The Cape Bonny – victory for cargo insurers salutary reminder of the importance of good technical management

The ongoing political crisis in Venezuela is increasingly causing concern amongst shipowners. Already last year Owners faced the risk of their vessels being arrested when many creditors ran out of patience with the state oil company, Petroleos de Venezuela (PDVSA), and sought to secure their positions by seizing PDVSA oil laden on tankers in Caribbean ports. This effectively resulted in PDVSA having to cease use of its transhipment storage facilities in the Dutch Antilles to prevent further cargoes being seized.

In a further worrying twist it has recently been reported that at least 3 foreign owned vessels employed in cabotage business were seized by the Venezuelan authorities. These vessels, time chartered to PDVSA under English law, were holding cargoes to enforce maritime liens under the terms of their respective charter parties due to unpaid hire. PDVSA appears to have circumvented the Owners’ charter party rights through the Venezuelan Courts to force the Owners to discharge the cargoes on the basis of ‘public interest’. It is understood that the Owners acquiesced after initial resistance in the face of possible contempt of court charges. Although such a use of the local maritime code is unlikely to be extended to vessels employed in international trades it is far from sure that the rule of law can be guaranteed in Venezuelan courts.

As a result of the above developments and with new US OFAC sanctions expected to further affect PDVSA’s cash flows and lead to the risk of freight payments in US$ being blocked in banking system, it is advisable for Owners to seek legal advice before entering into any contract with PDVSA.

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