Andrew Liu And Company Marine Insurance and Legal · PDF fileBill of lading issued under the...

Andrew Liu And CompanyMarine Insurance and Legal Consultants

Chartering

Capt. Vivek JainBarrister( England), Solicitor Advocate( England)

MBA( Norway)Master Mariner( UK), LLB, LLM, B.Sc.( N. Sc)

Ex-Asso. Prof ( Univ. of Plymouth)


Lecture Plan1. Contractual Chain and Special Considerations in Break Bulk

2. Time chartera. Classification of termsb. Rights and Indemnitiesc. Issues of stowage, delay etc.d. Bill of lading issued under the charter party

3. Voyage Chartera. Classification of termsb. Freightc. Issues of NOR , Laytime and Demmurage


Usual contractual chain in Shipping

•Head Owners (Bruce Lee) chartered MV Li Bing Bing to Charlieon a period T/C

• Charlie chartered Li Bing Bing to Max on a Time Charter Trip.

• Max chartered Li Bing Bing to Yi on a Voyage charter spot.

• Yi is a Buyer of steel coils under Sale Contract with FOB

Seller/Shipper Reeves •

Andrew Liu And CompanyMarine Insurance and Legal Consultants Special Break Bulk Issues

• Longshoremen and dealing with stevedores andunions, - cost , working times

• Loading cranes/derricks , - cost• Warehouses and port charges - cost• Transport vehicles—and often takes up more

dock space due to multiple vessels carryingmultiple loads of break bulk cargo

• Stowage/Tallying charges – cost• In technologically less advanced ports• Tallyman and pre-loading surveys- cost• Stability issues


Time Charterparty


TIME CHARTERERS’ RIGHTS

• The Right to get what he bargained for • The Right to use what was bargained for as he wishes • The Right to procure the issue of bills of lading


TIME CHARTERERS HAVE THE RIGHTTO GET WHAT WAS BARGAINED FOR

• but what did he bargain for?• Warranty?• Condition?• Intermediate term?


Classification of Terms

1. Conditionsa. innocent party can terminate for breach2. Warrantiesa. innocent party entitled to damages for breach3. Innominate or intermediate termsa. depends on the seriousness of the breachb. goes to “root of the contract” or innocent party losing

substantially the whole benefit of the contractc. Photo Productions -v- Securicor [1984], Hong Kong

Fir [1962]


WHO QUALIFIES?

• One who contracts for the use andservice of a Li Bing Bing for an agreedperiod of time • Time charterers have right to use andutilize the Li Bing Bing ( but it is notleasing)


DESCRIPTION OF THE VESSEL

• NYPE lines 4-11

• Correct at the time the charter was entered into

• Implied term that Owners will not changesignificantly


DESCRIPTION OF THE VESSEL

• Name• Class• Flag• Present Position


DESCRIPTION OF THE Li Bing Bing

• Speed and Consumption• Capacity• General rule – would breach lead to a variety of circumstances?


DESCRIPTION OF THE Li Bing Bing

• Seaworthiness– Modified by the Clause Paramount

• NYPE Clause 14 Cancelling Clause– Automatic right– No breach necessary


REMEMBER…

• Be clear, be precise and draft rider clauses carefully• Special things to take care in break bulk and make a list :

a. Who is responsible for appointing stevedores?b. Who is responsible for stowage and

dunnaging ?c. Who is paying for stowage and dunnage ?d. Who is paying for loading and discharging

costse. ICA clause ?


TIME CHARTERERS RIGHTS ?

• “Employment” or “Navigation”?• Limited by the terms of the Charterparty– trading limits– types of cargo– form of bills of lading


DELAY? Whose Responsibility

• The case of The Houda• Duty to act reasonably such as to:

– Clarify ambiguity– Question lawfulness– Verify authenticity

• Hours or days – “reasonable master” test


LOADING, STOWING, TRIMMING ANDDISCHARGING

1. Clause 8, NYPE “Charterers are to load, stow, and trim the cargo at their expenseunder the supervision of the Captain”

2. Charterers responsible but• Master always responsible for

seaworthiness• If his intervention causes the loss, Owners

liable


INDEMNITIES

• “With rights in the charterparties , charterersare also responsible to the owners ”• Express Indemnities“ …and charterers hereby agree to indemnifythe owners from any consequences that mayarise from the captain following the charterers’instructions…”


INDEMNITIES

• Implied– When owners bound to obey– Liabilities incurred against third parties– Falling outside the scope of the

charterparty


TIME CHARTERERS HAVE THE RIGHT TOPROCURE THE ISSUE OF BILLS OFLADING

• NYPE line 78 - 79• “…the Captain…who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts. ”• Wide discretion as to form• Owners’ contract with the owner of the goods


LIMITS TO THE RIGHT

• “manifestly inconsistent”• inaccurate information


WHO CAN SIGN?

• Charterers?• Sub-Charterers?• Charterers agents?• Implied authority• Ostensible authority


HIRE ISSUES

• Hire is payable each month in advance or as agreed• A period agreed in charter• If for 12 months, law will imply a commercially acceptable

margin of error of up to 5%• 2 weeks in 12 months

• Parties free to agree a min/max period• If charter exceeds the tolerance, Charterer pays damages at

current market rate if higher than charter rate• Anti-technicality clauses


VoyageCharterparties

Andrew Liu And CompanyMarine Insurance and Legal Consultants Introduction

1. Contract to carry a cargo from port A to port B2. Could be optional cargoes to or from optional ports3. Owner/Disponent retains possession of the vessel4. Charterer may have obligations to load or discharge5. Freight6. Laytime and demurrage7. Standard forms: Gencon


Classification of Terms

1. Conditionsa. innocent party can terminate for breach2. Warrantiesa. innocent party entitled to damages for breach3. Innominate or intermediate termsa. depends on the seriousness of the breachb. goes to “root of the contract” or innocent party losing

substantially the whole benefit of the contractc. Photo Productions -v- Securicor [1984], Hong Kong

Fir [1962]


Examples of Terms

1. Mostly intermediate termsa. vessel’s deadweight or capacity

2. Conditionsa. identity of Li Bing Bing : unless Owner has

optionb. class : The Appollonius [1978]c. vessel’s position or ‘expected ready to load’

Andrew Liu And CompanyMarine Insurance and Legal Consultants FREIGHT

Lump sum to cover all Owners’ costsCovers the costs of carrying voyage plus laytimeUsually (but not necessarily) calculated on amount of cargo carriedCommon law position : freight only payable on cargo delivered

This can often varied by contract C Freight payable on cargo loaded as evidenced by surveyor’s

certiificate… payable on full cargo loaded but on deliveryFreight earned on loading but payable after 5 days of issuanceof bill of lading

95% of freight deemed earned on shipment and payable with in 3days of loading, 5% after completion of discharge


Freight

Unless written in the contract, no deductionis allowed


NOR - Few Important Issues• Tendering of NOR before laycan? London Arbitration LMLN103 the absence of such a provision, a valid notice might be given at any time, but the laytime would not commence before earliest date of laycan • The Petr Shmidt [1998], clause of the CP provides NOR to be tend within 0600 and 1700 local time. NOR was tendered by the master outside this period, held, the NOR take effective as notices tendered at the hour of 0600 the next morning. • London Arbitration 9/96 :The tribunal held that there was to be implied into CP obliging the shippers to accept NOR reasonably promptly, if not immediately


Laytime

• Free time for loading and discharging calledlaydays

• Charterers’ contractual right to use all laytime -The Ulyanovsk [1990] : market falling

• If exceeded, Charterer pays agreed damagescalled demurrage

• Very complex provisions• how is the amount of laytime calculated?• when does laytime start?• what interrupts laytime?

Andrew Liu And CompanyMarine Insurance and Legal Consultants Laytime Calculation

• Can be very complicated especially in dry cargocharters

• Can be calculated by reference to time, number

of holds or hatches or a certain loading rate • Can exclude certain days, e.g. weekends and

holidays • Can exclude bad weather periods, e.g. “weather

working day”


Laytime – Starting Issues

1. Laycan date

2. Berth or Port Charter?

3. NOR issues

Andrew Liu And CompanyMarine Insurance and Legal Consultants Demurrage

1. Agreed damages for detention2. Exclusive remedy for delay unless separate

breach of other clause3. ‘Once on demurrage, always on demurrage’4. Any exceptions must clearly refer to excluding

liability for demurrage : see the case TheLefthero [1992]

5. Vessel must stay until delay is so bad thatcontract is repudiated or frustrated

Andrew Liu And CompanyMarine Insurance and Legal Consultants Loading/Discharging/Stowage/Dunnage

Charterers can :A.Arrange for performance of loading/discharging;and/or B.Pay for the above; and/or C.Charterers will bear the risk of loading andstowage


Cost/Risks continuedRisks are usually with owners but if clear words in contractthen on charterers

FIOST AND FIOS –

only cost is transferred and no transfer of liability of suchoperations

But if the risk is transferred on the Charterers ( by readingother clauses or by variation of the clause)

duty to stow safely is on the charterers and the standardof skill is same as that of Owners

Duty to appoint competent stevedoresMaster can still intervene, if stowage affect

seaworthiness, unless it is transferred to Charterers by aclause!


Thank [email protected]

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