Ship Cargo Claim, P&I Claim, How Value Ascertain And Process To Claim
Updated: Nov 3, 2020
Cargo is the reason for shipping. It is oxygen brought on very wide scale of Blue Ocean to many parts of the international shipping trade. Carriage of cargo by sea is an important trade because is very cost effective on a very large volume of cargo for a long distance. Other transport by road rail air are for short distance which play important role, but carriage by sea is yet to be beaten on the heavy volume and long distance marathon.
Ocean involves a complex network of shipping which includes shippers, traders, freight forwarders, banks carriers, insurers, receivers and charters.
The role of P&I club is very important as in handling claims related to cargo. P&I club is a non-governmental, non profitable mutual or cooperative association of marine insurance providers to its members which consist of owners, operators, charterers and seafarers under the companies.
A Cargo Claim – What It Is?
A claim is a demand in writing for a specific amount of money that contains sufficient information to identify the shipment received by the originating carrier, delivering carrier, or carrier on whose line the alleged loss, damage, or delay occurred within the time limits specified in the B/L Contracts.
How Value Ascertain?
The Market value is to be assessed at the time and place of due delivery and not at the time when the goods were lost or damaged or brought.
To gather cargo pricing information it’s better to consider data from different sources like:-
a) Specialist database
b) Trade Press
c) Digital Media
d) Traders and brokers market reports
Claims Handling Procedure.
1. Immediate Notification to concern Party
Notify cargo insurer nominated by company
Notify and hold cargo operation for the loss and invite for inspection/survey
If damage was not apparent at the time of delivery of the cargo, notice should in any event be given within 3 days of delivery.
2. Appoint a surveyor and arrange for joint / bilateral inspection of the damaged cargo
Appoint a surveyor to act on company behalf.
It is important that P&I representative lias with both the surveyor from owners and charterers side.
Survey to be carried out jointly with surveyor from both end, if possible the survey to be carried out while cargo is untouched, or if its liquid cargo samples to be withdrawn from tank and tested in presence of surveyor.
3. Minimize and prevent further losses
If the loss of cargo can be minimized immediate action can be taken by mutual agreement of both the surveyor
Both surveyors to be able to assist and communicate with each other.
4. Collect Documents
Bill of lading, Proof of title to claim
Proof of claim like – Surveyor report, documentation showing quantity and quality, ullage reports, mate’s receipts, invoices of additional mitigation cost, photograph.
Any evidence or documentation, that provides evidence of the claim and that reasonably supports the extent and the amount of the claimed loss.
5. Submit a substantiated and quantified claim
A formal claim must be submitted before any settlement can be considered and should include:
Claim statement and calculation of the specific value of the cargo damage or loss
Details of causation and this all supported by the collected documents as described.
6. Protect against time bar
In most cases the claim will be subject to a one-year time bar (Hague Visby Rules)
If the claim is not resolved within 1 year after the date of unloading:
- start legal proceedings or
- Request club in writing to extend the time limit. Club will normally, in consultation with their insurers, grant an extension
7. Lessons Learnt analysis
Any incident that leads to damage must be treated as an indication that something is wrong with the system.
Club will use the lessons learnt to reduce the probability of a similar incident happening again.
Risk Factor And Transfer Of Responsibility
The risk and liability for the transportation of cargo from point to point may include but not limited to:
● Total loss of cargo
● Loss of monies
● Damage of cargo
● Rerouting of cargo
● Abandonment of cargo
● Non- collection of documents
● Incorrect release of cargo
● Delays due to improper documentation
● Risk of carrier’s liability