Tank Cleaning - Legal issues related to voyage charter. Last updated 17-Aug-2014

… that in the ordinary way, apart from express provisions in the charter-party, the ship’s duty of seaworthiness comprises a duty, whether it be absolute or qualified due diligence, to have her loading and discharging tackle available for the ordinary purposes of loading and discharging.
Hang Fung v Mullion [1966] 1 Lloyd’s Rep 511, per McNair, J. at p 523.

Extent and operation of duty of due diligence

In the context of the common adventure contemplated by a voyage charter, the owners undertake to tender the vessel ready by a certain date (see Laycan) and give the notice of readiness confirming her status. From that point of time the Charterers’ duty to load begins (see Voyage Charters: Charterers’ obligation to load cargo). Extent of owners’ liability in case of their full or partial failure to present nominated ship ready to load the cargo depends on the wording of contract in question (see also Legal Readiness). Specifically for the voyage charters distribution of risks for liabilities accrued as a consequence of various delays, which vessel may suffer in ports of loading and discharging, is a matter of vital importance to both, the owner and the charterer. These liabilities are governed by laytime and demurrage provisions covering corresponding cargo operations at the end of each loading and carrying legs. Presenting the vessel ready for loading is a part of owner’s duty on approach leg of voyage charter.

In absence of any express provision the court would imply, if it is necessary and consistent with the express words of the contract, an absolute common law duty to provide the vessel fit to carry the goods specified in the contract . However, all modern standard tanker voyage charter forms expressly impose more or less analogous obligations in form of warranties as to description and condition of the vessel, which demand from the owners to exercise due diligence to make and maintain the vessel, her tanks in every way fit to carry the Charterers’ cargo . The latest version of Shellvoy standard form - Shellvoy6, in its cl. 2 (Cleanliness of Tanks) expressly deals with the matter at some length.

Cleanliness of tanks 2.

Whilst loading, carrying and discharging the cargo the master shall at all times keep the tanks, lines and pumps of the vessel always clean for the cargo. Unless otherwise agreed between Owners and Charterers the vessel shall present for loading with cargo tanks ready and, subject to the following paragraphs, if vessel is fitted with Inert Gas System (“IGS”), fully inerted. Charterers shall have the right to inspect vessel’s tanks prior to loading and the vessel shall abide by Charterers’ instructions with regard to tank or tanks which the vessel is required to present ready for entry and inspection. If Charterer’s inspector is not satisfied with the cleanliness of the vessel’s tanks, Owners shall clean them in their time and at their expense to the satisfaction of Charterers’ inspector, provided that nothing herein shall affect the responsibilities and obligations of the master and Owners in respect of the loading, carriage and care of cargo under this Charter nor prejudice the rights of Charterers, should any contamination or damage subsequently be found, to contend that the same was caused by inadequate cleaning and/or some breach of this or any other clause of this Charter. Notwithstanding that the vessel, if equipped with IGS, shall present for loading with all cargo tanks fully inerted, any time used for de-inerting (provided that such de-inerting takes place after laytime or demurrage time has commenced or would, but for this clause, have commenced) and/or re-inerting those tanks that at Charterers’ specific request were gas freed for inspection, shall count as laytime or if on demurrage as demurrage, provided the tank or tanks inspected are found to be suitable. In such case Charterers will reimburse Owners for bunkers consumed for de-inerting/re-inerting, at replacement cost. If the vessel’s tanks are inspected and rejected, time used for de-inerting shall not count towards laytime or demurrage, and laytime or demurrage time shall not commence or recommence, as the case may be, until the tanks have been re-inspected, approved by Charterers’ inspector, and re-inerted.

And for some, like Asbatankvoy, the charterers developed numerous additional clauses combined in standardizes sets of amendments.

When the owners warrant only exercising of due diligence, their failure to present ship’s tanks cleaned to satisfaction of charterers’ inspector(s) at loadport, not necessarily constitute a breach. Consequences of non-acceptance of the vessel’s tanks before loading and an effect of such failure on parties liabilities under laytime and demurrage provisions was a subject of an interesting analysis done by Moore-Bick J in Triton Navigation Ltd v VITOL SA (The Nikmary) [2003] EWHC 46 (Comm).

The material terms related to cleaning of thanks were contained in cl.18 and cl.30 of amended ASBANTANKVOY charter, as supplemented by Vitol’s terms, and provided as follows:

18. CLEANING.

The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of the Charterer’s Inspector …

30. Operations Clause.



(c) Inspection/Cleaning - Amended

(i) The Owner shall clean the tanks, pipes and pumps of the Vessel to the satisfaction of the Charterer’s Inspector who shall inspect the Vessel as per local and/or Charterer’s requirements prevailing at the time.

(ii) Notwithstanding whether or not the Vessel arrived and tendered NOR within laydays and notwithstanding any previous decision not to cancel the Charter, should, after inspection, the Vessel not be clean to the satisfaction of jointly appointed Inspector, the Charterer shall have the option of cancelling this Charter by giving Owner notice of such cancellation within 24 hours after rejection of the Vessel by jointly appointed Inspector.

(iii) Alternatively, should the Charterer still decide not to cancel this Charter, despite the Vessel not being clean to other satisfaction of the jointly appointed Inspector, the Vessel will be required, at Owner’s risk, time and expense, to carry out further cleaning, per (i) above, and represent for further inspection by jointly appointed Inspector.

(iv) Should, after further inspection, the Vessel still not be clean to the satisfaction of jointly appointed Inspector, the Charterer shall have the option to either cancel the Charter, as per (ii) above, or to request further cleaning, as per (iii) above.

(v) Owner shall indemnify Charterer for all direct and/or indirect costs and consequences as a result of the Vessel not being clean to the satisfaction of jointly appointed Inspector and should the Charter not be cancelled, all time until connection of hoses, after the Vessel has been passed as clean to the satisfaction of jointly appointed Inspector, shall not count as laytime, or if on demurrage, as time on demurrage.

Vessel through no fault of the owner arrived with her tanks not sufficiently clean and was rejected when she tendered NOR and berthed. In two days’ time she had her tanks passed and only then did the Charterers’ obligation to load within the laydays arise, but then there was no cargo available for the vessel. The charterers claimed that consequent delay was caused by fault of the shipowners so that laytime did not run while she waited for a cargo. The learned judge rejected charterers argument distinguishing between consequences of:
a) the owners act of giving a premature NOR because of tanks were not clean on arrival, which only gave to the charterers right to cancel the charter,and
b) the Charterers’ own inability to make satisfactory arrangements to obtain a cargo at paras 41-42:

Finally [charterers] submitted that the Nikmary was delayed in berthing by the fault of the shipowners so that laytime did not run while she waited for a cargo. The difficulty with this argument, however, lies in identifying an act or omission on the part of the shipowners that can properly be characterized as a fault and which prevented Vitol from performing its contract: see per Lord Justice Donaldson in Gem Shipping Co. of Monrovia v Babanaft (Lebanon) S.a.r.l (The Fontevivo), [1975] 1 Lloyd’s Rep. 339 at p. 342. [Charterers] submitted that the fault in this case lay in allowing the vessel to arrive at Sikka with dirty tanks, but I am unable to accept either that that involved a breach of the charter or that it was the effective cause of the subsequent delay. By cl. 1 of the charter the vessel was bound to proceed to Sikka with all convenient despatch and present ready to load. Having previously carried a cargo of vegetable oil, she had to be cleaned to make her fit to load gasoil. She was not clean on arrival at Sikka, but it was not suggested that the crew had failed to do as much as they could in the course of the voyage and there is no evidence that would enable me to make a finding to that effect.

42. [Charterers] sought to argue that under this charter it was a breach of contract to tender the vessel in an unclean condition, but I am unable to accept that. The charter might have imposed an obligation on the owners to tender the vessel ready to load by a certain date at the risk of incurring liability in damages, but it did not in fact do so. It merely gave [the charterers] the right to cancel if the vessel was not ready by the agreed date. To give notice of readiness prematurely is not a breach of charter; it is simply ineffective to start time running. Once the vessel had been properly cleaned a valid notice of readiness could be given and was given.

But owners must be aware that, in those instances where the words ‘exercise due diligence’ omitted from the warranty to keep the tanks, pipes and pumps of the vessel always clean, such obligation becomes an absolute one. It does not automatically worsen position of the owner though. The next thing to consider is whether the tanks were actually cleaned to the standards required for carriage of cargo specified, whichever method was applied. If they were, then there is no breach of charter from the part of the owner.

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