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9. Charter party and bill of lading considerations
9.1 Objectives:
To ensure that the relevant transport documentation is prepared in a manner that either averts or
minimizes the vessel owner’s potential exposures and risks associated with the carriage of
steel cargoes.
9.2 Charter party considerations
9.2.1
General. The most prevalent steel cargo damage claims have been presented in
Table 1.2 that
include rust/condensation damage, shortages, rough handling and shifting of cargo during the
voyage. Improper lashing, securing, dunnaging and/or stowing steel cargoes are also common
causes of cargo claims.
9.2.1.1 In order
to best protect its interests, the vessel owner should, as a matter of generally
accepted best practices, ensure that the governing fixture or charter party is appropriately
worded to allocate the risks and responsibilities of properly loading, stowing, dunnaging
and/or discharging
the cargo upon the charterer, and that the fixture includes sufficient
wordings to protect and preserve any rights of indemnity or contribution from charterer
for the breach of any such responsibilities. In the case of a sub-charter, the disponent
owner should also make best efforts to do so.
9.2.1.2 For example, Clause 8 of a standard New York Produce Exchange Form (NYPE) form charter
party provides for and allocates the risk
and responsibility of loading, stowing, dunnaging
and discharging upon the charterer. However, if Clause 8 is amended with the words “and
responsibility”, the risk and responsibility for these tasks may shift to the vessel owner.
Such an amendment would have significant impact upon the vessel owner’s risk exposure
when carrying steel cargoes or any other cargo destined for jurisdictions where cargo
claims are prevalent.
It should be noted that there may be some distinction as to just how much significance
attaches to this amendment in England versus the United States, where courts/arbitrators
in the latter are more inclined to require something more than just the additional
language “and responsibility” in order to shift liability to the vessel owner.
Also see
Section 9.2.1.5 regarding the Inter-Club Agreement.
9.2.1.3 If
the vessel is voyage chartered, the words “Free In Out Stowed and Trimmed”,
abbreviated to “F.I.O.S.T”-- whereby the vessel owner is not responsible for the costs
of loading, unloading, stowage and/or, trimming-- should be used, if possible.
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9.2.1.4 Whenever possible, especially in the context of bulk carriers being used to carry steel
cargoes along with general or other mixed cargoes (e.g. bagged cargoes,
containers, etc.),
it is recommended that the vessel owner do the following:
(1) ask the charterer to identify the specific types of cargo to be carried before
concluding the charter party;
(2) state in the charter party that the vessel’s Loading Manual, Cargo Securing
Manual and classification society requirements are to be strictly adhered to by
the charterer; and
(3) request the charterer to
provide a full list of cargoes, the stowage plan, and
the lashing and securing plan for review prior to the vessel’s arrival at the
loading port.
9.2.1.5
Inter-Club Agreement. Another consideration during the charter party drafting and
negotiation phase is the incorporation of the Inter-Club New York Produce Exchange
Agreement (ICA) wording to the fixture. The ICA has provided a relatively simple
mechanism for promptly and fairly apportioning liability for cargo
claims arising under a
NYPE Form time charter agreement. Any amendments that alter the vessel owner’s risk
and responsibility, such as adding “and responsibility” to Clause 8 of the NYPE Form
charter party, can increase a vessel owner’s cargo claims exposure even under the ICA.
The following is a brief summary of the key components of the ICA as it relates to
allocation of liability for cargo loss/damage as between the vessel owner and charterer.
(1)
Claims arising out of unseaworthiness, and errors in navigation or
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