TT Talk - Who pays for delays?
The shipping and maritime law community is beginning to pay more attention to an issue that arises from ISPS and the enforcement of other security legislation: who pays when a ship and its myriad cargoes are delayed by government officials acting on suspicion of some danger which turns out to be unfounded?
Where blame can be apportioned the tried and tested rule - that the responsible party pays - still holds good. Indeed, the rule will be found expressed in most contracts of carriage or affreightment. So, if the ship is detained because its ISPS documentation is incorrect or inadequate, the shipowner bears the cost but if it was the shipper's declaration of the cargo he loaded that caused the problem, the buck (or, more likely, the hundreds of thousands of bucks) will stop with him.
But what happens where the cargo has been properly declared and blame cannot be apportioned? Readers will be familiar with the case, reported in TT Talk No. 57, of the consignment of south American lemons: someone (falsely) claimed they posed a bioterrorism hazard and, as a result, the carrying ship was delayed for several days. Something similar happened two years ago, when the 2680-TEU Palermo Senator was denied entry to New York for three days because an inspector had detected radio-active emissions from a container. It was established that the cargo of ceramic tiles contained natural amounts of low-level radiation from the clay used in their manufacture.
Keeping a several-thousand TEU ship and its crew idle for several days is an expensive business and, inevitably, its owners and the thousands of shippers and consignees who have suffered as the result of the delay will be looking for compensation. But could you really say that in the above cases the shipper of the lemons or the manufacturer of the clay tiles should bear the entire financial responsibility?
In a recent article in the Journal of Commerce, Peter Tirschwell, vice-president and editorial director of Commonwealth Business Media's magazine division, looked at the issues and cast doubt on some of the legal steps now being proposed by carriers and shipowners to impose obligations on shippers. He wrote that one prominent maritime lawyer is advising his ocean carrier clients to amend their bill of lading conditions to require a much greater degree of disclosure in cargo declarations. The lawyer suggests that shippers should report to the ocean carrier any characteristics in their cargo that might cause a security problem, even if it is otherwise legal, properly declared and manifested. He does however acknowledge that this will not be a solution in all circumstances, as the security authorities sometimes do not even reveal the specific reasons for their suspicions and the consequent detention of the ship.
Others disagree with the proposal. Tirschwell quotes another attorney, Tom Willoughby of Hill Rivkins and Hayden LLP, as saying "it is hard to imagine how something that turns out not to have been a problem to begin with can be laid at cargo's door. [Carriers] are in the business of carrying commodities, and they are presumed to have knowledge of this sort of thing. They are free to accept the cargo or reject [it]."
We cannot ignore the risk that a terrorist group might misuse one of the hundreds of thousands of containers being landed daily for its own sinister ends. But the organisations responsible for security need to maintain a balance if they are not to alienate the shipping community.
One wonders how much a cargo-owner would have to declare. It requires a remarkable amount of prescience to know exactly what might worry or alarm an inspector in some far-off port. How far should shippers be able to rely on an inspector's ordinary knowledge of cargoes and commodities? Or should they declare everything, even that which is blindingly obvious? On a recent flight, the attendant gave me one of those cellophane-wrapped packets of peanuts to go with my in-flight drink. Printed on it was the legend: "DANGER: may contain nuts". Will shippers in future have to issue similar warnings about their products?
This is clearly an issue that affects and divides shipowners, NVOCs and cargo-owners. What are your views on it? TT Talk welcomes contributions to the debate: please send your views to firstname.lastname@example.org. We will publish a selection of views in a future edition. If you wish to remain anonymous, please say so in your email.
You may also be interested in:
Demystifying General Average
This new StopLoss provides a straightforward summary of the legal principle, General Average, along with essential good practice advice.
TT Talk - Demystifying General Average
Read more about TT Club's latest publication on GA StopLoss, providing general advice and a straightforward overview of the topic.
TT Club advocates for continued vigilance in limiting container ship fires, ensuring compliance with the IMDG Code, CTU Code and BIRPIT