Reviewing a recent arbitration award and the general rules governing liability for various port charges etc.
Liability for pier dues, garbage and sludge removal dues etc.
Usually there is a fairly clear allocation of liability of what should be paid by owners and charterers, respectively, but a rider clause may inadvertently disturb what was otherwise clear from the outset. Recently, owners have also been alerted to the fact that in some cases local ways of invoicing e.g. agency fees may lead to an unexpected liability.
One example of the allocation of liabilities for taxes, dues etc. between owners and charterers is Clause 12 in the Asbatankvoy form. Charterers are to pay all taxes, dues etc. on the cargo and also pay all taxes on freight and hold the vessel free of any wharf, dock or mooring charges incurred for the purpose of loading or discharging cargo. The owners, on the other hand, are to be responsible for wharf, dock and mooring charges etc. if this is incurred solely for the vessel’s purposes (exemplified by mentioning awaiting owners’ orders, tank cleaning, repairs etc.).
In a recent London arbitration (London Arbitration 1/08) an additional rider clause had been incorporated into the C/P terms which were otherwise in the Asbatankvoy form. Under this clause, it was now agreed that “port charges, quay dues and similar dues on ship are for owners’ account, but all dues and duties on cargo shall be for charterers/shippers’ account.”
The charterers then arranged for the discharging berth and subsequently invoiced the owners for “pier dues”. The owners’ refusal to pay this invoice for pier dues resulted in arbitration.
The arbitrators held that the additional clause could not be satisfactorily reconciled with the standard, printed Clause 12. The term “pier dues” must be read as having the same meaning as “quay dues” and under the additional, typed clause 3 pier dues were therefore made an owners’ liability. At the same time, if clause 12 had been left unamended the same dues would equally clear have been for charterers’ account.
The arbitrators acknowledged that there was a clear conflict between the standard Clause 12 in the Asbatankvoy form and the additional rider clause. On their respective wordings, Clause 12 and the rider clause allocated pier/quay dues differently. In order to resolve the conflict, it was necessary (and this is a general rule of construction of contracts) to say that a specifically agreed clause takes precedence over a standard, printed clause. Another general rule of construction is that a provision which appears later in a contract (and in this case the rider clause did just that) the later clause takes precedence if it cannot be reconciled with an earlier clause.
Consequently, the additional, typed clause 3 was governing the allocation of liability for the pier dues which were made clearly an owners’ responsibility.
An allocation of liabilities for duties and charges etc. similar to the arrangement in the Asbatankvoy form has been made in the much used NYPE form. Under the NYPE form (Clause 2), items such as port charges and usual expenses shall be for charterers’ account.
There is in fact surprisingly little case law which could clarify in any detail what is considered to be in particular “port charges” but in a very old case (Newman & Dale from 1896) it was clearly stated that port charges include all charges which a vessel has to pay before it leaves port. This case is still referred to in various textbooks and is taken as general guidance on this point.
If vessels are therefore not allowed to leave port before a charge is paid, then this will be a port charge which is for charterers’ account. This means that charges for garbage and/or sludge disposal would be for charterers’ account. Under EU legislation, several EU ports have introduced fixed sludge and garbage fees which are payable regardless of whether a vessel discharges sludge/garbage or not. Some ports refund part of the fixed fee if the vessel in fact does discharge sludge or garbage and then charge the actual discharge/disposal according to a tariff. Regardless of whether such a charge is levied as a constant/fixed amount or according to actual discharge this is still a port charge payable by charterers.
There is even less guidance on what would constitute “usual expenses”. It is at least arguable that “usual expenses” refers to expenses which are normally paid by charterers in either a particular country or perhaps even in a particular port.
Another cost incurred in port will be the agency fee commission, and in October 2007 BIMCO published a notice to its members warning that in some countries (Libya, Myanmar, Syria and Turkey were named as examples) the agency fee for attending tramp vessels can be/is based on a commission of freight whereas in other countries the agency fee is based wholly or in part on the cargo handle. BIMCO warned that clauses such as “any dues, taxes, charges levied on freight or weight of the cargo to be for charterers’ account” may, after all, be found not to be effective in shifting the burden of agency commission related to freight or weight of cargo on to charterers and BIMCO therefore made the recommendation that owners would be well advised to investigate the agency structure in the relevant port at an earlier stage of chartering negotiations and consider this factor in the voyage calculation and to cover it clearly in C/Ps.
London Arbitration 1/08 (2008) 734 LMLN 2