UK P&I Club advises to beware of LOIs and RETLA causes
The UK P&I Club has published an article regarding steel cargoes in the September 2014 edition ofHellas Highlights, theperiodical newsletter from the Thomas Miller Hellas team.
The most common problem with steel cargoes is rust. The steel may have “streak” marks which indicate that water has run across the surface, “spots” localised slight penetrations of the mill scale, “stains”: a tan-coloured and fine dust-like coating, “scale”, a thick flaking rust, or might be “rusty”: a thick coating of brown scale, which when removed leaves the remaining surface uneven or “pitted”: penetrtions of the surface with minor indentations which wire brushing cannot remove.
Pre-shipment Surveys and Clausing Bills of Lading
One of the ship’s first important shields against a claim is that the damage to the cargo is often caused before shipment.
Steel cargoes will invariably display some mechanical damage, such as edge denting due to handling and some surface rust, making it difficult, if not impossible, to reject all cargo which presents defects. The Club will appoint a qualified surveyor to inspect the cargo and provide an expert report on the state of the steel products before shipment. This will often include details on the extent of rust and photographs. Mate’s receipts and subsequently bills of lading must be claused with the surveyors’ remarks on the cargo’s condition.
It is usually the case that shippers can not accept a claused bill of lading, because this would breach the terms of the letter of credit provided by the banks to finance the purchase of the steel. In these circumstances, the shippers may demand that the bills of lading be marked clean and they may offer that the Owner accept an LOI to issue clean bills.
Marking a bill of lading clean when, in fact, it is not may prejudice club cover as the bill will not contain a true and accurate reflection of the cargo. In addition, an LOI may not be legally enforceable and is also only as good as the provider supplying it. Extreme caution must be exercised when contemplating whether to accept such a request.
| Given the value of steel cargoes it is imperative that care is taken in monitoring and recording any issues during loading. It is important that bills of lading record the condition of the cargo and although pressure to issue clean bills may occur this should be resisted on the basis that the receiver is the party that will be the aggrieved party if the cargo is found to be damaged on discharge. In these circumstances what occurred at the load port will be irrelevant in the eyes of the receiver who will want to secure compensation for any damage that may have occurred. The all-encompassing advice for steel is: ascertain the exact quality of the cargo before loading and clause the bills accordingly, stow and secure in accordance with the type of ship and cargo and beware of LOIs and RETLA causes. |
Read further details at UK P&I Club’s webiste
