Owners, charterers, BCOs must update liability risks if drug smuggling is discovered on board cargo ships
 Despite the best efforts of law enforcement, drug traffickers are finding increasingly ingenious ways of smuggling narcotics on ocean going ships, some of which may cause legal difficulties for those who are guilty of nothing more than not doing all they could to prevent it.
For example, a ship's sea chest in an underwater shell and fitted with a portable strainer plate provides a water intake reservoir from which the vessel's piping system can draw water.
A nocturnal covert operation by divers can conceal drugs in or around the hull in ways that are not easily discoverable even by an exercise of due diligence, say London solicitors Ian Short and Sam Jones, of Campbell Johnston Clark .
Writing in Hellenic Shipping News Worldwide, Messrs Short and Jones say this space has also been found to have other uses. By cutting through the plate, narcotics can be stored inside for an entire voyage.
"This is just one of the novel ways traffickers continue to find to conceal drugs on board ships, in this case at a location on the hull and below the waterline that can be exploited without the knowledge or cooperation of the crew," the lawyers said.
"Divers can covertly cut open the area around the sea chest at the points of departure and destination without needing to rely on or pay off dock workers and crew, while also rendering conventional board and search techniques redundant," they said.
Where narcotics are discovered, the ship will most likely be detained to allow for an investigation to take place. Fines can be imposed and, if the crew is deemed to be involved, arrests and criminal charges can be made with criminal sanctions to follow.
"The criminal aspects of the drug smuggling attempt would be subject to the laws and jurisdiction of the country where the drugs were discovered, where the vessel and the drugs are located and, possibly, where the drugs were first concealed on board," said the lawyers.
For the owner, the resulting delays can potentially lead to periods of loss of hire and can give rise to claims from cargo interests, especially where the cargo is perishable.
Port calls may be missed as well if the delays prevent the vessel from meeting its next port of call. Resolving these types of claims between vessel interests (owners, charterers, sub-charterers etc) can become particularly contentious especially where there is an absence of specific wording in any charterparty.
"Determination of liability as between the shipowners and charterers is therefore critical and much, as ever, turns on the specific wording agreed between the parties in their contracts, most usually a charterparty. One issue that can arise is the fact that many of the novel methods of smuggling narcotics were not envisaged when the relevant clauses were drafted and so, for example, the scenario envisaged above may not fall neatly within the charterparty clauses," Messrs Short and Jones said.
Under a conventional BIMCO 'Boxtime' charterparty, liability is allocated according to the nature of the smuggling event. If the 'Master, Officers and/or crew are complicit', then the Owners accept liability (Cl.5(f)), they said.
Where the smuggling is found to have taken place 'as part of the goods and/or in containers on board', liability will be allocated to the Charterers. As useful as these positions are, and which are not uncommon in charterparties generally, they do not account for narcotics trafficking in the manner such as that discussed above, ie, where the 'master, officers and/or crew' are not complicit and the narcotics are not smuggled 'as part of the goods and/or in containers on board'.
Where the BIMCO US Anti-Drug Abuse Act 1986 Clause for Time Charter Parties 2013 has been incorporated, as outlined below, charterers will be generally liable for the costs and delays caused by narcotics concealed on board the vessel.
All time lost and all expenses incurred, including fines, as a result of the charterers' breach of the provisions of this clause shall be for the charterers' account and the vessel shall remain on hire.
Should the vessel be arrested as a result of the charterers' non-compliance with the provisions of this clause, the charterers shall at their expense take all reasonable steps to secure that within a reasonable time the vessel is released and at their expense put up bail to secure release of the vessel.
"Owners shall remain responsible for all time lost and all expenses incurred, including fines, in the event that unmanifested narcotic drugs and marijuana are found in the possession or effects of the vessel's personnel," they warned.
"However, while this clause is fairly detailed in trying to apportion liability for time lost and fines incurred onto the charterers, except where such goods are found in possession of the vessel's personnel, there remains some ambiguity. The wording covers charterers' liability for drugs concealed 'on board' the vessel, which therefore begs the question whether drugs concealed in the sea chest are in fact 'on board'.
"Owners would, of course, argue that drugs concealed in the sea chest are, indeed, 'on board'. They may argue that the concealed drugs arose out of compliance with charterers' orders to proceed to a particular port where the drugs were attached to the hull," said Messrs Short and Jones.
"As a result, they would argue that they are therefore entitled to be indemnified for compliance with such orders. Alternatively, shipowners may try to argue that the charterers ordered the vessel to an unsafe port, albeit if the drugs were in fact found at that port, that would perhaps indicate safe port practice," they said.
Charterers, on the other hand, may point to the owners' seaworthiness obligations. If these are limited by the incorporation of the Hague/Hague-Visby Rules to the exercise of due diligence to make the ship seaworthy before and at the beginning of the voyage, that would make charterers' case more difficult.
Charterers may also argue that it is the owners' obligation to maintain the hull as well as point to the owners' obligations to ensure the vessel's compliance with both flag and port state laws and regulations.
If charterers can demonstrate that it was market practice, or would have been prudent, to arrange for underwater inspections and videotaping, or the welding shut of the sea chest, it may assist in any argument that the owner has failed to sufficiently maintain the hull or comply with their seaworthiness obligations.
Constructing such an argument would however be challenging if the vessel had all her documentation in order and had complied with all local regulations or international standards, said Messrs Short and Jones.
Where goods carried are perishable and there are delays caused by the finding of drugs on or attached to the ship, cargo claims can materialise. These may be brought against owners either under the bills of lading or in bailment, or against the charterers if charterers' bills of lading have been issued.
Either way, liability for any cargo damage will depend on the terms of the bills and, as above, issues as to whether the carrier exercised due diligence to make the ship seaworthy are likely to be relevant to the dispute. Otherwise, the cargo claims are to be dealt with in the usual way with cargo interests put to proof on their claims and their losses.
Given the prevalence of drug trafficking at certain ports, and the increasingly novel ways in which smugglers use ships, it is recommended that shipowners and charterers ensure that clearly worded provisions are contained within their charterparties and, where appropriate, their standard terms, to ensure that disputes do not materialise from contractual ambiguities.
"Whilst the insertion of the BIMCO US Anti-Drug Abuse Act 1986 Clause for Time Charter Parties 2013 provides some guidance, a variation of this clause or a more bespoke clause may provide the contractual certainty required," Messrs Short and Jones said.
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