Stowage factors

Endurance Bay Shipping Co Ltd v Panama Centro Americana de Navigacion.

This dispute arose under a New York Produce Exchange Time charterparty dated December 8, 1980, between Endurance Bay Shipping Co Ltd, as owners, and Panama Centro Americana de Navigacion SA, as charterers. The charter provided for a time charter trip of the Holland with an estimated duration of 18-24 days. The dispute before the Panel related to events which transpired during the loading of cargo at Panama City, Florida.

The vessel delivered under the charter at Panama City on December 22, 1980, and loading began the following day. The intended cargo was primarily rolled liner-board paper for discharge at Cristobal, Panama, and Puerto Limon, Costa Rica. The Holland loaded without incident through December 24, and on December 26 the charterers (Panama) started the loading on deck of two tiers of paper rolls. Steel sheets were later stowed on deck. The loading of deck catgo continued until December 27, and the vessel completed with 1,068.99 long tons of deck cargo. At about 2000hrs on December 27, the master started ballasting his deep tanks to correct a portside list of about four degrees. The ballasting continued for about four hours and the vessel’s sailing time was delayed from the evening of December 27 to 0600hrs the next morning. The harbour pilot returned to the vessel just before the scheduled sailing time of 0600hrs and noted that the port list had increased to nine degrees despite the ballasting. Although the master assured the pilot that he was fully prepared to sail and complete his ballasting at sea, the pilot expressed the belief that the Holland was unfit to sail. Nevertheless, the vessel made ready to depart and when some of the mooring lines were slackened and cast off she took a more pronounced list to port. Seeing this, the pilot refused to take the vessel out, although the master remained ready to unberth and sail. The vessel did not sail.

At 1300hrs on December 28, Panama’s stevedores started discharging a certain amount of deck cargo, alternating between the port and starboard sides, discharging one roll at a time. When they reached the twelfth roll, the vessel took a violent turn from an 8-10 degree port list to approximately a 22 degree starboard list. During this lurch, seventeen rolls of paper stowed on deck were lost overboard, although later retrieved in a wetted condition. About 1730 hrs, an inspection revealed an undetermined amount of water in holds 2 and 3, later established a having been caused by leakage of seawater from the deep tank during ballasting. The situation was stabilised on December 29, although cargo under deck was severely soaked in seawater. On December 31, Panama’s surveyor arrived at the vessel but was not permitted to board until the morning of January 3. During the same time-frame, various surveyors, underwriters’ representatives and attorneys representing Endurance had free access to all parts of the vessel.

It was ultimately agreed that the water-damaged paper rolls in the cargo holds be discharged and that sound rolls previously discharged from the deck cargo be loaded into the holds. For the reloading procedure, the master insisted on a maximum of 250 tons of deck cargo, the discharge and reloading of cargo completed, the vessel sailed on January 6, 1981, with approximately 225 tons of deck cargo instead of the 1,068.99 long tons initially placed there. Although the cargo damage was originally estimated to be about $240,000, a settlement was ultimately arrived at for $ 102,000. It was for the Panel to decide who should bear ultimate responsibility for settlement of that amount.

Panama, stipulating that 17 rolls lost overboard were not being claimed for, further asserted that Endurance should indemnify it for $70,612.19 which it claimed represented extra expenses incurred in storing and transshipping deck cargo which the vessel initially loaded but which Endurance shut out from reloading after the casualty. Panama contended that the vessel could have safely carried the cargo which had been shut out. Endurance, meanwhile, claimed the sum of $129,243.98 representing stevedoring costs and other expenses relating to the cargo problem. This sum also included deductions from hire, bunkers consumed and other related expenses.

The panel majority (Mr Andrews dissenting on points (1) and (2) concluded:- (1) Endurance was responsible for the entire cargo loss settlement, excluding the 17 rolls of deck cargo, and had therefore to indemnify Panama for the latter’s contribution to the $102,000 settlement. (2) Endurance’s claim for $129,243.98 was denied. (3) Panama’s claim for $70,612.19 was denied. It was Endurance’s position that Panama loaded an excessive amount of deck cargo to the vessel without ever first advising the master of the quality, character and positioning of the cargo, and all this despite the master’s continued objection to the deck stowage as it was loaded. But, said the Panel, the evidence surely supported Panama’s position that the master was given documents setting forth the amount of cargo loaded, its weight and distribution prior to the vessel’s intended departure on December 27, and in fact signed a copy of such a report. The Panel said that, if the master considered the deck cargo to be truly objectionable, he should have registered his protest to the stevedore and to Panama and taken immediate steps to stop loading. It was the majority’s conclusion that the master accepted the deck stowage as perfectly proper and that he was quite willing to sail with it as it was, ballasting in a manner he deemed appropriate. It was noted that the cause of the vessel’s sudden lurch from port to starboard was her instability as a result of being loaded with more deck cargo than could be compensated for by ballasting the deep tanks. The point was made that, if ballasting the deep tanks was all the master intended from the start, then he permitted Panama to load an excessive deck cargo. The subsequent leakage of about 500 tons of sea water from the deep tank into the cargo hold, it was held, exacerbated what was already an unseaworthy and unstable condition.

Endurance relied on the charterparty wording to the effect that, “If on deck, at charterer’s risk and responsibility and at master’s discretion” to support their position that the charterers bore the risk and responsibility for deck cargo because the master could, at his discretion, refuse to accept any and all deck cargo. But it was noted that, on December 27, the master was prepared о sail with a significant port list which was readily attributable to negative stability, and that it was the master’s responsibility to make stability calculations to assure himself that the vessel was stable and seaworthy. “Had the Holland managed to clear the berth and break ground”, said the Panel, “who knows what catastrophic end she would have come to?” It was also noted that the master’s apparent lack of awareness of the vessel’s stability problem constituted gross negligence, for which Endurance had to bear the responsibility. The second issue affecting the determination of liability related to the physical condition of the deep tanks and the influx of substantial quantities of seawater from them into the cargo holds. Among other things, the Panel noted that Endurance had chosen not to introduced the testimony of its attending surveyor and that no report was submitted or (according to Endurance) ever written. “It is indeed unusual”, said the Panel, “for a P&I surveyor to attend a significant casualty, thoroughly inspect the circumstances and not issue a written report. The Panel finds this highly suspect.”

The majority found that Endurance had failed to carry its burden of establishing the exercise of due diligence and therefore could not exonerate itself from liability for cargo claims under the Carriage of Goods by Sea Act and remained liable for the damage to cargo. The Panel added that, since Endurance was responsible for the cargo damage, it had to assume the time and expense associated with the handling of the damaged cargo and its claim in respect of such was accordingly denied. Panama’s claim for transshipping costs was also denied, the point being made that the master’s election to limit the deck cargo following the casualty was a reasonable exercise of his discretion.

Mr. Andrews concluded a lengthy and detailed dissent with the opinion that, “The damage to cargo on deck and other related expenses due to over stowage should be the sole responsibility of the charterers, the expenses to be proportionate to the delay. ”

Case № 4