Hello all, I have received below question from a reader relating to a bulk wheat shipment.. I would like your opinion on the same..
WHEAT TRADER shipped 60,000 tonnes of Canadian wheat grain aboard LIVERPOOL BULK’S vessel the “Liverpool Lady” from Thunder Bay, Canada, on the 1st August 2017.
LIVERPOOL BULK issued WHEAT TRADER with a number of bills of lading.
The Bill of Lading stated, amongst other things: “Shipped aboard the “Liverpool Lady” in Thunder Bay on the 1 st August 2017 in apparent good order and condition 60,000 tonnes of wheat grain. To be delivered to WHEAT TRADER or their order in Nantes, France.”
The bill of lading is subject to English law and jurisdiction.
On the 5th August 2017 WHEAT TRADER sold “60,000 tonnes of Canadian wheat grain; price US$200/METRIC TONNE; c.i.f. Nantes; shipment period August 2017″ to MONSIEUR TRADER tendering to MONSIEUR TRADER the bill of lading, an insurance policy and an invoice.
When the “Liverpool Lady” arrives in Nantes on the 14th August it is discovered that the wheat is contaminated by chemicals that had been used by LIVERPOOL BULK to clean out the ship’s holds before loading the wheat.
The wheat is now valueless. do monsieur have a claim, whom should MONSIEUR TRADER claim against, what laws apply to the claim and any defences that the defendant may rely on to defeat or limit any claim?
I think both, “LIVERPOOL BULK” and “WHEAT TRADER” are responsible for the damaged goods.
1. The company who sold the wheat should use some sort of packaging that can protect the goods from harmful chemicals that the shipment can be exposed during transportation.
2. The Shipping Company is also responsible for the damaged goods that where handed to them in good condition for delivery.
Shipment term is CIF , consignee should claim the insurance.
IT WAS THE SELLER FORT, HE SHOULD BE HELD RELIABLE FOR THE CHEMICAL SPOILING THE WHEAT. AS PER THE INCOTERM THE BUYER THIS NOT RECEIVE THE GOODS BEFORE SPOILING SO THE SELLER SHOULD BE LIABLE FOR THE DAMAGING OF THE WHEAT
According to me as per incoterm, it is sellers mistake. He is responsible for the goods till it is handed over to buyer.
i think acurate trace must be made in accordance with all necessary documentation from one stage to the other. But this to be done by responsible authorities such as P&I. In other words the shipper must make an insurance claim. failure to produce proper documentation in terms of inspection both of the cargo holds and of wheat itself on arrival to the first port before shipment will state who’s liable for such devastation
It is the normal and correct procedure. Attach pictures will be a great supprt to the claim inbehalf of the owners.
In these cases or load of commodities as a Master should instruct the C/officer to have cargo samples taken every watch on each of the loading cargo holds in barley bags, close and store in a dry room marked from wich hold, date and time. Also, the mate must observe the samples and report to the C/mate and to the vessel captain if it is observed any anomalie of the cargo quality. Then, if so Master should inform the owners and to appoint a P&I local surveyor. Suspend the loading inmidiately until the surveyors from both sides the owner and the shippers appears in the scene. Photos are very useful as evidence. But the duty deck officer on watch must to inspect the cargo being loaded frecuently. Shippers can load 1000 tons an hours therefore OOW must be very malicious, secialy when the loading facilities looks aged and suspucious of roof rain water leakage and or a lot of birds on the roof. Its is means that there are ceiling openings were the feeders sneak in for vitualing. Also, it is good that the captain walk around taken a glance of the area or silos.
It is to do with the Incoterms, however the ship owners are fully liable for this issue too unless stated otherwise in their terms and condition, which I doubt…
MONSIEUR TRADER claim may be against Insurance Company which may reduce claim payment by Carrier Liability.
Adding this comment: When loading grain and because the nature of the cargo and the purpose for human consumption the holds should have been and pass the clean inspection from a certify and named company. If the captain use plastic rolls the cargo ill be spoiled because the humility from the ships hull lower iron plates and also the stowage brown paper I will not to use because can be suctioned by the discharge air means.
As my understanding and experience the shippers will not commence the loading operation until the captain do not produce a Ships Cargo holds Clean and suitable to load certify issue from a named and registered chemical and Inspection Company the claims should be addressed to the P&I and the lawyers from both sides: the Vessel Owners, Shippers, Cargo Insurers get together. Sorry for the vessel captain resting time.
Kind any comment to my statement please…
First: The vessel owner knows about the wheat conditions since the captain “makes dirty the B/L when he add the note ” in apparent order and condition” instead of state that note on the Mate receipt. The Captain should clean the holds only with clean Water.
Since the agriculture department on the receiving port facility declares the cargo “no good for human consumption” then that cargo of wheat should be buried or disposed. even do, cattle or animals can not be feed with that wheat.
Same experience happen to me while on board.
All parties must meet their obligations, its quiet natural that the following facts emerge :
1.Liverpool Bulk loaded cargo in sound condition. Due dilligence must prevail which limited to the standard practice. This includes empty cargo holds inspection before loading is commissioned inorder to declare vessel as cargo worthy apart from being seaworthy. During loading so many unforeseen things may happen which beyond the knowledge of third party engagement whereby cargo under loading may be contaminated, damaged or lost. The causes are many and would range from faulty ship plumbery systems, defective ballast systems, open bilges on the tanktops of the holds etc and this shall be considered as direct vessel responsibility ones proven by P&I during joint survey with other independent inspection and vessel survey units.
2. Vessel accepted cargo as “clean-shipped-onboard” or “loaded in apparent good condition” which ABSOLVES Liverpool Bulk from any claims. However the loading terminal must provide all necessary paperworks as a proof of cargo condition before and while loading eg Cargo Mositure content analysis, cargo phytosanitary certifications, composite sampling records during loading and complete SOF to ascertain weather patterns during loading process.
3. This being a CIF based purchase, M/s.Monsieur is responsible for receiving her goods but in apparent good condition. Monsieur has a right to stop receiving the goods if not meeting conditions stated in the Bills of Lading as “shipped clean onboard”! By raising the alert, ship owner would step in with his P&I Club membership representative definately to investigate the claim, however Monsieur must equally instruct his independent surveyor to participate jointly in this exercise and eventually share the findings with his Insurers for proper guidance whilst taking action to place both the vessel and sellers on notice. This includes but not limited to arresting the vessel whilst with cargo or even if discharge was complete but better stop discharge until matter resolved. It may require a LOG or LOI issued by the underwriters for vessel owners who takes the biggest blame, similarly owners correspondent agents on the ground would place such guarantees.
4.It takes time to carry out all requisite tests for fresh water damages, moisture content, oil stain damages etc which would be required to determine the actual damages and the extent of the same. This will be part of the investigative reports to be raised by the Monsieur Insurance party. Alot of more procedures would unfold including owners decision to leave such damaged cargo onboard or find ways for destruction as vessel remains under arrest until matter resolved……….on and on and on….
Thanks for the detailed explanation.
What was the terms and conditions of this trade?
Was it done on shipped weight and shipped quality or landed weight and landed quality basis?
If it is on shipped weight & quality, shipper/seller is safe but if it is on landed weight/quality, then shipper is in trouble. If this is the case put a notice to ship’s owner for all responsibilities and costs. Has the representative/surveyor on behalf of shipper inspected and certify the all compartments are cleaned and dry and free from other contaminant that could contaminate the cargo. Is this being exercised?
Please lodge insurance claim…
Besides the vessel having to meet the requirements, were there not also certificates present from Agriculture (phytosanitary) to justify the condition of the wheat on departure from the first port to substantiate the claim.
in this case the liverpool bulk is cleaned out the ship before loading.the contaminated material on wheat ie chemical is due to carelessness ofliverpool bulk and they have to give compansetion.
It is not the duty of the exporter to check the inside of the vessel.
Ship agent must be aware of the products being loaded on board and therefore, it is in the liability of the carrier to compensate the consignee.
In as long as the bill of lading reads ” Loaded in apparent good order and condition” means this is a clean bill of lading.
The ship was seaworthy but not cargo worthy, which is the responsibility of the ship owner or his agent and therefore the claim lies on him.
The ship could also have been chartered, the charterer becomes liable in this case.
Once the claim has been laid on the ship owner, they are members of P&I clubs that protect them from third party claims, which will reimburse him.
The exporter must ensure about the cleaning of the vessel for the safety of the Exporter must have checklist completely filled about the sound condition of the vessel,
Secondly a thick polythene must be there at the bottom ,sides and above to keep it isolated from the floor and sides from where there could be any trouble ,
In this case the owner of the vessel are also responsible for this loss,have they issued the information about the” fit for wheat stuffing” it must be checked,
whether it was fit for wheat stuffing,
As per Hague Visby Rule it is duty of shipowner to provide vessel seaworthy and also responsible to load, keep, care till cargo discharged. Master issued wheat loaded in apparent good order. Present consignee should put seller/ ship owner on notice and prefer claim against Cargo underwriter
Hague Visby rules would apply to this case. Here is the article on Hague Visby rules that has similar cases as example and gives the rights and defended of claimant as well as defendant.
Was a hold fitness n cleanliness ready inspection n survey done. This is standard procedure. Next Hold cleaning does not normally need chemical cleaning. These 2 point’s to clarify.
The Shipper also has a role rgdsn responsibility with Carrier in providing a clean fit hold or Reject if unfit or odour or residues or infestation.
This is standard SOP matter needs more details
As it’s a cif purchase,Monsieur would need to inform the insurance of the situation as well as place the vessel and sellers on notice. Wheat traders will then need to place Liverpool Bulk on notice.
The Insurance will then guide Monsieur on how to proceed which will probably be by appointing surveyors at discharge port and try to salvage the cargo or arrange for it to be dumped.
Insurers will then pursue a claim against all parties involved chain as there’s multiple levels of responsibility and probably end up paying Monsieur out but it’s a much more lengthy process and not as simple as it sounds .
It also comes down to the load port surveyors, was any appointed and did they pass the holds before loading, why didn’t the crew also check that the holds where suitable? The vessel and load port surveyors are very much responsible for the contamination occurring due to incompetency in performing their job.
Liverpool Lady owners are liable as they did not provide a clean bulk carrier which is part of any contract. I would sue all parties involved and the insurance company if they do not pay the claim.
From my view LiverPool shipping company is to liable for this damages
Monsieur trader have commercial contract with wheat trader and claim have to be addressed at first place to wheat trader. This contract should state the law, conflicts have to apply .
Bl is also another toll giving right to make claim , however monsier trader have to place on it as consignee and bs/l front page is a frame of terms and conditions of claim.
Hello the terms of payment is silent. It does not reveal if the buyer Monsier Trader has already paid for the wheat in advance. Also the buyer and seller should have informed in advance to the vessel owners Liverpool Bulk on conditions how the holds must be cleaned and duly inspected by a competent authority by issuing a Hold or Hatch Cleanliness Certificate before loading of the vessel in the first place. In absence of these, both the buyer and seller should be blamed. Further more, buyer should have taken separate insurance cover to protect his goods from damage, theft etc. Such huge trade transactions better be done via Letter of Credit with various conditions stipulated. Lastly assuming the buyer already paid in advance and taken adequate insurance cover and on the basis of the same apply for claim from the insurance company who in turn lodge legal action of the vessel owners or agents at Nantes, France arrested vessel by the port authorities to ensure claims are paid in full before allowing vessel to sail or reach a out of court settlement.
The French Consignee has purchased the wheat on CIF INCOTERMS which implies the shipment is insured from place of shipment to its final place of receipt in France – note marine transit insurance does not cease at the POD Nantes. Clearly the Consignee should immediately notify the Insurer and appoint a surveyor to substantiate his claim. The underwriters should settle the claim and institute an investigation to ascertain the liable party – perhaps the ship owner who seemed to have not tendered a ship’s holds in an acceptable condition for the carriage of wheat in bulk. Also note the underwriter will require the Consignee to protect and limit the liability of the insured and should act accordingly – this will include taking instructions from the underwriter to minimise further costs associated with the discharge or return of the shipment as instructed by the underwriter.
FIRST OF ALL THE BUYER AND THE SELLER OF GOODS SHOULD REQUIRE A CERTIFICATE OF CLEANLINESS OF VESSEL HOLDS ISSUED BY A WELL KNOWN INTERNATIONAL SURVEY COMPANY WHICH COST FOR SUVERY CAN BE PAID BY BUYER AND EXPORTER.
THE SHIPOWNERS ARE OBLIGED TO PRESENT A CERTIFICATE ON CLEAN HOLDS TOGETHER WITH A REPORT OF HOW WERE THE CLEANING PROCEDURES ALSO ISSUED BY AN INTERNATIONAL SURVEY COMPANY.
I BELIEVE THAT BUYER HAS A CASE TO CLAIM AND RIGHT IF HE CAN SHOW THAT THE CONTAMINATION TOOK PLACE PREVIOUS TO LOADING THE GOODS.
IF CERTS OF CLEANLINESS SHOW THAT HOLDS WERE CLEAN AND THERE WAS NO CLAIM BY BUYERS BEFORE LOADING GOODS ONCE HOLDS CLEAN THEN BUYER CAN’T CLAIM