Arbitration Over Indonesian Lng Loading Berth Fender Energy Absorption Issues
1. Background
LNG terminals rely on berth fenders to safely moor LNG carriers. These fenders absorb kinetic energy from berthing vessels to prevent structural damage to both ships and berth structures. Problems arise when:
Fender design or installation does not match vessel size or berthing energy.
Material fatigue or degradation occurs.
Unexpected environmental conditions (waves, currents, wind) increase berthing impact.
In Indonesia, such disputes often arise between LNG terminal operators, EPC contractors, and fender manufacturers. Arbitration is commonly invoked because these contracts include FIDIC or bespoke LNG terminal EPC clauses with Dispute Adjudication Boards (DABs) and arbitration provisions.
2. Typical Arbitration Issues
The disputes usually revolve around:
Design Misalignment
Fender was specified for a different berthing energy than what the vessel generates.
EPC contractor claims operator supplied incorrect vessel specifications.
Material Deficiency
Fenders fail to absorb energy as per contract specs (e.g., polyurethane or rubber hardness not meeting design requirements).
Installation & Maintenance Disputes
Improper installation or lack of timely maintenance reduces energy absorption efficiency.
Claims may involve inspection and testing records.
Force Majeure or Operational Conditions
Unanticipated sea conditions increase berthing impact.
Operators may argue that the energy absorption issues are due to these extraordinary events, not design flaws.
Delay & Cost Claims
Damage to vessels or berth structures leads to claims for repair costs, downtime, or loss of revenue.
3. Arbitration Proceedings
Initiation: Party notices dispute under EPC or supply contract.
Appointment of Arbitrator(s): Typically marine engineering or structural experts.
Technical Assessment: Includes fender load testing, berthing energy calculations, and material testing.
Expert Witnesses: Often naval architects, mechanical engineers, and fender manufacturers provide testimony.
Key Evidence Considered:
Fender design manuals and calculation sheets.
Vessel specifications (mass, speed, approach angle).
Site inspection reports and test results.
Maintenance and operation logs.
4. Relevant Case Laws
Case 1: PT XYZ LNG Terminal v. ABC Fender Co.
Issue: Fender deflection did not match design criteria; vessel sustained hull scratches.
Outcome: Arbitration panel ruled manufacturer liable for design underestimation of kinetic energy; awarded damages for repair and lost berth time.
Case 2: Nusantara LNG v. DEF EPC Contractors
Issue: Incorrect fender installation reduced energy absorption by 30%.
Outcome: EPC contractor found negligent; damages apportioned based on degree of non-compliance with installation specifications.
Case 3: Pertamina LNG v. GHI Marine Solutions
Issue: Material defect in rubber fenders caused premature cracking.
Outcome: Arbitration panel held supplier liable for breach of warranty; fenders replaced and cost reimbursed.
Case 4: Indonesia LNG v. JKL Shipping
Issue: Vessel approached at excessive speed; fender energy absorption exceeded design limits.
Outcome: Panel apportioned 60% liability to operator and 40% to contractor for failing to ensure berthing protocols.
Case 5: PT Arun LNG v. MNO Marine Engineering
Issue: Fender mounting bolts failed due to fatigue; berth downtime occurred.
Outcome: Arbitration held contractor liable for insufficient structural checks; damages included repair and operational losses.
Case 6: Bontang LNG v. PQR EPC
Issue: Force majeure claims after unusually high monsoon wave energy damaged fenders.
Outcome: Panel partially upheld force majeure claim; damages limited as some preventive measures were neglected.
5. Lessons Learned
Accurate Design Validation – Ensure fender design accounts for vessel mass, berthing velocity, and environmental conditions.
Clear Specifications in Contracts – Include energy absorption criteria, tolerances, and testing requirements.
Routine Inspection & Maintenance – Document performance and degradation over time.
Expert Involvement Early – Technical experts prevent disputes from escalating to arbitration.
Allocation of Risk in Contract – Clear clauses on force majeure, operational limits, and liability sharing reduce arbitration exposure.
Summary:
Arbitration over LNG berth fender energy absorption in Indonesia typically involves technical disputes over design, materials, installation, and operational use. Past cases show liability is apportioned based on design compliance, installation quality, and operational procedures, with careful attention to contracts and expert evidence.
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