Ship chattering is the hiring of a vessel and crew for a voyage between a port of loading and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the vessel is known as freight.
Term of Charter
Parties should agree on the duration, whether it can it be extended or renewed and under what conditions?
Parties should agree on Place of Delivery & Redelivery
Vessel Operations, Fuel, Lube & Other Expenses
Charterer’s Signage & Other Modifications
Termination of Charter
Dispute Resolution, Choice of Law and Forum
The seller needs to ensure the freight is ready for shipping and provide all the correct documents. Here is common used freight shipping terms:
FOB – Free on Board
Seller will arrange through their freight forwarder the movement of the goods up to the origin port. The goods will then be the buyer’s responsibility. Their nominated forwarder will take control from here. Freight and destination costs will be charged to the buyer.
CIF – Cost Insurance & Freight
Similar to CFR but the maritime insurance cost will be paid by the seller. Insurance cover will up to the destination port only.
DAT – Delivery at Terminal
All charges up to the nominated terminal will be paid for by the shipper. Delivery, Customs Clearance and Customs import charges will be paid for by the buyer. The seller will arrange freight to the terminal through their freight forwarder, the buyer can have their own customs and delivery agent takeover from the terminal.
DAP – Delivery at Place
All charges as well as delivery to the buyer facilities will be arranged by the seller. Customs clearance cost can be arranged by either the seller or the buyer depending on the agreement at the time of the freight booking. Import Duty and Taxes will be paid by the buyer at destination. The company must ensure the right term is been chosen.
In Business time is money same in the maritime industry. The question is who bears the risk of delay is a crucial component of the contract of carriage. Charter party terms that provide compensation in the event of delays (laytime and demurrage) are key negotiation points and are regularly the subject of litigation or arbitration.
However, claims for delay are not limited to the terms of a charter party. Another class of claims can be founded on tort, negligence or contract and brought by or against parties not named in a charter party. Extra-charter party delay claims are important in a jurisdiction such as Cameroon where factors that result in delays (port congestion, suboptimal infrastructure and malpractice) are frequent and may not be adequately handled by claims founded on a charter party.
Shex shipping terms contained the manner in which laytime is calculated and accounted for. The general principle of charter party delay claims are that once laytime commences that is the agreed timeframe in which the charterer must unload cargo after being issued a notice of readiness) it generally runs without interruption unless the charterer can establish exceptions (e.g a force majeure event, fault with the vessel or a specific clause in the charter party excluding the delay-causing event). When laytime ends, the charterer must compensate the owner for each day of delay under the pre-agreed demurrage. Shex shipping terms looking at The Asbatankvoy charter party form provides the following in the context of laytime and delays:
Clause 6 provides that where delay is caused to a vessel getting into berth after giving notice of readiness for any reason over which the charterer has no control, the delay will not count as laytime.
Clause 7 provides that any delay due to the vessel’s condition or breakdown or the inability of the vessel’s facilities to load or discharge cargo within the time allowed will not count as laytime.
Clause 8 provides that that if demurrage is incurred at ports of loading or discharge by reason of explosion, strike, stoppage or restraint of labour or by breakdown of machinery or equipment ashore, the rate of demurrage will be reduced by half.
Delay causing events have far-reaching liability effects on parties not named in a charter party. A charterer may be able to avoid claims for demurrage where the port authority caused delay through the wrongful grant of berthing precedence to another ship. However the shipowner that is the victim in this situation may seek compensation for the delay from the port authority. A charterer liable for delay caused by an unsafe berth may seek an indemnity for losses caused by the resulting delay from the terminal or berth operator.
Extra-charter party delay claims present unique challenges which claimants must overcome to be successful. Finding the duty of care when negligence is sought may not be straightforward. In an as yet unreported case, a claimant relying on the Evidence Ordnance argued that the customary practice of granting berthing precedence on order of arrival at a particular Cameroonian port imposed a duty on the berth operator to spare itself from the losses arising out of not following said customary practice.
EDT shipping means Eastern Daylight Time” or “Estimated Delivery Time. EDT shipping is a supplier of high specification offshore support vessels to the Oil and Gas industry worldwide.
Article by Barr. Mafany Victor Ngando
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.