Poor infrastructure , lack of support are reasons for the frequent cargo shortage claims
The Japan P&I Club has issued circular to illustrate the situation of Cai Lan Port, Vietnam, where they frequently observe alleged cargo shortage claims.
The Club often faces alleged shortage claims in Cai Lan port because of four main causes:
1. Cai Lan is normally the last destination port before general cargo ships leave Vietnam
Normally when a ship call to the 1st port of Vietnam, local cargo underwriters will inform others if any alleged shortage/damage is found but will not try to arrest at the 1st port because it may affect the discharging schedule and some insureds (cargo owners) in the next port will not be happy if the ship is arrested in the 1st port of calling.
It depends on the materials but it is quite often for foreign ships to unload yellow corn, soya bean meal and other general cargoes in the last port in Cai Lan water. That is the 1st reason why the local cargo interests have tried to arrest the ships in Cai Lan Port.
2. Poor infrastructure of Cai Lan Port
Vietnam has a long coastal line and we set up three groups of major seaports, (i) in the South, i.e. Sai Gon, Cai Mep Thi Vai and Dong Nai, (ii) in the Middle, i.e. Quy Nhon and Da Nang and (iii) in the North, i.e. Hai Phong and Quang Ninh wherein Cai Lan Port is located.
Quang Ninh is a province of Vietnam 180km far from Hanoi with a well-known UNESCO heritage site of Ha Long Bay and the Government decides to develop it to become a tourist city. They have a total of 10 berths for receiving the call-in ships of which three are designed for loading coal only. There remain seven berths for receiving general cargo ships, tankers and container vessels.
The poor infrastructure has caused many troubles to all involved parties and some local cargo owners have even refused to receive the cargo for alleged damage claim but the port operators have no warehouse for temporarily storing cargo for survey and negotiation. In some many circumstances, the cargo interests were awaiting for a week and then arrest the ship in order to make pressure onto the shipowner. If the cargo is discharged in another port, i.e. Hai Phong in the North or any other port in the South of Vietnam, the port operator shall provide the shipowner and cargo interests with a warehouse or some areas for unloading all cargo before parties can find a solution for the case. But in Cai Lan port, many of Club’s clients were in trouble and even decided to unloading cargo to a barge in order to release their ship.
In some special cases, Club’s clients ships were detained in the Cai Lan port for more than a month and when we were instructed, we had to take more than 3 days to make pressure on thecargo interests, obtain agreements with local cargo underwriters, submit a challenge against the arrest order and provide 3 local claimants with LOUs to release Club’s clients ships.
3. Lack of support from local parties
With 7 berths and some transshipment areas, there are a few shipping agents or experience surveyors in Cai Lan port. In many circumstances, the experienced surveyors have to travel from Hai Phong to Cai Lan port (around 1.5 hours). Some surveyors are engaged by local cargo interests and are not professional people and will adjust their survey report subject to cargo interests; instructions.
Most local reputable correspondent companies are located in Ho Chi Minh City and may take around 6 hours to travel to the site (2 hours by air plane, 3.5 hours by car and 0.5 hour for waiting at the airport at least).
4. The judges of Quang Ninh court has an open view on the arrest issue
The last but most important reason for the ship to be arrested in Quang Ninh for shortage claim is the very open view of the judge on the issue.
Club has seen a gradual increase in number of arrest applications under in rem action and many judges in those courts are now aware that they have the power to arrest a ship irrespective of the applicable jurisdiction clause in the relevant contracts/agreements.
Among those, the Court of Quang Ninh Province which have jurisdiction over Can Lan port, are now very flexible for arresting a seagoing vessels as further analysed below.
- Flexible formal requirement on the arrest application and supporting documents: The Court of Quang Ninh Province is very flexible about formality requirements on supporting documents for ship arrest. Similar to international standard, they are now inclining to accept scan copies of supporting documents and not always insisting on original documents, i.e. original bills of lading which has been endorsed like many other local courts.
- Form of security: Unlike other local courts who insists on frozen account and/or bank guarantees as counter security before any arrest order is issued, the Court of Quang Ninh Province has accepted many other forms of counter security, i.e. real estate ownership certificate provided by the arresting party during the weekend when all the banks are closed LOUs issued by local reputable insurers and the court’s account and so on.
|The Club advises operators to appoint a shipping lawyer at the soonest and update the lawyers on any risk.There is no way to exclude 100% risks that the cargo surveyors may manipulate their books/figure and inflate their number and bring a case to the court to get a home advantage.f the cargo interests obtain an arrest order, under the laws of Vietnam, the owner and captain are allowed to submit an appeal to challenge the arrest order within 48 hours as from the time it is served to the Captain.|
Please click below to read Japan P&I Club’s bulletin regarding Cargo Shortage at Cai Lan Port, Vietnam.