Chapter CHAPTER 28 Recommended Clauses

8/10/2019 Chapter CHAPTER 28 Recommended Clauses

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Chapter CHAPTER 28

Recommended Clauses

Recommended Clauses

28.1As discussed in Chapter 10, the clubs recommend a number of provisions to their

members for incorporation into their charters or contracts of carriage which are designed

to ensure that the member will not incur particular liabilities which are excluded from club

cover. Many of the recommended clauses seek to exclude or restrict a members

liabilities in respect of activities which are excluded from club cover.

28.2So, for example, clubs exclude liabilities in respect of cargo damage where the

cargo is carried on terms which are more onerous than the liabilities imposed upon a

carrier in the Hague or Hague-Visby Rules and there is a recommended clause for

incorporation into contracts of carriage which seeks to ensure that these Rules areincorporated into the contract. Likewise, clubs exclude losses arising from the carriage of

certain nuclear cargoes and again there is a clause recommended to members for

incorporation into their contracts of carriage which seeks to ensure that the carrier does

not incur any such liabilities.

28.3A number of the clauses which are recommended by the clubs are already

contained in standard form charterparties and bills of lading but some are not and where

that is the case members are recommended to use these clauses. In the event of a

failure to use an appropriate term, the clubs usually reserve to themselves a discretion to

reject or reduce any claim by a member to the extent to which the claim would not havearisen if the member had used the recommended term. Such provisions usually place the

burden of proving that the claim would not have arisen on the member. Although the

incorporation of these clauses merely carries the recommendation of most clubs, any

liabilities faced by owners as a result of their failure to have incorporated them could

arguably give the club the right to decline cover also on the grounds of the members

imprudent trading or for agreeing to excessive contractual liabilities or his failure to act

as a prudent uninsured.

28.4Except for standard form clauses which have been drafted by other shipping bodies,

such as BIMCO, there is some variation between the various clubs in the wording andamount of detail of the Recommended Clauses. Also, some clubs do and some clubs do

not publish Recommended Clauses in their Rule-books or anywhere. Whether or not a

club does publish its Recommended Clauses members are strongly advised to contact

their own club to obtain their clubs preferred and most up-to-date wording of any

particular clause or to obtain a copy of all of the most up-to-date clauses recommended

by their particular club.

28.5The following account of the effect of some of the clauses is not designed to be

exhaustive of all of the clauses. The examples of Recommended Clauses to be found at

Appendix I should not be relied upon as being the exact wording of any particular clausebut are simply illustrative of such clauses. Further, these examples are not designed to


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be used in contracts of carriage and are simply provided by way of illustrations of typical

Recommended Clauses. Similarly, the commentary below is not based upon actual

clauses. Again, members are urged to seek guidance from their own club as to preferred

wordings and the most up-to-date wording of such clauses.

28.6Examples of the types of Recommended Clause that can be found include the

following.

Standard Law and Arbitration Clause1

28.7This Recommended Clause is a clause drafted by BIMCO2for use in time voyage

charterparties, bills of lading or any other marine contracts. It seeks to subject the

contract to English law and refers all disputes to arbitration in London in accordance with

the Arbitration Act 1996. It provides that arbitrations are to be conducted in accordance

with the terms of the London Maritime Arbitrators Association. Where disputes are in

respect of so-called small claims (i.e. neither the claim nor counterclaim exceedsUS$50,000) or in any sum where the parties agree, the arbitration is to be referred to the

Small Claims Procedure available from the LMAA.

US Law, New York Arbitration Clause3

28.8This clause subjects contracts to the United States Code, Title 9 and the Maritime

Laws of the United States and refers disputes to arbitration in New York which are to be

conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc. As with

the previous clause, there is provision for referring small claims (i.e. less than

US$50,000) to the US Shortened Arbitration Procedure which is available from the SMA.

General Clause Paramount4

28.9This clause is recommended for use in all contracts of carriage: voyage charterpar-

ties, bills of lading and seaway bills. Already found in most common standard form

contracts of carriage, this provision is designed to ensure that the contract of carriage is

governed by the provisions of the Hague or Hague-Visby Rules where they have been

enacted either in the country of shipment or country of destination or in neither country.

This is designed to ensure that the carriers responsibilities start no earlier or continue no

further and that his liability should not be any more extensive than is provided for underthese conventions.5

Voyage Charter Clause Paramount6

28.10Under a voyage charterparty, in the absence of express provisions to the contrary,

the shipowner is subject to an implied warranty of absolute seaworthiness.7This clause

is expressly to the contrary and seeks to override this implied term or indeed any other

express provisions to the contrary. Under this provision the owners obligation with regard

to the seaworthiness of his vessel is relaxed to that which was introduced by the Hague

Rules; that is, simply to exercise due diligence to ensure the vessels seaworthiness. In

addition, the clause provides that the owner will have the benefit of all the rights and


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immunities and be subject only to the responsibilities which are accorded to a carrier

under that convention. Also, notwithstanding Article IV Rule 5 of the Hague and Hague-

Visby Rules,8this clause limits the owners liability to 200 per package or unit. Further,

this clause provides that any bill of lading issued under the charterparty must contain a

clause paramount incorporating the Hague Rules.

Clause incorporating US COGSA 19369

28.11The clubs recommend that all bills of lading for carriage to or from the United

States should contain this provision, which incorporates the provisions of the US

Carriage of Goods by Sea Act 1936 which in some respects is broadly equivalent to the

Hague Rules.

Clause incorporating Canadian COGWA 193610

28.12This clause is equivalent to that noted immediately above in that it seeks toincorporate the Canadian Carriage of Goods by Water Act 1936.

General Deck Cargo Clause11

28.13The Hague and Hague-Visby Rules12both provide that the goods to which the

Rules apply do not include cargo which by the contract of carriage is stated as being

carried on deck and is so carried.13The purpose of the General Deck Cargo clause is to

make it clear that goods carried on deck are entirely at the shippers risk.

US Deck Cargo Clause14

28.14As with the Hague and Hague-Visby Rules, the American COGSA 1936

provides15that its provisions do not apply to cargo which is stated as being carried on

deck and is so carried and, as with the previous clause, this clause seeks to ensure that

such goods are carried at the risk of the shipper.

Hamburg Rules Clauses16

28.15Following the coming into force of the Hamburg Rules17in November 1992, the

clubs of the International Group18issued circulars to their members explaining club cover

and advising on amendments to contracts of carriage. Subject to a discretion beingexercised otherwise under Club Rules, it is still the case that liabilities, costs or expenses

arising from carriage on terms less favourable than those of the Hague or Hague-Visby

Rules will not be covered. Where, however, carriage is on such terms solely because of

the compulsory application by operation of law of the Hamburg Rules to the contract of

carriage, cover will be available. If, though, a member voluntarily adopts the Hamburg

Rules for a voyage to which the Rules do not compulsorily apply, his cover will be

prejudiced.

28.16Clubs of the International Group have recommended to their members clauses for

incorporation into contracts of carriage in order to deal with the application of theHamburg Rules. The first clause, Form A, can be used by members who wish to adopt


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the Hague or Hague-Visby Rules in preference to the Hamburg Rules where possible.

The clause is designed to ensure that where one or other of the Hague, Hague-Visby or

Hamburg Rules regimes would be applicable on its own terms by reason of the location

of the port of shipment or by reason of the port of discharge, the Hague or Hague-Visby

Rules have been preferred. The incorporation of this clause, however, is no guaranteethat proceedings will be commenced in a state which has not ratified the Hamburg Rules

and any cargo claimant might have the right to bring proceedings in a state which is a

party to the Hamburg Rules in a case where the Hague or Hague-Visby Rules have been

applied in preference to the Hamburg Rules.

28.17The other clause recommended by the clubs, Form B, has been drafted with a view

to compliance with Article 23(3) and (4) of the Hamburg Rules. By Article 23(3) the

document evidencing any contract of carriage which is subject to the Hamburg Rules

must contain a statement that the contract of carriage is subject to the Hamburg Rules

and that any stipulation to the contrary to the detriment of the shipper of consignee isvoid. In this way the Hamburg Rules attempt to ensure that even if proceedings are

commenced in a non-contracting state, the Rules will nevertheless apply. Where a

contract of carriage does contain such a statement, the courts in a state which is a

signatory to the Hague or Hague-Visby Rules might apply the Hamburg Rules to the

contract inasmuch as they are more burdensome to the carrier. This is so because the

Hague and Hague-Visby Rules allow the carrier to surrender his rights and increase his

liabilities under those Rules.19

28.18Where no such statement is contained in the contract of carriage, Article 23(4) of

the Hamburg Rules requires the carrier to compensate the cargo claimant for any loss hehas suffered by reason of not incorporating such a statement. This provision enables a

cargo claimant to sue in a contracting state where, by reason of the omission of a

statement in the contract of carriage, the cargo claim has been dealt with in a non-

contracting state without regard to the Hamburg Rules. The clubs have, therefore,

warned members of the potentially adverse consequences of omitting such a statement

from their contracts of carriage to which the Hamburg Rules apply. Form B is suggested

to members to enable compliance with Article 23(3) and (4) and it should be used only

when the carriage is between states which are contracting parties to the Hamburg Rules.

28.19The clubs have also suggested a clause to be incorporated into contracts ofcarriage of cargo on deck with the agreement of the shipper under the Hamburg Rules.

The deck-carriage clause is designed for over-stamping on contracts of carriage.

28.20In recommending the use of these clauses, the clubs have been careful to give

caveats to their members. First, the use of a clause paramount is not of itself a guarantee

that the contract of carriage will be entirely appropriate for use on voyages covered by

the Hamburg Rules. Secondly, the recommended clauses have been designed primarily

for incorporation in contracts of carriage subject to English law and jurisdiction. For those

members who use contracts of carriage which are subject to law and jurisdiction other

than English, they are recommended to seek advice from local lawyers as to whether theclauses will be of benefit under the relevant applicable law. This advice is particularly


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important in those jurisdictions where contracts of carriage are construed against the

carrier in cases of ambiguity. Further, the clubs have suggested to members who wish to

use these new clauses, that they seek confirmation from their club as to their suitability.

28.21On the question of liability arising in connection with the issue of bills of lading

under charterparties, the clubs have suggested a charterparty clause which provides that

neither the charterers nor their agents shall permit the issue of a bill of lading, waybill or

other evidence of the contract of carriage incorporating the Hamburg Rules or other

legislation which imposes liabilities exceeding those under the Hague and Hague-Visby

Rules, where such legislation or Hamburg Rules are not compulsorily applicable. The

clause goes on to provide for an express indemnity to owners should charterers breach

this clause.

H imalaya Clause20

28.22This clause seeks to overcome the English rules as to privity of contract by makingsome of the ships servants, agents and independent contractors (i.e. those who are not

a party to the contract of carriage) parties to the bill of lading contract to enable them to

have the defences and limitations which are available therein. The clause achieves this

by enabling the carrier to contract on behalf of all servants, agents and independent

contractors; this category would include ships crew and stevedores. Ontheir behalf, the

carrier agrees that they will be under no liability to the shipper, consignee, owner or

holder of bill of lading and in any event the benefits of all rights, exemptions and

limitations to which the carrier is entitled under the bill of lading or under the Hague or

Hague-Visby Rules are extended to this category of persons. In this way, aggrievedcargo interests are prevented from skirting the bill of lading or applicable Hague or

Hague-Visby Rules and obtaining any or any better rights by pursuing the servants or

agents of the shipowner rather than the carrier himself.21

Both-to-Blame Coll ision Clause22

28.23This provision is required for US trades and it is designed to avoid an anomalous

situation under American law of Carriage of Goods by Sea.23It seeks to avoid this

anomaly in a somewhat circuitous manner. In English law the carrying vessel is usually

exempted from liability in respect of loss or damage to cargo caused by a collision. If the

carrier has not expressly reserved himself this exemption he will receive the exemption

by virtue of the so-called error of navigation defence under Article IV Rule 2(a) of the

Hague or Hague-Visby Rules which are either applied by law or apply as incorporated in

the contract of carriage.

28.24Under US law24the position is the same. The cargo owner cannot recover at all

against the carrying vessel by virtue of the error of navigation exemption. According to

US case law, however, it has been held25that where the collision is caused by the fault of

both vessels (as is usually the case) and cargo is damaged, the cargo owner can recover

in full against the non-carrying vessel (regardless of his appointment of blame for the

collision). Again, according to US case law, having settled the cargo claim the non-


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carrying vessel can then claim half of those damages from the carrying vessel.26The

anomalies are, first, that the carrying vessel is deprived of much of the benefit of the

exemption clause by something of a back door route in that he will be paying towards

the cargo claim by virtue of having to partly indemnify the non-carrying vessel. Secondly,

the carrying vessel is actually in a worse position in being partly to blame than he wouldhave been if he were wholly to blame. If he were wholly to blame this means that the

non-carrying vessel would have no blame and the cargo owner would never have been

able to sue the non-carrying vessel, which in turn would have had no liability to be

indemnified by the carrying vessel.

28.25In order to overcome such a peculiar situation, carriers are recommended to

incorporate the both-to-blame collision clause. This clause seeks to complete the

circular movement of claims by requiring the cargo owner to indemnify the carrying

vessel in respect of any liability that the carrying vessel has to the non-carrying vessel in

respect of the liability of the non-carrying vessel to the cargo owner. It means that whereboth vessels are to blame and the cargo owner cannot, by virtue of the error of

navigation defence, claim against the carrying vessel, should he then claim against the

non-carrying vessel and in turn the non-carrying vessel claim against the carrying vessel,

the carrying vessel can then claim an indemnity in the same amount from the cargo

owner. In effect, whatever the cargo owner receives from the non-carrying vessel with

one hand he has to pay back to the carrying vessel with the other hand.

28.26There are both-to-blame collision clauses for incorporation into both bills of lading

and charterparties.27

New Jason Clause28

28.27This provision is recommended for use by carriers engaged in trading to the United

States or where the United States Harter Act 1893 or the US Carriage of Goods by Sea

Act 1936 is incorporated into the contract of carriage. There is a difference between

English law and American law with regard to an owners right to claim contributions in

general average.29

28.28The general rule under English law is that where a general average situation has

arisen because of the actionable fault of one of the parties to the event, the party at fault

is not entitled to recover a general average contribution from any of the other parties to

whom he would be liable in respect of that fault. If, however, the party (e.g. the carrier) is

exempted by contract from that liability, then the fault will not be actionable. Where a

contract of carriage contains exemptions in favour of the carrier, therefore, the carrier will

not be denied the right to recover general average contributions from the other parties

even though, but for the contractual exemption, he would have been liable.30

28.29Accordingly, where the contract of carriage is subject to the Hague or Hague-Visby

Rules, any loss or damage arising from causes for which the carrier is exempt from

liability31will not give rise to an actionable fault on the part of the carrier and so the

carrier would still be entitled to recover in general average from the other parties. Where,

for example, the general average event arises from a collision for which the carrier is


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responsible, this wouldprima facierepresent an actionable fault but the carrier could rely

upon the Hague or Hague-Visby exemption in respect of acts, neglects or defaults in the

navigation or management of the ship,32and in this way he not only could defend himself

against a cargo claim but is also not deprived of claiming a general average contribution

from cargo interests.

33

28.30The position under US law is somewhat different. The Harter Act 1893 and COGSA

1936, which are broadly equivalent to the Hague and Hague-Visby Rules, provide that if

the shipowner has exercised due diligence to make the ship seaworthy, neither he nor

his servants nor charterers shall be liable for loss or damage arising from, inter alia,

errors in navigation or management of the vessel.34

28.31In the US case of The Irrawaddy,35however, it was held that this exemption to the

carriers liability did not entitle the carrier to claim contributions in general average when

the loss was caused by the negligence of the carriers crew. It may be said that although

the carrier can use the statutory exemption to shield himself from the cargo claim he

cannot then use this shield as a sword in order to carve out a claim in general average. In

order to give the shipowner the right to claim general average contributions in such

circumstances a negligent general average clause was devised known as the Jason

Clause after name of the case in which such clause was first upheld as being

valid.36The clause has appeared in various versions and is now known either as the

Amended Jason Clause or, more commonly, the New Jason Clause.37

GA Clause for Dutch Ports38

28.32In similar fashion to the position in the United States, the Dutch Commercial Codealso prohibits recovery of general average contributions where the event giving rise to the

general average expense was caused by the fault of the carriers servants.39The clause

recommended provides that where there has been fault of the master or crew in the

navigation or management of the vessel, the carrier will still be entitled to recover general

average contributions from the consignees.

P& I Bunkering Clause40

28.33Under a voyage charter, unless expressly provided otherwise, the owner has an

implied duty to proceed on the chartered voyage without departing from the propercourse. If the proper course is not stated in the charter, it is presumed to be the usual

route or the most direct geographical route.41This recommended clause entitles an

owner to depart from the customary or most direct route in order to take bunkers and it

allows this whether or not the bunkers are actually required for that particular chartered

voyage. In other words, the clause seeks to protect the owner from claims that he has

deviated from the voyage.

Voyage (or Deviation) Clause42

28.34This recommended clause entitles an owner under a voyage charterparty to departfrom the contractual route in circumstances which are more extensive than simply picking


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up bunkers as provided for in the previous clause. This clause gives a wide liberty to the

shipowner to depart from the contractual route but it should be noted that it is not so wide

as to enable the owner to nullify the charter or to call at ports totally outside the range of

the charter such as to make the original agreed charter voyage a nonsense; on a voyage

from Southampton to Lisbon it would hardly permit calling at Cape Town.

43

Str ike Clause44

28.35This short clause is designed to relieve the shipowner from any liability for loss,

damage or delay arising from strikes, stoppages and other labour disputes.45

Carr iage of Nuclear Mater ials Clause46

28.36Club Rules provide that unless otherwise agreed with the managers in writing, a

member is not insured against any liabilities, costs or expenses arising from the carriage

of nuclear materials except for a few stated exceptions.47

This clause, for use in eithertime or voyage charters, expressly excludes the carriage of the prohibited cargoes whilst

allowing carriage of the permitted cargoes only with owners prior approval.

General I ce Clauses48

28.37For use in voyage charterparties, these are clauses in respect of problems arising

from ice at both the port of loading and port of discharge and there are two clauses

dealing with each port.

28.38In the clause designed for the port of loading, the master is at liberty to leave an

ice-bound port without loading cargo and charter is rendered null and void in the event

that the port of loading is inaccessible by reason of ice at the time that the vessel is ready

to proceed to it from its last port of call or at any time on its voyage to the ice-bound

loading port or after its arrival there. If during loading the master fears the vessel will

become frozen in, he has liberty to leave the port part-loaded and the part-loaded cargo

can then be forwarded to the contractual destination at the owners expense against

payment of freight.

28.39In the case of the port of discharge, the clause provides that in the event of the

vessel not reaching the port by reason of ice, the receivers have the option of paying

demurrage and keeping the vessel waiting until navigation is reopened or of ordering the

vessel to a safe and immediately accessible port. Any such orders must be given within

48 hours after notice has been given to charterers of the impossibility of reaching the

port. If during discharging the master fears that his vessel could be frozen in he has

liberty to leave and discharge the remainder of the cargo at the nearest accessible port.

The clause provides that upon delivery at such a port all the condition of the bill of lading

shall apply and the vessel shall receive the same freight as if it had discharged at the

original port of discharge except that if the substitute port is more than 100 nautical miles

from the original port the freight will be increased in proportion.

Conwartime 2004 Clause49


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28.40This clause was drafted by BIMCO for use in time charterparties. The clause is

another example of a clause which seeks to excuse members from performing activities

under their charters, liabilities for which are excluded from club cover.50The clause

requires charterers to either obtain the written consent of the owners or else to refrain

from ordering the vessel to any area where it appears in the reasonable judgement of theowners or of the master that it might be exposed to war risks. Also, the clause provides

that if the vessel is in an area which becomes dangerous it is at liberty to leave that area.

Further, the clause provides that the vessel shall not be required to load contraband or

pass through blockades.

28.41Under this clause owners are given liberty to effect war risks insurance in respect of

P&I,51hull and machinery, loss of earnings and crew risks. Calls and premiums for such

insurances are for owners account unless the vessel is within a war risks Additional

Premium zone or is due to enter one, in which case the clause requires charterers to

reimburse the owners in respect of premium.

28.42The clause also entitles owners to reimbursement from charterers in respect of any

additional wages or bonuses which become payable to the crew under the terms of their

employment contracts. In addition, the vessel has liberty to comply with orders and

directions regarding its movements which are issued by the flag state of the vessel or

other government to which the owners are subject or of the United Nations Security

Council, European Community or any other supernational body or national laws to which

the owner is subject or of the insurers from which the owner has obtained war risks

insurance.

28.43Also, the vessel is given liberty to make diversions to avoid, inter alia, confiscation,

arrest or other sanctions. If under this clause the vessel does or fails to do anything

which would otherwise be regarded as a deviation, it shall be executed. Where the

owners do refuse to proceed to a nominated loading or discharging port they are required

to notify charterers, who have 48 hours to nominate a safe port failing which the owners

may discharge at a safe port of their own choice.

Voywar 200452

28.44This clause is the equivalent to the previous provision, for use in voyage charters.

In the case of a voyage charter, if prior to loading it appears in the reasonable judgement

of the owners or master that the vessel could be exposed to war risks, the owners are

entitled to cancel the charter. If the charter provides for loading at a range of ports and

one or more of the nominated ports are attended with apprehended war risks, owners are

required to allow charterers to nominate any other safe port in the range and can only

cancel the charter where the charterer fails to make such a nomination within 48 hours.

28.45Owners are given the right to avoid discharging at ports attended by war risks and

to give 48 hours notice to charterers to nominate an alternative safe port and, failing

such a nomination, the owner may discharge at any safe port of his choice in complete

satisfaction of the contract of carriage. In addition, owners are entitled to recover from the

charterer the extra expenses involved in discharging at a different port. Where discharge


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takes place at any port other than the original loading port, the owner may recover full

freight and if the extra distance exceeds 100 miles, owners can claim additional freight at

the charter rate and owners are given a lien on the cargo for such freight and expenses.

Under the clause the vessel has liberty to change its course to avoid war risks and where

this new route exceeds the contractual route by a distance of more than 100 miles theowner is entitled to extra freight.

28.46As with the clause previously considered, the vessel has liberty to comply with

orders of governments, the United Nations Security Council, etc.53Again, the vessel can

avoid ports which could expose the vessel or crew to detention. Should any change in

route, voyage or port occur then such changes are not to be regarded as a deviation.

War Risks Deviation Clause54

28.47This is a much shorter and less detailed clause which simply allows the vessel to

comply with orders as to change of ports, routes, stoppages and delivery in accordancewith the directions of the government of the vessels flag or any other body with authority

to give such directions or under the war risks insurance cover.

Stowaways Clause55

28.48In recent years owners have suffered much inconvenience and incurred large

expenses in having to deal with stowaways found on board their vessels. Expenses can

include the costs of clothing, provisions and medical treatment whilst on board followed

by further hospitalisation, accommodation and repatriation when landed and can expose

the owners to fines and the vessel to detention. Stowaways found at American ports canbe a most expensive problem. The question arises as to whether it is the owner or

charterer or container owner/operator or cargo interests that is liable for such expenses.

28.49This clause seeks to resolve these disputes and apportion liability for the costs and

expenses of stowaways according to the means by which they gained access to the

vessel. If they gained access by hiding in cargo and/or containers shipped by the

charterers then liability rests with the charterers; otherwise the responsibility lies with the

owners.

28.50This clause is designed for use in time charters and provides that charterers

warrant to exercise due diligence in preventing access to the vessel by stowaways. If

stowaways do gain access by means of hiding in cargoes and/or containers shipped by

charterers this will amount to a breach of charter by charterers for which they are liable

and charterers are required to indemnify owners and hold them harmless in respect of all

costs, expenses, fines and loss of time and the vessel is to remain on hire. Should the

vessel be arrested as a result of having stowaways on board, charterers are required to

take reasonable steps to secure its release at their expense.

28.51If, on the other hand, stowaways have gained access to the vessel by means other

than hiding in cargo and/or containers shipped by the charterers, all time lost and all


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expenses, costs, fines, etc. are to be for owners account and the vessel shall be off-hire.

It follows that owners are responsible for securing the release of the vessel from arrest.

Stevedore Damage Clause56

28.52This clause is recommended for use in time and voyage charterparties. It requiresthat any damage caused by stevedores during the charterparty shall be reported by the

master to the charterers or their agents, in writing, within 24 hours of the occurrence or

as soon as possible and that the master shall use his best efforts to obtain written

acknowledgement of responsibility for the damage. Where the damage has affected the

seaworthiness or proper working of the vessel it must be repaired without delay to the

vessel and it is to be repaired in the charterers time and paid for by the charterers. Other

repairs can be done at the same time or later in owners time but all repairs of stevedores

damage are for charterers account and that is so whether or not payment had been

made by stevedores to the charterers.

Bunker Quali ty Control Clause57

28.53The supply of inferior bunkers by the charterers can cause damage to the vessels

engines and auxiliaries and result in reduced speeds and loss of time.58This clause, for

use in time charterparties, provides that charterers shall supply bunkers of a suitable

quality and which conform to specifications agreed under the charter.

28.54At the time of delivery of the vessel under the charter, owners are required to

provide to charterers the bunker delivery notes and any samples of fuels on board.

During the charter the charterers are required to provide the bunker delivery notes to themaster/ owners at the time of the supply of bunkers and samples are to be taken and

sealed in the presence of representatives of both owners and the charterers. Such

samples are to be retained by the vessel for 90 days after the bunkers are supplied or for

whatever necessary period if there is an on-going dispute. The clause provides owners

with the right to claim against charterers for any damage caused by the use of unsuitable

bunkers and owners are not to be responsible for any reduction in speed or increased

bunker consumption or any time lost or other consequences arising out of the use of

unsuitable bunkers.

1Infra, Appendix I(a).

2The Baltic and International Maritime Council.

3Infra, Appendix I(b).

4Infra, Appendix I(c).

5See Scrutton on Charterparties and Bills of Lading, 21st edn., 2008, at para. B1 p.

374 et seq., Carver on Bills of Lading, 2nd edn., 2005 at paras. 9.087-9.096.

6Infra, Appendix I(d).

7See Scrutton, op. cit. fn. 5 supra, at A51.


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8Article IV Rule 5 provides: 5(a) Unless the nature and value of such goods have been

declared by the shipper before shipment and inserted in the bill of lading, neither the

carrier nor the ship shall in any event be or become liable for any loss or damage to or in

connection with the goods in any amount exceeding 666.67 units of account per package

or unit or 2 units of account per kilogramme weight of the goods lost or damaged,whichever is the higher.

(b) The total amount recoverable shall be calculated by reference to the value of such

goods at the place and time at which the goods are discharged from the ship in

accordance with the contract or should have been so discharged. The value of goods

shall be fixed according to the commodity exchange price, or, if there be no such price,

according to the current market price, or, if there be no commodity exchange price or

current market price, by reference to the normal value of goods of the same kind and

quality.

(c) Where a container, pallet or similar article of transport is used to consolidate goods,

the number of packages or units enumerated in the bill of lading as packed in such article

of transport shall be deemed the number of packages or units for the purpose of this

paragraph as far as these packages or units are concerned. Except as aforesaid such

article of transport shall be considered the package or unit.

(d) The unit of account mentioned in this Article is the special drawing right as defined by

the International Monetary Fund. The amounts mentioned in sub-paragraph (a) of this

paragraph shall be converted into national currency on the basis of the value of that

currency on a date to be determined by the law of the Court seized of the case.

(e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation of

liability provided for in this paragraph if it is proved that the damage resulted from an act

or omission of the carrier done with intent to cause damage, or recklessly and with

knowledge that damage would probably result.

(f) The declaration mentioned in sub-paragraph (a) of this paragraph, if embodied in the

bill of lading, shall be prima facie evidence, but shall not be binding or conclusive on the

carrier.

(g) By agreement between the carrier, master or agent of the carrier and the shipper

other maximum amounts than those mentioned in sub-paragraph (a) of this paragraph

may be fixed, provided that no maximum amount so fixed shall be less than the

appropriate maximum mentioned in that sub-paragraph.

(h) Neither the carrier nor the ship shall be responsible in any event for loss or damage

to, or in connection with, goods if the nature or value thereof has been knowingly mis-

stated by the shipper in the bill of lading.

See also, section 1.A. of the Carriage of Goods by Sea Act 1971 as inserted by the

Merchant Shipping Act 1995, Schedule 13, para. 45 (Conversion of Special Drawing

Rights into Sterling).

9Infra, Appendix I(e).


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10Infra, Appendix I(f).

11Infra, Appendix I(g).

12Article I(c). See also, Scrutton, op. cit. fn. 5 supra, at para. B1 pp. 383-384.

13A liberty provided in the bill of lading to carry goods on deck does not remove the

goods from the ambit of the Rules; Svenska Traktor aktiebolagetv Maritime Agencies

(Southampton)[1953] 2 Lloyds Rep 124.

14Infra, Appendix I(h).

15See US COGSA 1936, Title I, section 1(c).

16Infra, Appendix I(i).

17United Nations Convention on the Carriage of Goods by Sea 1978.

18See Chapter 24 supra.

19Article V.

20Infra, Appendix I(j).

21Scrutton, op. cit. fn. 5 supra, at para. A16A.

22Infra, Appendix I(k).

23Cooke, Young and Taylor, Voyage Charters, 3rd edn., 2007, at paras. 75.1-75.2.

24Harter Act, 1893, section 3; US Carriage of Goods by Sea Act 1936 Title I, section

4(2)(a); see Coghlin, Baker, Kenny & Kimball, Time Charters, 6th edn., 2008, at p. 577.

25The Beaconsfield(1894) 158 US 303; The Atlas(1876) 93 US 302.

26The Chattahoochee(1899) 173 US 540.

27It has been held that the clause was invalid in a bill of lading not issued under a

charterparty; see USAvAtlantic Mutual Insurance Co[1952] 1 TLR 1237. See also The

Frances Hammer[1975] 1 Lloyds Rep 305,Dist. Court, Southern Dist. of New York.

The legal effectiveness of the clause is doubtful but it remains in common use.

28Infra, Appendix I(l).

29See Lowndes and Rudolf, The Law of General Average and The York-Antwerp

Rules13th edn., 2008, at paras. 00.56-00.57.

30See The Carron Park(1890) 15 PD 203; Louis Dreyfus & Cov Tempus Shipping

Co[1931] AC 726; The Makedonia[1962] 1 Lloyds Rep 316.

31See Article IV Rules 1 and 2.

32Hague and Hague-Visby Rules Article IV Rule 2(a).

33Under the York-Antwerp Rules 1974 and 1994, Rule D, adjustments can be made andcontributions sought without regard to fault, although this does not affect any remedies or


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defences of the parties in respect of such fault; see Lowndes and Ruldolf, op. cit., paras

D.22 et seq.

34Section 3 and US COGSA 1936 section 3.

35(1898) 171 US 187.

36The Jason(1912) 225 US 32.

37For a more complete account of the effect of the clause, see Lowndes and Rudolf, op.

cit. fn. 29 supra.

38Appendix I(m).

39See Article 700.

40Appendix I(n).

41See The Indian City[1939] AC 562 especially at p. 584perLord Parker.

42Infra, Appendix I(o).

43See Scrutton, op. cit., fn. 5 supraat para. 127.

44See Appendix I(p).

45See Voyage Charters, op. cit., fn. 23 supraat paras. 25.1 et seq.

46See Appendix I(q).

47See paras. 10.63 and 12.11 supra.

48Infra, Appendix I(r). See Voyage Charters, op. cit.fn. 23 supra, at paras. 27.1 et seq.

49Infra, Appendix I(s).

50See para. 12.10 supra.

51Ibid.

52Infra, Appendix I(t).

53Supraat paras. 28.42-28.43.

54Infra, Appendix I(u).

55Infra, Appendix I(v).

56Infra, Appendix I(w).

57Infra, Appendix I(x).

58See Noursev Elder Dempster(1922) 13 Ll L Rep 197; a fire in bunkers supplied by

the charterers.

Chapter CHAPTER 28 Recommended Clauses

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