In Circular 23/14 of August 11, 2014 entitled Steel Cargo Pre-Load Surveys: An Update, the American Club
revised its extensive recommendations in regard to the conduct of precautionary surveys of certain
steel cargoes to minimize the prospect of spurious steel cargo claims.
As explained, over the period since the first Circular, Members have followed the recommendations it contained and made progress in minimizing and averting the risks, and consequent liabilities, associated with such cargoes. To further clarify what is required of Members regarding the handling of steel cargoes, it has been thought appropriate to revisit and update the Club advice to reaffirm best practice going forward.
General considerations
To minimize the risk of exposure to such claims, the Club requires that Members appoint an experienced surveyor at the port(s) of loading steel cargoes to conduct a precautionary pre-load survey to:
- assist the Master in recording the apparent condition of the cargo prior to loading so that, where appropriate, mate’s receipts and bills of lading can be claused correctly as necessary; and
- verify that the vessel’s cargo hatch covers and other openings in way of the hold spaces are in sound condition.
The Club would like to reemphasize that any failure to complete such a steel pre-load survey will prejudice the Member’s coverage for any cargo claims that are asserted against it and its vessel in connection with the subject shipment(s).
If a Member fails to comply with this required practice and a claim in respect of cargo is subsequently asserted where the condition, nature or quantity of cargo would have been discovered during a precautionary steel pre-load survey, the Managers, in their absolute discretion, are authorized and entitled to (1) apply a double deductible for any cargo or other claim arising in connection with the shipment in question; and/or (2) to deny the coverage or reimbursement of any such claims, either in whole or in part. Furthermore, exclusions and/or limitations to coverage which have been imposed by reference to existing, outstanding deficiencies to hatch covers or any watertight boundaries to cargo holds will not be removed by a pre-load survey of cargo. Members are urged to ensure that they fully comply with this steel pre-load survey requirement and all other related conditions as may apply to an individual vessel’s terms of entry.
Furthermore, your Managers often receive enquiries from Members as to the possibility of undertaking joint surveys with their charterers and/or sub-charterers. While the Club appreciates that such surveys may result in cost savings, Members must not agree to joint surveys when it comes to steel pre-load surveys. The generally high values of steel cargo claims, as well as the variety of causes which may lead to any alleged cargo damage, necessitate that Members retain all available defenses and rights or recourse against cargo, stevedore, charterer etc. interests. Joint surveys compromise Members and the Club’s ability to do so.
Prompt notification to the Managers
The Managers must be contacted in advance to assist in the preload survey arrangements and surveyors to be employed must be approved in advance by the Managers. Members should not go directly to surveyors or through the network of correspondents to select the surveyor for the steel pre-load surveys even in areas which are sufficiently covered by approved steel pre-load surveyors. Insureds should kindly note that correspondents are not necessarily approved surveyors for steel preload surveys.
To ensure that clear and concise instructions are given to surveyors appointed to assist the Master in clausing bills of lading, or to survey cargo upon discharge, timely requests for a surveyor’s attendance should be made directly to the Managers. This notification should include:
- the vessel’s estimated time of arrival at the loading port;
- the exact nature (types) and approximate quantity(ies) of steel cargo(es) to be loaded; and
- the name and contact details of the vessel’s local agents at the load port.
Where it is impractical to give such prior notice to the Club, Members should contact the Club’s local correspondent at the loading port to provide direct details as above and inform the Club as soon as possible thereafter.
