It was a container vessel with 4999 GRT, built in 1981, registered in Panama and managed by a Greek shipping company. It was chartered by Samudera Shipping Co. of Singapore, which gave space in the ship to various carriers and freight forwarders. Prime Value was operating usually between Singapore and Calcutta. Do you wonder how international treaty in ocean transit business is? It is a little difficult for we landlocked Nepalis to understand its vast magnitude. Today, much of the passenger traffic is by air, which is very convenient and time saving. But, for the bulky cargo, the sea is still the cheapest and the most cost-effective route.

With ‘Prime Value’, cargo worth millions of rupees was gone. For the goods insured, the insurance companies suffered but for the uninsured goods, the balance sheet of the owners took a steep nosedive. Most of the Nepali insurance companies were hard hit as a result of this incident. As mentioned earlier, this unfortunate accident was probably caused by a combination of stormy weather, poor navigational skills and unseaworthiness of the vessel. It is the last one which is of grave concern because, if this incident would have been due to the unseaworthiness of the vessel, it was not covered by the insurance (exclusion clause no 5 of ICC transit clause) and we could well imagine what would’ve been the plight of the cargo owners?

 What is Institute Cargo Clause (ICC) exclusion No. 5 and what is its purpose?

To foster universal terms and conditions in the international insurance, there is a body known as Institute of London Underwriters with Head Office at London. It is under the committee of this institute that the Institute Clauses are drafted to form the basis for several marine insurance contracts used all over the world because ocean transit involves many nations at one time.

Exclusion Number 5 says that in case of unworthiness and unfitness of the vessel the liability does not fall upon the insurers. Therefore it is very important that vessel is fit and seaworthy.

 Seaworthiness of a vessel implies the following:-

1. The vessel should be reasonably fit to encounter the ordinary perils of the sea to take up the adventure insured.

2. The vessel should not be overloaded.

3. Cargo on board must be properly stowed.

4. Ship must not be under arrest by any government/port/legal authorities.

5. The crews and officers employed to undertake the journey should be competent and experienced for such type of journey.

6. Equipment and machinery of the vessel should be in good order and periodic maintenance done.

7. The vessel should be equipped properly to carry the particular cargo it has booked for the journey.

Therefore we can see that the insured has a great responsibility for the proper selection of the vessel for the carriage of his/her goods. Exclusion No. 4.6 of the Institute Cargo Clause further excludes any loss occurred due to the financial insolvency or default of the carrier.

The points mentioned hereunder should be thoroughly looked into while selecting a vessel.

1. Classification: Classification helps various concerned parties such as charterers, cargo owners and their agents. There are many registered societies who survey the vessel from time to time for the classification of the vessel and if the vessel is being maintained as per specification of the society. They issue certificates according to the class of the vessel to safeguard the interest of all the parties concerned. Therefore it is common for the insurers to put classification clause in the policy. In case the vessel is not classified, the insurance companies charge heavy extra premium, sometimes which can be more than the freight saved.

2. Tonnage: Also the tonnage of the vessel is very important. Undertonnage mostly attracts loading in the premium, because the vessel should be of appropriate weight to carry out the intended journey successfully.

2. Flag of Convenience:

Some countries like Cyprus, Dominican Republic, Greece, Honduras, Lebanon, Liberia, Maldives Island, Malta, Morocco, Nicaragua, Panama, Singapore, Somalia, Sri Lanka and Vanuatu do not enforce strict regulations and register the vessel only to earn revenue for the country. Therefore the vessels carrying such flags of convenience are more prone to cheat the cargo owners because of difficulty in tracing their registry.

In the above example of "Prime Value", we can see that the vessel was registered in Panama and managed by a Greek company.

The cargo owners are in risk because of various types of maritime frauds. The maritime frauds could be broadly divided into shipping frauds, documentary frauds, and frauds due to moral hazard of crew, handlers, port employees, other transporters etc.

The details about these frauds are quite lengthy. But what is more important is how to safeguard against such frauds. The following points can serve as guidelines:

1. The first and foremost safeguard is the selection of the shipping lines of repute.

2. The forwarding agents, supervisors and surveyors should be well experienced and having a good reputation in the market. The cargo owners do not have any direct contact with the shipping lines and depend on the intermediaries. Therefore, they should not do cost cutting in the selection of these intermediaries.

3. Pre-inspection of the cargo at the Port of Loading, Transshipment and Discharge also helps in the ultimate safeguard for the cargo owners.

4. Proper document: The exporter and importer of the cargoes should ensure that all the documents are legal and properly executed. This is specially necessary for the Bills of Lading, which are evidence that goods are loaded in the vessel. They should be signed only by the authentic persons, preferably by the Master of the ship.

Therefore we can see that though in today’s business world nothing is free, it is more important to spend money prudently and wisely.

Japanese cars ruled the roost for some two decades after they dethroned their American counterparts as the number one car manufacturer and supplier in the international market. The way they did it was by making available cars at lower prices, while maintaining quality throughout. But now the Japanese are facing the music, and danger of losing their top position. The ‘pusher’ this time are Korean car manufacturers who are willing to give the customer the same standard cars at lower costs, says a major car importer of Nepal.

The first entry Korean cars made into Nepal was in the early 1980s, recalls Praveen Dhariwal, the executive director of Business Link International, the importer of two prominent car makers of Korea - Ssangyong Motor Company and Daewoo Motors. Although nobody took much notice of them initially, Korean cars now hold an estimated 40-45 percent of market share within Kathmandu valley, claims Dhariwal. And that is not at all surprising because these cars have been recognised for their quality all over the world. In fact, the Nubira brand of Daewoo Motors won the ‘Family Car of the Year’ award in Geneva for the year 2000.

Established in 1990, Business Link is a subsidiary of the VIKUDHA Group of Companies and was earlier involved in importing all kinds of reconditioned vehicles. "That included Toyota, Nissan, Mitsubishi, Isuzu and others," says Dhariwal. But the unit gave up importing reconditioned vehicles after it acquired the authorised exclusive dealership for Daewoo and Ssangyong.

Presently, Business Link makes available Musso and Korando brands of Jeeps from Ssangyong Motor Company and Leganza, Nubira and Matiz from the Daewoo stable.

Besides these, Hyundai Motors and KIA Motors are other Korean manufacturers that have established their presence in the Nepal market.

Dhariwal views that the Korean cars are now set to take a greater share in the market here. "You can today buy a Korean car with as many options as you would get in any branded car - and that comes at a cost 40% lower," claims the Business Link ED. That is because of the technical tie-ups that the Korean car makers have set up with world famous car makers. For example, Ssangyong has been in technical collaboration with Mercedez Benz since 1991, thus earning the destination of being the "Mercedez Benz of Korea". Though the Korando was there already (since 1983) Musso was introduced in 1999. The additional laurel on Ssangyong’s cap is that it is the first 4WD vehicle manufacturer of Korea to acquire ISO 9001.

While accepting that each car, whether Korean or any other, has its own plus points, Dhariwal points out that the advantage in Korean cars lies in the fact that they offer the same features at astonishingly lower price. Pragyan Rana, a businessman who is the Chairman of Mountain Air, goes out of his way to praise the Korean vehicles. Posing in front of his Mitsubishi Pajero, Rana says, " I drive a Mitsubishi Pajero and after trying out the Musso. I am satisfied. Musso has all the power of a Mercedez Benz engine and what more can I expect!"

Ssangyong Motor company is an affiliate of Korean’s Ssangyong Group since 1986. The motor company itself was started in 1954, while Ssangyong Group was founded early in 1939. The other areas of involvement of the Group include cement, oil, investment and securities and paper, among others.

Dhariwal also contradicts news making rounds about Korean joint ventures not doing well the world over. "They have been doing extremely well, for example in the city car segmet," he points out. He in fact even claims that thanks to Korean car JVs, the market share of Japanese car JVs has plumetted to about 30 percent in India.