Cargo Shortage Claims & the ICA: Who Pays When Responsibility Is Split?

 ⚖️ Cargo Shortage Claims & the ICA: Who Pays When Responsibility Is Split?

Three Quick Questions for You:

1. Have you ever faced a cargo claim where fault wasn’t clear-cut?
2. Do you know how the Inter-Club Agreement (ICA) splits liability between Owners and Charterers?
3. Could a 50/50 apportionment save you—or cost you—millions?

 

📜 Clause Breakdown – ICA Paragraph 8 Explained

The Clause:

• (a) Claims from unseaworthiness or navigation/management errors → 100% Owners’ responsibility
• (b) Claims from loading, stowage, lashing, discharge, storage, or cargo handling → 100% Charterers’ responsibility
• (c) If the claim doesn’t fit into (a) or (b) → 50/50 split between Owners and Charterers

The Case:
A shortage claim arose due to excess water content in cargo. Since it wasn’t a direct result of vessel management (a) or cargo handling (b), the claim fell under Paragraph 8(c) → shared equally, 50/50.

 

⚓ Implications & Common Pitfalls

🔹 Implications:

• Owners can’t always shift blame to poor stowage.
• Charterers can’t always push liability onto Owners for vessel issues.
• Gray areas often trigger equal liability sharing.

🔹 Pitfalls to Avoid:

• Misclassifying a claim under (a) or (b) to escape liability.
• Ignoring contractual incorporation of the ICA 1996 (as amended 2011) into the charter party.
• Overlooking the importance of clear cargo condition records (e.g., moisture content).

🔹 Example:
If grain arrives short because of evaporation or inherent vice (not poor stowage or vessel fault), both sides will share the loss.

🔹 Case Law & Commentary:

• BIMCO guidance confirms that ICA aims to avoid prolonged disputes by providing simple apportionment rules.
• English courts often uphold ICA clauses when validly incorporated, even where outcomes seem “rough justice.”

 

🚢 Actionable Steps for Operators & Managers

1. Incorporate ICA properly into charter parties (usually via NYPE or Asbatime forms).
2. Maintain accurate records: cargo surveys, draft surveys, cargo condition reports.
3. Engage early with P&I Clubs—they’re experienced in ICA claim handling.
4. Don’t delay negotiations: once liability falls under 8(c), both sides save time by agreeing to share equally.
5. Educate your team: ensure Masters, operators, and claims handlers understand ICA basics.

 

🌅 Conclusion – Sharing the Storm, Sharing the Cost

The ICA exists to streamline disputes between Owners and Charterers. In gray-area claims—like excess water content in cargo—the fairest solution is a 50/50 split. Knowing how to interpret Paragraph 8 can help you save time, money, and relationships.

👉 If you found this breakdown useful, please like, comment, share, and subscribe to ShipOpsInsights—your hub for practical maritime wisdom.

 

⚠️ Disclaimer

This blog post is for educational and informational purposes only. It does not constitute legal advice. For case-specific guidance, please consult your P&I Club, legal counsel, or industry advisor.