Shortage Claims in Vietnam’s Maritime Sector

By
Mfame Editor
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13

  • Shortage claims arise from multiple bills of lading and discharge into barges.
  • Draft surveys at loading and discharge ports help defend against shortage claims.
  • Accurate measurements and adherence to procedures are critical for draft surveys.

Shortage claims are frequent in bulk loads such as soybean meal, corn, and fertilisers. While often not high-value, these claims do occur frequently and point toward the necessity for correct guidance, reports gard.

Causes of Shortage Claims

  1. Multiple Bills of Lading: Issuance of more than one bill of lading for bulk cargo enhances the possibilities of shortage claims. Receivers tend to measure shortfalls against their consignments, and this may cause liability to owners or carriers.
  2. Discharge into Barges: Cargo loaded onto several barges prior to shipment to warehouses makes it difficult to track and expose it to claims. Once cargo crosses the ship’s rail, the carrier’s liability typically terminates, and responsibility for subsequent handling rests with others.

Draft Surveys

  1. Essential Defensive Tool: Independent draft surveys at the loading and discharge ports are strong evidence against shortage claims. Shipowners are strongly advised to have such surveys.
  2. Accuracy Factors: Draft surveys rely on distinct draught marks, free-sounding pipes, and approved hydrostatic tables. Typical mistakes are reading marks incorrectly and hydrometer errors.
  3. Surveyor Signatures: All surveyors must sign the ship’s draft report to prevent arguments. In case of discrepancies, the Master must sign the receiver’s figures “for receipt only” and include the ship’s figures.

Intermediate Draft Surveys

Intermediate surveys are advisable where cargo grades vary or discharge is at various locations. Intermediate surveys allow for monitoring discharged quantities and can protect against claims.

Trade Allowances

  1. Shrinkage and Moisture Loss: International maritime trade allows trade allowances for shrinkage loss of cargo, but under Vietnamese law, accepts such allowances only if specified in a contract. Cargo interests tend to ignore these allowances, particularly when there is a ship arrest.
  2. Club Strategy: The club recommends negotiating decreases on the basis of trade allowances and insurance deductibles.

Letters of Undertaking (LOUs)

Though LOUs are not commonly accepted in Vietnam, recent case experience indicates greater flexibility with claims of moderate magnitude. Members should engage local correspondents to negotiate LOUs where possible.

Legal Framework and Jurisdiction

  1. Contract Terms and Law: While bills of lading can stipulate foreign law and jurisdiction, Vietnamese courts will apply domestic law to cargo claims in many cases, particularly where cargo was discharged within Vietnam.
  2. Carrier Liability: In the absence of a clear identification of the carrier on the bill of lading, shipowners can be held liable. Use the proper contractual carrier in the name.

Hague-Visby Rules

Vietnam’s Maritime Code adopts Hague-Visby seaworthiness and liability limit provisions, but delay claims only under the Hamburg Rules.

Vessel Arrests

Vessel arrests occur even for low-value shortages claims. Arrests exert pressure on shipowners to pay up speedily. To avoid this, nominate the carrier clearly on the bill of lading.

Time Bars for Claims

Time bars in Vietnamese law vary depending on claim types:

  1. Bill of Lading: 1 year
  2. Charterparty: 2 years
  3. Logistics Services: 9 months
  4. Tort Claims: 3 years

The club advises charterers to notify them of the 2-year time bar of the Inter-Club Agreement. Vietnamese law tends to respect the bill of lading’s mentioned quantity and quality. Foreign law in charterparties, however, may have exceptions depending on the judge’s discretion.

Carrier Exemption

Under Vietnamese law, the carrier is exempted from liability if the loss is outside of their control. For instance, if stevedores are loading the cargo, the carrier would be able to plead exemption.

Best Practices for Members

  1. Capturing ROROC: Receipt of Cargo Records (ROROC) would assist in pleading that all the cargo was delivered, particularly if draft and shore surveys vary.
  2. Engaging a Third Surveyor: A third-party surveyor can offer a neutral assessment where there are duplicate survey reports.
  3. Emergency Support: Members must seek assistance from the club’s emergency line or SPICA Services in Vietnamese ports.

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Source: gard