The ANEC FOB Contract No. 81 is a FOB contract form issued by ANEC (Brazilian Grain Exporters Association) to be used for the FOB sales of parcels of Brazilian Degummed Soybean Oil.

Vessel Nomination
The pre-advice period for the submission of the vessel`s nomination notice is minimum 10 days prior to the expected date of vessel readiness to load. In the vessel`s nomination notice the buyers must provide the vessel`s ETA date, IMO Number, flag, age and ownership and the quantity required to be loaded which must be in multiples of 500 MT. The minimum nominated quantity must be at least 500 MT.
The ANEC FOB Contract No. 81 does not stipulate any requirements to be complied with by the vessel to be nominated by the buyers.

Conditions For The Vessel Substitution
The Clause 8 of ANEC Contract No. 81 provides that the buyers may substitute the originally nominated vessel in the following conditions:
- the originally nominated vessel is unable to proceed to loading port due to a force majeure event or the seller agrees the vessel substitution;
- the buyers must give written notice of substitution of the vessel to seller with at least 3 working days prior to the substitute vessel`s ETA at loading port;
- the notice of substitution must include all the information required about the substitute vessel, i.e. IMO number, flag, age, ownership;
- the ETA date of substitute vessel is not more than 5 days earlier or 5 days later than the last ETA date reported by the Master of the originally nominated vessel.
Maximum two substitutions are allowed under ANEC Contracts. A third substitution is allowed only for short shipped quantities.

Conditions For The Vessel Presentation For Loading Vegetable Oil Cargoes At Brazilian Ports
The ANEC Contract has no provision concerning the conditions for the presentation of vessel for loading, no cleanliness warranty and no mention about the mandatory inspection of tanks and pipelines and manifolds.
The acceptance of vessels for loading vegetable oil cargoes at Brazilian ports is subject to the prior approval of tanks by a surveyor of the Brazilian Ministry of Agriculture and a FOSFA Member Superintendent appointed by the sellers.
The vessel`s NOR tendered after berthing must be accompanied by the Certificate of Fitness for the Carriage of Cargo issued by the surveyor of the Brazilian Ministry of Agriculture and the FOSFA Certificate of Compliance, Cleanliness and Suitability of Ship`s Tanks issued by the FOSFA Member Superintendent.

NOR And Commencement Of Laytime
The vessel`s Master may tender NOR only upon the vessel is ready in all respects to receive the soybean oil cargo, i.e. after the vessel was inspected and approved for loading by a surveyor of the Brazilian Ministry of Agriculture and a FOSFA Member Superintendent, at the berth ordered by the sellers.
If the loading port is congested and/or the berth is not available at the time of the vessel`s arrival at the loading port, the vessel`s Master can give NOR upon arrival at the anchorage place1.
The laytime will commence to run upon the expiry of 6 hours` Notice time after the valid NOR becomes effective, that is, after the expiry of the 10 days` pre-advice period. NOR tendered after 17:00 hours local time (Brazilian local time) on a regular business day or after 11:00 a.m. on Saturdays or Sundays and Holidays shall become effective only from 8:00 a.m. on the next business day.
If the Master tenders NOR upon arrival at the anchorage place and after berthing the vessel fails the tanks` inspection, the time lost by the vessel waiting for berth will not count as laytime or time on demurrage. In such case, the laytime shall start to count upon the vessel is declared ready in all respects for loading.

ANEC Contract Options For Counting The Time Spent By The Vessel At Anchorage Waiting For The Goods
The vegetable oil cargoes are sent to Brazilian ports by trucks. This leads to congestion on the roads and at the ports. The slow arrival of cargoes caused in the past loading delays and long waiting times for the buyers` vessels.
ANEC Contract provides two options for counting the time lost by the vessel waiting for the goods:
The first option is stated in Sub-Clause 11.1. In this case, the time lost waiting for the goods shall not count as laytime but the buyers shall be entitled to claim damages for detention for the time lost thereby. The detention shall be payable at the rate stated in the vessel nomination.
The second option for counting the time lost waiting for the goods is stated in Sub-Clause 11.2. In this case, the time lost waiting for the goods will count as laytime or if the laytime is exceeded, as time on demurrage. However, by stipulating a low rate of loading, the Sub-Clause 11.2 gives the Brazilian exporters a lengthy laytime and thereby protects them against a potential extensive liability for demurrage.
In case of contracts for sale of parcels to be shipped by more than one shipper, the time shall count pro rata. If one or several shippers/sellers do not have the goods ready for loading and loading is stopped due to non-availability of their parcels, then the pro rata counting of laytime shall stop from the moment when all other parcels are loaded by the shippers/sellers who had the goods ready for loading and the time shall count separately for the shippers/sellers of remaining parcels.
If the vessel is not allowed to berth because one or several shippers/sellers do not have the goods ready for loading, those shippers/sellers will be jointly and exclusively responsible for the time lost by the vessel upon arrival at loading port until the vessel is berthed.
The Debit Notes for detention or demurrage or despatch must be settled within 30 days from the date of presentation, but ANEC Contracts do not stipulate a time limit by which such debit notes should be presented.

The Contractual Time Limit For Tendering Valid NOR
The port operators schedule the vegetable oil shipments in function of the vessel`s laycan and expected readiness date. The Clause 8 of ANEC Contract No. 81 provides that the shipment date will be on the 11th day after the vessel nomination date or the first day of the contract delivery period, whichever is later.
If the Master will notify the shippers and port agents that the vessel will not be able to present for loading on the expected readiness date due to unexpected delays on the approach voyage to the loading port, the port operators will re-schedule the shipment date usually with no additional costs provided that the vessel will arrive within the contractual time limit after the expected readiness date.
The Clause 8 of ANEC Contract No. 81 provides that the contractual time limit for the presentation of vessel for loading and tendering valid NOR is 10 days from the expected readiness date notified in the vessel`s nomination notice. In the event that the originally nominated vessel does not present ready for loading within the 10 days` time limit, the initial nomination shall be deemed to have lapsed and the sellers shall start to count a new 10 days` pre-advice period.
The buyers must present the vessel ready in all respects for loading by 17:00 hours local time (Brazilian local time) on the last business day of the contract delivery period provided that the buyers have complied with the minimum 10 days` pre-advice requirement stipulated in the Clause 8 of ANEC Contract No. 81.
If the buyers nominate the vessel with at least 10 days before the last working day of the delivery period and the vessel arrives and tenders valid NOR by 17:00 hours local time (Brazilian local time) on the last working day of the delivery period, the buyers shall be deemed to have complied with the contract requirement and the sellers shall, if necessary, complete loading after the delivery period2.

Conditions For Extension Of The Delivery Period And Liability For Carrying Charges
If the buyer nominates the vessel with at least 10 days before the last working day of the delivery period and the nominated or substitute vessel arrives and tenders valid NOR by 17:00 hours on the last working day of the delivery period but the seller cannot commence or complete loading during the delivery period, the sellers shall, if necessary, commence and/or complete loading after the delivery period and bear the cargo carrying charges accrued after the delivery period.
Should the buyers fail to present the vessel ready in all respects for loading by 17:00 hours on the last day of the contract delivery period, they have the right to claim extension of the delivery period with additional 30 days by notice served to sellers no later than the last day of the contract delivery period.
In case of late nomination of vessel, that is, when the buyers nominate the vessel in less than 11 days before the expiry of the contract delivery period, the extension shall be deemed to have been claimed and the buyers will have to reimburse to sellers the cargo carrying charges accrued from the first working day after the expiry of the delivery period until the Bill of Lading date, even if the vessel arrives and tenders NOR by 17:00 hours on the last day of the contract delivery period, because the sellers must have the goods ready for loading on the 11th day after the vessel nomination date (i.e. after the expiry of the 10 days` pre-advice period), not sooner.

ANEC Contract Options In Respect Of Liability For Carrying Charges During Strike Periods
The first option is stated in Sub-Clause 13.1. In this case the buyers will not be liable for the cargo carrying charges accrued during strike periods, regardless of whether the vessel was berthed or not.
The second option is stated in Sub-Clause 13.2. In this case the buyers would also be liable for the cargo carrying charges accrued during strike periods.

Buyers` Obligation To Provide Evidence Of Insurance Cover
The buyers must obtain cargo insurance cover as per the Clause 5 of FOSFA Contract No.54 covering the marine risks as per the Institute FOSFA Trades Clauses (A) and the war risks and risks of strikes as per the Institute War and Strikes Clauses (FOSFA Trades). Upon the sellers` request, the buyers must confirm by notice to sellers before the commencement of loading that the cargo insurance cover has been effected. If the buyers fail to provide evidence of insurance cover in due time, the sellers shall have the right to obtain insurance cover for the buyers` account and expense.

Quality Determination
The cargo`s quality characteristics (specified in the sale contract) must be determined and certified by a FOSFA member superintendent appointed by the seller, based on a composite sample taken in accordance with the method in ISO 5555.
The buyers have the option to appoint a FOSFA member superintendent to sample the cargo jointly with the sellers` surveyor and provide their analysis results of the cargo sample provided that the seller shall be advised, at the latest upon the vessel`s berthing, of the name of the surveyor the buyer has appointed.
If the difference between the seller`s and buyer`s surveyors analysis certificates does not exceed 0.05% in respect of the Free Fatty Acids, 0.02% in respect of the Moisture Content and 0.002% in respect of Phosphorous, then the analysis results certified by the seller`s surveyors shall be final and binding.
If the difference between the seller`s and buyer`s surveyors analysis certificates exceeds any of the above-mentioned percentages, then either party may ask within 30 days from the Bill of Lading date a third analysis of cargo sample. In such case, the average of the two closest analysis results shall be final as to quality of the cargo and shall be settled by a complementary debit note.
However, the seller`s surveyor analysis certificate attesting the cargo`s quality characteristics at the time and place of loading shall be final, that is, the buyer will have to pay for the cargo based on such certificate, even if the buyer asked a third analysis of cargo sample. The request of the third test shall not entitle the buyers to refuse or delay the payment of shipping documents.

Weight Determination And Certification
The cargo weight figure shall be determined and certified by the independent surveyors appointed by the sellers based on the shore tanks gauging.
The cargo weight figure determined based on shore tanks gauging shall be the basis for the calculation of FOB price and issuance of commercial invoice, irrespective of any other weight figure resulted from the vessel`s tank ullages.
If the cargo is delivered from barges and/or the shore tanks figure is not available, the cargo weight figure shall be determined and certified by the independent surveyors appointed by the sellers based on the vessel`s tank ullages.

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Biofuels Trade Review Edition No. 4.

Endnotes:

1. See the last paragraph of Clause 11.
2. See Clause 5 of ANEC Contract No. 81.