Partners: Anthony Brown, Joe Mays, David Wartski, Stephen Grainger

This firm is regulated by the Solicitors Regulation Authority with number 00386858
ANTHONY BROWN
66 Royal Mint Street, London, E1 8LG
Tel : +44 (0) 20 7264 0600
Fax : +44 (0) 20 7264 0601
eMail : dmw@maysbrown.com
THE BUNGA SAGA LIMA
FITNESS OF HOLDS TO RECEIVE CARGO

THE PROBLEM
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The Bunga Saga Lima case in 2005 served to remind everyone of the difficulties that
Charterers face when trying to claim for damages where a vessels cargo hold has been
found unfit for loading and delays have been incurred as a result.
Particular problem:
Not necessarily the first / delivery voyage under the c/p but the subsequent
loading operations.
Aim:
Highlight legal position with reference to recent decisions.
Identify potential areas where Charterers position could be strengthened.


THE BUNGA SAGA LIMA [2005]
EWHC 244 (Comm)
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Time charter required vessel to be grain clean on delivery.

Vessel known by charterers not to be grain clean on delivery but charterers nevertheless
loaded iron ore cargo at first loadport without objection.

Delays at second loadport caused by the vessels failure to pass a tank inspection in
anticipation of loading a grain cargo.

Who was liable for the delays at the second load port?

Owners or Charterers?




THE BUNGA SAGA LIMA [2005] EWHC 244
(Comm)
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Charterparty Clauses:

Line 21:
vessel on her delivery to be ready to receive cargo with clean swept holds and tight, staunch
and in every way fitted for the cargo as per clause 29 having water ballast . . .


Clause 46 - Cleaning clause:

On arrival at the first loadport vessels holds to be clean and suitable to load charterers
intended cargo to Shippers surveyors satisfaction.






Charterparty Clauses (cont):

Amendment 5: Clause 46:

Cleaning clause, add at end: it is understood that on delivery or upon arrival 1st loading port, vessel to be
clean per grain standard up to independent surveyors satisfaction.


Clause 13 - Fixture Note:

owners warrant that vsls holds on delivery or arrival first load port to be cleaned, swept washed down with
freshwater, dried up free from rust leaks, scale, free from salt and free from residue of previous




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THE BUNGA SAGA LIMA [2005] EWHC 244
(Comm)
Held:

Since the charterers had not insisted on cleaning being done at the first loadport, even
though the iron ore could be loaded without it, the charterers had lost (waived) the right to
claim for the loss of time and expense at the second loadport.

Clause 13 of the fixture note made it clear that the warranty was only that the vessel
would have clean holds upon delivery or arrival at first loadport.

Likewise, amendment 5 to clause 46 imposed the obligation to be clean as per grain
standard only on delivery or upon arrival at the first loadport.

Thus, at any subsequent port after the first loadport there was no guarantee of clean
holds.

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THE BUNGA SAGA LIMA [2005] EWHC
244 (Comm)
London Arbitration 11/05 (2005) 665 LMLN 3

Facts:

Charterers ordered vessel to clean tanks to grain standard at Dunkirk (Vessel had just discharged a cargo of
copper cathodes at Dunkirk).

The sequence of events at Dunkirk was:

Vessel arrived: 0400 on 2 May
Completed discharge: 0330 on 5 May
Shifted to anchorage: 0900 on 5 May
Arrived Outer Anchorage: 1235 on 5 May
Failed first hold inspection: 1315 on 6 May
Tendered NOR: 1130 on 8 May
Passed second hold inspection: 1900 on 9 May



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FURTHER CASE EXAMPLES
Charterparty Clauses:

Rider clause 50 provided inter alia:

.The crew shall endeavour to clean the holds to the best of their capabilities but the Owners
and/or crew not to be held responsible for any/all consequences, damages, costs or liabilities
arising from such hold cleaning by the crew including but not limited to failure of hold
cleanliness test and/or failure to conform to shipper's cargo surveyor's standards, etc.,
whatsoever

Charterers claimed:

1.Breach of maintenance warranty due to failure to remove paint and rust. Alleged failure went
beyond normal washing / cleaning;
2.Breach of Rider Cls. 50, thus damages payable covering loss of time.


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FURTHER CASE EXAMPLES
Held:

1. There was no evidence that the owners failed to maintain their vessel or that the
hold cleaning operation was poorly conducted by the master and his crew. The
delay at Dunkirk in making the ship suitable to load wheat in bulk was a routine
operational delay which one might anticipate when putting forward an elderly
tween-deck vessel to load a bulk cargo demanding grain-clean holds.

2. In order for Charterers claim under Cls. 50 to succeed, the charterers were
obliged to show that the crew had not cleaned the cargo compartments to the
best of their capabilities. On the evidence, they could not do that.


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FURTHER CASE EXAMPLES
FURTHER CASE EXAMPLES
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London Arbitration 7/10 (2010) 796 LMLN 3

Facts:

Vessel loaded a cargo of steel coils on her delivery voyage without problem however when she came to load
grain at her second loadport the tanks were failed and delays were incurred.

The reason that the tanks were failed was due to the presence of a coal stain in the tank which, upon
investigation, was also present at the first loadport (vessel carried a cargo of coal on the voyage before
delivery).


Charterparty Clauses:

Lines 17-22:
Acceptance of delivery by Charterers shall not constitute any waiver of Owners obligations
hereunder.
Vessel on her delivery to be ready to receive cargo with clean-swept holds and tight,
staunch, strong and in every way fitted for the service

Clause 54: Hold Condition on Delivery/Redelivery
Vessels holds condition on arrival at first loading port to be fresh water washed down, clean
dry, free from loose rust flakes/scales and residues of previous cargo and in every way ready
and suitable to load Charterers intended cargo to the satisfaction of the independent
surveyor. If vessel is rejected by the independent surveyor at load port, vessel to be off-hire
until ready to pass inspection.

Clause 124: Hold Cleaning Intermediate
All intermediate hold cleaning to be in Charterers time, risk and expense, and vessel to
remain always on hire, however crew to perform such cleaning with the same care as if they
were acting on behalf of the Owners
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FURTHER CASE EXAMPLES
Charterers claimed:

Owners were in breach of lines 21-22 of the charter in that the vessels holds
were not, on delivery, in a fit state to receive grain cargo because of the presence
of coal residues.

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FURTHER CASE EXAMPLES
Held:

The first question was why the vessel was rejected. The cause was coal stains and not coal
residue.

Lines 21/22 only required Owners to present the vessel with clean swept holds thus
Owners were not in breach because this did not encompass stains.

The charterers had been correct to point out that line 17 of the present charter negated any
waiver argument, but the owners did not need to rely on that argument because, by
complying with the requirements of clause 54, they avoided committing any breach of the
charter.


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FURTHER CASE EXAMPLES
Arbitration Awards:

London Arbitration 6/07 (2007) 716 LMLN 1

London Arbitration 9/10 (2010) 798 LMN 3

London Arbitration 15/10 (2010) 804 LMN 2


Textbooks:

Time Charters Text Book (Sixth Edition)

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FURTHER READING
Vessels age.

Configuration of the vessels holds (height and accessibility).

How much time was provided to the vessel to clean the tanks (contrast against the
amount of time that would be considered as an accepted standard).

Weather and sea conditions.

Standard of cleaning required in c/p (e.g. grain).

Reason(s) the hold(s) failed the inspection.

The Bela Krajina [1975] 1 Lloyds Rep. 139

removal of soft non-adhering rust is the duty of the crew
removal of hard adhering rustcannot be done by the crew


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FACTORS TO CONSIDER - FACTS
Extend Owners hold cleaning warranty beyond the first / delivery loadport.

E.g. on arrival at the first [and subsequent] loadports

Clearly identify the standard of cleaning (the higher the standard the better).

E.g. grain clean encompass cargo stains as well as residues.

Guard against waiving rights under the warranty.

E.g. Acceptance of delivery by Charterers shall not constitute any waiver of
Owners obligations hereunder.

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FACTORS TO CONSIDER C/P
THANK YOU - ANY QUESTIONS