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Owners Nailed for Charterer’s Debts – September 2013

September 1, 2013

September 2013



Welcome to the first issue of the long awaited 'return of SEA Watch', SEAsia's monthly shipping and marine insurance newsletter focused on matters which impact the Asian markets.  In addition to topical news, we will also try to brighten your day with stories of some of the more bizarre decisions and events which often surface in the maritime world. If you've got a favourite that we've missed, then please share with us and your fellow SEA Watch readers.

First on offer is the story of the "STX Alpha" and her unfortunate arrest at the Port of Singapore. Never a happy event for any ship owner and particularly annoying when the basis for the arrest was a bunker invoice which had not been paid by the time charterer. Find out how this happened and how it could happen to you as well as the ways in which you and your company can guard against the aggressive debt collection tactics being used by Singapore bunker suppliers.

Our next story provides a 'snapshot' of the highly experienced SEAsia Claims Services crew at our headquarters in Singapore. (Who let the old guy into the team photo?) Our Editor's goal is to focus on one of the 20 SEAsia network offices in Asia each month so they can tell us something about themselves and their 'patch', as well as some of the daily problems they have to deal with – including typhoons, power 'brown outs', earthquakes and the rest – in order to stay on line and be able to respond quickly and proactively when a shipowner and their P&I insurers need urgent assistance.

Our third article, on Ultra Sonic Hatch Testing (UTS), provides some common sense reasons for using UTS instead of hose testing for this critical loss prevention process. Owners and brokers are sometimes afraid of UTS and its 'Hi-tech' accuracy. However, like surgery, its the accuracy and technology that ensures you survive and go on to prosper and if you can have that at no extra cost, why rely on redundant techniques? Time to move on and the P&I Clubs are endorsing UTS to avoid wet cargo and nasty claims.

Our fourth story reports the resurgence of 'sea robbery' in SE Asian waters with obvious risks to the crew if our gun toting friends decide to go back to their previous tactic of snatching the Master and other crew for ransom and sometimes the vessel and her cargo. Perhaps it's time to have an urgent chat with your broker about your H&M and P&I cover to ensure there are no unhappy 'policy gap' surprises in store?

Out fifth offering is an amusing tale of Greeks vs Filipinos in a costly game invented by the US EPA and refereed by the US courts. At the moment, the Filipinos are well ahead and it looks like staying that way until the Greeks take some time to learn and then abide by the rules. Tennis anyone?

We've also got some pieces for you on SEAsia's new domain name and improved IT services as well as some news on upcoming events, including the 7th run of the SeaProf/BI "Key Elements of Shipping" course, which is limited to 30 seats and is always a sell-out.

Read on and enjoy.



Owners nailed for charterer's debts

In the first of a two part commentary, Captain Robert Gordon explains a recent ship arrest case which centred on an unpaid bunker fuel invoice that could have major implications for all vessels calling at the Lion City.

The Arrest of the MV "STX Alpha"

The German owned cargo vessel “STX Alpha” (GT 10,000 built 2010) was recently arrested and delayed for over a week in Singapore by bunker suppliers Transocean Oil for non-payment of a bunker invoice.

“Not unusual”, you might say but the vessel - despite her name being linked to troubled ship operator STX Pan Ocean - was on time charter and was not owned by STX Corp (STX Pan Ocean’s parent company in Korea) who had contracted to purchase the bunkers.

So how could this happen? More importantly, could it happen to your vessel along with the incurrence of large legal costs, delays and serious earnings disruption?

The ability of a claimant to arrest a ship is a concept peculiar to maritime law facilitated by by the Arrest of Ships Convention of 1952. The Convention, as enacted into national law in Singapore, permits a ship to be detained by the Singapore court pending the provision of monetary security or bail. It also facilitates jurisdiction along with the right to issue a writ against the vessel itself (a writ in rem) provided the owner of the vessel would also be personally liable on the claim (by way of a writ in personam).

The procedural aspects of the Singapore law of ship arrest follow closely the procedures used in England and other Commonwealth countries whose legal systems are based on English/Common law. These procedures allow a bunker supplier claimant to make an application to the Singapore court to arrest a vessel on the basis of an affidavit in which he declares, under oath, that the owner of the vessel is personally liable for the cost of bunkers supplied.

However, as the law now stands, the claimant need not conclusively prove his entitlement; only that he has a "good arguable case" which would allow him to take the claim to trial where the court will ultimately decide. And this is where the ‘arrest game’ and coercion by claimant lawyers begins.

Under the usual time charter agreement, the bunkers will be paid for by the time charterer. Accordingly, at the time the bunkers are delivered on board they are owned by the charterer and this will continue until the charter comes to an end. The owner of a time chartered ship should therefore never be personally liable for payment to the supplier for the time charterer’s bunkers.

So how can it be that it was possible for the time chartered “STX Alpha” to be arrested for unpaid bunkers? The unfortunate answer starts with the decision of many bunker suppliers to agree unsecured sales on credit terms to time charterers instead of demanding payment in advance. To then cover their credit risk exposure, the suppliers – no doubt based on legal advice - deliberately manipulate the wordings of their sales contracts, their bunker delivery notes (BDN) and their invoices in an attempt to include the ship owner as a contracting party along with the time charterer.

Does this dubious contractual subterfuge work? Well, it certainly did in the “STX Alpha” case where the supplier’s affidavit to support his application for arrest stated that the bunker invoice was addressed to both the ship owner and to STX Corp and that the prior “confirmation of sales” document included the words:

Seller will not recognize any attempt to waive, negate or nullify Seller’s maritime lien against the receiving vessel nor accept any waiver of vessel owner’s ultimate liability for the cost of the bunkers received by the vessel.

The Singapore court accepted the claimant’s affidavit as providing sufficient evidence of “a good arguable case” and the vessel was arrested. However, there was no evidence presented that the ship owner had actually been sent a copy of the “confirmation of sales” document before or at the time the bunker supply contract was concluded.

Nor does it seem that a copy of the bunker invoice, addressed to both the owner and to STX Corp, was sent to the owner at the time the invoice was issued. Nor was any charter party term produced which would have entitled the charterer to act as the owner’s agent in ordering the bunkers. So how could it be that the owner was, by way of a “good arguable case”, bound by the terms in the invoice and BDN such that the owner was deemed personally liable for payment?

In short, there was no such case but as the procedural aspects of ship arrest in a common law country favour the arresting party, the claimant got away with it.

Injustice? To some degree but there are built-in checks and balances which would normally have allowed an application from the ship owner to have the arrest set aside on the grounds that the owner was not personally liable, etc. It was also possible to have a vessel released by the posting of security by way of a letter of undertaking from an International Group P&I Club or the provision of a bank guarantee.

But many owners are not entered with IG Clubs and bank guarantees can take up to a week to put in place. In the event, the owner - due to serious time constraints - was ‘caught between a rock and a hard place’. To meet his next charter commitment, he had no real option but to capitulate and settle a claim for which he was not liable albeit on compromised and' without prejudice terms, along with a reservation of his rights against STX Corp.

The events described above are unfortunately not uncommon as time charterers, in the current abysmal shipping market, have been going bust on a regular basis. So is there anything that owners can do to protect themselves? Well, yes. First, we recommend you contact either your P&I Club or your Defence Association. Alternatively, or in tandem with this, we have no doubt there are plenty of hungry maritime lawyers ready and willing to advise you. And finally, should you wish, please feel free to contact us here at SEAsia.  

What else? ...

(Part two of this commentary will appear in the October issue of SEA Watch.)



SEAsia claims team in Singapore: Still the hub and helm of the network in Asia

Captain Robert Gordon, SEAsia's founder and managing director, moved to Singapore with his family in 1995. It was a smaller place then, with fewer than 2.5 million people and more space on the roads and the MRT. But Singapore was already a major modern port with a thriving shipping industry and demand for maritime services and knowledge. A former ship master and solicitor, Robert saw the opportunity.

SEAsia P&I Services Pte Ltd was established in 1996, a specialist P&I correspondent office focusing on what was at the time a rapidly developing fixed premium and non-IG mutual P&I market for smaller ship owners. This market now insures 10% of the world's tonnage by GT and just over 40% of the world's vessels over 500 GT.

Robert also saw that quality P&I and transport liability support services were in demand all over Asia, prompting the establishment of the SEAsia Network office in Bangladesh, then Hong Kong, Vietnam and now a total of 20 Asian countries. Through the network and its team of over 100 experienced surveyors and support staff located in 60 major ports, SEAsia provides quality insurance and survey services from the Middle East to Japan on a 24/7 basis.

The core management and service coordination team in Singapore was refreshed several years ago with the appointment of SEAsia's General Manager, Colin Fordham, former MD of The UK P&I Club and TT Club facilities in Singapore. Colin, a Singapore PR, brought with him half a lifetime in the freight forwarding and transport liability industries. He has put his experience into building a portfolio of adjusting business for SEAsia from major players in the transport liability insurance world including Kiln, Chubb and other name brand facilities.

New members of the SEAsia team also include Senior Claims Executive, Oliver Rentzow, a German lawyer and Singapore PR. Oliver focuses primarily on the complicated aspects of multi-contract transport liability claims which often span several legal jurisdictions and involve multiple players.

SEAsia's new Survey and Loss Prevention Manager is Captain Kunal Pathak. Originally from India, Kunal was recruited from London where he had his Maritime Business MBA. Kunal is a Class 1 Mariner with much seagoing experience and a keen interest in incident investigation, risk management and marine insurance.

Kunal has been integral in helping SEAsia upgrade its P&I Survey and Formal Risk Assessment reporting process, He is now handling the majority of P&I incidents on which SEAsia is instructed by IG Clubs, such as The Standard Asia, and non-IG Clubs and insurers such as Hanseatic, MMIA and QBE.

After over 16 years of successful operation in providing top quality services and solutions to the P&I and marine insurance industries, SEAsia's future is looking brighter than ever with a new Singapore team and the lawyer support of the SEAsia Network.



More reliable than WikiLeaks... SEAsia network provides ultrasonic hatch testing to detect leaks

P&I Clubs have long recognized the high risks and big cargo losses associated with hatch cover leakage due to ingress of sea water in heavy weather. So in addition to carrying a valid Load Line Certificate (usually issued by Class), which attests to the fact that hatch covers are weathertight in accordance with the Load Line Convention, 1952, the Clubs require an independent assessment by a P&I surveyor as a loss-prevention measure.

What's the difference?

Well, Class and Flag State are focused on ship and crew safety and a small amount of water ingress may not be a concern. However, that "small amount" can turn into a big cargo claim so the Clubs demand more.

The traditional "hose testing" method requires significant manpower and time as well as a number of drawbacks including ensuring there is sufficient water pressure, that there is no cargo in the holds or any prohibition by the port authorities on water running over the side of the ship and into the harbour. It is also a method which only measures the effectiveness of the hatch seal when the vessel is in a static position and ships are not static when at sea!

The high-tech solution lies in the use of an ultrasonic hatch tester comprising a small portable high frequency transmitter placed in the cargo hold and a hand-held directional receiver operated by a trained surveyor.

If the hatch cover being tested is weather tight, then the ultrasonic sound from the transmitter cannot pass through the hatch seal barrier. If not weathertight, then ultrasonic sound (not detectable by humans but perhaps by the ship's dog!) will register on the receiver and the 'volume', displayed in decibels, will indicate the magnitude and precise location of the problem.

A straightforward one-man job – as shown by the accompanying photos of SEAsia Network surveyors in action - with no possible damage to cargo or harbour pollution. The best part of this method? The surveyor is able to pinpoint the leak and direct the crew to rectify a hatch leak immediately and then re-test - all in one go.

Ultrasonic Hatch Testing, conducted primarily with Class Instruments/Cargo Safe equipment, or other approved UTS equipment, is now available in 18 SEAsia Network countries as either a standard feature of a SEAsia P&I condition survey or as a standalone loss-prevention service for ship owners, charterers and cargo shippers.

Please contact us for full details and an "all in" cost estimate of attendance, testing and reporting. A sound investment in loss prevention and certainly for much less than the cost of exposure to the average P&I cargo claim deductible or renewal premium increase.




And you thought it was safe to go back in the water!

Pirates (or robbers as they should really be called) in the SE Asia region may have fallen out of the headlines in more recent times, but they have certainly not gone away.

A Dutch-owned general cargo vessel was attacked by 10 armed men off Indonesia at the end of July – it hardly caused a ripple in the media, but it was a serious incident.

The ship was one of 11 vessels targeted by robbers in Asia in July according to the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP).

The attack on the 17,967-dwt Dolfijngracht (built 2009) took place about 6.5nm north of Pulau Mapor in Indonesia.The robbers boarded the ship and entered the ship accommodation area via the bridge.

They reportedly threatened the crew, stole cash, computers and personal belongings before they escaped.

ReCAAP, quoted in TradeWinds, say the robbers also discharged their firearms as a bullet hole was found on the vessel. However, no crew were injured.

In another incident off Malaysia a tanker was boarded by eight robbers armed with guns and knives just north of the island of Tioman. They ordered the chief engineer of the 2,106-dwt LG Asphalt 1 to reduce speed to a minimum and then mustered the crew on the bridge, the engine room and the mess room where they were tied up.

The robbers then stole the crew's cash and ship properties, and left the ship an hour later. However, the ship's crew later regained control of the vessel and sailed to Kemaman port.

Who forgot to tell the pirates
Somebody forgot to tell the pirates? 

Five of the reported incidents took place in Indonesian waters, while four more occurred in Philippine waters. Although it's no longer a 'hot topic' for journalists, it seem that ship owners operating in Indonesia still face one of the highest risks of a piracy attack in the world where almost 30% of all sea crimes occur!

Other vessels involved in similar incidents in July included the 50,721-dwt bulker Sanko Mercury (built 2010), the 2,742-teu Cape Mahon (built 2007), the 106,045-dwt tanker Guanabara (built 2007), the 5,150-bhp anchor handler Jaya Mermaid 3 (built 2007), the 1,118-teu Helmuth Rambow (built 2005), the 4,250-teu APL Los Angeles (built 2008), the 46,200-dwt tanker Garnet Express (built 2013) and the 19,000-dwt product tanker Kirana Tritya (built 2004).


It's official! US Government pays crew better than Greek owners!

Greek shipowners feel their trust is being betrayed by Filipino seafarers reporting environmental negligence in order to supplement their wage packets.

Shipowners in Greece are seriously considering a halt to hiring Filipino crews, according to a TradeWinds article. You may well ask: why?

Some owners told the shipping weekly they feel crews from the Philippines are more likely to become whistle-blowers motivated by financial rewards.

Apparently, Filipinos are exploiting the US Environmental Protection Agency (EPA), which encourages whistle-blowing by offering money for info. (Ironic how an agency tasked with protecting the environment is being tarnished by top people who represent an industry generally associated with.... tarnishing the environment!)

According to US-based organisation Marine Defenders, in the past three-and-a-half years, more than a third of maritime prosecutions have resulted in whistle-blower awards ranging from $40,000 to $400,000.

"Our experience has shown that in almost every case reported it has been a Filipino making the accusation," one owner said. (This we take to mean they must have all been fabricated, every one.)

"The prospect of receiving a substantial monetary reward from the US Government that may be more than a lifetime's wages at sea is a powerful motivator to make up a false story of illegal activity or exaggerate an innocent situation to portray it as illegal activity," Michael Chalos, senior partner at law firm Chalos O'Connor told TradeWinds. (Or, in other words, these crews work themselves blind and get paid peanuts.)

Stavros Galanakis, president of crew-management company Elvictor, says one of the reasons why crew from the Philippines are more likely to be whistle-blowers is because they have advanced English language skills. "Well, it is true that crew from Egypt or Ukraine are not making such allegations," he said. (Or, in other words, the better your English, the more you can't be trusted. So if it's your mother tongue, you'd better watch out. Brits, Americans, Australians... your days are numbered!)

In fairness, it's not the entire Greek shipowning contingent ganging up on SE Asian crews trying to do the right thing or supplement their low wage. One owner said they "consider most Filipinos to be hard working and honest" although he did add, rather confusingly and in complete contrast to his earlier comment, that they have may have to stop employing them because "we are starting to lose our trust in them."

Apparently the key issue is the EPA unfairly targeting shipping companies. (Which we all know are above any environmental reproach, right?)

"The US authorities seem to think that all Greek owners are rich and, therefore, have money to throw away," he said. (Aren't they? Don't they?)

Galanakis points to unfair treatment, with different sets of rules for owners and whistle-blowers, which leads owners to complain about their treatment by US authorities and what they feel is the real motive behind the EPA.

We think you'll agree this is a contentious issue, readers. We've come down on the side of the crew and the environment, but we know there are two sides to every story and things are very often not black and white but uncomfortable shades of grey. What are your thoughts? Send us your viewpoints, your opinions. Is the US EPA at fault for offering whistle-blower rewards or is it the fault of ship owners who seem to have learned little about the law and MARPOL despite having been subjected to massive fines for 'magic pipe' incidents in US waters.


SEAsia IT upgrading in progress – 99% completed...

SEAsia P&I Services Pte Ltd has come a long way since it was established in 1996 as a specialist P&I correspondent office. Today, it has a team of over 100 experienced surveyors and support staff located in over 60 major ports, providing a coordinated service network which extends from the Middle East through to Japan.

Other than the provision of our core services as P&I correspondents, SEAsia has expanded its scope of services now offering to act as insurance adjustors and claims settling agents for transport liability, H&M, cargo and property insurers; and marine and property surveyors.

As SEAsia expands in size and in the type of services it offers, it is of utmost importance that our infrastructure expands as well to accommodate the growing needs of customers. And in our increasingly wired world, this means being able to support higher and faster email traffic and larger data transfer as part of our daily operations.

With that in mind, the management of SEAsia has upgraded its IT system along with its email system so that SEAsia can continue providing customers with the highest levels of service.

SEAsia is proud to announce its new domain name - - to reflect the extensive progress it has made to date together with its beefed-up IT infrastructure.

Now that we have relayed this piece of good news to you, consider our upgrade 100% complete!



Forthcoming Events:

“Key Elements of Shipping” 22-24 October, The Klapsons Hotel, Singapore

SeaProf/BI Norwegian Business School intensive short course

SeaProf, a sister company of SEAsia, is a leading specialist Maritime Executive Training organisation which partners with the renowned BI Norwegian Business School in Oslo to conduct its acclaimed specialist courses.  

SeaProf and BI have just completed the programme update for the seventh run of their "Key Elements of Shipping" course and bookings from student delegates are already underway. Speakers include Captain Robert Gordon of SEAsia Claims, Prof Catherine Bjune of BI, Prof Jasmine Lam of NTU as well as industry leaders from Class DNV, Nordea Bank, Ulstein and several others.

The course is intended for newcomers to the marine industry as well as professionals who now aspire to move up the management chain. The learning process is engaging and is achieved through topical lectures, interactive case studies and short assessment quizzes.

Past attendees include DBS Bank, Maersk, MPA, PSA, Rolls Royce, Holman Fenwick & Willan along with other top ship owners, managers and marine service companies. Participants can expect top level networking sessions and experience-sharing opportunities throughout the day with quality meals and coffee served.

A BI “Certificate of Achievement” will be awarded to successful course delegates followed by a drinks reception at the end of the course hosted at The Klapson's well-known rooftop bar, Fabrica.

The good news for Singapore employers is that the course is approved by the MPA for the 70% MCF rebate as well as the 60% PCI rebate on the balance. So it’s almost for free and not to be missed as a terrific way to reward your employees and upgrade their knowledge and problem-solving skills at the same time.

Don’t miss the chance to attend as seats are available on a first come first served basis. Take a look at the BI website at for full details including the programme, the speakers and Internet registration. Photos taken at our previous course are available on SeaProf’s Facebook page .

If you have any questions, please call the Course Administrator, Jenn Woo at +65 6323 7732 or email



“Moving to Safer Waters Despite Sea Change” 18 – 19 November, Marina Mandarin Hotel, Singapore

A Marine Insurance Conference

There has never been a more significant time for ship owners in terms of the decisions they make when buying insurance for their vessels. The P&I liability market has been through its most momentous renewal in a generation. The next renewal is tipped to spark even more upheaval; the H&M market remains soft globally with excess capacity available but things are changing. Will rates for hull cover finally rise? The cargo market remains driven by Asia, where is it going?

The two-day conference, which will be attended by SEAsia, discusses these key marine insurance markets as well as the growing market in shipyard and offshore vessel exposures including FPSOs and FSOs. It looks at the commercial changes each sector is now undergoing and combines these with insight and discussion into the technical issues which owners and their insurers are grappling with today.

To find out more, visit



Colin Fordham, General Manager of SEAsia, will be visiting London in the week starting 21 October 2013 – Colin will be around the City in Leadenhall Street & Lime Street areas for much of his time, and may even stand a round for the lucky few at The Lamb or another nearby hostelry while he's over. To all our friends in London: Colin looks forward to meeting you again!