THE EVOLVING LAW AND PRACTICE OF VOYAGE CHARTERPARTIES EDITED BY PROFESSOR D. RHIDIAN THOMAS informa LONDON 2009
Contents Foreword Preface Authors'Biographies Table of Cases Table of Legislation v VU xvii xxiii xxxv CHAPTER 1: THE EVOLVING FLEXIBILITY OF VOYAGE CHARTERPARTIES Professor D. Rhidian Thomas 1 Introduction 1 Load/discharge ports and the exercise of options 3 Introduction 3 Exercising the right of nomination 4 Procedural requirements 6 Time limits 6 Impossible and unlawful ports 7 Safe ports 9 No obligation of good faith 9 Nomination of berths and other places 10 The rotation question 11 Effect of breach 11 Defaults by charterers 11 Defaults by owners 13 The effect of a valid nomination 13 A contractual right to change a nomination 14 Protecting against the adverse consequences of a change of nomination 16 Nominations and the safe port promise 19 Other contractual rights to control the performance of the contracted voyage 22 Introduction (a) The right to direct a vessel to proceed to a specific place to await instructions 24 (b) The right to require the vessel to stop 25 (c) The right to regulate the speed of the vessel 26 (d) The right to require the vessel to follow a prescribed route 28 (e) The right to manage cargo at sea 29 (i) Transhipment 29 (ii) Sampling 29 (iii) Co-mingling (iv) Storage Conflicting instructions 31 Conclusion 22 ^0 ^1 3 5
CHAPTER2: JURISDICTION AND ARBITRATION CLAUSES Steven Gee QC 35 Introduction 35 Arbitration clauses: stay of proceedings 35 Changing public policies 36 Jurisdiction clauses and the Judgments Regulation 37 Incorporation by reference 39 "Agreement in writing" 39 Jurisdiction under an arbitration agreement 40 Scope of the arbitration clause and the projection of it from attacks on the main agreement 41 Anti-suit injunctions and the EC 47 CHAPTER3: LEGALASPECTS OF THE APPROACH VOYAGE Richard Lord QC 53 Introduction 53 Being in the right place at the right time 53 Location of vessel 54 Time of sailing 54 Expected ready to load 54 Proceeding with all convenient speed 54 Intermediate engagements 55 Safety 56 Exceptions 56 Seaworthiness 56 CHAPTER4: THE LOADING OBLIGATIONS OF VOYAGE CHARTERERS Dr Theodora Nikaki 59 Introduction 59 The preconditions for the transfer of the responsibility for the proper performance of the cargo loading and stowage to the charterers 61 The charterers' liability for loading and stowage under FIOS and similar clauses 62 The exceptions to the charterers' liability for improper loading and stowage 66 Who is liable for improper stowage that renders the vessels unseaworthy? 68 Conclusions 75 CHAPTER 5: THE WRECK OF THE HESPERUS REVISITED : A REVIEW OF THE OBLIGATIONS OF SEAWORTHINESS IN CONTRACTS OF AFFREIGHTMENT Charles G.C.H. Baker 19 Introduction 79 Warranty of seaworthiness implied at common law 80 Nature of the warranty 82 Stowage 85
Exceptions 90 Causation 92 The ISM code 94 Conclusion 95 CHAPTER6: DANGEROUS CARGOAND "LEGALLY DANGEROUS"CARGO Robert Gay 97 Introduction 97 Two types of concern with dangerous cargo 98 Concepts of "physically dangerous" and "legal dangerous" cargo 99 Naive versions of the two common law concepts 99 Outer boundary of the common law concepts 101 Boundary of the Hague Rules concept 103 The left-over concept of legally dangerous cargo 107 Further articulation of the definition of "legally dangerous" cargo 108 Consequences of this definition of legally dangerous cargo 110 Outstanding questions with this definition 113 Absolute liability 116 Absolute liability under the Hague Rules 116 Absolute liability at common law, and under the "leftover" principles 119 What the shipper need not say 121 Application of these points to legally dangerous cargo 125 Who is liable? 127 How will the concept of dangerous cargo develop? 131 CHAPTER 7: ARRIVAL, READINESS AND THE COMMENCEMENT OF LAYTIME Simon Rainey QC 137 The three requirements for the commencement of laytime 137 (1) The arrival of the vessel at destination 138 (2) The readiness of the vessel to load (or to discharge) 146 (3) The giving of notice of readiness 152 Conferring subsequent validity on an originally invalid notice of readiness 156 Conclusions 159 CHAPTER8: THE RUNNING OF LAYTIME AND DEMURRAGE WHEN A CHARTERER DOES NOT HAVE SOLE USE OF A VESSEL Mark Hamsher 161 Introduction 16 1 Suspending the running of laytime and demurrage 162 Absence of any loss of use by the charterers 163 A final comment 169
CHAPTER 9: LAYTIME AND DEMURRAGE CLAUSES IN CONTRACTS OF SALE - A SURVEY OF THE NEW YORK SOCIETY OF MARITIME ARBITRATORS' AWARD (1978-2008) AND ENGLISH CASE LAW Professor Jason Chuah 171 An examination of English decisions 172 Indemnifying or independent clause - a matter of construction 172 A general incorporation clause 181 Observations from across the pond 183 The New York maritime arbitration system 183 Practical importance of the issue of separateness between the sale and charter demurrage/laytime clauses 183 "Presumption" of separateness and the construction of the contract 186 Preference for separateness leading to strict view on incorporation 189 Relevance of knowledge of the charterparty to the construction of the contract 190 Applying the demurrage clause as a sale term - implications 191 The sale laytime/demurrage clause in the charterparty 195 Conclusion 196 Appendix 198 CHAPTER 10: BILLS OF LADING AND VOYAGE CHARTERS Professor Francis Reynolds QC 201 Introduction 201 The interaction of the two contracts 201 The springing contract 203 Bill transferred back to charterer 204 Further transfer of the bill of lading: statutes 205 The Berge Sisar 206 East West 208 The Ythan 209 The three cases 212 Spent bills of lading 213 CHAPTER 11: CHARTERPARTY BILLS OF LADING CARGO INTERESTS' LIABILITIES TO THE SHIPOWNER Simon Baughen 217 Introduction 217 The underlying contractual matrix 217 Shipowners' claims against the voyage charterer: the effect of cesser clauses 219 Shipowners' remedies against the bill of lading holder 223 The Hen on cargo 223 The lien on sub-freights 226 Personal liability under the bill of lading 228 Bills of lading incorporating the freight and demurrage provisions of a charterparty 232 Bills of lading with no express freight/demurrage provisions: implied obligations 238 Freight 328 Liability for delay during loading and discharge 241 Bills of lading and the indemnity in respect of dangerous cargo 243 The UNCITRAL Draft Convention and liabilities under charterparty bills of lading 246 Freight prepaid clausing 248
Time bar 249 Liens on cargo 249 No contracting out of shippers' obligations 250 Dangerous cargo and third parties 250 CHAPTER 12. THE BILL OF LADING CONTRACTS UNDER EUROPEANNATIONALLAWS (CIVILLAW APPROACHES TO EXPLAINING THE LEGAL POSITION OF THE CONSIGNEE UNDER BILLS OFLADING Professor Frank G.M. Smeele 251 Introduction 251 Transfer of bill of lading to third party acting in good faith 253 Conclusive evidence rule 254 Problem areas 256 Scope of this comparative study 257 Position of the consignee under a contract of carriage and under a bill of lading contract 258 Principles of European Contract Law (PECL) and UNIDROIT Principles 259 Civil law approaches 262 German Law 262 Contract of carriage 262 Bill of lading contract 266 French law 268 Dutch law 272 CHAPTER 13: COMPARATIVE OBSERVATIONS ONUNITED STATES LAW AND PRACTICE RELATING TO VOYAGE CHARTERS LeRoy Lambert 281 Two systems divided by a common law 281 Sources of "United States law" relating to voyage charterparties 281 United States maritime law 282 Maritime arbitration awards as a source of "law" 283 Voyage charters 283 "Subjects" 284 Brokers' commission claims 285 Safe ports and berths 286 Miscellaneous issues 287 Recoverability of attorneys' fees by the prevailing party 287 Conclusion 288 CHAPTER 14: THE IMPACT OF DEVIATION ON CONTRACTS OF AFFREIGHTMENT Professor Richard Williams 289 Introduction 289 The development of the law relating to deviation 290 The present conundrum 295
(a) The true juridical basis of the deviation cases is the "ordinary law of contract" relating to breach of condition and repudiation 296 (i) Does the breach terminate the contract automatically or only if the innocent party elect to terminate it? 298 (ii) Does the termination take effect (a) ab initio, or (b) as from the moment of the deviation, or (c) if the election is relevant, from the moment that the election is exercised? 298 (b) The deviation cases may be explained with reference to the interaction of traditional contractual construction rules which have a particular resonance in relation to the carriage of goods by sea 300 (i) The "deemed" cause role 301 (ii) The "deemed intention" rule 302 (iii) The actual intention rule 304 Resume 305 Conclusion 306 CHAPTER 15: CANCELLATION CLAUSES AND REPUDIATORY BREACH Professor Michael Furmston 307 Introduction 307 General principles 307 Application to voyage charterparties 309 Smith v Dart 309 Mode of cancellation 309 Premature cancellation by the charterer 310 Repudiatory breach 311 Appendix 313 CHAPTER 16: FRUSTRATION IN VOYAGE CHARTERS - SILTED-UP BACKWATER OR VITAL NAVIGATIONAL RESOURCE? Professor Andrew Tettenborn 317 Overview: what can frustrate a voyage charter? 317 (a) The loss or unavailability of the chartered vessel 318 (b) Difficulties with the route, the cargo, or the load or delivery port 319 (i) The route 319 (ii) The cargo 320 (iii) The port 321 (c) Danger 322 (d) Delay 322 The limitations on frustration 323 (a) The difficulty of showing frustration 323 (b) Other doctrines give the same result as frustruction, but more easily 324 (c) Frustration is merely a default rule 325 (d) The self-inducement rule 328 (e) Frustration, the prepaid freight rule, pro rata freight and the Law Reform (Frustration Contracts) Act 1943 328 (i) Prepaid freight 328 (ii) Pro rata freight 329 When does frustration matter? 330
(a) Ancillary obligations in relation cargo or ship 330 (b) One case of advance freight 331 (c) Periodical sums 331 (d) Frustration and damages 333 Conclusion 334 APPENDICES 335 Voyage Charterparties 1. Gencon (As Revised 1994) 337 2. AMWELSH93 341 3. SYNACOMEX 2000 353 4. ASBATANKVOY 359 5. BPVOY 4 Charterparty 365 6. SHELLVOY 6 Charterparty 397 Bills of Lading 7. CONGENBILL (Edition 1994) 419 8. BP Tank Ship Bill of Lading 421 9. Intankbill 2003 423 Index 425