pi_circular Tanker Cargo riskInsurance & claims Skuld
Liquid cargo contamination is an almost inevitable element of the tanker trade. Even the slightest pollution may render the cargo off specification and if the vessel is liable for the contamination, considerable claims are likely to follow. Which decisions need to be made in the initial phase following discovery of a contamination, and which options are available for restoring the cargo? Introduction and legal aspects Liquid cargo contamination is an almost inevitable element of the tanker trade. Whether the contaminant is seawater or previous cargo, even the slightest pollution on a PPM (parts per million) range may render the cargo off specification. Considering the homogenous nature of liquid cargo, once foreign matter has entered a tank it is likely that all of the tank's contents will be damaged. Adding insult to injury, liquid cargoes are usually expensive cargoes, meaning that if the vessel is liable for the contamination, considerable claims are likely to follow. The points raised above suggest that efforts minimising the damage are called for. We are all familiar with claimants demanding payment for the entire cargo at sale value, but is that actually the loss? A fundamental principle in both Continental and Anglo-American legal systems is that the claimant - in our context usually the cargo receiver - is bound to mitigate his loss. However, although the claimant has a duty to mitigate, this is not an unrestricted duty. What will be assessed by the court or arbitral panel is whether the decisions taken at the time they were made appeared to be reasonable and sensible. Arguments based upon the claimant's failure to mitigate therefore often fail. Judges will often sympathise with the claimant's position - in the heat of the battle, knowledge and information are often scarce while time pressure is proportionally high. Accordingly, it is a good idea for club and member to pursue an active role in the mitigation discussions. Cargo
Mitigation: Minimising the loss in case of liquid cargo contamination
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