INTRODUCTION
On 16th May 2024, the MV LODUR a container carrier sailing under the flag of Antigua and Barbuda inbound to the Freetown Container Terminal at The Queen Elisabeth II Port to discharge cargo ran aground on rocks within the territorial waters of Sierra Leone. Attempts by the crew to refloat the vessel under its own power proved unsuccessful. An advanced salvage team consisting of professional salvors was mobilised and dispatched to aid the refloating of vessel. The operators, CMA CGM have subsequently advised that owners of the vessel have in consequence declared General Average (GA) and have entered into a salvage agreement with professional salvors under ‘LOF’ terms to provide salvage assistance to the vessel1.
As part of the salvage operations, an initial underwater inspection of the vessel was undertaken to determine extent of the damage, methodology and scope of the salvage and what resources could be put at the disposal of the salvage operations in order to safely refloat the vessel. That inspection indicated among others that the vessel had run aground on rocks (known as the ‘Carpenter Rocks’) and that four of the vessel’s tanks had been breached as a result; a very serious situation by the stretch of any imagination keeping in view the possibility of damage to marine life, biodiversity and the economy of a country with limited resources in every aspect of the word if there was to be a fuel leak or sinking of the vessel but more importantly, that this had occurred within the narrow channel recommended by the British Admiralty Chart for entrance into the Sierra Leone river for vessels in or outbound to Freetown Terminal Port and Port Pepel among others.
The effort of the salvage team eventually proved successful and once the vessel was refloated, it departed the territorial waters of Sierra Leone. In effect, once General Average was declared, General Average Security and salvage security among others will now be required from all
1 Source – WK Webster, Marine and Transit Claims Consultant website
2 British Admiralty Nautical Chart 625, Entrance to Sierra Leone River is a standard nautical chart that complies with Safety of Live as Sea (SOLAS) regulations and is the recommended chart especially for vessels constrained by draught.
Consignees, cargo owners and persons with interest in the cargo that were onboard the vessel at the time of its running aground for the delivery of their cargo.
Following the incidence, the instructions to cargo, container and bunkers interest issued on 18th June 2024 by Messrs Stichling Hahn Hilbrich GmbH, Hamburg aptly captures the enormity of the conundrum in terms of costs and retrieving of cargo to name a few that lay ahead in the maze of the competing interest of cargo, container and bunkers interest, ship owners, salvors, the insurers, lost adjusters, arbitrators and the retinue of legal advisers that will be in attendance. The notice amongst others state as follows: “… As you are most probably aware m.v. “LODUR’ on laden voyage from Tanger Med and Algeciras to Freetown, Monrovia, San Pedro and Abidjan whilst arriving at the port in Freetown grounded…Salvage Operations were successful……Due to extraordinary expenditures already and still to be incurred, General Average has been declared on 18th May, 2024 and parties concerned are notified accordingly that Shipowners have instructed Stichling Hahn Hilbrich GmbH as average Adjusters in this case ……….., and to arrange for the collection of Geneal Average securities and documentation from all parties interested in Cargo, Containers and Bunkers. Simultaneously Albatross Adjusters Limited………….. have been instructed by the Salvors to assist in the collection of Salvage securities from parties concerned in Cargo, Containers and Bunkers in accordance with the terms of the Lloyds Open Form Salvage Contract (LOF 2020) and we shall co-ordinate the release of those consignments, for which Salvage and General Average securities has been submitted. Owners will exercise their possessory lien over the cargo and containers as long as no sufficient General Average securities are provided by property owners or receivers”
LOF Terms – ‘Lloyds Open Form’ known by its abbreviated acronym ‘LOF’ is a standard contract developed over time in the industry and used for ‘salvage under contract’ situations with regards a marine salvage operation. Formerly referred to as ‘Lloyds Standard Form of Salvage Agreement’, LOF specifies the rights, duties and obligations among others of the parties. In the present day and age, marine salvage operations are undertaken by professional salvors under contract (as opposed to the days of old). The Form is published by Lloyds and usually used in international salvage operations. Professional salvors endowed with top-of-the-line equipment, expertise and the resources including the ability to deploy at lightning speed and to scale up, if need be, remain on standby as it were. When opportunities present themselves to provide aid and assistance and they are successful (such as in the case of the running aground of the MV LODUR), they end up sailing into the sunset with a generous salvage reward.
SALVAGE LAW
No doubt, without the incidence of the running aground of the MV LODUR, there would have been no need for the involvement of salvors in the first place. It is therefore safe to say that that singular incident set into motion a cascade of events that has led among others to salvors being appointed who successfully undertook the salvage operation. But what is salvage one might ask? For the average run of the mill and or one time shipper and or merchant and or repeat shipper or business man with cargo interest that were onboard the vessel and now anxious for any news that would see the sooner release and discharge of his container, what is indeed salvage and how does this factor into the equation that results in a sooner release and discharge of his container is of the utmost importance. Basically, there are two common scenarios that come into play with salvage; one that is
3 Stichling Hahn Hilbrich GmbH instructions for Cargo and Container and Bunkers Interests dated 18th June 2024
contractual and the other voluntary. In the case of the first, salvage is rendered under contract by professional salvors with professional salvors appointed to undertake salvage operations usually on LOF terms as is the case with the MV LODUR. The second is voluntary and a concept of general application under the universality of maritime law. According to Modern Maritime Law and Risk Management by Aleka Mandaraka-Sheppard4; “Brice defines salvage as a right in law, which arises under English law when a person, acting as a volunteer (that is, without any pre-existing contractual or other legal duty so to act) preserves or contributes to preserving at sea any vessel, cargo, freight or other recognised subject of salvage from danger”. Were any such assistance is offered, a claim arises in law. According to Admiralty Jurisdiction and Practice by Nigel Meeson5, the essential prerequisites for a claim to be salvage at common law are; therefore, (a) that it concerns a recognised subject of salvage, (b) that the property was in danger, (c) that the services were voluntary and (d) that the services were successful. It can be gleaned from the instruction for cargo and container and bunkers interest of 18th June 2024 issued by Stichlling Hahn Hilbrich GmbH referenced above that the salvors had been appointed on Lloyds Open Form Salvage Contract (LOF 2020). It is the Advisory No.7 dated 18th June 2024 issued by CMA CGM to its customers under the rubric ‘The Salvage’ that state who the salvors are and perhaps how central they will be in the release of the salved property. It states as follows; “the salvors, T & T Salvage LLC have appointed the Average Adjusters Albatross Adjusters Ltd, to assist with the collection of Salvage securities from all parties concerned including Cargo. Before releasing their maritime lien on salved property, the Salvors will require salvage security to be lodged by cargo interests …” To be clear, the fact that “owners will be exercising possessory lien over the cargo and containers as long as no sufficient General Average securities are provided by property owners or receivers” and or that “before releasing their maritime lien on the salved property, the Salvors will require salvage security to be lodged by cargo interests” should not come as a surprise as merchants, property owners, cargo interests and shippers were issued with sea waybills or bills of lading on receipt of their goods for shipping and were clearly informed in ‘fine print’ that in either case, it will be governed by the Terms and Conditions available on the CMA CGM website, and the relevant page on the website was explicitly referred to.
THE FINE PRINT AND THE BILL OF LADING OR SEA WAYBILL
A cursory look at the said relevant CMA CGM website page reveals extant provisions on the right of the carrier, its servants and agents to lien on the Goods and any documents related thereto and a right to sell the said goods by private or public auction for among others detention charges, salvage, general average contributions and all other charges and expenses whatsoever which are for the account of the goods or of the merchant6. Similarly, there are quite extensive provisions on General Average and Salvage to the extent that “in the event of accident….before or after the commencement of the voyage, resulting from any cause whatsoever, due to negligence or not, for which, or for the consequences of which, the Carrier is not responsible, by statute, contract or otherwise, the Merchant shall contribute with the Carrier in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect of the Goods. All expenses in connection with a general average or salvage act to avoid damage to the environment shall always be considered as general average expenses …7”
4 2nd Edition, page 634
5 3rd Edition, Paragraph 2,81, page 45
6 Clause (13) of the Bill of Lading CMA CGM Terms and Conditions on the CMA CGM website
7 Clause (14) of the Bill of Lading CMA CGM Terms and Conditions on the CMA CGM website
Under the ‘additional clauses’ rubric of its Bill of Lading and waybill that was given to the merchants and shippers on delivery of their cargo, the carrier CMA CGM stated as follows; “this waybill is governed by the Terms and Conditions available on the CMA CGM website.” The CMA CGM website at the “Terms and Conditions” page states as follows: “to clearly describe and control the goods being shipped, A bill of lading or waybill is the contract covering the carriage of goods. It identifies the contract parties (carrier, shipper, merchant), what is being carried (goods) and key voyage information (vessel, route).The B/L : (i) Evidences the carriage contract, (ii) Represents the goods being carried, (iii) Proves that the goods have been received and (iv) Lastly, it contains the terms and conditions governing carriage of the goods, describing the rights and responsibilities of each party. This page also contains Bill of Lading CMA CGM Terms and Conditions , Standard Terms and Conditions for Credit with CMA CGM and Bill of Lading Terms and Conditions CMA CGM Roll-on Roll-off (RORO).”
According to ‘Bills of Lading’8 by Richard Aikens, Richard Lorad and Michael Bools; “there is a strong presumption that goods to be carried by sea are to be carried pursuant to a contract, and there is also universal knowledge and recognition in commercial and shipping circles, that bills of lading are issued in connection with such carriage and that they contain contractual terms. Where the bill is ‘filled in’ and tendered for signature by or on behalf of the shipper it will thus be difficult for him to deny assent to its terms”.
‘Pay attention to the fine print of a contract’ is cliché but never has this been so true and this is one lesson merchants, shippers, consignors, consignees and all cargo interests must pay heed to in the future. Cargo interests suddenly now find themselves being confronted with the very same document i.e. the bill of lading or sea waybill that they were presented with at the onset on delivery of their cargo for shipment but with now one key difference, performing the sacred duty of reading, understanding and comprehending or seeking further explanation and or advice before agreeing to be bound by the terms and conditions.
Whether the cart was put before the horse so to speak or the reverse as the case may be; in either case the horse having bolted, General Average has been declared. How persons with cargo, container or other interest proceed from this point on makes the difference.
THE NUTS AND BOLTS OF GENERAL AVERAGES
Unforeseen maritime eventualities, emergencies, accidents and the like are needless to say a reality in the maritime industry as even in the best of rigid operating procedures, protocols and safety regimes that are at the bedrock of the industry, they do occur once a vessel is put out to sea. To put it in another way, travelling by sea comes with its unforeseen emergencies from time to time and this is so despite all the modern-day technological advances in ship building, navigation and expertise. “O hear us when we cry to Thee for those in peril on the sea – The stirring words of the well-known hymn remind us that the transport of the world’s produce over the oceans from one country to another is still a hazardous undertaking”9. Enforcement of Maritime Claims, by D.C. Jackson describes ‘General Averages’ as follows; “It is based on the principle that the cost of a sacrifice of property in time of danger for the rescue of other property must be borne and shared by all those interested in the whole”10.
The history of General Averages can be traced to a form of it that was included in the Lex Rhodia, the Rhodes Maritime Code of 800 BC, the ancient maritime code of 800 BC around the time of Julius
8 Paragraph 7.39, Page 131
Paulus. “Historical records tell us that the systems of general average, involving a contribution from the interests involved in a common maritime adventure, have been in existence since the earliest days of seaborne traffic. The object of the system was to encourage ship masters and others who sailed with them to exert themselves to save the ship and its cargoes whenever a peril threatened the joint adventure. The prime example is the consent given by the owners of cargo to the ship master to make a judicious and timely sacrifice of their property, in the knowledge that their loss would be made good to them by ratable contribution from the other interest on the completion of the voyage.”11
There is no gainsaying that from those early beginnings, there has been a desire for uniformity evidenced by the various efforts to streamline and or codify what appertains when General Average is declared with a majority of European countries publishing their own codes of maritime law which incorporated provisions as to general average on the one hand and on the other hand, common law countries charting their own paths.9 The York-Antwerp Rules have been the most successful vehicle to date for attaining some form of uniformity and this has provided a framework for calculations of contributions of each part.
Finally on this issue, although the Merchant Shipping Act No. 3 of 2003 (as amended) of the Laws of Sierra Leone contains specific provisions for the “limitation and division of liability” including in the case of general average and lists those persons who are entitled to limit liability, home grown and or local jurisprudence in this area is very limited and recourse will have to be made as is usually the case to that of the United Kingdom and other commonwealth jurisdictions.
NEXT STEPS
Cargo and container interest have been provided with a series of documentation including forms by the adjusters and carrier, which it appears has occasioned more confusion rather than clarity. As a result, there has arisen a fog that has clouded possible next steps and options for resolution for the affected interested parties. If there was indeed a fairytale magic wand that could be waived by Poseidon thus bringing an end to the nightmare situations that merchants, shippers and other interests are now undergoing, now would be a good time to put it to use. Finding one’s footing in the melee of documentation, a complex process and maritime jargons in a cost-effective manner as well as safeguarding one’s interest and minimising further exposure not to talk of the attendant cost implications, whichever way this is cut, is now of the utmost importance. In the midst of losses that have been described as “extraordinary expenditures already and still to be incurred”10, it is perfectly normal, and we dare say legal for vessel owners, carriers, salvors, freight forwarders, marine insurers and other interests to head for safer shores and take steps to limit financial and other exposure in these circumstances. Inaction and torpidity by affected persons is simply put therefore not an option. The role of the adjusters cannot be overemphasised at this moment. To put it mildly, General Average adjustment is a complex process and performed by individuals and firms with expertise in this niche area of maritime law and insurance. Shippers, merchants, container, cargo and other interests who have a comprehensive cargo insurance policy in place and in addition have kept proper records and documentation of the cargo (to wit bill of lading/sea waybill, commercial invoice, packing list, freight invoice) in our view already have a leg up. When all is said and done, and keeping in view the exigencies of the moment, having an experienced marine and or transit claim consultant with a proven track record in your corner to navigate the course of retrieving one’s cargo that lies ahead does not hurt.
9 The York-Antwewrp Rules, 3rd Edition by N. Geoffrey Hudson and Michael D. Harvey, Paragraph 1.04, page 5
10 Instructions for Cargo and Container and Bunkers Interests providing Geneal Average Security dated 18th June 2024 by Stichling Hahn Hilbrich GmBH
Disclaimer
This article sets out some basic information on the running aground of the MV LODUR in Sierra Leone and the legal issues that have subsequently arisen. Although the contents of the publication are correct, well researched and to the best of our knowledge, information and belief at the time of press true, readers are encouraged to seek further specific and or professional advice before taking action on the basis of the opinions or facts expressed herein. We cannot accept any responsibility for any facts or errors that this article may contain whether negligent or otherwise or take responsibility for any loss or damage suffered by any person or business interest that relies on this publication. The contents of this article are for general information only. It does not constitute nor is it intended to constitute legal or any other form of professional advice The article is produced by the Admiralty & Maritime Practice Division, Macauley, Bangura & Co, 31 Lightfoot Boston Street, 4th Floor, UMC Building, Freetown, Sierra Leone. Macauley, Bangura & Co is a fully integrated boutique law firm providing end to end solutions to its clients. The Firm represents multinationals, companies, venture capitalists and individual businessmen in this sector and has advised clients on the arrest of vessels, P & I Clubs, shipyards, sea fearers, bank and lenders with regards the creation and registration of charge over a vessel, searches and marine accidents to name a few. It also has an established track record of working with international law firms such as Messrs Herbert Smith Freehills LLP, Messrs Salvus Law and Rajah & Tan Singapore LLP among others.
