Sumary of facts
On April 3, 2019, Claimant
signed a contract with
Respondent to a one
voyage time charter
for a seagoing cargo
vessel (“Vessel”) to carry
26,400metrictonsofcoal
from Balikpapan port,
Indonesia to Kemaman
port, Malaysia (“Trip Time
Charter”) . The Vessel
arrived at Balikpapan on
April 6, 2019 to load the cargo and left the port on
April 13, 2019 with all valid cargo documents showing that the coal originated from Indonesia. However, on April 18, 2019, the Vessel’s agent informed that the cargo was suspected of having North Korea-related origin discovered by the United Nations’ board of experts on North Korea embargo sanctions and the Malaysian authorities were alerted. Therefore, the Vessel was not allowed to enter Kemaman port to unload.
After the above problem, the Shipper admitted that he had intentionally concealed, loaded the cargo discharged from the motor vessel “Wise Honest” of North Korean nationality, non-Indonesian origin, transshipped by barge and then loaded onboard the Vessel. Because Respondent could not arrange another port of discharge, Claimant asked the Shipper/Charterer to return the cargo to the loading port of Balikpapan, but they advised that the unloading arrangement had been completed in Jakarta, so on May 24, 2019 Claimant ordered the Vessel to sail to Jakarta. However, on May 26, 2019, when the Vessel was about to arrive in Jakarta, the Indonesian Foreign Ministry asked the port authority not to allow the Vessel to enter the port because of a United Nations warning about coal related to North Korean origin. Therefore, the Vessel had to anchor about 150 nautical miles from Jakarta. Since no country allowed the Vessel to unload, the Claimant and Respondent were forced to bring the Vessel back to Vietnam. The Vessel arrived and anchored at the outer anchorage of Vung Tau Port at 13:45 on June 5, 2019.
At 19:30 on June 7, 2019, Squadron 3 (customs) boarded the Vessel for inspection after receiving information from the US Embassy in Hanoi about the suspicion of the coal origin loaded onto the Vessel, and requested Vessel to move and anchor at inner anchorage of Vung Tau Port. The Claimant had repeatedly invited the Shipper to come to Squadron 3 to clarify the shipment problem, but they have not responded. On October 30, 2019, Squadron 3 requested the Vessel to unload all the cargo to a bonded warehouse to wait for a decision.
Ideas of the parties
The Vessel finished unloading at 02:30 on November 15, 2019. On January 31, 2020, the General Department of Customs issued Decision on sanctioning of administrative violations No. 163/QD-XPVPHC and on February 13, 2020, Squadron 3 made minutes of confiscating material evidences of 26,253.25 metric tons of coal onboard the Vessel. Claimant asked Respondent to pay USD 1,698,461.45 and VND 1,528,046,010 (hire and incidental expenses) but he did not pay, therefore, Claimant sued Respondent at Arbitration, and to secure collection of the above amount the Claimant asked the Arbitral Tribunal to declare that the Claimant had the right to lien the cargo of 26,400 metric tons of coal. The Respondent had no response to the Claimant’s request.
Arbitral award
Regarding the amount of USD 1,698,461.45 and VND 1,528,046,010 requested by Claimant, it was found that the Respondent chartered the Vessel to “legally carry the cargo” as stipulated in the Trip Time Charter but shipped the cargo suspected to have origin from North Korea, causing damage to the Claimant; Respondent had not paid enough hire and expenses; Claimant had taken reasonable measures to limit the loss. Therefore, according to the Trip Time Charter, the Appendix, the inspection report upon delivery of the Vessel; bunker charges, hire payments..., specified in Clause 1, Article 227 of the 2015 Vietnam Maritime Code (“Maritime Code”) on payment of hire, Articles 302, 305 of the 2005 Commercial Law on compensation for damage, on applying reasonable measures to limit losses; The Arbitral Tribunal had grounds to compel the Respondent to pay in full the hire, costs under the Trip Time Charter, and to compensate the Claimant for damage as follows:
For the amount of USD 1,698,461.45 including the hire from the date of delivery of the Vessel of April 3, 2019 to the time of redelivery of the Vessel on April 22, 2019 which was USD 97,586.67, minus 3.75% commission, remaining USD 93,927.17, pursuant to Articles 10 and 11 about hire of the Trip Time Charter, Clause 1, Article 227 of Maritime Code on the payment of hire, the Arbitral Tribunal accepted this amount. Regarding the detention per day, the Claimant corrected the “hire” as USD 1,480,108.68, the Arbitral Tribunal said that this was actually also the hire because the Respondent could not redeliver the Vessel until December 5, 2019, as stipulated in Article 215, Clause 3 Article 223 of Maritime Code on the definition of a time charter party and the obligation to redeliver the vessel. After deducting 3.75% commission, the remaining amount of USD 1,424,604.61 was accepted by the Arbitral Tribunal. The Communication charge of USD 9,859.03; IFO (fuel oil) cost at Vessel delivery of USD 183,531.29 and MDO (diesel oil) USD 29,931.40; the bunkers supplied by Claimant of USD 239,043.73; cargo hold cleaning charge of USD 3,000; deviation cost of USD 10,000, and the amounts payable by the Claimant of bunkers at redelivery (USD 37,516.89 and USD 26,698.06); the amount paid by the Respondent to the Claimant (USD 74,700.00, USD 102,020.81 and USD 50,000)... had fully appropriate documents and confirmations; Respondent was informed of these amounts, costs and charges but did not have any comments or objections, therefore, the Arbitral Tribunal accepted the total amount of USD 1,698,461.45.
For the amount of VND 1,528,046,010 including expenses such as travel, hotel... meeting Charterer/ Shipper of VND 53,867,238; working with Squadron 3 VND 19,411,364... had fully appropriate documents/ confirmations. These were damages incurred directly, so this amount was also accepted by the Arbitral Tribunal.
Regarding the claim “... declared Claimant had the right to exercise a lien on cargo of 26,400 metric tons of coal”, the Arbitral Tribunal found that 26,253.25 metric tons of coal (a decrease in quantity after inspection in Vietnam) carried on the Vessel was confiscated according to the Confiscation Minute dated February 13, 2020 of Squadron 3 (implementing the above sanctioning Decision No. 163 of the General Department of Customs). Therefore, the Arbitral Tribunal did not have the authority to consider a lien on cargo because the confiscation of goods was already under the jurisdiction of the customs authority.
Conclusion: The Arbitral Tribunal (i) partially accepted the Claimant’s claim, forcing the Respondent to pay the Claimant the amount of USD 1,698,461.45 and VND 1,528,046,010, and (ii) did not accept Claimant’s claim to exercise a lien on cargo.
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