The Commercial Court was asked to consider whether a cargo of LNG could be a cargo injurious to the Vessel.
By way of a Time-Charterparty dated 3 January 2011 AOM chartered the LNG Gemini (the “Vessel”) to Golar Commodities Ltd. Clause 30 of the Charterparty was headed “Injurious Cargoes” and stated that:-
“No acids, explosives or cargos injurious to the Vessel shall be shipped and without prejudice to the foregoing any damage to the Vessel caused by the shipment of any such cargo, and the time taken to repair such damage, shall be for Charterers’ account.”
AOM alleged that Golar loaded cargo at Cameron on 7 March 2011 which contained metal particles. These particles contaminated the Vessel’s cargo tanks and pumps which required repairs. AOM claimed damages in the sum of USD 1,933,933 for the cost of these repairs.
The Vessel experienced difficulties during loading of the LNG in the form of increased pressures. During inspection, a build-up of sediment and debris was found in the load line filters. The pressure in the tanks had also risen which was thought to have been caused by a build-up of sediment which had managed to pass through the load line filters. Throughout the loading operation “no obvious signs of external damage” were noted as having been sustained by the Vessel.
The Vessel then sailed to Senboko where she discharged her cargo without incident and again, there were no signs of damage to the Vessel’s pumps or tanks. During subsequent voyages from Senboko to Singapore and thereafter to West Africa the Crew reported finding debris coming from the spay pumps.
The Vessel loaded a further cargo of LNG at Bonny, Nigeria for discharge at Tobata, Japan where a small amount of debris was found. The quantity was considered to be no more than what would usually be expected in a LNG cargo.
The Vessel then proceeded from Japan to Subic Bay and during that voyage the crew reported “abnormal vibrations” and “banging” inside the casing and “[A] big cloud of rust went out of the blower’s casing”.
During the course of pre-planned regulatory inspections, debris was found in all cargo tanks; it was described by AOM as being a “significant quantity”.
The presence of the debris was not disputed by Golar, however they denied that LNG was injurious to the Vessel for the purposes of Clause 30.
The Court’s Decision
AOM argued that the cargo had caused a contamination of the Vessel’s pumps and tanks by metallic particles which exposed the Vessel to the risk of abrasion, rust, electrical shortage and pump failure. However, there was no evidence that the cargo caused any damage whatsoever to the Vessel.
AOM submitted that cargo could be injurious to the Vessel without causing any physical damage; it was argued that the cargo could be injurious to the Vessel if it interfered with her trading. That is, if after the cargo was delivered, the Vessel needed to be cleaned and was therefore taken out of service, resulting in damage to her trading patterns.
This argument was rejected by the Court. Clause 30 was held to expressly cover physical damage as the Clause specifically provides for “repairs”. In addition, the Clause was found to cover only the time taken for the Vessel to be repaired and not time lost as a result of the Vessel being cleaned, as in this instance.
AOM’s alternative argument was that cargo could be “injurious to the Vessel” without actually causing damage if it had a tendency or propensity to do so. This was accepted by the Court however, it was not persuaded that the metallic particles found in the cargo posed any real risk to the Vessel.
It was accepted that LNG cargos often include some small foreign particles which would warrant the Vessel’s pipes and tanks being cleaned but would not necessitate a repair. In addition, there was an industry standard for strainers to be used when loading/discharging LNG cargo but their use was in response to concerns raised by terminal operators as a result of solid material being discharged and not in order to protect Vessels from damage caused by those same foreign particles.
The Court found that the industry did not envisage damage being caused by the current LNG system and that cases of damage caused by LNG cargoes were rare.
In conclusion, LNG cargo was not considered to be injurious to the Vessel and as such Golar were not found in breach of the Charterparty.
Even if the cargo was found to have been injurious, the evidence provided by AOM was insufficient and did not go to show that the cargo caused recoverable loss.
AOM’s claim was dismissed.
The case provides useful guidance on Injurious Cargo Clauses. Whilst the cargo in question does not necessarily have to have caused physical damage to the Vessel it must have a propensity to do so.
The requirement to clean a Vessel after shipment of cargo is not considered to be sufficient to satisfy this test.