Time Charter

MASTERCLASS WORKSHOP
TIME CHARTER
TIME CHARTER MASTERCLASS
Contents
1. Welcome letter
2. Introduction to BIMCO standard contracts and clauses
3. The inter-relationship between contracts
4. Time charter duration
5. The payment of hire
6. Off-hire clauses
7. Performance claims
8. The operational costs for which the charterers are responsible
9. The loading, stowage, discharge of the cargo
10.The duty to order the ship to trade between safe ports
11.The duty not to ship dangerous goods
12.The duty to provide a seaworthy ship and to care for the cargo
13.The duty to comply with legitimate employment orders
14.The duty to provide bill of lading
15.Case study 1
16.Frustration of time charter parties
17.The paramount clauses
18.Liens
19.Letters of indemnity
20.Case study 2
21.Personal notes
22. Appendices
Chapter 1
BIMCO Informatique A/S
Bagsvaerdvej 161
2880 Bagsvaerd
Denmark
Tel: +45 4436 6800
VAT: DK 12 10 26 90
Dear Participant
Welcome to the BIMCO Time Charter Masterclass.
We hope you will enjoy the course and you will leave feeling equipped to do a demanding job even
better.
The electronic course file contains transcripts of the presentations, supporting papers, appendices
and the case studies with model answers. For the case studies, we will hand out paper copies as
well.
Immediately after the course, we will ask you to complete an online evaluation form. Your feedback
is vital in our constant efforts to improve our courses further, therefore we would appreciate if you
would take the time to complete it online.
Should you have any questions with respect to the course, please do not hesitate to contact me.
I wish you three enjoyable and educational days.
Kind regards
Peter Grube
Head of Training, Courses
BIMCO Training
www.bimco.org
Chapter 2
Personal notes:
INTRODUCTION TO THE
DOCUMENTARY WORK OF
BIMCO and NYPE 2015
Peter Grube
Head of training: Courses
Masterclass in Monaco
April 2017
Personal notes:
Overview
• Why are BIMCO producing standard Documentation
or How to make charterparties?
• Current time charter developments and overview of
current BIMCO projects on clauses and forms being
developed
• The evolution of the NYPE form.
• Overview of GENTIME and other BIMCO time charter
forms. How much are they used?
Personal notes:
Why English Law?
1
The sun never sets on the British Personal notes:
Empire … What was actually agreed during
negos- English law
Sun never sets
Personal notes:
Cartel on min frt rates
Was it an effective way of Personal notes:

handling a fundamental
imbalance in supply and
demand?
Not really, but it triggered two other
drivers equally important at the
time,
• a need for standardsized shipping
documentation
• and sharing/pooling information
for the common good of the
members
2
Counting the cost Personal notes:
• Paperwork still accounts for
significant cost in maritime
supply chains. Importing a
single consignment generates
an average of 36 original
paper documents and 240
copies from 27 parties.
• The World Bank estimates
that paper documents waste
7% of the total value of world
trade which is said to be
equal to US$660bn annually.
• The problem is incompatible
IT systems preventing limited
data‐sharing. As a result 90%
of the information needs to
retyped, causing delays,
duplication and a high
likelihood of errors and
variances.
Personal notes:
The future of contracting Incortporates eb/l
• NYPE now refers to electronic B/L’s
Personal notes:
How do we do C/P’s
and clauses?
3
Documentation Personal notes:
Owner of cgo if broken CP matches
Carta Partita! Charta Partita!
Charta divisa! Medieval Latin for
divided document
Documentation Personal notes:
Personal notes:
1. Background
• Global perspective
• Well known activity
• Wide range of documents
• Trade facilitation
• Common industry benefit
4
Personal notes:
2. Objectives
•Unbiassed and balanced documents
•Legally sound language, which reflects current practices
•Clear and unambiguous terms which serves to reduce
disputes
•The 3 Cs…
Personal notes:
• Language
Clarity • Structure
• Harmonisation
Consistency • Core clauses
• Style
• Outcome
Certainty • Risk
• Insurance
Clauses Personal notes:
5
The Documentary Committee Personal notes:
The composition of the Documentary Committee Personal notes:

The DC reflects the wide spectrum of shipping, legal, commercial, shipbroking and insurance opinion
and expertise among its global membership.
The Documentary Committee consists of a chairman; two vice‐chairmen; the members of the BIMCO
Executive Committee; up to thirty owner‐members representing different countries; P&I, Defence
Club and shipping trade association representatives; a number of observers from various shipping
bodies such as the International Chamber of Shipping and FONASBA; and representatives from the
BIMCO Secretariat.
Personal notes:
6
Personal notes:
Working Schedule
Personal notes:
Sub committees from industry for
each CP
Personal notes:
Current T/C related BIMCO projects
• SUPPLYTIME 2005 Offshore Supply Vessel Time
Charter Party
• the subcommittee has conducted a consultation process
with a selected “sounding board” consisting of around 40
individuals and companies with a wide geographical
spread. There is also a good spread of representatives
from across the industry including owners, charterers,
brokers, P&I and legal expertise on the sounding board.
The interest in this document is reflected in the large
number of comments we have received – not less than 60
pages altogether.
7
Personal notes:
Current T/C related BIMCO projects
• Redelivery Clause for Time Charter Parties
• This clause aims to prevent charterers from changing their
minds close to redelivery for commercial reasons and not
giving notices as agreed, or even changing the redelivery
port, since this would severely affect the owners’ future
planning for the ship. At the same time the charterers
should not be penalised for events taking place which are
beyond their control.
Personal notes:
The drafting process
• Who does the drafting?
• How long does it take?
• How much does it cost?
• Who pays for it?
The important sub‐committee Personal notes:
8
Personal notes:
The evolution of Personal notes:

the NYPE form. NYPE 2015 BOOKLET
NYPE 2015 EXPLANATORY NOTES
COPY OF CONTRACT
NYPE Clauses Personal notes:
9
ASBATIME (NYPE 81)
# Executed
809
Personal notes:
BALTIME 1939 (Revised 2001) 5540
BPTIME 3 332
GENTIME 998
NYPE 2015 29
NYPE 46 (Landscape) 1259
NYPE 46 (Portrait) 3554
NYPE 93 10063
ROPAXTIME 41
SHELLTIME 1984 24
SHELLTIME4 ver 1.1 (as revised 2003) 2473
SUPPLYTIME 2005 33981
SUPPLYTIME 89 12087
Personal notes:
NYPE 2015 – what has changed?
• NYPE 2015 is the product of a co‐operative effort
between BIMCO, the Association of Shipbrokers and
Agents (ASBA), who are the copyright holders of the
NYPE form, and the Singapore Maritime Foundation
(SMF) and is jointly authored by the three
organisations.
Personal notes:
NYPE 2015 – what has changed?
• It is the result of three years work during which there
was extensive industry consultation. As with all
balanced documents, there have been some
compromises!
10
Personal notes:
Some issues
• It is important to understand that NYPE 2015 is designed
for adaption for either a single trip or a standard period
• There are some additional clauses that apply only to
period time charters (where the minimum charter period
exceeds five months). Check whether the additional
clauses should or should not apply in the context of the
specific fixture.
• NYPE 2015 includes a provision stating whether the
“Owners” are the legal or registered owners of the ship, or
whether they are operating the ship under a bareboat
(demise) agreement or are time chartering the ship from
another entity.
Personal notes:
NYPE 2015 specifics
• The parties can either agree that the ship will be
delivered ready to receive cargo, or be ready to
receive cargo at the first loading port if different from
the delivery place. It is important to choose and
delete the option not to apply. If overlooked, the
owners will by default be under a strict obligation to
deliver the ship at the delivery place ready to receive
cargo.
Personal notes:
Delivery/Redelivery
• Cl. 2 and 4 now contains provisions designed to give
greater certainty to the effect of delivery and re‐
delivery notices and in particular restricting the ability
to give further employment orders contrary to the
notices already given. The aim is to reverse the
problem created by the “Zenovia” [2009]. (We will
discuss this further on day 3)
11
Personal notes:
Clause 9 Bunkers
• Clause 9 regarding bunkers, extends over 3 pages in
length! It has been extensively re‐written to provide a
modern and comprehensive set of provisions dealing with
all bunker‐related matters under a time charter party.
• The seven separately headed provisions cover matters
such as quantities and prices; bunkering prior to
delivery/redelivery; bunkering operations and sampling;
quality and liability; fuel testing; ECA trading; and grades
and quantities on redelivery.
• All of these are matters that are commonly absent from or
insufficiently provided for in many standard form time
charter parties.
Personal notes:
Clause 11 Hire payment
• There is a right to damages after withdrawal for non‐
payment of hire and also a right to suspend service.
The grace period notice required before withdrawal
now applies even if the non‐payment of hire was
intentional. If the owners suffer a loss as a result of
the early termination of the charter party they will be
entitled to claim damages from the charterers to
cover the remaining period of the contract. This
provides a clear means of compensation to the
owners should they be exposed to lower market rates
than the charter hire rate due to the premature
ending of the charter
Personal notes:
Clause 6 & 7
• Amendment to the “Owners to Provide” clause to
include “lubricating oil”.
• Amendment to the “Charterers to Provide” clause to
include “customary pilotage”.
12
Personal notes:
Clause 12 whose determination shall be final
• Cl 12 is specifically covering speed and performance and binding
(as opposed to the mere speed and consumption
description found in the NYPE 1993).
• Notably the performance warranty is to
apply “throughout the duration of this
charterparty” and is a continuing warranty.
• There is also provision for the parties to resolve any
speed and consumption claims by referring such
disputes to an “expert” or “alternative weather
service”, “whose determination shall be final and
binding”.
Not by default included in NYPE Personal notes:

2015
NYPE 2015 do not Asian Gypsy
Moth Clause.
include a number
of BIMCO clauses Bunker Non‐Lien
Clause.
which the industry
often see as Cargo Fumigation
Clause.
necessary
additions: Anti‐Corruption
Clause.
Personal notes:
The Test af Approval
• Perhaps an
objective indicator
will be when the
authors of Time
Charters feel it
necessary to issue
a new edition with
references to
NYPE 2015.
13
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
14
Chapter 3
Personal notes:
The Inter‐Relationship
between Contracts
©Copyright Ince & Co LLP, 2015. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical,
including photocopying, scanning, recording or by any information storage or retrieval system, without the prior written
permission of the author.
Personal notes:
THE IMPORTANCE OF THE CAR O
SALE CONTRACT
Personal notes:
The importance of the international sale contract
• The type of sale contract and the terms of
that contract will determine the type of
transportation contract, the terms of that
transportation contract or contracts, and the
identity of the charterer.
1
How CIF sale and carriage contracts Personal notes:
interlink
Seller / Charterer / Shipper Sale Contract Buyer / Receiver
Transfer B/L
B/L B/L
1. Sale Contract
2. C/P
3. B/L
4. Transfer of B/L
5. B/L contract with
receiver
Shipowner
Personal notes:
TYPES OF SHIPPING CONTRACTS
Personal notes:
TYPES OF CONTRACTS
• There are many different types of contracts which
are designed to be used either directly or indirectly
for the purpose of carrying goods, commodities,
energy sources etc by sea.
• The most common examples are:
o Contracts of Affreightment (COA)
o Charter parties
o Bills of Lading
o Sea Waybills
In many cases goods etc are carried pursuant to more
than one such contract.
2
Personal notes:
CONTRACTS OF AFFREI HTMENT
COA
Personal notes:
Contracts of Affreightment (COA)
• These contracts are not strictly contracts of carriage of
goods but tonnage/volume contracts providing for the
delivery of a stated total quantity by a stated number
of shipments over a stated period.
e.g. A contract for the provision of “200,000 tons of
product in 5 shipments evenly spread over 12 months”
• Each individual shipment is governed by the terms of
an agreed voyage charter form but in the event of a
conflict, the terms of the COA are to override.
Personal notes:
The COA usually identifies the loading and
discharging ports or range and provides that the
shipowner is to nominate either a named vessel or
one satisfying an agreed description within the
agreed shipment period and the charterer is to
make cargo available for shipment by that vessel in
that shipment period.
3
Personal notes:
The benefit of a COA rather than a time charter to
sellers or buyers of goods is that it gives them
control over a vessel or vessels during periods when
they have need of a vessel without the necessity of
paying hire during periods when they have no need
for the vessel.
Personal notes:
CHARTERPARTIES AND BILLS OF
LADIN OR SEA WAYBILLS
Personal notes:
Contracts of carriage
• There are two basic types of contacts which
are relevant for the carriage of goods ‐
1. Contracts for 2. Contracts for the
the use of the carriage of
whole or a large individual parcels
part of the ship of cargo i.e. a bill
i.e. charter parties. of lading or sea
waybill.
4
Personal notes:
Contracts of carriage
• The different functions of the two basic
types of contacts ‐
1. Charter parties gives
2. A bill of lading or
the charterer the right
sea waybill needs to
to control the use of the
be issued once cargo
Ship at a future point in
has been shipped.
time.
Personal notes:
The negotiable (”to order”) bill of lading
A bill of lading is a far more complex document than a
charter party. It is a:
1. receipt for the goods; and
2. good evidence of a transferable contract of carriage;
and
3. a document of title ‐ transfer of it transfers
constructive possession of the goods and must be
produced to the carrier in order to obtain delivery of the
cargo from the ship.
Personal notes:
CHARTERPARTIES
5
Personal notes:
What is a charter party?
• Surprisingly, there does not seem to be a
definitive description of a charter party
under the law of England and Wales.
Personal notes:
A Useful Description
“Where the shipowner agrees to make available the entire
carrying capacity of his vessel for either a particular voyage or a
specified period of time, the arrangement normally takes the
form of a charterparty....
A charterparty is a contract which is negotiated in a free market
subject only to the laws of supply and demand. While the
relative bargaining strengths of the parties will depend on the
current state of the market, shipowner and charterer are
otherwise able to negotiate their own terms free of any
statutory interference.”
“Carriage of Goods by Sea”, ohn F Wilson
Personal notes:
Charter Parties
• There are two basic types ‐
1. Bareboat demise
charters.
2. Other charters
6
Personal notes:
BAREBOAT DEMISE CHARTERS
• Whereas time and voyage charters are contracts for the
provision of services a bareboat charter is a contract of
hire.
• Under a bareboat charter the operating costs e.g. the
provision of crew, bunkers, port costs etc are borne by the
charterer who is responsible as carrier for liabilities arising
during the charter period.
• Bareboat charters are used as part of complicated finance
and security arrangements for the purchase of ships.
Personal notes:
Other Charters
• There are two basic types ‐
1. Time charters
contracts for the use
of the ship for a 2. oyage charters
specified time. Contracts for the
use of the ship for a
specified voyage.
• NB! The voyage charter is usually more
directly relevant to the contract for the
carriage of the cargo.
Personal notes:
TIME CHARTERS
These are contracts for the use of the ship and
her crew for a specified period of time within
agreed trading limits as directed by the charterer
in consideration for the payment of hire.
7
Personal notes:
OYA E CHARTERS
These are contracts for the use of the ship and
her crew to carry an agreed cargo on an agreed
voyage regardless of time in exchange for the
payment of freight and other remuneration
such as demurrage.
Personal notes:
HYBRID CHARTERS
Some modern charters combine some of the characteristics
of time and voyage charters. For example ‐
• Time charter trips e.g. a round Atlantic voyage . The

contract is essentially for a voyage but payment is made in
accordance with the time spent
• Consecutive voyage charters e.g. 4 consecutive voyages
between A & B within three months .
Personal notes:
Allocation of Cost
• Under a voyage charter the shipowner is normally obliged to
pay for all the operating costs of the ship.
• Under a time charter the cost allocation is more balanced.
Whereas the owner pays for the crew and the cost of
insuring the ship, the charterer normally pays for bunkers,
port and stevedoring costs, agencies, pilotages and all other
usual expenses.
8
Personal notes:
Who bears the risk of delay?
• Under a voyage charter the shipowner is paid an
agreed freight for the voyage regardless of the
time spent to perform it.
• Therefore, if the performance of the voyage is
delayed the shipowner’s overhead costs increase
but his income remains the same.
• Consequently, the risk of delay under a voyage
charter is borne to a large extent by the
shipowner.
Personal notes:
• Under a time charter the charterer is obliged to pay hire
continuously for the use of the ship.
• Therefore, if performance is delayed the charterer is
obliged to pay more hire and more voyage operation
costs such as bunkers etc.
• Consequently, the risk of delay under a time charter is
borne to a large extent by the charterer.
Personal notes:
• To protect themselves against such risks shipowners and
charterers will normally seek to introduce clauses which are
intended to balance or even overturn the risk.
• A shipowner under a voyage charter will wish to introduce
e.g. demurrage provisions or clauses requiring the charterer to
nominate berths which are reachable on arrival.
• A charterer under a time charter will wish to introduce e.g.
off‐hire or performance clauses.
9
Personal notes:
THE IMPORTANCE OF CHARTERIN STRATE Y
The choice of the type of charter is important for
both the owner and the charterer.
Personal notes:
Example 1
A time charter is beneficial for an owner if the market
is stable or likely to drop since:‐
• he will get regular income; and
• his income will be higher than that which he could
otherwise get on the open market.
However, if the market is likely to rise instead of drop
the owner cannot exploit the rising market until the
end of the charter period. Therefore, he may prefer in
such circumstances to enter into voyage charters as
and when necessary (“spot chartering”).
Personal notes:
Example 2
A time charter is beneficial for a charterer if the
market is stable or likely to rise since he will secure
the use of the ship for the charter period at a fixed
rate which will be no lower than that which he
would otherwise have to pay on the open market.
• However, if the market is likely to drop instead of
rise the charterer cannot exploit the dropping
market until the end of the charter period.
Therefore, he may prefer to enter into voyage
charters as and when necessary (“spot
chartering”).
10
Personal notes:
CHARTER FORMS
• There are a large number of different charter forms.
• Some forms are intended for general trading e.g. Baltime,
Gencon etc.
• Others are intended for a specific type of trade e.g.
BPTIME, BPVOY, SHELLLNGTIME, COALVOY, C ORE 7,
SUGARCHARTER etc.
• The construction of each charter is affected by such
factors.
Personal notes:
ENERAL RULES
Not always, but nearly always:
• if there is a time charter there will be a bill of lading –
for each voyage under the charter
• the parties to the charter and the bill will be different
• the shipowner will be party to both
• the two contracts are separate – with different terms
• The bill will incorporate terms from a sub‐charter
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
11
BIMCO Training
_______________________________________________________________________
The information and opinions which this paper contains are not intended to be a comprehensive study, nor to provide legal
advice and should not be treated as a substitute for specific advice concerning individual situations.
THE INTER-RELATIONSHIP BETWEEN CONTRACTS
TYPES OF CONTRACTS
There are two types of contracts of carriage:
(1) contracts for the use of the whole (or, at least, a substantial part) of the ship, i.e.
charter parties; and
(2) contracts for the carriage of individual parcels of cargo (bills of lading or seaway bills)
or individual passengers (passenger tickets).
The distinction was explained in legal terms by Hobhouse J, in The Torrenia,1 as follows:
“The contract here is a contract in a bill of lading: it is a contract of carriage – that is to say, a
species of contract of bailment. It is not, as Mr Pollock for the Defendants at one stage argued,
a mere contract for the carriage of goods. Charter parties are typically contracts for the
carriage of goods. They are executory. They are intended to give rise to bailments (not
necessarily) between the parties to the charter party. They may include terms of an intended
bailment but they are not normally the contract of bailment itself. They cover other matters
besides the bailor/bailee relationship.”
Charter parties
There are two basic types of charter party:
(1) bareboat (or demise) charters, i.e. contracts which give the charterer full control of
the ship for an agreed period in exchange for the payment of hire. The contract is
similar to a time charter (see below) but with the important difference that it obliges
the charterer to provide his own crew and to incur responsibility as “owner” for
liabilities arising during the operation of the ship; and
(2) other forms of charter, i.e. contracts which oblige the owner of the ship to provide
the crew and to remain responsible as “owner” for liabilities arising during the
operation of the ship.
Bareboat Charter Parties
Since the crew are employees of the charterer and not of the owner, the acts, neglect or omissions of
the crew are imputed to the charterer and not to the owner. Accordingly, bills of lading signed by the
master will bind the charterer as carrier and not the owner. Similarly, it is the charterer and not the
owner who will be responsible for the tortious acts of the crew, e.g. for collisions.
Other Charter Parties
1
(1983) 2 Ll. Rep at 216
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There are two types:
(1) Time charters, i.e. contracts for the use of the ship and her crew for a specified period
of time within agreed trading limits as directed by the time charterer in consideration
for the payment of hire; and
(2) Voyage charters, i.e. contracts for the use of the ship and her crew to carry an agreed
cargo on an agreed voyage regardless of time in consideration for the payment of
freight (and, possibly, other remuneration such as demurrage if the
loading/discharging is delayed beyond the time agreed for such operations).
Hybrid Charter Parties
It is becoming increasingly common to see charters which combine some of the aspects of both time
and voyage charters, e.g:
(1) trip charters, i.e. contracts obliging the charterer to pay hire for the time taken by the
ship to complete a specified voyage, e.g. a “round Atlantic” voyage; or
(2) consecutive voyage charters, e.g. four consecutive voyages between A and B;
(3) slot charters or “space sharing agreements”, i.e. agreements which enable liner
operators to utilise empty space on their ships by allowing other operators to use
some of the (empty) carrying capacity in their vessels in exchange for the right to use
an equivalent amount of space on the ships of such other operators. This form of
arrangement is common in the container trade and remuneration is a complicated
equation often calculated with regard to the net profit earned over a period by all the
operators who are part of the arrangement.
Cost Allocation Between Shipowners and Charterers
Under a voyage charter the shipowner is normally (unless there is an express term to the contrary)
obliged, in consideration for the payment of the freight by the charterer, to pay for all the operating
costs of the ship.
Under a time charter the cost allocation is more balanced. Whereas the owner pays for the crew and
the cost of insuring the ship, the charterer normally pays for bunkers, port and stevedoring costs,
agencies, pilotages and “all other usual expenses”.2
Under a demise charter the charterer pays for all operating costs including costs related to the
employment of the crew and the insuring of the ship.
WHY HAVE CHARTER PARTIES?
Charterparties exist for a purpose. The type of charter which is appropriate will, therefore, depend on
the purpose required by the parties to it. In general, a distinction is drawn between the demise charter
on the one hand and other types of charter on the other.
2
e.g. Clause 2 of the New York Produce Exchange form of charter
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Bareboat Charters
Unlike a time charter, which is in reality a contract for the provision of services, a bareboat charter is
a genuine contract of hire and is, as such, subject to the Supply of Goods and Services Act 1982.
However, in practically all cases, the implied terms of that Act have been modified by the express terms
of charters such as the Barecon A form which has detailed provisions concerning the required condition
of the ship on delivery into service under the charter and which imposes duties on the charterer in
relation to the maintenance and insurance of the ship during the charter period. Under a demise
charter the operating costs of the ship (e.g. crew, bunkers (compartments on board ship for the
stowage of fuel – the operation of filling or replenishing a ship’s bunkers is known as bunkering), port
costs etc) are borne almost exclusively by the charterer.
Bareboat charters are created not so much with a view to the carriage of goods but more as part of a
complicated financing arrangement, often with the intention that the charterer should become the
owner of the ship in due course. Thus, a contract for the purchase of a ship by instalments will often
incorporate a bareboat charter into the contract. A variant of this would be for a financing bank to
lend the funds required to buy the ship, the bank then acquiring the ownership of the ship but bareboat
chartering it to the borrower for the period of the loan. This would enable the bank to avoid not only
the operating costs but also the liabilities which it would otherwise have to bear in relation to the
operation of the ship under a mortgage. Bareboat charters are also concluded between two associated
companies for tax or employment reasons.
Time and Voyage Charters
It would be wrong to think of time and voyage charterparties merely as contracts of carriage. They are
an essential part of the wider scenario involving the buying and selling of goods and the terms of the
charter are directly influenced by the requirements of the cargo sale contract.
The charter is a most useful vehicle for both shipowners and cargo traders.
1.From the Shipowner’s Standpoint
From the shipowner’s point of view a charter provides income. However, the owner has to decide his
chartering strategy in order to maximise his income. If the ship is time chartered, the income of the
ship is guaranteed at a fixed rate for a fixed period without the need to repeatedly find new
employment. However, during that period the market rate of hire may go up or down. If the market
rate goes down then the owner will have benefited from the time charter. However, if the market rate
has increased, the time charter will prevent the owner from exploiting the higher market rate. The
owner may, therefore, prefer – if he feels that the market rate will improve in the future – to avoid
committing his ship to a time charter and fix his ship instead for voyage charters on the “spot market”
as and when lucrative fixtures become available.
2.The Charterer’s Requirements
The charterer is usually either a speculator on the chartering market who hopes to make a profit by a
wise strategy of chartering and sub-chartering or is a trader who needs transportation for his cargo.
Example
If the charterer is a trader who wishes to sell goods on CIF terms then, if he does not own a ship, he
will need to charter one in order to satisfy his obligation under the cargo sale contract to transport the
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goods to the buyer’s chosen port of delivery. He may either decide to secure transportation for a
period (i.e. a time charter), thereby knowing in advance what the transportation cost element of his
cargo sale will be for that period when negotiating the price of the goods, or alternatively, he may
speculate on the market and secure transportation for a particular cargo to a particular destination
after (or possibly, at the same time as) negotiating the sale of that cargo (i.e. a voyage charter).
Whether the charter is a time charter or a voyage charter, the charterer will be looking for terms which
provide him with the maximum flexibility to control the employment of the ship since his
transportation requirements may well change depending on the requirements of the cargo sale
contract.
The importance of the charter as a commercial tool of this kind was recognised by the House of Lords
in the case of The Nanfri.3 Although the court was in that case considering a time charter, the
comments made by Lord Wilberforce at page 206 apply generally, i.e:
“It is important in this connection to have in mind that the present charters are time charters,
the nature and purpose of which is to enable the charterers to use the vessel during the period
of the charters for trading in whatever manner they deem fit. The issue of bills of lading in a
particular form may be vital for the charterers’ trade and indeed, in relation to this trade,
which involves CIF or C&F contracts, the issue of freight pre-paid bills of lading is essential if
the trade is to be maintained. Furthermore, Clause 9, as usual in time charters, contains an
indemnity clause against all consequences or liabilities arising from the master signing bills of
lading. This underlines the power of the charterers, in the course of exploiting the vessel, to
decide what bills of lading are appropriate for their trade and to instruct the master to issue
such bills, the owners being protected by the indemnity clause.”
1.
THE RELATIONSHIP BETWEEN THE CHARTERPARTY AND THE BILL OF LADING
In the vast majority of cases a charterer is either a trader who is selling or buying goods or is someone
acting for such a party vis-à-vis the shipowner and the main purpose of a chartered ship is to carry
goods in satisfaction of a contract for the international sale of goods. The ability of the charterer to
obtain a bill of lading from the ship is a fundamental requirement since, without a bill of lading, the
trader will have great difficulty in selling his goods. To understand why this is so, it is necessary to
remember the following:
(i) The seller often knows nothing of the financial standing of the buyer and is taking a
risk in consigning his goods unless he can be reasonably certain of being paid for them.
The obvious solution, that of demanding payment in advance, is unlikely to appeal to
the buyer, who may have no reason to trust the seller to ship goods of the promised
quantity and description.
(ii) The buyer is not usually present or represented at the load port and is not, therefore,
in a position to inspect the goods. Furthermore, even after shipment, so long as the
cargo remains at sea, its quantity and condition cannot be inspected by any further
potential buyer.
(iii) The cargo, whilst at sea, cannot be physically transferred to a new buyer. The only
way in which the seller can effect a transfer of any part of such cargo is by transferring
3
(1979) 1 Ll. Rep 201
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instead a document of title which is accepted as being the documentary equivalent of

that cargo.
The bill of lading was invented to cure these difficulties and has the following functions:
(1) it is a receipt given by the carrier for the goods which describes the apparent order
and condition and the quantity or weight of the goods on shipment; and
(2) it is a contract of carriage which sets out the terms under which the goods are to be
carried by the ship; and
(3) it is a transferable document of title, possession of which proves entitlement to the

goods. Payment for the goods can, therefore, be made against the bill of lading and
the bill can be negotiated (provided it has been made out “to order”) from one holder
to another, thereby transferring from one holder to another the right to obtain
delivery of the goods from the ship.
A sea waybill – otherwise known as a waybill – is also a receipt and a contract of

carriage. However, it is not treated as a document of title since, unlike a bill of lading,
it is not negotiable and remains at all times a contract with the shipper.4 In the past
this gave rise to a problem if the consignee named in the sea waybill wished to sue
the carrier since there was no contractual nexus between them and therefore, the
only way in which a consignee could bring such a claim was if he persuaded the shipper
(who might or might not agree) to bring the action in his (the shipper’s) name on
behalf of the consignee. However, this problem has now been solved since the named
consignee under a sea waybill has been given a statutory title to sue the carrier under
section 2(1) of the Carriage of Goods by Sea Act 1992. Nevertheless, since the sea
waybill is neither negotiable nor a document of title, it is not well suited to
transactions involving cargo sales and documentary credits, because banks tend to
place great importance on security and therefore, require a document of title. They
do, however, have one great advantage in that (because they are not documents of
title) they do not need to be surrendered to the ship in order to obtain delivery of the
goods at the port of discharge. Sea waybills should, therefore, be used only when
there is no intention to on-sell the goods during the course of the voyage. For this
reason, they are used most often in the container trade or on short-haul ro-ro (roll-
on/roll-off) ships.
So-called “straight” bills of lading (i.e. bills which are not made out “to order”) are in
many respects very similar to sea waybills in that they are not freely transferable from
one party to another but merely between the shipper and the named consignee.5
However, it has been held that they do act as documents of title as between the
shipper and the named consignee (albeit that they cannot then be negotiated on by
that consignee to anyone else) since the named consignee is obliged to surrender the
bill to the ship in order to obtain delivery of the goods at the port of discharge.6 This
is an important distinction between a sea waybill and a “straight” bill of lading. In
some trades (particularly the container trade) there are standard documents which
can be used either as negotiable or as “straight” bills of lading depending on how the
4
The Happy Ranger (2002) 2 Ll. Rep 357
5
The Happy Ranger (2002) 2 Ll. Rep at 539
6
The Rafaela S (2003) 2 Ll. Rep 113
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forms are completed.7 Care should, therefore, be taken to ensure when construing
them to ascertain in which form the document is being used in the particular
circumstance
7
See The Chitral (2001) 1 Ll. Rep 539 and The Rafaela S (2002) 2 Ll. Rep 403
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Chapter 4
Personal notes:
Time Charter Duration
Copyright Ince & Co LLP, 2015. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopying, scanning, recording or by any information storage or retrieval system, without the prior written permission of the
author.
Personal notes:
From Delivery to Re‐delivery
• The time which the charterer has to use the vessel
commences at the agreed delivery location and
continues until the vessel is redelivered at the agreed
redelivery location.
• The vessel must be redelivered within the agreed period
at the agreed redelivery location.
• If the vessel is not redelivered in time at the agreed
redelivery location the charterer is in breach of contract
and must compensate the owner in damages.
Personal notes:
Importance of Charter Duration
1. To charterers
• To enable them to plan sub‐fixtures during the
period.
2. To owners
• To enable them to calculate their gross income
for charter period.
• To assist them in planning future employment.
1
Personal notes:
Overlap and Underlap
1. Overlap
essel is re‐delivered after expiry of charter
duration.
2. Underlap
essel is re‐delivered before expiry of charter
duration.
Personal notes:
Charter Duration
Period 6 months from the date of delivery
End of 6 month
period
A.
Overlap
B.
Underlap
Personal notes:
Claims for Damages Principles
• Overlap and underlap are both cases of breach of contract. 1 Freedom of contract
2 duty to mitigate loses
• In both instances owners are entitled to damages subject
to any exception clause and the duty to mitigate losses. owners have duty to mitigate the
he eon 1991 1 Lloyd’s Rep 100 loses lower loses
2
Personal notes:
• In the case of overlap there is recoverable as damages
the difference if any between the charter rate and any
higher market rate for the overlap period.
However!
• It was deliberated whether the charterer could also be
liable for additional losses incurred by the owner if, as a
result of the late re‐delivery, he has lost his next fixture.
Personal notes:
he ch e 200 UKHL 4
• The chartered vessel was to be re‐delivered on 2 May 2004.
• On 21 April 2004, the owners fixed another charter party
with Cargill at a rate of $ 39,500 per day. The new
charterparty identified the cancellation dates as 29 April to
May 2004.
• By 5 May 2004, the owners recognised that the vessel
would not be delivered within the cancellation period of
the new charterparty with Cargill and entered into
negotiations to extend the cancellation date to 11 May.
Cargill accepted this but asked for a reduction from the
charter rate $ 31,500 .
Personal notes:
Recovered lost sub fixt vs sub fixture
• The vessel was delivered to Cargill on 11 May and was kept under the
charter agreement for almost 6 months.
• The owners claimed the money they lost for making adjustments with
Cargill the difference between the original rate agreed with Cargill and
the revised rate . The claim was for almost $1.3 million.
• Be careful, this was not a claim for the difference between the market
rate and charter rate for the period the vessel was kept by the first
charterer in breach of the charter period the damages under this
heading was about $ 15 ,301 and was also claimed from the charterer
separately .
• Both the High Court and the Court of Appeal allowed the claim. The
ship owner’s loss was treated as r ng n t r th t ccord ng to
the co r e of th ng from ch re ch of contr ct t e f.’
3
Personal notes:
• The House of Lords, however, reversed the decision and
allowed the charterer’s appeal.
• Identifying the ratio of the judgment of the House of Lords is
not easy.
• The majority Lords Hoffmann, Walker and Hope based their
decision on the fact that this kind of loss is not a kind of loss
that the charterer ought fairly to have accepted responsibility
for’.
• The test seems to suggest that in assessing the remoteness of
the loss, the court should identify whether a contract‐breaker
operating in that market would have assumed responsibility
for that loss or not!
Personal notes:
cancel = walk away

In the case of underlap damages will be calculated non guilty cancelation = cancelation
depending on whether or not there is a market at the
date of acceptance of the repudiation. fault = attracts responsibility
missed l/c either cancel or maintain
canceling vs termination
reasonable assumption/liability
reasonable forseebility
Personal notes:
DAMA ES FOR UNDERLAP Correct redelivery locations
A. Where there is an available market. Wrong redely = claimed damages
• In such circumstances, the damages will be based on
the difference between the anticipated profit under
the original charter (the charter rate) and the actual
profit earned (the market rate of hire) under a
replacement charter during the remaining period of
the original charter.
• However, the judge/arbitrator cannot ignore potential
developments that could have arisen between the
date of acceptance’ of repudiation and the date of
assessment of damages
4
Personal notes:
THE OLDEN ICTORY 2007 2 Ll. Rep. 164
• The chartered vessel was returned to owners 3 years into the 7 year charter
period in December 2001.
• The charterparty included a war clause which entitled either party to cancel in
the event of war between listed countries including, the USA, U and Iraq.
• The arbitrator when assessing the damages, found that if the charterparty had
been in force, the charterers would have cancelled the charter on the outbreak
of war in March 2003. The owners were accordingly awarded damages for the
period up to March 2003.
• The decision was subsequently upheld by the House of Lords (Lord Walker and
Lord Bingham dissenting) Even though the contract had been repudiated, its
provisions were still relevant in relation to the assessment of damages.
Personal notes:
DAMA ES FOR UNDERLAP
• The shipowner will not be entitled to claim damages
for the underlap period if early re‐delivery enables the
owners to make an unexpected profit
The “Elbrus” [2010] 2 Ll. Rep 315
• And the shipowner will not be able to claim the
wasted costs he suffers if he makes up for those by
entering into an alternative charterparty
The “Mamola Challenger ” [2011] 1 Ll. Rep. 47
Personal notes:
DAMA ES FOR UNDERLAP
B. Where there is no available market.
• In such a case the arbitrator/owner, should try to assess
the actual loss of the owners (e.g. by considering the
prospect of fixing the vessel for voyage charters in the
spot market).
• The date to determine the availability of the market is
the date of repudiation. The revival of the market at a
later stage does not mean that damages will from that
date onwards be calculated according to the market
rate.
The “Wren” [2011] 2 Ll. Rep. 370.
5
Personal notes:
CAN OWNERS REFUSE AN EARLY
REDELI ERY? CAN THEY HOLD CHARTERERS
TO THE CONTRACT?
• An early redelivery a repudiation
• You have a choice; accept a repudiation and sue for
damages, or refuse to accept
• Conventional wisdom; in a cp redelivery situation, you
have no real choice. The charterer has dumped the ship
on you. You have to accept it and sue for damages.
Personal notes:
THE A UAFAITH ‐ 2012
• The uafaith was chartered for 59‐61 months. The redelivery
date was 1 November 2011. On 6 uly 2011, the charterers told
the owners that they were going to redeliver early.
• The owners took the matter to urgent arbitration on 25 uly
seeking a declaration that they were entitled to refuse the early
delivery and affirm the contract. The vessel was redelivered on 9
August 2011 (94 days prior to the contractual delivery date)
• The charterers argued that in line with the principle established in
hite Carter v. c regor in 1962, the owner had no legitimate
interest in insisting on further performance of the contract. The
owners’ only remedy would be to claim damages.
Personal notes:
• The arbitrator upheld this argument.
• The Commercial Court reversed the decision. They held that the
principle established in White & Carter WAS applicable in this
context:
i) In a time charter, the owner CAN perform his side of the bargain without the co‐
operation of the charterer (The uerto uitrago was distinguished. It was a
bareboat charter.)
ii) The main issue was whether the owner had a legitimate interest in maintaining
the contract.
• Cooke . held that the innocent party would have no legitimate
interest if his insistence could be described as wholly
unreasonable, extremely unreasonable, or perverse
6
Personal notes:
This was not the case here:
1) The charterers were virtually bust;
2) The prevailing market conditions were difficult with 3
months left of a five‐year charterparty;
3) Trading on the spot market was difficult with substitute
charters virtually impossible. The charterers were
trying to shift the burden onto the owners of trading in
such a difficult market. The charterers could have sub‐
let the vessel themselves.
• So ‐ the owners were entitled to payment of hire for the remaining period
in the charterparty.
Personal notes:
WHY IS THIS IMPORTANT?
• It is new law – or at least it sweeps away the old
doubts
• It is good sensible law for the shipping business
• It helps owners faced with early redelivery in a bad
market
• But it also helps in other contract situations
eremy Cooke Speedy Gon ales
Personal notes:
Illegitimate last voyage‐ what is it?
A voyage which appears
EITHER OR
at the time at the time when
the order is given performance falls due
To result (if performed) in redelivery

after the charter expiry date
7
Illegitimate Last oyage
Personal notes:
Owners’ Remedies
Owners can :‐
Either
1.Comply with the order without prejudice to damages;
or
2.Refuse to comply with the order and demand a new
legitimate order. If charterers refuse to give one,
owners can accept such conduct as a repudiation
which terminates the charter subject to owners’ rights
to claim damages.
The regos [1995] 1 Lloyd’s Rep 1
Personal notes:
Illegitimate Last oyage
Why an owner would refuse to perform an order for an
illegitimate last voyage?
A claim for damages is not always a sufficient remedy for owners
since ‐
1. The charterer may be protected by an exception clause e.g.
cl.16 of NYPE
2. In the light of The Achileas it is very unlikely whether they
can recover damages for all consequent losses
3. The charterer may not have any money
4. Owners might make more money if the vessel were free to
benefit from a rising market hire rate.
Methods used by Charterers to Personal notes:

Redress Balance of Risk
• It is obvious that the risk of not re‐delivering the chartered
vessel on time is on the charterer
the r of de r m r on the ch rterer

per Lord Mustill in he rego 1995 1 Lloyd’s Rep 1
• To protect themselves in such circumstances charterers use
different methods to balance the risk of delay
8
Personal notes:
1‐ Tolerances
A‐ Express tolerance
• To make the charter operation more flexible the parties
may agree a specific or express tolerance e.g. 3 months
15 days MOLCHOPT’ more or less charterers’ option .
• In such cases there is no overlap/underlap if the vessel
is redelivered within the period of tolerance.
Personal notes:
B‐ Implied tolerance
• If there is no indication in the contract that the parties
have agreed any express tolerance a Court/Tribunal will
usually imply some degree of flexibility i.e. more or
less .
he emocr to 1976 2 Lloyd’s Rep 149
• This is so even if the word about’ is not added to the
charter duration period.
r v hr t e 1 9 5 TLR 577
• The longer the basic charter period the greater the
degree of flexibility and vice‐versa.
Personal notes:
However!
• A Court/Tribunal will not imply any additional tolerance if the
parties have made it clear that no further tolerance is to apply
e.g. 3 months min/max .
he rego 1995 1 Lloyd’s Rep 1
9
Personal notes:
2‐ Last oyage Orders
• The purpose of these clauses is to ensure that if the
vessel is performing a voyage at the expiry of the
charter period the charterer is entitled to continue
to use the vessel subject to the hire rate and other
terms of the charter until the voyage is over and
the vessel is redelivered at the location agreed in
the charter.
• In this situation the owner is expected to perform
the last voyage even if the order appears to be
illegitimate. The charter will be subject to the hire
rate and other terms of the charter until the vessel
is redelivered
Personal notes:
EFFECTI E CLAUSES
“Notwithstanding the provisions of clause 3 hereof (i.e.
duration of 6 months 15 days MOLCHOPT) should the
vessel be upon a voyage at the expiry of the period of this
charter, charterers shall have the use of the vessel at the
same rate and conditions for such extended time as may
be necessary for the completion of the round voyage on
which she is engaged and her return to a port of
redelivery as provided by the charter.”
The “World Symphony” [1992] 2 Lloyd’s Rep
115
The “ riti Akti” [2004] 1 Lloyd’s Rep 712
Personal notes:
• However, courts will normally construe last voyage
clauses’ against the interests of the charterers unless
clear wording is used.
The “Peonia” [1991] 1 Lloyd’s Rep 100
10
Personal notes:
• The charter period in “The Peonia”was stated to be:
about minimum 10 months maximum 12 months time charter.
Exact duration in Charters’ option. Charterers have further
option to complete the last voyage within below mentioned
trading limits.’
• It was held that the clause simply protected the
charterer against a claim for damages if a legitimate final
voyage accidentally overrun but it did not permit the
charterers to give orders for a voyage that could not be
completed within the charter period.
Personal notes:
3‐ Without uarantee
E AMPLE 1
Charter for about 40/120 days duration without guarantee .
• The vessel was redelivered 7 days after the original delivery
as the charterers had no cargo for her i.e. underlap.
he endo d nge o LMLN 40 24.06.95
Personal notes:
E AMPLE 2
Charter duration about 70/ 0 days without guarantee .
• The vessel was redelivered 24 days after the maximum 0
days i.e. overlap.
he endo d nge o 1977 1Lloyd’s Rep 404
11
Personal notes:
Result with good faith = you truly believe
In both cases charterers were protected by the words without
guarantee’ and held not to be in breach of contract
because ‐
1. Charterers’ only obligation is to give an estimate of charter
duration in good faith. There is no additional duty to give
such estimate on reasonable grounds.
2. The test is, therefore, subjective not objective and it is difficult
to prove bad faith.
Personal notes:
The problem is the same in all cases ‐
• If the charter duration is without guarantee how does the
owner prove that the charterer has not, after concluding the
fixture, introduced a further voyage which was not in fact in
the charterers’ mind when giving his original estimate of the
charter duration?
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
12
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TIME CHARTER DURATION
The law relating to the duration of a time charter and the legitimacy or otherwise of orders given under a
time charter to perform the final voyage has been developing relatively quickly during the last few years.
These issues are important since ultimately, the Courts have to decide whether it is owners or charterers
who have to bear the risk if, through the fault of neither party, their estimate of the charter duration is
undermined by circumstances over which they have no control. A classic example of such a case is that of
The Gregos [1995] 1 Lloyd’s Rep 1 where the carefully calculated voyage plans of the charterers were
undermined by the running aground of another vessel in the river which The Gregos was obliged to
navigate before she could commence her planned last voyage under the charter.
1) THE DURATION IS CALCULATED FROM DELIVERY LOCATION TO REDELIVERY LOCATION
In general terms the charterer has the commercial control of the vessel for the agreed charter period.
The charter period commences on the delivery of the vessel to the charterer at the agreed location
and the charterer has the duty to redeliver the vessel to the owner at the expiry of the agreed period
at the agreed redelivery location. Therefore, if the vessel is in the South Atlantic at the end of the
charter period but the agreed redelivery location is a port in Western Europe the charterer is not
entitled to tender redelivery in the South Atlantic; he is obliged to either plan his employment in such
a way that he is able to discharge the cargo and tender redelivery of the vessel in Western Europe by
the expiry of the charter period or alternatively, if the discharge port is not in Western Europe, he must
send the vessel in ballast to the redelivery location before the expiry of the charter period.
If the vessel is not redelivered at the agreed location by the end of the charter period the charterer is in
breach of contract and is obliged to recompense the owner in damages. In The Rijn [1981] 1 Lloyd’s Rep
267 Mustill J said:-
(the Owner) has a contractual right to have the ship kept in employment at the charter rate
of hire until the service is completed. This does not happen until the ship reaches the
redelivery range, and the voyage to that range forms part of the chartered service. In a case
such as the present, therefore, the tender is not only in the wrong place but also at the wrong
time; and full compensation for the breach requires the Charterer to restore to the Owner
the hire which he would have earned if the voyage had in fact been performed.
2) THE IMPORTANCE OF THE CHARTER PERIOD TO OWNERS AND CHARTERERS
The duration of the charter period is important to both owners and charterers;
1. It is important to Charterers since they cannot properly plan sub-fixtures unless they know
that they have the use of the vessel for a specified period.
2. It is important to Owners since, firstly, they wish to know what their gross income will be for
the charter period and since, secondly, they need to know when the vessel is likely to be
redelivered to them in order to plan future employment.
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Therefore, any event that subsequently affects the duration of the period may have important
repercussions for both parties. For example, charterers may find themselves unable to carry a cargo for
which they are committed under a sub-charter whilst owners may find themselves unable to deliver the
vessel before the cancelling date specified in her next fixture. Therefore, who should bear the risk of a
change of circumstances? In general terms, the English Court has concluded that the risk is to be borne by
the charterers since in the absence of any contrary terms, the contract defines the period for which they
are entitled to exploit the vessel commercially and the owner is entitled to re-assume control of his vessel
on the expiry of that period. In considering the question of allocation of risk in the landmark decision of
The Gregos, Lord Mustill speaking in the House of Lords stated that :-
… If the matter is to be decided according to balance of convenience the Owners’ argument appears to
have much the better of it.
However, he also went on to base his conclusion on a construction of the time charter terms and stated
that, in principle:-
… the risk of delay is primarily on the Charterer.
As a result of this risk allocation, the English Courts have formulated the following rules:-
1. If, as a result of the charterers’ employment of the vessel, she is redelivered to owners
either before or after the agreed redelivery date, the charterers are in breach of contract
and owners are entitled to damages for losses suffered by them as a result of the breach
unless they are protected by an exception clause in the charter. Since the purpose of
damages is to put the owners back in the position in which they would have been in had
there been no breach, the result is that:-
a. In relation to any overlap period, the owners are entitled to receive in addition to the
charter hire and other sums payable under the charter, any increased hire which may
have been available to the vessel on the open market for the overlap period had she
been free of the charter (The Peonia [1991] 1 Lloyd’s Rep 100).
At one point, there was a suggestion that the owners may be entitled to claim in
addition to these damages any other losses that they have suffered if, as a result of
the late re-delivery, the charterers of a subsequent charter have exercised their right
to cancel that charter due to the late delivery of the vessel to them under that
subsequent charter. In The Achileas [2007] 1 Lloyd’s Rep 19 the English commercial
court came to the conclusion that the cancellation of a subsequent charter due to the
late re-delivery of the vessel was a foreseeable result of a failure to re-deliver the
vessel on time and that any losses incurred by the owners as a result of such
cancellation were recoverable from the charterers. This decision of the first instance
court has been affirmed by the Court of Appeal [2007] EWCA Civ 901. However, the
House of Lords disagreed [2008] UKHL 48 and allowed the charterer’s appeal by
holding that the owners’ damages were limited to the difference between the market
and charter rates for the overrun period. Determining the ratio of the judgment of the
House of Lords is a not an easy task. Lord Roger seemed to allow the appeal on the
remoteness rule established in Hadley v. Baxendale. Lords Hoffman, Walker and Hope
seemed to be relying on an ‘assumption of responsibility’ test. The fundamental
question is, therefore, ‘is the loss the kind or the type for which the contract-breaker
ought fairly to have accepted responsibility?’. Applying this approach and relying on
the general understanding in the shipping market found by all the arbitrators, it was
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held by these Lords that ‘the charterer cannot reasonably be regarded as having
assumed the risk of the owner’s loss of profit on the following charter’.
When the various judgments in the Achilleas came out, they caused considerable
comment in the shipping market. Some said that it was high time that the Courts gave
shipowners the ability to get full compensation for real losses from a charterer who
redelivers late, frequently causing the Owners losses way in excess of a recovery based
on the limited period of the overrun. Others said that this sort of claim was wrong as
a matter of law, or simply wrong commercially. Owners should not be allowed to make
huge recoveries when the amount of actual days lost was fairly small and they could
often re-charter down the line at a good rate and recoup some of their losses.
What really caused comments though, was the possibility that the Achilleas, with its
five different judgments, somehow created a sort of new test for calculating losses in
this area.
From the two shipping cases that were decided in Court afterwards – the Amer Energy
and the Sylvia, it seems that the Courts do not really regard the Achilleas as creating
something new. In the Amer Energy Mr Justice Flaux said so. So did Mr Justice
Hamblen in the Sylvia.
The Sylvia is the most recent of the three cases. They were decided in 2008, 2009 and
2010 respectively. In Sylvia the problem was a maintenance problem with the ship. It
led to a delay in her readiness to load cargo. The Charterers then missed the laycan
for a sub-fixture. The sub-chartered cancelled. The next fixture was less profitable.
The Charterers claimed the difference from the Owners. The arbitrator said yes, they
could. The Owners appealed to the Commercial Court, relying on the Achilleas. They
said that the right measure of damages was limited to the difference between the
market and charter rates during the period of delay – nothing more.
The judge said no. The charterers could claim their full losses. He distinguished the
two cases. He said that whereas (a) losing a follow-on fixture made at the end of a
charter could be for any period, (b) a lost sub-charter could never be for a longer period
than the head charter. It was less likely, therefore, that the sort of loss that would
arise on (b) was unquantifiable, unpredictable, uncontrollable, or disproportionate.
And there was no general market understanding that this sort of claim should be
limited to the difference between two rates for a set period. On the contrary, the
market recognises that a lost voyage fixture is a good way to measure your damages
in this sort of case.
It is beginning to look as though the Achilleas philosophy is going to be confirmed by

the Courts to the right sort of case, on special facts, and as not laying down a new
principle of law.
b) In relation to any underlap period, it is submitted that owners are entitled to damages
equivalent to the hire which they should have received for the underlap period at the
charter rate together with sums which charterers were obliged to pay under the charter
(e.g. bunkers etc), less any savings made as a result of early redelivery. This would
require the judge or arbitrator to focus on the market rate for the chartered vessel.
However, in assessing the damages, the court or arbitrator must take into account what
would have happened under the charter period. In The Golden Victory [2007] 2 Lloyd’s
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Rep 164, the charterer three years into the charterparty (in December 2001) repudiated
the seven-year time charterparty. The charterparty contained a war clause entitling
either party to cancel in the event of war between the USA, the UK and Iraq. In March
2003, the USA and UK declared war to Iraq. When asked to assess the damages, the
arbitrator found that had the charterparty been in force, the charterers would have
been entitled to cancel it on the outbreak of war in March 2003. It was, therefore, held
that the owners could only recover damages for the period up to March 2003. The
decision was approved by Langley, J., in the first instance, the Court of Appeal and by a
majority in the House of Lords (Lord Bingham and Lord Walker dissenting). It is also
clear from the most recent decisions that the owners would not be able to claim
damages for the underlap period if early re-delivery enables them to make an
unexpected profit (The Elbrus [2009] EWHC 3394). Similarly the owners would not be
able to claim their wasted costs if they manage to more money under a replacement
charterparty than the one wrongfully repudiated (The Mamola Challenger [2010]
EWHC 2026 (Comm)).
An interesting question might arise if at the time of pre-mature termination of the

charterparty, no market rate exists due to the collapse of the charter market. In that
case, the arbitrator or court will try to assess the actual loss of the owners (The
Griparion [1994] 1 Lloyd’s Rep. 533) regardless of whether the market is revived later
during the period of unexpired time so that the owners could have fixed a long-term
period charterparty in the market. The revival of the charter market could potentially
be relevant to the question of mitigation of loss but the date for determining whether
an available market existed is the date of termination and damages are to be assessed
by reference to the actual losses of the owners (Glory Wealth Shipping Pte Ltd v. Korea
Line Corporation (The Wren) [2011] EWHC 1819 (Comm)).
Due to the current economic downturn, arbitrators and courts have been dealing with
various legal consequences emerging from cases concerning underlap. A very
interesting question is what happens if the owner does not accept early re-delivery and
seeks a declaration from the arbitrator or judge to the effect that he is entitled to refuse
early delivery and accordingly to the hire specified in the charterparty until the end of
the charter period. This was deliberated in Isabella Shipowner SA v. Shagang Shipping
Co Ltd (The Aquafaith) [2012] EWHC 1077 (Comm); [2012] 2 Lloyd’s Rep 61. The
Aquafaith was chartered for 59-61 months and was supposed to be re-delivered on 1
November 2011. On 6 July 2011, the charterers informed the owners that they would
re-deliver the vessel on completion of discharge under the current voyage to China.
This amounted to anticipatory breach on the part of the charterers but the owners
refused to accept and affirmed the contract. The owners took the matter to arbitration
on 25 July 2011 seeking a declaration that they were entitled to refuse the early delivery
and affirm the contract. The vessel was redelivered on 9 August 2011. Essentially, the
owners were after the hire payment for the outstanding minimum period of 94 days.
The charterers relying on White and Carter (Councils) v. McGregor [1962] 2 AC 413
maintained that insisting on further performance of the contract was unreasonable and
the owners’ only remedy was to seek damages. The arbitrator agreed with the
charterers. The Commercial Court reversed the decision. It was held that insisting on
further performance of the contract was not unreasonable as i) the prevailing market
conditions were difficult with only 94 days left of a five-year charterparty; ii) trading on
the spot market was difficult with substitute charters virtually impossible. Accordingly,
it was held that the owners were entitled to claim payment of hire for the remaining
period in the charterparty.
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2. If it appears, at the time that an order is given for the vessel to perform her last voyage
under the charter, that she will not be able to perform the required employment and be
redelivered to owners at the agreed redelivery range and by the agreed redelivery date,
then the order is illegitimate and owners are given the option of either refusing the order
and demanding a new legitimate order or of performing the illegitimate voyage without
prejudice to their right to claim damages. Alternatively, if the order is legitimate when
given, then the owner cannot refuse to comply with it at that stage. Nevertheless, if by ‘the
time when performance falls due’ it appears that the order, if performed, will result in the
redelivery of the vessel at the agreed redelivery range after the agreed charter expiry date
(i.e. the voyage has by then become illegitimate) the owner is entitled to refuse to comply
with it at that time.
3. Should owners opt to refuse to comply with the illegitimate order, and should charterers
thereafter either refuse or be unable to give an alternative legitimate order, owners are
entitled to treat charterers’ conduct as a repudiation, thereby terminating the charter party
subject to owners’ rights to claim damages The Gregos [1995] 1 Lloyd’s Rep 1.
Whatever be the rights or wrongs of the risk allocation determined by the Courts, it is clear that the
principles outlined above place serious restrictions on the ability of charterers to commercially exploit
vessels under time charters and, therefore, attempts have been made to redress the balance.
3) LAST VOYAGE CLAUSES
In some instances, charterers have felt it expedient to include an express clause intended to enable
them to perform a last voyage which appears on the face of it to be illegitimate. However, the Courts
have tended to construe such clauses in a manner contrary to charterers’ interests unless they are
clearly expressed.
For example, in The Peonia [1991] 1 Lloyd’s Rep 100 the charter period was stated to be:-
about minimum 10 months maximum 12 months time charter. Exact duration in

Charterers’ option. Charterers have further option to complete last voyage within below
mentioned trading limits.
Similarly, the Court considered in The Black Falcon [1991] Lloyd’s Rep 77 a clause providing:-
for about 9 (nine) months, Charterers’ option three months, Charterers’ option further
three months,15 days more or less on final period. Charterers having option to complete
last round voyage under performance prior to delivery at charter party rate.
In both instances, the Court held that the clause did not permit charterers to give orders for a voyage
that could not reasonably be expected to allow redelivery within the basic charter period; the clauses
merely protected the charterers against a claim for damages if a legitimate final voyage accidentally
overran.
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However, in The World Symphony[1992] 2 Lloyd’s Rep 115 the Court of Appeal considered a charter
for ‘a period of 6 months 15 days more or less in Charterers’ option’ and which included the following
clause:-
Notwithstanding the provisions of clause 3 hereof, should the vessel be upon a voyage at
the expiry of the period of this charter, Charterers shall have the use of the vessel at the
same rate and conditions for such extended time as may be necessary for the completion
of the round voyage on which she is engaged and her return to a port of redelivery as
provided by the charter.
The Court held that such a clause did entitle the Charterers to send the vessel on a voyage which
appeared, on the face of it to be illegitimate. It appears that the words which persuaded the Court of
Appeal to come to a different conclusion to that reached in The Peonia and The Black Falcon were the
following :-
Notwithstanding the provisions of Clause 3 hereof.
A similar conclusion has also recently been reached by the Court of Appeal in the case of The Kriti Akti
Shipping Co v. Petroleo Brasiliero [2004] 1 Lloyd’s Rep 712.
4) IMPLIED TOLERANCE
The Courts have also been prepared to assist in that they appreciate that there must, of necessity, be
a degree of flexibility. Therefore, the Courts will generally imply some degree of tolerance where the
charter provides for a stated period such as ‘three months’ or ‘one year’(Gray v. Christie (1889) 5 TLR
577) or even when there is a range such as ‘duration about 4 to 6 months’ (The Democritos (1976) 2
Lloyd’s Rep 149). Indeed, such tolerance is allowed even if the parties have not included words such
as ‘about’. The duration of the period of tolerance depends on what the Court decides is reasonable
in the particular circumstance.
However, the English authorities which have established this principle relate to cases of overlap and it
is debatable whether the court will allow a similar implied tolerance in the case of underlap as there is
not the same degree of commercial necessity for the court to interfere with the contract. In one
arbitration relating to a charter for ‘a period of four to six months’, the vessel was redelivered four days
early. The Owners claimed the charter hire for those 4 days and London arbitrators allowed them to
do so. An appeal to the court on this issue was not allowed. Aikens, J., said that the arbitrators were
‘probably, if not almost certainly, correct’ as the parties had agreed that the Owners were entitled to
payment of hire for the minimum period of four months and there was no commercial or business
reason to interfere with that agreement (Bocimar v. Farenco Navigation (2002) EWHC 1617).
5) EXPRESS TOLERANCE
The difficulty with the implied tolerance approach, however, is that the parties can never be certain
exactly how much tolerance the Court will imply in any particular circumstance. Therefore, since, as in
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most commercial instances, the parties prefer certainty, it is common now for them to introduce an
express degree of flexibility such as, for example:-
Three months 15 days more less Charterers’ option (MOLCHOPT).
Unless the parties have done so expressly, periods of off-hire are not added to the charter period in
order to extend the period for which the vessel is to be available to charterers. However, if the parties
have agreed that such periods are to be added to the charter period then the charter duration is
considered to be extended by such periods. For example, in The Kriti Akti the parties had agreed a
period of ‘11 months plus or minus 15 days at Charterers’ option’ and that the charterers also had the
option to add to such period any periods of off-hire which had occurred during the charter. The Court
of Appeal concluded that the charter period was 11 months plus any added on off-hire time plus 15
days.
If the parties have agreed a specific tolerance the courts will give effect to that margin but will not
allow any further tolerance as it takes the view that the parties have dealt with the problem themselves
and there is no need for further interference from the court (The Dione [1975] 1 Lloyd’s Rep 115).
It further follows, since the Court is prepared to give effect to the agreement reached between the
parties, that it will not allow any margin at all if the words used by the parties indicate that the period
is to be final. Therefore, the use of the words ‘minimum’ or ‘maximum’ (e.g. ‘70 days maximum’) are
taken to indicate finality (The Mareva AS [1977] 1 Lloyd’s Rep 368).
6) WITHOUT GUARANTEE
Albeit that an express or implied margin assists in introducing flexibility into the period allowed to the
charterer to perform his sub-fixture, the charterer still faces the problem that even if the original
estimate of the required period for completion of sub-fixtures was correct, a subsequent incident
occurring through no fault of his own (for example, bad weather) may mean that the duration of the
sub-fixture will, in fact, overrun the period of the time charter resulting in the time charterer incurring
liability to the head owner. Accordingly, some charterers have begun to introduce into the time charter
the words ‘without guarantee’.
The English Court has considered such words, albeit in a different context, for some years. Such words
were used traditionally in relation to a vessel’s carrying capacity. For example, in Japy Freres v.
Sutherland (1921) 26 Com. Cas 227 the Court of Appeal considered whether Owners were in breach
of a warranty that the vessel’s carrying capacity was 600 tons deadweight ‘without guarantee’. The
Court of Appeal concluded that, as a result of the inclusion of the words ‘without guarantee’, there
would be a breach of the carrying capacity warranty only if the estimate had not been given by the
owners in good faith. Accordingly, when the court again came to consider the words ‘without
guarantee’ in two subsequent cases in relation to the duration of a time charter (both of which,
somewhat strangely, involved the vessel Lendoudis Evangelos II (the first case is unreported but note
of it appears in the Lloyd’s Maritime Law Newsletter No 408 dated 24th June 1995 whilst the second
case is reported in [1997] 1 Lloyd’s Rep 404) it followed the same approach.
The first case involved a time charter trip ‘via safe berth(s)/port(s) …. about 40/120 days duration
without guarantee’ whereas the second case involved a charter for a time charter trip ‘duration about
70/80 days without guarantee’. The first case was the most remarkable since the vessel presented
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herself for loading at the loadport but the loading was aborted and the vessel was redelivered about
7 days later at the pilot station at the same port. In the second case, the vessel was redelivered late
(i.e. overlap as opposed to underlap) by nearly 24 days in excess of the stipulated 80 days. In both
cases, two different judges (Leggatt J in the first case and Longmore J in the second case) followed the
approach adopted in the Japy Freres case and held that as a result of the inclusion of the words ‘without
guarantee’, there would be no breach of contract on the part of the charterer in redelivering the vessel
either earlier or later than the period stated in the charter unless it was shown that their pre-
contractual estimate of the charter duration had not been given in good faith. Furthermore, the court
went on in the second case to hold that although there was a finding by an earlier arbitrator that the
charterers had no reasonable grounds for making the estimate that they did, this was irrelevant, since
the only relevant question was whether or not the original estimate had been given in good faith.
A) THE EFFECT OF THE INCLUSION OF ‘WITHOUT GUARANTEE’
It will be appreciated that by construing the effect of the words ‘without guarantee’ in the manner in
which they have done, the courts have in those charters which include such words, effectively reversed
the balance of risk between owners and charterers determined by the House of Lords in The Gregos.
The risk in such cases is now effectively on owners rather than on charterers. However, whilst a strong
case could be made for redressing the balance of risk in circumstances such as those which occurred
in The Gregos (i.e. when unexpected events, occurring without fault on the part of either owners or
charterers, undermine an original estimate given in good faith and on reasonable grounds), the
approach adopted by the courts seems to have given the pendulum of risk an unnecessarily strong
push in the owners’ direction.
B) ‘WITHOUT GUARANTEE’ AND THE LAST VOYAGE
For reasons stated above, a shipowner must at some stage fix his vessel for her next employment.
Therefore, any unexpected delay to his current fixture may cause him extreme difficulty since the
vessel may, as a result, miss her cancellation date under the next fixture. However, there may well be
temptation for charterers who have fixed a vessel on a ‘without guarantee’ basis, to try to introduce
into the fixture at a later date new voyages or cargoes which had not been planned when the fixture
was first negotiated. This could be the case, for example, when the charter rate is attractive in
comparison with the market rate, or where a new cargo suddenly presents itself during the course of
the fixture, the carriage of which would be profitable to the charterers.
It may be difficult in such circumstances to prove that the ‘new’ voyage or cargo was not one within
the bone fide contemplation of the charterers prior to fixing but was, instead, one which had been
subsequently introduced. However, the other terms of the charter may be helpful in casting any light
on the question. Therefore, in the first (unreported) case involving the Lendoudis Evangelos II, the
judge came to the conclusion that it must have been contemplated that the voyage would be for a
minimum of 15 days since another provision of the charter provided that the charterers were to give
owners not less than 15 days notice of the vessel’s expected date of redelivery and probable redelivery
port.
C) WITHOUT GUARANTEE AND TRIP CHARTERS
The House of Lords has recognised that the manner in which the parties have described the
contemplated voyage is paramount and charterers are not entitled to give orders which are
inconsistent with that description (Temple Steamship v. Sovfracht (1945) L1L Rep1). Therefore, if the
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service were to be described as ‘one round Atlantic trip, about 3 months without guarantee’, it would
seem to be clear that when estimating the 3 months, the charterers were contemplating a voyage from
the delivery range across the Atlantic and a further voyage back across the Atlantic to the redelivery
range. Consequently, any order which is given to perform a voyage not falling within the agreed ‘round’
would appear to be illegitimate, both on the basis that it took the vessel outside the agreed trading
area, and also on the basis that it was evidence of the fact that such a voyage had not been within the
bone fide contemplation of the charterers when initially estimating the charter duration.
However, a more difficult question arises when the vessel is not ordered on a new voyage outside the
agreed trading range but is ordered to load a further cargo on a voyage within the agreed ‘round’.
Again, in order to determine whether or not the order was legitimate, consideration would need to be
given to the other terms of the charter, and to questions such as whether the new cargo fell within the
range of ‘intended cargoes’.
The situation would also be more difficult if the contemplated employment was described as, for
example, ‘one time charter trip, about 3 months without guarantee’. On the face of it, there is very
little in such description to give any clues as to the contemplated voyage apart from the fact that there
would, presumably, be a delivery range and a redelivery range and some description of the intended
cargoes.
D) WITHOUT GUARANTEE AND A PERIOD CHARTER
An even more difficult question would arise in relation to a very general description such as a charter
for ‘3 months, about 15 days MOLCHOPT, without guarantee’, particularly if the charter provided for
worldwide trading and a wide choice of permissible cargoes. Clearly, if the charterers have, before or
at the beginning of the charter, given voyage instructions which relate to the whole of the 3 month
charter then this would give some idea of charterers’ intentions generally in relation to the 3 months
period. However, it frequently occurs in such circumstances that charterers merely give details of their
intentions in general terms, making it clear that, as some sub-fixtures have not yet been completed,
such a timetable is extremely tentative. In such circumstances, it would be extremely difficult for an
owner to bring evidence to show that a last voyage ordered by the charterers was not bona fide and
was, therefore, illegitimate.
E) OWNERS’ DILEMMA
The dilemma which an Owner faces in these circumstances is that if he performs the voyage, then he
may lose his next fixture, whereas if he refuses to perform the voyage, and it is subsequently shown
that the voyage was legitimate, it is he who is guilty of a repudiation and the charterers have a claim
against him for any losses suffered by them as a result of the fact that the vessel did not comply with
their instructions and perform the voyage.
F) CONCLUSION
To sum up, the inclusion of the words ‘without guarantee’ in relation to the duration of a time charter,
is beneficial in introducing the necessary flexibility which is required if an estimate originally given in
good faith is undermined by a subsequent and uncontemplated event. However, since the manner in
which the Court has (at least to date) construed these words is to absolve the charterers from any duty
to exercise reasonableness in relation to the initial estimate of the duration, care needs to be taken to
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ensure that when such an estimate is originally given, the particular employment which will be
required of the vessel is explained precisely and agreed.
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Chapter 5
Personal notes:
Payment of Hire
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying,
scanning, recording or by any information storage or retrieval system, without the prior written permission of the author.
Personal notes:
Hire Clauses
NYPE 1946
Clause 4
That the Charterers shall pay for the use and hire of the said vessel at
the rate of…commencing on and from the day of her delivery… hire
to continue until the hour and day of her redelivery in like good order
and condition….
Clause 5
Payment of said hire to be made in New York in cash in United States
Currency, semi‐monthly in advance, and for the last half of month or
part of same, the approximate amount of hire, and should same not
cover the actual time, hire is to be paid for the balance day by day, as
it becomes due, if so required by Owners….
Personal notes:
Payment of hire‐ method
• It is up to parties to agree in the charter how payment
is to be made e.g. by cash, by banker’s draft or by
direct bank to bank transfer.
• Traditionally, charters required hire to be paid in
cash , ’in advance and in full e.g. clause 5 of NYPE
form.
• The court or tribunal will enforce the agreement
reached by the parties unless there is evidence of
waiver.
1
Personal notes:
What is cash ?
• Cash includes other forms of payment commonly used
by bankers.
he r mne 1972 2 Lloyd’s Rep 465
• Other forms of payment are the equivalent of payment
by cash only if and when owners’ account is
irrevocably credited and the money is freely disposable
by the owner.
Personal notes:
More modern forms do not refer to “cash” but have a similar
requirement that payment shall be at the immediate
disposal of the shipowner.
Clause 11 of NYPE 93
“Payment of hire shall be made so as to be received by the
Owners….in funds available to the Owners on the due date”.
Clause of T
“…payment of hire shall be made in immediately available
funds to…in United States currency in advance..”
Personal notes:
Examples of payments not amounting to payment by cash
• Payment by uncleared cheque.
• Bankers payment slips.

The eorgios C 1971 1 Lloyd’s Rep 7
• Payment which cannot yet earn interest.
The Chikuma 19 1 1 Lloyd’s Rep. 371
2
Personal notes:
What is payment in advance ?
• The first payment is normally stated to be in advance of
the delivery of the ship into charter service e.g. clause 4
of NYPE.
• Payment is usually for a stipulated period e.g. monthly
or semi‐monthly in advance .
• BEWARE difference between monthly i.e. for the

calendar month and e.g. every 30 days !
Personal notes:
What is payment in advance ?
• If payment falls due on a weekend or a holiday, the
charterer needs to pay on whichever prior day will enable
his payment to be in advance . He will be in breach of
contract if he merely pays on the day after the banks re‐
open.
The Laconia 1977 1 Lloyd’s Rep 315
• However, the charterer has until midnight on the last
available day to pay and he is not in breach of contract until
then even though the banks may have closed before
midnight.
The Afovos 19 3 1 Lloyd’s Rep. 335
Personal notes:
What is payment in full ?
• Unless the charter expressly provides to the contrary
e.g. clause 5 of NYPE payment is to be made for the
full period e.g. half month even if it is clear that the
vessel will be redelivered before then.
Tonnelier v Smith 1 97 2 Com Cas 25
3
Personal notes:
However! Most charters provide expressly that at the
end of the charter the charterer need only pay in
advance for the estimated time remaining before re‐
delivery.
e.g. clause 5 of NYPE
Payment of said hire to be made …, semi‐monthly in
advance, and for the last half of month or part of
same, the approximate amount of hire, and should
same not for the balance day by day, as it becomes
due, if so required by Owners……
Personal notes:
There is no right to make a deduction from the charter hire
unless ‐
1. The charter expressly so provides e.g. for owners’
disbursements or cash advances to master
The Li Hai 2005 EWHC 735
OR
2. There is a right to do so under an off‐hire clause OR
3. There is a right of equitable set‐off at law.
Personal notes:
When would an equitable right of set
off arise?
Charterers might have an equitable right of set off when they
have a cross claim against the shipowner if
1. the cross claim arises from the same transaction or closely
connected with it and
2. the cross claim go directly to impeach the charterer’s
demands needs , i.e. charterer’s right to make full use of the
ship
The Nanfri 197 1 Lloyd’s Rep 5 1
4
Personal notes:
Examples
In The Nanfri [1978] 1 Lloyd’s Rep 581, the charterers had a
cross claim for defective speed. They wanted to make a
reduction from the hire. This was allowed.
In The Aliakmon Progress [1978] 2 Lloyd’s Rep 499, the
charterers had a cross claim for cargo damage. Equitable set off
was refused. The charterer still had the full use of the ship.
What is payment in full ? Personal notes:

What if the deduction is more than it should have been?
• A deduction will not be treated as excessive even if it is in
fact excessive so long as the deduction when made was
made
1. In good faith AND
2. On a reasonable assessment.
The Nanfri 197 2 Lloyd’s Rep. 132
The Kostas Melas 19 1 1 Lloyd’s Rep. 1
• In such circumstances, the charterer’s duty is to repay the
amount which has been over‐deducted when the full facts
are known.
Personal notes:
THE SHIPOWNERS’ REMEDIES FOR CHARTERERS’ FAILURE
TO PAY HIRE IN FULL AND/OR ON TIME
a claim the unpaid hire
b terminate the charterparty
5
Personal notes:
Termination of the charterparty
The shipowner may want to terminate the charter if
he does not consider damages to be satisfactory or

the charterer makes it clear that he will continue to make
deductions or pay late in future or
the shipowner reckons that he can use the ship more
profitably on the open market
or maybe even sell it
Personal notes:
HOW TO TERMINATE?
• English law; a general right where charterers
• breach a condition of the charter
• show by their conduct that they will not or cannot perform
– repudiation
• But the quickest and easiest way is to withdraw
Personal notes:
SHELLTIME 4
Clause 9 a
In default of such proper and timely payment
Owners may withdraw the vessel from the service of Charterers
without prejudice to any other rights Owners may have under the
charter or otherwise.
NYPE 1946
Clause 5
Payment of said hire to be made in New York in cash in United States
currency, semi‐monthly in advance….otherwise failing the punctual
and regular payment of the hire…..the Owners shall be at liberty to
withdraw the vessel from the service of the Charterers without
prejudice to any claim they the Owners may otherwise have on the
Charterers.
6
Personal notes:
WITHDRAWAL
Virtually all time charters allow you to withdraw when
hire is not paid
– in full
• on time
Or “for any other breach”
But this is risky – does it really mean any breach?
Personal notes:
THE TWO MAIN ISSUES
• Risks: if you get it wrong, you will be on the hook for
terminating wrongly
• Benefits: can you claim damages for the rest of the
unused cp period? Or can you only claim for the
unpaid hire?
Personal notes:
THE FIRST ISSUE
1. Act quickly; banking day = 24 hours
2. Do you still have the right? Did you do nothing last America = states/hours
time?
Tankexpress – 1946
Scaptrade – 1983
3. Are you sure the charterers owe you something?
Deductions?
4. Is there a grace clause? An anti‐technicality clause?
7
Personal notes:
The right to withdraw might be lost in
some cases
1‐ Waiver/Estoppel
An owner may be estopped from arguing that a payment
was not made in accordance with the terms of the charter
if the payment is in accordance with a practise which the
parties have followed.
Tankexpress v. Cie Belge 194 2 Ll.L Rep 43
Personal notes:
The right to withdraw might be lost in some
cases
Tankexpress v. Cie Belge ‐ 194
A seven year charter required the hire to be paid in cash, in advance
but from the outset, the charterers posted a cheque 2 days before
the end of the month addressed to the owner’s bank
In 1939, one payment was delayed in post due to the outbreak of
the war. The owners withdrew the vessel.
The House of Lords held that the owners were not allowed to
withdraw. There had been a variation in the method of payment.
The owners were estopped from relying on the withdrawal clause.
Acceptance of the new method of payment was treated as an
unequivocal representation that the strict legal rights were not
going to be endorsed.
Personal notes:
The Scaptrade ‐ 19 3
The owners on 16 times out of 22 accepted late payment
without protest.
When they attempted to withdraw the vessel following
another late payment, the charterers argued that it could
be inferred from the fact that late payments were accepted
in the past that the owners would not rely on their strict
legal rights to withdraw the vessel.
Charterers argument was rejected. Silence on its own was
not deemed adequate as a basis for the unequivocal
representation required for estoppel.
8
Personal notes:
DEDUCTIONS FROM HIRE
• Charterers can deduct
• where the cp says so
• where a breach has resulted in the loss of total use of the ship –
if it is equitable to deduct or off‐set against the hire
• For example:
• Off‐hire
• Speed/consumption
• Owners’ expenses
• You cannot withdraw if the charterer deducts bona fide
and reasonably – even though the amount which he
deducts turns out to have been too much
atar Star – 2011
Personal notes:
SHELLTIME 4
Clause 9 a
In default of such proper and timely payment Owners shall
notify Charterers of such default and Charterers shall within seven
days of receipt of such notice pay to owners the amount due,
including interest, failing which Owners may withdraw the
vessel…
BPTIME 3
Clause .4
Where there is a failure to pay hire by the due date Owners shall
notify Charterers in writing of such failure. Within five 5 banking
days of receipt of such notification Charterers shall pay the
amount due failing which Owners shall have the right
to…withdraw…
Personal notes:
NYPE 93
here there is failure to ma e punctual and regular
payment of hire due to oversight negligence errors or
omissions on the parts of the Charterers or their
ban ers the Charterers shall be given by the wners .
clear ban ing days written notice to rectify the failure
.
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Personal notes:
THE ANTI‐TECHNICALITY CLAUSE if not paid w/i 3 bd I WILL
• Does it apply? What if the non‐payment is deliberate? WITHDRAWAL
Dare you risk it?
• What does it say? How long is the grace period?
• What words must you use about possible withdrawal?
Rio Sun – 1982 – a clear ultimatum Li Hai 500 usd
• This is a rigid rule ‐ with tough results: WT
Li Hai – 2005 – wrong words
Western Triumph – 2002 – too early
Personal notes:
THE SECOND ISSUE
• How much can you claim?
• Very important – does not affect the right to
terminate, but affects the owner’s business decision.
• Only the outstanding hire? Or damages for the rest of
the cp period?
• But damages for what breach? One failure to pay
hire? The cp allows you to terminate. But does it
allow you to claim your full losses?
Personal notes:
IS IT A CONDITION?
• Three types of contract terms
• Conditions
• Warranties
• Innominate terms (intermediate terms)
• Conditions – you can terminate
• Warranties – you can’t terminate
• Innominate terms – depends how serious the effect is.
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IS THE FAILURE TO PAY HIRE A Personal notes:
CONDITION?
• It doesn’t say that it is
• So you look at it objectively – in its setting.
• It is a condition – Astra – Flaux
• It isn’t a condition – Spar Shipping – Popplewell
• Astra 2013 – no appeal

• Spar Shipping 2015 – went to appeal
Personal notes:
FOUR DIFFERENCES
• The right to withdraw is explicit
• Astra: a strong indication that the parties meant it to be a
condition
• Spar Shipping: you wouldn’t need the withdrawal right if it
was a condition
Personal notes:
• The anti‐technicality clause
• Astra: shows the importance of paying on time
• Spar Shipping: no, just tells you what to do
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Personal notes:
• Business Certainty
• Astra: shipowners need to know where they stand
• Spar Shipping: they do – they can withdraw
Personal notes:
• The Importance of Hire
• Astra: prompt payment is the life blood of the charter –
banks, crew, salaries
• Spar Shipping: that’s why you can withdraw – an immediate
get‐out
Personal notes:
• The traditional view: Spar Shipping
• Why?
• One Swallow shouldn’t make a Summer. A charterer might
not pay for all sorts of reasons – he thinks he shouldn’t, he
needn’t, he mustn’t
• Typical lawyers’ caution
• But cases on both sides of the line.
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Personal notes:
• Advice to Clients?
Personal notes:
• We now have the answer
• Court of Appeal in Spar Shipping
Personal notes:
• The payment of hire is not a condition of a time
charter
• It is an in‐between term
• An intermediate term – an innominate term
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Personal notes:
So
• You can claim the hire due (and any other sums due)
Personal notes:
BUT
• You cannot claim forward damages for the rest of the
charter for a single failure to pay
Personal notes:
UNLESS
• The failure to pay is part of a wider and deeper failure
– repudiation/renunciation
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Personal notes:
• In Spar Shipping:
• A. The owners got their forward damages – because
on the facts the charterers were in repudiation
(several late payments etc)
BUT
• B. The owners would not have recovered forward
damages just for a single late payment and a
(justified) termination of the CP via the
withdrawal clause
Personal notes:
• Advice to clients now?
• Think extra hard before you trigger a withdrawal
clause – look very carefully at whether you will have
an easy claim for forward damages on a falling market
Personal notes:
Suspension of Services
The shipowner may not want to terminate the charter for late
or non‐payment of hire for many reasons but would
nevertheless, like to put pressure on the charterer to pay by
refusing to comply with his employment orders unless he
does so.
However, unless the charter allows it the mere temporary
withdrawal of services e.g. the refusal to load cargo or to
sign bills of lading is not allowed and will be a repudiation of
the charter by the Owner.
So it is becoming common for time charters to give the
shipowner the alternative right to refuse to comply with the
charterers’ employment orders unless and until the
charterers pay hire in full and/or on time.
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Personal notes:
BPTIME 3
.4 Where there is a failure to pay hire by the due
date…, Owners shall have the right to suspend
the performance of any or all of their
obligations under this charter… Charterers
undertake to indemnify Owners in respect of
any liabilities incurred by Owners as a
consequence of Owners’ proper suspension
of…their obligations under this Charter.
Personal notes:
Such rights are usually linked to the giving of an anti technicality
clause notice by the shipowner to the charterer.
NYPE 93 Clause 11
At any time after the expiry of the grace period…and while
the hire is outstanding, the Owners shall, without prejudice
to the liberty to withdraw, be entitled to withhold the
performance of any and all of their obligations hereunder
and shall have no responsibility whatsoever for any
consequences thereof, in respect of which the Charterers
hereby indemnify the Owners, and hire shall continue to
accrue and any extra expenses resulting from such
withholding shall be for the Charterers’ account.
Personal notes:
The benefit of the right to suspend services in relation
to a possible withdrawal
A withdrawal terminates the charter but has no effect
on other quite separate contracts such as bills of lading.
The owner remains responsible to perform his duties
under such bills. Therefore, it is usually beneficial to a
shipowner to withdraw the vessel only if there is no
cargo on board at the time of the withdrawal.
The right to suspend services may give the shipowner
the right to refuse to load cargo and therefore, make
withdrawal possible.
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Personal notes:
Most clauses give the shipowner the right to suspend services only after
expiry of the grace period which must be allowed under the anti‐
technicality clause. Therefore, the shipowners must continue to comply
with the charterers’ employment orders during the grace period
including orders to load cargo.
The Solution: The BIMCO Non‐Payment of Hire Clause
“(a) If the hire is not received by the Owners by midnight on the due date,
the Owners may immediately following such non‐payment suspend the
performance of any or all of their obligations under this Charter Party
(and, if they so suspend inform the Charterers accordingly) until such
time as the payment is received by the Owners. Throughout any period
of suspended performance under this Clause, the Vessel is to be and
shall remain on hire…”
Personal notes:
BIMCO Non‐Payment of Hire Clause
3 Days notice clause. (not
There is no need to give any form of notice to compulsory)
the charterers before services can be
suspended.
Services can be suspended immediately once
hire is not paid.
Owners continue to earn hire during the
period the services remain suspended.
Personal notes:
THE KNEE IN THE ROIN contr bwn cargo and ship owner
• Is there a bill of lading?
• Is it an owner’s bill?
• Has cargo been loaded? Bills signed?
• Is the ship at sea?
• Remember:
• Bill of lading is a separate contract.
• The carrier’s obligations are separate.
• An old chestnut – several potential solutions but no
guarantee.
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Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
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THE PAYMENT OF HIRE
Cash flow is vital for the orderly administration of the carriage of goods. Accordingly, the laws of most
countries protect the rights of owners to receive remuneration in full without deduction unless there
is good reason to prevent them from doing so. Such laws ensure that the owner receives a steady
inflow of funds to enable him to finance the carriage. The same principle applies to both time and
voyage charters. In this part, the obligation of the charterer to pay the hire will be considered.
The parties are free to specify the time, place and frequency of payments of hire in their contracts.
Similarly, they can specify the currency in which the hire is to be paid. Standard charterparties would
invariably incorporate ‘hire clauses’. See, for example, clause 5 of the NYPE 1946 which states:
Payment of said hire to be made in New York in cash in United States Currency, semi-
monthly in advance, and for the last half of the month or part of same, the approximate
amount of hire, and should same not cover the actual time, hire is to be paid for the
balance day by day, as it becomes due, if so required by Owners...
Modern charterparties would normally a) specify the method of payment; b) require advance payment
and c) require the charterer to pay hire in full.
1) METHOD OF PAYMENT
It is up to the parties to decide in what form payment is to be made but many charters provide that
hire is to be paid ‘in cash’. ‘Cash’ traditionally denotes bank notes and coins but in most instances it
would be highly inconvenient for parties to have to pay and receive hire in such form. Accordingly, the
courts have striven to construe these words in the light of modern banking practice and have
interpreted the words as including other means of payment commonly used by banks provided such
payment provides the receiver of the funds with the same immediate and unfettered right of control
over the funds which he would have enjoyed had the payment actually been made by notes and coins.
See, for example, The Brimnes [1972] 2 Lloyd’s Rep 465, at 476 per Brandon, J. In other words,
payment is deemed to have been made ‘in cash’ only when the account of the receiver of the funds
has been irrevocably credited and the money is freely and unconditionally disposable by him.
Note how the ‘cash’ requirement has been phrased in more modern charterparties. See, for example,
cl 9 of SHELLTIME 4:
... payment of hire shall be made in immediately available funds to .... in United States
currency in advance...
The following forms of payment are not the equivalent of payment ‘in cash’:
• by uncleared cheque;
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• by banker’s payment slips; (The Georgios C [1971] 1 Lloyd’s Rep 7) and
• a credit which cannot yet earn interest. (The Chikuma [1981] 1 Lloyd’s Rep 371)
A) Advance payment
Most charterparties stipulate that payment should be made in advance at monthly (or 30-day) or semi-
monthly intervals before performance. Unless there is an express clause to the contrary, the charterer
has until midnight on the day in question within which to perfect payment even though banks may
have closed before then (The Afovos [1983] 1 Lloyd’s Rep 335). However, if payment falls due on a
bank holiday, then in order for hire to be paid in advance, it must be paid on the prior day (The Laconia
[1977] 1 Lloyd’s Rep 315). The obligation to pay ‘in advance’ is an absolute one. It does not matter
why the payment is late (e.g. bank remittance delays). The fact that it is not made by the required
time is sufficient to put the charterer in breach.
B) Full payment of the charter hire
Unless the charterparty provides to the contrary, payment is to be made for the full period (e.g. half
month) even if it is clear that the vessel will be redelivered before the expiry of that period (Tonnelier
v. Smith (1897) 2 Com Cas 258). See, however, cl 5 of the NYPE).
Most charterparties would give the owner the right to receive hire in full unless:
(i) there is an express provision of the charter which allows deduction;
The Li Hai [2005] EWHC 735- ‘Cash for vessel’s ordinary disbursements at any port may be
advanced as required by the Captain, by the charterers…and such advances shall be deducted
from the hire’.
ii) the charterer is entitled to rely on an off-hire clause; or
(iii) the charterer is entitled to rely on the right of equitable set-off to deduct from the hire
certain sums owed to him by the owner. However, the charterer is not entitled to deduct
each and every cross-claim which he has against the owner but only those which:
‘arise out of the same transaction or are closely connected with it’; and
‘go directly to impeach the plaintiff’s demands, that is, so closely connected with his
demands that it would be manifestly unjust to allow him to enforce them without
taking into account the cross-claim.’ (The Nanfri [1978] 2 Lloyd’s Rep 132, per Lord
Denning MR, at p. 140)
The test, therefore, appears to be whether the owner’s claim for hire and the charterer’s cross-claim
involves the same subject matter. If they do, then set-off is possible but if they do not, then set-off is
not possible. In most cases, for the cross-claim to be set-off, it must relate to a claim for the loss of
the use of the ship for a period. In The Nanfri the charterer was entitled to set-off against the owner’s
claim for hire for a particular month a claim which he has against the owner during the same month
for deficient speed. If set-off were not to be allowed in such circumstances, the owner would be
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recovering hire for time during which he is not giving full use of the ship. Indeed, he would be claiming
hire for delay caused by his own default. Therefore, the cross-claim was deemed as going ‘directly to
impeach the plaintiff’s (owner’s) demands’. On the other hand, in The Aliakmon Progress [1978] 2
Lloyd’s Rep 499 the charterer was not entitled to set-off against hire a claim which he had for damage
to or for loss of cargo during the hire period since, although the cargo had been damaged, the charterer
had, nevertheless, been given the full use of the ship during the relevant period. The cross-claim did
not, therefore, ‘go directly to impeach the plaintiff’s demands’.
On many occasions a charterer will wish to make a deduction before he knows exactly how much he is
entitled to deduct. In such circumstances, the court will consider the deduction to be legitimate if he ‘quantifies
his loss by a reasonable assessment made in good faith’ even if subsequently, when the full facts are known, it
is shown that the deduction was excessive (The Nanfri [1978] 2 Lloyd’s Rep 132). In the latter event, the
charterer is merely obliged, once the true facts are known, to pay to the owner the amount which he had over-
deducted earlier.
2) REMEDIES FOR NON-PAYMENT OF HIRE
A failure by a charterer to pay hire in accordance with the terms of the charter is clearly a breach of
contract entitling the owner to claim damages. However, an owner may also wish, in such
circumstances, to terminate the charter since the failure by charterers may be evidence of a more
serious inability to pay future instalments which will prejudice the owner’s need for cash-flow. If the
owner is able to prove that the failure to pay in accordance with the terms of the charter was either
intentional or enforced by financial difficulties and repeated, then such failure may well amount to a
repudiation of the charter which will entitle the owner to terminate the charter and/or claim damages
(Cohin Refineries v. Triton Shipping [1978] AMC 444). However, if the failure was merely due to a
mistake or an oversight then it has traditionally been doubted whether such failure amounts to a
repudiation or breach of a condition. (See, however, the decision of the Court of Appeal in The Stocznia
v. Latvian Shipping [1996] 2 Lloyd’s Rep 132 where it was held that a failure to pay an instalment due
under a shipbuilding contract within the agreed further grace period of 21 days which was allowed in
the contract once notice of default had been given, did amount to a breach of condition.) More
recently, Flaux, J, in Kuwait Rocks Co v. AMN Bulkcarriers (Astra) [2013] EWHC 865 (Comm) was
prepared to say that a failure to pay hire under an NYPE charterparty amounts to a breach of a
condition entitling a shipowner to terminate and seek damages.)
This ruling caught the market (and the legal profession) by surprise. We had long been waiting for a
modern test case on whether a failure to pay a single hire instalment would allow an Owner safely not
only (a) to withdraw the ship from the Charterer (thus finishing the charter early) but also (b) to recover
damages in the form of losses for the rest of the charter – if he then re-fixed the vessel at a lower rate.
The conventional wisdom was that one swallow was not enough to make a summer, and that you
needed either a repeated number of failures, or (in the case of one or two non-payments) clear
evidence that the Charterer was also walking away generally from performing the contract. Otherwise
(it was thought) yes, the Owner could safely terminate the charter and recover whatever was owing
at that stage; but no, he couldn’t make a claim for any knock-on losses. So on many occasions there
was a difficult judgment call for an Owner and his team to make.
The point is still up for grabs, because soon after the decision in the Astra, a different judge of the
Commercial Court decided it the other way. In Spar Shipping Mr Justice Popplewell disagreed with the
Astra reasoning. He ruled that the payment of hire is not a root condition of a charter contract. He
made two main points:
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a) he disagreed that the right to terminate under the withdrawal clause for any failure to make
punctual payment means that any non-payment was sufficiently serious to justify termination
- and therefore that a failure to pay hire on time is intended to be a condition. The withdrawal
clause provides only a liberty to withdraw the vessel from service. It does no more than give
the Owners an option to cancel. You would need explicit wording saying that the payment of
hire is a condition;
b) if there is no withdrawal clause in the charter (and therefore no express right to terminate)
payment of hire would not be treated as a condition of the charter. It cannot have been
intended that any breach of the payment obligation, no matter how big or small, would have
the same consequences and allow the Owners to terminate a long charter, often for a trivial
breach.
There is no easy way to reconcile these two decisions. But two points need mentioning. The first is
that while the judge prevented the parties in the Astra from applying for permission to appeal, the
Spar Shipping decision is going to appeal. So we will almost certainly get a clear ruling for the law and
the market. The other (for what it is worth) is that in a recent paper delivered to a shipping conference
in Hong Kong, Lord Phillips, until recently the Senior judge of the Supreme Court, discussed the two
cases and said that in his informal opinion the Astra is to be preferred.
The point has now been firmly decided.
It was decided last October, 2016. By the Court of Appeal. In the Spar Shipping case – on appeal from
the judgment of Mr Justice Popplewell discussed above.
The effect of the judgment is this:
1. the payment of hire under a time charter is not a condition of the charter. In other words, it
is not an obligation which automatically allows the shipowner to terminate the charter for any
breach, even the slightest – say, a payment made a few hours late or a payment made short
by a few hundred dollars. To do this, you need an express right – see below.
2. The payment of hire is an intermediate term (or an innominate term). In other words, it is
neither a condition (for which you can automatically terminate) or a warranty (for which you
have to live with the contract and just make a claim for money damages). It is an in-between
term. Whether you can terminate for it depends on the seriousness of the consequences.
3. That is the basic legal position. You can still terminate for any failure to pay (five minutes late,
$100 short) if you have a clause in the charter allowing you to do so. Typically in time charters,
this is by way of a withdrawal clause. See below.
4. But even if there is a withdrawal clause, there is no right to claim forward damages for the
rest of the charter unless the failure to pay springs from a deeper repudiation or renunciation.
In other words, the charterer shows by past and/or anticipated conduct that he does not
intend to perform the charter.
In the Spar Shipping case, the owners won in the end. They won because the overall conduct of the
charterers was judged to be repudiatory. There were several late payments and the overall conduct
crossed the line. But the owners lost on the “condition” point. So if there had been a simple or single
failure to pay hire, then the owners would not have been able to claim forward damages.
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In most situations where there is a failure to pay hire, the owners will look at withdrawing the ship
from charter if they see a rising market or they have no faith in the charterer performing. But they will
now need to factor in the likelihood that they may not get forward damages, just the hire due at the
time of withdrawal.
Because of the importance which is placed on the payment of hire and the difficulty of proving
repudiation, most time charters include a clause which provides that in the event of late or insufficient
payment, the parties agree that the owner is entitled to withdraw the ship from the use of the
charterer and to terminate the charter. Such clauses are known as ‘withdrawal clauses’.
SHELLTIME 4- Clause 9(a)
In default of such proper and timely payment: Owners may withdraw the vessel from the
service of Charterers without prejudice to any other rights Owners may have under the
charter or otherwise.
Caution is essential when considering a withdrawal of a vessel for various reasons:
i) unless the charter provides otherwise, withdrawal is final, in the sense that it terminates the
charter. The owner cannot withdraw the vessel or withhold services temporarily (e.g. until the
charterer pays outstanding hire). His choice is either to withdraw the vessel, thereby
terminating the charter, or to continue to perform his duties under the charter albeit that the
charterer is in breach of his duties;
ii) where the vessel is laden at the time of the failure by the charterer to pay hire, the withdrawal
right is of little benefit to the owner as he continues to owe duties under the bill of lading
contract and may also be unable, in the event he withdraws, to be compensated on the basis
of a quantum meruit. The owner may, therefore, be obliged to continue carriage under the
bills of lading and pay expenses such as port dues, stevedoring etc which should strictly be for
charterer’s account under the time charter;
iii) wrongful withdrawal by the owner (even if due to a technicality) is itself a repudiation by the
owner unless of course the charterer’s renunciation continues i.e. the charterer continues in
failing to make regular hire payments (White Rosebay Shipping SA v. Hong Kong Chain Glory
Shipping Ltd (Fortune Plum) [2013] EWHC 1355 (Comm)).
The right of withdrawal might be lost in some cases:
A) Waiver of the right to withdraw
Sometimes, even though the parties have agreed in the charter that payment is to be made in a particular
form, they will over a period of time pay and accept payment in a different form. For example, where a
charter provides that payment is to be made ‘in cash’, the charterer may in due course start to pay by
cheque. The owner may accept such payment for a period without protest but may subsequently wish
to argue that payment has not been made in accordance with the terms of the charter, particularly if he
wishes to withdraw the vessel from the charterers’ service (see below). However, unless the owner has
made it clear that he does not agree to accept payment in the non-contractual manner being utilised by
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the charterer he may be estopped from arguing that payment was not made in accordance with the
terms of the charter since the payment has been made in accordance with a practice which the parties
have accepted (See the facts of Tankexpress v. Cie Belge (1948) LlLR 43).
Should the owner wish to put an end to a method of payment which is contrary to the terms of the
charter he can do so by giving reasonable notice to the charterer that thereafter he requires the
charterer to comply with the strict terms of the charter. Thereafter the charterer cannot rely on the
course of dealing to justify future payment which is not in accordance with the terms of the contract
(The Effy [1972] 1 Lloyd’s Rep 18).
The owner might also be estopped from using his right to withdraw if his actions are deemed to be
inconsistent with his desire to withdraw the vessel from the use of the charters. Recently, in White
Rosbay Shipping SA v. Hong Kong Chain Glory Shipping Ltd (Fortune Plum) [2013] EWHC 1355 (Comm),
following the failure of the charters to make regular hire payments, the owners gave notice stating
that unless the payment was received by the expiry day, 7 November, the owners would take this as
repudiatory breach on the part of the charterers, and bring the contract to an end. The chartered
vessel arrived at the discharge port on 9th and owners waited for the discharge to be completed and
terminated the contract on 14 November. The charterers argued that the vessel’s withdrawal was
wrong and the owners were in repudiatory breach of the charterparty themselves. The arbitrator held
that the owner had a reasonable period to decide whether to terminate or not after the right to
terminate arose. In the present case, they had until 11 November. Allowing discharge after 11
November was deemed to be an affirmation. The first instance judge, Teare, J, agreed with the
arbitrator on this point.
B) Anti-technicality clauses
Withdrawal of a vessel from a time charterparty has serious repercussions not only to the parties to
the charter but also to third parties such as bills of lading holders. Accordingly, the court is reluctant
to allow the owner to do so unless he shows that he has complied strictly with all the steps which he
is required to take by the charter. This is particularly so if the charter includes an ‘anti-technicality’
clause which is designed to give the charterer the opportunity to rectify any failure to pay caused by
oversights or bank remittance delays.
SHELLTIME 4- Clause 9(a)
In default of such proper and timely payment: Owners shall notify Charterers of such
default and Charterers shall within seven days of receipt of such notice pay to the owners
the amount due, including interest, failing which Owners may withdraw the vessel...
BPTIME 3- Clause 8.4
Where there is a failure to pay hire by the due date Owners shall notify Charters in writing
of such failure. Within five (5) banking days of receipt of such notification Charterers shall
pay the amount due failing which owners shall have the right to ... withdraw...
If the Owner wishes to withdraw the vessel from charterers’ service under a charterparty which
includes an anti-technicality clause he must comply strictly with the requirements of the clause. This
was not the case in The Afovos [1983] 1 Lloyd’s Rep 335.
The relevant ‘anti-technicality’ provision of clause 31 of a charter read as follows:-
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When hire is due and not received the Owners, before exercising the option of withdrawing
the vessel from the Charter party, will give the Charterers forty-eight hours notice, Saturdays,
Sundays and holidays excluded and will not withdraw the vessel if the hire is paid within these
forty-eight hours.
The hire was due on 14 June. At 1640 on 14 June, the Owners’ agents sent the following message to
the Charterers:
Owners have instructed us that in case we do not receive the hire which is due today, to give
the Charterers notice as per clause 31 of the charter party for withdrawal of the vessel from
their service.
It was held that the purported withdrawal of the vessel was not valid since:
1. there was no default in payment until after midnight on 14/15 June;
2. The 48-hour notice under the ‘anti-technicality’ clause could not be given until after
there was default, i.e. after midnight on 14/15 June; and
3. in any event, the notice was not good since it did not call on the Charterers to make
payment but merely said what would happen if they did not do so. This was not what
was required by clause 31 with the result that the notice was deficient
A similar outcome has emerged in a recent case The Qatar Star [2010] EWHC 1663 (Comm). There, the
charterparty contained an anti-technicality notice which indicated that in the event of failure to make
punctual and regular payment of hire without any intention of failure by the charterers, the charterers
were to be notified by the Owners and given three banking days to rectify the failure and accordingly
the payment was to be deemed as punctual and regular payment of hire. Charterers failed on several
occasions to make payments on or before the due date. The 34th semi-monthly payment was due on
24 August, but when the charterers failed to pay on that date, the owners withdrew the vessel on 25th
August without giving notice on the basis of charterer’s many previous delays in payment. The
charterers contended that the vessel was withdrawn in breach of the anti-technicality clause. Clarke,
J., agreed. He based his reasoning on two grounds:
1- Failure to pay on due date in the past, does not mean that the current failure was intentional;
2- Failure to make payment was attributed to the charterer’s incompetent internal management.
If this amounted to ‘recknessness’, this was not the same as intent for the purposes of this
anti-technicality clause. The judge noticed that in some areas; i.e. tort of deceit, recklessness
might be equated with intent, but not in a purely contractual context like this one.
3) SUSPENSION OF SERVICES
In many instances (e.g. due to market conditions or the desire to maintain a working relationship with
the charterer) the shipowner may not wish to terminate the charter by withdrawing the vessel.
However, he may nevertheless, wish to put pressure on the charterer to pay outstanding hire by
withholding services under the charter (e.g. by refusing to comply with employment instructions or
releasing bills of lading) until the hire is paid. However, unless the charterer had agreed that the
shipowner may do so, the shipowner runs a risk if he were to proceed in such manner since,
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notwithstanding the charterers’ breach of contract, the charter remains in full force and the shipowner
has a continuing duty to comply with his obligations under such contract. Indeed, if the shipowner
were to refuse to comply with charterer’s legitimate employment orders he might well be held to be
in repudiation of the charter (The Nanfri [1979] 1 Lloyd’s Rep 201)
In such circumstances the more modern forms of time charter give the shipowner the express right
not only to withdraw the vessel but, at shipowners’ option, to withhold services in certain
circumstances. For example, cl 11 of NYPE 93 provides that:
At any time after the expiry of the grace period provided in Sub-clause 11 (b) hereunder
and while the hire is outstanding, the Owners shall, without prejudice to the liberty to
withdraw, be entitled to withhold the performance of any and all of their obligations
hereunder and shall have no responsibility whatsoever for any consequences thereof, in
respect of which the Charterers hereby indemnify the Owners, and hire shall continue to
accrue and any extra expenses resulting from such withholding shall be for the Charterers’
account
Similarly, cl 8.4 of BP Time 3 provides that:
Where there is a failure to pay hire by the due date, Owners shall notify Charterers in
writing of such failure. Within five (5) banking days of receipt of such notification
Charterers shall pay the amount due, failing which Owners shall have the right to suspend
the performance of any or all of their obligations under this Charter and/or to withdraw
the Vessel…Throughout any period of suspended performance under this Clause, the
Vessel is to be and remain on hire. Charterers undertake to indemnify Owners in respect
of any liabilities incurred by Owners under the bill of lading or any other contract of
carriage as a consequence of Owners’ proper suspension of ….their obligations under this
Clause.
Most of such clauses emphasise that the vessel will remain on hire whilst services are suspended and
that the charterer is to indemnify the shipowner against any liabilities that the shipowner incurs to
third parties (e.g. bill of lading holders) as a result of the suspension of services. Most of such clauses
also emphasise that the shipower is entitled to suspend services only if (a) an anti-technicality clause
notice has been given, and if (b) the charterer remains in breach of his duty to pay the outstanding
amount after the relevant grace period has expired. However, unintentional drafting difficulties can
create complications. For example, cl 11 (b) of NYPE 93 provides that an anti-technicality clause notice
is to be given only:
Where there is a failure to make punctual and regular payment of hire due to oversight,
negligence, errors or omissions on the part of the Charterers or their bankers…
Accordingly, if the failure to pay was deliberate it would seem that there is no requirement to give an
anti-technicality clause notice. It would further seem to follow that there can be no right in such
circumstances to suspend services. Such difficulty does not arise in the case of BP Time 3 since clause
8.4 of such charter provides that an anti-technicality clause notice is to be given whenever there is a
failure to pay hire whether deliberate or not.
Because of the technical problems which have arisen in relation to standard forms of time charters
BIMCO have introduced a clause which is intended to simplify the procedures necessary to enable
shipowners to suspend services when hire is unpaid. The BIMCO Non-Payment of Hire for Time Charter
Parties 2006 clause provides inter alia that:
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(a) If the hire is not received by the Owners by midnight on the due date, the Owners may
immediately following such non-payment suspend the performance of any or all of their
obligations under this Charter Party (and, if they so suspend inform the Charterers
accordingly) until such time as the payment is received by the Owners. Throughout any
period of suspended performance under this Clause, the Vessel is to be and shall remain
on hire…
This clause has the following advantages:
• There is no need to give any form of notice to the charterers before services can be suspended.
• Services can be suspended immediately once hire is not paid.
• Owners only need give notice to the charterers after they have commenced to suspend
services.
It looks like there is no need to give notice to the charterers under an anti-technicality clause to be able to
suspend the services under BIMCO Supplytime 1989 form. This issue has recently been considered in Greatship
(India) Ltd v. Oveanographia SA de CV (The Greatship Dhriti) [2012] EWHC 3468 where the charterer
argued that clause 10(e) contained an express or implied requirement to give five banking days’ notice
of the owners’ intention to suspend. The clause in question was worded accordingly:
[2] If payment is not received by the Owners within 5 banking days following the due date
the Owners are entitled to charge interest… on the amount outstanding… until the
payment is received…
[3] in default of payment… the owners may require the charterers to make payment of
the amount due within 5 banking days of receipt of notification from Owners, failing which
the Owners shall have the right to withdraw the Vessel…
[4] while payment remains due the owners shall be entitled to suspend the performance
of any and all of their obligations hereunder…
The arbitrators held in favour of the charterers indicating that the express notice provisions in parts
[2] and [3] of Clause 10(e) applied to part [4] as well. Gloster J, on the other hand, found in favour of
the owners. In the view of Gloster, J, the words “while payment remains due” in clause 10(e) clearly
and unambiguous suggested that the owner was entitled to suspend performance of his obligations at
any time after the payment became due, and whilst hire remained unpaid. According to Gloster, J, had
the parties intended to make the right to suspend dependent on a period of notice, they could have
made express provisions for that in the charterparty, as they had in numerous other contexts. In this
case, the wording of clause 10(e) was clear and unambiguous, and there was no scope for any
alternative construction. Equally, the trial judge saw no justification for the implication of a term of
that nature in the charterparty as suggested by the charterers.
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Personal notes:
OFF‐Hire Clauses
Personal notes:
• As a general principle in time charterparties the risk of
delay is borne by the charterers‐ i.e. charterers are
expected to continue making hire payments under the
charterparty even though they might not have the full
use of the vessel.
• If an off‐hire clause is incorporated into the
charterparty, the charterer will be entitled to stop
paying hire if delay to the operation of the vessel is
caused by one of the events stipulated in the off‐hire
clause.
Personal notes:
Clause 15 of the NYPE 1945
That in the event of loss of time from deficiency of men or
stores, fire, breakdown or damages to hull, machinery or
equipment, grounding, detention by average accidents to
ship or cargo, drydocking for the purpose of examination or
painting of bottom, or by any other cause preventing the full
working of the vessel, the payment of hire shall cease for the
time thereby lost.
1
Personal notes:
Clause 15 of the NYPE 1945
“That in the event of loss of time from deficiency of men or
stores, fire, breakdown or damages to hull, machinery or
equipment, grounding, detention by average accidents to ship or
cargo, drydocking for the purpose of examination or painting of
bottom, or by any other cause preventing the full working of the
vessel, the payment of hire shall cease for the time thereby lost.”
Personal notes:
• Whether an off‐hire clause applies in a
particular case or not is a matter of
construction.
• Off‐hire clauses are often construed very
narrowly and against the interests of the
charterers. From charterers’ perspective, it is
vital that off‐hire clauses are drafted clearly.
Personal notes:
The off‐hire event will not bring the charterers within the
ambit of the off‐hire clause if
a It has arises from breach of contract on the part of the
charterer‐ e.g. if the vessel is grounded and delayed due
to illegitimate employment orders given by the charterer
Lensen v. Anglo‐Soviet ‐ 1935
b It is the inevitable result of the charterer’s employment
instructions
2
Personal notes:
If the Charterer orders the vessel to load coal on one
voyage and sugar in bulk on the next, he can hardly expect
the cleaning to be done in Owner’s time’
Per Lord ustice Staughton in The Berge Sund 1993 2

Lloyd’s Rep 453.
Personal notes:
IS THE ESSSEL OFF HIRE?
THE SHOPPIN LIST
• is the full working of the vessel prevented?
• If yes, is it prevented by a listed cause?
• If yes, has it caused a net loss of time?
Personal notes:
THE FULL WORKIN OF THE
ESSEL
• This really means her ability to do the job in hand –
the service immediately required
• So if the ship is unfit in some way, but her immediate
order is to stay at berth and discharge, and she can do
so, then she is on‐hire ‐ The Westfalia – 1981
• If the ship is ordered to clean to load the next cargo
because the holds are dirty, and she can do so, then
she is on‐hire – The Berge Sund – 1993
3
Personal notes:
Hogarth v. Miller 1 91 AC 4
• The charterparty contained an off‐hire clause which
provided that in the event of loss of time from…
breakdown of machinery…’
• The chartered vessel’s engine broke down on route to
the discharge port. She had to be towed to the discharge
port.
• Once at the discharge port she was capable of
discharging the cargo.
• She was held to be off‐hire during the period of towage
but was back on hire for the period of discharge.
Personal notes:
A listed cause
• Most off‐hire clauses have a list of explicit events
• But this is usually followed by a more general sweep‐
up provision
• any other cause
or
• any other cause whatsoever
What do these words mean?
Is there a difference between them?
Personal notes:
• When the words any other cause’ are used after a list of specific
causes in an off‐hire clause, they are construed ejusdem generis to be
of similar genus to the list of causes appearing beforehand.
Saldanha (2011) 1 Ll. Rep. 187
Captain Stefanos (2012) 2 Lloyd’s Rep 46
• The chartered vessel was detained by Somali pirates for a period of 63
days. The charterers argued that the chartered vessel should be off hire
during this period.
• The relevant clause provided h t n the e ent of the o of t me
from detent on er ge cc dent to h or c rgo n other
c e re ent ng the f or ng of the e e the ment of h re
h ce e for the t me there o t
4
Personal notes:
• ross, ., reconfirmed that the words any other cause’ are read e dem

gener or at any rate in some limited way reflecting the general context of
the clause.
• So the event in question should be similar to the event described before
it. seizure by pirates’ had no connection with the list of causes.
• And it was a totally extraneous cause compared to average accidents .
So the charterer could not benefit from the sweep‐up provision.
Personal notes:
• However, the ejusdem generis rule does not apply when the

general words are followed by whatsoever’.
The Mastro iorgis 19 3.
.... a list of specific causes... and any other cause
whatever/whatsoever .
Here there is no need for the other cause’ to be of the same
type as the preceding causes.
Personal notes:
• When an off‐hire clause concludes with the phrase or by any other
cause preventing the full working of the vessel’ authorities tend to
restrict such other causes’ to causes which directly affect the physical
condition or the nature of the vessel.
The Apollo 197 1 Lloyd’s Rep 200
• The chartered vessel was not allowed to discharge under health
regulations of the port of discharge until she had been fully disinfected
as the crew were suspected of having typhus.
• It was held that this had an impact on the full‐working of the vessel
and was on off‐hire.
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Personal notes:
• However under a similar clause, the vessel will not be off‐hire if events
which delay performance of the contract do not relate to the physical
condition of the vessel or crew but are associated with external events.
o rt ne v. nt 1939 44 Com Cas 354
• The chartered vessel was delayed as she was trapped in the Yangtse river
during the China/ apan war by a boom placed across the river by Chinese
forces to prevent apanese forces proceeding up the river.
• It was held that the vessel was not off‐hire, as she remained fully efficient
during this period to perform the service and the delay was caused by an
external event which had nothing to do with the physical state or nature of
the vessel.
Personal notes:
Calculation of time deductible
Period’ off‐hire clause or net loss’ off‐hire clause
• Period off‐hire clause specifies the event that will bring the
clause into operation and the event that will bring to an end.
The hire is suspended during this period.
In the event of loss of time from ... breakdown of machinery...
the payment of hire shall cease until she be in an efficient state
to resume her service.’
Personal notes:
consequesnce of events.
Net loss of time off‐hire clauses normally provide: That in the
event of loss of time from specified occurrences ” the vessel
shall be off‐hire “for the time thereby lost.”
So you compare the time actually taken to perform the service
required by the charterers and the time that would have been
taken but for the relevant occurrence, and the ship is off‐hire for
the extra time taken.
6
Personal notes:
The relevant service for the purposes of the comparison is that
which was required by the charterers at the time of the relevant
occurrence.
If time is lost in performing that service then the vessel is off‐hire
– even if no time is lost on the overall chartered service
The Athena ‐ 2013
Personal notes:
• The charterer will not be entitled to damages upon the
occurrence of an off‐hire event unless he can prove that the
off‐hire event also amounts to breach of contract on the part
of the shipowner.
The Democritos 1975 1 Lloyd’s Rep 3 6
• The chartered vessel was delayed to commence on her voyage
due to engine breakdown cased by her owner failing to
exercise due diligence. The goods arrived at their destination
late and in the meantime the market for those goods
collapsed. Apart from being off‐hire during the period of
repairs, the charterers claimed damages for the difference
between the price of the goods had there been no delay and
the price of goods as a result of the delay.
Personal notes:
• Note that unless otherwise is provided in the charterparty,
during the period of off‐hire the obligations of the charterer
under the contract, such as obligation to pay bunkers, port
charges, commissions, do not cease.
See, however, clause 20 of NYPE 1946
... fuel used by the vessel while off‐hire, also for cooking,
condensing water or for grates and stoves to be agreed to as to
quantity, and the cost of replacing same to be allowed by
Owners.
7
Personal notes:
E TENSION OF CHARTER
• The charter period is not extended by off‐hire events and the
charterers cannot add off‐hire periods at the end of the charter
period unless the charter says so.
• For example, clause 4 (b) of ShellLNGTime 1 provides:‐
“Any time during which the vessel is off‐hire under the Charter
Party may be added to the charter period at Charterers’
option up to the total amount of time spent off‐hire.”
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
8
BIMCO Training
The information and opinions which this paper contains are not intended to be a comprehensive study, nor to
provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
OFF-HIRE CLAUSES
In time charterparties, the risk of delay is essentially borne by the charterers since in the absence of
any contrary terms, the contract defines the period for which they are entitled to exploit the vessel
commercially and the owner is entitled to receive hire throughout that period and to re-assume control
of his vessel on the expiry of that period. Therefore, time charterers will be anxious to introduce terms
which will minimize the risk which they bear when time chartering. The most common form of express
clause which is introduced in order to minimize risk is the ‘off-hire clause’, the purpose of which is to
entitle the charterer to stop paying hire if delay is caused to the operation of the vessel. However, the
general rule is that since hire is payable fully and in advance unless there is an express clause to the
contrary, the onus is on the charterers to prove that they are entitled to withhold hire in the particular
circumstances.
If the charterer wishes to argue that hire is not payable due to delay, then he must bring himself clearly
within the clause (The Mareva AS [1977] 1 Lloyd’ Rep 368 at 381). If he does not do so then he has
failed to pay hire in accordance with the provisions of the charter and runs the risk that the shipowner
will avail himself of the various remedies which are available to him in such circumstances including a
possible withdrawal of the vessel from the charterers’ service.
The wording of off-hire clauses differs substantially from charter to charter. For example, clause 15 of
NYPE 1945 reads:
That in the event of loss of time from deficiency of men or stores, fire, breakdown or
damages to hull, machinery or equipment, grounding, detention by average accidents to
ship or cargo, drydocking for the purpose of examination or painting of bottom, or by any
other cause preventing the full working of the vessel, the payment of hire shall cease for
the time thereby lost.
Clause 11 (A) of Baltime 1939 is, however, worded slightly different:
In the event of drydocking or other measures necessary to maintain the efficiency of the
Vessel, deficiency of men or Owners’ stores, breakdown of machinery, damage to hull or
other accident, either hindering or preventing the working of the vessel and continuing
for more than twenty-four consecutive hours, no hire to be paid in respect of any time
lost thereby during the period in which the Vessel is unable to perform the service
immediately required. Any hire paid in advance to be adjusted accordingly.
The wording of off-hire clauses in tanker charters are usually even more detailed (see, for example,
clause 19 of BP TIME 3 and clause 21 of Shelltime 4) but whatever the form of the charter the particular
clause must be closely construed as the effect of the clause can vary dramatically depending on the
words used in the particular context.
1. KEY PRINCIPLES IN RELATION TO OFF-HIRE CLAUSES
However, in general terms, if the charterer is to succeed in placing the ship off-hire, the following
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principles apply:
1) The question of whether the ship is off-hire is purely one of construction of the relevant clause.
If the wording is sufficiently broad, the ship is off-hire and it is immaterial whether the delay has
resulted from some breach of contract on the part of the owner.
2) The off-hiring event must, however, be fortuitous and not:
a) The result of a breach of contract on the part of the charterer. In Lensen v Anglo-Soviet (1935) 52 Ll.
Rep. 141, for example, where delay was caused as a result of running aground following illegitimate
employment orders given by the Charterer, it was held that the ship was not off-hire notwithstanding
the words ‘loss of time…due to damage to hull’’ in the off-hire clause.
Sometimes you get a clause saying (in the negative) that the vessel will be off-hire during an arrest
unless the arrest or detention caused by an act or omission of Charterers or their agents. If you are a
Charterer, beware. The Court of Appeal has recently given a wide meaning to this phrase. In the Global
Santosh in 2014, the vessel was time chartered, then voyage-chartered and then sub-voyage
chartered. As usual, the job of unloading the cargo was passed down the line from charterer to
charterer. There was a dispute at the bottom of the chain and a demurrage claim. The Claimant
arrested the vessel for security for the claim. The claim was not against the vessel or her Owner – the
vessel was named mistakenly in the arrest papers. But by then it was too late.
There was a dispute under the head time charter about whether the vessel was on hire during the
arrest. The Court of Appeal agreed with the trial judge and said that she was on hire. The clause said
that she would be on hire if the arrest had been “occasioned” by Charterers or their agents. The Court
said that in business terms the bottom Charterers were the agents of the head time charterers. The
head charterers knew nothing about what was going on and had not explicitly delegated any particular
job to each charterer. But there was a general transfer of duties under each contract. And that was
enough to create agency.
Or
b) The inevitable result of the charterers’ employment instructions. In The Berge Sund [1993] 2
Lloyd’s Rep 453, the chartered vessel was obliged to carry out additional tank cleaning in order to be
able to comply with the charterers’ orders to load her next cargo. The charterers placed the vessel off-
hire for such period. Lord Justice Staughton refused to accept this and said: ‘If the Charterer orders the
vessel to load coal on one voyage and sugar in bulk on the next, he can hardly expect the cleaning to
be done in Owners’ time’
3) The mere fact that one of the events enumerated in the clause has occurred is not of itself sufficient;
it must also be proved that time has been lost as a result. In determining whether or not there has
been loss of time it is the service immediately required of the vessel which is relevant. In Hogarth v.
Miller (1891) AC 48, the vessel’s engine broke down during the course of the voyage necessitating
towage to the port of discharge. The off-hire clause provides that the ship shall be off-hire ‘in the event
of loss of time from…breakdown of machinery’. It was held that the ship was off-hire during the towage
as the service immediately required of the ship at that time (i.e. steaming to the discharge port) was
delayed. However, once the ship was at the port, the service which was then required of her was the
discharge of the cargo and the ship was perfectly capable of performing that service without delay.
The ship was not therefore, off-hire for the period of discharging.
4) General words (e.g. ‘any other cause’) following a list of specific causes in an off-hire clause will be
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construed ejusdem generis the preceding specific clauses. In other words, the ‘other cause’ will be
relevant only if it is a cause of a similar genus (i.e. type) as one of the specific causes which precede it
in the clause. This principle has recently been endorsed in Cosco Bulk Carrier Co Ltd v. Team-up Owning
Co Ltd (The M/V Saldanha) [2010] EWHC 1340 (Comm) where the charterer argued that the chartered
vessel was off hire during the period when she was captured by Somali pirates. The relevant clause
provided that: ‘That in the event of the loss of time… from detention by average accidents to ship or
cargo… by any other cause preventing the full working of the vessel, the payment of hire shall cease for
the time thereby lost…’
Gross, J, was adamant that the words ‘any other cause’ are usually construed ejusdem generis or at
any rate in some limited way reflecting the general context of the clause. That means that the event
in question should be akin to ones described prior to it. The event in question ‘seizure by pirates’ is a
totally extraneous cause so the charterer cannot benefit from the sweep-up provision. It was stressed
by Cooke, J in Osmium Shipping Corp v Cargill International SA [2012] EWHC 576 (Comm) that the
outcome in The Saldanha could not be contended. However, the decision was given in favour of the
charterers in Osmium and it was held that the chartered vessel was off hire during the period when
she was at the hands of Somali pirates due to the fact that there was another off-hire clause in the
contract which made specific reference to capture/seizure. The clause in question worded:
Should the vessel put back whilst on voyage by reason of any accident or breakdown, or in the
event of loss of time either in port or at sea or deviation upon the course of the voyage caused
by sickness of or accident to the crew or any other person onboard the vessel (other than
supercargo travelling by request of the Charterers) or by reason of the refusal of the Master or
crew to perform their duties, or oil pollution even if alleged, or capture/seizure, or detention or
threatened detention by any authority including arrest, the hire shall be suspended from the
time...
It should be noted that the ejusdem generis rule does not apply when the general words are
accompanied by other words such as ‘whatever’ or ‘whatsoever’. (Mastro Giorgis [1983] 2 Lloyd’s Rep
66). In the latter situation there is no need for the ‘other cause’ to be of the same type as the preceding
causes.
5) Most standard off-hire clauses would frequently conclude with the phrase, ‘or by any other cause
preventing the full working of the vessel’. Authority restricts such ‘other causes’ and also all the
preceding enumerated causes to those which directly affect the running of the ship. Put differently,
the courts would put the vessel off-hire only if the enumerated cause or any other cause had, in fact,
an impact on the full working of the vessel. For example in The Mareva AS [1977] 1 Lloyd’ Rep 368 the
discharge of the vessel was delayed by 15 days due to the fact that her cargo was damaged (‘average
accident to cargo’) by leakage through defective hatch covers and was, therefore, more difficult to
discharge. However, the ship herself remained perfectly efficient to perform the discharge function. It
was held that the vessel was not off-hire as the ‘average accident to cargo’ had not ‘prevented the full
working of the vessel.’
On the other hand, the courts would not be willing to put the vessel off-hire if events which delay
performance of the contract do not relate to the physical condition of the vessel or crew but is
associated with external events. In Court Line v. Dant (1939) 44 Com Cas 345, the chartered vessel was
trapped in the Yangtse river during the China/Japan war by a boom placed across the river by the
Chinese forces to prevent Japanese forces proceeding up the river. However, the vessel herself
remained fully efficient at all times. The court held that the vessel was not off-hire as she remained
fully efficient in herself to perform the required service and the delay was caused by a cause which
was wholly extraneous to the vessel, namely the boom.
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The external factors, such as legal or political reasons, could trigger the off-hire clause as long as they
impose restrictions which affect the nature of the vessel herself. In The Apollo [1978] 1 Lloyd’s Rep
200, for example, the crew of the chartered vessel was suspected of having typhus and the vessel was
not allowed to discharge under the health regulations of the port of discharge until she had been fully
disinfected. It was held that the ship herself was prevented from working and was therefore, off-hire.
Similarly, in The Mastro Giorgis [1983] 2 Lloyd’s Rep 66, the chartered vessel was prevented from
sailing by an arrest placed by the owners of cargo damaged during the course of the voyage. The court
held that the vessel was off-hire and Lloyd J said, at p 69:
One must have regard not only to the physical condition of the vessel but also, in the words of
the arbitrators, to her qualities and characteristics, to which I would also add, her history and
Ownership… The arrest was, in my view, directly attributable to the history, if not the condition,
of this particular vessel.
(It should be noted that in both The Apollo and The Mastro Giorgis, the relevant off-hire
clause had included the word ‘whatsoever’ so as to obviate the ejusdem generis rule)
There is often however, a fine line between events which are considered to be attributable to the
characteristics of the vessel herself and those which are considered to be extraneous. A good example
in this context is The Roachbank [1987] 2 Lloyd’s Rep 498. There, the chartered vessel picked up a
number of Vietnamese refugees from another vessel in distress but the authorities in Taiwan refused
to allow the vessel to enter their ports whilst the refugees remained on board. The charterers placed
the ship off-hire but the court disagreed. It was held that neither the presence of the refugees on board
nor their number prevented the vessel from entering the port to load her cargo. The vessel herself
remained perfectly fit and efficient to perform the service required of her which was to enter
Kaohsiung and load cargo.
These cases illustrate the fact that the distinction between ‘internal’ and ‘extraneous’ causes is often
artificial. Accordingly, it is perhaps unsurprising that the traditional rule exemplified in the Court Line
case has been criticised and was doubted by Rix, J., in the more modern case of The Laconian
Confidence [1997] 1 Lloyd’s Rep 139. The charter was on the NYPE 1946 form and included clause 15
in the wording quoted above without the addition of the word ‘whatsoever’. At the end of discharge
at Chittagong the Bangladeshi authorities refused to allow the vessel to proceed to her next
employment because of the presence on board of 15.75 tons of rejected cargo residues. The vessel
was detained for 18 days and the charterers claimed that she was off-hire. Rix J did not agree since in
the absence of the word ‘whatsoever’, the ejusdem generis rule restricted the ambit of the words ‘or
any other cause’ to the types of events in the preceding causes enumerated in the clause. However,
he went on to say that if there had been a relevant event or if the word ‘whatsoever’ had been included
then the qualifying phrase ‘preventing the full working of the vessel’ did not in his view require the
vessel to be inefficient in herself. The natural meaning of the words was that an otherwise totally
efficient ship might be prevented from working by ‘outside’ as well as ‘internal’ events. Pending further
clarification from the higher courts it is unclear whether the view expressed by Rix, J., represents a
‘new’ approach on the part of the English courts or merely the personal view of that judge.
6) The time deductible in consequence of an off-hire event will depend on the wording of the off-
hire clause. There are two principal types of clause: the ‘period’ and the ‘net’ clause. Former type
designates the start and end of any period for which hire is suspended by linking them to the
occurrence of specified events. Therefore, whilst any one of a selection of events (e.g. deficiency of
men or stores) might activate the clause, it would normally only cease to operate when the vessel was
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restored to a fully efficient state, capable of providing the service immediately required of it. The
following is a typical ‘period’ type of off-hire clause:
In the event of loss of time from…breakdown of machinery…the payment of hire shall cease
until she be again in an efficient state to resume her service.
Conversely, the ‘net loss of time clause’ merely provides that hire is not payable for time lost as a result
of the occurrence of one of the specified events. The following is a typical ‘net’ loss of time off-hire
clause:
That in the event of loss of time from…breakdown of machinery…the payment of hire shall
cease for the time thereby lost.
Under a ‘period’ off-hire clause restoration of partial efficiency of the vessel would generally be
insufficient to satisfy the requirement specified in most clauses. However, a different outcome would
follow in ‘net loss’ type of off-hire clauses. In The HR Macmillan [1974] 1 Lloyd’s Rep 311, the court
held that the breakdown of one of the ship’s cranes would not result in any off-hire if the remaining
cranes were able to perform the required discharge work without any loss of time overall.
Under a ‘net loss’ type of off-hire clause, the charterers must demonstrate that time is lost in the
performance of the chartered vessel during the period of inefficiency and it is adequate to show that
time is lost as regards to the service immediately required. In Minerva Navigation Inc v. Oceana
Shipping AG (The Athena) [2012] EWHC 3608, the charterers instructed the chartered vessel on 16
January to proceed to Benghazi (Libya) after an unsuccessful attempt to deliver the cargo at Syria. The
master did not proceed to Benghazi and on 19 January stopped the vessel in international waters about
50 miles from Libya and began drifting. The drifting ended on 30 January and the vessel arrived at
Benghazi on 3 February. The discharge was completed on 18 February due to congestion in the port.
It was later established that even if the chartered vessel had arrived before 30 January still it would
not have been possible to berth. The charterers sought to argue that the vessel was off-hire under cl
15 of the NYPE 1946 form which provided that ‘in the event of loss of time from ... default of Master....
preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost..’
The owners argued that although time was lost when drifting and the vessel was not fully performing
with regard to the service immediately required, there was no net loss of time in the performance of
the chartered service. The trial judge agreed. However, the decision was reversed by the Court of
Appeal [2013] EWCA Civ 1753. It was held that the trial judge was wrong in considering the charter
service as a whole or the entire maritime adventure or adventures which might be undertaken in the
course of the charter service. Instead, attention should have been focused on the service immediately
required of the chartered vessel whilst she was drifting in international waters (during the period when
she was not fully operational). The service immediately required of the chartered vessel was to
proceed to the port of Benghazi and due to the negligence of the master the vessel was not in a position
to perform that voyage. There are practical reasons why the Court of Appeal’s approach is sensible. If
the trial judge’s decision on the matter had been endorsed by the Court of Appeal, it would have been
very difficult for the parties in many instances to assess where there is a legitimate off-hire claim until
the end of the voyage or adventure overall. However, in most cases hire is paid monthly and adopting
the Court of Appeal’s solution, it should be apparent whether during a particular hire period there was
any off-hire deduction to be made or not.
7) The fact that the ship is or is not off-hire does not affect any other remedies which the parties have
under the contract. Therefore, if the charterers can prove that they have suffered losses in excess of
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the hire, then they are entitled to recover damages in respect of such losses if the off-hire event is
caused by a breach of contract on the part of the owner (The Democritos [1975] 1 Lloyd’s Rep 386).
For example, if a ship is delayed on her voyage due to engine breakdown caused by the failure of the
owner to exercise due diligence. As a result of the breakdown, the ship misses her market for the goods
and the goods ultimately achieve a much lower price. The charterer is entitled to claim not only off-
hire but also damages for the difference between the price of the goods had there been no delay and
the price of the goods as a result of the delay.
2. OTHER OBLIGATIONS DURING OFF-HIRE
The mere fact that the vessel is off-hire does not necessarily mean that the other obligations of the
charterers during such periods also cease. Unless the charter otherwise provides, the charterer still
has the responsibility to provide and pay for bunkers while the ship is off-hire (Arild v. Hovrani [1923]
2 KB 141). Some charter parties such as NYPE 1946 (clause 20) expressly provide that:-
… fuel used by the vessel while off hire, also for cooking, condensing water, or for grates
and stoves to be agreed to as to quantity, and the cost of replacing same, to be allowed
by Owners.
However, this clause does not discharge the charterers from their other obligations in clause 2 to pay
for port charges, pilotages, agencies, commissions, consular charges and ‘all other usual expenses’
during the off-hire period.
In order to ensure that the charterers’ obligations in respect of all such expenditure is to cease when
the vessel is off-hire it is common to see the words ‘Whilst on hire’ added on to clause 2. This approach
has been adopted in relation to NYPE 93 clause 7 of which provides that:-
The Chartereres, while the vessel is on hire, shall provide and pay for all the bunkers etc…
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Personal notes:
Performance Claims
Personal notes:
Why are such claims important?
• Performance which is worse than that contemplated when
entering into the charter affects the profitability of the
charter for charterers.
• Since time charterers pay for hire and bunkers ‐
a the slower the ship sails, the more hire is payable and
b the more bunkers are consumed, the more expense to
the charterer.
REMEDIES A AILABLE TO Personal notes:

CHARTERER IN CASES WHERE THE
ESSEL UNDER‐PERFORMS
• Under‐performance might amount breach of the provisions of the
charterparty describing the vessel‐ this would give the charterer a right
to claim damages and possibly a right to terminate the charter where
the breach and its consequences are serious
The Aegean Dolphin 1992 2 Lloyd’s Rep 17 .
• Off‐hire if the charter expressly allows off‐hire in such circumstances.
Contrast The Rijn 19 1 2 Lloyd’s Rep 267 and The Ioanna
19 5 Lloyd’s Rep 164 .
1
Personal notes:
A TERMS AS TO DESCRIPTION
The charter usually describes the performance of the ship
in terms of speed and bunker consumption.
e.g. lines 9‐10 of NYPE 1946
vessel …capable of steaming, fully laden, under good

weather conditions about…knots on a consumption of
about…tons of fuel oil and …tons diesel …’
Personal notes:
A Practical Problem
What if there is a discrepancy between the weather and sea
conditions recoded in the vessel’s log book and information
obtained from independent weather bureaus?
In most cases charterparty will be silent as to which one should
be preferred.
A recent arbitration decision: “… log entries are at times made
with half an eye on the charter warranties.”
Personal notes:
The effect of tolerance
About’
• This word usually allows a margin in relation to both speed
and consumption.
• The extent of the margin is a matter of fact tailored to the
ship’s configuration, size, draft and trim etc..
• There is no presumption that the allowable margin is either
0.5 knots or 5%.
The Al Bida 19 7 1 Lloyd’s Rep 124 C/A
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Personal notes:
The effect of tolerances
Without uarantee’
• The addition of without guarantee’ dilutes the
representation as to speed or consumption to no more
than a statement that the estimate is given in good faith.
• The owner need not also prove that the estimate was given
on reasonable grounds.
The Lipa 2000 2 Lloyd’s Rep 17
TERMS AS TO DESCRIPTION Personal notes:

Compliance When?
Depending on the terms of the charter, the description may be
relevant
• at the date of the charter orent en h te 1943 74 LIL Rep
461
• or at the date of delivery The o on 197 1 Lloyd’s Rep 53
• or throughout the charter period. e.g. clause1 .2 of BPTIME 3
Owners warrant that the essel is and shall remain capable of
maintaining, throughout the Charter period, the speeds and bunker
consumptions for propulsion described in the uestionnaire..
Effect of Breach Personal notes:

a Damages for Deficient Performance
In order to claim damages, charterers must prove that
• the ship has not performed in accordance with her
description and that
• they have suffered loss as a result and that
• owners are not able to rely on any material exception
clause.
3
Personal notes:
HA E CHARTERERS SUFFERED LOSS?
The basic principles are ‐
• a comparison must be made between the performance
actually achieved and the performance which should have
been achieved had there been no breach.
• However! There is no right’ or accepted’ method of
calculation unless the charter provides for a particular
method.
See clause 24 of SHELLTIME 4
Personal notes:
HA E CHARTERERS SUFFERED LOSS ?
NB!
If the ship performs better than warranted the owner is not
entitled to a bonus unless the charter says so expressly.
The Didymi 19 2 Lloyd’s Rep 10
Personal notes:
b Termination of the charterparty?
• Statements as to speed and consumption are not conditions,
breach of which entitles the charterer to terminate the charter
automatically.
• They are intermediate or innominate terms breach of which

justifies termination of the contract only if the breach and its
consequences are serious.
4
Personal notes:
B OFF‐HIRE AS A REMEDY FOR
UNDER‐PERFORMANCE
SHELLTIME 4
Clause 21 b
if the vessel fails to proceed at any guaranteed speed pursuant to clause
24 …..then the period for which the vessel shall be off‐hire shall be…
BPTIME 3
Clause 1 .2
Charterers shall have the right to make deductions from hire in respect of
any time lost and any additional bunkers consumed by reason of the
essel’s failure to maintain the warranted capability.
Personal notes:
BENEFITS OF THE OFF‐HIRE REMEDY
• It is not necessary to prove a breach of contract.
• Owners do not have the benefit of any exception clause if
applicable .
• Unless the charterparty states otherwise e.g. cl. 24 b of
Shelltime 4 Owners cannot set‐off any saving in bunkers
against loss of time or vice‐versa
The Ioanna 19 5 2 Lloyd’s Rep 164
Personal notes:
BENEFITS OF THE OFF‐HIRE REMEDY
• However, if the deficiency is the result of a breach of contract
by Owners, then Charterers can also claim damages for losses
which are not remedied by the off‐hire clause.
See lines 502‐3 in clause 24 b of SHELLTIME 4
5
SLOW STEAMIN ‐ DAN EROUS
Personal notes:
PRACTICE?
It is possible that the charterer could claim damages on the
premise that the vessel did not proceed on each voyage under
the charterparty with utmost dispatch.
Would Art 4 rule 2(a) of the Hague‐Visby Rules afford a defence
to the owners?:
“Neither the carrier nor the ship shall be responsible for loss or
damage arising or resulting from:
a. Act, neglect, or default of the master, mariner, pilot, or the servants of
the carrier in the navigation or in the management of the ship;”
The Pearl C [2012] 2 Ll. Rep 533
Personal notes:
2. The charterer could rely on an off‐hire’ clause
In The Pearl C [2012] 2 Ll. Rep 533 it was held that the vessel
would be off‐hire’ under clause 15 of NYPE 1946:
“That in the event of the loss of time from deficiency sic ness
stri e accident or default of master fficers or crew or
deficiency of men or stores... or by any other cause preventing
full use of the vessel to the charterers the payment of hire shall
cease for the time thereby lost ...”
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
6
BIMCO Training
The information and opinions which this paper contains are not intended to be a comprehensive study,
nor to provide legal advice and should not be treated as a substitute for specific advice concerning
individual situations.
PERFORMANCE CLAIMS
The efficiency of the chartered vessel is of vital importance to the time charterer since the entire
success of the commercial enterprise may depend on it. The specifications of the vessel that can affect
the efficiency of the chartered vessel are those relating to speed, loading capacity and fuel
consumption. If, for example, the chartered vessel navigates at a speed slower than specified in the
charterparty, more hire will be payable by the charterer. Similarly, if the chartered vessel consumes
more fuel than indicated in the charterparty, given that time charterers are responsible for bunker
expenses, they will incur more expenses than expected at the time when the contract was formed.
Most charterparties would contain provisions describing the necessary attributes of the chartered
vessel.
Vessel when fully loaded capable of steaming about 14.5 knots in good weather and
smooth water on a consumption of about 38 tons of oil fuel.
It is a matter of construction whether the particular clause merely represents the performance ability
of the vessel at the time of the charter date or at the time of delivery, or whether, on the other hand, it
guarantees the performance throughout the charter period (The Appllonius [1978] 1 Lloyd’s Rep 53).
To amount to such a guarantee, the clause must usually include words such as: ‘such performance to
be maintained during the charter’. Some tanker charterparty forms also undertake that the
performance will be maintained throughout the charter period. For example, clause 24 of Shell Time 4
reads:
The service speed of the vessel is --- knots laden and --- knots in ballast and in the absence
of charterer’s orders to the contrary the vessel shall proceed at the service speed.
Similarly, it is a matter of construction whether the performance warranty applies irrespective of

weather or whether the owners warrant the vessel’s performance in ‘good weather’ (see, Hyundai
Merchant Marine Company Ltd v. Trafigura Beheer BV (Gaz Energy) [2011] EWHC 3108 (Comm)).
In cases where the provision dealing with the speed and consumption of the chartered vessel is
qualified by using the word ‘about’, this allows a margin in relation to both speed and consumption.
The extent of the margin is a matter of fact but would usually be either 0.5 knots or 5 % (Al Bida [1987]
1 Lloyd’s Rep 124). Also, when reference is made to the speed of the chartered vessel, it is not unusual
to add the proviso ‘in good weather conditions’, thus enabling arbitrators and/or judges to ignore
checks made on days when prevailing winds range above 4 and 5 on the Beaufort Scale. The addition
of the words ‘without guarantee’ is designed to dilute the representation as to the speed or
consumption to no more than an estimate given in good faith (The Lipa [2000] 2 Lloyd’s Rep 17).
Statements as to speed and consumption are usually classified as innominate terms (The Aegean
Dolphin [1992] 2 Lloyd’s Rep. 178). If the consequences of breach are serious, the charter will have a
right to elect to terminate the charterparty. In any event the charterer will, in case of breach, a right
to damages. The calculation of the damages which the Charterer is entitled to claim as a result of a
breach by the owners of the vessel’s performance obligations is notoriously complicated. The basic
approach is to make a comparison between the performance (both in terms of speed and bunkers)
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which the vessel should have achieved in the weather conditions which she encountered and the
performance which she actually achieved. However, some charters provide that the comparison is to
be made at the end of each voyage whereas others require a calculation at the end of the charter or
at the end of specific periods (e.g. every six months).
Occasionally, alternative remedies for errors in description may be deprived from other clauses in the
charterparty. It is not beyond the bounds of possibility that a cancellation clause might be drafted
widely giving the charterer to cancel the contract in case of under performance. Also, the obligation in
many charterparties to prosecute ‘all voyages with the utmost dispatch’ might provide a remedy for
speed deficiency. Furthermore, the Charterer may in certain circumstances be entitled to make a
deduction for deficiency performance under an off-hire clause.
Clause 15, Line 99-101 of NYPE 1946:-
….and if upon the voyage, the speed be reduced by defect on or breakdown of any part of
her hull, machinery or equipment, the time so lost and the cost of any extra fuel consumed
in consequence thereof, and all extra expenses shall be deducted from the hire.
Clause 17, lines 233-236 of NYPE 93:-
If upon the voyage, the speed be reduced by defect on or breakdown of any part of her
hull, machinery or equipment, the time so lost and the cost of any extra fuel consumed in
consequence thereof, and all extra proven expenses shall be deducted from the hire.
The claim can be brought within the off-hire clause only if the particular deficiency can be attributed
to the particular causes itemized in the clause. However, it may be important for the Charterer to
investigate whether he can bring a claim for deficient performance within an off-hire clause rather
than having to proceed with a claim for breach of the charter party provisions as to description for the
following reasons:-
1. A claim for breach of the description provisions is a claim for damages;
2. The quantum of damages which is payable is that which is necessary in order to place the
claimant in the same position financially as that in which he would have been had there
been no breach of contract;
3. In calculating the relevant damages the defendant is entitled to require the claimant to set-
off against the claim any savings which have been made as a result of the breach of contract;
4. If the vessel has proceeded slower than the warranted speed then she is likely to have used
less bunkers than that which would have been used at the warranted speed;
5. The savings of bunkers should therefore, be set-off against the claim for deficient speed in
order to calculate the damages payable for deficient speed performance;
6. However, if the claim for deficient speed can be brought within an off-hire clause such as
clause 15, lines 99-101 of NYPE 1946 then the Charterer is entitled to deduct from hire the
time lost as a result of the deficient speed without having to set-off the value of bunkers
saved as a result of the deficient speed as the claim is not one for damages. The deduction
which is allowed under lines 99-101 is the result of an express agreement between the
parties and must be construed as such. Since it makes no reference to a set-off for bunkers
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saved none will be given for any such savings (The Ioanna [1985] 2 Lloyd’s Rep 164).
Finally, it is appropriate to comment briefly on the practice of ‘slow steaming’ which has become rather
common in the sector due to the sharp decline in freight and hire rates. Such a practice is very risky
from the owners perspective and might enable the charterer to seek various remedies. Bulk Ship Union
SA v. Clipper Bulk Shipping Ltd (The Pearl C) [2012] EWHC 2595 (Comm); [2012] 2 Lloyd’s Rep 533 is a
illuminating example illustrating potential causes of action open to charters in the case of slow
steaming. In that case, after the chartered vessel was re-delivered, the charterer withheld hire alleging
underperformance of the vessel in seven out of sixteen voyages during the charter period. The
arbitrator found that in three out of seven disputed voyages, the chartered vessel, in fact,
underperformed due to slow steaming. The charterers main contention was that by slow-steaming,
the vessel was in breach of cl. 8 which required the vessel to proceed on each voyage with utmost
dispatch. It was also argued that slow-steaming amounted to an off-hiring event under amended NYPE
15. The arbitrator found in favour of the charters and owners appealed to commercial court. The trial
judge, Popewell, J, found that the owners were in breach of cl. 8 of the charterparty. It was also
discussed whether Article 4 rule 2(a) of the Hague-Visby Rules, incorporated into charterparty,
afforded a defence to the owners. The relevant provision in the Rules provides a defence for an error
in seamanship. Popplewell, J, held that this defence was not applicable in this context as slow steaming
was not a negligent but a deliberate act.
There was no need to comment on the point of off-hire, but the trial judge did so by stating that the
time lost as a result of slow steaming can be claimed as off-hire under cl. 15 which provided:
That in the event of the loss of time from deficiency, sickness, strike, accident or default of
master, Officers, or crew, or deficiency of men or stores... or by any other cause preventing
full use of the vessel to the charterers, the payment of hire shall cease for the time thereby
lost;...
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Personal notes:
The Operational Costs for
Which the Charterers are
Responsible
Copyright 2014. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including
photocopying, scanning, recording or by any information storage or retrieval system, without the prior written permission of the
author.
The Difference between Time and Personal notes:

oyage Charters
• The nature of a time charter is very different from a voyage
charter.
• Under a voyage charter the shipowners are paid freight for
the carriage of cargo from one location to another but are
normally obliged to bear the costs which must be incurred
in order to earn the freight .
• Under a time charter, the shipowners are paid periodic hire
for making the ship available to time charterers for their
own commercial interests for a period of time. Therefore,
in exchange for having the flexibility to exploit the vessel in
this manner, the time charterers assume responsibility for
most but not all of the operating costs of the vessel.
Personal notes:
In most cases
• Shipowners are made responsible for
expenses relating to
• the ship as an asset e.g. mortgage payments,
insurance etc
• her crew
• the navigation of the vessel.
• Time charterers are made responsible for
expenses arising from
• the commercial operation of the ship e.g. payment
of port costs, fuel costs, charges associated with
loading and discharging of cargo
1
Personal notes:
The Nature of Charterers’ Obligation
• The charterers’ obligation to provide and pay for
the items that are for their account under the time
charter is absolute.
• Therefore, they cannot justify any failure on their
part on the basis that they have exercised due
diligence i.e. they have done their best to do so.
Anastassia v Ugle‐Export 1934 49 Ll. Rep 1
What Items are for Charterers’ Personal notes:

Account?
• Hire See Payment of Hire session
• Stevedoring Costs See Cargo Operations session
• Bunkers i.e. Fuel
• Port Charges
• Pilotages
• Agencies
• All other usual expenses
Personal notes:
Bunkers
2
Personal notes:
Bunkers
• Most time charters provide that
i the charterers shall take over and pay for the bunkers
which are on board the vessel when she is delivered to
the charterers and
ii the charterers shall provide and pay for all bunkers
that may be required during the currency of the time
charter and
iii the shipowners shall take over and pay for the bunkers
that remain on board the vessel on redelivery by the
charterers.
Personal notes:
E AMPLE
• Clauses 7 and 9 of the NYPE 93 form of charter
provide that
7. he h rterer h e the e e on h re h ro de

nd for the n er e ce t other e greed
he h rterer on de er nd the ner on rede er

h t e o er nd for f e nd d e e o rem n ng
on o rd the e e here nder
Personal notes:
The Right to Deduct from Hire
• Most time charters provide expressly that the value of any
bunkers that are estimated to remain on board on redelivery
may be deducted from the final or penultimate hire instalment.
• For example, Clause 11 c of the NYPE 93 form of charter
provides that
• ho d the e e e on her o ge to rd ort of rede er
t the t me the t nd or the en t m te ment of h re
re d e d ment re to e m de for ch ength of
t me the ner nd the h rterer m gree on
e ng the e t m ted t me nece r to com ete the o ge
nd t ng nto cco nt n er ct on o rd to e t en
o er the ner
3
Personal notes:
The uantity and Price of Bunkers
• If the charter makes no provision as to price, the
relevant price is normally taken to be the m r et
r ce re ng t the ort hen nd here the
e e de ered or rede ered
ood Helmsman 19 1 1 Ll. Rep at 419
• However, since fuel is currently very expensive the
more modern forms of charter specify exactly what
quantities are to be on board on delivery and
redelivery and the prices which are to be paid on
delivery and redelivery.
Personal notes:
E AMPLE
• Clause 5 of ShellLN Time provides that
• h rterer h cce t nd for n er on o rd on
de er nd ner h on rede er cce t nd for
n er rem n ng on o rd ed t the e r ce
• he e e h e de ered to h rterer th no e th n
• tonne of f e o nd
• tonne of d e e o
• he e e h e rede ered to ner th no e th n
• tonne of f e o nd
• tonne of d e e o
Charterers to provide and pay for Personal notes:

bunkers
• Although it is normally the responsibility of the
charterers to ro de nd for n er during the
currency of the charter the shipowners are obliged to
provide them with relevant information as to quantity
and quality.
• Accordingly, if the master does not provide the
relevant information, the shipowners cannot hold the
charterers responsible for any failure on their part to
comply with their contractual obligations in relation
to bunkering the vessel.
4
Personal notes:
Charterers to provide and pay for
bunkers No bunkers=not seaworthy
• The English court has held that
• he ro on to ro de nd for f e doe not
re e e the h o ner from the o g t on of ee ng
th t the e e n e orth cond t on n re ect
of the of f e h t the d t of the m ter
to g e the ch rterer correct nform t on to en e
them to ro de the re te nt t of f e
The Captain Diamantis 1977 1 Lloyds Rep 36
Personal notes:
Bunker Specification
• If the charter does not specify any particular grade of
bunkers, the charterers are under an implied duty to
provide bunkers of reasonable quality.
• However, charters increasingly have precise terms
relating to the quality and specification of the
bunkers that are to be supplied by the charterers.
e.g. h rterer g r ntee th t the n er th t the
to the e e e of m n m m t nd rd
for c t
Personal notes:
• The bunkers that are provided must also enable the ship to
comply with Regulations 14 and 18 of Annex VI of MARPOL
and the related EU Directive 2005 33/EC and US
Environmental Protection Agency regulations which
establish various emission control areas (ECAs) and the use
in such areas of marine fuel which has a specified
maximum sulphur content. Failure to do so may restrict the
vessel’s ability to trade within the emission control ones
that have been established pursuant to these regulations
and may result in substantial fines if breaches of the
Regulations are discovered.
5
Personal notes:
o The charterers have an absolute obligation to provide bunkers
of the relevant quality and they may be liable for damage to
the ship’s machinery if the have not done so even if they have
exercised due diligence to provide reasonable bunkers.
o If the charterers are found liable to the shipowners they may
have difficulty in recovering an indemnity from the bunker
suppliers in view of the very restrictive contractual liabilities
which either exclude liability totally or limit liability to the
value of the bunkers supplied or specify that unless a claim is
brought within a very short time limit, liability is excluded.
Personal notes:
Example of Suppliers’ Terms
o ot ce of n c m of h t oe er n t re r ng 7 days (!)
m de the er g n t the e er h e g en
n r t ng f doc mented th ort ng
doc ment to the e er t the r ddre nd e
rece ed them th n d from the d te on
h ch the de er com eted n e the
er g e not ce of n c m r nt to th
c e th n the t me m t c m the er
of h t oe er n t re h e tom t c
e t ng hed nd o te t me rred nd
ed g n t the e er
Personal notes:
The Ownership of the Bunkers
• Since the charterers take over and pay for the bunkers on the
delivery of the vessel to them and have the duty to ro de
nd for n er during the currency of the charter the
charterers are considered to have the property in the bunkers
during the charter period i.e. they own them .
• Therefore, if third parties have claims against the charterers,
the bunkers may be arrested in certain parts of the world in
order to obtain security for such claims.
• Furthermore, the charterers are liable as owners of property at
risk, to contribute to salvage or general average claims
occurring during the charter period.
The Span Terza 19 4 1 Lloyds Rep 119
6
Personal notes:
Bunker Suppliers’ Liens
• The supplier may wish to rely on the following
remedies
A lien on the ship
Attachment of the bunkers
A retention of title Romalpa clause
However, the Supplier’s rights to do so vary from
country to country. For example, the supplier may
have a maritime lien against the ship in the USA but
there is no such remedy in the UK.
Personal notes:
ROMALPA Clauses
• The terms of most bunker suppliers will include Romalpa
clauses which provide that the supplier will retain ownership of
the bunkers until payment has been made even after the
bunkers have been delivered on board a vessel owned by a
third party.
• Therefore, if the supplier is not paid, the supplier can recover
the bunkers from the ship even if the shipowner is bankrupt.
• However, such rights may be prejudiced when the bunkers are
mixed in the ship with other bunkers from other suppliers.
See Fesco Angora 2011 1 Ll. Rep Plus 24
Personal notes:
Port Charges
7
Personal notes:
Port Charges
• Port charges include dock charges, tonnage dues, light
dues and ch rge th t the h h to efore
he e e ort .
Newman & Duke v Lamport & Holt
• However, unless the charter provides expressly to the
contrary, the charterers are normally responsible only
for those charges that are payable during the period
of the charter and not for charges which are payable
before the delivery of the vessel to the charterer or
after redelivery to the owners.
Personal notes:
Pilotages
Personal notes:
Pilotages
• Charterers are obliged to provide and pay for
pilotages either when the port requires compulsory
pilotage or where the master considers that pilotage
is necessary for the safety of the vessel.
• However, although the pilot may be provided and
paid for by the charterers the traditional rule is that
he remains the servant of the shipowners so that the
shipowners are responsible for any negligence on
the part of the pilot.
Fraser v Bee 1900 17 TLR 101
8
Personal notes:
Pilotages
• The charterers are obliged to appoint a pilot who is competent
and therefore, the shipowners might be able to claim an
indemnity from the charterers for any loss, damage or liability
incurred by them as a result of the acts or omissions of an
incompetent pilot.
• However, when considering whether someone is incompetent,
the courts make a distinction between negligence on the part
of an otherwise competent person and negligence on the part
of a basically incompetent person.
See the Sinoe 1972 1 Lloyds Rep 201
Personal notes:
Agencies
Personal notes:
Agencies
• Whilst charterers are normally obliged to provide
and pay for agencies it does not follow that the
charterers are necessarily responsible for the acts
or omissions of the agents. Agents frequently act in
differing capacities for different people and it is
normally a question of fact whether they have
acted in any particular situation as the agent of the
shipowners or the charterers.
• As in the case of pilotages, the charterers should
appoint agents who are competent and the same
questions arise in relation to responsibility for the
acts and omissions of agents.
9
Personal notes:
eneral Items
Personal notes:
eneral Items
Charterers are also frequently obliged to provide and pay for the
following items
• Crew overtime
• War bonus
• Taxes
• Dunnage
• Supercargo costs
• Hold cleaning
• Consular charges
• Fumigations and
• other e en e which is a question of fact in each
case
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
10
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The Operational Costs for Which the Charterers are Responsible
1. INTRODUCTION
Subject to considerations of illegality and public policy, the doctrine of the freedom of contract means
that parties are generally free to contract on whatever terms they wish. However, the agreement that
they reach is generally dictated by the nature of the contract that they wish to conclude. The nature
of a time charter is very different from a voyage charter. Under a voyage charter the shipowners are
paid freight as remuneration for the carriage of cargo from one location to another. However, they are
normally obliged to bear the costs which must be incurred in order to earn the freight e.g. crew costs,
bunkers, stevedoring, port charges, agencies etc. In the context of a time charter, the shipowners are
not paid for the carriage of goods but are paid periodic hire for making the ship available to time
charterers so that they may exploit the vessel for their own commercial interests for a period of time.
Therefore, in exchange for having the flexibility to exploit the vessel in this manner, the time charterers
assume responsibility for most (but not all) of the operating costs of the vessel.
In most cases:
a. shipowners are made responsible for expenses relating to:

i. the ship as an asset e.g. mortgage oayments, insurance etc
ii. her crew;
iii. the navigation of the vessel.
and
b. time charterers are made responsible for expenses arising from:

iv. the commercial operation of the ship (e.g. payment of port costs, fuel costs,
charges associated with loading and discharging of cargo)
The charterers’ obligation to provide and pay for the items that are for their account under the time
charter is absolute. Therefore, they cannot justify any failure on their part on the basis that they have
exercised due diligence (i.e. they have done their best) to do so.
EXAMPLE
In Anastassia v Ugle-Export1 the English court stated that:
“The charterers have contracted to supply the assistance, and that, in my opinion, means either
by themselves or by others, so that they cannot justify any failure to so on the pretext that they
had not the icebreakers under their control and could not get them supplied by those who
controlled them. In that sense the obligation is absolute. The charterers assumed the obligation
and the risk. It follows equally that the charterers’ obligation is not limited to an obligation to
do their best to supply.”
1
Per Lord Wright in Anastassia v Ugle-Export (1934) 49 Lloyds Rep. 1
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2. WHAT ITEMS ARE FOR CHARTERERS’ ACCOUNT?
As stated above it is up to the parties to decide who is to provide and pay for what. However, the
following section will comment on those items which are normally for charterers’ account in a time
charter.
a. Payment of Hire
A full discussion of this important issue may be found in the Payment of Hire Chapter.
b. Stevedoring costs
A full discussion of this important issue as it affects cargo damage may be found in the Loading,
Stowing, Discharging Chapter. However, the vessel may also be damaged as a result of the acts or
omissions of stevedores and the majority of time charters make the charterers liable for loss or damage
caused to the ship by stevedores.
EXAMPLE
Clause 12 of the BALTIME 1939 (Revised 2001) charter provides that:
“Charterers shall be responsible for loss or damage caused to the Vessel by … improper or careless
loading, stowing or discharging of the goods…”
However, many charters entitle the shipowners to recover from the charterers only if they have given
timely notice to the charterers.
EXAMPLE
Clause 35 of the NYPE 93 form of charter provides that:
“Notwithstanding anything contained herein to the contrary, the Charterers shall pay fro any and all
damage to the Vessel caused by stevedores provided the Master has notified the Charteers and/or their
agents in writing as soon as practical but not later than 48 hours after any damage is discovered.”
Other charters entitle the shipowners to recover from the charterers only if they have failed to make
any recovery from the stevedores themselves.
EXAMPLE
Clause 16 (b) of the SHELLTIME 4 form of charter provides that:
“Charterers shall be liable for any damage caused to the vessel caused by or arising out of the use of
stevedores…to the extent that Owners are unable by the exercise of due diligence to obtain redress
therefor from stevedores.”
Some time charters also oblige the charterers to redeliver the vessel in the same good order and
condition as on delivery “ordinary wear and tear excepted”.
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EXAMPLE 1
Clause 4 of the NYPE 1946 form of charter (clause 10 of NYPE 93) provides that:
“…hire shall continue until the hour of the day of her redelivery in like good order and condition,
ordinary wear and tear excepted, to the Owners…”
EXAMPLE 2
Clause 7 of the Baltime 1939 (Revised 2001) charter provides that:
“The Vessel shall be redelivered on the expiration of the Charter in the same good order and condition
as when delivered to the Charterers (fair wear and tear excepted).”
In such cases factual conflicts often arise as to whether the particular damage can be characterised as
stevedore damage, in which case the charterers are liable, or “ordinary wear and tear”, in which case
the charterers are not liable.
c. Bunkers
Most time charters provide that:
i) the charterers shall take over and pay for the bunkers which are on board the vessel when she is
delivered to the charterers; and
ii) the charterers shall provide and pay for all bunkers that may be required during the currency of the
time charter; and
iii) the shipowners shall take over and pay for the bunkers that remain on board the vessel on
redelivery by the charterers.
EXAMPLE
“The Charterers on delivery, and the Owners on redelivery, shall take over and pay for all fuel and diesel
oil remaining on board the Vessel as hereunder.”
Clause 7 of the same charter provides that:
“The Charterers, while the Vessel is on hire, shall provide and pay for all the bunkers except as otherwise
agreed:”
Most charters also provide that the charteres are expressly entitled to deduct the value of any bunkers
that are estimated to remain on board on redelivery from the final or penultimate hire instalment.
EXAMPLE
Clause 11 (c) of the NYPE 93 form of charter provides that:
“Should the Vessel be on her voyage towards port of redelivery at the time the last and/or the
penultimate payment of hire is/are due, said payment(s) are to be made for such length of time as the
Owners and the Charterers may agree upon as being the estimated time necessary to complete the
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voyage, and taking into account bunkers actually on board to be taken over by the Owners…”
The more modern forms of charter also go on to specify exactly what quantities are to be on board on
delivery and redelivery and the prices which are to be paid on delivery and redelivery.
EXAMPLE
Clause 5 of the ShellLNGTime form of charter provides that:
“Charterers shall accept and pay for all bunkers….on board on delivery, and Owners shall on
redelivery…. accept and pay for all bunkers…remaining on board valued …at the Fuel Price
The Vessel shall be delivered to Charterers with no less than:-
….tonnes of fuel oil; and
….tonnes of diesel oil.
The Vessel shall be redelivered to Owners with no less than:-
…..tonnes of fuel oil; and
…..tonnes of diesel oil”
If the charter makes no provision as to price, the relevant price is normally taken to be “the market
price prevailing at the port when and where the vessel is delivered or redelivered….”2
Albeit that it is normally the responsibility of the charterers to “provide and pay for bunkers” during
the currency of the charter they are not able to do so unless and until the vessel provides them with
relevant information as to quantity and quality.
EXAMPLE
In the “Captain Diamantis”3 the English court stated that:
“The provision (to provide and pay for fuel) does not relieve the shipowners from the obligation
of seeing that the vessel is in a seaworthy condition in respect of the supply of fuel….This it is
the duty of the master to give the charterers correct information, to enable them to provide
the requisite quantity of fuel…”
Accordingly, if the master does not provide the relevant information, the shipowners cannot hold the
charterers responsible for any failure on their part to comply with their contractual obligations in
relation to bunkering the vessel.
In some instances the charter will have precise terms relating to the quality and specification of the
bunkers that are to be supplied by the charterers. However, if the charter is silent in that regard, the
charterers are under an implied duty to provide bunkers of reasonable quality.
In either case it appears that the charterers have an absolute obligation to provide bunkers of the
relevant quality and they cannot escape liability on the basis that they have exercised due diligence to
provide reasonable bunkers.
Since the charterers take over and pay for the bunkers on the delivery of the vessel to them and since
they have the subsequent duty to “provide and pay for bunkers” during the currency of the charter it
follows that the charterers have the property in the bunkers during the charter period (i.e. they own
2
per Ackner LJ in the Good Helmsman (1981) 1 Lloyds Rep. at 419
3
The Captain Diamantis (1977) 1 Lloyds Rep 362
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them)4. Consequently, if third parties have claims against the charterers, the bunkers may be
susceptible to arrest in certain parts of the world in order to obtain security for such claims.
Furthermore, the charterers are liable as owners of property at risk, to contribute to salvage or general
average claims occurring during the charter period.
d. Port charges
Port charges include “all charges that the ship has to pay before she leaves a port”5. These include
dock charges, tonnage dues, light dues etc. However, unless the charter provides expressly to the
contrary, the charterers are normally responsible only for those charges that are payable during the
period of the charter and not for charges which are payable before the delivery of the vessel to the
charterer.6
e. Pilotages
Charterers are obliged to provide and pay for pilotages either when the port requires compulsory
pilotage or where the master considers that pilotage is necessary for the safety of the vessel.
However, although the pilot may be provided and paid for by the charterers the traditional rule is that
he remains the servant of the shipowners so that the shipowners are responsible for any negligence
on the part of the pilot7. This obligation is frequently stated expressly in the charter.
EXAMPLE 1
“The owners to remain responsible for the navigation of the vessel….same as when trading for their
own account.”
EXAMPLE 2
Clause 16 of the SHELLTIME 4 form of charter provides that:
“Owners hereby indemnify Charterers, their servants and agents against all losses, claims,
responsibilities and liabilities arising in any way whatsoever from the employment of pilots, tugboats
or stevedores who although appointed by the Charterers shall be deemed to be the servants of and in
the service of the Owners and under their instructions (even if such pilots, tugboat personnel or
stevedores are in fact the servants of the Charterers their agents or any affiliated Company)…”
Nevertheless, since it is implicit that the charterers should appoint a plot who is competent it may be
that the shipowners might be able to claim an indemnity from the charterers for any loss, damage or
liability incurred by them as a result of the acts or omissions of an incompetent pilot8. However, when
considering whether someone is incompetent, the courts may well make a distinction between
negligence on the part of an otherwise competent person and negligence on the part of a basically
incompetent person.
4
The Span Terza (1984) 1 Lloyds Rep 119
5
Newman & Duke v Lamport & Holt (1896) 1 QB 20
6
Scales v Temperley (1925) 23 Lloyds Rep. 312
7
Fraser v Bee (1900) 17 TLR 101
8
See the Sinoe (1972) 1 Lloyds Rep 201
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f. Agencies
Whilst charterers are normally obliged to provide and pay for agencies it does not follow necessarily
that the charterers are responsible for the acts or omissions of the agents. Agents frequently act in
differing capacities for different people and it is normally a question of fact whether they have acted
in any particular situation as the agent of the shipowners or the charterers. However, as in the case of
pilotages, it is implicit that the charterers should appoint agents who are competent and the same
questions arise in relation to responsibility for the acts and omissions of pilots
g. General Items
Finally, charterers are also frequently obliged to provide and pay for the following items:
Crew overtime, war bonus, taxes, dunnage, supercargo costs, hold cleaning, consular charges,
fumigations and “all other usual expenses”.
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Chapter 9
Personal notes:
The Loading, Stowage and
Discharge of Cargo
Personal notes:
THE BASIC RULE
• UNLESS the contract says otherwise cargo operations
are at the carrier’s risk and expense.
Flintermar 2005 1 Ll. Rep 409 at 417
• This rule is usually unchanged in the context of tanker
time charters due to the nature of the loading and
discharging process.
Personal notes:
THE BASIC RULE
• HOWE ER, parties to dry cargo time charters
frequently agree that the time charters shall
provide or arrange and pay for stevedoring
operations.
• Such words usually but not always mean that the

liability for such activities is also transferred to the
charterers.
1
Personal notes:
WHICH STE EDORIN COSTS ARE

TRANSFERRED TO THE CHARTERERS?
Personal notes:
BALTIME 1939
• Clause 4. The Charterers shall…arrange and pay for
all loading, trimming, stowing including dunnage and
shifting boards, excepting any already on board ,
unloading…
Personal notes:
NYPE 1946
• Clause . and Charterers are to load, stow, and trim
the cargo at their expense…
• Clause 2. That the Charterers shall provide and pay
for….all other usual expenses except those before
stated…
• NB ! There is no express reference to discharge but

this has sometimes been considered to be a usual
expense for the purposes of clause 2.
2
Personal notes:
ENTIME
• Clause 13. The Charterers shall….unless otherwise
agreed…provide and pay for the costs of the following…
• d All stevedoring operations during the currency of this
Charter Party including receipt, loading, handling, stuffing
containers, lashing, securing, unsecuring, unlashing,
discharging, stripping containers, tallying and delivering
of all cargo.
LOADIN , DISCHAR IN ETC. DURIN Personal notes:

THE OYA E
• Unless the charter party states clearly otherwise, the
transfer of the cost and possibly risk of stevedoring
operations applies only to contemplated operations at
the loading and discharging ports.
• If there is need for such operations during the course of
the voyage the carrier must initially bear the risk and
cost of such operations.
Aquacharm 19 2 1 Ll. Rep 7
Personal notes:
LOADIN , DISCHAR IN ETC.
DURIN THE OYA E
However, the carrier may be able to recover such
costs either
• as damages if the operation resulted from
charterers’ actionable breach of contract or
• by way of indemnity arising as a result of
charterers’ employment instructions.
3
Personal notes:
LIABILITY FOR STE EDORIN
OPERATIONS
Personal notes:
FORMS OF LIABILITY
Liability usually arises in two different contexts
• loss or damage to the ship or
• loss or damage to the cargo.
Personal notes:
STE EDORE DAMA E TO THE SHIP
4
Personal notes:
STE EDORE DAMA E TO THE SHIP
• The majority of time charters make the charterers
liable for loss or damage caused to the ship by
stevedores
e.g. clause 12 of BALTIME 1939
Charterers shall be responsible for loss or damage
caused to the essel by … improper or careless loading,
stowing or discharging of the goods…
Personal notes:
Stevedore Damage To The Ship
• HOWE ER, many charters entitle the shipowner to
recover from the charterers only if they have given
timely notice to the charterers e.g. clause 35 of
NYPE 93 or only if they have failed to recover from
the stevedores.
Personal notes:
SHELLTIME 4 CLAUSE 16 B
Charterers shall be liable for any damage caused to
the vessel caused by or arising out of the use of
stevedores…to the extent that Owners are unable by
the exercise of due diligence to obtain redress
therefor from stevedores.
5
STE EDORE DAMA E TO THE SHIP Personal notes:
ON REDELI ERY
• Some time charters also oblige the charterers to redeliver the
vessel in the same good order and condition as on delivery
ord n r e r nd te r e ce ted e.g. clause 4 and 10 of
NYPE 1946 and 93 respectively or f r e r nd te r
e ce ted e.g. clause 7 of BALTIME 1939 .
• Factual conflicts can arise as to whether the particular
damage can be characterised as stevedore damage, in which
case the charterers are liable, or ord n r e r nd te r in
which case the charterers are not liable.
Personal notes:
STE EDORE DAMA E TO THE CAR O
Personal notes:
PRELIMINARY THIRD PARTY CLAIMS
• In the most cases the cargo will be owned by a third
party and carried under bills of lading.
• If the cargo is damaged or lost as a result of improper
loading, stowing, discharging etc. the cargo owner is
likely to bring an action against the carrier either the
shipowner or the time charterer under the bill of
lading.
• Since the bill of lading is likely to be subject to the
Hague or Hague‐ isby Rules the cargo owner is likely
to recover his losses from the carrier due to a breach
of Article III Rule 2 of the Rules.
6
HA UE/HA UE‐ ISBY RULES Personal notes:
ARTICLE III RULE 2
• Subject to the provisions of Article I , the carrier
shall properly and carefully load, handle, stow, carry,
keep, care for, and discharge the goods carried .
Personal notes:
INDEMNITY CLAIMS INTER SE
• If the shipowners or time charterers have been
obliged to pay the cargo owners’ claims under the
bills of lading they may then seek to recover an
indemnity inter se under the terms of the time
charter.
• The merits of such indemnity claims depend on
who is liable for loading, stowing, discharging etc.
under the terms of the time charter.
Personal notes:
E AMPLE
A
B/L
T/C
D V/C
7
Personal notes:
RESPONSIBILITY FOR CAR O
OPERATIONS
RESPONSIBILITY FOR CAR O Personal notes:

OPERATIONS
• Most tanker time charters maintain the common law rule and
make the shipowners liable for the acts and omissions of
stevedores even if the latter are appointed by charterers.
e.g. clause 16 of SHELLTIME 4.
• Most dry cargo time charters make the charterers responsible
for arranging and paying for stevedores and make the
charterers responsible for loss or damage caused by the
stevedores which have been so appointed.
Personal notes:
E AMPLES OF DRY CAR O TIME
CHARTER CLAUSES
• NYPE 93. Clause . …and the Charterers shall perform all cargo
handling… at their risk and expense…
• NYPE 1946. Clause . …Charterers are to load, stow and trim the
cargo at their expense under the supervision of the captain…
• BALTIME 1939. Clause 4. The Charterers… shall arrange and pay
for loading, trimming, stowing etc.
8
THE EFFECT OF THE HA UE OR Personal notes:
HA UE‐ ISBY RULES
• The Rules do not apply compulsorily to charter
parties.
See Articles 1 b and .
• HOWE ER, it is common for charter parties to
incorporate the Rules by agreement in the form of a
clause paramount.
e.g. clause 20 of NYPE 1946.
THE EFFECT OF THE HA UE OR
Personal notes:
HA UE‐ ISBY RULES
• If the Rules apply to a time charter it has been held
that nothing in the Rules prevents the shipowner
from transferring liability for cargo loading, stowing,
discharging etc. to the charterer.
Pyrene v. Scindia 1954 1 Ll. Rep 321

ordan II 2005 1 Ll. Rep 57
Personal notes:
E CEPTIONS TO THE LIABILITY OF
THE CHARTERERS
1. Actual intervention by the master
Notwithstanding the primary liability of the
charterers, if the master intervenes to direct the
loading, stowage or discharge then the shipowners
will be liable for loss or damage caused by the
master’s acts.
Court Line v. Canadian Transport 1940 67 Ll. Rep

161
9
E CEPTIONS TO THE LIABILITY OF Personal notes:
THE CHARTERERS
2. Stevedore action resulting in unseaworthiness
• It was traditionally believed that the master had a duty to
intervene in such circumstances and that the shipowner
was liable for loss or damage caused by such
unseaworthiness if the master did not intervene.
Canadian Transport v Courtline (1940) 67 Ll. Rep 161

”Panaghia Tinnou” (1986) 2 Ll. Rep 586
Personal notes:
THE CHARTERERS
However, more recently it has been held at first instance
that the master merely has a right rather than a duty to
intervene and that the charterer remains liable for loss or
damage caused by unseaworthiness resulting from
negligent stowage on thepart of the charterers’
stevedores even if the master does not intervene.
Imvros 1999 1 Ll. Rep 4
ER Hamburg 2006 2 Ll. Rep 66
EEMS Solar 2013 2 Ll. Rep 4 7
However! This approach is questionable.
Personal notes:
THE CHARTERERS and re. . . . spon
sibility of the
3. The addition of the words and responsibility . . . . . aptain
. C
• If clause of NYPE 1946 is amended as follows
nd h rterer re to o d to nd tr m the c rgo t the r e en e
nder the er on nd re on t of the t n
liability reverts to the shipowner unless the charterers either
• intervene in the loading, stowing etc. process themselves
Shinjitsu Maru 19 5 1 Ll. Rep 56
Argonaut 19 5 2 Ll. Rep 216
or
• fail to appoint competent stevedores
Clipper San Luis 2000 1 Ll. Rep 645
10
Personal notes:
WHOSE RESPONSIBILITY?
• ea iror
Cargo shall be loaded spout trimmed and or stowed at the

e pense and ris of hippers Charterers at the average rate of
metric tons per weather wor ing day Cargo shall be
discharged at the e pense and ris of eceivers Charterers at the
average rate of metric tons per weather wor ing day
towage shall be under aster s direction and responsibility .
• Liable for loading: shippers/charterers
• Liability for stowage: Master
• Expense and risk are guidelines ‐ but responsibility usually
trumps them.
Personal notes:
SPECIAL A REEMENTS
Personal notes:
THE INTER‐CLUB NEW YORK PRODUCE
E CHAN E A REEMENT
11
Personal notes:
THE NYPE INTER‐CLUB A REEMENT
• The complex nature of the cargo operation clauses of dry cargo
time charters has resulted in lengthy and costly litigation
between shipowners and time charters.
• Both parties usually have liability insurance with one of the
member P&I Clubs of the International roup I .
• The member Clubs of the I sought to minimise such costs by
agreeing inter se to regulate liability by a far more simple form of
agreement.
Personal notes:
• The ICA applies to indemnity claims between shipowners and
time charterers for cargo claims paid or settled by one of them
under bills of lading, sea waybills or other similar contracts of
carriage .
• Such contracts of carriage must have been subject to the

Hague or Hague‐ isby Rules or, only if compulsorily
applicable the Hamburg Rules or any national law giving effect
to any such Rules.
Personal notes:
• The ICA is to be used only in relation to the NYPE 1946 and 93
and ASBATIME 19 1 forms of time charter party. It does not
apply to other forms of charter.
• The ICA is a more or e mech n c ort onment of

f n nc t h ch ho nde endent of the t
ro on of the ch rter rt
i.e. a rough and ready apportionment.

The Strathnewton 19 3 1 Ll. Rep 219
12
Personal notes:
• The ICA is not itself binding as between shipowner and
charterer but merely as between P&I Clubs and even then, the
Club is obliged merely to recommend the ICA to its members.
• HOWE ER ! Some charters now include the ICA as a clause
which is to be binding directly between the shipowner and
the charterer.
Personal notes:
NYPE 93 CLAUSE 27
• “ rgo c m et een the ner nd the h rterer
h e ett ed n ccord nce th the nter e or
rod ce ch nge greement of e r r mended
or n e ent mod f c t on or re cement
thereof
• The current version of the Inter‐Club Agreement is that of
1996 as amended September 2011 .
Personal notes:
TIME LIMIT UNDER THE ICA
• Even if the time charter requires a claimant to
commence proceedings within 12 months pursuant
to Art. III Rule 6 of the Hague or Hague‐ isby Rules
or the Centrocon arbitration clause, that time limit
does not apply to claims under the ICA.
• Strathnewton 19 3 1 Ll. Rep 219 The enius

Star 1 2012 I Ll. Rep 222
13
Personal notes:
TIME LIMIT UNDER THE ICA
• HOWE ER! Clause 6 of the ICA has a different type
of time limit. It provides that a claim is
• deemed to e ed nd o te rred
n e r tten not ce of the c m g en to the
other rt th n month of the de er of
the c rgo or of the d te hen t ho d h e een
de ered
Personal notes:
APPORTIONMENT UNDER THE ICA
• Unless there are material amendments to the charter in
which case the ICA will not apply the allocation of
responsibility is roughly as follows ‐
• Unseaworthiness or negligent navigation or management
claims – 100% owners
• Stowage/handling claims – 100% charterers
• Other claims – 50/50 owners/charterers
• NB. ! Where and responsibility is added to clause of the
NYPE charters the allocation for stowage/handling is
amended to 50/50 owners/charterers.
Personal notes:
E CHAN E OF SECURITY
• The September 2011 amendments to the ICA introduced an
important new provision re security.
• If one party has provided security for a claim to a third
party claimant, that party is entitled to receive satisfactory
security from the other party to the charter party provided
the party making the demand is prepared to reciprocate by
providing security for an equivalent amount to that other
party.
14
Personal notes:
SUPPLYTIME 2005
Personal notes:
SUPPLYTIME 2005
• Clauses 14 b and 17 provide for
• Knock for knock provisions supported by mutual
cross indemnities and
• Charterers to be named as co‐assured on Owners’
poicies and insurers waive rights of subrogation.
Personal notes:
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The Loading, Stowage, Discharge etc. of the Cargo

1. INTRODUCTION
At common law and in the absence of express provision, the Carrier has the obligation to load, stow, trim
and discharge the cargo at his cost and risk.1 However, parties may find that it may be cheaper for these
operations to be carried out by the cargo interests rather than by the Carrier. For example, the vessel may
be trading to a port or installation where the Charterers or cargo interests either have their own
stevedores or have a standing contractual arrangement with a firm of stevedores at favourable rates. The
parties may therefore, wish to transfer this responsibility away from the Carrier to the cargo interest or
the Charterer.
EXAMPLE
When goods are carried on FIOS (free in and out stowed) terms the stevedores at the loading and
discharging ports are generally appointed and act under the instructions of the cargo interest. In
exchange for this the Charterer usually pays a lower freight or hire rate.
However, the mere transfer of the obligation to “pay for” or to “arrange and pay for” stevedores does
not necessarily also transfer from the Carrier to the Charterer/ cargo interest the risk of loss or damage
to the cargo caused by the stevedores whilst engaged in these operations. If this is the intention of the
parties it is important to ensure that in its context, the FIOS provision transfers not only the cost but
also the responsibility to load, discharge etc. to the cargo interest. The mere reference to “FIOS” does
not itself necessarily give rise to the presumption that the duty has been passed as well as the cost2.
2. THE OBLIGATION TO PROVIDE AND PAY FOR STEVEDORING OPERATIONS
In the context of time charters, the duty to provide and pay for stevedoring services is usually transferred
from the Shipowner to the Charterer.
EXAMPLES
BALTIME 1939 – clause 4
“The Charterers shall…arrange and pay for all loading, trimming, stowing (including dunnage and shifting
boards, excepting any already on board), unloading…”
GENTIME – Clause 13
“The Charterers shall….unless otherwise agreed…provide and pay for the costs of the following…:
(d) All stevedoring operations during the currency of this Charter Party including receipt, loading, handling,
1 “Filikos” [1983] 1 Ll. Rep. 9

2 “Jordan II” (2003) 2 Ll. Rep 87
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stuffing containers, lashing, securing, unsecuring, unlashing, discharging, stripping containers, tallying and
delivering of all cargo.”
SHELLTIME 4 – Clause7
“Charterers shall provide and pay for…expenses of loading and unloading cargoes…”
In the case of some charter forms the wording is not quite as express but is nevertheless, to the same
effect. For example, Clauses 2 and 8 of the NYPE 1946 provide that:
2. “… the Charterers shall provide and pay for….all other usual expenses except those before stated…”
8. “ and Charterers are to load, stow, and trim the cargo at their expense…”
Somewhat strangely, clause 8 of NYPE 1946 does not expressly refer to “discharging”. In most cases this
word is expressly added by type-written words to the printed form but if this is not done then the question
arises whether the duty to provide and pay for discharging operations falls on the Shipowner or the
Charterer. Whilst the question is not completely free from doubt the likelihood is that such cost forms part
of the phrase “all other usual expenses” in clause 2 in which case the duty to provide and pay for
discharging operations is transferred to the Charterer.
This problem does not arise under NYPE 93 since clause 8 of this form of charter provides that:-
“…the Charterers shall perform all cargo handling, including but not limited to loading, trimming, lashing,
securing, dunnaging, unlashing, discharging and tallying, at their risk and expense, under the supervision
of the Master.”
3. LOADING, DISCHARGING ETC. DURING THE COURSE OF THE VOYAGE
Unless there are express words to the contrary, the transfer of the cost and risk of stevedoring obligations
under clauses such as clause 8 of NYPE 1946 applies only to loading and discharge at the contemplated
loading and discharging locations. Therefore if discharge is necessary during the course of the voyage,
then prima facie the cost of such discharge falls not upon the Charterers but upon the Owners3. However
if the discharge is caused by the Charterers' breach or can be shown to be a necessary consequence of the
Charterers' orders then the Owners may be entitled to recover the expenses of discharge as damages or
by way of indemnity under the employment clause.
The Aquacharm was time chartered for a trip on the New York Produce form, Clause 8 being amended to
include "and discharge". Having been ordered to load to maximum draught for a passage through the
Panama Canal, the master negligently failed to take into account that in passing through a freshwater lake
which forms part of the Canal, the ship's forward draught would increase. The ship was consequently
refused entry to the Canal and part of the cargo had to be discharged, carried through the Canal on
another ship and then reloaded. It was held by the Court of Appeal that the costs of discharging were not
recoverable under Clause 8, which was applicable only to discharging at the port of discharge, and that
the claim for an indemnity failed because of the master's negligence.
4. LIABILITY FOR STEVEDORING OPERATIONS
However, the mere fact that the cost of these operations has been transferred from the Shipowner to the
3 [1982] 1 Ll. Rep. 7
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Charterers does not mean that the Shipowner has escaped his common law duty to be responsible for loss
or damage caused by such operations. The law does not prevent the Carrier from transferring the risk of
these operations to the Charterer or the cargo interests4 but if this is to be done then there must be clear
words to this effect5. If the risk is not also transferred then the Shipowner will remain responsible for the
acts, neglect and default of the stevedores despite the fact that the stevedores have been appointed and
paid for by the Charterers.
Therefore, it is also necessary to consider whether the risk of these operations has been transferred to the
Charterer as well as the cost. The answer to this question depends very much on the wording of the
particular clause.
a) Clear Express Terms
Clause 8 of the NYPE 1993 form of charter makes the position clear as it states expressly that:-
“..and the Charterers shall perform all cargo handling... at their risk and expense…”
Similarly, Clause 5 (b) of the GENCON charter provides that:
“The cargo shall be brought into the holds, loaded, stowed and/or trimmed and taken from the holds and
discharged by Charterers or their agents, free of any risk, liability and expense whasoever to the Owners.”
b) Less clear Terms
In some cases the charter does not provide expressly that risk shall be transferred to the charterers. In
such cases, the courts have drawn a distinction between situations where the charter merely provides
that the cost of such operations is to be borne by the charterers and situations where the charterers also
promise to perform these cargo operations.
Example1
1) “Freight to be paid at the rate of U.S.$. . . per metric tonne F.I.O.S.T.”;
2) “Shippers/charterers/receivers to put cargo on board trim and discharge cargo free of expense to the
vessel.”
In example 1) it is merely the cost that is transferred to charterers but in example 2) the cost and liability
is transferred.
Example 2
Clause 8 of NYPE 1946 provides that:-
"... and Charterers are to load, stow and trim the cargo at their expense under the supervision of the
Captain.”
This wording has been treated for many years as shifting from the Owners to the Charterers the primary
responsibility and risk for loading, stowing and trimming the cargo.6
4 Pyrene v Scindia (1954) 2 QB 402
5 “Jordan II” (2003) 2 Ll. Rep 87
6 Court Line -v- Canadian Transport (1960) 67 L. Rep. 161
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c) More Doubtful Terms
Some charter forms do not provide that charterers will actually do the relevant operations but merely
provide that the charterers shall “appoint” stevedores or “arrange for” stevedores to carry out cargo
operations at charterers’ cost.
Examples
Clause 4 of Baltime 1939 provides that:
“The Charterers shall…arrange and pay for all loading, trimming, stowing (including dunnage and shifting
boards, excepting any already on board), unloading…”
Clause 13 of GENTIME provides that:
“The Charterers shall….unless otherwise agreed…provide and pay for the costs of the following…:
(d) All stevedoring operations during the currency of this Charter Party including receipt, loading,
handling, stuffing containers, lashing, securing, unsecuring, unlashing, discharging, stripping
containers, tallying and delivering of all cargo.”
It has been traditionally assumed that the words “arrange and pay for” in clause 4 of the BALTIME 1939
form has the effect of transferring cost and risk to the charterers.7 However, these authorities may need
to be reviewed in the light of the comments made by the House of Lords in the “Jordan II.”
5. THE EFFECT OF THE HAGUE OR HAGUE-VISBY RULES
Whilst the Hague and Hague-Visby Rules do not apply to charter parties compulsorily8 they are often
included by agreement through the medium of a Clause Paramount. For example, clause 20 of NYPE 1946
provides that:-
“It is also mutually agreed that ….It (the charter) is further subject to the following clauses…
U.S.A. Clause Paramount”
The USA Clause Paramount introduces the Hague Rules as given effect by the Carriage of Goods by Sea
Act (COGSA) 1936 of the USA into the charter.
Article III Rule 2 of the Rules states that the Carrier “shall properly and carefully load, handle, stow,
carry, keep, care for and discharge the goods carried”. This suggests that the Shipowner is obliged to
carry out all of these operations, and if this were indeed to be the true meaning of the words, then the
Shipowner would not be able to transfer the responsibility for such operations to the Charterer by
provisions such as clause 8 of NYPE 1946 since such words would be rendered void by Article III Rule 8
of the Rules. However, the wording of Article III Rule 2 is misleading (at least insofar as English law is
concerned9). It does not mean that the Carrier is obliged to carry out each and every one of these tasks;
it simply means that whichever of these tasks is agreed by the parties to be the obligation of the
Carrier, he must do that task “properly and carefully”. The Rules do not debar the Carrier and the
goods Owner from making their own private contract regarding who is to do what10.
7 “Filikos” (1981) 2 Ll. Rep 555;“Flintermar” (2005) 1 Ll. Rep 409.
8 See Articles 1(b) and V of the Rules
9 The construction which follows is not adopted by all countries. The law of some countries such as
Australia provides that the Carrier must perform all of the duties specified in Article III Rule 2.
10 Pyrene v Scindia (1954) 2 QB 418 and “Jordan II” (2003) 2 Ll. Rep. 87
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In brief, Article III Rule 2 should be approached in two stages:
1. One should firstly establish which of the various tasks itemised in the Rule is to be the
responsibility of the Carrier under the contract of carriage; and
2. Then enquire whether the Carrier has performed those tasks “properly and carefully.”
Therefore, if the parties have agreed that responsibility for stevedoring operations is to be transferred
from the Shipowner (the Carrier in the context of the charter party) to the Charterer, those operations
are removed from the list of tasks which the Shipowner is to perform “properly and carefully” under
Article III Rule 2 of the Hague Rules as incorporated into the charter party.
6. RESTRICTIONS ON THE TRANSFER OF LIABILITY TO THE CHARTERERS
Although the provisions of Clause 8 of NYPE 1946 transfer responsibility on a prima facie basis to the
Charterers, liability will remain with the shipowners in the following circumstances.
6.1 THE INTERVENTION OF THE MASTER
It appears on first impression that the words “under the supervision of the master” place an obligation on
the master to supervise the loading, stowage etc and to intervene if he believes that the stevedores are
not performing their obligations properly. However, this is not the way in which the courts have construed
these words11. The master has a right (but not a duty) to intervene. However, if he does intervene then he
will be responsible for the results of his intervention.
The relevant principles were explained by Lord Wright in Court Line -v- Canadian Transport12:-
"... under Clause 8 of this charter party the Charterers are to load, stow and trim the cargo at their expense.
I think these words necessarily import that the Charterers take into their hands the business of loading and
stowing the cargo. It must follow that they not only relieve the ship of the duty of loading and stowing,
but as between themselves and the Shipowners relieve them [the Shipowners] of liability for bad towage,
except as qualified by the words "under the supervision of the captain"...
These words expressly give the master a right which I think he must in any case have, to supervise the
operations of the Charterers in loading and stowing ... But I think this right is expressly stipulated
not only for the sake of accuracy, but specifically as a limitation of the Charterers" right to control the
stowage. It follows that to the extent that the master exercises supervision and limits the Charterers'
control of the stowage the Charterers' liability will be limited in a corresponding degree."
It was traditionally thought that if the proposed loading, stowage etc were to affect the seaworthiness
of the ship the master has a duty to refuse orders which are likely to render the ship
unseaworthy.13 The dicta of Lords Porter and Wright in the Court Line case have traditionally been
construed to such effect and Steyn J stated in the “Panaghia Tinnou” that the master retained an
“overriding responsibility” for seaworthiness and repeated such view as Lord Steyn in the “Jordan II”,
albeit obiter and in the context of a contract which was subject to the Hague-Visby Rules:
11 “Imvros” (1999)1 Ll. Rep. 848

12 [1940] 67 Lloyd’s at 168
13 Court Line v Canadian Transport (1940 ) AC 934
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“…it is obvious that obligation to make the ship seaworthy under Article III Rule 1 is a fundamental
obligation which the owner cannot transfer to another.”14
However, this view has recently been rejected by two judges at first instance. Langley J held in the
“Imvros”15 and Morrison J held the “ER Hamburg”16 that whilst the master may have had the right to
intervene in order to prevent the ship becoming unseaworthy, he did not have a duty to do so.
Accordingly, the shipowners retained the right to claim an indemnity from the time charterers if they
suffered loss, damage or liability as a result of the stowage ordered by the time charterers.
COMMENT
It is unclear on the present authority exactly when the master has a duty as opposed to a right to refuse
charterers’ orders which affect the safety of the ship. In the context of navigation a distinction has
been drawn between employment orders and seamanship (i.e. the manner in which those orders are
implemented) and it seems to be accepted that the master has a duty to refuse to implement orders
in a manner which affects the safety of the ship. For example, Lord Hobhouse stated in the “Hill
Harmony” that:
“The master remains responsible for the safety of the vessel, her crew and cargo. If an order is given
compliance with which exposes the vessel to a risk which the owners have not agreed to bear, the
master is entitled to refuse to obey it: indeed, as the safe port cases show, in extreme cases, the master
is under an obligation not to obey the order.”17
However, whilst the same considerations would appear to be equally important in the context of the
seaworthiness of the ship, the decisions in the “Imvros” and the “ER Hamburg” do not appear to place
the master under a duty to refuse orders which affect the seaworthiness of the ship. The issue is
important since if the master has a duty to refuse an order or to intervene, and does not do so, then
the cause of any subsequent loss, damage or liability is not the charterers’ orders but the master’s
failure to do what he had a duty to do. Consequently, the shipowners cannot claim an indemnity from
the charterers for such loss etc since the cause of the loss etc was the act or omission of their own
servant. Clearly, further clarification is required from a higher court
6.2. THE INCLUSION OF “AND RESPONSIBILITY”
Clause 8 of NYPE 1946 is often amended to include the words "and responsibility" after "supervision".
Therefore, the amended wording reads as follows:-
“..and Charterers are to load, stow, trim and discharge the cargo under the supervision and responsibility
of the Master.”
The addition of these words is to effect a prima facie transfer of liability for the entire operation of loading,
stowing, trimming and (where the charter is suitably amended) discharging of the cargo back from the
Charterers to the Shipowners18. This prima facie transfer of liability to the Owners covers not only loss or
damage to the cargo but also damage caused to the ship. Furthermore, the prima facie transfer of liability
covers all the operations referred to in Clause 8 including the negligence of the stevedores in planning
14 (2005) 1 Ll. Rep 57 at

15 (1999) 1 Ll. Rep 848
16 (2006) 2 Ll. Rep 66
17 (2001) 1 Ll. Rep 147 at 160
18 “Shinjitsu Maru No.5” [1985] 1 Lloyd’s 568
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those operations as much as the mechanical carrying out of the operations themselves19.
However, this rule is also subject to the principle that if the loss or damage has been caused by
intervention on the part of the Charterers, liability will remain with Charterers for the results of such
intervention. However, to transfer responsibility back to the Charterers, the Charterers must have
intervened themselves. Intervention merely on the part of the stevedores or the shippers is not sufficient
for these purposes20
(The addition of the words "and responsibility" in Clause 8 of the NYPE form also amends the Inter-Club
NYPE Agreement allocation of liability between Owners and Charterers.) [See below]
Sometimes, different parties are made liable by the addition of the word. In the recent case of the Sea
Miror [2015] EWHC 1747 (Comm). Here the commercial court was asked to determine under clause 5
of the standard Synacomex 90 Form whether the first defendant carrier was liable for loss or damage
to cargo caused by inadequate or improper loading or discharging. The clause was as follows:
"Cargo shall be loaded, spout trimmed and/or stowed at the expense and risk of Shippers/Charterers
at the average rate of 1,500 metric tons per weather working day … Cargo shall be discharged at the
expense and risk of Receivers/Charterers at the average rate of 1,500 metric tons per weather working
day …"Stowage shall be under Master's direction and responsibility…".
The court found that ‘at the expense and risk of Shippers/Charterers’ (in the case of loading) and ‘at
the expense and risk of the Receivers/Charterers’ (in the case of discharge) transferred responsibility
for loading and discharge to the charterers and cargo interests. ‘Stowage shall be under Master’s
direction..’ making it clear that responsibility for the stowage remains with the carrier. This again
demonstrates how the drafting of stowage clauses can affect the transfer of responsibility.
7. THE INTER-CLUB AGREEMENT
NB.
The Inter-Club Agreement is to be used in connection with the carriage of general cargo under the
NYPE 1946 and 1993 and ASBATIME 1981 forms of charter. It is not intended to apply to other forms
of trade, particularly oil trading, and is not intended for use with other “dry” charter forms.
In most instances, cargo claims are resolved first between the Carrier and the cargo interests under
the relevant bills of lading or under a sub-voyage charter. However, the Carrier under such contract is
frequently also the Owner or Charterer under a head time charter and disputes then arise between
such parties inter se as to who is to be liable for such claims in the context of the time charter. In view
of the cost and complexity of resolving such disputes the International Group of P&I Clubs agreed in
1970 to draw up the Inter-Club Agreement, the purpose of which was to resolve such disputes with
the minimum of cost and time on a “knock-for-knock” basis which had proved so successful in relation
to motor accident claims.
The philosophy behind the Agreement was described by Kerr LJ as follows:
“…[the Agreement] cuts right across any allocation of functions and responsibilities based on the Hague
19 “Alexandros P” [1986] 1 Lloyd's Rep. 421

20 “Argonaut” [1985] 2 Lloyd’s 216
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Rules…and provides a more or less mechanical apportionment of financial liability which is wholly
independent of these standards of obligation21.”
Accordingly, even if the charter has a clause which also makes it subject to the Hague or Hague-Visby
Rules, then the provisions of those Rules, including the one-year time limit for claims, will not be
applied in resolving indemnity claims between the Owners and Charterers in respect of cargo claims22.
The Agreement is not per se binding on the members of the Clubs; the Clubs merely agree to
recommend to their members that they resolve such claims in accordance with the provisions of the
Agreement. However, in the same way that the Hague or Hague-Visby Rules are made binding on the
parties to charter parties by virtue of the Clause Paramount despite the fact that the Rules themselves
do not apply to charters, it is common these days to see clauses in NYPE charters which oblige the
parties to resolve cargo claims arising under the charter in accordance with the provisions of the
Agreement. When this is done the Agreement is binding directly as between the Owner and the
Charterer23.
EXAMPLE
Cargo claims as between the Owners and the Charterers shall be settled in accordance with the Inter-
Club New York Produce Exchange Agreement of February 1970 as amended, May 1984, or any
subsequent modification or replacement thereof.”
(NB. The current version of the Inter-Club Agreement is that of 1996)
A similar form of “knock for knock” agreement can be found in clause 18 of the GENTIME form of
charter. In many respects this follows the provisions of the Inter-Club Agreement.
The Agreement is detailed and provides in a “rough and ready” manner that unless there are “material
amendments” to the printed provisions of the charter (in which case the Agreement does not apply)
claims caused by unseaworthiness are to be borne 100% by Owners, claims caused by bad stowage
and handling, 100% by Charterers whereas other claims are to be shared by the parties on a 50/50
basis. A “material amendment” is one which “makes the liability as between Owners and Charterers,
for cargo Claims, clear”. However, it is expressly agreed that “the addition of the words “and
responsibility” in clause 8 of the new York Produce Exchange Form 1946…is not a “material
amendment” for the purposes of the Agreement and that the effect of such addition is merely to
amend the allocation of responsibility for “the loading, stowage, lashing, discharge, storage or other
handling of cargo” from 100% on Charterers to a 50/50 basis.
21 “Strathnewton” (1983) 1 Ll. Rep. 225

22 “Benlawers” (1989) 2 Ll. Rep 51
23 “Ion” (1980) 2 Ll. Rep at 248
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Chapter 10
Personal notes:
The Duty to Order the Ship to

Trade Between Safe Ports

Personal notes:
SAFE PORTS
Charterers’ Warranty (i.e. promise) Personal notes:

of Safety
• Many charters include express promises by

charterers that the vessel will trade only to “to one
safe port” or “to one safe berth” or “between safe
ports”.
• Even where there is no express term the law will
frequently (but not always) imply that the charterers
have such a duty.
1
Personal notes:
An Implied Warranty of Safety
Two situations can be distinguished:
• (a) The law will usually imply such a promise of
safety when the charterer is allowed to nominate one
or more unnamed ports within a specified range, e.g.
“ one/two ports East Coast North America”.
• (b) The law will not usually imply such a term when
the ship is ordered to a named port (e.g. “to Hong
Kong”) or possibly, to one or more ports out of a range
of named ports (e.g. “to Swansea or to Cardiff or to
Liverpool”).
Personal notes:
An Implied Warranty of Safety
• The rationale which underpins the distinction is that

by naming the port expressly, the shipowner is in a
position to check safety for himself and to decide
whether or not to accept the risk of sending the ship
there.
• However, if the charterers wish to have the
commercial flexibility to decide where to send the
ship during the charter they must assume the
responsibility of nominating a safe port.
Personal notes:
Express warranty of safety
However!
• If the vessel is to proceed to a named port but the
named port is qualified by the addition of the word
“safe” (e.g. to “one safe port Swansea” or to “one
safe port Cardiff or Liverpool”) then the addition of
the word “safe” constitutes an express promise by
the charterers that the named port(s) is/are safe.
The Archimidis [2007] 2 Lloyd’s Rep 101

The Livanita [2008] 1 Lloyd’s Rep 86
2
Personal notes:
Safe berths
• If the vessel is to proceed expressly to “one safe
berth” the charterer has warranted the safety of
the berth.
• Similarly, if the charterer is to nominate a berth
(without specifying whether the berth is to be
“safe”) at “a safe port” (e.g. “one/two berths at
one safe port East Coast North America”) the safety
of the port encompasses the safety of the berth
and the charterer has warranted the safety of both
the port and the berth.
Personal notes:
Safe berths
• However, If the charterer is to nominate “a safe
berth” at a named port without specifying
whether the port is to be “safe” e.g. “1/2 safe
berths Bandar Abbas” the charterer has not
warranted the safety of the port as a whole or of
the approaches to the port, but has promised that
the berth and its approaches will be free of risks
other than those which affect the port as a whole.
The APJ Priti [1987] 2 Lloyd’s Rep 37.
Personal notes:
Safe berths
If the vessel is to load at a berth to be nominated
by the charterers at a named port without
expressly stating that either the port or the berth
is to be “safe” (e.g. “one/two berths Swansea”)
then so long as the nominated berth has no special
characteristics which distinguish it from other
berths at that port the likelihood is that the
charterer has not warranted the safety of the
berth.
The Reborn [2009] 2 Lloyd’s Rep. 639 C/A
3
Personal notes:
The Nature of the Promise
• If the charter is subject to an express or implied
term as to safety and the charterer orders the
vessel to an unsafe port, then he is in breach of
contract even though he may not in fact be aware
of the dangerous nature of the port.
• Liability is strict as it is in relation to dangerous
goods.
Personal notes:
What is safe?
‘…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.’
The Eastern City [1958] 2 Lloyd’s Rep 127
Personal notes:
“Safe”
1 SB = SAFE APPROACH
• A port can be unsafe for physical or political or legal
reasons or because of deficient systems or
infrastructures.
• Unless the charter provides that the port is to be safe
at all times the port will not be unsafe if the danger is
temporary and avoidable if the vessel waits for a
period of time which is not long enough to frustrate
the contract.
4
Personal notes:
Reasonably safe?
The Ocean Victory [2014] 1 Ll. Rep 59
The chartered vessel suffered damage whilst leaving the Japanese
port of Kashima. In a severe gale, she was forced onto the end of a
breakwater, went aground and later broke apart.
The owners claimed that Kashima had been prospectively unsafe for
a Capesize bulk carrier as there was a risk that such vessels might be
forced to leave port in bad weather, and yet there was no system in
place to ensure that they could do so safely.
Charterers argued that a port could not be said to be unsafe merely
because it did not have a system in place to guard against every
conceivable hazard. Charterers argue that the emphasis should be
on “reasonable safety” and taking of “reasonable precautions”.
The Court rejected charterer’s assertion.
Personal notes:
• The Court found that the port of Kashima was regularly

exposed both to long waves and gale force winds in the
channel approach. On the facts, there was a real as opposed to
fanciful risk that both might occur at the same time. In those
circumstances “ordinary seamanship and navigation” would not
ensure a safe exit from Kashima… “good luck” would also be
required.
• It was also stressed that accepting the charterer’s assertion
would represent an “unwelcomed and inappropriate” measure
of uncertainty in the meaning of the safe port warranty.
Personal notes:
“the relevant period of time”
Safety at the relevant time of call
The relevant period of time is not the date of the (ETA)
charter or the date of nomination but the time
when the vessel, proceeding normally, can be
expected to arrive at and remain at the port in due
course.
5
Personal notes:
“the particular ship”
• The question of safety is one of fact depending on
the particular ship and the particular situation.
• A port may be safe for one ship but unsafe for
another since the particular characteristics of a
particular ship will be very relevant.
Personal notes:
“in the absence of some abnormal
occurrence”
• The warranty is broken only if the danger is a
NO FORCE MAJORE CLAUSE
normal or usual characteristic of the port. RECOGNITION IN ENGLISH LAW
• If the danger is an abnormal occurrence at the port
(i.e. one which does not result from the set-up of
the port), the port is not dangerous in the legal
sense.
Personal notes:
OCEAN VICTORY
“the most important unsafe port case for a generation”
• Mr Justice Teare
• Brand new vessel
• Finished loading at Kashima – waiting to leave
• Bad weather closing in
• Port had system for taking out vessels of certain types
– but not OV
• Hit breakwater – eventually broke in two – total loss
6
Personal notes:
Safe Port?
• Teare J (after full trial of witnesses and experts): no.
Bad set up of port. So not abnormal occurrence
• Court of Appeal: yes

Abnormal occurrence. First time in 35 years
• Supreme Court: ?
March 2016
Personal notes:
“danger which cannot be avoided by good

navigation and seamanship.”
• Whatever the nature of the risk, the port will not be
dangerous if the danger can be avoided by the use of
reasonable care and skill on the part of the master and
crew.
• If more than a reasonable degree of skill is required to
avoid the danger, then the port may be unsafe.
Personal notes:
When does the duty arise?
• If the charter provides for the ship to proceed to a named
port which is warranted to be safe, then the obligation arises
when the charter is signed.
• If the charter provides for the nomination of ports during
the charter, the obligation arises when the port is nominated.
• The legitimacy of the charterers’ order is tested at that time.
7
Personal notes:
The Shipowner’s Rights
• If it appears that the vessel is being ordered to proceed to an
unsafe port contrary to the terms of the charter the owners
are entitled to refuse the order.
• If it appears (at the time that the order is tested) that the
port is safe the vessel must proceed.
• However, if the port subsequently becomes unsafe the
Owners have the right to refuse to proceed further.
Secondary Obligations: Time Personal notes:

Charters
• If a port is safe when the order is first given but becomes
unsafe later, then, in the case of time charters, the charterers
are obliged to issue new orders to proceed to an alternative
safe port.
The Evia (No. 2) (1982) 2 Lloyd’s Rep 367
Secondary Obligations: Voyage Personal notes:

Charters
• It is unclear whether the same principle applies in the case
of voyage charters as the House of Lords in The Evia (No. 2)
declined to consider the issue.
• In many cases the problem is resolved in practise by
reference to provisions which oblige/entitle the vessel to
proceed “or so near thereto as she can safely get”.
• However, if there is no such provision then the charter may
be frustrated.
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Personal notes:
Remedies
• It is unclear whether the safe port provision is a condition,
warranty or intermediate term.
• Two situations need to be considered:
(a) Can the vessel refuse to proceed into the port?; and
(b) What damages are recoverable?
Personal notes:
(a) Can the vessel refuse to proceed
into an unsafe port?
Even if the charterer’s order to proceed
to a port does not constitute a breach of
contract the ship is not obliged to
proceed into that port if the port is in fact
unsafe when the ship arrives.
The Evaggelos [1971] 2 Ll. Rep at 205
Personal notes:
b) What damages are recoverable?
Damages can be recovered for:
• Physical damage
Reardon Smith v Australian Wheat Board
(1956) 1 Ll. Rep 1)
• The cost of avoiding danger
Evans v Bullock (1877) 38 LT 34)
• Detention losses
The Count [2007] 1 Ll. Rep Plus 60
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Novus Actus Interveniens
• If the charterer’s nomination does constitute a breach of
contract but, nevertheless, the master proceeds into an
obviously unsafe port and the ship suffers damage or loss
the owner is not entitled to any damages.
• In such cases the cause of the loss or liability is not the
order of the charterer but the fault or neglect of the
owners’ own servant or agent in failing to perform his
duty.
Larrinaga v The King [1944] 78 LL. Rep 167
Personal notes:
Novus actus interveniens

• HOWEVER, the master is generally given the
benefit of the doubt when he is placed on
the horns of a dilemma as to whether or not
to proceed.
Personal notes:
The Stork [1955] 2 QB 68
• “(The master) is sometimes on the horns of a
dilemma. The material question is, I believe,
whether he acted reasonably….A master who
entered a berth which he knew to be
unsafe…rather than ask for another nomination
and seek compensation might find himself in
trouble. So might a master who sought
compensation for the time lost in sailing back
across the Atlantic because he had not cared to
risk damage to his paintwork.”
10
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
TIME CHARTER MSTERCLASS
11
BIMCO Training
THE DUTY TO ORDER THE SHIP TO TRADE BETWEEN SAFE PORTS
1. Express and Implied Terms as to Safety
Many charters include express terms relating to the safety of the places to which the vessel is to trade.
In such cases, the charterer is held to have promised that the place will be safe for the vessel at the
time discussed below. Such promise is usually evidenced by the addition of the adjective ‘safe’ before
the description of the place, e.g. ‘to one safe port’ or ‘between safe ports’. Indeed, the courts have
confirmed that the same rule applies even when the place has been expressly identified, e.g. ‘one safe
port Swansea’. In that case, the addition of the word ‘safe’ constitutes an express promise by the
charterers that the named port(s) is/are safe (The Archimidis [2007] 2 Lloyd’s Rep 101 and The Lavantia
[2008] 1 Lloyd’s Rep 86).
However, even where there is no express term, the law will frequently (but not always) imply such a
term. Two situations can be distinguished:
(a) The law will usually imply such a term when the charterer is allowed under the charter to order
the ship to trade to one or more unnamed ports or places within a specified range, e.g. ‘East Coast
North America’ (The Evangelos [1971] 2 Lloyd’s Rep 20).
(b) The law will not usually imply such a term when the ship is ordered to a named port (e.g. ‘to
Swansea’) or possibly, to one or more ports out of a range of named ports (e.g. ‘to Swansea or to
Cardiff or to Liverpool’) when the word ‘safe’ is not added before the named port or ports.
The reason for the distinction is that where the port is named, the shipowners have assumed the
responsibility of ascertaining whether the ship can safely trade there. However, if the charterers wish
to retain flexibility by giving themselves the right to nominate a port during the currency of the charter,
then they assume responsibility as to safety since the shipowners cannot do so before the charter is
agreed.
If the charter is subject to an express or implied term as to safety and the charterers order the vessel
to an unsafe port, then they are in breach of contract even though they may not in fact be aware of
the dangerous nature of the port (Lensen v. Anglo-Soviet [1935] 52 Lloyd’s Rep 141). Liability is,
therefore, strict in the same way as it is in relation to dangerous goods. For this reason, many time
charter parties (particularly tanker charters) now provide expressly that the charterers are to be liable
only if they have not exercised due diligence to send the vessel to a safe port or berth.
For example, clause 4 of the Shelltime 4 charter provides that:
Charterers shall exercise due diligence to ensure that the vessel is only employed between and at safe
places (which expression when used in this charter shall include ports, berths, wharves, docks,
anchorages, submarine lines, alongside vessels or lighters, and other locations including locations at
sea) where she can safely lie always afloat. Notwithstanding anything contained in this or any other
clause of this charter, Charterers do not warrant the safety of any place to which they order the vessel
and shall be under no liability in respect thereof except for loss or damage caused by their failure to
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exercise due diligence as aforesaid.
The purpose of the clause is clearly to try to ameliorate the strict liability which would otherwise exist.
However, it appears that if the charterers are to satisfy the courts that they have exercised due
diligence, they must prove that due diligence has been exercised not only by them personally but also
by all their servants and agents. In this regard, a port authority can be considered to be such an agent
provided it is acting in a commercial capacity when giving the relevant order on behalf of the charterers
(The Acina [1998] 1 Lloyd’s Rep 306).
Sometimes, the charter will specify that the ship is to proceed to a berth rather than simply to a port.
If the charter includes an express term as to the safety of the berth (e.g. ‘one/two safe berths
Swansea’) then the charterers have warranted the safety of the berth(s).
Alternatively, if the charter specifies that the vessel is to load at a berth to be nominated by the
charterers at a named port without expressly stating that either the port or the berth is to be ‘safe’
(e.g. ‘one/two berths Swansea’) then so long as the nominated berth has no special characteristics
which distinguish it from other berths at that port the likelihood is that the charterers have not
warranted the safety of the berth (The Reborn [2008] 2 Lloyd’s Rep 828).
However, the situation is often more complicated:
(a) if the charterers are to nominate a berth (without specifying whether the berth is to be ‘safe’)
at “a safe port”, (e.g. ‘one/two berths at one safe port East Coast North America’) then the safety of
the port encompasses the safety of the berth and the charterers have warranted the safety of both
the port and the berth;
(b) on the other hand, if the charterers are to nominate ‘a safe berth’ at a named port (without
specifying whether the port is to be ‘safe’) (e.g. ‘one/two safe berths Swansea’), the charterers have
warranted the safety of the berth and its approaches but not the safety of the port as a whole or of
the approaches to the port.
In the case of The APJ Priti [1987] 2 Lloyd’s Rep 37 the vessel was ordered to ‘1/2 safe berths Bandar
Abbas, 1/2 safe berths Bandar Bushire, 1/2 safe berths Bandar Khomeini in Charterers’ option’ during
the Iran/Iraq war.
The court held that the charterers had not warranted the safety of the approach voyage through the
Gulf war zone to reach the specified ports or that the nominated berth would be free of similar perils
that affect the port as a whole, but had warranted that the berth and its approaches should be free of
marine perils.
3. When Does the Charterer’s Duty to Nominate a Safe Port Arise?
If the charter provides for the ship to proceed to a named port which is warranted to be safe, then the
obligation arises when the charter is signed. However, if the charter gives the charterer the right to
nominate ports during the charter (as will usually be the case in time charters), then the obligation
cannot arise until later when the order to proceed to the port is given. The legitimacy or otherwise of
the order must be judged at that time. However, it must be remembered that the charterers are merely
promising that the port will be safe for the vessel when she gets there in due course. Therefore, if a
reasonable mariner would conclude at the time that the charterers’ order is given that the port will be
unsafe for the vessel when she gets there in due course then the vessel need not comply with the
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order and the shipowners can call on the charterers to give a new legitimate order. However, if a
reasonable prudent mariner would conclude at the time that the charterers’ order is given that the
port will be safe for the vessel when she gets there in due course then the vessel must comply with
the order and proceed to the nominated port. However, if the port subsequently becomes unsafe, the
master has the right to refuse to proceed further (The Kanchenjunga [1990] 1 Lloyd’s Rep 391)
If a port is safe when the order is first given but becomes unsafe later, then, in the case of time charters,
the charterers are obliged in such circumstances to issue new orders to proceed to an alternative safe
port (The Evia (No 2) [1982] 2 Lloyd’s Rep 307). It is unclear whether the same principle applies in the
case of voyage charters as the House of Lords in The Evia (No 2) case declined to consider the issue.
3- What Is ‘Safe’?
Sellers, LJ, in The Eastern City [1958] 2 Lloyd’s Rep 127, at 131, has described the obligation in the
following manner:
A port will not be safe unless, in the relevant 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.
We shall now consider the key aspects of this definition.
a. ‘the particular ship’
The safety of the port is tested in relation to the particular ship since ports may be safe for some ships
but not for others. Therefore, factors such as the size, draft, beam, etc of the ship will be relevant in
that regard and the mere fact that many ships have been able to use the port safely is not conclusive
since such ships may have different characteristics.
b. ‘safe’
Unless the charter provides that the port is to be safe at all times, a port will not be considered
dangerous if the danger is temporary and is avoidable if the vessel waits for a period of time which is
not long enough to frustrate the contract (The Sussex Oak [1950] 2 KB 383). Nevertheless, if it is the
nature of the port that it is regularly affected by perils which are temporary in duration, then that will
not prevent the port from being considered to be dangerous. If, for example, a port is regularly affected
by bad weather which, although temporary in nature, is of such ferocity and unpredictability that a
ship can be trapped inside the port without adequate protection, the port may be unsafe (The Eastern
City [1958] 2 Lloyd’s Rep 127).
A port may be dangerous if there is no adequate checking or warning system or infrastructure at the
port to enable vessels to use it safely. In the case of The Marincki [2003] 2 Lloyd’s Rep 655, a vessel
was ordered by charterers to proceed to a port in Indonesia and sustained serious bottom damage
caused by an underwater obstruction located within the dredged channel which constituted the
designated route into and out of the port. It was held that the port was unsafe because there was no
proper system in place to investigate reports of obstacles in the channel and/or to find and remove
such obstacles and/or to warn vessels in the interim by means of notices to mariners and buoying the
obstruction, that there was an obstacle in the channel. Recently, it was held in The Ocean Victory
[2013] EWHC 2199 (Comm) that absence of a system for ensuring that advice to leave the port due to
a convergence of bad weather events was given only when it was safe to leave the port, meant that
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the port was unsafe.
A port can be unsafe not simply for physical reasons but also for political or legal reasons, particularly
if there is a risk of extended delay, detention, confiscation or ‘blacking’. In the case of Ogden v Graham
(1861) 1 B&S 773, the vessel was to proceed to a port in Chile which was navigationally safe for the
vessel. However, entry to the port required governmental permit and due to an insurrection the
government refused all permits. It was held that the port was unsafe for the vessel if she were to
proceed there without a permit as she would be susceptible to confiscation by the government.
It was argued by the charterers in The Ocean Victory [2013] EWHC 2199 (Comm) that it was adequate
for the relevant port to be “reasonably safe” and a port should be deemed safe if “reasonable
precautions” were taken by the authorities. There, the chartered vessel suffered damage whilst leaving
the Japanese port of Kashima. In a severe gale, she was forced onto the end of a breakwater, went
aground and later broke apart. The owners claimed that Kashima had been prospectively unsafe for a
Capesize bulk carrier as there was a risk that such vessels might be forced to leave port in bad weather,
and yet there was no system in place to ensure that they could do so safely. The Court refused to
qualify the meaning of the word “safe” in the manner asserted by the charterers. It was also stressed
that accepting the charterer’s assertion would represent an “unwelcomed and inappropriate” measure
of uncertainty in the meaning of the safe port warranty. The Court found that the port of Kashima was
regularly exposed both to long waves and gale force winds in the channel approach. On the facts, there
was a real as opposed to fanciful risk that both might occur at the same time. In those circumstances
“ordinary seamanship and navigation” would not ensure a safe exit from Kashima… “good luck” would
also be required.
This decision has now been overturned in the Court of Appeal [2015] EWCA Civ 16 where the Lord
Justices found that although both the long waves and gale force winds in the channel were (separately)
regular occurrences, together they formed an exceptional event. They concluded that the exceptional
nature of the Kashima storm was an ‘abnormal occurrence’ meaning there was no breach of the
charterers’ safe port obligation. The Court also stated that although a danger to a port may be
‘foreseeable’ i.e. it is foreseeable that an event may occur, this does not make it a ‘normal’ event.
The owner has recently obtained permission to appeal this case to the Supreme Court and this will be
heard in March.
c. ‘can reach it, use it and return from it’
The promise of safety is not restricted to the port limits but also encompasses the approaches to and
from the port. This is particularly relevant in the case of river ports since the only way into and out of
the port is by navigating the river. Therefore, if the river passage is unsafe the port is considered to be
unsafe. However, the principle is general and applies equally to non-river ports. The question is one of
fact in each case.
d. ‘in the relevant time’
The relevant time is the time that the vessel will be using the port. Therefore, the charterers’ promise
is that the port will be safe for the vessel at the time that she will be using it. Therefore, the fact that
a port will be unsafe at the date of the charter or at the date that the vessel is delivered to the
charterers under the charter (e.g. because of hostilities) is irrelevant if the hostilities will have ended
by the time that the vessel comes to visit the port in due course. The relevant question is not whether
the port is safe at the moment the order to proceed there is given but whether in the absence of some
abnormal event, the port will be safe for the vessel at the time when, proceeding normally, she can be
expected to arrive at and remain at the port in due course (The Evia (No 2) [1982] 2 Lloyd’s Rep 307).
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e. “in the absence of some abnormal occurrence”
The charterers’ promise is restricted to the usual and normal characteristics of the port. Therefore, if
the danger is an abnormal occurrence at the port (i.e. one which a reasonable person would not
normally expect at that port), then even though the port is unsafe in fact, the port is not dangerous in
the legal sense. For example, in the case of The Evia (No 2) [1982] 2 Lloyd’s Rep 307, a vessel was
ordered to a port at a time of peace but was detained in the port due to the sudden and unexpected
outbreak of hostilities. Since the hostilities were not a normal characteristic of the port the charterers
were not held to be in breach of contract.
However, if another vessel were to be subsequently ordered to the same port after the hostilities had
continued for some time then the hostilities would probably not be considered to be abnormal and
the port would probably be considered to be legally unsafe.
f. ‘without, …., being exposed to danger which cannot be avoided by good navigation and
seamanship.’
Whatever be the nature of the danger, the port will not be dangerous if the danger can be avoided by
the use of reasonable care and skill on the part of the master and crew. However, if more than a
reasonable degree of skill is required to avoid the danger, then the port may be unsafe (The Polyglory
[1977] 2 Lloyd’s Rep 336).
4. Damages
If the charterers are in breach of their obligation under the charterparty to nominate a safe port (or, if
applicable, their duty to exercise due diligence to do so) then, subject to the usual rules relating to
causation, remoteness and forseeability, the shipowners are entitled to claim damages for losses
suffered by them as a result. Recoverable damages may be for physical damage to the ship (Reardon
Smith v Australian Wheat Board (1956) 1 Lloyd’s Rep 1) or for the cost of avoidance measures (Evans
v Bullock (1877) 38 LT 34) or for any delay caused to the ship (The Count [2007] 1 Lloyd’s Rep 60)). The
relevant delay need not be sufficiently long to frustrate the charter.
However, if the unsafety of the port is obvious but the master nevertheless proceeds into the port,
then his act may constitute a novus actus interveniens which breaks the chain of causation and debars
the right of the shipowners to claim damages (Kanchenjunga [1990] 1 Lloyd’s Rep 391). However, if
the danger is not obvious, or if the danger is slight so that the master is placed on the horns of a
dilemma whether to proceed into the port and incur some slight damage, or to refuse to proceed and
thereby frustrate the charterers’ commercial expectations of the vessel, the master’s act may not
constitute a novus actus interveniens, thereby preserving the shipowners’ right to claim damages. The
question in each case is whether the master acted reasonably in all the circumstances.
In the case of The Stork [1955] 2 QB 68, Devlin J explained the principle as follows:
(The master) is sometimes on the horns of a dilemma. The material question is, I believe, whether he
acted reasonably….A master who entered a berth which he knew to be unsafe…rather than ask for
another nomination and seek compensation might find himself in trouble. So might a master who
sought compensation for the time lost in sailing back across the Atlantic because he had not cared to
risk damage to his paintwork.
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5. Limitation of the Charterers’ Liability
The liability of a charterer for the shipment of dangerous goods or for sending a vessel to an unsafe
port is frequently strict and such liability can result in very substantial damages, e.g. damage to or loss
of the ship and/or cargo on board, reimbursement of the shipowners’ pollution liabilities etc.
Therefore, the charterer will wish to limit his liability for such claims. However, in order to qualify for
the right to limit, a person seeking such right must prove that he is a ‘person entitled to limit’ and the
claim is of the type for which limitation is allowed. A charterer is not entitled to limit his liability for
damage caused to the vessel as a result of sending her to an unsafe port (The CMA Djakarta [2004] 1
Lloyd’s Rep 460).
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Chapter 11
Personal notes:
The Duty not to Ship

Dangerous oods

Personal notes:
THE DUTIES
• The person who ships dangerous goods has
duties under:-
• the criminal law; and

• the civil law
Personal notes:
CRIMINAL LIABILITY
The International Convention for the Safety of Life
at Sea (SOLAS) 1974 requires its members to give
mandatory effect to the IMD Dangerous oods
Code, breach of which attracts a substantial fine
and possible detention of the ship.
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Personal notes:
CIVIL LIABILITY
Civil liability can arise EITHER:
a) as a result of express terms; or

b) by implication of law.
Personal notes:
E PRESS TERMS
• If the charter forbids the shipment of expressly identified
goods or “dangerous goods”:-
• it is a breach of an intermediate term to tender such
goods for shipment entitling the carrier to terminate the
contract if the breach is sufficiently serious and/or to
claim damages.
• the breach is not waived even if the master consents to
the carriage with knowledge of the cargo’s nature.
Chandris v Isbrandtsen-Moller (1951) 1 KB 240
Personal notes:
THE IMPLIED DUTY
• If there is no express term in the contract, the
shipper (or charterer in the case of a charter
party), impliedly undertakes not to ship
dangerous goods without first notifying the
carrier of their particular characteristics.
• However, such notice is not required when the

carrier (or his servants or agents) knew or ought
to have known of the dangerous nature of the
cargo.
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Personal notes:
THE IMPLIED DUTY
• Two questions need to be considered:-
1. What is “dangerous”?
and
2. When does notice need to be given?
Personal notes:
1. WHAT IS ”DAN EROUS”?
Personal notes:
WHAT IS “DAN EROUS”?
• Some statutes define what is “dangerous” for the

purposes of that statute.
e.g. Reg. 1(2) of MS (Dangerous oods) Regulations
1981 define “dangerous goods” as:
“goo s class f e n the l e oo the o e
or any other l cat on s ec f e elo ”
• However, there is no definition at common law.
The question is one of fact in each case.
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Personal notes:
oods can be “dangerous” either:-
• because they are inherently dangerous e.g.

explosives
or
• because they can become dangerous if
moved to a different location. e.g. pond coal
“Athanasia Comninos” (1990) 1 Ll. Rep. 277
Personal notes:
Something is “ angero s” if it poses a physical

threat to any person or object other than itself,
e.g. to human life or to the vessel or to other
cargo carried on the vessel.
“ iannis NK” (1998) 1 LL.Rep.337
Personal notes:
• A cargo which causes the vessel or other cargo to
be confiscated, detained or “blacked” can be
dangerous albeit that it causes no direct physical
threat to the ship or her crew or other cargo.
“ iannis NK” (1998) 1 Ll. Rep.337
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Personal notes:
• A cargo can also be dangerous in a legal or political
sense even though it is inherently safe in a physical
sense if it causes detention or extraordinary delay or
expenditure as a result of legal or political
impediments.
Mitchel Cotts v Steel (1916) 2 KB 610
• However, where such detention, delay or

expenditure is the result of commercial factors the
cargo is not considered dangerous
“Darye Radhe” (2009) 2 Ll. Rep 175.
Personal notes:
2. WHEN DOES NOTICE NEED TO BE

IVEN?
Personal notes:
THE CRUCIAL ISSUE
• The crucial issue is not whether the cargo is
“dangerous” in the popular sense but whether
the carrier knew of the risk and accepted it.
• Mustill J said in “Athanasia Comninos” (1990) 1

Ll. Rep. at 283 that the relevant question was:
“ hether on the tr e constr ct on of the
contract the r s s n ol e n th s art c lar
sh ent ere r s s h ch the sh o ners
contracte to ear.”
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WHAT IS THE CARRIER DEEMED TO Personal notes:
KNOW ?
The carrier is not expected to have the knowledge of an
expert scientist but is expected to avail himself of all the
information which is available to an ordinarily experienced
and skilful carrier.
Brass v Maitland (1856) 6 E B 470
WHAT IS THE CARRIER DEEMED TO Personal notes:

KNOW ?
If a cargo is known to be potentially ha ardous
but has a special characteristic which makes it
more than normally ha ardous, the shipper or
charterer has a duty to notify the carrier of this
additional ha ard.
Micada v Texim (1968) 2 Ll. Rep. 57
(The shipment of “a et olf n a ry shee s
cloth ng”
“Aconagua” (2011) 1 Lloyd’s Rep 683
Personal notes:
3. THE BASIS OF LIABILITY
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Personal notes:
LIABILITY IS STRICT !
• It is not necessary to establish negligence on the part of
the shipper/charterer.
• The mere shipment of goods without giving notice of
their dangerous nature establishes the liability.
• If no notice is given the shipper/charterer is liable even if
he has no knowledge of the dangerous nature of the
goods or even if he had no means of ascertaining its
dangerous nature.
“ iannis NK” (1998) 1 Ll. Rep. at 344-5
Personal notes:
WHY STRICT LIABILITY ?
• The purpose of notice is to enable the carrier to
either reject the cargo or to decide what
precautions he should take to enable him to carry
it safely.
• If neither the shipper/charterer nor the carrier is
aware of the true nature of the cargo, the court
has to decide which of two innocent parties
should bear the risk.
• The court has decided that the risk should fall on
the shipper/charterer as the party which should
have most knowledge of the nature of the cargo.
Personal notes:
LIABILITY UNDER THE HA UE AND

HA UE-VISBY RULES
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Personal notes:
LIABILITY IS STRICT !
• The shipper’s liability is strict as is the case at
common law.
“ iannis NK” (1998) ! Ll. Rep. 337
NB! This also now appears to be the position in

the USA.
Senator Lines v Sunway (2002) Jr.291F.2nd 145
Personal notes:
HA UE/HA UE-VISBY RULES:
ART IV RULE 6
“ oods of an inflammable, explosive or dangerous nature to the
shipment whereof the carrier, master or agent of the carrier has
not consented with knowledge of their nature and character,
may at any time before discharge be landed at any place, or
destroyed or rendered innocuous by the carrier without
compensation and the shipper of such goods shall be liable for
all damages and expenses directly or indirectly arising out of or
resulting from such shipment. If any such goods shipped with
such knowledge and consent shall become a danger to the ship
or cargo, they may in like manner be landed at any place, or
destroyed or rendered innocuous by the carrier without liability
on the part of the carrier except to general average if any.”
Personal notes:
WHAT IS “DAN EROUS” ?
• The Rule applies to “goods of an inflammable,
explosive or dangerous nature.”
• The words “dangerous nature” are given a

broad interpretation and not construed
ejusdem generis to “inflammable, explosive.”
“ iannis NK” (1998) 1 Ll. Rep. 337
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Personal notes:
ARTICLE IV RULE 6
The Rule deals with two issues:-
1. What can the carrier do with the goods during

the course of the voyage;
and
2. Who bears the costs of remedial action.
Personal notes:
ARTICLE IV RULE 6
• The rule draws a distinction between :-
• The carriage of goods to which the carrier did not

consent with knowledge of their dangerous
character; and
• The carriage of cargo to which the carrier did

consent with such knowledge.
Personal notes:
THE CARRIER’S RI HTS DURIN THE
VOYA E
• In both scenarios the carrier is entitled to avoid or
diminish the risk by landing or rendering innocuous
or even destroying the cargo.
• But the carrier should remember that he also has a
continuing duty under Article III Rule 2 to “properly
and carefully care …for the cargo.”
• Therefore, the action taken must be proportionate
to the risk.
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THE CARRIER’S RI HTS DURIN
Personal notes:
THE VOYA E
• When the carrier did not have knowledge of the dangerous
character when he consented to the carriage, he can take
remedial action “at any time before discharge” and even
before the goods actually cause damage.
• However, when the carrier did have knowledge of the

dangerous character when he consented to the carriage, he
can take remedial action only when the goods “become a
danger to the ship or cargo.”
Personal notes:
WHO BEARS THE COST OF
REMEDIAL ACTION ? (1)
• If the goods have not been shipped with the
consent and knowledge of the carrier:
• the carrier is not liable to the goods’ owners for
the damage or loss caused to the goods by the
(reasonable?) action taken by him; but
• the shipper is liable to indemnify the carrier
against any expenses or damages that he may
have suffered as a result of the shipment, whether
such damages or expenses result directly or
indirectly from the shipment.
WHO BEARS THE COST OF

Personal notes:
REMEDIAL ACTION ? (2)
• If the goods have been shipped with the consent
and knowledge of the carrier then:-
• neither party is liable to the other in damages for
losses or expenses incurred in rendering the cargo
harmless; but
• each party may have to contribute in general
average to losses or expenditure incurred by the
other party.
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Personal notes:
4. WHO IS LIABLE?
Personal notes:
1. THE PERSON WHO SHIPS THE
OODS
The person who ships the goods (shipper or

charterer) is liable for the shipment of dangerous
goods
2. A HOLDER IN DUE COURSE OF A Personal notes:

BILL OF LADIN
• S.3 (3) of CO SA 1992 states that the shipper remains liable
even after he transfers the bill of lading to a holder in due
course
However!
• S. 3 (1) states that a holder in due course of the bill would

also be liable in addition to the shipper if he took certain
steps.
“ iannis NK” (1998) 1 Ll .Rep at 343
11
Personal notes:
CO SA 1992, SECTION 3
“(1) Where…the person in whom rights are vested by virtue of (section 1(1))
a) takes or demands delivery from the carrier of any of the goods…;

b) makes a claim under the contract of carriage against the carrier in respect of any of those
goods;
that person shall (by virtue of taking or demanding delivery or making the
claim…) become subject to the same liabilities under that contract as if he had
been a party to that contract.
(3) This section, so far as it imposes liabilities under any contract on any
person, shall be without prejudice to the liabilities under the contract of any
person as an original party to the contract.”
Personal notes:
5. LIMITATION OF LIABILITY
Personal notes:
THE RI HT TO LIMIT LIABILITY

The right to limit liability is available only if the
right exists under the Limitation Conventions.
12
Personal notes:
HA UE AND HA UE-VISBY RULES
• The only party entitled to limit its liability under
Article IV Rule 5 of the Rules is the “Carrier.”
• Article 1 (a) defines the “carrier” as follows:

“ arr er” ncl es the o ner or the charterer
ho enters nto a contract of carr age th the
sh er.”
Personal notes:
THE 1976 LIMITATION CONVENTION
Chapter 1 - The Right of Limitation
Article 1 : Persons entitled to limit liability
1. Shipowners and salvors, as hereinafter defined

may limit their liability in accordance with the
rules of this Convention for claims set out in
Article 2.
2. The term “shipowner” shall mean the owner,
charterer, manager and operator of a seagoing
ship.
Personal notes:
SHIPPER OR LAWFUL HOLDER IN
DUE COURSE
Neither a shipper nor a lawful holder of the bill

of lading in due course is a “ erson ent tle to
l t l a l ty” under Article 1 of the 1976
Limitation Convention.
13
Personal notes:
CHARTERER
• A charterer is a “person entitled to limit liability”

under Article 1(2) of the 1976 Convention).
• It was also conceded in “MSC Napoli” that this
includes a slot charterer.
HOWEVER !
Is a claim for the shipment of dangerous goods or
for having ordered the ship to an unsafe port a
claim which is “subject to limitation” under Article
2 of the Convention ?
Personal notes:
THE 1976 LIMITATION CONVENTION
Article 2 : Claims subject to limitation
1 (a) Claims in respect of loss of life or personal

injury or loss of or damage to property (including
damage to harbour works, basins and waterways
and aids to navigation), occurring on board or in
direct connection with the operation of the ship
or with salvage operations, and consequential
loss resulting therefrom.
CAN A CHARTERER LIMIT HIS

Personal notes:
LIABILITY FOR CAUSIN DAMA E TO
THE SHIP?
NO !
A charterer cannot limit his liability for claims
brought against him by the ship for damage to
the ship since the ship (the tonnage of which
determines the limitation fund) is not
“property” for the purposes of article 2 of the
Convention.
“CMA Djakarta” (2004) 1 Ll. Rep.
14
Personal notes:
CONCLUSION
• A shipper, charterer or lawful holder of the bill

of lading in due course usually has strict
liability for the shipment of dangerous goods
or for having ordered the vessel to an unsafe
port.
• None of these parties are able to limit their

liability for loss or damage caused to the ship
as a result of such shipment.
Personal notes:
6. DAN EROUS CAR O AND

UNSEAWORTHINESS
Personal notes:
NB !
A ship which has already shipped a dangerous
cargo may be unseaworthy in relation to the
shipment of subsequent cargoes because of the
presence on board of the first cargo.
15
Personal notes:
“KAPITAN SAKHAROV”
“The vessel was not fit to withstand the ordinary
incidents of the voyage with it (Isopentane)
stowed under deck because it might itself catch
fire, or if another fire broke out, it would be
likely to exacerbate it.”
per Clarke J (Upheld by C/A in (2002) 2 Ll. Rep. at
266)
THE DUTY TO E ERCISE DUE Personal notes:

DILI ENCE
Hague/Hague-Visby Rules
Article III
1. The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to:-
(a) Make the ship seaworthy.
(c) Make the holds, refrigerating and cool chambers,
and all other parts of the ship in which goods are
carried, fit and safe for their reception, carriage and
preservation.

DILI ENCE
• The IMD Code sets out a detailed guide to the

packing, labelling, stowage and transportation of
dangerous cargo.
• The stowage of known dangerous cargo contrary to
the Code in a confined space without ventilation is
a breach of article III Rule 1
“Kapitan Sakharov” (2000) 2 Ll. Rep at 268
16
DILI ENCE
However!
A carrier is not responsible for the misconduct of a
shipper in failing to declare that a sealed container
contains dangerous cargo and the carrier is not
guilty of a lack of due diligence if such container is
wrongly stowed and causes damage.
“Kapitan Sakharov” (2000) 2 Ll. Rep at 273
Personal notes:
A RECENT E AMPLE
• con agua
Court of Appeal
• Container of calcium hypochlorite – exploded. Fire –
crew abandoned.
• Head charterer CSAV settled with Owner S 27m.
Claimed reimbursement from shippers.
• Container stowed next to bunker tanks. Chief
Engineer heated bunkers.
Personal notes:
• Shippers: crew negligence

• Owners: not negligence
• Owners: dangerous cargo – we could not have
known – rogue batch
• Shippers: not rogue batch – and even if so, not the
cause of the explosion.
17
Personal notes:
Findings:
• Negligence not proven
• Rogue batch proven
• Shippers liable
• If negligence had been proven, explosion would have
been mix of dangerous cargo and crew negligence.
• If so, no indemnity recovery under Hague Rules
Article IV Rule 6.
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
18
BIMCO Training
THE DUTY NOT TO SHIP DANGEROUS GOODS
1. WHAT IS “DANGEROUS”?
Whilst some regulations1 define what is considered to be “dangerous” for the purposes of that
particular statute, there is no definition at common law. The question is one of fact in each case but
there are some guidelines.
A cargo is “dangerous” if it poses a threat to any person or object other than itself.2 Therefore, it is
dangerous if it poses a threat to human life or to the vessel or to other cargo carried on the vessel3 or
to the environment.
Goods may be “dangerous” either because they are inherently dangerous (such as explosives) or
because they have a propensity to become dangerous in certain circumstances or situations (for
example, pond coal which can self-ignite when lifted from water).
In most cases a cargo is dangerous if it poses a direct or indirect physical threat4.
Example
The “Giannis NK” shipped consignments of ground nut pellets and wheat middlings from West Africa
to the Dominican Republic and Puerto Rico. The ground nut cargo loaded into one hold was at all times
infested with Khapra Beetle which is a serious agricultural pest. When this was discovered in the
Dominican Republic, the vessel was ordered to sail without having discharged her cargo. She moved
to Puerto Rico and the USDA again refused to allow either of the cargoes to be discharged and ordered
the vessel to leave US waters. Finally, the cargo was jettisoned and the owners of the ship sought to
recover from the shippers of the ground nut cargo all the losses and expenses which they had incurred
as a result of the shipment.
The House of Lords held that the question to ask was whether the cargo presented a danger to some
object other than itself and concluded that from the moment of shipment, the ground nut cargo
subjected the vessel and any other cargo on board to the perils of detention and jettison and that
accordingly, the cargo was dangerous..
However, a cargo can be dangerous not simply as a result of physical reasons but also if it subjects the
ship, crew, cargo or other property to the risk of delay, detention or extraordinary expenditure.
However, it seems that such factors are relevant only if the delay, detention or expenditure is the result
of legal or political restrictions e.g. as a result of import regulations, government embargo or political
1 For example, Regulation 1(2) of the Merchant Shipping (Dangerous Goods) Regulations 1981 which defines “dangerous
goods” as: “…goods classified in the Blue Book, the IMDG Code or any other IMO publication specified below…”
2 The Giannis NK [1998] 1 Lloyd’s Rep 337.
3
The Giannis NK [1998] 1 Lloyd’s Rep 337.
4 If the Rotterdam Rules come into force then the definition will be extended to include danger to the environment. See Article 15.
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“blacking.”5 However, if such delay or detention is the result of restrictions which are merely
commercial in nature then it has been held that this does not render the cargo dangerous.
Example
In the case of the “Darye Radhe”6 two cargoes (soya bean meal pellets and maize) were loaded on
board a vessel in Brazil for carriage to Iran. A number of live rats were introduced with the soya bean
cargo during the loading and the Brazilian authorities ordered a routine fumigation of the holds. The
claimant charterers accepted that it was unlikely that any rats would have remained alive after the
fumigation but considered that the likelihood that the cargo could be rejected by the Iranian receivers
if some live rats were discovered during the discharge was too great to ignore. Therefore, although the
vessel had originally planned to proceed to Iran via the Cape, she was diverted to Lisbon where some
of the cargo was discharged, re-inspected and the entire cargo was fumigated once again. The extra
costs and expenses incurred by the claimant charterers as a result exceeded $2 million and the
charterers claimed such sum from the shippers of the soya bean cargo as damages on the basis that
these shippers had shipped a dangerous cargo.
Arbitrators found that since there was no physical danger to the ship or the other cargo and since the
import of a cargo which included some dead rats did not contravene local law at the discharge port it
could not be said that the cargo was dangerous. The English court agreed with this conclusion on
appeal.
2. THE BASIS OF LIABILITY
A person who causes dangerous cargoes to be shipped may be in breach of both the criminal and the
civil law. A breach of the criminal law attracts a substantial fine and possible detention of the ship7.
Although primarily aimed at ship operators the Code applies to anyone engaged in the carriage of
hazardous cargoes.
Such persons also have duties both at common law and under the Hague or Hague-Visby Rules (when
such Rules apply) and will be liable under the civil law for such breaches8.
3. COMMERCIAL LIABILITY
The charterers’ duty at common law may be either express or implied.
a. THE EXPRESS DUTY
Many charters expressly forbid the shipment of certain specific types of goods or use more general
words such as “No injurious, inflammable or dangerous goods to be shipped”.
EXAMPLE
5 Mitchel Cotts v Steel [1916] 2 KB 610.

6 The Darye Radhe (2009) 2 Ll. Rep. 175
7
Pursuant to the International Convention for the Safety of Life at Sea (SOLAS) 1974 and the IMDG Dangerous Goods Code.
8Itis important to remember in the context of a bill of lading that both the shipper and a holder in due course of the bill may
be liable to the shipowner for damage or loss caused to the ship by the shipment of dangerous cargo. This is the result of
section 3(1) of the Carriage of Goods by Sea Act 1992 which makes a person to whom the bill is transferred liable for losses or
liabilities caused by the shipper if the holder in due course either takes delivery of the cargo or makes a formal claim against
the carrier. For further details see The Berge Sisar [2001] 1 Lloyd’s Rep 663 and The Ythan [2006] 1 Lloyd’s Rep 457.
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Clause 3 of the Baltime 1939 (Revised 2000) charter provides that:
“No live stock nor injurious, inflammable or dangerous goods (such as acids, explosives, calcium
carbide, ferro silicone, naptha, motor spirit, tar or any of their products) shall be shipped.”
Such terms are considered to be conditions, the breach of which usually entitles the shipowner to
terminate the charter and/or claim damages. Therefore, where there is an express clause, the question
is one of fact; have or have not such goods been shipped? If so, there is a breach of condition.9
b. THE IMPLIED DUTY
If there is no express term in the charter, the duty is different. The relevant question is not whether
the cargo is or is not “dangerous” in the popular sense but:
“…whether on the true construction of the contract, the risks involved in this particular shipment
were risks which the (shipowners) contracted to bear.”10
The charterers impliedly undertake not to ship dangerous goods without first notifying the shipowners
of the particular characteristics of that cargo. However, notice is not required when the shipowners
or their servants or agents knew or ought to have known in any event of the dangerous nature of the
goods. In determining whether or not the shipowners or their representatives should have the
requisite knowledge, the courts recognise that the shipowners are not expected to have the
knowledge of an expert scientist. However, they are expected to avail themselves of all the
information which is available to an ordinarily experienced and skilful mariner and to have all the
knowledge which such information would provide.11 Accordingly, if a cargo is known to be potentially
hazardous but has a special characteristic which makes it more than normally hazardous, the
charterers need not inform the carrier of the usual characteristics of the cargo but have a duty to notify
the carrier of the additional hazard.
Example
In Micada v Texim12 the charterers ordered the vessel to load iron ore concentrate. The characteristics
of such cargo are well known but it is not normally necessary to use shifting boards to stow the cargo.
However, this particular cargo had a high moisture content which would result in substantial
movement of the cargo in stow during the voyage unless shifting boards were used. The charterers
failed to inform the shipowners of the high moisture content. Donaldson J said:
“The danger consisted in the fact that the cargo was not what it seemed to be. The master…had
proffered to him what one might describe as a non-shifting board cargo and it was offered, as it were,
labelled as a non-shifting board cargo. In fact we now know that it was, at least in part, a shifting
board cargo and as to part it may not have been loadable at all. In a word, what he was being offered
was a wet wolf in a dry sheep’s clothing and there was nothing to put him on notice that the cargo was
something radically and fundamentally different from that which it appeared to be.”
c. THE NATURE OF THE LIABILITY
9 See Chandris v Isbrandtsen-Moller [1951] 1 KB 24 and Amphion [1991] 2 Lloyd’s Rep 101.
10 Per Mustill J in The Athanasia Comninos [1990] 1 Lloyd’s Rep at 283.
11
Brass v Maitland (1856) 6 E&B 470.
12 Micada v Texim [1968] 2 Lloyd’s Rep 57.
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Liability for breach of the implied duty is strict13. Therefore, the charterers are liable even if they have
no knowledge of the dangerous nature of the goods, or even if they had no means of ascertaining its
dangerous nature.14 In such circumstances, the law has to choose between two innocent parties and
the courts have determined that the risk lies with the charterer as the party which is most likely to
have most knowledge of the characteristics of the cargo.
4. THE HAGUE AND HAGUE-VISBY RULES
If the Rules are incorporated by agreement, then Article IV Rule 6 will apply. This Rule provides that:
“Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier,
master or agent of the carrier has not consented with knowledge of their nature and character, may at
any time before discharge be landed at any place, or destroyed or rendered innocuous by the carrier
without compensation and the shipper of such goods shall be liable for all damages and expenses
directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such
knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed
at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the
carrier except to general average, if any.”
The words “dangerous nature” are given a broad interpretation and are not construed ejusdem generis
with the preceding words.15 Furthermore, it need not be shown that the cargo poses a direct physical
danger to the vessel or other cargo. Lord Steyn said in The Giannis NK that:
“Secondly, it would be wrong to detract from the generality and width of the expression ‘goods
of...[a] dangerous nature’ by importing the suggested restriction that the goods must by themselves,
or by reason of their inherent properties, pose a danger to the ship or other cargo. For my part I would
resist any temptation to substitute for the ordinary and non-technical expression ‘goods...of a
dangerous nature’ any other formulation.”
As at common law the liability of the charterer for the shipment of such goods is strict.
However, the following points arise in relation to the Rule:
(i) The Rule draws a distinction between:

(a) the carriage of goods, the dangerous nature of which was not known to the carrier when he
agreed to carry them; and
(b) the carriage of goods, the dangerous nature of which was known to the carrier when he agreed
to carry them.
(ii) In the case of scenario (a) the carrier is entitled to land or render innocuous or even destroy the
cargo as soon as he learns of its dangerous nature whereas in the case of scenario (b) he can do so only
if the goods actually “become a danger to the ship or the cargo”.
(However, it is probable that in both cases the carrier must only take remedial action which is
proportionate to the danger since he also has an on-going duty under Article III Rule 2 to “properly and
carefully…care for” the cargo.)
13 After earlier debate this now also appears to be the position under US law. See Senator Lines v Sunway (2002) Jr.291F.2nd 145
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(iii) The question of who is to bear the cost of such acts depends on whether the cargo has been
shipped with the knowledge and consent of the carrier.
(a) If the goods have not been shipped with the consent and knowledge of the carrier then:
• the carrier is not liable to the goods owner for the damage or loss caused to the goods by the
action taken by him to avoid or diminish the risk; and
• the shipper is liable to indemnify the carrier against any expenses or damages that he may have
suffered as a result of the shipment, whether such damages or expenses result directly or indirectly
from the shipment.
(b) If the goods have been shipped with the consent and knowledge of the carrier then:
• neither party is liable to the other in damages for losses or expenses incurred in rendering the
cargo harmless; but
• the parties may have to contribute in general average to losses or expenditure incurred by the
other party.
5. HAGUE RULES: DNGEROUS GOODS AND NEGLIGENT STOWAGE – A TRICKY COMBINATION
Shipowners at one end and cargo Charterers at the other end will see things differently when there is
an accident involving a potentially dangerous cargo. The shipowner will say that he did everything
correctly to keep it safely on board, and that if it was risky then he did not know about the particular
problem. The Charterer will say if he can, that the cause of the accident was not the quality or
characteristics of the cargo but some sort of negligence in its stowage or carriage.
Sometimes the root cause will be the failure by the Owners to maintain the condition of the critical
part of the ship (the holds or equipment) properly, or some other form of unseaworthiness. More
often it will be a problem regarding stowage.
This difficult combination came to light recently in the Aconcagua, a case which went to the
Commercial Court in 2009 and then to the Court of Appeal in 2010. It was the first dangerous goods
case to deal directly with a carrier’s right to recover an indemnity under the Hague Rules where the
loss potentially arose from a combination of the shipment of a dangerous cargo and a breach of the
carrier’s obligation to stow and carry the cargo properly.
The Aconcagua was carrying a container of calcium hypochlorite. It was a dangerous cargo and had
been declared as such. The relevant code required the cargo to be stowed away from heat sources.
But it was stowed in the position where it was surrounded on three sides by a bunker tank. And the
bunker tank was heated during the voyage.
The container exploded. The resulting fire was so great that the crew had to abandon ship. There was
widespread damage to the vessel and the cargo.The ship was on time charter to CSAV. The case was
settled, with CSAV paying the shipowners US$28m.The Court case concerned a sort of indemnity claim
by CSAV against their shippers, Sinochem. The whole case was re-opened. CSAV said that the cargo
was abnormally risky. It was a rogue batch from the suppliers. CSAV did not know about it and couldn’t
have known. Sinochem said no the real cause of the explosion was negligent stowage. The Chief
Engineer should not have ordered the heating of the bunkers. Each side said that the other’s case had
no real bearing on liability.
In a ruling upheld by the Court of Appeal the judge found:
a) the cargo was a rogue batch. CSAV couldn’t have known this when they agreed to carry it.
Everyone knew the cargo was dangerous, but only in the normal sense;
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b) the Chief Officer should have assessed the wisdom of heating the bunker tank with the cargo
next to it. But even if this was negligent, Sinochem could not show that it was the cause or a
cause of the explosion. But:
c) if they had been able to show negligence – if the explosion had been caused by a mixture of
the shipment of dangerous goods and the negligent heating of the bunker tanks - then CSAV
would not have been able to recover an indemnity under the Hague Rules. Article IV Rule 6
only operates if there is no causative negligence by the Claimant. The casualty would have
been caused in part by the operation of a non-excepted peril for which CSAV was responsible.
And that was enough to defeat a claim.
Note that if the Rotterdam Rules had been in force by then (they were ratified by various states just
after the hearing, in September 2009) then the outcome would have been different. Under the
Rotterdam Rules the carrier has to exercise due diligence not only at the beginning of the voyage but
during it, and not only to make the ship seaworthy but to keep it that way. He cannot avoid liability
simply because the event which causes the loss or damage has occurred during the voyage. And there
is no defence of nautical fault. So the negligence of the Master or crew would not have protected the
carrier.
6. LIMITATION OF LIABILITY
The claims which arise as a result of the shipment of dangerous goods are often for very large sums
and, in view of the strict liability which is imposed by law, Charterers often have no defence to such
claims. Consequently, they may well be anxious to limit their liability. However, whilst a charterer is a
“person entitled to limit liability” under Article 1 of the 1976 Limitation Convention., charterers are not
entitled to limit their liability for damage caused to the vessel as such a claim is not a claim which is
“subject to limitation” under Article 2 of the Convention16.
16
CMA Djakarta (2004) 1 Ll. Rep.
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Personal notes:
The Duty to Provide a

Seaworthy Ship and to Care
for the Cargo

Personal notes:
Owners’ Obligations
Personal notes:
The Duty to Provide A Seaworthy Ship
• Most charter parties provide expressly that the
vessel must be seaworthy but they may not
mention seaworthiness specifically.
e.g. clause 2.1 of BPTIME
“Upon delivery the vessel shall be tight, staunch
and strong and in every way fit for service…”
1
Personal notes:
• If there is no express seaworthiness provision, the

duty to provide such a ship is, nevertheless,
implied at law.
• We shall consider the meaning and scope of this

obligation in common law and then will make
references to contemporary charterparty forms to
analyse how the duty has been modified by
express agreement.
What is seaworthiness? Personal notes:

The classic test of whether or not a vessel is in fact
seaworthy was stated by Scrutton LJ in FC Bradley Sons
v Federal Steam Navigation Co (1926) 24 Ll. Rep 446
namely:
“The ship must have that degree of fitness which an

ordinary careful owner would require his vessel to have
at the commencement of her voyage having regard to all
the probable circumstances of it. Would a prudent
owner have required that it (the defect) should be made
good before sending his ship to sea, had he known of it?”
Personal notes:
The standard of seaworthiness
required is relative
It depends on various factors such as:
• The time of the year

• The nature of cargo to be carried
• The nature of the voyage undertaken
• The technological developments
2
Personal notes:
The obligation is a far-reaching one
Extends beyond the physical condition of the

vessel to factors such as:
• Competence of the crew ( he ras an rea [2002] EWHC 118)
• Adequacy of the crew ( he er y [1985] 2 Lloyd’s Rep 325)
• Navigational aids (e.g. compass, charts) ( he ar on [1984] AC 325)
• Loading (loading having an impact on the safety of the vessel
( th ogg o v. lac ea alt c [1940] AC 997)
• Compliance with safety regulations (ISM Code, ISPS Code)
Personal notes:
The obligation in carriage contracts also relates to
the ‘cargoworthiness’ of the vessel, i.e. the vessel
should be fit to receive the cargo to be carried (the
refrigerators must be in good working condition if
fro en food is to be carried, the hold must be clean)
Common law obligation of seaworthiness:

• Is absolute in nature
• Is relevant at the commencement of the cargo
loading (cargoworthiness) and at the
commencement of the voyage (seaworthiness).
The duty is modified under the

Personal notes:
regime of Hague-Visby Rules
Article III
The carrier shall be bound before and at the beginning
of the voyage to exercise due diligence to:-
a) Make the ship seaworthy.
b) Properly man, equip and supply the ship.
c) Make the holds, refrigerating and cool chambers, and all
other parts of the ship in which goods are carried, fit and
safe for their reception, carriage and preservation.
3
Personal notes:
Important aspects of the duty under
Article III of the Hague-Visby Rules
• “The carrier” includes all the carrier’s servants,
agents and contractors;
• “Before” is not restricted to
“immediately before;”
• Lack of due diligence is negligence.
• “Seaworthiness” is not restricted to physical
matters and includes documentation necessary
for the voyage.
Seaworthiness in Contemporary Personal notes:

Practice
• The Hague-Visby regime is normally incorporated into charterparties
by express clauses- the owners are expected “to exercise due
diligence to make the ship seaworthy’ before each laden voyage
• However, most charter parties also indicate that the vessel must be
seaworthy in fact at certain times. The relevant times depend upon
the construction of the particular term.
• It may be the date of the charter (e.g. line 5 of NYPE), or the date of
delivery into the charter (e.g. clause 2.1 of BPTIME), or, possibly,
throughout the charter (e.g. clause 1 of BPVOY 4).
Elli and Frixos (2008) 2 Lloyd’s Rep 119
Causation Personal notes:

• Unseaworthiness is relevant only if it actually
causes loss or damage.
• If loss or damage has been caused partly by
unseaworthiness and partly by some factor for
which the carrier has a defence under the contract
then the carrier is not entitled to rely on that
defence.
Smith Hogg v Black Sea (1940) AC 99)
• It is sufficient, therefore, that unseaworthiness is
one of the proximate causes of the loss
4
Personal notes:
Onus of Proof
• At common law, cargo interest is under an obligation

to prove loss caused by unseaworthiness.
The impact of Hague Visby Rules?
• As soon as cargo interest proves unseaworthiness

the burden is on the shoulders of the owner to
prove that he has exercised due diligence to make
the ship seaworthy.
Personal notes:
However bad stowage that does not endanger the
safety of the ship also does not render the vessel
unseaworthy.
The Thorsa [1916] P 257
• A cargo of chocolate was stowed in the same hold as
gorgon ola cheese.
• On arrival chocolate was found to be tainted with
cheese.
• It was held that the damage resulted from bad
stowage rather than from any unfitness of the vessel
to receive the contract cargo.
Personal notes:
Can time charterers be entitled terminate the charter if
unseaworthiness affects the performance?
• It depends on the effect of breach

• Has the charterer been deprived of the whole benefit he expects
under the contract due to the breach (is the breach serious)?
• The obligation has been classified as an innominate term in ong
ong r h ng o. v. a asa shen a sha [1962] 2 WLR- 5
months absence of the chartered vessel as she was undergoing
repairs was not sufficient to terminate the 24 month charterparty
(breach not so serious)
5
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
6
BIMCO Training
DUTY TO PROVIDE A SEAWORTHY SHIP COMPLYING WITH THE

CHARTERPARTY DESCRIPTION
In every contract of carriage there is an implied obligation to provide a seaworthy vessel. Field, J, said
in Kopitoff v Wilson (1876) 1 QBD 377, at 380, that the implied obligation was to provide a ship which
was ‘fit to meet and undergo the perils of the sea and other incidental risks to which of necessity she
must be exposed in the course of the voyage.’ In the majority of charterparties this implied undertaking
is reinforced by an express term to the same effect, indicating that the chartered vessel is to be ‘tight,
staunch, and strong and in every way fitted for the voyage’ or words to similar effect.
A) What is Seaworthiness?
‘Seaworthiness’ means that the ship, her equipment and crew must be fit to withstand the perils which
can foreseeably be encountered on the contemplated voyage and that she is also fit to carry the cargo
safely (often referred to as ‘cargo-worthiness’ although it is an aspect of the wider concept of
seaworthiness) despite such perils (The Good Friend [1984] 2 Lloyd’s Rep 586). As stressed by Channell,
J., in McFadden v. Blue Star Line [1905] 1 KB 697, at 706, the test would appear to be objective in that
‘the vessel must have that degree of fitness which an ordinary, careful and prudent owner would
require his vessel to have at the commencement of her voyage having regard to all the possible
circumstances of it’.
The standard of seaworthiness required is relative in the sense that it depends upon the nature and
age of the ship, the kind of voyage envisaged, the nature of the cargo and a host of other
factors. Therefore, if one chartered a brand new ship to carry cargo one would expect her to be fitted
with all the latest navigation equipment. However, if one chartered a tramp ship (a cargo-carrying
merchant vessel which does not work a regular route but carries general cargo to any destination as
required) built in the 1960s her owners could not be criticised if she did not have such equipment (MDC
v. NV Zeevart [1962] 1 Lloyd’s Rep 180).
The obligation of ‘providing a seaworthy ship’ is far-reaching. It covers not only the physical condition
of the vessel (for example in The Torenia [1983] 2 Lloyd’s Rep. 342 the vessel was held to be
unseaworthy as her hull structure was seriously weakened by corrosion; similarly in Quebec Marine
Insurance Co. v. Commercial Bank of Canada (1870) LR 3 PC 234, defective boilers rendered the vessel
unseaworthy; and more recently in The Devon [2012] EWHC 3747 the vessel was deemed to be
unseaworthy due to engine breakdown caused, either solely or collectively, by a blockage or by closure
of a valve in the system or by a blockage in a strainer preventing the cooling medium from cooling the
fresh water to the correct temperature) but extends to other factors. A vessel could be unseaworthy
due to
(i) The absence of required charts for the voyage (The Marion [1984] AC 325).
(ii) The incompetence of the crew (The Eurasian Dream [2002] EWHC 118 (Comm); [2002] 1
Lloyd’s Rep).
(iii) The insufficiency of the crew in numbers (The Derby [1985] 2 Lloyd’s Rep 325).
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(iv) Insufficient bunkers for the voyage (McFadden v. Blue Star Line [1905] 1 KB 697).
(v) The absence of navigational aids (such as compass) (Paterson SS Ltd. v. Robin Hood Mills
Ltd. (The Thordoc) (1937) 58 LIL Rep 33).
A ship is also unseaworthy if she does not possess the legal documents required for the satisfactory
prosecution of the contemplated voyage (Madeleine [1967] 2 Lloyd’s Rep 224). In July 2002, the
International Safety Management Code (ISM Code) of the IMO was made applicable to all vessels. The
annex to the Code explains that it was brought into effect in order to ‘provide an international standard
for the safe management and operation of ships and for pollution prevention’. The Code obliges
shipping companies to establish a Safety Management System (SMS) and provides that a Document of
Compliance (DOC) and a Safety Management Certificate (SMS) will be issued to verify compliance with
the Code. It is likely that a vessel will not be considered seaworthy when trading to states which are
parties to the Code if she does not possess the DOC and SMC.
Similarly, a vessel which does not have the documentation (ISSCs) and DOS (declaration of security)
clearances required by the SOLAS ISPS (International Ship and Port Facilities Security) Code (which
came into effect on 1st July 2004) may well be considered to be an unseaworthy ship.
It has also been repeatedly emphasised that the vessel is unseaworthy (in the uncargoworthy sense) if
she is not reasonably fit to receive and carry the contemplated cargo and to deliver it at the specified
destination (The Benlawers [1989] 2 Lloyd’s Rep 51). Indeed, a vessel may be ‘not reasonably fit’ in
this sense (and therefore, unseaworthy for the contemplated cargo) due to the presence on board of
a previously loaded cargo, the nature of which, or the stowage location of which, is potentially
dangerous to the safe carriage of the contemplated cargo (The Kapitan Sakharov [2000] 2 Lloyd’s Rep
255). Furthermore, the vessel may be unseaworthy if her cargo is stowed in such a manner after
loading that the safety of the vessel for the contemplated voyage is put in doubt (Smith, Hogg & Co v
Black Sea & Baltic [1940] AC 997). However, where such stowage merely affects the safe carriage of
the cargo and does not affect the safety of the ship it does not necessarily make the ship unseaworthy
(Patterson Zochonis v Elder Dempster [1924] AC at 558-562 and The Apostolis [1997] 2 Lloyd’s Rep
241).
B) Nature of the Obligation
When there is no express seaworthiness obligation in the contract the implied duty placed on the
carrier obliges him to provide a vessel which is ‘cargoworthy’ at the commencement of the loading
(McFadden v. Blue Star Line [1905] 1 KB 697, at 704) and seaworthy in the wider sense at the
commencement of the voyage. The fact that the vessel is in fact unseaworthy at an earlier point in
time (for example during the ballast voyage to the loading port) is irrelevant if the carrier can repair
the defects before the commencement of loading in the case of ‘cargoworthiness’, and otherwise
before the beginning of the laden voyage. It further follows that if the carrier does provide a ship
which is seaworthy at these times he is not liable if the vessel subsequently becomes unseaworthy at
a later time during the laden voyage.
However, if the contract contains an express clause obliging the carrier to provide a seaworthy ship
then the relevant time will depend upon the construction of that particular clause. It may be the date
of the charter (e.g. clause 1.2 of the New York Produce Exchange (NYPE) form which provides that the
ship is to have ‘hull, machinery and equipment in a thoroughly efficient state’), or the time of delivery
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into service under the charter (e.g. clause 2.1 of BP Time which provides that: ‘Upon delivery the Vessel
shall be tight, staunch, strong and in every way fitted for service…or at the commencement of loading.’)
It is also becoming increasingly more common (particularly in the case of time charters) to encounter
clauses which oblige the owner to maintain the ship in a seaworthy condition throughout the duration
of the charter. A similar trend is apparent in voyage charterparties. For example, BPVOY 4 clause 1
states that:
Owners shall, before, at the commencement of, and throughout the voyage carried out hereunder,
exercise due diligence to make and maintain the Vessel, her tanks, pumps, valves and pipelines tight,
staunch, strong, in good order and condition, in every way fit for the voyage and fit to carry the
cargo…..
At common law, the obligation to provide a seaworthy ship, whether pursuant to an express term such
as the one quoted above or pursuant to the implied duty at law, is to provide a ship which is seaworthy
in fact. This is an absolute obligation and if the ship is not seaworthy in fact, then the owner is in
breach, notwithstanding the fact that he may have exercised due diligence to try to ensure the
seaworthiness of the ship.
Where the contract of carriage is governed by the Hague or Hague/Visby Rules, the absolute obligation
at common law is replaced by a duty to exercise due diligence to make the ship seaworthy (See Art III
rule 1). This means that the shiopwner will no longer be strictly liable in the absence of fault. However,
he remains liable not only for his own negligence but also for the negligence of any party, including an
independent contractor, to whom he has delegated responsibility for making the vessel seaworthy
(The Muncaster Castle [1961] AC 807). Many modern standard charter forms have now adopted the
Hague Rules formula with regard to the requirement of seaworthiness (see BPVOY clause 1 above).
C) Effect of Breach
In the case of the breach being discovered before the performance of the charterparty has commenced
(this is an unlikely event in voyage charterparties), the charterer will be able to treat his obligations
under the contract as discharged if the breach deprives him of substantially the whole benefit of the
contact and it is a breach which cannot be rectified within such time as would prevent the object of
the contract from being frustrated (Stanton v. Richardson (1875) LR 9 CP 390). In reality, if the ship is
not ready in a voyage charterparty due to unseaworthiness or any other cause, there would be
contractual mechanisms allowing the charterer to terminate or cancel the agreement.
Where the unseaworthy state of the chartered vessel is not discovered until after it has set sail and a
loss arises, the shipowner will be liable for the loss and deprived of relying in any exclusion clause as
long as the loss is proximately caused by unseaworthiness (The Torepo [2002] 2 Lloyd’s Rep 535).
Therefore, if the vessel was unseaworthy because of hull damage but that did not cause cargo damage,
there is no breach. However, unseaworthiness is deemed to be causative of the loss even if other
causes contribute to it so long as the unseaworthiness is ‘a real or effective or actual cause of the
loss’. This is so even if the carrier was entitled to an exemption in respect of the other contributory
causes (Smith, Hogg v Black Sea & Baltic [1940] AC 99). The carrier can escape liability in such
circumstances only if he is able to show clearly that despite the unseaworthiness, an ascertainable
proportion of the loss or damage was caused exclusively by the excepted peril (The Kapitan Sakharov
[2000] 2 Lloyd’s Rep 255).
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Personal notes:
The Duty to Comply with

Legitimate Employment
Orders

Personal notes:
VOYA E AND TIME CHARTERS
• Under a voyage charter the obligation of the parties are
set out in the contract itself and the charterer has limited
rights to give detailed subsequent orders to the
shipowner.
• However, in the case of a time charter the charter gives

the charterer the right to employ the ship during the
charter as he wishes. Therefore, the charterer has the
right to give detailed employment instructions to the
ship during the charter period.
Personal notes:
THE PURPOSE OF A TIME CHARTER:
• “Clause 8 of the present charterparty, providing that the
master (although appointed by the owners) shall be under
the orders and directions of the charterers, gives the
charterer his key right under the contract: to decide where
the vessel shall go and what she shall carry, how (in short)
she shall be used, always subject to the terms of the
charterparty. The language used is general and the power
correspondingly wide.”
“Hill Harmony”(2001) AC 638
1
Personal notes:
THE PURPOSE OF A TIME CHARTER:
• “It is important in this connection to have in

mind that the present charters are time
charters, the nature and purpose of which is to
enable the charterers to use the vessel during
the period of the charters for trading in
whatever manner they deem fit.”
per Lord Wilberforce in “Nanfri”[1979] 1 Lloyd’s

Rep 201
Personal notes:
SHIP INSPECTION
The right of the charterer to give employment
instructions includes a right to inspect the vessel to
verify whether she complies with any particular
clearances which may be required for a particular
trade.
“Silver Constellation” (2008) 2 Ll. Rep 240
Personal notes:
E AMPLE:
A
B/L
T/C
D V/C
2
Personal notes:
THE EMPLOYMENT CLAUSE:

•
Personal notes:
BALTIME 1939: CLAUSE 9

“The Master to be under the orders of the
Charterers as regards employment, agency, or
other arrangements. The Charterers to
indemnify the owners against all consequences
or liabilities arising from the Master, Officers or
Agents signing Bills of Lading or other
documents or otherwise complying with such
orders, as well as from any irregularity in the
Vessel’s papers or for over-carrying goods.”
Personal notes:
NYPE 1946:CLAUSE 8
“That the Captain shall prosecute his voyages
with the utmost despatch, and shall render all
customary assistance with the ship’s crew and
boats. The Captain (although appointed by the
Owners), shall be under the orders and
directions of the Charterers as regards
employment and agency;”
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Personal notes:
IMPLIED INDEMNITIES
• A shipowner is usually entitled to an implied
indemnity (even if there is no express one) if the
loss or liability that he suffers is the result of
complying with employment orders given by the
charterers.
“Island Archon” (1994) 2 Ll. Rep. 227
Personal notes:
HOWEVER !
• An indemnity will not be implied if it is inconsistent
with express terms in the charter.
“Berge Sund” (1993) 453 at 462
• Furthermore, there is no indemnity for ordinary or

“usual” navigation risks since these are risks that the
shipowner has agreed to bear by simply being a
shipowner i.e. they are not risks that can be imputed
to chartererers’ employment orders.
“Aquacharm” (1980) 2 Ll. Rep 237
Personal notes:
CAUSATION
• The mere fact that the loss or liability that the

shipowner has suffered would not have arisen
but for the charterers’ employment order is not
sufficient to give rise to a right of indemnity.
• The right to an indemnity arises only if the

shipowner can prove that the direct cause of the
loss or liability that he has suffered is the
employment orders given by the charterers.
4
Personal notes:
E AMPLES
• .
” .
Personal notes:
WHAT CONSTITUTES AN EMPLOYMENT

ORDER?
Personal notes:
CONFLICTIN REQUIREMENTS:
• When trading, the master frequently experiences conflict when

trying to balance:
The interests of The interests of

the vessel the charterers
and crew or cargo interests
5
Personal notes:
WHICH TAKES PRECEDENCE?
Personal notes:
MATTERS OF SAFETY AND LE ALITY:

• The traditional rule is that a master is
responsible for matters of safety and legality
and has a duty to exercise that responsibility.
Personal notes:
• “The charterers’ right to use the vessel must be

given full and fair effect ; but it cannot encroach
on matters falling within the specialised
professional maritime expertise of the master,
particularly where the safety or security of the
vessel, her crew and her cargo are involved. He
is the person, on the vessel, immediately
responsible. Technical questions concerning the
operation of the vessel are for him.”
“Hill Harmony” (2001) AC 638:
6
Personal notes:
EMPLOYMENT
V
NAVI ATION OR SEAMANSHIP
Personal notes:
THE BALANCE: !!!!!!!
1. The charterer is entitled to give, and the
owner must comply with, orders relating to
the commercial usage of the ship;
BUT !
2. The charterer is not entitled to give, and the

owner has a responsibility to refuse to comply
with orders which affect the safe navigation of
the ship.
Personal notes:
EMPLOYMENT .
• An order to proceed from A to B is an order as to

employment.
• An order to proceed from A to B on a particular route

or at a particular time is also an order as to
employment so long as that route or time is safe.
• An order to proceed from A to B on a route or at a

time which is not safe is not an order as to
employment but an order as to navigation for which
the master is responsible.
7
Personal notes:
EMPLOYMENT V NAVI ATION
1. In Larrinaga v The Crown (1944) 78 Ll. Rep 167
the House of Lords distinguished between
employment orders and the manner in which
they were to be executed (i.e. matters of
navigation).
2. Lord Porter said at page 176:
“ t as the ty of the aster to e erc se h s
ge ent n s ch atters of na gat on.”
Personal notes:
“HILL HARMONY”:
• “The choice of ocean route was, in the absence of some
overriding factor, a matter of the employment of the vessel,
her scheduling, her trading so as to exploit her earning
capacity”.
• “The responsibility for making good, so far as possible,
whatever course is chosen of course remains with the
master and crew, as does that for navigating the vessel
safely into and out of port, and responding to maritime
problems encountered in the open sea. But subject to
safety considerations and the specific terms of the charter,
the charterers may not only order a vessel from A to B but
may also direct the route to be followed between the two.”
NB! See “The Triton Lark” (2011) 1 Ll. Rep Plus 103
Personal notes:
UNSAFE PORTS OR CAR OES
• The same principles apply if the master
unreasonably chooses to proceed into an unsafe
port or to load a dangerous cargo.
• HOWEVER, the master is generally given the

benefit of the doubt when he is placed on the
horns of a dilemma as to whether or not to
proceed.
8
Personal notes:
“THE STORK” (1955) 2 QB 68
“(The master) is sometimes on the horns of a
dilemma. The material question is, I believe,
whether he acted reasonably….A master who
entered a berth which he knew to be
unsafe…rather than ask for another nomination
and seek compensation might find himself in
trouble. So might a master who sought
compensation for the time lost in sailing back
across the Atlantis because he had not cared to
risk damage to his paintwork.”
Personal notes:
LIBERTY CLAUSES
• In many cases, the charter will include Liberty (or
Caspiana) Clauses that are intended to clarify the master’s
rights in the event that the ship may conceivably
encounter danger en route.
e.g. CON ARTIME 2013 and the BIMCO Piracy Clauses for
Time Charter Parties, Single Voyage Charter Parties and
Consecutive Voyage Charter Parties and COA 2013
• However, to a large extent these clauses mirror the
principles that have already been established by the
courts in the preceding cases.
See “Triton Lark” (2012) 1 Ll. Rep 151 and 457 and
“Paiwan isdom” (2012) 2 Ll.Rep 416
Personal notes:
EMPLOYMENT
V
SEAWORTHINESS
9
Personal notes:
“A”
TRADITIONAL THINKIN
Personal notes:
EMPLOYMENT V. SEAWORTHINESS:
• An order to load a particular cargo is an order as to

employment.
• An order to stow a cargo in a particular way is also an

order as to employment as long as the stowage is
safe.
• An order to load a cargo which brings the vessel

below her marks or makes her potentially unstable is
not an order as to employment and should be
refused.
Personal notes:
COURT LINE V. CANADIAN
TRANSPORT:
• . ”
. ”
.
10
Personal notes:
“B”
MORE RECENT THINKIN
Personal notes:
“IMVROS” (1999) 1 LL. REP 848
“ER HAMBUR ” (2006) 2 LL. REP.66
“EEMS Solar” (2013) 2 LL. Rep 487
• The master has the right to intervene to prevent the ship from
becoming unseaworthy as a result of the stowage proposed by
the charterers.
• However! He does not have the responsibility or duty to

intervene in such circumstances.
• Except (possibly!) where the master knew (but the charterers did
not know) that the proposed stowage would affect the ship’s
stability.
Personal notes:
QUERY!
If the master has a responsibility (or duty) to
exercise his professional seamanship skill to
prevent damage or loss caused by navigational
risks why does he not have the same
responsibility or duty to prevent damage by bad
stowage?
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Personal notes:
THE RESULT OF THE MASTER’S FAILURE
TO REFUSE AN ORDER WHICH HE HAS A
DUTY TO REFUSE:
The owner is not entitled to any indemnity for
losses or liabilities incurred whilst performing the
required order since the cause of the loss or
liability is not the order of the charterer but the
fault or neglect of his own servant or agent.
See Larrinaga v the King (1944) 78 LL. Rep 167
Personal notes:
ORDERS WHICH DO NOT INVOLVE

NAVI ATION OR SEAWORTHINESS
Personal notes:
”A”
ORDERS WHICH A MASTER HAS
A DUTY TO REFUSE
12
Personal notes:
A) ORDERS WHICH A MASTER MUST REFUSE:
.
. .
Personal notes:
ILLE AL ORDERS
• The question of whether an order is or is not

illegal is tested in accordance with the law
which governs the contract of carriage or the
law of the flag.
Personal notes:
ILLE AL ORDERS
• However, the recent upsurge in the application
of sanctions regulations have widened the
scope.
• For example, the parties to a charter which is
not subject to US law for a ship which does not
fly the flag of the USA may still fall foul of US
sanctions regulations if payments under the
charter are to be made in US dollars since all
such payments have to pass through the Bank of
America and may be blocked.
13
Personal notes:
SANCTIONS CLAUSES
• Consequently, BIMCO, INTERTANKO and
other organisations have produced specific
clauses to deal with this specific problem:
e.g. the BIMCO Designated Entities Clause
for Charter Parties and the BIMCO Sanctions
Clause for Time Charter Parties.
Personal notes:
FRAUD:
• Most of the instances of fraud involve bills

of lading. HOWEVER, the principle applies
generally to orders of all kinds.
E AMPLES OF ORDERS TO COMMIT A Personal notes:

FRAUD
• An order to sign a clean bill of lading for goods which

are clearly not in apparent good condition.
“Nogar Marin” (1988) 1 Ll. Rep. 412
• An order to sign an ante dated or post dated bill of

lading.
SCB v PNSC (2003) 1 Ll. Rep. 227
14
Personal notes:
NB
An indemnity given in such circumstances will not be

enforced by courts or tribunals on public policy
grounds.
Brown Jenkinson v Percy alton (1957) 2 Ll. Rep. 1
SCB v PNSC (2003) 1 Ll. Rep. 227
Personal notes:
B T
If there is genuine doubt e.g. whether cargo is or

is not in apparent good order and condition, an
indemnity given to resolve an impasse may be
enforced by the court or tribunal as there is no
intention in such circumstances to commit
illegality or fraud.
Personal notes:
MORRIS LJ IN BROWN JENKINSON V PERCY
DALTON
There may perhaps be some circumstances in which
indemnities can properly be given. Thus, if a shipowner
thinks that he has detected some faulty condition in
regard to goods to be taken on board he may be assured
by the shipper that he is entirely mistaken if he is so
persuaded by the shipper, it may be that he could
honestly issue a clean bill of lading while taking an
indemnity in case it was later shown that there had in
fact been some faulty condition. Each case must
depend upon its circumstances”
15
Personal notes:
”B”
ORDERS WHICH A MASTER HAS A
RI HT TO REFUSE
Personal notes:
NB!:
• It makes a crucial difference whether a

master is obliged to refuse an order or
merely has a right to do so.
Personal notes:
THE CRUCIAL DIFFERENCE:
• If a master is entitled (rather than obliged) to
refuse an order:-
1. It places his owners in a strong bargaining position

they can either refuse or agree subject to terms;
and
2. His owners are normally entitled to an indemnity

for losses or liabilities incurred should they agree
to comply with the order.
16
Personal notes:
E AMPLES OF ORDERS WHICH A

MASTER MAY (BUT IS NOT OBLI ED
TO) REFUSE
Personal notes:
ORDERS WHICH ARE INCONSISTENT WITH

THE CHARTER
Personal notes:
E AMPLE 1
Where the charter calls for bills of lading
in a specific form
If the charter calls for bills to be issued in

particular terms or a particular form (e.g.
the Asbatankvoy form) the charterer
cannot demand that the master should
sign a bill in different terms or form.
“ ar s” l. e .
17
Personal notes:
ASBATANKVOY CLAUSE 20
.
Personal notes:
E AMPLE 2
Where the charter provides that the master
shall sign bills of lading or waybills “as
presented” or “as directed”
NB! Dry cargo time charters usually use the

phrase “as presented” whilst tanker time
charters usually use the phrase “as directed”.
Both phrases have the same effect
Personal notes:
BPTIME 3: CLAUSE 11
“Bills of lading and waybills shall be signed as
Charterers direct, without prejudice to this Charter.”
18
Personal notes:
“AS PRESENTED”/”AS DIRECTED”
These phrases oblige the master to sign bills in a form
required by charterers provided they are not :-
• manifestly inconsistent with the terms of the

charter; or
• contain extraordinary terms.
“Ikariada” (1999) AER (Com Cas) 257
If they do contain such terms the master has the right to

refuse to provide such bills.
Personal notes:
E AMPLES OF TERMS THAT ARE

MANIFESTLY INCONSISTENT WITH THE
CHARTER
A clause providing that bills will be voluntarily
subject to the Hamburg Rules contrary to clause
25 of BPTIME 3
A clause providing for carriage to a port which is

outside the geographical limits of the charter.
Personal notes:
E TRAORDINARY TERMS
Possible examples:
Terms which exclude the shippers’ liability for

the shipment of dangerous goods.
Terms which impose liability on the carrier for

delivery inland far from the port of delivery.
19
Personal notes:
”C”
ORDERS WHICH ARE INCONSISTENT
WITH EARLIER ORDERS
Personal notes:
E AMPLE
• An order to deliver cargo without surrender of

original bills of lading is an order which is
inconsistent with earlier employment
instructions.
UNLESS
THEREFORE, there is a clause
such orders in the charter obliging
are illegitimate the master to comply
with such orders.
Personal notes:
WHY?
• An order to sign and release a bill of lading obliges the
master to deliver cargo in accordance with the basic
principle that the original bill must be surrendered
before delivery is given.
• A subsequent order to deliver cargo without surrender
of the original bill of lading is therefore, manifestly
inconsistent with the first order.
• Unless the charter obliges the master to deliver without
surrender of the original bill of lading, the master is
entitled to refuse to comply with the second order.
“Houda” (1994) 2 Ll. Rep. 541
20
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
21
BIMCO Training
THE DUTY TO COMPLY WITH LEGITIMATE EMPLOYMENT ORDERS
1. TIME CHARTERS AS USEFUL VEHICLES FOR TRADE
A time charter is a contract for the hire of the whole of the ship for a specified period. Once the ship is
under his control in this way, the time charterer may exploit his control by either sub-letting the whole of
the ship for one voyage, (i.e. sub-voyage charter her) or agree to carry individual parcels of cargo under
individual bills of lading.
The time charter therefore, is a most useful vehicle for both shipowners and traders. From the shipowners'
point of view it means that the income of the ship is guaranteed for a fixed period without need to
repeatedly find new employment. From the trader's point of view he has the control of a vessel for a fixed
period which makes it easier for him both to satisfy his existing commitments to his customers and to
exploit new markets. shipowners therefore, agree when time chartering, to delegate the employment of
the vessel to the time charterers and to comply with employment instructions given by the charterers,
including instructions to issue bills of lading for cargoes shipped pursuant to those employment
instructions.
The importance of this arrangement was recognised by the House of Lords in the case of The Nanfri1. Lord
Wilberforce said at page 206 that:
"It is important in this connection to have in mind that the present charters are time charters, the nature
and purpose of which is to enable the Charterers to use the vessel during the period of the charters for
trading in whatever manner they deem fit”.
2. THE EMPLOYMENT CLAUSE
To facilitate the charterers' needs, most time charters have clauses in which the right of the time charterer
to give employment instructions is expressly outlined.
EXAMPLE 1
Clause 8 of the NYPE form provides that:
"Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as
regards employment; .. the Captain ... is to sign bills of lading for cargo as presented in accordance with
Mate's or Tally Clerk's receipts."
EXAMPLE 2
Clause 10 of BPTIME 3 provides that:-
1 (1979) 1 Lloyd's 201
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“The Master, though appointed by Owners, shall throughout the Charter period be under the orders and
directions of Charterers as regards employment, agency and other arrangements and shall render the
Charterers all reasonable assistance with the officers, crew and equipment….”
EXAMPLE 3
Clause 12 of GENTIME provides that:-
“The master ….although appointed by the Owners , shall at all times during the currency of this Charter
Party be under the orders and directions of the Charterers as regards employment, agency or other
arrangements.”
The courts have repeatedly emphasised the importance to charterers of their rights to give employment
orders. The English House of Lords when commenting on clause 8 of the NYPE 1946 charter said that:-
“Clause 8 of the present charter party, providing that the master ( although appointed by the Owners )
shall be under the orders and directions of the Charterers, gives the Charterer his key right under the
contract : to decide where the vessel shall go and what she shall carry, how ( in short ) she shall be used,
always subject to the terms of the charter party. The language used is general and the power
correspondingly wide”2
3. THE “PACKAGE” OF RIGHTS AND OBLIGATIONS UNDER THE EMPLOYMENT CLAUSE
In a nutshell, the basis of the agreement between the shipowners and the charterers is as follows:
The charterers are entitled to give, and the shipwners are obliged to comply with, employment
instructions given by the charterers, in consideration for which the charterers agree to indemnify the
shipowners, sometimes expressly and sometimes impliedly, for most losses and liabilities incurred by the
shipowners as a direct result of so doing.
However, the package is not all-embracing in that the shipowners are not obliged to comply with every
order given by the charterers, the shipowners are not always protected by an indemnity if they comply
with employment instruction, and lastly, even if there is an indemnity it does not necessarily extend to all
losses or liabilities incurred by the shipowners. The shipowners may therefore, be hesitant to comply with
some employment instructions if they believe that they are not sufficiently protected if they do so.
Alternatively, even if they believe that the contract does provide protection, they may not be satisfied that
the charterers' credit worthiness is sufficient to underpin the indemnity which charterers provide under
the contract. For example, if the shipowners were to agree to comply with charterers’ instructions to
deliver cargo without presentation of original bills of lading, the shipowners would be potentially liable to
the holder of the bills of lading for the full value of the cargo without the benefit of P&I cover.
However, it is equally important to the charterers that they be confident that the shipowners will comply
with employment instructions. The dictum of Lord Wilberforce in the Nanfri, to which reference is made
above, makes it clear that the ability to give employment instructions is a basic requirement for charterers
under the charter party. Indeed, any sub fixtures into which they enter or any cargo purchase or sale
contracts in which they engage are based upon their ability to give such orders. Accordingly, it would, at
the very least, disrupt charterers' commercial planning if shipowners were able to refuse to comply with
2 per Lord Bingham in “Hill Harmony” (2001) 1Ll. Rep. 147
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charterers’ orders.
Consideration is given below to the circumstances in which the shipowners are not obliged to comply with
employment instructions given by the charterers. However, it is necessary firstly to consider what is meant
by “employment” instructions.
4. THE DIFFERENCE BETWEEN “EMPLOYMENT” AND “NAVIGATION”
Whilst the charterers are entitled to give employment orders, they are not necessarily entitled to direct
the manner in which the ship is to be navigated or used in order to execute those employment
instructions.
The English House of Lords has distinguished between “employment” and “navigation” as follows:
“Employment embraces the economic aspect – the exploitation of the earning potential of the vessel.
Navigation embraces matters of seamanship.”3
In general terms, employment instructions relate to the commercial exploitation of the vessel by the
time charterers and include matters such as the selection of the ports of loading and discharge, the
issuance of bills of lading and other documentation required from the vessel and instructions relating
to the loading, carriage and delivery of the cargo itself. However, the master is not only entitled but,
indeed, obliged to retain responsibility for matters relating to the seaworthiness, navigation or general
safety of the vessel. Although the charterers may be entitled to order the vessel to proceed from port
A to port B they cannot insist upon the vessel proceeding either on a route which is potentially
dangerous or at a time when the vessel can be expected to meet heavy weather which is potentially
dangerous.4
However, unless the master is able to prove that a routing required by the charterers will be inherently
dangerous for the vessel, he is bound to comply with the charterers’ orders to proceed on that route
and must then use his navigational skills to avoid danger should the vessel encounter it on the route.
The House of Lords described the master’s duties as follows:
“The responsibility for making good, so far as possible, whatever course is chosen of course remains
with the master and crew, as does that for navigating the vessel safely into and out of port, and
responding to maritime problems encountered in the open sea. But subject to safety considerations
and the specific terms of the charter, the Charterers may not only order a vessel from A to B but may
also direct the route to be followed between the two.”
“The choice of ocean route was, in the absence of some overriding factor, a matter of the employment
of the vessel, her scheduling, her trading so as to exploit her earning capacity.” 5
5. ORDERS WHICH AFFECT THE SEAWORTHINESS OR SAFETY OF THE SHIP
Traditionally, it was believed that the master has a similar duty to refuse orders which are likely to
affect the seaworthiness of the ship since, in such circumstances, the safety of the ship or her crew
3 “Hill Harmony” (2001) 1 AC 638

4
Larrinaga v R (1944) 78 Ll. Rep. 167
5 “Hill Harmony” (2001) 1 AC 638
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could be put in jeopardy. Therefore, if the charterers’ orders were likely to affect the stability of the
ship or to load her below her marks it was believed that the master had a duty to refuse such orders6.
However, recent case law appears to have doubted this conclusion. It was held in the “Imvros” and ER
Hamburg7 that the master has the right but not the duty to intervene to prevent the ship from
becoming unseaworthy as a result of the stowage proposed by the charterers except (possibly!) where
the master knew (but the charterers did not know) that the proposed stowage would affect the ship’s
stability.
6. ORDERS WHICH DO NOT AFFECT NAVIGATION OR SAFETY
Subject to the restrictions which are considered below charterers are usually obliged to comply with
employment orders which do not affect the navigation or safety of the ship provided they are not
contrary to the express or implied terms of the charter and the shipowners are entitled to an indemnity
from the charterers in respect of losses or liabilities incurred directly by them as a result of complying
with such orders.
7. THE RIGHT TO INDEMNITY
If shipowners comply with the charterers’ employment instruction they may be entitled to an indemnity
either as a result of an express provision in the charter party (an express indemnity) or as a result of the
implication of law (an implied indemnity).
a. EXPRESS INDEMINITIES
Since an express indemnity is the result of express agreement between the parties, the court will
normally enforce it unless the relevant order is to commit a crime or a fraud, in which case, the court
will, for policy reasons, refuse to enforce the term. (See below)
b. IMPLIED INDEMNITIES
Even though the charter does not provide an express agreement, shipowners may nevertheless be
entitled to an implied indemnity at law. However, the court will not imply a term merely to render the
contract a fairer contract. It will do so only if it is satisfied that it is necessary to do so to give business
efficacy to the contract or if it is satisfied that a reasonable man would conclude that the term was
clearly intended to be part of the bargain although not expressed.8
Mustill J said in “Nogar Marin” that:
“It seems to us plain and the authorities leave us in no doubt that the implication of an obligation to
indemnify is not automatic. It must always depend on the facts of the individual case, and on the terms
of any underlying contractual relationship.”9
Nonetheless, it appears that indemnities will normally be implied in the following circumstances:
6 Court Line v Canadian Transport (1940 ) AC 934, See also the dicta of Steyn J. in “Panaghia Tinnou” (1986) 2 Ll. Rep at 591
7 (1999) 1 Ll. Rep 848 and (2006) 2 Ll. Rep.66 respectively
8
“Island Archon” (1994) 2 Ll. Rep. at 231-2
9 (1988) 1 Ll. Rep. at 422
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1. When the shipowners incur damage or expense or liability to third parties as a result of complying
with orders which the charterers are entitled to give.
EXAMPLE
If a charter party obliges a Shipowner to sign bills of lading “as presented”, he must do so although the
terms of the bill of lading may make the Shipowner liable to the holders of the bills in circumstances
in which he would not be liable were the same claim to be made against him by the Charterers under
the charter party. In such circumstances, the Owner is entitled to claim an indemnity from the
Charterer in respect of the “additional” liability which he has been obliged to incur under the bills of
lading.10
However, it has been recognised that an indemnity may not be implied if this would be inconsistent
with other provisions of the charter.
EXAMPLE
It was held in “C Joyce”11 that such implication was not legitimate where an express clause of the
charter provided that the bills of lading which would be issued under the charter were required to
include the terms which gave rise to the Owners’ increased liability. It was held that since it was an
express term of the contract between Owners and Charterers that Owners were to issue bills of lading
in this form and to incur liability thereunder, the implication of a term which entitled the Owners to
be indemnified by Charterers for such liability was contrary to the agreement reached in the charter
and should not, therefore, be allowed.
2. When the Shipowners incur damage or expense or liability as a result of complying with orders which
the Charterers are not entitled to give but which Owners are not obliged to refuse.12
EXAMPLE 1
The Owner is entitled to an implied indemnity in respect of liabilities incurred to the true Owner of the
goods as a result of delivering cargoes at Charterers’ request without surrender of the original bills of
lading in good faith.13
EXAMPLE 2
If Charterers require Owners, after issuing bills of lading providing for delivery of the cargo at port A,
to proceed to port B, such an order would potentially make the Owner guilty of deviation under the
bill of lading contract with consequent serious liability to the bill of lading holder. Therefore, if the
Owner complies with such an order in good faith, he is entitled to an indemnity.14
EXAMPLE 3
10 “Berge Sund” (1992) 1 Ll. Rep. 460

11 (1986) 2 Ll. Rep. 285
12 Sheffield Corporation v Barclay (1905) AC 392
13
“Sagona” (1984) 1 Ll. Rep. 194
14 This follows from the principle in the “Houda” which was held to be of general application.
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Charterers are under an implied duty to ensure that the cargo description and data which they require
to be included on bills of lading is correct. If they are in breach of that duty, the Shipowner is entitled
to claim an indemnity for liabilities incurred by him to the holders of the bill of lading as a result of
having signed such bill “as presented”15 (unless the deficiency relates to the “apparent order and
condition” of the cargo, in which case the master has a duty to refuse to sign the bill of lading in that
manner).16
EXAMPLE 4
An Owner is entitled to an indemnity for additional costs and expenses incurred by him as a result of
complying with Charterers’ instructions to proceed to a port which was outside the agreed trading
limits.17
10. THE EXTENT OF THE INDEMINITY (WHETHER EXPRESS OR IMPLIED)
Even when the Owner is entitled in principle to an indemnity (whether express or implied) it does not
follow that he will secure an indemnity in all circumstances or in respect of all losses.
a. The Owner will be entitled to an indemnity only if the loss claimed is the direct result of the
employment order. The mere fact that the loss would not have arisen but for the order is not
sufficient; there must be an unbroken chain of causation between the order given by the Charterer
and the loss incurred by the Owner. If there is intervening negligence on the part of the Owners
or the master, then this will break the chain of causation and no indemnity will be available.
EXAMPLE 1
A master who is guilty of negligent navigation when performing an employment order to proceed from
port A to port B is not entitled to claim an indemnity in respect of damage incurred whilst so doing
since the cause of the loss or liability was not the Charterer’s employment order but his intervening
negligence.18
EXAMPLE 2
A master who fails, when bills of lading are presented to him for signature, to clause the bills of lading
in respect of cargo which is clearly not in apparent good order and condition is negligent and cannot
therefore, claim an indemnity from the Charterers when his Owner is held liable to third party
transferees of the clean bill.19
The chain of causation may also be broken even if the intervening event does not constitute negligence
on the part of the person seeking the indemnity.
15 “Boukadoura” (1989) 1 Ll. Rep. 393

16 “Nogar Marin” (1988) 1 Ll. Rep. 412
17 “Batis” (1990) 1 Ll. Rep. 345
18
Larrinaga v R (1944) 78 Ll. Rep. 167
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The basic principle was explained by Donaldson J:20
“A loss may well arise in the course of compliance with the time Charterers’ orders but this
fact does not, without more, establish that it was caused by and is in law a consequence of
such compliance and, in the absence of proof of such causation, there is no right to
indemnity.”
EXAMPLE
A stevedore appointed by Charterers to load the vessel left his station for his own purposes and fell
through an unfenced part of a tweendeck hatch. He sued the Owners for personal injury and the
Owners were obliged to incur legal fees and to contribute towards the settlement of the claim. The
Owners claimed to be indemnified by the Charterers but the claim was rejected since the loss had been
caused partly by the lack of fencing (for which the Charterers were not responsible) and partly by the
negligence of the injured man himself. It could not, therefore, be said that the loss had resulted
directly from the Charterers’ employment order.21
b. Even if the loss flowed directly from the Charterers’ employment instruction it has been recognised
that not every loss which occurs as a result is recoverable. Lloyd J stated22 that:
“It is of course well settled that Owners can recover under an implied indemnity for the direct
consequences of complying with the Charterers’ orders. But it is not every loss arising in the
course of the voyage that can be recovered. For example, the Owners cannot recover heavy
weather damage merely because, had the Charterers ordered the vessel on a different
voyage the heavy weather would not have been encountered. The connection is too remote.
Similarly, the Owners cannot recover the expenses incurred in the course of ordinary
navigation, for example, the costs of ballasting, even though in one sense the cost of
ballasting is incurred as a consequence of complying with the Charterers’ orders: see Weir &
Others v Union Steamship Company Limited [1900] AC 525. The same considerations apply
in the present case. The costs of transhipment were an ordinary expense incurred in the
course of navigation.”
The precise location in which to draw the line between recoverable and irrecoverable losses is difficult
to establish. The test is to ask what risks the Owners have “agreed to run” and to exclude such risks
from the right to an indemnity.23
11. ORDERS WHICH DO NOT AFFECT NAVIGATION OR SEAWORTHINESS
When considering orders which do not affect navigation or seaworthiness a distinction needs to be
drawn between orders which a master must refuse and orders which he has a right to refuse.
a. Circumstances where a master has a duty to refuse
A master is obliged to refuse to comply with orders which are either:
1. Illegal under the law which governs the contract; or

20 “White Rose” (1969) 2 Ll. Rep. 52
21 “White Rose” (1969) 2 Ll. Rep. 52
22
“Aquacharm” (1980) 2 Ll. Rep. 237
23 “Island Archon” (1994) 2 Ll. Rep. 236
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2. Intended to commit a fraud.
EXAMPLE 1
An Owner is obliged to refuse an order to deliver cargo to a party who is not entitled to take possession
of it if he is aware that that person is not the person entitled to possession.24
EXAMPLE 2
An Owner is obliged to refuse to comply with an order to ante-date a bill of lading since were he to do
so, an endorsee or consignee of that bill would be led to believe that the cargo was shipped before it
was in fact shipped.25
EXAMPLE 3
An Owner is obliged to refuse to comply with an order to sign clean bills of lading when the cargo is
clearly not in apparent good order and condition since were he to do so, a consignee would be led to
believe that the cargo was shipped “in apparent good order and condition” when in fact, there was
pre-shipment damage.26
The court will not enforce contracts which are intended to facilitate a crime or fraud and accordingly,
the court will not assist a shipowner who has complied with such instructions. Therefore, if it is proved
that the shipowners and the charterers have colluded together to defraud a third party such as a
transferee of the bill of lading, the court will not imply a right of indemnity from the charterers. Indeed,
even when the charterers have provided an express indemnity, the court will refuse to enforce that
indemnity.27
However, there may be circumstances in which it is genuinely unclear whether the cargo is damaged
or indeed, even if it is, whether this is normal in the particular trade. In such circumstances, then the
master’s conduct may well be reasonable and bona fide if he signs a clean bill at the request of the
charterers. Morris LJ explained the situation as follows:
“There may perhaps be some circumstances in which indemnities can properly be given. Thus, if a
Shipowner thinks that he has detected some faulty condition in regard to goods to be taken on board
he may be assured by the shipper that he is entirely mistaken; if he is so persuaded by the shipper, it
may be that he could honestly issue a clean bill of lading while taking an indemnity in case it was later
shown that there had in fact been some faulty condition. Each case must depend upon its
circumstances.”28
b. Circumstances where a master has a right to refuse
The shipowners hasve agreed to provide the charterers with only those services which fall within the
ambit of the time charter. Therefore, if the effect of the employment order given by the charterers is
to require the shipowners to do something which (although not illegal or an instruction to commit a
fraud) falls outside that ambit, then this order requires the shipowners to perform services which they
24 Strathlorne v Andrew Weir (1934) 50 Ll. Rep. 196

25 “Almak” (1985) 1 Ll. Rep. 557
27
Brown Jenkinson v Percy Dalton 91957) 2 Ll. Rep. 1
28 Brown Jenkinson v Percy Dalton 91957) 2 Ll. Rep. 1
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have not agreed to perform.
EXAMPLES
1. An order to proceed outside the trading limits agreed in the time charter.29
2. An order to load a particular type of cargo which falls outside the list of agreed or acceptable
cargoes.
3. An order to sign a bill of lading other than in the form agreed in the charter.30
4. An order to perform an illegitimate last voyage, that is to say, a voyage which will result in
the vessel being redelivered to her Owner after expiry of the agreed charter period.31
An important example of this principle is where the charterers order the shipowners to deliver cargo
without surrender of the original bills of lading. In the “Houda”32 Millett LJ stated that:
“In the present case the Owners were contractually obliged to comply with the Charterers’
instructions, and the master was expressly required to sign bills of lading as the Charterers
might direct. They directed him to sign negotiable bills of lading in favour of the Charterers
or their order. This amounted to an instruction, not merely to sign bills of lading, but to
deliver the cargo to the persons who provided evidence of their entitlement thereto by
producing the bills of lading. By complying with the Charterers’ instructions and signing and
handing over bills of lading in negotiable form, the master rendered the Owners potentially
liable to any third party to whom the bill of lading might be negotiated. In the absence of
express contractual provision entitling them to do so, it is in my judgment thereafter no
longer open to the Charterers to countermand or vary their instructions by directing the
Owners to deliver the cargo otherwise than against presentation of the bills of lading, thereby
depriving the Owners of a protection to which their original instructions had entitled them.”
c. The distinction between the duty and the right to refuse the charterers’ orders
In cases where the shipownera are not obliged to refuse to comply with the charterers’ orders they
have a choice. They can either:
1. Agree to comply with the order and rely upon an implied right to indemnification at common
law; or
2. Refuse to comply with the order; or
3. Agree to perform only if the charterers agree to additional terms which are not included in
the time charter. Typically, shipowners can be expected to demand additional
remuneration, and/or indemnification for additional expenses incurred and/or a more
secure indemnity (possibly in the form of a bank guarantee) for any liabilities which they
incur to third parties as a result of complying with the order.
However, if the terms of the charter oblige the shipowners to proceed in the manner instructed by the
charterers, then they must do so notwithstanding the fact that, by so doing, they incur a potential
liability. In each case, the wording of the charter party must be closely scrutinised.
29 “Sussex Oak” (1950) 80 Ll. Rep. 297

30 “Garbis” (1982) 2 Ll. Rep. 283
31
“Gregos” (1995) 1 Ll. Rep. 1
32 (1994) 2 Ll. Rep. at 559
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EXAMPLE 1
The relevant clause in “Houda” read as follows:
“The master…shall be under the orders and directions of Charterers as regards employment of the
vessel…and shall sign bills of lading as Charterers or their agents may direct…
…Charterers hereby indemnify Owners against all consequences or liabilities that may arise from the
master – otherwise complying with Charterers’ or their agents’ orders, (including delivery of cargo
without presentation of bills of lading)...”
It was held that this did not oblige the shipowners to comply with the charterers’ directions to deliver
the cargo without surrender of the bills of lading.
EXAMPLE 2
In “Delfini”33 the Court of Appeal considered the following clause:
“Should bills of lading not arrive at discharge port in time then Owners agree to release the entire cargo
without presentation of the original bills of lading against delivery by Charterers of letters of indemnity
issued in accordance with Owners’ P&I Club wording…”
It was held that the shipowners were obliged to comply with the charterers’ directions.
The wording in Example 2 is clearly different from the wording in Example 1 in that it places a positive
obligation on the part of the shipowners to release the cargo without surrender of the original bills of
lading. The wording in Example 1, on the other hand, merely states that if the shipowners comply with
the order, they are entitled to an indemnity. In Example 1 the shipowners still retain the option to
refuse the order.
12. UNCERTAIN SITUATIONS
It is not always completely clear at the time that an employment order is given whether the order is
indeed a legitimate order i.e. an order which the Charterers are entitled to give. This creates a difficulty
since in general terms charterers are entitled to expect the master to comply with employment
instructions without delay whereas the master/Owner will be reluctant to comply with an order which
they fear may be illegitimate for whatever reason. The law recognizes this reality and allows the
master/Owner a reasonable time within which to make enquiries to ascertain the facts, to evaluate the
legitimacy of the order given and the potential ramifications for Owners. In many cases, the shipowners'
reluctance may be based upon a potential danger, whether physical or political, to the vessel. However,
the right to a reasonable time for consideration is not confined to specific categories of case and the
question in each case is how a reasonably prudent master would have acted in the circumstances.
If after making such enquiries, the master/Owner decides that they should comply with the charterer’s
order the shipowners iare not considered to have been in breach of contract during the period when
they were making their enquiries. Therefore, for example, the ship will remain on hire during such
period. However, the shipowners will be in breach if they takeslonger than a reasonable time to make his
33 (1990) 2 Ll. Rep. 252
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enquiries. The question of how much delay is reasonable will itself depend upon the circumstances.
EXAMPLE
In the case of Midwest v Henry34 a master was ordered to load jute at Chalna but was told that although
the cargo was bound for Europe, he should issue bills of lading for Singapore and tell the local authority
that the vessels was bound there. Shortly after sailing from Chalna, the Charterers ordered the master to
return there to load more jute. However, the master feared that if he did so the ultimate destination of
the cargo would become known and the vessel would face difficulties. The master therefore delayed for
a day or so before returning to Chalna. Donaldson J. confirmed that he was entitled to such time and said:
"It seems to me that against that background it must be the duty of the master to act reasonably upon
receipt of orders. Some orders are of their nature such as they would, if the master were to act reasonably,
require immediate compliance. Others would require a great deal of thought and consideration before a
reasonable master would comply with them."
The general nature of this principle was subsequently confirmed by the English Court of Appeal in the
“Houda” 35. where Leggatt L.J. stated:-
"It is obvious that lawful orders have to be obeyed, unless to do so would imperil the safety of ship, crew
or cargo. It is not obvious that they have to be obeyed unthinkingly. "Theirs is not to reason why" is a creed
that neither characterises nor befits masters of chartered vessels. In my judgment when a master receives
an order relating to the cargo his duty, which is probably owed to the Owners of the cargo as well as the
Owners of the vessel, is to act reasonably. Orders ordinarily require immediate compliance. But the
circumstances in which an order is received or the nature of it may make it unreasonable for the master to
comply without further consideration or enquiry. When an order is reasonably regarded as ambiguous, it
must be clarified. When the lawfulness of an order is reasonably called in question, it must be established.
When the authenticity of an order is reasonably doubted, it must be verified. The delay introduced by any
of these processes will usually be brief. In the present case opportunity to verify the authority with which
the order was given to sail for Ain Sukhna had to be afforded to the Owners. Other concerns have been
raised about the Ownership of the cargo and about United Nations sanctions. The resolutions of all these
matters might have been expected to occupy hours or at most days rather than weeks. That will depend
on how long it was reasonable for the master to take"
It will be noted that in both of these quotes, the judge emphasised that the master not only had a right to
take a reasonable time to evaluate the order, but that he had a duty to do so.
Although the master may be criticised for complying with an order which is obviously illegitimate, he is
given the benefit of a doubt when the illegitimacy of the order is doubtful. This principle was emphasised
by Hobhouse J. in the “Kanchenjunga”36:
"Generally speaking a person is entitled to act in the faith that the other party to a contract is carrying out
his part of it properly. Even if the breach of contract is clear it is vital to the proper conduct of business that
the relevant party should be able, if he considers the breach a minor one, to proceed without sacrificing his
right to be indemnified. But this does not mean that the master can enter ports that are obviously unsafe
and then charge the Charterers with the damage done. It is also the rule that an aggrieved party must act
reasonably and try to minimise his damage."
34 Mid West Shipping -v- Henry (1971) 1 Lloyd’s 375

35
“Houda” (1994) 2 Lloyd’s at 552-553
36 (1987) 2 Lloyd’s 509 at 515
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This principle is also of general application and applies not only in cases of physical danger to the vessel.
13. SUMMARY
The right of the Charterers to give employment orders to the vessel is, as stated in the “Hill Harmony”,
their “key right” under the charter. That right is a powerful right as it may well result in the imposition
on the shipowners of liabilities and expenditure which they are not obliged to bear under the time
charter. The effectiveness or otherwise of the right to indemnity is therefore, very important to the
shipowners. However, that right is not always available or effective and accordingly, disputes
frequently arise as to the extent of the charterers’ right to give particular orders since such right is not
unfettered and there will be many instances in which the shipowners would prefer, if possible, to
refuse the order rather than to comply with it and rely on an uncertain right to indemnity. It is
therefore, important to both parties to the time charter to have a clear understanding of the extent of
the right which is given to the charterers to give such orders and the right (and sometimes, the duty)
which the shipowners have to refuse such orders. A failure to properly understand these results can
only result in delay and litigation.
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Chapter 14
Personal notes:
The Duty to Provide Bills of

Lading

Personal notes:
WHO CONTROLS THE FORM OF THE

BILL OF LADIN ?
Personal notes:
Why is the question important?
• From the carrier’s perspective:

• The bill may impose on the carrier liabilities (to third
party endorsees etc.) which he would not incur under
the terms of the charter.
• The right to an indemnity from the charterer may not
exist or may be worthless.
• A carrier might therefore, prefer to try and avoid the
problem by controlling the terms of the bill of lading
and avoiding any “additional” liability under the bills.
1
Personal notes:
Why is the question important?
• From the cargo owners’ perspective:
• They will require a bill of lading in a particular form
to satisfy a cargo sale or a letter of credit.
• If they do not obtain the correct form of bill they will
not be able to enforce payment for the cargo.
Personal notes:
The Importance of the Form of the Bill
“t s ortant n th s connect on to ha e n n that the
resent charters are t e charters the nat re an r ose of
h ch s to ena le the charterers to se the essel r ng the
er o of the charters for tra ng n hate er anner they
ee f t. he ss e of lls of la ng n a art c lar for ay
e tal for the charterers tra e an n ee n relat on to th s
tra e h ch n ol es or contracts the ss e of fre ght
re a lls of la ng s essent al f the tra e s to e
a nta ne .”
“Nanfri” [1979] 1 Ll. Rep 201
Personal notes:
The importance of documents
• An international sale is essentially a sale of
documents rather than a sale of goods.
• The documents must conform with the
requirements of the contract of sale otherwise
they can be rejected and the buyer can refuse to
pay even though the cargo itself conforms with
the contract.
• Relatively minor deficiencies in the
documentation will justify rejection particularly if
payment is to be made under a letter of credit.
2
Personal notes:
The documentary requirements
of the CIF sale
• Seller Buyer
• The buyer pays against provision by the seller
of the following documents:-
• Invoice (and, possibly other cargo description
documents such as a certificate of origin etc.).
• Insurance Certificate.
• Bill of lading.
Personal notes:
The Issue of Bills of Lading

• There is an important distinction between:
1. The Form of the Bill of Lading
(i.e. Congenbills, Conlinebills, Combiconbills
etc.);
and
2. The Data to be inserted on the Bill of Lading
(i.e. The quantity or weight of the cargo, the
date shipped, the apparent order and condition
of the cargo etc.)
Personal notes:
The Form of the Bills of Lading
• If the vessel is chartered, the terms of the charter will

often determine who controls the form of the bills.
• In the case of time charters the shipowner is normally
obliged to issue bills of lading “as resente ” or “as
recte ”.
• These quoted words give the time charterers the right to
control the form of the bills of lading.
“Nanfri” (1979) 1 Lloyds Reports 201
3
Personal notes:
NYPE 1946
• Clause 8.
“The Captain (although appointed by the Owners), shall be
under the orders and directions of the Charterers as regards
employment and agency; and Charterers are to load, stow
and trim the cargo at their expense under the supervision of
the Captain who is to sign Bills of Lading for cargo as
presented, in conformity with Mate’s or Tally Clerk’s
receipts”.
Personal notes:
BPTIME 3: Clause 11
“Bills of lading and waybills shall be signed as Charterers
direct, without prejudice to this Charter.”
Personal notes:
The Form of the Bills of Lading
• In the case of voyage charters the position is
more varied.
• Most voyage charters do not provide that bills are
to be signed “as resente ” or “as recte ” in
which case it is the shipowners who can control
the form.
• However, some voyage charters provide for a
specific type of bill of lading in which case this is
the only form of bill which the charterers can
demand.
4
Personal notes:
SYNACOME 2000 form
• Clause 18. Bills of Lading

“The Master to sign Bills of Lading as presented
without prejudice to the terms, conditions and
exceptions of this Charter Party...”.
Personal notes:
ASBATANKVOY form
• Clause 20.Issuance and Terms of Bills of Lading
a) “The Master shall, upon request, sign Bills of Lading
in the form appearing below for all cargo shipped
but without prejudice to the rights of the owner
and charterer under the terms of this Charter”.
Personal notes:
ENCON 1994 form
• Clause 10. Bills of Lading

“Bills of Lading shall be presented and signed by
the Master as per the “Congenbill” Bill of Lading
form 1994...”.
5
Personal notes:
“As presented”/”As directed”
These phrases oblige the master to sign bills in a form
determined by the time charterers provided the
terms of the bills are not :-
• manifestly inconsistent with the terms of the
charter; or
• contain extraordinary terms.
“Ikariada” (1999) AER (Com Cas) 257
NB! These terms do not oblige the master to sign

bills which contain incorrect data.
Personal notes:
Examples of terms that are manifestly

inconsistent with the charter
• A clause providing that bills will be voluntarily subject to

the Hamburg Rules contrary to clause 25 of BPTIME 3
• A clause providing for carriage to a port which is outside

the geographical limits of the charter.
Personal notes:
Extraordinary Terms
Possible examples:
• Terms which exclude the shippers’ liability for the

shipment of dangerous goods.
• Terms which impose liability on the carrier for delivery

inland far from the port of delivery.
6
Personal notes:
WHO IS THE CARRIER UNDER THE

BILL OF LADIN ?
Personal notes:
Who is the Carrier under the Bill of
Lading?
1. A bill of lading signed by or on behalf of the Master binds
the shipowners as carriers even if it is actually signed by
the charterers or their agents.
• E CEPT: When the vessel is demise chartered, in which
case it is the demise charterer who is the carrier.
2. A bill of lading signed by the charterers or their agents
otherwise than “for” or “on behalf of” the master binds
the charterers as carrier.
Personal notes:
Confusing Clauses
• However, specific clauses can confuse the matter.
e.g. CONLINEBILL 1978: Clause 17. Identity of Carrier
“ he contract e ence y th s ll of la ng s et een the
erchant an the ner of the essel na e here n or
s st t te an t s therefore agree that sa sh o ner only
shall e l a le for any a age or loss e to any reach or
non erfor ance of the contract of carr age.”
7
Personal notes:
“Starsin” at first instance
1. Bill on Charterers’ (Maras Linje) own form.
2. Bill included an “Identity of Carrier” clause 3.
• Signature :
“ gne as agents for the carr er aras n e”.
• HELD : Owners’ Bill.
Personal notes:
“Starsin”-House of Lords Judgement
• The bill was held to be a charterer’s bill.
• Priority is to be given to the typed or stamped
words next to the signature on the face of the bill.
These words are not overridden by printed terms
on the back of the bill.
• This dovetails with Art. 20 of UCP 600 which
requires a bill of lading to state the name of the
carrier on the face of the bill.
Personal notes:
THE PROBLEM FOR SHIPOWNERS
8
Personal notes:
The Carrier’s Difficulty
Shipowner
C/P B/L
Receiver
Charterer
Personal notes:
Conflict between the charter and B/L
• The charter party and the bill of lading are
completely separate contracts on different terms.
• HOWEVER, if the shipowner is the carrier under the
B/L, he is a party to both contracts.
• The shipowner may therefore, be liable to two quite
separate parties under two quite different contracts
on different terms.
• In particular, the shipowner’s liability to the receiver
under the B/L may be greater than the liability that
he has to the charterer under the charter party.
Personal notes:
The Right to Indemnity
• If, as a result of complying with charterers’ orders to issue
B/LL, the shipowner incurs a liability to the receiver under the
B/L which he would not have incurred if the particular claim
had been brought against him by the charterer under the
terms of the charter, the shipowner is usually entitled to an
indemnity from the time charterer in respect of such
“additional” liability.
• Most time charters have express indemnity clauses to this
effect.
9
Personal notes:
Example: BPTIME 3 Clause 11
“Bills of lading and waybills shall be signed as charterers direct,
without prejudice to this Charter. Charterers hereby indemnify
Owners:-
11.1.1 against all liabilities that may arise from the signing of
bills of lading and waybills in accordance with the directions of
Charterers and to the extent that the terms of such bills of
lading and waybills impose more onerous liabilities than those
assumed by Owners under the terms of this Charter;
Personal notes:
Implied Indemnity
• Even if there is no express indemnity the shipowners are
usually entitled under a time charter to an implied indemnity
in such circumstances.
• However, the position is not so clear in the case of a voyage
charter party.
“C. Joyce” (1986) 2 Ll. Rep 285
“Nogar Marin” (1987) 1 Ll. Rep 456
The Incorporation Of Charter Terms

Personal notes:
into Bills of Lading
• The shipowner may be not happy to rely on his right of
indemnity in all circumstances and may prefer to try to ensure
that his liability under bills of lading is “back to back” to the
liability that he has agreed to bear under the charter.
• Therefore, the shipowner may wish to incorporate the charter
party terms into a bill of lading.
• However! This aim is often defeated by:
1) unsuccessful incorporation techniques: and/or
2) the effect of the Hague/Hague-Visby Rules
10
Personal notes:
1. UNSUCCESSFUL INCORPORATION
TECHNIQUES
Personal notes:
1. Unsuccessful Incorporation
Techniques
• Two separate problems arise in relation to

incorporation:
a) Which is the relevant charter party?;
b) Which terms (if any) are incorporated?
Personal notes:
The terms of which charter

are incorporated? A
T/C?
D B/L? B
V/C?
11
Personal notes:
Which Charter Party?
• If the charter party is expressly identified (usually by date) it
is the terms of that charter to which the B/L incorporation
clause refers even if that charter is a time charter.
“Coral” (1993) 1 Ll. Rep 1
• However, if the charter party is not so identified and there is
more than one possible charter (e.g. a head charter and a
sub-charter) it is not immediately obvious to which charter
reference is being made and the courts rely on certain
presumptions.
Personal notes:
Which Charter Party?
If V/C in bottom - CP date
• If the charter party is not expressly identified by date it is
presumed that:
1. If the carrier under the bill is the shipowner then the bill of
lading will normally incorporate the terms of the head charter
since this is the charter to which the carrier is a party.
2.However, if that charter is a time charter then the
presumption is usually rebutted on the basis that it is not
commercially sensible to incorporate the terms of a contract
for time into a contract for a voyage and the bill will purport
to incorporate the terms of the sub voyage charter.
“San Nicholas” (1976) 1 Ll. Rep. 8
Personal notes:
Which charter terms are incorporated?

• A distinction is drawn between:
1) eneral words of incorporation; and

2) Specific words of incorporation
12
Personal notes:
eneral Words of Incorporation
• Facts:
• B/L: “ ll the ter s hatsoe er of the charter a ly to
an go ern the r ghts of the art es ”
• C/P Cl. 8: “ harterer shall ay
e rrage er r nn ng ho r ”
• HELD
• Clause 8 did not oblige the receivers to pay demurrage.
“Miramar” (1984) AC 676
Personal notes:
Specific Words of Incorporation
• Facts:
• B/L:
“ ll the ter s an con t ons l ert es e ce t ons an ar trat on
cla se of the charter arty ate as o erleaf are here th
ncor orate .”
• C/P
“ ho l any s te ar se et een the ners an the harterers
the atter n s te sho l e eter ne n on on ar trat on ”
• HELD:
The charter party arbitration clause was validly incorporated.
“Nerano” (1996) 1 Ll. Rep. 1
Personal notes:
The Relevant Principle
• If the incorporation clause makes specific
reference to a particular clause, that clause
will be incorporated even if it necessitates
verbal manipulation.
• However, if the incorporation clause makes a general
reference to charter clauses then the charter clause
will not be validly
incorporated into the bill of lading unless
verbal manipulation is not necessary and
the charter party clause makes sense in the
context of the bill of lading.
13
Personal notes:
1. THE IMPACT OF THE HA UE OR

HA UE-VISBY RULES
Personal notes:
Article III Rule 8
“Any clause, covenant or agreement in a contract of carriage
relieving the carrier or the ship from liability for loss or
damage to or in connection with the goods arising from the
negligence, fault or failure in the duties and obligations
provided in this Article or lessening such liability otherwise
than as provided in these Rules, shall be null and void and of
no effect.”
Personal notes:
The Carrier’s Difficulty
Shipowner
C/P B/L
Receiver
Charterer
14
Personal notes:
E AMPLE
1. Under the Baltime 1939 (revised 2001) charter the owner is
liable “for loss or a age to goo s on oar ” only if:-
“s ch ...loss has een ca se y ...any other ersonal act or
o ss on or efa lt of the ner or the r anagers .”
2. However! The owner will probably be liable under a bill of
lading issued pursuant to such a charter if there is want of due
diligence on the part of any of his servants or agents or
independent contractors. (This is due to the compulsory
application of the Hague or Hague-Visby Rules to such bill.)
See the discussion in “EEMS Solar” (2013) 2 Ll. Rep 487
Personal notes:
WHO CONTROLS THE DATA WHICH IS

TO BE INCLUDED IN THE BILL OF
LADIN ?
Personal notes:
Does “as resente ” extend to data?

• The master is not obliged by words such as “as resente ” to
sign bills for cargo the apparent order and condition of which is
wrongly described, or for a quantity which is known not to be
shipped.
“Boukadoura” (1989) 1 Ll. Rep 393
15
Personal notes:
Does “as resente ” extend to data?
• The master is obliged to refuse to sign bills:

• which incorrectly describe the apparent condition of the cargo.
“Nogar Marin” (1988)1 Ll. Rep 412
• or which are ante-dated (or, probably, post-dated).
“Saudi Crown” (1986) 1 Ll. Rep. 261
Personal notes:
Does “as resente ” extend to data? Master is not in position to asses
• The master has the right (but not the obligation) to sign bills
which give a description of the quantity or weight of the cargo
which he doubts to be correct. Why the MAster is so convinced?
(See Article III Rule 3 of the Hague and Hague-Visby Rules)
• However, should the master know that the figures are wrong
he may prejudice the shipowners’ P I cover if he authorises
the bill to be signed on his behalf.
Personal notes:
WHO IS AUTHORISED TO SI N THE

BILL OF LADIN ?
16
Personal notes:
The Production of the Bills of Lading
• The bills of lading are normally drawn up in the first instance
by the shippers or their agents and presented to the master
or the carrier’s agents for signature.
• The master or the carrier’s agents should then check:
1. that the bills are in an acceptable form (depending on the
charter terms);and
2. the data which is recorded on the bills against the data
recorded by the ship’s crew on the Mate’s Receipts during
the loading.
Personal notes:

• If the master or carrier’s agents are satisfied with the
form and data then the bills should be signed either by
the master or by the carrier’s agents (if they are so
authorised by the carrier).
• However, if the master or carrier’s agents are not satisfied
with the form and/or data then the bills should not be
signed and enquiry should be made of the carriers
whether they authorise the master or carrier’s agents to
sign or require further investigation or enquiry.
Personal notes:

• If the ship is not chartered the bills of lading should
normally be signed either by the master or by the
shipowners’ agents on behalf of the master.
• However, if the ship is chartered, the charter will usually
provide that the vessel’s agents are authorised to sign bills
of lading on behalf of the master provided that the bills are
in accordance with the data recorded by the ship’s crew on
the Mate’s Receipts.
17
Personal notes:
A COMMON PROBLEM
• There may be situations in which the master refuses to sign
the B/LL and the charterers refuse to present different B/LL
for signature.
• As a result the ship is delayed and the shippers are unable to
obtain the B/LL which they require in order to secure
payment for the cargo under the letter of credit.
Personal notes:

• Consequently!
• Charters (particularly time charters) will often now
include express provisions authorising the charterers’
agents to sign bills of lading on behalf of the master
provided that the bills are in accordance with the data
recorded by the ship’s crew on the Mate’s Receipts.
Personal notes:
Clause 30 (a) of NYPE 93
“ o e er the harterers ay s gn lls of la ng on ehalf
of the aster th the ner s r or r tten a thor ty
al ays n confor ty th ates or tally cler s rece ts.”
18
Personal notes:
• However!
• Even if the charter does not contain such express
provisions it has been held in the case of time
charters that the charterers or their agents may
have implied authority to sign bills of lading on
behalf of the master .
Personal notes:
NYPE 1946
• Clause 8.
“ he a ta n altho gh a o nte y the ners shall e
n er the or ers an rect ons of the harterers as regar s
e loy ent an agency an harterers are to loa sto an
tr the cargo at the r e ense n er the s er s on of the
a ta n ho s to s gn lls of a ng for cargo as resente n
confor ty th ate s or ally ler s rece ts”.
Personal notes:
“Berkshire” (1974) 1 Ll. Rep. 185
(See also “Ines” (1995) 2 Ll. Rep. 144)
“ n the secon lace the harterers ay nstea of
resent ng s ch lls of a ng to the aster for s gnat re y
h on ehalf of the sh o ners s gn the the sel es on the
sa e ehalf. n e ther case hether the aster s gns on the
rect ons of the harterers or the harterers short c rc t the
atter an s gn the sel es the s gnat re n s the
sh o ners as r nc als to the contract conta ne n or
e ence y the lls of a ng”.
per Brandon J.
19
Personal notes:
The Problem
• In the case of a time charter (at least) a charterer is deemed to
have the authority to sign a bill of lading “for” or “on behalf
of” the master even if he has not been given an express letter
of authority to this effect.
• Under the doctrine of apparent authority a bill of lading
signed “for” or “on behalf of” the master normally binds the
shipowner vis a vis endorsees and other third parties even if
signed without actual authority.
“Saudi Crown” (1986) 1 Ll. Rep.261
“Starsin” (2000) 1 Ll. Rep 85
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
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THE DUTY TO PROVIDE BILLS OF LADING

1. CHARTERPARTIES AS USEFUL VEHICLES FOR TRADE
A charterparty is a most useful vehicle for the furtherance of international trade and is beneficial to
both Shipowners and traders. It provides the Shipowners with income and provides the trader in his
capacity as Charterer with the means to carry cargo from one country to another. Therefore, the
charterparty facilitates the international sales of goods. However, most international sales of goods
provide that payment is to be made against documents including the bill of lading Therefore, the ability
to obtain such bills of lading is vital to enable the Charterers or their customers to satisfy the
documentary requirements of their cargo sale and purchase contracts and any letters of credit relating
thereto. To understand why this is, it is necessary to remember the following:-
1. The seller often knows nothing of the financial standing of the buyer and is taking a risk
in consigning his goods unless he can be reasonably certain of being paid for them. The
obvious solution, that of demanding payment in advance, is unlikely on the other hand to
appeal to the buyers, who may have no reason to trust the seller to ship goods or cargo
of the promised quantity and description.
2. Another difficulty is that as long as the cargo is at sea, its condition cannot be inspected
by the buyer.
3. Cargo is frequently sold and re-sold to different purchasers while the vessel is at sea.
However, whilst the cargo is at sea, it cannot be physically transferred to a potential new
buyer to effect the sale. The only way in which the seller can effect the transfer of any
part of the cargo is by transferring instead a document of title, representing that part of
the cargo. In this way, the holder of the document of title can claim his part of the cargo
from the vessel, when it arrives at its destination.
The bill of lading attempts to ease these difficulties since it has the following functions:-
1. It is a receipt from the Carrier for the goods, and describes the apparent condition and
the quantity or weight of the goods on shipment.
2. It is a contract of carriage which sets out the terms under which the goods are carried.
3. It is a document of title to the goods (so long as it is made negotiable by the Shipper). As
a document of title:
a. It represents the goods so as to make it possible for the buyer to deal with the goods
at sea;
b. It transfers constructive possession of the goods i.e. it enables the holder of the bill in
due course to demand possession of the cargo from the Shipowner;
c. It may operate to transfer property in the goods if it is the intention of the parties to
do so.
The importance of bills of lading to Charterers was recognised by the House of Lords in the case of the
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"Nanfri"1. Lord Wilberforce said at page 206 that:
"It is important in this connection to have in mind that the present charters are time charters, the nature
and purpose of which is to enable the Charterers to use the vessel during the period of the charters for
trading in whatever manner they deem fit. The issue of bills of lading in a particular form may be vital
for the Charterers' trade and indeed, in relation to this trade, which involves CIF or C&F contracts, the
issue of freight pre-paid bills of lading is essential if the trade is to be maintained. Furthermore, Clause
9, as usual in time charters, contains an indemnity clause against all consequences or liabilities arising
from the Master signing bills of lading. This underlines the power of the Charterers, in the course of
exploiting the vessel, to decide what bills of lading are appropriate for their trade and to instruct the
Master, to issue such bills, the Owners being protected by the indemnity clause".
2. CHARTER CLAUSES RELATING TO THE ISSUE OF BILLS OF LADING
To facilitate the Charterers' needs, most charters have clauses which provide expressly for the issuance
of bills of lading. In the case of time charters the right is usually part and parcel of the of the Time
Charterers’ right to give employment instructions to the vessel.
2.1 EXAMPLES
Clause 8 of NYPE 1946 provides that:
"Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers
as regards employment; ... the Captain ... is to sign bills of lading for cargo as presented in accordance
with Mate's or Tally Clerk's receipts."
“Bills of Lading and Waybills shall be signed as Charterers direct, without prejudice to this Charter.”
However, even if the obligation to issue bills of lading is not express, it is probably implicit as it is the
natural result of the master's obligation to comply with the Time Charterers’ orders to proceed to a
particular port to load cargo.
Similarly, voyage charters will also usually include express clauses relating to the provision of bills of
lading.
2.2 EXAMPLES
Clause 10 of the GENCON 1994 form provides that:
“Bills of Lading shall be presented and signed by the Master as per the “Congenbill” Bill of Lading form
1994...”
Clause 20 of the ASBATANKVOY form provides that:
a) “The Master shall, upon request, sign Bills of Lading in the form appearing below for all cargo
1 (1979) 1 Ll. Rep. 201
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shipped but without prejudice to the rights of the owner and charterer under the terms of this
Charter”.
3. WHO ARE CARRIERS UNDER BILLS OF LADING ISSUED PURSUANT TO CHARTERERS’

INSTRUCTIONS?
It must be remembered that the bill of lading is (amongst other things) itself a contract of carriage of
goods between the Carrier and the goods Owner and it is therefore, relevant to ascertain who is the
Carrier under bills of lading issued pursuant to Charterers’ orders. The following general rules usually
apply:-
1. Bills of lading signed by the master himself or by the Owners’ agents or by time Charterers
or their agents “for” or “on behalf of” the master bind the master's principals (i.e. the
Shipowners) as Carriers under those bills2.
2. However, where the vessel is demise chartered, the party which appoints the master and
who is therefore normally his principal is the Demise Charterer rather than the Owner. In
such circumstances, a signature by the master, or by others on his behalf, will normally
bind the Demise Charterer as Carrier3.
3. If the Charterers sign the bill of lading themselves, or if their agents do so on their behalf,
without reference to the fact that the signature is “for” or “on behalf of” the master then
the Charterers themselves may well be held to be the Carriers even though the ship is not
owned by them4.
4. If the bill of lading contains an “identity of Carrier” or “demise” clause then, at least under
English law, the Owner (or the Demise Charterer, if the vessel is demise chartered) is the
Carrier unless the other terms of the bill (including its signature) make it clear that the
Carrier is intended to be the Charterers5.
3.1 EXAMPLE
Clause 17 ("Identity of Carrier”) clause in the CONLINEBILL 1978 form of bill of lading reads as
follows:
"The contract evidenced by this Bill of Lading is between the merchant and Owner of the vessel
named herein (or substitute) and it is therefore agreed that the said Shipowner only shall be
liable for any damage or loss due to any breach or non-performance of any obligation arising
out of the Contract of Carriage, whether or not relating to the vessel's seaworthiness."
(Other forms specify that it is the Shipowner or the Demise Charterer (if there is one) who is
to be the Carrier).
However, priority is to be given to the typed or stamped words next to the signature and if
these would make it clear to a reasonable man that the Carrier was intended to be someone
other than the Shipowner then the Identity of Carrier clause in the printed terms at the back
of the bill must give way to these typed or printed words.6
2 "Rewia" (1991) 2 Ll. Rep. 325

3 Baumwoll v Gilchrist (1893) AC8
4 “Oakhampton” (1913) Probate 173
5
“Berkshire” (1974)1Ll. Rep. 185,
6 “Starsin” (2003) UKHL 12
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(This ruling of the House of Lords in the “Starsin” is important to ensure that the manner in
which the court is now to decide who is the Carrier dovetails with the requirements of UCP
600 which provides that the identity of the Carrier has to be plain on the face of the bill since
banks are not expected to closely peruse the printed terms on the back of the bill.)7
5. Lastly, if the court is not assisted by any of these principles then it has to do its best by
looking at all the terms of the bill of lading and the surrounding circumstances to ascertain
what a “reasonable man” would have concluded.
4. TWO SEPARATE CONTRACTS: THE TIME CHARTER AND THE BILL OF LADING
If a bill of lading has been signed on behalf of the master, this usually means that the Shipowner
thereafter becomes party to two separate contracts with two separate parties, namely, the charter
contract with the Charterer and the bill of lading contract with the cargo Owner. This was emphasised
by the Court of Appeal in the "Island Archon"8:-
"Legal relations between Shipowner and Charterer are governed by their contract contained in the
charter party. When a bill of lading is issued or is transferred to the Owner or person entitled to
possession of the cargo, who is not the Charterer, then it contains or evidences a separate contract
between the Shipowner and that other person."
This duality of obligation frequently puts the Owner in a difficult position since amended employment
orders given by the Charterer under the time charter may put him in breach of his obligation to the
cargo Owner under the bill of lading. For example, an order given by a Charterer to change the port of
discharge from Port A to B after bills of lading have been released for Port A would, if the Shipowner
complied with them, make him guilty of deviation under his bill of lading contract with potentially
disastrous effect on his P&I cover.
Similarly, the fact that the bill of lading has been issued may seriously diminish the effectiveness of
rights which the Owner may have under the charter.
4.1 EXAMPLE 1
Under clause 2 of the Gencon charter the owner is liable only if:
“…loss, damage or delay has been caused by personal want of due diligence on the part of the
carrier…”
However, the owner will probably be liable under a bill of lading issued pursuant to such a charter if
there is want of due diligence on the part of any of his servants or agents or independent contractors.
(This is due to the application of the Hague or Hague-Visby Rules to such bill.)
4.2 EXAMPLE 2
An Owner usually has the right under a time charter to withdraw the vessel from the Charterers'
7
Article 20 of UCP 600
8 [1994] 2 Ll. Rep. 227
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employment if hire has not punctually been paid. However, if a bill of lading has been issued in the
meantime, a withdrawal may not be of much use to the Shipowners since his completely separate
obligations to the cargo Owner under the bill of lading will continue. These obligations include the duty
to proceed to and deliver the cargo at the port specified in the bill of lading even though the bill of
lading freight may already have been pre-paid to the Charterer and even though no further hire will
be payable under the time charter. Indeed, the Owner may even have to pay out of his own pocket,
port expenses, stevedoring charges and other costs which should have been for the Time Charterers'
account under the time charter.
5. THE INCORPORATION OF CHARTER PARTY TERMS INTO BILLS OF LADING
To avoid such difficulties some bills of lading purport to incorporate the terms of the charter party into
the bill of lading, intending thereby to ensure that the liability of the shipowner under the charter and
the bill of lading is on “back to back” terms.
EXAMPLE 1
The CONGENBILL form of bill of lading provides that:-
“…All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf,
including the Law and Jurisdiction Clause, are herewith incorporated.”
EXAMPLE 2
The ASBATANKVOY form of bill of lading provides that:-
“This shipment is carried under and pursuant to the terms of the charter dated....and all the
terms whatsoever of the said charter...apply to and govern the rights of the parties concerned
in this shipment.”
However, such aim is usually defeated either by unsuccessful incorporation techniques or by the
applicability of the Hague or Hague-Visby Rules.
5.1 Unsuccessful Incorporation Techniques
Two problems generally arise:-
(i) Where there is more than one charterparty, which is the charter to which the bill of
lading refers?
(ii) Are the words of purported incorporation in the bill of lading and charterparty
sufficiently specific?
It is necessary to consider each problem in turn:-
(i) If the bill of lading specifically identifies the charter (usually by date) little difficulty arises.
However, it frequently happens that the person drawing up the bill of lading either forgets to
insert the date of the charter or does not know the date of the charter. Frequently, there is
either a reference to an undated charter or a reference to “the charterparty governing this
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voyage”.
The usual presumption under English law is that if the charter is undated then the reference is
to the head charter - at least, if the head charter is a voyage charter.9 However, if the head
charter is a time charter then the presumption is that there is a reference to a sub-voyage
charter if there is one in existence.10 The reason for this is that it normally makes little sense
for the provisions of a time charter, which cater for a period exceeding that of the voyage in
question, to be incorporated into a bill of lading which is necessarily restricted to the voyage
in question. However, if the bill of lading purports to incorporate the provisions of an expressly
identified time charter then the English Court will do its best to construe the provisions of the
time charter in the context of the bill of lading11.
(ii) Once the charter has been identified then it is necessary to consider the sufficiency or
otherwise of the incorporating words in the bill of lading.
There are two main difficulties which arise:
The first is that many of the terms of a charter party do not make sense in the context of a bill
of lading. This is particularly so in the case of time charters e.g. the duty to pay hire or to pay
for bunkers. However, even in the case of voyage charters there are clauses which one would
not normally find in a bill of lading e.g. laytime and demurrage.
The second is that many of the terms of the charter party refer to duties which are placed on
“the charterer” (who is not necessarily a party to the bill of lading) and not on the “receiver”
or “the consignee” or any other “holder” of the bill of lading. Therefore, if such clause were to
be incorporated into the bill it would not make sense in the context of the bill of lading unless
the word “receiver” or “consignee” or “holder” was to be substituted for “charterer”.
Against this background, the English Court has drawn a distinction between clauses which
make a general reference to the terms of the charter party (e.g. “all the terms of the charter
dated…are herewith incorporated”) and provisions which make a specific reference to
particular clauses (e.g.….the Law and Arbitration Clause of the charter party…is hereby
incorporated.”).
If the incorporation clause makes specific reference to a particular clause, that clause will be
incorporated even if it means that it will be necessary to manipulate the words so as to make
sense in the context of the bill of lading e.g. by reading “receiver” for “charterer.”
Example 1
The bill of lading in the “Nerano”12 provided that:-
“All terms and conditions, liberties, exceptions and arbitration clause of the charter party,
dated as overleaf, are herewith incorporated.”
The arbitration clause in the charter party in question provided that :-
9 “San Nicholas” (1976) 1 Lloyd’s Rep.

10 “Sevonia Team” (1983) 2 Lloyd’s 640 and the “SLS Everest” (1981) 2 Lloyd’s Reports 389.
11
“Coral” (1993) 1 Ll. Rep.1
12 (1996) 1 Lloyd’s 1
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“Should any dispute arise between the Owners and the Charterers the matter in dispute should
be determined in [“London arbitration”]…”
Saville LJ stated that:-
“… by identifying and specifying the charter party arbitration clause it seems to me to be clear
that the parties to the bill of lading contract did intend and agree to arbitration, so that to give
force to that intention and agreement the words in the clause must be read and construed as
applying to those parties. Indeed, it seems to me that it would be an extraordinary result if
English law reached a different conclusion. “
However, if the incorporation clause in the bill of lading makes a general reference to charter
clauses (e.g. “all the terms of the charter dated…are herewith incorporated”) then the charter
clause will not be validly incorporated into the bill of lading unless the charter party clause
makes sense in the context of the bill of lading and verbal manipulation is not necessary.
Example 2
In the “Miramar”13 the relevant bill of lading provided that :-
“This shipment is carried under and pursuant to the terms of the charter dated
between and charterer, and all the terms whatsoever of the said charter
except the rate and payment of freight specified therein apply to and govern the right
of the parties concerned in this shipment.
The charter party to which reference was made included the following clause:-
“Charterer shall pay demurrage per running hour …. “
It was argued that the payment of demurrage could make sense in the context of the bill of
lading and that it was necessary to manipulate the words of the clause so that the word
“charterer” in the charter should be read as the “consignee under a bill of lading issued in
respect of the whole or any part of the cargo”. However, the House of Lords rejected this
argument and concluded that:-
“… this House should take this opportunity of stating unequivocally that, where in a bill of
lading there is included a clause which purports to incorporate the terms of a specified
charterparty, there is not any rule of construction that clauses in that charterparty which are
directly germane to the shipment, carriage or delivery of goods and impose obligations upon
the “charterer” under that designation, are presumed to be incorporated in the bill of lading
with the substitution of (where there is a cessor clause), or inclusion in (where there is no cessor
clause), the designation “charterer” the designation “consignee of the cargo” or “bill of lading
holder””.
5.2 The application of the Hague or Hague-Visby Rules
The Hague and Hague-Visby Rules apply compulsorily only to “a bill of lading or any similar document
of title.”14Therefore, they do not apply compulsorily to charter parties and the parties to such contracts
13
(1984) 2 Lloyd’s Report 129
14 Article 1 (b) of the Rules
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have the luxury of freedom of contract. However, if a clause in a charter which is perfectly valid in that
context pursuant to the freedom of contract principle, is incorporated into, and therefore, becomes a
term of, the a bill of lading, that same clause, in the context of the bill of lading, may come into conflict
with the Hague or Hague-Visby Rules which apply compulsorily to such contracts. Article III Rule 8 of
the Rules provides that:
“Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship
from liability for loss or damage to or in connection with the goods arising from the negligence,
fault or failure in the duties and obligations provided in this Article or lessening such liability
otherwise than as provided in these Rules, shall be null and void and of no effect.”
EXAMPLE
Clause 2 of the Gencon charter provides that:
“Owners are to be responsible for loss of or damage to the goods ... only in case the loss,
damage ... has been caused by ... the personal act or default of the Owners or their Manager.
And the Owners are responsible for no loss or damage...arising from any other cause
whatsoever, even from the neglect or default of the Captain or crew or some other person
employed by the Owners.”
Therefore, if a claim were to be brought against the shipowner under the charter for damage caused
by the crew’s negligence, the shipowner would probably be able to rely on clause 2 to avoid liability.
However, if such clause were to be incorporated into a bill of lading and the same claim were to be
brought against the shipowner under the bill, the shipowner would probably be liable for such claim
since, whilst Clause 2 of the GENCON charter may have been incorporated into the bill of lading, it
would be rendered void in the context of the bill by Article III Rule 8 of the Hague or Hague-Visby Rules
which would apply compulsorily to the bill of lading.
6. THE RIGHT TO AN INDEMNITY
Therefore, when the Charterer requires the master to sign the bill of lading (or requires a bill to be
signed for or on behalf of the master) he will generally be requiring the Shipowner to contract with the
cargo owner on terms which will probably differ from, and which may well be more onerous than, the
obligations which the Shipowner has to the Charterer under the pre-existing charter. To protect the
Shipowner in such circumstances, many charters provide expressly that the Charterer will indemnify
the Owners against such additional exposure. Some clauses are general nature whilst others are more
specific.
6.1 EXAMPLES
1. Clause 9 of BALTIME 1939 provides that:-
“Charterers to indemnify the Owners against all consequences or liabilities arising from
the Master, Officers or Agents signing Bills of Lading…”
2. Clause 11.1 of BPTIME3 provides that:-
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“Charterers hereby indemnify Owners:-

11.1.1 against all liabilities that may arise from the signing of bills of lading and waybills
in accordance with the directions of Charterers to the extent that the terms of such bills of
lading and waybills impose more onerous liabilities than those assumed by Owners under
the terms of this Charter;”
3. Clause 10 of GENCON 1994 provides that:
“Charterers shall indemnify the Owners against all consequences or liabilities that may
arise form the signing of bills of lading presented to the extent that the terms or contents
of such bills of lading impose or result in the imposition of more onerous liabilities upon
the Owners that those assumed by the Owners under this Charter Party.”
However, even if there is no express clause15 of this nature, the law usually implies an indemnity in
Owners' favour. This principle has been repeatedly recognised by the Court of Appeal. In the "Island
Archon", Lord Justice Evans stated that:
"If the Shipowner's liability under the Bill of Lading is more onerous than under the Charter party, then
the extent to which, if at all, he can recover an indemnity against the excess from the Charterer is
governed by the Charter party, or it may arise under the general principles of law recognised in Kruger
-v- Moel Tryvan as a consequence of the Master's compliance with the Charterers' request"16.
7. THE CHARTERERS RIGHT TO DEMAND A BILL OF LADING
However, even if the law does allow an indemnity, the Charterer may not have sufficient financial
standing to honour that indemnity. Therefore, the Shipowner may often prefer if possible to refuse to
release bills of lading in accordance with the Charterers’ orders rather than issue such bills and rely on
a dubious right to an effective indemnity. However, if he were to do so then this would be a serious
restriction on the ability of the Charterer to obtain the bills of lading which he or his customer require
in order to obtain payment from a buyer of the goods. It is therefore, necessary to consider when a
Shipowner is entitled to refuse to comply with Charterers’ orders to sign and release bills of lading.
6.1 Can Charterers demand bills of lading, the terms of which differ from the time charter and
which may place "extra" liability on the Shipowner?
The House of Lords recognised in the "Nanfri" the importance to Charterers of obtaining the sort of
Bills of Lading required by their customers to satisfy their trading requirements. Contracts for the sale
and purchase or Letters of Credits often specify particular types of bills of lading. Alternatively, the
mere fact that the vessel is to load at a particular port may mean that in practical terms, only a
particular form of bill of lading will be available.
Frequently, these bills of lading will contain terms which differ from the terms of the Time Charter
under which they have been ordered and which will, in many cases, mean that the Shipowner will incur
more liability to the cargo Owner than he has to the Charterer under the charter. The question which
therefore arises, is whether the Shipowner is entitled to frustrate the Charterers requirements by
refusing to sign such bills of lading. The answer to this question depends to a large extent on the
15
See e.g. clause 8 of NYPE 1946
16 (1993) 2 Ll. Rep. at 233
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wording of the particular charter party.
6.1.1 “As presented”, “As charterers’ direct” etc.
Where the relevant charter clause provides that bills of lading are to be signed "as presented" 17(i.e. as
presented by or on behalf of the Charterers) or “as Charterers direct”18 no problem arises since the
Owners are expressly obliged in such circumstances to sign the bills of lading presented by the charter
even if the presented bills are inconsistent with the time charter19.
For example, Brandon J. stated in the "Berkshire" that:
"The effect of such a clause (Clause 8 of the NYPE form) in the Charter party is well settled. In the first
place, the clause entitles the Charterers to present to the Master for signature by him on behalf of the
Shipowners, Bills of Lading which contain or evidence contracts between the Shippers of goods and the
Shipowners, provided always that such Bills of Lading do not contain extraordinary terms or terms
manifestly inconsistent with the Charter party; and the Master is obliged, on presentation to him of
such Bills of Lading, to sign them on the Shipowners' behalf."20
A distinction needs to be drawn between terms which are merely different from those of the time
charter and terms which are "manifestly inconsistent" with the terms of the time charter. The precise
distinction is not always crystal clear. However, the test appears to be to ask the question whether
there is any provision of the time charter which either expressly or impliedly forbids a bill of lading
being issued in the requested form or terms. If so, then a bill of lading in such terms is “manifestly
inconsistent” with the time charter.
EXAMPLE 1
The charter was subject to Norwegian law and jurisdiction whereas the bills of lading which were
presented for signature provided for English law and jurisdiction. It was held that the terms of the bills
of lading were merely different from and not manifestly inconsistent with the terms of the charter
since there was nothing in the charter which said that any bills of lading issued pursuant to the charter
should be subject to Norwegian law and jurisdiction. The court stated that:
".... there is no inconsistency between the jurisdiction clause in the Charter party and the jurisdiction
clause in the Bill of Lading. The Charter party provided for disputes between the Owners and the
Charterers under the Charter to be referred to arbitration in Oslo. This is not inconsistent with the
provisions of the Bill of Lading that disputes under a different contract between different parties, the
Owners and the Bill of Lading holders - are to be decided by the High Court here."21
EXAMPLE 2
Clause 17 (a) (iii) of the GENTIME form provides that:-
“Neither the Charterers nor their agents shall permit the issue of any Contract of Carriage
17 E.g. clause 8 of NYPE 1946 and clause 11 of GENTiME

18 E.g. clause 13 of SHELLTIME 3 and clause 11.1 of BPTIME 3
19 Jones -v- Hough (1879) 5 Ex.115 and “Anwar Al Sabar” (1980) 2 Ll. Rep. 261
20
(1974) 1 Ll. Rep at 858. See also "Vikfrost" (1980) 1 Ll. Rep. 560.
21 “Vikfrost” (1980) 1 Ll. Rep. at 568 (Browne LJ)
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…..incorporating, where not compulsorily applicable, the Hamburg Rules or any other legislation giving
effect to the Hamburg Rules or any other legislation imposing liabilities in excess of Hague or Hague-
Visby Rules.”
If the Charterer were to order a bill of lading to be issued subject to the Hamburg Rules when such
Rules were not compulsorily applicable to such bills, this would be an order which was “manifestly
inconsistent” with the terms of the charter party.
6.1.2 “Without prejudice to the charter party” etc.
Alternatively, the clause may not contain words such as "as presented" but may instead, provide that
bills of lading have to be signed "without prejudice to the Charter party". Whilst there has, in earlier
days, been some confusion as to the effect of the words, the better, and more modern, view22 is that
the words do not, limit the Charterers' rights to order the master to sign inconsistent bills but merely
provide that as between the Shipowner and the Charterer, the provisions of the charter will not be
varied23.
6.1.3 Bills of Lading in a particular form
Unlike time charters, most voyage charters24 do not give the charterers the wide power to choose bills
of lading in different forms but provide that the shipowners are to provide bills of lading in a specific
form.
EXAMPLE 1
Clause 20 (a) of the ASBATANKVOY form provides that:-
“The Master shall, upon request, sign Bills of Lading in the form appearing below for all cargo
shipped but without prejudice to the rights of the owner and charterer under the terms of this
Charter”.
EXAMPLE 2
Clause 10 of the GENCON 1994 form provides that:-
“Bills of Lading shall be presented and signed by the Master as per the “Congenbill” Bill of
Lading form 1994...”
Consequently, the shipowner is not obliged to provide bills of lading in any other form and can refuse
the charterers’ demand to produce a bill in another form25. This could cause the charterer great
inconvenience if he is a trader and requires bills of lading in a different form in order to secure payment
under his sale contract or letter of credit.
22
At least in the context of time charters. The position may be different under voyage charters. These words may not be sufficient to entitle
the Charterer to insist on bills which increase the level of liability which the Shipowner has under the voyage charter. See Kruger v Moel
Tryvan (1907) AC 272
23 Hanson -v- Harrold (1894) 1 QB at 619 andTurner -v- Haji Goolam (1904) AC at 837.
24
One exception can be found in Clause 18 of the SYNACOMEX 2000 form.
25 “Garbis” (1982) 2 Ll. Rep. 283
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8. BILLS OF LADING WITH INCORRECT DATA
A distinction must also be drawn between the terms of bills of lading and the data which must be
recorded on the bills. Apart from being evidence of contracts of carriage bills of lading are also receipts
for the cargo shipped. Therefore, bills of lading will normally include data relating to the quantity or
weight of cargo shipped, the general description of the goods, the apparent condition of the goods,
the date of shipment etc. Since the Carrier knows that that description will form the basis of the cargo
sold by the Shipper (as seller) to his purchasers and that each buyer will be relying upon the data
contained in the bill, he will be keen to ensure that the data is accurate since otherwise, he may well
be liable for misrepresentation. He will also be aware that the courts are anxious to ensure that
innocent third parties relying on such data should not be misled.
A distinction is drawn between (1.) data which the master can verify for himself and (2.) data in relation
to which he is entitled to rely on information given by the Charterer or cargo Owner.
1. The master is obliged to use his own eyes to verify the apparent order and condition of
the goods on shipment. Mustill L.J. said that:-
"Everyone in the shipping trade knows that a Master need not sign a clean Bill of Lading
just because one is tendered; everyone knows that it is the Master's task to verify the
condition of the goods before he signs."26
Accordingly, if the master is presented for signature with bills which are for example,
clean, when the mate's receipts indicate that the cargo is not in apparent good order and
condition he has an obligation to refuse to sign.
The same principle applies in the case of bills containing other inaccurate data relating to
the date of shipment27 or the fact that the goods are under deck when it is known that
they are on deck28
It should also be emphasised that the duty to refuse to sign exists even if the time charter
specifies that the bills are to be signed "as presented". Mustill J. emphasised in the
"Almak" that:
"The obligation to sign Bills of Lading as presented could not of course, ever require the
Master to sign Bills which stated a falsehood".29
It further follows that if the master knows that the bill of lading includes such "a
falsehood" but nevertheless agrees to sign the bill of lading against provision by the Time
Charterer of a letter of indemnity purporting to protect the Shipowners against liabilities
incurred to third parties as a result, he cannot in fact enforce that indemnity through the
courts. The courts will refuse to enforce such an indemnity since it would clearly be given
in order to assist a fraud on an innocent third party consignee or endorsee of the bill of
lading30.
26 "Nogar Marin" (1988) 1 Ll. Rep. 412.

27 "Almak" (1985) 1 Ll. Rep. 557
28 "Nea Tyhi" (1982) 1 Ll. Rep. 606.
29
(1985) 1 Ll. Rep. at 561
30 Brown Jenkinson -v- Percy Dalton (1957) 2 Lloyd's 1
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2. However, a master is entitled (at least if the charter provides that the bill of lading is to
be subject to the Hague or Hague-Visby Rules) to rely on the data “furnished in writing”
by the Shipper in relation to the leading marks, quantity and weight of the goods31 and to
seek an indemnity from the Shipper32 or from the Charterer33 if that data is incorrect and,
as a result, the Carrier incurs a liability to the receiver.
In many instances there may be no liability if the bill of lading includes clauses such as
“weight unknown” or “quantity unknown” the effect of which is to give notice to the
consignee that the Carrier does not represent the accuracy of the data34. However, the
Carrier also has the right under Article III Rule 3 of the Rules to refuse to sign a bill of lading
containing the data provided by the Shipper if he has reasonable grounds for suspecting
the accuracy of the data, or if he has had no reasonable means of checking the accuracy
of the data. Therefore, in the case of data relating to leading marks, quantity or weight,
the Carrier has a choice; he can either accept the data provided by the Shipper/Charterer
and rely on his right of indemnity or he can rely on his right to refuse to sign under Article
III Rule 3 of the Rules.
9. WHO CAN SIGN BILLS OF LADING ISSUED UNDER A CHARTER?
Since a bill of lading is a receipt confirming shipment of the cargo on the vessel, a bill of lading has
been traditionally signed by the master. Most voyage charters recognise this tradition and the relevant
provision dealing with signing of bills usually provides that the bill is to be signed either by the master
or by the Shipowners’ agents.
EXAMPLE 1
Clause 10 of the GENCON 1994 form provides that:
“Bills of Lading shall be presented and signed by the Master as per the “Congenbill” Bill of
Lading form 1994....or by the Owners’ agents provided written authority has been given by
Owners to the agents, a copy of which is to be furnished to the Charterers”.
However, many time charters provide that the bill is to be signed either by the master or by the
Charterers or their agents.
EXAMPLE 2
Clause 30 (a) of the NYPE 93 form provides that:
“The master shall sign bills of lading or waybills for cargo as presented in conformity with mates
or tally clerk’s receipts. However, the Charterers may sign bills of lading…on behalf of the
Master with the Owner’s prior written authority always in conformity with mates or tally clerks’
receipts.”
31 See Article III Rule 3 of the Rules

32 See Article III Rule 5 of the Rules
33
"Boukadoura" (1989) 1 Ll. Rep. 393
34 “Atlas” (1996) 1 Ll. Rep. 642.
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In most cases, the master will provide a letter authorising the relevant party to sign the bills on his
behalf35. If this is done, then that party clearly has express authority to sign bills on behalf of the master
and to bind the Shipowners as Carriers under those bills.
However, if no such letter of authority is provided, it has been queried whether the Charterers or their
agents nevertheless have implied authority to sign bills of lading on the master's behalf. The issue is
important since if the Charterers have such authority, they may decide to circumvent any problems
which might arise if they believe that the master would object to the signature of bills in a certain form,
by signing the bills themselves on his behalf.
In general terms it seems that the Charterers do have such implied authority. Brandon J considered
the effect of clause 8 of the NYPE form in the "Berkshire" and said:
"; "in the second place, the Charterers may, instead of presenting such Bills of Lading to the Master for
signature by him on behalf of the Shipowners, sign them themselves on the same behalf. In either case,
whether the Master signs on the directions of the Charterers, or the Charterers short circuit the matter
and sign themselves, the signature binds the Shipowners as principals to the contract contained in or
evidenced by the Bills of Lading."36
On the same basis, it has been confirmed that if the time charter contains an option to sub-let37 the
sub-Charterers or their agents have similar implied authority to sign Bills of Lading on behalf of the
Master38.
However, even if the Charterers or their agents may not have actual or implied authority to sign bills
of lading on behalf of the master they may nevertheless have sufficient apparent or ostensible
authority to bind the Shipowners vis a vis cargo receivers. In one case the Charterers’ agents signed
bills of lading “for the master” stating that the cargo was under deck when it was in fact carried on
deck. It was held that these bills were nevertheless binding on the Shipowners since an innocent
consignee or endorsee of the bills would expect the time Charterer or his agents to have the necessary
authority and would have acted on that understanding.39 However, if the claimant has actual
knowledge of the lack of authority then the terms of a bill issued without authority may not be binding
on the Shipowner40.
35
See clause 17 (a) (i) of GENTIME
36 (1974) 1 Ll. Rep. 188. See also the decision of the House of Lords in Tillmans -v- Knutsford (1908) AC 272
37 e.g. clause 29(b) of STB Time
38 "Vikfrost" (1980) 1 Ll. Rep. 560.
39
"Nea Tyhi" (1982) 1 Ll. Rep. 606, See also “Saudi Crown” (1986) 1 Ll. Rep 261 and “Starsin” (2000) 1 Ll. Rep 85
40 “Hector” [1998] 2 Ll. Rep. 287
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CASE STUDY 1
OFF-HIRE
THE CHARTERS
The owner “A” has chartered his vessel to “B” on the NYPE 1946 form and “B” has sub-
chartered the vessel to “C” on his preferred Gentime form. Both charters are subject to English
law and London arbitration, and hire is payable in advance on the first day of each month. The
master has given authority to “C” or their agents to sign bills of lading on the master’s behalf
without prejudice to the terms and conditions of the charter.
THE EVENTS
1. At the loadport
The vessel commenced loading cargo at a port in Egypt for carriage to South Africa but the
loading was delayed for five days due to a breakdown of the vessel’s cranes. The vessel’s
departure was then delayed due to the fact that the Chief Engineer had been rushed to
hospital and his replacement arrived three days later.
Egypt is a party to the Hamburg Rules and Egyptian regulations provide that the Hamburg
Rules are obligatory in relation to carriage between states which are parties to the Hamburg
Rules. “C”’s local agents signed bills of lading which were subject to the Hamburg Rules.
However, South Africa is not a Hamburg Rules country.
2. During the voyage
Subsequently, the vessel was unable for four days to proceed through the Suez Canal due to
the fact that the owners had not extended the validity of the vessel’s Suez Canal tonnage
certificate. However, for the first two days, damage to Canal equipment prevented transit.
Later the vessel ran aground and there was an ingress of water.
3. At the discharge port
On arrival in South Africa on 3 September the vessel was arrested by the consignees claiming
loss and damage to the cargo. “A” sought to reject the claim and produced evidence proving
that the grounding had been caused by the negligent navigation of the officer on watch,
liability for which is excluded under Article IV Rule 2 (a) of the Hague and Hague-Visby Rules.
However, the consignees maintained their claim, pointing out that the bills of lading had
incorporated the Hamburg Rules which do not give a defence for negligent navigation. The
arrest did not prevent cargo from being discharged and the vessel was finally released upon
provision of security by “A” after seven days.
In the meantime, due to the problems encountered on the voyage, “C” had forgotten to give
their bank instructions to effect payment of the hire which was due on 1 September and on 2
September “B” gave notice requiring “C” to pay within the three clear banking days specified in
clause 8. “B” refused to start discharging the cargo until the hire was received on 4 September
and discharge was finally completed on 8 September.
© BIMCO Training 1
THE TASK
a) What are the relevant incidents which have caused delay?
b) Is “B” entitled to make a deduction for each incident under the NYPE charter and if so,
for what period?
c) Is “C” entitled to make a deduction for each incident under the GENTIME charter and if
so, for what period?
(You may use the attached schedule to record your decisions in relation to off-hire but
please explain your reasoning in more detail.)
d) If the vessel is not off-hire can “B” or “C” rely on any other provisions of their respective
charters to claim for delay?
© BIMCO Training 2
HEAD CHARTER SUB-CHARTER

NYPE GENTIME
Incident Is vessel off- Period of Is vessel off- Period of
hire? Off-Hire hire? Off-Hire
Yes/No Yes/No
Why? Why?
Yes/No Yes/No
Why? Why?
Yes/No Yes/No
Why? Why?
Yes/No Yes/No
Why?
Yes/No Yes/No
Why? Why?
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Chapter 16
Personal notes:
Frustration of Time Charter

Parties
©Copyright Baris Soyer, 2014. All rights reserved.

Personal notes:
“Frustration occurs whenever the law recognises that

without default of either party, a contractual obligation
has become incapable of being performed because the
circumstances in which performance is called for would
render it a thing radically different from that which was
undertaken by the contract. on haec n foe era en .
It was not this that I promised to do.”
a s ontractors v areha [1956] AC at 728
Personal notes:
A change in circumstances which converts a commercially
viable contract into a bad deal is not sufficient to constitute
frustration.
Therefore, the mere fact that events occurring without the
fault of either party have resulted in:-
Extra cost; and/or
Delay; and/or
Extra hardship
does not necessarily amount to frustration.
It is very unlikely that a time (trip) charter could be frustrated
on the premise that the vessel is forced to navigate around the
Cape of ood Hope due to piracy.
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Personal notes:
To amount to frustration the event must have rendered
performance of the contract “e ther oss le or so ra cally
fferent fro that or g nally conte late y the art es that t
o l e n st to hol the art es to the contract n the change
c rc stances”.
per Lord Denning in The Eugenia [1963] 2 Lloyd’s Rep at 390
Personal notes:
Types of Frustrating Event
A) Impossibility of Performance
a) Destruction of the subject matter of the contract
(i) The Ship
• If the carrying ship has become a total or constructive loss
during the voyage there is usually frustration.
• The shipowner has the right to carry the cargo in a substitute
vessel in order to earn any freight which is payable on
delivery of the cargo but he does not have the obligation to
do so.
Personal notes:
• However, if the charter is not for a specific ship but for

one to be nominated then the total loss of one of the
possible ships to be nominated does not necessarily
frustrate the charter as it is possible to obtain a
substitute.
The Super Servant II [1990] 1 Lloyd’s Rep 1.
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(ii) The oods
• Similarly, the destruction of generally described goods (e.g.

coal) before shipment does not normally amount to
frustration since the charterer can usually obtain a
substitute cargo even if it means going to a different loading
area.
The Aello [1961] AC 135;
The Mary Nour [2008] 2 Lloyd’s Rep. 526
Personal notes:
b) Supervening illegality
“It is implicit that any contract is to be performed in a legal

manner. Therefore, if there is a change in the law (whether in
the law which governs the contract or the law of the place of
performance) after the contract has been agreed which renders
performance of the contract illegal, there is usually frustration
since thereafter: the th ng n erta en o l f erfor e ea
fferent th ng fro that contracte for.”
Davis Contractors v areha (1956) AC at 729
Personal notes:
Fibrosa v. Fairbairn Lawson [1943] AC 32,

• After the charter agreement was agreed, war broke out
between the country to where the cargo was to be
delivered and the country of the flag of the vessel.
• The supervening illegality made the performance of the
contract impossible as performance would have
encouraged commercial dealings between enemies.
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Should be substantial duration
B) Delay in Performance
• To constitute frustration the delay must be of very

substantial duration in relation to the purpose of the
contract, the overall contemplated period, and the
remaining period of the contract.
• Therefore, the delay necessary to frustrate a time charter of
long duration is likely to be greater than the delay which
would be necessary to frustrate a short-term charter or a
voyage charter unless there are special circumstances.
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Personal notes:
force majeure frustration clause
• The importance of a force ma eure clause with a list of specific (if..no frustration)
events and a catch all phrase.
• The specific events can specify matters which will never

constitute frustration, such as, a drastic or extreme market
collapse after the 2008 financial tsunami: Classic Maritime Inc
v Lion iversified Holding Berhad (2010) 1 Lloyd’s Rep 59
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Personal notes:
Self induced frustration
A) Deliberate acts or omissions
There can be no frustration where the relevant event has been
caused by the deliberate act or omission of one of the parties
to the contract or where such act or omission has contributed
to the occurrence.
The Sea Angel [2007] 2 Lloyd’s Rep 517
The chartered vessel was detained for a considerable period
as a result of the charterer’s attempt to negotiate a settlement
rather than to apply the local court for an order releasing the
vessel.
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Personal notes:
B) Negligent acts or omissions
The position is not so clear!
Traditionally, it was considered that negligence did not

amount to “self-induced” frustration.
The “Carron Park” (1890) 14 P 203 and the amended or New

Jason Clause to deal with the different S position in The
“Irrawaddy” (1898) 171 S 187
Constantine v Imperial Smelting (1942) AC 195
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Personal notes:
• However, the more modern view is that contributory

negligence on the part of one of the parties does amount to
“self-induced” frustration since the cause of the event is not
outside the control of one of the parties.
See Bingham LJ in The Super Servant II [1990] 1 Lloyd’s Rep at
p. 10
• If this is correct then a negligent party cannot rely on the

doctrine of frustration and (subject to any exclusion clause)
may be liable in damages to his contracting party.
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Personal notes:
Effect of Frustration
•Both parties are released from obligations which are not to
be performed until after the frustrating event.
•All obligations which have accrued due before the frustrating
event remain binding.
•However If there has been a total failure of consideration,
sums paid before the frustrating event are repayable (if already
paid) and cease to be payable (if not yet paid)
Fibrosa v Fairbairn (1943) AC at 67 and 79
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Personal notes:
Impact on Voyage Charters

• If freight is earned and payable on delivery and the charter is
frustrated before the end of the voyage, no freight is
payable;
• If freight is earned on delivery but paid in advance before
the frustrating event and there is a total failure of
consideration, the freight is repayable in full.
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Personal notes:
Problem for time charterparties
The common law rule that all sums paid before the
frustrating event are recoverable (if already paid) if there is a
total failure of consideration creates difficulties in the
context of long term time charters.
• For example, if a time charter for three years is frustrated
after 2 years due to the loss of the chartered vessel, the hire
paid over the preceding 2 years would have to be repaid.
• The Frustrated Contracts Act 1943 provides a statutory
remedy in the case of demise and time (but not voyage)
charters which are subject to English law.
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Personal notes:
The Frustrated Contracts Act 1943

Where sums are paid in advance but a proportion is not
earned until after the frustrating event, a court or tribunal
is given the discretion to allow a party who has received the
payment to retain out of the payment a sufficient amount
to cover its expenses or any benefit that has been conferred
on the paying party.
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Personal notes:
Example
• The hire under a time charter for 6 months is payable every

30 days in advance.
• The charter is frustrated on the 20th day of the 5th month.
• The tribunal has the discretion to allow the shipowners to
retain out of the 5th month hire part or all of the hire that
relates to the 20 days for which the charterers were given
the use of the ship.
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Personal notes:
Thank you!
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7
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FRUSTRATION IN CHARTERPARTIES
1. General
In some instances, the law determines that the contract is terminated when an event occurs without
any default on the part of either party to the contract. In such circumstances, the contract is said to
be frustrated. In the words of Lord Radcliffe, ‘frustration occurs whenever the law recognises that
without default of either party, a contractual obligation has become incapable of being performed
because the circumstances in which performance is called for would render it a thing radically different
from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I
promised to do.’ (Davies Contractors v. Fareham UCD [1956] AC 696, at p. 728)
The decision as to whether or not a contract is frustrated is a question of law, but this decision has to
be taken after an assessment of relevant facts. Therefore, as stressed by Devlin, J., in Universal Cargo
Carriers v. Citati [1957] 1 Lloyd’s Rep 174, the assessment of a period of delay sufficient to constitute
frustration is a question of fact.
If the court is satisfied that the facts constitute frustration, then the contract is considered terminated
without liability on the part of either party. Put another way, frustration brings the contract to an end
forthwith, without more and automatically and neither party has an option to continue the contract.
The doctrine of frustration is potentially applicable to all forms of contracts of carriage by sea, although
in practice litigation in this area usually arises from charterparties.
2. Types of Frustration
In the context of charterparty contracts, frustration can take a variety of forms ranging from
impossibility of performance or supervening illegality to inordinate delay.
A) Impossibility of Performance
The most obvious example of this type of frustration occurs when a chartered ship is either actually
lost or becomes a constructive total loss (Balane Steamships v. Minister Transport [1951] 2 Lloyd’s Rep
155). In case of constructive total loss, the charterparty would not be frustrated if there is any
undertaking on the part of the owners to maintain the vessel’s hull and machinery insurance up to a
specified amount throughout the charterparty (Bunge SA v. Kyla Shipping Company Limited (The Kyla)
[2012] EWHC 3522 (Comm)).
However, if the intended cargo is destroyed before shipment, there is usually no frustration since it is
normally possible for the charterer to obtain a substitute cargo. The charterer is under an absolute
duty to procure for shipment a cargo of the agreed description and is not absolved of that duty by
factors outside his control, e.g. a crop failure. (Aello [1961] AC 135) Nevertheless, there may be
frustration if the contract were construed to be for the shipment of a specific cargo, not merely a cargo
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of a particular type (i.e. this cargo of chemical not simply a cargo of chemical of this type). (Aaby’s
Rederi v LEP Transport [1948] 81 Lloyd’s Rep 465).
Similarly, the mere fact that, after the event, performance of the contract has become substantially
more expensive is not per se evidence of impossibility In The Eugenia [1963] 2 Lloyd’s Rep at 381, a
vessel was chartered for a time charter trip between Genoa and the Black Sea to India on the
assumption that she would be able to navigate through the Suez Canal. However, due to the war
between Egypt and Israel, the canal was blocked to traffic and the vessel would be obliged to navigate
around the Cape of Good Hope in South Africa at substantially greater cost in terms of hire, bunkers
used etc. The charterers contended that the charter was frustrated. However, it was held that there
was no frustration. Lord Denning, at p,390, stipulated:
The fact that it has become more onerous or more expensive for one party than he thought
is not sufficient to bring about a frustration. It must be more than merely more onerous or
more expensive. It must be positively unjust to hold the parties bound.
It is submitted that a similar conclusion should follow in cases where the vessel is forced to take a less
direct route, i.e. navigate around the Cape, due to safety concerns, e.g. the risk of piracy.
B) Supervening Illegality
There is an implication that any contract is to be performed in a legal manner. Therefore, if after the
contract has been agreed there were to be a change in the law which renders performance of the
contract illegal, there is usually frustration.
The supervening illegality could arise either under the law which governs the contract or under the law
of the place of performance (Ralli v. Compania Naviera Sota y Aznar [1920] 2 KB 287).
Frustration will also occur where the outbreak of law renders further performance of contract illegal.
Such a situation may arise when a vessel is owned or chartered by a person who subsequently becomes
an enemy alien, or where the performance of the contract involves dealings with parties resident in
enemy occupied territory (Fibrosa v. Fairbrain Lawson [1943] AC 32).
The position will be the same if the charter provides for the carriage of a cargo to a particular country,
but that country is subsequently made the subject of a UN enforced embargo recognised by the
country of the vessel’s flag or the country where the owners are domiciled. It is very likely that the
sanctions imposed on Iran by the EU and UN will have a similar effect.
C) Delay in Performance
To constitute frustration, the delay must be of very substantial duration in relation to the purpose of
the charter, the overall contemplated period, and the remaining period of the charter. Therefore, the
delay necessary to frustrate a time charter of long duration is likely to be greater than the delay which
would be necessary to frustrate a short-term charter or a voyage charter, unless there were special
circumstances.
Example
A vessel suffers a breakdown and needs to go into drydock for repairs which are likely to take three
months to complete:
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(i) In the context of a time charter for four months or a short voyage charter, the period
of delay may well be sufficient to constitute frustration.
(ii) In the context of a time charter for two years which still has 15 months to run, the
delay is probably not sufficient to constitute frustration.
(iii) However, in the context of a time charter for a special and urgent trade which still has
15 months to run, the delay may be sufficient to constitute frustration.
The length and effect of any interruption to performance must be assessed at the time that it occurs
based on the facts as then known, and is not affected by subsequent events or the benefit of hindsight.
The test has been described by Bailhache, J., in Anglo-Northern v Jones [1917] 2 KB at 85 as follows:
the parties must have the right to claim that the charterparty is determined by frustration
as soon as the event upon which the claim is based happens. The question will then be
what estimate would a reasonable man of business take of the probable length of the
withdrawal of the vessel from service…and it will be immaterial whether his anticipation
is justified or falsified by the event.
If at the time that the event occurred a reasonable man would conclude that a delay of a particular
duration was likely, and that such a delay in the context of the particular contract was such as to
constitute frustration, then there is likely to be frustration, and such conclusion will not be changed by
the fact that thereafter, the duration of the delay was in fact much less than had been expected (The
Nema [1981] 2 Lloyd’s Rep 239).
3. The Effect of Contractual Provisions Dealing with Contemplated Events and Intervention of
One or Both Parties to the Contract on Frustration
A) Contractual Provisions Dealing with Contemplated Events
Traditionally, frustration has been considered to be an unexpected event which has radically changed
the contemplated mode of performance of the contract. Therefore, if the event was either one which
had been contemplated by the parties412 or, even more importantly, one for which provision had been
made in the contract by the inclusion of a specific clause, then it can potentially be argued that the
doctrine of frustration could not apply since, in such circumstances, the event must have been
foreseeable (See, for example, The Sea Angel [2007] 1 Lloyd’s Rep. 335).
However, the courts have held that a specific clause of this nature will only exclude the possibility of
frustration if it not only contemplates the specific event but also provides clearly and unambiguously
exactly what remedy is available to the parties in that event, and makes “full and complete provision
for all of the effects of the supervening (frustration)”. The clause must be examined in its context to
see whether it is sufficiently wide to provide a solution to the particular event and its effect on
performance (Super Servant Two [1990] 1 Lloyd’s Rep. 1).
In Bank Lane v. Capel [1935] AC 435 the charterparty included an option in favour of the charterer to
cancel the charter should the vessel “be commandeered by Government during this charter”. The
vessel was, indeed, subsequently requisitioned. It was held that the charter was frustrated. The court
explained that while the clause gave the charterers an unfettered option to cancel if the vessel was
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commandeered no matter what the likely duration of the requisition, it did not deal with the effect on
both parties where the option was not exercised by the charterers but the delay was likely to be
substantial in duration.
The same principle has recently been emphasised again in The Florida [2007] 1 Lloyd’s Rep. 1 where
Tomlinson, J., held that a clause in the charter would only displace the doctrine of frustration if it made:
full and complete provision for all of the effects of supervening illegality which, even before
a cargo had been brought forward for loading, made discharge at the contractual
destination impossible.
The clause in the particular contract provided a remedy only where the goods had already been loaded
and, therefore, did not displace the doctrine of frustration.
B) Intervention of One or Both Parties to the Contract
There can be no frustration where the relevant event has been caused by the deliberate act or omission
of one of the parties to the contract or where such act or omission has contributed to the occurrence.
Such conduct is often described as “self-induced frustration” and cannot result in the termination of
the contract by frustration. In Maritime National Fish v. Ocean Trawlers [1935] AC 524, a trawler
named the St Cuthbert which was fitted with an otter trawl was chartered expressly for use in the
fishing industry. Subsequently, it became illegal to use otter trawls without a licence. The charterers
obtained three licences for the ships that they operated but did not nominate the St Cuthbert as one
of the vessels entitled to use the licences, and contended that the charter was frustrated by
subsequent illegality. It was held that the frustration was self-induced and that the charterers could
not rely on their own election not to nominate the St Cuthbert as justification for their failure to
operate the charterparty. The Court reached a similar conclusion in The Sea Angel [2007] 1 Lloyd’s Rep.
335. There, a vessel was time chartered for a period of “up to 20 days” to assist with salvage services.
On completion of the services, the vessel was detained by a port authority between the first week of
September and the end of December, pending payment of claims made by the port authority. It was
held that there was no frustration since the delay was attributable (at least in part) to the decision
taken by the charterers to attempt a negotiated settlement rather than to apply to the local court for
an order releasing the vessel.
Where the relevant event is not the result of a deliberate act or omission on the part of one of the
parties to the contract but is the result of the negligence of one or more of them, it is not clear whether
there can be frustration. In Constantine v Imperial Smelting [1942] AC 154 it appears to have been the
view of the House of Lords that negligence of one or more of the parties is not enough to displace
frustration. Lord Wright at p. 195 said that:
…mere negligence never seems to have been suggested as sufficient to constitute ‘fault’
in this connection.
However, the Court of Appeal in The Super Servant Two [1990] 1 Lloyd’s Rep. 1, at p. 10 per Bingham,
LJ, held that the “real question” was not so much whether the act or omission was deliberate but:
whether the frustrating event relied upon is truly an outside event or extraneous change
of situation, or whether it is an event which the party seeking to rely on it had the means
and opportunity to prevent but nevertheless caused or permitted it to come about.
The court seemed to be of the conclusion that so long as one or more of the parties was in a position
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to avoid the event but failed to do so, whether deliberately or negligently, that was sufficient to
displace frustration.
4. The Effect of Frustration
Under the common law, when frustration occurs, the parties are released from any future duties or
obligations under the contract, but any rights which have accrued due before the frustration remain
binding and enforceable. However, if there has been a total failure of consideration, then sums which
have been paid but not earned before the frustration are repayable (Fibrosa v. Fairbrain Lawson [1943]
AC 67 at p. 97. The impact of this in voyage charterparties is as follows:
i) If freight is earned and payable on delivery of the cargo and the charter is frustrated before
the end of the voyage, no freight is payable as it is a future obligation.
ii) If freight is earned on shipment and payable in advance or at any time before the frustrating
event then it remains payable (or non-returnable if already paid) despite the fact that
the charter has subsequently been frustrated before the end of the voyage. (Similarly,
any demurrage earned before the frustrating event remains payable despite the
subsequent frustration.)
iii) if freight is earned on delivery but paid in advance before the frustrating event, then there
has been a total failure of consideration as a result of the frustrating event, and the
freight is repayable in full.
A similar rule operated in relation to payment of hire under a time charter, prior to the enactment of
the Frustrated Contracts Act 1943. However, the strictness of the common law rule has been softened
by the Frustrated Contracts Act 1943 in case of demise and time charterparties. The Act applies only
to contracts which are subject to English law. It provides that all sums paid or payable before the
frustrating event shall be recoverable (if already paid) or cease to be payable (if not yet paid).
However, since this could have an inordinate effect on long-term time contracts (for example, all prior
hire payments would have to be returned), the Act goes on to provide that any part of the contract
which was wholly performed before the frustrating event may be severed from the rest of the contract
and remain unaffected by the frustration (section 2(4)). The effect of this statutory intervention could
be better explained with an example. Imagine that a time charter for six months is frustrated in the
5th month. The performance by the shipowner of his services in the first four months can be severed
from the services due in the 5th and 6th months as they have been wholly performed before the
frustrating event, with the result that the shipowner can retain the hire paid or payable for the first
four months.
Furthermore, the Act provides, even in the case of the non-severable part of the contract, that any
sums payable before the frustrating event shall cease to be payable and that any sums actually paid
before the frustrating event shall be returnable. However, such right is subject to a discretion given to
a court or tribunal to grant compensation to the receiving party for any expenses incurred by such
party in performing the contract prior to the frustrating event (Section 1(2)) or for any valuable benefit
conferred on one of the parties before the frustrating event. (Section 1(3)). In the example above, if
the time charterparty for six months is frustrated on the 20th day of the 5th month, the hire paid in
advance for the 5th month is repayable to the charterers subject to the tribunal’s discretion to allow
the shipowner to retain part or all of the hire for 20 days out of the full month’s hire.
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Chapter 17
Personal notes:
The Paramount Clauses

Personal notes:
PARAMOUNT CLAUSES
• The purpose of the Paramount Clause is to
introduce the Hague or the Hague-Visby
Rules in one form or another into a
contract.
• Article III Rule 8 of the Hague and Hague-

Visby Rules may render void other terms of
that contract.
Personal notes:
HA UE/HA UE-VISBY RULES

ARTICLE III RULE 8
• “Any clause, covenant or agreement in a
contract of carriage relieving the carrier or
the ship from liability for loss or damage to
or in connection with the goods arising from
the negligence, fault or failure in the duties
and obligations provided in this Article or
lessening such liability otherwise than as
provided in these Rules, shall be null and
void and of no effect.”
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Personal notes:
E AMPLES OF CLAUSES RENDERED
VOID
• Exception clauses
• Definition clauses
Studebaker v Charlton (1938) 1 KB 459
• Time limits
“Ion” (1971) 1 Ll. Rep. 541
• Package limits
“River urara” (1997) 4 AER 498
• Law/jurisdiction clauses
“Hollandia” (1983) 1AC 565
Personal notes:
E AMPLE
• Clause 12 of the Baltime charter provides that the owner is
The word “paramount” means
liable for “loss or a age to goo s on oar ” only if caused
by their personal want of due diligence and that they are not “supreme” or “above all others”. It is
liable “ n any other case nor for a age... hatsoe er an
ho soe er ca se e en f ca se y the neglect or efa lt of related to some feature that prevails
the r ser ants.”
• However! the Hague-Visby Rules provide that the carrier is
over everything else
liable if there is want of due diligence on the part of any of
their servants or agents or independent contractors.
• Therefore, whilst Clause 12 should protect the ship owners if
a claim were to be brought against them under the Baltime
C/P, clause 12 may be rendered void if the charter were also
to contain a Paramount Clause pursuant to Art III Rule 8 of
the Hague-Visby Rules.
See the discussion in “EEMS Solar” (2013) 2 Ll. Rep. 487
Personal notes:
WHEN THE RULES APPLY AS A MATTER OF

LAW (I.E. COMPULSORILY)
In these circumstances Article III Rule 8 will

always render void any other contractual
provision which is designed to give the carrier
more protection than that which he is given by
the Rules.
The Rules apply by law usually in relation to
bills of lading.
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But!
When the Rules apply merely by agreement

(e.g. as in the case of charter parties) it is a
matter of construction whether it is the
Clause Paramount or the other clause which
is to be predominant.
Personal notes:
THE IMPORTANCE OF THE
PARTICULAR WORDIN
• If the Paramount Clause commences with words such
as: -
“ ot thstan ng anyth ng h ch ay other se e
state n the charter ”
the Paramount Clause is likely to be predominant over
any other clause.
• However, if it is the other clause which has such

wording the other clause is likely to be predominant
over the Paramount Clause.
“Tasman Discoverer” (2004) 2 Ll. Rep. 647
Personal notes:
ENERAL RULES OF CONSTRUCTION
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Personal notes:
• A general reference to a “Clause Paramount” is

a reference to the Hague Rules.
Seabridge v Orleffs (1999) 2 Ll. Rep.685
• A reference to the “ eneral Clause Paramount”

is a reference to the clause in the Congenbill
form of bill of lading i.e. either Hague or Hague-
Visby Rules depending on the circumstances.
“Bukhta Russkaya” (1997) 2 Ll. Rep. 744
Personal notes:
BUT !
• There are many different types of specific

Clauses Paramount which are often
specifically incorporated.
• The different wording can result in vastly
different results !
Personal notes:
•
. .
.
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Personal notes:
E AMPLE 1
• “The Hague Rules as enacted in the country

of shipment shall apply to this contract.
When no such enactment is in force in the
country of shipment, the corresponding
legislation of the country of destination
shall apply. But in respect of shipments to
which no such enactments are compulsorily
applicable, the terms of the Hague Rules
shall apply.”
Personal notes:
US CLAUSE PARAMOUNT
• “This Bill of Lading shall have effect subject
to the provisions of the Carriage of oods by
Sea Act of the United States, approved 16
April 1936, which shall be deemed to be
incorporated herein and nothing herein shall
be deemed a surrender by the Carrier of any
of its rights or immunities or an increase of
any of its responsibilities or liabilities under
said Act…”
Personal notes:
• Some clauses incorporate the Rules or statute

into both the charter and the bills of lading
whereas other clauses incorporate the Rules
or statute merely into bills which may be
issued pursuant to the charter i.e. not into the
charter itself.
• (Compare clause 24 of NYPE 1946 and clause

25 of BPTIME 3)
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Personal notes:
CLAUSE 24 NYPE 1946

“ t s also agree that th s charter s s ect
to all the ter s of the arter ct . t s
f rther s ect to the follo ng cla ses
oth of h ch are to e ncl e n all lls
of la ng ss e here n er
la se ara o nt
“ hs ll of la ng shall e s ect to the
”
Personal notes:
CLAUSE 25 BPTIME 3
• Clause 25. CLAUSE PARAMOUNT

“ harterers n erta e that all lls of
la ng ss e n er th s harter shall conta n
the follo ng
“
hs ll of la ng shall ha e effect s ect
to .”
Personal notes:
• In both instances the Clause Paramount itself

states that it is to apply to bills of lading.
BUT !
• The preliminary wording of the incorporating
clause makes all the difference!
Adamastos v Anglo-Saxon (1957) 1 AC 133
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Personal notes:
• Sometimes the Rules are stated to apply only if

they are “compulsorily applicable”.
Personal notes:
E AMPLE
• “This bill of lading shall have effect subject to
the provisions of any legislation relating to
the carriage of goods by sea which
incorporates the Rules relating to the bills of
lading contained in the International
Convention dated Brussels 25th August 1924
and which is compulsorily applicable to the
contract of carriage herein contained.”
Personal notes:
WHAT IS MEANT BY ”
”
• The current view of the English Court of Appeal is that the
question is determined by reference to the law which
governs the contract of carriage.
“Happy Ranger” (2002) 2 Ll. Rep. 357
“MSC Amsterdam” (2007) 2 Ll. Rep 622
• Another view preferred in Commonwealth courts is that

the question depends purely on whether the exporting
country is a party to the Hague or the Hague-Visby Rules.
“Tasman Discovery”(2001) 2 Ll. Rep. 665
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Personal notes:
” ”
under English law all B/l auto incorp
• If the English Court of Appeal approach is correct then a
Paramount Clause that includes these words cannot make H-V rules
the Rules apply compulsorily to the charter since the
Rules only apply compulsorily to bills of lading.
• However, depending on the words of the clause the Rules
may nevertheless apply by agreement.
• In such circumstances the distinction between the
construction principles discussed earlier may be very
important.
Personal notes:
E AMPLES TO ILLUSTRATE THE

IMPORTANCE OF IDENTIFYIN THE
CORRECT CLAUSE PARAMOUNT
Personal notes:
1. TIME LIMITS FOR INDEMNITY CLAIMS
8
Personal notes:
HA UE RULES, ART. III RULE
• “In any event the carrier and the ship shall

be discharged from all liability in respect of
loss or damage unless suit is brought within
one year after the delivery of the goods or
the date when the goods should have been
delivered”.
Personal notes:
HA UE VISBY RULES, ARTICLE III

RULE 6 BIS
•
.”
INDEMNITY CLAIMS Personal notes:

A) ALL CONTRACTS SUBJECT TO THE HA UE
RULES
Shipowner
B/L
Time charterer
Sub-charterer Receiver
NB. If the Sub-Charterer’s claim against the Time Charterer is not

brought until near the end of one year from delivery, the Time
Charterer’s indemnity claim against the Shipowner will be time barred
unless he also brings such an indemnity claim before the expiry of the
one year.
9
INDEMNITY CLAIMS Personal notes:
A) ALL CONTRACTS SUBJECT TO THE HA UE-VISBY
RULES
Shipowner
B/L
Time charterer
Sub-charterer Receiver
NB. The Time Charterer’s claim against the Shipowner will not be time
barred. The Time Charterer will have a minimum of three months after either
settling the Sub-Charterer’s claim against him or service of proceedings on
him by the Sub-Charterer, whichever is earliest, within which to claim an
indemnity from the Shipowner.
Personal notes:
2. PACKA E LIMITATION
Personal notes:
HA UE RULES
ARTICLE IV RULE 5
• “Neither the carrier nor the ship shall in any
event be or become liable for any loss or
damage to or in connection with goods in an
amount exceeding 100 per package or unit or
the equivalent of that sum in other currency,
unless the nature and value of such goods
have been declared by the shipper before
shipment and inserted in the bill of lading…
10
Personal notes:
US CLAUSE PARAMOUNT
• S. 4 (5) of US CO SA 1936
• “Neither the carrier nor the ship shall in any
event be or become liable….in an amount
exceeding 500 per package…or in the case
of goods not shipped in packages, per
customary freight unit…”
Personal notes:
HA UE-VISBY RULES
ARTICLE IV RULE 5
a) “Unless the nature and value of such goods have been
declared by the shipper before shipment and inserted
in the bill of lading, neither the carrier nor the ship
shall in any event be or become liable for any loss or
damage to or in connection with the goods in any
amount exceeding the equivalent of 666.67 units of
account per package or unit or 2 units of account per
kilo of gross weight of the goods lost or damaged,
whichever is the higher.
Personal notes:
E AMPLE
• A heavy crane is shipped from Italy (a Hague-
Visby Rules country).
• The bill of lading is subject to the eneral
Paramount Clause with paragraph (c) deleted.
• 3 units of the crane worth 2 million are stowed
on deck but the B/L is not claused to this effect.
• The units are lost overboard as a result of the
carrier’s breach of Article III Rule 1.
11
Personal notes:
E AMPLE CONTD.
• The carrier offers to pay the Hague Rules
limit for 3 “units” i.e. approximately
25,000.
• The cargo claimant argues that he is
entitled to recover the full loss as the
package limitation based on weight under
the Hague-Visby Rules exceeds 2 million.
Personal notes:
THE RESULT
• The Hague-Visby Rules do not apply
compulsorily to cargo which is carried on deck
without a declaration to this effect on the B/L (
Article 1(c)).
• If the Hague-Visby Rules do not apply
compulsorily the Hague Rules apply by virtue of
the last sentence in paragraph (a) of the eneral
Paramount Clause.
• The Hague Rules (which does not include a
weight calculation) package limit of
approximately 25,000 therefore applies.
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
12
BIMCO Training
individual situation.
PARAMOUNT CLAUSES
1. INTRODUCTION
The Hague and Hague-Visby Rules apply compulsorily only to:
“contracts of carriage covered by a bill of lading or any similar document of title…”1
Therefore, the Rules do not apply compulsorily to charter parties. Nevertheless, both voyage and time
charters frequently include a “Clause Paramount” either in the printed form or in the multiplicity of
typed clauses at the end of charters. The purpose of such a clause is to incorporate the Rules in one
form or another into the charter by agreement.
EXAMPLE 1
“It is also agreed that this charter is subject to all the terms …of the (Harter Act). It is further subject to
the following clauses, both of which are to be included in all bills of lading issued hereunder:
USA Clause Paramount
This bill of lading shall be subject to the (US COGSA)”
EXAMPLE 2
CLAUSE PARAMOUNT
“Charterers undertake that all bills of lading …issued under this Charter shall contain the following:-
“CLAUSE PARAMOUNT
(1) This bill of lading shall have effect subject to….”
There are many reasons why parties wish to incorporate the Rules by agreement. One reason is the
need to ensure that the liability of the carrier under the charter and under any bill of lading which may
be issued pursuant to it will be “back to back”. Secondly, since the liability cover which the carrier will
normally have from his P&I club or other liability insurer is based on the liability levels established by
the Rules, the carrier will wish to ensure that ,insofar as possible, he contracts within the limits imposed
by his liability insurance.
2. THE IMPORTANCE OF THE CLAUSE PARAMOUNT
The impact of the inclusion of such a clause can be dramatic for the following reasons:
1 Article 1(b)
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a. The Clause Paramount will generally incorporate the provisions of Article III Rule 8 of the Hague
or Hague-Visby Rules. Article III Rule 8 provides that:
“Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship
from liability for loss or damage to or in connection with the goods arising from the
negligence, fault or failure in the duties and obligations provided in this Article or lessening
such liability otherwise than as provided in these Rules, shall be null and void and of no effect.
A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier
from liability.”
Since the Rules apply to the charter by agreement it is a question of construction whether the
Rules will override another clause which gives the carrier greater protection than that to which
he is entitled under the Rules.
EXAMPLE 1
The Paramount Clause is likely to be predominant when the clause incorporating it into the
charterparty commences with words such as:
“ Notwithstanding anything which may otherwise be stated in the charterparty……”2
The preliminary words indicate that the Clause Paramount is to override the provisions of any
other clause.
EXAMPLE 2
However, The Paramount Clause is likely to be subordinate to another clause when the other
clause commences with words such as:
“Notwithstanding any provision to the contrary, the (carrier may limit to a sum less that provided
by the Rules) …..” 3
The preliminary words indicate that it is the other clause which is to override the provisions of
the Clause Paramount (and, therefore, the Rules).
Therefore, if the true construction of the charter as a whole leads to the conclusion that the
terms of the Clause Paramount are to be treated as predominant,4 the result of the inclusion of
the Clause Paramount may be to render void many of the exceptions and limitation provisions
of the printed terms of the charter.
EXAMPLES OF CLAUSES RENDERED VOID BY ARTICLE III RULE 8
• Exception clauses such as clause 13 of the BALTIME 1939 form of charter which provides
that:
2 Varnish v the Kheti (1949) 82 Ll. Rep.525)

3 “Tasman Discoverer” (2004) 2 Ll. Rep. 647
4 Contrast varnish v Kheti (1949) 82 Ll. Rep 525 and Holland v Alwadeen (1954) 2 Ll. Rep 45 and see “River Guraira” (1998) 1
Ll. Rep. 225
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“Owners are to be responsible for loss or damage…. if…caused by want of due diligence on
the part of the Owners or their Manager in making the Vessel seaworthy and fitted for the
voyage or any other personal act or omission or default of the Owners or their Manager…”5
• A clause which purports to give the claimant a time limit for claims against the Carrier which
is less than the one year stated in Article III Rule 6.6
• A clause which limits the Carrier’s liability to a sum less than that stated in Article IV Rule 5.7
• A clause which attempts to define in agreed terms how the obligations specified by the Rules
are to be construed or performed or treated, e.g. clauses stating that a container is to be
treated as a package in all circumstances8 or stating that a surveyor’s certificate is to be
treated as conclusive evidence of the vessel’s seaworthiness.9
• Exclusive law or jurisdiction clauses in favour of a country which does not allow a claimant
the same degree of rights as he would have under the Rules.10
3. DIFFERENCES BETWEEN THE HAGUE AND HAGUE-VISBY RULES
It is important to ascertain whether the particular Clause Paramount is intended to incorporate the
Hague Rules, the Hague-Visby Rules or some other version of the Rules such as the US COGSA 1936.
The distinction may be important since the Hague-Visby Rules have many provisions which are not in
the Hague Rules, and even the US COGSA11 (which is based on the Hague Rules), has provisions which
are not in the Hague Rules themselves.
EXAMPLE 1
Article IV Rule 5 of the Hague Rules provides that a carrier may limit his liability in the following
circumstances:
“Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or
in connection with goods in an amount exceeding £100 per package or unit or the equivalent of
that sum in other currency, unless the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading…
The Hague Rules’ provisions relating to “package limitation” in Article IV Rule 5 are based purely on
the concept of the “package or unit” and such phrase has been construed since the 1920s as referring
to a physical package or unit12. Accordingly, it is difficult to extend the right of package limitation
where the cargo is a bulk cargo whether dry or wet since the wording of the Hague Rules does not
allow a calculation to be made.
However, section 4(5) of the US COGSA 1936 modifies the relevant provision of the Hague Rules by
providing a limit which is calculated either by reference to the number of packages or, where the cargo
is not packaged, by a limit of US$500 “per customary freight unit”. The latter words provide a method
5 “Isla fernandes” (2001) 2 Ll. Rep.15

6 “Ion” (1971) 1 Ll. Rep. 541
7 “River Gurara” (1998) 1 Ll. Rep. 225
8 “River Gurara” (1998) 1 Ll. Rep. 225
9 Studebaker v Charlton (1938) 1 KB 459
10 “Hollandia” (1983) 1 AC 565
11 The United States Carriage of Goods by Sea Act 1936
12 See Studebaker v Charlton SS Co. Ltd (1937) 59 Ll. Rep 23 at 27
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of calculating the package limit which is not based purely on a physical concept but is based on the
non-physical unit which is the customary basis for calculating the freight that is to be paid e.g. the US
barrel or the metric ton or the long ton etc.
The limited wording of the Hague Rules is understandable since bulk carriers had not been built in the
1920s when the Rules were enacted. However, given the development of bulk carriage since that time
the need arose for reform and the defect is remedied in the case of the Hague-Visby Rules since Article
IV Rule 5 (a) of those Rules provides that:
“Unless the nature and value of such goods have been declared by the shipper before shipment and
inserted in the bill of lading, neither the carrier nor the ship shall in any event be or become liable
for any loss or damage to or in connection with the goods in any amount exceeding the equivalent
of 666.67 units of account per package or unit or 2 units of of account per kilo of gross weight of
the goods lost or damaged, whichever is the higher.
The underlined words provide an alternative method of calculating limitation based on weight.
EXAMPLE 2
The liability of shipowners and charterers inter se usually arises in the context of a charter party as an
indemnity issue after either the one or the other has already paid or settled a claim brought against
them as carrier under a bill of lading by a third party consignee. It is important in this regard to ascertain
whether the Clause Paramount in the charter incorporates the Hague or the Hague-Visby Rules since
the time limit which is available for such claims can differ.
Article III Rule 6 of the Hague Rules provides that:
“In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after the delivery of the goods or the date when the
goods should have been delivered”.
Article III Rule 6 of the Hague-Visby Rules is similarly worded but Article III Rule 6 bis of the Hague-
Visby Rules goes on to provide that:
“ An action for indemnity against a third person may be brought even after the expiration of the
year provided in the preceding paragraph if brought within the time allowed by the law of the court
seized of the case. However, the time allowed shall be not less than three months, commencing
from the day when the person bringing such action for indemnity has settled the claim or had been
served with process in the action against himself.”
The additional Article III Rule 6 bis was included in the Hague-Visby Rules since problems had arisen in
relation to indemnity claims under charters which were subject to the Hague Rules. The problem was
that if the charterer was not made aware of the third party claim until shortly before the expiry of the
one year time limit he ran the risk that any indemnity claim which he would subsequently wish to make
against the shipowner under the charter could be time barred since such claim would also have to be
made within the same one year time limit. Consequently, Article III Rule 6 bis of the Hague-Visby Rules
was intended to provide the charterer with additional time within which to purse his indemnity claim13.
13 NB! The Hague and Hague-Rules time limit of one year only applies to claims against the carrier and not to claims by the
carrier. Claims by the carrier are subject to whatever time limit is imposed by the general law which applies to the contract.
In the case of English law that is 6 years.
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4. TYPES OF CLAUSE PARAMOUNT
It has been judicially recognised that there are very many different types of Clauses Paramount.14 It
appears that a general reference to a “Paramount Clause” is a reference to the Hague
Rules.15 However, a reference to “the General Clause Paramount” is likely to be construed as a
reference to the detailed form of clause which appears in clause 2 of the BIMCO Congenbill form of
bill of lading and which provides in the alternative for the Hague or the Hague-Visby Rules depending
on the law of the countries of shipment and discharge.16
The clause provides as follows:-
“General Paramount Clause

a) The Hague Rules contained in the International Convention for the Unification of certain rules
relating to Bills of Lading dated Brussels 25th August 1924 as enacted in the country of
shipment shall apply to this Bill of Lading. When no such enactment is in force in the country
of shipment, the corresponding legislation of the country of destination shall apply, but in
respect of shipments to which no such enactments are compulsorily applicable, the terms of
the said Convention shall apply.
b) Trades where the Hague-Visby Rules shall apply.
In trades where the International Brussels Convention 1924 as amended by the Protocol
signed at Brussels on 23rd February 1968 – the Hague-Visby Rules – apply compulsorily, the
provisions of the respective legislation shall apply to this Bill of Lading.
c) The carrier shall in no case be responsible for loss or damage to the cargo, howsoever arising
prior to loading into and after discharging from the Vessel or while the cargo is in the charge
of another carrier, nor in respect of deck cargo or live animals.”
Other types of clauses refer to the specific form of the Rules as adopted by the municipal legislation of
specific countries or by international bodies.
EXAMPLE
US Clause Paramount:
“This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the
United States, approved 16 April 1936, which shall be deemed to be incorporated herein and nothing
herein shall be deemed a surrender by the Carrier of any of its rights or immunities or an increase of
any of its responsibilities or liabilities under said Act…”
Other such examples are the Canadian Clause Paramount and the Chamber of Shipping Voyage Charter
Clause Paramount 1958.
5. DO THE RULES APPLY TO THE CHARTER PARTY OR TO THE BILLS OF LADING OR TO BOTH?
There are also other types of clauses which incorporate a Clause Paramount but make it clear that the
14 Anglo-Saxon v Adamastos (1957) 1 Ll. Rep. 271

15 “Agios Lazaros” (1976) 2 Ll. Rep. 47 and Seabridge v Orssleffs (1992) 2 Ll. Rep 685
16 “Bukhta Russkaya” (1997) 2 Ll. Rep. 744
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Clause Paramount is to apply to bills of lading issued pursuant to the charter party but not to the
charter itself. It is important to be sure whether the wording has this effect or whether it also
incorporates the Rules into the charter party as well. If the Rules apply to the charter then the
application of Article III Rule 8 may render void some of the provisions of the charter. However, if the
Rules are to apply merely to bills of lading issued pursuant to the charter then the charter is subject to
traditional freedom of contract principles.
EXAMPLE 1
Clause 25 of the BPTIME 3 charter provides as follows:
CLAUSE PARAMOUNT
“Charterers undertake that all bills of lading …issued under this Charter shall contain the following:-
“CLAUSE PARAMOUNT
(1) This bill of lading shall have effect subject to….”
EXAMPLE 2
Clause 24 of the NYPE 1946 provides that:
“It is also agreed that this charter is subject to all the terms …of the (Harter Act). It is further subject to
the following clauses, both of which are to be included in all bills of lading issued hereunder:
USA Clause Paramount

This bill of lading shall be subject to the (US COGSA)”
In both instances the Clause Paramount itself states that it is to apply to bills of lading but the
preliminary wording of the incorporating clause makes all the difference! The small word “It” at the
beginning of the second sentence of clause 24 of NYPE 1946 is a reference to “the charter party” which
therefore, means that the Rules are to apply to both the charter party and to bills of lading issued
pursuant to it17.
6. “COMPULSORILY APPLICABLE”
Some Clauses Paramount stipulate that the Hague or Hague-Visby Rules will apply only if they are
“compulsorily applicable”. Two views have been put forward as to the effect of this phrase. The first
is that provided the country of the port of shipment has a statute which makes the Hague or the Hague-
Visby Rules compulsorily applicable under that law to exports from that country, the Rules will apply
“compulsorily”. The alternative view is that the Rules will apply “compulsorily” only if the law which
governs the contract of carriage (i.e. the “proper law” of the contract) has a statute which makes the
Hague or Hague-Rules applicable to the venture in question. The distinction may be highly relevant
particularly when such a clause is incorporated into a charter since very few (if any) countries specify
that the Rules are to apply “compulsorily” to charters18
17 Adamastos v Anglo-Saxon (1957) 1 AC 133

18 Vita Foods v Unus Shipping (1939) AC 277 a
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EXAMPLE
An export from country A may be compulsorily subject to the Hague Rules under the law of country A,
but if the contract is governed by the law of country B it may not be compulsory under the law of
country B that exports from country A are to be subject to the Hague Rules.
The question is not free from doubt. The English Court of Appeal has favoured the “proper law”
approach.19 However, Rix LJ expressed the minority view in the “Happy Ranger” that on a true
construction of the clause the relevant question was what was compulsory in the country of shipment.
This alternative view seems to be the one favoured by the courts of other Commonwealth countries20.
19 “Happy Ranger” (2002) 2 Ll. Rep. 357and “MSC Amsterdam” (2007) EWCA
20 See “Tasman Discovery”(2001) 2 Ll.Rep. 665
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Personal notes:
Liens
Personal notes:
WHAT IS A LIEN?
A lien has been defined as:-
“ .a efence a a la le to one n ossess on of a

cla ant s goo s ho s ent tle at co on la or
y contract to reta n ossess on nt l he s a
hate er he s o e ”
“Chrysovalandou Duo” (1981) 1 Ll. Rep. at 165
Personal notes:
A LIEN AS A SELF-HELP REMEDY

“ t s rge on ehalf of the efen ants that t o l e
ano alo s to let n y the ac oor a l a l ty h ch as
ha e alrea y hel s not create rectly y ncor orat on of
the e rrage ro s ons of the charter. .. o not acce t
these s ss ons. t has een a feat re of sh ng ract ce
for any years that the sh o ner loo s r ar ly to h s l en
n case of s te ”
per Mustill J in “Miramar” (1983) 2 Ll. Rep at 325
1
Personal notes:
THE PROBLEMS
However!
Liens are not always an effective remedy.
Shipowners usually face two types of difficulty
when purporting to exercise a lien:
1) Legal difficulties; and

2) Practical difficulties
Personal notes:
”A”
LIENS ON CAR O
Personal notes:
1. LE AL DIFFICULTIES
2
Personal notes:
THERE ARE TWO KINDS OF LIEN
1. Those which are given at law and require

no express agreement.
2. Those which exist only as a result of
express agreement.
Personal notes:
LIENS AT LAW
The only liens which are binding under English law (i.e.
irrespective of express agreement) are those for:-
• Freight payable on delivery of cargo.

• eneral average.
• Expenses incurred in protecting or preserving cargo.
Liens for other claims (e.g. for demurrage) are biding on

the owners of the goods only if they have been
expressly agreed.
Personal notes:
E PRESS LIENS IN TIME CHARTERS
• NYPE 1946
“…The owners shall have a lien upon all cargoes, and all
sub-freights for any amounts due under this Charter…”
• ENTIME
“The Owners shall have a lien on all shipped cargo
before or after discharge and on all sub-freights and/or
sub-hire including dead-freight and demurrage, for any
amount due under this Charter Party including but not
limited to unpaid charter hire, unreimbursed
Charterers’ expenses initially paid by owners, and
contribution in general average properly due.”
3
Personal notes:
THE PROBLEM
• A charterparty lien is binding as between the
shipowner and the charterer.
• “Aegnoussiotis” (1977) 2 Ll. Rep. 268
• However, if the cargo owner is not the charterer, the
lien in the charter party does not bind the cargo
owner unless the cargo owner has also agreed to
the lien.
• The cargo owner will usually be held to have agreed
to the lien only if the B/L either has its own lien
clause or it incorporates the charter lien clause into
the B/L.
Personal notes:
COMMON CONTRACTUAL STRUCTURE

Shipowner
B/L
C/P
Receiver
Charterer
Personal notes:
INCORPORATION OF CHARTER LIEN CLAUSE
• Unless the incorporating words in the B/L refer

expressly to a particular clause in the charter it
has been traditionally held that it is only those
provisions of the charter which are “germane” to
the receipt, carriage and delivery of the cargo
which are incorporated.
See “Annefield” (1971) P. 319
4
Personal notes:
INCORPORATION OF CHARTER LIEN CLAUSE

FROM A VOYA E CHARTER
• In the context of the incorporation of clauses

from a voyage charter into a B/L a lien clause
has been held to be “germane” in the sense
discussed above.
See Fidelitas v V/O Exportchleb (1963) 2 Ll. Rep 113
Personal notes:
INCORPORATION OF CHARTER LIEN
CLAUSE FROM A TIME CHARTER
If the B/L purports to incorporate the terms of an
expressly identified time charter there is no bar to
incorporation in principle.
“Coral” (1993) 1 Ll. Rep 1 (C.A.)
However, courts will reject incorporation if this
would result in an absurdity. A lien which is
intended to enforce payment of hire and other
time charter expenses does not make sense in the
context of a B/L which is a contract for a specific
voyage.
Personal notes:
THE DAN ERS OF SELF-HELP!

• If the time charter provides that B/LL are to be
signed “as presented” the shipowner is not
entitled to insist that the B/LL should be claused
so as to incorporate the time charter lien clause.
• Such an insistence amounts to a repudiation of
the charter party by the shipowner which entitles
the charterer to terminate the charter.
“Nanfri” (1979) 1 Ll. Rep. 201
5
Personal notes:
“NANFRI” (1979) 1 LL. REP

“t st e clear that the o ners cannot re re
lls of la ng to e cla se so as to ncor orate
the ter s of the t e charter s ch a re re ent
o l e contrary to the hole co erc al
r ose of the charterers.”
Lord Wilberforce at page 206
Personal notes:
A LIEN ON CAR O FOR FREI HT
AN ALTERNATIVE APPROACH TO A LIEN

ON CAR O FOR HIRE
Personal notes:
COMMON CONTRACTUAL STRUCTURE
Shipowner
B/L
C/P
Receiver
Charterer
6
Personal notes:
• Where the carrier under the B/L issued pursuant

to a time charter is the shipowner the shipowner
has the contractual right to receive the freight.
• However, provided, and so long as, the shipowner
continues to receive the hire from the time
charterer he impliedly agrees that the freight may
be payable to the time charterer.
Wehner V Dene (1905) 2 KB 92
Personal notes:
• However, should the charterer fail to pay the hire, the
shipowner is entitled to notify the party paying freight
under the B/L that the freight should be paid to the
shipowner and not to the time charterer.
“Spiros C” (2000) 2 Ll. Rep 319
“Bulk Chile” (2012) 2 Ll. Rep 594
“MV Loyalty” (2013) 1 Lloyd’s Rep 89
• If such notice is received before the freight has been paid

the holder of the B/L has a duty to pay the freight to the
shipowner.
Molthes Rederi v Ellermans (1926) Ll. Rep at 261
Personal notes:
• Therefore, it appears that the shipowners can, after
demanding that the freight should be paid to the
shipowners, exercise a lien at law on the cargo for
freight that is payable on delivery of the cargo even
if there is no lien clause to that effect in the B/L.
• However, the lien will be ineffective if the freight
has in fact been paid before the holder of the B/L
receives notice from the shipowners.
7
Personal notes:
• Doubt has been expressed in the past as to
whether the shipowners’ lien may be undermined
if the B/L provides that freight should be paid “as
per the charter” and the latter provides expressly
that freight is to be paid into a nominated account
controlled by the time charterer.
• However, see the comments of Coleman J and Rix
LJ in “Spyros C” (2000) 2 Ll. Rep 319 and Andrew
Smith J in “Bulk Chile” (2012) 2 Ll. Rep 594
Personal notes:
2. PRACTICAL DIFFICULTIES
Personal notes:
• Even if the shipowner has the right to

exercise a lien under the law which governs
the B/L his wishes may be thwarted since:
• the exercise of a lien is not allowable under the
law of the country where the cargo is to be
delivered: and/or
• there may be other practical difficulties e.g. a
lack of storage space.
8
Personal notes:
• enerally, the lien can be exercised only when the
vessel has completed the carrying voyage to the
discharge port. A lien can be exercised at an
intermediate port only in exceptional circumstances
if it can be proved that by proceeding to the
discharge port the exercise of the lien would be
practically or legally impossible due to local
conditions.
“Mihalios ilas” (1978) 2 Ll. Rep 186
Personal notes:
”B”
LIENS ON
SUB-FREI HTS
Personal notes:
1. LE AL DIFFICULTIES
9
Personal notes:
DEFINITION
• A lien on sub-freights is not a lien in the true
sense of the word as it is not based on a right to
retain possession of any property which is already
in the control of the person exercising the lien.
• It is merely a right to intercept monies which are

payable by a third party to the charterer by giving
notice to the third party that he should pay the
monies not to the charterer but to the person
giving the notice.
Personal notes:
SUB-FREI HT PAYABLE TO
CHARTERERS
• The “lien” is enforced by giving notice to the
sub-charterer to pay sub-freights directly to
owners.
• If the sub-charterer refuses and pays sub-

freight to charterers, he is liable to pay a
second time to owners.
Personal notes:
“NANFRI” (1979) 1 LL. REP
“ he l en o erates as an e ta le charge on hat s
e fro the sh er to the charterer an n or er to
e effect e an a l ty to nterce t the s fre ght y
not ce of cla efore t s a y the sh er to the
charterer”
per Lord Russell at page 210
10
Personal notes:
SUB-FREI HT PAYABLE TO CHARTERERS
• However, the “lien” is ineffective if the sub-charterer has
paid the charterer before he receives the notice.
• The shipowner is entitled to demand that the whole of

the sub-freight be paid to him even if that sum is more
than the sum owed by the charterer under the time
charter. However, the shipowner must account to the
charterer for any sum received in excess of the debt
owed under the charter.
Personal notes:
COMMON LAW VS
WHAT TYPES OF PAYMENTS ARE

INCLUDED IN
”SUB-FREI HTS”?
Personal notes:
SUB-HIRE
• It has been unclear whether “sub-freight”

includes sub-hire.
• There are conflicting judgements at first instance
on this issue.
• “Cebu” - 1983
- sub-freight includes sub-hire.
• “Cebu (2)” 1990 and “Bulk Chile” - 2012
- sub-freight does not include sub-hire.
• However, to avoid the problem, charters now
frequently refer expressly to sub-hire.
11
Personal notes:
• u hi e went to appeal – but Court of Appeal dealt

with other points. No comment on lien ruling.
• So probably: lien on sub freight does not include sub
hire
• If you are owner, add explicit reference.
Personal notes:
SUB-SUB-FREI HTS/HIRE
• The words “sub-freight” or “”sub-hire” will

include sub-sub-freight or sub-sub-hire (i.e.
freight or hire payable under a sub-sub-charter) if
there is a lien on sub-freights or sub-hire in both
the head charter and in the sub-charter.
“Cebu” (1983) 1 Ll. Rep. 302

“Western Moscow” (2012) 2 Ll. Rep. 163
Personal notes:
2. PRACTICAL DIFFICULTIES
12
Personal notes:
• When exercising a lien on sub-freights the
shipowner does not have physical control of the
cargo.
• Therefore, if the B/L holder refuses to comply with
the demand to pay freight to the shipowner the
latter must resort to the courts to enforce payment.
• Initially, it will be necessary to apply to the court of
the lex contractus to obtain an order of payment
and in most circumstances this will have to be
accompanied by an application to serve proceedings
out of the jurisdiction.
Personal notes:
• The concept of a lien on sub-freights is one which

is difficult to explain to non common law countries
COMMON LAW (CASES) VS NON
and it may be difficult to persuade a local court in COMMON LAW (ARTICLES)
the country where the B/L holder is domiciled to
enforce a payment demand.
Personal notes:
WHAT CLAIMS ARE SUBJECT TO

LIEN?
13
Personal notes:
LIENS FOR CURRENT DEBTS
• The general rule is that lien can be exercised only
for amounts which have accrued due at the time
the lien is exercised.
• Therefore, a lien cannot be exercised for future hire.
• However, hire will normally continue to accrue due
whilst a valid lien is being exercised and therefore,
the quantum of the lien can be periodically
increased.
Personal notes:
RELEASIN THE LIEN
• If there is no dispute about the claim, the lien is

released by payment of the claim to the
shipowner.
• If there is a dispute the law of most jurisdictions

provides that the lien is released by a payment
of the sum claimed into Court to await
resolution of the dispute on its merits.
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
14
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LIENS
THE EFFECTIVENESS OF LIENS AS A SELF-HELP REMEDY?
(This article was published in “Legal Issues Relating to Time Charterparties”, Informa 2008)
The world community has recognized for many centuries that it is in its interests to ensure that there
is a healthy infrastructure for the international carriage of goods and that carriers need to be
encouraged to invest funds in such business enterprises. Long-standing public policy considerations
mean that the laws of most countries recognize the need for carriers of goods to receive regular and
prompt cash income in order to be able to finance such enterprises1 and that carriers should have the
right to take prompt self-help measures to protect such income if required. The most well established
example of the self-help measure is the right to exercise a lien on cargo and this right is used regularly
in the shipping industry as a quick and effective means of enforcing payment from recalcitrant debtors.
This has been repeatedly recognized by the judiciary. For example, Mustill J said in “Miramar”2 that:
“It has been a feature of shipping practice for many years that the shipowner looks primarily to
his lien in case of dispute…”
What is a lien?
A lien has been defined as:-
“….a defence available to one in possession of a claimant’s goods who is entitled at common
law or by contract to retain possession until he is paid whatever he is owed…”3
If the goods are subject to a lien then it gives the carrier a right to retain possession of the goods even
if the debt is owed by someone other than the goods owner. This makes it a particularly effective
remedy since, if the party who is liable for the debt refuses to pay or is unable to pay, it enables the
carrier to enforce payment4 from another party who may not be personally liable for the debt The
ability of the carrier to enforce payment by such means has again been recognised by the courts.
Mustill J went on to say in the “Miramar” 5 that:
“It is urged on behalf of the defendants that it would be anomalous to let in by the back door
a liability which, as I have already held, is not created directly by incorporation of the
1
See e.g. the “Aries” (1977) 1 Ll. Rep 334 regarding the inability of cargo interests to set-off cargo claims against freight and the “Aliakmon
Progress” (1978) 2 ll. Rep. 499 and the “Nanfri” (1978) 2 Ll. Rep 132 regarding the limited circumstances in which deductions can be made
from hire.
2 (1983) 2 Ll. Rep at p.324-325
3 Mocatta J in “Chrysovalandou Dyo” (1981) 1 Ll. Rep. at 165
4
Payment is enforced either by immediate payment of the debt in order to release the lien or, where there may be a dispute as to the claim
which is the subject of the lien, by enforcement in due course against any security provided by the goods owner in order to obtain the release
of the goods from the lien.
5
The main argument in the “Miramar” was whether a clause in the charter which provided that demurrage should be payable by “charterers”
could be incorporated into the bill of lading and read as though payment should be made by “consignees” in that context. This argument was
rejected but Mustill J held at first instance that even if the consignees were not personally liable for paying demurrage they would still be
liable to make payment under a lien which was properly exercisable over their cargo for demurrage. This dictum was approved by Sir John
Donaldson MR in the Court of Appeal (1984) 1 Ll. Rep 142 at p. 144 but the issue was not appealed further to the House of Lords. The dictum
of Mustill J was subsequently also approved by the Court of Appeal in the “Spyros C” (2000) 2 Ll. Rep. 319 at p. 333
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demurrage provisions of the charter. ….. I do not accept these submissions. It has been a
feature of shipping practice for many years that the shipowner looks primarily to his lien in
case of dispute, and no doubt has ever been raised about the acceptability of a situation where
the lien is more extensive as against consignees than their own direct personal liability: see,
for example, Vergottis v. Robinson David & Co. Ltd., sup. at p. 256.”
At common law a carrier of goods is given a lien on the goods for:-
o Freight which is payable on delivery of the goods7

o Cargo’s contribution to General Average8
o Expenses incurred in preserving the goods9.
In such circumstances it is not necessary for the contract of carriage to say expressly that there is such
right of lien as the lien is given in any event by the common law and is binding on the goods owner
without further notice.
However, if the carrier wishes to have a lien on the goods for other claims10 then he must prove in one
way or another that the owner of the goods has consented to the cargo being subject to a lien for the
particular claim. If no such consent can be proved then the carrier has no right to retain possession of
the goods in defiance to a claim for delivery up of the goods from the owner of those goods. In practice,
the relevant consent is proved by the existence of a lien clause in the contract between the carrier and
the goods owner.
Most time charters have express lien clauses giving the shipowners an express lien on the cargo for
various sums payable by the time charterer to the shipowner under the time charter. The following
are examples:
NYPE 1946: Clause 18

“…The owners shall have a lien upon all cargoes, and all sub-freights for any amounts due
under this Charter…”
GENTIME: Clause 14 (d)
“The Owners shall have a lien on all shipped cargo before or after discharge and on all sub-
freights and/or sub-hire including dead-freight and demurrage, for any amount due under this
Charter Party including but not limited to unpaid charter hire, unreimbursed Charterers’
expenses initially paid by owners, and contribution in general average properly due.”
However, despite the express right given to the shipowner by the terms of the time charter to exercise
a lien on the cargo the exercise of such a lien is often frustrated by:
(a) legal difficulties; and/or
(b) practical difficulties
This essay will consider how the lien which is included in most time charters is frustrated by these
difficulties and which steps, if any, a shipowner may take to circumvent such difficulties.
(a) Legal Difficulties
6 (1928) 31 Ll. Rep. 23

7 See Allison v Bristol Marine Insurance Co. (1876) 1 App Cas 209 at p. 255
8 See Hain SS Co v Tate & Lyle (1936) 41 Com Cas 350
9
See Hingston V Ward (1876) 1 QBD 367
10 E.g. for advance freight, dead-freight, demurrage, damages for detention, hire or “all sums owing under the contract”
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In order to be effective the shipowner must prove that his right to lien is effective under the relevant
lex contractus. The following commentary will proceed to consider such issue in accordance with the
law of England and Wales.
(i) The necessity for the goods owner to have agreed to the lien
Time charter liens are binding as between the shipowner and the charterer since the charterer has
agreed to them by contract and they will, therefore, be effective where the time charterer is the owner
of the cargo. However, in the vast majority of cases the time charterer will not be the owner of the
goods at the end of the voyage. The goods will be carried under the terms of a bill of lading which will
evidence a completely separate contract between the carrier and a third party owner of goods. For the
lien to be effective vis a vis this receiver of goods the shipowner must prove that the receiver has
agreed to subject his cargo to the lien. Even if the carrier under the bills is the shipowner, the mere
fact that there is a lien clause in his favour under the time charter will not be binding on the receiver
under the bill of lading (if this is a party different from the time charterer) since the relevant lien clause
is in a contract to which the receiver is not a party. For the lien to be effective vis a vis the receiver the
shipowner will have to prove that the bill of lading contract is also subject to a lien clause which gives
the shipowner the same rights as he has under the lien clause in the time charter. This could be
established by the insertion in the bill of lading of an express lien clause subjecting the cargo to a lien
for sums unpaid under the time charter or by incorporation of the time charter lien clause into the bill
of lading11. It would be very unusual to see a bill of lading including an express lien clause of the first
type since in most circumstances the shipowner under a time charter must sign the bills of lading “as
charterers’ direct”12 or “as presented” 13 by the charterer who will be reluctant to subject the goods’
owner to such a lien. A bill of lading including such a provision might well be unacceptable under the
sale contract pursuant to which the goods are carried. Therefore, if, despite the objections of the
charterer, the shipowner were to insist on the inclusion on the bill of lading of a clause giving him the
right to lien cargo for unpaid hire the shipowner may well be held to have repudiated the charter.14
Lord Wilberforce said in the “Nanfri” that:
“It must be clear that the owners cannot require bills of lading to be claused so as to incorporate the
terms of the time charter: such a requirement would be contrary to the whole commercial purpose of
the charterers”15.
Therefore, in most circumstances the argument usually turns on whether or not the terms of the
particular bill of lading have validly incorporated the time charter lien clause into the bill.
(ii) Incorporation of the time charter lien clause into the bill of lading
Firstly, the shipowner must prove that the bill of lading seeks to incorporate the terms of the relevant
time charter and not the terms of any other charter (particularly any other sub voyage charter) which
may be in the contractual chain. Courts are generally reluctant to conclude that a bill of lading has
incorporated the terms of a time charter since in most cases it makes little sense for a bill of lading
(which is a contract based on geography) to incorporate the terms of a contract based on time.
11 See “Chrysovalandou Dyo” (1981) 1 Ll. Rep at 165

12 See clause 11.1 of BPTIME 3 and clause
13 See clause 8 of NYPE 1946, clause 30 of NYPE 93 and clause 17 (a) of GENTIME.
14
. See “Nanfri” (1979) 1 Ll. Rep. 201 and the “Anwar al Sabar (1980 ) 2 Ll. Rep 261.
15 (1979) 1 Ll. Rep at page 206
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However, if the bill of lading refers expressly to the provisions of a time charter16 the courts have been
ready to conclude that (subject to the second issue below) the terms of that charter are provisionally
incorporated.17 However, if the bill of lading does not identify the time charter expressly the usual
presumption is that unless the time charter is the only relevant charter, a general reference in the bill
of lading to an unidentified charter will be construed as a reference to a sub voyage charter18.
Secondly, even if the shipowner proves that the bill of lading purports to incorporate the provisions of
the time charter he must prove that the wording of the incorporation provision in the bill of lading is
sufficiently clear to incorporate the charter lien clause into the bill. The English court is notoriously
reluctant to accept that general words of incorporation are sufficient to achieve incorporation even
when the words are, on their face, extremely wide. For example, it has been held that the following
words were not sufficient to incorporate a charter party jurisdiction clause into the bill:
“This shipment is carried under and pursuant to the terms of the charter dated between . . .
and all the terms whatsoever of the said charter apply to and govern the rights of the parties
concerned in this shipment19.”
The traditional principle is that only those clauses which are germane to the receipt, carriage or
delivery of the goods are prima facie incorporated by general words of incorporation.20 This principle
is likely to be applied even more strongly when the bill of lading purports to incorporate the terms of
a time charter since, given the nature of a time charter, only some of its clauses are likely to be
“germane” to the receipt, carriage or delivery of the goods. Nevertheless, provided that the relevant
time charter provision is “germane” in this sense then such provision can in principle be incorporated
into the bill so as to make its provisions binding on the cargo receiver. In the “Coral”21 the bill of lading
expressly identified the time charter and went on to state that: “All terms and conditions, liberties and
exceptions of the Charter Party, dated as overleaf, are herewith incorporated.” It was held by the Court
of Appeal that the following charter provision: “charterers are to load, stow, and trim and discharge
the cargo at their expense under the supervision of the Captain” was validly incorporated into the bill
since such clause was germane to the, receipt, carriage and delivery of the goods.
It has been held in the context of voyage charters that a lien clause is “germane” in the sense discussed
above.22 However, it is submitted that a time charter lien for hire, port costs and bunkers would not
be “germane” in the sense discussed since they would be payable by the time charterers irrespective
of whether cargo was being carried. Furthermore, even when the relevant clause is “germane” in the
above sense the courts have nevertheless, been prepared to reject incorporation if the parties to the
bill of lading contract cannot be presumed to have intended incorporation since this would result in an
absurdity under the bill23. The time charter lien is intended to enforce payment of hire and other
expenses payable by time charterers such as bunkers, stevedoring, port expenses etc. whereas the
remuneration payable by the cargo owner under the bill of lading is not hire but freight and is usually
intended to be inclusive of such expenses. Accordingly, a lien which is intended to enforce payment of
16
Usually by refering to the relevant time charter date on the face of the bill of lading
17 See the “Coral” (1993) 1 Ll. Rep 1 (C.A.)
18 See the “SLS Everest” (1981) 2 Ll. Rep. 389

19 See the “Siboti” (2003) 2 Ll. Rep 364
20
See Thomas v Portsea (1912) AC 1; the “Annefield” (1971) P 319 and “Coral” (1993) 1 Ll. Rep 1
21 (1993) 1 Ll. Rep 1
22 See Fidelitas v V/O Exportchleb (1963) 2 Ll. Rep 113 and “Miramar” (1983) 2 Ll. Rep 319 at p 324 per Mustill J (there was no appeal on this
point to the higher courts).

23 See the judgement of Lord Roskill in the “Miramar” (1984) 2 Ll .Rep at p.132. When considering whether a holder of a bill of lading would
agree to a clause making him liable for demurrage payable under a charterparty at the loadport Lord Roskill said that: “My Lords, I venture
to assert that no business man who had not taken leave of his senses would intentionally enter into a contract which exposed him to a
potential liability of this kind.” It is submitted that the comment has even greater force in relation to a clause purporting to make a consignee
liable for hire and other time charter expenditure.
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hire and such expenses does not usually make sense in the context of a bill of lading. Indeed, if the
alternative were true then the goods could be subject at the same time to a lien at law for any freight
payable on delivery of the goods and to a contractual lien for hire and other time charter expenses.
Accordingly, it is submitted that the incorporation of a time charter lien into the bill would not be
effective in such circumstances. However, it is possible that the incorporation into a bill of lading of a
time charter lien for stevedoring costs and port expenses might be effective to the extent that the
receivers have the obligation under the bill to pay for port and/or discharge costs.
On the other hand, if the incorporating words in the bill of lading refer expressly to a particular clause
in the charter then there is a better chance that such provision will be incorporated into the bill even
if this necessitates manipulation of the words of the clause (e.g. reading the word “charterer” as
“consignee”) in order for the clause to make sense in the context of the bill of lading24. Accordingly, if
the incorporating clause in the bill of lading clause were to make specific reference to the time charter
lien clause then it may be that a time charter lien will be enforceable in the context of a bill of lading.
However, it is submitted that this is an extremely unlikely scenario since very few if any of the standard
bill of lading forms make express reference to a charter lien clause, and even if they did, it is likely that
the court would require strong evidence that the parties to the bill expressly intended in the particular
case to incorporate the lien clause in a time charter since such the printed terms of such bills would be
drafted for the most part in order to accompany and incorporate the terms of voyage not time charters
and would be intended and expected to operate in conjunction with voyage and not time charters.
(iii) The significance of the lien between the shipowner and the time charterer inter se.
Even if the cargo is in fact owned by a party other than the time charterer the fact that the time charter
is subject to a lien clause may not be completely without significance. In those circumstances where
the time charterer is not in financial difficulties but is reluctant for some reason to pay sums owing by
him to the shipowner under the time charter the exercise of the lien by the shipowner may enable the
shipowner to put pressure on the charterer to pay the demanded sums. Since the charterer has
contractually agreed to the fact that the cargo is to be subject to a lien hire would continue to run
during any time spent in exercising the lien25. However, the exercise of such a lien in such
circumstances may render the shipowner liable in damages to a third party consignee under the bill of
lading and it is by no means certain that the shipowner would be able to recover such damages by way
of an indemnity from the time charterer26. The position may be different if the time charter includes a
“suspension of services” provision since such a clause expressly entitles the shipowner in certain
circumstances not only to suspend the services (including the discharge or delivery of the cargo) which
he is otherwise contractually bound to perform under the time charter until hire is paid, but also to be
paid an indemnity by the charter for any liabilities that the shipowner has incurred to third parties such
as cargo receivers as a result of such suspension. A classic example of such a clause can be found in
clause 11(a) of NYPE 93:
“At any time after the expiry of the grace period…and while the hire is outstanding, the Owners
shall, without prejudice to the liberty to withdraw, be entitled to withhold the performance of
any and all of their obligations hereunder and shall have no responsibility whatsoever for any
consequences thereof, in respect of which the Charterers hereby indemnify the Owners, and
hire shall continue to accrue and any extra expenses resulting from such withholding shall be
for the Charterers’ account27.”
24
See the “Nerano” (1996) 1 Ll. Rep 1
25 See the judgement of Donaldson J in the “Aegnoussiotis” (1977) 1 Ll. Rep. 268. This conclusion was subsequently approved by Lloyd J in
the “Cebu” (1983) 1 Ll. Rep 303 but a contrary view was taken by Mocatta J in the earlier case of the “Agios Giorgis” (1976) 2 Ll. Rep 192. All
of these judgements are at first instance.
26
See the discussion in “Time Charters”, 5th edition at 30.12
27 A similar provision can be found in the Gentime (clause 8 (c)). Clause 8.4 of BPTIME 3 is even more specific in that it provides that
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On the other hand if the time charterer is in financial difficulties the shipowner is unlikely to wish to
exercise the time charter lien or to suspend services in the manner described above as such action is
worth while only if recourse can be had to a financially viable charterer in due course. In most
circumstances the shipowner will wish if possible to persuade the cargo owner that he is entitled to
exercise a lien under the bill of lading since the terms of the latter validly incorporate the time charter
lien clause into the bill. In so doing he faces the formidable difficulties discussed above. Therefore, the
shipowner may wish to consider other possibilities.
(iv) Indirect enforcement of sums due under the time charter by the exercise of a lien on freight
The fact that the time charter includes a clause purporting to give a lien on cargo will be of little
practical value to the shipowner in the majority of cases. However, should the shipowner be the carrier
under a bill of lading issued pursuant to the time charter the shipowner may be able to compensate
for this disappointment by making use of the lien that he has on the cargo at law (even if there is no
express clause in the bill itself) for freight in order to enforce indirect payment of sums owing to him
under the time charter.
If the shipowner is the carrier under the bill of lading he has the contractual right to receive any freight
which is payable under the bill. However, provided, and so long as, the shipowner continues to receive
the hire from the time charterer, he impliedly agrees to allow the time charterer to collect and keep
the bill of lading freight28. Therefore, should the charterer fail to pay the hire the shipowner is entitled
to notify the party paying freight under the bill that the freight should be paid to the shipowner as the
party who is contractually entitled to it and not to the time charterer..Rix LJ explained the situation in
the “Spiros C” as follows:
“It should be emphasized that the freight claim made by the owner in these proceedings is
against Tradigrain (the shippers) and is to bill of lading freight, and is not a claim against
Tradigrain Shipping (the sub-charterers) to freight under the sub-charter. In theory the claim
could have been put forward in the alternative, against Tradigrain as a direct claim under the
bill of lading, and against Tradigrain Shipping as a claim to enforce the time charter lien for
sub-freights29”.
If the notice to pay the shipowner is received before the freight has been paid to the time charterer,
the holder of the bill has a duty thereafter to pay the freight to the shipowner30. Accordingly, if the bill
of lading holder does not pay the freight as demanded, the shipowner should logically have the right
to exercise whatever lien is available to him in order to enforce payment of the freight. If the freight is
payable on delivery of the cargo the shipowner should have a lien at law even if there is no express
lien clause in the bill of lading. Alternatively, if the freight is payable in advance or after a fixed number
of days after release of the bills then the shipowner would have the right of lien only if the bill of lading
expressly gives such right since there is no right of lien at law for advance freight. However, in most
instances of advance freight, the bill of lading will be marked “freight prepaid”. In the case of The Bulk
Chile31 the bills were marked “freight prepaid”, but it was not sufficient to show that the shippers were
not liable for freight which they knew had in fact not been paid. However, where bills of lading are
marked “freight prepaid” the shipowner's lien on cargo for unpaid freight may be of little value against
“Charterers undertake to indemnify Owners in respect of any liabilities incurred by the Owners under the bill of lading or any other contract
of carriage as a consequence of Owners’ proper suspension of …their obligations under this Charter.”
28 See Wehner v Dene (1905) 2 KB 92
29 (2000) 2 Ll. Rep 319 at p.323
30
See Molthes Rederi v Ellermans (1926) Ll. Rep at 261
31 [2013] 2 Lloyd's Rep. 38, at para [25]
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endorsees of the bill of lading. However, if the shipper is the bill of lading holder and knows they have
not paid the freight, the mere fact that the bill of lading states “freight prepaid” does not stop the
shipper from being liable for freight.
The right to demand and receive the bill of lading freight in the manner described above can work even
if there is a sub voyage charter and the bill of lading provides that freight is to be payable as per the
terms of that charter. It was held by Collman J in The Spyros C that, despite such provision, the
shipowner could demand that payment to be made to his bank account provided that the demand was
made before the sub-charterer had made payment to the bank account nominated in the sub-charter.
That reasoning was followed by the Court of Appeal in The Bulk Chile32. The bill of lading contract
between the shipowner and the shipper is not a contract by which the shipowner contracted to provide
a service to the shipper in consideration of the shipper promising to confer a benefit (in the form of
payment of freight) on an independent third party. Rather the nominated recipient was, as between
the shipowner and the shipper, to be regarded as the shipowner's agent. On that basis there is no
reason why the shipowner's contract with the shipper should be taken to preclude the shipowner from
cancelling his nominated agent's authority to act on his behalf in receiving the freight, before such
payment had been made, and requiring it to be made to himself.
If the shipowner succeeds in enforcing payment of the freight then he has the right to withhold
sufficient of the freight to reimburse him for sums unpaid by the charterer under the time charter up
to the time that the lien is exercised and, if there is any balance remaining, he must return this to the
time charterer33.
(v) For what amounts can the lien be exercised?
Most time charters provide that the shipowners are given a lien for “any amounts due under this
Charter.34” There is no doubt that this includes hire and, also, other expenses and disbursements35
payable by the time charterers under the charter36. However, once the ship has been withdrawn by
the shipowner from the services of the time charterer, the shipowner is not entitled to claim such sums
as “amounts due under this Charter” but merely as quantum meruit payments which, consequently,
are not subject to the lien37.
Furthermore, unless the lien clause states other wise (which would be extremely rare) the lien can be
exercised only for amounts which have accrued due at the time that the lien is exercised. In other
words a lien cannot usually be exercised in relation to future debts38. However, since hire is usually
payable in advance, the shipowner has the right if, say, one month’s hire is payable in advance before
the 1st day of the month, to exercise a lien for the full one month’s hire on the 1st day of the month
albeit that such hire is not yet fully earned at that time. Nevertheless, if it transpires later in the month
that the charterer is also unlikely to be able to pay the next month’s hire as well, the shipowner cannot
extend his lien demand to include the next month’s hire; he must wait until the 1st day of the next
month (since it is only then that the next hire payment has accrued due) and extend his lien demand
at that time. This may give the shipowner a problem. Whilst as a matter of principle the shipowner is
entitled to refuse delivery of the entire cargo until the sums claimed are satisfied, the law of some
32 [2013] 2 Lloyd's Rep. 38, at para [25]

33
See Wehner v Dene (1905) 2 KB 92
34 See clauses 18 of NYPE 1946, clause 23 of NYPE 93 and clause 26 of Shelltime 4. Clause 14 of BPTime 3 gives a lien for “any amounts owed
by charterers under this Charter” whilst Clause 14 (d) of Gentime is more specific in that a lien is given for “any amount due under this Charter
Party including but not limited to unpaid charter hire, unreimbursed Charterers’ expenses initially paid by the Owners and contributions in
general average properly due.”
35 For example bunkers, stevedoring, port and agency costs
36 Samuel v West Hartlepool (1906) 11 Com Cas 115
37
See “Lakatoi Express” (1990) N.S.W.L.R. 285 at p. 304
38 See Samuel v West Hartlepool (1906) 11 Com Cas 115
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countries, or practical considerations (see below), will restrict the shipowner’s right of lien merely to
that quantity of cargo which has a value sufficient to satisfy the lien. Therefore, by the time that the
next hire instalment falls due, there may not be sufficient cargo remaining on board to provide security
for that further month’s hire. Consequently, the shipowner will have no worthwhile lien for future hire
and no security for the cost of future time lost whilst exercising the lien for past unpaid hire.
(b) Practical Difficulties
Even if the shipowner proves that he has a valid and effective lien under the law that governs the
relevant contract he may still be unable in practice to exercise such right due to local difficulties at the
port of discharge of the cargo. Notwithstanding the fact that the shipowner has a valid lien under the
lex contractus, local regulations at the port of discharge may make the exercise of such a lien illegal at
that port39.
Secondly, in order for the lien to be effective the carrier must retain possession of the goods. Once
possession is lost the right to lien is lost. It is therefore, very important for the carrier that he retains
control of the cargo and this can usually best be done by retaining the cargo on board. So long as there
is no clear alternative method whereby the possession of the goods can continue to be secured ashore
at less cost than by detention of the ship40 and without the danger of loss of control,41 the carrier is
entitled to withhold delivery of the goods and to claim demurrage42 or, by parity of reasoning, hire,
whilst the ship is being detained for this purpose. However, this may create further possible difficulties
for the carrier. If the ship is delayed this will have an effect on subsequent voyages and if the delay
occurs at the end of the charter then the shipowner may miss the cancellation date under his next
fixture with the result that his “next” charterer may cancel the next fixture43.
The shipowner may therefore, prefer in some circumstances to discharge the cargo and to maintain
the lien ashore under the control of a trusted agent. However even if the exercise of the lien is valid in
principle at the port a lack of anchorage or storage space may mean that the ship is not allowed to
exercise a lien in fact.44 Furthermore, unless the lien clause provides otherwise, he has no right to sell
the cargo in order to satisfy his claim. However, in most jurisdictions the carrier has the right under
the local law to petition the court to order the sale of the cargo in order to satisfy the claim45 and such
orders are usually made if it appears that the delay in making payment of the claim will be substantial
and/or if the cargo is perishable.
Therefore, in many cases the shipowner will fear that if the ship proceeds to the discharge port it will
be impossible to exercise a lien for a number of reasons and may prefer to exercise the lien before the
voyage is completed. In normal circumstances a shipowner must complete the voyage to the discharge
port before he can exercise a lien and may be liable to the time charter and/or the consignees for a
failure to prosecute the voyage with due dispatch if he purports to exercise a lien before reaching the
39 See the “Sinoe” (1972) 1 Ll. Rep. 201

40 See Lyle Shipping Co. Ltd. v Cardiff Corporation (1899) 5 Com Cas 87
41 For example, by storage in a statutory warehouse under Sections 493-494 of the UK Merchant Shipping Act 1894. If storage ashore is held
to be more reasonable than storage on board the ship the shipowner is also entitled to include in his lien demand on the cargo the costs
incurred by such storage. See Anglo-Polish v Vickers (1924) 19 Ll. Rep at p. 125
42 “Boral Gas” (1988) 1 Ll. Rep. 442.
43 For a recent example of cancellation in different circumstances see “Achileas” (2007) 1 Ll. Rep 19
44
The manual entitled “Check Before Fixing” published annually by BIMCO includes a section running to over 40
pages commenting on the possibility of exercising liens in various countries of the world and it is clear from such
survey that the practical difficulties are significant.
45 In the United Kingdom such rights are statutorily protected by ss. 492-501 of the Merchant Shipping Act 1894.
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discharge port. However, the English court has held that the ship may be entitled in exceptional
circumstances to exercise a lien at a location sufficiently far away from the discharge port to enable
the right to exercise a lien to be exercised without difficulty46. Nevertheless, it may be difficult in many
cases to prove that the exercise of a valid lien may be lost by local complications and accordingly, the
inclusion in the time charter of a “suspension of services” clause47 may be of considerable assistance
to the shipowner since such a clause would appear to allow the shipowner to delay the completion of
the voyage so long as the time charterer remains in breach of his duty to pay hire.
Liens on Sub-Freights
Due to the difficulties discussed above in relation to the exercise of a time charter lien on cargo many
time charters also give the shipowner the right to lien “all sub-freights48”. The purpose of this remedy
is to enable the shipowner to collect freight under sub-contracts which would otherwise be payable to
the charterer who has failed to pay hire or other sums due under the head time charter. This provision
is intended in particular to provide the shipowner with a remedy in those circumstances in which he is
not entitled as carrier to claim the freight payable under shipowners’ bills of lading. Classic examples
would be freight payable to the time charterers under bills of lading which are charterers’ bills49 and
not shipowners’ bills or under a sub voyage charter. However, this remedy is not a “lien” in the strict
sense of the word since the shipowner does not have physical possession of the sub-freights; he is
merely given the right to give notice to the party who is obliged to pay the sub-freight that following
receipt of the notice, the sub-freight should be paid not to the charterer but to the shipowner. The
right has been described as follows:-
“The lien operates as an equitable charge upon what is due from the shipper to the charterer,
and in order to be effective requires an ability to intercept the sub-freight (by notice of claim)
before it is paid by shipper to charterer.”50
So long as the notice is received by the party who is to pay the sub-freight before he has in fact done
so then he is obliged to make payment to the shipowner and remains obliged so to do even if he
ignores the notice and pays the charterer. However, if the party who is to make payment has already
made payment to the charterer before he receives the notice then he is under no further duty to pay
that sum to the shipowner51.
The shipowner is entitled to give notice that the whole of the sub-freight should be paid to him even
if the sub-freight is in fact in excess of the sums which are owed under the time charter. However, as
in the case of bill of lading freights which are payable to the shipowner under shipowners’ bills, the
shipowner is obliged in such circumstances to account to the charterer for any sums received which
are in excess of the sums owed under the time charter52.
The right to exercise a lien on (i.e. to intercept) “sub-freights” includes a right to intercept sub-sub-
freights provided that both the head charter and the underlying sub-time charter are on the NYPE
46 See the “Mihalios Xilas” (1978) 2 Ll. Rep 186

47
See page…above
48 See clause 18 of NYPE 1946 and clause 14 (d) of GENTIME quoted on page 2 above.
49 i.e. bills of lading under which the time charterers (rather than the shipowners) act as carrier.
50 Per Lord Russell in “Nanfri” (1979) 1 Ll. Rep at 210
51
Molthes Rederi v Ellermans (1926) 26 Ll. Rep 259
52 Wehner v Dene (1905) 2 KB 92
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194653 form and both charters have the same clause 18.54
For some time there was some dispute whether the right to lien “sub-freights” includes the right to
lien “sub-hire”. The position has now been clarified by Andrew Smith J in The Bulk Chile55, however the
Court of Appeal56 did not comment on that finding. In the case of The Bulk Chile the owner brought a
claim, amongst various other things, asserting a lien of hire under a time charterparty. The time charter
provided right to lien “sub-freights” and the judge held that this did not include the right to lien “sub-
hires”57. Therefore, to cover both under the NYPE 46 form the wording of clause 18 would need to be
amended to provide for a lien on all “sub-freights and/or sub-hires”. It is worth noting that NYPE 93
standard clause 23 already provides for both.
In addition, in situations where there are long charterparty chains, it is important to check how far
down the chain the owner’s right to a lien goes. If one of the charterparties does not create a lien there
will be no rights to assign to the owner.58
Legal and practical difficulties
As in the case of the lien on cargo the exercise of a lien on sub-freights may also be frustrated by a
number of difficulties59.
Firstly, in order to have the right to intercept the sub-freight the shipowner must make sure that he
gives his notice to the cargo owner before the latter pays the sub-freight to the time charterer. If the
notice is received after the payment has been made to the time charterer then the notice is of no
effect and the shipowner has “lost” his lien60. This danger is particularly obvious when the sub-freight
is prepaid.
An additional hurdle is created by the fact that, in England anyway, sub-hire clauses create an
assignment by way of charge61. This means that in addition to having to give notice, depending on the
jurisdiction, the charge would need to be registered in order for it to be effective if the time charterer
becomes insolvent. A failure to register the lien, again depending on jurisdiction, may mean that it is
void and the ship-owner will be treated as an unsecured creditor of the time charterer. Therefore, for
a UK company a lien on sub-freight will be void against a liquidator or creditor if not registered within
21 of the charterparty being entered into.
Similarly, if the time charterer has assigned his right to receive the freight to a third party before receipt
of the notice from the shipowner, the doctrine of priorities of equitable assignments laid down in
53 The same comment can also be made when both charters are on the NYPE 93 form or one is on the 1946 form and the other on the 93
form since the wording of clause 23 of NYPE 93 is identical to that of clause 18 of the 1946 form for all practical purposes. However, the same
conclusion does not apply when the head charter is on the BALTIME form since clause 17 of that form gives a lien merely on “sub-freights
belonging to the Time Charterers”. See the judgement of Lloyd LJ in the “Cebu” (1983) 1 Ll. Rep. 302
54 See the “Cebu” (1983) 1 Ll. Rep. 302.
55 [2012] 2 Lloyd's Rep. 594
56 [2013] 2 Lloyd's Rep. 38
57 [2012] 2 Lloyd's Rep. 594, at [49]
58
The Western Moscow [2012] EWHC 1224, at para [122]
59 A particular difficulty which arises in England and Wales is that the shipowners’ lien on sub-freights is not enforceable against the liquidators
or creditors of time charterers who are incorporated in England and Wales unless the time charter has been registered as a charge under
sections 395 or 410 of the Companies Act 1985 within 21 days of its date. See “Ugland Trader” (1985) 2 Ll. Rep 372 and “Annagel Glory”
(1988) 1 Ll. Rep 45 (although this conclusion was doubted by Lord Millett in Agnew v Commissioners of Inland Revenue (ReBrumark
Investments) (2001) 2 AC 710 (PC)). Section 93 of the Companies Act 1989 removes the need for such registration but this section has not
yet (as at 26th June 2007) been brought into force.
60
See Wehner v Dene (1905) 2 KB 92
61 The Western Moscow [2012] EWHC 1224, at para [52]
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Dearle v Hall62 means that the shipowner’s demand has been undermined by the earlier assignment
and the shipowner cannot demand payment of the freight in defiance of the right of the prior
assignee63.
Secondly, even if the notice is given in time the shipowner may face practical problems in enforcing his
right to receive the sub-freight if the cargo owner is resident in a foreign country which is not familiar
with English law principles and concepts. If the cargo owner ignores the notice to pay the shipowner
may need to obtain the assistance of the local court in the country of residence of the goods owner in
order to enforce the lien on sub-freights. The concept of an equitable assignment of freight which can
be cancelled by the giving of notice is a difficult concept to explain to a foreign court and there is a
significant risk that the court may refuse to order the cargo owner to make payment to the shipowner.
This problem may be less acute in the case of a sub-charterer who is domiciled in the EU or EFTA
countries64 since a judgment or order of the English court requiring payment of the sub-freight to be
made by such sub-charterer to the shipowner would be enforceable in the sub-charterer’s country of
domicile without review of its substance65.
Conclusion
The purpose of a lien is to provide a means of self-help. However, in many instances the law and
practice relating to the enforcement of the lien clause in a time charter means that the clause is of
little practical benefit to a shipowner who wishes to take prompt and effective steps to secure payment
of sums owing to him under the time charter. The situation is complicated by the fact that the
authorities relating to the effectiveness or otherwise of the lien are often contradictory both in their
result and in the rationale for the result. This is particularly so in relation to the complex and confusing
issue of the incorporation of charterparty lien clauses into bills of lading. The House of Lords recognized
the difficulties in 1984 when Lord Roskill stated in the “Miramar”66:
“My Lords, I deliberately refrain from expressing any view upon the effect of this curiously
drafted lien clause, except to say that the time may be ripe for this House to re-examine this
and other standard forms of lien clauses around which there seems to have accumulated a
mystique which cries out for clarification and simplification.”
It is submitted that the time is indeed ripe!
62 (1825) 3 Russ 1
63
See “Attika Hope” (1988) 1 Ll. Rep. 439
64 Iceland, Norway, Switzerland and Poland.
65 See Article 36 of the European Regulation (EC) 44/2001 of 22nd December 2000 on Jurisdiction and Enforcement of Judgments in Civil and
Commercial Matters. A similar provision appears in Article 36 of the Lugano Convention on Jurisdiction and Enforcement of Judgments in
Civil and Commercial Matters of 16th September 1988.
66 (1984) 2 Ll. Rep at p. 134
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Chapter 19
Personal notes:
Letters of Indemnity (LOI)

Copyright Richard illiams, 2014. All rights reserved.
scanning, recording or by any information storage or retrieval system, without the prior written permission of the author
Personal notes:
WHAT IS AN LOI?
• A letter of Indemnity (LOI) is an enforceable
promise made by A to B to hold B harmless against
any liability, loss or damage that B incurs as a
result of complying with a request made by A.
• i.e. “ f yo o hat as ll hol yo
har less aga nst any loss l a l ty or a age
that yo ay nc r as a res lt of o ng hat
as ”
Personal notes:
THE PURPOSE OF LOI
In general terms:-
• a LOI is used in order to protect one party against
any losses or liabilities which he may incur as a
result of complying with another party’s request to
perform some task which he is not obliged to
perform under the contract; or
• when it is unclear whether or not there is an
obligation to perform the task and the parties do
not wish to delay its performance.
1
Personal notes:
THE BENEFIT OF LOI

In the circumstances just described the LOI is a
useful tool to break the impasse which would
otherwise occur and there is no difficulty in
enforcing the terms of the LOI through the courts
if needs be.
Personal notes:
UNENFORCEABLE LOI
• However !
• LOI s are also commonly used to facilitate acts
which are at best, irregular, and at worst,
fraudulent.
• In such circumstances the courts of common law
countries are not prepared to enforce the terms
of the LOI.
Personal notes:
E AMPLES OF UNENFORCEABLE LOI
Masters are often:
• asked to sign B/LL which contain false data e.g.
stating that the cargo is clean when it is not in
apparent good order and condition, or giving a
wrong shipment date; and
• are offered an LOI which is intended to indemnify
them against any liability which they incur to
transferees of the bill as a result of doing so.
2
Personal notes:
“EACH CASE MUST DEPEND UPON ITS
CIRCUMSTANCES.”
There may perhaps be some circumstances in which
indemnities can properly be given. Thus, if a shipowner
thinks that he has detected some faulty condition in
regard to goods to be taken on board he may be
assured by the shipper that he is entirely mistaken; if
he is so persuaded by the shipper, it may be that he
could honestly issue a clean bill of lading while taking
an indemnity in case it was later shown that there had
in fact been some faulty condition. Each case must
depend upon its circumstances.”
Morris LJ in Brown Jenkinson
Personal notes:
WHY UNENFORCEABLE?
• If a master knows or should have known that the
data is false he is knowingly assisting the person
making the request to deceive the transferee.
• A court will not enforce an LOI which is intended to
facilitate a fraud as a matter of public policy.
Brown Jen. v Percy Dalton (1957) 2 Ll. Rep. 557

SCB v PNSC (2003) 1 Ll. Rep 227
Personal notes:
WHEN ENFORCEABLE?
However!
• If a LOI is given for a non-fraudulent reason then

there is normally no reason why it should not be
enforced.
3
Personal notes:
CHARTERPARTY CLAUSES
• Many charters now include clauses which call for

the provision of a LOI in certain circumstances.
• However, these principles apply even if there is an
agreed clause relating to the provision of a LOI.
• Such clauses will only be enforced if and when
they are used for legal and non-fraudulent
purposes.
Personal notes:
WHEN ARE LOI REQUESTED?
LOI s are normally requested in the following
situations:
• Delivery of cargo without surrender of original B/LL
• Change of destination/Deviation
• Releasing clean or ante-dated B/LL
• Switch B/LL
• Blending and commingling of cargoes
Personal notes:
DELIVERY OF CAR O WITHOUT
BLADIN S
• Ships may be delayed at the discharge port because
the original bills of lading are not available.
• Since the carrier is entitled to demand surrender of
the bills before giving delivery of the cargo the
consequent delay is for the account of the charterer,
or cargo interests if the ship is not chartered.
• If the ship is time chartered hire continues to run
whilst, if the ship is voyage chartered, demurrage
continues to run.
4
Personal notes:
THE RELEVANCE OF LOI
• In order to avoid delays LOI are frequently offered to
carriers to persuade them to deliver cargo without
surrender of the bills of lading.
• However, there is no custom (even in the tanker
trade) which obliges a carrier to accept a LOI when
offered.
• Therefore, unless there is a clause in the charter
which obliges the carrier to accept a LOI, the carrier
is entitled to refuse one and keep the ship waiting
until the bills are produced.
Personal notes:
CHAN E OF DESTINATION
• Charterers are frequently traders who are parties
to contracts for the sale or purchase of cargoes.
• The requirements of the sale contracts may
change and the charterers may wish to order the
ship to discharge the cargo at a port other than
that specified in the bill of lading.
• Should the ship owner agree to do so they may
be committing a deviation under the bill of
lading.
Personal notes:
A COMMON CONTRACTUAL
STRUCTURE
Shipowner
B/L
C/P
Receiver
Charterer
5
Personal notes:
THE RELEVANCE OF DEVIATION
• If a carrier commits a deviation he is traditionally believed to

have lost the ability to rely on the various exception and
limitation clauses in the carriage contract.
• Consequently, the rules of the P I clubs who are members of
the International roup provide that the carrier may not be
covered for liabilities arising as a result of the deviation.
(NB! Some clubs provide alternative insurance cover on a non-
mutual basis whilst other may be able to obtain such cover on
the open market, in each case on payment of additional
premium)
Personal notes:
Switch Bills of Lading
• Bills of lading are “switched” when one set of bills
(usually in 3 original copies) is replaced by another
set in different terms or in a different form.
• The switch is usually performed since the original
bills do not for some reason meet the traders’
requirements.
• Bills can be switched both for legitimate and
illegitimate reasons.
Personal notes:
Examples of legitimate reasons for a
switch
• The contract of sale or the letter of credit may call
for a different form of bill of lading.
• The trader may wish to change the port of delivery
of the cargo.
• The trader may wish to conceal the name of the
party from whom he has bought the goods and
may therefore, wish to conceal the name of the
Shipper on the bill of lading.
6
Personal notes:
Examples of illegitimate reasons for a switch
• The trader may wish to conceal where the cargo

was loaded or the date of shipment.
• The trader may wish to conceal the fact that the
cargo has been commingled with another cargo at
another location after shipment.
Personal notes:
Practical Problems for the Carrier

• If the carrier does agree to “switch” the bills the
carrier will run various risks.
• Because he runs such risks the carrier may well
prejudice his P I cover.
• Even if the carrier agrees to the “switch” he will
probably insist on receiving a LOI.
Personal notes:
WHAT IS BLENDIN AND COMMIN LIN ?

• Blending occurs when different cargoes are mixed
together in the same hold or tank.
• Commingling occurs when different grades of the
same cargo are mixed together in the same hold or
tank.
• This is done deliberately in order to produce a
product with a higher or better spec.
7
Personal notes:
THE ON-BOARD BLENDIN AND
COMMIN LIN OF CAR OES
• Ships will often load one consignment at one port
and then proceed to another port to load either a
different cargo or another grade of the same cargo
on top of the first cargo in the same tank and
thereby blend or commingle the two cargoes in
order to produce a new product of a higher
specification.
Personal notes:
IMO RE ULATIONS
The August 2009 circular of the Maritime Safety

Committee and Marine Environment Protection
Committee warns that blending on board during
a sea voyage “ resents clear ha ar s for the
safety of the sh an rotect on of the ar ne
en ron ent” and prohibits blending on board
during a sea voyage.
Personal notes:
BLENDIN AND COMMIN LIN

• Whilst such commingling or blending may be
technically feasible it may cause the carrier
various legal and/or insurance problems.
• Consequently, the carrier may prejudice his P I
cover.
8
Personal notes:
WHY ARE LOI REQUESTED?

• LOI s are normally requested in such situations since
the shipowner is being asked to do something which
will prejudice his P I cover.
• Consequently, the LOI is intended to be alternative
cover to the shipowner’s liability insurance that may
be prejudiced.
• Therefore, it is important to ensure that the LOI is
effective.
Personal notes:
The P I Position
• The Rules of all the P I Clubs that are parties to the
International roup emphasise that their members may
prejudice their cover if they indulge in such practices.
• However, the Clubs appreciate that their members may be
obliged for commercial reasons to indulge in some of these
practices and have drafted standard forms of LOI for use by their
members in such cases.
• Nevertheless, they have done so merely as a service and
emphasise that if a member uses these forms they do not
maintain their P I cover the LOI is alternative not additional
protection.
DELIVERY WITHOUT B/LL AND Personal notes:

DEVIATION
• All the member clubs of the International roup of
P I Clubs have suggested the same standard forms
for use in these circumstances.
• Forms “A” and “AA” are intended to apply where
there is delivery of cargo without surrender of
original bills of lading.
• Forms “B” and “BB” are intended to apply where
there is deviation.
• Forms “C” and “CC” are intended to apply where
there is both delivery without bills and deviation.
9
Personal notes:
DELIVERY WITHOUT B/LL AND
DEVIATION
• The forms headed with a single capital letter (e.g.
“A”) are intended for signature by one party
whereas the forms headed with a double capital
letter (e.g. “AA”) are intended to be counter-
signed by a second party e.g. a bank.
• The banking federation has confirmed its
agreement to recommend the wording of the
standard forms to their members.
Personal notes:
OTHER SITUATIONS
• The ard P I club has suggested a form for
commingling situations but there seem to be no
standard recommended forms available for
switch B/LL or co-mingling.
See www.gard.no/publications/ ard News No.
144
• However, the existing standard forms are often
amended to apply to these situations.
Personal notes:
IMPORTANT FEATURES OF LOI
The effectiveness or otherwise of an LOI depends
upon:
(a) its legal enforceability;

(b) the legal capacity of the entity
issuing the LOI;
(c) the creditworthiness of the
entity issuing the LOI;
(d) the terms of the LOI; and
(e) the beneficiary of the LOI.
10
Personal notes:
THE TERMS OF THE LOI
1) The terms of the P I recommended wording
entitles the beneficiary of the LOI to require the
provider of the LOI to replace security put up by the
beneficiary in order to prevent the arrest of his ship
by security put up by the LOI provider.
2) The beneficiary is entitled to demand specific

performance of the LOI only if he proves that he has
delivered the cargo to the party named by the
provider of the LOI.
“The Bremen Max” (2009) 1 Ll. Rep. 81
Personal notes:
THE ORI INAL I FORM A
The above cargo was shipped on the above ship by …
and consigned to … for delivery at the port of but
the bill of lading has not arrived and we, … hereby
request you to deliver the said cargo to [ nsert na e
of arty to ho el ery s to e a e] at … without
production of the original bill of lading.
In consideration of your complying with our above
request, we hereby agree as follows :-
To indemnify you…”
Personal notes:
Thank you!
Contact BIMCO at
www.bimco.org
11
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LETTERS OF INDEMNITY
RICHARD WILLIAMS
The information and opinions which this paper contains are not intended to be a comprehensive
study, nor to provide legal advice and should not be treated as a substitute for specific advice
concerning individual situations.
1. General Principles
A letter of Indemnity (LOI) is an enforceable promise made by A to B to hold B harmless against

any liability, loss or damage that B incurs as a result of complying with a request made by A. i.e.
“If you (B) do what I (A) ask, I (A) will hold you (B) harmless against any loss, liability or damage
that you (B) may incur as a result of doing what I (A) ask.”
In many cases such an indemnity is contained within the fabric of the contract itself. For example
most charter parties have clauses such as the following:
“The Master shall be under the orders of the Charterers as regards employment, agency, or other
arrangements. The Charterers shall indemnify the Owners against all consequences or liabilities
arising from the Master, officers or Agents signing Bills of Lading or other documents or
otherwise complying with such orders, as well as from any irregularity in the Vessel’s papers or
for overcarrying goods.”1
However, A might ask B to perform some task which is not within the boundaries of the contract.
For example, A as charterer might request B as owner to perform a voyage which is outside the
agreed charter party geographical limits. In such circumstances, even if B were prepared to
comply with A’s request B might be concerned that the charter party indemnity might not be
sufficient to protect B against damage, loss or additional expenditure which B might incur as a
result of complying with A’s request. Alternatively, B might wish to increase the scope of the
indemnity in consideration for his agreement to provide extra-contractual services. In such
circumstances, parties will often agree to provide and accept extra-contractual (i.e. free-
standing) LOI2. However, such LOI are themselves binding contracts albeit separate and
collateral to the original contract. Therefore, the terms of the LOI may differ from the terms of
the underlying contract and their enforceability or otherwise is considered separately from that
of the underlying contract3.
Therefore, LOI are often used in order to persuade one party to comply with a request made by
another party to perform some task which that party is not obliged to perform under the
contract or to persuade a party to do something when it is unclear whether or not there is an
obligation to do so and the parties do not wish to delay the performance of the contract (e.g. to
sign clean bills of lading when there is an honest difference of opinion as to whether the cargo
is indeed in apparent good order and condition).
In circumstances such as this the LOI performs a useful purpose in that it provides commercial
flexibility. It enables the contract to be performed without delay whilst at the same time
1 Clause 9 of Baltime 1939 (revised 2001)

2 See for example the forms of LOI jointly recommended by the member clubs of the International Group of P&I clubs.
3 See Laemthong v Artis (2005) 1 Ll. Rep 632
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protecting the rights of the party who is being asked to perform the requested task and who
may suffer damage or loss or liability as a result of performing the required task. Therefore, the
law recognises the usefulness of the LOI in such circumstances and courts are ready to enforce
the terms of the collateral contract contained in the LOI.
However, LOI are also often used to facilitate acts which are fraudulent or illegal. For example,
most international contracts of sale will provide that payment is to be made against clean bills
of lading4 or bills of lading of a certain date5. Therefore, if the shipper were to produce claused
bills or bills which were differently dated then they would not be able to obtain payment of the
price from the buyers. In such circumstances, sellers of cargo sometimes request carriers to
release clean bills of lading even though the cargo is clearly not in apparent good order and
condition or to release ante-dated or wrongly dated bills of lading in order to deceive the buyer
and obtain payment of the price in circumstances in which they should not be able to do so.
Such requests are often accompanied by the offer of a LOI which is intended to protect the
carrier were he to incur liability to the buyer as a result of releasing such improper bills. In such
circumstances, the LOI is being used as a mechanism to persuade the carrier to fraudulently
deceive the buyer, and if the carrier were to do so, he would be knowingly become part of the
fraud. In such circumstances, courts are not usually prepared to enforce the terms of the LOI for
public policy reasons i.e. the courts are not prepared to encourage frauds6.
2. Circumstances in which LOI are normally used
LOI are normally requested in the following situations:
• Delivery of cargo without surrender of original bills of lading.

• Change of destination/Deviation.
• Releasing clean or ante-dated bills of lading
• Switch bills of lading.
• Commingling.
1) Delivery of cargo without surrender of original bills of lading
If a Carrier does deliver cargo without production of the Bills of Lading, he does so at his risk.
Such an act would be an interference with the rights of the true goods Owner to possess and
dispose of the cargo. It would technically be a conversion of the cargo rendering the Carrier
potentially liable for the full value of the cargo to the true cargo Owner. For example in The
"Sagona" Staughton J. stated that:
"...the Owners are at the very least not bound to obey an order to receiver Y, if in fact it is receiver
Z who is the Owner of the cargo and entitled to delivery of it. By doing so the Owners, and their
master as joint tort feasors, would be liable for the tort of conversion, whether or not they would
also be liable to Z for breach of contact." 7
4 Article 27 of UCP 600 defines a clean transport document as “…one bearing no clause or notation declaring a defective condition
of the goods or their packaging”.
5 A contract to sell “June goods” means that the bill of lading must be dated the 30th June at the very latest. Therefore, if the goods
are not fully loaded until the 1st July the bill of lading should also be dated 1st July in which case the seller could not obtain the price
from the buyer. In such circumstances the shipper may try to persuade the carrier to release a bill of lading dated 30th June in order
to deceive the buyer.
6 See Brown Jenkinson v Percy Daulton (1957) 2 Ll. Rep. 557 and SCB v PNSC (2003) 1 Ll. Rep 227
7 [1984] 1 LLR at 198.
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It should be remembered that a Bill of Lading ceases to be an effective document of title which
can, by endorsement, transfer constructive possession (i.e. Ownership) only when delivery of
the goods has been made to the person having the right to claim them under the Bill of Lading,
that is to say, the holder of the Bill of Lading.8 It has been recognised by the Law Commission9
that a Bill of Lading can take a year or even longer to reach the ultimate holder. Therefore, the
Carrier may not be faced with a claim for unlawful delivery for some appreciable time after the
event. Within that time, the Charterer or the other person providing him with a letter of
indemnity for delivering without surrender of the original Bills of Lading, may have disappeared
or have been made bankrupt.
It is unlikely that a Carrier who has delivered the goods other than again surrender of the original
Bill of Lading will be entitled to rely on any exception clause in the Bill of Lading to escape liability
to the true goods Owner.10 The Court will look long and hard at the particular exception clause
and may well conclude that it provides the Carrier with no defence to a claim which is likely to
be very substantial. For example, in the Motis11 case it was held that the Carrier was not
protected by an exception clause designed to protect the Carrier for “ any loss or damage to the
goods whilst in the carrier’s actual or constructive possession…after discharge over the ship’s
rail…however caused” since the goods had not been “lost” but misdelivered. For the carrier to
be protected the clause would have to state expressly that the carrier is protected against
misdelivery occurring on or after discharge and in all circumstances. Insofar as the writer is
aware none of the standard forms of bills of lading currently have any clause such as this.
However, if the misdelivery has occurred after discharge from the vessel (e.g. from a shore
warehouse or from a container storage area) the carrier may be able to rely on contractual
limitation rights even if those clauses give him greater protection than that provided by the
Hague or Hague-Visby Rules. The reason for this is that, firstly, the courts construe limitation
rights more liberally than exemption clauses12 and secondly, since the Rules apply only “from
tackle to tackle.” Consequently, Article III Rule 8 of the Rules would have no application to
contractual limitation rights which apply after discharge and would not curtail their
effectiveness.13 However, the court will again wish to be satisfied that the wording is sufficiently
clear in this respect. At first instance, Aikins J held in the Trafigura case that if the right to
package limitation had been extended post discharge the words of Art IV Rule 5 would be wide
enough to apply to cases of misdelivery. However, this appears to have been doubted by the
Court of Appeal albeit that such views are obiter since the Court of Appeal did not have to deal
with this issue. Therefore, to be safe, carriers probably need to follow the example of the “New
York Star” where the relevant clause expressly extended the right to rely on package limitation
to incidents of “misdelivery”14. Lastly, it is uncertain whether the Carrier will be able to rely on
any right to limit his liability under the global or tonnage limitation conventions in all
circumstances15.
Delay caused by the failure to produce Bills of Lading
8 The "Delfini" [1988] 2 LLR 609.

9 "Rights of Suit in Respect of Carriage of Goods by Sea" Report No. 196, 1991 p. 17.
10 Sze Hai Tong Bank Ltd -v- Rambler Cycle Co. Ltd [1939] 2 LLR 120.
11 Motis v D/S AF (2000) 1 Ll. Rep. 211
12 See Ailsa Craig Fishing Co v Malvern Fishing Co (1983) 1 Ll. Rep 183 and “Happy Ranger” (2002) 2 Ll. Rep 357
13 See “MSC Amsterdam” (2007) 2 Ll. Rep 622
14 (1980) 2 LLR 317
15 See the discussion in “Problematical Areas in the current Limitation regime” by Prof Richard Williams in Liability Regimes in
Contemporary Maritime Law published by Informa, 2007

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If the Shipowner decides to rely on his right to refuse to give delivery unless original Bills of
Lading are produced then there will inevitably, be delay at the discharge port. Clearly, if the
Shipowner has the right to insist on production of the original Bill of Lading before he tenders
delivery then a Charterer or a cargo interest who calls upon the Shipowner to do so without
production of the Bill of Lading does not have any claim for damages against the Shipowner for
his refusal to deliver. However, it does not necessarily follow that a Shipowner who refuses to
give delivery without production of the Bills of Lading can claim for the delay to his vessel since
this question depends upon the other provisions of the charter.
In the case of a time charter, the usual rule is that hire is payable continuously in advance unless
the Charterers can bring themselves clearly within an off-hire clause16 or the Charterers can
show that the delay resulted from a breach of contract on the part of the Shipowner. It was
held by the Court of Appeal in The "Houda" 33 that a refusal on the part of the Shipowner to
deliver cargo without presentation of original Bills of Lading was not a breach of contract and
that accordingly hire was payable in full during the period of delay. Similarly, it is extremely
unlikely that a time charter will include an off-hire clause which places the vessel off-hire in these
circumstances. Accordingly, in the vast majority of cases, a vessel will remain on hire.
The Shipowners appear to have similar rights if they are entitled to claim demurrage under a Bill
of Lading or voyage charter. The usual rule in these circumstances is that laytime or demurrage
will run continuously unless there is default on the part of the Shipowner which causes delay or
unless the running of laytime or demurrage is prevented by a clearly worded exception clause.
In The “Boral Gas”17 the court held that demurrage ran during a period when the Shipowner was
exercising a lien on the cargo for non-payment of freight, since it was the duty of the receivers
or Charterers to discharge the cargo within the laydays and, to enable this to be done, it was
their responsibility to pay the freight. It is submitted that a similar principle must apply in a case
where it is the responsibility of the Charterer or the cargo interest to produce the original Bill of
Lading to enable discharge to take place.
Lastly, the position is not quite so clear-cut where the Bill of Lading or voyage charter does not
provide for demurrage. However, there is an implied obligation on the receiver under English
Law to discharge the cargo within a reasonable time even if the contract does not provide for a
specific period of laytime.18 Accordingly, if the Charterer or cargo interest is in breach of that
obligation then he is liable to pay damages for the detention of the vessel over and above the
period considered to be a reasonable time for discharge of that particular cargo.19 Accordingly,
if delay is caused by the failure of the Charterer or the cargo interest to produce the original Bill
of Lading, then for the reasons described above, it seems to me that he may well be liable for
damages for detention.
However, throughout the law relating to hire and demurrage there runs a thread of authority to
the effect that a Shipowner cannot delay his vessel unreasonably if, by using other remedies
available to him, he was able to discharge the cargo but nevertheless, avoid thereby giving
delivery of the cargo to the cargo interests.20 Thus, for example, Section 493 of the English
Merchant Shipping Act of 1894 gives the Shipowner a statutory right to discharge and
warehouse the cargo in the case of imports into the United Kingdom after the expiration of 72
hours. Similarly, other countries have provisions which enable the cargo to be discharged and
16 "Mareva A.S." [1977] 1 LLR at 381

17 [1988] 1 LLR 342
18 Hicks -v- Raymond [1898] A.C. 22
19 Scrutton 18th edition p.154
20 Carlberg -v- Wemyss (1915) S.C. 616
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to remain under the custody of the port or customs authorities until the receiver is able to take
delivery.
It has, furthermore, been recognised that if a Shipowner continues to delay the discharge of his
vessel unreasonably when he could, by discharging the cargo in the manner described above,
have curtailed the delay, he may not be able to claim for demurrage incurred after the time
when a reasonable man would have discharged the cargo.21 Therefore, although it is clear from
the decision of the Court of Appeal in The “Houda” that the Shipowner is not obliged to comply
with an order to deliver cargo without production of the Bill of Lading, both Leggatt L.J.22 and
Millett L.J.23 referred to the equitable jurisdiction of the Court in the event of the Bill of Lading
being lost. Therefore, it may still be open to a Charterer to argue if the delay becomes
unreasonable, that the Shipowner is not entitled to claim for losses incurred by him as a result
of further delay if he could, by taking reasonable alternative action such as an application to the
Court or the discharge to shore into safe custody, have avoided that delay.
The P&I Position
For these various reasons, the various members of the International Group of P&I Clubs have all
introduced a rule which emphasises that a member who delivers cargo other than against
surrender of the original Bill of Lading does not have P&I cover for liabilities resulting from such
act. The Clubs have furthermore, repeatedly re-emphasised this rule in a number of circulars to
their members over the past few years. Such circulars have emphasised that, whilst the Clubs
may recognise the commercial pressure under which their members may come from time to
time to deliver cargo without surrender of original Bills of Lading, and whilst the Clubs may
provide assistance to the member in the drafting of a suitable letter of indemnity to be given by
the Charterer or Consignee or other party to the Shipowner in such circumstances24, the
member must understand that the Clubs are not by doing so, waiving the rule described above.
The member must, therefore, ensure that he has satisfactory alternative security by way of
letter of indemnity since ultimately, this will probably be his only source of comfort if a claim is
made by a third party who produces the original Bill of Lading in due course. The Clubs'
recommendation therefore is that the letter of indemnity should be given by a bank or by
someone of equal financial standing.
Is the Carrier obliged to accept a LOI if one is offered to them?
Whilst it is frequently the case that a letter of indemnity is offered in lieu of a Bill of Lading the
traditional rule is that a Shipowner is not obliged to deliver on this basis. It was recognised in
The "Sagona"25 and in The "Houda"26 that there was a practice in the oil cargo trade for cargoes
to be delivered against a letter of indemnity. However, the existence of a practice does not
normally affect legal rights and obligation unless the practice amounts to a custom. Customs
are enforced by the Court only when they are proved to be reasonable, certain, consistent with
a contract, universally acquiesced in and not contrary to law.27 The Plaintiffs originally pleaded
21 Lyle -v- Cardiff Corporation (1899) 5 Com. Cas. 94

22 [1994] 2 LLR at 553
23 [1994] 2 LLR at 558
24 The member clubs of the International Group have jointly produced standard LOI forms which they have recommended to their
members in these situations. There are three different LOI headed A (delivery of cargo without bills of lading), B (deviation under
bills of lading)and C (where both situations exist). Each LOI is in two forms e.g. A and AA. The single letter form is intended to be
given by one party without counter guarantee whereas the double letter LOI is intended to be counter guaranteed by a bank.
25 [1984] 1 LLR at 201
26 [1994] 2 LLR 551.
27 Scrutton 18th edition p. 15.
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in The "Sagona" that the practice amounted to a custom. However, this pleading was
subsequently deleted and the Plaintiff merely argued that there was a practice. It appears from
the judgment that this concession was probably correct in that on the evidence as a whole it
was found to be a common but not universal practice in the carriage of oil cargo. In such
circumstances, the practice was not "universally acquiesced in" and could not therefore, amount
to a custom. It now seems that this principle is firmly fixed since the Court of Appeal found in
The "Houda" that the Owner of a tanker was not obliged to deliver notwithstanding the fact that
a letter of indemnity was offered.
Is the position different if the vessel is chartered?
It frequently occurs that a Carrier is asked to deliver without production of original Bills of Lading
when the vessel is voyage or time chartered under terms which firstly, entitle the Charterer to
call for Bills of Lading to be signed and released and which secondly, provide the Owner with an
indemnity, either express or implied, in the event of their complying with Charterers' orders. If
the Charter party provides an express indemnity in favour of the Shipowner then he is of course
entitled to rely on that indemnity if he complies with Charterers' request. However, even if
there is no express indemnity the Shipowner is probably entitled to an implied indemnity if he
complies with Charterers' instructions, provided that "such an act is not apparently illegal in
itself, but is done honestly and bona fide in compliance with the (Charterers') directions ...".28
However, the fact that a Shipowner has a right to an indemnity under a Charter party or to
demand a letter of indemnity from another party does not necessarily oblige the Shipowner to
deliver without production of a Bill of Lading if so required by the Charterer. This distinction is
very important since an Owner may be very reluctant to have to rely upon an indemnity from a
party of whose financial standing he is not convinced. This is particularly so given the fact that
he will have lost his P&I cover if he delivers without production of the original Bills of Lading and
faces a claim which is potentially enormous. Indeed, given the substantial delay which
frequently occurs before the Bills of Lading can emerge in the hands of another party and the
rapidity with which even the most well-established of financial institutions can collapse, what
looks like good security today may well be useless security tomorrow.
The Court of Appeal established in the "Houda”29 that the Charterers were not entitled to
demand that the Carrier should deliver the cargo without presentation of the Bills of Lading
merely because the charter party provided them with an indemnity should they agree to do so
and said:
"In my judgment the solution to the problem which arises in the present case is not to be found
in the implication of some contractual term, but on the general rule of the common law that,
wherever one person acts on the instructions of another and thereby incurs personal liability or
potential liability to a third party, that other cannot afterwards lawfully countermand his
instructions: see for example Chappell -v- Bray30; Read -v- Anderson31 ...
In the present case the Owners were contractually obliged to comply with the Charterers'
instructions, and the Master was expressly required to sign Bills of Lading as the Charterers might
direct. They directed him to sign negotiable Bills of Lading in favour of the Charterers or their
28 Strathlorne -v- Andrew Weir [1934] 50 LLR 185. See also 'Nogar Marin' [1988] 1 LLR 412 and
29 [1994] 2 LLR at 558
30 (196) 6 H&N 145
31 (1984) 13 QBD 779
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order. This amounted to an instruction, not merely to sign Bills of Lading, but to deliver the cargo
to the persons who provided evidence of their entitlement thereto by producing the Bills of Lading
... By complying with the Charterers' instructions and signing and handing over Bills of Lading in
negotiable form, the Master rendered the Owners potentially liable to any third party to whom
the Bills of Lading might be negotiated. In the absence of express contractual provision entitling
them to do so, it was, in my judgment, thereafter no longer open to the Charterers to
countermand or vary their instructions by directing the Owners to deliver the cargo otherwise
than against presentation of the Bills of Lading, thereby depriving the Owners of the protection
to which their original instructions had entitled them".32
The principle to which the Court of Appeal refers is a general principle of the common law and
is not therefore restricted to time charters but is applicable in relation to all forms of contracts
of carriage.
Specific clauses requiring delivery without production of bills of lading
Although the Shipowner is normally entitled to refuse to give delivery without production of Bills
of Lading he may well have to do so if the terms of the particular contract of carriage oblige him
to do so. This was recognised by the Court of appeal in the "Houda".33 However, it appears that
the particular clause must be clearly worded. For example, the relevant clause in the "Houda"
stipulated that:
"The master ... shall be under the orders and directions of Charterers as regards employment of
the vessel ... and shall sign Bills of Lading as Charterers or their agents may direct ... .
Charterers hereby indemnify Owners against all consequences or liabilities that may arise from
the master ... otherwise complying with Charterers' or their agents' orders, (including delivery of
cargo without presentation of Bills of Lading ...".
It was recognised that this wording did not go so far as to oblige the Shipowners to deliver
without presentation of Bills of Lading. Neill L.J. stated:
"Clauses 13 and 50 do not in my view impose any express obligation on the Charterers to
discharge a cargo in the absence of the Bill of Lading. They merely provide for a letter of
indemnity if such discharge takes place. But I do not construe the clauses as imposing a
contractual duty on the Owners."34
By way of contrast, the charter party in the “Delfini”35 provided that:
"Should Bills of Lading not arrive at discharge port in time then Owners agree to release the
entire cargo without presentation of the original Bills of Lading against delivery by Charterers of
letters of indemnity issued in accordance with Owners' PandI Club wording, counter-signed by
...".
32 [1994] 2 LLR at 558-559

33[1994] 2 LLR at 559
34 [1994] 2 LLR at 551
35 [1990] 2 LLR 252
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The latter wording is clearly different in that it places a positive obligation on the part of the
Shipowner to release the cargo without surrender of the original Bills of Lading36. The result on
a strict construction of such a provision is that the Owner is contractually obliged to proceed in
this manner notwithstanding the fact that he will lose his P&I cover if he does so. “Delfini” type
clauses are common in charter forms used by the oil majors and the shipowner who uses such
forms regularly is warned about the dangers of using such forms when chartering to charterers
who are not oil majors and who may not therefore have the same financial backing for such LOI.
2) Change of Destination/Deviation
Once a bill of lading provides for discharge at a particular port the carrier is obliged to proceed
to that part on the usual and customary voyage for that port and may be liable for deviation if
the vessel either proceeds on a different route or to a different port. Traditionally, an intentional
breach of this kind has been considered to be a deviation unless excused by custom, agreement or
statute. The effect of deviation was explained by Lord Wright in Hain v Tate&Lyle as follows:-
“It (the deviation) abrogates the special contract entirely”37
Consequently, a deviating carrier was subject to the following risks:-
(i) The cargo interests had the right to terminate the contract on the basis that the
carrier is in breach of a condition or has repudiated the contract of carriage and
can claim delivery up of his cargo. If they claim delivery at a location other than
the agreed port of cargo delivery in the contract, then the carrier may not be
entitled to recover freight which is payable on delivery at such agreed port; and
(ii) The carrier might not be able to rely on any exception clause to protect him against
claims; and
(iii) The carrier might lose his right to limit liability; and
(iv) The carrier might lose his right to claim general average contribution in respect of
expenses incurred as a result of a casualty occurring after the deviation; and
(v) The carrier might well lose his P&I cover.38
Revised Orders Clauses
As in the case of delivery of cargo without surrender of original bills of lading, a carrier is not bound
to comply with an order to proceed to a port other than the one nominated in the contract of
carriage unless there is a clause in the contract which obliges him to do so. However, it is becoming
increasingly common, particularly in tanker voyage charterparties, to see clauses which are
intended to give charterers the right to amend their voyage orders after cargo has been loaded,
and to order the vessel to deliver the cargo at a port other than that first nominated. If such orders
are given after a bill of lading has been issued this may cause the shipowner difficulty, in that the
bill of lading is a completely separate contract between the shipowner and a holder in due course
of the bill and contractually obliges the shipowner to deliver the cargo to the holder of the bill at
the port specified in the bill. Accordingly, any order given under the charterparty to deliver the cargo
36 However, consistent with the principle that contractual provisons are not enforceable if they are used for fraudulent purposes a
shipowner might not be obliged to deliver pursuant to such a clause if he was put on notice that he was being asked to deliver cargo
to someone who was clearly not entitled to delivery of it. See 3 (a) below.
37 (1936) 41 Com Cas at 354
38 For a more detailed commentary on the modern law of deviation see The Evolving Law and Practice of Voyage Charterparties (ed
Thomas)(Informa 2009), Chp 14, 'The Impact of Deviation on Contracts of

Affreightment', pp 289 - 306.
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at a port which differs from that specified in the bill of lading potentially exposes the shipowner to
a claim for deviation under the bill of lading unless the holder of the bill also agrees to the new port.
The difficulty which the shipowner faces when receiving such instructions from the voyage
charterer is that he may not know at that point in time whether a holder in due course of the bill
has agreed to the diversion; indeed, he may not know the identity of the holder in due course at
that time. Furthermore, if he complies with the order and there is a deviation then he will have
prejudiced his P&I cover.
Such clauses are strictly construed by the courts but if the clause does not oblige the shipowner to
commit a deviation under the bills of lading there is no reason why the clauses should not be
enforced by the court. Am example of such a clause is clause 4 (b) of the ASBA II form of charter
which reads as follows:
“(b) After loading or discharging port(s) have been nominated, charterers may change such
port(s) and/or vary their rotation consistent with Part I and bills of lading, if any, and owner
shall issue instructions necessary to give effect to such change.”
The underligned words make it clear that any revised orders must not be contrary to the terms of
any bills of lading which have been issued in the meantime and that, accordingly, the clause does
not oblige the shipowner to commit a deviation.
However, even if the clause does oblige the shipowner to commit a deviation if called upon to do
so by the charterer the court will enforce the clause if it is sufficiently clearly worded. The following
is an example of such a clause:
“Notwithstanding anything else to the contrary in this charterparty and notwithstanding

what loading and/or discharging ports may have been nominated and bills of lading issued,
charterer shall have the right to change at any time its nomination of the loading and/or
discharging ports in accordance with Part I of the charterparty39.”
Notwithstanding the difficulties which a carrier may face if he complies with an order to proceed
to a port other than that nominated in the contract of carriage there will be many occasions in
which he will feel commercially obliged to comply with such a request. To give him some
protection in such circumstances he may require a LOI as consideration for compliance and in
order to assist members in such circumstances the member P&I clubs of the International Group
of P&I clubs have jointly recommended a form of LOI which the member may wish to use in such
circumstances40. However, it must be appreciated that even if the member chooses to use such
form he may still have prejudiced his club cover. The LOI is intended to be a substitute form of
protection.
3) Releasing clean or ante-dated bills of lading
It is necessary to consider this issue in two different circumstances: -
(a) Where it is obvious that cargo is not in apparent good order and condition or that the date
of the bill of lading is false.
39 “Jasmine B” (1992) 1 Ll. Rep 39

40 Forms B and BB
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The "clean" nature of a Bill of Lading is a representation of the condition of the goods on
shipment41. Potential buyers of the cargo will rely on this representation when deciding whether
or not to pay for the goods. Similarly, the date of the bill of lading is often material to the
underlying cargo sale contract in that it either confirms that the goods have been shipped within
the agreed shipment period or it establishes the price of the goods. Accordingly, it was held in
Brown Jenkinson v Percy Dalton42 that it is a fraud to knowingly issue clean Bills when it is clear
that the cargo is damaged. A similar conclusion was reached in the case of ante-dated bills of
lading in SCB v PNSC.43 It further follows that any indemnity given by the Shipper to the Carrier
for so doing is unenforceable as an illegal contract. In the Brown Jenkinson case the Shipper
requested the Carrier to issue a clean Bill of Lading for a cargo of orange juice when the casks
were clearly leaking, and the Carrier agreed to do so only if the Shipper indemnified him against
any action by the Consignee. Although such indemnities were (and still are) commonly used the
Court of Appeal held the indemnity to be unenforceable because its purpose was to commit a
fraud on the buyer,
(b) Where it is unclear whether cargo is not in apparent good order and condition
In the Brown Jenkinson case the Shipowner issued a clean Bill which he knew to be false, and
therefore, committed the tort of deceit. However, if there is a bona fide doubt whether or not
the cargo is damaged, there are indications in the judgment that an indemnity given in these
circumstances might well be valid as there would be no intentional fraud or deceit. Lord Justice
Morris said:
"There may perhaps be some circumstances in which indemnities can properly be given. Thus, if
a shipowner thinks that he has detected some faulty condition in regard to goods to be taken on
board he may be assured by the shipper that he is entirely mistaken; if he is so persuaded by the
shipper, it may be that he could honestly issue a clean bill of lading while taking an indemnity in
case it was later shown that there had in fact been some faulty condition. Each case must depend
upon its circumstances.”
The effectiveness or otherwise of a LOI which is given in these circumstances depends on

whether the LOI was intended to facilitate a fraud or in order to break through an impasse in
good faith. However, it is difficult to think of circumstances in which the master is not aware of
the correct date of shipment and accordingly, it is unlikely that a letter of indemnity given in
relation to ante – dated Bills would be enforced by the court since by issuing such a Bill and
demanding an indemnity, the Carrier would be committing the tort of deceit.
A. SWITCH BILLS OF LADING44
The very nature of international commodity sales means that traders look for the maximum
flexibility in trading opportunities. When traders see a good opportunity to buy commodities at
a good price they may well decide to do so even though they have yet to find a suitable customer
for those goods. Indeed, the goods may already have been shipped and on the high seas before
that customer has been found. However, when that customer has been found the trader will
need to have a Bill of Lading for the goods which he can negotiate to his customer in order to
complete the sale. Indeed, if he cannot produce a Bill of Lading he will often, quite simply, not
41 See Article 27 of UCP 600 and Footnote 2 above.

42 (1957) 2 Ll. Rep. 1
43 (2003) 1 Ll. Rep 227
44 For further reading see the article by K.S.Toh in (1996) LMCLQ 416
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be able to sell. This is because he will need to transfer title to the cargo and the Bill of Lading is
evidence of title which is transferable from person to person. The Bill of Lading is therefore the
“corner stone” of international carriage of goods by sea.
However, the problem which the trader faces in this situation is that the Bill of Lading is also
evidence of the contract of carriage which has been agreed with the Carrier and a receipt which
describes the nature, condition and quantity of the cargo and where and when that cargo has
been loaded. That document is issued when the goods are loaded and may well therefore, have
been signed and released by the Carrier before the trader concludes the on-sale of the cargo to
his customer. However, the trader may find that the Bill of Lading which has been issued by the
Carrier is not suitable for the sale which he has concluded with his customer for a number of
possible reasons.
EXAMPLES
• The contract of sale or the letter of credit may call for a different form of Bill.
• The trader may wish to conceal the name of the party from whom he has bought the
goods and may therefore, wish to conceal the name of the Shipper on the Bill.
• The trader may wish to conceal where the cargo was loaded or the date of shipment.
• The cargo which was originally loaded may have been co-mingled with another
ingredient after loading in order to produce a commodity of a different specification
which is now being sold to the customer.
The trader may therefore wish to obtain a different Bill of Lading from the Carrier in order to
enable him to fulfil the requirements of his proposed sale to his customer.
However, since the Bill of Lading is a document which is signed by or on behalf of the Carrier and
which therefore, places legal responsibilities on the Carrier, the trader cannot simply change or
amend the Bill of Lading which is in his possession. He must ask the Carrier to agree to such
amendments or to issue new Bills of Lading in a different form or in different terms. He may
therefore, need to ask the Carrier to agree to “switch the bills” i.e. collect in the Bills which have
already been issued and replace them with new Bills in the requested form.
It must firstly, be emphasised that unless the contract between the trader and the Carrier says
so, the Carrier is not obliged to agree to this request. This is because the Bills of Lading which
have been issued already constitute a binding contract between the Carrier and the trader and
it is a fundamental rule of contract law that neither party to a contract is obliged to agree to any
amendments to that contract. The Carrier can therefore, either refuse to agree to the trader’s
request or he can agree to do so on terms which usually include a demand for a letter of
indemnity protecting the Carrier against any losses or liabilities which he may incur as a result
of “switching” the Bills. A switched bill which is issued without the authority of the carrier is not
binding on the carrier45.
(However, if the trader is also the charterer of the ship, it may be that the charterparty will
include a clause which does require the Carrier to “switch” the Bills if this is demanded by the
trader. In these circumstances, the Carrier may be obliged to “switch” the Bills even though, by
doing so, he will expose himself to the dangers which will be described below).
The dangers of switching bills of lading
45 See the Singapore case Feoso Maritime v Faith Maritime (“the Daphne L” )(2003)3 SLR 556
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An original negotiable Bill of Lading is, inter alia, a document of title, production of which entitles
the holder to demand delivery up of the cargo from the ship.46 On production of the original
negotiable bill the Carrier is obliged to give delivery of the cargo to the holder and is liable for
the full value of the cargo plus other consequential losses if he has in the meantime given
delivery to another party. Therefore, if there are two different Bills of Lading in existence at the
same time, this would be a recipe for disaster as the shipowner would prima facie be under an
obligation to deliver to two competing claimants47. Even if the Carrier refuses to give delivery to
one claimant and then asks the court to decide which of the two competing claimants is entitled
to the goods, he may well be unable to recover the costs which he has incurred in defending his
position since the court may conclude that these costs were the result of his negligence, or at
least, his bad practise, in failing to ensure that the first set of Bills had not been taken out of
circulation48.
The Carrier should therefore, ensure if he agrees to “switch” the Bills, that he will have collected
in and destroyed the first set of Bills before he has released the “switch” Bills. The Carrier should
also ensure that the Bills which he destroys are the original negotiable Bills and not merely
photocopies or other “non-negotiable” copies since it is the original negotiable copies which are
the documents of title and which, therefore, need to be destroyed. Finally, since Bills of Lading
are usually issued in sets of three, any one of which can stand on its own as a document of title
which entitles the holder to demand delivery of the cargo from the ship49, the Carrier should
ensure that he collects in the full set of three original negotiable Bills of Lading before issuing
the new “switch” Bills.
Even if the first set of Bills of Lading have been satisfactorily destroyed or eliminated before the
“switched” Bills have been released the Carrier may still face difficulties under the new “switch”
Bills50:
1. Despite the fact that the Bills have been “switched” the new Bills must still record the true
details of the shipment. In other words, they must correctly represent the nature,
condition and quantity or weight of the goods and state where and when the goods were
loaded. If they do not do so then the Carrier will be liable for misrepresentation to any
party to whom the goods are transferred without notice of the true facts.
EXAMPLE
Cargo is loaded at port “A” but the “switched” Bill of Lading states that it was loaded at
port “B” since it is illegal under the law of the port of delivery to import cargo from port
“A.” The Carrier is liable to the receiver of the cargo for any losses or expenses which he
has incurred if the true facts were ascertained by the authorities and he was unable to
import the goods or if they were impounded by the authorities.
2. Even if the “switched” Bills record the true details of the shipment, the terms of the
“switched” Bills may be different from the terms of the first set of Bills and may expose
the Carrier to greater liability or expenditure.
46 Barclays Bank Ltd -v- Commissioners of Customs and Excise [1963] 1 LLR at p. 88.
47 See the Singapore case: UCO Bank v Golden Shore Transportation (“Asean Pioneer”) Singapore High Court (25 June 2003)
48 See Elder Dempster v Zaki Ishag (1983) 2 Ll. Rep. 548
49 See “Raphaela S” (2003) 2 Ll. Rep 113
50 See “Atlas” (1996) 1 Ll. Rep. 642 and “Irini A” (1999) 1 Ll. Rep. 189
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EXAMPLE 1
The first set of Bills may have been on FIOS terms whereas the “switched” Bills may be on
“liner” terms thereby increasing the liability of the Carrier for the cost of discharge.
EXAMPLE 2
The first set of Bills may not have been subject to the Hague or Hague-Visby Rules and
may have had a favourable exception clause whereas the “switched” Bills are subject to
the Rules thereby increasing the liability of the Carrier for cargo claims.
3. Even if care is taken to ensure that the terms of the “switched” Bills are the same as those
of the first set of Bills other factors may mean that the Carrier is nevertheless exposed to
greater liability.
EXAMPLE
Cargo is shipped in the Russian Far East and the Bill of Lading which is issued is subject to
the Soviet Maritime Code (as it then was) which provided the Carrier with a very
favourable package limitation. The first set of Bills are destroyed and a new set of Bills in
identical form confirming the true details of the shipment in Russia are issued and released
in Hong Kong. Hong Kong is a party to the Hague-Visby Rules, Article X of which provides
that the Rules will apply compulsorily to any Bill of Lading issued in a contracting state
(which includes Hong Kong). The Carrier is therefore, bound by the Hague-Visby Rules
package limitation which is far more favourable to the cargo claimant.
4. If English law applies to the first set of Bills and these Bills have provisions for the
protection of sub-contractors, then even if the “switch” Bills do not contain such
provisions, the sub-contractors will still be entitled to rely on those provisions of the first
set of Bills since Section 2 of the Contracts (Rights of Third Parties) Act 1999 makes it clear
that the parties to the Bill of Lading contract (i.e. the Carrier and the cargo interest) cannot
cancel or vary the Bill in a manner which affects the third party’s rights without his consent
or the consent of the court.
5. Switching the bills of lading in another country may have the effect of “introducing” the
law of that country into disputes arising as a result of the switch51.
The effect of switched bills on P&I cover
Because of the difficulties described above some P&I clubs will refuse to extend cover to a
Carrier for any liability which he incurs as a result of the fact that the Bills of Lading have been
“switched”. Therefore, any Carrier who receives a request to “switch” Bills should firstly discuss
the matter in detail with his P&I club to ensure that there is cover and that he complies with any
recommendations made by the club.
However, even if there is no cover then the Carrier may feel for commercial reasons that he has
no real choice but to comply with the request to “switch” Bills. He must however, understand
that if he does so, he is running a substantial risk.
51 See Trafigura v Kookmin Bank Co (2006) 2 Ll. Rep 455

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LOI and switched bills of lading
Requests for “switched Bills” are usually accompanied by the offer of a letter of indemnity which
is intended to protect the Carrier against any liabilities which he incurs as a result of “switching”
the Bills. However, such letters of indemnity (LOIs) may not be sufficient protection in fact.
Requests for “switched” Bills of Lading can be made for perfectly legitimate reasons (e.g. to
satisfy the formal requirements of a letter of credit) or in order to mislead or defraud potential
transferees of the Bill. If the “switch” is being made for legitimate reasons, then an LOI given to
protect the Carrier in such circumstances is normally enforceable by the courts. However, for
the reasons stated above, if the “switch” is requested for illegal or fraudulent reasons, then the
courts will probably refuse to enforce it 52.
B. COMMINGLING OF CARGOES
Commingling (sometimes referred to as blending) occurs when a vessel loads a part cargo in one
location and then loads another different product at a subsequent location into the same cargo
compartment and on top of the first product. The intention is to make use of the ship’s
movement during the subsequent voyage to blend the two products and thereby improve the
specification of the overall product. For obvious reasons such commingling usually occurs in
relation to wet cargoes.
Such operation has various cost advantages and is therefore, an operation which can be
commercial attractive to traders. However, whilst such an operation is technically sensible
provided there is no danger ca used to the ship or crew it does have legal and insurance
ramifications since commingling creates two problems for the carrier, namely:
1. Liability for physical problems for the commingled cargoes; and

2. Documentary difficulties.
Firstly, the commingling of one cargo by a subsequent cargo is a potential contamination of the
“first” cargo which has been loaded in apparent good order and condition and is therefore, a
potential breach of Article III Rule 2 of the Hague or Hague-Visby Rules (i.e. a failure to properly
and carefully care for the cargo). Furthermore, the shipment of the “second” cargo into a tank
which already contains other cargo of a different specification is potentially a breach of Article
III Rules 1 (i.e. a failure to exercise due diligence to “make the holds, refrigerating and cool
chambers, and all other parts of the ship in which goods are carried, fit and safe for their
reception, carriage and preservation”) and/or 2 of the Hague or Hague-Visby Rules.
Secondly, once the second cargo has been loaded on top of the first cargo the carrier is usually
asked to replace the bills of lading which had originally been issued for the “first” cargo by a new
set of bills which reflect the fact that the ship now has additional cargo on board of a different
specification (i.e. asked to switch the bills). For example, clause 5 of the EXXONMOBIL 2000 form
of charter provides that:
“Charterer will surrender to master all original Bills of Lading for the unblended cargo and the
Master will provide new consolidated Bills of Lading on completion of blending operations which
Bills will reflect the actual grade that has been blended.”
52 See e.g. Brown Jenkinson v Percy Dalton (1957) 2 Ll. Rep. 1.

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However, such practise creates difficulty in that the new set of bills must, nevertheless, record
the true place and date of shipment, For example, if 1,000 tons of product was loaded at Port A
on 1st January and a further 1,000 tons loaded on top of that product at Port B on the 15th January
what details are to be inserted on the new bills? One could not truly say that 2,000 tons was
loaded at port A or at port B or say that 2,000 tons was loaded on either the 1st or the 15th
January. It would be factually correct to say that1,000 tons has been loaded at port A and then
insert a clause on the face of the bill stating that this quantity had been subsequently
commingled at port B with another quantity of 1,000 tons on the3 15th January53. However, the
presence of such a clause on the face of the bill might make such a bill unacceptable for the
purposes of a letter of credit.
Because of these difficulties P&I Clubs emphasise that commingling may prejudice P&I cover and
that liabilities resulting therefrom are not covered by the clubs54. Furthermore, whilst P&I clubs
may recommend a draft LOI wording for their members to use in such circumstances, there is
no guarantee that such an indemnity will be enforceable in all circumstances. The enforceability
or otherwise of such a LOI will depend on the whether the commingling and subsequent switch
of the bills of lading is done for legitimate or fraudulent reasons.
C. PRACTICAL ISSUES AFFECTING LOI
The effectiveness or otherwise of an LOI depends upon:

(a) its legal enforceability;
(b) the legal capacity of the entity issuing the LOI;
(c) the creditworthiness of the entity issuing the LOI;
(d) the beneficiary of the LOI; and
(e) the terms of the LOI.
Comment has already been made above in relation to (a) and the relevance of (c) is self-evident.
• Issue (b) is also important in that LOI are usually given in order to protect a party against
a liability which is potentially very large and it is unlikely that the individual who has
signed or otherwise provided the LOI will have sufficient personal assets to honour it
personally. Therefore, it is important to establish that that person has the authority of
the organisation on whose behalf he or she is purporting to sign the LOI to bind that
organisation to the terms of the LOI. If that person does not have actual or ostensible
authority to bind the organisation then the organisation may well not be bound by it
and the person signing may be personally liable for breach of an agent’s warranty of
authority55. For example, in one Hong Kong case a bank refused to honour a LOI which
had been countersigned on its behalf by one bank official on the grounds that internal
regulations required such a document to be signed by two officials. The court finally
determined that the one official had sufficient ostensible authority to bind the bank but
the issue was closely fought. Similarly, if the agent does not disclose the fact that it is
acting for an undisclosed principal the principal and agent may be both jointly and
severally liable under the LOI56. The English court has also taken a liberal view of the
effectiveness of guarantees and has been ready to enforce guarantees albeit that they
may have technical deficiencies. For example, in Golden Ocean v Salgaocar (2012) EWCA
Civ 265 the Court of Appeal held that a guarantee sent by email exchange was
53 This is the remedy suggested by BP in additional clauses 13 and 35 of BPVoy4 and BPTIME3 respectively.
54 For example, see www.gard.no - Gard News – “LOIs for commingling or blending cargo on board”)
55 See Rasnoimport v Guthrie (1966) 1 Ll. Rep 1 and Bowstead & Reynolds on Agency (16th Edition) Arts 105-106
56 See the Hong Kong case of Yang Ming v Shing Lee(2009) HKCU 1184
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enforceable despite the fact that the Statute of Frauds required guarantees to be
“signed”. Similarly, Blair J held (obiter) in WS Tankship II BV v Kwangju Bank Ltd [2011]
EWHC 3103 that an unsigned refund guarantee sent by the guarantor through the SWIFT
system was enforceable.
Examples of (e) - the importance of the terms of the LOI
1) The terms of Form A recommended by the members of the International Group of P&I clubs
provide as follows:
“The above cargo was shipped on the above ship by [insert name of shipper] and consigned to
[insert name of consignee or party to whose order the bill of lading is made out, as appropriate]
for delivery at the port of [insert name of discharge port stated in the bill of lading] but the bill
of lading has not arrived and we, [insert name of party requesting delivery], hereby request you
to deliver the said cargo to [insert name of party to whom delivery is to be made] at [insert place
where delivery is to be made] without production of the original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows :-
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any
liability, loss, damage or expense of whatsoever nature which you may sustain by reason of
delivering the cargo in accordance with our request.
2. In the event of any proceedings being commenced against you or any of your servants or
agents in connection with the delivery of the cargo as aforesaid, to provide you or them on
demand with sufficient funds to defend the same”.
The beneficiary is entitled to demand specific performance of the LOI only if he proves that he
has delivered the cargo to the party named by the provider of the LOI in the initial paragraph
quoted above. Therefore, if the beneficiary of the LOI is requested to deliver the cargo to X but
delivers instead to Y then the beneficiary cannot call upon the provider of the LOI to either put
up security to release the ship from arrest or to indemnify the beneficiary against damages paid
by him to the true owner of the cargo as a result of the misdelivery of the cargo to some other
party57.
2) In the case of Laemthong v Artis58 a shipowner was asked by his time charter to deliver cargo
without surrender of the original bills of lading. The shipowner agreed to do so in consideration
of receipt from his time charterers of a LOI in Form A recommended by the International Group
of P&I Clubs. The time charterers gave such LOI only after they had themselves received a LOI in
similar terms from the party requesting delivery of the cargo. The shipowner was subsequently
held to have misdelivered the cargo and was held to be liable to the true owner of the cargo.
Therefore, the shipowner sought to enforce the LOI given by the time charterers but by this time
the time charterers were found to be bankrupt.
The shipowners subsequently sought to enforce the terms of the LOI which had been given to
the time charterers by the party who had requested delivery of the cargo. Despite the fact that
the shipowners were not a party to the contract contained in such LOI they were nevertheless,
57 See “The Bremen Max” (2009) 1 Ll. Rep 81

58 (2005) 1Ll. Rep. 688
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entitled to enforce its terms. The reason why they were entitled to do so was because Form A is
subject to English law and, therefore, to the terms of the Contracts (Rights of Third Parties) Act
1999. This statute entitles a third party to enforce the terms of a contract which has been
concluded for his benefit. Section 1 (1) of the Act provides that:
“Subject to the provisions of this Act, a person who is not a party to a contract (a “third
party”) may in his own right enforce a term of the contract if-
(a) the contract provides that he may; or
(b) subject to subsection (2), the term purports to confer a benefit on him.”
The Court of Appeal recognised that the LOI was intended “to indemnify (the time charterers),
your servants and agents and to hold all of you harmless” and that, for the purposes of delivering
the cargo, the shipowners were the agents of the time charterers. Therefore, since the contract
contained in the LOI was intended to confer a benefit on the shipowner, the shipowner as a third
party to that contract was entitled to enforce the terms of the LOI given to the time charterers.
For how long should a LOI be kept in force?
The person who has provided the LOI may either have to pay a bank or a guarantor a fee for
providing the security or, at the very least, record that security in its accounts as a possible
liability. Therefore, it will wish to release that liability as quickly as possible. On the other hand,
the beneficiary of the LOI will wish to retain the security as long as possible in the event of future
claims.
Under English law, the usual time limit for contractual claims is six years59 whereas the time limit
for claims against the Carrier under the Hague or Hague-Visby Rules is one year from the date
of delivery or the date when the cargo should have been delivered.60 Therefore, the question
of whether the letter of indemnity should be kept in force for six years or one year depends
largely on which time limit applies to the particular claim for which the LOI is intended to provide
protection.
If the contract of carriage is subject to the Hague-Visby Rules it seems that the relevant time
limit is likely to be one year since Article III Rule 6 of these Rules provides that the Ship shall:-
"..in any event be discharged from all liability whatsoever in respect of the goods"
unless it is brought within one year. In the case of the "Captain Gregos No. 1" Bingham L.J. stated
that:-
"I do not see how the draftsman could use more emphatic language"
and
"..the one year time bar was intended to apply to all claims arising out of the carriage (or
miscarriage) of goods by sea under bills subject to the Hague-Visby Rules".61
However, if the carriage is subject to the Hague Rules then the position is not so clear since
Article III R. 6 of those Rules is arguably moré restrictive in that it provides that:-
59 Limitation Act 1980 S.5
60 Article III R.6
61 [1990] 1 LLR at 315
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"In any event, the Carrier and the Ship shall be discharged from all liability in respect of loss or
damage unless it is brought within one year...".
In the case of the "New York Star"62 the Privy Council considered the effect of the Hague Rules
as contractually incorporated into the contract of carriage and concluded that the time limit for
a claim for wrongful delivery was one year. Similarly, it has been held by the Court of Appeal
that the words “in any event” are to be given a very wide construction.63 However, the “New
York Star” decision may not be conclusive since the Hague Rules were not incorporated in toto.
Furthermore, it is clear that delivery may often take place after discharge64 and that the Hague
Rules usually apply only from "tackle to tackle"65. Therefore, it was held in Sze Hai Tong Bank -
v- Rambler Cycle Company Limited66 that the Hague Rules provisions did not apply to the failure
of the Carrier to effect a valid delivery after discharge67. If this is so, then the relevant time limit
under English Law for claims subject to the Hague Rules may be six years rather than one year.
If there is a danger that the proper time limit is six years rather than one year, a Carrier obviously
runs a risk if he agrees to release a letter of indemnity before that period expires, particularly
since, as stated above, he will in the meantime have lost the benefit of his P & I cover for
liabilities arising as a result. For this reason, the single letter (i.e. A, B and C) forms of LOI which
have been jointly recommended by the International Group of P&I Clubs do not provide for any
time limit and Form A provides that the security will remain in effect until all negotiable copies
of the Bills of Lading have been surrendered to the Carrier. The double letter forms (i.e. AA, BB
and CC) which are to be countersigned by a bank provide for a six year time limit.
© Copyright Richard Williams, 2014. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopying, scanning, recording or by any information
storage or retrieval system, without the prior written permission of the author
62 [1980] 2 LLR 217

63 “Happy Ranger” (2002) and “Kapitan Petko Voivoda” (2003) 2 Ll. Rep 3
64 Carlberg -v- Wemyss [1915] S.C. 616
65 Pyrene -v- Scindia [1954] 1 LLR 321and Trafigura v MSC (2007) EWCA (Civ) 794
66 [1959] AC 576
67 See also in this regard the “MSC Amsterdam” (2007) 2 Ll. Rep 622
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Chapter 20
BIMCO Masterclass– Time Charter
CASE STUDY 2 (NYPE 1946 FORM)

“MARIE CELESTE”
In November 1998 Owners chartered the Marie Celeste to Fixer for “24 months 30 days
MOLCHOPT” (“more or less in charterers’ option”) on the NYPE 1946 form. The vessel was to
be delivered and redelivered off Gibraltar. Hire was payable at the rate of $ 5,000 per day in
advance. The vessel was delivered into service under the charter on 1 December 1998. By May
2000 the market hire rate had increased to $12,000 per day. However, Fixer was by now in
financial difficulties and in order to obtain a source of quick cash, he sub – chartered the Marie
Celeste to Twister on the same charter form for “6 months 15 days MOLCHOPT” at the rate of
$10,000 per day. The vessel was delivered into service under the sub – charter on 3 June 2000
and was also to be redelivered off Gibraltar.
On 27 November 2000 the vessel was ordered by Twister to proceed to Marseilles to load a
cargo of containers for delivery in the Eastern Mediterranean. The master sent the following
message to Owners and Fixer from Marseilles:
“Twister has exercised its option to extend charter by 15 days. Started loading containers
yesterday. Twister’s agents are issuing clean bills of lading and signing them on behalf of
master. Many containers appear to have broken seals and damaged. I estimate will complete
round trip and return to redelivery area on 27/12. Rumours that hostilities likely in Eastern
Mediterranean within one month. Have reason to believe that some of the containers loaded
contained IMO classified cargo (explosives and shells) but none declared to me.”
The market hire rate at the end of November 2000 was still $12,000 per day and looked likely
to remain at this level for the foreseeable future. However, there was reported to be an
alternative cargo in the Genoa area available for shipment in the first week of December at a
rate of $14,000 per day for a 4 month voyage.
1. What potential problems do Owners face if they comply with the employment
instructions given by Twister?
2. Do Owners have any rights to claim an indemnity from Fixer if the master complies with
the orders given by Twister?
3. Are Owners entitled to refuse to perform the voyage which has been ordered by
Twister?
4. How should Owners proceed to protect both their legal and commercial interests?
Copyright Richard Williams, 2012. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or by any means, electronic or
mechanical, including photocopying, scanning, recording or by any information storage or retrieval
system, without the prior written permission of the author
© BIMCO Training 1
Chapter 21
Personal Notes
Personal Notes
Chapter 22
Time Charter Masterclass
Appendices
1. BALTIME 1939 (2001)
2. BARECON 2001
3. BPTIME3
4. GENTIME
5. NYPE 1946
6. NYPE 93
7. NYPE 2015
8. SHELLTIME 4 (2003)
9. SUPPLYTIME 2005
10.COMBICONBILL 1995
11.COMBICONBILL 2016
12.CONGENBILL 2007
13.CONGENBILL 2016
14.CONLINEBILL 2000
15.CONLINEBILL 2016
16.GENWAYBILL 2016
17.HEAVYCONRECEIPT 2016
18.INTANKBILL 78
19.MULTIDOC 95
20.WORLDFOODRECEIPT
21.BIMCO Dispute Resolution Clauses – Mediation Clauses
22.Hague Rules
23.Hague-Visby Rules
24.Rotterdam Rules 2008
25.Inter-Club NYPE Agreement
26.Standard Form LOI Circ – Grp A-CC
Appendix 1
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Appendix 7
NYPE 2015
PY
TIME CHARTER
New York Produce Exchange Form©
November 6th, 1913 – Amended October 20th, 1921; August 6th, 1931; October 3rd, 1946;
Revised June 12th 1981; September 14th 1993; June 3rd, 2015.
O
1 THIS CHARTER PARTY, made and concluded in _____ this _______ day of _________ 20___
3
4
Between ____ of _______ C
as *Registered Owners/*Disponent Owners/*Time Chartered Owners (the “Owners”) of the Vessel
described below
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5 *delete as applicable
6 Name:
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7 IMO Number:
8 Flag:
9 Built (year):
Deadweight All Told: ____ metric tons

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10
11 (For Vessel’s charter party description see Appendix A (Vessel Description)),
12 and ______ Charterers of (the “Charterers”)

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13 This Charter Party shall be performed subject to all the terms and conditions herein consisting of this
14 main body including any additional clauses and addenda, if applicable, as well as Appendix A
15 attached hereto. In the event of any conflict of conditions, the provisions of any additional clauses and
16 Appendix A shall prevail over those of the main body to the extent of such conflict, but no further.
17 1. Duration/Trip Description
18 (a) The Owners agree to let, and the Charterers agree to hire, the Vessel from the time of delivery,
19 for ___________ within below mentioned trading limits.
20 (b) Trading Limits - The Vessel shall be employed in such lawful trades between safe ports and
21 safe places within the following trading limits _________ as the Charterers shall direct.
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Published by BIMCO. Jointly authored by ASBA, BIMCO and the SMF. Copyright © 2015 the Association of Ship Brokers and Agents
(U.S.A.), Inc. (ASBA). All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this document will
constitute an infringement of ASBA’s copyright. Printed by BIMCO’s IDEA2. Explanatory Notes are available at www.bimco.org.
22 (c) Berths - The Vessel shall be loaded and discharged in any safe anchorage or at any safe berth
23 or safe place that the Charterers or their agents may direct, provided the Vessel can safely
24 enter, lie and depart always afloat.
25 (d) The Vessel during loading and/or discharging may lie safely aground at any safe berth or safe
26 place where it is customary for vessels of similar size, construction and type to lie at the
27 following areas/ports ________ (if this space is left blank then this sub-clause 1(d) shall not
28 apply), if so requested by the Charterers, provided it can do so without suffering damage.
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30 The Charterers shall indemnify the Owners for any loss, damage, costs, expenses or loss of
31 time, including any underwater inspection required by class, caused as a consequence of the
32 Vessel lying aground at the Charterers’ request.
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33 (e) Sublet - The Charterers shall have the liberty to sublet the Vessel for all or any part of the time
34 covered by this Charter Party, but the Charterers remain responsible for the fulfillment of this
35 Charter Party.
36 2. Delivery
37 (a) The Vessel shall be delivered to the Charterers at ______ (state port or place).
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38
39 (b) The Vessel on delivery shall be seaworthy and in every way fit to be employed for the intended
40 service, having water ballast and with sufficient power to operate all cargo handling gear
41 simultaneously, and, with full complement of Master, officers and ratings who meet the
42
43
44
45
(c)
a vessel of her tonnage. C
Standards for Training, Certification and Watchkeeping for Seafarers (STCW) requirements for
The Vessel’s holds shall be clean and in all respects ready to receive the intended cargo, or if
no intended cargo, any permissible cargo:
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46 (i) On *delivery; or
47 (ii) On *arrival at first loading port if different from place of delivery. If the Vessel fails hold
inspection then the Vessel shall be off-hire from the time of rejection until the Vessel has
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48
49 passed a subsequent inspection.
50 *(c)(i) and (c)(ii) are alternatives; delete as appropriate. If no deletion then Sub-clause (c)(i) shall
51 apply.
52 (d) The Owners shall keep the Charterers informed of the Vessel’s itinerary. Prior to the arrival of
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53 the Vessel at the delivery port or place, the Owners shall serve the Charterers with ____ days’
54 approximate and ____ days’ definite notices of the Vessel’s delivery. Following the tender of
55 any such notice the Owners shall give or allow to be given to the Vessel only such further
56 employment orders, if any, as are reasonably expected when given to allow delivery to occur
57 on or before the date notified. The Owners shall give the Charterers and/or their local agents
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58 notice of delivery when the Vessel is in a position to come on hire.
59 Vessel itinerary prior to delivery:
60 (e) Acceptance of delivery of the Vessel by the Charterers shall not prejudice their rights against
61 the Owners under this Charter Party.
62 3. Laydays/Cancelling
63 If required by the Charterers, time on hire shall not commence before _____ (local time) and
64 should the Vessel not have been delivered on or before (local time) at the port or place stated
65 in Sub-clause 2(a), the Charterers shall have the option of cancelling this Charter Party at any
66 time but not later than the day of the Vessel’s notice of delivery.
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67 4. Redelivery
68 (a) The Vessel shall be redelivered to the Owners in like good order and condition, ordinary wear
69 and tear excepted, at ______ (state port or place)
70 (b) The Charterers shall keep the Owners informed of the Vessel’s itinerary. Prior to the arrival of
71 the Vessel at the redelivery port or place, the Charterers shall serve the Owners with _____
72 days’ approximate and _____ days’ definite notices of the Vessel’s redelivery. Following the
73 tender of any such notices the Charterers shall give or allow to be given to the Vessel only such
74 further employment orders, if any, as are reasonably expected when given to allow redelivery to
75 occur on or before the date notified.
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76 (c) Acceptance of redelivery of the Vessel by the Owners shall not prejudice their rights against the
77 Charterers under this Charter Party.
78 5. On/Off-Hire Survey
79 Prior to delivery and redelivery the parties shall, unless otherwise agreed, each appoint
80 surveyors, for their respective accounts, who shall not later than at first loading port/last
81 discharging port respectively, conduct joint on-hire/off-hire surveys, for the purpose of
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82 ascertaining the quantity of bunkers on board and the condition of the Vessel. A single report
83 shall be prepared on each occasion and signed by each surveyor, without prejudice to his right
84 to file a separate report setting forth items upon which the surveyors cannot agree.
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by the other party.
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If either party fails to have a representative attend the survey and sign the joint survey report,
such party shall nevertheless be bound for all purposes by the findings in any report prepared
Any time lost as a result of the on-hire survey shall be for the Owners’ account and any time
89 lost as a result of the off-hire survey shall be for the Charterers’ account.
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90 6. Owners to Provide
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91 (a) The Owners shall provide and pay for the insurances of the Vessel, except as otherwise
92 provided, and for all provisions, cabin, deck, engine-room and other necessary stores, boiler
93 water and lubricating oil; shall pay for wages, consular shipping and discharging fees of the
94 crew and charges for port services pertaining to the crew/crew visas; shall maintain the
95 Vessel’s class and keep her in a thoroughly efficient state in hull, machinery and equipment for
96 and during the service, and have a full complement of Master, officers and ratings.
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97 (b) The Owners shall provide any documentation relating to the Vessel as required to permit the
98 Vessel to trade within the agreed limits, including but not limited to International Tonnage
99 Certificate, Suez and Panama tonnage certificates, Certificates of Registry, and certificates
100 relating to the strength, safety and/or serviceability of the Vessel’s gear. Such documentation
101 shall be maintained during the currency of the Charter Party as necessary.
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102 Owners shall also provide and maintain such Certificates of Financial Responsibility for oil
103 pollution to permit the Vessel to trade within the agreed limits as may be required at the
104 commencement of the Charter Party. However, in the event that, at the time of renewal, a
105 Certificate of Financial Responsibility is unavailable in the market place, or, the premium for
106 same increases significantly over the course of the Charter Party, then Owners and Charterers
107 shall discuss each with the other to find a mutually agreeable solution for same, failing such
108 solution the port(s) that require said Certificate of Financial Responsibility are to be considered
109 as added to the Vessel's trading exclusions. (See also Clause 18 (Pollution)).
110 (c) The Vessel to work night and day if required by the Charterers, with crew opening and closing
111 hatches, when and where required and permitted by shore labor regulations, otherwise shore
112 labor for same shall be for the Charterers’ account.
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113 7. Charterers to Provide
114 (a) The Charterers, while the Vessel is on-hire, shall provide and pay for all the bunkers except as
115 otherwise agreed; shall pay for port charges (including compulsory garbage disposal),
116 compulsory gangway watchmen and cargo watchmen, compulsory and/or customary pilotages,
117 canal dues, towages, agencies, commissions, consular charges (except those pertaining to
118 individual crew members or flag of the Vessel), and all other usual expenses except those
119 stated in Clause 6, but when the Vessel puts into a port for causes for which the Vessel is
120 responsible (other than by stress of weather), then all such charges incurred shall be paid by
121 the Owners.
122 (b) Fumigations ordered because of illness of the crew or for infestations prior to delivery under
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123 this Charter Party shall be for the Owners’ account. Fumigations ordered because of cargoes
124 carried or ports visited while the Vessel is employed under this Charter Party shall be for the
125 Charterers’ account.
126 (c) The Charterers shall provide and pay for necessary dunnage, lashing materials and also any
127 extra fittings requisite for a special trade or unusual cargo, but the Owners shall allow them the
128 use of any dunnage already aboard the Vessel. Prior to redelivery the Charterers shall remove
129 their dunnage, fittings and lashing materials at their cost and in their time.
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130 8. Performance of Voyages
131 (a) Subject to Clause 38 (Slow Steaming) the Master shall perform the voyages with due despatch
132
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135
136
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and shall render all customary assistance with the Vessel’s crew. The Master shall be
conversant with the English language and (although appointed by the Owners) shall be under
the orders and directions of the Charterers as regards employment and agency; and the
Charterers shall perform all cargo handling, including but not limited to loading, stowing,
trimming, lashing, securing, dunnaging, unlashing, discharging, and tallying, at their risk and
137 expense, under the supervision of the Master.
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138 (b) If the Charterers shall have reasonable cause to be dissatisfied with the conduct of the Master
139 or officers, the Owners shall, on receiving particulars of the complaint, investigate the same,
and, if necessary, make a change in appointments.
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140
141 9. Bunkers
142 (a) Bunker quantities and prices
143 *(i) The Charterers on delivery, and the Owners on redelivery or any termination of this Charter
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144 Party, shall take over and pay for all bunkers remaining on board the Vessel as hereunder. The
145 Vessel’s bunker tank capacities shall be at the Charterers’ disposal. Bunker quantities and
146 prices on delivery /redelivery to be ______.
147 *(ii) The Owners shall provide sufficient bunkers onboard to perform the entire time charter trip.
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148 The Charterers shall not bunker the Vessel, and shall pay with the first hire payment for the
149 mutually agreed estimated bunker consumption for the trip, namely _____ metric tons at _____
150 (price). Upon redelivery any difference between estimated and actual consumption shall be
151 paid by the Charterers or refunded by the Owners as the case may be.
152 *(iii) The Charterers shall not take over and pay for bunkers Remaining On Board at delivery
153 but shall redeliver the Vessel with about the same quantities and grades of bunkers as on
154 delivery. Any difference between the delivery quantity and the redelivery quantity shall be paid
155 by the Charterers or the Owners as the case may be. The price of the bunkers shall be the net
156 contract price paid by the receiving party, as evidenced by suppliers’ invoice or other
157 supporting documents.
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158 *(i), (ii) and (iii) are alternatives; delete as applicable. If neither Sub-clause (i), (ii) nor (iii) is
159 deleted then Sub-clause (i) shall apply.
160 (b) Bunkering Prior to Delivery/Redelivery
161 Provided that it can be accomplished at ports of call, without hindrance to the working or
162 operation of or delay to the Vessel, and subject to prior consent, which shall not be
163 unreasonably withheld, the Owners shall allow the Charterers to bunker for their account prior
164 to delivery and the Charterers shall allow the Owners to bunker for their account prior to
165 redelivery. If consent is given, the party ordering the bunkering shall indemnify the other party
166 for any delays, losses, costs and expenses arising therefrom.
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167 (c) Bunkering Operations and Sampling
168 (i) The Chief Engineer shall co-operate with the Charterers’ bunkering agents and fuel suppliers
169 during bunkering. Such cooperation shall include connecting/disconnecting hoses to the
170 Vessel’s bunker manifold, attending sampling, reading gauges or meters or taking soundings,
171 before, during and/or after delivery of fuels.
172 (ii) During bunkering a primary sample of each grade of fuels shall be drawn in accordance with
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173 the International Maritime Organization (IMO) Resolution Marine Environment Protection
174 Committee (MEPC) MEPC.182(59) Guidelines for the Sampling of Fuel Oil for Determination of
175 Compliance with the Marine Pollution Convention (MARPOL) 73/78 Annex VI or any
176 subsequent amendments thereof. Each primary sample shall be divided into no fewer than five
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178
179
180
Charterers and the bunker suppliers.
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(5) samples; one sample of each grade of fuel shall be retained on board for MARPOL
purposes and the remaining samples of each grade distributed between the Owners, the
(iii) The Charterers warrant that any bunker suppliers used by them to bunker the Vessel shall
181 comply with the provisions of Sub-clause (c)(ii) above.
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182 (iv) Bunkers of different grades, specifications and/or suppliers shall be segregated into
183 separate tanks within the Vessel’s natural segregation. The Owners shall not be held liable for
any restriction in bunker capacity as a result of segregating bunkers as aforementioned.
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184
185 (d) Bunker Quality and Liability
186 (i) The Charterers shall supply bunkers of the agreed specifications and grades: ______ . The
187 bunkers shall be of a stable and homogeneous nature and suitable for burning in the Vessel’s
188 engines and/or auxiliaries and, unless otherwise agreed in writing, shall comply with the
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189 International Organization for Standardization (ISO) standard 8217:2012 or any subsequent
190 amendments thereof. If ISO 8217:2012 is not available then the Charterers shall supply
191 bunkers which comply with the latest ISO 8217 standard available at the port or place of
192 bunkering.
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193 (ii) The Charterers shall be liable for any loss or damage to the Owners or the Vessel caused
194 by the supply of unsuitable fuels and/or fuels which do not comply with the specifications and/or
195 grades set out in Sub-clause (d)(i) above, including the off-loading of unsuitable fuels and the
196 supply of fresh fuels to the Vessel. The Owners shall not be held liable for any reduction in the
197 Vessel’s speed performance and/or increased bunker consumption nor for any time lost and
198 any other consequences arising as a result of such supply.
199 (e) Fuel Testing Program
200 Should the Owners participate in a recognized fuel testing program one of the samples retained
201 by the Owners shall be forwarded for such testing. The cost of same shall be borne by the
202 Owners and if the results of the testing show the fuel not to be in compliance with ISO
203 8217:2012, or any subsequent amendment thereof, or such other specification as may be
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204 agreed, the Owners shall notify the Charterers and provide a copy of the report as soon as
205 reasonably possible.
206 In the event the Charterers call into question the results of the testing, a fuel sample drawn in
207 accordance with IMO Resolution MEPC.96(47) Guidelines for the Sampling of Fuel Oil for
208 Determination of Compliance with Annex VI of MARPOL 73/78 or any subsequent amendments
209 thereof, shall be sent to a mutually agreed, qualified and independent laboratory whose
210 analysis as regards the characteristics of the fuel shall be final and binding on the parties
211 concerning the characteristics tested for. If the fuel sample is found not to be in compliance with
212 the specification as agreed in the paragraph above, the Charterers shall meet the cost of this
213 analysis, otherwise same shall be for the Owners’ account.
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214 (f) Bunker Fuel Sulphur Content
215 (i) Without prejudice to anything else contained in this Charter Party, the Charterers shall
216 supply fuels of such specifications and grades to permit the Vessel, at all times, to comply with
217 the maximum sulphur content requirements of any emission control area when the Vessel is
218 ordered to trade within that area.
219 The Charterers also warrant that any bunker suppliers, bunker craft operators and bunker
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220 surveyors used by the Charterers to supply such bunkers shall comply with Regulations 14 and
221 18 of MARPOL Annex VI, including the Guidelines in respect of sampling and the provision of
222 bunker delivery notes.
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224
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226
comply with this Sub-clause (f)(i).
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The Charterers shall indemnify, defend and hold harmless the Owners in respect of any loss,
liability, delay, fines, costs or expenses arising or resulting from the Charterers' failure to
(ii) Provided always that the Charterers have fulfilled their obligations in respect of the supply of
227 fuels in accordance with Sub-clause (f)(i), the Owners warrant that:
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228 1. the Vessel shall comply with Regulations 14 and 18 of MARPOL Annex VI and with the
229 requirements of any emission control area; and
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230 2. the Vessel shall be able to consume fuels of the required sulphur content,
231 when ordered by the Charterers to trade within any such area.
232 Subject to having supplied the Vessel with fuels in accordance with Sub-clause (f)(i), the
233 Charterers shall not otherwise bear any loss, liability, delay, fines, costs or expenses arising or
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234 resulting from the Vessel’s failure to comply with Regulations 14 and 18 of MARPOL Annex VI.
235 (iii) For the purpose of this Clause, "emission control area" shall mean an area as stipulated in
236 MARPOL Annex VI and/or an area regulated by regional and/or national authorities such as,
237 but not limited to, the European Union (EU) and the United States (US) Environmental
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238 Protection Agency.
239 (g) Grades and Quantities of Bunkers on Redelivery
240 Unless agreed otherwise, the Vessel shall be redelivered with the same grades and about the
241 same quantities of bunkers as on delivery; however, the grades and quantities of bunkers on
242 redelivery shall always be appropriate and sufficient to allow the Vessel to reach safely the
243 nearest port at which fuels of the required types are available.
244 10. Rate of Hire; Hold Cleaning; Communications; Victualing and Expenses
245 (a) The Charterers shall pay for the use and hire of the said Vessel at the rate of _______ per day or
246 pro rata for any part of a day, commencing on and from the time of her delivery, as aforesaid,
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247 including the overtime of crew; hire to continue until the time of her redelivery to the Owners as
248 per Clause 4 (Redelivery) (unless Vessel lost).
249 Unless otherwise mutually agreed, the Charterers shall have the option to redeliver the Vessel
250 with unclean/unswept holds against a lumpsum payment of ________ in lieu of hold cleaning, to
251 the Owners (unless Vessel lost).
252 The Owners shall victual pilots and such other persons as authorized by the Charterers or their
253 agents. While on-hire, the Charterers shall pay the Owners along with the hire payments, _______
254 per thirty (30) days or pro rata, to cover all Communications, Victualing and Expenses properly
255 incurred by the Vessel under the Charterers’ employment.
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256 For the purpose of hire calculations, the times of delivery, redelivery or termination of this
257 Charter Party shall be adjusted to Coordinated Universal Time (UTC).
258 (b) Hold Cleaning/Residue Disposal
259 (i) The Charterers may request the Owners to direct the crew to sweep and/or wash and/or
260 clean the holds between voyages and/or between cargoes against payment at the rate of ______
261 per hold, provided the crew is able safely to undertake such work and is allowed to do so by
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262 local regulations. In connection with any such operation the Owners shall not be responsible if
263 the Vessel's holds are not accepted or passed. Time for cleaning shall be for the Charterers’
264 account.
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267
268
269
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(ii) Unless this Charter Party is concluded for a single laden leg, all cleaning agents and
additives (including chemicals and detergents) required for cleaning cargo holds shall be
supplied and paid for by the Charterers. The Charterers shall provide the Owners with a dated
and signed statement identifying cleaning agents and additives that, in accordance with IMO
Resolution 219(63) Guidelines for the Implementation of MARPOL Annex V, are not
270 substances harmful to the marine environment and do not contain any component known to be
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271 carcinogenic, mutagenic or reprotoxic.
272 (iii) Throughout the currency of this Charter Party and at redelivery, the Charterers shall remain
responsible for all costs and time, including deviation, if any, associated with the removal and
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273
274 disposal of cargo related residues and/or hold washing water and/or cleaning agents and
275 detergents and/or waste. Removal and disposal as aforesaid shall always be in accordance
276 with and as defined by MARPOL Annex V, or other applicable rules.
277 11. Hire Payment

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278 (a) Payment
279 Payment of Hire shall be made without deductions due to Charterers’ bank charges so as to be
280 received by the Owners or their designated payee into the bank account as follows Click here to
281 enter text. in the currency stated in Clause 10 (Rate of Hire; Hold Cleaning; Communications;
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282 Victualing and Expenses), in funds available to the Owners on the due date, fifteen (15) days in
283 advance, and for the last fifteen (15) days or part of same the approximate amount of hire, and
284 should the same not cover the actual time, hire shall be paid for the balance day by day as it
285 becomes due, if so required by the Owners. The first payment of hire shall be due on delivery.
286 (b) Grace Period
287 Where there is failure to make punctual payment of hire due, the Charterers shall be given by
288 the Owners three (3) Banking Days (as recognized at the agreed place of payment) written
289 notice to rectify the failure, and when so rectified within those three (3) Banking Days (as
290 recognized at the agreed place of payment and the place of currency of the Charter Party)
291 following the Owners’ notice, the payment shall stand as punctual.
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292 (c) Withdrawal
293 Failure by the Charterers to pay hire due in full within three (3) Banking Days of their receiving
294 a notice from Owners under Sub-clause 11(b) above shall entitle the Owners, without prejudice
295 to any other rights or claims the Owners may have against the Charterers:
296 (i) to withdraw the Vessel from the service of the Charterers;
297 (ii) to damages, if they withdraw the Vessel, for the loss of the remainder of the Charter Party.
298 (d) Suspension
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299 At any time while hire is outstanding, the Owners shall, without prejudice to the liberty to
300 withdraw, be entitled to withhold the performance of any and all obligations hereunder and shall
301 have no responsibility whatsoever for any consequences thereof, and Charterers hereby
302 indemnify the Owners for all legitimate and justifiable actions taken to secure their interests,
303 and hire shall continue to accrue and any extra expenses resulting from such withholding shall
304 be for the Charterers’ account.
305 (e) Last Hire Payment
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306 Should the Vessel be on her voyage towards port/place of redelivery at the time the last
307 payment(s) of hire is/are due, said payment(s) is/are to be made for such length of time as the
308 estimated time necessary to complete the voyage, including the deduction of estimated
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310
311
312
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disbursements for the Owners’ account before redelivery. Should said payments not cover the
actual time, hire is to be paid for the balance, day by day, as it becomes due.
Unless Sub-clause 9(a)(ii) or (iii) has been agreed, the Charterers shall have the right to deduct
the value of bunkers on redelivery from last sufficient hire payment(s).
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313 When the Vessel has been redelivered, any difference in hire and bunkers is to be refunded by
314 the Owners or paid by the Charterers within five (5) Banking Days, as the case may be.
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315 (f) Cash Advances
316 Cash for the Vessel’s ordinary disbursements at any port may be advanced by the Charterers,
317 as required by the Owners, subject to two and a half (2.5) per cent commission and such
318 advances shall be deducted from the hire. The Charterers, however, shall in no way be
319 responsible for the application of such advances.
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320 12. Speed and Consumption
321 (a) Upon delivery and throughout the duration of this Charter Party the Vessel shall be capable of
322 speed and daily consumption rates as stated in Appendix A in good weather on all sea
323 passages with wind up to and including Force four (4) as per the Beaufort Scale and sea state
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324 up to and including Sea State three (3) as per the Douglas Sea Scale (unless otherwise
325 specified in Appendix A). Any period during which the Vessel’s speed is deliberately reduced to
326 comply with the Charterers’ orders/requirements (unless slow steaming or eco speed
327 warranties have been given in Appendix A) or for reasons of safety or while navigating within
328 narrow or restricted waters or when assisting a vessel in distress or when saving or attempting
329 to save life or property at sea, shall be excluded from performance calculations.
330 (b) The Charterers shall have the option of using their preferred weather routing service. The
331 Master shall comply with the reporting procedure of the Charterers’ weather routing service and
332 shall follow routing recommendations from that service provided that the safety of the Vessel
333 and/or cargo is not compromised.
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334 (c) The actual route taken by the Vessel shall be used as the basis of any calculation of the
335 Vessel's performance.
336 (d) If the speed of the Vessel is reduced and/or fuel oil consumption increased, the Charterers may
337 submit to the Owners a documented claim limited to the estimated time lost and/or the
338 additional fuel consumed, supported by a performance analysis from the weather routing
339 service established in accordance with this Clause. The cost of any time lost shall be off-set
340 against the cost of any fuel saved and vice versa.
341 (e) In the event that the Owners contest such claim then the Owners shall provide copies of the
342 Vessel's deck logs for the period concerned and the matter shall be referred to an independent
343 expert or alternative weather service selected by mutual agreement, whose report shall take
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344 Vessel’s log data and the Charterers’ weather service data into consideration and whose
345 determination shall be final and binding on the parties. The cost of such expert report shall be
346 shared equally.
347 13. Spaces Available
348 (a) The whole reach of the Vessel’s holds, decks, and other cargo spaces (not more than she can
349 reasonably and safely stow and carry), also accommodation for supercargo, if carried, shall be
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350 at the Charterers’ disposal, reserving only proper and sufficient space for the Vessel’s Master,
351 officers, ratings, tackle, apparel, furniture, provisions, stores and bunkers.
352 (b) In the event of deck cargo being carried, the Owners are to be and are hereby indemnified by
353
354
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356 14.
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the Charterers for any loss and/or damage and/or liability of whatsoever nature howsoever
caused to the deck cargo which would not have arisen had the deck cargo not been loaded.
Bills of Lading shall be issued as per Clause 31(c).
Supercargo
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357 The Charterers are entitled to appoint a supercargo, who shall accompany the Vessel at the
358 Charterers’ risk and see that voyages are performed with due despatch. He is to be furnished
359 with free accommodation and meals same as provided for the Master’s table. The Charterers
and the supercargo are required to sign the standard letter of waiver and indemnity
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360
361 recommended by the Vessel’s Protection and Indemnity Association before the supercargo
362 comes on board the Vessel.
363 15. Sailing Orders and Logs
364 The Charterers shall furnish the Master from time to time with all requisite instructions and
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365 sailing directions, in writing, in the English language, and the Master shall keep full and correct
366 deck and engine logs of the voyage or voyages, which are to be patent to the Charterers or
367 their agents, and shall furnish the Charterers, their agents or supercargo, when required, with a
368 true copy of such deck and engine logs, showing the course of the Vessel, distance run and the
369 consumption of bunkers. Any log extracts required by the Charterers shall be in the English
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370 language.
371 16. Cargo Exclusions
372 The Vessel shall be employed in carrying lawful merchandise, excluding any goods of a
373 dangerous, injurious, flammable or corrosive nature unless carried in accordance with the
374 requirements or recommendations of the competent authorities of the country of the Vessel’s
375 registry, and of ports of loading and discharge, and of any intermediate countries or ports
376 through whose waters the Vessel must pass. Without prejudice to the generality of the
377 foregoing in addition the following are specifically excluded: livestock of any description, arms,
378 ammunition, explosives, nuclear and radioactive material, _________ .
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379 17. Off-Hire
380 In the event of loss of time from deficiency and/or default and/or strike of officers or ratings, or
381 deficiency of stores, fire, breakdown of, or damage to hull, machinery or equipment, grounding,
382 detention by the arrest of the Vessel, (unless such arrest is caused by events for which the
383 Charterers, their sub-charterers, servants, agents or sub-contractors are responsible), or
384 detention by Port State control or other competent authority for Vessel deficiencies, or
385 detention by average accidents to the Vessel or cargo, unless resulting from inherent vice,
386 quality or defect of the cargo, drydocking for the purpose of examination, cleaning and/or
387 painting of underwater parts and/or repair, or by any other similar cause preventing the full
388 working of the Vessel, the payment of hire and overtime, if any, shall cease for the time thereby
389 lost. Should the Vessel deviate or put back during a voyage, contrary to the orders or directions
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390 of the Charterers, for any reason other than accident to the cargo or where permitted in Clause
391 22 (Liberties) hereunder, the hire to be suspended from the time of her deviating or putting
392 back until she is again in the same or equidistant position from the destination and the voyage
393 resumed therefrom. All bunkers used by the Vessel while off-hire shall be for the Owners’
394 account. In the event of the Vessel being driven into port or to anchorage through stress of
395 weather, trading to shallow harbors or to rivers or ports with bars, any detention of the Vessel
396 and/or expenses resulting from such detention shall be for the Charterers’ account. If upon the
397 voyage the speed be reduced by defect in, or breakdown of, any part of her hull, machinery or
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398 equipment, the time so lost, and the cost of any extra bunkers consumed in consequence
399 thereof, and all extra proven expenses may be deducted from the hire. Bunkers used by the
400 Vessel while off-hire and the cost of replacing same shall be for the Owners’ account and
401 therefore deducted from the hire.
402
403
404
18. Pollution C
The Owners shall provide for standard oil pollution coverage equal to the level customarily
offered by the International Group of P&I Clubs, together with the appropriate certificates to that
405 effect. (See also Clause 6 (Owners to Provide)).
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406 19. Drydocking
The Vessel was last drydocked ___________ .

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407
408 Except in case of emergency or under Clause 52(b), no drydocking shall take place during the
409 currency of this Charter Party.
410 20. Total Loss

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411 Should the Vessel be lost, money paid in advance and not earned (reckoning from the date of
412 loss or being last heard of) shall be returned to the Charterers at once.
413 21. Exceptions

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414 The act of God, enemies, fire, restraint of princes, rulers and people, and all dangers and
415 accidents of the seas, rivers, machinery, boilers and navigation, and errors of navigation
416 throughout this Charter Party, always mutually excepted.
417 22. Liberties
418 The Vessel shall have the liberty to sail with or without pilots, to tow and be towed, to assist
419 vessels in distress, and to deviate for the purpose of saving life and property.
420 23. Liens
421 The Owners shall have a lien upon all cargoes, sub-hires and sub-freights (including
422 deadfreight and demurrage) belonging or due to the Charterers or any sub-charterers, for any
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423 amounts due under this Charter Party, including general average contributions, and the
424 Charterers shall have a lien on the Vessel for all monies paid in advance and not earned, and
425 any overpaid hire or excess deposit to be returned at once.
426 The Charterers will not directly or indirectly suffer, nor permit to be continued, any lien or
427 encumbrance, which might have priority over the title and interest of the Owners in the Vessel.
428 The Charterers undertake that during the period of this Charter Party, they will not procure any
429 supplies or necessaries or services, including any port expenses and bunkers, on the credit of
430 the Owners.
431 24. Salvage
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432 All derelicts and salvage shall be for the Owners’ and the Charterers’ equal benefit after
433 deducting the Owners’ and the Charterers’ expenses and crew’s proportion.
434 25. General Average
435 General average shall be adjusted according to York-Antwerp Rules 1994 and settled in US
436 dollars in the same place as stipulated in Clause 54 (Law and Arbitration). The Charterers shall
437 procure that all bills of lading issued during the currency of this Charter Party will contain a
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438 provision to the effect that general average shall be adjusted according to York-Antwerp Rules
439 1994 and will include the “New Jason Clause” as per Clause 33(c). Time charter hire will not
440 contribute to general average.
441
442
443
444
26. Navigation
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Nothing herein stated is to be construed as a demise of the Vessel to the Charterers. The
Owners shall remain responsible for the navigation of the Vessel, acts of pilots and tug boats,
insurance, crew, and all other matters, same as when trading for their own account.
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445 27. Cargo Claims
446 Cargo claims as between the Owners and the Charterers shall be settled in accordance with
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447 the Inter-Club NYPE Agreement 1996 (as amended 1 September 2011), or any subsequent
448 modification or replacement thereof.
449 28. Cargo Handling Gear and Lights
450 The Owners shall maintain the cargo handling gear of the Vessel providing lifting capacity as
451 described in Appendix A (Vessel Description). The Owners shall also provide on the Vessel for
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452 night work lights as on board, but all additional lights over those on board shall be at the
453 Charterers’ expense. The Charterers shall have the use of any cargo handling gear on board
454 the Vessel. If required by the Charterers, the Vessel shall work night and day and all cargo
455 handling gear shall be at the Charterers’ disposal during loading and discharging. In the event
456 of disabled cargo handling gear, or insufficient power to operate the same, the Vessel is to be
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457 considered to be off-hire to the extent that time is actually lost to the Charterers and the
458 Owners to pay stevedore stand-by charges occasioned thereby, unless such disablement or
459 insufficiency of power is caused by the Charterers’ stevedores. If required by the Charterers,
460 the Owners shall bear the cost of hiring shore gear in lieu thereof, in which case the Vessel
461 shall remain on-hire, except for actual time lost.
462 29. Solid Bulk Cargoes/Dangerous Goods
463 (a) The Charterers shall provide appropriate information on the cargo in advance of loading in
464 accordance with the requirements of the IMO International Maritime Solid Bulk Cargoes
465 (IMSBC) Code to enable the precautions which may be necessary for proper stowage and safe
466 carriage to be put into effect. The information shall be accompanied by a cargo declaration
467 summarising the main details and stating that the cargo is fully and accurately described and
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468 that, where applicable, the test results and other specifications can be considered as
469 representative for the cargo to be loaded.
470 (b) If a cargo listed in the IMO International Maritime Dangerous Goods (IMDG) Code (website:
471 www.imo.org) is agreed to be carried, the Charterers shall provide a dangerous goods transport
472 document and, where applicable, a container/vehicle packing certificate in accordance with the
473 IMDG Code requirements. The dangerous goods transport document shall include a certificate
474 or declaration that the goods are fully and accurately described by the Proper Shipping Name,
475 are classified, packaged, marked and labelled/placarded correctly and are in all respects in
476 proper condition for transport according to applicable international and national government
477 regulations.
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478 (c) The Master shall be entitled to refuse cargoes or, if already loaded, to unload them at the
479 Charterers’ risk and expense if the Charterers fail to fulfil their IMSBC Code or IMDG Code
480 obligations as applicable.
481 30. BIMCO Hull Fouling Clause for Time Charter Parties
482 (a) If, in accordance with the Charterers’ orders, the Vessel remains at or shifts within a place,
483 anchorage and/or berth for an aggregated period exceeding:
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484 (i) a period as the parties may agree in writing in a Tropical Zone or Seasonal Tropical Zone*;
485 or
486
487
488
489
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(ii) a period as the parties may agree in writing outside such Zones*
any warranties concerning speed and consumption shall be suspended pending inspection of
the Vessel’s underwater parts including, but not limited to, the hull, sea chests, rudder and
propeller.
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490 *If no such periods are agreed the default periods shall be 15 days.
491 (b) In accordance with Sub-clause (a), either party may call for inspection which shall be arranged
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492 jointly by the Owners and the Charterers and undertaken at the Charterers’ risk, cost, expense
493 and time.
494 (c) If, as a result of the inspection either party calls for cleaning of any of the underwater parts,
495 such cleaning shall be undertaken by the Charterers at their risk, cost, expense and time in
496 consultation with the Owners.
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497 (i) Cleaning shall always be under the supervision of the Master and, in respect of the
498 underwater hull coating, in accordance with the paint manufacturers’ recommended guidelines
499 on cleaning, if any. Such cleaning shall be carried out without damage to the Vessel’s
500 underwater parts or coating.
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501 (ii) If, at the port or place of inspection, cleaning as required under this Sub-clause (c) is not
502 permitted or possible, or if the Charterers choose to postpone cleaning, speed and
503 consumption warranties shall remain suspended until such cleaning has been completed.
504 (iii) If, despite the availability of suitable facilities and equipment, the Owners nevertheless
505 refuse to permit cleaning, the speed and consumption warranties shall be reinstated from the
506 time of such refusal.
507 (d) Cleaning in accordance with this Clause shall always be carried out prior to redelivery. If,
508 nevertheless, the Charterers are prevented from carrying out such cleaning, the parties shall,
509 prior to but latest on redelivery, agree a lump sum payment in full and final settlement of the
510 Owners’ costs and expenses arising as a result of or in connection with the need for cleaning
511 pursuant to this Clause.
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512 (e) If the time limits set out in Sub-clause (a) have been exceeded but the Charterers thereafter
513 demonstrate that the Vessel’s performance remains within the limits of this Charter Party the
514 vessel’s speed and consumption warranties will be subsequently reinstated and the Charterers’
515 obligations in respect of inspection and/or cleaning shall no longer be applicable.
516 31. Bills of Lading
517 (a) The Master shall sign bills of lading or waybills for cargo as presented in conformity with mates’
518 receipts. However, the Charterers or their agents may sign bills of lading or waybills on behalf
519 of the Master, with the Owners’/Master’s prior written authority, always in conformity with
520 mates’ receipts.
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521 (b) All bills of lading or waybills shall be without prejudice to this Charter Party and the Charterers
522 shall indemnify the Owners against all consequences or liabilities which may arise from any
523 inconsistency between this Charter Party and any bills of lading or waybills signed by the
524 Charterers or their agents or by the Master at their request.
525 (c) Bills of lading covering deck cargo shall be claused: “Shipped on deck at the Charterers’,
526 Shippers’ and Receivers’ risk, expense and responsibility, without liability on the part of the
527 Vessel or her Owners for any loss, damage, expense or delay howsoever caused.”
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528 32. BIMCO Electronic Bills of Lading Clause
529 (a) At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charter
530
531
532
533
(b)
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Party shall be issued, signed and transmitted in electronic form with the same effect as their
For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless)
Trading Systems as directed by the Charterers, provided such systems are approved by the
534 International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems
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535 shall be for the Charterers’ account.
536 (c) The Charterers agree to hold the Owners harmless in respect of any additional liability arising
from the use of the systems referred to in Sub-clause (b), to the extent that such liability does
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537
538 not arise from Owners’ negligence.
539 33. Protective Clauses
540 The following protective clauses shall be deemed to form part of this Charter Party and all Bills
541 of Lading or waybills issued under this Charter Party shall contain the following clauses.
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542
543 (a) General Clause Paramount
544 This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea
545 Act of the United States, the Hague Rules, or the Hague Visby Rules, as applicable, or such
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546 other similar national legislation as may mandatorily apply by virtue of origin or destination of
547 the bill of lading, (or if no such enactments are mandatorily applicable, the terms of the Hague
548 Rules shall apply) which shall be deemed to be incorporated herein, and nothing herein
549 contained shall be deemed a surrender by the carrier of any of its rights or immunities or an
550 increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading
551 be repugnant to said Act to any extent, such term shall be void to that extent, but no further.
552 and
553 (b) Both-to-Blame Collision Clause
554 “If the ship comes into collision with another ship as a result of the negligence of the other ship
555 and any act, neglect or default of the master, mariner, pilot or the servants of the carrier in the
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556 navigation or in the management of the ship, the owners of the goods carried hereunder will
557 indemnify the carrier against all loss or liability to the other or non-carrying ship or her owners
558 insofar as such loss or liability represents loss of, or damage to, or any claim whatsoever of the
559 owners of said goods, paid or payable by the other or non-carrying ship or her owners to the
560 owners of said goods and set-off, recouped or recovered by the other or non-carrying ship or
561 her owners as part of their claim against the carrying ship or carrier.
562 The foregoing provisions shall also apply where the owners, operators or those in charge of
563 any ships or objects other than, or in addition to, the colliding ships or objects are at fault in
564 respect to a collision or contact.”
565 and
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566 (c) New Jason Clause
567 “In the event of accident, danger, damage or disaster before or after the commencement of the
568 voyage, resulting from any cause whatsoever, whether due to negligence or not, for which, or
569 for the consequences of which, the carrier is not responsible, by statute, contract, or otherwise,
570 the goods, shippers, consignees, or owners of the goods shall contribute with the carrier in
571 general average to the payment of any sacrifices, losses or expenses of a general average
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572 nature that may be made or incurred, and shall pay salvage and special charges incurred in
573 respect of the goods. If a salving ship is owned or operated by the carrier, salvage shall be paid
574 for as fully as if salving ship or ships belonged to strangers. Such deposit as the carrier or his
575 agents may deem sufficient to cover the estimated contribution of the goods and any salvage
576
577
578 34. BIMCO War Risks Clause CONWARTIME 2013

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and special charges thereon shall, if required, be made by the goods, shippers, consignees or
owners of the goods to the Carrier before delivery.”
579 (a) For the purpose of this Clause, the words:

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580 (i) “Owners” shall include the shipowners, bareboat charterers, disponent owners, managers or
581 other operators who are charged with the management of the Vessel, and the Master; and
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582 (ii) “War Risks” shall include any actual, threatened or reported:
583 war, act of war, civil war or hostilities; revolution; rebellion; civil commotion; warlike operations;
584 laying of mines; acts of piracy and/or violent robbery and/or capture/seizure (hereinafter
585 “Piracy”); acts of terrorists; acts of hostility or malicious damage; blockades (whether imposed
586 against all vessels or imposed selectively against vessels of certain flags or ownership, or
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587 against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or
588 political group, or the government of any state or territory whether recognized or not, which, in
589 the reasonable judgement of the Master and/or the Owners, may be dangerous or may become
590 dangerous to the Vessel, cargo, crew or other persons on board the Vessel.
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591 (b) The Vessel shall not be obliged to proceed or required to continue to or through, any port,
592 place, area or zone, or any waterway or canal (hereinafter “Area”), where it appears that the
593 Vessel, cargo, crew or other persons on board the Vessel, in the reasonable judgement of the
594 Master and/or the Owners, may be exposed to War Risks whether such risk existed at the time
595 of entering into this Charter Party or occurred thereafter. Should the Vessel be within any such
596 place as aforesaid, which only becomes dangerous, or may become dangerous, after entry into
597 it, the Vessel shall be at liberty to leave it.
598 (c) The Vessel shall not be required to load contraband cargo, or to pass through any blockade as
599 set out in Sub-clause (a), or to proceed to an Area where it may be subject to search and/or
600 confiscation by a belligerent.
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601 (d) If the Vessel proceeds to or through an Area exposed to War Risks, the Charterers shall
602 reimburse to the Owners any additional premiums required by the Owners' insurers and the
603 costs of any additional insurances that the Owners reasonably require in connection with War
604 Risks.
605 (e) All payments arising under Sub-clause (d) shall be settled within fifteen (15) days of receipt of
606 Owners’ supported invoices or on redelivery, whichever occurs first.
607 (f) If the Owners become liable under the terms of employment to pay to the crew any bonus or
608 additional wages in respect of sailing into an Area which is dangerous in the manner defined by
609 the said terms, then the actual bonus or additional wages paid shall be reimbursed to the
610 Owners by the Charterers at the same time as the next payment of hire is due, or upon
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611 redelivery, whichever occurs first.
612 (g) The Vessel shall have liberty:
613 (i) to comply with all orders, directions, recommendations or advice as to departure, arrival,
614 routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or
615 in any other way whatsoever, which are given by the government of the nation under whose
616 flag the Vessel sails, or other government to whose laws the Owners are subject, or any other
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617 government of any state or territory whether recognized or not, body or group whatsoever
618 acting with the power to compel compliance with their orders or directions;
619 (ii) to comply with the requirements of the Owners’ insurers under the terms of the Vessel’s
620
621
622
623
insurance(s);
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(iii) to comply with the terms of any resolution of the Security Council of the United Nations, the
effective orders of any other Supranational body which has the right to issue and give the
same, and with national laws aimed at enforcing the same to which the Owners are subject,
624 and to obey the orders and directions of those who are charged with their enforcement;
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625 (iv) to discharge at any alternative port any cargo or part thereof which may expose the Vessel
626 to being held liable as a contraband carrier;
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627 (v) to call at any alternative port to change the crew or any part thereof or other persons on
628 board the Vessel when there is reason to believe that they may be subject to internment,
629 imprisonment, detention or similar measures.
630 (h) If in accordance with their rights under the foregoing provisions of this Clause, the Owners shall
631 refuse to proceed to the loading or discharging ports, or any one or more of them, they shall
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632 immediately inform the Charterers. No cargo shall be discharged at any alternative port without
633 first giving the Charterers notice of the Owners’ intention to do so and requesting them to
634 nominate a safe port for such discharge. Failing such nomination by the Charterers within forty-
635 eight (48) hours of the receipt of such notice and request, the Owners may discharge the cargo
636 at any safe port of their own choice. All costs, risk and expenses for the alternative discharge
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637 shall be for the Charterers’ account.
638 (i) The Charterers shall indemnify the Owners for claims arising out of the Vessel proceeding in
639 accordance with any of the provisions of Sub-clauses (b) to (h) which are made under any bills
640 of lading, waybills or other documents evidencing contracts of carriage.
641 (j) When acting in accordance with any of the provisions of Sub-clauses (b) to (h) of this Clause
642 anything is done or not done, such shall not be deemed a deviation, but shall be considered as
643 due fulfilment of this Charter Party.
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644 35. Ice
645 The Vessel shall not be obliged to force ice but, subject to the Owners’ prior approval having
646 due regard to its size, construction and class, may follow ice-breakers. The Vessel shall not be
647 required to enter or remain in any icebound port or area, nor any port or area where lights or
648 lightships have been or are about to be withdrawn by reason of ice, nor where there is risk that
649 in the ordinary course of things the Vessel will not be able on account of ice to safely enter and
650 remain in the port or area or to get out after having completed loading or discharging.
651 36. Requisition
652 Should the Vessel be requisitioned by the government of the Vessel’s flag or other government
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653 to whose laws the Owners are subject during the period of this Charter Party, the Vessel shall
654 be deemed to be off-hire during the period of such requisition, and any hire paid by the said
655 government in respect of such requisition period shall be retained by Owners. The period
656 during which the Vessel is on requisition to the said government shall count as part of the
657 period provided for in this Charter Party.
658 If the period of requisition exceeds ninety (90) days, either party shall have the option of
659 cancelling this Charter Party and no consequential claim in respect thereof may be made by
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660 either party.
661 37. Stevedore Damage
662
663
664
665
666
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Notwithstanding anything contained herein to the contrary, the Charterers shall pay for any and
all damage to the Vessel caused by stevedores provided the Master has notified the Charterers
and/or their agents in writing within twenty-four (24) hours of the occurrence but in case of
hidden damage latest when the damage could have been discovered by the exercise of due
diligence. Such notice to describe the damage and to invite Charterers to appoint a surveyor to
667 assess the extent of such damage.
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668 (a) In case of any and all damage affecting the Vessel’s seaworthiness and/or the safety of the
669 crew and/or affecting the trading capabilities of the Vessel, the Charterers shall immediately
arrange for repairs of such damage at their expense and the Vessel is to remain on-hire until
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670
671 such repairs are completed and if required passed by the Vessel’s classification society.
672 (b) Any and all damage not described under Sub-clause (a) above shall be repaired, at the
673 Charterers’ option, before or after redelivery concurrently with the Owners’ work. In such case
674 no hire and/or expenses will be paid to the Owners except and insofar as the time and/or
675 expenses required for the repairs for which the Charterers are responsible, exceed the time
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676 and/or expenses necessary to carry out the Owners’ work.
677 38. Slow Steaming
678 (a) The Charterers may at their discretion provide, in writing to the Master, instructions to reduce
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679 speed or Revolutions Per Minute (main engine RPM) and/or instructions to adjust the Vessel’s
680 speed to meet a specified time of arrival at a particular destination.
681 (i) *Slow Steaming – Where the Charterers give instructions to the Master to adjust the speed
682 or RPM, the Master shall, subject always to the Master’s obligations in respect of the safety of
683 the Vessel, crew and cargo and the protection of the marine environment, comply with such
684 written instructions, provided that the engine(s) continue(s) to operate above the cut-out point
685 of the Vessel's engine(s) auxiliary blower(s) and that such instructions will not result in the
686 Vessel’s engine(s) and/or equipment operating outside the manufacturers’/designers’
687 recommendations as published from time to time.
688 (ii) *Ultra-Slow Steaming – Where the Charterers give instructions to the Master to adjust the
689 speed or RPM, regardless of whether this results in the engine(s) operating above or below the
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690 cut-out point of the Vessel's engine(s) auxiliary blower(s), the Master shall, subject always to
691 the Master’s obligations in respect of the safety of the Vessel, crew and cargo and the
692 protection of the marine environment, comply with such written instructions, provided that such
693 instructions will not result in the Vessel’s engine(s) and/or equipment operating outside the
694 manufacturers’/designers’ recommendations as published from time to time. If the
695 manufacturers’/designers’ recommendations issued subsequent to the date of this Charter
696 Party require additional physical modifications to the engine or related equipment or require the
697 purchase of additional spares or equipment, the Master shall not be obliged to comply with
698 these instructions.
699 *Sub-clauses (a)(i) and (a)(ii) are alternatives; delete whichever is not applicable. In the
700 absence of deletions, alternative (a)(i) shall apply.
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701 (b) At all speeds the Owners shall exercise due diligence to ensure that the Vessel is operated in a
702 manner which minimises fuel consumption, always taking into account and subject to the
703 following:
704 (i) the Owners’ warranties under this Charter Party relating to the Vessel’s speed and
705 consumption;
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706 (ii) the Charterers’ instructions as to the Vessel’s speed and/or RPM and/or specified time of
707 arrival at a particular destination;
708 (iii) the safety of the Vessel, crew and cargo and the protection of the marine environment; and
709
710
711 (c)
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(iv) the Owners’ obligations under any bills of lading, waybills or other documents evidencing
contracts of carriage issued by them or on their behalf.
For the purposes of Sub-clause (b), the Owners shall exercise due diligence to minimise fuel
712 consumption:
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713 (i) when planning voyages, adjusting the Vessel’s trim and operating main engine(s) and
714 auxiliary engine(s);
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715 (ii) by making optimal use of the Vessel’s navigation equipment and any additional aids
716 provided by the Charterers, such as weather routing, voyage optimization and performance
717 monitoring systems; and
718 (iii) by directing the Master to report any data that the Charterers may reasonably request to
719 further improve the energy efficiency of the Vessel.
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720 (d) The Owners and the Charterers shall share any findings and best practices that they may have
721 identified on potential improvements to the Vessel’s energy efficiency.
722 (e) For the avoidance of doubt, where the Vessel proceeds at a reduced speed or with reduced
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723 RPM pursuant to Sub-clause (a), then provided that the Master has exercised due diligence to
724 comply with such instructions, this shall constitute compliance with, and there shall be no
725 breach of, any obligation requiring the Vessel to proceed with utmost and/or due despatch (or
726 any other such similar/equivalent expression).
727 (f) The Charterers shall procure that this Clause be incorporated into all sub-charters and
728 contracts of carriage issued pursuant to this Charter Party. The Charterers shall indemnify the
729 Owners against all consequences and liabilities that may arise from bills of lading, waybills or
730 other documents evidencing contracts of carriage being issued as presented to the extent that
731 the terms of such bills of lading, waybills or other documents evidencing contracts of carriage
732 impose or result in breach of the Owners’ obligation to proceed with due despatch or are to be
733 held to be a deviation or the imposition of more onerous liabilities upon the Owners than those
734 assumed by the Owners pursuant to this Clause.
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735 39. BIMCO Piracy Clause for Time Charter Parties 2013
736 (a) The Vessel shall not be obliged to proceed or required to continue to or through, any port,
737 place, area or zone, or any waterway or canal (hereinafter “Area”) which, in the reasonable
738 judgement of the Master and/or the Owners, is dangerous to the Vessel, her cargo, crew or
739 other persons on board the Vessel due to any actual, threatened or reported acts of piracy
740 and/or violent robbery and/or capture/seizure (hereinafter “Piracy”), whether such risk existed at
741 the time of entering into this Charter Party or occurred thereafter. Should the Vessel be within
742 any such place as aforesaid which only becomes dangerous, or may become dangerous, after
743 her entry into it, she shall be at liberty to leave it.
744 (b) If in accordance with Sub-clause (a) the Owners decide that the Vessel shall not proceed or
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745 continue to or through the Area they must immediately inform the Charterers. The Charterers
746 shall be obliged to issue alternative voyage orders and shall indemnify the Owners for any
747 claims from holders of the Bills of Lading caused by waiting for such orders and/or the
748 performance of an alternative voyage. Any time lost as a result of complying with such orders
749 shall not be considered off-hire.
750 (c) If the Owners consent or if the Vessel proceeds to or through an Area exposed to the risk of
751 Piracy the Owners shall have the liberty:
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752 (i) to take reasonable preventative measures to protect the Vessel, crew and cargo including
753 but not limited to re-routeing within the Area, proceeding in convoy, using escorts, avoiding day
754 or night navigation, adjusting speed or course, or engaging security personnel and/or deploying
755
756
757
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equipment on or about the Vessel (including embarkation/disembarkation);
(ii) to comply with underwriters’ requirements under the terms of the Vessel’s insurance(s);
(iii) to comply with all orders, directions, recommendations or advice given by the Government
758 of the Nation under whose flag the Vessel sails, or other Government to whose laws the
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759 Owners are subject, or any other Government, body or group (including military authorities)
760 whatsoever acting with the power to compel compliance with their orders or directions; and
(iv) to comply with the terms of any resolution of the Security Council of the United Nations, the
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761
762 effective orders of any other Supranational body which has the right to issue and give the
763 same, and with national laws aimed at enforcing the same to which the Owners are subject,
764 and to obey the orders and directions of those who are charged with their enforcement;
765 and the Charterers shall indemnify the Owners for any claims from holders of Bills of Lading or
766 third parties caused by the Vessel proceeding as aforesaid, save to the extent that such claims
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767 are covered by additional insurance as provided in Sub-clause (d)(iii).
768 (d) Costs
769 (i) if the Vessel proceeds to or through an Area where due to risk of Piracy additional costs will
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770 be incurred including but not limited to additional personnel and preventative measures to avoid
771 Piracy, such reasonable costs shall be for the Charterers’ account. Any time lost waiting for
772 convoys, following recommended routeing, timing, or reducing speed or taking measures to
773 minimise risk, shall be for the Charterers’ account and the Vessel shall remain on hire;
774 (ii) if the Owners become liable under the terms of employment to pay to the crew any bonus or
775 additional wages in respect of sailing into an area which is dangerous in the manner defined by
776 the said terms, then the actual bonus or additional wages paid shall be reimbursed to the
777 Owners by the Charterers;
778 (iii) if the Vessel proceeds to or through an Area exposed to the risk of Piracy, the Charterers
779 shall reimburse to the Owners any additional premiums required by the Owners' insurers and
780 the costs of any additional insurances that the Owners reasonably require in connection with
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781 Piracy risks which may include but not be limited to War Loss of Hire and/or maritime Kidnap
782 and Ransom (K&R); and
783 (iv) all payments arising under Sub-clause (d) shall be settled within fifteen (15) days of receipt
784 of the Owners’ supported invoices or on redelivery, whichever occurs first.
785 (e) If the Vessel is attacked by pirates any time lost shall be for the account of the Charterers and
786 the Vessel shall remain on hire.
787 (f) If the Vessel is seized by pirates the Owners shall keep the Charterers closely informed of the
788 efforts made to have the Vessel released. The Vessel shall remain on hire throughout the
789 seizure and the Charterers’ obligations shall remain unaffected, except that hire payments shall
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790 cease as of the ninety-first (91st) day after the seizure until release. The Charterers shall pay
791 hire, or if the Vessel has been redelivered, the equivalent of Charter Party hire, for any time lost
792 in making good any damage and deterioration resulting from the seizure. The Charterers shall
793 not be liable for late redelivery under this Charter Party resulting from the seizure of the Vessel.
794 (g) If in compliance with this Clause anything is done or not done, such shall not be deemed a
795 deviation, but shall be considered as due fulfilment of this Charter Party. In the event of a
796 conflict between the provisions of this Clause and any implied or express provision of the
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797 Charter Party, this Clause shall prevail.
798 40. Taxes
799
800
801
802
803
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Charterers are to pay all local, State, National taxes and/or dues assessed on the Vessel or the
Owners resulting from the Charterers’ orders herein, whether assessed during or after the
currency of this Charter Party including any taxes and/or dues on cargo and/or freights and/or
sub-freights and/or hire (excluding taxes levied by the country of the flag of the Vessel or the
Owners). In the event the Owners/Vessel/her flag state are exempt from any taxes, the Owners
804 shall seek such exemption and filing costs for such exemption, if any, shall be for the
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805 Charterers’ account and no charge for such taxes shall be assessed to the Charterers.
806 41. Industrial Action

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807 In the event of the Vessel being delayed or rendered inoperative by strikes, labor stoppages or
808 boycotts or any other difficulties arising from the Vessel’s ownership, crew or terms of
809 employment of the crew of the chartered Vessel or any other vessel under the same ownership,
810 operation and control, any time lost is to be considered off-hire. The Owners guarantee that on
811 delivery the minimum terms and conditions of employment of the crew of the Vessel are in
812 accordance with the International Labour Organization Maritime Labour Convention (MLC)
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813 2006, and will remain so throughout the duration of this Charter Party.
814 42. Stowaways
815 (a) If stowaways have gained access to the Vessel by means of secreting away in the goods
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816 and/or containers or by any other means related to the cargo operation, this shall amount to
817 breach of this Charter Party. The Charterers shall be liable for the consequences of such
818 breach and hold the Owners harmless and keep them indemnified against all claims; costs
819 (including but not limited to victualing costs for stowaways whilst on board and repatriation);
820 losses; and fines or penalties, which may arise and be made against them. The Charterers
821 shall, if required, place the Owners in funds to put up bail or other security. The Vessel shall
822 remain on hire for any time lost as a result of such breach.
823 (b) Save for those stowaways referred to in Sub-clause (a), if stowaways have gained access to
824 the Vessel this shall amount to a breach of this Charter Party. The Owners shall be liable for
825 the consequences of such breach and hold the Charterers harmless and keep them
826 indemnified against all claims; costs; losses; and fines or penalties, which may arise and be
827 made against them. The Vessel shall be off-hire for any time lost as a result of such breach.
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828 43. Smuggling
829 (a) In the event of smuggling by the Master, other Officers and/or ratings, this shall amount to a
830 breach of this Charter Party. The Owners shall be liable for the consequences of such breach
831 and hold the Charterers harmless and keep them indemnified against all claims, costs, losses,
832 and fines and penalties which may arise and be made against them. The Vessel shall be off-
833 hire for any time lost as a result of such breach.
834 (b) If unmanifested narcotic drugs and/or any other illegal substances are found secreted in the
835 goods and/or containers or by any other means related to the cargo operation, this shall
836 amount to a breach of this Charter Party. The Charterers shall be liable for the consequences
837 of such breach and hold the Owners, Master, officers and ratings of the Vessel harmless and
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838 keep them indemnified against all claims, costs, losses, and fines and penalties which may
839 arise and be made against them individually or jointly. The Charterers shall, if required, place
840 the Owners in funds to put up bail or other security. The Vessel shall remain on hire for any
841 time lost as a result of such breach.
842 44. International Safety Management (ISM)
843 During the duration of this Charter Party, the Owners shall procure that both the Vessel and
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844 “the Company” (as defined by the ISM Code) shall comply with the requirements of the ISM
845 Code. Upon request the Owners shall provide a copy of the relevant Document of Compliance
846 (DOC) and Safety Management Certificate (SMC) to the Charterers. Except as otherwise
847 provided in this Charter Party, loss, damage, expense or delay caused by failure on the part of
848
849
850
45.
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the Owners or “the Company” to comply with the ISM Code shall be for the Owners’ account.
International Ship and Port Facility Security Code (ISPS Code)/Maritime Transportation
Security Act (MTSA)
851 (a) (i) The Owners shall comply with the requirements of the ISPS and the relevant amendments to
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852 Chapter XI of Safety of Life at Sea (SOLAS) (ISPS Code) relating to the Vessel and “the
853 Company” (as defined by the ISPS Code). If trading to or from the US or passing through US
854 waters, the Owners shall also comply with the requirements of the MTSA relating to the Vessel
and the “Owner” (as defined by the MTSA).
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855
856 (ii) Upon request the Owners shall provide the Charterers with a copy of the relevant
857 International Ship Security Certificate (ISSC) (or the interim ISSC) and the full style contact
858 details of the Company Security Officer (CSO).
859 (iii) Loss, damages, expense or delay (excluding consequential loss, damages, expense or
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860 delay) caused by failure on the part of the Owners or “the Company”/“Owner” to comply with
861 the requirements of the ISPS Code/MTSA or this Clause shall be for the Owners’ account,
862 except as otherwise provided in this Charter Party.
863 (b) (i) The Charterers shall provide the Owners and the Master with their full style contact details
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864 and, upon request, any other information the Owners require to comply with the ISPS
865 Code/MTSA. Where sub-letting is permitted under the terms of this Charter Party, the
866 Charterers shall ensure that the contact details of all sub-charterers are likewise provided to the
867 Owners and the Master. Furthermore, the Charterers shall ensure that all sub-charter parties
868 they enter into during the period of this Charter Party contain the following provision:
869 “The Charterers shall provide the Owners with their full style contact details and, where sub-
870 letting is permitted under the terms of the charter party, shall ensure that contact details of all
871 sub-charterers are likewise provided to the Owners”.
872 (ii) Loss, damages, expense or delay (excluding consequential loss, damages, expense or
873 delay) caused by failure on the part of the Charterers to comply with this Clause shall be for the
874 Charterers’ account, except as otherwise provided in this Charter Party.
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875 (c) Notwithstanding anything else contained in this Charter Party all delay, costs or expenses
876 whatsoever arising out of or related to security regulations or measures required by the port
877 facility or any relevant authority in accordance with the ISPS Code/MTSA including, but not
878 limited to, security guards, launch services, vessel escorts, security fees or taxes and
879 inspections, shall be for the Charterers’ account, unless such costs or expenses result solely
880 from the negligence of the Owners, Master or crew or the previous trading of the Vessel, the
881 nationality of the crew, crew visas, the Vessel’s flag or the identity of the Owners’ managers. All
882 measures required by the Owners to comply with the Ship Security Plan shall be for the
883 Owners’ account.
884 (d) If either party makes any payment which is for the other party’s account according to this
885 Clause, the other party shall indemnify the paying party.
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886 46. Sanctions
887 (a) The Owners shall not be obliged to comply with any orders for the employment of the Vessel in
888 any carriage, trade or on a voyage which, in the reasonable judgement of the Owners, will
889 expose the Vessel, Owners, managers, crew, the Vessel’s insurers, or their re-insurers, to any
890 sanction or prohibition imposed by any State, Supranational or International Governmental
891 Organization.
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892 (b) If the Vessel is already performing an employment to which such sanction or prohibition is
893 subsequently applied, the Owners shall have the right to refuse to proceed with the
894 employment and the Charterers shall be obliged to issue alternative voyage orders within forty-
895
896
897
898
899
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eight (48) hours of receipt of the Owners’ notification of their refusal to proceed. If the
Charterers do not issue such alternative voyage orders the Owners may discharge any cargo
already loaded at any safe port (including the port of loading). The Vessel to remain on hire
pending completion of the Charterers’ alternative voyage orders or delivery of cargo by the
Owners and the Charterers to remain responsible for all additional costs and expenses incurred
900 in connection with such orders/delivery of cargo. If in compliance with this Sub-clause (b)
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901 anything is done or not done, such shall not be deemed a deviation.
902 (c) The Charterers shall indemnify the Owners against any and all claims whatsoever brought by
the owners of the cargo and/or the holders of Bills of Lading and/or sub-charterers against the
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903
904 Owners by reason of the Owners’ compliance with such alternative voyage orders or delivery of
905 the cargo in accordance with Sub-clause (b).
906 (d) The Charterers shall procure that this Clause shall be incorporated into all sub-charters issued
907 pursuant to this Charter Party.
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908 47. BIMCO Designated Entities Clause for Charter Parties
909 (a) The provisions of this clause shall apply in relation to any sanction, prohibition or restriction
910 imposed on any specified persons, entities or bodies including the designation of specified
911 vessels or fleets under United Nations Resolutions or trade or economic sanctions, laws or
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912 regulations of the European Union or the United States of America.
913 (b) The Owners and the Charterers respectively warrant for themselves (and in the case of any
914 sublet, the Charterers further warrant in respect of any sub-charterers, shippers, receivers, or
915 cargo interests) that at the date of this fixture and throughout the duration of this Charter Party
916 they are not subject to any of the sanctions, prohibitions, restrictions or designation referred to
917 in Sub-clause (a) which prohibit or render unlawful any performance under this Charter Party or
918 any sublet or any Bills of Lading. The Owners further warrant that the nominated vessel, or any
919 substitute, is not a designated vessel.
920 (c) If at any time during the performance of this Charter Party either party becomes aware that the
921 other party is in breach of warranty as aforesaid, the party not in breach shall comply with the
922 laws and regulations of any Government to which that party or the Vessel is subject, and follow
21
923 any orders or directions which may be given by any body acting with powers to compel
924 compliance, including where applicable the Owners’ flag State. In the absence of any such
925 orders, directions, laws or regulations, the party not in breach may, in its option, terminate the
926 Charter Party forthwith or, if cargo is on board, direct the Vessel to any safe port of that party’s
927 choice and there discharge the cargo or part thereof.
928 (d) If, in compliance with the provisions of this Clause, anything is done or is not done, such shall
929 not be deemed a deviation but shall be considered due fulfilment of this Charter Party.
930 (e) Notwithstanding anything in this Clause to the contrary, the Owners or the Charterers shall not
931 be required to do anything which constitutes a violation of the laws and regulations of any State
932 to which either of them is subject.
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933 (f) The Owners or the Charterers shall be liable to indemnify the other party against any and all
934 claims, losses, damage, costs and fines whatsoever suffered by the other party resulting from
935 any breach of warranty as aforesaid.
936 (g) The Charterers shall procure that this Clause is incorporated into all sub-charters, contracts of
937 carriage and Bills of Lading issued pursuant to this Charter Party.
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938 48. BIMCO North American Advance Cargo Notification Clause for Time Charter Parties
939 (a) If the Vessel loads or carries cargo destined for the US or Canada or passing through US or
940 Canadian ports in transit, the Charterers shall comply with the current US Customs regulations
941
942
943
944
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(19 CFR 4.7) or the Canada Border Services Agency regulations (Memorandum D3-5-2) or any
subsequent amendments thereto and shall undertake the role of carrier for the purposes of
such regulations and shall, in their own name, time and expense:
(i) have in place a Standard Carrier Alpha Code (SCAC)/Canadian Customs Carrier Code;
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945 (ii) for US trade, have in place an International Carrier Bond (ICB);
946 (iii) provide the Owners with a timely confirmation of (i) and (ii) above as appropriate; and
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947 (iv) submit a cargo declaration by Automated Manifest System (AMS) to the US Customs or by
948 ACI Automated Commercial Information (ACI) to the Canadian customs, and provide the
949 Owners at the same time with a copy thereof.
950 (b) The Charterers assume liability for and shall indemnify, defend and hold harmless the Owners
951 against any loss and/or damage whatsoever (including consequential loss and/or damage)
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952 and/or any expenses, fines, penalties and all other claims of whatsoever nature, including but
953 not limited to legal costs, arising from the Charterers’ failure to comply with any of the
954 provisions of Sub-clause (a). Should such failure result in any delay then, notwithstanding any
955 provision in this Charter Party to the contrary, the Vessel shall remain on hire.
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956 (c) If the Charterers' ICB is used to meet any penalties, duties, taxes or other charges which are
957 solely the responsibility of the Owners, the Owners shall promptly reimburse the Charterers for
958 those amounts.
959 (d) The assumption of the role of carrier by the Charterers pursuant to this Clause and for the
960 purpose of the US Customs Regulations (19 CFR 4.7) shall be without prejudice to the identity
961 of carrier under any bill of lading, other contract, law or regulation.
962 49. BIMCO U.S. Census Bureau Mandatory Automated Export System (AES) Clause for Time
963 Charter Parties
964 (a) If the Vessel loads cargo in any US port or place, the Charterers shall comply with the current
965 US Census Bureau Regulations (15 CFR 30) or any subsequent amendments thereto and shall
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966 undertake the role of carrier for the purposes of such regulations and shall, in their own name,
967 time and expense:
968 (i) have in place a SCAC (Standard Carrier Alpha Code);
969 (ii) have in place an ICB (International Carrier Bond);
970 (iii) provide the Owners with a timely confirmation of (i) and (ii) above; and
971 (iv) submit an export ocean manifest by Automated Export System (AES) to the US Census
972 Bureau and provide the Owners at the same time with a copy thereof.
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974 against any loss and/or damage whatsoever (including consequential loss and/or damage)
975 and/or any expenses, fines, penalties and all other claims of whatsoever nature, including but
976 not limited to legal costs, arising from the Charterers’ failure to comply with any of the
977 provisions of Sub-clause (a). Should such failure result in any delay then, notwithstanding any
978 provision in this Charter Party to the contrary, the Vessel shall remain on hire.
979 (c) If the Charterers' ICB is used to meet any penalties, duties, taxes or other charges which are
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980 solely the responsibility of the Owners, the Owners shall promptly reimburse the Charterers for
981 those amounts.
982 (d) The assumption of the role of carrier by the Charterers pursuant to this Clause and for the
983
984
985 50.
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purpose of the US Census Bureau Regulations (15 CFR 30) shall be without prejudice to the
identity of carrier under any bill of lading, other contract, law or regulation.
BIMCO EU Advance Cargo Declaration Clause for Time Charter Parties 2012
986 (a) If the Vessel loads cargo in any EU port or place destined for a port or place outside the EU
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987 (“Exported”) or loads cargo outside the EU destined for an EU port or place or passing through
988 EU ports or places in transit (“Imported”), the Charterers shall, for the purposes of this Clause,
989 comply with the requirements of the EU Advance Cargo Declaration Regulations (the Security
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990 Amendment to the Community Customs Code, Regulations 648/2005; 1875/2006; and
991 312/2009) or any subsequent amendments thereto and shall, in their own name, and in their
992 time and at their expense:
993 (i) have in place an Economic Operator Registration and Identification (EORI) number;
994 (ii) provide the Owners with a timely confirmation of (i) above as appropriate; and
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995 (iii) where the cargo is being:
996 1. Exported: Submit, or arrange for the submission of, a customs declaration for export or, if a
997 customs declaration or a re-export notification is not required, an exit summary declaration; or
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998 2. Imported: Submit, or arrange for the submission of, an entry summary declaration.
999 Unless otherwise permitted by the relevant customs authorities, such declarations shall be
1000 submitted to them electronically.
1002 against any loss and/or damage and/or any expenses, fines, penalties and all other claims of
1003 whatsoever nature, including but not limited to legal costs, arising from the Charterers’ failure to
1004 comply with any of the provisions of Sub-clause (a). Should such failure result in any delay
1005 then, notwithstanding any provision in this Charter Party to the contrary, the Vessel shall
1006 remain on hire.
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1007 51. Ballast Water Exchange Regulations
1008 If ballast water exchanges are required by any coastal state where the vessel is trading, the
1009 Owners/Master shall comply with same at the Charterers’ time, risk, and expense.
1010 52. Period Applicable Clauses
1011 If the minimum period of this Charter Party exceeds five (5) months, the following Sub-clauses
1012 shall apply:
1013 (a) Should the Vessel at the expiry of the described employment period be on a ballast voyage to
1014 the place of redelivery or on a laden voyage, reasonably expected to be completed within the
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1015 employment period when commenced, the Charterers shall have the use of the Vessel on the
1016 same conditions and at the same rate or the prevailing market rate, whichever is higher, for any
1017 extended time as may be necessary for the completion of the last voyage of the Vessel to the
1018 place of redelivery.
1019 (b) Drydocking
1020 The Owners shall have the option to place the Vessel in drydock during the currency of this
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1021 Charter Party at a convenient time and place, to be mutually agreed upon between the Owners
1022 and the Charterers, for bottom cleaning and painting and/or repair as required by class or
1023 dictated by circumstances. (see also Clause 19 (Drydocking)).
1024
1025
1026
1027
(c) Off-hire
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The Charterers to have the option of adding any time the Vessel is off-hire to the Charter
period. Such option shall be declared in writing not less than one (1) month before the expected
date of redelivery, or latest one (1) week after the event if such event occurs less than one (1)
1028 month before the expected date of redelivery.
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1029 (d) Charterers’ Colors
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1030 The Charterers shall have the privilege of flying their own house flag and painting the Vessel
1031 with their own markings. The Vessel shall be repainted in the Owners’ colors before termination
1032 of the Charter Party. Cost and time of painting, maintaining and repainting those changes
1033 effected by the Charterers shall be for the Charterers’ account.
1034 53. Commissions

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1035 A commission of Click here to enter text. per cent is payable by the Vessel and the Owners to _____
1036 on hire earned and paid under this Charter Party, and also upon any continuation or extension
1037 of this Charter Party.
1038 An address commission of _______ per cent on the hire earned shall be deducted by the
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1039 Charterers on payment of the hire earned under this Charter Party.
1040 54. Law and Arbitration
1041 *(a) New York. This Charter Party shall be governed by United States maritime law. Any dispute
1042 arising out of or in connection with this Charter Party shall be referred to three persons at New
1043 York, one to be appointed by each of the parties hereto, and the third by the two so chosen.
1044 The award of the arbitrators or any two of them shall be final, and for the purposes of enforcing
1045 any award, judgment may be entered on an award by any court of competent jurisdiction. The
1046 proceedings shall be conducted in accordance with the rules of the Society of Maritime
1047 Arbitrators, Inc. (SMA) current at the time this Charter Party was entered into.
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1048 In cases where neither the claim nor any counter claim exceeds the sum of US$ 100,000 (or
1049 such other sum as the parties may agree), the arbitration shall be conducted before a sole
1050 arbitrator in accordance with the Shortened Arbitration Procedure of the SMA current at the
1051 time this Charter Party was entered into. (www.smany.org).
1052 *(b) London. This Charter Party shall be governed by and construed in accordance with English
1053 law and any dispute arising out of or in connection with this Charter Party shall be referred to
1054 arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification
1055 or re-enactment thereof save to the extent necessary to give effect to the provisions of this
1056 Clause.
1057 The arbitration shall be conducted in accordance with the London Maritime Arbitrators
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1058 Association (LMAA) Terms current at the time when the arbitration proceedings are
1059 commenced.
1060 The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall
1061 appoint its arbitrator and send notice of such appointment in writing to the other party requiring
1062 the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and
1063 stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own
1064 arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the
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1065 other party does not appoint its own arbitrator and give notice that it has done so within the
1066 fourteen (14) days specified, the party referring a dispute to arbitration may, without the
1067 requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
1068 and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
1069
1070
1071
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both parties as if he had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide
for the appointment of a sole arbitrator.
1072 In cases where neither the claim nor any counterclaim exceeds the sum of US$ 100,000 (or
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1073 such other sum as the parties may agree) the arbitration shall be conducted in accordance with
1074 the LMAA Small Claims Procedure current at the time when the arbitration proceedings are
1075 commenced. (www.lmaa.org.uk)
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1076 *(c) Singapore. This Charter Party shall be governed by and construed in accordance with
1077 Singapore**/English** law.
1078 Any dispute arising out of or in connection with this Charter Party, including any question
1079 regarding its existence, validity or termination shall be referred to and finally resolved by
1080 arbitration in Singapore in accordance with the Singapore International Arbitration Act (Chapter
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1081 143A) and any statutory modification or re-enactment thereof save to the extent necessary to
1082 give effect to the provisions of this Clause.
1083 The arbitration shall be conducted in accordance with the Arbitration Rules of the Singapore
1084 Chamber of Maritime Arbitration (SCMA) current at the time when the arbitration proceedings
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1085 are commenced.
1086 The reference to arbitration of disputes under this clause shall be to three arbitrators. A party
1087 wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such
1088 appointment in writing to the other party requiring the other party to appoint its own arbitrator
1089 and give notice that it has done so within fourteen (14) calendar days of that notice and stating
1090 that it will appoint its own arbitrator as sole arbitrator unless the other party appoints its own
1091 arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the
1092 other party does not give notice that it has done so within the fourteen (14) days specified, the
1093 party referring a dispute to arbitration may, without the requirement of any further prior notice to
1094 the other party, appoint its arbitrator as sole arbitrator and shall advise the other party
1095 accordingly. The award of a sole arbitrator shall be binding on both parties as if he had been
1096 appointed by agreement.
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1097 Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide
1098 for the appointment of a sole arbitrator.
1099 In cases where neither the claim nor any counterclaim exceeds the sum of US$ 150,000 (or
1100 such other sum as the parties may agree) the arbitration shall be conducted before a single
1101 arbitrator in accordance with the SCMA Small Claims Procedure current at the time when the
1102 arbitration proceedings are commenced. (www.scma.org.sg)
1103 (d) This Charter Party shall be governed by and construed in accordance with the laws of the place
1104 mutually agreed by the parties and any dispute arising out of or in connection with this Charter
1105 Party shall be referred to arbitration at a mutually agreed place, subject to the procedures
1106 applicable there.
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1107 *Sub-clauses (a), (b), (c) and (d) are alternatives; indicate alternative agreed. If alternative (d)
1108 agreed also state the place of arbitration. If no alternative agreed and clearly indicated then
1109 Sub-clause (a) shall apply by default.
1110 **Singapore and English law are alternatives; if Sub-clause (c) agreed also indicate choice of
1111 Singapore or English law. If neither or both are indicated, then English law shall apply by
1112 default.
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1113 55. Notices
1114 All notices, requests and other communications required or permitted by any clause of this
1115
1116
1117
1118
1119
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Charter Party shall be given in writing and shall be sufficiently given or transmitted if delivered
by hand, email, express courier service or registered mail and addressed if to the Owners, to
Click here to enter text. or such other address or email address as the Owners may hereafter
designate in writing, and if to the Charterers to Click here to enter text. or such other address or
email address as the Charterers may hereafter designate in writing. Any such communication
1120 shall be deemed to have been given on the date of actual receipt by the party to which it is
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1121 addressed.
1122 56. Headings

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1123 The headings in this Charter Party are for identification only and shall not be deemed to be part
1124 hereof or be taken into consideration in the interpretation or construction of this Charter Party.
1125 57. Singular/Plural
1126 The singular includes the plural and vice-versa as the context admits or requires.
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1127 Clauses _______ to ___________ , both inclusive, as attached hereto are fully incorporated in this
1128 Charter Party.
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1129 OWNERS: CHARTERERS:
__________________________ _________________________
1130 Name: Name:
1131 Title: Title:
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NYPE 2015 APPENDIX A (VESSEL DESCRIPTION)
GENERAL INFORMATION
1.1 Vessel’s name
1.2 Type of vessel
1.3 IMO number
1.4 Year of build
1.5 Name of shipyard/where built
1.6 Flag
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1.7 Port of Registry
1.8 Classification Society
1.9 Protection & Indemnity Club – full name
1.10 Hull & Machinery insured value
1.11 Date and place of last drydock
1.12 Vessel’s Call Sign
1.13 Vessel’s INMARSAT number(s)
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1.14 Vessel’s fax number
1.15 Vessel’s email address
LOADLINE INFORMATION
2.1 Loadline
Winter
Summer
C Deadweight Draft TPC
Tropical
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Fresh Water
Tropical Fresh Water
2.2 Constant Excluding Fresh Water
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2.3 Freshwater Capacity
TONNAGES
3.1 Gross Tonnage (GT)
3.2 Net Tonnage (NT)
3.3 Panama Canal Net Tonnage (PCNT)
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3.4 Suez Canal Tonnage Gross (SCGT) Net (SCNT)
3.5 Lightweight
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DIMENSIONS
4.1 Number of holds
4.2 Hold dimensions 1. 2. 3.
4. 5. 6.
7. 8. 9.
4.3 Height of holds
4.4 Number of hatches
4.5 Manufacturer and type of hatch covers
4.6 Hatch dimensions 1. 2. 3.
4. 5. 6.
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7. 8. 9.
4.7 Is vessel strengthened for the carriage of
heavy cargoes?
4.8 If yes, state which holds may be left
empty
4.9 Main deck strength
4.10 Tanktop strength
4.11 Strength of hatch covers
4.12 Cubic grain capacity, by hold 1. 2. 3.
4. 5. 6.
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7. 8. 9.
4.13 Cubic bale capacity, by hold 1. 2. 3.
4. 5. 6.
7. 8. 9.
4.14 Length overall
4.15 Length between perpendiculars
4.16 Extreme breadth (beam):
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4.17 Keel to Masthead (KTM):
4.18 Distance from waterline to top of hatch No. 1 hatch Midships Last hatch
coamings or hatch covers if side rolling
hatches
Ballast condition (ballast holds not
flooded, basis 50% bunkers)
Full ballast condition (ballast holds
flooded, basis 50% bunkers)
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Light condition (basis 50% bunkers)
Fully laden condition
4.19 Vessel’s temporary ballast hold(s)
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4.20 Vessel’s ballasting time/rate of ballasting

4.21 Vessel’s de-ballasting time/rate of de-
ballasting
4.22 If geared state manufacturer and type
4.23 Number & location of cranes
4.24 If vessel has power outlets for grabs –
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state number and power

4.25 Maximum outreach of cranes beyond
ship’s rail
4.26 Are winches electro-hydraulic?
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4.27 If vessel has grabs on board, state:

Type
Number/Capacity
4.28 Are holds CO2 fitted?
4.29 Are holds vessel fitted with Australian
type approved hold ladders?
4.30 Is vessel fitted for carriage of grain in
accordance with Chapter VI of SOLAS
1974 and amendments without
requiring bagging, trapping and securing
28
when loading a full cargo (deadweight) of
heavy grain in bulk (stowage factor 42
cubic feet) with ends untrimmed?
4.31 Is vessel logs fitted?
4.32 If yes, state number, type and height of
stanchions on board and which stanchions
are collapsible. Also state number and
type of sockets on board
BUNKERS, SPEED AND CONSUMPTION
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5.1 What type/viscosity of fuel is used for
main propulsion?
5.2 Capacity of main engine bunker tanks
(excluding unpumpables):
5.3 Number of bunker tanks
5.4 What type/viscosity of fuel is used in the
generating plant
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Capacity of auxiliary (aux.)engine(s)
bunker tanks (excluding unpumpables)
Speed on sea passage Knots Knots On tons On tons
Consumption in Port
C ballast
Tons (main)
laden (main)
Tons (aux.)
(aux.)
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Working
Idle
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CREW
6.1 Number of Officers
6.2 Number of Ratings
6.3 Name and nationality of Master
6.4 Nationality of Officers
6.5 Nationality of Ratings
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CERTIFICATE EXPIRY DATES

7.1 P&I
7.2 H&M
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7.3 Class
7.4 Gear
7.5 Document of Compliance (DOC)
7.6 Safety Management Certificate (SMC)
7.7 International Ship Security Certificate
29
Appendix 8
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Appendix 9
1. Place and date of contract
BIMCO
TIME CHARTER PARTY FOR OFFSHORE SERVICE VESSELS
CODE NAME: SUPPLYTIME 2005 PART I
Revised 1989 and 2005.
2. Owners/Place of business (full style, address, e-mail and fax no.) 3. Charterers/Place of business (full style, address, e-mail and fax no.)
First issued 1975.
4. Vessel´s name and IMO number (ANNEX A) 5. Date of delivery (Cl. 2(a) and (c)) 6. Cancelling date (Cl. 2(a) and (c))
7. Port or Place of delivery (Cl. 2(a)) 8. Port or place redelivery/notice of redelivery (Cl. 2(d))
(i) Port or place of redelivery
(ii) Number of days´ notice of redelivery
9. Period of hire (Cl. 1(a)) 10. Extension of period of hire (optional) (Cl. 1(b))
(i) Period of extension
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(ii) Advance notice for declaration of option (days)
Printed by BIMCO’s idea
11. Automatic extension period to complete voyage or well (Cl. 1(c)) 12. Mobilisation charge (Cl. 2(b)(i))
(i) Voyage or well (state which) (i) Lump sum
(ii) Maximum extension period (state number of days) (ii) When due
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13. Early termination of charter (state amount of hire payable) (Cl. 31(a)) 14. Number of days´ notice of early 15. Demobilisation charge (lump sum)
(i) State yes, if applicable termination (Cl. 31(a)) (Cl. 2(e) and Cl. 31 (a))
(ii) If yes, state amount of hire payable
16. Area of operation (Cl. 6(a))

C 17. Employment of vessel restricted to (state nature of services(s)) (Cl. 6(a))
Association (ISOA), London
International Support Vessel
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18. Specialist operations (Cl. 6(a)) 19. Bunkers (Cl. 10)
(i) State if vessel may be used for ROV operations (i) Quantity of bunkers on delivery and redelivery
Adopted by
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Owners´
(ii) State if vessel may be employed as a diving platform (ii) Price of bunkers on delivery
(iii) Price for bunkers on redelivery
(iv) Fuel specifications and grades for fuel supplied by Charterers

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20. Charter hire (state rate and currency) (Cl. 12(a) , (d) and (e)) 21. Extension hire (if agreed, state rate) (Cl 12(b))
SA
22. Invoicing for hire and other payments (Cl 12(d)) 23. Payments (state mode and place of payment; also state beneficiary and bank
(i) State whether to be issued in advance or arrears account ) (Cl 12(e))
(ii) State by whom to be issued if other than the party stated in Box 2
(iii) State to whom to be issued if addressee other than stated in Box 3
24. Payment of hire, bunker invoices and disbursements for Charterers’ account 25. Interest rate payable (Cl. 12(e)) 26. Maximum audit period (Cl. 12(g))
(state maximum number of days) (Cl. 12(e))
Copyright published by
BIMCO) Copenhagen
27. Meals (state rate agreed) (Cl. 6(c)(i)) 28. Accommodation (state rate agreed) 29. Sublet (state amount of daily increment of charter hire) (Cl. 20)
(Cl. 6(c)(i))
30. War Cancellation (indicate countries agreed) (Cl. 23)
( continued
(continued) Supplytime 2005 Time Charter Party for Offshore Service Vessels PART l
31. General Average (Place of settlement – only to be filled in if other than London) (Cl. 26)
32. Taxes (Payable by Owners) (Cl. 30)
33. Breakdown (State period) (Cl. 31(b)(v))
34. Dispute resolution (state (a), (b) or (c) of Cl. 34, as agreed; if (c) agreed also state Place of Arbitration) (Cl. 34)
35. Numbers of additional clauses covering special provisions, if agreed.
It is mutually agreed that this Contract shall be performed subject to the conditions contained in the Charter consisting of PART l, including additional clauses, if any agreed and
stated in Box 35, and PART ll as well as ANNEX “A” and ANNEX “B” as annexed to this Charter. In the event of a conflict of conditions, the provisions of PART l shall prevail
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over those of PART ll and ANNEX “A” and ANNEX “B” to the extent of such conflict but no further.
Signature (Owners) Signature (Charterers)
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PART II
SUPPLYTIME 2005 Time Charter Party for Offshore Service Vessels
Definitions 1 the expiration or earlier termination of this Charter Party 67

“Owners” shall mean the party stated in Box 2 2 free of cargo and with clean tanks at the port or place 68
“Charterers” shall mean the party stated in Box 3 3 as stated in Box 8(i) or such other port or place as may 69
“Vessel” shall mean the vessel named in Box 4 and 4 be mutually agreed. The Charterers shall give not less 70
with particulars stated in ANNEX “A” 5 than the number of days notice in writing of their intention 71
“Well” shall mean the time required to drill, test, 6 to redeliver the Vessel, as stated in Box 8(ii). 72
complete and/or abandon a single borehole including 7 (e) Demobilisation. - The Charterers shall pay a lump 73
any side-track thereof. 8 sum demobilisation charge without discount in the amount 74
“Offshore Unit” shall mean any vessel, offshore 9 as stated in Box 15 which amount shall be paid on the 75
installation, structure and/or mobile unit used in offshore 10 expiration or on earlier termination of this Charter Party. 76
exploration, construction, pipe-laying or repair, 11
exploitation or production. 12 3. Condition of Vessel 77
“Employees” shall mean employees, directors, 13 (a) The Owners undertake that at the date of delivery 78
officers, servants, agents or invitees. 14 under this Charter Party the Vessel shall be of the 79
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description and Class as specified in ANNEX “A”, 80
1. Charter Period 15 attached hereto, and in a thoroughly efficient state of 81
(a) The Owners let and the Charterers hire the Vessel 16 hull and machinery. 82
for the period as stated in Box 9 from the time the Vessel 17 (b) The Owners shall exercise due diligence to 83
is delivered to the Charterers. 18 maintain the Vessel in such Class and in every way fit 84
(b) Subject to Clause 12(b), the Charterers have the 19 for the service stated in Clause 6 throughout the period 85
option to extend the Charter Period in direct continuation 20 of this Charter Party. 86
for the period stated in Box 10(i), but such an option 21
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must be declared in accordance with Box 10(ii). 22 4. Structural Alterations and Additional Equipment 87
(c) The Charter Period shall automatically be 23 The Charterers shall, at their expense, have the option 88
extended for the time required to complete the voyage 24 of making structural alterations to the Vessel or installing 89
or well (whichever is stated in Box 11(i)) in progress, 25 additional equipment with the written consent of the 90
such time not to exceed the period stated in Box 11(ii). 26 Owners, which shall not be unreasonably withheld. 91
2. Delivery and Redelivery

(a) Delivery. - Subject to Clause 2(b) the Vessel shall
be delivered by the Owners free of cargo and with clean
tanks at any time between the date stated in Box 5 and
the date stated in Box 6 at the port or place stated in
C 27
28
29
30
31
Unless otherwise agreed, the Vessel is to be redelivered 92
reinstated, at the Charterers’ expense, to her original 93
condition. The Vessel is to remain on hire during any 94
period of these alterations or reinstatement. The 95
Charterers shall at all times be responsible for repair 96
and maintenance of any such alteration or additional 97
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Box 7 where the Vessel can safely lie always afloat. 32 equipment. However, the Owners may, upon giving 98
(b) Mobilisation. – 33 notice, undertake any such repair and maintenance at 99
(i) The Charterers shall pay a lump sum mobilisation 34 the Charterers’ expense, when necessary for the safe 100
charge as stated in Box 12 without discount. 35 and efficient performance of the Vessel. 101
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(ii) Should the Owners agree to the Vessel loading 36

and transporting cargo and/or undertaking any 37 5. Survey 102
other service for the Charterers en route to the 38 The Owners and the Charterers shall jointly appoint an 103
port of delivery or from the port of redelivery, then 39 independent surveyor for the purpose of determining 104
all terms and conditions of this Charter Party shall 40 and agreeing in writing, the condition of the Vessel, any 105
apply to such loading and transporting and/or 41 anchor handling and towing equipment specified in 106
other service exactly as if performed during the 42 ANNEX “A”, and the quality and quantity of fuel, 107
Charter Period excepting only that any lump sum lubricants and water at the time of delivery and redelivery
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43 108
freight agreed in respect thereof shall be payable 44 hereunder. The Owners and the Charterers shall jointly 109
and earned on shipment or commencement of 45 share the time and expense of such surveys. 110
the service as the case may be, the Vessel and/ 46
or goods lost or not lost. 47 6. Employment and Area of Operation 111
(c) Cancelling. - If the Vessel is not delivered by (a) The Vessel shall be employed in offshore activities
SA
48 112
midnight local time on the cancelling date stated in Box 49 which are lawful in accordance with the law of the place 113
6, the Charterers shall be entitled to cancel this Charter 50 of the Vessel’s flag and/or registration and of the place 114
Party. However, if the Owners will be unable to deliver 51 of operation. Such activities shall be restricted to the 115
the Vessel by the cancelling date, they may give notice 52 service(s) as stated in Box 17, and to voyages between 116
in writing to the Charterers at any time prior to the delivery 53 any good and safe port or place and any place or 117
date as stated in Box 5 and shall state in such notice the 54 offshore unit where the Vessel can safely lie always 118
date by which they will be able to deliver the Vessel. The 55 afloat within the Area of Operation as stated in Box 16 119
Charterers may within 24 hours of receipt of such notice 56 which shall always be within International Navigation 120
give notice in writing to the Owners cancelling this Charter 57 Limits and which shall in no circumstances be exceeded 121
Party. If the Charterers do not give such notice, then the 58 without prior agreement and adjustment of the Hire and 122
later date specified in the Owners’ notice shall be 59 in accordance with such other terms as appropriate to 123
substituted for the cancelling date for all the purposes of 60 be agreed; provided always that the Charterers do not 124
this Charter Party. In the event the Charterers cancel 61 warrant the safety of any such port or place or offshore 125
the Charter Party, it shall terminate on terms that neither 62 unit but shall exercise due diligence in issuing their 126
party shall be liable to the other for any losses incurred 63 orders to the Vessel as if the Vessel were their own 127
by reason of the non-delivery of the Vessel or the 64 property and having regard to her capabilities and the 128
cancellation of the Charter Party. 65 nature of her employment. 129
(d) Redelivery. - The Vessel shall be redelivered on 66 Unless otherwise stated in Box 18(i), the Charterers 130
PART II
shall not have the right to use the Vessel for ROV 131 (ii) (1) No Bills of Lading shall be issued for 198
operations. Unless otherwise stated in Box 18(ii), the 132 shipments under this Charter Party. 199
Vessel shall not be employed as a diving platform. 133 (2) The Master shall sign cargo documents as 200
(b) Relevant permission and licences from responsible 134 directed by the Charterers in the form of receipts 201
authorities for the Vessel to enter, work in and leave 135 that are non-negotiable documents and which are 202
the Area of Operation shall be obtained by the 136 clearly marked as such. 203
Charterers and the Owners shall assist, if necessary, 137 (3) The Charterers shall indemnify the Owners 204
in every way possible to secure such permission and 138 against all liabilities that may arise from the signing 205
licences. 139 of such cargo documents in accordance with the 206
(c) The Vessel’s Space. - The whole reach and burden 140 directions of the Charterers to the extent that the 207
and decks of the Vessel shall throughout the Charter 141 terms of such cargo documents impose more 208
Period be at the Charterers’ disposal reserving proper 142 onerous liabilities than those assumed by the 209
and sufficient space for the Vessel’s Master, Officers, 143 Owners under the terms of this Charter Party. 210
Crew, tackle, apparel, furniture, provisions and stores. 144 (b) The Vessel’s Crew if required by Charterers will 211
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The Charterers shall be entitled to carry, so far as space 145 connect and disconnect electric cables, fuel, water and 212
is available and for their purposes in connection with 146 pneumatic hoses when placed on board the Vessel in 213
their operations: 147 port as well as alongside the offshore units; will operate 214
(i) Persons other than crew members, other than fare 148 the machinery on board the Vessel for loading and 215
paying, and for such purposes to make use of 149 unloading cargoes; and will hook and unhook cargo on 216
the Vessel’s available accommodation not being 150 board the Vessel when loading or discharging alongside 217
used on the voyage by the Vessel’s Crew. The 151 offshore units. If the port regulations or the seamen and/ 218
Owners shall provide suitable provisions and 152 or labour unions do not permit the Crew of the Vessel to 219
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requisites for such persons for which the 153 carry out any of this work, then the Charterers shall make, 220
Charterers shall pay at the rate as stated in Box 154 at their own expense, whatever other arrangements may 221
27 per meal and at the rate as stated in Box 28 155 be necessary, always under the direction of the Master. 222
per day for the provision of bedding and services 156 (c) If the Charterers have reason to be dissatisfied 223
for persons using berth accommodation. 157 with the conduct of the Master or any Officer or member 224
(ii) Lawful cargo whether carried on or under deck.
(iii) Explosives and dangerous cargo whether in bulk
or packaged, provided proper notification has
been given and such cargo is marked and packed
in accordance with the national regulations of the
Vessel and/or the International Maritime Danger-
158
159
160
161
162
163
C of the Crew, the Owners on receiving particulars of the
complaint shall promptly investigate the matter and if
the complaint proves to be well founded, the Owners
shall as soon as reasonably possible make appropriate
changes in the appointment.
(d) The entire operation, navigation, and management
225
226
227
228
229
230
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ous Goods Code and/or other pertinent regula- 164 of the Vessel shall be in the exclusive control and 231
tions. Failing such proper notification, marking or 165 command of the Owners, their Master, Officers and 232
packing the Charterers shall indemnify the Own- 166 Crew. The Vessel will be operated and the services 233
ers in respect of any loss, damage or liability 167 hereunder will be rendered as requested by the 234
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whatsoever and howsoever arising therefrom. The 168 Charterers, subject always to the exclusive right of the 235
Charterers accept responsibility for any additional 169 Owners or the Master of the Vessel to determine 236
expenses (including reinstatement expenses) in- 170 whether operation of the Vessel may be safely 237
curred by the Owners in relation to the carriage 171 undertaken. In the performance of the Charter Party, 238
of explosives and dangerous cargo. 172 the Owners are deemed to be an independent 239
(iv) Hazardous or noxious substances, subject to 173 contractor, the Charterers being concerned only with 240
Clause 14(f), proper notification and any pertinent 174 the results of the services performed. 241
regulations.
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175
(d) Laying-up of Vessel. - The Charterers shall have 176 8. Owners to Provide 242
the option of laying up the Vessel at an agreed safe 177 (a) The Owners shall provide and pay for all 243
port or place for all or any portion of the Charter Period 178 provisions, wages and all other expenses of the Master, 244
in which case the Hire hereunder shall continue to be 179 Officers and Crew; all maintenance and repair of the 245
paid but, if the period of such lay-up exceeds 30 Vessel’s hull, machinery and equipment as specified in
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180 246
consecutive days, there shall be credited against such 181 ANNEX “A”; also, except as otherwise provided in this 247
Hire the amount which the Owners shall reasonably 182 Charter Party, for all insurance on the Vessel, all dues 248
have saved by way of reduction in expenses and 183 and charges directly related to the Vessel’s flag and/or 249
overheads as a result of the lay-up of the Vessel. 184 registration, all deck, cabin and engineroom stores, 250
cordage required for ordinary ship’s purposes mooring 251
7. Master and Crew 185 alongside in harbour, and all fumigation expenses and 252
(a) (i) The Master shall carry out his duties promptly 186 de-ratisation certificates. The Owners’ obligations under 253
and the Vessel shall render all reasonable 187 this Clause extend to cover all liabilities for consular 254
services within her capabilities by day and by night 188 charges appertaining to the Master, Officers and Crew, 255
and at such times and on such schedules as the 189 customs or import duties arising at any time during the 256
Charterers may reasonably require without any 190 performance of this Charter Party in relation to the 257
obligations of the Charterers to pay to the Owners 191 personal effects of the Master, Officers and Crew, and 258
or the Master, Officers or the Crew of the Vessel 192 in relation to the stores, provisions and other matters 259
any excess or overtime payments. The Charterers 193 as aforesaid which the Owners are to provide and/or 260
shall furnish the Master with all instructions and 194 pay for and the Owners shall refund to the Charterers 261
sailing directions and the Master and Engineer 195 any sums they or their agents may have paid or been 262
shall keep full and correct logs accessible to the 196 compelled to pay in respect of such liability. 263
Charterers or their agents. 197 (b) On delivery the Vessel shall be equipped, if 264
PART II
appropriate, at the Owners’ expense with any towing and 265 which fuels of the required type or better are available. 331
anchor handling equipment specified in ANNEX “A”. 266 (b) Purchase Price. – The Charterers shall purchase 332
the fuels on board at delivery at the price prevailing at 333
9. Charterers to Provide 267 the time and port of delivery unless otherwise stated in 334
(a) While the Vessel is on hire the Charterers shall 268 Box 19 (ii) and the Owners shall purchase the fuels on 335
provide and pay for all fuel, lubricants, water, 269 board at redelivery at the price prevailing at the time 336
dispersants, firefighting foam and transport thereof, port 270 and port of redelivery unless otherwise stated in Box 337
charges, pilotage and boatmen and canal steersmen 271 19 (iii). The Charterers shall purchase the lubricants 338
(whether compulsory or not), launch hire (unless 272 on board at delivery at the list price and the Owners 339
incurred in connection with the Owners’ business), light 273 shall purchase the lubricants on board at redelivery at 340
dues, tug assistance, canal, dock, harbour, tonnage and 274 the list price. 341
other dues and charges, agencies and commissions 275 (c) Bunkering. – The Charterers shall supply fuel of the 342
incurred on the Charterers’ business, costs for security 276 specifications and grades stated in Box 19 (iv). The fuels 343
or other watchmen, and of quarantine (if occasioned 277 shall be of a stable and homogeneous nature and unless 344
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by the nature of the cargo carried or the ports visited 278 otherwise agreed in writing, shall comply with ISO 345
whilst employed under this Charter Party but not 279 standard 8217:1996 or any subsequent amendments 346
otherwise). 280 thereof as well as with the relevant provisions of 347
(b) At all times the Charterers shall provide and pay 281 MARPOL. The Chief Engineer shall co-operate with the 348
for the loading and unloading of cargoes so far as not 282 Charterers’ bunkering agents and fuel suppliers and 349
done by the Vessel’s crew, cleaning of cargo tanks, all 283 comply with their requirements during bunkering, 350
necessary dunnage, uprights and shoring equipment 284 including but not limited to checking, verifying and 351
for securing deck cargo, all cordage except as to be 285 acknowledging sampling, reading or soundings, meters 352
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provided by the Owners, all ropes, slings and special 286 etc. before, during and/or after delivery of fuels. During 353
runners (including bulk cargo discharge hoses) actually 287 delivery four representative samples of all fuels shall be 354
used for loading and discharging, inert gas required for 288 taken at a point as close as possible to the Vessel’s 355
the protection of cargo, and electrodes used for offshore 289 bunker manifold. The samples shall be labelled and 356
works, and shall reimburse the Owners for the actual 290 sealed and signed by suppliers, Chief Engineer and the 357
cost of replacement of special mooring lines to offshore
units, wires, nylon spring lines etc. used for offshore
works, all hose connections and adaptors, and further,
shall refill oxygen/acetylene bottles used for offshore
works.
(c) Upon entering into this Charter Party or in any
C 291
292
293
294
295
296
Charterers or their agents. Two samples shall be retained
by the suppliers and one each by the Vessel and the
Charterers. If any claim should arise in respect of the
quality or specification or grades of the fuels supplied,
the samples of the fuels retained as aforesaid shall be
analysed by a qualified and independent laboratory.
358
359
360
361
362
363
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event no later than the time of delivery of the Vessel 297 (d) Liability. – The Charterers shall be liable for any 364
the Charterers shall provide the Owners with copies of 298 loss or damage to the Owners caused by the supply of 365
any operational plans or documents which are 299 unsuitable fuels or fuels which do not comply with the 366
necessary for the safe and efficient operation of the 300 specifications and grades set out in Box 19 (iv) and the 367
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Vessel. All documents received by the Owners shall be 301 Owners shall not be held liable for any reduction in the 368
returned to the Charterers on redelivery. 302 Vessel’s speed performance and/or increased bunker 369
(d) The Charterers shall pay for customs duties, all 303 consumption nor for any time lost and any other 370
permits, import duties (including costs involved in 304 consequences arising as a result of such supply. 371
establishing temporary or permanent importation 305
bonds), and clearance expenses, both for the Vessel 306 11. BIMCO ISPS/MTSA Clause for Time Charter Parties 372
and/or equipment, required for or arising out of this 307 (a) (i) The Owners shall comply with the requirements 373
Charter Party. of the International Code for the Security of Ships
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308 374
(e) The Charterers shall pay for any replacement of 309 and of Port Facilities and the relevant amendments 375
any anchor handling/towing/lifting wires and accessories 310 to Chapter XI of SOLAS (ISPS Code) relating to 376
which have been placed on board by the Owners or the 311 the Vessel and “the Company” (as defined by the 377
Charterers, should such equipment be lost, damaged or 312 ISPS Code). If trading to or from the United States 378
become unserviceable, other than as a result of the or passing through United States waters, the
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313 379
Owners’ negligence. 314 Owners shall also comply with the requirements 380
(f) The Charterers shall pay for any fines, taxes or 315 of the US Maritime Transportation Security Act 381
imposts levied in the event that contraband and/or 316 2002 (MTSA) relating to the Vessel and the 382
unmanifested drugs and/or cargoes are found to have 317 “Owner” (as defined by the MTSA). 383
been shipped as part of the cargo and/or in containers 318 (ii) Upon request the Owners shall provide a copy of 384
on board. The Vessel shall remain on hire during any 319 the relevant International Ship Security Certificate 385
time lost as a result thereof. However, if it is established 320 (or the Interim International Ship Security 386
that the Master, Officers and/or Crew are involved in 321 Certificate) to the Charterers. The Owners shall 387
smuggling then any financial security required shall be 322 provide the Charterers with the full style contact 388
provided by the Owners. 323 details of the Company Security Officer (CSO). 389
(iii) Except as otherwise provided in this Charter Party, 390
10. Bunkers 324 loss, damages, expense or delay (excluding 391
(a) Quantity at Delivery/Redelivery.– The Vessel shall 325 consequential loss, damages, expense or delay) 392
be delivered with at least the quantity of fuel as stated 326 caused by failure on the part of the Owners or 393
in Box 19 (i) and the Vessel shall be redelivered with 327 “the Company”/”Owner” to comply with the 394
about the same quantity as on delivery, provided always 328 requirements of the ISPS Code/MTSA or this 395
that the quantity of fuels at redelivery is at least sufficient 329 Clause shall be for the Owners’ account. 396
to allow the Vessel to safely reach the nearest port at 330 (b) (i) The Charterers shall provide the Owners and 397
PART II
the Master with their full style contact details and, 398 and disbursements for the Charterers’ account shall be 465
upon request, any other information the Owners 399 received within the number of days stated in Box 24 466
require to comply with the ISPS Code/MTSA. 400 from the date of receipt of the invoice. Payment shall 467
Furthermore, the Charterers shall ensure that all 401 be made in the currency stated in Box 20 in full without 468
sub-charter parties they enter into during the 402 discount to the account stated in Box 23. 469
period of this Charter Party contain the following 403 However, any advances for disbursements made on 470
provision: 404 behalf of and approved by the Owners may be deducted 471
“The Charterers shall provide the Owners with 405 from Hire due. 472
their full style contact details and, where sub- 406 If payment is not received by the Owners within 5 473
letting is permitted under the terms of the charter 407 banking days following the due date the Owners are 474
party, shall ensure that the contact details of all 408 entitled to charge interest at the rate stated in Box 25 475
sub-charterers are likewise provided to the 409 on the amount outstanding from and including the due 476
Owners”. 410 date until payment is received. 477
(ii) Except as otherwise provided in this Charter Party, 411 Where an invoice is disputed, the Charterers shall notify 478
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loss, damages, expense or delay (excluding 412 the Owners before the due date and in any event pay 479
consequential loss, damages, expense or delay) 413 the undisputed portion of the invoice but shall be entitled 480
caused by failure on the part of the Charterers to 414 to withhold payment of the disputed portion provided 481
comply with this Clause shall be for the Charterers’ 415 that such portion is reasonably disputed and the 482
account. 416 Charterers specify such reason. Interest will be 483
(c) Notwithstanding anything else contained in this 417 chargeable at the rate stated in Box 25 on such disputed 484
Charter Party all delay, costs or expenses whatsoever 418 amounts where resolved in favour of the Owners. 485
arising out of or related to security regulations or 419 Should the Owners prove the validity of the disputed 486
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measures required by the port facility or any relevant 420 portion of the invoice, balance payment shall be received 487
authority in accordance with the ISPS Code/MTSA 421 by the Owners within 5 banking days after the dispute 488
including, but not limited to, security guards, launch 422 is resolved. Should the Charterers’ claim be valid, a 489
services, tug escorts, port security fees or taxes and 423 corrected invoice shall be issued by the Owners. 490
inspections, shall be for the Charterers’ account, unless 424 (f) (i) Where there is a failure to pay Hire by the due 491
such costs or expenses result solely from the Owners’
negligence. All measures required by the Owners to
comply with the Ship Security Plan shall be for the
Owners’ account.
(d) If either party makes any payment which is for the
other party’s account according to this Clause, the other
425
426
427
428
429
430
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writing of such failure and further may also suspend
the performance of any or all of their obligations
under this Charter Party until such time as all the
Hire due to the Owners under the Charter Party
has been received by the Owners. Throughout any
492
493
494
495
496
497
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party shall indemnify the paying party. 431 period of suspended performance under this 498
Clause, the Vessel is to be and shall remain on 499
12. Hire and Payments 432 Hire. The Owners’ right to suspend performance 500
(a) Hire. - The Charterers shall pay Hire for the Vessel 433 under this Clause shall be without prejudice to any 501
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at the rate stated in Box 20 per day or pro rata for part 434 other rights they may have under this Charter Party. 502
thereof from the time that the Vessel is delivered to the 435 (ii) If after 5 days of the written notification referred 503
Charterers until the expiration or earlier termination of 436 to in Clause 12(f)(i) the Hire has still not been 504
this Charter Party. 437 received the Owners may at any time while Hire 505
(b) Extension Hire. - If the option to extend the Charter 438 remains outstanding withdraw the Vessel from the 506
Period under Clause 1(b) is exercised, Hire for such 439 Charter Party. The right to withdraw is to be 507
extension shall, unless stated in Box 21, be agreed 440 exercised promptly and in writing and is not 508
between the Owners and the Charterers. Should the dependent upon the Owners first exercising the
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441 509
parties fail to reach an agreement, then the Charterers’ 442 right to suspend performance of their obligations 510
shall not have the option to extend the Charter Period. 443 under the Charter Party pursuant to Clause 12(f)(i) 511
(c) Adjustment of Hire. - The rate of hire shall be 444 above. The receipt by the Owners of a payment 512
adjusted to reflect documented changes, after the date 445 from the Charterers after the five day period 513
of entering into the Charter Party or the date of referred to above has expired but prior to the
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446 514
commencement of employment, whichever is earlier, 447 notice of withdrawal shall not be deemed a waiver 515
in the Owners’ costs arising from changes in the 448 of the Owners’ right to cancel the Charter Party. 516
Charterers’ requirements, or regulations governing the 449 (iii) Where the Owners choose not to exercise any of 517
Vessel and/or its Crew or this Charter Party or the 450 the rights afforded to them by this Clause in 518
application thereof. 451 respect of any particular late payment of Hire, or 519
(d) Invoicing. - All invoices shall be issued in the 452 a series of late payments of Hire, under the 520
contract currency stated in Box 20. In respect of 453 Charter Party, this shall not be construed as a 521
reimbursable expenses incurred in currencies other than 454 waiver of their right either to suspend performance 522
the contract currency, the rate of exchange into the 455 under Clause 12(f)(i) or to withdraw the Vessel 523
contract currency shall be that quoted by the Central 456 from the Charter Party under Clause 12(f)(ii) in 524
Bank of the country of such other currency as at the 457 respect of any subsequent late payment under 525
date of the Owners’ invoice. Invoices covering Hire and 458 this Charter Party. 526
any other payments due shall be issued monthly as 459 (iv) The Charterers shall indemnify the Owners in 527
stated in Box 22(i) or at the expiration or earlier 460 respect of any liabilities incurred by the Owners 528
termination of this Charter Party. Notwithstanding the 461 under the Bill of Lading or any other contract of 529
foregoing, bunkers and lubricants on board at delivery 462 carriage as a consequence of the Owners’ proper 530
shall be invoiced at the time of delivery. 463 suspension of and/or withdrawal from any or all 531
(e) Payments. - Payments of Hire, bunker invoices 464 of their obligations under this Charter Party. 532
PART II
(g) Audit. - The Charterers shall have the right to 533 In the event of less time being taken by the Owners for 600
appoint an independent chartered accountant to audit 534 repairs and drydocking or, alternatively, the Charterers 601
the Owners’ books directly related to work performed 535 not making the Vessel available for all or part of this 602
under this Charter Party at any time after the conclusion 536 time, the Charterers shall, upon expiration or earlier 603
of the Charter Party, up to the expiry of the period stated 537 termination of the Charter Party, pay the equivalent of 604
in Box 26, to determine the validity of the Owners’ 538 the daily rate of Hire then prevailing in addition to Hire 605
charges hereunder. The Owners undertake to make 539 otherwise due under this Charter Party in respect of all 606
their records available for such purposes at their 540 such time not so taken or made available. 607
principal place of business during normal working hours. 541 Upon commencement of the Charter Period, the Owners 608
Any discrepancies discovered in payments made shall 542 agree to furnish the Charterers with the Owners’ 609
be promptly resolved by invoice or credit as appropriate. 543 proposed drydocking schedule and the Charterers 610
agree to make every reasonable effort to assist the 611
13. Suspension of Hire 544 Owners in adhering to such predetermined drydocking 612
(a) If as a result of any deficiency of Crew or of the 545 schedule for the Vessel. 613
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Owners’ stores, strike of Master, Officers and Crew, 546
breakdown of machinery, damage to hull or other 547 14. Liabilities and Indemnities 614
accidents to the Vessel, the Vessel is prevented from 548 (a) Definitions 615
working, no Hire shall be payable in respect of any time 549 For the purpose of this Clause “Owners’ Group” shall 616
lost and any Hire paid in advance shall be adjusted 550 mean: the Owners, and their contractors and sub- 617
accordingly provided always however that Hire shall 551 contractors , and Employees of any of the foregoing. 618
not cease in the event of the Vessel being prevented 552 For the purpose of this Clause “Charterers’ Group” shall 619
from working as aforesaid as a result of: 553 mean: the Charterers, and their contractors, sub- 620
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(i) the carriage of cargo as noted in Clause 6(c)(iii) 554 contractors, co-venturers and customers (having a 621
and (iv); 555 contractual relationship with the Charterers, always with 622
(ii) quarantine or risk of quarantine unless caused by 556 respect to the job or project on which the Vessel is 623
the Master, Officers or Crew having communication 557 employed), and Employees of any of the foregoing. 624
with the shore at any infected area not in 558 (b) Knock for Knock 625
connection with the employment of the Vessel
without the consent or the instructions of the
Charterers;
(iii) deviation from her Charter Party duties or
exposure to abnormal risks at the request of the
Charterers;
C 559
560
561
562
563
564
(i) Owners. - Notwithstanding anything else contained
in this Charter Party excepting Clauses 6(c)(iii),
9(b), 9(e), 9(f), 10(d), 11, 12(f)(iv), 14 (d), 15 (b),
18(c), 26 and 27, the Charterers shall not be
responsible for loss of or damage to the property
of any member of the Owners’ Group, including
626
627
628
629
630
631
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(iv) detention in consequence of being driven into port 565 the Vessel, or for personal injury or death of any 632
or to anchorage through stress of weather or 566 member of the Owners’ Group arising out of or in 633
trading to shallow harbours or to river or ports 567 any way connected with the performance of this 634
with bars or suffering an accident to her cargo, 568 Charter Party, even if such loss, damage, injury or 635
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when the expenses resulting from such detention 569 death is caused wholly or partially by the act, 636
shall be for the Charterers’ account howsoever 570 neglect, or default of the Charterers’ Group, and 637
incurred; 571 even if such loss, damage, injury or death is caused 638
(v) detention or damage by ice; 572 wholly or partially by unseaworthiness of any 639
(vi) any act or omission of the Charterers, their 573 vessel; and the Owners shall indemnify, protect, 640
servants or agents. 574 defend and hold harmless the Charterers from any 641
(b) Liability for Vessel not Working. – The Owners’ 575 and against all claims, costs, expenses, actions, 642
liability for any loss, damage or delay sustained by the proceedings, suits, demands and liabilities
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576 643
Charterers as a result of the Vessel being prevented 577 whatsoever arising out of or in connection with such 644
from working by any cause whatsoever shall be limited 578 loss, damage, personal injury or death. 645
to suspension of hire, except as provided in Clause 579 (ii) Charterers. - Notwithstanding anything else 646
11(a)(iii). 580 contained in this Charter Party excepting Clause 647
(c) Maintenance and Drydocking. - Notwithstanding 11, 15(a), 16 and 26, the Owners shall not be
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581 648
Clause 13(a), the Charterers shall grant the Owners a 582 responsible for loss of, damage to, or any liability 649
maximum of 24 hours on hire, which shall be 583 arising out of anything towed by the Vessel, any 650
cumulative, per month or pro rata for part of a month 584 cargo laden upon or carried by the Vessel or her 651
from the commencement of the Charter Period for 585 tow, the property of any member of the Charterers’ 652
maintenance and repairs including drydocking 586 Group , whether owned or chartered, including 653
(hereinafter referred to as “maintenance allowance”). 587 their Offshore Units, or for personal injury or death 654
The Vessel shall be drydocked at regular intervals. The 588 of any member of the Charterers’ Group or of 655
Charterers shall place the Vessel at the Owners’ 589 anyone on board anything towed by the Vessel, 656
disposal clean of cargo, at a port (to be nominated by 590 arising out of or in any way connected with the 657
the Owners at a later date) having facilities suitable to 591 performance of this Charter Party, even if such 658
the Owners for the purpose of such drydocking. 592 loss, damage, liability, injury or death is caused 659
During reasonable voyage time taken in transits 593 wholly or partially by the act, neglect or default of 660
between such port and Area of Operation the Vessel 594 the Owners’ Group, and even if such loss, 661
shall be on hire and such time shall not be counted 595 damage, liability, injury or death is caused wholly 662
against the accumulated maintenance allowance. 596 or partially by the unseaworthiness of any vessel; 663
Hire shall be suspended during any time taken in 597 and the Charterers shall indemnify, protect, 664
maintenance repairs and drydocking in excess of the 598 defend and hold harmless the Owners from any 665
accumulated maintenance allowance. 599 and against all claims, costs, expenses, actions, 666
PART II
proceedings, suits, demands, and liabilities 667 or indirectly, as a result of the Vessel’s carriage of any 735
whatsoever arising out of or in connection with 668 hazardous or noxious substances in whatever form as 736
such loss, damage, liability, personal injury or 669 ordered by the Charterers, and the Charterers shall 737
death. 670 defend, indemnify the Owners and hold the Owners 738
(c) Consequential Damages.- 671 harmless for any expense, loss or liability whatsoever 739
Neither party shall be liable to the other for any 672 or howsoever arising with respect to the carriage of 740
consequential damages whatsoever arising out of or in 673 hazardous or noxious substances. 741
connection with the performance or non-performance 674
of this Charter Party, and each party shall protect, defend 675 15. Pollution 742
and indemnify the other from and against all such claims 676 (a) Except as otherwise provided for in Clause 18(c)(iii), 743
from any member of its Group as defined in Clause 677 the Owners shall be liable for, and agree to indemnify, 744
14(a). 678 defend and hold harmless the Charterers against all 745
“Consequential damages” shall include, but not be 679 claims, costs, expenses, actions, proceedings, suits, 746
limited to, loss of use, loss of profits, shut-in or loss of 680 demands and liabilities whatsoever arising out of actual 747
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production and cost of insurance, whether or not 681 or threatened pollution damage and the cost of cleanup 748
foreseeable at the date of this Charter Party. 682 or control thereof arising from acts or omissions of the 749
(d) Limitations.- 683 Owners or their personnel which cause or allow 750
Nothing contained in this Charter Party shall be 684 discharge, spills or leaks from the Vessel, except as may 751
construed or held to deprive the Owners or the 685 emanate from cargo thereon or therein. 752
Charterers, as against any person or party, including 686 (b) The Charterers shall be liable for and agree to 753
as against each other, of any right to claim limitation of 687 indemnify, defend and hold harmless the Owners from 754
liability provided by any applicable law, statute or 688 all claims, costs, expenses, actions, proceedings, suits, 755
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convention, save that nothing in this Charter Party shall 689 demands, liabilities, loss or damage whatsoever arising 756
create any right to limit liability. Where the Owners or 690 out of or resulting from any other actual or threatened 757
the Charterers may seek an indemnity under the 691 pollution damage, even where caused wholly or partially 758
provisions of this Charter Party or against each other in 692 by the act, neglect or default of the Owners, their 759
respect of a claim brought by a third party, the Owners 693 Employees, contractors or sub-contractors or by the 760
or the Charterers shall seek to limit their liability against
such third party.
(e) Himalaya Clause.-
(i) All exceptions, exemptions, defences, immunities,
limitations of liability, indemnities, privileges and
conditions granted or provided by this Charter Party
694
695
696
697
698
699
C unseaworthiness of the Vessel.
(c) The Charterers shall, upon giving notice to the
Owners or the Master, have the right (but shall not be
obliged) to place on board the Vessel and/or have in
attendance at the site of any pollution or threatened
incident one or more Charterers’ representative to
761
762
763
764
765
766
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or by any applicable statute, rule or regulation for 700 observe the measures being taken by Owners and/or 767
the benefit of the Charterers shall also apply to 701 national or local authorities or their respective servants, 768
and be for the benefit of the Charterers’ parent, 702 agents or contractors to prevent or minimise pollution 769
affiliated, related and subsidiary companies; the 703 damage and to provide advice, equipment or manpower 770
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Charterers’ contractors, sub-contractors, co- 704 or undertake such other measures, at Charterers’ risk 771
venturers and customers (having a contractual 705 and expense, as are permitted under applicable law 772
relationship with the Charterers, always with 706 and as Charterers believe are reasonably necessary to 773
respect to the job or project on which the Vessel is 707 prevent or minimise such pollution damage or to remove 774
employed) ; their respective Employees and their 708 the threat of pollution damage. 775
respective underwriters. 709
(ii) All exceptions, exemptions, defences, immunities, 710 16. Wreck Removal 776
limitations of liability, indemnities, privileges and If the Vessel becomes a wreck and is an obstruction to
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711 777
conditions granted or provided by this Charter Party 712 navigation and has to be removed by order of any lawful 778
or by any applicable statute, rule or regulation for 713 authority having jurisdiction over the area where the 779
the benefit of the Owners shall also apply to and 714 Vessel is placed or as a result of compulsory law, the 780
be for the benefit of the Owners’ parent, affiliated, 715 Owners shall be liable for any and all expenses in 781
related and subsidiary companies, the Owners’ connection with the raising, removal, destruction,
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716 782
contractors, sub-contractors, the Vessel, its Master, 717 lighting or marking of the Vessel. 783
Officers and Crew, its registered owner, its operator, 718
its demise charterer(s), their respective Employees 719 17. Insurance 784
and their respective underwriters. 720 (a) (i) The Owners shall procure and maintain in 785
(iii) The Owners or the Charterers shall be deemed 721 effect for the duration of this Charter Party, with 786
to be acting as agent or trustee of and for the 722 reputable insurers, the insurances set forth in 787
benefit of all such persons and parties set forth 723 ANNEX “B”. 788
above, but only for the limited purpose of 724 Policy limits shall not be less than those indicated. 789
contracting for the extension of such benefits to 725 Reasonable deductibles are acceptable and shall 790
such persons and parties. 726 be for the account of the Owners. 791
(f) Hazardous or Noxious Substances. 727 (ii) The Charterers shall upon request be named as 792
Notwithstanding any other provision of this Charter Party 728 co-insured. The Owners shall upon request cause 793
to the contrary, the Charterers shall always be 729 insurers to waive subrogation rights against the 794
responsible for any losses, damages or liabilities 730 Charterers (as encompassed in Clause 14(e)(i)). 795
suffered by the Owners’ Group, by the Charterers, or 731 Co-insurance and/or waivers of subrogation shall 796
by third parties, with respect to the Vessel or other 732 be given only insofar as these relate to liabilities 797
property, personal injury or death, pollution or otherwise, 733 which are properly the responsibility of the Owners 798
which losses, damages or liabilities are caused, directly 734 under the terms of this Charter Party. 799
PART II
(b) The Owners shall upon request furnish the 800 pollution damage, and the Charterers shall 867
Charterers with copies of certificates of insurance which 801 indemnify the Owners against any liability, cost 868
provide sufficient information to verify that the Owners 802 or expense arising by reason of such actual or 869
have complied with the insurance requirements of this 803 potential spill, seepage and/or emission. 870
Charter Party. 804 (iv) The Vessel shall not be off-hire as a consequence 871
(c) If the Owners fail to comply with the aforesaid 805 of giving such assistance, or effecting repairs 872
insurance requirements, the Charterers may, without 806 under Clause 18(c)(ii), and time taken for such 873
prejudice to any other rights or remedies under this 807 repairs shall not count against time granted under 874
Charter Party, purchase similar coverage and deduct 808 Clause 13(c). 875
the cost thereof from any payment due to the Owners 809 (v) The Charterers shall indemnify the Owners 876
under this Charter Party. 810 against any liability, cost and/or expense 877
whatsoever in respect of any loss of life, injury, 878
18. Saving of Life and Salvage 811 damage or other loss to person or property 879
(a) The Vessel shall be permitted to deviate for the 812 howsoever arising from such assistance. 880
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purpose of saving life at sea without prior approval of 813
or notice to the Charterers and without loss of Hire 814 19. Lien 881
provided however that notice of such deviation is given 815 The Owners shall have a lien upon all cargoes and 882
as soon as possible. 816 equipment for all claims against the Charterers under 883
(b) Subject to the Charterers’ consent, which shall not 817 this Charter Party and the Charterers shall have a lien 884
be unreasonably withheld, the Vessel shall be at liberty 818 on the Vessel for all monies paid in advance and not 885
to undertake attempts at salvage, it being understood 819 earned. The Charterers will not suffer, nor permit to be 886
that the Vessel shall be off-hire from the time she leaves 820 continued, any lien or encumbrance incurred by them 887
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port or commences to deviate and she shall remain 821 or their agents, which might have priority over the title 888
off-hire until she is again in every way ready to resume 822 and interest of the Owners in the Vessel. Except as 889
the Charterers’ service at a position which is not less 823 provided in Clause 14, the Charterers shall indemnify 890
favourable to the Charterers than the position at the 824 and hold the Owners harmless against any lien of 891
time of leaving port or deviating for the salvage services. 825 whatsoever nature arising upon the Vessel during the 892
All salvage monies earned by the Vessel shall be divided
equally between the Owners and the Charterers, after
expenses, value of fuel and lubricants consumed, Hire

of the Vessel lost by the Owners during the salvage,
repairs to damage sustained, if any, and any other
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deducting the Master’s, Officers’ and Crew’s share, legal
826
827
828
829
830
831
Charter Period while she is under the control of the
Charterers, and against any claims against the Owners
arising out of the operation of the Vessel by the
Charterers or out of any neglect of the Charterers in
relation to the Vessel or the operation thereof.
Should the Vessel be arrested by reason of claims or
893
894
895
896
897
898
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extraordinary loss or expense sustained as a result of 832 liens arising out of her operation hereunder, unless 899
the salvage. 833 brought about by the act or neglect of the Owners, the 900
The Charterers shall be bound by all measures taken 834 Charterers shall at their own expense take all 901
by the Owners in order to secure payment of salvage 835 reasonable steps to secure that within a reasonable time 902
PL
and to fix its amount. 836 the Vessel is released and at their own expense put up 903
(c) The Owners shall waive their right to claim any 837 bail to secure release of the Vessel. 904
award for salvage performed on property owned by or 838
contracted to the Charterers, always provided such 839 20. Sublet and Assignment 905
property was the object of the operation the Vessel was 840 (a) Charterers. - The Charterers shall have the option 906
chartered for, and the Vessel shall remain on hire when 841 of subletting, assigning or loaning the Vessel to any 907
rendering salvage services to such property. This waiver 842 person or company not competing with the Owners, 908
is without prejudice to any right the Vessel’s Master, subject to the Owners’ prior approval which shall not be
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843 909
Officers and Crew may have under any title. 844 unreasonably withheld, upon giving notice in writing to 910
If the Owners render assistance to such property in 845 the Owners, but the original Charterers shall always 911
distress on the basis of “no claim for salvage”, then, 846 remain responsible to the Owners for due performance 912
notwithstanding any other provisions contained in this 847 of the Charter Party. The person or company taking such 913
Charter Party and even in the event of neglect or default subletting, assigning or loan and their contractors and
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848 914
of the Owners, Master, Officers or Crew: 849 sub-contractors shall be deemed contractors of the 915
(i) The Charterers shall be responsible for and shall 850 Charterers for all the purposes of this Charter Party. 916
indemnify the Owners against payments made, 851 The Owners make it a condition of such consent that 917
under any legal rights, to the Master, Officers and 852 additional Hire shall be paid as agreed between the 918
Crew in relation to such assistance. 853 Charterers and the Owners in Box 29, having regard to 919
(ii) The Charterers shall be responsible for and shall 854 the nature and period of any intended service of the 920
reimburse the Owners for any loss or damage 855 Vessel. 921
sustained by the Vessel or her equipment by 856 (b) Owners. - The Owners may not assign or transfer 922
reason of giving such assistance and shall also 857 any part of this Charter Party without the written approval 923
pay the Owners’ additional expenses thereby 858 of the Charterers, which approval shall not be 924
incurred. 859 unreasonably withheld. Approval by the Charterers of 925
(iii) The Charterers shall be responsible for any actual 860 such subletting or assignment shall not relieve the 926
or potential spill, seepage and/or emission of any 861 Owners of their responsibility for due performance of 927
pollutant howsoever caused occurring within the 862 the part of the services which is sublet or assigned. 928
offshore site and any pollution resulting therefrom 863
wheresoever it may occur and including but not 864 21. Substitute Vessel 929
limited to the cost of such measures as are 865 The Owners shall be entitled at any time, whether before 930
reasonably necessary to prevent or mitigate 866 delivery or at any other time during the Charter Period, 931
PART II
to provide a substitute vessel, subject to the Charterers’ 932 time as the next payment of hire is due, or upon 999
prior approval which shall not be unreasonably withheld. 933 redelivery, whichever occurs first. 1000
(f) The Vessel shall have liberty:- 1001
22. BIMCO War Risks Clause “CONWARTIME 2004” 934 (i) to comply with all orders, directions, recommen- 1002
(a) For the purpose of this Clause, the words: 935 dations or advice as to departure, arrival, routes, 1003
(i) “Owners” shall include the shipowners, bareboat 936 sailing in convoy, ports of call, stoppages, desti- 1004
charterers, disponent owners, managers or other 937 nations, discharge of cargo, delivery, or in any 1005
operators who are charged with the management 938 other way whatsoever, which are given by the 1006
of the Vessel, and the Master; and 939 Government of the Nation under whose flag the 1007
(ii) “War Risks” shall include any actual, threatened 940 Vessel sails, or other Government to whose laws 1008
or reported: war; act of war; civil war; hostilities; 941 the Owners are subject, or any other Government, 1009
revolution; rebellion; civil commotion; warlike 942 body or group whatsoever acting with the power 1010
operations; laying of mines; acts of piracy; acts of 943 to compel compliance with their orders or direc- 1011
terrorists; acts of hostility or malicious damage; 944 tions; 1012
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blockades (whether imposed against all vessels 945 (ii) to comply with the order, directions or recommen- 1013
or imposed selectively against vessels of certain 946 dations of any war risks underwriters who have 1014
flags or ownership, or against certain cargoes or 947 the authority to give the same under the terms of 1015
crews or otherwise howsoever); by any person, 948 the war risks insurance; 1016
body, terrorist or political group, or the Government 949 (iii) to comply with the terms of any resolution of the 1017
of any state whatsoever, which, in the reasonable 950 Security Council of the United Nations, the 1018
judgement of the Master and/or the Owners, may 951 effective orders of any other Supranational body 1019
be dangerous or are likely to be or to become 952 which has the right to issue and give the same, 1020
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dangerous to the Vessel, her cargo, crew or other 953 and with national laws aimed at enforcing the 1021
persons on board the Vessel. 954 same to which the Owners are subject, and to 1022
(b) The Vessel, unless the written consent of the 955 obey the orders and directions of those who are 1023
Owners be first obtained, shall not be ordered to or 956 charged with their enforcement; 1024
required to continue to or through, any port, place, area 957 (iv) to discharge at any other port any cargo or part 1025
or zone (whether of land or sea), or any waterway or
canal, where it appears that the Vessel, her cargo, crew
or other persons on board the Vessel, in the reasonable
judgement of the Master and/or the Owners, may be,
or are likely to be, exposed to War Risks. Should the
Vessel be within any such place as aforesaid, which
958
959
960
961
962
963
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confiscation as a contraband carrier;
(v) to call at any other port to change the crew or any
part thereof or other persons on board the Vessel
when there is reason to believe that they may be
subject to internment, imprisonment or other
1026
1027
1028
1029
1030
1031
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only becomes dangerous, or is likely to be or to become 964 sanctions. 1032
dangerous, after her entry into it, she shall be at liberty 965 (g) If in accordance with their rights under the 1033
to leave it. 966 foregoing provisions of this Clause, the Owners shall 1034
(c) The Vessel shall not be required to load contraband 967 refuse to proceed to the loading or discharging ports, 1035
PL
cargo, or to pass through any blockade, whether such 968 or any one or more of them, they shall immediately 1036
blockade be imposed on all vessels, or is imposed 969 inform the Charterers. No cargo shall be discharged at 1037
selectively in any way whatsoever against vessels of 970 any alternative port without first giving the Charterers 1038
certain flags or ownership, or against certain cargoes 971 notice of the Owners’ intention to do so and requesting 1039
or crews or otherwise howsoever, or to proceed to an 972 them to nominate a safe port for such discharge. Failing 1040
area where she shall be subject, or is likely to be subject 973 such nomination by the Charterers within 48 hours of 1041
to a belligerent’s right of search and/or confiscation. 974 the receipt of such notice and request, the Owners may 1042
(d) (i) The Owners may effect war risks insurance in discharge the cargo at any safe port of their own choice.
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975 1043
respect of the Hull and Machinery of the 976 (h) If in compliance with any of the provisions of sub- 1044
Vessel and their other interests (including, but not 977 clauses (b) to (g) of this Clause anything is done or not 1045
limited to, loss of earnings and detention, the crew 978 done, such shall not be deemed a deviation, but shall 1046
and their Protection and Indemnity Risks), and 979 be considered as due fulfilment of this Charter Party. 1047
the premiums and/or calls therefor shall be for
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980
their account. 981 23. War Cancellation Clause 2004 1048
(ii) If the Underwriters of such insurance should require 982 Either party may cancel this Charter Party on the 1049
payment of premiums and/or calls because, 983 outbreak of war (whether there be a declaration of war 1050
pursuant to the Charterers’ orders, the Vessel is 984 or not) 1051
within, or is due to enter and remain within, or pass 985 (a) between any two or more of the following countries: 1052
through any area or areas which are specified by 986 the United States of America; Russia; the United 1053
such Underwriters as being subject to additional 987 Kingdom; France; and the People’s Republic of China, 1054
premiums because of War Risks, then the actual 988 or, 1055
premiums and/or calls paid shall be reimbursed 989 (b) between the countries stated in Box 30. 1056
by the Charterers to the Owners at the same time 990
as the next payment of hire is due, or upon 991 24. BIMCO Ice Clause for Time Charter Parties 1057
redelivery, whichever occurs first. 992 (a) The Vessel shall not be obliged to force ice but, 1058
(e) If the Owners become liable under the terms of 993 subject to the Owners’ prior approval having due regard 1059
employment to pay to the crew any bonus or additional 994 to its size, construction and class, may follow ice- 1060
wages in respect of sailing into an area which is 995 breakers. 1061
dangerous in the manner defined by the said terms, 996 (b) The Vessel shall not be required to enter or remain 1062
then the actual bonus or additional wages paid shall be 997 in any icebound port or area, nor any port or area where 1063
reimbursed to the Owners by the Charterers at the same 998 lights, lightships, markers or buoys have been or are 1064
PART II
about to be withdrawn by reason of ice, nor where on 1065 claim whatsoever of the owners of any goods carried 1130
account of ice there is, in the Master’s sole discretion, 1066 under this Charter Party paid or payable by the other or 1131
a risk that, in the ordinary course of events, the Vessel 1067 non-carrying ship or her owners to the owners of the 1132
will not be able safely to enter and remain at the port or 1068 said goods and set-off, recouped or recovered by the 1133
area or to depart after completion of loading or 1069 other or non-carrying ship or her owners as part of their 1134
discharging. If, on account of ice, the Master in his sole 1070 claim against the Vessel or the Owners. The foregoing 1135
discretion considers it unsafe to proceed to, enter or 1071 provisions shall also apply where the owners, operators 1136
remain at the place of loading or discharging for fear of 1072 or those in charge of any ship or ships or objects other 1137
the Vessel being frozen in and/or damaged, he shall 1073 than or in addition to the colliding ships or objects are 1138
be at liberty to sail to the nearest ice-free and safe place 1074 at fault in respect of a collision or contact. 1139
and there await the Charterers’ instructions. 1075
(c) Any delay or deviation caused by or resulting from 1076 28. Health and Safety 1140
ice shall be for the Charterers’ account and the Vessel 1077 The Owners shall comply with and adhere to all 1141
shall remain on-hire. 1078 applicable international, national and local regulations 1142
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(d) Any additional premiums and/or calls required by 1079 pertaining to health and safety, and such Charterers’ 1143
the Vessel’s underwriters due to the Vessel entering or 1080 instructions as may be appended hereto. 1144
remaining in any icebound port or area, shall be for the 1081
Charterers’ account. 1082 29. Drugs and Alcohol Policy 1145
The Owners undertake that they have, and shall maintain 1146
25. Epidemic/Fever 1083 for the duration of this Charter Party, a policy on Drugs 1147
The Vessel shall not be ordered to nor bound to enter 1084 and Alcohol Abuse applicable to the Vessel (the “D & A 1148
without the Owners’ written permission any place where 1085 Policy”) that meets or exceeds the standards in the 1149
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fever or epidemics are prevalent or to which the Master, 1086 OCIMF Guidelines for the Control of Drugs and Alcohol 1150
Officers and Crew by law are not bound to follow the 1087 Onboard Ship 1995 as amended from time to time. 1151
Vessel. 1088 The Owners shall exercise due diligence to ensure that 1152
Notwithstanding the terms of Clause 13, Hire shall be 1089 the D & A Policy is understood and complied with on 1153
paid for all time lost including any lost owing to loss of 1090 and about the Vessel. An actual impairment, shall not 1154
26.
or sickness to the Master, Officers, Crew or passengers
or to the action of the Crew in refusing to proceed to
such place or to be exposed to such risks.
General Average and New Jason Clause

General Average shall be adjusted and settled in
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1092
1093
1094
1095
30.
in and itself mean that the Owners have failed to
exercise due diligence.
Taxes
Within the day rate the Owners shall be responsible for
the taxes stated in Box 32 and the Charterers shall be
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London unless otherwise stated in Box 31, according 1096 responsible for all other taxes. 1160
to York-Antwerp Rules, 1994. 1097 In the event of change in the Area of Operation or 1161
Hire shall not contribute to General Average. Should 1098 change in local regulation and/or interpretation thereof, 1162
adjustment be made in accordance with the law and 1099 resulting in an unavoidable and documented change of 1163
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practice of the United States of America, the following 1100 the Owners’ tax liability after the date of entering into 1164
provision shall apply: 1101 the Charter Party or the date of commencement of 1165
“In the event of accident, danger, damage or disaster 1102 employment, whichever is the earlier, Hire shall be 1166
before or after the commencement of the voyage, 1103 adjusted accordingly. 1167
resulting from any cause whatsoever, whether due to 1104
negligence or not, for which, or for the consequence of 1105 31. Early Termination 1168
which, the Owners are not responsible, by statute, 1106 (a) At Charterers’ Convenience. - The Charterers may 1169
contract or otherwise, the cargo, shippers, consignees terminate this Charter Party at any time by giving the
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or owners of the cargo shall contribute with the Owners 1108 Owners written notice of termination as stated in Box 1171
in General Average to the payment of any sacrifices, 1109 14, upon expiry of which, this Charter Party will 1172
loss or expenses of a General Average nature that may 1110 terminate. Upon such termination, Charterers shall pay 1173
be made or incurred and shall pay salvage and special 1111 the compensation for early termination stated in Box 1174
charges incurred in respect of the cargo. 13 and the demobilisation charge stated in Box 15, as
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1112 1175
If a salving vessel is owned or operated by the Owners, 1113 well as Hire or other payments due under the Charter 1176
salvage shall be paid for as fully as if the said salving 1114 Party up to the time of termination. Should Box 13 be 1177
vessel or vessels belonged to strangers. Such deposit 1115 left blank, Clause 31(a) shall not apply. 1178
as the Owners, or their agents, may deem sufficient to 1116 (b) For Cause. - If either party becomes informed of 1179
cover the estimated contribution of the cargo and any 1117 the occurrence of any event described in this Clause 1180
salvage and special charges thereon shall, if required, 1118 that party shall so notify the other party promptly in 1181
be made by the cargo, shippers, consignees or owners 1119 writing and in any case within 3 days after such 1182
of the cargo to the Owners before delivery”. 1120 information is received. If the occurrence has not ceased 1183
within 3 days after such notification has been given, 1184
27. Both-to-Blame Collision Clause 1121 this Charter Party may be terminated by either party, 1185
If the Vessel comes into collision with another ship as a 1122 without prejudice to any other rights which either party 1186
result of the negligence of the other ship and any act, 1123 may have, under any of the following circumstances: 1187
neglect or default of the Master, mariner, pilot or the 1124 (i) Requisition. - If the government of the state of 1188
servants of the Owners in the navigation or the 1125 registry and/or the flag of the Vessel, or any 1189
management of the Vessel, the Charterers will 1126 agency thereof, requisitions for hire or title or 1190
indemnify the Owners against all loss or liability to the 1127 otherwise takes possession of the Vessel during 1191
other or non-carrying ship or her owners insofar as such 1128 the Charter Period. 1192
loss or liability represent loss of or damage to, or any 1129 (ii) Confiscation. - If any government, individual or 1193
PART II
group, whether or not purporting to act as a 1194 limited to the Employees of the party seeking to invoke 1261
government or on behalf of any government, 1195 force majeure; 1262
confiscates, requisitions, expropriates, seizes or 1196 (h) fire, accident, explosion except where caused by 1263
otherwise takes possession of the Vessel during 1197 negligence of the party seeking to invoke force majeure; 1264
the Charter Period (other than by way of arrest 1198 (i) any other similar cause beyond the reasonable 1265
for the purpose of obtaining security). 1199 control of either party. 1266
(iii) Bankruptcy. - In the event of an order being made 1200 The party seeking to invoke force majeure shall notify 1267
or resolution passed for the winding up, dissolu- 1201 the other party in writing within 2 working days of the 1268
tion, liquidation or bankruptcy of either party (oth- 1202 occurrence of any such event/condition. 1269
erwise than for the purpose of reconstruction or 1203
amalgamation) or if a receiver is appointed or if it 1204 33. Confidentiality 1270
suspends payment or ceases to carry on business. 1205 All information or data provided or obtained in 1271
(iv) Loss of Vessel. – If the Vessel is lost or becomes 1206 connection with the performance of this Charter Party 1272
a constructive total loss, or is missing unless the 1207 is and shall remain confidential and not be disclosed 1273
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Owners promptly state their intention to provide, 1208 without the prior written consent of the other party. The 1274
and do in fact provide, within 14 days of the Vessel 1209 parties shall use their best efforts to ensure that such 1275
being lost or missing, at the port or place from 1210 information shall not be disclosed to any third party by 1276
which the Vessel last sailed (or some other 1211 any of their sub-contractors, Employees and agents. 1277
mutually acceptable port or place) a substitute 1212 This Clause shall not apply to any information or data 1278
vessel pursuant to Clause 21. In the case of 1213 that has already been published or is in the public 1279
termination, Hire shall cease from the date the 1214 domain. 1280
Vessel was lost or, in the event of a constructive 1215 All information and data provided by a party is and shall 1281
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total loss, from the date of the event giving rise to 1216 remain the property of that party. 1282
such loss. If the date of loss cannot be ascertained 1217
or the Vessel is missing, payment of Hire shall 1218 34. BIMCO Dispute Resolution Clause 1283
cease from the date the Vessel was last reported. 1219 * (a) This Charter Party shall be governed by and 1284
(v) Breakdown. - If, at any time during the term of 1220 construed in accordance with English law and any 1285
this Charter Party a breakdown of the Owners’
equipment or Vessel result in the Owners being
unable to perform their obligations hereunder for
a period exceeding that stated in Box 33 and have
not initiated reasonable steps within 48 hours to
remedy the non-performance or provided a
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1223
1224
1225
1226
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Party shall be referred to arbitration in London in
accordance with the Arbitration Act 1996 or any statutory
modification or re-enactment thereof save to the extent
necessary to give effect to the provisions of this Clause.
The arbitration shall be conducted in accordance with
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substitute vessel pursuant to Clause 21. 1227 the London Maritime Arbitrators Association (LMAA) 1292
(vi) Force Majeure. - If a force majeure condition as 1228 Terms current at the time when the arbitration 1293
defined in Clause 32 prevents or hinders the 1229 proceedings are commenced. 1294
performance of the Charter Party for a period 1230 The reference shall be to three arbitrators. A party 1295
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exceeding 15 consecutive days from the time at 1231 wishing to refer a dispute to arbitration shall appoint its 1296
which the impediment causes the failure to 1232 arbitrator and send notice of such appointment in writing 1297
perform if notice is given without delay or, if notice 1233 to the other party requiring the other party to appoint its 1298
is not given without delay, from the time at which 1234 own arbitrator within 14 calendar days of that notice 1299
notice thereof reaches the other party. 1235 and stating that it will appoint its arbitrator as sole 1300
(vii) Default. - If either party is in repudiatory breach 1236 arbitrator unless the other party appoints its own 1301
of its obligations hereunder. 1237 arbitrator and gives notice that it has done so within the 1302
Termination as a result of any of the above mentioned 14 days specified. If the other party does not appoint its
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1238 1303
causes shall not relieve the Charterers of any obligation 1239 own arbitrator and give notice that it has done so within 1304
for Hire and any other payments. 1240 the 14 days specified, the party referring a dispute to 1305
arbitration may, without the requirement of any further 1306
32. Force Majeure 1241 prior notice to the other party, appoint its arbitrator as 1307
Neither party shall be liable for any loss, damage or sole arbitrator and shall advise the other party
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1242 1308
delay due to any of the following force majeure events 1243 accordingly. The award of a sole arbitrator shall be 1309
and/or conditions to the extent the party invoking force 1244 binding on both parties as if he had been appointed by 1310
majeure is prevented or hindered from performing any 1245 agreement. 1311
or all of their obligations under this Charter Party, 1246 Nothing herein shall prevent the parties agreeing in 1312
provided they have made all reasonable efforts to avoid, 1247 writing to vary these provisions to provide for the 1313
minimize or prevent the effect of such events and/or 1248 appointment of a sole arbitrator. 1314
conditions: 1249 In cases where neither the claim nor any counterclaim 1315
(a) acts of God; 1250 exceeds the sum of US$50,000 (or such other sum as 1316
(b) any Government requisition, control, intervention, 1251 the parties may agree) the arbitration shall be conducted 1317
requirement or interference; 1252 in accordance with the LMAA Small Claims Procedure 1318
(c) any circumstances arising out of war, threatened 1253 current at the time when the arbitration proceedings 1319
act of war or warlike operations, acts of terrorism, 1254 are commenced. 1320
sabotage or piracy, or the consequences thereof; 1255 * (b) This Charter Party shall be governed by and 1321
(d) riots, civil commotion, blockades or embargoes; 1256 construed in accordance with Title 9 of the United States 1322
(e) epidemics; 1257 Code and the Maritime Law of the United States and 1323
(f) earthquakes, landslides, floods or other extraor- 1258 any dispute arising out of or in connection with this 1324
dinary weather conditions; 1259 Charter Party shall be referred to three persons at New 1325
(g) strikes, lockouts or other industrial action, unless 1260 York, one to be appointed by each of the parties hereto, 1326
PART II
and the third by the two so chosen; their decision or 1327 have agreed to mediation. The arbitration 1381
that of any two of them shall be final, and for the 1328 procedure shall continue during the conduct of 1382
purposes of enforcing any award, judgement may be 1329 the mediation but the Tribunal may take the 1383
entered on an award by any court of competent 1330 mediation timetable into account when setting the 1384
jurisdiction. The proceedings shall be conducted in 1331 timetable for steps in the arbitration. 1385
accordance with the rules of the Society of Maritime 1332 (vi) Unless otherwise agreed or specified in the 1386
Arbitrators, Inc. 1333 mediation terms, each party shall bear its own 1387
In cases where neither the claim nor any counterclaim 1334 costs incurred in the mediation and the parties 1388
exceeds the sum of US$50,000 (or such other sum as 1335 shall share equally the mediator’s costs and 1389
the parties may agree) the arbitration shall be conducted 1336 expenses. 1390
in accordance with the Shortened Arbitration Procedure 1337 (vii) The mediation process shall be without prejudice 1391
of the Society of Maritime Arbitrators, Inc. current at 1338 and confidential and no information or documents 1392
the time when the arbitration proceedings are 1339 disclosed during it shall be revealed to the Tribunal 1393
commenced. 1340 except to the extent that they are disclosable under 1394
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* (c) This Charter Party shall be governed by and 1341 the law and procedure governing the arbitration. 1395
construed in accordance with the laws of the place 1342 (Note: The parties should be aware that the mediation 1396
mutually agreed by the parties and any dispute arising 1343 process may not necessarily interrupt time limits.) 1397
out of or in connection with this Charter Party shall be 1344 If Box 34 in PART I is not appropriately filled in, sub- 1398
referred to arbitration at a mutually agreed place, subject 1345 clause 34(a) of this Clause shall apply. Sub-clause (d) 1399
to the procedures applicable there. 1346 shall apply in all cases. 1400
(d) Notwithstanding (a), (b) or (c) above, the parties 1347 * Sub-clauses 34(a), 34(b) and 34(c) are alternatives; 1401
may agree at any time to refer to mediation any 1348 indicate alternative agreed in Box 34. 1402
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difference and/or dispute arising out of or in connection 1349
with this Charter Party. 1350 35. Notices 1403
In the case of a dispute in respect of which arbitration 1351 (a) All notices given by either party or their agents to 1404
has been commenced under (a), (b) or (c) above, the 1352 the other party or their agents in accordance with the 1405
following shall apply: 1353 provisions of this Charter Party shall be in writing. 1406
(i) Either party may at any time and from time to
written notice (the “Mediation Notice”) calling on

the other party to agree to mediation.
(ii) The other party shall thereupon within 14 calendar
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time elect to refer the dispute or part of the dispute
to mediation by service on the other party of a
1354
1355
1356
1357
1358
1359
(b) For the purposes of this Charter Party, “in writing”
shall mean any method of legible communication. A
notice may be given by any effective means including,
but not limited to, cable, telex, fax, e-mail, registered or
recorded mail, or by personal service.
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1408
1409
1410
1411
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days of receipt of the Mediation Notice confirm that 1360 36. Headings 1412
they agree to mediation, in which case the parties 1361 The headings of this Charter Party are for identification 1413
shall thereafter agree a mediator within a further 1362 only and shall not be deemed to be part hereof or be 1414
14 calendar days, failing which on the application 1363 taken into consideration in the interpretation or 1415
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of either party a mediator will be appointed 1364 construction of this Charter Party. 1416
promptly by the Arbitration Tribunal (“the Tribunal”) 1365
or such person as the Tribunal may designate for 1366 37. Severance 1417
that purpose. The mediation shall be conducted 1367 If by reason of any enactment or judgement any 1418
in such place and in accordance with such 1368 provision of this Charter Party shall be deemed or held 1419
procedure and on such terms as the parties may 1369 to be illegal, void or unenforceable in whole or in part, 1420
agree or, in the event of disagreement, as may be 1370 all other provisions of this Charter Party shall be 1421
set by the mediator. unaffected thereby and shall remain in full force and
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1371 1422
(iii) If the other party does not agree to mediate, that 1372 effect. 1423
fact may be brought to the attention of the Tribunal 1373
and may be taken into account by the Tribunal 1374 38. Entire Agreement 1424
when allocating the costs of the arbitration as 1375 This Charter Party, including all Annexes referenced 1425
between the parties. herein and attached hereto, is the entire agreement of
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1376 1426
(iv) The mediation shall not affect the right of either 1377 the parties, which supersedes all previous written or 1427
party to seek such relief or take such steps as it 1378 oral understandings and which may not be modified 1428
considers necessary to protect its interest. 1379 except by a written amendment signed by both parties. 1429
(v) Either party may advise the Tribunal that they 1380
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ANNEX "A" to Time Charter Party for Offshore Service Vessels
CODE NAME: SUPPLYTIME 2005
VESSSEL SPECIFICATION
1. General (i) Heavy Weight Brine (cu.m): __________________________
(a) Owner: Name: __________________________________ (max. SG) ______________________ /hr at ________ head
Address: ________________________________ * Multipurpose Tanks yes/no: ____________________________
(b) Operator: Name: __________________________________

4. Machinery
Address: ________________________________
(a) BHP Main Engines: ________________________________
(c) Vessel’s Name: ___________ Builder: _________________
(b) Engine Builder: ____________________________________
(d) Year built: _______________________________________
(c) Number of Engines and Type: ________________________
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(e) Type: ____________________________________________
(d) Generators: ______________________________________
(f) Classification and Society: ___________________________
________________________________________________
(g) Flag: ____________________________________________
________________________________________________
(h) Date of next scheduled drydocking: ____________________
(e) Stabilisers: _______________________________________
2. Performance (f) Bow Thruster(s): ___________________________________
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(a) Certified Bollard Pull (Tonnes) ________________________ (g) Stern Thruster(s): __________________________________
(b) Speed/Consumption (Non-Towing) (h) Propellers/Rudders: ________________________________
(Approx. Daily Fuel Consumption) (Fair Weather) (i) Number and Pressure Rating of Bulk Compressors:
Max Speed: __________ Kts (app.) ______________ Tonnes C

Service Speed: ________ Kts (app.) ______________ Tonnes
Standby (main engines secured)Tonnes

________________________________________________
(j) Fuel Oil Metering System: ___________________________
5. Towing and Anchor Handling Equipment

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(c) Approx. Towing/Working Fuel Consumption
(a) (i) Stern Roller (Dimensions): _______________________
Engine Power 100% _________________ Tonnes
(ii) Anchor Handling/Towing Winch: ___________________
(d) Type(s) and Grade(s) of Fuel Used: ____________________
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(iii) Rig Chail Locker Capacity (linear feet of
3. Dimensions and Capacities/Discharge Rates 3 in. Chain): __________________________________
(a) L.O.A. (m): ______ Breadth (m): ______ Depth (m): ______ (iv) Tugger Winches: _______________________________
Max Draught (m): __________________________________ (v) Chain Stopper Make and Type: ___________________
(b) Deadweight (metric tons): ___________________________ (b) (i) Towing Wire: __________________________________
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Discharge Rate (ii) Spare Towing Wire: _____________________________
(c) * Cargo Fuel max (m3): ______________ /hr at ______ head (iii) Work Wire: ___________________________________
(d) * Drill Water max (m3): ______________ /hr at ______ head (iv) Spare Work Wire: ______________________________
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(e) Potable Water (m ): ________________ /hr at ______ head

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(v) Other Anchor Handling Equipment
(f) Dry Bulk (cu.m): _____ in Tanks ______ /hr at ______ head (e.g. Pelican Hooks, Shackles, Stretchers etc.): _______
(g) Liquid Mud (cu.m): _________________ /hr at ______ head ____________________________________________
(max. SG) ________________________________________ ____________________________________________
State type of recirculation system i.e.

6. Radio and Navigation Equipment
mechanical agitation, centrifugal pumps etc. _____________
(a) Radios
________________________________________________
Single Side Band: __________________________________
(h) Cargo Deck Area (m2): ________ Capacity (m.t.): ________
VHF: ____________________________________________
Lenght (m) x Breadth (m): ___________________________
Satcom: _________________________________________
Load Bearing Capacity ______________________________
continued
continued ANNEX "A"
VESSSEL SPECIFICATION
(b) Electronic Navigation Equipment: _____________________ 9. Galley
________________________________________________ (a) Freezer Space (m3): ________________________________
(c) Gyro: ____________________________________________ (b) Cooler (m3): ______________________________________
(d) Radar: ___________________________________________

10. Additional Equipment
(e) Autopilot: ________________________________________
(a) Mooring Equipment: ________________________________
(f) Depth Sounder: ___________________________________
________________________________________________
7. Fire Fighting Equipment (b) Joystick: _________________________________________
(a) Class (FF1, FF2, FF3, other): _________________________ (c) Other: ___________________________________________
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(b) Fixed: ___________________________________________ ________________________________________________
(c) Portable: _________________________________________

11. Standby/Survivor Certificate Yes/No
8. Accommodation Nos: _______________________________________________
(a) Crew: _______________ (b) Passengers: ______________
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ANNEX "B" to Time Charter Party for Offshore Service Vessels
CODE NAME: SUPPLYTIME 2005
INSURANCE
Insurance policies (as applicable) to be procured and

maintained by the Owners under Clause 17:
(1) Marine Hull Insurance. - Hull and Machinery Insurance shall be provided with limits equal to those normally carried by the
Owners for the Vessel.
(2) Protection and Indemnity (Marine Liability) Insurance. -

Protection and Indemnity (P&I) or Marine Liability Insurance with coverage equivalent to the cover provided by members of the
International Group of Protection and Indemnity Associations with a limit of cover no less than USD …….. for any one event.
The cover shall include liability for collision and damage to fixed and floating objects to the extent not covered by the insurance
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in (1) above.
(3) General Third Party Liability Insurance. - To the extent not covered by the insurance in (2) ABOVE, Coverage shall be for:
Bodily Injury ................................................................... per person
Property Damage ........................................................... per occurrence.
(4) Workmen’s Compensation and Employer’s Liability Insurance for Employees. -

To the extent not covered in the insurance in (2) above, covering Owners’ employees and other persons for whom Owners are
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liable as employer pursuant to applicable law for statutory benefits as set out and required by local law in area of operation or
area in which the Owners may become legally obliged to pay benefits.
(5) Comprehensive General Automobile Liability Insurance. -

Covering all owned, hired and non-owned vehicles, coverage shall be for:
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Bodily Injury ................................................................... According to the local law.
Property Damage ........................................................... In an amount equivalent to _______
single limit per occurrence.
(6) Such other insurances as may be agreed.

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Appendix 10
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Appendix 11
Appendix 12
CONGENBILL 2007
Revised 1994, 2007 (v2.0)
BILL OF LADING
To be used with charter parties
Page 1
Shipper Bill of Lading No. Reference No.
Consignee Vessel
Notify address Port of loading

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Port of discharge
Shipper’s description of goods Gross weight

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(of which on deck at shipper’s risk; the Carrier not

being responsible for loss or damage howsoever arising)
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Freight payable as per
CHARTER PARTY dated:
SHIPPED at the Port of Loading in apparent good order and condition on the Vessel
for carriage to the Port of Discharge or so near thereto as the Vessel may safely get the
goods specified above.
Weight, measure, quality, quantity, condition, contents and value unknown.
IN WITNESS whereof the Master or Agent of the said vessel has signed the number of Bills
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FREIGHT ADVANCE
Received on account of freight: of Lading indicated below all of this tenor and date, any one of which being accomplished
the others shall be void.
FOR CONDITIONS OF CARRIAGE SEE OVERLEAF.
Copyright, published by BIMCO, Copenhagen
Date shipped on board Place and date of issue Number of original

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Bills of Lading
Signature:
(i) ..................................................................................... Master

Master’s name and signature
Or
(ii) ..................................................................................... as Agent for the Master
Agent’s name and signature
Or
(iii) ..................................................................................... as Agent for the Owner*
Agent’s name and signature
..................................................................................... Owner
*if option (iii) filled in, state Owner’s name above
Printed and sold by Fr. G. Knudtzons Bogtrykkeri A/S, Vallensbaekvej 61, DK-2625 Vallensbaek. Fax: +45 4366 0708
CONGENBILL 2007
BILL OF LADING
To be used with charter parties
Page 2
Conditions of Carriage
(1) All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration
Clause/Dispute Resolution Clause, are herewith incorporated.
(2) General Paramount Clause

The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading signed at Brussels on 25 August
1924 (“the Hague Rules”) as amended by the Protocol signed at Brussels on 23 February 1968 (“the Hague-Visby Rules”) and
as enacted in the country of shipment shall apply to this Contract. When the Hague-Visby Rules are not enacted in the country
of shipment, the corresponding legislation of the country of destination shall apply, irrespective of whether such legislation may
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only regulate outbound shipments.
When there is no enactment of the Hague-Visby Rules in either the country of shipment or in the country of destination, the
Hague-Visby Rules shall apply to this Contract save where the Hague Rules as enacted in the country of shipment or if no such
enactment is in place, the Hague Rules as enacted in the country of destination apply compulsorily to this Contract.
The Protocol signed at Brussels on 21 December 1979 (“the SDR Protocol 1979”) shall apply where the Hague-Visby Rules
apply, whether mandatorily or by this Contract.
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The Carrier shall in no case be responsible for loss of or damage to cargo arising prior to loading, after discharging, or while
the cargo is in the charge of another carrier, or with respect to deck cargo and live animals.
(3) General Average

General Average shall be adjusted, stated and settled according to York-Antwerp Rules 1994 in London unless another place
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is agreed in the Charter Party.
Cargo’s contribution to General Average shall be paid to the Carrier even when such average is the result of a fault, neglect or
error of the Master, Pilot or Crew.
(4) New Jason Clause

In the event of accident, danger, damage or disaster before or after the commencement of the voyage, resulting from any cause
E
whatsoever, whether due to negligence or not, for which, or for the consequence of which, the Carrier is not responsible, by statute,
contract or otherwise, the cargo, shippers, consignees or the owners of the cargo shall contribute with the Carrier in General
Average to the payment of any sacrifices, losses or expenses of a General Average nature that may be made or incurred and
shall pay salvage and special charges incurred in respect of the cargo. If a salving vessel is owned or operated by the Carrier,
salvage shall be paid for as fully as if the said salving vessel or vessels belonged to strangers. Such deposit as the Carrier, or
his agents, may deem sufficient to cover the estimated contribution of the goods and any salvage and special charges thereon
C
shall, if required, be made by the cargo, shippers, consignees or owners of the goods to the Carrier before delivery.
(5) Both-to-Blame Collision Clause

If the Vessel comes into collision with another vessel as a result of the negligence of the other vessel and any act, neglect or
default of the Master, Mariner, Pilot or the servants of the Carrier in the navigation or in the management of the Vessel, the
O
owners of the cargo carried hereunder will indemnify the Carrier against all loss or liability to the other or non-carrying vessel
or her owners in so far as such loss or liability represents loss of, or damage to, or any claim whatsoever of the owners of said
cargo, paid or payable by the other or non-carrying vessel or her owners to the owners of said cargo and set-off, recouped or
recovered by the other or non-carrying vessel or her owners as part of their claim against the carrying Vessel or the Carrier.
The foregoing provisions shall also apply where the owners, operators or those in charge of any vessel or vessels or objects
PY
other than, or in addition to, the colliding vessels or objects are at fault in respect of a collision or contact.
For particulars of cargo, freight,

destination, etc., see overleaf.
Appendix 13
Appendix 14
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Appendix 15
Appendix 16
Appendix 17
Appendix 18
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Appendix 19
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Appendix 20
WFCR No.
CODE NAME: "WORLDFOODRECEIPT 99" NON-NEGOTIABLE
Shipper
CARGO RECEIPT
Reference No.
World Food Programme, Rome
Consignee (not to order)
Notify address
Vessel Port of loading
Port of discharge
Shipper's description of cargo Marks and Nos Number and kind of packages Gross weight Measurement
(of which on deck at Shipper's risk; the Shipowner not being responsible for loss or
damage howsoever arising)
Issued pursuant to "Worldfood 99" Voyage

Charter Party dated as indicated hereunder
RECEIVED on board the cargo specified above, according to Shipper's
declaration in apparent good order and condition - unless otherwise stated
herein - weight, volume, quantity, quality and value unknown, for delivery
at the port of discharge or so near thereto as the Vessel may safely get,
always afloat.
(Place and date of issue) The cargo shipped under this Cargo Receipt will be delivered to the
party named as Consignee or its authorised agent, on production of
proof of identity without any documentary formalities. The Shipowner
shall exercise due care ensuring that delivery is made to the proper
party. However, in case of incorrect delivery no responsibility shall be
accepted unless due to fault or neglect on the part of the Shipowner.
FOR FURTHER DETAILS SEE OVERLEAF.
Freight payable at Place and date of issue
Freight payable in accordance therewith.

Signature of the Master
Printed by The BIMCO Charter Party Editor

WORLD FOOD PROGRAMME
NON-NEGOTIABLE CARGO RECEIPT
CODE NAME: "WORLDFOODRECEIPT 99"
Conditions of Carriage
(1) This document serves as a Cargo Receipt as per Clause 20 of the "Worldfood 99" Voyage Charter Party dated as indicated on the front page
of this Cargo Receipt. All the terms, conditions, liberties, clauses and exceptions of the said "Worldfood 99" Voyage Charter Party, including the
Law and Arbitration Clause, shall be deemed to be incorporated in this Cargo Receipt and shall govern the transportation of the cargo described
on the front page of this Cargo Receipt. In addition, the provisions set out below shall apply to this Cargo Receipt.
(2) Paramount Clause.

(a) This Cargo Receipt is a non-negotiable document. It is not a Bill of Lading and no Bill of Lading will be issued. However, it is agreed that the
International Convention for the Unification of Certain Rules of Law relating to Bills of Lading signed at Brussels on 24 August 1924 ("the Hague
Rules") as amended by the Protocol signed at Brussels on 23 February 1968 ("the Hague-Visby Rules") and as enacted in the country of shipment
shall apply to this Contract. When the Hague-Visby Rules are not enacted in the country of shipment, the corresponding legislation of the country
of destination shall apply, irrespective of whether such legislation may only regulate outbound shipments.
(b) When there is no enactment of the Hague-Visby Rules in either the country of shipment or in the country of destination, the Hague-Visby Rules
shall apply to this Contract save where the Hague Rules as enacted in the country of shipment or, if no such enactment is in place, the Hague Rules
as enacted in the country of destination apply compulsorily to this Contract.
(c) The Protocol signed at Brussels on 21 December 1979 ("the SDR Protocol 1979") shall apply where the Hague-Visby Rules apply, whether
mandatorily or by this Contract.
(d) The Carrier shall in no case be responsible for loss of or damage to cargo arising prior to loading, after discharging, or while the cargo is in the
charge of another carrier, or with respect to deck cargo and live animals.
(e) It is agreed that whenever the Hague Rules and the Hague-Visby Rules or statutes incorporating same use the words "Bill of Lading" they shall
be read and interpreted as meaning "Cargo Receipt".
(3) General Average.

General Average shall be adjusted, stated and settled according to York-Antwerp Rules 1994 or any modification thereof at the place agreed in the
said "Worldfood 99" Voyage Charter Party.
Cargo's contribution to General Average shall be paid to the Carrier even when such average is the result of a fault, neglect or error of the Master,
Pilot or Crew.
If the adjustment of General Average or the liability for any collision in which the vessel is involved while performing the carriage under the terms
of the "Worldfood 99" Voyage Charter Party, as dated overleaf, which govern the transportation of the cargo described on the front page of this
Cargo Receipt falls to be determined in accordance with the law and practice of the United States of America, the following clauses shall apply:
New Jason Clause.

In the event of accident, danger, damage or disaster before or after the commencement of the voyage, resulting from any cause whatsoever,
whether due to negligence or not, for which, or for the consequence of which, the Carrier is not responsible, by Statute, contract or otherwise, the
cargo, shippers, consignees or owners of the cargo shall contribute with the Carrier in general average to the payment of any sacrifices, losses or
expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the cargo.
If a salving vessel is owned or operated by the Carrier, salvage shall be paid for as fully as if the said salving vessel or vessels belonged to strangers.
Such deposit as the Carrier, or his agent, may deem sufficient to cover the estimated contribution of the cargo and any salvage and special charges
thereon shall, if required, be made by the cargo, shippers, consignees or owners of the cargo to the Carrier before delivery.
Both-to-Blame Collision Clause.

If the Vessel comes into collision with another vessel as a result of the negligence of the other vessel and any act, neglect or default of the Master,
Mariner, Pilot or the Servants of the Carrier in the navigation or in the management of the Vessel, the owners of the cargo carried hereunder will
indemnify the Carrier against all loss or liability to the other or non-carrying vessel or her owners in so far as such loss or liability represents loss
of, or damage to, or any claim whatsoever of the owners of the said cargo, paid or payable by the other or non-carrying vessel or her owners to the
owners of the said cargo and set-off, recouped or recovered by the other or non-carrying vessel or her owners as part of their claim against the
carrying vessel or the Carrier. The foregoing provisions shall also apply where the owners, operators or those in charge of any vessel or vessels
or objects other than, or in addition to, the colliding vessels or objects are at fault in respect of a collision or contact.
For particulars of cargo, freight,

destination, etc., see overleaf.
Appendix 21
BIMCO Courses and Seminars
DISPUTE RESOLUTION CLAUSES
Dispute Resolution Clause

English Law, London Arbitration
(a) This Contract shall be governed by and construed in accordance with English law and
any dispute arising out of or in connection with this Contract shall be referred to arbitration
in London in accordance with the Arbitration Act 1996 or any statutory modification or re-
enactment thereof save to the extent necessary to give effect to the provisions of this
Clause.
The arbitration shall be conducted in accordance with the London Maritime Arbitrators
Association (LMAA) Terms current at the time when the arbitration proceedings are
commenced.
The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration
shall appoint its arbitrator and send notice of such appointment in writing to the other party
requiring the other party to appoint its own arbitrator within 14 calendar days of that notice
and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints
its own arbitrator and gives notice that it has done so within the 14 days specified. If the
other party does not appoint its own arbitrator and give notice that it has done so within the
14 days specified, the party referring a dispute to arbitration may, without the requirement
of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and
shall advise the other party accordingly. The award of a sole arbitrator shall be binding on
both parties as if he had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to
provide for the appointment of a sole arbitrator.
In cases where neither the claim nor any counterclaim exceeds the sum of USD 50,000 (or
such other sum as the parties may agree) the arbitration shall be conducted in accordance
with the LMAA Small Claims Procedure current at the time when the arbitration proceedings
are commenced.
(b) Notwithstanding the above, the parties may agree at any time to refer to mediation any
difference and/or dispute arising out of or in connection with this Contract.
In the case of a dispute in respect of which arbitration has been commenced under the
above, the following shall apply:-
(i) Either party may at any time and from time to time elect to refer the dispute or part of
the dispute to mediation by service on the other party of a written notice (the “Mediation
Notice”) calling on the other party to agree to mediation.
(ii) The other party shall thereupon within 14 calendar days of receipt of the Mediation
Notice confirm that they agree to mediation, in which case the parties shall thereafter agree
a mediator within a further 14 calendar days, failing which on the application of either party
a mediator will be appointed promptly by the Arbitration Tribunal (“the Tribunal”) or such
person as the Tribunal may designate for that purpose. The mediation shall be conducted in
such place and in accordance with such procedure and on such terms as the parties may
agree or, in the event of disagreement, as may be set by the mediator.
(iii) If the other party does not agree to mediate, that fact may be brought to the attention
of the Tribunal and may be taken into account by the Tribunal when allocating the costs of
the arbitration as between the parties.
(iv) The mediation shall not affect the right of either party to seek such relief or take such
steps as it considers necessary to protect its interest.
(v) Either party may advise the Tribunal that they have agreed to mediation. The arbitration
procedure shall continue during the conduct of the mediation but the Tribunal may take the
© BIMCO Courses and Seminars 1

mediation timetable into account when setting the timetable for steps in the arbitration.
(vi) Unless otherwise agreed or specified in the mediation terms, each party shall bear its
own costs incurred in the mediation and the parties shall share equally the mediator’s costs
and expenses.
(vii) The mediation process shall be without prejudice and confidential and no information
or documents disclosed during it shall be revealed to the Tribunal except to the extent that
they are disclosable under the law and procedure governing the arbitration.
(Note: The parties should be aware that the mediation process may not necessarily interrupt
time limits.)

U.S. Law, New York Arbitration
(a) This Contract shall be governed by and construed in accordance with Title 9 of the
United States Code and the Maritime Law of the United States and any dispute arising out of
or in connection with this Contract shall be referred to three persons at New York, one to be
appointed by each of the parties hereto, and the third by the two so chosen; their decision or
that of any two of them shall be final, and for the purposes of enforcing any award,
judgement may be entered on an award by any court of competent jurisdiction. The
proceedings shall be conducted in accordance with the rules of the Society of Maritime
Arbitrators, Inc.
In cases where neither the claim nor any counterclaim exceeds the sum of USD 50,000 (or
such other sum as the parties may agree) the arbitration shall be conducted in accordance
with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current
at the time when the arbitration proceedings are commenced.
and expenses.

time limits.)

Law and Place of Arbitration as Mutually Agreed
(a) This Contract shall be governed by and construed in accordance with the laws of the
place mutually agreed by the parties and any dispute arising out of or in connection with this
Contract shall be referred to arbitration at a mutually agreed place, subject to the
procedures applicable there.
and expenses.
time limits.)

Mediation Clause
Note: This Clause can ONLY be used in conjunction with one of the three BIMCO Dispute
Resolution Clauses: English law/London arbitration; US law/New York arbitration; and law
and arbitration as agreed. For the Mediation Clause to function properly you MUST insert
your chosen Arbitration provision immediately above the Mediation Clause.
Notwithstanding the above, the parties may agree at any time to refer to mediation any
and expenses.
time limits.)

Appendix 22
Appendix 23
Appendix 24
2008 - United Nations Convention on
Contracts for the International Carriage of
Goods Wholly or Partly by Sea
- the "Rotterdam Rules"
Adopted by the General Assembly on 11 December 2008, the Convention establishes a
uniform and modern legal regime governing the rights and obligations of shippers,
carriers and consignees under a contract for door-to-door carriage that includes an
international sea leg. The Convention builds upon, and provides a modern alternative
to, earlier conventions relating to the international carriage of goods by sea, in
particular, the International Convention for the Unification of Certain Rules of Law
relating to Bills of Lading (Brussels, 25 August 1924) ("the Hague Rules"), and its
Protocols ("the Hague-Visby Rules"), and the United Nations Convention on the
Carriage of Goods by Sea (Hamburg, 31 March 1978) ("the Hamburg Rules").
The Rotterdam Rules provide a legal framework that takes into account the many
technological and commercial developments that have occurred in maritime transport
since the adoption of those earlier conventions, including the growth of
containerization, the desire for door-to-door carriage under a single contract, and the
development of electronic transport documents. The Convention provides shippers and
carriers with a binding and balanced universal regime to support the operation of
maritime contracts of carriage that may involve other modes of transport.
Source: July 2009

http://www.uncitral.org/uncitral/en/uncitral_texts/transport_goods/2008rotterdam_rules.html
Appendix 25
Inter-Club New York Produce Exchange Agreement 1996
(as amended September 2011)
This Agreement, the Inter-Club New York Produce Exchange Agreement 1996 (as amended September
st
2011) (the Agreement), made on 1 September 2011 between the P&l Clubs being members of The
International Group of P&l Associations listed below (hereafter referred to as "the Clubs") amends the Inter-
Club New York Produce Exchange Agreement 1996 in respect of all charterparties specified in clause (1)
hereof and shall continue in force until varied or terminated. Any variation to be effective must be approved
in writing by all the Clubs but it is open to any Club to withdraw from the Agreement on giving to all the other
Clubs not less than three months' written notice thereof, such withdrawal to take effect at the expiration of
that period. After the expiry of such notice the Agreement shall nevertheless continue as between all the
Clubs, other than the Club giving such notice who shall remain bound by and be entitled to the benefit of this
Agreement in respect of all Cargo Claims arising out of charterparties commenced prior to the expiration of
such notice.
The Clubs will recommend to their Members without qualification that their Members adopt this Agreement
for the purpose of apportioning liability for claims in respect of cargo which arise under, out of or in connection
with all charterparties on the New York Produce Exchange Form 1946 or 1993 or Asbatime Form 1981 (or
any subsequent amendment of such Forms), whether or not this Agreement has been incorporated into
such charterparties.
Scope of application
(1) This Agreement applies to any charterparty which is entered into after the date hereof on the New York
Produce Exchange Form 1946 or 1993 or Asbatime Form 1981 (or any subsequent amendment
of such Forms).
(2) The terms of this Agreement shall apply notwithstanding anything to the contrary in any other
provision of the charterparty; in particular the provisions of clause (6) (time bar) shall apply
notwithstanding any provision of the charterparty or rule of law to the contrary.
(3) For the purposes of this Agreement, Cargo Claim(s) mean claims for loss, damage, shortage
(including slackage, ullage or pilferage), overcarriage of or delay to cargo including customs dues or
fines in respect of such loss, damage, shortage, overcarriage or delay and include:
(a) any legal costs claimed by the original person making any such claim;
(b) any interest claimed by the original person making any such claim;
(c) all legal, Club correspondents' and experts' costs reasonably incurred in the defence of or in the
settlement of the claim made by the original person, but shall not include any costs of whatsoever
nature incurred in making a claim under this Agreement or in seeking an indemnity under
the charterparty.
(4) Apportionment under this Agreement shall only be applied to Cargo Claims where:
(a) the claim was made under a contract of carriage, whatever its form,
(i) which was authorised under the charterparty; or
(ii) which would have been authorised under the charterparty but for the inclusion in that
contract of carriage of Through Transport or Combined Transport provisions, provided that
(iii) in the case of contracts of carriage containing Through Transport or Combined

Transport provisions (whether falling within (i) or (ii) above) the loss, damage, shortage,
overcarriage or delay occurred after commencement of the loading of the cargo on to the
chartered vessel and prior to completion of its discharge from that vessel (the burden of
proof being on the Charterer to establish that the loss, damage, shortage, overcarriage or
delay did or did not so occur); and
(iv) the contract of carriage (or that part of the transit that comprised carriage on the
chartered vessel) incorporated terms no less favourable to the carrier than the Hague or
Hague Visby Rules, or, when compulsorily applicable by operation of law to the contract of
carriage, the Hamburg Rules or any national law giving effect thereto; and
(b) the cargo responsibility clauses in the charterparty have not been materially amended. A
material amendment is one which makes the liability, as between Owners and Charterers, for
Cargo Claims clear. In particular, it is agreed solely for the purposes of this Agreement:
(i) that the addition of the words "and responsibility" in clause 8 of the New York Produce
Exchange Form 1946 or 1993 or clause 8 of the Asbatime Form 1981, or any similar
amendment of the charterparty making the Master responsible for cargo handling, is not a
material amendment; and
(ii) that if the words "cargo claims" are added to the second sentence of clause 26 of the New
York Produce Exchange Form 1946 or 1993 or clause 25 of the Asbatime Form 1981,
apportionment under this Agreement shall not be applied under any circumstances
even if the charterparty is made subject to the terms of this Agreement; and
(c) the claim has been properly settled or compromised and paid.
(5) This Agreement applies regardless of legal forum or place of arbitration specified in the
charterparty and regardless of any incorporation of the Hague, Hague Visby Rules or Hamburg Rules
therein.
Time Bar
(6) Recovery under this Agreement by an Owner or Charterer shall be deemed to be waived and
absolutely barred unless written notification of the Cargo Claim has been given to the other party to the
charterparty within 24 months of the date of delivery of the cargo or the date the cargo should have
been delivered, save that, where the Hamburg Rules or any national legislation giving effect thereto are
compulsorily applicable by operation of law to the contract of carriage or to that part of the transit that
comprised carriage on the chartered vessel, the period shall be 36 months. Such notification shall if
possible include details of the contract of carriage, the nature of the claim and the amount claimed.
The apportionment
(7) The amount of any Cargo Claim to be apportioned under this Agreement shall be the amount in
fact borne by the party to the charterparty seeking apportionment, regardless of whether that
claim may be or has been apportioned by application of this Agreement to another charterparty.
(8) Cargo Claims shall be apportioned as follows:
(a) Claims in fact arising out of unseaworthiness and/of error or fault in navigation or management of
the vessel:
100% Owners
save where the Owner proves that the unseaworthiness was caused by the loading, stowage,
lashing, discharge or other handling of the cargo, in which case the claim shall be apportioned
under sub-clause (b).
(b) Claims in fact arising out of the loading, stowage, lashing, discharge, storage or other handling of
cargo:
100% Charterers
unless the words "and responsibility" are added in clause 8 or there is a similar amendment
making the Master responsible for cargo handling in which case:
50% Charterers 50%
Owners
save where the Charterer proves that the failure properly to load, stow, lash, discharge or
handle the cargo was caused by the unseaworthiness of the vessel in which case:
100% Owners
(c) Subject to (a) and (b) above, claims for shortage or overcarriage:
50% Charterers
50% Owners
unless there is clear and irrefutable evidence that the claim arose out of pilferage or act or neglect
by one or the other {including their servants or sub-contractors) in which case that party shall then
bear 100% of the claim.
(d) All other cargo claims whatsoever (including claims for delay to cargo):
50% Charterers
50% Owners
unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of the
one or the other (including their servants or sub-contractors) in which case that party shall then
bear 100% of the claim.
Security
(9) If a party to the charterparty provides security to a person making a Cargo Claim, that party shall be
entitled upon demand to acceptable security for an equivalent amount in respect of that Cargo Claim
from the other party to the charterparty, regardless of whether a right to apportionment between the
parties to the charterparty has arisen under this Agreement provided that:
(a) written notification of the Cargo Claim has been given by the party demanding security to the
other party to the charterparty within the relevant period specified in clause (6); and
(b) the party demanding such security reciprocates by providing acceptable security for an
equivalent amount to the other party to the charterparty in respect of the Cargo Claim if
requested to do so.
Governing Law
(10) This Agreement shall be subject to English Law and the exclusive Jurisdiction of the English Courts,
unless it is incorporated into the charterparty (or the settlement of claims in respect of cargo under the
charterparty is made subject to this Agreement), in which case it shall be subject to the law and
jurisdiction provisions governing the charterparty.
American Steamship Owners Mutual Protection & Indemnity Association, Inc.

Assuranceforeningen Gard
Gard P&I (Bermuda) Ltd
Assuranceforeningen Skuld
The Britannia Steam Ship Insurance Association Ltd.
The Japan Ship Owners' Mutual Protection and Indemnity Association
The London Steam-Ship Owners' Mutual Insurance Association Ltd.
The North of England Protecting and Indemnity Association Ltd.
The Shipowners' Mutual Protection and indemnity Association (Luxembourg)
Skuld Mutual Protection and Indemnity Association (Bermuda) Ltd.
The Standard Steamship Owners’ Protection and Indemnity Association (Asia) Ltd
The Standard Steamship Owners' Protection & Indemnity Association (Bermuda) Ltd.
The Standard Steamship Owners’ Protection and Indemnity Association (Europe) Ltd
The Standard Steamship Owners’ Protection and Indemnity Association (London) Ltd
The Steamship Mutual Underwriting Association Ltd
The Steamship Mutual Underwriting Association (Bermuda) Ltd.
Sveriges Angfartygs Assurans Forening (The Swedish Club)
The United Kingdom Mutua! Steam Ship Assurance Association (Bermuda) Ltd.
United Kingdom Mutual Steam Ship Assurance Association (Europe) Ltd
The West of England Ship Owners Mutual Insurance Association (Luxembourg)
Appendix 26

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MASTERCLASS WORKSHOP

Welcome to the BIMCO Time Charter Masterclass.

I wish you three enjoyable and educational days.

Was it an effective way of Personal notes:

Documentation Personal notes:

Clauses Personal notes:

The composition of the Documentary Committee Personal notes:

The important sub‐committee Personal notes:

The evolution of Personal notes:

NYPE Clauses Personal notes:

Not by default included in NYPE Personal notes:

©Copyright Ince & Co LLP, 2015. All rights reserved.

• Time charter trips e.g. a round Atlantic voyage . The

THE INTER-RELATIONSHIP BETWEEN CONTRACTS

There are two types of contracts of carriage:

There are two basic types of charter party:

Bareboat Charter Parties

Other Charter Parties

There are two types:

Hybrid Charter Parties

Cost Allocation Between Shipowners and Charterers

WHY HAVE CHARTER PARTIES?

Time and Voyage Charters

1.From the Shipowner’s Standpoint

2.The Charterer’s Requirements

THE RELATIONSHIP BETWEEN THE CHARTERPARTY AND THE BILL OF LADING

instead a document of title which is accepted as being the documentary equivalent of

(3) it is a transferable document of title, possession of which proves entitlement to the

A sea waybill – otherwise known as a waybill – is also a receipt and a contract of

cancel = walk away

missed l/c either cancel or maintain

eremy Cooke Speedy Gon ales

A voyage which appears

To result (if performed) in redelivery

Methods used by Charterers to Personal notes:

the r of de r m r on the ch rterer

TIME CHARTER DURATION

1) THE DURATION IS CALCULATED FROM DELIVERY LOCATION TO REDELIVERY LOCATION

2) THE IMPORTANCE OF THE CHARTER PERIOD TO OWNERS AND CHARTERERS

… the risk of delay is primarily on the Charterer.

It is beginning to look as though the Achilleas philosophy is going to be confirmed by

An interesting question might arise if at the time of pre-mature termination of the

3) LAST VOYAGE CLAUSES

about minimum 10 months maximum 12 months time charter. Exact duration in

Notwithstanding the provisions of Clause 3 hereof.

Three months 15 days more less Charterers’ option (MOLCHOPT).

A) THE EFFECT OF THE INCLUSION OF ‘WITHOUT GUARANTEE’

B) ‘WITHOUT GUARANTEE’ AND THE LAST VOYAGE

C) WITHOUT GUARANTEE AND TRIP CHARTERS

D) WITHOUT GUARANTEE AND A PERIOD CHARTER

Examples of payments not amounting to payment by cash

• Payment by uncleared cheque.

• Bankers payment slips.

• BEWARE difference between monthly i.e. for the

Tonnelier v Smith 1 97 2 Com Cas 25

What is payment in full ? Personal notes:

he does not consider damages to be satisfactory or

• Astra 2013 – no appeal

THE PAYMENT OF HIRE

• by banker’s payment slips; (The Georgios C [1971] 1 Lloyd’s Rep 7) and

B) Full payment of the charter hire

(i) there is an express provision of the charter which allows deduction;

ii) the charterer is entitled to rely on an off-hire clause; or

2) REMEDIES FOR NON-PAYMENT OF HIRE