i-law

Voyage Charters

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Chapter 52

Terms of Bills of Lading
[Clause 20 continued]
(b) The carriage of cargo under this Charter Party and under all Bills of Lading issued for the cargo shall be subject to the statutory provisions and other terms set forth or specified in sub-paragraphs (i) through (vii) of this clause and such terms shall be incorporated verbatim or be deemed incorporated by the reference in any such Bill of Lading. In such sub-paragraphs and in any Act referred to therein, the word “carrier” shall include the Owner and the Chartered Owner of the Vessel.
[Clause 20(b) is continued in the next chapter]
52.1 The purpose of clause 20(b) is to incorporate the provisions contained in sub-clauses (i) to (vii) of the charter form into both the charterparty itself and into any bills of lading issued under clause 20(a). So far as concerns incorporation of these clauses into the charterparty, clause 20(b) is of itself effective to achieve the intended result. However, clause 20(b) cannot of itself achieve an effective incorporation of the clauses into a bill of lading, a result which can only be achieved if the bill of lading itself contains words which are apt to incorporate the relevant terms of the charter. The required form of bill of lading prescribed by clause 20(a) incorporates “all the terms whatsoever” of the charter, and these words are wide enough to bring in all the appropriate terms of the charter including terms other than sub-clauses (i) to (vii) of clause 20(b). In The Miramar 1 it was held, under the identical Exxonvoy 69 form of charter, that the bill of lading incorporated the lien clause (clause 21) but did not incorporate into the bill of lading contract a personal liability to pay demurrage under clause 8, since that clause referred only to the “charterer” and should not be rewritten to include a bill of lading holder. For similar reasons, it seems the personal obligation of the charterer under clause 2 to pay freight would not be incorporated.

“The carriage of cargo”

52.2 As far as the charterparty itself is concerned, the Rules apply only to the “carriage of cargo” and not to those occasions when the vessel is not carrying cargo, for example, ballast voyages. This is in contrast to Adamastos Shipping Co. v. Anglo-Saxon Petroleum Co.,2 where the charterparty term incorporating the Hague Rules was not so limited. However, the Rules will apply to all cargo-carrying voyages, and geographical restrictions on the application of the Rules in the relevant legislation (e.g., the restriction in the U.S. Carriage of Goods by Sea Act to voyages to or from the United States) will not apply.3

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“such terms shall be incorporated verbatim or be deemed incorporated by the reference in any such Bill of Lading”

52.3 Where the bill of lading form prescribed by clause 20(a) is used, as it must be unless otherwise agreed, there is an effective incorporation by reference. In such cases it is neither necessary, nor indeed permissible, to set out sub-clauses (i) to (vii) verbatim in the bill of lading, since that would involve an alteration of the prescribed form, which would be a breach of clause 20(a).4

“carrier” includes owner and chartered owner

52.4 The last sentence of clause 20(b) appears to be directed primarily at the Clause Paramount in sub-clause (i), ensuring that, when the bill of lading is a charterer’s bill,5 the charterer is entitled to rely upon the rights and immunities conferred on “the carrier” by the Hague Rules. Since Article I of the Rules defines carrier as including “the owner or the charterer who enters into a contract of carriage with the shipper”, the provision in clause 20(b) seems super-fluous. It was presumably not intended to place the charterer in the same position as a “carrier” under the Rules, vis-à-vis the bill of lading holder, in circumstances where the bill of lading would not otherwise be regarded as a charterer’s bill.

Discharge and delivery against letters of indemnity

52.5 It is becoming increasingly common for deliveries of oil cargoes, especially in short haul trades, to be made against letters of indemnity from charterers and/or receivers.6 Under the current P. & I. Club approved form of letter of indemnity, discharge into a tank farm is (or may well be)7 deemed to be “delivery” to the recipient identified in the letter of indemnity or the purposes of activating the obligations created by that letter, but it will not, of itself, amount to delivery as against a bill of lading. Given the problems that can arise, not least by reason of the insolvency of the donors of letters of indemnity,8 carriers would be wise to stipulate for bank guarantees of or countersignatures of the letter of indemnity given to them.9 Conversely, not all lawful holders of a bill of lading referable to goods discharged against a letter of indemnity will have rights of action.10

U.S. Law

52A.1 See Time Charters, paras 21A.1–21A.53.