International Carriage of Goods by Sea

Advise O, HB, TC, F & A ; D and S as to their rights and duties and how they could lawfully implement them.

Part One – Advice to O and HB sing the contract between them

1.Statement of Facts

O is the proprietor of the Interbulk Viking and has agreed to a bare boat ( death ) charter to the charterer, HB. This is a death charter as O is to supply the vas for a period of five old ages and has hence delivered the vas to Buenos Aires prior to the cancellation day of the month. HB is hence paying a monthly hire and is, for the continuance of the charter, to the full responsible for the ship. As stated by the United Nations Conference on Trade and Industry:

“Under this type of contract, the charterer adult males and equips the vas and assumes all duty for its pilotage, direction and operation ; he therefore acts as the proprietor of the vas in all of import respects during the continuance of the charter.[ 1 ]

The footings of the death charter contract are under the standard signifier of Barecon 2001. Clause 23 ( a ) of Barecon 2001 relates to the application of the Hague-Visby regulations as the applicable jurisprudence in absence of any other express term in a contract of passenger car.

The relationship between O and HB does non affect any contract of passenger car and hence, no resort to clause 23 ( a ) is required.

Alternatively, the grudge relates entirely to the fitness of the vas.

2.Statement of legal issues

( a ) Was O asked for permission to Sub-Charter the vas?

( B ) Is O apt to HB for amendss caused onboard the ship?

( degree Celsius ) Does O hold a right to action for hire from HB?

3.Statement of Answers

The jurisprudence of this affair falls under the legal power of England, as specified under clause 30 ( a ) of the Barecon 2001 Standard Bareboat Charter and any difference will hence be conducted in conformity with the London Maritime Arbitrators Association.

( a ) Was O asked for permission to Sub-Charter the vas?

While sub-chartering is a really common and necessary happening for the industry of passenger car of goods by sea [ 2 ] , clause 22 ( a ) of Barecon 2001 provinces that anterior consent in authorship is required from the proprietor before any such activity may take topographic point. Termination of the contract is nevertheless non permitted for breach of this clause as it does non organize one of the default acts under clause 28 for which expiration may result.

( B ) Is O apt to HB for the amendss caused onboard the ship?

( I ) O’s duties as the ship proprietor

Clause 3 ( a ) of Barecon 2001 provinces that:

“The Owners shall earlier and at the clip of bringing exercising due diligence to do the Vessel seaworthy and in every regard ready in hull, machinery and equipment for service under this Charter.”

The inquiry now is whether the ship was seaworthy and in order to reply this, mention must be made to the appropriate instance jurisprudence.

( two ) Was the vas seaworthy?

The authoritative definition of fitness by Lord Justice Scrutton in FC Bradley & A ; Sons Ltd v Federal Steam Navigation Co [ 3 ] is as follows:

“The ship must hold that grade of fittingness which an ordinary careful and prudent proprietor would necessitate his vas to hold at the beginning of her ocean trip holding respect to all the likely fortunes of it…if the defect existed, the inquiry to be put is, would a prudent proprietor have required that it would be made good before directing his ship to sea had he known of it? If he would, the ship was non seaworthy…[ 4 ]

The old death charterers had notified O of a really hot engine and a prudent proprietor would hold investigated this and rectified the state of affairs before directing the ship to sea.

Further aid is provided in the more modern attack in Popera Traders Co Ltd V Hyundai Merchant Marine Co Ltd, The Eurasiatic Dream [ 5 ] . Here Justice Creswell homed on several cardinal points of which the most relevant is that fitness relates to the‘physical status of the vas and its equipment[ 6 ]’ .

The clear decision here hence is that the vas was non seaworthy.

( three ) Does the fact that HP did non do regular cheques of the vas render them responsible for the fixs to the vas?

The fact that the vas was non seaworthy does non automatically intend that the harm caused to the ship was wholly the mistake of O. There is besides the consideration of causing, which was considered in the instance of A Meredith Jones & A ; Co Ltd V Vangemar Shipping Co Ltd ( The Apostolis ) [ 7 ] in which it was held that an act or skip must go through the trial of causing and that therefore the act or skip must be the operative cause of the ship’s unseaworthiness.

The facts of the present instance do non show a clip graduated table, which would be needed in order to determine whether HP should hold made periodic cheques prior to the fire, in order to keep the ship in conformity with clause 10 ( a ) of Barecon 2001.

Nothing can get away from the fact that the ship was unseaworthy from the beginning and it was the skip of O, under clause 3 ( a ) , that constituted the operating cause of this unseaworthiness.

However clause 3 ( degree Celsius ) states that:

“The bringing of the Vessel by the Owners and the pickings over of the Vessel by the Charterers shall represent a full public presentation by the Owners of all the Owners’ duties under this clause 3, and thenceforth the Charterers shall non be entitled to do or asseverate any claim against the Owners…but the proprietors shall be apt for the cost…occasioned be latent defects in the Vessel…”

The defect on the ship was in fact an obvious one, which means that it would hold been the duty of HB ( the charterer ) , under clause 10 ( a ) ( one ) following bringing in Buenos Aires and non the proprietors, whose exclusive duty would hold been for latent defects within the first 12 months of the charterparty [ 8 ] .

In add-on to clause 10 ( a ) ( I ) , clause 17 ( a ) besides states that HB, as charterer, has the duty of indemnifying O:

“…against any loss, harm or disbursal incurred by the Owners originating out of or in relation to the operation of the Vessel by the Charterers…”

HB is hence responsible for the losingss incurred.

( four ) Would the vas have been insured for this harm?

Clause 13 ( a ) specifies that it is the duty of the Charterer to see the vas ‘against hull and machinery’ . It is besides noted that such insurances would be arranged by the Charterer and:

“The Charterers shall consequence all insured fixs and shall set about colony and reimbursement from the insurance companies of all costs in connexion with such fixs every bit good as insured charges, disbursals and liabilities to the extent of coverage under the insurances herein provided for…[ 9 ]

The first job here is that the Charterer ( insured ) would non hold declared the obvious defect in the engine as he merely would non hold known about it. While it is critical that the insurance policy is scrutinised in order to determine the full extent of the insured points, it is extremely likely that the non-disclosure of the defect would render the policy nothingness.

It is hence safe to reason that the insurance companies will non reimburse for the cost of the harm to the ship.

( degree Celsius ) Does O hold a right to action for hire from HB?

Clause 11 ( a ) states that the Charterers are obliged to pay hire duly in conformity with the footings of the Charter. Further to this, clause 11 ( vitamin E ) specifies that hire may be ceased when the vas is lost or losing but this appears to be the lone case when such action is allowable. This therefore means that, in conformity with clause 11 ( degree Fahrenheit ) , hold in payment entitles the proprietor to involvement at an in agreement rate or the rate quoted by the British Bankers’ Association.

LEGAL ADVICE TO O

O is entitled to bear down involvement for hire withheld but in order to avoid holding to take the instance to arbitration under the Arbitration Act 1996, O should non pay the amendss to HB for their losingss as they are non apt for such costs due to dispatch of any liability under clause 3 ( a ) in conformity with clause 3 ( degree Celsius ) .

LEGAL ADVICE TO HB WITH RESPECT TO THIS CONTRACT

HB should go on to pay hire because it is non entitled to keep back such payment unless the ship is lost or losing [ 10 ] .

HB is apt under clause 10 ( a ) ( I ) for any loss due to failure to keep the ship and must indemnify O in conformity with clause 17 ( a ) .

Part Two – Advice to HB and TC with regard to the contract between them

1.Statement of Facts

HB sub-chartered the ship for 2 old ages under Time Charter NYPE 1993 charterparty, which incorporates clauses 45 ( B ) to Temp Charter Co ( TC ) with a topographic point of concern in Spain.

Technetium wants to keep back hire from HB but, as the monetary value of higher has risen a great trade, TC would wish to keep usage of the vas for the contract period. Technetium admirations if it would be possible to wheedle its bank into taking its clip with the payment.

HB is reasoning that the sub-charter to F & A ; D was non authorised and argues the right to retreat the vas.

TC claims that HB must lend to fulfill any lading claim.

2.Statement of legal issues

In conformity with clause 45 ( B ) of NYPE, 1993, this contract is governed by English jurisprudence and any difference will be arbitrated under this legal power via one or two Arbiters who are members of the Baltic Mercantile & A ; Shipping Exchange.

( a ) Does TC have the right to keep back hire from HB?

( B ) What are the effects under NYPE 1993 of unauthorized sub- charter?

( degree Celsius ) Should HB lend to fulfill any lading claim?

3.Statement of Answers

( a ) Does TC have the right to keep back hire from HB?

Clause 11 ( a ) of NYPE, 1993 provinces that:

“Failing the punctual and regular payment of the hire, or on any cardinal breach of this Charter Party, the proprietors shall be at autonomy to retreat the Vessel from the service of the Charterer without bias to any claims they ( the Owners ) may otherwise hold on the Charterers.”

This therefore means that TC does non hold a right to keep back hire from HB and if it did, HB would be entitled to retreat the vas, which, due to the increased cost of hire, non something that TC would desire to happen!

( B ) What are the effects under NYPE 1993 of unauthorized sub- charter?

Clause 18 of NYPE 1993 provinces:

“Unless otherwise agreed, the Charterers shall hold the autonomy to sublease the Vessel for all or any portion of the clip covered by this Charter Party, but the Charterers remain responsible for the fulfillment of this Charter Party.”

This clause therefore licenses TC to sub-charter the vass so long as the continuance falls within the parametric quantities of its ain death charter period of two old ages. The sub-charter to F & A ; D is a ocean trip charterparty, which is described by UNCTAD as follows:

“…the proprietor undertakes to supply a vas for the passenger car of specified goods on one or several ocean trips between named ports ( or within certain scopes of burden and dispatching topographic points ) …[ 11 ]

The ocean trip charterparty would hence hold taken topographic point good within the set clip period of the death charterparty between HB and TC. TC was hence expressly authorised to sublease.

( degree Celsius ) Should HB lend to fulfill any lading claim?

The charterer is expressly exempted from

Clause 27 of NYPE, 1993 provinces that:

“Cargo claims as between the Owners and the Charterers shall be settled in conformity with the Inter-ClubNew YorkProduce Exchange Agreement of February 1970, as Amended, May 1984 or any subsequent alteration or replacing thereof.”

However, the lading that has been lost is purely a affair associating to the contract between F & A ; D and S, in which TC are moving as bearers ( on history of that contract being a ocean trip charterparty ) . This therefore means that HB’s duties to TC make non affect any lading and are merely in relation to the fitness of the ship. This is nevertheless worded slightly otherwise under NYPE, 1993, in which clause 6 provinces that the proprietors shall:

“…maintain the Vessel’s category and maintain her in a thoroughly efficient province in hull, machinery and equipment for and during the service, and have full complement of officers and crew.”

Despite the fact that this is a sub-charter, the proprietor is classified as HB for the intents of this contract and this is expressly stated under clause 39 of the UNCTAD Charterparties study [ 12 ] , which states that:

“Where the contract from subleasing is embodied in a charterparty, two independent charterparties will be running at the same time, puting the original charterer in a double place: as against the proprietor of the vas his place remains that of a charterer, whilst as against the subcharterer it is in consequence that of an owner…”

All of this therefore means that HB’s duties are entirely in relation to contracts to which it is a party. This therefore means that any part to a lading claim is merely collectible in the event that TC itself becomes apt for such payment to either S or F & A ; D. This will be illustrated below but for the current intents it is merely necessary to province that TC was apt to F & A ; D for amendss caused to the goods and hence, HB must lend to the lading claim.

LEGAL ADVICE TO HB WITH RESPECT TO THIS CONTRACT

There are no effects for TC as a consequence of the sub-charter being unauthorised in authorship. The ground for this is that the footings of NYPE 93 expressly stipulate mandate to sublease capable to a contrary understanding for which there is no grounds in the present instance.

HB is required to lend to a lading claim

LEGAL ADVICE TO TC WITH RESPECT TO THIS CONTRACT

If TC desires to keep the charterparty, they must in no manner effort to discontinue or detain payment of hire.

Part Three – Advice to TC and F & A ; D sing the contract between them

1.Statement of Facts

TC Sub-chartered a ocean trip charter [ 13 ] to Fast & A ; Dry ( F & A ; D ) , under GENCON 1994 Revision on ‘freight and delivery’ footings. As a ocean trip charter, the bearer is the proprietor ( TC ) and the charterer is F & A ; D. The vas was to sail from Buenos Aires to Lisbon with S’s lading of 10,000 jackets and received a clean CONLINEBILL Revision 1978 Bill of Ladling which was issued ‘on behalf of the ship’s master’ by F & A ; D. The goods are in good order and status and are placed in a lading clasp for stowage.

Due to an obvious defect of the engine, a fire broke out in the engine room and destroyed the lading.

F & A ; D seeks a missive of insurance from TC saying that disbursals will be paid by TC

TC provinces that they owe no such duty and contends that F & A ; D owes TC cargo and amendss for publishing inappropriate measures of cargo.

2.Statement of Legal Issues

The legal power of this charterparty is unknown and may hold been missed out wholly as there is no indicant as to whether Gencon 1994 clause 19 ( a ) [ 14 ] , Gencon clause 19 ( B ) [ 15 ] or a nominative legal power has been adopted. Therefore for default purposes the legal power must be determined in conformity with the method stipulated in Bonython v Commonwealth of Australia [ 16 ] which stated that it is:

“The system of jurisprudence by mention to which the contract was made or that with which the dealing had its closest and most existent connexion.[ 17 ]

This is now dealt with by the 1980 European Community Convention on the Law Applicable to Contractual Obligations ( Rome Convention ) . The Convention provinces that the jurisprudence most closely connected with the contract must be applied and under article 4 ( 2 ) this is to represent the jurisprudence of ‘characteristic performance’ . In the present instance the charterer is transporting out the public presentation of the contract by runing the vas and hence the legal power of the cardinal disposal of F & A ; D will be the legal power of the charterparty in the event of a difference. The Jurisdiction is hence Portugal and this is in maintaining with clause 3 of the Bill of cargo, which states that:

“Any difference originating under this Bill of Ladling shall be decided in the state where the bearer has his chief topographic point of concern, and the jurisprudence of such state shall use except every bit provided elsewhere herein.”

( a ) Should TC indemnify F & A ; D?

( B ) Was the measure of ladling inappropriate?

( degree Celsius ) Does F & A ; D owe TC cargo and amendss?

3.Statement of replies

( a ) Should TC indemnify F & A ; D?

TC is distinctive as the proprietor of the vas for the intents of this charterparty [ 18 ] . In conformity with clause 2 of Gencon 1994:

“The proprietors are to be responsible for loss of or damage to the goods…in instance the loss harm or hold has been caused by personal privation of due diligence on the portion of the Owners or their Director to do the Vessel in all respects seaworthy…”

The clause besides states that no other liability arises for unseaworthiness ‘at any clip whatsoever [ 19 ] ’ . The defect itself was obvious, which means that due diligence would hold resulted in find of the defect instead rapidly and hence TC should indemnify F & A ; D.

( B ) Was the measure of ladling inappropriate?

The above facts reveal that S received a clean CONLINEBILL Revision 1978 Bill of Ladling which was issued ‘on behalf of the ship’s master’ by F & A ; D. The goods were besides in good order and status and were placed in a lading clasp for stowage.

With respect to the Bill of Lading, clause 10 of Gencon, 1994 provinces that:

“Bills of ladling shall be presented and signed by the Master as per the Congen Bill of Ladling signifier, Edition 1994”

The Bill of Ladling that was really issued was a Conlinebill and is hence inappropriate.

( degree Celsius ) Does F & A ; D owe TC cargo and amendss?

Clause 10 of Gencon, 1994 continues to province that:

“The Charterers shall indemnify the Owners against all effects or liabilities that may originate from the sign language of measures of ladling every bit presented to the extent that the footings or contents of such measures of ladling impose or consequence in the infliction of more burdensome liabilities upon the Owners than those assumed by the Owners under this Charterparty.”

This therefore means that liability that has arisen as a consequence of the footings of the inappropriate Bill of Ladling are collectible to the proprietor by the charterer. In conformity with this Bill of Lading, it is stated under clause 17 that:

“…said Shipowner merely shall be apt for any harm or loss due to any breach or non-performance of any duty originating out of the contract of passenger car whether or non associating to the vessel’s seaworthiness…”

Further to this, clause 2 of the Bill of Ladling provinces that:

“In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on February 23rd1968 – The Hague Visby Rules – apply obligatorily, the commissariats of the several statute law shall be considered incorporated in this Bill of Lading.”

It has already been established that the legal power of Bill of Lading is Portugal and this state has ratified the Hague-Visby regulations. Crucially, in conformity with Article 1, the bearer is either the ship proprietor or the charterer who enters into the contract of passenger car with the shipper. This therefore means that in this instance the bearer is F & A ; D and non TC as it is F & A ; D who has entered into the contract of passenger car with S [ 20 ] . This is accounted for in the balance of clause 17 of the Bill of Ladling which states that:

“If…it is adjudged that any other is the Carrier…all restrictions of, and exonerations from, liability provided for by jurisprudence of by this Bill of Ladling shall be available to such other…”

This therefore means that F & A ; D is capable to the statutory restrictions of liability that are set out in the Hague-Visby regulations.

The consequence therefore is that, for the intents of this contract, TC incurs no liability under Gencon 1994 and nor does it incur liability under the Bill of Ladling as it was non the bearer under the contract of passenger car. Therefore, F & A ; D does non owe TC cargo and amendss.

Legal Advice to TC

TC should indemnify F & A ; D as there was personal privation of due diligence on the portion of TC.

TC is right in believing that the Bill of Lading is inappropriate as it is non a Congen Bill of Ladling signifier, edition 1994. However, as TC is non the bearer of the vas under the Bill of Lading, TC incurs no farther liability over and above that of Gencon 1994 and hence no cargo and amendss are owed by F & A ; D.

Legal Advice to F & A ; D with regard to this contract

The Bill of Lading was inappropriate but F & A ; D has incurred no liability towards TC as a consequence of this mistake. F & A ; D are right to anticipate damages from TC for losingss incurred.

Separate Four – Advice to F & A ; D and S with respect to the contract between them

1.Statement of Facts

S is now actioning F & A ; D for amendss but it argues that it is non responsible for the harm and must action the bearer.

2.Statement of the legal issue

( a ) Who may S Sue?

3.Statement of the reply

In conformity with the Hague-Visby regulations S may action the bearer ( F & A ; D ) who is obligated to keep that the ship is seaworthy and able to procure the lading safely.

Article III ( 1 ) ( a ) states that:

“1. The bearer shall be bound before and at the beginning of the ocean trip to exert due diligenceto: ( a ) Make the ship seaworthy”

Article IV ( 1 ) of the Hague-Visby regulations states that:

“Neither the bearer nor the ship shall be apt for loss or harm arising or ensuing from un-seaworthiness unless caused by privation of due diligence on the portion of the bearer to do the shipseaworthy…”

Further to this, Article IV ( 2 ) ( B ) states that:

“Neither the bearer nor the ship shall be responsible for loss or harm arising or ensuing from ( B ) fire, unless caused by the existent mistake or privity of the carrier.”

Again, as the defect was obvious and F & A ; D is apt to S as bearer for losingss that have arisen out of the fire. However, in conformity with the Hague-Visby regulations, amendss are limited under Article IV ( 5 ) ( a ) to the equivalent of 666.67 of the higher of either units of history per unit or per kg of weight.

Advice TO F & A ; D

As bearers F & A ; D are apt to losingss incurred by S but these losingss are limited under Article IV ( 5 ) ( a ) of the Hague Visby Rules.

Advice TO S

S is entitled merely to limited amendss provided under the Hague Visby regulations.

Bibliography

Legislation

European Community Convention on the Law Applicable to Contractual Obligations 1980

Hague-Visby Rules

Inter-Club New York Produce Exchange Agreement of February 1970

Standard Forms

Barecon 2001

Gencon 1994

NYPE 1993

CONELINEBILL 1978

Case Law

Scrutton in FC Bradley & A ; Sons Ltd v Federal Steam Navigation Co ( 1926 ) 24 LIL Rep 446

Popera Traders Co Ltd V Hyundai Merchant Marine Co Ltd, The Eurasiatic Dream [ 2002 ] EWHC 118

A Meredith Jones & A ; Co Ltd V Vangemar Shipping Co Ltd ( The Apostolis ) [ 1997 ] 2 Lloyd’s Rep 241

Bonython v Commonwealth of Australia [ 1951 ] AC 201

Offshore International SA V Banco Central SA [ 1976 ] 3 All ER 749

Freedom General Shipping SA v Tokai Shipping Co Ltd, The Khan Zephyr [ 1982 ] 1 Lloyd’s Rep 73

Text Book Publications

Hughes, AD, 1999,Casebook on Passenger car of Good by Sea,Blackstone Press Ltd, 2neodymiumedition, London

D’Arcy L, Murray C and Cleave B, 2000,The Law and Practice of International Trade,Sweet & A ; Maxwell, 10Thursdayedition, London

Chuah JCT, 2001,Law of International Trade,Sweet & A ; Maxwell, 2neodymiumedition, London

Day & A ; Griffin B, 2003,The Law of International Trade,Butterworths, 3rdedition

Dockray M, 2004,Cases and Materials on the Carriage of Goods by Sea,Cavendish Publishing, 3rdedition, London

Legal Publication

UNCTAD,Charter Parties, study by the Secretariat of UNCTAD, 1974, New York UN, clause 22

Article

Professor W Tetley, QC,Interpretation and Construction ofthe Hague, Hague/Visby andHamburgRules( 2004 ) 10 JIML 30-70

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