Owners argued that they were entitled to recover for stevedore damages suffered by the vessel, despite the fact that the Master may not have given the appropriate notices as required in the charter parties. In this respect, Owners insisted that the on/off hire surveys must be considered in conjunction with the notice clauses, especially when hidden or obscure damage is involved. Owners further claimed that the damage items indicated in the comparison survey were not fair wear and tear, and that the estimated repair costs were fair and reasonable. They claimed entitlement to the repair cost regardless of whether the repairs were ever carried out.
Charterers' and Subcharterers' positions were essentially similar. They stated that Owners were not entitled to recover for the stevedore damages because the Master failed to file protests or written advices of damages that would reasonably have been detected at the time they occurred. Similarly, no notice was given of possible hidden hold damages. They also argued that the alleged damages were minimal for the carriage of a steel products cargo, especially in light of the large number of existing hold structure damages noted in the Subcharter on-hire survey. The additional damages should be considered as wear and tear.
Charterers and Subcharterers further pointed to the fact that the vessel's holds and tanks subsequently passed Special Survey, after tank cleaning and gas freeing, without any requirement that the damages be repaired. As respects the stevedore damage issue, it was conceded that whatever damage occurred was the result of the Subcharterers' steel cargo; therefore, Charterers seek indemnification from Subcharterers should they be found liable.
The Panel was of the unanimous conclusion that Owners' claim for stevedore damage be denied. In reaching this decision, the Panel considered the following points:
a) The failure of the Master to give the requisite notice, while not fatal to the claim as a whole, renders defective those damages that were readily discernible at the time they occurred. The on/off hire survey must be read together with the notice provision to give any sort of commercial sense to these apparently conflicting clauses in the charter party. It is obviously impossible to give notice of stevedore damage at the time it occurs if it is hidden beneath a mass of cargo as it is loaded.
b) The failure of Owners to properly document the quantum of their loss by securing shipyard bids on repair specifications makes it virtually impossible for this Panel to assess repair costs, were they to decide Owners' entitlement to these damages. The Panel placed no weight on the testimony of Owners' Superintending Engineer fixing monetary estimates on the damages established by the comparison survey. He had never viewed the damages and, therefore, was not able to identify where they were and how severe they appeared. His estimates were without any scientific or commercial foundation.
c) Owners failed to establish they suffered any monetary loss. The vessel was admittedly sold to an associated company without repairs being made to the stevedore damaged portions of the vessel. There was no demonstration of any diminution in the sale price of the Vessel as a result of the unrepaired damages.
SMA 1278
In a more recent SMA 2190, The Panel unanimously concluded that the Owner was entitled to reimbursement for properly documented stevedore damage repair claims. However, the Panel believed Owner did not mitigate its damages at a previous port where repairs could have been more reasonably done. Also, a number of Owner's claim reports were filed after the fact. Other repairs were unsubstantiated -- i.e. the Master stated new crane motors had to be used yet no invoice was presented for same. The Panel concluded that the Owner had only established a portion of its stevedore damage claim.
Comment: It is not uncommon in practice for Owners to submit a cost estimate prepared by their technical department as part of their claim for reimbursement; however, this alone is insufficient.
In recent London Arbitration Awards, contracts specified that reimbursement would be granted only upon the submission of a final invoice, deeming cost estimates inadequate for this purpose. In London Arbitration 29/22, the charterers were liable to reimburse the owners for the cost of repairs against an invoice for the repairs when done, subject to that event occurring within a reasonable time. Since the owners submitted no invoice following the drydocking, the tribunal presumed that repairs were either not carried out or had been incorporated with other repairs. The owners had proven no loss.
In a recent case that was settled during arbitration, the Owners were claiming damages to the ship’s structure. The ship was sold after the arbitration commenced. There was no proof of any diminution in the sale price of the Vessel as a result of the unrepaired damages.
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Note: These posts are for informational purposes only and do not reflect the views of the author.