A shipowner is entitled, whether by law or contract, to a wide general right of indemnity for losses incurred as a consequence of compliance with charterers’ orders. The potentially far-reaching application of the indemnity has led to limitations, in particular that the loss, damage or liability does not result from a risk or cost which the shipowners have expressly or impliedly agreed to bear, and is effectively caused by the charterers’ order. The main focus of this paper is the nature, extent and effect of those limitations.

The subject matter of my talk this evening is the shipowners’ general right of indemnity for the consequences of complying with time charterers’ orders. This is both important and topical. It is important because the indemnity right is one which may arise at almost any stage of time charter service and there is a need to know and understand its operation in practice. It is topical because it is an area of the law that has been addressed in recent years, by the Supreme Court in The Kos,1 a decision which has generated a degree of debate and controversy.

The particular focus of my talk is the limitations on the general right of indemnity. The right of indemnity is cast in wide terms and its potential application is very far reaching. The courts have accordingly been concerned to limit the extent of the right, and I shall endeavour to analyse and draw together the various means by which they have done so, to identify and explain those limitations and to provide a practical check list of principal matters to consider.