Bills of lading, war risks, limitation of liability and deviation

Clause 11 of the draft is again very common to most C/P´s115. This clause has almost no relevance in LNG trade because LNG cargoes are normally not traded by use of B/L´s, at least not under T/C`s; There the LNG is transported from the producer to the importer under long term sales contracts, where the charterer of the vessel is either the seller or the buyer. Thus, no B/L is needed. Under a V/C on the other hand, the consignee of the spot cargo may not be known when the charterparty is signed, and hence the third party who will buy the cargo can rely on a B/L.

The clause links the master - even though he is appointed by the owner - with the charterer in that the charterer will have the right to order and direct the master regarding the signing of the B/L. The charterer on the other hand has the duty to indemnify the owner against all consequences or liabilities that may arise from signing bills of lading in accordance with the directions of Charterer or their agents, to the extent that the terms of such bills of lading fail to conform to the requirements of the draft. This clause i.e. stipulates charterers’ liability for the signed B/L (since it is the charterer who has the right to direct the master). Additionally stipulates that the charterer has to indemnify the ship-owner if he orders the

114 _{As e.g. the ExxonMobil VOY2005: The exceptions stated in of this Clause shall not affect Owner’s} warranties and undertakings herein with respect to the condition of Vessel, the obligations of Owner in respect of the loading, handling, stowage, carriage, custody, care and discharge of the cargo and/or the rights or obligations of either owner or charterer with respect to laytime or demurrage as elsewhere provided in this Charter.

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master to sign a B/L that triggers liability exceeding what the owner under the V/C had already. This can be towards any third party such as cargo owners.

Criticism arose regarding the missing reference to the Letter of indemnity (LOI)116.

After this the draft incorporates the most common protective clauses that are to be found in B/L or C/P´s. First, the clause Paramount117 and the New Jason clause118 (clause 11 ii) are incorporated. Additionally, the draft states that general average119 (GA) shall be adjusted according to the York/ Antwerp Rules 1974 as amended 1994120 and incorporates the

116 _{The LOI is a written statement in which one party seeks to compensate another for the costs and} consequences of carrying out a certain act. For example, a shipper who has been delayed in sending the original B/L to the receiver may instruct the master of the ship or the ship-owner to release the cargo to a named third party without production of the original B/L. The master or the owner, if they agree, may require a letter of indemnity from the shipper for the consequences of complying should it turn out that the named party is not entitled to take delivery of the goods. Another example is a request by the shipper to discharge the goods in a port other than the one listed in the contract of transport. It should be noted that, as a rule, any such letter which seeks to indemnify against an act which is intended to defraud an innocent third party is unenforceable in a court of Law. Cf Brodie, Peter: Dictionary of Shipping Terms, 5th edn, London 2007, p. 147.

117

Clause in a B/L or C/P which regulates that the contract of carriage is governed by the Hague Rules or Hague- Visby Rules or the enactment of these rules of the country that has jurisdiction over the contract. Cf. Debattista, Charles: Southampton on Shipping Law, London 2008, p. 49.

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This clause is commonly found in B/L and C/P, see TankerVoy 87 clause 28 and Combiconbill clause 21. It is a protective clause inserted in a C/P or a B/L which stipulates that the shipowner can recover in general average (GA) even when the loss is caused by negligent navigation. This clause followed from the decision of an American court. While American law exempted a ship-owner from liability for loss or damage to cargo resulting from negligent navigation, this did not entitle the ship-owner to recover in GA for such a loss. Cf. Bull, Hans Jacob/ Falkanger, Thor/ Brautaset, Lasse: Scandinavien Maritime Law: the Norwegian perspective, 4th edn, Oslo 2004, p. 469.

119

“A deliberate sacrifice or expenditure incurred for the common safety of the adventure. Those interests that benefits from the sacrifice or expenditure contribute rateably towards the loss”. Cf. Branch, Alan E: Dictionary of Shipping, London 2005, p. 152.

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commonly used both to blame collision clause121. Finally, the draft incorporates the limitation of liability122 principle, the war risks clause123 and the deviation clause124.

3.2 Lien

Clause 11 of the draft renders the owner a lien on the cargo for all freight, deadfreight, demurrage and costs including attorney fees of recovering the abovementioned monies. The charterer has a lien on the vessel for any freight prepaid and not earned. Also this clause is pretty standard125, limited to the charterers’ lien on the vessel for prepaid freight which seems to be a novelty.

121 _{That is a clause in a B/L or a C/P which states that, in a both to blame collision, the owners of the cargo} must indemnify the carrying ship against any amount paid by the carrying ship to the non-carrying ship for damage to that cargo. The need for this clause arose because under American law, a cargo owner is not able to make any recovery from the carrier for damage resulting from negligent navigation, but may instead sue the non-carrying ship which in turn seeks recovery from the carrying ship in proportion to its fault. This would render a carrier indirectly liable for a loss for which he is not directly liable to the cargo owner. The clause has, however, been held to be invalid in the American courts when incorporated into a contract with a common carrier. Cf. Brodie, Peter: Dictionary of Shipping Terms, 5th edn, London 2007, p. 45.

122

Under this principle there is a maximum sum of money payable by a carrier to a shipper or B/L holder for any damage or loss to the cargo for which the carrier is liable under the contract of carriage. The limitation may be per attached to any piece or package, or per tonne or per container according to the particular contract. The amount of the limitation is determined by agreement of the two parties or by law and varies between the different sets of rules(Hamburg Rules, Hague-Visby Rules, Hague Rules and the new Rotterdam Rules), some being more cargo friendly or vice versa.

123 _{A War risks clause in a C7P or a B/L stipulates the actions the master can take if the ship is put at risk} because of war should the voyage proceed according to the contract. The outcome is that the master would not be forced to proceed if he would put the ship or the crew at risk.

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That is a clause in a B/L or a C/P which allows the ship-owner to deviate from the agreed route. It may permit the vessel to call at unscheduled ports for whatever reason, or to deviate from the route to safe human life or property. The clause can vary from contract to contract. In a T/C this clause is also known as a putting back clause.

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