Tank Cleaning - Jointly appointed inspector. Last updated 17-Aug-2014

… examination of the … analyses demonstrates the difficulties into which the adversarial use of experts may lead litigation when an expert report succumbs to the temptation, as I believe has happened on this occasion, of overstating the evidence so as to lend support to a hypothesis.
The Liepaya [1999] 1 Lloyd’s Rep 649 per Rix J.

Important determination by the person jointly appointed

From decision in Petrofina SA of Brussels v Compagnia Italiana Trasporto Olii Minerali of Genoa (1937) 53 TLR 650, CA it follows that charterer’s inspector’s approval will be of no assistance to the owners if the vessel is not in fact cargoworthy and fitted for the voyage and/or its loading leg. Wrongful inspector’s approval by itself does not create estoppel in favour of owners. To avoid conflict with Article III rule 8 of the Hague Rules express exception barring this Article from operation is necessary, same as, for example, BPVOY4 form contains.

In Triton Navigation Ltd v VITOL SA (The Nikmary) [2004] 1 All ER (Comm) 698 Asbatankvoy form was amended with numerous Charterers’ clauses one of which, clause 30, provided that if ‘after inspection, the Vessel not be clean to the satisfaction of jointly appointed Inspector, the Charterer shall have the option of cancelling this Charter’ or, alternatively, ‘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’. The charterers did not exercise their right to cancel the charter although in fact vessels’s tanks failed inspection on 2 occasions. Both times, however, inspectors did jointly inspection but were not jointly appointed. The learned judge held that at para 28:

In the present case the first inspection was carried out by Mr. Maiti, the Charterers’ surveyor, alone. When Mr. Maiti carried out the second inspection he was accompanied by an inspector acting for the owners and on the third occasion an inspector appointed by the vessel’s P. & I. Club was also in attendance. On that occasion all three surveyors agreed that the vessel was clean enough to load. [The charterers were] therefore able to submit with some justification that there had been a joint inspection and that the requirements of the clause had been satisfied in spirit, if not in form, even though none of the inspectors was acting on the joint instructions of the owners and charterers. The difficulty with that argument, however, is that the clause as a whole provides quite unambiguously for the vessel’s condition to be judged by an inspector appointed by both parties jointly and cannot be construed as providing in the alternative for a joint inspection of the kind that took place in this case.

On appeal in the Court of Appeal Mance LJ affirmed that the judge in the High Court was correct in relation to the actual wording of the clause 30, envisaging ‘jointly appointed inspector’ and not ‘a joint inspection by separately appointed inspectors’ but excluded application of cl.30 on the ground that the charterers were first in breach of charter in failing to have cargo available for loading.

It is notable that cl.30 contains several references to inspector assigned for inspection of tanks before loading. If sub-section (i) only requires initial inspection to be done by the charterers’ inspector alone, sub-sections (ii)-(v) all provide for or refer to inspection which is carried out by jointly appointed inspector.

30. Operations Clause.

(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.

The idea is clear, stipulation as to the Charterers’ right to cancel contract in sub-sections (ii) and (iii) and further options in sub- sections (iv) and (v), designed to operate for the benefit of one party, namely the charterers, only and therefore can be triggered by decision of inspector who is reliable and trustworthy for both sides.

This approach highlights the concept developed in the Protank Orinoco that it is very unlikely that the parties would have intended to entrust such an important determination unless the person was jointly appointed. By analogy with the Protank Orinoco a determination by charterers’ surveyor alone or by jointly inspection by independently appointed inspectors has a much limited effect and would merely entitle the charterer to order vessel to undertake some further cleaning. The court prepared to follow strictly the lines of the contract when it says that inspection to be done by ‘jointly appointed inspector’, rather then agree with an alternative proposition that ‘jointly inspection by independently appointed inspectors’ satisfied requirements in spirit, if not in form.

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