Introduction for port knowledge

8/9/2019 Introduction for port knowledge

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1. The structure of shipping

shipper (sea) carrier consignee

Personnel and organisations

The major components of the industry can be divided intothree sections

♦Ship interests

♦Cargo interests

♦ Ancillary services

SHIPOWNER

CARGO OWNER SHIPMANAGER

CHARTERPART!"#$$ %& $A'#()!

*H#P+A(A)E+E(T



*hip interests

♦Shipowner

♦Shipmanager

♦Shipping line

♦Carrier

*hipping line

A company ,hich operates a ship or ships bet,eenadvertised ports on a regular basis and offers space forgoods in return for freight based on a tariff of rates.

Carrier

The shipo,ner or charterer or ,hoever enters into acontract ,ith the shipper for the transportation ofmerchandise.

Cargo interest

♦Shipper

♦Charterer

♦Freight forwarder



*hipper

A person or company ,ho enters into a contract ,ith aliner conference! shipping line or shipo,ner for thecarriage of goods.

The shipper could be the seller of the cargo! the buyer ofthe cargo or some third party that solely arranges thetransportation of the cargo.

Charterer

A person or organisation that contracts to ac-uire a vessel!for a voyage or a period of time! to carry his cargo.

&reight for,arder

An increasing importance is being placed upon the freightfor,arder! as he taes over many of the functions of thetraditional shipo,ner/carrier yet retains interested in thecargo.

+any of the larger e0porting companies maintain an

inhouse shipping and distribution department ,hichnegotiates contracts of affreightment or carriage of goodsfor the company ,ith the shipping line that trades to thearea of the ,orld ,here the companys goods are destined.

Ho,ever! there could probably be a lac of no,ledge ofe0porting procedures! and a lac of e0pertise fornegotiating! in a smaller company that e0ports.

Traditionally! the freight for,arder filled the need fore0pertise! ,ith their no,ledge of e0port/importdocumentation and procedure! plus their ,ide e0periencein dealing ,ith shipping companies ,ith regard tocontracts and documents.

The freight for,arder can offer services that come under

four distinct headings



♦Purely as a shipper’s agent procuring transport andshipping services on behalf of the exporter and underhis direction

♦ As a forwarder offering a total expertise package to theexporter with regard to routeing and choice of modetogether with ancillary documentation and perhapspacking service. With regard to transport he remains anagent for the exporter and bills of lading are made out inthe shipper’s name and to the shipper’s account

♦ As a principal usually multi!modal transport operatortaking responsibility for the goods irrespective of who

actually carries them. "n many cases he may be theactual carrier for at least part of the transit. #e issuesthe transport documents combined bill of lading

♦ As a specialist provider of ancillary selfstandingservices such as custom clearance warehousingpacking and port agency

Ancillary services

♦$rokers♦ "nsurers

♦Surveyors

♦Classification societies

♦%lag state officials

♦Port management

♦Stevedores

♦Port authorities♦Coastguard



"roer

The first of these headings is of relevance because of the

countless persons met ,ho calls himself a 2broer.

#n relation to shipping the term broer covers a ,ide andvaried list of activities

Agents employed (at a customaryor agreed rate of commission or

remuneration) to buy or sellgoods, merchandise or marketablesecurities, or to negotiateinsurance, freight rates or othermatters, for a principal; the salesor transaction being negotiatednot in his own name but in thename of the principal &the marineencyclopaedia dictionary'.

+ore specifically broers connected ,ith the maritimeindustry can be categorised as3

"nsurance brokers! ,ho act as the intermediary bet,een theship/cargo o,ner and the under,riters ,hen marineinsurance is negotiated. This form of broer could be an

individual but more liely it ,ill be part of a largeorganisation providing a global service of insurance!consultancy! ris management! and information.

Shipbrokers! ,ho can be further divided into

♦*ale and purchase broers who buy and sell ships forclients &principals' or arrange contracts for building new

ships



♦*hipo,ners broers who act for the shipowner with aship to charter for a voyage he is approached by theshipowner with a view to finding cargo to carry

♦$oading broer/liner broers who represent theshipowner or shipping line at the port of loading. #eadvertises the date of sailing in shipping publicationsobtains cargo and co!ordinates the arrangements fordelivery to the ship and loading though the actualstowage is decided upon by the cargo superintendentand the ship’s officers. "t can also be this broker’sbusiness to sign the bill of lading on behalf of the masterand issue it to the shipper &cargo owner' or his agent inexchange for freight if freight is to be paid in advance

♦Charterers or merchants broer who acts for thecargo interest and finds ships for the cargo they will tendto specialise in a particular area or commodity.

♦Chartering broers who act as intermediaries betweenthe shipowner and the charterers or shippers andreceivers. (hey are mostly responsible for the drafting or

signing of the charterparty

The parties to the contract may use separate broers orcomplete the fi0ture through the intervention of a mutualbroer. This broer usually retains the original documentsand issues certified copies to each party

The broers commission! paid by the shipo,ner! is

generally specified in the charterparty in the form of astated percentage of the freight 4voyage5 or hire 4time5

♦&or,arding agent is employed by the shipper to find aship usually on a liner trade to carry his cargo. "t is theforwarding agent’s normal duty to ascertain the date andplace of sailing obtain a space allocation and to preparethe bill of lading



As different shipping lines tend to have their o,n form ofbill of lading! it is the duty of the for,arding agent to obtainthe correct bill of lading! complete it ,ith the necessaryparticulars and for,ard it to the loading broer for signing

His other duties often include arranging for the goods to bebrought alongside the ship! maing custom entries andpaying any dues on the cargo.

After shipment the for,arding agent collects the completed

4signed5 bill of lading and sends it to the shipper

The for,arding agent ,ill also be employed by theconsignee to collect the delivered goods and arrange thein,ard customs clearance and formalities.

Ship’s agent)shipping agent! though technically not a broer!

the ships agent does attend to the shipo,nerscommercial needs and formalities before! during and afterthe ships stay in port

The ships agent represents the shipo,ner ,ith regard tothe official re-uirements needed for the ship to enter port!arranging ,ith the port authorities for the allocation ofberthing space to load/unload the ship! advising import

and e0port cargo o,ners! or the for,arding agent! andloading/unloading the cargo

The ships agent ,ill also attend to the customsre-uirements of the port! and pay 4to be later reimbursedby the shipo,ner5 all charges and dues the ship incurs.



The agent can often be nominated by the charterer andpaid for by the o,ner. #n this case he could have a conflictof interest! ,here he is nominally acting for the ship butprimarily puts the charterers interest first. Care must be

taen in approaching charterers named agents and shipsshould be advised to contact the ship managers office ona secure line for advice.

#f the shipping company is little used or even unno,n tothe ships agent company! they ,ill usually be as foradvance sums of money to pay disbursements and cash

advances to the cre,

Apart from the commercial duties the ships agent ,ill alsoloo after the ships non6commercial activities! cre,replacement! repatriation and arranging stores! buners!,ater and money

7ith passenger ships the agent handles all that is needed

for the embaration and disembaration of the passengers

Chartering agents! are broers ,ho undertae the importand/or e0port of commodities in large -uantities! they actas an intermediary bet,een the o,ner and consignee ofthe goods

"roers thus appear to discharge ,ell developed andseparate functions! but in practice the activities of firmsmay include more than one of these functions and thesame firm is often acting for both parties! e.g. $oadingbroer and for,arding agent.

*urveyors

Surveyors is a general term used by anybody ,anting toinspect the ship or its cargo! its procedures or operation.



They can be associated ,ith3

♦(he company ! superintendents auditors etc.

♦*uality)sep)ism code

♦P+i clubs♦,nderwriters

♦Classification societies

♦%lag state authorities

♦Port state authorities

♦Cargo

♦Possible buyer of vessel





"ecause of this! a trust ,as established bet,een theclassification society and the shipping industry and if aship ,as 2in class! or ,as given a the class a1 lloyds! thecargo o,ner or under,riter could be confident that the

ship ,as ,ell found and had been built to the highestpossible standard! that she had been surveyed during thebuilding process and all her ancillary e-uipment! egengines! plates!etc! had also been surveyed and passed ascomplete.

%nce the ship ,as classed by the society it had to maintainan e0tensive and regular survey schedule to maintain thatclass! this ,ould entail dry docing! under the societyssupervision! onboard inspections and dismantling ofpotentially ha8ardous e-uipment for detailed e0amination!eg boilers.

The shipo,ner could gain by having his ship in class beobtaining more favourable insurance rates and betterchartering arrangements.

Present day classification societies provide more than justclassing and surveying ships! they also provide

♦ "ndependent inspection agencies for states to use assupplementary to their own government surveyors

♦ "mpartial exclusive surveyors who work in the interestsof their principle with regard to building accident andbuying surveys

♦ A comprehensive shipping information service lloyd’sregister of ships is probably the oldest &first printed-/0' and the best known

♦ A marine advisory service on most sub1ects connectedwith the technical aspects of ship operations

♦ Auditing of 2uality systems established by shipoperators.

♦ A extensive service in small boat building heavyindustry non!destructive testing safety technology



engineering advise 2uality assurance and the offshoreindustry

7ith the advent of international organisations! lie theinternational maritime organisation! the classificationsocieties realised that their control ,as being supersededby state legislation!over ,hich they usually had littlecontrol! therefore in 19:; they formed an internationalassociation to protect their interests and to provide aunified voice in promoting improvements that they felt vitalto the e0panding technically comple0 shipping industry.

#nternational association of classification societies 4iacs5

The main aim of iacs ,as to maintain close co6operation,ith the ,orlds maritime industries and to consult and co6operate ,ith relevant international and maritimeorganisations in the promotion of improvements ofstandards of safety at sea.

The topics covered by iacs include

♦$ulk chemicals

♦Containers

♦3rilling units

♦4lectrical

♦4ngines

♦%ire protection

♦5as tankers♦"nland waterway

ships

♦6arine pollution

♦6aterials and welding

♦6ooring andanchoring

♦Pipes and pressureships

♦Strength of ships♦Subdivisions stability

and loadlines♦Survey reporting and

certification



Classification societies provide a useful and necessaryservice! there are often doubts e0pressed about theirimpartiality and their commercialism! but overall the

shipping industry must be a safer place ,ith the no,ledgethat most of them provide a ,orth,hile and note,orthysystem of accreditation.



< . #nternational regulations

7hen the shipping company has decided ho, to obtain theship it needs! its ne0t decision ,ill be one on the flag ornationality of the ship.

The traditional vie,! of ships 2belonging to the country,here the o,ner has his business! has long been out offavour.

The contemporary attitude of shipo,ners! regarding the

flag of the ship! is no longer based on the plaintive cries ofreactionary maritime nations

♦7ational economies

♦3efence

♦Pride of flag



"ut on simple economics and the realities of a commercialenterprise.

#f a united states ship can be operated for a third of thecost under the liberian flag! the us shipping company ,illneed a very strong commercial inducement to registerunder the us administration rather than the liberian.

&lag

The flag of the vessel is the state ,here the vessel isregistered.

#n most cases the difference in attitudes regardingregistration re-uirements can be associated ,ith thetraditions a country has ,ith the shipping industry.

*ome countries ,ith a tradition of maritime activities havevery strict re-uirements for approving vessel registration3

♦=nited states ! shipowner needs to be a us citi8en or usregistered company. (he vessel re2uires to have been built inthe usa. (he crew re2uire to be &on the whole' us citi8ens.

♦)reece ! shipowner re2uires to be greek or greek company.Crew re2uire to be greek citi8ens though some allowance are

made but pay must comply with strict marine laws regardingpay and conditions.

%ther traditional maritime states have a more pragmaticvie, on registration3

♦=> ! shipowner needs to have a percentage of uk ownership

♦)ermany ! allows dual registration



♦(or,ay ! invented a 9new: domain to allow owners to puttheir vessels under norwegian law for some items but notothers &e.g crew conditions'.



%pen registers

+any non6traditional maritime countries! ho,ever! haveapplied an open register system that allo,s any foreignperson! company or organisation to register a vessel under its la,s. They have no restrictions on the nationality ofo,ner or cre,! they do not impose financial burdens by,ay of ta0 and they have a limited infrastructure for themanagement of their vessels! relying mainly on privateorganisations and classification societies to control theirflagged vessels technical operation. These countries areoften referred to as flags of convenience.

RegistrationRegistration provides a ship ,ith a national identity andshould give the ship and cre, some degree of protection,hen dealing ,ith other states.

#t provides jurisdiction for incidents occurring on board the

ship ,hen the ship is on the high seas.

#t further provides other states ,ith a recognisedprocedure for dealing ,ith events that occur in theircoastal ,aters or on the high seas.

=nder various conventions! unclos iii! unctads united

nations convention on conditions for the registration ofships 19;:! ilo 41?@ of 19;5 and imo resolutions 4a.BB140i55!an attempt has been made by international legislators tohave a genuine lin ,ith state of registration and the shipso,ner



The assembly invites every state to tae necessary stepsto ensure that the o,ner of a ship ,hich flies its flagprovides such state ,ith current information to enable it toidentify and contact the person responsible for that ship in

regard to matters relating to maritime safety 4imoresolution a.BB140i55

Thus the registration of the ship provides a statutorysystem under ,hich the ship should be operated! bothnationally and internationally.

Ho,ever! the commercial life of the ship is little affected bythe flag that it flies! apart from certain states protectionismand the muted rumblings of the B?/B?/<? convention onliner conferences! most cargo o,ners are more concernedabout freight rates and service levels than they are aboutregistration.

7here pressure can be applied is through the itf and their

practice of stopping ships from operating in a port ,hen ithas a cre, that is considered to be under paid. Toovercome this problem some charterers demand that theship has a blue ticet from the #T& that gives someimmunity from delays based on cre,s ,ages.

*imilarly! the flag of a ship has little influence ,ith regardto insurance and classification societies! ,here the valueof the o,ner ,eighs heavier than the nationality of theship! especially ,here many of the less traditional flagstates use the classification societies to issue theirstatutory certificates.



Country A

Country B

Vessel Flag C

urisdictionThe vessel is registered ,ith a country register. 7hile the

vessel is on the high seas it is solely governed by the la,s!rules and regulations of that country. *afety and pollutionla,! pay and conditions of the cre,! and all other legalaspects are controlled by the flag state.

%nce the vessel enters the ,aters of a particular state e.g.Country b! it must comply ,ith that states la,s! this isno,n as port state control.

#t is normal for a port state not to interfere ,ith the socialaspects of shipboard life! but they ,ill certainly becomeinvolved in safety! pollution and operational aspects.

&lag state=nder the customary role of the la, of the sea! it is the flagstate that dictates the la, relating to the ship.

#t is on this premise that the imo acts! la,s are passed andregulations are implemented.



*ince its inception in 19;! the international maritimeorganisation has adopted and amended e0istingconventions and instigated others! such that the shippingindustry has countless items of legislation ,ith ,hich it

must comply! so much so that resolution ?? ,as recentlypassed ,hich recognises the plethora of international rulesand states that ne, regulations should only be introduced,here there is clear evidence of compelling need.

A recent global survey of ship managers indicated that

♦;;< consider the industry regulated at about the right

level♦=>< consider the industry is over regulated

♦-=< consider the industry is under regulated



+aritime legislation

$egislation no, e0ists that covers most aspects of the shipand its commercial activities! and these regulations can begrouped into four areas

♦Ship

♦Crew

♦4nvironment

♦Safety management

♦?thers

These categories are not! and can never be thought of as!separateD they overlap and certain conventions apply tothem individually! ,hile others apply to them all.

*hip#nternational legislation regarding the ship and the safetyof the ship consists of

♦Safety of life at sea convention &S?@AS' -0

♦Convention on load lines -//♦Convention on tonnage measurement of ships -/

*%$A**%$A* consists of nine chapters covering all aspects ofship board safety! it e0tends the legislation to all sea going

ships 4e0cept fishing boats ,hich are legislated for by thetorremolinos convention 19@95.

*%$A* covers

♦Certification that all ships re2uire showing that theycomply with the regulations with regard to



6 cargo ship safety construction

6 cargo ship safety e-uipment

6 cargo ship safety radio

6 passenger ship safety certificate6 e0emption certificate 4chapter i5

♦Construction with regard to subdivision and stabilitymachinery and electrical installations fire protectionfire detection and fire extinction &chapter ii'

♦@ife!saving appliances and arrangements &chapter iii'

♦Badio communications &chapter iv'

♦Safety of navigation &chapter v'

♦Carriage of cargoes &chapter vi'

♦Carriage of dangerous goods which implement theinternational gas carrier &igs' code and the internationalbulk chemical &ibc' code &chapter vii'

♦7uclear ships &chapter viii'

♦6anagement for the safe operation of ships &chapter ix'

♦Safety measures for high!speed craft &chapter x'

♦Special measures to enhance maritime safety &chapterxi'

$oadlineThe limitations on the draft to ,hich a ship may load are asignificant factor in the safety of that ship. #mo recognisesthis fact and are sponsors of this 19:: convention.

The legislation has regulations relating to the

♦Watertight integrity of the ship’s hull

♦ Additional safety with regard to doors and openings inthe weather deck and hull

♦Providing stability information for ships

♦6arking the ship with her loadline



TonnageThe aim of the parties to the convention ,as to establish

uniform principles and rules to determine the tonnage ofships engaged on international voyages.

The regulations define t,o tonnages

♦5ross tonnage ! the total under deck volumeof the ship

♦7et tonnage ! the cargo carrying volume of the ship

Cre,+ost legislation pertaining to the cre,s ,elfare andconditions is adopted through the international labourorganisation! though imo have produced some legislationon cre,! from a safety point of vie,

♦ Age limits &"@? ;)-=/'

♦6edical certificate &"@? =)-0/'

♦6inimum standards &"@? -0)-/'

♦Standards of training certification and watchkeeping&S(CW' &"6? -'



+inimum standards #$% 1B@The convention ,as adopted as one ,ay of dealing ,ith

substandard ships! especially those registered under flagsof convenience.

#t applies to every seagoing ship engaged in the transportof cargo or passengers.

Article < of the convention lays do,n the areas ,hich theminimum standards are to be applied

♦Safety standards hours of work and manning

♦Social security measures

♦Shipboard conditions of employment and livingarrangements

♦4ngagement of crew and complaints procedure

♦Properly 2ualified and trained seafarers

♦?fficial in2uiries into serious marine casualties



A state that has ratified the convention may tae allmeasures necessary to rectify any conditions on board aship of a different flag! that enters its port in the normalcourse of business! that does not conform to the standardsset by the convention! and ,hich are clearly ha8ardous tosafety and health 4article B.15.

This is a divergence from the long accepted vie, that theflag state controls the standards of the ship! and theemergence of the principle of port state control.

*TC7 conventionEarly on in the development of the #+% attention ,asdra,n to the need to have suitably educated and trainedseafarers manning ships! the training should be in the useof

♦ Aids to navigation

♦@ife!saving e2uipment

♦%ire prevention and extinction e2uipment

♦?ther ship’s e2uipment contributing to safety

*tc, provides the basis on ,hich states can establish acommon standard regarding certification and,atcheeping.

#t lays do,n♦(he minimum standards and numbers for the various

classes of engine radio and deck officer certificatesre2uired

♦(he special re2uirements for tankers gas and chemicalcarriers regarding the training of the master officersand ratings

♦

(he standards of proficiency re2uired in survival craft



#ndividual states that ratify this convention must implementits regulations into their national legislation! such that it,ill apply on ships that sail under their flag.

Ho,ever! one important feature of stc, is that it applies toships of non6party states ,hen they are visiting ports ofstates ,hich are parties to the convention! and thesevisiting ships are to be given no more favourable treatmentthan a ship that belongs to a state that has accepted theconvention 4article 05.

%nce again the doctrine of flag state jurisdiction andcontrol is breached! and port states are encouraged toenforce regulations on non6convention flag ships.

*tc, @; ,as e0tensively amended in july 199D the revisedversion of the convention is no,n as stc, 9.

*tc, 93 6 entered into force in its revised form on 1february 199@.

6 incorporates an stcw code, to ,hich manytechnical regulations have been transferred. )enerally

*peaing the revised convention containsbasic re-uirements ,hich are enlarged and e0plained inthe

Code. Part a of the code is mandatory 4andcontain! for e0ample! tables of minimum standards

Re-uired of seafarers5! ,hile part b isrecommended and contains guidance intended to help ,ith

#mplementation of the convention. Regulationsare divided in this ,ay to mae future amendments

Easier to introduce 6 there is no need to call afull conference to update a code.



=nder chapter , reg.!, parties are re-uired to providedetailed information to imo concerning administrative

Procedures taen to ensure compliance ,ith theconvention! education and training courses! certificationprocedures and other factors relevant to implementation.This information ,ill be used by imos maritime safetycommittee to identify complying parties. %ther parties ,illthen be able to accept certificates issued by these parties.(o proof of compliance ,as re-uired under the originalconvention.

=ntil 1 february <??<! parties may continue to issue!recognise and endorse certificates ,hich applied beforethis

'ate in respect of seafarers ,ho began training orseagoing service before 1 august 199;.

%ther important amendments to chapter " (general

provisions) include3

♦Enhanced procedures concerning e0ercise of port state

controlD♦Parties are re-uired to establish procedures for

investigating acts by persons to ,hom they have issuedcertificates that endanger safety or the environmentD

♦Technical innovations! such as different ,oring

practices and the use of simulators for training purposes!have been recognised. *imulators ,ill becomemandatory for training in the use of radar and arpa.Parties are re-uired to ensure that training! certificationand other procedures are continuously monitored bymeans of a -uality6assurance systemD

♦+edical standards are contained in reg..#. Certificatesmust be issued sho,ing that levels of fitness have been

met! particularly regarding eyesight and hearingD



♦Every master! officer and radio operator is re-uired atintervals of not more than years to meet the fittnessstandards prescribed in reg.# and the level ofprofessional competence contained in section a$i% ofthe stcw code;

♦A reference is made in reg.& to the ism code. The

regulation details further company responsibilities for



+anning! certification! record eeping! shipboardfamiliarisation and cre, co6ordination.

The remaining chapters contain regulations concerningspecific departments and rans. 'hapter ii, for e0ample!deals ,ith the master and dec department and chapter iii,ith the engine department.

*pecial re-uirements have been introduced in chaptervconcerning training and -ualifications of personnel oncertain types of ship.

Emergency! occupational safety! medical care and survivalfunctions have been introduced in chapter vi.

Regulations concerning the functional approach to trainingare introduced in chapter vii.

Re-uirements concerning minimum rest period areintroduced in chapter viii .

Cre, agreements

Contracts of employment bet,een the shipo,ner/managerand the cre, of the ship have al,ays been a cause of much

contention.

Theoretically the flag state controls! through nationallegislation! the ,elfare and conditions of its ships seamenand a shipping company has little room for maneuvreregarding such items that concern its employees

♦ Accommodation

♦%eeding

♦Bepatriation

♦(reatment for sickness



7hile not covered by legislation! cre,s pay and leaveconditions are normally negotiated for by unions andseamens organisations! allo,ing the shipo,ner slightlymore fle0ibility in gaining the ma0imum benefit that he can.

#n reality though! the shipo,ner of a non6traditionalshipping state can! and often does! employ seafarers fromthird party states! ,ith little regard for the niceties ofnational or international la,.

The problems encountered in some parts of the ,orldmaes the blue certificate accreditation of the itf important.

#ndeed charterers often insist on it being applied for andcarried on board the ship! to reduce the possibilities ofdelays and detention.

*hipboard agreements must be carried and displayed! andany discrepancies bet,een the ship agreement and theseamans shore contract should be identified at the time ofsigning on! or engagement! and steps should be taenimmediately to rectify a possible area of contention andproblem.

Environment

Protection of the environment is an important issue and theshipping industry can go a long ,ay to improve thestandards of its anti6pollution measures.

%ne of the most effective means of combating marinepollution is by educating and training the operatingpersonnel

♦4mployed on board ships

♦ "nvolved in the management of ships♦ Administering the export)import port



To assist in this education there are many pieces oflegislation relating to pollution prevention

♦,nclos iii &un conference on the law of the sea iii'♦ "nternational convention for the prevention of pollution

from ships &marpol -= and protocols'♦Convention for the protection of the pollution of the sea

by oil &oilpol -;0 and amendments'♦Convention on the prevention of marine pollution by

dumping of wastes and other matter ->♦Solas -0 chapter vii

+arpol is the most important single document concerned,ith preventing marine pollution! it covers five categoriesof pollutants

♦?il

♦7oxious li2uid substances in bulk♦#armful substances in package form

♦Sewage

♦5arbage

The anne0es concerning oil 4anne0 i5! no0ious li-uidsubstances 4anne0 ii5! harmful substances 4anne0 iii5 and

garbage 4anne0 v5 are all in force.

+arpol includes provisions on reducing/preventingpollution by

♦?perational methods e.g. 3ilution rates for oil andnoxious li2uids crude oil washing

♦Constructional methods e.g. Wing tanks segregatedballast loading areas

♦Shore side methods reception facilities



#mportant aspects of the marpol regulations also includethe provision for a shipboard oil pollution emergency plan4sopep5.

This document is prepared by the ship operator and! afteraccreditation by the flag state or a classification societyacting for it! a copy is carried on board the ship and actsas a contingency plan for actual and possible oil pollutionincidents.

%ther

The international agencies associated ,ith the unitednations have produced many conventions! some obviouslymore relevant to shipping operations than others. This finalsection covers the legislation that is not easy to categoriseunder ship! cre, and environment! though! of course! it isassociated ,ith all three

♦Convention on the international regulations for theprevention of collision at sea &colregs' ->

♦Convention on maritime search and rescue &mersar'-

♦ "nternational convention for safe containers ->

♦ "nternational maritime dangerous goods code &imdg'

♦ "nternational safety management &ism' code



Colregs 19@<

The 2rules of the road! associated ,ith the safe passage

and navigation of a ship through traffic.

The regulations that determine ,hich ship has 2the right of,ay in a possible t,o ship! non6reduced visibility! collisionsituation. "oth have the responsibility to avoid a collision!but one has the initial responsibility to tae action first!,hile the other is the 2stand on ship.

#n reduced visibility! both must tae action! a manoeuvrethat ,ill not jeopardise the action of the other.

=nder the colregs! ship must display certain lights! port6red! starboard6green! masthead lights6,hite! etc andshapes! a ball for an anchored ship! a cylinder for a shipconstrained by its draft! and 2t,o blac balls in a vertical

line for a ship not under command.

%ne of th most important aspects of the colregs is theimplementation of the traffic separations schemes thateep ships to recognised routes at concentration pointsaround the land.

#nternational safety management 4ism5 code#ntroduction

Accidents over the last fe, years! involving passengerships and ships carrying harmful substances! havehighlighted the need for good operational standards andon6board procedures. These standards and procedures areprimarily the concern of the flag state but in manyinstances port states have taen a pro6active role in

ensuring vessels comply ,ith the at least the minimumstandards set out in solas! marpol and stc,.



The imo have recognised that ships need goodmanagement and control! and have set out an appropriatesystem for the organisation of management of shipsthrough the international management code for the safeoperation of ships and for pollution prevention 6international safety management 4ism5 code 4imoresolution a @B141;5 6 1995.

A copy of the document of compliance and the safetymanagement certificate must be carried onboard the

vessel.%bjectives 41.<5

The objectives of the code are to ensure safety at sea!prevention of human injury or loss of life! and avoidance of damage to the environment! in particular to the marineenvironment! and to property.

Each company must have safety management objectivesto3

♦Provide for safe practices in ship operation and a safeworking environment

♦4stablish safeguards against all identified risks

♦Continuously improve safety management skills ofpersonnel ashore and aboard ships including preparingfor emergencies related to safety and environmental

protection.



#mplementation

"y 1st june 199; signatory governments to the ism codeshould have implemented its use for all passenger ships!oil taners! chemical taners! gas carriers! bul carriersand cargo high6speed craft of ?? gross tonnage andup,ards. %ther cargo vessels and mobile offshore drillingunits of ?? gross tonnage and up,ards must be coverednot later than 1 july <??<.

'ocument of compliance 41.<5

7hen a company! ,hich o,ns or manages vessels!complies ,ith the re-uirements of the ism code! it ,ill be

issued ,ith a document of compliance. The document ,illbe issued3

♦$y the administration of the vessel owned or operated

♦$y an organisation recognised by the administration or

♦$y the government on behalf of the administration ofthe country in which the company operates.



The document ,ill be displayed in the management officeand must be also carried on board the vessel. Thedocument should be accepted as evidence that thecompany is capable of complying ,ith the re-uirements ofthe ism code.

The rene,al survey/audits are at five year intervals! ,ithannual intermediate survey/audits.

*afety management certificate 41.B5

A certificate! called a safety management certificate!

should be issued to a ship by the administration or anrecognised authority verifying that its managing companyand its shipboard management operate in accordance ,iththe approved safety management system

The smc should be issued to a ship follo,ing an initialverification of compliance ,ith the re-uirements of the ism.This includes the verification that doc for the companyresponsible for the operation of the ship is applicable tothat particular type of ship! and assessment of theshipboard sms to verify that it complies ,ith there-uirements of the ism code! and that it is implemented.%bjective evidence demonstrating that the companys smshas been functioning effectively for at least three monthson board the ship should be available! including inter alia,records from the internal audit performed by the company.

The smc is valid for a period of five years.



The validity of the smc is subject to at least oneintermediate verification! confirming the effectivefunctioning of the sms! and that any modifications carriedout since the previous verification comply ,ith the

re-uirements of the ism code. #n certain cases! particularlyduring the initial period of operation under the sms! theadministration may find it necessary to increase thefre-uency of the intermediate verification. Additionally! thenature of non6conformities may also provide a basis forincreasing the fre-uency of intermediate verifications.

%nly the issuing administration may ,ithdra, the smc. Theissuing administration should ,ithdra, the smc ifintermediate verification is not re-uested or if there isevidence of major non6conformity ,ith the ism code.

"nterim doc and smc

#n cases of change of flag or company! special transitionalarrangements should be made.

An interim doc! valid for no more than t,elve months! maybe issued to facilitate initial implementation of the ism codeand implementation ,here a company is ne,ly establishedor ,here ne, ship types are added to an e0isting doc.

An interim smc! valid for not more than si0 months! may beissued to ne, ships on delivery! and ,hen a companytaes on the responsibility for the management of a ship,hich is ne, to the company. #n special cases theadministration may e0tend the validity of the interim smcfor a further si0 months.

*afety management system 4sms5 41.B5



To comply ,ith the code every company must develop!implement and maintain a safety management system4sms5 ,hich ,ill include the follo,ing3

♦ A safety and environmental protection policy

♦3efined levels of authority and lines of communicationbetween and amongst shore and shipboard personnel

♦ "nstructions and procedures to ensure safe operation ofships and protection of the environment in compliancewith relevant international and flag state legislation

♦Procedures for reporting accidents and non!

conformities &breaches' with the provisions of the code♦Procedures to prepare for and respond to emergency

situations♦Procedures for internal audits of the system and

management reviews



Safety management policy (..)

The company must establish a policy that describes ho,the safety management objectives of the company ,ill beachieved.

evelopment of plans for shipboard operations (!)

The company should establish procedures for preparingplans and instructions for ey shipboard operationsconcerning the safety of the ship and the prevention ofpollution.

'ompany responsibilities and authority (*)

The company should define and document theresponsibility! authority and interrelation of all personnel,ho manage! perform and verify ,or relating to andaffecting safety and pollution prevention.

+mergency preparedness ()

The company should establish procedures to identify!describe and respond to potential emergency shipboardsituations. These procedures should be tested in drills and

e0ercises.

The safety management system should provide formeasures ensuring the companys organisation canrespond at any time to ha8ards! accidents and emergenciesinvolving its managed ships.

-eports and analysis (#)

The safety management system should include proceduresensuring that non6conformities! accidents and ha8ardoussituations are reported to the company! investigated andanalysed ,ith the objective of improving safety andpollution prevention.

Human resources

esignated person (&)



To ensure the safe operation of each ship and to provide alin bet,een the company and those on board! eachcompany should designate a person ashore having directaccess to the highest level of management. The

responsibility and authority of the designated personshould include monitoring the safety and pollutionprevention aspects of the operation of each ship and toensure that ade-uate resources and shore based supportare applied! as re-uired.

aster/s responsibility and authority (0)

The company should clearly outline and document themasters responsibility regarding3

♦ "mplementing the safety and environmental protectionpolicy of the company

♦6otivating the crew in complying with of the policy

♦ "ssuing appropriate orders and instructions in a clear

and simple manner ♦Derifying that specified re2uirements are observed

♦Beviewing the safety management system andreporting its deficiencies to shore!based management

The company should ensure that the safety managementsystem operating on board the ship contains a clearstatement emphasising the masters authority.

1ualifications and training (2)

The company should ensure that the master is3

♦Properly 2ualified for command

♦%ully conversant with the company’s safetymanagement system

♦5iven the necessary support so that the master’s dutiescan be safely performed



The company should ensure that each vessel is manned,ith relevant -ualified and certificated! and medically fitseafarers. These seafarers should be given properfamiliarisation ,ith their duties information or instruction,hich is essential and should be provided prior to sailingmust be identified! documented and issued.

The company should ensure that all personnel involved inthe safety management system have an ade-uateunderstanding of relevant rules! regulations! codes and

guidelines.Training is essential for the proper compliance of the safetymanagement system and the company must establish andmaintain procedures to ensure all personnel concernedreceive relevant instruction.

All relevant information on the safety management systemshould be provided in the ,oring language of the vessel.

*tructure of a safety management system



Company Management Documentation

?b1ectives and 3escription of CompanyEs S6S

Safety and 4nvironmental Protection

Policy Statement

%ffice

+anagement

'ocumentation

%ffice

Contingency

Plan

Shipboard Management Documentation

3escription of Safety

6anagement System

3escriptions of %leet Standing ?rders

System Administration and Audit Be2Ements

*hipboard

Contingency

Plan

+anual

Technical(avigation

+anual

+ARP%$ *%PEP

(asks

3escription

"nstructionsProcedures

Audit Schedule

&leet *afety

+anual

Passenger

*afety

Cre, +anual

%perating

+anual

Cargo

'ry Cargo

Tan.er

Ro Ro

+anual

On Shore

Shipboard

Maintenance of te si! an" e#ui!$ent %&'(

Proce"ures $ust )e esta)lise" to ensure tat te si! is tecnically

$aintaine" in confor$ity *it te !ro+isions of te rele+ant

international an" class rules an" regulations,

In $eeting tese !ro+isions te co$!any $ust ensure tat-

♦ Inspections are held at appropriate interals

♦ !ny non"con#ormity is reported$ %ith the possible cause

.ESCRIP/ION OF SHIPBOAR.

MANAGEMEN/ S0S/EM

.ESCRIP/ION OF F1EE/ S/AN.ING

OR.ERS



♦ !ppropriate correctie action is ta&en

♦ Records are maintained

E#ui!$ent an" tecnical syste$s *ose failure coul" result in a

a3ar"ous situation $ust )e i"entifie" an" s!ecific $easures soul")e recor"e" to !ro$ote te relia)ility of tis e#ui!$ent or syste$,

.ocu$entation %&&(

All "ocu$ents an" "ata *ic are rele+ant to te safety $anage$ent

syste$ soul" )e controlle" an" te co$!any soul" ensure tat-

♦ 'alid documents are aailable at all releant locations

♦ Changes to documents are reie%ed and approed by authorised personnel

♦ Obsolete documents are promptly remoed

Co$!any +erification4 re+ie* an" e+aluation %&5(

Internal au"its $ust )e carrie" out to esta)lis tat safety an"

!ollution !re+ention acti+ities co$!ly *it safety $anage$ent

syste$, In a""ition te co$!any soul" !erio"ically re+ie* an"

e+aluate te efficiency of te safety $anage$ent syste$,

Personnel carrying out au"its soul" )e in"e!en"ent of te areas

)eing au"ite",

/e results of te au"its soul" )e )rougt to te attention of allrele+ant !ersonnel an" $anage$ent res!onsi)le for te au"ite" area

soul" ta6e ti$ely correcti+e action on "eficiencies foun",

Certification %&7(

A co!y of te "ocu$ent of co$!liance an" a safety $anage$ent

certificate $ust )e carrie" on )oar" te +essel an" )e a+aila)le for

ins!ection )y flag an" !ort officials,

Conclusion

/e is$ co"e sets out a strict regi$e for te o!eration of +essels, /e

$anage$ent syste$ i$!le$ente" )y te si!o*ner or $anager

$ust )e *ell "ocu$ente" an" )e a)le to so* tat it is !ractical an"usa)le, It $ust inclu"e infor$ation relate" to-

♦ Procedures to ensure the sa#e operation o# ships and protection o# the enironment

♦ Procedures #or &ey shipboard operations

♦ Procedures to ensure that the ship is maintained

♦ Procedures to identi#y$ describe and respond to potential emergency shipboard situations

♦ (eels o# authority and lines o# communication





/e $e"iterranean $ou4 signe" in @uly &<=4 is e8!ecte"

to )e i$!le$ente" 5 years fro$ tis "ate,

/e !aris $e$oran"u$ of un"erstan"ing on !ort state control%$ou( *as a"o!te" in @anuary &<5,

It is an agree$ent )et*een & *est euro!ean states to enforce an

effecti+e syste$ of !ort state control,

/e !ort state control *ill ensure tat4 *itout "iscri$ination as to

flag4 foreign $ercant si!s +isiting its !orts co$!ly *it te

stan"ar"s lai" "o*n in international con+entions on te safety of

si!s4 cre*s an" te en+iron$ent %section &,5(4 si!s of $e$)er

states are regar"e" as foreign;,



/e con+entions tat are a!!lica)le to te $ou are

♦ Sa#ety o# li#e at sea )solas*

♦ (oad line

♦ Standards o# training$ certi#ication and %atch&eeping )stc%*

♦ Collision regulations )colregs*

♦ Preention o# pollution #rom ships )marpol*

♦Minimum standards )ilo no +,-*

)section ./+*

/o acie+e te $e$oran"u$;s ai$ of !re+enting te o!eration of

su)9stan"ar" si!s4 states are re#uire" to ins!ect an" sur+ey te

si!s tat +isit teir !orts,

Eac state *ill acco$!lis tis )y an annual total ins!ection

corres!on"ing to 5 !er cent of te esti$ate" nu$)er of in"i+i"ual

foreign $ercant si!s *ic entere" te !orts of te state "uring a

recent res!ecti+e !erio" of &5 $onts %section &,7(,

In fulfilling teir co$$it$ents states *ill carry out ins!ections4

*ic *ill consist of a +isit on )oar" a si! in or"er to cec6

certificates an" "ocu$ents rele+ant for te !ur!oses of te

$e$oran"u$,

In te a)sence of +ali" certificates or "ocu$ents4 or if tere are clear

groun"s for )elie+ing tat te si! "oes not su)stantially $eet te

re#uire$ents of a rele+ant con+ention4 a $ore "etaile" ins!ection

*ill )e carrie" out %section 7,&(,

/e state *ill regar" as clear groun"s; te follo*ing

♦ ! report #rom another member state

♦ ! report or complaint by the master or cre%$ or any organisation %ith a legitimate interest in

the sa#e operation o# the ship$ shipboard liing and %or&ing conditions or the preention o# pollution$ unless the state concerned deems the report as mani#estly un#ounded

♦ Other indications o# serious de#iciencies )section 0/.*

In selecting si!s for ins!ection te state *ill !ay !articular attention

to

♦ Ships %hich may present a special ha1ard$ #or instance$ oil tan&ers and gas and chemical

carriers

♦ Ships %hich hae had seeral recent de#iciencies/ States %ill see& to aoid inspecting ships

%hich hae been inspected by any other member state %ithin the preious si2 )3* months$unless they hae clear grounds #or inspection/ )section 0/,*



/o assist !ort states in tis re#uire$ent si!s can re#uest a letter of

co$!liance fro$ te sur+eyor so*ing "ate an" !lace of ins!ection4

an" tat te si! co$!lie" *it te re#uire$ents of te $ou,

Eac state *ill en"ea+our to secure te rectification of "eficiencies

"etecte" %section 7,:(,

In te case of "eficiencies *ic are clearly a3ar"ous to safety4

ealt or te en+iron$ent4 te !ort state *ill ensure tat te a3ar"

is re$o+e" )efore te si! is allo*e" to !rocee" to sea4 to ensure tis

te si! can )e "etaine" %section 7,=(,

Were "eficiencies cannot )e re$e"ie" in te !ort of ins!ection4 te

state $ay allo* te si! to !rocee" to anoter !ort4 su)@ect to anya!!ro!riate con"itions "eter$ine" *it a +ie* to ensuring te si!

can !rocee" *itout unreasona)le "anger to ealt4 safety or te

en+iron$ent4 in suc circu$stances te !ort state *ill notify te

state *ere te ne8t !ort of call of te si! is situate" %section 7,(,

/e !ort state *ill4 after an ins!ection4 issue to te $aster of te si!

a "ocu$ent gi+ing te results of te sur+eys %section 7,&'(,

Often a situation arises *ere te flag state as not ratifie" a

!articular con+ention4 an" tus "oes not a+e te a"$inistration or

!roce"ure to sur+ey te si! an" issue te rele+ant certificate,

In tis case a si!o*ner can a!!ly for a certificate of co$!liance

fro$ a classification society4 *o *ill sur+ey an" e8a$ine te si! as

if it *ere a national sur+ey,

Once tey are satisfie" as to te acce!ta)le con"ition of te si! tey

*ill issue te certificate, Eg a flag state $ay not )e a !arty to $ar!ol4

terefor te co$!any $ay a!!ly for a certificate of co$!liance as an

alternati+e to te international oil !ollution !re+ention %io!!(

certificate,

Anne8 &

Wen sur+eying4 te sur+eyor is to e8ercise is !rofessional

@u"ge$ent in "eter$ining *eter to "etain te si! until te

"eficiencies are correcte" or to allo* it to sail *it certain

"eficiencies *itout unreasona)le "anger to safety4 ealt or te

en+iron$ent %&,&,5(,

Si!s tat are entitle" to fly te flag of a state *ic is not a !arty to

a rele+ant con+ention sall recei+e a "etaile" ins!ection follo*ing tesa$e gui"elines tat are !ro+i"e" for a si! of a state tat is a !arty

to te con+ention %&,&,7(,



/e area co+ere" )y te !aris $e$oran"u$ can )e "i+i"e" into

tree $a@or !arts

♦ Sa#ety o# the ship

/is co$es un"er te con+entions of solas &<=D %!lus

&<= !rotocol(4 loa" line an" colregs %section 5(

♦ Protection o# the enironment

/e $ar!ol con+ention of &<=7 %!lus !rotocol &<=(

!ro+i"es te stan"ar"s for tis area %section 5(

♦ Cre%

/e legislation for tis area is containe" in nu$erous ilo

con+entions i$!le$ente" )y ilo con+ention no,&D= an" )y

te stc* con+ention4 te $ain ite$s of concern are9 $anning %section 7,5(

9 certification %section 7,7(

9 $ini$u$ age %section D,5(

9 $e"ical e8a$ination %section D,7(

9 foo" an" catering %section D,D(

9 cre* acco$$o"ation %section D,(

9 acci"ent !re+ention an" occu!ational ealt %section

D,:(

♦ Small ships under 455 gt)section 4*



Anne8 5

In cases of "eficiencies not fully rectifie" or only !ro+isionally

re!aire"4 a $essage using te for$at of tis anne8 soul" )e sent to

te ne8t !ort of call of te si!,

Anne8 7

After an ins!ection te $aster of te si! is to )e gi+en a "etaile"

re!ort,

Anne8 D

Infor$ation syste$ to )e use" )y a !artici!ating state to te central

a"$inistration at st $alo %c,a,a,$,(,

=scg port state control initiative

/e uscg i"entifie" su)stan"ar" si!s as a !ro)a)le cause of safety

an" !ollution inci"ents in teir territorial *aters an" set u! a !ort

state control !rogra$ to eli$inate te !ro)le$,

/e !rogra$;s goal is to i"entify an" eli$inate su)stan"ar" foreign

+essels fro$ us *aters an" to encourage !ersons co$$itte" to

tra"ing to te us to a"o!t $anage$ent !iloso!ies tat ensure

co$!liance *it acce!te" stan"ar"s %section i(,

/e !rogra$ carries tis out )y syste$atically targeting ig ris6

+essels for )oar"ing an" ins!ection,

/e initiati+e is for a )oar"ing regi$e to target su)stan"ar" si!s

an" its goal is to i"entify an" eli$inate su)stan"ar" foreign +essels

fro$ us *aters an" encourage tose co$$itte" to tra"ing *it te

us to a"o!t $anage$ent !iloso!ies tat ensure co$!liance *it

acce!te" stan"ar"s,

/e initiati+e increases te fre#uency of )oar"ings on ig ris6si!s, /e ris6s in+ol+e treats to life4 !ro!erty an" te en+iron$ent,

/e ig ris6 si!s are i"entifie" fro$ teir o*n !re+ious recor"s4 in

a""ition to te recor"s affecting teir o*ner %o!erator(4 classification

society an" flag state,

/e coast guar" acie+e tis )y i"entifying ig ris6 +essels )y 6ey

ele$ents suc as4 su)stan"ar"-

♦'essels

♦O%ners6managers

♦Classi#ication societies

♦7lag states



Su)stan"ar" si!

Si! is regar"e" as su)stan"ar" if te ull4 cre*4 $acinery or

e#ui!$ent suc as lifesa+ing4 fire figting an" !ollution !re+ention

are su)stantially )elo* te stan"ar"s re#uire" )y us la* or

international con+ention,

Su)stan"ar" a!!lies to-

A( a)sence of !rinci!al e#ui!$ent

B( gross non9co$!liance *it e#ui!$ent stan"ar"s

C( su)stantial "eteriation

/argete" o*ner

Inclu"es te o*ner4 o!erator4 $anaging o!erator of any +essel tat is

su)@ect to an us inter+ention carrie" out un"er te autority of an

international con+ention,

/e "esignation a!!lies to e+ery +essel associate" *it te targete"

o*ner4 not @ust te +essel su)@ecte" to te inter+ention,

/o $a8i$ise te effecti+eness of coast guar" actions4 te )oar"ing

tea$s con"uct teir e8a$inations at sea an" in !ort,

/argete" classification society

A targete" classification society is one tat as not )een recognise"

)y te coast guar" as "e$onstrating co$!liance *it te gui"elines

of te i$o an" tat as an inter+ention ratio e8cee"ing te uscg

li$its,/argete" flag states

/ese are i"entifie" on a co$!arison of te +essel inter+ention ratios

of +arious flag states4 te nu$)er of +essels un"er tat flag an" te

nu$)er of +isits to te us,

/o ili$inate su)stan"ar" si! o!erations in us *aters4 no9us +essels

entering !orts *ill )e targete" accor"ing to a !riority an" ris6 factor,

/ose +essels suspected of !resenting an i$$inent treat to life4 te

port an" te environment *ill )e targete" for )oar"ing !rior to entry

into !ort,Priority i +essels

♦ Stateless essels

♦ 'essels suspected o# ha1arding the port or enironment as a result o# a ha1ardous materials

release or an ongoing discharge o# oil

♦ 'essels operated by targeted o%ned or operator$ essels #lying #lag o# targeted #lag$ essel

operating under targeted classi#ication society

♦ +- points or more

Priority ii +essels

♦ 'essels that do not hae tan& essel e2amination )te*

♦ 'essels %ith oerdue outstanding re8uirements issued at preious e2aminations



♦ 'essels that lac& a record o# preious uscg e2amination

♦ - points or more

Priority iii +essels

♦'essels that do not hae or are past due #or an annual #reight essel e2amination or 8uarterly passenger essel re"e2amination

♦ 'essels alleged to be substandard by a memer o# the cre%$ a pro#essional or other

association$ a trade union or any other interested person

♦ , to 3 points

Priority i+ +essels

♦ 'essels possessing none o# the critical criteria/

♦ 5 to 0 points

/argeting criteria

Eac !riority also !ossesses a !oints syste$ )ase" on te targeting

criteria of-

O%ner 7lag Class History '6l type

Si! o*ne" )y

targete" o*ner

or o!erator

= Si! flagge"

to targete"

state

= Not liste" as

a recognise"

class

Su)@ect to

+iolation

re!ort

&

!er

cas

e

Bul6

ce$ical

tan6er

&

Si! going to

facilityfre#uently

recei+ing su)

stan"ar" si!s

5 No a+aila)le

!erfor$ancerecor" on

state

= Inter+ention

ratio a)o+euscg li$its

7 Su)@ect to

o!erationalcontrol or

"etention

&

!ercas

e

Oil tan6er &

In+ol+e" in

$arine

casualty or

oil>

a3ar"ous

inci"ent in

last &5

$onts

&

!er

cas

e

Gas

carrier

Bul6

friegter

&' years

or $orePassenger

si!

&

&

&

Si! not

)oar" *itin

: $onts

& Si!

carrying

lo* +alue

co$$o"it

y

&



/o $aintain a goo" recor" *it te uscg it is i$!ortant to re!ort all

"efects an" corres!on"ence to te $anage$ent office,

!ction must be ta&en to clear all de#ects be#ore entering us %aters/

Pre+ention troug !eo!le

Hu$an error causes $ore tan ' of $arine casualties, /e uscg

are "e+elo!ing a long9ter$ strategy to refocus !re+ention efforts on

casualties cause" )y u$an error,





On a !ro@ect )asis te len"er *ill *ant to 6no* tat te si!o*ner

can ser+ice te loan an" re!ay te ca!ital trougout te agree"

ter$,

Sericing the loan $eans !aying interest4 *ic *ill !ro)a)ly )e at a

+aria)le rate4 lon"on inter)an6 offere" rate %li)or( !lus a fi8e"

"ifferential, So if interest rates rise "uring te loan4 te interest

!ay$ents *ill increase, Si$ilarly4 if interest rates soul" fall4 interest

!ay$ents *ill "ecrease,

It also $eans repaying capital,

As te +alue of te si! is $ost li6ely to fall troug ti$e4 "ue to

*ear4 tear an" o)solescence4 ignoring4 of course4 $ar6et factors4 a

)an6 *oul" not acce!t sale of te si! as a $eans of re!aying all te

original loan,

Ca!ital re!ay$ents are terefore re#uire"4 generally in e#ual

a$ounts trougout te loan !erio", /ese !ay$ents a+e to )e $et

fro$ te inco$e generate" )y tra"ing te si!- fro$ ire4 if on a

ti$e carter? fro$ freigt4 if te si! is +oyage cartere",

It is no goo" )eing a)le to $eet interest an" ca!ital nee"s an" not

)eing a)le to !ay for a"e#uate re!air $ainteance an" !ay cre*

*ages, /e )an6 *ill loo6 at casflo* on a year9)y9year )asis toensure tis is a"e#uate to co+er te si!o*ner;s lia)ilities in all

areas,

/is is te )an6;s !ri$e concern- te si!o*ner;s a)ility to re!ay

loan !lus interest, Wat return on ca!ital te si!o*ner acie+es4

*at te !ro@ect return yiel" is4 is of no $ore tan !assing interest to

te )an6,

Wat is collateral Basically it is te security offere" )y te

si!o*ner to te +alue of te loan,

.e!en"ing on te +alue of $ortgage a"+ance"4 te si! itself *ill )e

te collateral or !ri$ary security for te loan, %note- a $ortgage is a

lien or con"itional con+eyance of te si! or oter !ro!erty as

security for !ay$ent of $oney,(

/e len"er *ill i$!ose con"itions tat te $ortgagor %i,e, /e

si!o*ner( $ust $eet,

/y!ical con"itions co+er ite$s suc as-

♦ Insurance ♦ 7lag o# registry ♦Management



Wate+er collateral is offere" it *ill a+e to )e insure" to co+er te

usual tra"ing an" oter ris6s, For te si! te )an6 $ay "e$an" a

$ +alue" !olicy4 ty!ically at least &&'9&7' of te outstan"ing

loan a$ount4 an" co+er for *ar ris6s, /e !olicy *ill )e assigne" to

te len"er, It is usual for te len"er to re#uire insurance to co+er ullan" $acinery4 ! i4 *ar ris6s4 $ortgagee;s interest an" loss of

ire,

/e #uality an" co$!etence of te tecnical $anage$ent of te si!

*ill )e of interest to te )an6, /ere are $any *ays in *ic te

co$$ercial an" tecnical $anage$ent of te si! can affect its

+alue an" tra"ing !ros!ects an" tese are of interest to te )an6,

For e8a$!le4 if a long9ter$ contract to carry )ul6 grain *ere

ter$inate" an" re!lace" )y a carter for sul!ur in )ul64 ten$aintenance costs %steel*or6 corrosion( $ay rise su)stantially, If te

si! re#uire" e8tensi+e a)nor$al re!airs4 or re!airs o+er a certain

su$4 ten te )an6 $ay re#uire to )e infor$e" )ecause of te

i$!act on casflo*,

Si$ilarly4 if for any reason a cange in classification society *ere to

)e $a"e4 te )an6 *oul" *ant to )e infor$e" of tis fact an" te

reason for suc a cange,

/e )an6 is li6ely to loo6 closely at te off9ire recor" of si!s let

un"er ti$e carters,

Finally4 )ut $ost i$!ortantly fro$ te len"er;s !oint of +ie*4 *e

"iscuss control, /e )an6 *ill *ant to )e &'' sure tat it can gain

control of its security in te e+ent of "efault an" foreclosure,

/e concerns of te si! $ortgage )an6 an" te si!o*ner are

"ifferent,

/e si!o*ner generally as to ta6e a long9ter$ +ie*, His )usiness is

to $a6e a !rofit in te long ter$ )y tra"ing te si! in *ate+er

$ar6ets are +ie*e" as gi+ing te )est return,

/is $ay )e in te s!ot $ar6et4 or )y ti$e cartering ai$ing to fi8

an" loc69in near te !ea6s of $ar6et cycles,

/e o*ner;s ai$ is also to generate an inco$e an" ence a !ositi+e

return on in+est$ent4 usually a $i8 of e#uity an" )orro*ings,

/e si! $ortgage )an6 fre#uently ta6es a sorter ter$ +ie*,



For e8a$!le4 a ne*)uil"ing $ay a+e a tecnical life of 5' years4 or

$ore, /y!ically te "uration of a loan on a ne*)uil"ing is ten years,

O+er tis !erio"4 a)out alf te si!;s life4 te )an6 as one concern

only4 tat is tat te si!o*ner as sufficient casflo* to )e a)le to

re!ay te loan in #uarterly or se$i9annual instal$ents4 an" $a6e

te agree" interest !ay$ents,

/e )an6 $a6es its $oney fro$ fees carge" in setting u! an"

a"$inistering te loan an" fro$ te interest rate s!rea"4 i,e, /e

"ifference )et*een te rate at *ic it )orro*s $oney an" te rate

at *ic it len"s $oney,

So te )an6;s concern is casflo*, /e si!o*ner;s concern is *it

casflo* too an" to acie+e an a"e#uate return on %e#uity(

in+est$ent,

$oan security

Wit te e8ce!tion of liner si!!ing4 te ty!ical si!o*ning grou! is

co$!ose" of a series of co$!anies, 2sually eac si! is o*ne" )y a

se!arate co$!any,

/is is for reasons of li$itation of lia)ility4 tat is *ere tere is a

$ulti9si! fleet in teory action cannot )e ta6en against one si! for

"e)ts or oter legal res!onsi)ilities of anoter si! in te fleet,

Most of te co$!anies in te grou! e8ist solely to o*n a si!4 an"

a+e little or no financial su)stance e8ce!t for a s$all a$ount of

cas,

Recourse %financial !rotection( is re#uire" )y te )an6 not only

)ecause te si!o*ner is nor$ally a single9!ur!ose co$!any *it

little su)stance oter tan te si!4 )ut also )ecause of ris6s *it

res!ect to e$!loy$ent,

Security4 terefore4 ta6es te for$ of a $ortgage on te si!4assign$ent of te si!;s earnings an" insurances4 an" te cor!orate

guarantee of te !arent co$!any or te !ersonal guarantee of te

sareol"ers,

/e ty!ical ty!e of co$$ercial )an6 finance for secon"9an"

!urcases is !ro@ect finance4 tat is te e$!loy$ent of te si! is

e8!ecte" to )e a"e#uate to co+er o!erating e8!enses an" re!ay te

"e)t,

The future



For a regular an" a"e#uate strea$ of ne* fun"s to flo* troug te

in"ustry4 te si!o*ners are "e!en"ent on- a sta)le *orl" econo$y4

te !olicies of oil an" oter co$!anies *it res!ect to trans!ortation

an" te structure of teir o*n in"ustry,

/e *orl" econo$y is )eyon" te si!o*ners; control4 as are te oil

co$!anies, /us te only *ay te in"ustry can $eet te callenge

for ne* ca!ital in te &<<'s is )y a"a!ting itself,

It certainly as te ca!acity to a"@ust )ut it $ay $ean so$e

i$!ortant canges in te *ay it is structure", For e8a$!le-

♦ 9he need #or ne% ships together %ith shipo%ners: limited resources calls #or outside capital$

♦ Ship o%ners should be %illing to open their capital to outside inestors$ at least to some

e2tent i# not ne% inestors %ill come in;

♦ Ship o%ners may be able to retain their autonomy through a separation o# the o%nership

#unction #rom the management #unction %ith the creation o# partnerships or <oint entures/

/ese +entures *ill eiter )e organise" aroun" te largest co$!anies

in te in"ustry *ic *ill use te$ as a $eans to e8!an" teir

)usiness *ile $ini$i3ing teir financial e8!osure4 or aroun" grou!s

of in+estors *o *ill ire tecnical an" co$$ercial $anagers,

Me"iu$9ter$ carter agree$ents *it en"9users $ay re9a!!ear an"

for$ te )asis of tese ne* +entures, /e financing *ill ta6e te

for$ of "e)t4 e#uity or leasing,

/e en" result $ay $ean a consoli"ating or restructuring of te

in"ustry ta6ing !lace o+er te ne8t &'9& years to acie+e fleet

re!lace$ent- tis is te real callenge,

E0ercise 1 6 ship financeA si!o*ner is loo6ing at t*o financial o!tions to )uy a +essel of 5' $illion,

O!tion one 9 :' loan o+er years at a rate of interest of &'

O!tion t*o 9 ' loan o+er &' years at a rate of interest of

E8!lain *ic o!tion *oul" gi+e a )etter tra"ing !osition,



Cargo o!erations

/e i$!ortance of cargo to te si!!ing in"ustry cannot )e o+er

state"4 *itout goo"s to trans!ort tere *oul" )e no nee" for si!s,

Most si!s are associate" *it te $o+e$ent of cargo4 *eter it iscontainers fro$ ne* yor6 to rotter"a$4 oil fro$ te gulf to @a!an or

iron ore fro$ +ittoria to unterston4 e+en !assengers can )e

consi"ere" a t*o legge" cargo

No tug)oats *oul" )e nee"e" if si!s "i" not )ert nor

oceanogra!ic sur+ey si!s *oul" )e nee"e" to cart te seas if

tere *ere no si!s sailing on te$,

Pro)a)ly te only area tat *oul" )e unaffecte" )y te $o+e$ent of

cargo *oul" )e te ar$e" na+al ser+ices of te *orl",

/e co$$ercial as!ects of cargo o!erations can )e categorise"

un"er te follo*ing ea"ings

♦ 9ypes o# maritime trade

♦ Contracts o# a##reightment

Types of maritime trade

Si!!ing o!erations can )e "i+i"e" into tree )roa" categories

♦ Cargo

♦ Passenger

♦ Other



Cargo

/is class of o!eration $a6es u! a)out <' !er cent of all si!s !lying

te oceans, /e co$$o"ities carrie" "uring cargo o!erations are as

"i+erse as te ty!es of si!s tat carry te$, Eac ty!e of

co$$o"ity an" ty!e of si! as its o*n !eculiarities an" s!ecialnee"s of o!eration,

Foyage diagram

cargo si! )rougt togeter )y )ro6ers agree$ent

contract of carriage liner agree$ent4 ti$e or +oyage carter!arty

load !ort agents 9 agency>c! agree$ent

ste+e"ores 9 ire" )y o*ner or carterer

bill of lading issue" an" signe" as !er contract

steam fuel

$aintenance as !er contract

cre*

bill of lading i"entifie" as !er contract

discharge !ort agents 9 agency>c! agree$ents

ste+e"ores 9 ire" )y o*ner or carterer

Cargo si! +oyage to ne8t cargo

/e $ain areas of cargo carrying o!erations are

♦Oil tan&ers

♦=ul& carriers

♦>eneral cargo ships

♦ Container ships

♦ >as and chemical carriers

Witin tese areas4 te ty!es of tra"e fall into t*o "istinct "i+isions

♦(iner serice ♦ 9ramp operations



$iner service

On a liner ser+ice4 te si! o!erates to a sce"ule4 it tra"es on a

s!ecific route )et*een a"+ertise" loa" an" "iscarge !orts on a

regular )asis,

/e itinerary of te +oyage *ill a+e )een 6no*n for so$e ti$e in

te !ast an" its future *ill )e 6no*n *ell in a"+ance, /is allo*s te

si!o*ner to !lan is si!;s $aintenance !rogra$$e an" cre* relief

rotation,

O)+iously te liner ser+ice can only o!erate )et*een areas *ere

cargo can )e loa"e" as *ell as "iscarge"4 an" te si!o*ner *ill

re#uire an efficient sore si"e organisation to secure a regular an">or

constant su!!ly of cargo for is si!s to carry,

Cargo s!ace allocation in te si! *ill a+e )een negotiate" an"

)oo6e" in a"+ance troug for*ar"ing agents %freigt for*ar"ers(

an" liner )ro6ers %or loa"ing )ro6ers(, Pay$ent for te carriage *ill

)e !er *eigt %or +olu$e( as freigt,

Freigt rates are )ase" on te si!!ing co$!any;s tariff or4 if te

co$!any is a $e$)er of a liner conference4 te tariff of tat

conference,

$iner conferences 4conference lines5An association of si!!ing co$!anies of +arious nationalities

running a liner ser+ice )et*een te sa$e general areas4 e,g, N*

euro!e>*est coast of sout a$erica,

/e association %conference( *ill agree4 a$ong oter tings

♦ 9o charge similar #reight rates

♦ 9o limit the number o# sailings

♦ 9o &eep to scheduled sailing dates

♦ 9o #i2 the trade share #or each member o# the con#erence

/e a"+antage of te conference syste$ is tat

♦ It allo%s members to ad<ust capacity to meet demand

♦ It guarantees a #i2ed #reight rate

♦ It aoids ine##icient duplication o# port calls during the oyage by its members



/ere are a)out 5'' conferences *orl"*i"e4 *it & )eing u6 )ase"

an" 5' o!erating fro$ te us,

/ere is one unfortunate resi"ual effect of te tra"itional conferencesyste$s, For )eing *ell esta)lise"4 tey "o ten" to e8clu"e ne* an"

"e+elo!ing states fro$ !artici!ating in a tra"e4 es!ecially *ere te

"e+elo!ing states are trying to initiate teir o*n si!!ing lines fro$

countries tat are on an esta)lise" conference line,

/o o+erco$e te reluctance of tra"itional $ariti$e countries in

allo*ing !artici!ation )y te "e+elo!ing states4 a conference *as

con+ene"4 un"er te aus!ices of te unite" nations conference on

tra"e an" "e+elo!$ent %uncta"(4 for an international con+ention on

a co"e of con"uct for liner conference syste$s4 often 6no*n )y

uncta" liner co"e or D'>D'>5'4 *ic is te !ro!ortional sareout ofsea)orne tra"e )et*een t*o !artici!ating countries,

1iner ser+ice contracts

For te liner ser+ice te $ost co$$on for$ of contract4 )et*een te

si!!ing co$!any an" te cargo o*ner4 is e+i"ence" )y a )ill of

la"ing or a liner ser+ice *ay )ill,

Mo"ern si!$ent4 )et*een freigt for*ar"er an" si!!ing line4 is

contracte" )y $eans of a co$)ine" trans!ort "ocu$ent,

It is !ossi)le for te si!o*ner to release is si! for a !erio" of ti$e

to anoter !erson>co$!any4 an" in tis case te carterer can

control te si! on a liner tra"e un"er

♦ Demise charterparty

♦ 9ime charterparty



Tramp operations

Wit a fe* e8ce!tions4 e+eryting tat is not liner ser+ice is co+ere"

)y tra$! o!erations,

A si! on tra$! o!erations *ill call at any !ort to carry *ate+er

cargo is a+aila)le,

E+en *ere te si! o!erates on a regular run )et*een oil fiel" an"

refinery it co$es un"er tis category of tra"ing,

For on tis regular tra"e te tan6er "is!lays a caracteristic feature

of tra$! si! o!erations *ic is te lac6 of a return cargo,

It is te a)sence of a regular or constant loa">unloa" of cargo tati"entifies tis ty!e of tra"e4 an" !ro+i"es !ro)le$s for te si!

$anager,

At all ti$es e $ust )e calculating $onts aea" to o!ti$ise te use

of is si!s4 a consign$ent to antarctica $ay !ro+i"e a goo" freigt4

)ut *ere *oul" te si! nee" to go to !ic6 u! its su)se#uent cargo

All calculations for te freigt rates carge" for cargo carrie" $ust

)e )ase" on te $o)ilisation carge to get te si! to te loa" !ort

an" te "e9$o)ilisation carge to co+er te si!;s costs after

"iscarge,

O)taining cargoes4 negotiating freigt an" !re!aring contracts is a

full9ti$e occu!ation4 an" a si!!ing co$!any tat is in+ol+e" in a

tra$! si! o!eration *ill eiter a+e a "e!art$ent s!ecifically

"esignate" for its cargo !rocure$ent o!erations or it *ill use te

co$!reensi+e ser+ices of a si!o*ner;s )ro6er,

/ra$! o!erations co+er $ost ty!es of cargo4 toug so$e contracts

*ill co+er te occasional consign$ent of general cargo4 te +ast

$a@ority *ill )e for te carriage of )ul6 cargoes

♦Oil

♦>rain

♦Coal

♦ Chemicals

♦ (i8ue#ied gases

♦ Metal ores e/g/ =au2ite

/ra$! o!eration contracts

Contracts for tra$! o!erations *ill generally )e

♦ 'oyage charterparty

♦ Contracts o# a##reightment



Passenger ships

Passenger si!s $a6e u! a!!ro8i$ately t*o !er cent of te total

*orl" tonnage,

/ere are +ery fe*4 if any4 !assenger si!s tat o!erate solely on a

co$!letely "ee! sea liner ser+ice4 tat is4 a regular an" sce"ule"

run )et*een i"entifie" !orts,

Certainly so$e of te cargo liner ser+ices are !re!are" to carry u! to

&5 !assengers %ten te !assenger si! regulations a+e to )e

co$!lie" *it(4 an" in"ee"4 tis ty!e of !assenger arrange$ent can

!ro+i"e a lucrati+e a""ition to te si!;s o!erating re+enue,

In a""ition4 a fe* !assenger si! co$!anies o!erate a syste$ ofcarrying !assengers across te atlantic !rior to te si! going on to a

su)se#uent cruise,

Most large ocean going !assenger si!s %class i( o!erate on cruises4

eiter *ar$ *eater or interest; cruises to a s!ecific location4 e,g,

Nor*egian f@or"s4 antarctica or te gala!agos islan"s for te )ir"s,

/is category inclu"es te +ast $a@ority of te D4'' !assenger si!s

tat are registere" trougout te *orl",

/e si!s tat o!erate on sort sea ser+ices are usually 6no*n as

ferries4 an" tey can )e as "i+erse as te renfre* ferry4 o!erating as

an o+ergro*n launc across te ri+er cly"e tat is "esigne" to carry

an a$)ulance4 an" te !ri"e of "o+er4 one of te $ost $o"ern cross

%englis( cannel ro9ro si!s tat carries 55<' !assengers an" :'

cars4 an" te !ili!!ines inter9islan" ser+ices,

Oter ty!es of !assenger si! inclu"e4 te casino )oats out of $ia$i4

te cre* )oats tat run *or6ers to oil !latfor$s an" rigs4 an" te

a"@ si!s tat carry te !ilgri$s to $ecca an" are legislate" forun"er te s!ecial tra"e !assenger si! agree$ent &<=&,

Passenger si!s o!erating in international *aters are e8!ecte" to

co$!ly *it te rele+ant legislation concerning safety an" !ollution4

tat is4 solas an" $ar!ol,

Passenger contracts

International legislation e8ists for regulations co+ering te lia)ilities

of si!o*ners regar"ing !assengers an" !assengers; luggage %atens

con+entions(,



/is *ill )e incor!orate" in to te tic6ets issue" to !assengers *en

te flag state as ratifie" te con+ention4 as *ill any national

legislation relating to !assengers rigts4 to for$ te )asis of te

contract )et*een te si!!ing co$!any an" te !assenger,

%ther cargoes

/e $ariti$e in"ustry is full of s!ecialist co$!anies tat o!erate te

unusual4 an" so$eti$es )i3arre4 ty!e of si!,

/oug tis ty!e of tra"e only $a6es u! ten !er cent of te *orl"s

si!!ing it "oes inclu"e so$e i$!ortant areas

♦ Proiding bac&"up and support to the oil industry? supply ships$ tugs$ anchor handlers$ crane

barges$ lay barges$ surey ships$ etc

♦ Heay li#t cargo ships

♦ Proiding and assisting port operations? dredgers$ tugs$ pilot ships$ etc

♦Miscellaneous sea"going ships? icebrea&ers$ %eather ships$ surey and research ships$ cable

layers$ etc

♦ 7loating storage tan&s eg sirri island

Most of te s!ecialise" si!s *ill )e "esigne" for a s!ecific tas64

toug +ery occasionally a su!!ly si! is con+erte" into a general

cargo si!,

/e s!ecific tas6 is catere" for )y a!!lying to te "esign4 an"

o!eration4 of te si!4 te 6no*n re#uire$ents of te @o),

Contracts

Contracts *ill in+aria)ly )e )y carter!arty4 te $ore s!ecialise"

te tas64 te longer4 an">or te $ore e8!ensi+e te carter!arty, As

te si! *ill !ro)a)ly a+e )een co$$issione" *it tat @o) in

$in",

Once te ty!e of tra"e as )een recognise" )y $ar6eting an"

researc4 te si!o*ner *ill !rocee" *it si! ac#uisition4 o* e

"oes tat *ill "e!en" on

♦ 9he trade? its continuity$ olume and reenue generating possibilities

♦ 9he aailability o# ade8uate ships and the costs o# operating them

♦ 9he possible e2clusions en#orced by other state legislation



Fi8ing a cargo

A si!4 not nor$ally engage" in tra$!ing4 !resently as a full cargo

to )e unloa"e" in australia4 an" a su)se#uent cargo *aiting in

*estern euro!e,

/e si!o*ner *oul" li6e a )ac6aul cargo fro$ australia to assist

*it is o!erating costs4 terefore e $ust enter te $ar6et to o)tain

a fi8ture for is si!,

As is inouse 6no*le"ge of !ossi)le cargoes4 rates an" !roce"ure

*ill !ro)a)ly )e li$ite"4 e $ust engage te ser+ices of an e8!ert to

fin" a cargo an" "o is negotiating4 tis is carrie" out on is )ealf

)y an o*ner;s )ro6er,

/e si!o*ner $ust a"+ertise te fact tat e is *illing to carry

cargo4 e can eiter "o tis on a general le+el4 if e as e8!erience4

)y sen"ing out a tele8 to 6no*n cargo e8!orters or cartering

)ro6ers tat *ill arrange te entire contact an" contract,

More li6ely4 o*e+er4 te si!o*ner *ill no$inate an e8lusi+e

si!o*ner;s )ro6er to act for i$4 engaging i$ *it a contract tat

"etails te e8tent of is res!onsi)ility an" autority,

He *ill infor$ is )ro6er tat e as a si! a+aila)le4 an" furnisi$ *it "etails of te si!

♦9ype o# ship? ro"ro$ general cargo$ tan&er

♦(oading ability? cranes$ no gear

Wen an" *ere se *ill )e

a+aila)le- e,g, Australia

♦ !rea o# trade anticipated? e/g/ Western europe

♦ Carrying capacity? net tonnage$ dimensions

♦ !ny other releant in#ormation

♦ 9ype o# cargo? clean6dirty

It is !ossi)le tat te si!o*ner *ill @ust as6 for "etails of any cargo

a+aila)le4 tat *ill "e!en" on o* "es!erate e is to fi8 is si!,

Wen e recei+es tese instructions4 te )ro6er *ill ac#uaint i$self

*it te o+erall !icture tra"e4 e !ro)a)ly as a goo" i"ea of *at is

an" *at is not a+aila)le alrea"y, /is 6no*le"ge of *at cargoes

are a+aila)le co$es fro$ using a clearing ouse of cargo infor$ation

calle" a freigt $ar6et4 one of te )etter 6no*n is acco$$o"ate" at

te )altic e8cange,

/e )altic e8cange

9he baltic e2change limited$ to use its #ull title$ is an institution located in the city o# london/ !ppro2imately

355 u& registered companies o# a %ide ariety o# international o%nership are members o# the e2change$ and

they are engaged in many di##erent actiities connected %ith international trade



/e #reight mar&et is te $ain acti+ity of te $e$)ers of te )altic

an" co+ers te !ro+ision of si!!ing trans!ort for )ul6 cargoes, As

te infor$ation of si!s an" cargoes a+aila)le is su)stantial4 a "egree

of s!ecialisation is ine+ita)le,

E+ery $e$)er in+ol+e" in te freigt $ar6et as to $aintain a

constant recor" of )ot te a+aila)ility of si!s an" teir locations4

cou!le" *it a 6no*le"ge of cargoes tat are loo6ing for carriage,

It is te "uty of $e$)ers of te freigt $ar6et to $atc u! te

a+aila)le si!s an" cargoes, Wen a cargo is i"entifie" it is

custo$ary for te si!o*ner to $a6e te initial offer4 tis offer *ill

)e s6etcy an" co+er only te $ain ele$ents of te e+entual fi8ture

♦Cargo si1e and description

♦(aydays and cancelling days

♦Rate o# #reight

♦1ayti$e allo*e"

♦ Demurrage6despatch

♦ 9he title o# the charterparty he %ould li&e to use

/e co$$ission

Wit reference to tese salient !oints4 te #uestion for te si!o*ner

an" is )ro6er at tis stage is -

♦What rates do they tender$ do they o##er more than %as last done$ i# so$ ho% much more@

♦ Do they agree to the charterer:s usual terms$ i# &no%n@

♦ Ho% badly is the business needed@



/e first "ecision concerns te freigt rate, /is is so$eting of an

art4 as tere is no 6no*n secret for$ula tat calculates *at is a

goo" rate,

/e situation in te $ar6et *ill a+e an effect on te rate an" so *ill

te attitu"e of te carterer an" is )ro6er, /e rate *ill )e

"eter$ine" )y te 6no*le"ge4 intuition an" "o*nrigt nosiness of

te si!o*ner;s )ro6er4 o* "es!erate te carterer is to fi8 a si!

can )e gleane" fro$ te $ost unli6ely sources

E8!erience *ill so* te )ro6er o* to an"le te situation4 an" e

*ill soon learn *ic o*ners a+e a re!utation for al*ays as6ing

+ery ig !rices an" ten re"ucing4 an" tose *ose initial offer is

close to teir fi8ing rate, 1i6e*ise e soul" soon learn te foi)les of

te carterers,

One reasona)le *ay of ascertaining te going rate of freigt is to

consult "aily an" *ee6ly tra"e !erio"icals4 for e8a$!le4 fair!lay4 for

*at rates si!s a+e recently )een fi8e" at4 for tan6ers tis is

e8!resse" at a ne* *orl"scale rate,

Ne* *orl"scale rate

/e *orl"*i"e tan6er no$inal freigt scale4 co"e na$e *orl"scale4

is a sce"ule of freigt rates a!!lying to tan6ers carrying oil cargoes

in )ul6, It is uni#ue to tan6er +oyage cartering4 no oter sector of

si!!ing uses suc a syste$,

/e *or" no$inal; nee"s to )e note" )ecause te freigt rates

*ic *orl"scale !ro+i"es are inten"e" solely as a stan"ar"

reference an" co$!arison )y $eans of *ic rates for all +oyages

an" $ar6et le+els can )e co$!are" an" rea"ily @u"ge",

Basically *orl"scale is a set of rates #uoting te freigt rate !er

tonne for eac of a +ery large nu$)er of !ossi)le +oyages,

In $a6ing te first offer4 o*ners

♦ Need the highest possible #reight rate consistent %ith the mar&et to ma2imise earnings

♦ Re8uire the best terms

♦Must ensure that the #irst o##er dra%s a counter o##er #rom the charterer$ in the &no%ledge

that most negotiations #all at the #irst hurdle



At tis !oint it is *ort $entioning tat te !ru"ent si!o*ner4

an">or is )ro6er soul" 6ee! a recor" of te "etails of all offers an"

counter offers, A log of tis sort is in+alua)le at a later "ate *en

so$e "is!ute arises o+er *o sai" *at4 an" *en,

.e!en"ing on *at contract is )eing negotiate"4 an initial offer fro$

te si!o*ner *oul" )e follo*e" )y a counter offer )y te carterer,

A straigt for*ar"4 one co$$o"ity carter!arty4 eg norgrain4 lea+es

little roo$ for oter negotiations4 *ereas gencon4 *ic can )e use"

to co+er $ost cargoes an" $ost +oyages4 allo*s a""itional clauses

an" can )e $a"e as co$!licate" as )ot !arties *is an" can agree

on, A tan6er +oyage carter!arty *ill in+ol+e te a""ition of

JclausesK outlining te e8act nature of te contract,

Once te contract is signe" it )eco$es )in"ing on )ot !arties an"

te )ro6er is !ai" is co$$ission as agree" in te carter!arty,



Contracts of carriage

"ill of lading

9he bill o# lading is one o# the most important documents related to thecommercial operations o# shipping/

Without the bill o# lading the international transport industry %ould not be as %e &no% it today$ in #act$ international trade %ould probably note2ist in its present guise$ and cargo"supernumeries %ould hae more

po%er and authority than the ship:s master/

9he international$ commercial moement o# cargo needs the bill o#lading?

♦ It !ro+i"es te *ere*ital to allo* cargo to )e )ougt

an" sol" *en te !arties to te transaction are se!arate"

)y tousan"s of $iles

♦ It allo*s goo"s to )e transferre" )et*een o*ners *ile

te goo"s are still )eing carrie" on a si!

♦ It !ro+i"es security for )an6 loans an" $ortgages

♦ It !ro+i"es !ersons4 not !arty to te original sale *it

rigts4 an" o)ligations4 regar"ing te trans!ort of te

goo"s4 teir loss4 "a$age or "estruction

♦ It !ro+i"es a "etaile" "escri!tion of te goo"s an" te

con"itions in *ic it *as loa"e"

An#ortunately the bill o# lading can also be abused )see maritime crime*/

9he bill o# lading:s identity and legal standing is proided #or by nationaland international la%$ by case la% and precedent$ and by common usageoer many years/

International la*

Conentions #or the uni#ication o# certain rules o# la% relating to bills o#lading +B., )hague rules* and the +B3 protocol$ %hich collectiely ma&eup the hague isby rules$ are the main regulations that in#luence the#ormat$ issue and use o# bills o# lading/

9here is a lesser used conention on the carriage o# goods by sea +B-sponsored by unctad and &no%n as the hamburg rules$ that is supposed toeentually replace the hague and hague isby rules/

Ho%eer$ there is much entrenched #eeling against the hamburg rules#rom the traditional maritime industry$ as it places a greater burden o#responsibility on the carrier$ that is$ ship$ than the more %idely usedhague6hague isby/

National la*

Most maritime states hae some #orm o# national legislation based on the

minimum re8uirements o# hague6hague isby$ the usa hae the carriageo# goods by sea act +B03 %hich uses the hague rules$ and the u& has thecogsa +B-+ %hich #ollo%s hague isby/



9he bill o# lading has three main #unctions

♦ Receipt o# goods shipped

♦ >ood eidence o# contract

♦ Document o# title

!nd it is these #unctions that gie the bill o# lading its importance in theaspects o# ship operations

♦ !s a receipt o# goods loaded$ the bill o# lading proides an e2act assessment as to the

8uantity or %eight o# the commodity$ its condition on loading and een its alue

♦ 9he bill o# lading also proides the name o# the ship and its o%ner$ and %here and %hen

goods %ere loaded

♦ !s a document o# title$ the bill o# lading allo%s the la%#ul possessor o# the bill to be

considered the la%#ul o%ner o# the cargo described on it

9hus trans#erring the bill o# lading bet%een seller and buyer is a&in totrans#ering the rights o# property in the goods themsel#

♦ >ood eidence o# contract is important$ because subse8uent buyers o# the described cargo

%ill not hae been parties to the original contract o# a##reightment and %ill not be a%are o#

the rights and obligations o# that contract/ 9hus the bill o# lading:s clauses and conditions

%ill be those that are applicable bet%een the carrier )ship* and the o%ner o# the cargo

Once the goods hae been loaded the bill o# lading is gien to the shipper

by the captain o# the carrying ship/

9he shipper can either?

♦ 9rans#er the goods to the intended buyer$ by e2changing the bill o# lading #or money$ usually

through an intermediary eg a ban&

♦ Put the goods on the open mar&et$ selling them to %hoeer o##ers the most money

In the #irst instance$ it %ill probably be the case that the seller and the buyer o# the goods hae conducted a contract o# sale on some preiousoccassion and the trans#er o# the bill o# lading %ill be the completion o#

that contract/

In the second instance the shipper$ a cargo trader$ %ill hae bought andshipped the goods as a speculatie enture$ %ith no positie &no%ledgeo# the identity o# the #inal purchaser o# the goods$ and during the passageo# the cargo it %ill change hands any number o# times be#ore it arries atits destination/ Some oil cargoes are &no%n to hae been bought and soldas many as +55"+45 times during the course o# its carriage #rom the gul#and %estern europe/

9he importance o# the bill o# lading no% becomes eident



♦.ocu$ent of title 9 te )uyer of te goo"s "oes not

necessarily a+e to see te$4 as e8cange of )ill of la"ing

is sufficient for te transfer of te goo"s

♦Recei!t of goo"s si!!e" 9 te )uyer 6no*s te con"ition

of te goo"s is correct fro$ *at is "escri)e" on te )illof la"ing

♦Goo" e+i"ence of contract 9 te )uyer4 $any ti$es

re$o+e" fro$ te original contractors of si!!er an"

carrier4 can see fro$ te )ill of la"ing *at ter$s co+er

te contract, He also 6no*s te )ill of la"ing is go+erne"

)y ague4 ague +is)y or a$)urg rules %or teir national

e#ui+alent( tat te ter$s an" con"itions of te contract

$ust )e reasona)le

9hough the traditional shipped: bill o# lading is the most %idely usedmethod in the carriage o# sea cargoes$ there are other cargo documentsthat are gro%ing in popularity

♦Way)ill 9 so$eti$es 6no*n as a container )ill4 it as te

functions of a tra"itional )ill *it regar" to goo" e+i"ence

an" recei!t of goo"s4 )ut it is not transfera)le4 as te

cargo $ust )e "iscarge" to te consignee4 *ose na$e is

inclu"e" on te *ay)ill

♦Co$)ine" )ill of la"ing 9 *it te a"+ent of $ulti9$o"al

trans!ort4 roa"9si!9roa"4 te i"entity of te contracting

carrying !arty coul" )e in "ou)t4 terefore tis ty!e of"ocu$ent allo*s te co$)ine" trans!ort o!erator %see

freigt for*ar"er( to assu$e res!onsi)ility for te care of

te cargo4 irres!ecti+e of *ic actual carrier "a$ages4

"elays or loses te goo"s4 an" "isregar"ing *ic for$ of

trans!ort *as )eing use" at te ti$e of te loss

Authorisation to sign bills of lading

Ander a time or oyage charterparty the master in signing bills o# lading acts as agent #orshipo%ner/ Similarly$ i# a loading bro&er or charterers: agent signs bills o# lading it %ill be as

agent o# the shipo%ner/ Ho%eer$ both time and oyage charterparties o#ten contain a dimiseclause: %hich %ill state %hether the master or another is signing on behal# o# the o%ner or thecharterer/Ander the terms o# many time charterparties and some oyage charterparties the o%nerstrans#er the authority to sign bills o# lading to the charterers$ thereby canceling the authoritynormally held by the master/ In these circumstances the master should not sign bills o# ladingand cannot delegate authority to others to do so/ I# in doubt$ ho%eer$ he should re8uestspeci#ic instructions #irst #rom his o%ners and secondly #rom the time charterers/ I# the timecharterers tell the master to do nothing they hae retained their o%n authority to sign bills o#lading/ I# they instruct him to authorise a named agent they hae$ in doing so$ passed theiro%n authority bac& to the master/

In any case in %hich the agent %ill be signing bills o# lading on behal# o# the master$ themaster should ensure that the agent receies appropriate instructions in the #orm o# anauthorisation %hich he should issu/ 9he %ording o# any such authorisation is o#ten dictated by



o%ners: or charterers: oyage instructions and the master should consult his o%ner i# he is inany doubt as to the #orm o# instruction to be issued/9he authorisation should be gien to the agent and a copy should be retained by the master$%ith the agent:s signed ac&no%ledgement/It is common practice #or agents to present masters %ith letters o# authority %hich are %orded

to the agent:s o%n adantage/ 9he master is neer obliged to use such #orms/ He can al%aysuse the o%ners: %ording/ I# such agents re#use to accept such an authority the master shouldin#orm o%ners and time charterers accordingly/In some trades$ such as the grain and agricultural products trades$ it is common to hae 05 to,5 bills o# lading/ In these circumstances it is adisable #or the master$ al%ays acting underinstructions$ to delegate his authority to one or seeral named indiiduals in the agency and toobtain copies o# their signatures on all copies o# the letter o# authority/ 9his %ill help toreduce opportunity #or #raud %hen bills o# lading are presented to the master at the discharge

port/It is important to stress that the master should al%ays be a%are o# the precise terms o# anyreleant charterparty clauses and should consult his o%ners i# he is in any doubt as to the

e2istence or e2tent o# his authority to sign bills o# lading$ %hether on behal# o# o%ners orcharterers/

before signing the bill of lading, the master should ensure that ?+/ 9he goods are actually aboard and the bill o# lading is correctly dated/./ 9he description o# the goods complies %ith the mate:s receipts$ #ailing %hich the bill o#lading should be

claused accordingly/ I# i doubt about clausing the bill o# lading he should consult hiso%ners$ some o# %hom

%ill re#er him to the local pi club representatie %hilst others consider this too importanta matter #or anyone

but themseles/0/ 9hat he only eer signs the same number o# originals as is sho%n on the #ace o# the bill o#lading/ I# three

originals are sho%n on the document$ as is usual$ only three should be signed/

,/ 9he bill o# lading contains a clause re##ering to any releant charterparty$ and includes the protection clauses speci#ied in that charterparty/ 'ery speci#ic %ording is o#ten re8uired in order to achiee the

protection o# allreleant charterparty proisions$ and the master should consult his o%ners/ Ho%eer$ themaster is usually

re8uired to sign bills o# lading as presented and there is little that he can do e2cept bring thematter to the notice

o# o%ners and charterers i# the bills o# lading do not contain the speci#ic clauses/the master should not:

+/ Sign a bill o# lading %hich is in any respect inaccurate/./ =e persuaded to sign clean bills o# lading against the o##er o# a letter o# indemnity/0/ Sign bills o# lading %hich name a destination %hich is outside the range named in thecharterparty or in the

oyage orders or %hich the essel cannot physically reach/ He must not sign a bill o# lading%hich e2plicitly

#orbids transhipment i# the essel:s dra#t %ill ma&e transhipment unaoidable/



Payment of freight

! bill o# lading %hich contains no re#erence to #reight haing been paid in %hole or in part isa receipt only #or cargo$ but a bill o# lading mar&ed #reight paid: or #reight prepaid: may be areceipt #or both cargo and #reight money/

9he master should only sign #reight paid: or #reight prepaid: b6l %here he is speci#icallyinstructed to do so by o%ners )but not by charterers*$ or he is speci#ically instructed to do so by time charterers i# the charterparty allo%s them to do so$ or the charterparty e2plicitlyre8uires him to do so$ or he has good eidence that the #reight has indeed been properly paidand receied by o%ners or time charterers$ but this should al%ays be chec&ed/I# none o# the aboe conditions is satis#ied the master should delete the %ords #reight paid: or #reight prepaid:$ and should initial this amendment be#ore signing/ I# this proes impossiblethe master should pass the bill o# lading to the agent %ith a %ritten instruction not to issue it%ithout e2plicit instructions #rom his o%ners and should noti#y o%ners o# %hat he has done/It should be noted that oyage charterers cannot insist on a #reight paid: bill o# lading beingsigned be#ore payment o# #reight unless the charterparty e2plicitly allo%s it/ In any eent the

position should be chec&ed/ Signature o# #reight paid: bills o# lading in a situation %here#reight had not in #act been paid may lead to the loss o# the o%ner:s right later to e2ercise alien #or unpaid #reight/9ime charterers can insist on a #reight prepaid: bill o# lading being signed proided that thecharterparty speci#ically allo%s them to do so$ but the master should assume that they do not%ant such a bill o# lading signed unless they hae gien him speci#ic instructions to sign/

)eneral considerations at time of sailing from the loadport

On no account should the master sail %ithout either issuing a bill o# lading under his o%nsignature or else delegating the signing to the agent/ On sailing #rom the loadport the mastershould noti#y the discharge port agents that he %ill re8uire to see original bills o# lading #or

the cargo be#ore he %ill authorise its discharge and he should insist that they ac&no%ledge andcon#irm his instructions in %riting$ unless o%ners hae instructed him in %riting that theyconsider this procedure unnecessary/I# the master should at any time discoer that he has issued an incorrect bill o# lading$ he mustnoti#y o%ners immediately$ giing #ull details o# its particulars$ including names o# shippersand consignees/ He must also noti#y those parties/

'elivery of cargo in return for bill of lading

When the ship has arried in the discharge port$ the cargo must be sa#ely discharged into thecare o# the correct person/When the cargo has been receied aboard ship and the master has issued a bill o# lading in

respect o# it$ he becomes responsible #or ensuring that it is deliered to those %hom hereasonably beliees to be entitled to its possession/ 9he master should only gie deliery o#cargo against production o# one o# the three original bills o# lading or under speci#icinstructions #rom o%ners/ It is e2tremely bad practice to assume that the agent has attended tothis matter on o%ner:s behal#$ as this is o#ten not the case/9he master should gie plenty o# adance %arning to the discharging port agent that he %illre8uire to see the original bills o# lading/ 9his ensures that the agent has time in %hich toarrange to comply/When original bills o# lading hae not reached the discharge port the o%ners may agree todischarge the cargo against letters o# indemnity proided by the receiers$ shippers orcharterers$ but that is a decision #or the o%ners and not #or the master/ When the o%nersinstruct the master to accept a letter o# indemnity )loi*$ they %ill ta&e steps to ensure that the%ording o# the loi presented to the master is the same as that %hich they hae proposed/ 9he



master should then chec& care#ully that the loi presented matches the one supplied to him byo%ners/

Proper delivery of cargo against bill of lading

9here are three situations in %hich the master must be particularly alert to ensure the proper

deliery o# the cargo/ 9hese are change o# destination$ transhipment6lightering$ and split billso# lading and6or part cargoes/Change of destination: i# the master receies an instruction to proceed to some port or placeother than the one %hich appears in the bill o# lading$ he should dra% this #act to the attentiono# all concerned as soon as possible/ 9his rule applies regardless o# %hether the instructioncomes #rom o%ners$ time charterers$ oyage charterers or agents/9here is no pi coer #or misdeliery o# cargo$ so change o# destination is usually the sub<ecto# a letter o# indemnity )loi)/ Proided that the change o# destination is con#irmed$ the mastershould contact the agent at the ne% destination to ensure that he has in his possession at leastone original bill o# lading/ !lthough this document

Names the original destination$ it %ill still be deliered to the master and accomplished in the

normal %ay$ proided that the loi has been issued and accepted by the o%ner/ 9he o%ner %illretain the loi/Transhipment/lightening: on receiing the instructions to tranship or lighten all or part o# hiscargo$ the master should al%ays as& himsel# %hether this instruction is consistent %ith the billo# lading/ I# it is not$ he must immediately noti#y all concerned/On parting %ith all or part o# his essel:s cargo other than at its #inal destination$ the mastershould ensure that he receies a clean and plainly %orded receipt #or it$ signed by a 8uali#ied

person such as the master or chie# mate o# the other essel/ 9he master should ensure that thereceipt states the #ull 8uantity trans#erred$ this being particularly important in the case o# partdischarge or lightening$ as i# the essel has actually discharged more cargo than stated in thereceipt there %ill be a shortage at the ne2t port/

Split bill of lading and/or part cargoes: there are t%o types o# split bill o# lading/ 9he #irstoccurs %here a consignment o# cargo described in one bill o# lading is split at the discharge

port and sold partly to one receier and partly to another/ In these circumstances$ deliery isgien against deliery orders to %hich all the conditions o# the original bills o# lading apply/Asually$ the re8uired number o# deliery orders is issued by the o%ner:s agent %hen all theoriginal copies o# the bill o# lading are presented to him/ 9he master %ill gie deliery o# thecargo against production o# all the originals plus all the deliery orders/ Deliery orders aremade out in original only$ %ith no copies$ and are o#ten unacceptable to ban&s$ %hich seerelylimit their use/More di##icult is the situation in %hich the charterers re8uire bills o# lading #or seeral parcelso# cargo %hen the master originally issued a single set o# bills o# lading #or the entire

consignment/ 7or e2ample$ it might be that one set o# bills o# lading %as issued #or the entirecargo$ but the charterers and their traders re8uire three sets o# bill o# lading$ each #or one"thirdo# total cargo/ 9his di##ers #rom the #irst case because three sets o# negotiable bills o# ladingare re8uired/ 9he procedure #or dealing %ith this simple in theory and di##icult in practice/9he one set o# originals is collected and deliered to the o%ners or their nominated agents$together %ith the re8uired number o# replacements/ 9he o%ners destroy the original set andsign and issue the replacement sets/ I# the master is re8uested to authorise the issuing o# split

bills o# lading$ he should re#er the matter to o%ners and a%ait orders/

Contracts of sale

9he contract bet%een the cargo seller and the cargo buyer is a contract #or the sale o# goodsand is normally 8uite separate #rom the ship:s charter or other contract o# carriage/ Certainaspects o# the sale o# goods contract are important #or a shipmaster to understand/



Contract #or sale o# goods hae three important points?

• 9he time or circumstances o# the passing of ownership o# the goods

#rom seller to buyer;

• 9he time when payment becomes due; and

• 9he time when the risk of loss/damage! passes #rom seller to buyer/

International sale o# goods contracts usually incorporate a set o# mutually"agreed trade termsnamed incoterms %hich help the buyer and seller aoid misunderstanding oer the aboe

points/

7ob and ci# are the chie# incoterms used #or sea or inland %ater%ay transport/

!ll that concerns the shipo%ner is$ that somebody %ishes him to carry goods$ this could beeither the purchaser %hen the contact o# sale %ill be #/o/b/ or the seller$ %hen the contract o#sale %ill be c/i/#/

9he respectie purchaser or seller %ill enter into a contract %ith the shipo%ner to carry thegoods/

Free on )oar" %fo)(

9he seller o# the goods must supply the goods and documents stated in the contract o# sale/ He must load the goods on board the essel named by buyer at the named port o# shipment onthe date or %ithin the period stipulated/

9he seller must bear all costs and ris&s o# the goods until they hae passed the ship:s rail at

the named port o# shipment$ including e2port charges and ta2es/

He must also pay #or pac&ing %here necessary/ Ris& passes %hen the goods pass the ship:srail/ 9he seller must noti#y the buyer %hen the goods hae been loaded/

9he buyer charters a ship or reseres the necessary space on a ship and noti#ies the seller o#the ship:s name$ loading berth and loading dates/

9he buyer bears all costs$ including insurance )%hich he must arrange* and #reight$ #rom thetime the goods cross the ship:s rail at loading port$ #rom %hen he is liable to pay the contract

price/ )#reight is normally collectable by the carrier #rom the buyer at the discharge port/* 9he buyer must also pay the seller #or proiding the re8uired documents$ e/g/ =ills o# lading andcerti#icate o# origin/ 9he seller must gie su##icient in#ormation to the buyer #or him toarrange insurance/ I# the seller #ails to gie enough in#ormation$ the ris& stays %ith him/

Cost4 insurance4 freigt %cif(

Cost$ insurance$ #reight$ is the name gien to a contract o# sale %here the buyer o# the goods is8uoted a price that coers all the e2penses o# getting the goods #rom the seller to a placenominated by the buyer$ %here he can claim possession o# them/

9he seller o# the goods is responsible #or contracting$ and paying #or$ a contract o# carriage%ith the shipo%ner$ deliering the cargo to the loading port and paying all e2penses #or the

loading o# the essel/



9he buyer o# the goods is only responsible #or nominating the discharge port$ paying #or thegoods and ta&ing deliery/

Normally payment is made by the buyer %hen he receies the bill o# lading #or the goods andhe is a%are that the cargo is being FshippedF to his nominate port o# discharge/

9he seller is also bound to arrange the insurance o# the cargo through a responsibleunder%riter and attend to the re8uirements o# e2port licences$ permits and clearance/

Hague and hague visby rules

In +B., the #irst international attempt at the codi#ication and uni#ication o# rules concerning bills o# lading and the carriage o# goods by sea %as completed in a conention &no%n as the

hague rules/

=y the end o# the +B35Gs it %as realised that the original rules %ere dated and inade8uate #ormodern usage$ and a ne% con#erence %as conened to agree a protocol that %ould bring therules some %ay to%ard the contemporary practice o# carriage o# goods by sea/

9he original rules that no% include the changes brought about by the protocol are &no%n asthe hague isby rules +B3/

9his section deals %ith the complete hague isby rules %hich are #ound as the schedule in theunited &ingdomGs carriage o# goods by sea act +B-+ )cogsa -+*/all re#erences to the originalconention$ %here it di##ers #rom hague isby$ %ill be in italics$ sections o# hague isby %hich%ere not included in the original rules are underlined/

Hague visby rules

9he rules consist o# ten articles %hich include the rights$ immunities$ responsibilities andliabilities o# carriers$ shippers and indorsees %ho enter into a contract o# carriage o# goods/

9he contract is in relation to the loading$ handling$ sto%age$ carriage$ custody$ care anddischarge o# goods )art ii*/

carrier includes the o%ner or the charterer %ho enters into a contract o# carriage %ith ashipper )art +)a**/

Contract o# carriage applies only to contracts o# carriage coered by a bill o# lading or anysimilar document o# title$ %here they are issued )!rt I)b**$ or %here the shipper can demandthat they be issued )!rt III)0**)Harland and Wol## / =urns and (aird (ines +B,,*/

9his can include a bill o# lading issued under a charterparty$ #rom the moment at %hich the bill o# lading regulates the relations bet%een the carrier and the holder o# the bill o# lading$ ie/When it is trans#erred by the charterer to a third party/

>oods include goods$ %ares$ merchandise$ and articles o# eery &ind %hatsoeer e"cept liveanimals and cargo which by contract is stated as being carried on deck and is so carried )!rtI)c**/



Carriage o# goods coers the period #rom the time %hen the goods are loaded on to the timethey are discharged #rom the ship )!rt I)e**$ proided that the ports o# loading and dischargeare in t%o di##erent States )!rt * and the port #rom %hich carriage is made or #rom %here the

bill o# lading is issued is in a contracting State ie/ 9he State has rati#ied the Conention and

Protocol )!rt */

9his applies %hateer the nationality o# the ship$ the carrier$ the shipper$ the consignee orother interested persons )!rt */

9he Rules apply during the loading and unloading operations/

(oaded on is interpreted as being the beginning o# the operation o# loading the goods o# theshipper concerned$ and not as the moment %hen the goods in 8uestion cross the shipGs rail/Where the loading o# the shipperGs goods has begun$ and some o# the goods %hich hae notyet been loaded are damaged be#ore they hae crossed the shipGs rail$ the liability #or this

damage is goerned by Hague 'isby Rules/

%bligations under the hvrs

/ere are 7 )asic carrier;s o)ligations un"er te Hague9Vis)y Rules %+rs(-

• 9o ensure the essel:s sea%orthiness;

• 9o loo& a#ter the cargo; and

• 9o issue a =6(/

O)ligation un"er te +rs in res!ect of sea*ortiness

Ander !rticle III)+*J and I')+* the carrier must$ be#ore and at the beginning o# the oyage)i/e/ Ap to the moment o# sailing*$ to e2ercise due diligence to?

• Ma&e the ship sea%orthy;

• Properly man$ e8uip and supply the ship; and

• Ma&e the holds$ re#rigerating and cool chambers$ and all other parts o#

the ship in %hich goods are carried$ #it !nd sa#e #or their reception$ carriage and preseration/

#ue diligence means ta&ing all reasonable precautions to see that the essel is #it #or theoyage contemplated/ 9he carrier is not obliged to gie an absolute guarantee o#sea%orthiness/ 9he carrier may delegate his duty to e2ercise o# due diligence )e/g/ 9osureyors or repairers* but he %ill be responsible i# they #ail to e2ercise due diligence incarrying out their %or&/

Seaworthy in this conte2t means that the hull must be in sound condition$ the essel must bemechanically sound$E8uipped %ith charts$ etc/$ and cre%ed by a properly trained cre%/ 9he holds must be #it andsa#e #or the reception$Carriage and preseration o# the cargo and$ in particular$ the hatch coers must be tight and

there must be no instability o# the essel through improper sto%age/ It has been held that theneglect to protect a %ater pipe in a hold #rom #rost %hich could hae been e2pected at thetime o# year sho%ed lac& o# due diligence to ma&e the essel sea%orthy/



9he essel need only be sea%orthy at the commencement o# the oyage$ %hich usualy means%hen she leaes the=erth$ %hether under her o%n motie po%er or %ith the aid o# tugs/

I# a cargo o%ner can sho% that his loss %as caused by a #ailure o# the carrier to e2ercise due

diligence to ma&e the'essel sea%orthy$ the carrier %il not be able to rely on any other clauses in the Rules %hichreduce his liability)i/e/ 9he e2ceptions to liability*/

O)ligation un"er te +rs to*ar"s te cargo

9he carrier must properly and carefully load, handle, stow, carry, keep, care for and

discharge any goods carried$%

Anli&e sea%orthiness$ this duty e2tends throughout the oyage and implies greater care than

due diligence:/ 9heCourts do not e2pect per#ection #rom the carrier$ but it has been held that sto%age %asimproper %here "

• Contamination o# other goods occurred?

• 9here %as inade8uate or no entilation;

• Dry cargo %as damaged by li8uid goods; and

• 'ehicles %ere secured only by their o%n bra&es/

9he carrier must hae a sound system #or loo&ing a#ter the cargo %hen sto%ed/ He has a dutyto use all reasonable means to ascertain the nature and characteristics o# the cargo and to care

#or it accordingly$ though the shipper should gie special instructions %here special care isre8uired/ )Where %ater in tractor radiators #ro1e$ it %as held that the carrier should hae beentold o# the ris&/*

O)ligation un"er +rs to issue a B>1

!#ter receiing the goods into his charge the carrier shall$ on demand o# the shipper$ issue tothe shipper a bill o# lading sho%ing among other things?

• !ll leading mar&s #or identi#ication o# the goods$ as stated by the

shipper be#ore loading )in his shipping note or boat note*$ proidedthese are isible on the goods or their coerings;

• Either the number o# pac&ages or pieces$ or 8uantity$ or %eight$ as

stated by the shipper )in his shipping note

• Or boat note*; and

• 9he apparent order and condition o# the goods/

9hese details %ill proide prima #acie eidence o# receipt o# cargo in the manner andcondition so described )!rt III),**/

9hus the carrier$ master or agent is allo%ed to state or sho% in the bill o# lading any mar&s$number$ 8uantity$ or %eight %hich he has reasonable grounds #or suspecting not accurately

represent the goods actually receied )!rt III)0**$ this ma&es the clean bill o# lading adirty bill o# lading/





C* Perils$ dangers and accidents o# the sea or other naigable%aters )!rt I' .)c**/

9his includes pirates$ but on a more mundane leel it also includes losses not peculiar to thesea li&e rats or coc&roaches eating goods in a ship/

!s %ell as sea related losses such as #oundering a#ter a collision/

In recent cases courts hae accepted that the entry o# sea %ater %as a peril o# the sea ho%eerthe %eather has to be abnormal #or it to apply/

D* !ct o# >od )!rticle I' .)d**/ 9he act o# >od is a mere short %ay o#e2pressing this proposition? ! carrier is not liable #or any accident asto %hich he can sho% that it is due to natural causes$ directly ande2clusiely$ %ithout human interention$ and that it could not hae

been preented by any amount o# #oresight and pains and care

reasonably to be e2pected o# him )Nugent / Smith +-3*/

It can include?i* ! sudden gust o# %indii* 7all o# rain heaier than any %ithin liing memoryiii*! ship encountering more than ordinary %eather

E* !ct o# War )!rticle I' .)e**/7* !ct o# public enemies )!rticle I' .)#**/ 9his phrase is also interpreted

as King or LueenGs enemies$ it does not include robbers on land$ butit can include pirates$ as robbers at sea$ as being enemies o# all nations

9he master is <usti#ied in putting into port and delying the oyage %here he has a reasonableapprehension o# danger #rom capture by a enemy o# the King6Lueen

>* !rrest or restraint o# princes$ rulers or people$ or sei1ure underlegal process )!rticle .)g**/

9his section coers any #orcible inter#erence %ith the oyage or the enture at the hands o#the constituted goernment$ or ruling po%er o# any country

It includes? i* orders o# goernment prohibiting or restricting the e2portation or landing o#goods ii*embargo

H* Luarantine restrictions )!rticle I' .)h**

I* !ct or omission o# the shipper or o%ner o# the goods$ his agent orrepresentatie )!rticle I' .)i**

* Stri&es or loc&outs or stoppages or restraint o# labour #rom %hateercause$ %hether partial or general )!rticle I' .)<**

K* Riots and ciil commotions )!rticle I' .)&**



(* Saing or attempting to sae li#e or property at sea )!rticle I'.)l**/

9his is allo%ed %here it does not e2tend beyond the necessity o# the particular case

M* Wastage in bul& or %eight or any other loss or damage arising#rom inherent de#ect$ 8uality or ice o# the goods )!rticle I' .)m** "Wastage includes lea&age

Inherent ice or de#ect$ is a de#ect in the goods carried %hich is incidental to the nature o# thethings themseles/

'ice is not a moral ice$ but is the sort %hich by its internal deelopment tends to thedestruction or the in<ury o# the animal or thing to be carried

Inherent ice does not coer goods %hich %ere sto%ed incorrectly and thus$ %ere damaged

N* Insu##iciency o# pac&ing )!rticle I' .)n**/ Where the carrier hasissued a clean bill o# lading #or goods shipped$ he %ill not be able torely on this e2ception i# the insu##iciency o# pac&aging %as e2ternallyisible on a reasonable e2amination on shipment

O* Insu##iciency or inade8uacy o# mar&s )!rticle I' .)o**/

>enerally$ this e2ception only e2cuses the carrier #rom deliering the actual goods shipped i#he can proe?

i* 9hat the goods are unidenti#iable o%ing to insu##iciency o# mar&s andii* 9hat he has not lost any o# them$ or$ i# he has$ that they %ere lost by

some other e2cepted peril

9he e2ception %ill not coer the cases %here mar&s are incorrect )as compared %ith the statedmar&s on the bill o# lading* or inaccurate

P* (atent de#ects not discoerable by due diligence )!rticle I' .)p**/9his section re#ers to latent de#ects that can occur in the ship$ as %ith the hull$ machinery$ andappurtenances/ ! latent de#ect is any de#ect %hich is not apparent$ and cannot be discoered

by due diligence/

Ander English la%$ i# the latent de#ect is not discoerable by due diligence$ the carrier isapparently not liable een i# he #ailed to e2ercise due diligence in attempting to discoer latentde#ects/

L*!ny other cause arising %ithout the actual #ault or priity o# thecarrier$ or %ithout the #ault or neglect o# the agents or serants o# thecarrier )but the burden o# proo# shall be on the person claiming the

bene#it o# this e2ception to sho% that neither the actual #ault or priityo# the carrier nor the #ault or neglect o# the agents or serants o# thecarrier contributed to the loss or damage* )!rticle I' .)8**/

LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL 'eviation under the hvrs

!ny deiation in saing or attempting to sae li#e or property at sea or any reasonabledeiation shall not be deemed to be an in#ringement or breach o# the Rules$ or o# any contract



o# carriage/ 9hus the carrier shall not be liable #or any loss or damage resulting #rom thereasonable deiation )!rticle I' ),**/

9he 8uestion as to %hat is a reasonable deiation #or the purposes o# !rticle I' ),* is probablya matter o# #act in eery case/

It must be?a* (imited to departures #rom the route %hich %ere in the contemplation

o# the parties at the time the contract %as made/ b* It must be reasonable to all the parties concerned$ not <ust #rom the

point o# ie% o# the carrier$ or that o# the cargo o%ner concerned inthe dispute but o# all the cargo o%ners/

It %as #urther held that a deiation in the national interest %ould be <usti#ied$ but not to landshore %or&ers/

Ander this section$ there may be a duty to deiate to sa#eguard the cargo$ %here it is perishable and cannot be discharged at a stri&e"bound port/

'angerous goods under hvrs

9he hrs proide that in#lammable$ e2plosie or dangerous goods %hich hae been shipped%ithout the consentO# the carrier$ master or agent )or %ithout their &no%ledge o# the nature and character o# thegoods*$ may at any9ime be#ore discharge "

• =e landed at any place;

•

=e destroyed; or • =e rendered innocuous by the carrier/

No compensation is payable$ and the shipper o# the goods %ill be liable #or all damages ande2penses directly or indirectly arising out o# or resulting #rom the shipment/

I# any such goods$ legally shipped %ith the &no%ledge and consent o# the carrier$ master oragent$ become a danger to the ship or other cargo$ they may similarly be landed at any place$destroyed or rendered innocuous by the carrier %ithout liability on any part o# the carriere2cept to >eneral !erage$ i# any/

$imitation of $iabilityAnless the nature and the alue o# the goods hae been declared by the shipper$ be#oreshipment and inserted in the bill o# lading$ neither the carrier nor the ship shall be liable #orany loss or damage to$ or in connection %ith the goods that e2ceeds the amount o#?

a* 333/3- units o# account per pac&age or unit or b* . units o# account per &ilo o# gross %eight o# goods lost or damaged$

%hich eer is higher )!rticle I' 4)a**/

9he ma2imum amount payable may be raised by agreement bet%een the carrier and theshipper )!rticle I' 4)g**/

9he unit o# account is a Special Dra%ing Right )SDR* as de#ined by the InternationalMonetary 7und )IM7* )!rticle I' 4)d**/



9he alue o# the SDR is +////+/.B00B SDR +////5/-345 SDR )!ugust +B*$ these aluesary only slightly oer a period o# time/

9he actual %ording o# the +B3 Protocol is +5$555 #rancs per pac&age$ and 05 #rancs per &ilo$

%ith the #ranc being de#ined as 34/4 milligrammes o# gold o# millesimal #ineness B55/Ho%eer$ this has all been updated by a #urther Protocol o# +B-B/

Ander the +B.+ Hague Rules the ma2imum amount %as +55 per pac&age or unit$ or thee8uialent o# that sum in other currency$ ho%eer it %as possible to raise this ma2imum byagreement bet%een the shipper and the carrier/

Pac&age or Anit under the Hague Rules caused some concern$a rail%ay %agon %as apac&age $ but unbo2ed cars %ere not/

!s essels became palleti1ed and containeri1ed the problems gre% )pallets o# si2 cartons a

pac&age*$ and een e2ist in the AS! ) a non"signatory to Hague 'isby* post Hague 'isby)045 adding machines in one container*

9he problem o# goods consolidated into containers$ pallets or other similar articles o#transport has been recti#ied by Hague 'isby Rules?

the number o# pac&ages or units enumerated in the bill o# lading as pac&ed in such article o#transport shall be deemed the number o# pac&ages or units #or the purpose/// o# these Rules)!rticle I' 4)c**/

Pac&ages must hae its ordinary meaning and cartons o# colour teleision sets inside thecontainers %ere to be considered pac&ages/

Ho%eer$ %hen there is no mention o# internal pac&ages$ the article o# transport is to beconsidered the pac&age or unit )!rticle I' 4)c**/

9he total alue recoerable is calculated by re#erence to the alue o# the goods at the placeand time at %hich the goods are discharged #rom the ship or by the commodity e2change

price)!rticle I' 4)b**/

!rticle ibis is completely uni8ue to the Hague 'isby Rules$ it proides the de#enses that are

aailable under the Himalaya Clause$ in as much that it applies the limitation o# liability to theserants and agents o# the carrier$ enabling such indiiduals$ i# sued personally$ to claim the bene#its o# the Rules as #ar as limitation o# liability and de#enses to an action are concerned/9he action can be in contract or tort )!rt I' bis )+**/

9he !rticle )I' bis* does not coer independent contractors/

9he carrier has the liberty to surrender all or part o# his rights or immunities$ or to increaseany o# his responsibilities and obligations under these Rules )!rticle '*/

*pecial Agreements

Where particular goods are to be carried$ the carrier$ agent or master and the shipper mayenter into any agreement$ in any terms as to responsibilities and liability$ as #ar as thestipulations are not contrary to public policy$ or the care and diligence o# the carriers serants



or agents in regard to loading$ handling$ sto%age$ carriage$ custody$ care and discharge o# thegoods carried by sea/

Proided that this section shall not apply to ordinary commercial shipments made in theordinary course o# trade$ but only to other shipments %here the character or condition o# the

property to be carried or circumstances$ terms and conditions under %hich the carriage is to be per#ormed are such as reasonably to <usti#y a special agreement/

It is a #urther stipulation that there has been nor shall there be any bill o# lading issued$ andthe terms agreed shall be embodied in a receipt %hich shall be a non"negotiable document andshall be mar&ed as such/)!rticle 'I* public policy re#ers only to agreements as to the carrierGsobligation regarding sea%orthiness/

9he Hague 'isby Rules do not preent an agreement bet%een the carrier and shipper #orcustody$ care or handling o# cargo be#ore loading on$ and subse8uent to discharge #rom$ theship on %hich the goods are carried by sea$ this proides agreements #or through bills o#

lading and Combined 9ransport Operations )!rticle 'II*/

9he proisions o# the Hague 'isby Rules do not a##ect the rights and obligations o# the carrier$gien by any national statute that is in #orce$ %hich relates to the limitation o# the liability o#o%ners o# sea going essels )!rticle 'III*/

9he Rules shall not a##ect the proisions o# any international Conention/

Convention Countries

Hague Rules

!lgeria$ !ngola$ !ntigua$ !rgentina$ =ahamas$ =eli1e$ =oliia$ Cuba$ Cyprus$ DominicanRepublic$ 7i<i$ >ambia$ >hana$ >renada$ >uyana$ Iran$ Ireland$ Israel$ Iory Coast$ amaica$Kiribati$ Ku%ait$ Madagascar$ Malaysia$ Monaco$ Mo1ambi8ue$ Nauru$ Ne% ealand$Paraguay$ Peru$ Portugal$ St Kitts$ St (ucia$ St 'incent >renadines$ Seychelles$ SolomonIslands$ Somalia$ 9ai%an$ 9rinidad 9obago$ 9ur&ey$ 9ualu$ AS!/),. Countries*

Hague Visby

!ruba$ !ustralia$ =elgium$ Canada$ China$ Denmar&$ Ecuador$ EgyptQ$ 7inland$ 7rance$>ermany$ >reece$ India$ Italy$ apan$ Netherlands$ Nor%ay$ Papua Ne% >uinea$ Poland$

Singapore$ South !#rica$ South Korea$ Spain$ Sri (an&a$ S%eden$ S%it1erland$ Syria$ 9onga$AK ).B Countries* Hamburg

=arbados$ =ots%ana$ =ur&ina 7aso$ Chile$ EgyptQ$ >uinea$ Hungary$ Kenya$ (ebanon$(esotho$ Mala%i$ Morocco$ Nigeria$ Romania$ Senegal$ Sierra (eone$ 9an1ania$ 9unisia$Aganda$ ambia ).5 Countries*

Hamburg Rules

9he Anited Nations Conention on the Carriage o# >oods by Sea +B- %ere deeloped byANCI9R!( to replace the Hague and Hague 'isby Rules a#ter complaints by shippers indeeloping countries that the e2isting Rules un#airly protected the ship o%ner and %ere too

onerous #or the shipper/

9he Hamburg Rules clearly de#ine the role o# the carrier-



• !ny person by %hom or in %hose name a contract o# carriage o#

goods by sea has been concluded %ith a shipper and the actual carrier?

• !ny person to %hom the per#ormance o# the carriage o# goods$ or any

part o# the carriage$ has been entrusted by the carrier )!rticle +*/

9he term goo"s includes lie animals$ and %here the goods areconsolidated in a container$ pallet or similar article o# transport$ goodsinclude such article o# transport )!rt +*/

9he Conention is applicable #or contracts o# carriage by sea bet%eent%o di##erent States )!rticle .*/

9hey are not applicable to charterparties/ Ho%eer %hen a bill o# ladingis issued in pursuance %ith a charterparty$ the Conention applies to a billo# lading %hen it goerns the relationship bet%een the carrier and theholder o# the bill o# lading %ho is not the charterer )!rticle ./0*/

Bill of la"ing means a document %hich eidences a contract o# carriage by sea and the ta&ing oer or loading o# the goods by the carrier$ and by%hich the carrier underta&es to delier the goods against surrender o# thedocument )!rt +/-*/

When the carrier ta&es the goods in his charge he must$ on demand o# theshipper$ issue to the shipper a bill o# lading )!rticle +,/+*/

9he contents o# the bill o# lading must include details o# the cargo and its

apparent condition$ o# the carrier and the shipper )!rticle +4*/

!#ter the goods are loaded on board the carrier must issue a shipped bill o# lading to a shipper$ the shipped bill o# lading %ill state that thegoods are on board a named ship and the date o# loading/ I# the carrierhas preiously issued another document to the shipper$ the shipper is toe2change it #or the shipped bill o# lading$ or is to hae the originaldocument amended to that o# a shipped bill o# lading )!rticle +4/.*/

9he responsibility o# the carrier #or the goods coers the period during%hich the carrier is in charge o# the goods at the port o# loading$ during

the oyage and at the port o# discharge )!rticle ,*/

During this period the carrier is liable #or loss resulting #rom loss ordamage to the goods$ as %ell as #rom delay in deliery$ unless the carrier

proes that he too& all measures that could reasonably be re8uired toaoid the occurrence and its conse8uences )!rticle 4*/

I# the carrier is liable #or loss or damage he can limit his liability to 04units o# account per pac&age or .$4 units o# account per &ilogramme$%hich eer is highest )!rticle 3*/ 9he unit o# account is a SDR )!rticle.3*/



9he liability #or delay is limited to t%o and hal# times the #reight payable#or the goods delayed$ but not e2ceeding the total #reight payable underthe contract o# carriage o# goods by sea )!rticle 3*/

9he carrier is not entitled to limit his liability i# it is proed that the loss$

damage or delay %as caused by an act or omission$ done %ith intent or%ith the &no%ledge that such results %ould probably result )!rticle */

9he carrier is entitled to carry goods on dec& only i# such carriage is inaccordance %ith an agreement %ith the shipper or %ith the usage o# the

particular trade or is re8uired by statutory rules or regulations )!rticle B*/

!rticle +5 ma&es the carrier responsible #or the entire carriage$ %hetheror not he entrusts the carriage to an actual carrier )!rticle +5*/

Notice o# loss or damage must be gien$ in %riting$ to the carrier not later

than the %or&ing day a#ter the day %hen the goods %ere handed oer tothe consignee/ When loss or damage is not apparent the notice in %ritingmust be gien %ithin +4 days o# the handing oer to the consignee)!rticle +B/+ .*/

No compensation shall be payable #or loss resulting #rom delay indeliery unless a notice has been gien in %riting to the carrier %ithin 35days a#ter the day %hen the goods %ere handed oer to the consignee)!rticle +B/4*/

!ny action relating to the carriage o# goods is time barred i# proceedingshae not been instituted %ithin a period o# t%o years )!rticle .5*/



CHAR/ERPAR/IES

Charterparties can be diided into t%o main categories?

♦ Demise

♦ Not by Demise

'emise Charter

9he shipo%ner is paid to relin8uish complete control o# his ship toanother company/

9he la% on demise charterparties )the most common o# %hich is the=areboat Charter* has been long established in that the charterparty by%ay o# demise is a lease o# the ship %here the charterer$ not the o%ner$has possession o# the ship in la% )=aum%oll / >ilchrist +B.*/ 9heresponsibility #or the ship and its sa#e operation usually lies %ith thedemise charterer/

Once the demise charterer obtains the ship he %ill then operate it eitherhimsel# or perhaps$ to complicate matters$ through a ship managementagreement/

(ot by 'emise

Charterparties that are not by demise can be deided into the #ollo%ingclasses

9he shipo%ner is paid #or the use o# his essel and retains some degree o# control oer its operation/

9his area o# charterparties can be sub"diided into?

♦ 9ime Charter

♦ 'oyage Charter

Charterparty

'emise (ot by 'emise

4lease5

Foyage Time

Contract of Affrei htment

.ifferent /y!es of Carter!arties



Time Charterparty

In this case the company:s need #or a ship may be o# a relatiely short duration$ and going tothe e2pense and trouble o# buying a ship$ or leasing a ship$ and haing the complications o#

hiring and controlling a cre%$ may not be economically iable/

In this #orm o# charter the charterer %ill hire the essel #or a prescribed period$ during %hichhe %ill operate it as his o%n ship$ a common reason #or time charterparties is as temporaryreplacement #or one o# the companies o%n indisposed essels/

! time charterparty is a contract %here the shipo%ner o##ers his ship and cre% #or hire/ 9heessel generally going %hereer the charterer directs/

9he contract is #or a period o# time$ during %hich the charterer is to hae the right %ithinagreed limits o# directing ho% the ship shall be used$ and is to pay #or her in proportion to the

time used/ 9he hire payable strictly on the dates agreed in the charter other%ise the shipo%ner may hae the right to %ithdra% his essel or not/

During the period o# the charter the charterer %ill bear the cost o# any delays due to shippingoperations$ eg/ Cargo port delays$ but %ill normally be compensated #or delays due to theoperation o# the ship$ eg/do%n time or o## hire/

It is not necessary #or the period o# hire to be #i2ed$ #re8uently a ship may be hired under atime charterparty #or a single oyage$ %hose duration is might be uncertain/ Here the charterer %ill bear the ris& and the cost o# any delays in the oyage/

9he contract o# a time charterparty is commonly dra%n up on one o# many pro #ormadistributed by shipping organi1ations or oil ma<or$ eg/ =altime +B0B or Shelltime

9he shipo%ner retains #ull possession o# their ship and in most cases is #ully liable #or thesa#ety o# the ship and its sa#e operation/

! time charterparty is a contract %here the shipo%ner o##ers the use o# his ship and cre% #or alimited period/ 9he essel generally going %hereer the charterer directs/ 9he remuneration#or a 9ime Charter is called Hire and is payable at an agreed rate per agreed time period/

9he hire is payable strictly on the dates agreed in the charter other%ise the shipo%ner mayhae the right to %ithdra% his essel )Mardor# Peach / !ttica Sea Carriers +B--* or not )9he=rimnes +B-.$ 9he !#ouos +B0*

In this #orm o# charter the charterer %ill hire the essel #or a prescribed period$ during %hichhe %ill operate it as his o%n ship/ ! common reason #or time charterparties is as temporaryreplacement #or one o# the companies o%n indisposed essels/

During the period o# the charter the charterer %ill bear the cost o# any delays due to shippingoperations$ e/g/ Cargo port delays$ but %ill normally be compensated #or delays due to theoperation o# the ship$ e/g/ Do%n time or o## hire/



It is not necessary #or the period o# hire to be #i2ed$ #re8uently a ship may be hired under atime charterparty #or a single oyage$ %hose duration might be uncertain/ Here the charterer%ill bear the ris& and the cost o# any delays in the oyage/

Asing a contract$ such as Shelltime, means that the charterer and the shipo%ner are #ully

a%are o# the e2pressed clause included in it and o# the implied proisions that courts haedecided should be so obious that they need not be included/ !ny other interpretations %ill beincluded in a list o# Special Clauses/

Clauses o# 9ime Charterparty It is important that all aspects o# the charterparty areunderstood/ Certain items hae a higher importance/

Shipo%ner " entitled to trans#er the o%nership o# the essel during the period o# thecharterparty/ Asually %ith charterer:s consent/

Responsibility and e2emption " by %ant o# due diligence any claim against the shipo%ner#or delay or loss$ damage to goods or loss o# #reight by the charterer has to be substantiated by

proo# that the shipo%ner %as negligent and did not ta&e reasonable steps to mitigate such lossor delay/

Period o# Hire " this is at the chartererGs option and can occasionally be e2tended at thechartererGs option

9ime o# Deliery " the implication that the ship %ill proceed #orth%ith or %ithout delay$ to the port o# loading$ is not a condition/ I# the shipo%ner brea&s this term o# the contract$ and the

essel delays be#ore proceeding to the port o# loading$ the charterer is entitled to damages/Where the charter does e2pressly proide #or the time %hen the charterers hae to giedirections #or the aailable berth to %hich the essel is to go to ma&e her deliery$ thenecessary in#erence is that directions hae to be gien on arrial at the port or be#ore arrial/

Present position " !t the date o# the charterpartyGs ma&ing or signing the position o# the ship isa condition o# the charterparty )=ehn / =urness +30*/

Cancelling date " 9he #i2ing o# a cancelling date in a charterparty merely gies %arning to theshipo%ner that non"arrial by that date may go to the root o# the contract$ so as to entitle thecharterer to rescind the agreement/ It does not reliee the shipo%ner o# his primary obligationto proceed %ith all conenient speed to the port o# loading/

Re"deliery place or range " is important to the shipo%ner$ he %ill not %ant the essel delayedor in a condition that re8uires time %asting repairs/ 9he location #or re"deliery is usuallydecided %ith a ie% to subse8uent charters$ and a breach o# such a clause entitles theshipo%ner to claim damages/

State on re"deliery " Where damage$ in e2cess o# #air %ear and tear$ has been in#licted onthe ship$ the o%ner is entitled damages$ though he cannot insist on the charterer e##ecting therepairs be#ore re"deliery$ he can claim #or loss o# pro#it %hile she is being repaired/



7inal 'oyage " ! charterer %ill be in breach i# he sends the ship on a oyage %hich he doesnot reasonably e2pect to #inish a#ter the stated period/ I# the charterer sends the essel on herlast oyage at a time %hen there is no e2pectation that she %ill be re" deliered %ithin areasonable time o# the end o# the period o# the charterparty$ and she is re"deliered late$ he isguilty o# a breach o# contract/ Where the charter period is #or a stated time e/g/ 0 or 3 months$

%ithout an e2pressed additional allo%ance$ the court may imply a reasonable allo%ance because o# the impossibility o# calculating e2actly %hen a oyage %ill end/

I# the charterer sends the essel on a oyage %hich it is reasonably e2pected %ill becompleted by the end o# the charter period$ the shipo%ner must obey the directions/ I# she isdelayed by causes #or %hich neither party is responsible$ hire is payable at the charter rateuntil re"deliery$ een though the mar&et rate may hae gone up or do%n/

Cancelling " 9he cancelling clause e2ists so that the charterer has the option$ under the termso# the contract$ to repudiate in certain circumstances/ ! cancelling clause is a #or#eiture clauseand so not to be applied lightly/ 9he shipo%ner is under a duty to send the essel to the port

o# loading een though it is impossible #or her to get there by the cancelling date$ I# he doesnot do so$ the charterer can sue #or any damage %hich may hae resulted/ E2penses incurreddue to non"arrial o# the essel can be claimed by the charterer #rom the shipo%ner/ 9here isno contractual right to rescind a charterparty unless and until the date speci#ied in the clausehas been reached/

Nationality o# a essel " is a %arranty and a change in circumstances %hich result in theregistered nationality o# the ship altering is a breach o# contract #or %hich the charterers mayobtain damages/

Class " is a condition at the time o# ma&ing the charter$ a breach o# %hich entitles thecharterer to treat the contract as discharged/ 9he loss o# class during the period o# the chartermay hae been caused by unsea%orthiness$ or some other breach o# the shipo%nerGsobligation$ #or %hich the charterer %ould hae a remedy/

=un&er 7uel " used by the essel must comply %ith the o%ner:s re8uirements$ sub<ect to costs being borne by the o%ner #or more e2pensie grades/ I# the price o# bun&ers is not mentioned$it is implied that both parties must pay a reasonable price$ i/e/ 9he mar&et price/

Permanent bun&ers " all ships carrying a minimum amount bun&ers as a sa#ety precaution$ thissmall 8uantity o# oil %ill be carried on board at all times and %ill thus reduce the cargo

carrying capacity o# the essel/

=un&ers on re"deliery " this enables the shipo%ner to &eep %ithin the prescribed sa#ety limits%ith regard to bun&ers on board at all times/

>ross6Net 9onnage " 9he olume o# the total under dec& space and the olume o# the cargocarrying capacity/ Capacity #or a particular cargo and registered tonnage are conditions o# thecontract %here the charterer has underta&en to load a #ull cargo/ Other%ise it is not and maynot een amount to a %arranty i# it is irreleant/

Speed " capability in &nots and the consumption o# #uel/ ! statement in the charterparty o# the

shipGs speed amounts only to a promise that the ship$ at the time o# ma&ing the charter$ is



capable o# the stated speed and not that she %ill continue to be capable o# it throughout thecharterparty/

Condition o# 'essel " there is in time charters$ an implied underta&ing o# sea%orthiness at the beginning o# the time o# the period o# hire/ Ansea%orthiness by itsel# does not entitle the

charterer to repudiate the contract/ He can only do so i# the delay in putting the de#ects right issuch as to amount to a #rustration o# the charterparty/

Cargo e2clusion " disallo%s the charterer #rom carrying all types o# commodities$ though it%ill normally e2clude only dangerous and no2ious substances/ 9he charterers must proide#or shipment$ cargo in the condition and o# the &ind usually shipped at the port in 8uestion orcargo o# a &ind described in the charterparty/ I# the charterparty merely describes the cargo to

be carried as la%#ul merchandise$ the charterers must proide cargo %hich may be la%#ullyshipped #rom the port o# loading and la%#ully carried to and discharged at the port ordered bythe charterers/

9rade limits " can be speci#ied in a time charter$ and %hen they are$ there must be a clearde#inition as to the area coered/ 9he charterparty may state that the charterer has the

priilege o# breaching the trading limits by paying an e2tra insurance premium/

(oad6Discharge " all ports attended during the charter are to be good and sa#e$ %here theessel can sa#ely lie al%ays a#loat )unless other%ise proided in the charterparty*$ this

phrase is concerned %ith the marine characteristics o# the place and is not to be con#used %itha sa#e port/

Sa#e Port? a port %ill not be sa#e unless$ in the releant period o# time$ the particular ship canreach it$ use it$ and return #rom it %ithout$ in the absence o# some abnormal occurrence$ beinge2posed to damage %hich cannot be aoided by good naigation and seamanship/

Charter Hire " is normally agreed on a contractual basis$ %here no sum has been agreed$ thehire must be e8uitable$ or sometimes the rate is calculated according to a standard scale li&ethe International 9an&er Nominal 7reight Scale/ ! charterer may set o## certain claims againsthire$ een %here the contract does not e2pressly gie him the right to do so/ I# the shipo%ner%rongly and in breach o# contract depries the charterer #or a time o# the use o# the essel$ thecharterer can deduct a sum e8uialent to the hire #or the time so lost/

Hire is only interrupted by the occurrence o# some eent %hich ta&es the ship o## hire under a

charter clause or the contract is #rustrated/

Hire payment " 9he charterer is liable to pay hire in adance/ 9he charterparty %ill state thecurrency to be used in accounting e/g/ Sterling or AS Dollars/

O##"hire clause " since it operates #or the bene#it o# the charterer$ %ill be construed in #aouro# the shipo%ner i# itGs meaning is not clear/ 9he clause proides that in the eent o# time

being lost in circumstances %hich preent the %or&ing o# the essel #or more than ., hours$ payment o# hire shall cease until she is again e##icient to resume serice/ I# the time loste2ceeds ., hours$ hire is not payable in respect o# the #irst ., hours/ I# a essel brea&s do%nand puts into a port #or repairs$ she is o## hire$ but hire %ill be payable again %hen she is #it to

sail again #rom that place$ and not #rom the time she reaches the location o# her brea& do%n/Hire recommences as soon as the ship is able to resume serice though she is not then in the



same geographical position and though in e##ect the charterer has to pay t%ice #or the same part o# the oyage/

Place o# !rbitration " in most charterparties is a##ected through (ondon or Ne% or&$ %ithorganisations li&e the (ondon Maritime !rbitrators !ssociation )(M!!* or la% courts li&e

the Commercial Diision o# the High Court o# ustice/

(ien " the right to hold property until a debt is paid o##/

Salage " the act o#$ and the money paid #or$ saing property o# a ship and6or cargo$ it is acontractual agreement and in time charters the a%ard is normally paid e8ually to theshipo%ner and the charterer/

!dditional Clauses " 9he additional clauses are agreed by the parties to the contract and arenormally appended as type %ritten sheets to the signed charterparty/

Foyage Charterparty

i* Contract #or the use o# the ship$ on a oyage or series o# oyages$ incarrying goods to be shipped by the charterer$ or in his name/ 9hecharterer agreeing to pay #or the ship either in proportion to the goodscarried$ or a lump sum #or the oyage$ or in proportion to the timeoccupied/

ii* Contracts similar to i*$ but by %hich liberty is gien to the charterer touse the ship #or the purpose o# ta&ing goods o# other shippers$ and tore8uire the master to gie bills o# lading #or goods so shipped/

! company needs a ship #or a ery limited period to carry a one"o## large amount o# cargo bet%een t%o speci#ic areas/ In this case their need is satis#ied by a oyage charter #rom a porto# loading to a port o# discharge/

9he shipo%ner retains #ull control and has #ull liability #or his ship/

9he oyage charterparty is a contract to carry speci#ied goods on a de#ined oyage bet%eent%o named ports/ 9he remuneration o# the shipo%ner #rom a oyage charterparty is Freight $calculated according to the 8uantity o# cargo loaded or carried$ or sometimes a lump sum#reight #or the complete oyage/

In the tan&er trade freight is usually calculated on Worldscale/

9o assist the shipo%ner in ma2imising the bene#it o# the oyage all oyage charterparties haecertain attributes that are based on the need to?

♦ Reduce time delays that are a result o# the action or inaction o# the charterer

♦ Charterer not being ready #or the ship

♦ (oading6discharge di##iculties or delays

♦ 9ardiness in releasing a loaded ship

♦ Proide a secure place to load or discharge the ship



♦ 9o proide the agreed amount o# cargo

Re"ucing /i$e .elays

9he most obious %ay o# ensuring that time delays are &ept to aminimum is to put an #inancial obligation on the charterer #or aoidable

idleness on his part/ 9his must not be ie%ed as a penalty$ more asli8uidated damages )Hardley / =a2endale +4,*/

So that both parties to the contract &no% %hat is e2pected o# themregarding the duration o# the oyage$ the oyage charterparty %ill includedetail proisions #or?

♦ Ho% much time is to be spent loading and unloading

♦When the agreed time should begin to count

♦Who has responsibility #or %hat delay

♦ 9he amount o# money due to the shipo%ner #or delay or the bonus payable to the charterer

#or #inishing be#ore the allotted time/

'ariations o# oyage charterparties can include?

♦ Gross For$$ %here the shipo%ner pays all the cargo costs

♦ Free In an" Out$ %here the charterer pays loading and discharging e2penses

♦ Port4 "oc6 an" )ert carters determine the commencement o# laytime and %here the

essel can be considered an arried ship/

Some #orms o# general charterparties are adaptable enough to encompassthese ariations$ though others are speci#ic charters #or a speci#ied trade/

Some commonly used oyage charterparties include? >ENCON #or drycargo$ Shelloy 4 and !S=!9!NK'O/

! speci#ic charter %ould be one li&e the North !merican >rainCharterparty +B-0 )NOR>R!IN*$ %hich coers the carriage o# grain andincludes special clauses on sel# trimming bul& carriers )Cl/+.* andSt/(a%rence Sea%ay 9olls )Cl .3*/

9he #undamental aspect o# a oyage charterparty is that since the #reight payable is not dependent on the duration o# the oyage but on the amounto# cargo carried$ it is the shipo%ner not the charterer that bears the cost o# any delays$ and it is incumbent on the charterer to proide the agreedamount o# cargo/

Clauses of a Foyage Charterparty

Dead%eight cargo " this is a guarantee o# the carrying capacity o# theship$ %ithout re#erence to any particular cargo proposed to be shipped$

%here re#erence to a particular cargo is made the guarantee %ill relate tothe capacity to carry that cargo/ I# the essel is chartered #or a lump sum



#reight but is incapable o# carrying the guaranteed capacity the charterer%ill be entitled to damages/

No% in position " is a stipulation as to the position o# the ship$ and is acondition o# the contract$ non"compliance o# %hich means the charterer is

entitled to treat the contract as repudiated and re#use to load/

E2pected ready to load " this e2press proision$ that the ship %ill beready to load$ is a condition/ ! breach o# %hich allo%s the charterer tore#use to load/ He is also entitled to damages unless the breach %ascaused by an e2cepted peril or i# the enture has been #rustrated/

Notice of Rea"iness

! Notice o# Readiness is a communication to the charterer$ shipper$receier or other persons as re8uired by the charter$ that the ship hasarried at the port or berth$ as the case may be$ and is ready toload6discharge )Charterparty De#initions +B5*/

9he NOR must be gien in accordance %ith the procedure in the NoticeClause or (aytime Clause in the C6P/9he NOR must be gien %ithin the laycan: period and be#ore laytimecan commence/

NOR usually be tendered during o##ice hours #rom Monday to Saturday)but chec& the C6P #or instructions*/9he C6P %ill normally state that laytime %ill commence a certain number o# hours a#ter NOR is gien or accepted/ I# this is not stated$ laytime %ill

commence as soon as NOR is gien/ ! #e% minutes delay in tendering ona Saturday morning could mean that laytime %ill not commence until9uesday morning$ een though cargo %or& starts earlier/

NOR usually need only be tendered at the #irst o# t%o or more load ports$unless the C6P proides other%ise/Most modern charterparties contain an e2pressed proision ma&ing a%ritten notice o# readiness obligatory at all ports o# loading anddischarging/

NOR may )in common la%* be oral$ but #or practical purposes )and

because nearly all C6Ps re8uire it* should be gien in %riting/ Nor may betendered by deliery o# a printed #orm or letter$ or by tele2$ #a2 or cable$unless the C6P proides other%ise/

NOR must be addressed to Charterers or their agent$ not the o%ner:sagent/

&rrived ship$ T 9o determine %hether the essel has become an 'arrived

ship$ %ithin the C6P terms the master %ill need to &no% %hether the C6Pis a 'port C/P$ or a 'berth C/P$% Which party bears the ris& o# delay#ollo%ing arrial o# the essel %ill depend on %hich type the C6P is/

9he agreed oyage is de#ined by the places named in the C6P #or loadingand discharging/ I# a port is de#ined as the place #or loading$ %ithout



stipulating a particular berth$ the C6P is a port C6P/ In this case the essel becomes an arried ship %hen?

• She has entered port limits;

• Is #ully at the Charterer:s disposal; and

• Is #ully ready to load in a place %here ships %aiting #or berth in the

port usually %ait/It is not necessary #or the essel to be on her loading berth to be an arried ship: under a portC6P/ !ll delays in berthing %ill be #or the Charterers: account$ and this is the more #aourableC6P #or o%ners/ ) &sbatankvoy$ (""onvoy and )eepeevoy are e2amples o# port C6P*/I# a particular berth is de#ined as the loading place$ the C6P is a berth C6P/ In this case theessel becomes an arried ship only %hen she arried at the named berth/ )Shellvoy *,+ and

are e2amples o# berth C6Ps*/9o protect themseles o%ners %ill o#ten?

- Insert a -aiting for )erth clause; or - Insert the %ords 'whether in berth or not$, 'whether in port or not$ or

some other protecting phrase in the (aytime Clause to ma&e it clearthat time can count as laytime once the essel is at the customary%aiting place/

Sometimes doubt arises as to %hether the ship is at the place %herenotice should be gien/ In such a case it %ould seem prudent to #ollo%the adice gien by the <udge in the 9imna Case?

. have considerable sympathy with the master in his predicament% t is a

good working rule in such situations to give notice of readiness and to go

on giving notices in order that when later lawyers are brought in, no one

shall be able to say 0if only the master had given notice of readiness,laytime would have begun and the owners would now be able to claim

demurrage0% 9he 9imna +B-5*

It *oul" terefore )e sensi)le4 *ene+er in "ou)t4 to ser+e notice of

rea"iness on te carterers,

I# the charterer does not hae notice$ and is not other%ise a%are o# thereadiness o# the ship to load or discharge$ laytime may not begin/

Wen in "ou)t a)out Notice of Rea"iness 9 AS

The ship is in all respects ready to load$ 1 means the essel is sea%orthyand in eery %ay #it to carry the particular cargo on the oyagecontemplated by the Charterer/ 9he essel must be #ully at the Charterer:sdisposal$ i/e/ With derric&s or cranes ready #or operation$ holds or tan&scleaned$ prepared and sureyed$ #ree prati8ue and customs clearancegranted$ etc/ T unless the C6P allo%s other%ise$ %hich it may do by theinclusion o# a protecting phrase/!t common la% the duty to proide a sea%orthy ship on presentation %asabsolute$ i/e/ No e2ceptions %ere allo%ed/ Ho%eer$ most modern C6P

#orms hae reduced the absolute obligation to a duty o# e2ercising duediligence:$ i/e/ Doing eerything %hich a prudent shipo%ner can





could not sa#ely load in the port$ unless this practice is a custom o# the port/

I# the ship is to load in a tidal harbour or rier %ith a bar$ and her loadingis being completed at neap tides$ the captain is not entitled to sail %ith

less than a #ull cargo$ though that is all %ith %hich$ at the then state o# thetides$ he can get out/ He must complete his cargo and %ait #or the springtide that %ill enable him to leae/

!l%ays a#loat " is concerned e2clusiely %ith the marine characteristicso# the port and re8uires that the essel shall at all times be %aterborne/ It%ill not <usti#y a essel in declining to go to a berth %here she cannot liecontinuously al%ays a#loat$ i# she can do so partly be#ore and a#ter neaptides/

'essel shall proceed " in the absence o# e2press stipulations to the

contrary$ the o%ner o# a essel implicitly underta&es to proceed in thatship by a usual and reasonable route and %ithout unreasonable delay/ 9heroute is normally the direct geographical route$ but other routes are

permissible %here it can be proed in that case/ ! route may be a usualand reasonable although only #ollo%ed by ships o# a particular line andrecently adopted/ It is <usti#iable to deiate in order to sae li#e or tocommunicate %ith a ship in distress or i# it is inoluntary$ e/g/ !s a resulto# necessity/ In the absence o# an e2press clause$ it is not <usti#iable i#only to sae property o# others/

#eviation clause " clause allo%s the shipo%ner to proceed on a courseother than usual and reasonable to sae property/

Reaching the agreed destination " stated in the charterparty may be anarea such as a rier or port$ or a precise place such as a particular berth$%har#$ doc& or mooring/ !n area may be stated %ith a proiso that$ onarrial there the ship is to proceed to a particular port nominated by thecharterer at a later date/

9he three main categories o# stated destinations are those included in the#ollo%ing charterparties?

♦ Bert Carter When a berth or %har# is named as destination$ or is to be named later$ the

ship reaches the agreed destination on berthing alongside/ Een %here there is congestion in

the port$ bad %eather or un#aourable tides etc/$ any ris& o# delay in going alongside #alls on

the shipo%ner$ #or laytime %ill not start to count until the ship is alongside the berth

nominated by the charterparty/

♦ .oc6 Carter When the charterparty names a doc& as the destination$ or proides #or a

doc& to be named later$ the ship becomes an arried ship on entering the doc&/ 9he same

principle applies i# a 8uay or roadstead is named/

♦ Port Carter When a port is named$ the ship has reached the agreed destination %hen she

has reached the place$ %ithin the commercial area o# the port$ %here ships proposing to load

or discharge her type o# cargo usually %ait$ at the disposal o# the charterers/





♦ Non"e2istence o# cargo )Hills / Sughrue +,3* or by causes preenting a cargo$ %hen

obtained$ #rom being transmitted to the port o# loading such as?

♦ Ice )>rant / Coerdale +,*

♦ =ad %eather )7en%ic& / Schmal1 +3*

♦ Rail%ay delays )!dams / Royal Mail Steam Co/ +4*

♦ >oernment orders )7ord / Cotes%orth +3*/

9he charterer must per#orm his part o# the operation o# putting cargo on board$ unless e2cused by e2press e2ceptions$ the causes e2cepted being proed not merely to e2ist$ but also directly inoled in preenting theessel being loaded/ I# the charterer proes that the usual and propermethod o# loading %as preented by e2cepted peril$ the onus shi#ts to theshipo%ner to proe the e2istence o# an alternatie method/

Freigt

4reight is the remuneration payable by Charterers to o%ners #or the per#ormance o# the contracts$ and may be called charterparty freight%

7reight must be paid$ under common la%$ on deliery o# the cargo to theconsignee or his receier at the agreed destination$ in the absence o# anyterm to the contrary/

7reight is normally payable in accordance %ith the terms o# a 7reightClause %hich stipulates the amount o# #reight$ the time #or payment andthe method o# payment/

7reight is o#ten payable under the C6P terms partially in adance$ e/g/ Onloading or on the issue o# =6(/

7reight may depend in amount on the inta&en %eight o# cargo$ theoutturn %eight$ the cargo olume$ cargo alue$ or on some otherstipulated basis/

7reight is not payable unless the entire cargo reaches the agreeddestination$ een i# not the carrier:s #ault$ e/g/ I# the oyage is abandoneda#ter a general aerage act/ )O%ners usually protect themseles byinsuring against possible loss o# #reight$ so that the #reight insurers

become a party to the common adenture: in >eneral !erage cases*/

7reight is not payable %here o%ners hae breached the contract$ but%hen cargo is deliered damaged$ #ull #reight is normally payable and aseparate claim is presented by the cargo o%ners #or damage/

I# #reight is payable in adance$ it is collected by the port agent at theloading port be#ore issue o# a #reight paid: bill o# lading/

I# #reight is payable on discharge$ it is collected by the port agent on presentation o# an original bill o# lading by the receier/



7reight is not payable on deliery i# cargo has lost its specie:$ i/e/Changed its physical nature/

7reight may be o# the #ollo%ing &inds?

• Charterparty freight )described aboe*;• 2umpsum freight;

• )ill of lading freight;

• &dvance or pre5paid freight;

• Pro5rata freight;

• &d valorem freight;

• )ackfreight; or

• #eadfreight /

2ump sum freight not calculated on cargo carried$ but on the oyage/ 9o

earn lump sum #reight$ either the ship must complete the oyage$ or thecargo must be transhipped and deliered by the shipo%ner to itsdestination/

)ill of lading freight is #reight calculated on shipped or inta&en %eights$ as stated in a =6(and may be payable in adance or at destination/

&dvance freight T is deemed to be earned as the cargo is loaded and may be the total #reight or an agreed proportion o# it$ payable in adance at theloading port$ the balance being payable on deliery o# the cargo/It is not re#undable i# the essel and cargo is lost/9his type o# #reight is commonly re8uired %here cargo is shipped under atrans#erable =6($ as buyers o# goods coered by a =6( o#ten re8uire a'freight paid$ )/2%

It is also o#ten demanded by carriers o# dry cargoes and is usual in theliner trade/

Pro5rata freight T is payable in common la% %here only part o# theoyage has been completed$ e/g/ When the oyage is abandoned#ollo%ing an outbrea& o# %ar or an accident$ and cargo is discharged atan intermediate port$ or i# the essel had to leae port because o# onset o#

ice/

&d valorem freight is #reight charged as a percentage o# the alue o# ashipment$ usually o# high"alue goods andIs not normally used in oyage C6Ps$ generally being con#ined to linershipments/ !n ad valorem )/2 is one on %hich the alue o# the cargo isrecorded and under %hich the o%ner %aies his right to limit his liabilityto the goods o%ner under the pac&age limitation proisions in thecontract$ usually in return #or the higher

&d valorem freight%

=ac& 7reight " normal deliery at the port o# destination may sometimes be preented by some cause beyond the control o# the master e/g// !



#ailure on the part o# the cargo o%ner to ta&e deliery/ In such a case themaster may and must deal %ith the cargo #or the bene#it o# its o%ner bylanding it$ carrying it on$ or transhipping it$ as may seem best/ 9heshipo%ner may then charge the cargo o%ner to coer the e2penses thusincurred #or his actions and e##orts/

Dead#reight " the name gien to the damages to %hich a shipo%ner isentitled #or the chartererGs breach o# the contract in #ailing to load a #ullcargo/ 9o sustain such a claim$ the shipo%ner must proe that thecharterer or shipper %as a%are that the essel could carry more cargo and%as gien reasonable opportunity to proide the balance be#ore theessel le#t the loading port/ I# the charterer #ails to supply a completecargo$ the shipo%ner is not only permitted to ta&e reasonable steps to #illthe ship %ith other cargo$ he may be obliged to do so in mitigation o# hisdamages #or dead#reight/ 9he shipo%ner is not entitled to dead#reight

because$ by the method chosen$ less cargo can be loaded than by another

usual method/

Where the ship ta&es on board all she can ship$ though in #act she loadsless than a #ull cargo$ the #ull #acts hae to be considered be#ore arriingat a conclusion as to %hether or not the charterer is liable #or dead#reight/

7reight Payable " When there is no proision to the contrary$ #reight is payable on the deliery o# the goods/

1oa"ing>.iscarging Costs

>ross 9erms " the shipo%ner pays all the ma<or costs o# loading anddischarging/ 9he charterer has only the cost o# deliery to the ship andthe cost o# heay li#ts loaded into the ship/

7/I/O/ )7ree In6Out* " the charterer pays the total loading and discharginge2penses/

1ayti$e

(aytime is the time allo%ed to Charterers #or cargo operations/

(aytime is de#ined as the period of time agreed between the parties during which the owner

will make and keep the ship available for loading/discharging without payment additional to

the freight%

(aytime should$ in the interests o# o%ners$ start as soon as practicable/

(aytime may be separate #or load and discharge ports$ or reversible )or all purposes$ *; themaster should chec& the C6P/

(aytime may be o# three types?

• #efinite laytime T is stated in the C6P as a de#inite period o# time$ e/g/

'6 si"! days78 or $+9 running hours$%



• Calculable laytime T is determined by ma&ing a calculation #rom

in#ormation in the C6P$ e/g/ Where a cargo %eighing .5$555 tons is to be loaded at a rate o# +5$555 tons per day$ the laytime is . days/

• ndefinite laytime T the C6P may state that the cargo is to be loaded

%ith 'customary despatch$ or 'customary uick despatch$ or 'as fast

as the vessel can receive$%

(aytime can not start to count against Charterers until 0 conditions are #ul#illed?

• 9he essel has become an 'arrived ship$ %ithin the terms o# the C6P;

• 9he essel is in all respects ready to load6discharge; and

• Nitice o# readiness has been sered on Charterers or their agent )or$ in

#e% cases$ such as under the Shellvoy + C6P$ %hen NOR has been received by Charterers or their agent/

O*ners Res!onsi)ility

9he shipo%ner is 8uite #ree to e2clude his liability #or loss or damage tocargo in any %ay that he thin&s #it %ith an e2press clause/ In mostcharterparties the o%ner is responsible #or loss or damage to goods only%here the loss has been caused by the management o# the cargo$ orpersonal %ant o# due diligence to ma&e the ship sea%orthy/

9he o%ner is not responsible #or loss by any other cause$ een neglect or#rom unsea%orthiness o# the essel on loading or commencement o# theoyage or at any time/

Oter Clauses

♦ Clause Paramount " identi#ies the %ording o# a clause to be inserted in the bill o# lading the

authority o# the Hague Rules$ or the Hague 'isby Rules$ or Hamburg Rules/

♦ (ien Clause " (ien is the name gien to the shipo%nerGs right to retain possession o# the

goods carried on board his ship as security #or payment o# #reight and other charges/

♦ Cancelling Clause " may e2ist in a charterparty so that the charterer has the option$ under the

terms o# the contract$ o# repudiating in certain circumstances/

♦ >eneral !erage " money paid out by all inoled in the contract #or losses %hich arise in

conse8uence o# e2traordinary sacri#ices made or e2penses incurred #or the preseration o#

the ship and6or cargo/ 9he amounts due are proportional to the interest that the participants

had in the enture/

♦ Indemnity " the shipo%ner maybe entitled$ either by implication o# la% or by e2press

agreement$ to be recompensed by the charterer #or loss caused by the chartererGs actions/

9his recompense in monetary terms is based on the total #reight due/

♦ >eneral Stri&e Clause " this clause is needed to e2plain the limits o# the chartererGs liability

%ith regard to stri&es/ 9his e2ception only coers stoppages arising out o# trade disputes/

#mportance of Time and Cargo

When the shipo%ner and charterer hae agreed on the #reight rate to be paid$ it becomes o# paramount importance that the conditions in the

charterparty regarding the times allo%ed #or loading6discharging and theamount o# cargo to be loaded$ are strictly adhered to$ other%ise the



1oa"ing Port .iscarge Port'essel !rries Cancelling day

A

$aydays $aytime 'emurrage

B

'espatch

'essel Sails

shipo%ner:s calculation %ill count #or nothing and he %ould not beoperating at an economic rate/

9o increase the charterer:s a%areness o# the importance o# time andcargo$ there are clauses included in the charterparty that state he agrees to

pay )li8uidated damages not penalties* 7or any in#ringement

.e$urrage- the cost per day o# any e2tension o# time aboe that agreed )laytime*

#or loading and discharging

.ea"freigt? the cost applied to any shortage o# cargo belo% the agreed #igure

.es!atc? a repayment to shipper6charterer #or releasing the ship 8uic&er than

contracted

9his is o# an essence to the shipo%ner$ he %ill %ant his ship loaded$discharged and o## the charter as soon as possible$ and then on to the ne2tone/

Mechanical brea&do%ns$ logistical and naigational problems are to hisaccount$ there#ore he has to &eep a &een eye on any delays$ trying todeduct them #rom the laytime in port$ or hustling the ship to ma&e up anylost time at sea/

9his is %here the commercial aspects o# ship operations could impingeon the sa#ety consciousness o# the shipboard teams/

Co$$ence$ent of 1ayti$e

It is the general rule that a essel must be an arried ship be#orelaytime can begin to count/ ! oyage charterparty %ill normally proide

#or the beginning o# laytime by the inclusion o# an e2pressed clausestating %hen and ho% it should start/

Whether or not such a clause is contained in a charterparty$ the #ollo%ingre8uirements must be satis#ied be#ore laytime can begin to count?

♦ 9he ship must hae reached the agreed destination

♦ 9he ship must be ready to load or discharge

♦ Notice o# readiness must be gien$ a#ter arrial$ to the charterers or their agents/



Res!onsi)ilities for "elays "uring layti$e

I# disputes are to be aoided$ the charterparty should indicate clearly thetypes o# contingencies that are allo%ed to be %ritten o## as non"laytime/9he most obious problem %ill be oer the de#inition o# time/

(aytime clauses use arious e2pressions such as?

♦ Day

♦Weather %or&ing day

♦ Running day

In general$ the e2pression day$ %ithout #urther 8uali#ication$ means

continuous days/ E/g// 9hursday to 9uesday %ould count as 4 dayslaytime )NO/ 1A0.A0S* on the basis o# continuous days/

Where there is an established custom o# the port not to %or& Sundays$laytime %ill be interrupted and a Sunday %ould not count to%ardslaytime/

In <udgement on the case o# Cochran / Retburg it %as stated that i# thecase %as decided on the legal interpretation o# the clauses in isolation$the e2pression days %ould mean running days and hence includeSundays and holidays/ 9he usage o# the %ords in the clause %as admittedin order to establish their meaning$ and the term days %as held to mean%or&ing days$ and the shipo%ner could not claim #or the period the

portGs custom house %as o## duty and on holiday/

Running hours or running days " is used to denote consecutie hours$ by day and night$ both during and out o# normal %or&ing hours$ orconsecutie days o# ., hours )Nielson Co / Wait$ ames Co +4*$that is days %hich #ollo% one immediately a#ter the other )CharterpartyDe#initions +B5*/

Sundays and Holidays E2cepted )SHE* " generally charterparties proide that these days do not count to%ards laytime$ and the e##ect isthat een i# %or& is done on these days by arrangement$ they do not count)Nelson / Nelson +B5*/ E2cept %here there is an e2press condition thatthey do count/

!#ter laytime has begun$ there may be bad %eather %hich interrupts or preents %or&$ and the e##ect o# bad %eather then depends on the%ording o# the laytime clause$ %hich may re#er to?

♦Weather %or&ing days

♦Weather permitting



Weather permitting or %eather %or&ing day is a %or&ing day that isnot unaailable to %or& because o# %eather$ that is a day on %hich the%eather permits the releant %or& to be done$ %here the %eather does

preent %or& #rom being carried out$ that time does not count to%ardslaytime/ 9he calculation o# laytime must ta&e into account the type o#

laytime clause %hich applies$ to decide %hether a day should count as acomplete day #or laytime or %hether the part o# the ., hours that has

been a##ected by the %eather should be omitted #rom the total/

Luestions oer the responsibilities o# each party to the contract oerdelays must be #ound in the charterparty/ Clauses included in the te2t %illgie re#erence to speci#ic instances o# liability?

♦ (oading hold"ups due to machinery brea& do%ns could be #or the shipGs account )and not

count to%ards laytime* i# it is the #ault o# the shipGs gear/ Or it could count as laytime i# the

charterer is proiding the e8uipment/

♦ Stri&es in a port can be e2cluded #rom laytime calculations$ %hereas$ stri&es only a##ecting

the ship in 8uestion could be included in the total laytime/

.e$urrage

When the agreed time #or loading or discharging$ %ith allo%ances #or%eather$ holidays$ etc/$ has been used$ the shipo%ner should be able tosail or$ i# discharging$ is due his ship bac& #or #urther employment/Ho%eer$ this %ill not al%ays be possible because it is probable that thecargo has not all been loaded or$ at the discharge port$ there may still becargo in its hatches %aiting #or o##"loading/

9here#ore the shipo%ner should be able to obtain payment #or the delay

o# his essel$ and conersely the charterer should be re%arded #orreturning the essel to the o%ner be#ore the prescribed period has ended/

9he agreed additional payments #or the delay are called demurrage andthey are paid by the charterer to the shipo%ner on a day rate basis$ %ith

pro rata payment #or parts o# the day/

It is the money payable to the o%ner #or delay$ #or %hich the o%ner is notresponsible$ in loading and6or discharging a#ter the laytime has e2pired/

! ery important point regarding demurrage is that$ %hen a charterer hasused the laytime due #or loading6 discharging all time counts #rom thenon to%ards the damages$ %ith no e2ceptions as to %eather$ Sundays$Holidays or %hateer/

.es!atc

Despatch is the money payable by the o%ner o# the ship to the chartereri# the ship completes loading or discharging be#ore the laytime hase2pired/

9his bonus payments is #or not using all the allotted laytime/ It is paid bythe shipo%ner to the charterer as per the rates included in the

charterparty/



Despatch can be paid #or either?

♦ !ll time saed the time saed to the ship #rom completion o# loading6discharging to the

e2piring o# the laytime including periods e2cepted #rom laytime/

♦ !ll laytime saed the time saed to the ship #rom completion o# loading6discharging to the

e2piring o# the laytime e2cluding any notice time and periods e2cepted #rom laytime/

In the absence o# an e2pressed clause in the charterparty e/g/ 0Ten

running days on demurrage%%%%%will be allowed$ demurrage %ill be paid#or a reasonable time and the charterer may not detain the esselinde#initely as the shipo%ner %ill be entitled to rescind the contract/



$aytime Guestion

Charterparty States?♦ Cargo shall be loaded at 455 tonnes per hatch per day$ %eather permitting$ Sundays and

Holidays e2cepted/

♦ (aytime shall commence at + p/m i# notice o# readiness is gien be#ore noon$ and at 3 a/m

ne2t %or&ing day i# notice gien during normal o##ice hours a#ter noon/

♦ Demurrage shall be paid at 455 per day and pro rata #or any part o# a day$ despatch at hal#

demurrage #or all time saed/ Normal o##ice hours are #rom 5B55 to +-55 hrs/

State$ent of facts,Wednesday 0rd/ ++55 'essel arried in port/

.555 Notice o# readiness tendered andaccepted/

9hursday ,th/ 5-55 Wor& commenced in all , hatches toload +,555 tonnes o# cargo/

Monday th/ Public Holiday/9hursday ++th/ 5B55 " +355 Rain stopped loading/9uesday +3th/ ..55 (oading Completed/

Asing the in#ormation supplied calculate the amount o#

Demurrage or despatch due and to %hom it is payable/

1ayti$e Ans*er

(aytime +,555 V +,555 V - days4552, .555

.ay .ate /i$

e

Re$ar6s 1ayti$e /otal .e$urrage

.ay

s

Hour

s

.ay

s

Hour

s

.ay

s

Hours

Wed 0rd .555 NOR gien6accpted9hu ,th +055 (aytime Comm 5 ++ 5 ++7ri 4th + 5 + ++Sat 3th + 5 . ++Sun -th E2cepted 5 5 . ++Mon th Holiday E2c 5 5 . ++9ue Bth + 5 0 ++Wed +5th + 5 , ++9hu ++th 5B55"+355 Rain 5 +- 4 ,7ri +.th + 5 3 ,

Sat +0th .555 (aytime ends + 5 - , ' DSun +,th Not E8ce!te" + 5 , & D



Mon +4th + 5 B , 5 D

9ue +3th ..55 Completed Cargo 5 .. +5 . 7 5

Demurrage V 0 .6., 2 455 V +4,+/33Paid by the charterer to the ship o%ner/



SAFE POR/

! port %hich$ during the releant period o# time$ the ship can reach enter$remain at and depart #rom %ithout$ in the absence o# some abnormaloccurrence$ being e2posed to danger %hich cannot be aoided by goodnaigation and seamanship )=IMCO Charterparty De#initions +B5/

9he port is not sa#e$ in the absence o# any e2press agreement to thecontrary$ unless the ship can enter it as a laden ship carrying the cargo%hich is to be deliered to the consignee there/

! port may be rendered unsa#e #rom political matters$ such as %ar and bloc&ade as %ell as #rom natural dangers o# the sea$ essels sin&ing in#air%ays and authorities closing the port due to congestion$ as long as the

prohibition is not merely temporary/

9he chartererGs obligation to nominate a sa#e port usually arises under ane2press clause in the charterparty/

9he essel to be employed only bet%een good and sa#e ports or places%here she can sa#ely lie////)=!(9IME +B0B Clause .*/

Many oyage charters lac& such an e2press clause in their printedersions$ eg >encon$ Polcoaloy$ and a #e% more contain a diluted #ormo# sa#e port obligation %hich stipulates only that the charterer shall usedue diligence to proide a sa#e port$ eg Shelloy . and Shelltime 0/

9here is$ ho%eer$ an implied condition in a charterparty that thecharterer %ill name a sa#e port/

I# a charterer names an unsa#e port$ the shipo%ner is not entitled torepudiate the charterparty$ but must proceed to the nearest sa#e port$ anddischarge the goods there/

I# the charterer names an unsa#e port$ he %ill be liable to the shipo%ner#or any damages caused to the ship by sailing there$ unless the masterought to hae been a%are o# the danger in the port named$ and e2ercisedhis right o# proceeding to the nearest sa#e port/

9he normal de#inition o# sa#e port is deried #rom?

//a port %ill not be sa#e unless$ in the releant period o# time$ the particular ship can reach it$ use it and return #rom it %ithout$ in theabsence o# some abnormal occurrence$ being e2posed to danger %hichcannot be aoided by good naigation and seamanship///

9he doctrines o# a sa#e port apply e8ually as %ell to a sa#e berth and there8uirements #or a time charterer to proide good and sa#e ports carries%ith it the obligation to nominate sa#e berths %ithin such ports/



9he releant period o# time///9he contractual promise is that the port %ill be sa#e %hen the ship has to use it/ I#$ un&no%n to anyone$ access to the port is in #act bloc&ed by a submerged %rec& at the time the order isgien$ the port %ill not be prospectiely sa#e and i# damages result thecharterers %ill be liable/

=y %ay o# contrast$ i# the hidden obstruction occurs a#ter the order isgien but be#ore the ship arries$ the time charterer is obliged to do all hecan to protect the ship #rom the ne% danger/ 9his secondary obligationdoes not arise i# the charterer has no means o# &no%ing about the ne%une2pected and abnormal occurance/9hus it is #or shipo%ners$ %hose ships are damaged in incidents o#secondary obligations$ to proe that the Charterers ought to hae #oreseenthe danger presented by the interening danger/

! temporary danger or obstruction %ill not render the port as unsa#e i#

the carrier could %ait a reasonable %hile #or the obstruction to beremoed and then proceed into the port/

Neap tides do not ma&e a port unsa#e/

9he la% does not re8uire the port to be sa#e at the ery time o# theesselGs arrial/ ust as the ship may encounter %ind and %eatherconditions that delay her on oyage to the port$ so may she be delayed bysimilar conditions on her arrial that put bac& her entry into the port$ andthe charterer can not be held responsible #or one delay and not the other/

! port is not necessarily unsa#e <ust because a essel might hae to leaeit on the approach o# bad %eather$ #or it to be sa#e though$ there must be?

!* an ade8uate %eather #orecasting system=* ade8uate aailability o# pilotsC* ade8uate searoom to manoeureD* an ade8uate system #or ensuring that the searoom %as al%aysaailable/

! port must be sa#e in its set up$ %hich consists o# the proisions o#

e8uipment such as properly #unctioning naigation lights and part inserices rendered by tugs$ pilots and meteorological stations$ or the portmust ma&e it clear to Masters that they must themseles &eep a %ireless%atch/

The particular ship////! port can be held unsa#e #or a particular ship$%here it might be the largest eer to call at the port$ and could not enter%ithout tugs$ that %ere not aailable locally/

<each it, use it and return from it ///When something occurs that stops theessel #rom arriing at the port$ eg ice/



It is immaterial in point o# la% %here the danger is located$ though it isobious that the more remote it is #rom the port$ the less li&ely it is tointer#ere %ith the sa#ety o# the oyage/

9he charterer does not guarantee the the most direct route to the port is

sa#e$ but the oyage he orders must be one %hich an ordinarily prudentand s&il#ul master can #ind a %ay o# ma&ing in sa#ety/

I# access to the port is dangerous$ o%ing to the operation o# submarinesin %artime$ the port may be unsa#e$ een though there is no danger in the

port itsel#/

7or a port to be sa#e it must be one that she can sa#ely get out o#$ eg/ Not be obstructed by bridges %hen sailing out in ballast/

n the absence of some abnormal occurrence%%%

!n eent is not abnormal merely because it has hardly eer happened be#ore/ Roc&et attac&s in =eirut %ere not considered abnormal$ as they%ere an inherent #eature o# that port in +B-/

=ood navigation and seamanship/I# the e##ectie cause o# the damagesu##ered by a ship is her o%n poor naigation then it #ollo%s that thesa#ety or lac& o# sa#ety o# the port is beside the point/



OPERA/ING COS/S

9he allocation o# costs is based on?

♦ 9ype o# charterparty

♦ Clauses o# charterparty

Costs in running a ship can be subdiided into t%o main categories?

♦ Operating costs " %hich e2ist i# the ship is %or&ing or not

♦ 'oyage costs " %hich are incurred %hen the essel is actually %or&ing

=ased on this$ the costs inoled in a charter can be allocated/



.e$ise or Bare)oat Carter!arty

9he shipo%ner is responsible #or the #inancing o# the ship and the demisecharterer is normally responsible #or all other e2penses$ as though he %asthe o%ner/

/i$e Carter!arty

9he shipo%ner:s hire rate %ill be based on his o!erating costs/ In a badmar&et$ the hire may not coer all these e2penses

♦ 7inancing o# the ship

♦ Hull and machinery insurance )i# any*

♦ PI coer$ including additional pollution insurance

♦Membership o# re8uired organisations

♦ Cre% %ages and e2penses$ such as trael$ #ood etc/

♦Maintenance

♦ (ubricating oils

♦ Dry"doc&ing e2penses

♦ Statutory certi#ication

♦ Classi#ication

♦Management

♦ 'ie%s o# the current and #uture mar&et/ 9his is also related to the lay upX or tradeX

decision/

9he charterer usually pays #or the +oyage costs>running

♦ 7uel

♦ Port and harbour charges or dues

♦ 9ugs and pilots

♦ (oading and discharging e2penses

♦ Cre%:s oertime$ i# used #or cargo purposes

Once the charterer has ta&en oer the commercial operation o# the shipthe shipo%ner is paid hire: %hether the ship is carrying cargo and%or&ing or not/

9he charterer:s main operational concern is that the ship?

♦ Perfor$s as %ell as the charterparty states in speed$ carrying capacity$ load6discharge rates$

heating6cooling o# cargo etc/

♦ Has a cre* %ho are e2perienced and reliable

♦ .oes not e8!erience off9ire;$ due to some mechanical or logistical reason$ #or e2ample$

engine mal#unction or no ship:s captain$ and the ship is incapable o# %or&

♦ Proides e##ectie co$$unication



Some charterparties contain a clause stating a minimum period o# time )e2ample ., hrs* be#ore o## hire: is actiated/

Voyage Carter!arty

9he shipo%ner %ill pay #or almost eery item o# oyage e2pense

♦ Operating costs

♦ 'oyage costs

He %ill also hae to estimate cost o# mobilising his ship$ positioning cost$to the load port and de"mobilising$ a#ter he has #inally discharged thecargo$ to another loading area/9he operating cost o# the time ta&en to load and discharge his ship mustalso be ta&en into account/ In addition the oyage costs o# this periodmust be included i/e/ Port charges$ pilotage$ tugs$ #uel$ oertime etc/Ased/

Once he has calculated the total cost and the li&ely period o# time thecharter %ill ta&e to complete$ he can arrie at a #reight rate$ dollar pertonne$ #or the speci#ied cargo/

9he charterer %ill o#ten be responsible #or load6discharge costs$ e2cept%hen the o%ner pays e2tra to ensure the essel leaes be#ore the end o#laytime/

9he charterer:s concerns are usually based on the 8uality and 8uantity o#cargo output/

In addition there %ill be interest %ith regard to any delay in port$ thatcould be attributed to the ship$ %hich could e2tend the essel:s stay andincur demurrage/

9he #reight rate #or tan&ers is normally calculated by Worldscale %heremost o# the port charges are allo%ed #or/

Once he has calculated the total cost and the li&ely period o# time thecharter %ill ta&e to complete$ he can arrie at a #reight rate$ dollar pertonne$ #or the speci#ied cargo/

7rom the #ollo%ing e2ample$ i# a ship could charge its #reight on thecargo carrying section o# the oyage alone it %ould proe ery much lesse2pensie #or the shipper/

! mar&ed di##erence in #reight #or the shipper to choose bet%een

E0ample

The 2*trathclyde Fenture is presently at erbi! negotiating for a FoyageCharterparty from AE( to "AR"# ,ith a full cargo of 1;??? tonnes of grain!loading at :?? tonnes per day and discharging at :??? tonnes per day.

The ne0t cargo ,ill be loaded at berg.



The ship has a daily operating cost of I1<!??? and uses <? tonnes of fuel per dayon passage 4&uel at I9?/tonne5 6 4%perating Cost includes profit element5! and thecontract is fio 4free in and out 6 all loading and discharging costs! including portfees! paid by charterer5.

'istance Table4in days5erbi to Ajen B daysAjen to "arbi 1? days

$oading Time J 1;???/:?? J days'ischarging Time J 1;???/:??? J days

Total days spent << days

?perating Cost F days x cost F >> x ->GGG F H>/0GGG

Doyage Cost F days x oil rate x oil costF -/ x &>GxG' F H>GGG

Total Cost J I<9<!???

&reight Rate J Total Cost/Cargo Capacity J <9<!???/1;???

J I1:.< per tonneCargo Foyage Cost

#f the ship could be solely costed per cargo voyage@oading at A ; daysDoyage from A to $ -G days3ischarging at $ = days

(otal (ime - days

?perating Cost F - x ->GG F H>-/GGGDoyage Cost F -G x &>GxG' F H-GGGTotal Cost I<B!???

&reight Rate J <B???/1;??? J I1 per tonne

E0ercise 6 Choice of Charter

'essel is discharging in 9allin and has t%o charterparty options?

Option One " 'oyage Charterparty #rom Poland to Mauritius %ith .5$455tonnes o# coal at .3 per tonne )7IOS* " total distance +5$55 miles iaCape )Sue1 too e2pensie*/ (aytime . days to load$ 0 days to discharge/

Option 9%o " 9ime Charterparty ,5 days at ++$.45 per day deliery StPetersburg and redeliery !nt%erp6Hamburg Range )!H!*

7inance Cost )Capital and Interest* " -$555 per day



Operating Costs )Cre%$ insurance$ maintenance etc/* " ,$555 per day7uel Costs " +4 &nots at .4 tpd at +55 pt/

Which charterparty proides the best return and e2plain %hat other itemsyou %ould loo& #or/



COMM2NICA/E REPOR/

REA' A*> TE$$

Communication is ital$ and it must be understood by the ship:s master$o##icers and cre% that they must?

♦ REA. statutory$ company and commercial documents that are carried on board the ship

♦ AS the ship management o##ice$ operators$ superintendents and managers #or clari#ication

or additional in#ormation

♦ /E11 the ship management o##ice$ operators$ superintendents and managers o# all incidents

that could$ or hae$ a##ected the ship and its operation/

/E11 " Example One

,$555 d%t Product 9an&er on 9ime Charter )shelltime , %ithamendments* #or about a period o# one year/ !#ter many oyagescarrying petroleum products the essel %as #i2ed to carry a cargo o#egetable oil/

On arrial at the loading port the ship %as inspected by the shipper andthe charterer:s sureyor/ 9he condition o# the tan&s %ere consideredunsuitable #or the carriage o# egetable oil due to seere soot staining/ It

%as apparent that the essel had cleaned %ell bet%een cargoes as there%as no traces o# petroleum product in the tan&s$ ho%eer$ it %as alsoapparent that the incorrect operation o# the inert gas plant and dirty #iltershad resulted in soot deposits collecting on the tan& coating/

9his %as the #irst indications that the Managers receied that the essel%as in a condition %here she could not carry cargoes according to theCharterparty/ 9he Master$ ho%eer$ tol" te carterers tat tere a"

)een soot "e!osits for a consi"era)le ti$e4 "uring *ic ti$e e a"

not infor$e" te Managers/

I# the Master had /O1. te Managers about the soot deposits at anearlier date$ %hile the essel %as employed on the petroleum trade$ the

REA." SOPEP" 'RP" SEP Manuals" Operating Instructions" Charterparty 9erms" etc

AS " Luestions

" !dice" In#ormation" Who@" !bout" etc

/E11" about incidents" Cargo In#ormation" Statutory Re8uirements" o# problems" o# mista&es



Managers %ould hae been able to carry out special cleaning or repair$ or in#orm the charterers and re"negotiate the charter not to carry egetableoil/

9his incident resulted in a considerable cost to the O%ners and

Managers$ plus longer term damage o# unreliability and poormanagement practice/

/E11 " Example Two

!n oil tan&er on the AS 9rade %as boarded by the AS Coast >uard at adischarge port and inspected/ 9he authorities #ound three items thatre8uired attention and gae the Master a list indicating that the de#ectsmust be completed be#ore arrial in the ne2t AS port/

9he Master decided to ignore the list and sailed to the ne2t load port%hich %as also in the AS/ 9he essel %as again boarded by the AS Coast

>uard %ho %anted to ensure that the outstanding de#ects had beenrecti#ied/ 9hey had not

9he essel %as sered %ith a detaining order and not allo%ed to load orsail/ It %as at this time that the Managers heard o# the problems andde#ects at the discharge port/

9he ASC>$ and the Paris Memorandum Countries$ operate a commoncomputer database that they call up %hen a essel is scheduled #or theirarea/ It lists the complete history o# the essel$ its incidents)i# any* andde#ects/ 9hey are #ore%arned o# possible de#ectie ships/

9he Master should hae /O1. te co$!any immediately he receiedthe de#ect report and they %ould hae ta&en action to clear the problemseither at the discharge port or at the load port$ be#ore the Coast >uard had

boarded/

Instead$ an immense amount o# time and e##ort %as used to repair thede#ects !ND ensure that the ship$ o%ners and management company%ere not targeted under the ASC> Port State Control Initiatie/

/E11 " Example Three

! B3$555 d%t O=O %as on a 9ime Charter and sub"chartered on a'oyage basis to load t%o parcels o# bul& cargo at t%o separate terminals/

On completion o# the #irst parcel$ a dra#t surey %as ta&en by the Chie#O##icer and the 8uantity o# cargo calculated by himsel# and a sureyor/

An#ortunately an error %as made in the readings o# a ballast tan& %hichresulted in appro2imately .$555 mt less cargo being calculated/ Mates





much #uel #or the same speed and this is a prime instance o# technologyleading commercialism; lo%er #uel cost mean lo%er chartering rates and

probably employment in a marginal situation/

Care#ully planned maintenance and ship repairs %ill proide a ship that is

capable o# carrying out its tas&$ do%n time #ree$ and this in turn %illmean less penalties #or the shipo%ner %hich$ in time$ %ill gain him aname #or reliability and e##iciency/

9he shipo%ner must there#ore build into a ship:s schedule a pre"determined planned maintenance programme/ 9his may include a certainnumber o# days %here the ship %ill be immobile and not able to %or&$

but gien notice a charterer can plan his schedule$ and %ith a little gieand ta&e on both sides$ the ship can complete a regular maintenance

programme at a time o# less disruption to the charterer/

Obiously any sa#ety repairs should not be held up #or commercial or anyother reason/

9hus$ technical #actors %ill hae a direct and signi#icant impact on thecommercial iability o# ship operations/

Reports and Records

!s important as the actual technical aspects o# ship management are$ thechec&s that are associated %ith them are e8ually ital/

Strict$ detailed accounts o# all eents that a##ect the ship and its operationshould be &ept by the ship and shore sta## allocated to the ship/

9here can be nothing more in#uriating #or a ship o%ner to hae his shipdry doc& #or planned repairs and maintenance and to #ind that the shiphas sustained some ma<or indentation or other damage #or %hich there isno report or record/

Insurance %ill o#ten re#use to pay #or such unreported damage and it isle#t to the shipo%ner to bear the cost o# repair or replacement/

Ship:s cre% should be encouraged to report all instances o# accidents andeents a##ecting ship operations$ no matter ho% triial$ using a clearlyestablished company reporting procedure/

9his in#ormation should then be collated and disseminated by a membero# the shore sta## to all interested personnel/

9his$ o# course$ must not be restricted to ship accidents$ but it should bee2tended to accidents to all persons$ both cre% and ship isitors$ egdoc&ers/



E0penditure Control

9hese technical reports and records hae themseles obious #inancialimplications in the #orm o# e2penditure control/

Ships use a ast array and amount o# spare parts$ consumables and

e8uipment$ and &eeping trac& o# the oil consumption or ho% many pencils a ship uses is a daunting tas& unless a complete system o#accounting is proided/ Many modern Companies no% use computertechnology to control spare parts$ maintenance and purchasing$ #ore2ample !MOS"D/

In this age o# #luctuating demand #or ships and shipping$ the shipmanager should be cost conscious$ because a dollar saed on the cost o#running the ship could proide the di##erence bet%een a contract beingiable or not/

Many computer systems e2ist to assist %ith good boo&&eeping andaccounting$ and an e##icient shipping company %ill proide the minimumamount o# paper %or& #or its ship sta## to produce a complete record o#all goods and stores receied$ and ho% they %ere used/

9his in#ormation should proide the basis o# a budget #or the ne2t periodo# operation and ship master$ ship manger and ship o%ner should %atchthe build up o# ariances and di##erences bet%een the actual and

budgeted amounts$ to see i# there is any %ay o# reducing e2pendituresand proiding a more economical ship operation that still lies %ell %ithin the limits o# sa#ety/

Reporting #ncidents

In the eent o# any incident that could result in a claim against theCompany or essel a #ull report must be completed in a recognised PIor company #ormat/

9he details o# log entries$ shore side reports and personal statements must be supported by as much physical eidence as possible/

9his eidence %ill be photographs and dra%ings o# the location )try to

introduce some indication o# scale in the photograph " a ruler orhand6man*$ idoes )i# possible " o# surroundings and releant details*$samples )e/g/ Rope that parted$ damaged material6components etc*/

!ll this in#ormation and support material must be #or%arded immediatelyto the Company/

Co"operation %ith the local authorities is desirable$ but ensure that allcre% are gien access to local legal adice through the PICorrespondent %here necessary/

7ailure to proide detailed in#ormation could a##ect the Company:sability to re#ute a claim at a later date/



It is there#ore ital to relate the technical and commercial aspects o# aship:s programme$ to come up %ith the total picture o# ship operationsthat %ill enable the manager to control an e##icientand pro#itableorganisation/



Mariti$e insurance

It is a co$$on tenet tat a loss *ill lie4 at te first instance4 *it te

o*ner, /us4 if a si! sin6s an" is lost or if cargo is "a$age"4 te

o*ner of te si! an" te cargo *ill )ear te costs of te loss,

It $ay )e tat te loss or "a$age *as cause" )y te negligence of

anoter !arty to te contract or +enture4 in tat case te !erson

suffering te loss $ay )e a)le to o)tain reco$!ense or "a$ages

troug te courts or ar)itration, A si!o*ner *ose si! *as sun6

)y a collision $ay try to gain co$!ensation )ecause te na+igation of

te oter si! *as at fault, /e cargo o*ner $ay atte$!t to gain

restitution fro$ te si!o*ner for te cargo "a$age" or lost )y te

actions of te cre* of te si!, 2nfortunately for te !erson suffering

te loss or "a$age in )ot tese cases te offen"ing si!o*ner can

clai$ eiter no lia)ility for "a$age or li$ite" lia)ility un"er a

con+ention or national la* %e,g, Collision 9 &<=: $ariti$e lia)ilitycon+ention an" cargo "a$age 9 ague +is)y rules(,

/erefore )ot te si!o*ner an" te cargo o*ner *oul" )e

i$!ru"ent to e$)ar6 on a +oyage *itout !ro+i"ing so$e for$ of

co+er to offset financial losses tat coul" )e encountere" "uring te

tri!,

/ere are four )roa" areas of in"e$nifying te !erson *o as

suffere" a loss

♦Marine insurance

♦ >eneral aerage

♦ P i clubs

♦ Shipo%ner:s liability

Marine insurance in te u6 is co+ere" )y te $arine insurance act

&<': an" )y te use of insurance !olicies4 usually contracte" *it

un"er*riters4 tat incor!orate te institute clauses,

>eneral aerage is co+ere" )y te yor6>ant*er! rules &<=D an"

concerns contri)utions )y all !artici!ants of a +enture for a loss

suffere" )y an in"i+i"ual for te co$$on goo" of te +oyage,

P i clubs are organisations *ere si!o*ners @oin togeter to

s!rea" te cost of an in"i+i"ual co$!any;s loss or e8!ense,

Shipo%ner:s liability can )e categorise" into t*o "istinct areas

♦ 7ull liability

♦ (imited liability



7ull liability is *ere te si!o*ner *ill a+e to !ay full

co$!ensation for te loss or "a$age tat as occurre",

(imited liability allo*s te si!o*ner to !ay a !ercentage of teco$!ensation clai$e"4 tis is !ro+i"e" for )y statute4 con+ention or

contractual clause,

Average

Fre#uently4 in insurance4 te *or" a+erage is encountere"4 in tis

conte8t te ter$ as te $eaning of a loss;,

A+erage can )e "i+i"e" into t*o areas

♦ Particular aerage

♦ >eneral aerage



Particular a+erage

Particular average is the incidence of a partial loss or damage of ship

cargo or freight through unavoidable accident upon the individual

owners !or insurers" of the interest affected %o8for" concise

"ictionary(,

It is furter "efine" as

a particular average loss is a partial loss of the sub#ect matter insured

caused by a peril insured against and which is not a general average

loss %s :D $arine insurance act &<':(

Co$$on e8a$!les of !articular a+erage on a si! are ea+y *eater

"a$age4 "a$age cause" )y stran"ing4 collision an" fire,

Particular a+erage is nor$ally co+ere" )y a $arine insurance !olicy4

el" *it a $arine un"er*riter4 *ic e8ten"s to total as *ell as

!artial loss,

General a+erage

General a+erage is te a!!ortion$ent of loss cause" )y intentional

"a$age to te si!4 sacrifice of cargo4 etc, An" te e8!enses incurre"

to secure te general safety of te si! an" cargo,

/ere is a general a+erage act *ere any e8traor"inary sacrifice ore8!en"iture is +oluntarily an" reasona)ly $a"e or incurre" in ti$e

of !eril for te !ur!ose of !reser+ing te !ro!erty i$!erille" in te

co$$on a"+enture %s :: $ia &<':(,

In te e+ent of an inci"ent of general a+erage4 contri)utions are

$a"e to tose suffering te loss4 )y all tose in+ol+e" in te +oyage,

/e !rinci!le of general a+erage contri)utions is !eculiar to te la*

of te sea an" e8ten"s only to sea ris6 %$orrison ss co +, Greysto6e

castle &<D=(,

/e e8tent of te contri)ution is )ase" on te +alue of te

!artici!ants; interest in te +oyage,

+arine insurance

Altoug tere is no legal co$!ulsion to insure si!s or cargoes4 te

a$ount of ca!ital in+ol+e" an" te enor$ous financial losses *ic

$ay follo* a $arine casualty $a6e it i$!ru"ent to lea+e ris6s

uninsure",



In te u6 all !resent9"ay $arine insurance contracts are go+erne" )y

te &<': $arine insurance act4 *ere a contract of $arine insurance

is one tat te insurer un"erta6es to in"e$nify te assure"4 in

$anner an" to te e8tent tat as )een agree"4 against $arine losses

tat are te outco$e of a $arine a"+enture %s &(,

No !erson is allo*e" to enter into a contract of $arine insurance

unless tey a+e an insura)le interest;4 tis is to re"uce te inci"ents

of ga$ing an" *agering on a +oyage;s outco$e4 a !ractice tat

ren"ers all $arine insurance contracts +oi" %s D $ia( an" illegal %s &

$arine insurance %ga$)ling !olicies(act &<'<,

/is act !ro+i"es tat any !erson *o effects a contract of $arine

insurance *itout a+ing any )ona fi"e interest4 "irect or in"irect4

eiter in te safe arri+al of te si! or in te !reser+ation of te

su)@ect $atter insure"4 or any !erson in te e$!loy$ent of teo*ner of te si! *o effects a contract J*itout furter !roof of

interest tan te !olicy itselfK %i,e, P,!,i( sall )e "ee$e" to )e

ga$)ling on te si! or cargos loss an" sall )e lia)le4 on su$$ary

con+iction4 to i$!rison$ent *it or *itout ar" la)our %s &(4

unfortunately te unite" 6ing"o$ autorities a)olise" ar" la)our

in &<D

Insurance is effecte" troug a $ar6et;4 for e8a$!le4 te lon"on

$ar6et4 *ic is !art of te $uc larger )ritis insurance in"ustry4

or $ar6ets in te usa4 @a!an4 france4 etc,

/e lon"on $ar6et s!ecialises in co+ering $a@or or co$!le8 ris6s4

tat is4 ris6s incurre" )y )usinesses rater tan )y in"i+i"uals an"

!ri+ate consu$ers,

/e $ar6et is caracterise" )y te use of )ro6ers;4 *o are te

co$$ercial $ar6eting ar$ of te in"ustry an" *ose function is to

see6 out te )est co+er for teir custo$er;s nee"s,

#nsurance procedure

Wen a si!o*ner )uys a si!4 or nee"s to rene* is annual

insurance !re$iu$4 or a cargo o*ner re#uires to a+e is goo"s

insure" for te fortco$ing +oyage4 e usually as6s is )ro6er to

fin" insurance co+er,

/e )ro6er !re!ares a sli!;4 *ic is a "ocu$ent gi+ing a

"escri!tion of te ite$ to )e co+ere"4 *it atten"ant "etails of ti$e4

location4 +alue an" any oter rele+ant infor$ation regar"ing te

ris6,



/e )ro6er ten a!!roaces an ac6no*le"ge" un"er*riter %lea"er(

of tis category of ris64 )e it si!4 cargo or *ate+er4 an" as6s for

♦ ! 8uote o# price o# premium

♦ 9he percentage o# the ris& that he is prepared to coer

If4 as nor$ally a!!ens4 te lea"er only co+ers a !ercentage of te

ris64 te )ro6er $ust co$!lete te co+erage )y so*ing te

insurance to oter un"er*riters %units(4 *o *ill assess te ris64 in

ter$s of te !re$iu$ an" !ercentage #uote" )y te lea"er4 )efore

$a6ing teir o*n !ro!osal,

By offering te sli! aroun" in tis $anner allo*s te ris6 to )e

s!rea"4 an" te affects of a loss *ill )e sare" a$ongst a larger

nu$)er of un"er*riters4 tus a clai$ can )e $et #uic6ly *itout

@eo!ar"ising te security of one insurer, So$e ris6s4 suc as ull an"$arine oil !latfor$s4 can )e co9insure"; )et*een $ore tan fifty

se!arate un"er*riting units4 an" in a""ition $ay e+en )e sare"

internationally )et*een any nu$)er of $ar6ets,

Wen te )ro6er as succee"e" in !lacing te total a$ount of te

ris64 e sen"s a co+er note to is client4 eiter si!o*ner or cargo

o*ner4 as confir$ation an" !re!ares te final "ocu$entation of te

transaction4 so*ing te e8act sare of te ris6 un"erta6en )y eac

unit4 an" gi+ing a clear in"ication of te co+er finally agree",

/e contract of insurance is !lace" )et*een te t*o !rinci!als4 te

assure" %si!o*ner( an" te insurer %un"er*riter(, /e $arine

insurance )ro6er is te !rofessional inter$e"iary an" is te agent

for te assure",

The presentation of the slip by the bro$er constitutes the offer and the

writing of each line constitutes an acceptance of this offer %general

reinsurance cor! +, Ff! &<7(

An un"er*riting unit can )e fro$ t*o "ifferent areas

♦ Insurance company

♦ (loyd:s syndicate



#nsurance company

An insurance co$!any un"er*rites on te strengt of reser+es !ut

u! )y te co$!any, It o!erates troug a "e!art$ent of te

co$!any calle" an un"er*riting roo$4 an" ser+ices its finances4 an"

acie+es sta)ility4 )y s!rea"ing its total reser+es o+er $any classes of )usiness4 e,g, Motor4 ousing4 !ro!erty4 as *ell as te $arine fiel"s of

si!s an" cargo,

In te u6 statutory !rotection for te !u)lic su!er+ision of insurance

co$!anies is !ro+i"e" for un"er te insurance co$!anies act &<5,

/e act !ro+i"es a co$!reensi+e sce$e to ensure tat no one

launces or con"ucts affairs in insurance *itout sufficient fun"s to

$eet clai$s4 e8!ecte" or une8!ecte",

Pro)a)ly one of te )est 6no*n $arine organisations4 lloy";s is a

society incor!orate" )y act of !arlia$ent in &=& *ic as

a!!ro8i$ately 774'' $e$)ers for$e" into o+er 7=: syn"icates,

$loyds syndicate

A lloy";s syn"icate is an agency *ose resources are !ro+i"e" for )y

te in"i+i"uals %na$es of $e$)ers( tat $a6e u! te syn"icate,

Syn"icates transact insurance for teir o*n account an" at teir o*n

ris6, /e $e$)ers of a syn"icate a+e an unli$ite" lia)ility for!aying out clai$s,

Eac syn"icate o!erates un"er te !rofessional control an"

autorisation of lloy";s, /oug lloy";s itself "oes not engage in

un"er*riting4 it !ro+i"es logistical )ac69u!4 !re$ises an" a reser+e

fun" for its syn"icates,

Because of te ig estee$ to *ic lloy";s is el"4 teir $e$)ers

are e8e$!t fro$ te !ro+isions of te insurance co$!anies act,

So$e of te larger si!4 an" cargo4 o*ning co$!anies4 use a syste$

of insurance tat retains $ost of te financing of loss *itin te

co$!any,

Captive insurance

Ca!ti+e insurance o!erates troug an insurance co$!any tat is a

su)si"iary of te !arent si! or cargo o*ning concern4 te ris6 is

ten *ritten troug te su)si"iary as if it *ere an in"e!en"ent

organisation, /us te !re$iu$s are !ai" to te su)si"iary an" "o

not lea+e te o+erall finances of te co$!any,



/oug te !arent co$!any *ill a+e to )ear te losses of any clai$s

recei+e"4 eiter )y its o*n si!s an"4 of course4 fro$ tir" !arties4

e,g, After a collision,

So$e ca!ti+e insurance is !rocesse" troug esta)lise" insurance

co$!anies4 )ut $ost of te un"er*riting is ten !lace" *it te

ca!ti+e su)si"iary co$!any,

/e )enefits of a co$!any using an insurance co$!any in tis *ay

are tat

♦ 9he captie insurance company has an established %orld"%ide net%or& o# agents to oersee

claims

♦ 9he documents issued are those o# a recognised insurance company

♦ Initial general aerage agreements can be made by a ga guarantee

(o insurance

As alrea"y state"4 it is not a legal re#uire$ent to a+e ull or cargo

insurance4 in"ee" te only statutory insurance re#uire" is for

tan6ers tat carry o+er 5''' "*t of cargo4 for oil !ollution

co$!ensation,

So$e si!>cargo organisations o!erate totally *itout un"er*riting

ris6s, /is coul" )e )ecause of te cost of te !re$iu$ of te ris64

e,g, .ue to age or con"ition of te si!4 or )ecause te co$!any feels

tat insurance is unecono$ic,

Cargo o*ners $ay feel tat te !rotection affor"e" )y te

ague>ague +is)y>a$)urg rules is sufficient,

#nsurance policy

/e final "ocu$entation tat is !ro"uce" for te insure" ris6s is

calle" a !olicy,

/e !olicy consists of

♦ !n outer coer

♦ Clause inserts depending on the ris&



/e out9co+er contains te na$e of te insuring organisation4

co$!any4 )ro6er or syn"icate,

It furter contains te na$e of te assure"4 te si!;s na$e an" teti$e !erio" or +oyage co+ere",

Infor$ation is also entere" on te su)@ect $atter insure"4 e,g, Cargo4

an" its agree" +alue,

/e !re$iu$ !ai" is inclu"e"4 as is te na$e of te co$!any to

notify in te e+ent of a loss an" *ere te agree" clai$s are to )e

!ai",

Finally4 any a""itional clauses4 en"orse$ents4 s!ecial con"itions or*arranties are to )e entere",

#nstitute clauses

Fi8e" to te outer co+er is an insert *it te contractual o)ligations

tat a!!ly to tis !olicy,

/o ar$onise te insurance in"ustry4 so e+ery insurance co$!any

an" e+ery si!>cargo concern is o!erating e#ually4 central tra"e

associations4 e,g, /e institute of lon"on un"er*riters4 "e+elo!e"

stan"ar" clauses for insertion in te !olicy,

/ese *oul" !ro+i"e clauses tat *ere 6no*n an" un"erstoo"

trougout te $ar6et as a suita)le general le+el of co+er to )e

!ro+i"e" to any assure",

Suc stan"ar" clauses coul"4 of course4 )e tailore" to !articular

re#uire$ents4 *it co+er a""e" or ta6en a*ay "e!en"ing on te

!rice an" te nature of te ris64 )ut tey *oul" act as a co$$on

starting !oint an" gi+e a "egree of certainty to )ot te insurer an"

te assure" tat $igt oter*ise )e lac6ing,

/e $a@or "i+ision of institute clauses is )et*een te ull %for si!s(

an" cargo,

/e range of su)@ects tat are co+ere" )y te institute cargo clauses

are as +arie" as te cargoes tat a si! can carry

♦ Institute cargo clauses

♦ Institute timber trade #ederation clauses

♦ Institute stri&e clauses



♦ Institute <ute clauses

♦ Etc/

Basically tey are all +ery $uc te sa$e4 an" inclu"e clauses on-

♦ Na+igation$ proides that the ship is coered at all times$ may sail %ith or %ithout pilots$

and can assist and to% ships in distress

♦ Breac of *arranty4 used to be called held coered$ it coers the ship #or a breach o# the

#undamental conditions o# the contract$ as long as the under%riters %ere gien immediate

notice o# the breach and the policy %as amended and any additional premiums re8uired %ere

paid

♦ /er$ination$ the insurance %ill automatically end at the time o# change o# classi#ication

society$ e2piration o# class$ change o# #lag$ or trans#er to ne% management

♦ Perils$ these are the accepted areas %here the shipo%ner %ill be coered #or loss$ and it

includes maritime perils$ #ire$ e2plosion$ piracy$ contact %ith aircra#t$ earth8ua&e$ negligenceo# master$ o##icers$ cre% or pilot

♦ Pollution a3ar"$ the insurance coers loss o# or damage to the ship caused by any

goernment authority acting to preent or mitigate a pollution ha1ard$ this coers the

shipo%ner #or incidents %here the ship is destroyed under the interention conention

regulations$ such as the torrey canyon incident %here the u& goernment bombed a tan&er

that %as lea&ing oil )+B33*

♦ 7>Dt collision lia)ility4 also &no%n as the running down clause, %here the under%riters

agree to indemni#y the insured #or three"8uarters o# any sum paid out #or damage caused by

loss or damage to another ship$ etc/

♦ Sistersi!$ this clause allo%s ships o# the same company to be treated as i# they %ere o#

di##erent companies %ith regard to collision and salage

♦ Notice of clai$s an" ten"ers$ in the eent o# an incident %here loss or damage has been

sustained$ and a claim may result$ notice must be gien to the under%riters prior to surey so

that they may appoint their o%n sureyor and repair yard/

Failure to o)ser+e tis clause coul" result in a "e"uction of & !er

cent of te ascertaine" clai$

♦ General a+erage an" sal+age$ the insurance coers the ship:s proportion o# salage$

salage charges and6or general aerage

♦ .e"ucti)le$ no claims arising #rom a peril insured against shall be payable unless the

aggregate o# all such claims e2ceeds an agreed sum

♦ .uty of assure"$ originally &no%n as sue and labour $ and it is included to emphasise that

the shipo%ner$ master$ etc/ 9a&e such measures as may be reasonable #or the purpose o#

aerting or minimising a loss %hich could be recoerable under the policy

♦ Ne* for ol"$ claims are payable %ithout a deduction #or ne% #or old

♦ Constructi+e total loss$ there is a constructie total loss %hen the cost o# salaging$

repairing or recoering the insured ris& is greater than the alue o# the ris&

♦War e8clusion$ generally policies do not coer ships #or damage caused by %ar$ ciil %ar$

reolution$ etc/ Nor damage caused by derelict mines$ torpedoes or bombs$ thus a ship

entering a &no%n %ar 1one %ill re8uire a ne% policy at a higher premium



♦ Finally$ insurance coer does not normally e2tend to damage caused by stri&ers$ loc&out$

terrorists or any %eapon o# %ar or nuclear #ission6#usion

)eneral average

General a+erage is an ancient conce!t an" "ates )ac6 to te ro"ian

la* of t*o tousan" years ago %"igest of @ustinian(,

It in+ol+es a syste$ *ere all tose !ersons a+ing a financial

interest in a +enture %+oyage( !ay a contri)ution to so$eone *o as

suffere" an intentional loss or e8!ense to sa+e te outco$e of te

+oyage,

It *as state" in one of te earliest englis cases4 in *ic te

!rinci!al of general a+erage *as recognise"4 tat-

%ll loss which arises in conse&uence of extraordinary sacrifices made

or expenses incurred for the preservation of the ship and cargo comes

within general average and must be borne proportionally by all who

are intereste" %)ir6ley +, Presgra+e &'&(

General a+erage on )oar" a si! is a!!lie" an" a"$inistere" un"er

te internationally recognise" yor69ant*er! rules &<=D,

/oug general a+erage is a custo$ tat as )een acce!te" for

countless years it is still necessary to inclu"e a clause in a contract to

i$!le$ent te yor69 ant*er! rules into a s!ecific agree$ent-

General a+erage to )e settle" accor"ing to yor69ant*er! rules &<=D,

Pro!rietors of cargo to !ay te cargo;s sare in general a+erage e+en

if sa$e as )een necessitate" troug neglect or "efault of te

o*ner;s ser+ants %clause ++ gencon(,

/e yor69ant*er! rules lay "o*n te con"itions *ic $ust a!!ly

)efore losses an" e8!en"itures co$e un"er general a+erage4 an" o*

contri)utions are to )e calculate" an" !ai",

or6ant,erp rules 199B

/e rules consist of t*o sections-

♦ (ettered rules a " g

♦ Numbered rules i " 22ii



In te $a6is case it *as rule" tat te y9a rules *ere inten"e" to )e a

co$!lete co"e4 te lettere" section a+ing !rece"ence an" setting out

te general !rinci!les an" te nu$)ere" section )eing referre" to in

!articular instances, /is conce!t *as inclu"e" in te &<=D rules as

te rule of inter!retation %neiter letter nor nu$)er(-

In the ad<ustment o# general aerage the #ollo%ing lettered and numberedrules shall apply/// E2cept as proided by the numbered rules$ generalaerage shall be ad<usted according to the lettered rules

General a+erage is to )e a"@uste" accor"ing to te lettere" rules4 an"

te )asic !rinci!les of a"@ust$ent is "efine" as-

9here is a general aerage act %hen$ and only %hen$ any e2traordinarysacri#ice or e2penditure is intentionally and reasonably made or incurred#or the common sa#ety #or the purpose o# presering #rom peril the

property inoled in a common maritime adenture %rule a(,

/is !rinci!le as )een acce!te" troug out te ages4 tat general

a+erage losses $ust arise fro$ a "eli)erate sacrifice4 *it te

reasona)le intention of !reser+ing te si! an" its cargo %te )ona

&<(,

/e $ain con"itions for an act4 sacrifice or e8!en"iture to #ualify forgeneral a+erage are-

♦ 9he enture must be maritime )morrison ss co / >reysto&e castle +B,-*

♦ 9he act must be oluntarily made$ i/e/ Is intentional )mccall / Houlder bros +B-; s 33 mia

+B53*

♦ 9he act must result #rom the action o# man$ not the #ortuitous result o# ordinary and normal

perils o# the sea )bir&ley / Presgrae +5+*

♦ 9he act must be reasonable )the seapool +B0,* and necessary )s 33 mia +B53*

♦ Sacri#ice and e2pense must be o# an e2traordinary nature )societe nouelle d:armement /

Spillers ba&ers ltd +B+-; 33 mia +B53*

♦ Sacri#ice and e2penditure must be made or incurred in the time o# peril )<oseph %atson

son ltd / 7ireman:s #und ins co/ +B..; s 33 mia +B53*$ though the peril need not be

immediate )mccall / Houlder bros +B-* it must be real )the %est imboden +B03*

It $ust )e for te !ur!ose of !reser+ing te !ro!erty i$!erille" in

te co$$on a"+enture %6e$! +, Halli"ay &::(

♦ 9he interests concerned must be inoled in a common adenture )the <p donaldson

+B-;dabney / Ne% england co/ +3-*

♦ 9he sacri#ice or e2penditure must achiee success )chelle% / Royal commission on the

sugar supply +B.+*/



/e acts tat incur general a+erage costs can )e "i+i"e" into t*o

categories-

♦ !cts o# sacri#ice

♦ !cts o# e2penditure

Sacrifice

Sacrifice is incurre" *en te su)@ect $atter is intentionally

"estroye" or lost4 tis can inclu"e-

♦ ettison o# cargo$ %hen it is carried in accordance %ith a recognised custom o# the trade )rule

i*/

/e $aster as a rigt to e8ercise tis !o*er in case of i$$inent

"angers %te gratitu"ine &'&( an" against "ec6 cargo %goul" +,

Oli+er &7=(,

♦ Damage to machinery and boilers o# a ship$ %hich is ashore and in a position o# peril$ in

endeaouring the re#loat )rule ii*/

♦ 'oluntary stranding %hen a ship is intentionally run ashore #or the common sa#ety o# the

enture )rule */

♦ Damage to the ship or cargo due to e##orts to e2tinguish a #ire )rule iii*/

♦ Cutting a%ay %rec& )rule i* and ship:s cargo$ material and stores used as #uel )rule i2*/

E8!en"iture

E8!en"iture is te e8traor"inary costs sustaine" in !reser+ing te

!ro!erty of all concerne" in te a"+enture,

♦ Salage remuneration$ under contract or other%ise$ incurred saing all the interests in the

adenture$ to the e2tent that the salage operations %ere under ta&en #or the purpose o#

presering #rom peril the property inoled in the common maritime enture )rule i*/

♦ E2penses lightening the ship %hen ashore$ %ith regard to cargo$ ship:s stores and #uel )rule

iii*/

♦ E2penses at a port o# re#uge necessary #or the common sa#ety$ this can include the e2penses

o# entering and leaing$ the cost o# handling cargo on board$ the costs o# discharging$ storing

and reloading cargo$ stores and #uel$ the additional insurance %hile the cargo is ashore , All

tis )eing necessary for te "a$age to te si!4 cause" )y te sacrifice or acci"ent4 to

)e re!aire" )rule 2*/

♦ (oss o# #reight arising #rom the damage to$ or loss o#$ cargo )rule 2*/





Wen one of te securities as )een o)taine" te si! *ill release te

cargo to te consignee4 an" at a later "ate4 *en te final

a"@ust$ents a+e )een $a"e4 te si!o*ner *ill recei+e te full

a$ounts on surren"er of te security,

Protection and indemnity 4pKi5

Protection an" in"e$nity associations4 co$$only referre" to as !i

clu)s4 *ere for$e" in te u6 fro$ & on*ar"s )y si!o*ners for

teir $utual !rotection against tose ris6s *ic tey *ere not

co+ere" un"er or"inary $arine insurance4 eiter ull or cargo e,g,

♦ 9he last 8uarter damage sustained in collision

♦ (oss #rom non"deliery o# cargo

♦ Cre% repatriation costs

♦ 9hird party liability #or personal in<ury to passengers and cre%

/ere are o+er a "o3en !i clu)s in te u6 an" tere $any oters to

)e foun" in scan"ina+ia4 us an" @a!an,

In te u6 te clu)s are-

♦ Run on a non"pro#it ma&ing mutual entry #ee basis

♦ Controlled by committees o# representaties o# the shipo%ner members

♦Managed by e2perts %ho calculate the #ees due$ collect the premiums #rom the members and

deal %ith claims as they arise



/e clai$s on te association4 of *ic te $a@ority are in

connection *it !assenger4 cre* an" cargo4 are $et )y financial

calls; on te $e$)ers at annual inter+als4 toug furter calls can

)e $a"e at inter$e"iate "ates as te occasion "e$an"s4 an"4 in rare

instances4 refun"s are $a"e,

/us4 in one year te lia)ilities an" clai$s of a $e$)er $ay )e

ea+y an" in conse#uence4 te call on all $e$)ers $igt )e iger

tan nor$ally e8!erience",

/e a$ount of te in"i+i"ual call is tra"itionally )ase" on te gross

tonnage of eac si! te $e$)er as in te clu),

Pi clu)s in te u6 inclu"e si!o*ners fro$ all !arts of te *orl"4an" foreign flag si!s are re!resente" on te co$$ittees,

In recent years $any clu)s a+e )een for$e" for "i+ersifie" sectors

of te $arine in"ustry-

♦ Protection against bad debts " itic

♦ Small ships " the shipo%ners

♦ Stri&e coer " transmarine mutual stri&e assurance association

♦ Etc/

Generally te !i clu)s are eiter arrange" geogra!ically or )y

tra"e4 !ro+i"ing

Protection

/is co+ers su)@ects inclu"ing-

♦ (oss o# li#e

♦ Collision or damage to another ship or #i2ed ob<ect Y cre% e2penses$ including repatriation$

sic&ness and #unerals abroad

♦ >oernment in8uiries

♦ Raising and remoing %rec&s )probably the most e2penses item that pi %ill attempt*

In"e$nity

/is co+ers si!o*ner;s-

♦ (iability through contracts

♦ (iabilities to cargo interests

♦ Custom #ines #or innocent breaches o# regulations

♦ Cost o# #ighting cases

♦ Proportion o# general aerage$ %hen in e2cess o# the insured alue



7reight 9 co+ers te legal cost of reco+ering freigt an" oter cargo

relate" "ues suc as "e$urrage

War ris&s 9 co+ers $ine "a$age ris6s an" in te e+ent of ostilities it*oul" co+er te si!o*ner until te si! reace" a !ort of refuge

an">or a go+ern$ent *ar9ris6 sce$e coul" )e intro"uce"

Other 9 te !i clu) !ro+i"e a final in"is!ensa)le ser+ice of

a"$inistration-

♦ Posting bond #or arrested ships

♦ Disseminating in#ormation$ e/g/ Ne% legislation regarding pollution

♦ !dising their members on suspect commercial practices$ and ho% to aoid their dire

conse8uences

♦ Producing lists o# acceptable la%yers$ sureyors and adisors

♦ Producing standard #orms o# letters$ e/g/ O# indemnity$ protest etc/

Pi !ro+i"es te )enefit of te econo$ies of scale4 larger si!!ing

co$!anies can a)sor) te e8!enses of non9insure" ite$s )y

s!rea"ing te cost aroun" its fleet,

Ho*e+er4 te s$aller si! o*ning co$!any nee"s te !rotection

affor"e" )y te clu)4 as it s!rea"s tese non9insure" costs4 tat a+e)een occurre"4 aroun" all its $e$)ers,

1ia)ility

*hipo,ners liability

Were+er a si! carries cargo tat is lost or "a$age"4 or "iscarges

oil tat !ollutes a coastline4 or stri6es anoter si! or structure4 tere

$ay )e a "egree of res!onsi)ility for $a6ing goo" te loss4 re!airing

te "a$age or restoring te en+iron$ent,

Weter tis is a full re!lace$ent cost or a re"uce" !ay$ent *ill"e!en" on te circu$stances of te case4 as *ill te fact tat te

si!o*ner $ay a+e no lia)ility *atsoe+er for te "a$age or loss,

2n"er +arious international con+entions an" national la*s tis

lia)ility is "efine" as-

♦ E2cluded

♦ (imited

♦ 7ull



E2cluded liability is *en te inci"ent tat cause" te loss falls un"er

a section of te la* tat allo*s te si!o*ner to esca!e any

res!onsi)ility for !ay$ent or rei$)urse$ent e,g,

♦ Cargo " hague isby " act o# god$ 8ueen:s enemies$ etc/

♦ Pollution " international conention on ciil liability #or oil pollution +B3B )clc* " act or

omission done %ith intent to cause damage by a third party

♦ Passenger:s luggage " athen:s conention " carrier shall not be liable #or the loss or damage

to monies$ negotiable securities$ gold$ siler etc/$ e2cept %here such aluables hae been

deposited %ith the carrier #or sa#e &eeping

(imited liability is *ere an inci"ent causes loss or "a$age an" it

falls *itin te si!o*ner;s nor$al o!eration4 tus e is a)le to

in+o6e te regulations containe" in te con+ention>la* to !rotect

i$self against full rei$)urse$ent of te loss,

2n"er te regulations te si!o*ner can re"uce te a$ount !aya)le

to te !erson suffering te loss to an agree" a$ount )ase" on te

*eigt of te cargo or te gross tonnage of te si!,

E8a$!les of !ossi)le li$itations of lia)ility are

♦ Cargo " %ith all the e2ceptions #rom liability that are aailable$ the shipo%ner is only liable

to pay a limited amount %here the management o# cargo has caused loss or damage )hague

isby*

♦ Pollution " oil tan&er o%ner can limit his liability %here the damage %as caused by an

accidental spill o# oil #rom a collision or grounding )clc +B3B*

♦ General " claims in respect o# loss o# li#e or loss o# or damage to property$ occurring on

board or in direct connection %ith the operation o# the ship )maritime claims conention

+B-3*

♦ Passengers " the carrier shall be liable #or the damage su##ered as a result o# the death o# or

personal in<ury to passengers )athen:s conention*

1i$itation is allo*e" u! to te s!ecifie" a$ounts

♦ Hague isby 333/3- sdr per pac&age or . sdr per &ilo

♦ Clc +00 sdr per gt up to +, million sdr

♦Maritime claims +3-$555 sdr #or a ship %ith tonnage not

e2ceeding 455 gt

♦ !then:s ,3$333 sdr per passenger



7ull liability occurs *en tere is so$e factor tat negates te

!rotection affor"e" )y te con+ention or la*4 an" te si!o*ner ten

e8!eriences te full force of co$!ensation an" rei$)urse$ent,

Fre#uently full lia)ility is acti+ate" )y te si!o*ner;s lac6 of "ue

"iligence in carrying out is si! o!erations

♦ Cargo " the carrier shall be bound be#ore and at the beginning o# the oyage to e2ercise due

diligence to ma&e the ship sea%orthy$ properly man$ e8uip and supply the ship and ma&e all

parts in %hich cargo is to be carried$ #it and sa#e #or their reception )h art 0)+**$ #ailure to

comply %ith this article %ill remoe the limitation o# liability coer #rom the shipo%ner

♦ Pollution " the tan&er o%ner may not aail himsel# o# the limitation o# liability #or oil

pollution damage i# the incident occurred as a conse8uence o# the actual #ault o#$ or o#

someone in priity %ith$ the o%ner )clc*

♦ General " a person liable shall not be entitled to limit his liability i# it is proed that the lossresulted #rom his personal act or omission$ committed %ith intent to cause such loss or

rec&lessly and %ith &no%ledge that such loss %ould probably result )maritime claims art ,*

♦ Passenger " the carrier shall not be entitled to bene#it #rom the limitation o# liability i# it is

proed that the damage resulted #rom an act or omission o# the carrier done %ith intent to

cause damage or rec&lessly and %ith &no%ledge that such damage %ould probably result

)athen:s art +0*

A"@ust$ents for general a+erage

Wen a general a+erage act as incurre" a sacrifice or e8!en"iture

te cost of tis $ust )e )orne )y all tose *o a" an interest in te

+oyage,

/e !arties tat a+e an interest an" tus can )e e8!ecte" to

contri)ute to general a+erage inclu"e

♦ 9he shipo%ner

♦ Charterer

♦ Cargo o%ner

♦ 7reight holder

♦ Contractors that hae hired naigational or radio e8uipment to the shipo%ner



/e contri)ution is )ase" on te actual net +alue of te !ro!erty at

te ter$ination of te a"+enture %rule 8+ii(,

In te case of cargo4 te starting !oint *oul" )e te in+oice +alue ofte goo"s )ut tere $ay a+e )een a su""en $ar6et fluctuation

*ic *oul" increase or "ecrease teir salea)le +alue, In tis case it

*oul" )e tis +alue less "a$age or loss *ic *oul" )e ta6en into

account,

Collection of ga contri)utions

It is te "uty of a s!ecialist on )ealf of te si! to collect te general

a+erage contri)utions fro$ te res!ecti+e !arties to te a"+enture,

/e si!o*ner is lia)le in "a$ages to te o*ner of goo"s @ettisone" if

e "eli+ers te rest of te cargo *itout o)taining general a+eragesecurity,

It cannot )e too strongly e$!asise" tat an a!!ro!riate security

$ust al*ays )e o)taine" )y a $aster )efore te "eli+ery of any

cargo,

/e si!o*ner as a co$$on la* lien on cargo for general a+erage

%ingston +, Wen"t &=:(,

It is not nor$al for te si!o*ner to e8ercise tis lien4 )ut )eforeletting te cargo out of is !ossession4 te $aster soul" o)tain so$e

for$ of agree$ent or security for te general a+erage contri)ution4

tis can )e-

♦ Cash payment

♦ >eneral aerage bond

♦ >eneral aerage deposit

♦ !erage guarantee

♦ Or any combination o# these



Wen one of te securities as )een o)taine" te si! *ill release te

cargo to te consignee4 an" at a later "ate4 *en te final

a"@ust$ents a+e )een $a"e4 te si!o*ner *ill recei+e te full

a$ounts on surren"er of te security,

Non se!aration agree$ent

A !ro)le$ can arise *it regar" to cargo *ic is eiter off loa"e"

at te ti$e of te inci"ent4 or "iscarge" at a !ort of refuge an" not

reloa"e"4 eiter )ecause te !ort is te cargoes "estination or it is

for*ar"e" )y so$e oter $eans,

/is is co+ere" )y a non se!aration agree$ent4 suc tat in te e+ent

of cargo not )eing returne" to te si! te rigts an" lia)ilities

un"er general a+erage are not affecte",

Wen a si!!er;s cargo is loa"e" into ligters fro$ a stran"e" si!

an" is ta6en straigt to its "estination4 te rigts an" lia)ilities

in+ol+e" in tis are not affecte"4 as a non se!aration agree$ent is in

force,

Si$ilarly4 any "iscarge" cargo at te !ort of refuge tat is

transferre" )y roa" to its "estination *oul" still )e lia)le for ga

contri)utions4 an" soul" not )e release" until so$e for$ of security

is arrange",

Were te contri)ution is large4 te si!o*ner *oul" )e a"+ise" to

secure eiter

♦ >a bond and ga deposit or

♦ >a bond and ga guarantee

In te case of $ost s$aller cargoes tey are si!!e" *it insurance4

cif4 an" te ga guarantee *oul" !ro)a)ly )e sufficient,

Ho*e+er4 *ere tere is no insurance te si! o*ner is a"+ise" to

ol" te cargo until so$e !ay$ent is $a"e,

Claims for liability

Clai$s against a si! can )e classe" as-

♦ Collision6loss o# ship

♦ Personal in<ury



♦ Cargo loss and delay

♦ Pollution



Collision>loss of si!

A si!o*ner *ill argue tat te collision occurre" as !art of )ot

si!s fault4 or e+en tat it *as entirely te oter +essel;s fault4 an"

try to get so$e 6in" of re"ress,

If tey cannot a!!ortion )la$e to te oter +essel4 tey *ill tenatte$!t to li$it teir lia)ility un"er te flag states +ersion of te

$ariti$e clai$s con+ention &<=:4 as a loss or "a$age to !ro!erty in

"irect connection *it te o!eration of te si! %article 5(,

If te +essel *as o)+iously to )la$e te oter +essel;s o*ners *ill

atte$!t to !lace full lia)ility on te +essel4 )y suggesting tat it is

)arre" )y its con"uct fro$ li$iting lia)ility4 "ue to !ersonal act or

o$ission4 co$$itte" *it intent to cause loss4 or rec6lessly an" *it

6no*le"ge tat suc loss *oul" result %article D(,

/ey coul" "o tis )y so*ing tat te unsafe o!eration of te si!

*as 6no*n to te co$!any4 tat tey *ere to )e @u"ge" )y te

stan"ar" of con"uct of te or"inary4 reasona)le4 si!o*ner in te

$anage$ent an" control of si!s4 tat te !ri$ary concern of a

si!o*ner *as safety of life at sea4 an" tat in+ol+e" a sea*orty

si!4 !ro!erly $anne" an" safely na+igate" %la"y g*en"olen&<::(,

Si$ilarly it coul" )e argue" tat te co$!any faile" to ensure te

si! *as $anne" *it co$!etent officers4 an" tey furter faile" to

su!er+ise an" cec6 on o* teir si! *as na+igate"4 es!ecially infog %te gar"en city &<5(,

/us *en it can )e so*n tat te *atc officer *as 6no*n to a+e

a "rin6 !ro)le$ an" no action a" )een ta6en4 or it can )e so*n

tat te $aster a" no o!erational gui"elines regar"ing inca!a)le or

inco$!etent officers4 traffic se!aration4 fog4 etc,4 or tat is actions

a" ne+er )een $onitore" or su!er+ise" in a clear4 !recise an"

co$!reensi+e $anner %te $arion &<7(,

It *ill )e e8tre$ely "ifficult for te si!o*ner or si!$anager toclai$ tat te e+ents lea"ing u! to a collision occurre" *itout is

fault an" !ri+ity4 an" terefore no li$itation of lia)ility *oul"

!ro)a)ly )e allo*e",

In@ury to cre*

In@ury to a sea$an *ill )e a!!roace" along si$ilar lines4 an" un"er

te sa$e national legislation !re!are" fro$ te $ariti$e clai$s

con+ention &<=: %article '(,

Cargo loss or "a$age

Cargo clai$s can )e "i+i"e" into t*o categories

♦ Claims #or loss and damage



♦ Claims #or del ay

/e $ain !ro+isions for cargo loss an" "a$age are to )e foun" in te

ague or ague +is)y rules, /ese !ro+i"e tat *en te carrier4 *o

coul" )e te si!o*ner or a carterer4 e8ercises "ue "iligence )eforean" at te )eginning of te +oyage to

♦Ma&e the ship sea%orthy

♦ Properly man$ e8uip and supply the ship

♦Ma&e the holds etc/ 7it and sa#e #or the reception$ carriage and preseration o# cargo )h

article iii*

/en neiter e nor te si! sall )e lia)le for loss or "a$age,

%article i+ %&((,

/is $a6es it is +ery "ifficult for te cargo o*ning clai$ant4 or is

insurer4 to gain any reco$!ense for cargo loss or "a$age,

/e rules !ro+i"e tat it is for te clai$ant to so* tat a loss *as

cause" )y one of te a)o+e4 an" only ten4 *it regar" to

unsea*ortiness4 "oes te carrier a+e te )ur"en of !ro+ing te

e8ercise of "ue "iligence %+ article i+(,

For e8a$!le-

♦ I# the steering gear bro&e do%n$ but the shipo%ner had sho%n due diligence by including a

spare$ %hich had$ un#ortunately$ proed ine##ectie/ Were the shipo%ners to &no% that it

%ould %or&@ O# course not$ there#ore ho% can they be penalised/ I# they had a habit o#

selecting shoddy spares it may be a di##erent story/

♦ I# a collision occurred as a peril$ danger or accident o# the sea$ albeit the ship %as obiously

in the %rong separation lane$ and again$ %hat could the carrier hae done at that time$

assuming that he had issued operational orders about sa#e naigation and preiously chec&ed

that they had be carried out

♦ I# the %atch o##icer:s had a lac& o# competence$ this %ould be coered by the section %hich

re#ers to the carrier not being responsible #or loss or damage arising #rom any act$ neglect or

de#ault o# the master$ or serants o# the carrier in the naigation or in the management o# the

ship )hague isby article i ).**

♦ Possibly the use o# an out o# date chart$ %hich should hae been disposed o#$ could be

termed lac& o# due diligence on part o# the carrier )the marion +B0*



If te cargo is )eing carrie" un"er te a$)urg rules it is ar"er for

te carrier to e+a"e lia)ility )ecause te carrier is lia)le for loss

resulting fro$ loss of or "a$age to te goo"s4 as *ell as fro$ "elay

in "eli+ery4 if te occurrence *ic cause" te loss4 "a$age or "elay

too6 !lace *ile te goo"s *ere in is carge, 2nless te carrier!ro+es tat e4 is ser+ants or agents too6 all $easures tat coul"

reasona)ly )e re#uire" to a+oi" te occurrence an" its conse#uences

%article (,

Is it any *on"er *y fe* si!!ing co$!anies *oul" *ant to use

contracts of carriage tat co$e un"er te aus!ices of te a$)urg

rules,

Wen cargo is not )eing carrie" un"er a$)urg %*ic is on $ost

occasions( clai$s for co$!ensation relate" to te "elay of cargo)eing "eli+ere" are "ealt *it )e te $ariti$e clai$s con+ention

&<=: %article 5%&(%)((4 *it all te atten"ant li$itations an"

e8clusions "iscusse" a)o+e,

Pollution

Oil tan6ers

Co$!ensation an" clean9u! costs for all as!ects of !ollution !lay a

large !art in to"ay;s si! $anage$ent,

For all +essels te cost of clean9u! of an oil s!ill eiter for$ an

inci"ent or fro$ "aily o!eration suc as )un6ering4 can )e enor$ous

an" so$e)o"y as to !ay,

All tan6 +essels4 *it o+er 5''' tonnes of cargo4 tra"ing to clc

countries a+e co$!ulsory insurance, /ey re#uire a certificate to

!ro+e tat tey a+e sufficient co+er %usually troug !i( for te

si3e of te +essel,

In a""ition $any countries %an" carterers( insist on a""itional !i

co+er of :'' $illion for inci"ents,

Non9tan6ers

A +essel tat is not a tan6er as no o)ligation un"er te

co$!ensation regulations of clc an" te fc,

O)+iously so$eone nee"s to clean !ollute" )eaces4 an" te local

!o!ulation *ill nee" co$!ensation for lost li+elioo"s,





1ien

1ien is te rigt in la* of one !erson to retain in is !ossession

!ro!erty )elonging to anoter until te clai$s of te !erson in

!ossession against te oter are satisfie",

It is an efficient $eto" for o)taining !ay$ent for outstan"ing "e)ts

or clai$s tat anoter !erson *ises to ignore,

/e !ro!erty el" )y te !erson enforcing te lien is lost to its o*ner

for te "uration of te lien an" if a si!4 it is earning no ire or

friegt4 if cargo4 it is unsella)le an" tus a cas flo* lia)ility,

/e o*ner of te ting un"er lien tus as is attention focuse" on

retrie+ing is !ro!erty an" te "isagree$ent *ill co$e to a s!ee"y

conclusion,

1iens can )e categorise" as-

a( !ossessory

)( non9!ossessory

A !ossessory liens e8ists *ere te !erson see6ing satisfaction as

actual !ossession4 rigtfully o)taine"4 of te !ro!erty,

/is ty!e of lien can arise un"er-♦ 9he common la%$ %hen it is &no%n as a legal lien

♦ ! contract agreed by the parties inoled$ %hen it is &no%n as an e8uitable lien or a

contractual lien/

A non9!ossessory lien occurs *en a clai$ is el" o+er !ro!erty tat

te clai$ant cannot ta6e into is actual !ossession4 )ecause of te

!ro!ertys si3e4 location or non9 a+aila)ility,

/e $ost co$$on non9!ossessory lien is a $ariti$e lien4 tougtere are occasions *ere an e#uita)le lien fro$ !artici!ation in a

contract can )e non9!ossessory,

A furter su)9"i+ision of $ariti$e an" co$$on la* liens %legal

liens( is-

♦ Particular$ %hich entitles the claimant to retain in respect o# charges incurred %ith regard to

the thing possessed only/

♦ >eneral$ %hich entitle the claimant to retain possession o# the property until all claims o# the

possessor are satis#ied$ irrespectie o# the item the claims are against/



/oug liens "o occur in a general co$$ercial sense4 tis section *ill

loo6 at te liens foun" in si!!ing o!erations4 an" e8a$!les *ill )e

$ainly fro$ si!!ing la*,



categories of lien.

Possessory liens

/is category of lien can arise *ere te !erson in !ossession of te

goo"s as-

♦ =esto%ed labour$ s&ill$ or e2pense in altering and improing the goods

♦ =een obliged to receie the goods or render the serice %hich has gien occasion to the lien

♦ Saed the goods #rom loss at sea or capture by an enemy/



At co$$on la* te carrier as !ro+i"e" a ser+ice in carrying te

goo"s an"4 tus4 as a !articular legal lien on te goo"s carrie" in

res!ect of all su$s "ue to i$ for freigt %anony$ous &='&(4 general

a+erage contri)utions %croo6s +, Allen &=<- te corintian glory

&<==( *ic inclu"es sal+age costs an" $oney s!ent !rotecting tecargo %ingston +, Wen"t &=:(,

lien

!ossessory non9!ossessory

co$$on la* e#uita)le $ariti$e

legal contractual !articular general

Particular general

/e carrier as no co$$on la* lien in res!ect of any oter su$s

o*ing to i$ fro$ te cargo o*ner in connection *it oter

transactions %o!!enei$ +, Russell &'5(4 for e8a$!le "ea" freigt

%!illi!s +4 ro"ie &&5(4 a"+ance freigt %6ircner +, Venus &<( an"

"e$urrage %)irley +, Gla"stone &&D(,

/e carrier $ay ac#uire a lien for tese an" for all oter suc $oney

"ue to i$4 )y an e8!ress ter$ in te contract %$clean o!e +,

Fle$ing &=&(4 a !articular e#uita)le lien,

/e e#uita)le or contractual lien is e+i"ence" )y a clause in te

carter!arty-

The owners shall have a lien on the cargo for frieght deadfreight

demurrage and average contribution due to them under this

Carter!arty,%norgrain clause 7D(



The carrier shall have a lien over the goods (((((((for all freight

primage charges demurrage damages for detention,,,,,%ne* 3ealan"

sout)oun" tra"e )ill of la"ing &<= clause (,

1iens create" )y contract co+er any $anner of ite$s te !arties to

te contract $ay *is-

♦ Dead#reight

♦ Demurrage )gray / Carr +-+? the an%ar al sabar +B5*

♦ all sub"#reights )the cebu +B0*

♦ #reight$ demurrage and all other charges %hatsoeer %hich included %arehouse charges

)harley / >ardner +B0.*

♦ Damages #or detention/



/e carrier as a lien4 at co$$on la*4 not only for freigt an"

general a+erage contri)utions "ue for te goo"s u!on *ic e

e8ercises te lien4 )ut for su$s "ue for freigt an" general a+erage in

res!ect of all goo"s of te sa$e o*ner in te sa$e si! on te sa$e

+oyage4 )ut not against goo"s on "ifferent +oyages un"er "ifferentcontracts %)ernal +, Pi$ &7(,

/is a!!lies e+en *ere te goo"s are carrie" un"er "ifferent )ills of

la"ing %so"ergren +, Fligt @ennings &=<:(4 a general !ossessory

lien,

If te )ill of la"ing for te goo"s as )een in"orse" or "eli+ere" to

"ifferent in"orsees4 te carrier $ay not e8ercise4 against one !erson4

a lien in res!ect of freigt an" general a+erage contri)utions "ue on

goo"s in"icate" in te )ill of la"ing *ic as )een transferre" toanoter %so"ergren +, Fligt @ennings &=<:(,

/e carrier loses is lien if e "eli+ers te goo"s to te consignee4

unless e *as in"uce" to "o so )y frau", He $ay "eli+er so$e of te

goo"s on *ic e as a lien4 an" continue to e8ercise a lien on oter

goo"s *ic e retains in res!ect of su$s o*ing %)ernal +, Pi$ &7(,

If te carrier "iscarges te goo"s into a *areouse of a tir" !arty4

e loses te lien at co$$on la* %$ors9le9)lanc +, Wilson &=7(4

toug te llien re+i+es if e o)tains !ossession of te goo"s once

$ore,

Wen a carrier "iscarges te goo"s into one of is o*n *areouses4

e continues to ol" a lien4 as e is still in !ossession of te goo"s

%$ors9le9)lanc +, Wilson &=7(,

/e carrier $ay also )e allo*e" to sell te goo"s if a clause to tat

effect is inclu"e" into te contract of affreigt$ent-

The carrier shall have a lien over the goods and the right to sell the

same by public auction or otherwise for all freight(((( %ne* 3ealan"

sout)oun" tra"e )ill of la"ing &<= clause (

Mariti$e liens

/ere are occasions *ere a si! incurs a "e)t or a carge is le+ie"

against it4in $ost cases te si!o*ner *ill settle te outstan"ing

a$ount4 as tere is no "is!ute as to te carge or te "e)t,

Ho*e+er4 tere are ti$es *en te si!o*ner is in "is!ute *it te

!erson )ringing te carge an" te si!o*ner *ill not or cannotsettle4 or e+en4 te si!o*ner $ay not )e a*are tat a carge is "ue,



In te e+ent of non9!ay$ent or "isregar" )y te si!o*ner it *oul"

)e i$!ossi)le for te cre"itor or in@ure" !arty to gain !ysical

!ossession of te si!,

/us a syste$ of $ariti$e lien as e+ol+e" allo*ing te clai$ant te

rigt to a+e te +essel an" cargo sei3e" as security for te

outstan"ing a$ounts,

A $ariti$e lien tra+els *it te ting to *ic it attaces4 into

*osoe+er an"s tat ting $ay !ass4 it is in no *ay "e!en"ent on

!ossession

A $ariti$e lien is a !ri+ilege" clai$ on a si!4 or on er cargo4 or on

eiter )ot tese an" te freigt4 in res!ect of ser+ice "one to4 orin@ury cause" )y4 te$, %te ri!!on city &<=(

A $ariti$e lien cannot generally e8ist in res!ect of a foreign state

o*ne" +essel %te !arle$ent )elge &'(,

Mo"ern !ractice is inclu"e" in te international con+ention for te

unification of certain rules relating to $ariti$e liens an" $ortgages

&<:=4 unfortunately insufficient states a+e ratifie" tis con+ention

to $a6e it o!era)le4 terefore $ost legal issues on tis su)@ect are

settle" )y national la*4 one of te $ost i$!ortant )eing te "ecisionsof te a"$iralty court of englan",

Englis la* recognises a li$ite" nu$)er of $ariti$e liens-

♦ Damage done by the ship

♦ Salage done to the ship

♦ SeamenGs and masterGs %ages

♦MasterGs disbursements

♦ =ottomry and respondentia/

Mariti$e liens can )e "i+i"e" into t*o $ain categories-

♦ 7or damage su##ered

♦ 7or money due under a contract



Damages su##ered inclu"e inci"ents *ere te +essel as colli"e" *it anoter +essel4 a

#uay4 or so$e oter structure4 it coul" also co+er "a$ages suffere" "ue to !ollution fro$

a non9tan6er,

Money due under contract *oul" inclu"e situations *ere te cre* are o*e" *ages4 a

si!s agent as not )een !ai" for ser+ices ren"ere"4 tugo*ners *is to ol" te +essel

until so$e agree$ent is foun" *it regar" to sal+age !ay$ent,

)aster*s disbursements are e8!enses )y te $aster for ite$s tat are necessary for te

na+igation of te si! an" te !rosecution of te +oyage %te orienta &<(,

Oter e8a$!les %all)eit +ery "ate"( of contracts *ic allo* $ariti$e liens to )e !lace"

are-

Respondentia *ic is in res!ect of a loan to te $aster tat ena)les te +essel to

continue on +oyage4 te security for te loan lies in te cargo,

=ottomry *ic is $oney )orro*e" )y te $aster on te security of te si! an" freigt4

for te !ur!ose of co$!leting te +oyage,

/o e8ercise a $ariti$e lien4 te clai$ant $ust !rocee" troug an action in rem in te

a"$iralty court %su!re$e court act &<&(4 *ere e $ust satisfy te court tat tere are

goo" groun"s for a clai$ against te si!,

Once te !lainti+e as o)taine" a *rit for te action in rem e can a!!ly for a *arrant

to arrest te si!4 *ic is "one )y a court official nailing a *rit to te $ain $ast,

Anoter for$ of restraint is )y a mareva in#unction4 tis for)i"s te $o+e$ent of a

co$!anys assets fro$ te @uris"iction of te court %$are+a co$!ania na+iera s,a +,

International )ul6carriers s,a &<=(,

In )ot te a)o+e instances if te "efen"ant in te case sails is si! %te @arlinn &<:( or

"is!oses of is assets4 e *ill )e el" in conte$!t of court an" lia)le to )e i$!risone",

2n"er a $ariti$e lien it is !ossi)le4 after a successful court !rocee"ings4 to sell te si!

an" use te !rocee"s to settle any outstan"ing a$ounts,

Priority of liens

Wen te $oney is !ai"4 or te +essel is sol" to o)tain fun"s to settle te "e)ts4 tere *ill

!ossi)ly )e $ore tan one clai$ant,

/o facilitate tis tere as e+ol+e" a !riority of liens4 so$e countries a+e tis !riority

*ritten into teir national la*4 in te u6 tere are no statutory !ro+isions setting out te

or"er of !riority for $ariti$e clai$s,



Generally te or"er a!!ears to )e tat contractual $ariti$e liens a+e !rece"ent o+er

co$$on la* !ossessory liens4 toug "iscretion for a!!ro+ing !riority liens rest solely

*it te courts,

Contractual liens nor$ally a+e te or"er-

Salage4 )ecause successful sal+age !reser+es te !ro!erty out of *ic te oter

clai$ants can )e !ai" %te gustaf &:5- te lyr$a no,5 &<=(,

Co$!eting sal+age clai$s ran6 in tat te $ost recent clai$ co$es first4 *ile te

earlier clai$s co$e last,

&, Wages4 $asters an" sea$ens *ages ran6 e#ual %te royal *ells

&<D(

5, Masters "is)urse$ents

7, Botto$ry %te union &:'(,

.a$age liens all ran6 e#ual4 e+en toug it can )e !ro+e" tat so$e occurre" )efore

oters %te stea$ fiser &<5=( *ere tere are conflicting clai$s )et*een contractual

an" "a$age liens4 te $atter is "ealt *it on an e#uita)le )asis4 gui"e" )y te follo*ing

!rinci!les %te inna &<7(

&, Mariti$e liens for negligence %tort( ran6 !rior to tose arising

fro$ contract *ic accrue" )efore te tort,

5, Sal+age lien attacing to a si! after a collision *ill ta6e

!rece"ence o+er te "a$age liens resulting fro$ te collision %teinna &<7(,

7, Wages lien are !ut after su)se#uent "a$age liens an" !ro)a)ly

after earlier "a$age liens as *ell %te elin &5(,

+ischarge of liens

Wen a cargo o*ner *ises to regain is goo"s4 or a si!o*ner "eci"es tat e *ants

te use of is +essel4 tey )ot $ust ta6e ste!s to satisfy eiter te !ossessory lien ol"er

or te court tat i$!ose" te $ariti$e lien4 tat tey are *illing to-

&, Pay *at is "ue

5, Co$e to so$e $utual agree$ent

7, Put u! a )on"4 for te "is!ute" a$ount4 *it a court as goo"

fait,

/e latter o!tion is !ossi)ly te $ost co$$on, As !ay$ent coul" a+e )een $a"e if

tere a" )een !rior agree$ent,

/e )on" !oste" can )e-

&, A cas !ay$ent4 to )e el" in sus!ense until a trial "eci"es on te

$erits of te case4 an" eiter !ays te $oney to te clai$ant or

returns it to te !erson *o !oste" it,

5, A )an6 guarantee for te "is!ute" a$ount

7, A guarantee fro$ te +essels !i clu) tat any outstan"ing

a$ount *ill )e !ai" after te court as "eci"e",



/e lien ol"er ten releases te cargo or gets te *rit lifte" fro$ te si!,

/e !rotagonists no* resort to la* or ar)itration for settle$ent of teir "isagree$ent4

secure in te 6no*le"ge tat *ate+er te outco$e4 te $oney *ill )e a+aila)le,



Sal+age

Ho!efully a si! *ill ne+er )e in a !osition to re#uest sal+age assistance4 nor soul"

$asters )e encourage" to atte$!t te sal+age of oter si!s4 e8ce!t !ossi)ly o*n

co$!any si!s4 unless tey are !ur!ose )uilt tugs,

2nfortunately sal+age "oes occur an" te rules concerning it for$ an interesting !art of

te co$$ercial as!ects of si! o!erations,

2n"er te &<&' )russel;s con+ention for te unification of certain rules of la* res!ecting

assistance an" sal+age at sea %safety con+ention( a $aster of a si! sall ren"er

assistance to any !erson *o is foun" at sea an" is in "anger of )eing lost,

9he master has an obligation to sae li#e$ he is under no obligation to sae property/

,aving property is called salvage!the remuneration for saving property is also calledsalvage"(

/e rigt of sal+age only arises in certain circu$stances

♦Maritime property %as saed$ this includes ships$ their apparel$ cargo and %rec&age

♦ 9he act too& place in tidal %aters )the goring +B-*

♦ 9he property %as in danger$ %hich %as a real danger$ such that any prudent master %ould

consider it reasonable to accept an o##er o# assistance

♦ 9he assistance %as oluntary

♦ 9he salage %as success#ul i/e/ No cure no pay

/e re*ar" for sal+age is "eter$ine" )y eiter courts or ar)itration4

an" te actual a$ount *ill "e!en" on

♦ 9he degree o# danger to the salage ship

♦ 9he ris& and danger to the property saed

♦ 9he enterprise o# the salors and the e2tent o# ris& to %hich they %ere e2posed

♦ 9he amount o# labour and s&ill applied by the salors

♦ 9he alue o# the property saed

♦ 9he loss$ i# any$ incurred by the salor





No cure no !ay

/e ter$ of Jno cure no !ayK $eans tat only successful sal+age *ill

)e !ai" for4 toug it *as generally acce!te" tat if a !art cargo *as

sa+e"4 te o*ner *oul" )e re#uire" to !ay sal+age for tat !art,

Ho*e+er4 *it te gro*ing concern for te en+iron$ent4 an" te"a$age %an" cost( tat !ollution coul" inflict4 oil tan6er o*ners *ere

a*are tat in a sal+age situation te sal+or *oul" not atte$!t

anyting *ere is e8!en"iture of e#ui!$ent an" $oney "i" not

!ro"uce so$e a$ount of financial return4 i,e, No cure no !ay4 *as

not te )est )asis on *ic to negotiate a contract,

In &<< an international conference *as calle" to consi"er te

a!!lication of sal+age an" o* it *as to )e +ie*e" in a conte$!orary

$ariti$e in"ustry4 *it te e$!asis on te safety of life4 !ro!erty

an" te en+iron$ent,

/is conference as !ro"uce" an international con+ention on

sal+age4 *it far reacing effects for te sa+ing of !ro!erty an"

en+iron$ent,

It *as "eci"e" tat te re*ar" for sal+age *oul" )e fi8e" *it a +ie*

to encouraging sal+age o!erations4 an" *oul" ta6e into account

♦ 9he saled alue o# the ship or other property

♦ 9he s&ill and e##orts o# the salors in preenting or minimising damage to the enironment

♦ 9he measure o# success obtained by the salor

♦ 9he nature and degree o# danger

♦ 9he s&ill and e##orts o# the salor in saling the ship$ other property and li#e

♦ 9he time used and e2penses and losses incurred by the salor

♦ 9he ris& o# liability and other r is&s run by the salors and their e8uipment

♦ 9he promptness o# the serices rendered

♦ 9he aailability and use o# ships and other e8uipment intended #or salage operations

♦ 9he state o# readiness and e##iciency o# the salor:s e8uipment and the alue thereo# )article

+0*



/e re*ar"s for sal+age o!erations cannot e8cee" te +alue of te

si! or oter !ro!erty sal+e",

S!ecial co$!ensation

/e con+ention also recognises te significance of !re+ious lof4 in

tat unsuccessful sal+age o!erations "o not get !ai" for4 tus it *as

agree" tat in cases of !ollution te sal+or *oul" recei+e so$e

re$uneration,

If te circu$stances of te case are suc tat te sal+or is not eligi)le

for sal+age un"er te rules of article &7 for a sal+age o!eration in

res!ect of a si! *ic )y itself or its cargo treaten "a$age to te

en+iron$ent e *ill )e entitle" to s!ecial co$!ensation fro$ te

o*ner of te si! e#ui+alent to is e8!enses,

Ho*e+er if e as !re+ente" or $ini$ise" "a$age to te

en+iron$ent te s!ecial co$!ensation !aya)le $ay)e increase" u!

to a $a8i$u$ of 7' of te e8!enses incurre"4 an" in +ery s!ecial

circu$stances a tri)unal $ay "eci"e tat te co$!ensation $ay )e

increase" furter to &'' of te e8!enses incurre" %article &D(,

(on6salvage operations

/e a)o+e section on sal+age does not a!!ly to agree$ents

+oluntarily entere" into-

♦ 9o sae property o## ships that are already sun&

♦ 9o remoe %rec&s

♦ 9o to% ships bro&en do%n that are not in danger

♦ 9o proide harbour tugs

♦ 9o to% oil rigs or disabled ships



/ese si!!ing o!erations *oul" )e "ealt *it )y nor$al contract

la* an" not "one in te eat of te $o$ent,

Protest

If any inci"ents occur "uring te +oyage te $aster $ust )eencourage" to note !rotest,

Wen te $aster of a si! Jnotes !rotestK e $a6es a "eclaration on

oat4 )efore a consular official4 $agistrate or notary !u)lic4 tat an

inci"ent occurre" or tat loss or "a$age as )een or $ay a+e )een

cause"4 )y circu$stances or actions )eyon" te $aster;s control,

/e s*orn state$ent $ust )e su!!orte" )y rele+ant log )oo6 entries

an" te e+i"ence of oter cre* $e$)ers,

At te ti$e of noting !rotest4 te $aster soul" reser+e te rigt to

e8ten" it if an" *en te full e8tent of te loss or "a$age is later

ascertaine",

A !rotest soul" )e note" as early as !ossi)le after te inci"ent to

*ic it relates4 i,e, At te ne8t !ort, Wen te !rotest concerns

cargo4 it soul" )e ten"ere" *itin 5D ours of arri+al at te !ort

an" )efore J)rea6ing )ul6K or co$$ence$ent of "iscarge,

Noting !rotest is a"+isa)le *en-

♦ =oisterous %eather on passage may hae caused damage to cargo

♦ !ny happening has caused or may hae caused damage to the ship

♦ Deterioration o# cargo on passage is anticipated because o# its condition on shipment/ 9he

bills o# lading #or the cargo must also hae been appropriately UclausedF/

♦ Rough %eather has preented the normal cargo entilation or bilge sounding routine being

carried out$ especially %ith perishable cargo

♦ 9he charterer or shipper is not abiding by the terms o# the charterparty e/g/ No cargo #or

shipment$ undue delay in loading$ cargo o# a sort not allo%ed by the c6p$ re#usal to paydemurrage and re#usal to accept bills o# lading a#ter signing because o# clausing by master/

♦ No consignee appears at the discharge port$ or #ails to discharge cargo or pay #reight

according to the c6p

♦ ! general aerage sacri#ice or e2penditure has been made/



A Ja!!eningK tat cause" "a$age to te si! coul" inclu"e circu$stances in+ol+ing

oter si!s4 e,g, Collision4 a foul )ert or ancorage4 "a$age in )erting an" sifting

)ert )y oter +essels4 i$!ro!er gang*ay )y Jinsi"eK si! etc,

In so$e countries te +essel;s legal rigts are not affecte" )y te a)sence of a note of

!rotest4 e,g, /e u6 *ere its $ain function is to su!!ort te clai$ of a cargo o*ner on

is insurers, Ho*e+er4 in $ost oter countries4 te !rotest for$s te first o)ligatory ste!

in te esta)lis$ent of a legal clai$,

/e original !rotest is entere" in a register at te autority *ere it *as $a"e an"

certifie" co!ies are issue" to te $aster on !ay$ent of a fee, /e $aster soul" o)tain

tree co!ies an" sen" t*o of te$ to te o*ner>$anagers of te +essel an" 6ee! one

on)oar" for reference, Rele+ant co!ies of log )oo6s4 state$ents of cre* an" any oter

su!!orting e+i"ence $ust )e for*ar"e" to te o!erator *it te note of !rotest,

*ample note of protest

Sir4

On tis "ay4 te ''nd day of #une one thousand nine hundred and ninety five4 )efore $e -

n( O( Tary of the city of riga latvia4 notary !u)lic "uly a"$itte" an" s*orn,

Documents

Introduction for port knowledge