MARITIME LAW

MODULE -1

1.MARITIME LAW -INTRODUCTION 

Maritime law - is a complete system of law, both public and private, substantive and
procedural,national and international, with its own courts and jurisdiction, which goes back to
Rhodian law of 800 B.C. and pre-dates both the civil and common laws. Its more modern origins
were civilian in nature, as first seen in the Rôles of Oléron of circa 1190 A.D. 

Maritime law was subsequently greatly influenced and formed by the English Admiralty Court
and then later by the common law itself. That maritime law is a complete legal system can be
seen from its component parts. For centuries maritime law has had its own law of contract: 

− contract of sale (of ships), 

− contract of service (towage), 

− contract of lease (chartering), 

− contract of carriage (of goods by sea), 

− contract of insurance (marine insurance being the precursor of insurance ashore), 

− contract of agency (ship chandlers), 

− contract of pledge (bottomry and respondentia), 

− contract of hire (of masters and seamen), 

− contract of compensation for sickness and personal injury (maintenance and cure) and 

− contract of risk distribution (general average). 

It is and has been a national and an international law (probably the first private international
law). It also has had its own public law and public international law. 

Maritime law is composed of two main parts - national maritime statutes and international 
maritime conventions, on the one hand, and the general maritime law (lex maritima), on the
other. The general maritime law has evolved from various maritime codes, including Rhodian
law (circa 800 B.C.), Roman law, the Rôles of Oléron (circa 1190), the Ordonnance de la Marine
(1681), all of which were relied on in Doctors' Commons, the  English Admiralty Court, and the
maritime courts of Europe. This lex maritima, part of the lex mercatoria, or "Law Merchant" as it
was usually called in England, was the general law applicable in all countries of Western Europe
until the fifteenth century, when the gradual emergence of nation states caused national
differences to begin creeping into what had been a virtually pan-European maritime law system. 

Today's general maritime law consists of the common forms, terms, rules, standards and
practices of the maritime shipping industry - standard form bills of lading, charterparties, marine
insurance policies and sales contracts are good examples of common forms . 

Glimore and Black, in their the Law of Admiralty, define maritime law as a ‘’corpus of rules,
concepts and legal practices governing certain centrally important concerns of the business of
carrying goods and passengers by water’’. 

William Tetley’s Glossary of Maritime Terms describes  maritime law as ‘’a complete system of
law, both public and private, substantive and procedural, national and international’’. 

The famous legal dictionary –Black’s Law Dictionary, in its part, defines maritime law as ‘’the
body of law governing marine commerce and navigation, the carriage at of persons and the
property, and marine affairs in general; the rules governing contract, tort and  workers’
compensation claims or relating to commerce on or over water’’. 

A rather simpler but broad definition of maritime law would be: the branch of jurisprudence that
governs ships and shipping.

As the law of ships, it regulates the nationality, ownership and registration of vessels. As the law
of shipping, it governs the relationship between private entities which operate vessels on the
oceans. 

In other words, it governs maritime questions such as sea carriage, contract of affreightment,
marine insurance, maritime lien, and the like. Admiralty law or maritime law is a distinct body of
law that governs maritime questions and offenses. It is a body of both domestic law governing
maritime activities, and private international law governing the relationships between private
entities that operate vessels on the oceans. It deals with matters including marine commerce,
marine navigation, marine salvaging, shipping, sailors, and the transportation of passengers and
goods by sea. Admiralty law also covers many commercial activities, although land based or
occurring wholly on land, that are maritime in character. 

Admiralty law is distinguished from the Law of the Sea, which is a body of public international
law dealing with navigational rights, mineral rights, jurisdiction over coastal waters and
international law governing relationships between nations. 

Maritime law consists of a body of laws, conventions and treaties that governs international
private business or other matters involving ships, shipping or crimes occurring on open water. 

Laws between nations governing such things as national versus international waters are
considered public international law and are known as the Law of the Seas. 
In most developed nations, maritime law is governed by a separate code and is a separate
jurisdiction from national laws. The United Nations, through the International Maritime 

Organization, has issued numerous conventions that can be enforced by the navies and coast
guards that have signed the treaty outlining these rules. Maritime law governs many of the
insurance claims relating to ships and cargo, civil matters between shipowners, seamen and
passengers, and piracy.

2.DEFINITION , SCOPE AND CHARACTERISTICS OF MARITIME LAW

Maritime law is a complete system of law both public and private, substantive and procedural,
National and International. The famous legal dictionary black law dictionary defines Maritime
law as the body of law governing Marine commerce and navigation,the carriage of persons and
property and affairs in general ; the rules governing contract , tort and worker's compensation
claims or relating to commerce on or over Water. A rather simpler but broad definition of
maritime law would be : the branch of jurisprudence that governs ships and shipping. As the law
of shipping it regulates the nationality, ownership and registration of vessels. It governs maritime
questions like sea carriage, contract of affreightment, marine insurance, maritime lien and the
like. It is distinguished from another etymologically identical area of law the law of the sea. The
law of the sea is the branch of public International Law which aims to regulate the relationship
between states in respect of those areas of the sea and sea bed subject to coastal state jurisdiction
and beyond .Whereas Maritime law or admiralty law is a body of private law that govern the
legal relationship arising from the transportation of passengers and cargo on high Seas and other
navigable waters.

3.CHARACTERISTICS OF MARITIME LAW:

1. International Nature:

Though each Nation has their own maritime legislation, maritime law in almost all jurisdictions
is clearly shaped by international influences, in particular international conventions. This is due
to the fact that shipping by its very nature involves International relations. The ocean- going
vessels flying the flag of a state operate in all waters throughout the world and sail from country
to country.

Vessels often are supplied and repaired in foreign ports. Cargo may be damaged or lost while at
sea in the course of an international voyage or in a Foreign port, and likewise seamen may be
injured on the high Seas on the waters of foreign countries . Such background facilitated the
development of common International usage and practice since antiquity. The common
Universal usage and practices were subsequently adopted by National Laws. Maritime law is the
specialised domestic law that cannot avoid International influences.
2.Comprehensiveness:

The second important characteristic of maritime law is its breadth . Just as the civil law and the
common law, Maritime law is a complete legal system. As noted by William Tetley, maritime
law has had its own law of contract -- of sale(of ships),of service(towage),of lease(chartering),of

carriage(of goods by sea), of insurance, of agency ,of pledge, of hire, of compensation for
sickness and personal injury and risk distribution (general average). Maritime law has its own
courts and procedures from earliest times. The comprehensiveness of the law can also be seen in
its administrative and few criminal provisions. Thus maritime law is a comprehensive system of
law concerning maritime matters- both public and private.

4.HISTORY AND DEVELOPMENT OF MARITIME LAW IN THE WORLD

ANCIENT ORIGINS

Ancient maritime rules derived from the customs of the early Egyptians, Phoenicians and the
Greeks who carried an extensive commerce in the Mediterranean Sea. The earliest maritime code
is credited to the island of Rhodes which is said to have influenced Roman law. It is generally
accepted that the earliest maritime laws were the Rhodian Sea Laws, which more likely appeared
in the form recognized today .These laws were recognized in the Mediterranean world as a
method of providing predictable treatment of merchants and their vessels. The complexity and
attention to detail found in the Rhodian Sea Laws demonstrated the development of commerce
and trade of Ancient Greece – a world of commerce, the centre of which, Rhodes, was in a
position to dictate terms for trade.

RHODIAN LAW

Then the decline of Greece and the rise of the Roman Empire altered the influence of the
Rhodian Sea Law. But a uniform code based on the Rhodian Law remained and was recognized
that it is very necessary to peaceful and profitable Mediterranean trade. For more than 1,000
years the Mediterranean Sea was only ruled by the Rhodian Law, with some additions by the
Romans. It is evidenced from ‘the Digest of Justinian’, dated 533 A.D., states the following
regarding any controversy arising in the Mediterranean Sea: "This matter must be decided by the
maritime law of the Rhodians, provided that no law of ours is opposed to it."

APPLICATION OF ROMAN CIVIL LAW

These laws which derived their essential elements from Rhodian customs were afterwards
levelled up by Romans. There was a great enlargement of the application of the principles of the
Roman law in the revival of commerce consequent upon the growth of the Italian republics and
the great free cities of the Rhine and the Baltic Sea. Special tribunals were set up in the
Mediterranean port towns to judge disputes arising among seafarers. Finally this activity led to
the recording of individual judgments and the codification of customary rules by which courts
become bound.

During the centuries between A.D.1000 and A.D.1300 ,three important Codes of Maritime Law
(whose principles were found in the Roman law), were formulated in Europe. They were Libre
del Consolat de mar of Barcellon (adopted by the cities on the Mediterranean), the Laws of
Oleron (prevailed in France and England) and the Laws of Wisby (governed the great free cities
of the Hanseatic League on the Baltic).

CODES OF BARCELONA

The oldest of these codes was Consolato del Mare, or Regulation of the Sea, prepared at
Barcelona. It was a compilation of comprehensive rules for all maritime subjects. It ,for example,
dealt with ownership of vessels, the duties and responsibilities of the masters or captains thereof,
duties of seamen and their wages, freight, salvage, jettison, average contribution, and the like.
Libre del Consolat de mar of Barcellona and the Tablets of Amalfi (one prepared at the famous
of Italian seaports), enjoyed authority far beyond the ports where they were promulgated. Till the
rise of modern nations, maritime law did not derive its force from territorial sovereigns but
represented the customary law of the sea.

Then , as commerce from the Mediterranean moved northward and westward, sea codes
developed in northern European ports. Among these important medieval sea codes were the
Laws of Wisby (a Baltic port), the Laws of Hansa Towns (a Germanic league), and the Laws of
Oleron (a French island). The Consolato del Mare was inspirational in the preparation of these
later codes. In particular, the Laws of Oleron, the second great code of maritime regulation, was
inspired by the Consolato del Mare. These three codes are called the three arches upon which
rests modern admiralty structure.

Thus the earliest developments relating to maritime law occurred in areas belonging to what is
now known as the Continental legal tradition. These developments contributed to the early
admiralty law of England the origin of the common law legal tradition and one of the major
maritime states lo’k, with rich tradition in shipping. The European admiralty doctrines were
carried to the USA which is another important shipping nation through the English system of
admiralty law, which initially was inspired by what have been termed the three arches of modern
admiralty law –the Laws of Wisby, the Laws of Hansa Towns, and the Laws of Oleron.

LAWS OF WISBY

The laws of Wisby was known in the 12th century. They were largely founded upon the laws of
Oleron and the commercial usages of Lubeck and Amsterdam. They were adopted by all the
nations of the North, and furnished what must have been regarded as a very complete and
satisfactory guide to them in their commercial relations and transactions. They were very
interesting since they contained what is believed to be the first expression to the law of marine
and life insurance.

HANSEATIC LEAGUE

In 1164, The confederation of Hanseatic cities originated at Bremen. It included 62 European

cities. This league was purely a commercial partnership by which those cities which were
members of it divided the profits of the trade carried on by the association. This co-partnership,
survived until the year 1669, when the last general assembly was held. Henceforth the name
"Hanse-town" was kept by Lubeck, Hamburg and Bremen, but it was to designate their
independence, not their union.The marine ordinances of this league were published for the first
time at Lubeck in 1591. They were corrected and enlarged in 1614, and as thus completed
consisted of fifteen chapters subdivided into a great number of articles.

FRENCH ATTEMPT

The code , Marine Ordinance of Louis XIV has been called a "most masterly act of legislation
the common law of all the neighbouring nations." Mr. Abbott observes that, "in matter, method
and style it is one of the most finished acts of legislation that ever was promulgated." Lord
Mansfield acknowledged that he had derived much of his knowledge of maritime law from it and
from the elaborate commentary of Valin upon it. The ordinance was published in 1681.

MODERN LEGAL SYSTEM

In 1897, the International Maritime Committee or CMI initiated uniformity among national
maritime legislations of member countries. Among the conventions drafted by CMI, were the
Hague Rules (International Convention on Bill of Lading), and the Visby Amendments
(amending the Hague Rules), the Salvage Convention and many others. Since 1958, many of
CMI’s functions have been taken by the International Maritime Organization of the UNO. This
organization has also continued the move towards uniform maritime laws. Many states agreed to
this rule either by incorporation of the provisions in domestic laws or by implication of treaty
obligations. But the degree of harmonisation so far attained is not satisfactory related to some
areas . For example, existence of differences in assessment of maritime claims.
5.HISTORY AND DEVELOPMENT OF ADMIRALTY JURISDICTION

IN ENGLAND

Admiralty Law is a branch of jurisprudence regulating maritime matters of civil and criminal
nature and it contemplates a court or tribunal administering maritime law by a procedure peculiar
to it. This jurisdiction finds an ultimate source in the initial law of sea which was the law of
commercial nations generally. The origin of the Admiralty Jurisdiction is traced briefly in
HALSBURY'S LAW OF ENGLISH’.

England, being an island, has all along been engaged in commercial business through the sea and
in that process the admiralty law developed. Since Indian admiralty jurisdiction is founded on the
English law, it would be proper to briefly refer to the development of admiralty jurisdiction in
that country.

During Medieval period in England Lord High Admiral and other Admirals appointed for
different portions of the sea around the British Isles possessed disciplinary powers to cover
vessels under their command, in addition they were in a sense Functioning as Sea Magistrates.
They were only maritime officials having both authority and power. They determined disputes
according to the custom, usage and equity. The court of the lord high admiral , as a result of
possessing criminal jurisdiction began to hear all disputes in civil as well as criminal matters
connected with the sea and gradually began to encroach upon the jurisdiction of the common law
Courts in matters arising in inland tidal waters.

This rivalry between the jurisdiction of the High Court of Admiralty and the Common Law
Courts of England was eventually taken note of by the British Parliament. In 1389, it passed an
Act (13 Ric, 2 (1389)) pertaining to the jurisdiction of the Admiral and the Deputy and also
prescribing the limits of the jurisdiction of the High Court of Admiralty. The Act laid down that
the Admirals and their deputies shall not meddle in anything done within the realm, but only of a
thing done upon the sea. In spite of legislation forbidding the High Court of Admiralty from
meddling in things not wholly and exclusively done upon the sea, the Admiralty Court continued
to encroach upon the forbidden area of jurisdiction. The British Parliament passed another
Statute (Jurisdiction of the Admiral Act, 1391), which clarified that of all manner of contracts,
pleas, and quarrels and all other things arising within the bodies of the counties as well by water,
and also wreck of the sea, the Admiral's Court shall have no manner of cognizance, power, not
jurisdiction, instead all such manner of contracts, pleas and quarrels and all other things arising
within the bodies of Counties as well by land as by water, as afore and also wreck of the sea,
shall be tried, determined, discussed and remedied by the laws of the land and not before nor by
the Admiral nor his lieutenant. This Act made it clear that the jurisdiction of the High Court of
Admiralty was limited to things done upon the high seas and it had absolutely no jurisdiction to
deal with things arising within the body of a county. However, this enactment failed tobring
avoidance of the conflict of jurisdiction.

In 1648 an Ordinance was issued prescribing the jurisdiction of the Court of Admiralty. But it
was set aside and thereafter the High Court of Admiralty lost its importance for nearly two
centuries until in the eighteenth century. The learning and ability of Lord Stowell raised the
Court to a position of the highest importance'. In 1840, the British Parliament passed the
Admiralty Court Act, 1840.

In 1861 the British Parliament enacted the Admiralty Court Act of 1861. This Act made an effort
to remove the conflict of jurisdiction and to enlarge the jurisdiction of the High Court of
Admiralty. One of the significant changes introduced by the 1861 Act was that the High Court of
Admiralty, instead of limiting its jurisdiction only to cases of 'damage received by a ship', could
now entertain claims in regard to "damages done by a ship".

It is important to note that the jurisdiction of the High Court of Admiralty and the Common Law
and Chancery Courts in respect of "damage received by a ship" were concurrent under the 1840
Act. But the jurisdiction of the High Court of Admiralty in regard to "damage done by a ship"
under the 1861 Act was exclusive. The 1861 Act further provided that in cases of damage done
by a ship on the high seas, the aggrieved party had the choice to move the High Court of
Admiralty either for an action in rem or for an action in personam. Another feature of this Act
was that by Section 6, it empowered the Admiralty Court to assume jurisdiction over foreign
ships in respect of claims to cargo carried into any part in England or Wales but it did not apply
to outward cargo.

The Judicature Act of 1873, which came into force in 1875, merged the High Court of Admiralty
with the High Court of Justice, causing a fusion of Admiralty Law, Common law and Equity.
The provisions of the 1861 Act limiting jurisdiction of the Admiralty Court to the claims in
respect of inward cargo was discarded by the Administration of justice Act.

This Act extended the jurisdiction of the High Court to:

(a) any claim arising out of an agreement relating to the use or hire of a ship;

(b) any claim relating to the carriage of goods in any ship; and

(c) any claim in tort in respect of goods carried in any ship.

The 1861 Act and the subsequent enactments were consolidated by the Supreme Court of
judicature (Consolidation) Act, 1925. This Act vested the Admiralty jurisdiction in all divisions
of the High Court empowering the Court to entertain apart from actions in rem, any claim in
personam which could be brought in any other divisions of the High Count. By the
Administration of justice Act. 1956, the Admiralty Jurisdiction was further widened and
redefined.
The 1925 Act was superseded by the Supreme Court Act of 1981. The Parliament enacted the
1981 Act to consolidate with amendments the Supreme Court Act of Judicature and other
enactments and to repeal certain obsolete and unnecessary enactments. Section met the Act
defines admiralty jurisdiction of the High Court and Sections 21 and 22 deal with the procedure
and mode and side of admiralty jurisdiction. Section 24 defines various expressions and
commonly used in maritime and admiralty jurisdiction. The provisions contained in that Act
have made significant changes enlarging the High Court's jurisdiction in admiralty matters. It is
not necessary to discuss in detail the provisions in Sections 20, 21 and 22 but it is important to
note that the position that has now finally emerged in England is that the jurisdiction of the High
Court is vested in all Divisions although in practice admiralty actions are assigned to the Queen's
Bench Division and taken up by the Admiralty Court. It also ensures -that the usual requirements
of an action in personam. viz. the habitual residence or a place of business of the defendant or the
cause of action having a nexus with England and Wales or a connected matter in the English
High Court or the submission of the defendant to the jurisdiction of that Court are not applicable
to the proceeding commenced as admiralty action in rem. The law as it stands at present extends
the right to proceed in rem in many claims which do not give rise to a maritime lien. Similarly,
the admiralty jurisdiction of the High Court will now in all causes be invoked by an action in
personam although the exercise of jurisdiction is inhibited by the operation of rules of court
relating to service of proceedings within jurisdiction.

In modern international law, it has been recognised that the jurisdiction of the Admiralty Court
extends both to foreign ship on high seas as well as over injurious acts done on the high seas. In
other words, the admiralty jurisdiction of the High Court now extends to all ships or aircrafts
whether registered or not and wherever the residence or domicile of their owners may be and in
relation to all claims, wheresoever arising. However, the extent of admiralty jurisdiction is
subject to rules governing the mode of exercise of jurisdictions. Generally the jurisdiction of the
court is also restricted in collision and other similar cases where the action is in personam. The
international nature of maritime affairs and the right to proceed in rem readily produced conflicts
of jurisdiction and disputes as to the forum in which claims should be heard.

5.HISTORY AND DEVELOPMENT OF ADMIRALTY JURISDICTION

IN INDIA

The first Charter was granted in 1726 to the United East India Company establishing Mayor's
Courts at the settlements of Madras, Bombay and Calcutta- Mayor's Courts, each comprising of a
Mayor and nine Aldermen. The Mayors Court was a Court of Record and it had jurisdiction to
try, hear and determine all civil suits, actions and pleas within the respective towns. The
Governor and the five Seniors of the Council were appointed Justices of the Peace with power to
hold Quarter Sessions of the peace and they were constituted into a Court of Record for the trial
of all offences (except high treason) committed within the said towns or within ten miles of the
same.

In 1773, the Committee of Secrecy appointed to enquire into the state of the East India Company
submitted its report. This report led to the passing of "the Regulation Act". This Act authorised
His Majesty to establish a Supreme Court of Judicature at Fort William in Bengal, consisting of a
Chief Justice and three other Judges to exercise all Civil, Criminal, Admiralty and Ecclesiastical
jurisdiction. Clause 26 of the Charter dated (26th March, 1774) declared the Supreme Court of
Judicature at Fort William in to be a "Court of Admiralty" in and for the provinces, counties, or
districts, of Bengal, Bihar and Orissa and all other dependent territories and islands adjacent
thereunto.

The British Parliament enacted the Colonial Courts of Admiralty Act of 1890. Section 2 of the
Act provided that every court of law in a British possession which is for the time being declared
in pursuance of the Act to be the Court of Admiralty and if such declaration is in force and if
there be a court having unlimited civil jurisdiction, it shall be Court of Admiralty. It further
provides that such court will exercise all the powers which it possessed for the purpose of other
civil jurisdiction. Clause 2 of Section 2 declared that the jurisdiction of Court of Admiralty shall
be over the like place, matters and things as the admiralty jurisdiction of the High Court and the
Colonial Court of Admiralty may exercise such jurisdiction in like manner to full extent as the
High Court in England.

Pursuant to the aforesaid provision contained in Section 3 of 1890 Act, the Indian Legislature
enacted the Colonial Courts of Admiralty (India) Act (XVI) of 1891 wherein the High Courts of
Judicature being courts of 'unlimited civil jurisdiction' were declared to be Colonial Courts of
Admiralty established under the 1890 Act, at Calcutta ,Madras and Bombay.

Thereafter the Chartered High Courts of Calcutta, Bombay and Madras established under the
Letters Patent continued to exercise admiralty jurisdiction in view of the declaration made by
virtue of the 1891 Act. The powers and jurisdiction were further continued successively by the
Government of India, Act, 1915 and Government of India, Act, 1935. On the promulgation of the
Constitution the aforesaid Chartered High Courts continued to exercise admiralty jurisdiction in
View of the savings provisions contained in Article 372 of the Constitution as no law or statute
was enacted by the Parliament limiting or expanding the admiralty jurisdiction.

6.PUBLIC INTERNATIONAL LAW AND ITS RELATION WITH MARITIME LAW

Law of the sea is also known as Maritime law which is that branch of public International Law
which regulates the rights and duties concerning the regulation of states with respect to the sea. It
governs the legal rules regarding ships and shipping. It is one of the principal subjects of
international law and is a mixture of the treaty and established or emerging customary law.
The law of the sea forms the basis of conducting maritime economic activities, the codification
of navigation rules and to protect oceans from abuse of power. It covers rights, freedoms and
obligations in areas such as territorial seas and waters and the high seas, fishing, wrecks and
cultural heritage, protection of the marine environment and dispute settlement.

The law of the sea is a body of public international law governing the geographic jurisdictions of
coastal States and the rights and duties among States in the use and conservation of the ocean
environment and its natural resources. The law of the sea is commonly associated with an
international treaty, the Convention on the Law of the Sea (UNCLOS), negotiated under the
auspices of the United Nations, which was signed in 1982 by 117 States and entered into force in
1994. At present 133 States have signed and ratified UNCLOS; Canada, Israel, Turkey, USA,
and Venezuela are the most prominent among those that have not ratified. This treaty both
codified customary international law and established new law and institutions for the ocean.
UNCLOS is best understood as a framework providing a basic foundation for the international
law of the oceans intended to be extended and elaborated upon through more specific
international agreements and the evolving customs of States. These extensions have begun to
emerge already, making the law of the sea at once broader, more complex, and more detailed
than UNCLOS per se.

The law of the sea can be distinguished from two closely related bodies of law: maritime and
admiralty. Maritime law is the private law relating to ships and the commercial business of
shipping. Admiralty law, often used synonymously with maritime law, applies to the private law
of navigation and shipping, in inland waters as well as on the ocean. The latter may also refer
more parochially to the legal jurisdiction of specialized Admiralty courts. There may be
important overlaps between the public international law of the sea and private maritime law, as
may occur through the application of rules for vessel passage through a jurisdiction or the
enforcement of domestic law in the ocean.

7.LAW OF THE SEA

EVOLUTION OF LAW OF THE SEA

In 1609 Hugo Grotius a Dutch jurist published the first book on the law of the sea under the title
Mare Liberum or The Free sea. It is said to be the first and the classic exposition of the doctrine
of the freedom of the seas which has been the essence and backbone of the modern law of the sea
ever since its origin. In this remarkable book which became part of his later and more
authoritative work ,De jure! Belli ac pacis (1625), Grotius is so especially associated with
maritime international law as to become entitled to the general tribute he has received in modern
times as the 'Father of International Law’ .It is universally acknowledged that process was the
first to proclaim the freedom of the seas by elaborate arguments which later came to be accepted
as an and challenge the doctrine of international law and formed the bulk and essence of the law
of the sea.

Grotiu's Mare Liberam was seen as threatening contemporary British claims to control the seas
around Great Britain. It was therefore met with spirited responses from writers such as William

Welwood in his Abridgment of all sea laws. The most valuable of the books on the subject is,
Selden's Mare Clausum , an exhaustive reply to Grotiu's work that appeared in 1618 .But whilst
Selden disputed the argument of Grotius and maintained the right of appropriation by the British
kings of the waters surrounding Great Britain, he admitted the principle that a State could not
forbid the navigation of its seas by other people without being wanting in its duties to humanity.
He was thus endeavouring to recouncil British Special claim to the sea with the general claims of
the freedom of navigation.

With the begining of the Industrial Revolution in Europe and acquisition of huge
colonial empires in Asia and Africa the Europeans got more interested in commercial prosperity
and needed more raw materials ,larger markets, and investment of their surplus capital . John
Selden's Mare Clausum became an impediment to the attainment of these objectives. England
therefore quietly dropped her support to exclusive jurisdiction over the high seas and became the
strongest champion of the freedom of the seas. Thus Grotiu's defence of the freedom of the sea
eventually attained the success and became generally recognized. In the age of new
expansionism and colonisation freedom of the seas became a necessity.It is significant to note
that however that Europe came to accept freedom of the seas not because it was suddenly
convinced of the doctrine but because the doctrine became the need of the time.

It is well known that law was developed according to the needs of a society. The European law
of the sea was the special concern of a few seafaring Nations and the dominant interest of the big
maritime powers largely determined the shape and the content of this law. They could not
therefore play any role in its formulation in the most creative period of its history.

At the end of World War II Europe lost its dominance and Asian States revived again to become
fully fledged members of the international society. New law was needed for the expanded
International society in an entirely new age. This Revolution had been going on since the 1970 in
the third United Nations conference on the law of sea(UNCLOS) .

CODIFICATION OF THE LAW OF THE SEAS

In the 20th century there had been three Global Conferences on the law of seas preceding the 3rd
UNCLOS. The first of these was held in 1930 under the protection of the League of Nations and
two conferences were convened in Geneva by the United Nations in 1958 and 1960.

HAGUE CODIFICATION CONFERENCE ,1930

The first attempt at codification of the law of the sea was instigated by the League of Nations in
1924.The league appointed A committee of experts to draw up a list of subjects for codification.
Territorial waters, PIRACY, exploration of marine resources and legal status of the state- owned
on the merchant vessels were among the subjects considered .Subsequently a preparatory
Commission was set up to prepare 3 topics- nationality, state responsibility and the territorial
waters -for codification. The Hague conference was basically a European gathering ,four of the
five members of the preparatory Commission were from Western Europe. Though not a League
member the US also attended. The Soviet Union came only as an observer. Eight Latin American
states were present but only Chile was really active. One of the main purposes of the conference
was to reach an agreement on some standard limits to territorial waters since the "Cannon shot"
rule was always a vague measure. The US and Britain had settled on 3 miles limit but this was by
no means Universally adopted. Scandinavian countries had a 4 mile limit. France claimed 6
miles and Russia had proclaimed a 12 Mile territorial sea. As a result delegates to the Hague
conference met in mixed atmosphere of uncertainty and of hope at new opportunities, and of
shaken and traditionalism on the part of the European States. Unfortunately the conference did
not succeed in adopting a convention on territorial waters . A draft of 13 Articles on the" legal
status of the territorial sea " was provisionally adopted and the Council of the league was asked
to refer the draft articles to governments in the hope that agreement could be reached at some
later date.

The Hague codification conference was however useful in other ways:

1.It accepted the broad principle of coastal States sovereignty over territorial waters.

2. It recognizes the general right of innocent passage in these waters and the right of hot pursuit
by vessels of coastal state beyond its territorial sea.

3. Finally by failing to agree on a single limit for all purposes it repudiated the argument of the
British delegation that the three mile limit was the rule of international law because the maritime
powers which owned most of the world shipping had so decided.

The Hague codification conference had also resolved that the codification of the international
law of the sea should be continued under the aegis of the League of Nations, But developments
in the 1930s reached in the highest point in the outbreak of World War 2. The first permanent
international organization for the maintenance of international peace and security was
demolished and on it's ruins ,a new Edifice under the name of the UN was erected under its own
charter in 1945. Under the provisions of article 13 of the UN charter the general assembly had
created an International law commission for the progressive development and codification of
international law of the sea. The commission, in its very first session, decided to undertake the
preparation of draft articles on the regime of the high seas and territorial waters. By 1956, the
commission had at the request of the UN general assembly produced a report comprising 73
articles covering all aspects of the law of the sea of contemporary importance . This report
formed the basis of the work of the first UNCLOS held in Geneva between February 24th and
April 28, 1958.

Before the actual convening of the first UNCLOS , some significant developments that happened
deserved to be noted . The first was the widening horizons of scientific enquiry and tremendous
developments in marine technology which revolutionized fishing mechanics .Significant
technology breakthroughs in the ability to detect , concentrate and harvest fish on the high seas
increase the capacity of a few technologically advanced States to indulge massive overfishing
threatening the entire fishery resources near the coast of other states .The second development
that constituted the starting point for contemporary developments in the laws of the sea was the
history proclamation issued by Harry S Truman, president of the US ,on September 28, 1945 on
the continental shelf .In this declaration he announced to the world that ' Government of United
states regards the natural resources of the subsoil and seabed of the continental shelf beneath the
high seas but contiguous to the US cost as belong to the United States subject to its jurisdiction
and control'. The proclamation was made at a time when the petroleum resources in the shallow
areas of the continental shelf were beginning to become exploitable. The declaration was a piece
of skillful drafting and found quick international acceptance since it clearly embodied the
principle of reciprocity . The US not only claimed jurisdiction and control over their respective
continental shelf but also explicitly recognized the rights of other Nations to exercise jurisdiction
and control over their respective continental shelves. The Truman proclamation however proved
to be the root cause of considerable juridical chaos during the decade following 1945. Some of
the countries deliberately misconstrued the proclamation to suit the exigencies of their situation
and the Latin American countries in this regard took particular initiative. Some of them like
Chile, Ecuador and Peru, having no significant continental shelf along their coasts, decided that
such geographical misfortune was not going to prevent them from extending National
sovereignty over the resources close to their shores. Referring to the claim of the US, they
claimed Two Hundred Miles territorial waters from their coasts, and despite protests from other
Maritime Nations, they consistently maintained this position. Similarly, other Latin American
States claimed a territorial sea of 200 miles. In the continents of Asia and Africa are also
countries claimed sovereignty over their Continental shelves. The Indian proclamation was made
on August 30, 1955 without specifying any outer limit. Another development was the judgment
of International Court of Justice in the Anglo-Norwegian Fisheries case, where the Court ruled
that the baseline or seaward limit of its internal waters should not follow the 'sinuosities' of
Northern Norway's deeply indented coast but be drawn directly between the headlands of fjords
or around the outside of the furthest Islands and reefs. The territorial sea that Norway claimed,
therefore, extended 4miles beyond these straight baselines. An immediate effect was to exclude
large British trawlers from these waters.

In its final report in 1956 the International Law commission recommended that the general
assembly should Summon and international conference to examine the law of the sea ,taking into
account not only the legal but also the technical, biological, economic and political aspects of the
problem and to embody the results of its work in one or more International conventions or such
other instruments as it may deem appropriate.

FIRST UN CONFERENCE ON THE LAW OF THE SEA, 1958

The first UNCLOS had much wider scope than the Hague codification conference and was
attended by 86 countries. Each of the four committees in the First UNCLOS turned the
International Law Commission's report into a draft convention within 9 weeks and all the four
conventions were approved by a solid majority of the 86 participating States. These became:

1. The Convention on the high Seas;

2. The Convention on fishing and conservation of the living resources of the High seas;

3. The convention on the territorial sea and contiguous zone;

4. The convention on the continental shelf.

The conference was a considerable success and as the Chief US delegate wrote later: 'These
conventions encompassed surprisingly a large area of agreement'. As regards the uniform
Limited territorial waters, International Law Commission had not been able to reach any
agreement and had merely said in it's report, inter alia,

1. The commission recognizes that International practice is not uniform as regards the
delimitation of the territorial sea;

2. The commission considers that International Law does not permit an extension of the
territorial sea beyond 12nautical miles.

Thus one major problem with the 1958 conference could not solve ,was that which had
defeated the 1930 Hague Codification conference ----the breadth of the territorial sea.

The convention on the high Seas be came into force in 1962 but the convention on the territorial
sea and the contiguous zone and the convention on the continental shelf did not come into force
until 1964 by the convention on fisheries and conservation of the living resources and All legal
effect until 1966 and number of countries including India fail to ratify some of these
conventions.

SECOND UN CONFERENCE ON THE LAW OF THE SEA 1960

Prior to its adjournment, the 1958 Conference adopted a resolution requesting the UN General
Assembly to examine the advisability of convening a second international conference for further
consideration of questions left unsettled, that is, the breadth of the territorial sea and exclusive
fishery limits. The General Assembly acted upon this request and at its thirtieth session in 1958,
by an almost unanimous vote, requested the Secretary-General to convene a second conference
in March-April, 1960 for the purpose of considering the two questions further.

Within a few months of the termination of the 1958 Conference, several countries like Iran, Iraq,
Libya, Mexico, Panama, and Sudan discarded the three-mile rule and extended their territorial
sea beyond the three-mile limit generally to twelve-nautical miles They believed, as the Foreign
Minister of Mexico declared right after the close of the Geneva Conference, that 'the old concept
of three miles as limit of the territorial sea has generally been abandoned and repudiated and
disappeared for ever from the juridical world as a standard of international law' . Protests by the
maritime powers, such as Japan, the US, and the UK merely strengthened their resolve to
maintain their new wider limits. While the major maritime powers recounted and reasserted the
virtues of the freedom of the seas as a time-honoured' principle at the Second UNCLOS in
Geneva, the developing countries thought it was a 'time-worn' and old doctrine which could still
serve and be useful but only if modified and adapted according to the changed needs of the
changing international society. The eighteen- power proposal for a 12 mile territorial sea
sponsored by the developing States and supported by the Soviet group did not even receive a
majority vote and was rejected by 39 votes to 36 with 13 abstentions The joint US-Canada
proposal for a six-mile territorial sea and a further six miles towards fisheries jurisdiction,
although accepted and recommended by the Committee as a whole, received 54 votes in the
plenary session in favour and 28 against, with 5 abstentions, and could not be adopted as it had
failed to obtain the required two-thirds majority of those present and voting. The Second
UNCLOS thus failed to resolve the two lines submitted to it. The determined opposition of the
developing States led to disappointment for the maritime powers.

THIRD UN CONFERENCE ON THE LAW OF THE SEA 1960

With the failure of the First and the Second UNCLOS, there emerged a marked trend towards
unilateralism and States began to claim huge areas of the sea as coming within their jurisdiction
and control. Between 1967 and 1973, the year of the formal opening of the Third UNCLOS, the
speed and frequency with which nations asserted unilateral claims on ocean space were almost
dazzling. perhaps symptomatic of a recrudescence of nationalism generally throughout the
world. During that period no less than eighty- one States asserted over 230 new jurisdictional
claims of varying degrees of importance. Some, like Iceland's move to a fifty-mile exclusive
fishing zone, Brazil's assertion of a 200-mile territorial sea, and Canada's establishment of a 100-
mile pollution control zone, precipitated immediate controversies with other States.

The Convention was opened for signature in Jamaica on December 10, 1982 until December
9 ,1984 at the ministry of Foreign Affairs Jamaica and also from July 1st 1983 until December
1984 at the UN headquarters in New York .After December 09 ,1984, the Convention was
deposited with the UN Secretary-General. In terms of Article 308 of the Convention, it was
entered into force twelve months after the date of deposit of the sixtieth instrument of ratification
or accession. The State of Guyana did this on November 16, 1993, paving the way for the
coming into Source of the United Nations Convention on the law of the Sea on November 16,
1994. India formally ratified the Convention on June 29, 1995. The Convention itself establishes
a comprehensive framework for the regulation of all ocean space. The importance of the package
of the Convention is the that the enjoyment of rights and benefits involves the concomitant
undertaking of duties and obligations, so that an overall equitable order may be created.

________________

8.UNCLOS

UNCLOS (United Nations Convention on the Law of the Sea) 

The United Nations Convention on the Law of the Sea (UNCLOS) is an international agreement
that establishes guidelines for businesses, the environment, and the management of marine
natural resources. 

UNCLOS is also known as the Law of the Sea Convention or the Law of the Sea Treaty that
defines the rights and responsibilities of nations towards the use of the world’s oceans. 

● The United Nations Convention on the Law of the Sea lays down a comprehensive regime of
law and order in the world’s oceans and seas establishing rules governing all uses of the oceans
and their resources. 

● It enshrines the notion that all problems of ocean space are closely interrelated and need to be
addressed as a whole. 

UNCLOS Background 

The third session of the United Nations Conference on the Law of the Sea (UNCLOS III) which
was held between 1973 to 1982 led to the formation of the current convention named UNCLOS. 

● The Convention which concluded in the year 1982 replaced the quad-treaty of 1958 also
known as Convention on the High Seas. ● UNCLOS became effective in the year 1994 and later
in the year 2016, UNCLOS was joined by 167 countries and the European Union. 

Formation of UNCLOS 

UNCLOS was formed by replacing the older concept of the 17th-century known as ‘freedom of
the seas’ where the national rights were only limited to a specified belt of water that extended
usually up to 3 nautical miles (5.6 km) from a nation’s coastlines. 

● Therefore, the belts of water that were beyond the national boundaries were considered
international waters.
● Later, during the early 20th century, several nations addressed their needs for extending the
national claims that included mineral resources, protection of fish stocks, and supply of resources
to enforce pollution controls. 

● As a result, in the year 1945, President Harry S. Truman extended United States control to all
the natural resources of its continental shelf. ● Soon, between 1946-1950, three more nations
namely Chile, Peru, and Ecuador also extended their rights to a distance of 370 km to cover their
Humboldt Current fishing grounds whereas the other nations extended their territorial seas to 22
km. 

The issues related to the varying claims of the territorial waters were raised in the year 1967 in
the United Nations. During the Third UN Conference on the Law of the Sea (UNCLOS III) of
1973, the UN ambassador, Mr. Arvid Pardo requested a legal power that could bring about
international governance over the oceanic floor and bed. 

● Even as the name of the nautical law suggests a United Nations’ involvement, the UN does not
have any major functional role in the working of UNCLOS. 

UNCLOS Features 

Some of the important features of the United Nations Convention on the Law of the Sea are
listed below: 

● Nations are provided with full money rights by UNCLOS for a 200-mile zone along the
shoreline. 

● The sea and oceanic bed extending to this area are regarded to be the Exclusive Economic
Zone (EEZ) of a country and that country can use these waters for their economic utilization. 

● Another important organization that plays a vital role in UNCLOS operations is the
International Maritime Organization (IMO). ● Other important parties involved in Nautical Law
and its functioning are the International Seabed Authority and the International Whaling
Commission.

Initiatives under UNCLOS 

UNCLOS I 

The first Conference on the Law of the Sea (UNCLOS I) was held in the year 1956 at Geneva,
Switzerland by the United Nations. This conference resulted in the following four treaties: 

1. Convention on the Territorial Sea and Contiguous Zone, entry into force: 10 September 1964 

2.Convention on the Continental Shelf, entry into force: 10 June 1964 3.Convention on the High
Seas, entry into force: 30 September 1962 
4.Convention on Fishing and Conservation of Living Resources of the High Seas, entry into
force: 20 March 1966 

Although UNCLOS I was considered a success, it left open the important issue of breadth of
territorial waters. 

UNCLOS II 

In 1960, the United Nations held the second Conference on the Law of the Sea ("UNCLOS II");
however, the six-week Geneva conference did not result in any new agreements. Generally
speaking, developing nations and third world countries participated only as clients, allies, or
dependents of the United States or the Soviet Union, with no significant voice of their own. 

UNCLOS III 

Several initiatives were taken after the establishment of the United Nations Conference on the
Law of the Sea (UNCLOS) which are mentioned below: 

● International Tribunal for the Law of the Sea (ITLOS) 

● Established by the UNCLOS, the International Tribunal for the Law of the Sea is an
independent judicial body that adjudicates 

disputes arising out of the convention. ITLOS was signed on December 10, 1982, and entered
into force on November 16, 1994. ● International Seabed Authority

● It was formed in 1994 for regulating the exploration and exploitation of marine non-living
resources of oceans in 

international waters. 

● Commission on the Limits of the Continental Shelf (CLCS) ● Established under the United
Nations Convention on the Law of the Sea, CLCS is responsible for facilitating the
implementation of UNCLOS with respect to the establishment of the outer limits of the
continental shelf beyond 200 nautical miles 

UNCLOS DIVIDES MARINE AREAS INTO FIVE MAIN ZONES: 

There is the low-water line called Baseline along the coast as officially recognized by the coastal
state. 

1.INTERNAL WATERS: These are waters on the landward side of the baseline from which the
breadth of the territorial sea is measured. 

o Each coastal state has full sovereignty over its internal waters as like its land territory. E.g.
bays, ports, inlets, rivers and lakes that are connected to the sea. 
2.TERRITORIAL SEA: It extends seaward up to 12 nautical miles (nm) from its baselines. 

o The coastal states have sovereignty and jurisdiction over the territorial sea. These rights extend
not only on the surface but also to the seabed, subsoil, and even airspace. 

3.CONTIGUOUS ZONE: It extends seaward up to 24 nm from its baselines. o It is an

intermediary zone between the territorial sea and the high seas. 

o The coastal state has the right to both prevent and punish infringement of fiscal, immigration,
sanitary, and customs laws within its territory and territorial sea.

o Unlike the territorial sea, the contiguous zone only gives jurisdiction to a state on the ocean’s
surface and floor. It does not provide air and space rights. 

4.EXCLUSIVE ECONOMIC ZONE (EEZ): Each coastal State may claim an EEZ beyond and
adjacent to its territorial sea that extends seaward up to 200 nm from its baselines. 

o Within EEZ, a coastal state has sovereign rights for the purpose of exploring, exploiting,
conserving and managing natural resources, whether living or non-living, of the seabed and
subsoil. 

o Rights to carry out activities like the production of energy from the water, currents and wind. 

o Unlike the territorial sea and the contiguous zone, the EEZ only allows for the above-
mentioned resource rights. It does not give a coastal state the right to prohibit or limit freedom of
navigation or overflight, subject to very limited exceptions. 

5.HIGH SEAS: The ocean surface and the water column beyond the EEZ are referred to as the
high seas. 

o It is beyond any national jurisdiction. States can conduct activities in these areas as long as
they are for peaceful purposes, such as transit, marine science, and undersea exploration. 

9.UNCLOS AND DOMESTIC LAWS IN INDIA

UNCLOS and India 

India played a constructive role in deliberations leading to UNCLOS’s adoption in 1982

and has been a party to the convention since 1995. 

India shares maritime boundaries with the following countries: 

Bangladesh, Indonesia, Sri Lanka, Maldives, Thailand, Pakistan 

● The coastal State has exclusive jurisdiction to commercially exploit the continental shelf
for metallic ore, non-metallic ore, and hydrocarbon extractions, opportune and accurate
strategic measures will not only  safeguard India’s maritime boundaries but can also reap
benefits beyond expectation. 

● India has invested heavily in exploring non-living resources in deep international waters
for polymetallic nodules, cobalt crust, and hydrothermal sulphides. More and more
hydrocarbon resources are being discovered worldwide in deeper parts of the continental
shelf. 

Enrica Lexie Case 

Known as the Enrica Lexie incident, it took place in 2012, when the Italian oil tanker Enrica
Lexie, traveling off the coast of Kerala, was approached by an Indian fishing vessel named
St.Antony. 

● Two Italian marines onboard fired what Italy contends were warning shots at the ship. Two
Indian fishermen from Kerala were killed. 

● The marines were then detained by the Indian Navy which had intercepted the Enrica Lexie. 

● This sparked off a diplomatic row between India and Italy as the latter said that India did not
have the jurisdiction to try the marines.

● The two marines were detained in India for two and four years respectively. 

● Italy had approached the International Tribunal for the Law of the Sea, an arbitral tribunal
under the International Court of Justice in 2015, and the matter was heard by the Permanent
Court of Arbitration in July 2019. 

Point of views of both the countries: 

INDIA ITALY
  The Italians had offered
● India says the vessel was fired without
compensation of Rs.1 crore each as
notice.
‘compensation’ for
● The marines flouted
the families of the dead
India’s sovereign right
fishermen.
by entering Indian
● This was interpreted as ‘blood money’ by the
waters and killing the
SC, who
fishermen.
expressed shock at this
development.

In July 2020, the Permanent Court of Arbitration brought out its judgement: 

● India does not have the jurisdiction to try the marines. The Italian marines cannot be tried in an
Indian court. The Court recognized the marines’ functional immunity since they were engaged in
a mission for the Government of Italy. 

● Italy should compensate the victims’ families for the killing of the fishermen. Both countries
are to jointly fix the amount of compensation. 

● The Court rejected Italy’s demand for compensation for India’s detention of the marines.

10.THE MERCHANT SHIPPING ACT , 1958

Merchant Shipping Act -1958, 

India has been a seafaring nation for centuries. She has built up a glorious maritime history and
tradition much before the rise of European maritime powers. The Indian ships used to sail across
many seas and carried on prosperous trade with Asian and Middle East countries. Since the
advent of British Rule, the development of the indigenous shipping industry was discouraged
because of preferential treatment given to British shipping. The restrictive British navigational
laws not only hindered the growth and development of Indian shipping but gradually made it
disappeared from the High Seas. 
The Indian Merchant Shipping Law as it existed in the 19th century has never been on a sound
footing. The British law was applicable to Indian ships trading in international sea voyages as
these ships were required to be registered under U.K. Merchant Shipping Act and therefore,
technically they were British Ships although registered in India. The Indian Merchant Shipping
Law was nebulous and sketchy. Between the years 1938 to 1947, the following legislation on
merchant shipping have held the field 

(a) The Bombay Coasting Vessels Act, 1938 

(b) The Indian Registration of Ships Act, 1841 (as amended in 1950); and (c) The Indian
Merchant Shipping Act, 1923. 

The first of the three enactments referred to above dealt with regulations of seagoing vessels. The
1841 Act embodied in its provisions relating to the registration of sailing vessels. Both these
enactments had, however, been so modeled as to apply only to small coasters and sailing vessels.
The third Act, namely, the Indian Merchant Shipping Act, 1923 was fairly comprehensive.
Indian Merchant Shipping Law consolidating the provisions of the earlier two Acts was
supplemented by passing of the Seamen (Litigation) Act, 1946 and Control of Indian Shipping
Act, 1947. This Act had, however, only consolidated the laws on merchant shipping and it did
not revise the law and therefore, was found wanting in many respects. The provisions of the
International Conventions with respect to Load Lines, 1930 and SOLAS, 1948,(The International
Convention for the Safety of Life at Sea (SOLAS) in an international maritime treaty
implemented by the International Maritime Organization (IMO), requiring Signatory flag states
to ensure that ships flagged by them comply with minimum safety standards in construction,
equipment and operation) both of which were ratified by India were later on incorporated
through Indian Merchant Shipping Amendment Acts of 1933 and 1953. 

Immediately after the independence to suit the requirements of a maritime country like India, the
Merchant Shipping Act, 1958 was passed by the Indian Parliament. This Act had made good the
main deficiency in the earlier laws that they did not provide for the registration of what may be
termed as Indian Ships. Certain enabling provisions were also incorporated in the Act to
accelerate the pace of development of shipping in the post-independence period. This Act is
divided into 24 parts, each part dealing with specific aspects of merchant shipping like
registration of ships, sailing vessels, and fishing vessels, National Shipping Board, manning
of ships, engagement, discharge and repatriation of seamen and apprentices, the safety of
passenger and cargo ships, control of Indian ships and ships engaged in the coasting trade,
collisions, prevention and control of pollution of the sea by oil from ships, limitation of
shipowners' liability, civil liability for oil pollution damage etc. 

Various Amendments of Merchinant Shipping Act are: Merchant Shipping (Amendment)

Act, 2002 

Merchant Shipping (Amendment) Act, 2003 

Merchant Shipping (Amendment) Act, 2014 

Merchant Shipping (Second Amendment) Act, 2014

Draft Merchant Shipping Bill, 2020 

● Ministry of Ports, Shipping, and Waterways have issued a draft of the Merchant Shipping Bill,
2020 for public consultation. ● It aims to repeal and replace the Merchant Shipping Act, 1958
and the Coasting Vessels Act, 1838. 

● The Bill has provisions for the repatriation of abandoned seafarers to improve their welfare on
abandoned vessels. ● The Bill does away with the requirement of a general trading license for
Indian vessels to promote ease of doing business. ● It also enables electronic means of
registration and grants statutory recognition to electronic agreements, records, and log-books. 

● The Bill has clauses to increase India’s tonnage and to make the vessel a tradeable asset. 

● It also seeks to introduce for the first-time statutory framework for regulating maritime
emergency response against maritime incidents to promote India as a bankable shipping
jurisdiction and avoid situations leading to the wreck. 

● To make India an active enforcement jurisdiction, the Bill incorporates powers of the Director-
General to take action against vessels that are unsafe, and pose a threat to the safety of life at sea
and the environment 

● It also encourages the active enforcement of pollution prevention standards.

In the case law BRITISH INDIA STREAM NAVIGATION CO. V. SHANMUGHAVILAS

CASHEW INDUSTRIES, it was reported by the Supreme Court that, a statute extends
territorially, unless the contrary is stated, throughout the country and extends to the territorial
waters, and such places as the intention to that effect are shown. Indian Parliament has no
authority to legislate on foreign vessels and foreigners in them on the high seas. No foreign ships
or its owners are deprived of their rights by our statutory enactments expressed in general terms
unless it provides that a foreign ship entering an Indian port or territorial waters and thus coming
within the territorial jurisdiction is to be covered. Thus, Indian statutes are ineffective against
foreign property and foreigners outside the jurisdiction. The principle is quoted in Section 2(2) of
the Indian Merchants Shipping Act.

LIMITATION OF LIABILITY

Limitation of liability for maritime claims is a concept of ancient days. But now it is deeply
rooted in the maritime industry. As per this concept, the ship owner is entitled to limit his
liability for maritime claims up to a maximum sum regardless of the actual amount of the claims.
The concept of limitation of liability has been adopted by many conventions ranging from those
relating to the carriage of goods by sea, carriage of passengers and their luggage by sea, liability
and compensation for pollution damage, to liability for the removal of wrecks.

The first attempt for the unification of rules relating to Limited Liability of owner’s of sea going
vessel adopted by several leading nations was THE BRUSSELS CONVENTION ,1924. In
1957 , a new Convention on Limitation of Liability of sea going vessels was drafted to replace
the BRUSSELS CONVENTION ,1924 . This new Convention is referred as BRUSSELS
LIMITATION CONVENTION ,1957. India was also signatory of this Convention. This
Convention fixes the limit of an owner of sea going vessels on the basis of tonnage of the vessel
without regard to the vessel’s value.

The concept of Limitation of Liability is inserted in Indian Legislation ,The Merchant Shipping
Act ,1958 through the Part XA. This Part governs the right of an owner to bring a limitation
action under The Merchant Shipping Act ,1958. The objective of this concept of limitation of
liability is to provide protection to an owner against large claims which exceeding the value of
the ship and cargo ,which can be made against him all over the world in case his ship met with
an accident causing damage to cargo, property ,to another vessel or loss of personal life or
personal injury.

In the case law WORLD TANKER CARRIER CORPORATION v. SNP SHIPPING

SERVICES PVT. LTD.,Court held that in the case of an action for limitation of liability , it is
the personal right of the owner of the vessel to file a limitation action or to use it as a defense to
an action against him for liability. It is a defensive action against various claimants against the
owner of the vessel. A Limitation action need not be filed in the same forum of a liability action.
However it must be a forum having Jurisdiction to limit the extent of such claims .

MODULE-2

FLAG STATE JURISDICTION

1.FLAG STATE JURIDICTION AND ROLE OF FLAG STATE

Every merchant ship needs to be registered to a state of its choice. The ship is then bound to
carry the flag of that state and also follow the rules and regulations enforced by the same. The
ship’s flag is an important factor when the court makes the decision on the judging.

The ship will follow the regulation of the flag state nation’s maritime law in the open sea and it
will also avail different protections and preferential treatments as tax, certification, and security
etc as per the flag state benefits.

Why Flag State?

The term Flag State came to existence because of the usage of flags as the symbol of the
nationality or tribe the ships belong to from the early days. The flag has come to be an officially
sanctioned and very powerful symbol of the State and is the visible evidence of the nationality
conferred by the State upon ships registered under its national law. The ship’s flag displays the
nationality of the ship, under whose laws the ship is plying in the international waters. However,
it is to note that not all vessels are registered to their ship owners’ country of origin. The country
under whose registration such vessels operate is referred to as a flag state whereas the practice of
registering the ship to a state different than that of the ship’s owner is known as the flag of
convenience (FOC). The vessel in consideration thus has to comply with all the maritime rules,
regulations and stipulations laid out by the flag state in accordance with the international
maritime rules and stipulations.

For a country to be included in the list of flag states, it has to have the necessary maritime
infrastructure – both financial and technical and should, most importantly, adhere to all the
norms and regulations established by the International Maritime Organisations (IMO).

Additionally, in case a ship is not complying with the required norms imposed by authority, then
the country registered as a flag state needs to be adequately equipped to impose strictest of
penalties on the offending vessel and party.

• Although there are several benefits to have a separate flag state and register a vessel to its port
of registry, there are several significations of the same as well. A country offering the most
optimum returns for the owner of a vessel is chosen as the flag state

• The country which serves as a flag state is deemed to be the superior- most in the authorisation
hierarchy

• As such the flag state for ships is entitled and required to carry out regular monitoring and
inspections to ensure that the vessel is following its maritime guidelines appropriately

• These requirements to be fulfilled are mandatory and bear clear outlining in several
international maritime conventions like the SOLAS and UNCLOS

• A vessel that flies the flag of a state, not complying with the monitoring and inspection
requirements is deemed to be of an inferior standard, this could complicate the matter for an
owner, even if the vessel by itself isn’t inferior.

• In order to ensure that the flag state for ships itself possess the necessary resources to carry out
the policy of safe and secure shipping, the IMO has come up with a unique system. The system
involves the flag states themselves to ascertain their levels of competency and thereafter present
a detailed report about the same to the organisation. While this promises to be an interesting
method, the only loophole is that there is no base level against which all flag states can measure
themselves. However, port state control (PSC) inspections and other methods are used to
improve the standard of the ships to a great extent.

• However, it is to note that lately there have been problems related to a few flags of convenience
(FOC) which has sacrificed seafarers’ safety and security. It is therefore important that seafarers
know about problems related to such flags of convenience

• The shipowner can apply for the flag state even before the keel laying of the ship depending
upon the benefits the owner will be getting for doing the business in the international water with
the flag

Role of Flag State:

• One of the most important roles of the flag states is to arbitrate different types of maritime
conflicts such as accident, salvage etc. under the principle law of ships’ nationality

• The ship is always on the move and there are high chances of damages to its cargo or structure
at open seas or within the jurisdiction of another country. It is very difficult and impractical to
judge the conflict by any country’s authority. In such cases, the flag state judgment is taken and
based on that, the course of action is decided. However, if the incidence involves damage to the
structure of another ship or land/ post based property or pollution, the local authority will be
involved and have the upper hand on the legal decisions

• When a situation of salvage occurs, it has to be undertaken as per of the contract. If the contract
does not explain the salvage condition, it will be performed as per the maritime law of the flag
state nation

• The flag state is responsible for overseeing the International Safety Management Code and it
had the authority to issue or withdraw the ship’s Safety Management Certificate (SMC)

• The basic operational standards for a ship required by IMO and ILO such as competence of the
crew, minimum manning, ship and port security, employment standards, onboard working
conditions, movement of ships between flags, repatriation of the crew, different audits etc. are

also the responsibility of the flag state, by working with ship owners

• If the port or regulatory authority found out that the ship is not fit for sailing at high seas, the
crew will work as per the flag state instructions specified in SMS along with adequate
monitoring and verification procedures to ensure the issue is resolved as per the requirement.

Usually, the flag state will allow such tasks to one of the selected classification societies
• Flag state is responsible to cooperate with other authorities or flag states to carry out an
investigation in case of accidents in which causality or pollution is involved

• As per UNCLOS, the flag state must ensure its ships are in compliance with all anti-pollution
requirements and marine pollution laws, i.e. to adopt laws and regulations aiming at prevention,
reduction, and control of pollution

THE ROLE AND RESPONSIBILITY OF FLAG STATE

Article 91 of UNCLOS defines a Flag State as the state in whose territory a ship is registered.
Thus Flag State is the State which has granted to a ship the right to sail under its flag and has the
exclusive right to exercise legislative and enforcement jurisdiction over its ships on the high
seas.

The concept of Flag State came into being through the evolution of customary use of flag as a
means of identification and symbol of Nation when the ship belonging to a particular Sovereign
State and moving on the high sea. Thus traditionally , Jurisdiction over a vessel is linked to its
Nationality and the flag that a vessel flies is the symbol of its Nationality.

Flag State Jurisdiction was initially considered in High Sea Convention , 1958 and then it is
recorded in the Law of the Sea Convention. Flag State Jurisdiction can be taken as the extension
of jurisdiction of a flag state to their ships regardless of where they are. But for the sanctity of
maritime activities , the role and responsibility of flag states mentioned under UNCLOS III is
great significant.

NATIONALITY OF SHIP

According to Article 91(1) every State shall fix the conditions for the grant of its nationality to
ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the
nationality of the State whose flag they are entitled to fly. There must exist a genuine link
between the State and the ship. Every State shall issue to ships to which it has granted the right to
fly its flag documents to that effect. So the right for the States to confer their flag is
Unconditional. The only restriction is that there must exist a genuine link between the State and
Ship.

THE RESPONSIBILITY OF FLAG STATE

The right if a State to confer Nationality to a ship came with the responsibilities of a State and it
is provided in UNCLOS . Important provisions related to Flag State Responsibilities under
UNCLOS are Article 94, 194(3) and 217.

Article 94(1) of Unclos makes explicit the matters on which flag states should exercise
jurisdiction. It provides that every state be required to "effectively exercise its jurisdiction and
control in administrative, technical and social matters over ships flying its flag". This paragraph
attempts to strengthen the concept of genuine link provided for in Article 91 concerning the
nationality of a ship, by indicating matters over which the state should exercise jurisdiction. It
also complements article 92(1) of UNCLOS to the effect that, on the high sea or exceptional
cases provided for in international treaties, a ship is subject to the exclusive jurisdiction and
control of its flag state. Article 94(2) directs the flag state to maintain the Register and to Assume
Jurisdiction i.e. the Flag states are required to maintain a register of ships flying its flag and to
assume jurisdiction under its internal laws over each ship, its masters as well as crew in
administrative, technical and social matters concerning the ship. It is important to note that,
beyond the requirement that the register should contain the names of the ships and particulars, no
further requirements were specifically mention within this provision.

According to Article 94 (3) and (4) ,the flag states are imposed with the obligation to ensure
safety with regard to the construction, equipment, seaworthiness of ships, qualified crew and
communication maintenance. Article 217(2) of UNCLOS extends the scope of article 94(3); it
requires the flag State to ensure that its vessels are prohibited from sailing until they can proceed
to sea in compliance with the requirements of international rules and standards with regard to
design, construction and equipment of vessels. Article 94 (4) provides that measures be taken by
flag States must include those necessary to ensure that each ship, before registration and
thereafter at appropriate intervals, is surveyed by a qualified surveyor of ships, and has on board
such charts, nautical publications and navigational equipment and instruments as are appropriate
for the safe navigation of the ship. It also stresses that ship officers and crew should possess
appropriate qualifications, and adhere to international regulations to guarantee safety and prevent
pollution and collisions.

Furthermore, International law empowers states to issue their flags to an individual merchant
ship or fishing vessel. As part of their responsibility to other states, each state has the obligation
to confirm seaworthiness and by such, do adequate due diligence before issuing registration and
may deny or revoke registration to “problem ships” or repeat offenders . Similarly, with regards
to article 94(3) and (4), subsection 5 of the same article stresses that flag state are required to
conform to “generally accepted” international regulations, procedures and practices and to take
any steps which may be necessary to secure their observation. The emphasis on the above
phrase” internationally accepted regulations and practices” is dictated by practical necessity.
While each state remains free to apply its own legal requirements as regards safety, there would
be confused situation if these requirements widely varied or where incompatible.

This provision is vague to an extent because the regulation and procedures to be adopted are not
specified. It also does not give a guidance as to what legislation could be classified as “generally
accepted”. Thus one could go ahead to understand it to mean rules and standards established
through competent international organizations or general diplomatic conferences to bridge the
reluctant of states to impose strict safety legislations due to competition in the industry. Thus, a
state might be bound to standards it did not specifically adopt. Examples of such rules,
procedures and standards include SOLAS, MARPOL etc. Flag states by this article, are under
obligation to take any steps necessary to ensure observance of generally accepted international
regulations and procedures. Including those related to safety, marine pollution and the
maintenance of radio communication.

Article 94 (6) makes it possible for any other State, which has grounds to believe that the flag
State has not exercised proper jurisdiction and control with respect to a ship, to report the facts to
the flag State. When the flag State receives such a report, it is to investigate the matter and, if
necessary, take remedial actions. While this provision calls for good faith on the part of flag
states, it also re-emphasizes the exclusive jurisdiction of flag states over vessels flying its flag on
the high sea. Article 94(7) imposes on states the obligation to carry out inquires before qualified
people or person into every maritime accidents on the high sea. This applies to incidents that
cause loss of life or serious injury to nationals of another State, or serious damage to ships or
installations of another State or to the marine environment. The flag State and the other State
concerned are to cooperate in the conduct of any such inquiry.

SHIP REGISTRATION AND OPEN REGISTRIES/FLAGS OF CONVENIENCE

In adherence to the provisions of UNCLOS III, all shipping countries now adopt a system of
registration because not only is it a precondition for nationality, it is also considered the essential
objective test of a state’s jurisdiction over a vessel. When a ship of any registration is within the
territorial sea of any country, it can be governed by the law of that state subject to certain
recognized limitations imposed by international law such as the right of innocent passage
without interruption. When the vessel is outside the territorial sea and is on the high sea, the laws
of the flag state and the general public international law are the only laws that apply to it.

Further more Article 91 (2) requires that flag states not only to register ships but to issue
registered vessels with documentation to prove registration and nationality .

The process of registration results but is not limited to:

• The allocation of a vessel to a specific State and its subjection to a single jurisdiction for the

purposes, for example, of safety regulation, security aspects, crewing and discipline on board;

• The conferment of the right to fly the national flag;

• The right to diplomatic protection and consular assistance by the flag State; the right to naval
protection by the flag State. Accordingly, an unregistered ship and ships that sail under more
than one flag, using one or the other according to convenience, are regarded as STATELESS
SHIPS. As stated by Article 92 “A ship which sails under the flags of two or more States, using
them according to convenience, may not claim any of the nationalities in question with respect to
any other State, and may be assimilated to a ship without nationality “. Thus, In the interest of
order on the open sea, a stateless vessel not sailing under the maritime flag of any particular State
enjoys no protection whatever, for the freedom of navigation on the open sea is a freedom for
such vessels only as sail under the flag of a State.

OPEN REGISTRIES / FLAG OF CONVENIENCE (FOC)

“Flag of Convenience” is the term used to describe states that set their standards or requirements
for registration to a minimum to attract vessels especially commercial ship owners from any part
of the world rather than just nationals of the state. Such attractive offers include but is not limited
to,

• Easy access to registry

• Transfer from registry is not restricted

• Low taxes

• Manning of ships by non-nationals of the flag state is permitted

• Little or no Government or International regulations are imposed nor does the state in question
even wish to control the companies themselves.

However, one cannot legally oppose their existence or their right to set the rules for ship
registration as it is because Article 91 of UNCLOS gives every sovereign state the right to decide
whom to accord the right to fly its flag and to prescribe the rules governing such grants.

This was illustrated in the case of the “Muscat Dhows” between Great Britain and France. The
court held that a state is free to register any vessel regardless of its nationality .This Judgment set
forth a principle which is used as a judicial precedent by courts till this day.

MUSCAT DHOWS CASE (FRANCE v. GREAT BRITAIN)

By a Compromise concluded in London on October 13, 1904, France and the United Kingdom
submitted to an Arbitral Tribunal certain questions regarding the scope of France's right to grant
subjects of the Sultan of Muscat the right to fly the French flag, and the privileges and
immunities resulting there from. In particular, the privilege against searches of French flagged
vessels was used by Arab traders engaged in the slave trade along the East African coast. On this
basis, Great Britain protested the grant of French flags to Arab dhows following the ‘prohibition
of slavery’ adopted by the signatories of the General Act of the Brussels Conference of July 2,
1890. These questions were decided by the Arbitral Tribunal in an Award dated August 8, 1905.
The Tribunal ruled that each sovereign was free to decide to whom to accord the right to fly its
flag and to prescribe the rules governing such grants.

GENUINE LINK :

Article 91(1) of UNCLOS requires that a genuine link be established between the state and the
ship apparently trying to control the liberty and freedom enjoyed by states in defining ship

registration conditions. However, the convention fails to define what exactly constitutes a
genuine link and The NOTTEBOHM CASE (1955) due to the specific subject matter of the
dispute, the definition of “genuine connection” given by the court does not add much to the
debate on the meaning of the concept with regard to vessels’ nationality .

The 1986 CONVENTION ON CONDITIONS FOR REGISTRATION OF SHIPS (UNCCORS)

made an effort to clarify the above by introducing the concept of economic link.

EVOLUTION OF GENUINE LINK PRINCIPLE

The legal basis for evolution of Genuine Link Principle was the decision of the Nottebohm case,
where the Court described Nationality as ..’ a legal bond having as its basis a social fact of
attachment , a genuine connection of existence , interests and sentiments together with the
existence of reciprocal rights and duties,’ noted that a substantive connection should exist
between the individual and the State of his Nationality.

THE NOTTEBOHM CASE

In this case, Liechtenstein claimed restitution and compensation from the Government of
Guatemala on the ground that the latter had acted towards Friedrich Nottebohm, a citizen of
Liechtenstein, in a manner contrary to international law. Guatemala objected to the Court’s
jurisdiction but the Court overruled this objection in a Judgment of 18 November 1953. In a
second Judgment, of 6 April 1955, the Court held that Liechtenstein’s claim was inadmissible on
grounds relating to Mr. Nottebohm’s nationality. It was the bond of nationality between a State
and an individual which alone conferred upon the State the right to put forward an international
claim on his behalf. Mr. Nottebohm, who was then a German national, had settled in Guatemala
in 1905 and continued to reside there. In October 1939 , after the beginning of the Second World
War , while on a visit to Europe, he obtained Liechtenstein nationality and returned to Guatemala
in 1940, where he resumed his former business activities until his removal as a result of war
measures in 1943. On the international plane, the grant of nationality is entitled to recognition by
other States only if it represents a genuine connection between the individual and the State
granting its nationality. Mr. Nottebohm’s nationality, however, was not based on any genuine
prior link with Liechtenstein and the sole object of his naturalization was to enable him to
acquire the status of a neutral national in time of war. For these reasons, Liechtenstein was not
entitled to take up his case and put forward an international claim on his behalf against
Guatemala.

Though its content are expressed in mandatory terms, the article still leaves so much of its
implementation to the flag states and viewed in this light, the provision can be seen as a mere

statement of principle. More so, it is uncertain what consequences follow when there is no
genuine link existing between a vessel and flag state and this could be seen as another reason
why the concept has not been widely observed. While some states do require that a fixed
proportion of crew and ship owners must be a national of the state in question, other states
require very little or no link at all.

EFFECT OF OPEN REGISTRIES ON THE IMPLEMENTATION OF FLAG

STATE RESPONSIBILITIES

The role and objectives of flag states shows that their primary focus is based on bringing some
form of coordination to the maritime industry, ensure safety as much as possible and to relate
closely with vessels flying its flag; to ensure corporation with international regulations and
standards and set penalties for violation severe enough to discourage infringements.

Unfortunately, the master and other key shipboard personnel are not nationals and they have no
need or incentive to visit the flag State and therefore can avoid legal action. Even though Open
Registries are responsible for a large amount of world fleet, they have no desire and lack the
power and administrative machinery to impose regulations that temper economic concerns with
social objectives. In addition, open registries are accused of being lax in preserving high
standards in terms of safety and enforcing international regulations. It is a fact that the most
famous and widely publicized maritime disasters have involved vessels registered under flag of
convenience, to mention a couple - the TORREY CANYON OF 1967 AND THE AMOCO

CADIZ OF 1978.

Open registries are not interested in exercising responsibilities and effective control over vessels,
crew training nor maintenance by regular surveys and repairs. In just one year, the vessels
registered in Malta had 207 detained ships and the reasons cited included - safety in general and
marine pollution and operational deficiencies. This can clearly cause loss of revenue to genuine
ship operators and unless properly controlled, the flags that provide opportunity for low
standards can be a risk to other vessels.

ATTEMPTS TO SOLVE THE PROBLEM OF OPEN REGISTRIES:

i. UNITED NATION CONFERENCE ON TRADE AND DEVELOPMENTS (UNCTAD)

In the late 1970, UNCTAD began dealing with the problems of FOC. In its study, it reached a
resolution that the expansion of Open registry fleets affected the development and
competitiveness of fleets of other countries including developing countries. UNCTAD through a
diplomatic conference adopted the 1986 UNCCORS, which aims amongst other things; to
strengthen the link between a ship and its flag state, ensure states effectively exercise jurisdiction
and control over their ships not only to administrative, economic social and technical matters but
also with regards to identification and being accountable for their vessels and to adopt measures

ensuring that the owners/operators can be readily identified. This proposal for the phasing out of
open registries led to warnings by leading ship finance experts of an exodus of international
bankers from the ship finance market..

UNCCORS though it reaffirmed the flag state supremacy, still left the required concept of
genuine link nebulous and controversial. Consequently, the convention did not receive the
needed amount of ratification and therefore has not come into force and from the look of things,
one would not expect it ever would; even the major maritime countries that complained about the
operations of open registries are yet to ratify. It that might be an indication that they benefit from
the system.

ii. ORGANIZED LABOR CAMPAIGN

This began in the 1930s in the United States due to transfer off American ships to the
Panamanian and Honduran flags. In 1948, the INTERNATIONAL TRANSPORT WORKER’S
FEDERATION (ITF) which as at date unites more than 700 trade unions from all over the world
adopted resolution threatening to boycott ships transferred from the US to the Panamanian flag.
The campaign is aimed at eliminating the FOC system by achieving global acceptance of a
genuine link and to ensure the protection of seafarers serving FOC ships from exploitation.

iii. CONCEPT OF PORT STATE MONITORING

The catastrophic consequences caused by major oil spills and the outcry of the general public
resulted in an expansion of coastal state jurisdiction, development of unilateral port state
enforcement and the adoption of international instruments by the IMO and ILO incorporating the
concept of port state monitoring and inspection of vessels. It is important to note that though
several states began to exercise port state control over vessels calling at their port. Such control
was only a temporary remedy and could not substitute for flag state responsibilities. Port State
control is weak because the port State can only report sub-standard vessels and practice to a flag
State that has no real control over the owner.

Thus International law deals out the right to set standards for registration and in the same breathe
tries to curtail this by demanding a genuine link should exist in doing so. Efforts made to define
or clarify what “genuine link” entails has not seen any success hence the continuous rise of open
registries..

Even though UNCTAD intended to bring some order in the industry and to curb open registries,
the fact remains that as of today, the absence of a separate international legal instrument
regulating ship registration is still a big loophole in the system. Efforts should be made to put
some control over the situation and developing a separate legal instrument to that effect would be
a step in the right direction.

2.COASTAL STATE JURISDICTION

COASTAL STATE JURISDICTION is the jurisdiction enjoyed by the coastal state in relation to
breaches of regulations and laws by foreign flagged ships that take place within its jurisdictional
zones. The prescriptive and enforcement jurisdiction comprise the main power of a coastal state.
Prescriptive is the jurisdiction to prescribe laws and regulations, while Enforcement is the
jurisdiction to enforce such laws.

The rights and obligations of states in relation to navigation and pollution are determined
primarily by International conventions and Customary international law. The United Nations
1982 Law of the Sea Convention (UNCLOS) is the most widely ratified convention in this field
of law, outlining the rights and obligations of states in relation to their jurisdictional zones as
well as with respect to environmental protection. UNCLOS stipulates the measures a coastal
state can take and coastal state jurisdiction to ensure peace and good order in their territorial sea.

CONCURRENT JURISDICTION

There is no prohibition of concurrent jurisdiction under UNCLOS, and vessels therefore can be
subject to the jurisdiction of states besides the flag state in certain circumstances, such as
entering their maritime zones and ports.

EXCEPTION

Government-owned- non-commercial vessels and warships are immune to any other jurisdiction
except the Flag State’s as stipulated by Article 32 of UNCLOS, and are under no circumstances
subject to the jurisdiction of other states.

COASTAL STATE JURISDICTION

INTERNAL WATERS

A foreign vessel located in internal waters, is subject to the legislative, administrative, judicial
and jurisdictional powers of the coastal State with regard to any illicit acts committed on board
the vessel or on land by crewmembers . The coastal State does not have to allow innocent
passage, except where straight baselines enclose "as internal water areas which had not
previously been considered as such. In those circumstances a right of innocent passage shall exist
through those waters." I t is mentioned under Article 8(2) of UNCLOS.

TERRITORIAL SEA

According to UNCLOS, the coastal State exercises full jurisdiction in the territorial sea. The
limitation on this sovereignty is the right of innocent passage of foreign vessels, whether private
or military. UNCLOS Article 17, which states as follows: "ships of all States, whether coastal or
land-locked, enjoy the right of innocent passage through the territorial sea." UNCLOS defines
"innocent passage" in Article 19(1) as "innocent so long as it is not prejudicial to the peace, good
order or security of the coastal State."

CORFU CHANNEL CASE

In 1949, in the Corfu Channel case, the International Court of Justice (ICJ) recognized that all
vessels have a right of passage through international straits, even warships, as long as they do not
engage in activities that are currently listed in UNCLOS Article 19.

LEGISLATIVE COMPETENCE OF THE COASTAL STATE

according to UNCLOS Article 21(1), the coastal State can: (a) adopt laws regarding the safety of
navigation: it can organize maritime traffic and passage of ships by drawing sea-lanes and traffic
separation schemes in its territorial sea;38 (b) adopt laws regarding the protection of navigational
aids and facilities or installations, which would comprise artificial islands and oil rigs; (c)
regulate the protection of pipelines and cables; (d) adopt legislation regarding the conservation of
living resources of its territorial sea; (e) regulate the fishery activities;39 (f) ensure the
preservation of the environment by adopting regulations on the prevention, reduction and control
of pollution; 40 (g) regulate the activities of marine scientific research and hydrographic surveys;
(h) apply its customs, fiscal, immigration and sanitary laws. Thus according to Article 21(4)
foreign vessels in the territorial sea must conform to the coastal State's legislation regarding
security of navigation.

UNCLOS Article 24,directs that the coastal State cannot impose requirements on foreign vessels
that have as a consequence the denial or impairment of the right of innocent passage. And coastal
state shall not discriminate against vessels of any State or vessels transporting cargoes to, from,
or on behalf of any State. Furthermore, the coastal State has the duty to appropriately warn others
of any danger to navigation in its territorial sea of which it has knowledge. The coastal State may
also not levy charges on foreign vessels for the only reason of their passage in its territorial sea,
but it can do so as payment for services rendered to the vessel. Notwithstanding the provisions of
UNCLOS Article 24, according to Article 25, the coastal State may take steps necessary to
prevent passage in its territorial sea that is not innocent. The coastal State can, without
discrimination among foreign vessels, temporarily suspend the innocent passage of foreign ships
in specific areas of its territorial sea, if it is essential to the protection of its security.

CRIMINAL JURISDICTION OF THE COASTAL STATE

Article 27 of UNCLOS empowers coastal state with criminal jurisdiction on board a foreign
Ship. This Article states that the criminal jurisdiction of the coastal State should not be exercised
on board a foreign ship passing through the territorial sea to arrest any person or to conduct any
investigation in connection with any crime committed on board the ship during its passage.
Exceptions to this rule can be seen y in the following cases:

(a) if the consequences of the crime extend to the coastal State;

(b) if the crime is of a kind to disturb the peace of the country or the good order of the territorial
sea;

(c) if the assistance of the local authorities has been requested by the master of the ship or by a
diplomatic agent or consular officer of the flag State; or(d) if such measures are necessary for the
suppression of illicit traffic in narcotic drugs or psychotropic substances.

MCRUBY CASE

A good example of the coastal State asserting criminal jurisdiction can be found in the McRuby
case.

In this case, nine stowaways who boarded the McRuby vessel (which was registered in the
Bahamas) during a stop in Ghana were discovered while on the high seas by the crewmembers of
the McRuby . Not wanting to bring the stowaways back to Ghana, the Ukrainian crew decided to
make them disappear by savagely killing them and throwing their bodies overboard. However,
one of the stowaways succeeded in hiding and was able to go to the police upon arrival in Le
Havre, France. The French court based its finding of jurisdiction on two grounds. First, part of
the crime had been committed in the territorial waters of France. Indeed, when the McRuby
entered the French territorial sea, the crewmembers were still searching for the last survivor. The
court found that these searches were subsequent to the sequestrations and executions, and all the
facts constituted an indivisible whole. It is common practice in France for the courts to hear
matters concerning acts committed outside the country by foreigners, if the acts are indivisible
and part of them are undertaken on French territory. The second ground used by the French court
was UNCLOS Article 101 regarding the universal competence in cases of piracy, which seems to
be an erroneous qualification.

ARTICLE 28 of UNCLOS empowers the coastal state with civil jurisdiction in relation to
foreign ships. Acording to this Article ,the coastal State should not stop or divert a foreign ship
passing through the territorial sea for the purpose of exercising civil jurisdiction in relation to a
person on board the ship.

The coastal State may not levy execution against or arrest the ship for the purpose of any civil
proceedings, save only in respect of obligations or liabilities assumed or incurred by the ship
itself in the course or for the purpose of its voyage through the waters of the coastal
State.Paragraph 2 is without prejudice to the right of the coastal State, in accordance with its
laws, to levy execution against or to arrest, for the purpose of any civil proceedings, a foreign
ship lying in the territorial sea, or passing through the territorial sea after leaving internal waters.

THE CONTIGUOUS ZONE

The important point related to contiguous zone is that it is the part of the exclusive economic
zone (EEZ), and thus of the high seas where the principle of freedom of navigation applies.
Therefore, in its contiguous zone, the coastal State does not exercise sovereignty, but rather only
has specialized jurisdictions. According to UNCLOS Article 33, the coastal State can exercise
the control necessary to prevent violations of its legislation concerning customs, taxes,
immigration and sanitation within its territorial sea. This provision applies only to private
vessels. as warships are immuned. Furthermore, pursuant to UNCLOS Article 303(2), "to control
traffic in historical and archeological objects, the coastal State may presume that the removal of
such objects from the contiguous zone without the State's consent would violate the laws
mentioned in [UNCLOS] Article 33, and the State may act accordingly." In addition, because the
contiguous zone is a part of the EEZ, the coastal State will also have all the rights and duties,
without exception, that pertain to the EEZ.

EXCLUSIVE ECONOMIC ZONE

The EEZ does not follow either the concept of sovereignty, prevailing in the territorial sea, or the
concept of freedom, which characterizes the high seas.

Article 56 of UNCLOS offers coastal states jurisdiction in their EEZ, with regard to:

1.Artificial islands, installations and structures;

2.Marine scientific research; and

3.Protection and preservation of the marine environment

According to UNCLOS Article 246(1), coastal States have a right to regulate, authorize, and
conduct marine scientific research in their EEZ and on their continental shelf. No State can
conduct research in the EEZ of a coastal State without the consent of that State. Furthermore
according to UNCLOS Article 246(8), a foreign State has the obligation to refrain from
interfering with the rights and duties of the coastal State when undertaking marine scientific
research with the consent of that State. It also has to comply with the conditions stated in
UNCLOS Article 249.

Finally, under UNCLOS Article 253, the coastal State can require the suspension of any research
if it is conducted in such a way that it is contrary to the information provided and upon which the
coastal State gave its consent, or if it does not respect the rights and duties of the coastal State
listed in UNCLOS Article 249. As per UNCLOS Article 60(1), the coastal State has an
"exclusive right to construct and to authorize, and regulate the construction, operation, and use"
of these installations for the purposes stated in UNCLOS Article 56 (regarding natural resources)
and other economic purposes. The coastal State has exclusive jurisdiction regarding artificial
islands and other installations with regard to customs, fiscal, health, safety, and immigration
laws. At the same time, the coastal State must give due notice of the construction and presence of
such structures, and it may establish safety zones around them to ensure safety of navigation.
Foreign vessels must respect these zones.

THE HIGH SEAS

Freedom is the fundamental principle underlying the legal concept of the high seas. According to
UNCLOS Article 87, the general freedom of the high seas include, inter alia, the freedom of
navigation and overflight, as well as the freedom to lay submarine cables and pipelines, to
construct artificial islands and other installations permitted under international law, to fish, and
to engage in marine scientific research. UNCLOS directs that all States should exercise these
freedoms with due regard to the rights of others and the high seas "shall be reserved for peaceful
purposes." Moreover, under Article 89, "no State may validly purport to subject any part of the
high seas to its sovereignty."

UNCLOS Article 90 provides, "every State, whether coastal or land-locked, has the right to sail
ships flying its flag on the high seas." The underlying consequence is that a flag State has
exclusive jurisdiction over the vessels flying its flag. Similarly, it can be understood from
Articles 90 through 92, that each vessel must have only one nationality. Moreover, every State
has the right to determine how it will grant nationality to a vessel. Flag States have several duties
listed in UNCLOS Article 94. Additionally, on the high seas, as in other sea zones, warships and
government vessels used for non-commercial service have complete immunity.

In the event of a collision or any other accident of navigation involving the penal responsibility
of a crewmember, only the flag State or the State of which the responsible person is a national
can institute proceedings. Specifically, Article 97 provides that "no arrest or detention of the
ship, even as a measure of investigation, shall be ordered by any authorities other than those of
the flag State."
THE LOTUS CASE

In that case, the question was whether a State, other than the flag State, could assert penal
jurisdiction on the high seas. Indeed, in 1926, after a collision between a French vessel (the
Lotus) and a Turkish vessel, Turkey filed a lawsuit against the French Master. France opposed
these proceedings, and the case was submitted before the CPJI. According to the Court, the
principle of exclusivity of the flag State, in applying only to acts of authority, is not an obstacle
to the jurisdictional competence of foreign tribunals. However, Turkey should recognize the

exclusive competence of France, as set forth in the Brussels Convention on penal jurisdiction in
matters of collision, and UNCLOS Article 97.

3.POWERS OF COAST GUARD

Coast guard is a maritime security organization of a particular country. The term embraces a
wide range of responsibilities in different countries, from being a heavily armed military force
with customs and security duties to being a volunteer organization tasked with search and rescue
without law enforcement authority. In most countries, a typical coast guard's functions are
distinct from those of the navy (a military service) and the transit police (a law enforcement
agency), while in certain countries has similarities to both.

In 1829 the first UK Coastguard instructions were published and dealt with discipline and
directions for carrying out preventative duties. They also stipulated that, when a wreck took
place, the Coastguard was responsible for taking all possible action to save lives, to take charge
of the vessel, and to protect property.

In the United States, the United States Coast Guard was created in 1915 by the merger of two
other federal agencies. The first, the United States Revenue Cutter Service, was a maritime
customs enforcement agency that also assumed a supporting role to the United States Navy in
wartime. The second, the United States Life-Saving Service, was formed in 1848 and consisted
of life-saving crews stationed at points along the eastern seaboard. The Coast Guard later
absorbed the United States Lighthouse Service and the Bureau of Navigation and Steamboat
Inspection.

COAST GUARD IN INDIA

The Indian Coast Guard (ICG) is maritime law enforcement and search and rescue agency of
India with jurisdiction over its territorial waters including its contiguous zone and exclusive
economic zone. The Indian Coast Guard was formally established on 1 February 1977 by the
Coast Guard Act, 1978 of the Parliament of India. It operates under the Ministry of Defence. The
Coast Guard works in close cooperation with the Indian Navy, the Department of Fisheries, the
Department of Revenue (Customs), and the Central and Statepolice forces. The Indian Coast
Guard's motto is "वयम रामः" (Vayam Rakshamah), which translates from Sanskrit as "We
Protect".The important functions are law enforcement, coastal patrol, marine border protection,
marine search, and rescue.

Constitution of the Coast Guard. (Section 4 ,The Coast Guard Act,1978 )

(1) There shall be an armed force of the Union called the Coast Guard for ensuring the security
of the maritime zones of India with a view to the protection of maritime and other national
interests in such zones.

(2) Subject to the provisions of this Act, the Coast Guard shall be constituted in such manner as
may be prescribed and the conditions of service of the members of the Coast Guard shall be such
as may be prescribed.

The Direction and Control of the coast guard ( Section 5.)

(1) The general superintendence, direction and control of the Coast Guard shall vest in, and be
exercised by, the Central Government and subject thereto, and to the provisions of this Act and
the rules, the command and supervision of the Coast Guard shall vest in an officer to be
appointed by the Central Government as the Director-General of the Coast Guard.

(2) The Director-General shall, in the discharge of his duties under this Act, be assisted by such
number of Inspectors-General, Deputy Inspectors-General, Commandant and such other officers
as may be appointed by the Central Government.

Duties and functions of Coast Guard. (Section 14)

(1) It shall be the duty of the Coast Guard to protect by such measures, as it thinks fit, the
maritime and other national interests of India in the maritime zones of India.

(2) Without prejudice to the generality of the provisions of sub-section (1), the measures referred
to therein may provide for--

(a) ensuring the safety and protection of artificial islands, offshore terminals, installations, and
other structures and devices in any maritime zone;

(b) providing protection to fishermen including assistance to them at sea while in distress;

(c) taking such measures as are necessary to preserve and protect the maritime environment and
to prevent and control marine pollution;

(d) assisting the customs and other authorities in anti-smuggling operations;

(e) enforcing the provisions of such enactments as are for the time being in force in the maritime
zones; and
(f) such other matters, including measures for the safety of life and property at sea and collection
of scientific data, as may be prescribed.

(3) The Coast Guard shall perform its functions under this section in accordance with, and
subject to such rules as may be prescribed and such rules may, in particular, make provisions for
ensuring that the Coast Guard functions in close liaison with Union agencies, institutions and
authorities so as to avoid duplication of effort.

Missions of Indian Coast Guard:

● Safety and protection of artificial islands, offshore terminals, and other installations

● Protection and assistance to fishermen and mariners at sea

● Preservation and protection of marine ecology and environment including pollution control

● Assistance to the Department of Customs and other authorities in anti-smuggling operations

● Law enforcement in territorial as well as international waters

● Scientific data collection and support

● National defence during hostilities (under the operational control of the Indian Navy)

Additional responsibilities of the Indian Coast Guard:

● Offshore Security Coordination Committee (OSCC) – The Director-General of the Indian

Coast Guard is the Chairman of OSCC constituted by the Ministry of Petroleum and Natural Gas
(MoPNG).

● National Maritime Search and Rescue Coordinating Authority (NMSARCA) – The Director-
General of the Indian Coast Guard is the NMSARCA for executing/coordinating search and
rescue (SAR) missions

● Lead Intelligence Agency (LIA) – For coastal and sea borders

● Coastal Security – The Director-General of the Indian Coast Guard is the commander of
coastal command and is responsible for overall coordination between central and state agencies
in all matters relating to coastal security
 4.PORT STATE JURISDICTION

Ships trade internationally have to call at various ports all over the world. many ships may not
call at any of their home ports for a considerable period and it is possible that during a certain
period of time Ship’s Certificates may not have been renewed or maintenance in general has
suffered due to various reasons. Therefore, it is imperative that ships must be inspected at
various ports to ensure compliance with rule requirements as regards safety, maintenance,
manning, etc. This control is termed as PORT STATE CONTROL. Thus the Port State Control
is the inspection of foreign ships in national ports to verify that the condition of the ship and its
equipment comply with the requirements of international regulations and that the ship is manned
and operated in compliance with these rules.

PORT STATE JURISDICTION OVER A FOREIGN-FLAGGED VESSEL

A port state enjoys limited jurisdiction over a foreign-flagged vessel in its port. Foreign vessels
calling at ports are subject to the coastal state’s criminal laws, civil laws, and regulations, yet the
coastal state has discretion as to whether jurisdiction will be exercised in each instance. This
means it is up to the coastal state to decide if, how, and when to exercise its jurisdiction . Such
types of jurisdictional enforcement powers are typically considered Port State Control (PSC).
PSC allows port states to inspect and verify that foreign vessels are compliant with international
standards for ship condition (including vessel source pollution), equipment, manning and
operation on three grounds:

– Own initiative (non-compliance with domestic or regional regulations)

– At the request of the flag state or another coastal state (for infractions against their legislation)

– After a third party complaint (specifically working conditions provided by crew, a trade
union,etc.)

These enforcement powers are, of course, restricted to a reasonable extent for foreign sovereign

immune vessels such as warships, vessels owned and operated by a sovereign foreign state

entity, and vessels which may be controlled, owned, or operated by diplomatic missions.

VOLUNTARY ENTRY & FORCED ENTRY

Voluntary entry to port entitles a vessel to less freedoms (more port state jurisdiction) than if a
vessel has entered port under force majeure or other conditions of distress such as severe
weather, mechanical or structural integrity problems, etc. Such reasons for entering a port,
without earlier intended plans, usually grant a vessel limited immunity from prosecution in
matters specifically related to the coastal state’s jurisdiction (violations of coastal / port state’s
civil laws, and domestic environmental regulations) as the vessel in distress could not take
appropriate measures to avoid entering the waters / port and hence avoid non-compliance. In
particular, they are generally considered exempt from non-malicious breaches of marine
pollution laws and regulations. Under extreme circumstances and violations of international law
(unacceptable pollution, suspected Fishing, suspected piracy, etc) the port state may impose
jurisdiction on the basis of preventative measures for the benefit of the international community .

However, if while the vessel is in port, and the vessel (including members of the crew) violate
the laws of the coastal state they may be subject to the jurisdiction of the local authorities (i.e.
committing crimes while in port, etc). This is a grey area in the law which is often debated and
open to interpretation depending on specific circumstances. Generally, the vessel and crew which
operate it are not given a complete freedom to do as they please while in port and ashore in the
coastal state. If the authorities are under the impression the vessel or members of the crew may
currently be engaging in activities which violate the laws or regulations of the coastal state they
may increase their jurisdiction, including enforcement powers, and even prosecution. Again, this
is a grey area in the law, and the coastal state has discretion to enforce or not enforce certain laws
and regulations.

EXCEPTION TO SHIPS THAT HAS TAKEN PART IN SEARCH & RESCUE

Under SOLAS, vessels having conducted search and rescue missions at sea are permitted to
disembark persons at the nearest available port. Here the port state should not engage in their
jurisdiction , to the vessel engaged in such operation or the subjects of the rescue.

It is a Customary International Law that port states have the right to control if the vessels in their
harbours are safe and detain them if they are not .Thus in accordance with the customary
international law 14 European States reacting to the AMOCO CADIZ DISASTER signed a
MEMORANDUM OF UNDERSTANDING (MOU) on port state control in 1982 ( PARIS MOU
).

The PARIS MOU provides that the participating port states maintain an effective system of Port
State Control and also enforce compliance with the main International safety and pollution
conventions ,regardless of whether the flag state of the concerned ship is a party to these
conventions or not .The Port states have the control competences that are given by the various
conventions.

Port state control enables participating Port States - in cooperation with other states to develop
positive as well as negative list of flag states and performance tables for classification societies.
These lists include information on detained ships ,their flags ,names and types ,which is
published on relevant websites .A great part of the success of Port state control measures is
therefore based on the “NAME AND SHAME” PRINCIPLE.

As port state control turned out to be an effective measure to enhance compliance with

International agreements ,other regions of the World followed the example of the Paris MOU

and adopted there own MOUs. There are currently NINE REGIONAL MOUs on port state

control.

Nine regional agreements on port State control - Memoranda of Understanding or MOUs - have

been signed.

ENFORCEMENT BY PORT STATES

ARTICLE 218 OF UNCLOS III

Important provision dealing with Port State Control under UNCLOS is Article 218 .It concerns
the enforcement of environmental standards by Port States . Article 218 allows Port States to
undertake investigations of any discharge from a vessel “outside the internal waters, territorial
sea or exclusive economic zone of that State in violation of applicable international rules and
standards”. The provision therefore amounts to an extra – territorial jurisdiction .However there
are limitations in the number of cases in which case the discharge took place in the internal
waters , territorial sea or EEZ of another State. In that case, proceedings can only be taken if the
other State or Flag State requests so.

THE INDIAN PORTS ACT, 1908

This is an Act to consolidate the enactments relating to ports and port-charges. Important
provisions under this Act are related to the Powers of Port Officers .

 CHAPTER III of the Act deals with PORT-OFFICIAL’S POWERS AND DUTIES .
 Thus the powers of Port Officers are:
 Power of conservator to give and enforce directions for certain specified purposes
(SECTION 8).
 Power to cut warps and ropes (SECTION 9).
 Removal of obstructions within limits of port (SECTION 10).
 Recovery of expenses of removal (SECTION 11).
 Removal of lawful obstructions (SECTION 12).
  Fouling of Government moorings (SECTION 13).
 Raising or removal or wreck impeding navigation within limits of port (SECTION 14).
 Power to board vessels and enter buildings. (SECTION 15).
 Power to require crews to prevent or extinguish fire (SECTION 16).

MODULE-3

1.CARRIAGE BY SEA

Carriage of goods by sea is carried out on the basis of a contract of carriage between the
consignor and the carrier .'Carrier 'means any person or entity who is tasked with the duty to
carry goods or cargo from one place to another . 'Consignor means the person who sends the
goods,also known as shipper . A contract of carriage by sea may be defined as an agreement
between a carrier and the shipper for the carriage of goods by sea against the payment of
frieght,undertakes to deliver goods from one port to another. In general the contract of carriage is
executed with the carrier either by the seller or the purchaser depending on the terms of the sale
agreement . A contract for the carriage of goods by sea is called contract of affreightment. A
contract of affreightment may take one of the three forms namely it may take the form of a
chapter party or bill of lading or passenger contract.

The laws for transporting goods from one place to another by sea are as follows:

 THE (INDIAN) BILLS OF LADING ACT, 1856

 CARRIERS ACT, 1865
 THE MERCHANT SHIPPING ACT, 1958
 CARRIAGE OF GOODS BY SEA ACT, 1924, 1925.
 THE MARINE INSURANCE ACT, 1963

When a situation comes that there is no particular law for a case then the Indian judiciary refers
to the common English law, to solve the disputes or case.

2.CHARTER PARTY CONTRACTS

Defining a charter party

A charter party (commonly abbreviated to “C/P”)

i) is a document containing the written terms of a charter agreement between a shipowner and a
charterer, who are usually referred to as “Owners” and “Charterers”.

ii) defines the obligations, rights, and liabilities of the shipowner and charterer.

iii) is usually drawn up by the broker representing the charterers following negotiation and
agreement of terms between both parties.

iv) is usually based on a particular edition of a recognized standard form (e.g. GENCON,
BALTIME, NYPE).

v) is sometimes based on a specified charter party already performed by another vessel at an

earlier date, in order to save effort and time in negotiating many of the terms.

vi) usually comprises a set of standard clauses on a printed form, with additional typed rider
clauses appended if the standard clauses fail to cover all aspects of the parties’ agreement. Where
there is a conflict between standard and rider terms, the rider clauses override the standard
clauses.

vii) may have many amendments to the standard clauses, as agreed by the parties. Generally, the
more amendments there are, the more scope for legal disputes, and it is preferable to have as a
few amendments as possible.

viii) maybe in a modern “boxed” layout, with the plain wording of clauses (as with BIMCO-
designed forms), or in a more traditional style with (sometimes) rather archaic wording.

ix) may contain annexes dealing with special arrangements (as with CRUISEVOY, which has
five annexes).

x) may have sensitive clauses in an addendum and/or side letter. Side letters are legally not so
important as addenda.

xi) should be signed by a broker representing each party to the contract, unless their principals
sign instead.

xii) should ideally be balanced so that it does not favour one party to the disadvantage of the
other. (Some charter parties, such as SUGAR CHARTER 1999, are sometimes accused of being

biased.)

Numerous charter party forms are in use for different trades and purposes. The use of an “off-
the-shelf” form which has been carefully drafted, amended, and improved over the years to avoid
legal pitfalls is generally preferred by brokers and shipping practitioners to creating a totally new
document for an individual charter.
Many forms have more than one edition, having been amended and improved over the years.
Brokers may still use an older version, however, in preference to a newer version that has not
gained their confidence. Modern charter party forms drafted by BIMCO9 generally have boxed
layouts, whereas older forms are in a “conventional” layout. In a BIMCO boxed layout form,
variable information is contained in boxes in Part I, while standard terms are contained in printed
terms in Part II. Legally, the contract is generally contained in the Part I details, and in any other
variable details in rider clauses, etc.

The main types of charter parties are Bareboat Charter Party,Time Charter Party and
Voyage Charter Party

Bareboat Charter Party.

By this type of charter, the shipowner leases his entire vessel and the charterer has the
responsibility of operating it as though it were his own vessel. As the name implies, the bare
vessel is chartered. The shipowner has, for the period covered by the charter party, lost control of
his vessel. The charterer pays all expenses: fuel, stores, provisions, harbour dues, pilotage, etc.,
and employs and pays the crew. There may, however, be a clause in the charter party that the
master and the chief engineer must be approved by the shipowner. The charterer is responsible
for the upkeep, preservation, and safety of the vessel. Before delivery to the charterer, the vessel
is surveyed by representatives of both parties, and the same is done on redelivery.

The charter party will stipulate that the vessel must be redelivered in the same good order and
condition as when delivered, ordinary wear and tear excepted. On redelivery, the owner's
representatives, usually the port captain and port engineer, may check the logbooks for
information pertaining to groundings, striking objects, and collisions. Fuel oil in the vessel on
delivery is paid for by the charterer - at the current price at the port at that time, and on
redelivery, the shipowner pays for the fuel in the vessel at the current price in the port at the
time.

Voyage Charter Party

According to Black's Law dictionary, a voyage charter is a charter under which the ship owner
provides a ship and crew, and places them at the disposal of the charterer for the carriage of
cargo to a designated port. The voyage charterer may lease the entire vessel for a voyage or a
series of voyage or may lease only a part of the vessel (by space charter party).

Under a voyage charter the vessel is let out to the charterer for a specific voyage. The ship owner
will be paid freight' which will cover its costs, including fuel and crew, as well as its profit.

Legally, freight is a special type of payment, as the usual rule of set off will not apply to it. A set
time, lay time', will also be provided for the loading and discharging operations. If these
operations exceed the permitted laytime, the shipowner will be compensated by demurrage' at the
rate set down in the charter.

For its part, the shipowner owes the charter the duty of proceeding with reasonable dispatch on
the charter party voyage, or voyages, in the case of a consecutive voyage charter.

A voyage charter differs from time charter in many respects, but primarily in that it is a contract
to carry specific goods on a defined voyage or voyages, the remuneration of the ship owner
being a freight calculated on the basis of the quantity of cargo loaded or carried or sometimes a
lump sum freight.

A Voyage charter party usually carries a cancellation clause that gives the charterer the right to
cancel the charter if the ship is not as his disposal at the port of loading at the specified time.The
charterer would have to fix a cancellation date before exercising this right.

Time Charter Party

A time charter party is also known as charter party by demise. Morgan defines time charter as a
contract for the hire of a ship or charter party for a specified period of time; the charter pays for
the bunker fuel, fresh water, port charges etc in addition to the charter hire.

According to Blacks law dictionary, charter for a specified period, rather than for a specific task
or voyage; a charter under which the ship owner continues to manage and control the vessel but
the charter designates the ports of call and the cargo carried. Each party bears the expenses
related to its functions and for any damage it causes. Also termed as catch-time charter.

A charter by demise operates as a lease of the ship itself, to which the services of the master and
the crew may or may not be superadded. The charterer becomes for the time being the owner of
the vessel; the master and crew become his servants and through them the possession of the ship
is in him.

Under a charter not by demise the ship owner agrees with the chartered to render services by his
master and crew to carry the goods that are put on board his ship by or on behalf of the charterer.
In this case it was held that the ownership and also the possession of the ship remained with the
original owner through the master and crew though the charterer has the temporary right to have
his goods loaded and conveyed in the vessel.

3.BILL OF LADING

The meaning of the term “bill”, it is defined as a printed or written statement of the cost for the
goods or services delivered or to be delivered. The term “ lade” means to put the cargo onto a
ship or other form of goods carrier. Thus, a bill of lading in shipping is a record of the traded
goods which have been received on board. It is a document that establishes an agreement
between a shipper and a transportation company for the transportation of goods.

Transportation Company (carrier) issues these records to the shipper.

A bill of lading indicates a particular carrier through which the goods have been placed to their
final destination and the conditions for transporting the shipment to its final destination. Land,
ocean and air are the means used for bills of lading.

A bill of lading is a very important issue when making shipments to move the cargo or freight
from one point to the other. On one hand, it is a contract between a carrier and shipper for the
transportation of goods and on the other hand, it serves as a receipt issued by a carrier to the
shipper.

Hence, the bill of lading is considered a legal document which provides all the vital details to the
shipper and the carrier to conveniently process the freight shipment through different maritime
countries and invoice it correctly. The original copy of the bill of lading is provided to the
carrier, and a copy of the same should also be ascribed to the packaged freight.

Purpose of Bill of Lading:

The bill of lading document is meant to act as a transport document enacting as the evidence of
the contract of carriage of the goods. A negotiable bill of lading has the following legal qualities:

● It acts as a piece of evidence for the carriage contract containing the terms and condition
under which the goods transportation will be carried out

● It represents as a receipt which endorses that the carrier has received the cargo as per the
contract and the goods are received in good condition.

● It is a document of title, permitting the sale of goods in transit and the raising of financial
credit.

● Most of the local and international system does not consider a bill of lading as a document of
title. It provides the right for the delivery to be made to the possessor.

Negotiable and Non-negotiable bill of lading

Negotiable bill of lading: In this type of bill, clear instruction is provided to make the delivery of
the goods to anyone having the possession of the original copy of the bill, which itself signifies
the title and control of the freight. In this type of bill, the buyer/ receiver or his/her agent has to
acquire and present an original copy of the bill of lading at the discharge port. In the absence of
original bill copy, the freight will not be released. Non-negotiable bill: This type of bill of lading
fixes a specific consignee/name of the receiver to whom the freights will be shipped and
delivered. It, however, does not itself serve the ownership of the goods. Under this type of bill,
the assigned receiver/ buyers can claim the cargo by confirming their identity.

Types of Bill of Lading

The bill of lading can be classified on the basis of “how it is executed” and “Method of operation

On the basis of execution:

1. Straight bill of lading reveals that the goods are consigned to a specified person and it is not
negotiable free from existing equities. It means any endorsee acquires no better rights than those
held by the endorser. This type of bill is also known as a non-negotiable bill of lading, and from
the banker’s point of view, this type of bill of lading is not safe. This type of bill is prominently
used for military cargo.

2. Open bill of lading – This is a negotiable bill of lading where the name of Consignee can be
changed with consignees’ signature and thus transferred. This can be transferred multiple times.
Switch bill of lading is a type of open bill of lading.

3. Bearer bill of lading is a bill that states that delivery shall be made to whosoever holds the
bill. Such bill may be created explicitly or it is an order bill that fails to nominate the consignee
whether in its original form or through an endorsement in blank. A bearer bill can be negotiated
by physical delivery. They are used for bulk cargo that is turned over in small amounts.

4. Order bill of lading is the bill uses express words to make the bill negotiable. This means that
delivery is to be made to the further order of the consignee using words such as “delivery to A
Ltd. or to order or assigns. The cargo is only delivered to the bonafide holder of the bill of
lading, and it has to be verified by an agent who issues delivery order and the verified bill of
lading. The order bill of lading:

– is the most modern type bill which is widely used all over the world

– ensures the safety of delivery of cargo to a bonafide holder of B/L

– Since the ship visits several foreign ports where the language, practice, procedures may be
different the master might be inconvenienced during the delivery of the cargo. People might
fraudulently collect the cargo.
– To overcome this difficulty and avoid future cargo claims and litigations, the consignee or the
holder is required to surrender the bill of lading to the ship’s agent at the discharge port who will
verify the genuineness of the bill of lading. When satisfied the agent will issue a delivery order
and the verified bill of lading. Now any person can collect the cargo from the ship by
surrendering the bill of lading and the delivery note to the ship.

On the basis of Method of Operation:

1. Received for shipment bill of lading–This bill is sent from agent /charterer to shipper. The
endorsement of this bill ensures that the carrier has received goods but does not confirm it is
onboard of the assigned vessel

2. Shipped B/L – This bill of lading is Issued when cargo is loaded on board. It binds the
shipowner and the shipper directly

3. A clean bill of lading is one which states that the cargo has been loaded on board the ship in
apparent good order and condition. Such a bill of lading will not bear a clause or notation which
expressively declares a defective condition of goods and/or the packaging. The opposite term is a
soiled bill of lading. It reflects that the goods were received by the carrier in anything but good
condition.

4. Through B/L – This bill of lading is a legal document that allows for direct delivery of cargo
from point A to point B. The bill allows transportation of goods both within domestic borders
and through international shipment as it serves as a receipt of the cargo, a contract of carriage,
and sometimes title for the products as well

5. Combined transport B/L – This bill gives information about cargo being transported in large
containers by sea and land, i.e. through multi-model transport

6. Dirty bill of lading: If the shipowner raises an objection about “the condition of the cargo is
in good order”, he/she can include a clause thereby causing the bill of lading to be “claused or
dirty” along with the remarks as per the finding of the cargo condition. E.g. torn packing, broken
cargo, shortage in the quantity of the goods etc.

CONTENTS OF BILL OF LADING:

The bill of lading comprises of the following details:

● The complete name and official address of the receiver and the shipper.

● The Purchase orders or special reference/ invoice numbers which helps the shipper and the
consignee to release the goods for pickup or accepted at delivery
● The date of the pickup which acts as a reference to track the freight

● The details of the item including the number of unit being shipper, weight and dimension of
the product, along with the nature of the cargo being carried, i.e. dangerous goods etc.

● If the goods are hazardous, Department of Transportation hazardous material designation is

tagged, and it is cited on the bill to follow special rules and requirements when shipping

● The details of the packaging used such as crates, palates, cartons, pills, drums etc.

● Any special notes or instruction for the carrier

CASE LAW

EXPORT-IMPORT v. EASTRN ASSOCIATES CO. the High Court of Delhi held in a case
property in the goods i. e. the two dumpers , passed to the defendants .The defendants neither
paid the price nor returned the bill of lading. They were therefore liable to pay the price of these
two dumpers.

THOMPSON v. DOMINY

A Bill of Lading is not negotiable like a bill of exchange so as to enable the indorsee to maintain
an action upon it in his own name ; the effect of the indorsement being only to transfer the right
of property in the goods , but not the contract itself.

4.RIGHTS AND DUTIES OF SHIP-OWNERS AT COMMON LAW

RIGHTS OF SHIP-OWNERS

Both by the common law or express contractual provision, the ship owner enjoys the right to
retain the goods in the port of discharge as a security for the payment of freight or other charges.

1. LIEN IN COMMON LAW

In common law, the ship-owner has the right to retain the cargo as security for freight, assuming
that the payment and delivery are occurring at the same time, for general average contribution
and for the money spent in protecting the cargo . These are possessory liens depending on the
possession of the cargo. In contrast to contractual liens, the common law liens bind the third
parties

a) Lien for the general average contributions

The ship-owner has the right to retain the cargo for the general average contribution.
Furthermore, the ship-owner has the duty to exercise the lien in favour of those who are entitled
to pretend the contribution . Where general average contribution due to the cargo is recovered,
the ship-owner shall release the goods to the consignee in return for the signing of a general
average bond or some other form of security provisions. In the situation of a particular average,
lien shall be exercised in respect to the paid sums determined by the salvage of cargoes owned
by several owners or by just a single one. The idea behind the existence of the lien for general
average applies to situations where action is less than the whole. The lien extends in favour of
the agent

b) Lien for the freight

Lien for the freight may be exercised where the cargo is shipped under the bill of lading or a
charterparty contract. The lien shall not be exercised in relation to other sums due under the
contract such as demurrage, damages for detention or dead freight . The common law lien shall
apply to all cargoes coming to the same consignee on the same voyage for the freight due or only
for a part of them but not for goods on different voyages shipped under different contracts .
Where a single contract is involved, the ship owner is entitled to exercise the lien on all cargoes
consigned to the same person on the same voyage even where goods are shipped under different
bills. If the bills of lading were endorsed to different assignees, the exercise of ship owner’s right
of lien is confined to those bills on which the freight is due . Similarly, when goods are delivered
in installments because there is an interdependent obligation to pay the freight to the delivery of
each installment, the exercise of the lien shall be confined to the specific installment on which
the freight is due . Where a lien clause is found in the bill of lading, the ship owner cannot
exercise, as against the holder of the bill of lading other than the charterer or his agent, a lien for
freight payable under the charter party in respect of the same goods or other property, or
difference, if any, between the freight due under the bill of lading and freight payable under the
charter, or dead freight or demurrage at the port of discharge . The only possibility to reach such
a result lies in the way the bills of lading clause is construed to extend the ship owner’s right.
The lien extends only on unpaid freight. It ceases when the freight is paid and there is no right
under which the amounts can be followed in the hands of the charterer or a third party . The ship
owner’s right to exercise the lien may be waived in the following circumstances: by accepting a
bill for the freight, by making the freight payable after the delivery of the goods or by delivery
without requiring payment unless such a delivery was due to fraud . At common law, the lien
does not confer the right for the ship owner to resale the cargo not even when their retention
involves certain expenses .

Other rights are:

1.right to rent on charter of demise.

2.right to pay for freight on voyage charter.

3. right to rent or remuneration monthly or annualy as the case may be under time charter.
4.right to maintenance under bare boat charter.

5.right to damages , repair.

6.right to return of ship after the contract period.

7.right to sue in case of default in part of charterer or consigner.

DUTIES OF SHIPOWNERS

It is worth noting initially that the Shipowners Duties are the Charterers’ Rights, the various
duties of the Shipowners can be summarised as follows:

1. To provide a seaworthy ship which complies with the charterparty description;

2. To properly and carefully load, handle, stow, carry, keep, care for, discharge and deliver
the cargo;

3. To comply with charterers’ legitimate employment instructions;

4. To prosecute voyages with reasonable dispatch

5. Obligation to issue Bills of Lading

Article III of the Hague-Visby Rules states that the shipper can demand the carrier to issue a
Bill of Lading showing the leading marks,the quantity of goods and apparent order and
condition of the goods.This states that the carrier is issuing the Bill of Lading does not
provide any sort of penalty for non-compliance and it is seen in the case of LEESH RIVER
TEA CO.V. BRITISH INDIAN STEAM NAVIGATION CO., it was decided that the
carrier had a non-delegable duty for carrying,caring and keeping the cargo as it was
considered as an important duty.

It can be understood that the carrier may not know the precision of whether the cargo is packed
in containers or in packages as told by the shipper,however if the precision of the information is
not correct,the carrier would be held liable as he is one to issue the Bill of Lading.

6.Exercise due diligence to keep the ship sea-worthy and care for the goods.

7.duty to provide seaworthy ship.

8. duty to maintain the goods

9.duty to disclosure

10. duty to avoid loss of goods

11.duty to maintain the bills of lading

12.duty to deliver goods to consignee

13.duty to issue bill of lading

14.Delivery of ship to charterer at a agreed date and place.

15.Shipowners undertake to co-operate with charterers in loading and unloading cargoes.

16.Shipowners undertake to keep the ship properly manned and to provide her with necessary
supplies and meet the running expenses during the charter period.

5.THE INDIAN CARRIAGE OF GOODS BY SEA ACT, 1924

This Act came into force on 21st September 1925.This Act is to amend the law with respect to
the carriage of goods by sea and it contains 7 sections and 1 schedule consists of 9 Articles . The
Act extends to the whole of India.

Section 2 deals with Application of Rules.- The rules set out in the Schedule shall have effect in
relation to and in connection with the carriage of goods by sea in ships carrying goods from any
port in India to any other port whether in or outside India.

Section 3. There shall not be implied in any contract for the carriage of goods by sea to which
the Rules apply any absolute undertaking by the carrier of the goods to provide a seaworthy ship.

Section 4. Statements as to application of Rules to be included in bills of lading.-

Section 5. Carriage of goods by sea in ship carrying goods from a port in India is notified in
Official Gazatte by Central Govt.[goods and routes are to be notified and sail as per the
notification]

Section 6.In bulk cargoes if there is a difference between the weight of cargo and weight in bill
of lading, in such situation bill of lading is not an evidence prima facie.

SCHEDULE

RULES RELATING TO BILLS OF LADING

ARTICLE I contains the definitions for Carrier,Goods ,ship and contract of carriage. Thus "
Carrier " includes the owner or the chartered who enters into a contract of carriage with a shipper
. "Contract of carriage " applies only or contract of carriage covered by a bill of lading or any
similar document of title, in so far as such document relates to the carriage of goods by sea
including any bill of lading or any similar document as aforesaid issued under or pursuant to a
charter party from the moment at which such bill of lading or similar document of title regulates
the relations between a carrier and a holder of the same. "Goods" includes any property
including live animals as well as containers, pallets or similar articles of transport or packaging
supplied by the consignor, irrespective or whether such property is to be or is carried on or under
deck. "Ship" means any vessel used for the carriage of goods by sea . "Carriage of goods"
covers the period from the time when the goods are loaded on to the time when they are
discharged from the ship.

Article II states that subject to the provisions of Article VI, under every contract of carriage of
goods by sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to
the rights and immunities hereinafter set forth.

Article III deals with RESPONSIBILITIES AND LIABILITIES i.e.

1. 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.

2. Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle,
stow, carry, keep, care for and discharge the goods carried. 3. After receiving the goods into his
charge, the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to
the shipper a bill of lading showing among other things-

(a) The leading marks necessary for identification of the goods as the same are furnished in
writing by the shipper before the loading for such goods starts, provided such marks are stamped
or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which
such goods are contained, in such a manner as should ordinarily remain legible until the end of
the voyage :

(b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as
furnished in writing by the shipper :
(c) The apparent order and condition of the goods:

Provided that no carrier, master or agent of the carrier, shall be bound to state or show in the bill

of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting
not accurately to represent the goods actually received, or which he has had no reasonable means
of checking.

4. Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as
therein described in accordance with paragraph 3 (a), (b) and (c).[However, proof to the contrary
shall not be admissible when the bill of lading has been transferred to a third party acting in good
faith.]

5. The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of
shipment of the marks, number, quantity and weight, as furnished by him bad the shipper shall
indemnify the carrier against all loss, damages, and expenses arising or resulting carrier against
all loss, damages, and expenses arising or resulting from inaccuracies in such particulars. The
right of the carrier to from inaccuracies in such particulars. The right of the carrier to such
indemnity shall in no way limit his responsibility and liability under the contract of carriage to
any person other than the shipper.

6. Unless notice of loss or damage and the general nature of such loss or damage be given in
writing to the carrier or his agent at the port of discharge before or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima
facie evidence of the delivery by the carrier of the goods as described in the bill of lading.

The notice in writing need not be given if the state of the goods has at the time of their receipt
been the subject of joint survey or inspection.

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 delivery of the goods or the date when the
good should have been delivered.

In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and tallying the goods.

7. After the goods are loaded the bill of lading to be issued by the carrier, master or agent of the
carrier, to the shipper shall, if the shipper so demands, be a "shipped" bill of lading, provided
that, if the shipper shall have previously taken up any document of title to such goods, he shall
surrender the same as against the issue of the "shipped" bill of lading, but at the option of the
carrier, such document of title may be noted at the port of shipment by the carrier; master, or
agent with the name or names of the ship or ships upon which the goods have been shipped and
the date or dates of shipment, and when so noted the same shall for the purpose of this Article be
deemed to constitute a "shipped " bill of lading.

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 goods arising from 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.

ARTICLE IV deals with Rights and Immunities.

It states that

1. neither the carrier nor the ship shall be liable for loss or damage arising or resulting from
unseaworthiness unless caused by want of due diligence on the part of the carries to make the
ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and 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 in accordance with the
provisions of paragraph 1 of Article III.

Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise
of due diligence shall be on the carrier or other person claiming exemption under this section.

2.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 servant of the carrier in the
navigation or in the management of the ship :

(b) Fire, unless caused by the actual fault or privity of the carrier :

(c) Perils, dangers and accidents of the sea or other navigable waters :

(d) Act of God :

(e) Act of war:

(f) Act of public enemies:

(g) Arrest or restraint of princes, rulers or people, or seizure under legal process:
(h) Quarantine restriction:

(i) Act or omission of the shipper or owner of the goods, his agent, or representative:

j) Strikes or lock-outs or stoppage or restraint of labour from whatever cause, whether partial

or general:

(k) Riots and civil commotions :

(l) Saving or attempting to save life or property at sea :

(m) Wastage in bulk or weight or any other loss or damage arising from inherent defect,

quality, or vice of the goods :

(n) Insufficiency of packing :

(o) Insufficiency or inadequacy of marks :

(p) Latent defects not discoverable by due diligence :

(q) Any other cause arising without the actual fault or privity of the carrier, or without the fault
or neglect of the agents or servants of the carrier; but the burden of proof shall be on the person
claiming the benefit of this exception to show that neither the actual fault or privity of the carrier
nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

3. The shipper shall not be responsible for loss or damage sustained by the carrier or the ship
arising or resulting from any cause without the act, fault or neglect of the shipper, his agents, or
his servants.

4.Any deviation in saving or attempting to save lie or property at sea, or any reasonable deviation
shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage,
and the be liable for any loss or damage resulting there from.

ARTICLE V states about the Surrender of rights and immunities and

Increase of Responsibilities and Liabilities.

A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities
or to increase any of his responsibilities and liabilities under the Rules contained in any of these
Articles, provided such surrender or increase shall be embodied in the bill of lading issue to the
shipper.

The provisions of these Rules shall not be applicable to charter parties, but if bills of lading are
issued in the case of a ship under a charter party they shall comply with the terms of these Rules.
Nothing in these Rules shall be held to prevent the insertion in a bill of lading of any lawful
provision regarding general average.

ARTICLE VII deals with the Limitations on the Application of the Rules.

Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement,
stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier
or the ship for the loss or damage to or in connection with the custody and care and handling of
goods prior to the loading on and subsequent to the discharge from the ship on which the goods
are carried by sea.

ARTICLE VIII deals with Limitation of liability

The provision of these Rules shall not affect the rights and obligations of the carrier under any
Statute for the time being in force relating to the limitation of the liability of owners of sea-going
vessels.

ARTICLE IX states that the monetary units mentioned in these Rules are to be taken to be

gold value.

CASE LAW

1.Shipping Corporation. Of India Ltd. vs. Bharat Earth Movers Ltd.,(2008)2 SSC 79, in

this case, the issue was the applicability between the Indian Act 1925 and the Japanese act

1992. It was held that the Indian Act will follow only in India, not outside the Indian ports.

2.In the case of British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew

Industries, (1990) 3 SCC 481, the issue was the Indian law will be seen in the disputes if the

shipped had sailed from the port of India, it was held that Indian law will be used when the

ship starts its journey from the ports of India but it is starting from Africa and going to the

ports of Cochin.

6.PROTECTION OF SHIP OWNER AND LIMITATION OF LIABILITY UNDER

MERCHANT SHIPPING ACT,1958

LIMITATION OF LIABILITY

Limitation of liability for maritime claims is a concept of ancient days. But now it is deeply
rooted in the maritime industry. As per this concept, the ship owner is entitled to limit his
liability for maritime claims up to a maximum sum regardless of the actual amount of the claims.
The concept of limitation of liability has been adopted by many conventions ranging from those
relating to the carriage of goods by sea, carriage of passengers and their luggage by sea, liability
and compensation for pollution damage, to liability for the removal of wrecks.

The first attempt for the unification of rules relating to Limited Liability of owner’s of sea going
vessel adopted by several leading nations was THE BRUSSELS CONVENTION ,1924. In
1957 , a new Convention on Limitation of Liability of sea going vessels was drafted to replace
the BRUSSELS CONVENTION ,1924 . This new Convention is referred as BRUSSELS
LIMITATION CONVENTION ,1957. India was also signatory of this Convention. This
Convention fixes the limit of an owner of sea going vessels on the basis of tonnage of the vessel
without regard to the vessel’s value.

The concept of Limitation of Liability is inserted in Indian Legislation ,The Merchant Shipping
Act ,1958 through the Part XA. This Part governs the right of an owner to bring a limitation
action under The Merchant Shipping Act ,1958. The objective of this concept of limitation of
liability is to provide protection to an owner against large claims which exceeding the value of
the ship and cargo ,which can be made against him all over the world in case his ship met with
an accident causing damage to cargo, property ,to another vessel or loss of personal life or
personal injury.

In the case law WORLD TANKER CARRIER CORPORATION v. SNP SHIPPING

SERVICES PVT. LTD.,Court held that in the case of an action for limitation of liability , it is
the personal right of the owner of the vessel to file a limitation action or to use it as a defense to
an action against him for liability. It is a defensive action against various claimants against the
owner of the vessel. A Limitation action need not be filed in the same forum of a liability action.
However it must be a forum having Jurisdiction to limit the extent of such claims .

SECTION 352 A of MERCHANT SHIPPING ACT, 1958 deals with this provision. It states
that the insurer may limit his liability if

(a)claim arising from loss of life or personal injury or damage to property in direct connection
with operation of ship and loss resulted from it.

(b) Claim aring out of loss resulting from delay in carriage by sea.

(c) Claim arising out of loss resulting from infringement of right other than contractual rights
occurred, in connection with operation of ship.

(d) Claims of person other than the person liable in respect of measures taken to minimize the
loss for which the person liable may link his liabilities in accordance with the provisions of
Convention or rules made.
(e) Claims for the loss of life or personal injury to passengers of a ship brought by or on

behalf any person—

1.Under the contract of passenger carriage or who with consent of carrier, accompanying a
vehicle for live animal which are covered by a contract for the carriage of goods carried in that
ship.

2.Claims set out in subsection(1) shall be subjected to limitation of liability to the extent that

they relate to remuneration under a contract with person liable.

3.Nothing in this section shall apply to :

a) Claim for salvage or contribution in General Average.

b) Claim for oil pollution damage.

c) Claims by servants of the ship owner or salvor whose duties connected with the ship or
salvage operation including claims of their heirs , dependants or other person entitled to make
such claim ,if under the law governing the contract of service between the ship owner or salvor
and such servants of such owner is not entitled to limit his liability in respect of such claims ,or if
he is by such law only permitted to limit his liability to an amount greater than that provided for
the provisions of the Convention or the rules made under this part prescribed.

d) Claims subject to any International Convention or any law for the time being in force in India
governing or prohibiting limitation of liability for nuclear damage.

e) Claims against the ship owner of a nuclear ship for nuclear damage.

7.BILL OF LADING AS DOCUMENT OF TITLE IN INDIA AND ABROAD

Title in the context of bills of lading means right to possession of the goods from the carrier. It
does not mean right to ownership – the sales contract usually determines this. If the right to
possession of the goods from the carrier is determined by the possession of a document, such as a
bill of lading, then that document is a document of title. Therefore, the person presenting an
original bill of lading is entitled to delivery of the goods at the place of destination. 

Until goods are physically delivered, the possession of the bill of lading is deemed to be
constructive possession of the goods. Transfer of the bill of lading is deemed to be constructive
possession of the goods. Transfer of the bill of lading by the seller to the buyer is deemed to be
symbolic delivery of the goods to the buyer and the buyer, on the ship’s arrival could demand
delivery of the goods. 
In the case of Sanders v/s MacLean (1883), the bill of lading by the law merchant is universally
recognized as its symbol and the endorsement and delivery of the bill of lading operates as a
symbolic delivery of the cargo. 

The buyer can sell the goods while they are at sea to the third party by simply endorsing the bill
of lading and delivering it to the third party. The third party, by becoming the holder, can
demand delivery of the goods on arrival. 

Not all bills of lading, however, are transferable. To impart transferability to a bill of lading, it
must be drafted as order bills . Upon endorsement, the endorsee takes the place of the original
party to the bill of lading, and will be sue and be sued on all the terms, expressed and implied in
the bill of lading despite privity of contract. This is due to the operation of Section 2 and 3 of the
Carriage of Goods by Sea Act, 1992. 

A bill of lading need not be equated with a bill of exchange, which is a negotiable instrument in
the strict legal sense. 

In the case of Gurney v/s Behrend (1854) it was observed that a bill of lading is not like a bill
of exchange or a promissory note, a negotiable instrument that passes by mere delivery to a bona
fide transferee for valuable consideration, without regard to the title of the parties who make the
transfer. 

Therefore, bill of lading is a transferable document although in some jurisdictions it is

considered as a negotiable instrument.

8.C.I.F and F.O.B TERMS

C.I.F AND F.O.B CONTRACT 

Export and import transactions in the sphere of international trade normally involve the use
ofInternational Trade Terms incorporated under International Commercial terms 

1. C.I.F.Contract 

The term C.I.F.is the acronym which means Cost, Insurance and Freight.Itis a type of a contract
which is more widely and more frequently in use than any other contract used for the purpose of
seaborne commerce. 

According to Lord Porter in the case of Comptoir d'Achat vs. Luis de Ridder It is the type of
contract where the seller is under obligation to ship at the port of shipment,goods of the
description enclosed in the contract, to secure contract of carriage by sea, to make out invoice
which will charge the buyer with the agreed price of the actual cost, commission charges, freight
and insurance premium and to tender bill of lading to the buyer covering the goods contracted to
be sold.Moreover,his excellence pointed out that,against tender of the aforesaid documents the
purchaser must pay the price, receive the goods at the port of destination, procure import or
permit license and in such a case a property may pass either on shipment or on tender of
documents. The risk generally passes on shipment and title over the goods does not pass until
documents which represent the goods are handed over to the buyer in exchange of price.In
C.I.F.contract,the focus is not the sale of the goods themselves, but the sale of documents
relating to the goods. This is to the effect that,possession of document is as good as possession of
goods in transit 

. 

2 .F.O.B.Contract 

F.O.B.contract is another trade term which stands for Free On Board. This Type of contract was
well elaborated in the case of 

Wimble Sons & Co.Ltd vs.Rosenberg & Sons.[1913] 3 KB at 743 

In this landmark case,it was declared that, F.O.B.is the contract under which the buyer nominates
the seaworthy ship,the seller is obliged to put the goods free on board at his own expense under
the account of the buyer. 

Furthermore, the seller is under obligation to pay cost and bear responsibility of putting the
goods free onboard until the goods pass the ship rail.

It is at the ship's rail where division of liability in F.O.B.contractoccurs, this is in the sense
that,the risks over the goods passes from the seller to the buyer when the goods passesover the
ships rail. 

However, the passing of property in goods has different legal procedures in terms of
unascertained and ascertained goods. In F.O.B contract,unascertained goods shipped in bulk to
be distributed to different buyers at the port of destination, the property in such arrangement does
not pass to the assigned buyers until the bulk of goods are apportioned to them at the port of
destination. 

The property will be said to have been passed,when every concerned buyer has acquired his or
her portion of the imported goods at the port of destination. 

In case of ascertained goods, property passes when they are shipped unless the passing of title is
postponed by express or implied contract terms. 

Types of F.O.B.Contract 
F.O.B contract has become a flexible contract and parties are left free to agree over and above
the terms fixed under the International commercial terms(Incoterms). This Position Was well
expressed in the case of 

Pyrene V.Scindia Navigation Co.Ltd [1954] 2 Q.B.198  where Devlin J pointed out three
varieties ofF.O.B.contract including;

a)Strict or Classic F.O.B, 

b)F.O.BContract(BuyerContracting with Carrier) and 

c)F.O.B withAdditionalServices.

DIFFERENCE BETWEEN CIF AND FOB 

  

 The important difference between CIF and FOB agreement is the  point at which responsibility
and liability transfer from seller to buyer. In case of FOB shipment,  this occurs when the
shipment reaches the port or other facility designated as the point of origin.  In case of CIF
agreement , the seller pays costs and assumes liability until the goods reach the  port of
destination choosen by buyer.  

In case of Free on Board the seller pays for transportation and loading costs, and clears the 
goods for export. The seller also takes responsibility for loading the goods onto the ship. Once 
the goods are onboard, risk and costs are divided between the buyer and the seller. In case of
CIF  contract, the seller pays costs, including freight and insurance. But as soon as the goods are 
loaded onto the ship, all risk transfers to the buyer. 

 Usually FOB is preferred by seller and CIF by Buyer. 

 SELLERS DUTIES UNDER FOB & CIF CONTRACT

FOB  

 Duty to load goods inside the vessel. 

 Seller is obliged to pay for all handling cost up to the ships rail. 

The seller is deemed to have delivered the goods to the buyer when the goods pass the ship’s  rail
on the date of shipment regardless of the time of arrival at the port of destination.

CIF  

 Duty only to deliver the goods in the port of shipment.  

  Seller has a duty to obtain a shipped bill of lading. 

The seller is also obliged to procure a contract of carriage and prepare shipment documents. 
Unless otherwise stated in the contract, the seller must prepare an invoice, and obtain a bill of 
lading and insurance policy . 

 SELLERS RIGHTS UNDER CIF AND FOB CONTRACT 

 Right to Sue for damages non acceptance of goods due to refusal or neglect.  Right to lien 

BUYERS DUTY UNDER CIF & FOB CONTRACT 

CIF 

 Obligation to accept the goods and to pay the price. 

 The buyer must receive the goods at the agreed port of destination and, unless the
contract  states otherwise, bears all unloading costs and charges incurred in the course of
the goods  transit, save for the freight and insurance. 

FOB  

 He/she is responsible for securing the shipping space and giving sufficient notice to the
seller  of the details of the ship including its availability for loading, time and location of
the  delivery.  
 The buyer is also obliged to obtain any appropriate licences, authorisation for the import
of  the goods and comply with custom formalities for importation in the country of
destination or  in a country of transit. 

BUYER’S RIGHT UNDER CIF & FOB CONTRACTS 

 As for the buyer, s/he may reject the goods on arrival they do not correspond to the  contract
description or are not of satisfactory quality, or obtain damages for defective goods. The buyer
has also a right to sue for non-delivery of the goods by the Seller.

 ADVANTAGES AND DISADVANTAGES OF CONTRACT 

 ADVANTAGES OF CIF  :The advantage to the seller is that it can often obtain cheap
insurance and then build a larger  amount into its selling price. The advantage to the buyer is that
it does not have to worry  about declaring the shipment to its own insurer. 

DISADVANTAGES OF CIF  

It is considered an expensive option than FOB for buyers because the seller decides  all the
factors such as the route, transit time, shipping company, freight insurance costs, and  other
factors that may affect the overall price. 
ADVANTAGES OF FOB

• The seller knows the whereabouts of his country and can dispatch the goods  properly. 

• Free On Board contract ensures clearance of customs. It is the responsibility of the  supplier to
get the necessary clearance papers at the port under FOB. This saves  time, money,
complications, hassles, and unnecessary effort from the buyer. 

• The buyer controls the shipping document as he is the one who selects the transport  carrier and
gets to keep payment documents that have been made for cargo  transportation. 

• If a buyer is unable to clear payment, then the seller can recover the goods before he  hands it
over to the buyer even if it is in transit.

• Free On Board is considered the best option if you are looking for a cost-effective  shipment. 

• Free On Board is a good logistic solution as it ensures safe passage and fewer costs. • An
important advantage of Free On Board or FOB is that there are no hidden extra costs  in the
process. 

• It is accepted as a standard contract by most buyers and sellers and thus has wide  acceptance. 

 DISADVANTAGES OF FOB 

• The buyer has to suffer the risk and liability in case of damaged goods if he has  signed Free On
Board shipping point contract. He will bear any untoward  consequences even if the goods do not
reach him. 

• The seller is responsible for losses if he has signed Free On Board destination. • If the buyer
does not name an effective ocean carrier, the seller will be unable to  recover the price of the
goods. 

• In some cases, the seller adds margin costs to their Free On Board costs. 

CIF contracts are more attractive to both seller and buyer.Seller’s margin of profit in CIF 
contract is higher than FOB.Seller does not bear any risk during the transit of goods.Buyer  does
not need to pay for the goods until the relevant documents are rendered. Seller also  retains the
right of disposal of the goods until payment is made , there by keeping the level of  security. 

  

 IMPORTANT CASE LAWS 

1. In the case law BELAE v. MARKWARTH SHIPPING CO., it was held that the cargo 
receipt was not a contract of carriage defined under Carriage of Goods by Sea Act . 2. In the case
law HAUHAE v. LAURABADA SHIPPING SERVICES LTD., it was held  that Clause 6 of
B/L expressly limit the liability of the defendant to losses incurred  during the time that the
goods on ship.

3. In the case law WANI v. CONSORT EXPRESS LINES, it was held that the suit must 
brought within one year after the delivery of goods. This claim was filed more than  2years after
the delivery. 

MODULE-4

1.MARINE POLLUTION

Marine pollution is a combination of chemicals and trash, most of which comes from land
sources and is washed or blown into the ocean. This pollution results in damage to the
environment, to the health of all organisms, and to economic structures worldwide. 

Marine pollution has been an ever-present problem since the advent of large-scale agricultural
activity and industrialization. However, significant laws and regulations at an international level
to tackle the problem came only in the mid-twentieth century. During United Nations
Conventions on the Law of the Sea in the early 1950s, the various stakeholders came together to
deliberate and formulate laws pertaining to marine pollution. Till mid-twentieth century the
majority of the scientists maintained that oceans were vast enough to be able to dilute the amount
of pollution being drained into them, thus, considering pollution harmless to the marine life 

Definition: 

Marine pollution refers to direct or indirect introduction by humans of substances or energy into
the marine environment (including estuaries), resulting in harm to living resources, hazards to
human health, hindrances to marine activities including fishing, impairment of the quality of sea
water and reduction of amenities 

Causes of Marine Pollution 

The marine environment becomes polluted and contaminated through various sources and forms.
Major sources of marine pollution are the inflow of chemicals, solid waste, discharge of
radioactive elements, industrial and agricultural effluents, man-made sedimentation, oil spills,
and many such factors. The majority of the marine pollution comes from the land that contributes
to 80 percent of the marine pollution, air pollution also carries pesticides from farms and dust
into the marine waters. Air and land pollution is a major contributor to the growing marine
pollution that is not only hampering the aquatic ecology but also affecting life on land. The non-
point sources like wind-blown debris, agricultural runoff, and dust become the major source of
pollution. Apart from these, factors like land runoff, direct discharge, atmospheric pollution,
pollution caused by ships, and deep sea mining of natural resources contribute heavily.

Types of Marine Pollution 

Eutrophication 

When there is an excess of chemical nutrients, mainly nitrates and phosphates in the water, it
leads to eutrophication or nutrient pollution. Eutrophication decreases the level of oxygen,
reduces the quality of water, makes the water inhabitable for fish, affects the breeding process
within marine life and increases the primary productivity of the marine ecosystem. 

Acidification 

Oceans act as a natural reservoir for absorbing the carbon dioxide from the Earth’s atmosphere.
But, due to rising levels of carbon dioxide in the atmosphere, the oceans across the world are
becoming acidic in nature, as a consequence, it leads to acidification of oceans. Researchers and
scientists have not been able to uncover the potential damage ocean acidification may have on
the Earth’s atmosphere. But, there is a strong concern that acidification might lead to dissolution
of calcium carbonate structures that can affect the shell formation in shellfish and also the
corals. 

Toxins 

There are persistent toxins that do not get dissolved or disintegrate with the marine ecosystem
rapidly. Toxins such as pesticides, DDT, PCBs, furans, TBT, radioactive waste, phenols, and
dioxins get accumulated in the tissue cells of the marine lifeforms and lead to bioaccumulation
hampering the life underwater and sometimes leads to a mutation in aquatic life forms. 

Plastics 

The ever-growing dependence of the human population on plastic has filled the oceans and the
land, it consists of 80 percent of the debris found in the oceans. Plastic dumped and found in the
oceans are dangerous for marine life forms and wildlife, as sometimes it strangles and chokes
them to death. The rising levels of plastic dumps found in the oceans are suffocating, ingesting,
and entangling life underwater as well as above it.

Effects of Marine Pollution 

The contamination of water by excessive nutrients is known as nutrient pollution, a type of water
pollution that affects life under water. When excess nutrients like nitrates or phosphates get
dissolved with the water it causes the eutrophication of surface waters, as it stimulates the growth
of algae due to excess nutrients. Most Benthic animals and plankton are either filter feeders or
deposit feeders that take up the tiny particles that adhere to potentially toxic chemicals. In the
ocean food chains, such toxins get concentrated upward. This makes estuaries anoxic as many
particles combine chemically depletive of oxygen. 

When the marine ecosystem absorbs the pesticides, they are incorporated into the food webs of
the marine ecosystem. After getting dissolved in the marine food webs, these harmful pesticides
cause mutations, and also results in diseases, which can damage the entire food web and cause
harm to the humans. When toxic metals are dumped or flown into the oceans through drains, it
engulfs within the marine food webs. It affects the biochemistry, reproduction process, can affect
the tissue matter These can cause a change to tissue matter, biochemistry, behavior,
reproduction, and suppress and alter the marine life’s growth. Marine toxins can be transferred to
several animals feeding on the fish or fish hydrolysate as a meal, toxins are then transferred to
dairy products and meat of these affected land animals. 

Steps to Prevent Marine Pollution 

Stop using plastic and littering garbage as they not only choke up the drains but also release into
the oceans. 

Ensure that chemicals mentioned above are not used anywhere near the streams of water and try
cutting down on the usage of such chemicals. 

For farmers, they need to switch from chemical fertilizers and pesticides and move towards the
usage of organic farming methods.

Use public transport and reduce the carbon footprint by taking small and substantial measures
that will not help in reducing the pollution from the environment but will ensure a safe and
healthy future for the upcoming generations. 

Prevent from any oil or chemical spill in the oceans and if in case there is an oil or chemical spill
near you volunteer and help in cleaning out the ocean water. 

Volunteer or initiate beach clean up activities and spread awareness about the same in the nearby
vicinity.

2.INTERNATIONAL CONVENTIONS

International Convention for the Prevention of Pollution from Ships

(MARPOL)  MARPOL is one of the most significant international marine environmental

conventions. The International Convention for the Prevention of Pollution from Ships
(MARPOL) is the main international convention covering prevention of pollution of the marine
environment by ships from operational or accidental causes. 
The MARPOL Convention was adopted on 2 November 1973 at IMO. The Protocol of 1978 was
adopted in response to a spate of tanker accidents in 1976-1977. 

The current convention is a combination of the 1973 Convention and the 1978 Protocol, which
entered into force on 2 October 1983. 

The Convention includes regulations aimed at preventing and minimizing pollution from ships -
and currently includes six technical Annexes: 

Annex I: Regulations for the Prevention of Pollution by Oil 

Annex II: Regulations for the Control of Pollution by Noxious Liquid Substances in Bulk Annex
III: Prevention of Pollution by Harmful Substances Carried by Sea in Packaged Form Annex IV:
Prevention of Pollution by Sewage from Ships 

Annex V: Prevention of Pollution by Garbage from Ships 

Annex VI: Prevention of Air Pollution from Ships 

In 2011, IMO became the first international regulator for a transport sector to adopt globally
binding energy efficiency requirements, which apply to all ships globally, regardless of trading
pattern or flag State, aimed at reducing greenhouse gas emissions from international shipping. 

International Maritime Organization 

The International Maritime Organization is a specialized agency of the United Nations. IMO is
responsible for measures to improve the safety and security of international shipping and to
prevent pollution from ships. 

It is also involved in legal matters, including liability and compensation issues and the
facilitation of international maritime traffic. 

It was established by means of a Convention adopted under the auspices of the United Nations in
Geneva on 17 March 1948 and met for the first time in January 1959. 

It currently has 174 Member States.

3.LOSS AND ABANDONMENT OF SHIPS AND GOODS IN THE HIGH SEAS

According to the Marine Insurance Act,1963 

Sec.55. Included and excluded losses.— 

(1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is
liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is
not liable for any loss which is not proximately caused by a peril insured against. 

(2) In particular— 

(a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but,
unless the policy otherwise provides, he is liable for any loss proximately caused by a peril
insured against, even though the loss would not have happened but for the misconduct or
negligence of the master or crew; (b) unless the policy otherwise provides, the insurer on ship or
goods is not liable for any loss proximately caused by delay, although the delay be caused by a
peril insured against; 

(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear,
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any
loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused
by maritime perils.

Sec.56. Partial and total loss.— 

(1) A loss may be either total or partial. Any loss other than a total loss, as hereinafter defined, is
a partial loss. 

(2) A total loss may be either an actual total loss, or a constructive total loss. (3) Unless a
different intention appears from the terms of the policy, an insurance against total loss includes a
constructive, as well as an actual, total loss. (4) Where the insured brings a suit for a total loss
and the evidence proves only a partial loss, he may, unless the policy otherwise provides, recover
for a partial loss. 

(5) Where goods reach their destination in specie, but by reason of obliteration of marks, or
otherwise, they are incapable of identification, the loss, if any, is partial and not total. 

Sec.57. Actual total loss.— 

(1) Where the subject-matter insured is destroyed, or so damaged as to cease

to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is
an actual total loss. 

(2) In the case of an actual total loss no notice of abandonment need be given.

Sec.58. Missing ship.— 

Where the ship concerned in the adventure is missing, and after the lapse of a reasonable time no
news of her has been received, an actual total loss may be presumed. 
Sec.59. Effect of transhipment, etc.—Where, by a peril insured against, the voyage is
interrupted at  intermediate port or place, under such circumstances as, a part from any special
stipulation in the contract of affreightment, to justify the master in landing and reshipping the
goods or other movables, or in transhipping them, and sending them on to their destination, the
liability of the insurer continues, notwithstanding the landing or transhipment. 

Sec. 60. Constructive total loss defined.— 

(1) Subject to any express provision in the policy, there is a constructive total loss where the
subject-matter insured is reasonably abandoned on account of its actual total loss appearing to be
unavoidable, or because it could not be preserved from actual total loss without an expenditure
which would exceed its value when the expenditure had been incurred. 

(2) In particular, there is a constructive total loss— 

(i) where the assured is deprived of the possession of his ship or goods by a peril insured against,
and 

(a) it is unlikely that he can recover the ship or goods, as the case may be, or (b) the cost of
recovering the ship or goods, as the case may be, would exceed their value when recovered; or 

(ii) in the case of damage to a ship, where she is so damaged by a peril insured against that the
cost of repairing the damage would exceed the value of the ship when repaired. In estimating the
cost of repairs, no deduction is to be made in respect of general average contributions to those
repairs payable by other interests, but account is to be taken of the expense of future salvage
operations and of any future general average contributions to which the ship would be liable if
required; or 

(iii) In the case of damage to goods, where the cost of repairing the damage and forwarding the
goods to their destination would exceed their value on arrival. Sec.61. Effect of constructive
total loss.—Where there is a constructive total loss the insured may either treat the loss as a
partial loss, or abandon the

subject-matter insured to the insurer and treat the loss as if it were an actual total loss. 

Sec.62. Notice of abandonment.— 

(1) Subject to the provisions of this section, where the assured elects to abandon the subject-
matter insured to the insurer, he must give notice of abandonment. If he fails to do so the loss can
only be treated as a partial loss. (2) Notice of abandonment may be given in writing, or by word
of mouth, or partly in writing and partly by word of mouth, and may be given in any terms which
indicate the intention of the insured to abandon his insured interest in the subject-matter insured
unconditionally to the insurer. 
(3) Notice of abandonment must be given with reasonable diligence after the receipt of reliable
information of the loss, but where the information is of doubtful character the assured is entitled
to a reasonable time to make an inquiry. (4) Where notice of abandonment is properly given, the
rights of the assured are not prejudiced by the fact that the insurer refuses to accept the
abandonment. (5) The acceptance of an abandonment may be either express or implied from the
conduct of the insurer. The mere silence of the insurer after notice is not an acceptance. 

(6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of
the notice conclusively admits liability for the loss and the sufficiency of the notice. 

(7) Notice of abandonment is unnecessary where at the time when the assured receives
information of the loss, there would be no possibility of benefit to the insurer if notice were
given to him. 

(8) Notice of abandonment may be waived by the insurer. 

(9) When an insurer has reinsured his risk, no notice of abandonment need be given by him. 

Sec.63. Effect of abandonment.— 

(1) Where there is a valid abandonment the insurer is entitled to take over the interest of the
assured in whatever may remain of the subject-matter insured, and all proprietary rights
incidental thereto. 

(2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of
being earned, and which is earned by her subsequent to the casualty causing the loss, less the
expenses of earning it incurred after the casualty; and, where the ship is carrying the owner’s
goods, the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to
the casualty causing the loss.

PARTIAL LOSSES (INCLUDING SALVAGE AND GENERAL AVERAGE AND

PARTICULAR CHARGES) 

Sec.64. Particular average loss.— 

(1) A particular average loss is a partial loss of the subject-matter insured, caused by a peril
insured against, and which is not a general average loss. 

(2) Expenses incurred by or on behalf of the insured for the safety or preservation of the subject-
matter insured, other than general average and salvage charges, are called particular charges.
Particular charges are not included in the particular average. 

Sec.65. Salvage charges. 

(1) Subject to any express provision in the policy, salvage charges incurred in preventing a loss
by perils insured against may be recovered as a loss by those perils. 

(2) “Salvage charges” means the charges recoverable under maritime law by a salvor
independently of contract. They do not include the expenses of services in the nature of salvage
rendered by the assured or his agents, or any person employed for hire by them, for the purpose
of averting a peril insured against. Such expenses, where properly incurred, may be recovered as
particular charges or as a general average loss, according to the circumstances under which they
were incurred. 

Sec.66. General average loss.— 

(1) A general average loss is a loss caused by or directly consequential on a general average act.
It includes a general average expenditure as well as a general average sacrifice. 

(2) There is a general average act where any extraordinary sacrifice or expenditure is voluntarily
and reasonably made or incurred in time of peril for the purpose of preserving the property
imperilled in the common adventure. (3) Where there is a general average loss, the party on
whom it falls is entitled, subject to the conditions imposed by maritime law, to a rateable
contribution from the other parties interested, and such contribution is called a general average
contribution. 

(4) Subject to any express provision in the policy, where the assured has incurred a general
average or expenditure, he may recover from the insurer in respect of the proportion of the loss
which falls upon him; and in the case of a general average sacrifice, he may recover from the
insurer in respect of the whole loss

without having enforced his right of contribution from the other parties liable to contribute. 

(5) Subject to any express provision in the policy, where the assured has paid, or is liable to pay,
general average contribution in respect of the interest insured, he may recover therefore from the
insurer. 

(6) In the absence of express stipulation, the insurer is not liable for any general average loss or 

contribution where the loss was not incurred for the purpose of avoiding, or in connection with
the avoidance of a peril insured against. 

(7) Where ship, freight, and cargo, or any two of those interests, are owned by the same assured,
the liability of the insurer in respect of general average losses or contributions is to be
determined as if those interests were owned by different persons.
 4.MARINE SALVAGE

Marine salvage is the process of rescuing a ship, its cargo, or other property from peril. Salvage
encompasses rescue towing, putting out fires, patching or repairing a ship, refloating a sunken or
grounded vessel, moving a disabled vessel in order to clear navigation channels, and raising
sunken ships or their cargo. Equipment involved in salvage operations may include cranes,
floating dry docks, and support vessels (such as tugboats). Commercial divers may be called
upon to perform underwater tasks and monitor progress below the surface. 

Protecting the marine environment from pollution from cargoes such as oil or other contaminants
is often an important part of salvage activities. Usually the vessel or valuable parts of the vessel
or its cargo may be recovered for its resale value, or for scrap. The vast majority of salvage
operations are contracted to qualified seamen and engineers working as professional salvors.
Usually, contracted agents expect no financial reward unless the salvage operation is at least
partially successful. 

If salvage is not performed under a contract, then the rescuer must act voluntarily and aside from
any legal duty to act, other than the acknowledged duty to render assistance to those in peril at
sea or to attend after a collision. If the owner or the owner’s agent is still on the ship, 

they can refuse offers of assistance. A vessel found entirely deserted or abandoned without hope
or intention of recovery is considered derelict and is fair game for anyone who comes across it. It
is not true, however, that the rescuer or salvor automatically becomes the owner of the property.
The owner always has the option to reclaim his property by paying an appropriate reward. 

There are a few types of composite marine salvage processes. 

Offshore Salvage 

These operations encompass stranded or sunken ships in open waters and are often too
challenging as the ships would be exposed to sea waves and weather. The procedure may take
months as the hostility of the nature could hinder the workflow with frequent intervals between
work-shifts for the attributes of unusual tides or inclement weather.Hurried and rapid
accomplishment of the task is requisite for which, in addition to regular stable work force and
salvage tugs and vessels, portable diving facilities should also be implemented at the work area
transported by small boats or helicopter. 

Harbour Salvage 

This is not as much as the same as the offshore salvage since being less challenging for the
operations to cover stranded or sunken ships in sheltered water and are unhindered by the natural
conditions like intemperate weather or waves and currents.
Unless it’s too necessary to clear out the passage for navigation there is not much need to hasten
the process. 

Also harbour salvage is not much time consuming, hence the pace can be adjusted in accordance
with the requirements of labour resources like man power and heavy equipment like cranes,
construction tenders, dredges and barges. 

Cargo Salvage 

This is even more important, sometimes, than salvaging the ship itself, as the cargo onboard may
pose an imminent threat to the marine environment. The priority is to get rid of any hazardous
element and save any expensive material as much as possible before it gets dumped in the water,
beyond further repair. 

Equipment Salvage 

Another focus is on salvaging large machinery components like engines, turbines, driving
systems by dissecting, disassembling or destructing the hull if these equipment survive the
intrusion of seawater. 

Shipwreck Salvage 

This is a lower priority task than the above mentioned salvage operations. The objective is to
disembarrass the water area of hazardous or unsightly substances using the most practical and
cheapest method possible. One of the most common methods is to cut the hull into very small
sections and refloat the parts and scuttle it in deeper waters. 

Recognizing and correcting potential hazards and safeguarding the environment by removing
them prior to the disposal of the wreck is indispensable in ship wreck salvage operations. 

Afloat Salvage 

When a ship is damaged but still floats in the water the salvage operation is called afloat salvage.
This doesn’t take a toll of challenging exertions as the work involve damage controlling and
primary repairing tasks like the hull welding, stabilizing by rebalancing ballast tanks and shifting
cargo and structural bracing.

The purpose and the path of the ship might get a little disrupted but it can remain underway with
a timely afloat ship salvage operation. 

Clearance salvage 

These operations are carried out in the aftermath of catastrophic events like hurricanes, tsunamis,
and wars. In clearance salvage a number of shipwrecks are scavenged or removed coordinately
to clear out the passage in a harbour or waterway that can be blocked for navigation by multiple
obstructions with ships’ varying degrees of damage due to events like fire, collision, or
explosions etc.

MODULE -5

1.MARINE INSURANCE

In today’s globalised world, most of the international trade happen by way of sea route hence,
marine transport plays an important role, and it is the backbone of international trade. While
conducting any sort of business there are certain risks involved and marine transport is no
exception to it. It also involves various risks related to the “perils at the sea” and this risk is
reduced with the help of marine insurance. Marine insurance helps to tone down the risks of
financial loss to the ship, goods or other movables in maritime transport. It adds the needed
factor of financial security so that the risk of accident is not an inhibiting factor in the conduct of
international trade. 

Marine insurance is a type of insurance that covers ships and their cargo and at times the place
where the ship is docked. The British law on marine insurance passed in 1906 created the
standards and policies that are followed in India as well as the rest of the world. Though the
standards set by the act are rational but due to technological development and advancement in
society new legislations are replacing it. 

MARINE INSURANCE IN INDIA 

Marine insurance in India is governed by the Marine Insurance Act 1963. It defines marine
insurance as a contract wherein the insurer agrees to indemnify the insured to the extent agreed,
against losses incidental to marine adventure 

as defined by the provisions of the Act. It means that if the loss occurring to the vessel or the
cargo during its voyage due to any marine adventure it would be a marine loss and people or
companies have the option of protecting themselves against such losses under marine insurance
contracts. 

Marine adventure is defined under section 2(d) of the act , it means when the vessel is open to
the elements of maritime perils i.e. accidents or causalities of the sea and does not include the
damage caused due to the normal action of wind or waves but it includes loss caused due to fire,
pirates, war perils, etc. 

WHAT IS MARINE INSURANCE?  

Marine insurance has been defined as a contract between the insurer and insured in which
insurer agrees to pay an agreed amount to the insured against marine losses. Marine insurance
covers transportation of goods by ship, rail, road, air & couriers.
Features of marine insurance  

• It is based on utmost good faith i.e. both the insured and insurers must disclose.  Everything
which is in their knowledge and can affect the contract of knowledge.  

• It is a contract of ‘Indemnity’: the insured is entitled to recover only. The actual  amount of loss
from the insurer.  

TYPES OF MARINE INSURANCE  

Different types of marine insurance are as follows: 

Freight Insurance: 

Freight insurance offers and provides protection to merchant vessels’ corporations which stand a
chance of losing money in the form of freight in case the cargo is lost due to the ship meeting
with an accident. This type of marine insurance solves the problem of companies losing money
because of a few unprecedented events and accidents occurring.

Liability Insurance:

 Liability insurance is that type of marine insurance where compensation is sought to be provided
to any liability occurring on account of a ship crashing or colliding and on account of any other
induced attacks.

Hull Insurance: Hull insurance mainly caters to the torso and hull of the vessel along with all
the articles and pieces of furniture on the ship. This type of marine insurance is mostly taken out
by the owner of the ship to avoid any loss to the vessel in case of any mishaps occurring.

Marine Cargo Insurance:

 Cargo insurance caters specifically to the marine cargo carried by ship and also pertains to the
belongings of a ship’s voyages. It protects the cargo owner against damage or loss of cargo due
to ship accident or due to delay in the voyage or unloading. Marine cargo insurance has third-
party liability covering the damage to the port, ship or other transport forms (rail or truck)
resulted from the dangerous cargo carried by them.

Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd. [2006(12)SCC673]  

This Court held that where the policy contained a wider term of risk coverage, the  decision in
Bihar Supply Syndicate (supra) will not apply. In Peacock Plywood, the  extended warranty
clause in the insurance policy specifically extended the coverage  to include the risks of theft,
pilferage and non-delivery. In view of it, this Court held  that a claim by way of constructive
total loss on account of a ship being stranded on  sea on account of its unseaworthiness was
maintainable, although the goods  themselves were not damaged. In that case when the ship
carrying the goods got stranded at a port due to its  unseaworthiness, the assured took steps to
recover the value of the cargo with a view  to minimize its total loss due to non delivery, but
found that the cost of recovering and  getting the cargo back to the destination port would be
more than the value of the  goods.  

Therefore the assured effected sale of the insured goods at the port where ship was  stranded.
Insurer was found liable to pay the insured value of the goods (less the  amount actually
recovered by such sale.

Types of Marine Insurance policies 

The various types of marine Insurance policies being offered by the Insurance Companies and
some of them are explained below: 

1. Voyage policy: It refers to policy issued for a specific passage from departure location to the
destination location. It is applicable where subject matter is the cargo. Here, the risk arises when
the ship leaves the departure port and covers the cargo even when it is located at intermediate
places. Ex. A voyage policy from Bombay port to Hong Kong port. 

2. Time policy: As the name implies, the subject matter is covered for a specific period of time
which is usually one year. In the case where time has to be extended more than one year, a
Continuation clause is to be added in the contract. It is applicable in case of hull insurance where
the vessel is insured while it is navigating or it is being constructed. The vessel can follow any
course it wants. They are standard clauses with respect to freight and premium which are added
on to this policy. Ex. A time policy from 1st Jan, 2016 to 1st Jan,2017 . 

3. Mixed policy: It is hybrid of Voyage and Time policy where the insurance policy covers risk
during a particular voyage for a specified time period. It is more applicable in case of cargos. 

4. Unvalued policy: It refers to that policy where the value of the subject matter is not
mentioned in the contract. The compensation is paid after ascertaining the value of the loss,
where the method to determine the loss is already pre decided and mentioned in the contract. The
value so determined after loss is known as Insurable value or valuable. This policy is also known
as open policy. 

5. Valued policy: It is reverse of the unvalued policy, here the worth of the subject matter is
ascertained and thus the value of loss to be indemnified is pre decided between the insured and
the insurer while making the contract and it does not change. The value here is refer as insured
value or agreed value and it may not be the actual value to be indemnified. 

6. Floating policy: This policy is useful for those who have frequent cargos to transport or are
involved in large scale trade activities. In this policy only the general terms and policy coverage
amount are specified and other details such as ship name can be subsequently declared. The
declaration is made when the order is dispatched on the vessel. The sum insured is based on
previous year turnover or by estimating annual turnover in case of new proposal. 

7. Single vessel policy: This policy is for one ship only. A company may have separate policy
for each of its ship. 

8. Fleet or single policy: Here one policy covers fleet of ship; it is preferred by shipping
companies owning multiple ships.

9. Named policy: This policy is specific in nature where the name of the vessel and the claim
amount is clearly stated. 

10. Special declaration policy: This policy is issued to those organizations which have a large
annual turnover i.e. 3 crores or more. The coverage amount shall be on the previous year
turnover. 

11. Annual policy: As the name suggests it is a policy having duration for one year and cover
goods belonging to the insured or held in trust by him. 

12. Wager Policy: A wager policy is one where there are no fixed terms of reimbursements
mentioned. If the insurance company finds the damages worth the claim, then the
reimbursements are provided. Else, there is no compensation offered. Also, it has to be noted that
a wager policy is not a written insurance policy and as such is not valid in a court of law. 

13. Block Policy: Sometimes, a policy is issued to cover both land and sea risks. If the goods are
sent by rail or by truck to the departure, then it will involve risk on land also.

2.GENERAL PRINCIPLES OF MARINE INSURANCE

PRINCIPLES OF MARINE INSURANCE 

The general principles followed in every insurance contract are the same. However, due to the
complex conditions involved in sea voyage they require very precise arrangements for the
provisions of marine insurance. Hence the universal principles of insurance applies to marine
insurance but with more accuracy in their application. 

1.PRINCIPLE OF UTMOST GOOD FAITH 

A contract of marine insurance is a contract based upon utmost good faith and if the utmost
good faith is not exercised by either party, the contract may be avoided by the other party. The
duty of utmost good faith is required by both the parties. The insurer must deal with all claims
fairly and expeditiously and must be able to pay for potential claims. The assured must disclose
all material facts about the condition of the insured property which the insurer knows or ought to
know. Material facts are those facts which could affect the judgment of a prudent underwriter in
deciding whether to accept the risk of insuring the property and at what rate of premium and to
what terms and conditions.

The principle of Utmost Good Faith is the primary principle of insurance. The doctrine of
uberrimae fides - utmost good faith - is present in the insurance law of all common law systems.
An insurance contract is a contract of utmost good faith. The most important expression of that
principle, under the doctrine as it has been interpreted in England, is that the prospective insured
must accurately disclose to the insurer everything that he knows and that is or would be material
to the reasonable insurer.

Something is material if it would influence a prudent insurer in determining whether to write a

risk and if so upon what terms. If the insurer is not told everything material about the risk, or if a
material misrepresentation is made, the insurer may avoid the policy, i.e. the insurer may treat
the policy as having been void from inception, returning the premium paid.

In a nutshell, a higher degree of honesty is imposed on an insurance contract than is imposed on

other contracts. Honesty is mainly imposed on insurance applicants. It is supported by three legal
doctrines; Representation, Concealment & Warranty.

According to this principle, the insurance contract must be signed by both parties (insurer and
insured) in an absolute good faith or belief or trust. Both parties in the contract must disclose all
material facts for the benefit of each other. False information or non-disclosure of any important
fact makes the contract voidable.

All commercial contracts are subject to the doctrine of caveat emptor i.e. let the buyer beware,
this doctrine states that the buyer must be aware of all the terms and conditions of the contract
and that it is his duty to satisfy himself of the provisions of the contract before entering into one.
It means that the buyer must ask questions and the seller must answer only those questions that
are asked and vice versa. This means that each party must ask questions to ensure that they have
all the details that they need. 

Insurance contracts are based on the principle of “Utmost Good Faith” and it plays an important
part in the framing of insurance contracts. In other words insurance contracts are based on the
facts within the knowledge of both the parties. In Carter v Boehm (1766) 3 Burr 1905, Lord
Mansfield stated that “if the true facts are concealed in any way, whether fraudulently or not,
then the risk taken by the insurers may be different from the risk they intended to take in which
case the policy would be void” 

Utmost good faith or “Uberrima fidei” means most abundant faith. It simply means that the
parties involved in the insurance contract must disclose all which they are aware of, to the other
party. This principle requires either party to  disclose all facts that may influence the judgment of
the other party with respect to enter into the insurance contract or not. At times it may happen
that due to the disclosure of a fact the insurer may refuse to give insurance or would give
insurance at a much higher premium. If a material fact has not been disclosed and the same is
discovered at a later stage it may lead to the insurance contract being void. Section 19 of Marine
insurance act, 1963, states that insurance is uberrima fides. It says that in case where this
principle is not adhered to contract become voidable by the other party. 

Materiality means that the fact so hidden from either party is of such nature that if disclosed it
would have affected the decision of the other party. In marine insure facts related to the subject
matter, ship, the perils to be insured against and the perils to which the ship would be exposed to,
are material as these facts would influence the decision of the insurer in deciding the premium
for the policy. 

In the case of Glasgow Assurance Corpn v William Symondson & Co (1911) 104 LT 254. It
was held that in marine insurance it is not a material fact to disclose that the proposal had been
rejected earlier by another company. 

Section 20 of the Act states the facts that must be declared by the insurer. Every fact or change in
circumstance that would affect the decision of a prudent insurer in fixing

the premium is a material fact15 and all such material facts must be declared. Facts such as,
those which are likely to increase the quantum of loss or which make the risk larger than usual
are to be disclosed. 

Certain facts are of the nature that need not be disclosed by the insured like facts which diminish
the risk or which are not to be disclosed by reason of any warranty or information on any fact
which has been waived by the insurer. 

Facts which are of common knowledge or common to the trade need not to be disclosed
separately neither any fact which the insurer can ascertain from the information given to him.
material facts, of In George Cohen Sons & Co. v Standard Marine Insurance Co Ltd.(1925)
21 LIL Rep 30 KB, an obsolete battleship was insured whilst being towed to a place where she
was to be broken up. 

The ship went off shore at Dutch coast. The insurer sought to avoid liability on the ground that
the fact, that the ship would not have steam power to assist her steering gear was not told to
them. Court held, that there was no need for the insured to disclose this fact as it was of common
knowledge that such a ship would be in this condition. 

The fact that the vessel that was being insured had already been destroyed in an accident and this
fact was hidden from the insurance company doesn’t amount to breach of principle of utmost
good faith it is a case of fraud being committed by the insured. As held in Arjandas Brijlal &
Co. v Oriental Insurance Co Ltd. As insurance is method of shifting risk from one party to
another mutual confidence and plenty of good faith is really important for a contract of
insurance. 

2 .PRICIPLE OF INSURABLE INTEREST 

 In order to claim for a loss or damage, the insured must have a financial interest in the insured
property. A person can be said to have an insurable interest in the property insured when he
suffers a loss if the property is lost or damaged or when he gains a profit when the property
insured is safe and is in continuous existence. Every person who is engaged in a marine
adventure is saidto have an insurable interest. Example: interest of the ship-owner in his ship, an
interest of master and crew for their wages, an interest of the insurance company in the property
insured.

The person getting an insurance policy must have an insurable interest in the property or life
insured. A person is said to have an insurable interest in the property if he is benefited by its
existence and be prejudiced by its destruction. The presence of insurable interest is a legal
requirement. So an insurance contract without the existence of insurable interest is not legally
valid and cannot be claimed in a Court. The object of this principle is to prevent insurance from

becoming a gambling contract. Most common law jurisdictions require the insured to have an
insurable interest in the subject matter of the insurance. An insurable interest is that legal or
equitable relationship between the insured and the subject matter of the insurance, separate from
the existence of the insurance relationship, by which the insured would be prejudiced by the
occurrence of the event insured against, or conversely would take a benefit from its non-
occurrence.

Insurable interest was long held to be morally necessary for insurance contracts to distinguish
them, as enforceable contracts, from unenforceable gambling agreements and to quell the
practice, in the seventeenth and eighteenth centuries, of taking out life policies upon the lives of
strangers. In the case of life insurance policies, insurable interest must exist at the time of policy
inception, but not at the time of a loss (death).

The intent behind this principle is that the insured must be in a position to financially suffer if a
loss occurs. This principle helps in preventing gambling by way of taking insurance on a
property and waiting for a loss occur. In the case of life insurance contracts, it reduces moral
hazard whereby a person takes life insurance on a person and prays for his/her death for
insurance proceeds.

Insurable interest refers to the concern which one has for the subject matter of the insurance and
is recognized by law. No contract of insurance can be made without the insurer having an
insurable interest in the inured subject. On reading section 6 of the Act18, we can say that an
insurance contract without insurable interest would be a wager and void. Generally the interest is
some kind of financial benefit that the insured would get from protecting that subject matter and
if that subject matter is damaged or destroyed the insured would suffer a monetary loss. 

In simple words insurable interest means a valid reason to protect a subject matter in in order to
protect the insured from suffering direct pecuniary loss. Insurable interest would exist if the
insured drives any financial or other benefit from the uninterrupted existence of that
subject.Section 7 of the Act Indian Marine Insurance Act 1963, defines what an insurable interest
is. Clause (1) states that every person has an insurable interest who is interested in a marine
adventure. A buyer would have an insurable interest in the ship or its cargo only after it has been
transferred to him. As long as the property is in the seller, the buyer will have no insurable
interest in it, as held in P. Samuel & Co Ltd v Dumas. . 

Under a contract of marine insurance the insured need not have an insurable interest at the time
of taking the policy, however, this interest needs to be present at the time of loss. A person is
said to have an insurable interest if he or she would suffer a direct monetary loss if an accident or
harm occurs. As held in the case of Sutherland v Pratt, the insured can claim compensation
under a marine insurance even if his interest was acquired in the goods after they were lost and
this fact is known to both the inured and the insurer under the clause of “lost or not lost”. 

Also it is not necessary that only one person has an insurable interest in one subject matter,
different people can have separate insurable interest in the same subject matter. 

The following persons are deemed to have insurable interest: 

The owner of the ship, cargo or freight would have an insurable interest up to their interest in the
subject matter only. It is known as having partial interest and is explained under section 10 of the
Act,. For example, a creditor who has advanced money on the security of the ship or cargo has
insurable interest to the extent of his loan. 

Section 13 states that, if the master and crew of the ship want they can also insure their wages. If
the ship or the cargo on it has be mortgaged the mortgagee and the mortgagor both have an
insurable interest to the extent of their respective interest. 

A trustee holding any property in trust has insure The insured has an insurable interest in the
charges of any insurable policy and he may reinsure the same as stated in section 11 of the
Act26 

3.PRINCIPLE OF INDEMNITY 

An insurance contract is a contract of indemnity. Such an insurance contract will make good a
loss or damage in such a manner that the assured is neither better-off nor worse-off as a result of
the loss. In other words, the assured is placed in the same financial position as he was in
immediately before the loss.
Thus the principle of indemnity prevents the insurer from making a profit out of his loss or
gaining any benefit out of the insurance.

The essence of insurance is the principle of indemnity that the person who suffers a financial loss
is placed in the same financial position after the loss as before the loss occurred. He neither
profits nor is disadvantaged by the loss. In practice, this is much more difficult to achieve in life
insurance than in property insurance. No life insurance company would provide insurance in an
amount clearly exceeding the estimated economic value of the covered life. Limiting the amount
of life insurance sold to reflect economic value gives recognition to the rule of indemnity.

Additionally, only persons exposed to the potential loss may legitimately own the insurance
covering the insured’s life. The principle of indemnity is applicable to all types of insurance
policies except life insurance. Indemnity means security, protection, and compensation given
against damage, loss, or injury. The insurer promise to help the insured in restoring the financial
position before the loss has occurred. Whenever there is a loss of property, the loss is
compensated. The compensation payable and the loss suffered should be measurable in terms of
money. The insured will be compensated only up to the amount of loss suffered by him. He will
not earn profit from the contractor. The maximum amount of compensation will be up to the
value of the policy which is fixed at the time of contract. The courts rely upon the principle of
indemnity to hold that an insured may not recover more than his true loss.

All insurance policies except life insurance policies are contracts of indemnity. A contract of
indemnity means that the insurer promises to indemnify the insured to the extent of loss suffered
or the loss covered by the policy, whichever is less. Indemnity means that the insured should be
put in the same position, after making good the loss, at which he was prior to suffering that loss.
The insured cannot get more than the actual loss occurred to him and the insured should not
make any profit from the loss or damage suffered. 

Section 75 of the Act talks about the measure of indemnity and states that the purpose indemnity
is to place the insured in the same place as if the loss hasn’t occurred. The fact that the loss has
happened and it is due to a proximate cause and within the extent of loss insured are certain
circumstances that have to be proved by the insured in order to claim indemnity. 

In Castellain v Preston , observed that Marine insurance is a contract to indemnify a person

against the peril insured when the loss is occurred due to that peril. Moreover the insured is not
allowed to make any profit out of his loss and hence the rights of the insured are subrogated to
the insurer to deal with the third party from thereon. 

Indemnity is an important principle not only for marine insurance but for all other insurances too
because it helps to solve the problem of over insurance. If there is notable interest in such
properconcept of indemnity the insured in order to protect himself or to gain profit may
insure his property for a large amount and even when the loss suffered by him would be less he
would be suing the insurance company for more as there would be no limit on the extent to
which he can be compensated for. Also indemnity helps to keep the premium at low levels
because since the insured cannot get more than the loss suffered the insurer cannot charge him a
higher premium to protect his property. 

4 WARRANTIES 

In general, warranty is a contractual term and the breach of it, under the insurance law frees the
insurer from his liability under the insurance policy. It is a promise by the insured that the
statements given by him are true and if any statement turns out to be untrue the insurer may
refuse to cover the claim. 

Marine Insurance Act discusses about promissory warranty. A warranty by which the insured
undertakes that some particular thing shall or shall not be done, or that some order shall be
fulfilled or whereby he affirms or negates the existence of a particular status such warranties are
called promissory warranties. 

Warranties are like certain does and don’ts that the insured would have to follow or they may be
certain conditions that the insured has to fulfil in order for the policy to be enforceable. Once
accepted the warranty becomes a condition and they must be complied with. If the warranties are
not complied with the insurer would no longer be liable under the policy from the date of breach
of warranty. 

Section 36 of the Act state cases where in the breach of warranty can be excused and the policy
would not become unenforceable. 

1. When there is a change in circumstance and the warranty cannot be applicable any longer. 

2. When due to any change or development in law the warranty becomes unlawful 3. When the
insurer waives the breach of any warranty. 

If the insured makes a contract based on any false warranty and suffers a loss the policy would
be void even if loss occurs not because of that false warranty as held in Woolmer v Muliman. In
Bank of Nova Scotia v Hellenic War Risk Assn (Bermuda) Ltd, the court stated the effect of
breach of warranty. It held that the breach of warranty has the same effect as a breach of
condition would in any other law. 

The breach of warranty can have the following effects: 

It can give the insurer the right to avoid the contract. 

The insurer also has the right to renounce his liability under the policy and at the same time if
they want they can rely on other terms of the policy. 
Warranties may be expressed or implied. Expressed warranty is when the words of the contract
clearly state the intent to warrant i.e. what is to be done and what is not to be done.An express
warranty would exclude an implied warranty only when both cannot co- exist. Implied warranty
means a warranty that will exist in the contract of insurance irrespective of the kind of policy
taken.

5.Principle of Causa Proxima 

Principle of Proximate Cause means when a loss is caused by more than one cause, the
proximate or the nearest or the closest cause should be taken into consideration to decide the
liability of the insurer. This principle is found very useful when the loss occurred due to a series
of events. The principle states that to find out whether the insurer is liable for the loss or not, the
proximate (closest) and not the remote (farthest) must be looked into.

However, in the case of life insurance, the principle of Proximate Cause does not apply.
Whatever may be the reason for death the insurer is liable to pay the amount of insurance. under
this rule, in order to determine whether a loss resulted from a cause covered under an insurance
policy, a court looks for the predominant cause which sets into motion the chain of events
producing the loss, which may not necessarily be the last event that immediately preceded the
loss.

At the time of loss, the marine insurance policyholder would consider the proximate or nearest
cause, which would assist in analyzing the genuine cause of loss when there would be a series of
causes that have contributed to the loss. Here, a remote cause for a loss is not needed to analyze
the liability, and therefore, if the proximate cause is insured, the marine insurance company has
to fix the claim. 

6.Principle of Loss Minimization 

According to the Principle of Loss Minimization, the insured must always try his level best to
minimize the loss of his insured property, in case of sudden events like fire, etc. The insured
must take all necessary steps to control and reduce the losses and to save what is left. This
principle makes the insured more careful in respect to this insured property, just as any prudent
person would do in those circumstances. If he does not do so, the insurer can avoid the payment
of loss attributable to his negligence. But it must be remembered that though the insured is bound
to do his best for his insurer, he is, not bound to do so at the risk of his life. The insured must not
neglect and behave irresponsibly during such events just because the property is insured. Hence
it is the responsibility of the insured to protect his insured property and avoid further losses.

Just because someone has a marine insurance policy, it does not mean the person can act
irresponsibly. It is important for the policyholder to take all the essential steps to curtail and
minimize the losses. The policyholder should not behave irresponsibly during an accident just
because the property is covered under marine insurance. 
Marine insurance is an aspect that helps with relieving the dangers of monetary misfortune to the
property, for example, merchandise, ship, or other movables, in the oceanic vehicle, on the
installment of premium by the insured to the insurance provider. So buy marine cargo insurance
for protecting yourself from such mishaps.

3.DUTY OF DISCLOSURE

Insurance is a contract between two parties whereby one party agrees to undertake the riher in
exchange for consideration known as the premium and promises to pay affixed sum of money to
the other party on happening of some uncertain future event (death) or after the expiry of a
certain period in the case of life insurance or to indemnify the other party on happening of some
uncertain event in the case of general insurance. The primary function of insurance is the
equitable distribution of the financial losses of insured, in other words, compensating the few
who have lost from the fund built up by the contribution of all the members. The insured
member’s contribution to the fund is in proportion to the risk from which he is protected and it is
the special function of the insurer to calculate and charge this contribution or premium. It is also
his function to manage the fund up and pay compensation to the insured who have suffered
losses. This benefits both the insurer and the insured. The insured feels secure that he will be
protected from the insurance fund and this gives him freedom from anxiety. The insurer benefits
from investing the fund. The party bearing the risk is known as the „insurer‟ or the „assurer‟ and
the party whose risk is covered is known as the „insured‟ or the „assured.

The marine insurance is based on an important principle that is ‘Utmost Good Faith’. It is the
responsibility of the ship-owner or the cargo owner to an insurance contract makes statement of
facts, expectations, belief to the insurer before or at the time of the contract being made. The
assured must disclose every material fact known to him before the contract is concluded.

 The material circumstance is one which is known to the assured and the assured is deemed to
know every circumstance which in the ordinary course of business ought to be known by him.
The impact for the non disclosure of a material circumstance by the assured leads to avoidance of
the contract by the other party that is the insurer, this happens because a contract of marine
insurance is a contract based on good faith. It is very essential for the assured not to misrepresent
as it may lead to avoidance of the contract, therefore if the assured fails to make any disclosure
or misrepresentation, the insurer may avoid the contract from the time of inception of the
contract.
DISCLOSURE

Non-Disclosure‟ refers to that situation where a customer fails to reveal a relevant fact when
applying for or renewing an insurance contract. It is concerned with the insured‟s duty to
volunteer material facts. In law, a person applying for or renewing a policy of insurance is
obliged to disclose all material facts. A material fact is one which would have an effect not
necessarily decisive – on the mind of the prudent insurer in assessing the risk. If a person fails to
disclose material facts, and that failure induces the policy i.e. causes the insurer to offer cover, or
to offer cover on terms which would otherwise be available – the insurer may, when it becomes
aware of non-disclosure, set the policy aside from outset. Thus,it is the duty of the insured person
to disclose all material circumstances actually known to them or which in the ordinary course of
business ought to be known by, or to have been communicated to them, and he cannot escape the
consequences of not disclosing them on the ground that he did not know them. The duty of
disclosure has to be discharged whenever the insurer has to decide whether or not to accept the
risk and, if so, on what terms. Thus it is to be noted here that the duty applies before any
contractual relationship exists between the parties.

There are certain provisions in the Indian Marine Insurance Act, 1963, which provides for the
requirements which are needed for disclosure by a prudent insured, but it does not provide for
the disclosure requirements of the insurer.

Section 19, 20 and 21 of the Indian Marine Insurance Act, 1963, lays down the provisions as to
the effect of non-observance of utmost good faith. These above mentioned sections provides for
the facts that the assured or the insured compulsorily needs to disclose or need not disclose. It
must also be noted that these may be taken as applying mutandis to all classes of insurance.

Section 20. Disclosure by assured.—

(1) Subject to the provisions of this section, the assured must disclose to the insurer, before the
contract is concluded, every material circumstance which, is known to the assured, and the
assured is deemed to know every circumstance which, in the ordinary course of business, ought
to be known to him. If the assured fails to make such disclosure, the insurer may avoid the
contract.

(2) Every circumstance is material which would influence the judgment of a prudent insurer in
fixing the premium, or determining whether he will take the risk.

(3) In the absence of inquiry the following circumstances need not be disclosed, namely:—

(a) any circumstance which diminishes the risk; (b) any circumstance which is known or
presumed to be known to the insurer. The insurer is presumed to know matters of common
notoriety or knowledge, and matters which an insurer in the ordinary course of his business as
such ought to know; (c) any circumstance as to which information is waived by the insurer;
(d) any circumstance which it is superfluous to disclose by reason of any express or implied
warranty.

(4) Whether any particular circumstance, which is not disclosed, be material or not is, in each
case, a question of fact.

(5) The term “circumstance” includes any communication made to, or information received by,
the assured.

Section 20 lays down the provisions for „Disclosure by the assured‟. This section has five
subsections. It provides the meaning of material circumstances and also provides that the assured
should provide information as to all the material circumstances that may be present in a given
risk intended to be insured. It further lies down that the insurer can avoid a contract if all the
relevant material circumstances are not disclosed. It also states those materials that need not be
disclosed in case there is no inquiry.

Section 21. Disclosure by agent effecting insurance.—Subject to the provisions of the preceding
section as to circumstances which need not be disclosed, where an insurance is effected for the
assured by an agent, the agent must disclose to the insurer—

 (a) every material circumstance which is known to himself, and an agent to insure is deemed to
know every circumstance which in the ordinary course of business ought to be known by, or to
have been communicated to, him; and (b) every material circumstance which the assured is
bound to disclose, unless it comes to his knowledge too late to communicate it to the agent.

Section 21 of the Act lays down the provisions of „Disclosure by Agent effecting Insurance.‟
This part lays down the disclosure norms that need to be followed by an agent who is affecting
the insurance. According to this section, the agent must disclose to the insurer every material
circumstances which is known to him and at the same time every material circumstance which
the assured is bound to disclose.

Section 20(2) of the Indian Marine Insurance Act, 1963, provides what are material
circumstances. According to the provision, „every circumstance is material which would
influence the judgment of a prudent insurer in fixing the premium, or determining whether he
will take the risk.‟ The wide ambit of this provision is due to the reason that the assured alone is
deemed to know all the circumstances that may arise with the risk intended to be insured. It is his
duty to disclose them fully to the insured whether or not the insurer has asked specific question
as regards to the same.

Insurance contracts are a special class of contracts, having distinctive features such as utmost
good faith, insurable interest, indemnity, subrogation and contribution and doctrine of proximate
cause which are more or less common to all branches of insurance. There are certain obligations
in contract of insurance which makes it unique and due to its unique nature, an insurance
contract is also known as „contract of good faith‟. This requires that parties to it to act towards
each other with utmost good faith. This means that each party is entitled to rely on the
representations of the other and each party should have a reasonable expectation that the other is
acting in good faith without attempts to conceal or deceive. In a contract of utmost good faith,
the parties have an affirmative duty to each other to disclose all material facts related to the
contract. That is not just a duty not to lie, but also a duty to speak up. So all, the material facts
which are likely to influence the insurer in deciding the amount of premium payable by the
insured must be disclosed by the insured. Failure to disclose material facts renders the contract
voidable at the option of the insurer.

4.CONDITIONS

Marine Policy Conditions 

The Marine Insurance Act 1906 provides the framework on which marine insurance is based and
the policy document is formulated on the base of marine policy conditions. Based upon this
framework, the insurers are obliged to issue their policies. 

• Insurance Cargo Clauses (ICC) (C): The clause provides major casualty coverage during the
land transit and tends to be used for cargoes that are not easily damaged, e.g. scrap steel, coal,
etc. Subject to the policy exclusions and warranties the covers loss or damage to the subject
matter insured reasonably attributable to 

o Fire or explosion 

o Grounding, sinking 

o Overturning or derailment 

o Collision or contact of vessel 

o Discharge of cargo at point of distress 

• Insurance Cargo Clause (B): Subject to the policy exclusions and warranties, the (B) clauses
provide all the cover under (C) and also cover loss of damage to the subject matter insured
reasonably attributable to: 

o Earthquake, volcanic eruption or lightning 

o Water damage by entry of sea/ water (excluding rainwater), 

o Total loss of package lost overboard 

• Insurance cargo Clause (A): Subject to the policy exclusions and warranties, the clause “A”
provides the widest of all three covers and generally summed up as ‘all risk’ of loss or damage to
the subject matter insured.

5.ASSIGNMENT OF MARINE POLICY 

Assignment as recognized under the contract act, 1872 means the transfer of rights and
obligation held by one person to another. Assignment is the complete transfer of rights to receive
benefits by one party and the obligations or duty to be performed by that party to another. 

In most cases of insurance assignment of an insurance contract require the consent of the insurer
before the assignment can be fulfilled. However, it is not so in case of assignment of marine
insurance. Especially in case of cargo insurance an assignment made expressly does not need the
approval of the insurer or any written notice.Section 52of the Indian Marine Insurance Act 1963 

containing the conditions of when and how valid assignments can be made. A marine policy can
be assigned to another person only when the policy itself has a clause or provision for
assignment. The policy can be transferred either before or after the loss but an assignment cannot
be made after the insured has parted with the interest in the goods or lost them. This means that if
the insured has interest in the goods he may assign the policy covering those goods to anyone
even if the goods have suffered the loss or are damaged. If the insurer parts with the interest in
the subject matter or if the goods have been lost before assignment or the intention to make
assignment, either expressly or impliedly was not there, such subsequent assignment cannot be
valid. 

Assignment cannot be done by a person who has no proprietary interest and who has not
acquired insurable interest at the time of assignment. As held in case of New IndiaAssurance
Co Ltd v G.N. Sainani ,4 (1997) 6 SCC 383: AIR 1997 SCC 2938 

Once the assignment is done the assignee assumes all the right available to the insured and
including the right to sue in his name. The insurer can also use all his defences against the
assignee as if he would have used against the insured. The assignment of policy can be done by
endorsement on the policy or on the insurance certificate or in any other customary manner.