Chartering. Capt. Vivek Jain Barrister( England), Solicitor Advocate( England) MBA( Norway)

Transcription

1 Chartering Capt. Vivek Jain Barrister( England), Solicitor Advocate( England) MBA( Norway) Master Mariner( UK), LLB, LLM, B.Sc.( N. Sc) Ex-Asso. Prof ( Univ. of Plymouth)

2 Lecture Plan 1. Contractual Chain and Special Considerations in Break Bulk 2. Time charter a. Classification of terms b. Rights and Indemnities c. Issues of stowage, delay etc. d. Bill of lading issued under the charter party 3. Voyage Charter a. Classification of terms b. Freight c. Issues of NOR, Laytime and Demmurage

3 Usual contractual chain in Shipping Head Owners (Bruce Lee) chartered MV Li Bing Bing to Charlie on 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

4 Special Break Bulk Issues Longshoremen and dealing with stevedores and unions, - 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 carrying multiple loads of break bulk cargo Stowage/Tallying charges cost In technologically less advanced ports Tallyman and pre-loading surveys- cost Stability issues

5 Time Charterparty

6 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

7 TIME CHARTERERS HAVE THE RIGHT TO GET WHAT WAS BARGAINED FOR but what did he bargain for? Warranty? Condition? Intermediate term?

8 Classification of Terms 1. Conditions a. innocent party can terminate for breach 2. Warranties a. innocent party entitled to damages for breach 3. Innominate or intermediate terms a. depends on the seriousness of the breach b. goes to root of the contract or innocent party losing substantially the whole benefit of the contract c. Photo Productions -v- Securicor [1984], Hong Kong Fir [1962]

9 WHO QUALIFIES? One who contracts for the use and service of a Li Bing Bing for an agreed period of time Time charterers have right to use and utilize the Li Bing Bing ( but it is not leasing)

10 DESCRIPTION OF THE VESSEL NYPE lines 4-11 Correct at the time the charter was entered into Implied term that Owners will not change significantly

11 DESCRIPTION OF THE VESSEL Name Class Flag Present Position

12 DESCRIPTION OF THE Li Bing Bing Speed and Consumption Capacity General rule would breach lead to a variety of circumstances?

13 DESCRIPTION OF THE Li Bing Bing Seaworthiness Modified by the Clause Paramount NYPE Clause 14 Cancelling Clause Automatic right No breach necessary

14 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 costs e. ICA clause?

15 TIME CHARTERERS RIGHTS? Employment or Navigation? Limited by the terms of the Charterparty trading limits types of cargo form of bills of lading

16 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

17 LOADING, STOWING, TRIMMING AND DISCHARGING 1. Clause 8, NYPE Charterers are to load, stow, and trim the cargo at their expense under the supervision of the Captain 2. Charterers responsible but Master always responsible for seaworthiness If his intervention causes the loss, Owners liable

18 INDEMNITIES With rights in the charterparties, charterers are also responsible to the owners Express Indemnities and charterers hereby agree to indemnify the owners from any consequences that may arise from the captain following the charterers instructions

19 INDEMNITIES Implied When owners bound to obey Liabilities incurred against third parties Falling outside the scope of the charterparty

20 TIME CHARTERERS HAVE THE RIGHT TO PROCURE THE ISSUE OF BILLS OF LADING NYPE line 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

21 LIMITS TO THE RIGHT manifestly inconsistent inaccurate information

22 WHO CAN SIGN? Charterers? Sub-Charterers? Charterers agents? Implied authority Ostensible authority

23 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

24 Voyage Charterparties

25 Introduction. Contract to carry a cargo from port A to port B. Could be optional cargoes to or from optional ports. Owner/Disponent retains possession of the vessel. Charterer may have obligations to load or discharge. Freight. Laytime and demurrage. Standard forms: Gencon

26 Classification of Terms 1. Conditions a. innocent party can terminate for breach 2. Warranties a. innocent party entitled to damages for breach 3. Innominate or intermediate terms a. depends on the seriousness of the breach b. goes to root of the contract or innocent party losing substantially the whole benefit of the contract c. Photo Productions -v- Securicor [1984], Hong Kong Fir [1962]

27 Examples of Terms 1. Mostly intermediate terms a. vessel s deadweight or capacity 2. Conditions a. identity of Li Bing Bing : unless Owner has option b. class : The Appollonius [1978] c. vessel s position or expected ready to load

28 FREIGHT Lump sum to cover all Owners costs Covers the costs of carrying voyage plus laytime Usually (but not necessarily) calculated on amount of cargo carried Common 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 delivery Freight earned on loading but payable after 5 days of issuance of bill of lading 95% of freight deemed earned on shipment and payable with in 3 days of loading, 5% after completion of discharge

29 Freight Unless written in the contract, no deduction is allowed

30 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

31 Laytime Free time for loading and discharging called laydays Charterers contractual right to use all laytime - The Ulyanovsk [1990] : market falling If exceeded, Charterer pays agreed damages called demurrage Very complex provisions how is the amount of laytime calculated? when does laytime start? what interrupts laytime?

32 Laytime Calculation Can be very complicated especially in dry cargo charters 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

33 Laytime Starting Issues 1. Laycan date 2. Berth or Port Charter? 3. NOR issues

34 Demurrage 1. Agreed damages for detention 2. Exclusive remedy for delay unless separate breach of other clause 3. Once on demurrage, always on demurrage 4. Any exceptions must clearly refer to excluding liability for demurrage : see the case The Lefthero [1992] 5. Vessel must stay until delay is so bad that contract is repudiated or frustrated

35 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 and stowage

36 Cost/Risks continued Risks are usually with owners but if clear words in contract then on charterers FIOST AND FIOS only cost is transferred and no transfer of liability of such operations But if the risk is transferred on the Charterers ( by reading other clauses or by variation of the clause) duty to stow safely is on the charterers and the standard of skill is same as that of Owners Duty to appoint competent stevedores Master can still intervene, if stowage affect seaworthiness, unless it is transferred to Charterers by a clause!

37 Thank you