The Review Of ANEC FOB Contract Form No. 81, Edition 2016
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 Soyabean Oil.
Vessel Nomination
The
pre-advice period for the submission of the vessel`s nomination notice
is minimum 15 days prior to the expected date of vessel readiness to
load. In the vessel`s nomination notice the buyers must provide the
vessel`s name and details (flag, age, 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 ETA of substitute vessel is not more than 5 days earlier or 5 days
later than the last reported ETA of the originally nominated vessel;
-
if the ETA of the substitute vessel is earlier than the last reported
ETA of the originally nominated vessel, the vessel substitution notice
must be given to sellers with at least 3 working days prior to the
substitute vessel`s ETA.
Maximum two substitutions are allowed under ANEC Contracts. A third substitution is allowed 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 vegetable 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 NOR has been tendered.
The
ANEC Contract does not stipulate clearly whether the time lost by the
vessel waiting for berth will count or not as laytime or time on
demurrage, if after berthing, the vessel fails the tanks` inspection.
The Sub-Clause 10.2 paragraph (C) provides that:
"Vessel must
be ready in all respects to receive cargo. In case vessel is found
unsuitable, laytime starts to count only when vessel is declared
suitable in all respects to receive cargo."
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 Clause 10.1. 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
second option for counting the time lost waiting for the goods is
stated in Clause 10.2. 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 Clause
10.2 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 or is
required to vacate the berth because one or several shippers/sellers do
not have the goods ready for loading, after getting the goods ready,
those shippers/sellers shall be the first to load and any time lost
thereby shall be for his/their account up to the moment he/they have
loaded all his/their goods. Thereafter, the time shall count pro rata
between the shippers/sellers who had their goods ready for loading.
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 16th day
after the vessel nomination date or vessel substitution date in case of a
short shipped quantity.
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 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
nomination shall be deemed to have lapsed and the buyers will have to
make another vessel nomination subject to the minimum 15 days`
pre-advice period.
The buyers must present the vessel ready in all
respects for loading by 17:00 hours on the last day of the contract
delivery period provided that the buyers have complied with the minimum
15 days` pre-advice requirement stipulated in the Clause 8 of ANEC
Contract No. 81. If the buyers nominate the vessel with at least 15 days
before the last working day of the delivery period and the vessel
arrives and tenders valid NOR by 17:00 hours on that day, the buyers
shall be deemed to have complied with the contract requirement2 and the sellers will have to bear the cargo carrying charges accrued after the delivery period.
Conditions For Extension Of The Delivery Period
Should
the buyers fail to present the vessel in 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 sellers3.
The
extension of the delivery period shall also be deemed to have been
claimed in case of the late nomination of vessel. If the buyers nominate
the vessel in less than 16 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
16th day after the vessel nomination date (i.e. after the expiry of the
15 days` pre-advice period), not sooner.
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
sellers` surveyor analysis certificate attesting the quality
characteristics of the cargo at the time and place of loading shall be
final, that is, the buyers will have to pay for the cargo based on such
certificate.
The buyers have the option to appoint independent
surveyors to sample the cargo jointly with the sellers` surveyors and
provide their analysis results of the cargo sample.
If the difference
between the sellers` and buyers` 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 sellers` surveyors shall be final.
If
the difference between the sellers` and buyers` 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. The timing of payment of shipping
documents shall not be delayed thereby.
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.
Settlement Of Disputes
ANEC Contract No. 81 provides two options for the settlement of disputes:
- FOSFA arbitration in accordance with the FOSFA Arbitration Rules; or
- arbitration by Associacao Brasileira de Arbitragem – ABAR, Chamber of Arbitration in Sao Paulo, Brazil.
by Vlad Cioarec, International Trade Consultant
This article has been published in Commoditylaw`s Biofuels Trade Review Edition No. 1.
Endnotes:
1. See Sub-Clause 10.2 paragraph (C).
2. See Clause 11 of ANEC Contract No. 81
3. See Clause 11 of ANEC Contract No. 81