SAFE PORT ISSUES IN THE CONTEXT OF CHITTAGONG PORT

Capt.Mohiuddin Abdul Kadir, MSc(Wales) LL.B FNI FCILT Master Mariner

1.0 Introduction
A seaport is a place that provides for the vessel transfer of cargo and passengers to and from waterways and shores. A port is a node in a transportation network-a spatial system of nodes and links over which the movement of cargo and passenger occurs. A port is also an economic unit that provides a (transfer) service as opposed to producing a physical product. The amount of the transfer service is referred to as the ports throughput. In a competitive environment, ports not only compete on the basis of location and operational efficiency, but also on the basis of the fact that they are embedded in the supply chains of shippers. The port of Chittagong is the principle port of the Peoples Republic of Bangladesh. It is situated on the right bank of the river Karnafuli at a distance of 9 nautical miles from the shore line of the Bay of Bengal. River Karnafuli rising in the Lushai Hills and falls in the Bay of Bengal after taking a winding course of about 120 nautical miles through the district of Chittagong Hill Tracts and Chittagong. The importance of Chittagong Port in the development of the country and in achieving the governments goal to eliminate poverty cannot be over emphasized. It is important that the Port remains competitive to international shipping and the cost to users remains reasonable. An unsafe port can result in difficulty in getting tonnage to service our trade and in excessive freight being charged resulting in higher commodity prices to the detriment of the entire nation. A number of arbitrations are pending in various jurisdiction on the question whether Chittagong is a SAFE PORT or not. The purpose of the paper is to identify the issues which are critical for maintaining Chittagong as a Safe Port and to put forward recommendations to continually maintain Chittagong Port as a safer port to call.

2.0 Historical Background

A brief historical background of the port is set out belowi:

4th Century BC:Used to be called SHETGANG. Ships from Middle East and China used this Port. 9th century:Omani & Yemeni traders landed in this Port.Used to be called Samunda 16th century:Used to be known as "PORTE GRANDE". Portuguese took great interest to use this port. 1887:Formal Port operation started from 25th April 1887.

1895-1910:Four Jetties were constructed to handle 0.5 million tons of cargo. Port used to be administered jointly by Port Commissioners and AssamBengal Railway. 1960:Chittagong Port Trust was formed. 1976:Chittagong Port Authority (CPA) was formed.

3.0 Hinterland of Chittagong Port

The term Hinterland was borrowed from German, where it means literally the land behind (a city , a port or similar). Specifically, by the doctrine of the hinterland, the word is applied to the inland region lying behind a port, claimed by the state that owns the coast. The area from which products are delivered to a port for shipping elsewhere is that port's hinterland. The demand of port services is a derived demand and it would depend on the growth of the hinterland which would create demand for inflow and outflow of products and raw materials to and from the hinterland. Apart from Bangladesh the seven land locked Indian states, Nepal, Bhutan and even China is the natural hinterland of Chittagong Port and vice versa Chittagong is the natural port for our neighbours from these huge area. They should be allowed to use our port services to move products at a much lesser cost rather than sending through land/ air route. Apart from making a good neighbourly gesture for improving relations with our neighbours by allowing use of our ports we could also earn significant revenue in the process.
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4.0 Strategic Importance of Bangladeshi Ports

In a globalised world with modern IT services information regarding product price is freely available. The challenge is to arrange the logistics to deliver the product in the most efficient and cost effective manner. The geography of the Indian Subcontinent makes Bangladesh and its ports the logistical corridor of a vast hinterland. Effective use of the Ports of Bangladesh can bring welfare to a large population my making supplies available at a cheaper price.

5.0 Charterers SAFE PORT Obligation

Traditionally it has been the duty of the charterer of a vessel to ensure that the port he sends the vessel to is safe for the vessel to berth and discharge and receive cargo. A shipowner is obliged to proceed the vessel to port nominated by the charterer under charterparty, but various clauses are inserted in the charterparty with the intention of rendering the shipowner immune from the vagaries of an unsafe port. There is no doubt that the safe port obligation is critical for the shipowner, as he is not obliged to load if it can be shown that the charterer has failed to nominate a safe port. If a port nominated becomes unsafe, the shipowner notifies the charterer to nominate an alternative port, and if the charterer fails to do so the shipowner may deliver the cargo at the nearest safe port in accordance with the terms of the charterparty. The obligation imposed on the charterer is not an absolute one in the sense that he is usually absolved from abnormal occurrences, but the duty of the charterer to ensure that the port nominated is safe for all intents and purposes is quite an onerous one.

6.0 Definition of Safe Port

The classic definition of the safe port warranty may be found in the Judgment by Sellers L.J. of the UK Court of Appeal in the case of the Eastern City: If it were said that a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship, it would probably meet all circumstances as a broad statement of the law. Most, if not all, navigable rivers, channels, ports, harbours and berths have some dangers from tides, currents, swells, banks, bars or revetments. Such dangers are frequently minimized by lights, buoys, signals, warnings and other aids to
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navigation and can normally be met and overcome by proper navigation and handling of a vessel in accordance with good seamanship.ii (Leeds Shipping v Socit Franaise Bunge (The Eastern City) [1958] 2 Lloyd's Rep. 127) A more detailed description of a safe port is provided in the case of the EVIA by Lord Justice Denning who stated: What are the characteristics of a safe port? What attributes must it possess and retain if the charterer is to fulfil has warranty ? To my mind it must be reasonably safe for the vessel to enter, to remain, and to depart without suffering damage so long as she is well and carefully handled. Reasonably safe, that is, in its geographical configuration on the coast or waterway and in the equipment and aids available for her movement and stay. In short it must be safe in its set up as a port. To elaborate a little, every port in its natural state has hazards for the ships going there. It may be shallows, shoals, mud banks, or rocks. It may be storms or ice or appalling weather, In order to be a safe port there must be buoys to mark the channel, lights to point the way, pilots available to steer, a system to forecast the weather, good places to drop anchor, sufficient room to manoeuvre, sound berths, and so forth. In so far as any of these precautions are necessary and the set-up of the port is deficient in them then it is not a safe port. Once the set up of the port is found to be deficient such that it is dangerous for the vessel when handled with reasonable care then the charterer is in breach of his warranty and he is liable for any damage suffered by the vessel in consequence of it. To illustrate this proposition, I will give some of the deficiencies in set-up which have been held to render a port unsafe. On the other hand, if the setup of the port is good but nevertheless the vessel suffers damage owing to some isolated, abnormal and extraneous occurrence unconnected with the set-up then the charterer is not in breach of his warranty. Such as when a competent berthing-master makes for once mistake, or when the vessel is run into by another vessel, or a fire spreads across to her, or when a hurricane strikes unawares. The charterer is not liable for damage so caused.iii The Evia (No.2), [1982] 1 Lloyds Rep. 338

7.0 The essential characteristics of a Safe Port is therefore: 1. In the absence of abnormal occurrences a. It must be safe to reach the port/ berth b. It must be safe to load or discharge at the berth c. It must be safe to leave the port 1. The port must have a system in place to deal with navigational hazards 2. There must be no danger of capture or seizure from political source Safety is a question of fact, but the criteria that have to be applied in determining whether a port is a safe port are matters of law.

8.0 Physical Factors the absence of which can render a port unsafe:
a. b. c. Safe Channel Sound Berths Good place to drop anchor

Discussion on Physical Factors the absence of which may make a Port Unsafe. 8.a Safe Channel There are three areas in the channel namely Outer bar, Gupta bend and Cutting bend where current is distinctive in nature, strength and rate. Natural tidal stream of Chittagong Port averages to upto 6 kts in summer flood tides that assumes critical/confused direction at these crucial points. . At current tends to move vessels bow to starboard needs to check with higher steering speed responding helm. There are regulations in place to ensure safety of navigation in these difficult areas where a number of serious accidents have taken place and the most notable being the accident between the merchant vessel Eagle Strength and the vessels belonging to Bangladesh Navy which resulted in the merchant vessel being detained for almost a year.

The CPA need to consider strict traffic control to prevent vessels passing these critical area at the same time. The dimensions of a channel dictate the size of vessel which can be manoeuvred. Channel width in particular, is determined by a characteristic known as basic ship manoeuvring lane which is dependant upon a number of factors, including firstly: The inherent manoeuvrability of the ship The ability of the ship handler

The basic manoeuvring lane is also affected by: Speed The navigational aid available to the ship handler The visibility

A second determinant of manoeuvring lane is environment, which basically means: The effects of cross winds Current, and Waves

The foregoing is applicable to a vessel manoeuvring on a steady course (i.e.in a straight channel). To assess the manoeuvring lane requirement in a curve, the turning data for the vessel must be taken into account to determine the width of the vessel track. The foregoing factors contribute to defining the amount of manoeuvring room required by a vessel. To develop this into the appropriate size of channel it is necessary to add allowance for other factors, i.e. Nature of bottom Depth Bank clearance Passing ship clearance Additional clearance for cargo hazard

An example of the type of evaluation which is appropriate is that set out in the PIANC (Permanent International Association of Navigation Congresses) document Approach
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Channels- A Guide for Design. The intention of the PIANC Guidelines is to provide a basis from which a channel can be designed for a given mix of ship types, or a basis from which to assess the suitability of an existing channel given the development of modern shipping and the risks associated therewith. On the basis of PIANC Guidelines the width of channel for safe passing for two ships of 25m beam at Gupta bend should be between 145meters to 217meters for favourable and unfavourable conditions respectively. The actual width of channel at Gupta bend is about 200m. The width of channel for safe passing for two vessels of 25m breadth at Cutting bend would be between 140meters to 210meters in favourable and unfavourable conditions respectively The actual width of navigable channel at cutting bend is about 250m. The above conclusion does not allow for special conditions related to concatenated bend, depth and drafts, and the complications of additional manoeuvring required in some circumstances. Three other factors namely i. the presence of other river traffic and ii.Reduced visibility due to fog iii. Channel width taken up by vessels at berth has also not been taken into account. The Port rules of 1939 stipulate that a 200yards (183m) free channel is to be maintained for navigation. On the basis of PIANC guidelines and the Port Rules it is clear that the width of channel at Gupta bend and Cutting bend is critical for the passing of two vessels at the same time. The width is further restricted by possible presence of small crafts failing to keep out of the channel and the presence of naval vessels at the cutting bend. Naval vessels must be given a safety zone within which merchant vessels should not enter at Gupta Bend and Cutting Bend may pose danger to navigation and may need to be restricted.

8.b Sound Berths There is serious deficiency in the maintenance of general cargo berths by Chittagong Port and a number of accidents has taken place resulting in damage to vessels. The berths must always be repaired and kept in good condition. 8.c Good Place to drop anchor The anchorage is divided into three areas A B & C.

Anchorage A is formed by extending 2 (Two) lines up to port limit, one (1st ) having bearing 337 45and the other (2nd ) 310 30 form the point having lat 22 12 30 N and long 91 47 00 E. Anchorage B is formed in between 4th and 5th line having bearing 234extended up to port limit from the previous point. Anchorage C is between 4th and 5th line having bearing 2340 & 157respectively, extended up to Port limit from a point of lat 221200'' N and long 91 4712'' E. The space between 3rd and 4th lines is prohibited anchorage. A Anchorage is for vessels over 9.2m draught. B Anchorage is for vessels entering the port within 24 hours.

C Anchorage is for vessels lightering and other vessels not scheduled to enter the port within 24 hours. The holding ground at the anchorage is soft mud which is considered poor holding ground. Due to very strong current of up to 6knots dragging of anchor by vessels is common at Chittagong outer anchorage. There is no limit imposed by Chittagong Port Authority in terms of number of vessels that can anchor within the limited area or the maximum draft of vessels that may be allowed. To improve the safety at Chittagong outer anchorage the port authority may need to consider imposing certain controls relating to maximum draft and number of vessels in the anchorage.

9.0 Administrative or Political Factors which may make a port unsafe: It is now established that administrative shortcomings, failures in port systems and deficiencies in the set-up of a port may render a port unsafe. In the Mary Lou, Mustill J identified that: a port may have geographical, climatic or other characteristics which entail that it will be safe if, but only if, a particular system for securing its safety remain effectively in operationsuch port will be safe if the system works properly, and unsafe if it does notiv Discussion on Administrative or Political factors which may make a Port Unsafe a. b. Traffic Management and regulations Pilotage/ Pilot Management
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c. System to identify obstructions in the channel and promulgation of the information d. e. f. g. Promulgation of weather report Detention caused by abuse of Customs Act 1969 Unlawful gains made by shipping agents by cheating shipowners Unlawful detention by government agencies

h. Dealy and detention due to difficulty in disposing of damaged cargo i. j. k. Labour Management Lack of expeditious legal remedy Piracy

9.a Traffic Management and Regulations There are a number of Acts, Ordinances, Rules, Manuals, Guidelines currently in force namely: 1. 2. 3. 4. 5. The Port Act 1908 The Port Rules published in 1939 pursuant to Port Act 1914 The Chittagong Port Authority Ordinance 1976 The Traffic manual for Chittagong Port published in 2001 Guide Lines for Pilots published in 2005

The law as laid down in the above enactments are sometimes conflicting with each other and in case of the older acts are no longer relevant. For example section 4 of the rule states: All vessels shall steam, sail or be towed at a moderate speed between Gupta Crossing and Doma Khal, having regard to the conditions existing at the time, and no vessel shall proceed at a greater speed than four knots through the water when within harbor limits, when passing vessels in moorings, jetties, deeply laden boats or vessels employed in
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salvage work in connection with moorings no vessel shall proceed at a greater speed than is absolutely necessary to keep her under control.: In practice most vessels pass at more than four knots in violation of the law which could raise serious questions in case of accidents. It is, therefore, extremely important to either follow the law or amend it to suit practical considerations. The laws regarding navigation should be available to Pilots and port officials as well as the masters of vessels calling Chittagong Port. In our discussion regarding width of channel at Gupta and Cutting bend we have pointed out the need to implement one way traffic in those two areas. The Port Authority is to seriously consider the implementation of such restriction and not leave it to the discretion of the pilots. The Chittagong Port Authority has floated tender as part of its plan to install VTMS both VHF and camera based. VTMS is recognized as an aid to safety of navigation. A VTMS system is developed to provide the information of vessels movement within a VTMS area for the users, after tracing and analyzing that information by way of using advanced Radar, Radio communication equipment and computer system and at the same time to improve safety and efficiency of vessels traffic through providing the vessels with relevant information and to protect marine environment. It is, however, important to keep in mind that a VTMS system would need trained operators to run the system. In 1990 the UK Pilot Association (Marine) had adopted a policy in which the VTMS operator is required to hold proper Pilots or Masters license in relevant water to understand the Pilots or Masters requirements. There had been quite a few cases of VTMS ASSISTED ACCIDENTS in various parts of the world which highlighted the need for trained and adequate operators for obtaining the benefits of VTMS system.. The VTMS authority should take into account the legal implication in the event of a shipping accident where the VTMS operator has failed to carry out his duties properly. 9.b Pilotage/ Pilot management There are at present 10 pilots excluding DC, Harbour Master and Dock Master. A trainee pilot has to co-pilot 200 vessels before being eligible for exam as second grade pilot. A second grade pilot is eligible for being promoted as a 1st grade pilot after five years. Under ordinary circumstances it would require upto seven years or more to get a trained first class Pilot.
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There has been no increase in the number of Pilots during the last ten years although the number of vessels calling Chittagong Port has grown significantly and the growth it expected to continue. YEAR WISE VESSEL HANLING AND TURN-AROUND TIME OF THE VESSES FROM 1998 TO 2010

YEAR No. of Ships Calling 1998 1333 1999 1505 2000 1435 2001 1622 2002 1622 2003 1719 2004 1858 2005 1982 2006 2078 2007 2050 2008 2257 2009 2309 2010 2397 SOURCE: CPA

TURN-AROUND TIME OF SAILED VESSEL CONT. ALL VESSEL VESSEL 7.26 6.51 6.5 6.4 6.83 6.16 6.64 5.91 4.56 4.76 4.3 4.55 3.99 4.22 4.08 4.55 7.1 6.06 5.02 5.23 2.48 5.63 2.48 5.25 4.31 6.12

CONT. VESSEL SAILED 441 495 512 571 620 659 691 744 851 946 962 947 890

OTHER VESSEL SAILED 911 980 950 1060 982 1061 1073 1148 1106 999 1137 1220 1502

It can be seen from the above table that the number of vessels calling Chittagong Port has almost doubled since 1998. The increase in the number of vessels is likely to place demand on the individual Pilots. The task of pilotage requires significantly greater concentration than watch keepers at sea. This may result in fatigue which may cause lack of concentration and accident. Fatigue is a matter of complexity and of considerable interest. Fatigue and the Maritime Pilot was the subject of MSC Circular 1014 of June 2001. There is lack of any systematic training programme for pilots at present. The ship board technology is changing very fast and it is important that the Pilots are continuously kept upto date to make best use of the modern navigational instruments to be found on board a vessel. The training may consist of training on board under supervision of senior pilot and training on a simulator.

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The port authority is indemnified by Port Act for acts of negligence of the Pilots. However, they may not have indemnity against acts of gross negligence and failure to maintain a system to provide safe pilotage may question the safety of Chittagong Port. In the case of the Khian Sea Lord Denning pointed out, in some circumstances a port will require competent pilotage and towage in order to be considered safev. The Nautilus concerned the safety of a berth at the port Manzanillo, Mexico. The Nautilus was chartered under a voyage charterparty on the Gencon formvi. Between 3 and 20 September 1984 discharge proceeded normally but on the afternoon of 20 September the Master began monitoring the progress of Hurricane Olivia. Later that evening the weather conditions deteriorated and the master contacted local agent to arrange pilots and tugs to move the vessel to anchorage. It is noteworthy that while the Sailing Directions described the port as one which provided a tug and pilotage service, there was no tugs available at that time and the only pilot was engaged elsewhere. That night the vessel struck the quay numerous times causing damage. The Arbirtation Panel held that the clear cause of damage was the lack of pilotage and tugs, which rendered the port unsafe.vii

9.c Systems to Indentify Obstructions in the Channel and promulgate the information The Chittagong Port Authority has its own Hydrographic Department and the hydrographic department carries out regular surveys to identify obstructions in the channel. If any obstruction is caused in the channel due to any accident or during firing exercises a notice to mariners is issued immediately and the POMMD is also informed. The POMMD notifies the British Admiralty. The information is also promulgated by VHF. In the past there used to be some lapse in passing the information to British Admiralty and the charts did not represent the features. The CPA is maintaining a very informative website and the hydrographic information is regularly posted on the website. It is important that the charts for Chittagong should be regularly updated with such information. Lately the Hydrographic Department of Bangladesh Navy has been publishing the charts for Chittagong and it is expected that the charts will remain fully up to date. In the case of the Marinicki the vessel sustained damage from underwater obstruction on the event of berthing at the port of Jakarta. It was found that there was a very unsatisfactory regime prevailing in the port administration in relation to safety of vessels using the dredged channel.viii
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9.d Promulgation of Weather Reports The Patenga Met office provides CPA with meteorological information 4 times with special reference to Chittagong Port. The CPA also issues warning regarding freshets. In the case of the Dagmar the charterers were required pursuant to a clause in a Baltime Charterpaty agreement to direct the vessel, the Dagmar, to safe ports. The vessel was ordered to Cape Chat, Quebec where she commenced loading without incident. Two days later, while the Dagmar was still berthed, the force of the wind and seas increased causing the vessel to ground in her berth. The owners complained that the port was unsafe for the vessel. Mocatta J found that there was an adequate weather forecasting system based not far from the port. Furtehrmore, the facts were distinguishable from the Eastern City as the port was not a place where winds could arise suddenly without warning. Notwithstanding these findings, Mocatta J concluded that the port was unsafe for the vessel because the Master and crew were not in receipt of weather broadcasts.ix The Dagmar establishes that a port authority must not only ensure sufficient weather forecasting and reporting system is in place, but it must also make certain that mariners are in receipt of them. It would be desirable for a weather bulletin be issued by the CPA at least three times a day by VHF through Port Radio Control and also send additional notices to Masters of vessels berthed in the port regarding freshets etc. 9.e Detentions caused by abuse of Customs Act 1969 Certain provisions of Customs Act are regularly abused by shipping by agents and consignees to commit extortion on ship owners. The most commonly abused provision is: Abuse of Section 55 of Customs Act 1969 by local agents: In enacting section 55 of Customs Act 1969 the object of the legislature was to authorize the Customs Authorities to release the ship provided there was some person within their jurisdiction who would be answerable for such claim as either the ship would have been answerable for if she had remained within the jurisdiction, or the carrier would have been answerable for, if he had been within the jurisdiction to enable the vessel to sail out without any delay. As a precondition to being accepted as a licensed customs agent all agents furnish a general and continuous declaration to cover ships agents liability for all vessels for which he may act as agent under the Customs Act.
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However, the very provision enacted to expedite departure of vessels is being used as a tool for oppression and extortion by most of the agents dealing with breakbulk cargo. They refuse to accept reasonable security to protect them against any claim and demand that the claims be settled in cash. This type of extortion has done great damage to the reputation of Chittagong Port. There is a provision under Customs Act for the Master of the vessel to change the agent under Customs Act 1969 which has not been allowed by Customs Authorities unless there is a joint declaration between new and existing agent. Obviously the extortionists do not agree to signing a joint declaration. In the case of the vessel Alkimos the Master of the vessel Alkimos requested the Customs Authorities to allow changing the agent but the Customs Authorities instead of allowing change of agent sought direction from National Board of Revenue which never came and the vessel was unable to depart for more than six months. There can be no reason for the vessel be allowed to depart and port clearance be issued if any other agent who has provided the Customs Authorities with a similar guarantee to cover the liabilities of the ship owner agrees to accept the same. Abuse of section 156.24 by the Customs Authorities Section 156.24 of Customs Act 1969 states : i. If any goods entered in the import manifest of a conveyance are not found in the conveyance; or ii. If the quantity found in the conveyance is short, and the shortage is not accounted for to the satisfaction of the officer in charge of the customs house The person in charge of such conveyance shall be liable to a penalty not exceeding twice the amount of duty chargeable on the goods not found on the conveyance or, if such goods are not dutiable or the duty thereon cannot be ascertained, to a penalty not exceeding [twenty thousand taka ] for every missing or deficient package or separate article, and, in the case of bulk goods, to a penalty not exceeding the value of the goods or [fifty thousand taka] whichever is higher. The Supreme Court of Bangladesh in a long chain of cases has laid down the law in clear terms that in case of dispute regarding quantity of cargo discharged the quantity determined by shipboard ullage survey in case of liquid bulk cargo and by draft survey in case of dry bulk cargo shall prevail. Most unfortunately our Customs Authorities are simply defying the law set out by the highest court although our constitution makes such law binding on all citizens.
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9.f Unlawful gains made by shipping agents by cheating ship owners Agents are the interface between the vessel and the country. The first person who boards a vessel upon arrival is the agents from whom the foreign Master and the owners make the first impression of our port and our country. Unfortunately most of the owners face harassment in the hands of their own agent and there is no effective remedy. The agents often force owners to pay money as bribes to government officials when in reality the officer has never asked for such bribe. It is therefore important that agents carry out businesses in a professional manner and it is imperative that the Government and the port authorities have a system in place to identify any misdemeanor of the agent and take action against such agents. The Customs Authority being the licensing authority of agents should consider setting up a system to take note of corruption and malpractices by the agents a responsibility they neither share with other nor perform themselves. In view of the importance of Chittagong Port in shaping the economic future of our country the government should seriously consider setting up a committee consisting on officials from Customs Authority, Port Authority and Law enforcing agencies who should be responsible for addressing any complain by shipowners or Masters against the local agents. 9.g Detention of vessels by Government agencies Some government agencies such as MOF, BCIC, BADC and BSFIC are regular importers of cargo and users of the port. Most of the time they conclude contracts with suppliers on terms that the supplier would deliver the cargo at their ware house. Whenever there is a dispute regarding the quality of cargo they simply take their hands off and put the vessel at the mercy of the agent and suppliers. This inaction is caused at least in part due to ignorance of the dealing officer in the government organizations about how to lawfully secure their claim. Under the law of our country as consignee of the cargo named in the Bills of Lading they are under an obligation to take delivery of the cargo and if they have any claim they can enforce same by filing an action in rem for arresting the vessel. The vessel Vishwa Kumudini and many others were totally destroyed and damaged due to inaction of the authorities. Lack of any system to safely discharge the cargo and leave the vessel can have the port portrayed as a dangerous port and potentially unsafe.

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9.h Delay and detention due to difficulty in disposing of damaged cargo Ships arrive at the Chittagong Port after sailing through the high seas where they have to face the perils of the sea. Cargo damage is quite a common phenomenon in shipping and all vessels and cargo are insured against such losses. One of the major worries for shipowners is to dispose of cargo if found damaged. There is a circular issued by one of our ex-prime minister long time ago which requires the participation of about fourteen agencies for disposing damaged cargo. This was apparently done to stop any damaged cargo being passed into the human food chain. The shipping agents were quick to see the business in this circular and whenever, damaged cargo is found on board they compel the shipowners to pay huge extortion money for the cargo to be hidden. If the owners refuse to pay the extortion money they threaten the vessel that it will never leave Chittagong. The process of disposal of damaged cargo needs to be simplified urgently. 9.i Labour Management The management of labour is a matter of great importance for the efficiency and image of the port. Frequent and prolonged labour unrest can result in lengthy detentions for vessels and put the safety of the port in question. Chittagong Port has changed from traditional stevedoring system to berth operator system during the time of the past caretaker government. The change has apparently improved the turnaround time of the port in the short run and we are not aware of any research having been carried out regarding the long term impact of the change in system. One particular issue must be borne in mind by the policy makers as we as the senior management of the port which is the issue of liability. In the past the stevedores were appointed by the agents who were servants of the ship owner. The vessel was held responsible for any damage to port structure or to the cargo due to stevedores incompetence or negligence. Under the new system the Chittagong Port Authority may be held liable for any damage done by the labourers employed by the berth operators. The Chittagong Port Authority would also be liable for ensuring that the berth operators employ suitably trained labourers to handle the winches/ cranes of the vessel. There are a number of suits pending in the court against the Chittagong Port Authority following change in system.

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9.j Lack of expeditious legal remedy An efficient, transparent legal system is the key to most of the problems faced by the nations and the delay in case management in courts is one of the reasons why the miscreants dare to commit extortion and also the reason for the ship owners giving in to the extortion. The ships time is valuable and for a small claim of USD20,000/-the shipowners prefer to give in to extortion and curse our country than to engage in seeking legal remedy. The problem may be overcome in the following ways: 1. Accepting P&I Club LOU as security: Letters of undertaking issued by P&I clubs are widely recognized as equivalent or better security to bank guarantees. Civil courts in countries like Singapore accept P&I Club undertakings as sufficient security for release of a vessel for arrest or as security against any claim. It is also easier and quicker to put up. The National Board of Revenue (NBR) may issue a circular to agents for accepting club letter of undertakings. 2. Our law ministry could take up the matter with our honourable chief justice for authorizing our courts to accept P&I club letters of undertaking. 3. The other solution could be making ADR mandatory for maritime claims where the amount of claim is less than a certain minimum amount for example less than Taka one crore. The mediator or the arbitrator should be empowered to obtain security from both parties and give necessary directions. This may, however, require amendment of our civil Procedure Code. The judicial process is often abused and local importers agents take advantage of court delay to harass shipowners. 9.k PIRACY The following definition of piracy is contained in article 101 of the 1982 United Nations Convention on the Law of the Sea (UNCLOS): Piracy consists of any of the following acts: (a) any illegal acts of violence or detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft, and directed: (i) on the high seas, against another ship or aircraft, or against persons or property on board such ship or aircraft;
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(ii) (b) (c)

against a ship, aircraft, persons or property in a place outside the jurisdiction of any State; any act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft; any act inciting or of intentionally facilitating an act described in subparagraph (a) or (b).

According to IMB the number of acts of piracy and armed robbery in some part of the world is as following: TABLE 1: Locations of ACTUAL and ATTEMPTED attacks January December: 2006 2010 Locations SE ASIA INDIAN SUBCONTINENT Indonesia Bangladesh India Srilanka Gulf of Aden Nigeria Somalia 2006 50 47 5 1 10 12 10 2007 43 15 11 4 13 42 31 2008 28 12 10 1 92 40 19 2009 15 18 12 11 29 80 2010 40 23 5 53 19 13

AFRICA

SOURCE: ICC-IMB Piracy and Armed Robbery Against Ships Report- Annual Report 2010 Armed Robbery has been defined as : Armed robbery against ships means any unlawful act of violence or detention or any act of depredation, or threat thereof, other than an act of piracy, committed for private ends and directed against a ship or against persons or property on board such a ship, within a States internal waters, archipelagic waters and territorial sea.

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Analysis of the incidents reported carried out by Chittagong port revealed following:

Type of incident Rope Snatch Attack On Ships Crew Armed Robbery Zinc Anode Theft Piracy Attempted but Failed Ship Store Theft Total

2006 19 02 00 01 00

2007 13 04 00 00 01

2008 09 02 00 00 00

00 22

00 18

01 12

Comparative Statistics of Piracy in 2006-2008 DATA SOURCE: CPA

Most of the pirates apprehended in Bangladesh water are not organized criminals but poor fisherman who had lost their livelihood as the fishing stock on which their livelihood depended has drastically reduced. The destruction has been caused by 1. overfishing by imported modern trawlers 2. destruction of the wetland which is vital for the food chain and reproduction of fishes from pollution by the ship breaking industry. The extent of their activity is mostly limited to stealing of mooring ropes, stores etc. The problem of piracy, may, therefore, need to be addressed at root level by rehabilitation of the destitute fishermen and the poor population of our coastal regions. However, the Chittagong Port Authority need to keep a check on the situation so that it does not take such proportion that the port may become unsafe for shipping. What is important is that a system should be there to suppress and deal with acts of violation against vessels.

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10.0 Effect of Delay and Detention of vessels in Chittagong Port on Economy The users of port services has to face two costs namely the cost imposed in way of port charges and the cost of the ships times measured in turnaround time. A more efficient port does not need to be less expensive. On the contrary, it may charge higher prices to the shipper and the carrier if it provides faster and more reliable services, or it it allows the shipper or the carrier to achieve savings elsewhere. Research has indicated that improvement of port services has a clear and measurable impact on international maritime transport costs. Port improvements appear to have a stronger impact on the maritime freight of the countrys exports than on freight of its imports. Delay and detention due to customs, however, has a stronger bearing on the maritime freight charged on countries imports. The overall impact of port efficiency goes beyond the measurable impact on international maritime transport costs. Port improvements does not only lead to lower freight rates, but by providing better services ports can also attract additional liner services and additional cargo. Both- more liner services and higher cargo volumes- lead to further reduction in freight rates. Lower transport costs, in turn will stimulate increased trade volumes, which lead to further economies of scale and lower freight chargesx. The international leg of most international trade transactions continues to be maritime, and most determinants of international maritime transport cost are outside the control pf policy makers. It is through improvements in the ports that cost savings and increased trade competitiveness can be achieved. On the other hand allowing our ports to be operated in an inefficient and unsafe manner would increase the freight rates both for exports and imports. In case of imports the major portion of our imports being of low elasticity of demand the poor consumers of our country bears the burden of increased freight. Making an weighted average of freight the total amount of excess freight burden to our consumers in 2010 in 36670356 Mts of import cargo could be well in excess of USD183m of about 1300crore taka and in respect of 4512439Mts of cargo our exporters have paid excess freight in excess of USD45m or approximately 315crore taka. The calculation is linear and does not take into account the additional export that could have been made due to increased competitiveness.

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Recommendations: 1) Bilateral relation with our neighbours and especially with India need to be improved so that our port services can be used by the neighbours. It would not be possible to service Nepal and Bhutan without co-operation from India. 2) A long term strategy to be formulated for successful marketing of our port services to be taken. 3) The safety of the channel in way of Gupta and cutting bend to be ensured by appropriate traffic management system. 4) The maintenance dredging of the channel and the berths to be carried out regularly. 5) The jetty berths to be regularly maintained in safe condition. 6) There should be some strict control on the maximum draft and number of vessels at the outer anchorage. 7) The procedure for changing agents by owners must be made simple and reasonable. 8) The National Board of Revenue must immediately give effect to the directives of the Honble High court while imposing penalty on vessels. 9) The receivers should be compelled to take delivery of all cargo including damaged cargo and warehouse facilities to be provided for storage of same. 10) There should be a Task Force to investigate any complain by Masters of vessels and ship owners against local agents and strict actions should betaken against agents who hold the port at ransom. 11) Officials of Government agencies regularly importing cargo should be educated in the procedure of lawfully securing their claims. 12) Insurance for third party claim should be made mandatory for the berth operators. 13) The labours used by berth operators must be adequately trained. 14) The acceptance of P&I Club letter of undertaking as security against marine claims need to be seriously considered. 15) Amendment may be proposed to Civil Procedure Code for making ADR mandatory for small marine claims.

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Source CPA Website www.cpa.gov.bd Leeds Shipping v Socit Franaise Bunge (The Eastern City) [1958] 2 Lloyd's Rep. 127 The Evia (No.2), [1982] 1 Lloyds Rep. 338 The Mary Lou [1981] 2 Lloyds Rep 272, 277 The Khian Sea [1979] 1 Lloyds Report 545, 547

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The relevant safe port/ berth clause in the charterpart provided: charterers by themselves to ship, and being so loaded, the vessel shall proceed to one (1) Safe berth, one (1) safe port out of Manzanillo, port in charterers option.
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The Nautilus SMA 2622 (Arbitration at N.Y.1990) The Marinicki [2003] 2 Lloyds Law Report 655, 656

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ix

Tage Berglund v Montoro Shipping Corporation Ltd. (The Dagmar) [1968] 2 Lloyds Rep 563

Gordon Wilmsmeier et.al The Impact of Port Characteristics on International Maritime Transport Costs. Port Economics: Research in Transport Economics Vol:16 134-135

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