Cargo damage – interpretation of NYPE ICA
Agile Holdings Corporation let the vessel to Essar Shipping Ltd on a time charter for a single trip from Tunisia to India via Trinidad.
The cargo was a consignment of direct reduced iron and the charter was on the NYPE 46 form.
DRI is highly reactive and combustible in the presence of heat or water.
In the course of loading the cargo onto the vessel by means of a conveyor belt at Port Lisas, Trinidad, the belt was seen to have caught fire.
Supercargo inspected the holds and advised that loading could continue.
The DRI was still on fire through the voyage and upon discharge, the cargo interests, Essar Steel Limited – an associated company of Essar brought a claim against Agile.
Agile commenced an arbitration seeking from Essar a declaration that it was obliged as charterer to indemnify it against any liability it might be found to have to the cargo interests.
By clause 8 of the charter party:
“… Charterers are to load, stow, and trim, tally and discharge the cargo at their expense under the supervision of the Captain…”
By clause 89 of the charter party:
“Cargo claims as between the Owners and Charterers shall be settled in accordance with the Inter- Club New York Produce Exchange Agreement of February 1970 as amended September 1996 as attached, or any subsequent amendments.”
Clause (8) of the ICA provided as follows:
“Cargo claims shall be apportioned as follows:…(a) Claims in fact arising out of unseaworthiness and/or error or fault in navigation or management of the vessel: 100% Owners…
(b) Claims in fact arising out of the loading, stowage, lashing, discharge, storage or other handling of cargo: 100% Charterers unless  the words “and responsibility” are added in clause 8 [of the NYPE form] or there is a similar amendment making the Master responsible for cargo handling in which case: 50% Charterers 50% Owners save  where the Charterer proves that the failure properly to load, stow, lash, discharge or handle the cargo was caused by the unseaworthiness of the vessel in which case: 100% Owners
(c) Subject to (a) and (b) above, claims for shortage or overcarriage: 50% Charterers 50% Owners…
(d) All of the cargo claims whatsoever (including claims for delay to cargo): 50% Charterers/50% Owners…”
Finally, by Clause 49 of the charter party (“Clause 49”),
The Stevedores although appointed and paid by Charterers/Shippers/Receivers and or their Agents, to remain under the direction of the Master who will be responsible for proper stowage and seaworthiness and safety of the vessel…”
Agile’s case was that Clause (8) (b) applied without qualification so that Essar was 100% liable.
In the alternative it contended that Clause (8) (b) applied but in circumstances where there was clear and irrefutable evidence that the claim arose out of the act or neglect of Essar so that again, Essar was 100% liable.
Essar’s case was that Clause (8) (a) applied without qualification so that Agile was 100% liable.
In the alternative it relied upon Clause (8) (b) contending that Clause 49 was a “similar amendment making the Master responsible for cargo handling” in which case liability was 50/50.
This content is restricted to site members. If you are an existing user, please login. New users may register below.