CHARTERPARTIES AND THE INTER-CLUB AGREEMENT

CHARTERPARTIES ANDTHE INTER-CLUB AGREEMENT

We are going to look at the 2 main types of

Charterparties in use.

We will then look at the NYPE Inter-Club Agreement

and how this allocates liabilities for cargo claims.

2

INTRODUCTION

Please find your copies of:

• Gencon 1994 (Page 58)

• NYPE 1946 (Page 38)

• Inter-Club Agreement 1996 (as amended September

2011)(Page 52)

3

INTRODUCTION

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TYPES OF CHARTERPARTY

• Demise Charter

• Non-Demise Charter

5

TYPES OF CHARTERPARTY

• Demise charter

• Master & crew employed by the Demise Charterer

Non-Demise charter

• Master & crew employed by the shipowner or ship

manager on behalf of the shipowner

6

MASTER & CREW

Two main types of Non-Demise charterparties:

• Voyage charter

- Charter period is one voyage from Port A to Port B

- Charterer pays freight to his owner (or disponent Owner)

• Time charter

- Charter period is a period of time (e.g. 11-13 months)

- Charterer pays hire: usually every 15 days in advance

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NON-DEMISE CHARTERPARTIES

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CONTRACTUAL CHAINS FOR THE

CARRIAGE OF GOODS

Shipowner

Time Charterer /Disponent Owner

Shipowner

9


CARRIAGE OF GOODS

10


CARRIAGE OF GOODS

Sub-Time Charterer


Shipowner

11


CARRIAGE OF GOODS

Voyage Charterer

Sub-Time Charterer


Shipowner

12


CARRIAGE OF GOODS

Cargo Owner

Sub-Sub-Voyage Charterer

Sub-Time Charterer


Shipowner

Bill of Lading

13

VOYAGE CHARTERPARTIES

A typical Voyage Charterparty:

• Gencon 1994

• For a voyage from Port A to Port B

• Charterer pays freight based on the amount of

cargo loaded

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CARGO - VOYAGE

CHARTERPARTIES

• An unamended Gencon is favourable to the

Shipowner

• Cargo is loaded and stowed by the Charterer at

his cost and also at his risk

Clause 5

15

GENCON 1994

Shipowners will only be responsible for loss, damage or

delay to the cargo when:

• It has been caused by personal want of due diligence

on the part of the Owners or their Manager to make

the vessel seaworthy and to secure that she is

properly manned, equipped or supplied.

• By the personal act or default of the Owner or

Manager.

Clause 2

16

GENCON 1994

Changes and Rider (additional) Clauses will often be

inserted which can significantly change the original

cargo responsibility provisions.

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GENCON 1994

Examples:

‘…shipowners to be responsible for the number of

bags loaded..’

‘…stevedores, although appointed by charterers to

be considered agents of the shipowners…’

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GENCON 1994

A frequent amendment is:

‘…Clean bills of lading to be issued for cargo loaded…’

It is crucial that the Master is made aware of such a

clause in the charterparty before loading commences

as this will affect what he is entitled to load or reject.

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GENCON 1994

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TIME CHARTERPARTIES

• NYPE 1946

• Probably the most popular dry cargo Time

Charterparty in use

• Contract for the hire of the Ship for a period of time

• Charterer pays hire, usually every 15 days in advance

21

NYPE 1946

• The shipowner employs the Master

• The Time Charterer is responsible for the loading,

stowing and discharge of the cargo under the

supervision of the Captain

Clause 8

22

NYPE 1946

The Time Charterer is responsible for

• Cargo damage due to bad stowage

Clause 8

23

NYPE 1946

Responsibility for:

• Cargo shortage claims

• Claims arising from over-carriage of cargo

is not clear from the Charterparty terms.

24

NYPE 1946

Clause 8 includes

‘…under the supervision of the Captain…’

Supervision means that the Master has an obligation

to:

• Make sure that the vessel remains seaworthy at all

times during the cargo operation

25

NYPE 1946

• The charterers are loading and stowing the cargo

But:

• The Master must still make sure that they are doing

it in a way that will not result in the vessel becoming

unseaworthy

26

NYPE 1946

• If the Master insists on changing the way in which

the Charterers are loading and stowing the cargo

the shipowners may then be responsible for any

damage to the cargo which subsequently arises.

27

NYPE 1946

Changes and Rider Clauses will often be inserted

which will significantly change the original cargo

responsibility provisions.

28

NYPE 1946

A frequent amendment to Clause 8:

‘…under the supervision and responsibility of the

Captain…’

Transfers responsibility for loading and stowing onto

the Owners.

29

NYPE 1946

30

INTER-CLUB AGREEMENT

TIME CHARTERPARTIES

• Inter-club Agreement to promote amicable and equitable

settlements to cargo claims

• Mechanical apportionment of liability

• No re-trial of the underlying cargo claim, but the cause of

the loss/damage is examined

• Incorporated into time Charterparty by reference

• Most recent version: ICA 1996 (as amended September

2011)

31


Defines cargo claims and includes:

• Loss of cargo

• Damage to cargo

• Shortage of cargo (including slackage, ullage or

pilferage)

• Over-carriage of cargo

• Delay to cargo

• Customs dues or fines in respect of such loss, damage,

shortage, over-carriage or delay

32


Additional costs covered:

• Legal costs of the original cargo claim

• Interest on the original claim

• Certain costs and expenses incurred by the Club

which dealt with the claim initially

33


• Does not apply if there has been a material amendment to the

cargo responsibility clauses in the Charterparty.

• A material amendment to the cargo responsibility clauses under the

Inter-Club Agreement is one that makes the liability, as between

owners and charterers, for cargo claims clear.

• The addition of the words “and responsibility” in Clause 8 of NYPE is

not considered a material amendment.

34


• Cargo claims arising out of the unseaworthiness of

the vessel will be apportioned 100% Owners [NB –

no defence of due diligence]

• Unless the Owner prove that the unseaworthiness

was caused by the loading, stowage, lashing,

discharge or other handling of the cargo

35


Under the Inter-Club Agreement:

• If NYPE Clause 8 is not amended by the addition of

the words “and responsibility”

• Claims arising out of the loading, stowage, lashing,

discharge, storage or other handling of the cargo will

be apportioned 100% Charterers.

36


• If NYPE Clause 8 is amended to include words and

responsibility

• Claims arising out of the loading, stowage, lashing,

discharge, storage or other handling of the cargo will

be apportioned:

50% Charterers/50% Owners

37


• Claims arising out of shortage or over carriage will

be apportioned:


• Unless there is clear evidence that the claim arose

out of pilferage or neglect

• All claims to be notified within 2 years of discharge

38


39


Pilfering

• All other claims including delay will be apportioned:


• Unless there is clear evidence that the claim arose

out of neglect

40


• If Clause 26 of NYPE is amended to include “and

cargo claims”

• Apportionment under the Inter-Club Agreement will

not apply even if the Agreement is specifically

incorporated into the Charterparty

41


• Cargo claims must be properly settled or

compromised and paid for a liability to arise

• Can usually be fulfilled where a settlement is

achieved on a reasonable basis

• Security

42


Summary:

We have looked at 2 different types of Charterparty

• Voyage Charterparty

Port A to Port B; freight paid

• Time Charter

Hire of a ship for a period of time; hire paid

• ICA – to simplify cargo claims

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SUMMARY

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THANK YOU

CHARTERPARTIES AND THE INTER-CLUB AGREEMENT

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