Defence Guide - Hold cleaning in a nutshell (time charters)

The state of the holds on delivery is usually a requirement to validly tender an N.O.R. In the absence of any specific clause, most charters require that the ship be “ready to receive cargo with clean swept holds” (e.g. line 22 NYPE) i.e. she is ready to commence loading without delay.

To what standard must the holds/tanks be presented?

Courts will look at the wording of clauses and give them their literal meaning. The words “clean dry, free from loose rust flakes/scales and residues of previous cargo” will not mean that the holds can be rejected if “traces” of previous cargo are found, although there are conflicting arbitration decisions on this issue.

Very often, the rider clauses will require the ship’s holds to be delivered up to a particular standard. If a ship is to be delivered with holds clean to a high standard, e.g. grain standard or “hospital clean”, but the holds do not comply with this standard of cleanliness, it is not relevant whether the failed holds are still in a suitable condition for the particular cargo to be loaded (e.g. coal); charterers will still be entitled to reject the holds and insist that these are cleaned to the agreed standard before charterers accept delivery of the vessel.

Similarly, if a ship is to be “on delivery…ready to receive any permissible cargo allowed under the charter party…” then holds should be cleaned to the standard of the most sensitive cargo permitted under the charter party. For example, If grain cargoes are permitted, then the hold must be ready for grain cargo, no matter what the intended cargo is.

When must the holds be at the required charter party standard?

Careful consideration must be given as to the precise wording of the clause. Whilst many clauses will require the holds to be in satisfactory condition on “delivery”, some clauses may only require this to be “upon arrival at first load port”. Delivery of the ship may occur before arrival at the first load port.

Can charterers reject the ship if the holds are not clean?

If the ship is not in the required condition, the N.O.R is invalid and charterers are entitled to refuse delivery/reject her, and the charter period will not start. If owners are not able to rectify the condition of the ship before the cancelling date, charterers may become entitled to cancel the charter.

Clauses allowing owners to tender a valid N.O.R with unready holds

Some clauses will state that “If vessel fails such hold inspection, vessel to be off hire from time of failure until all holds passed. Any additional expenses because of hold failure to be for owner’s account”. There are also similar clauses in voyage charters where “laytime is suspended”. In this situation, charterers will have to accept the ship/N.O.R. and their remedy will be to put the ship off-hire/suspend laytime. In the context of time charters, such clauses are “period” off-hire clauses and no actual loss of time needs to be proven.

Holds to the “satisfaction of an independent surveyor’s whose estimate shall be final and binding”

Clauses often require the holds/tanks to be to the “satisfaction of an independent surveyor”. An independent surveyor must come from a survey firm, independent from owners, charterers, shippers & receivers. The surveyor must be jointly appointed unless the clause states that the holds are to be to the “charterers/shipper’s surveyor’s satisfaction” in which case it is arguable that the surveyor need not be jointly appointed.