The Club has produced a series of Legal Costs Cover (LCC) guides for Members to explain several common disputes.
Safe ports
Both time and voyage charterparties will normally place charterers under an obligation to order the ship to proceed to ports which are safe. Safe port disputes are normally complex and fact sensitive. We set out some of the principles a court or arbitration tribunal will usually apply when considering such claims.
Off-hire issues
Unless otherwise provided in the charterparty, the charterer is under an obligation to pay hire from the time the vessel was delivered to them, until the time of redelivery. However, it is usually the case that the parties have agreed to certain circumstances which would allow charterers to stop paying hire for specific periods of time. This guide provides some general guidance for owners and charterers on off-hire issues.
Laytime & demurrage
Laytime and demurrage are two of the most fundamental principles applicable to voyage charterparties. This guide will set out a basic summary of what they are and how they operate in practice. Whilst the position can vary from jurisdiction to jurisdiction, the following principles govern the construction of the relevant incorporation clauses under English law and are set out for guidance purposes only.
Exercising the right of withdrawal
The right of withdrawal is one of the remedies available to shipowners who have time chartered their vessel, when their charterer fails to pay hire promptly and in full. The right can have significant consequences upon the shipowner unless it is carefully considered beforehand and exercised correctly. Therefore, this guide provides a summary of the way such right appears in practice, how it is exercised and what consequences arise from its application for both the shipowner and charterer.
Liens
Liens are an important tool in the maritime industry, defined as ‘the right to take another’s property if an obligation is not discharged’. Liens are a remedy available to a shipowner to secure claims against a charterer when there has been a breach of contract, most usually non-payment or short payment of hire. Liens are ‘in rem’ claims meaning they concern the property, i.e. the vessel and/or its cargo. The property itself is treated as the wrongdoer although it naturally forces the owner of such property to act. This guide provides some general guidance for owners and charterers on the effectiveness of liens and some other self-help remedies.
Incorporation of the charterparty terms into bills of lading
In the commodity trade, when goods are carried on a chartered vessel it is common practice to include a clause in the bills of lading incorporating some or all of the terms of the charterparty. It should be borne in mind that a bill of lading remains a separate contract from the charterparty, the terms of which are incorporated and so the question ‘whether a cargo claim is subject to bill of lading or charterparty terms’ often arises. Due to its significance, the construction of the clause incorporating those terms into bills of lading has given rise to extensive judicial consideration. Whilst the position can vary from jurisdiction to jurisdiction, the following principles govern the construction of the relevant incorporation clauses under English law and are set out for guidance purposes.
Formation of the contract: What happens when the fixture is on 'subject to...'?
It is common practice in the chartering trade for vessels to be fixed “on subs”, but what does this mean and when does a legally enforceable contract actually come in to being? This guide looks at this commercial practice and explores the legal consequences when contracts are negotiated in this way.
Arbitration & mediation
English law allows for several different forums to resolve disputes, as an alternative to litigation in court. Given the costs and resource requirements of court proceedings in England and Wales, these Alternative Dispute Resolution (ADR) methods are now actively encouraged by the courts. This guide looks at arbitration and mediation in particular.
Anti-suit injunctions
A law and jurisdiction clause is usually negotiated and included in almost all shipping
contracts to provide certainty on how an agreement will be interpreted. Whilst a law
and jurisdiction clause can be straightforward, when parties are based in different jurisdictions, there is potential for conflicts of law or cross-border disputes. This guide focuses on contractual anti-suit injunctions and provides general guidance on how to seek an anti-suit injunction or defend an application in court.
Deviation
The duty of utmost dispatch and the concept of deviation are central to understanding the operation of charterparties and the requirements which such contracts place upon owners and carriers. This guide provides a short introduction to these concepts. For more detailed guidance, please contact the Club’s Claims team, who will be happy to assist.
Charterparty Implied Indemnities
The following LCC guide explores the concept of charterparty implied indemnities. In contracts, an implied indemnity provides protection that is not explicitly stated but is understood to exist by operation of the law. In shipping, such indemnities play a key role - under a time charter, the owners must follow the charterers’ instructions on how to use the vessel.
Hold Cleanliness
This article considers the legal obligations of owners regarding the cleanliness of their vessel’s holds from the perspective of both time and voyage charters. Hold cleaning remains a vital issue for the carriage of any bulk cargo. Failure to comply with the contractual obligations for cleanliness can often lead to disputes and lost time in addition to potential claims for cargo contamination.