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Slow Steaming – Cargo Cover


Jagan - July 29, 2019 - 1 comment

  1. The Centre for Maritime Law1, National University of Singapore regularly conducts seminars with speakers who have in depth knowledge in Marine Insurance. The last seminar was conducted on 27thJune 2019 where Ms Ayşegül Buğra, Visiting Research Fellow spoke on “Express and Implied Conditions in Marine Cargo Insurance”. Ms Buğra is also the author of “Insurance Law Implications of Delay in Maritime Transport” which was awarded the British Insurance Law Association (BILA) Book Prize in 2018.
  2. During the seminar, Dr Vivek Jainraised a question on whether slow-steaming may result in cargo insurers denying any cargo claim on the basis of  “delay” defence available under S 483of the UK Marine Insurance Act 1906. This question was answered on the basis that invariably, cargo interests, do not have any control on the prosecution of the voyage. Accordingly, cargo interests would be entitled to the defences available under Cl 8.3 of the Institute Cargo Clauses 1/1/20094 i.e. “This insurance shall remain in force (subject to termination as provided for in Clauses 8.1.1 to 8.1.4 above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to carriers under the contract of carriage” (words underlined by us for emphasis).
  3. While it is generally the case that cargo interests may not be involved in the prosecution of voyage, it is not necessarily true in all instances given that some cargo interests may also own / operate or may have reasonable control on vessels trading with their own cargoes (as voyage charterer e.g. oil trade5). The question would then be whether the defences provided in Cl 8.3 of the Institute Cargo Clauses 1/1/2009 be still available to cargo insurers. Accordingly, there appear to be two possibilities:
    1. Cargo interests transport cargo using third party vessels and have no control on the way the voyage is performed. Accordingly, any delay during the voyage would be excused basis the provisions provided in Cl 8.3 of the Institute Cargo Clauses 1/1/2009.
    2. Cargo interests transport cargo using vessels either owned or chartered (where they have reasonable control over the voyage) by them:
      1. If the vessel is operating within a range of speeds as provided in the vessel specifications (for e.g. 10 000 TEU Container vessel “16kts to 22kts” or VLCC vessel “11kts to 16kts” speed as per trade practices or vessels design), it is submitted that the reduced speeds at the lower range would falls within “reasonable despatch” such that the question of “delay” would not arise.
      2. If the vessel is instructed to deliberate slow-steam, well below the usual lowest speed mentioned in the vessel specifications as as to take advantage of fuel efficiencies, reduced port costs or to arrive at discharge port during certain windows etc., resulting in a delay in the voyage: If this “delay” is substantial, it is submitted that this is not a risk which has been willingly accepted by the cargo Insurers (unless they have been advised at the inception of risk). Accordingly, cargo insurers would be entitled to deny any liability from the time the delay became unreasonable.
  4. The argument which could be made by cargo interests owning / chartering vessels against the delay is that these are developments that the cargo insurers should be aware i.e. the fuel efficiencies available due to “slow steaming”. However, in order for this argument to be successful, the use of slow-steaming must be widely prevalent in the market such that it would  be considered a common usage. In such circumstances, cargo interests would have a fair chance of ensuring that the cargo insurers remain on risk during the voyage.
  5. In conclusion, the effects of slow-steaming is yet to be litigated and therefore, it is best to be cautious. Accordingly, if cargo interests are in control of the voyage, they should keep all parties, and in particular their cargo insurers, updated of any “slow steaming” so as to avoid any “coverage” issues arising at a later date.

 

  1. Centre for Maritime Law is a part of NUS Faculty of Law and is a research centre funded by both the Maritime Port Authority of Singapore and the NUS Law Vision Project (Ministry of Law). It conducts frequents seminars providing Singaporeans and Singapore Residents access to the developments in Maritime and Marine Insurance Law.
  2. Dr Vivek Jain is based at Singapore and employed with the well-known Marine Insurance brokerage, ALCO Insurance Brokers Pte Ltd. He recently published a book “Insight into China through Comparative Law Analysis of Invisible Factors and Contexts – Common Law v. Chinese Law” and which gives an insight of how law is developed in China.
  3. S 48: Delay in voyage: “In the case of a voyage policy, the adventure insured must be prosecuted throughout its course with reasonable dispatch, and , if without lawful excuse it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable”.
  4. The wordings of Institute Cargo Clauses 1/1/82 are similar such that the effect would be the same as in the case of 1/1/2009.
  5. A well-known Charterparty, ShellVoy6 provides under Part 1/Sec. (L) that “Charterer shall also have the option to instruct the vessel to reduce speed.
  6. In the case of Liner Bills of Lading, they invariably incorporate a clause disclaiming any liability for delay. However, such a clause is not incorporated into Bills of Lading issued pursuant to charterparties used in the bulk trades.

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1 comment

  1. Markus Posl

    Very good initiative that you took up this topic also on Cargo site. Thanks.

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