in navigation and seamanship.

To determine whether a port (or anchorage) was safe for the ship concerned and whether a master was competent, the arbitrators relied on precedents set in Leeds Shipping Co Ltd v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 at page 131 and in Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2014] 1 Lloyd’s Rep 59 at para 112).

Both parties presented reports from qualified nautical experts in the dispute, who jointly agreed that Hurricane Ida’s intensity was within expected bounds for the Gulf of Mexico season, and the hurricane was not considered an abnormal occurrence. The experts concurred that the initial anchorage position was safe and suitable, and soft contact with the riverbank and bottom was not automatically detrimental to the vessel’s safety. Despite the charterers’ claim that tug assistance was unnecessary, the experts did not find evidence that the vessel was hard aground on August 29-30 and unable to re-float without tug assistance.

The tribunal favored the owners’ expert opinion, suggesting the vessel likely touched the riverbank and dragged its anchor in a pilotage area, requiring the master to use tugs for repositioning in a fast-flowing river. This maneuver involved moving the anchorage position away from the riverbank, justifying the use of tugs. Even if the vessel did not drag anchors, the initial position posed grounding risks, leading to a breach of the charterers’ warranty. The owners’ claim for tug assistance costs on August 31, totaling US$17,165.40, succeeded, as the use of tugs was necessary to comply with the warranty and fell under the charterers’ account.

Tug assistance on 22 September

The tribunal acknowledged the master’s reasonable need to relocate the vessel to an anchorage free from grounding risks, executed on August 31, albeit exposing it to the risk of turning. Berthing prospects were limited, and the vessel had already grounded, leading the master to prioritize the lesser risk of turning. The charterers alleged negligence by the master, alleging the fouling of the anchor cables was the result of his negligence.  They asserted he failed to implement appropriate measures and delayed remedial action until berthing instructions. 

The owners, invoking the Clause Paramount and Hague-Visby Rules, argued against responsibility for losses arising from the master’s acts or neglect. They also referred to Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7 and Clearlake Shipping Pte Ltd v Privocean Shipping Ltd (The Privocean) [2018] 2 Lloyd’s Rep 551.

Experts disagreed on the master’s actions, with the charterers’ expert criticizing the lack of risk assessment, while the owners’ expert considered the 360-degree swing unavoidable. The tribunal found the evidence inconclusive. The charterers contended that the vessel, rendered unseaworthy due to fouled anchor chains, was effectively incapacitated from September 12 to 22, compromising emergency movement capabilities.

The master knowingly risked a 360-degree swing without assessing potential risks or taking preventive measures. The master’s failure to address the fouled anchor chains promptly, lasting over a week, was deemed a serious and negligent omission. 

However, the available evidence did not provide enough support to conclude that the fouling of the anchor cables would not have happened if the master had properly evaluated the risks and taken necessary corrective measures.  Thus, the charterers were held liable for the costs of engaging tugs on September 22, amounting to US$12,320, as the second anchorage was deemed unsafe. 

The tribunal, guided by the principle (described by Rix J in Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at page 151) that a ship is not off-hire in circumstances in which the loss of time is caused by events for which the charterer is responsible, further ruled that the vessel remained on hire during the disentanglement period, and the charterers were not entitled to place it off hire. The additional costs were attributed to the master’s negligent actions in untangling the fouled anchor chains rather than not complying with charterers’ orders.  Thus,  the implied indemnity did not apply. 

Regarding clause 2, the incurred costs were not within the scope of “Port Charges, customary, IMO recommended Pilotages, and all other usual expenses,” and therefore, the provisions of the clause did not apply. Even if the master was causally at fault, the incorporation of the Clause Paramount absolved the owners from responsibility for loss or damage resulting from his negligence. The master’s conduct aligned with Article IV, rule 2(a), and the owners were not liable for the additional expenses, leading to the success of their claim for wrongly deducted hire.

Underwater hull cleaning

Clause 100 of the charterparty provided:

“Where the vessel remains at anchorage, in port or idle for a period exceeding 25 consecutive days (whether in tropical waters or not) in compliance with Charterers’ orders/instructions, and this causes fouling of the hull or underwater parts, Owners shall not be responsible for such fouling or any vessel underperformance caused by such fouling. Charterers to arrange, before redelivery, the vessel’s underwater hull area to be inspected and cleaned, if necessary. The cost of cleaning the hull or underwater parts, and the time spent doing so, shall be for Charterers’ account.

In case underwater cleaning is needed and should the vessel is [sic] redelivered at an area where an underwater cleaning cannot take place, then Owners to notify Charterers about vessel’s schedule and Charterers to arrange cleaning at first available port/place and all costs to be for Charterers’ account and time to be invoices [sic] at hire rate or in Owners’ option this to be mutually settled against payment of lumpsum amount to Owners.”

The vessel waited at Alliance Anchorage for 34 days, and the charterers refused underwater inspection. Following an inspection in Singapore, the owners claimed breach of clause 100, holding charterers liable for inspection and cleaning costs. Charterers argued clause 100 applied only to prolonged stays in salt water, not freshwater like the Mississippi. They presented expert evidence suggesting fouling predated the freshwater stay. Owners, without expert evidence, submitted a news article indicating saltwater intrusion due to drought conditions in the Mississippi. Despite objections, the tribunal admitted the article, noting its relevance to the anchorage’s location and the saltwater wedge creeping upstream.

The news article was given little weight for several reasons. Ambiguity surrounded the term “nearly 64 miles,” and the mention of the “mouth of the Mississippi” raised doubts about the saltwater’s proximity to Alliance Anchorage. The article lacked specificity regarding the applicable year or month, and for August and September 2021, no evidence supported factors influencing saltwater movement, except for Hurricane Ida in late August 2021. Additionally, there was no evidence indicating the necessary salinity to support alleged marine organism development. Consequently, the new evidence supporting the owners’ claims of brackish water at Alliance Anchorage was weak, and insufficient for a positive finding, and the charterers’ expert evidence was favored, resulting in the owners’ claim for inspection and cleaning costs in Singapore failing.

Award

The owners’ successful claims included US$17,165.40 for tug expenses and US$145,039.58 for expenses and off-hire due to anchor chain fouling, totaling US$162,204.98. However, their claim under clause 100 for US$32,414.82 was dismissed. The owners were granted compound interest at 6% per annum from January 1, 2022, and awarded costs of the reference to be assessed if not agreed upon. The charterers were responsible for bearing and paying the costs of the award.