MUR Shipping BV v Cathagrow International Ltd. (The “African Jay”) – SMA No. 4371, 15 Jul 2019
BEIZAI 1991 – EQUIPMENT FAILURE – UNION SAFETY INSPECTION FAILURE – DEMURRAGE – DAMAGES
This dispute arose in accordance with a Contract of Affreightment (hereinafter referred to as”COA”) dated December 1, 2017 and fixed under BEIZAI 1991. The contract was between the time charter owner MUR Shipping BV (hereinafter referred to as the “Owner”) and Cathagrow International Limited (hereinafter referred to as ” Charterer”). It involved a single voyage of MN “African Jay” (“vessel”) and the interruption of log loading in Coos Bay, Oregon.
Relevant to this dispute are the following clauses:
39. The Owners warrant that the vessel’s crew shall always be employed under terms and conditions acceptable to the I.T.F. Any costs or loss of time due to the Owners’ failure to comply shall be for the owners’ account. Time lost by reason of any boycott or I.T.F. blacklisting shall not count as laytime or time on demurrage.
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47. The Notice of Readiness shall not be given before the vessel is in all respects ready to load and respectively discharge the cargo intended under this contract.If after berthing, the vessel is found deficient in its ability to commence loading or discharging, the total time of such inefficiency from the discovery thereof, shall not count as laytime. Further, Owner/Vessel shall be responsible for stevedore and other labor detention and/or dead time and/or standby charges if incurred as a result of vessel’s deficiency.
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49. Owners/Vessels shall be responsible for stevedore and other labor detention and/or dead time and/or standby charges resulting from vessel equipment failures, including loss of ships power, and the total time of such failure shall not count as laytime.
The vessel docked at Ocean Terminals in the port of Coos Bay to discharge under a prior C/P. It was at this time that the stevedores inspected the cranes and “all passed” (MCP8, MCexh3). During the second day of discharge the No. 1 crane safety cut-off tripped due to overloading of the grab bucket causing a 2+ hour delay in the discharge. Stevedores arranged a Union safety inspection to double check the cranes. Jones Stevedoring reported “All ships (4) cranes were deemed to have failed inspection by the ILWU crane operators,” citing PCMSC Rule -266, due to worn sheaves presenting an unsafe condition for crane utilization.” As a result, Jones Stevedoring Company stated that it had no choice but to place Owner on notice that loading operations were shut down and cannot commence until the cranes are repaired and have passed an inspection by an ILWU crane operator and ILWU safety committee.
The Owner argued that because the Charterer’s stevedores refused to load timely, Charterer breached the COA.
Thereafter, an ILWU Safety Committee representative met with surveyors Alexander Gow, Inc. hired by Owner, which inspected the sheaves finding that as alleged by the Longshore Safety Committee the sheave grooves for all sheaves were corrugated. The ‘Pacific Coast Marine Safety Code involves the following: Rule: 266 “Sheaves with deep grooving from wear or corrugated from line grooving shall be taken out of service.” The depth of the corrugation was not quantified in this code and has in the past been interpreted as any visible corrugations.
The Owner argued that because the Charterer’s stevedores refused to load timely, Charterer breached the COA which placed liability for loading cargo on the Charterer. However, to end the halt created by Charterer’s refusal to load the cargo and to mitigate any further damages, Owner arranged to fix the sheaves and because the resultant dockage, agency fees, surveyors’ fees, costs of machining the sheaves, standby costs, Port Captain charges, and bunker costs were reasonably within the contemplation of the parties at the time they entered the COA the Owner claimed for these costs as well as the demurrage. Owner further rejected Charterer’s claim that the Vessel was in breach of PCMSC Rule 266. Charterer in turn attempted to rely upon a clause in the COA to exempt itself from paying the expenses related to the sheave machining and from demurrage. Owner however countered that this position was misdirected because Clause 38 clearly addresses the Vessel’s cranes, is related to the circumstances surrounding the sheaves, states plainly the penalties for owners’ failure to conform with the requirements of the Clause and therefore ought to rule over the general wording of Charterer’s clause which is a General Exceptions clause and thus does not apply to the calculation of laytime and demurrage.
The Charterer contested the liability and counterclaimed from the Owner the cargo handling wait time and the delivery based on laytime taken while the sheaves work was interrupted. The Charterer demanded interest from the owner credited to the shipper, cost of the arbitration plus fees of the Arbitrator, and Attorneys’ fees.
The Sole Arbitrator ruled that the Charterer is accountable to the Owner for the claimed demurrage and that Charterer is not entitled to dispatch nor is Charterer entitled to the longshoremen standby time. Neither clause 38 nor Charterer’s referenced clause excuse the running of laytime during the longshoremen going on stand-by as a result of their deeming the sheaves, as per PCMSC Rule 266, to have to go out of service. However, the Owner’s claim for damages for the machining costs was also denied. Stevedore standby for frozen blocks and 25% Overtime for stevedore weekend labor were both credited to Charterer.
In the end, Charterer was directed to pay Owner $91,707.10 plus interest.
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