Carriage of Goods by Sea in Sri Lanka under English Lawpptx.pdf
PrabashSemasinghe1
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Jul 06, 2024
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About This Presentation
Sri lankan law relating to carrier related law
Slide Content
Carriage of Goods
by Sea
By
Prabash Semasinghe
Attorney at Law
LLM -(International Trade Law ) -Wales ,
LLM - (Commercial Law) - Colombo
PADip In Intellectual Property Law
by Sea
By
Prabash Semasinghe
Attorney at Law
LLM -(International Trade Law ) -Wales ,
LLM - (Commercial Law) - Colombo
PADip In Intellectual Property Law
Introduction
International transport or logistics is one of the most important features related to
international trade. It involves the carrying of goods from one place to another and the
handling of consignments, loading and unloading, shipment expenses and other
arrangements between the importer and exporter. International transport uses all
types of modes and means of transport such as trucks, ships, planes, containers, roll-on
- roll-off, rail, river transport and others. A regularly used mode of transport is
Intermodal transportation. This is the containerised movement of cargo, over land and
sea, door to door, without the physical handling associate with break- bulk
transportation.
International transport or logistics is one of the most important features related to
international trade. It involves the carrying of goods from one place to another and the
handling of consignments, loading and unloading, shipment expenses and other
arrangements between the importer and exporter. International transport uses all
types of modes and means of transport such as trucks, ships, planes, containers, roll-on
- roll-off, rail, river transport and others. A regularly used mode of transport is
Intermodal transportation. This is the containerised movement of cargo, over land and
sea, door to door, without the physical handling associate with break- bulk
transportation.
Carriage of Goods By Sea
●Governing law in Sri Lanka is Carriage of Goods by Sea Act 1982
●This statute incorporates the Brussels Convention on Maritime Law The
Convention is based on the Rules (Protocol ) framed in 1922 and later in 1968,
●They apply to shipping contracts based on both Charter Party and Bill of Lading.
●As a gap filler English Common law applies in accordance with resection 5 of the
Civil law Ordinance.
●Unimodal international transport is governed by international conventions:
●Sea transport – the Hague-Visby Rules relating to Bills of Lading
●Air transport – the Warsaw Convention (as amended)
●Land transport by road – the CMR (Convention relative au contrat de transport
international des marchandises de route)
●
●Governing law in Sri Lanka is Carriage of Goods by Sea Act 1982
●This statute incorporates the Brussels Convention on Maritime Law The
Convention is based on the Rules (Protocol ) framed in 1922 and later in 1968,
●They apply to shipping contracts based on both Charter Party and Bill of Lading.
●As a gap filler English Common law applies in accordance with resection 5 of the
Civil law Ordinance.
●Unimodal international transport is governed by international conventions:
●Sea transport – the Hague-Visby Rules relating to Bills of Lading
●Air transport – the Warsaw Convention (as amended)
●Land transport by road – the CMR (Convention relative au contrat de transport
international des marchandises de route)
●
Methods of Transport
●Goods by sea in bulk – shipper may hire a whole vessel – charterparty.
●Individual packages are loaded in the ship’s hold or on deck and are carried under a Bill of
Lading.
●Container transport – traditional transport documents or variations are used.
●Combined Transport Documents – FIATA (“Fédération Internationale des
Associations de Transitaires et Assimilés” or in English, “International Federation of Freight
Forwarders Associations") combined transport bills of lading.
●As a large amount of transport is now carried out by containers it is now provided for
banks to accept multimodal transport document provided this covers the entire
carriage
●Goods by sea in bulk – shipper may hire a whole vessel – charterparty.
●Individual packages are loaded in the ship’s hold or on deck and are carried under a Bill of
Lading.
●Container transport – traditional transport documents or variations are used.
●Combined Transport Documents – FIATA (“Fédération Internationale des
Associations de Transitaires et Assimilés” or in English, “International Federation of Freight
Forwarders Associations") combined transport bills of lading.
●As a large amount of transport is now carried out by containers it is now provided for
banks to accept multimodal transport document provided this covers the entire
carriage
The Course of Business in the Carriage of Goods by Sea
Exporter concludes contract of sale of goods with buyer abroad.
Exporter concludes contract of carriage with a shipowner from UK port
of shipment to port of destination.
The remuneration to be paid to the shipowner is the freight.
The shipowner is the carrier.
The exporter is the shipper
Exporter concludes contract of sale of goods with buyer abroad.
Exporter concludes contract of carriage with a shipowner from UK port
of shipment to port of destination.
The remuneration to be paid to the shipowner is the freight.
The shipowner is the carrier.
The exporter is the shipper
Basic implied obligations in carriage of goods by sea
●Seaworthiness
●Deviation
●Safe ports
●Frustration
●Seaworthiness
●Deviation
●Safe ports
●Frustration
Seaworthiness
●Carrier’s duty is to provide a vessel that was tight ,strunch and properly
manned and equipped for the voyage.Lyon v Mells 1804 5 East 428
●But the carrier need not assume strict liability for the unseaworthiness of the
vessel but it must exercise due diligence to provide a seaworthy vessel
●‘the carrier could escape liability for the negligence of its employees in the
navigation or management of the vessel, but must accept responsibility for
the negligence of its employees in the care and custody of the cargo.
●Unseaworthiness: Competency of Crew
●Carrier’s duty is to provide a vessel that was tight ,strunch and properly
manned and equipped for the voyage.Lyon v Mells 1804 5 East 428
●But the carrier need not assume strict liability for the unseaworthiness of the
vessel but it must exercise due diligence to provide a seaworthy vessel
●‘the carrier could escape liability for the negligence of its employees in the
navigation or management of the vessel, but must accept responsibility for
the negligence of its employees in the care and custody of the cargo.
●Unseaworthiness: Competency of Crew
Unseaworthiness
●Competency of Crew: Standard Oli V Clan Line 1924 AC100. The Vessel’s characteristics meant that special
precautions had to be taken when ballasting. The Owner knew it but not the Captain.
Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd. The Euresian Dream [2002 ] 1 LLoyd’s Rep 719
●Lack of Necessary Documents: This common law rule was restricted by new case law . The Derby 1985 2
LLoyd’s Rep325CA
●Doctrine of Stages :The duty of seaworthiness operates at different points in the contract of carriage
and is not a continuous obligation throughout the voyage. The Vortigern 1899 P 140, CA.the vessel
rebunkered with insufficient coal and, as a consequence, had to have recourse to the plaintiff’s
cargo of copra as fuel. The contract contained a clause excepting the negligence of the
master and crew. However, the shipowners were unable to rely on it because they had broken
the absolute warranty of seaworthiness that had reattached as regards the provision of
bunkers at the intermediate fuelling port
●Competency of Crew: Standard Oli V Clan Line 1924 AC100. The Vessel’s characteristics meant that special
precautions had to be taken when ballasting. The Owner knew it but not the Captain.
Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd. The Euresian Dream [2002 ] 1 LLoyd’s Rep 719
●Lack of Necessary Documents: This common law rule was restricted by new case law . The Derby 1985 2
LLoyd’s Rep325CA
●Doctrine of Stages :The duty of seaworthiness operates at different points in the contract of carriage
and is not a continuous obligation throughout the voyage. The Vortigern 1899 P 140, CA.the vessel
rebunkered with insufficient coal and, as a consequence, had to have recourse to the plaintiff’s
cargo of copra as fuel. The contract contained a clause excepting the negligence of the
master and crew. However, the shipowners were unable to rely on it because they had broken
the absolute warranty of seaworthiness that had reattached as regards the provision of
bunkers at the intermediate fuelling port
●Unseaworthiness or bad storage? It is said that the duty to provide a seaworthy ship
is breached if there is something about the vessel that endangers the safety of the
cargo. Elder Dempster & Co Ltd V Paterson , Zochonis & Co.Ltd.(1924) AC 522
●Causation :Cargo may be damaged by multiple causes. If unseaworthiness is a
cause, then the shipowner will be liable, provided that the loss is not too
remote. In The Europa,[1908] P 84essel struck the dock wall when entering the
dock at Liverpool. This caused a pipe to fracture, which allowed water to flow
into the tween-decks and damage the cargo stowed there. Some scupper holes
in the tween-deck were imperfectly plugged. This allowed the water to leak
down and damage the cargo stowed below in the lower hold.
●Read .Hongkong Fir Shipping v Kawasaki Kisen Kaisha 1962 2QB 26 CA
is breached if there is something about the vessel that endangers the safety of the
cargo. Elder Dempster & Co Ltd V Paterson , Zochonis & Co.Ltd.(1924) AC 522
●Causation :Cargo may be damaged by multiple causes. If unseaworthiness is a
cause, then the shipowner will be liable, provided that the loss is not too
remote. In The Europa,[1908] P 84essel struck the dock wall when entering the
dock at Liverpool. This caused a pipe to fracture, which allowed water to flow
into the tween-decks and damage the cargo stowed there. Some scupper holes
in the tween-deck were imperfectly plugged. This allowed the water to leak
down and damage the cargo stowed below in the lower hold.
●Read .Hongkong Fir Shipping v Kawasaki Kisen Kaisha 1962 2QB 26 CA
Deviation
●At common law it is implied that the carrier will not deviate from the proper route without lawful
justification.
●If breached shipowner may not be able to rely on the exemption clauses.
●There is no breach of the term if a ship deviates on reasonable grounds as, for example, to avoid
the dangerous weather or to save the life at sea, although deviation to save property at sea is not a
permitted deviation art common law as it is under the Hague-Visby Rules.
●he importance of the term for the shipowner lies in the legal effect of a breach of the term by the
carrier. Any voluntary and unjustified deviation is a fundamental breach of the contract of carriage.
In consequence, the shipowner is entitled to reject the contract and, if he does so, the carrier will
lose the benefit of any immunity in the contract protecting him from legal responsibility for loss or
damage except those available to a common carrier
●Justified and Unjustified Deviation:It may be possible to deviate in order to prosecute the voyage
with safety. A master is always under a duty to use reasonable care to ensure the success of the voyage, by
protecting his ship and cargo from avoidable risks. In some circumstances, there may even be an obligation
on the shipowner to deviate in order to protect the cargo interests. Deviation in order to save human life is
always justified, but no to save property, unless this is expressly provided for in the charterparty.
●At common law it is implied that the carrier will not deviate from the proper route without lawful
justification.
●If breached shipowner may not be able to rely on the exemption clauses.
●There is no breach of the term if a ship deviates on reasonable grounds as, for example, to avoid
the dangerous weather or to save the life at sea, although deviation to save property at sea is not a
permitted deviation art common law as it is under the Hague-Visby Rules.
●he importance of the term for the shipowner lies in the legal effect of a breach of the term by the
carrier. Any voluntary and unjustified deviation is a fundamental breach of the contract of carriage.
In consequence, the shipowner is entitled to reject the contract and, if he does so, the carrier will
lose the benefit of any immunity in the contract protecting him from legal responsibility for loss or
damage except those available to a common carrier
●Justified and Unjustified Deviation:It may be possible to deviate in order to prosecute the voyage
with safety. A master is always under a duty to use reasonable care to ensure the success of the voyage, by
protecting his ship and cargo from avoidable risks. In some circumstances, there may even be an obligation
on the shipowner to deviate in order to protect the cargo interests. Deviation in order to save human life is
always justified, but no to save property, unless this is expressly provided for in the charterparty.
Safe Port
● Definition “A port will not be safe unless, in the relevant period of time, a particular ship can reach it, use it and
return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be
avoided by good navigation and seamanship”
●Port which through adherence to international standards and best practice, and under the required operating conditions
set out in this Agreement has the facilities, operations and procedures to ensure the safety of the Vessel, its crew and the
Port environment whilst at the berth, or maneuvering within the Designated Port limit and its contiguous zone/traffic
scheme
●Charterers first have an obligation to nominate a safe port. If the port becomes unsafe after the first nomination,
charterers then have an obligation to nominate another (safe) port.
■Charterers have an absolute obligation to nominate a prospectively safe port.
■The fact that charterers do not reasonably know of the danger is no defence
■The port does not need to be safe at the time of the nomination.
■However it must be safe when the ship is due to reach, stay and leave the port
●In the case of a time charter party, charterers will have to cancel the original order and nominate a safe port. If the ship
is in port, charterers must order the ship to leave (if the danger can still be avoided)
●In the case of a voyage charter party, where the port has already been nominated, the view is that charterers have no
general duty or right to re-nominate. If the charter (and the B/L) have a liberty clause (e.g. “so near thereto as she may
safely get”), then the owner may discharge the cargo at some other port.
● Definition “A port will not be safe unless, in the relevant period of time, a particular ship can reach it, use it and
return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be
avoided by good navigation and seamanship”
●Port which through adherence to international standards and best practice, and under the required operating conditions
set out in this Agreement has the facilities, operations and procedures to ensure the safety of the Vessel, its crew and the
Port environment whilst at the berth, or maneuvering within the Designated Port limit and its contiguous zone/traffic
scheme
●Charterers first have an obligation to nominate a safe port. If the port becomes unsafe after the first nomination,
charterers then have an obligation to nominate another (safe) port.
■Charterers have an absolute obligation to nominate a prospectively safe port.
■The fact that charterers do not reasonably know of the danger is no defence
■The port does not need to be safe at the time of the nomination.
■However it must be safe when the ship is due to reach, stay and leave the port
●In the case of a time charter party, charterers will have to cancel the original order and nominate a safe port. If the ship
is in port, charterers must order the ship to leave (if the danger can still be avoided)
●In the case of a voyage charter party, where the port has already been nominated, the view is that charterers have no
general duty or right to re-nominate. If the charter (and the B/L) have a liberty clause (e.g. “so near thereto as she may
safely get”), then the owner may discharge the cargo at some other port.
Frustration
In the context of a carriage of goods by sea contract, frustration operates under the same general legal principles as in
other contracts but is applied to the specific circumstances and challenges associated with maritime transport. Here's
how the concept of frustration might manifest in this setting:
Key Elements of Frustration in Carriage of Goods by Sea
1.Unforeseeable Event:
○An event that neither party could have anticipated or controlled at the time the contract was made.
○Such events might include extreme weather conditions, blockades, war, or other significant disruptions.
2.Impact on Performance:
○The event must make it impossible to perform the contract as agreed, or it must fundamentally alter the
nature of the obligations.
○For example, if the port of destination becomes inaccessible due to a natural disaster, the purpose of
the contract is defeated.
3.No Fault of the Parties:
○The event causing frustration should not be due to the negligence or intentional actions of either party.
In the context of a carriage of goods by sea contract, frustration operates under the same general legal principles as in
other contracts but is applied to the specific circumstances and challenges associated with maritime transport. Here's
how the concept of frustration might manifest in this setting:
Key Elements of Frustration in Carriage of Goods by Sea
1.Unforeseeable Event:
○An event that neither party could have anticipated or controlled at the time the contract was made.
○Such events might include extreme weather conditions, blockades, war, or other significant disruptions.
2.Impact on Performance:
○The event must make it impossible to perform the contract as agreed, or it must fundamentally alter the
nature of the obligations.
○For example, if the port of destination becomes inaccessible due to a natural disaster, the purpose of
the contract is defeated.
3.No Fault of the Parties:
○The event causing frustration should not be due to the negligence or intentional actions of either party.
Common Examples of Frustrating Events in Maritime Contracts
●Natural Disasters: Severe storms, hurricanes, or earthquakes that damage the vessel or make navigation to the
destination port unsafe.
●War or Piracy: Outbreaks of war, acts of piracy, or political instability that render the journey dangerous or impossible.
●Blockades or Embargoes: Government-imposed blockades, sanctions, or embargoes that prevent the vessel from
reaching its destination.
●Port Closures: Unexpected closures of ports due to strikes, political decisions, or other unforeseen events.
Consequences of Frustration in Maritime Contracts
When a contract for the carriage of goods by sea is frustrated, the usual outcome is that the contract is automatically terminated.
The parties are released from their obligations to continue with the contract, and the consequences are typically as follows:
●Termination of Obligations: The contractual obligations of both parties are discharged from the point of frustration.
●Restitution: If freight or other payments have been made in advance, there may be claims for restitution. However, this
depends on the specifics of the contract and the point at which the frustration occurred.
●Apportionment of Losses: Courts may apportion any losses or expenses incurred up to the point of frustration,
depending on the circumstances.
●Natural Disasters: Severe storms, hurricanes, or earthquakes that damage the vessel or make navigation to the
destination port unsafe.
●War or Piracy: Outbreaks of war, acts of piracy, or political instability that render the journey dangerous or impossible.
●Blockades or Embargoes: Government-imposed blockades, sanctions, or embargoes that prevent the vessel from
reaching its destination.
●Port Closures: Unexpected closures of ports due to strikes, political decisions, or other unforeseen events.
Consequences of Frustration in Maritime Contracts
When a contract for the carriage of goods by sea is frustrated, the usual outcome is that the contract is automatically terminated.
The parties are released from their obligations to continue with the contract, and the consequences are typically as follows:
●Termination of Obligations: The contractual obligations of both parties are discharged from the point of frustration.
●Restitution: If freight or other payments have been made in advance, there may be claims for restitution. However, this
depends on the specifics of the contract and the point at which the frustration occurred.
●Apportionment of Losses: Courts may apportion any losses or expenses incurred up to the point of frustration,
depending on the circumstances.
Practical Considerations
●Force Majeure Clauses: Most carriage of goods by sea contracts include force majeure clauses that
specifically address unforeseen events. These clauses can provide detailed procedures and
consequences for dealing with such events, potentially reducing reliance on the frustration doctrine.
●Deviation and Alternate Arrangements: In some cases, the shipowner or carrier may seek to
deviate from the original route or find alternative ports to mitigate the impact of the frustrating event.
The terms of the contract and applicable laws will influence the legitimacy and consequences of such
actions.
●Insurance: Both parties often rely on marine insurance to cover risks associated with unforeseen
events. Understanding the scope and limits of insurance coverage is crucial.
●Force Majeure Clauses: Most carriage of goods by sea contracts include force majeure clauses that
specifically address unforeseen events. These clauses can provide detailed procedures and
consequences for dealing with such events, potentially reducing reliance on the frustration doctrine.
●Deviation and Alternate Arrangements: In some cases, the shipowner or carrier may seek to
deviate from the original route or find alternative ports to mitigate the impact of the frustrating event.
The terms of the contract and applicable laws will influence the legitimacy and consequences of such
actions.
●Insurance: Both parties often rely on marine insurance to cover risks associated with unforeseen
events. Understanding the scope and limits of insurance coverage is crucial.
Legal Framework
The legal framework for frustration in carriage of goods by sea is influenced by international conventions, such as:
●Hague-Visby Rules: These rules govern the rights and responsibilities of carriers and shippers under a bill of
lading, including liability issues that may arise from unforeseen events.
●Hamburg Rules: Similar to the Hague-Visby Rules, but with some variations in terms of carrier liability and
obligations.
Steps for Parties
●Drafting Detailed Contracts: Including specific provisions for dealing with unforeseen events, such as force
majeure clauses and detailed descriptions of responsibilities and remedies.
●Risk Assessment: Conducting thorough risk assessments and contingency planning for potential disruptions.
●Legal and Insurance Advice: Consulting legal experts and insurance professionals to ensure comprehensive
coverage and understanding of rights and obligations under potential frustration scenarios.
The legal framework for frustration in carriage of goods by sea is influenced by international conventions, such as:
●Hague-Visby Rules: These rules govern the rights and responsibilities of carriers and shippers under a bill of
lading, including liability issues that may arise from unforeseen events.
●Hamburg Rules: Similar to the Hague-Visby Rules, but with some variations in terms of carrier liability and
obligations.
Steps for Parties
●Drafting Detailed Contracts: Including specific provisions for dealing with unforeseen events, such as force
majeure clauses and detailed descriptions of responsibilities and remedies.
●Risk Assessment: Conducting thorough risk assessments and contingency planning for potential disruptions.
●Legal and Insurance Advice: Consulting legal experts and insurance professionals to ensure comprehensive
coverage and understanding of rights and obligations under potential frustration scenarios.
Contract of affreightment
●Is the contract of carriage of goods by sea
●There persons are involving in such contract.
❖ Ship Owner - person who owns the ship and undertake sto transport the goods
❖ Charterer : The person who hires the ship and delivers the goods to the ship owner fro
transportation . In other words consignor or Shipper
❖ Consignee: the person to whom the goods are addressed and to whom the shipowner
should deliver the goods
●The consideration for which the shipowner undertakes to carry the goods of the charterer is called
fright.
●Is the contract of carriage of goods by sea
●There persons are involving in such contract.
❖ Ship Owner - person who owns the ship and undertake sto transport the goods
❖ Charterer : The person who hires the ship and delivers the goods to the ship owner fro
transportation . In other words consignor or Shipper
❖ Consignee: the person to whom the goods are addressed and to whom the shipowner
should deliver the goods
●The consideration for which the shipowner undertakes to carry the goods of the charterer is called
fright.
Kinds of Contract of affreightment
1.Charter party
2.Bill of lading
1.Charter parties are legal contracts used in the maritime industry that outline the terms and conditions
under which a shipowner agrees to rent out their vessel to a charterer for transporting goods. There
are several types of charter parties, each designed to cater to different needs and arrangements in
maritime shipping.
1.Charter party
2.Bill of lading
1.Charter parties are legal contracts used in the maritime industry that outline the terms and conditions
under which a shipowner agrees to rent out their vessel to a charterer for transporting goods. There
are several types of charter parties, each designed to cater to different needs and arrangements in
maritime shipping.
Charter Party
●Definition: a contract for the hiring of the whole ship or its substantial part.
●By a contract of Charter party , the ship owner agrees to place the whole ship or its
substantial part at the disposal of the chatterer fo the purpose of carrying goods to a
particular place.
●The Chatterer agrees to pay a certain sum of money called freight for hiring of the
ship for that purpose.
●Chatterer may hirer the ship for carrying his own goods or use the ship as a general
ship for carrying goods of third parties.
●Definition: a contract for the hiring of the whole ship or its substantial part.
●By a contract of Charter party , the ship owner agrees to place the whole ship or its
substantial part at the disposal of the chatterer fo the purpose of carrying goods to a
particular place.
●The Chatterer agrees to pay a certain sum of money called freight for hiring of the
ship for that purpose.
●Chatterer may hirer the ship for carrying his own goods or use the ship as a general
ship for carrying goods of third parties.
Types of Charter Party
1.Time Charter Party : a contract by which a ship is hired for a specific time - one years . it can undertake
any number of voyages within that time period.
2.Voyage Charter Party : It is a contract by which a ship is hired for a particular voyage or voyage. It is
therefore a contract of the carriage of specific goods on a particular voyage. In this case , the freight is
usually calculated on the quantity of the goods that carried.
1.Time Charter Party : a contract by which a ship is hired for a specific time - one years . it can undertake
any number of voyages within that time period.
2.Voyage Charter Party : It is a contract by which a ship is hired for a particular voyage or voyage. It is
therefore a contract of the carriage of specific goods on a particular voyage. In this case , the freight is
usually calculated on the quantity of the goods that carried.
1. Voyage Charter Party
In a voyage charter party, the shipowner agrees to rent out the vessel for a specific voyage between designated ports with a specific cargo. Key characteristics include:
● Specified Voyage: The contract details the loading and discharge ports.
● Freight Payment: Payment is usually based on the quantity of cargo transported or as a lump sum for the entire voyage.
● Laytime and Demurrage: Time allowed for loading and unloading is specified, with penalties (demurrage) for delays.
● Cargo Details: Type and quantity of cargo are defined.
Key Elements of a Voyage Charter Party
1.Parties Involved:
○ Shipowner: The owner of the vessel who provides the ship for the transportation of goods.
○ Charterer: The individual or company who hires the vessel to transport their cargo.
2.Specific Voyage:
○ The contract specifies the particular voyage the vessel will undertake, including the loading port(s) and the discharge port(s).
3.Cargo Details:
○ The type and quantity of cargo to be transported are clearly stated in the charter party.
4.Freight Payment:
○ The charterer agrees to pay the shipowner a sum of money called freight for the transportation services. This can be calculated in various ways, such as
per ton of cargo or as a lump sum for the voyage.
5.Duration and Laytime:
○ The contract will specify the laytime, which is the amount of time allowed for loading and unloading the cargo. If this time is exceeded, the charterer
usually has to pay demurrage, a penalty for the delay.
6.Responsibilities and Obligations:
○ The charter party outlines the responsibilities of both the shipowner and the charterer regarding the provision of the vessel, loading and unloading of
cargo, and compliance with regulatory requirements.
In a voyage charter party, the shipowner agrees to rent out the vessel for a specific voyage between designated ports with a specific cargo. Key characteristics include:
● Specified Voyage: The contract details the loading and discharge ports.
● Freight Payment: Payment is usually based on the quantity of cargo transported or as a lump sum for the entire voyage.
● Laytime and Demurrage: Time allowed for loading and unloading is specified, with penalties (demurrage) for delays.
● Cargo Details: Type and quantity of cargo are defined.
Key Elements of a Voyage Charter Party
1.Parties Involved:
○ Shipowner: The owner of the vessel who provides the ship for the transportation of goods.
○ Charterer: The individual or company who hires the vessel to transport their cargo.
2.Specific Voyage:
○ The contract specifies the particular voyage the vessel will undertake, including the loading port(s) and the discharge port(s).
3.Cargo Details:
○ The type and quantity of cargo to be transported are clearly stated in the charter party.
4.Freight Payment:
○ The charterer agrees to pay the shipowner a sum of money called freight for the transportation services. This can be calculated in various ways, such as
per ton of cargo or as a lump sum for the voyage.
5.Duration and Laytime:
○ The contract will specify the laytime, which is the amount of time allowed for loading and unloading the cargo. If this time is exceeded, the charterer
usually has to pay demurrage, a penalty for the delay.
6.Responsibilities and Obligations:
○ The charter party outlines the responsibilities of both the shipowner and the charterer regarding the provision of the vessel, loading and unloading of
cargo, and compliance with regulatory requirements.
2. Time Charter Party
In a time charter party, the shipowner rents out the vessel for a specific period, during which the charterer has control over the vessel’s operations, but the
ownership and management remain with the shipowner. Key points include:
● Specified Period: The charter is for a set period rather than a specific voyage.
● Hire Rate: Payment is typically made based on daily or monthly hire rates.
● Operational Control: The charterer directs the vessel's movements and voyages within agreed limits.
● Bunker Costs: The charterer usually pays for fuel (bunkers).
Key Elements of a Time Charter Party
1.Duration:
○ The charter specifies the period during which the charterer has control over the vessel, which could range from a few months to several
years.
2.Hire Rate:
○ The charterer pays a hire rate to the shipowner, usually calculated on a daily or monthly basis. This hire rate is agreed upon in the charter
party.
3.Operational Control:
○ The charterer has the right to direct the vessel’s voyages and commercial activities, including the ports of call, the cargo to be transported,
and the routes to be taken.
4.Responsibilities:
○ Charterer: Responsible for fuel (bunkers), port charges, canal fees, and other voyage-related expenses.
○ Shipowner: Responsible for the vessel’s maintenance, crew wages, insurance, and operational management.
5.Redelivery:
○ The contract includes terms for the redelivery of the vessel to the shipowner at the end of the charter period, specifying the condition and
location for redelivery
In a time charter party, the shipowner rents out the vessel for a specific period, during which the charterer has control over the vessel’s operations, but the
ownership and management remain with the shipowner. Key points include:
● Specified Period: The charter is for a set period rather than a specific voyage.
● Hire Rate: Payment is typically made based on daily or monthly hire rates.
● Operational Control: The charterer directs the vessel's movements and voyages within agreed limits.
● Bunker Costs: The charterer usually pays for fuel (bunkers).
Key Elements of a Time Charter Party
1.Duration:
○ The charter specifies the period during which the charterer has control over the vessel, which could range from a few months to several
years.
2.Hire Rate:
○ The charterer pays a hire rate to the shipowner, usually calculated on a daily or monthly basis. This hire rate is agreed upon in the charter
party.
3.Operational Control:
○ The charterer has the right to direct the vessel’s voyages and commercial activities, including the ports of call, the cargo to be transported,
and the routes to be taken.
4.Responsibilities:
○ Charterer: Responsible for fuel (bunkers), port charges, canal fees, and other voyage-related expenses.
○ Shipowner: Responsible for the vessel’s maintenance, crew wages, insurance, and operational management.
5.Redelivery:
○ The contract includes terms for the redelivery of the vessel to the shipowner at the end of the charter period, specifying the condition and
location for redelivery
Common Clauses in a Time Charter Party
1.Hire Payment:
○ Details the amount, frequency, and method of hire payments. Includes provisions for late payments and possible
penalties.
2.Bunkers:
○ Specifies the quantity and quality of fuel on board at delivery and redelivery. Often includes provisions for bunkers
supplied during the charter period.
3.Trading Limits:
○ Defines geographical limits within which the vessel can operate. The charterer must adhere to these limits unless
additional agreements are made.
4.Off-hire Clause:
○ Specifies conditions under which the vessel may be declared off-hire, meaning the charterer does not have to pay hire
during periods when the vessel is unable to perform due to breakdowns, repairs, or other specified reasons.
5.Maintenance and Repairs:
○ Outlines the shipowner’s obligations for maintaining and repairing the vessel, including regular maintenance schedules
and unexpected repairs.
6.Liability and Indemnity:
○ Defines the liability of each party for various types of damage or loss, including damage to the vessel, cargo, and
third-party claims.
7.Insurance:
○ Specifies the types of insurance the shipowner must maintain, such as hull and machinery insurance and Protection and
Indemnity (P&I) insurance.
8.Performance Clauses:
○ Includes performance warranties regarding the vessel’s speed, fuel consumption, and cargo capacity.
1.Hire Payment:
○ Details the amount, frequency, and method of hire payments. Includes provisions for late payments and possible
penalties.
2.Bunkers:
○ Specifies the quantity and quality of fuel on board at delivery and redelivery. Often includes provisions for bunkers
supplied during the charter period.
3.Trading Limits:
○ Defines geographical limits within which the vessel can operate. The charterer must adhere to these limits unless
additional agreements are made.
4.Off-hire Clause:
○ Specifies conditions under which the vessel may be declared off-hire, meaning the charterer does not have to pay hire
during periods when the vessel is unable to perform due to breakdowns, repairs, or other specified reasons.
5.Maintenance and Repairs:
○ Outlines the shipowner’s obligations for maintaining and repairing the vessel, including regular maintenance schedules
and unexpected repairs.
6.Liability and Indemnity:
○ Defines the liability of each party for various types of damage or loss, including damage to the vessel, cargo, and
third-party claims.
7.Insurance:
○ Specifies the types of insurance the shipowner must maintain, such as hull and machinery insurance and Protection and
Indemnity (P&I) insurance.
8.Performance Clauses:
○ Includes performance warranties regarding the vessel’s speed, fuel consumption, and cargo capacity.
3. Bareboat Charter Party (Demise Charter)
Under a bareboat charter, the shipowner leases the vessel without crew, provisions, or supplies. The charterer takes
on full control and responsibility for the vessel. Key aspects include:
●Full Control: The charterer assumes full operational control and responsibility.
●Long-term: These charters are often for longer periods, such as years.
●All Costs: The charterer covers all operational costs, including crew, maintenance, and insurance.
●Transfer of Responsibility: The shipowner has minimal involvement
Under a bareboat charter, the shipowner leases the vessel without crew, provisions, or supplies. The charterer takes
on full control and responsibility for the vessel. Key aspects include:
●Full Control: The charterer assumes full operational control and responsibility.
●Long-term: These charters are often for longer periods, such as years.
●All Costs: The charterer covers all operational costs, including crew, maintenance, and insurance.
●Transfer of Responsibility: The shipowner has minimal involvement
Usual Clauses of a Charter Party
●Name of the Parties : name and address of the ship owner and the Charterer
●Name and nationality
●Position of the ship . In which port the sip now located at
●Seaworthiness of the ship : It is always implied that ship is seaworthy.
●Port of Loading of Cargo
●Delivery of goods at the port of discharge : this clause obliged the ship owner to deliver the goods at the port of
discharge .When the Ship reaches the port of Discharge the ship owner must get out of the ship’s hold and put them
on the Ship’s deck in such a position that the consignee can take delivery of the same..
●Payment of Freight ,Advance Freight and dead freight : Dead freight is payable by the charterer if he fails to load the
agreed quantity of the goods .
●Pro Rata Freight ,Lumpsum Freight and Primage : Primage is a shipping term not found in the other contracts . It is
the extra freight which is payable by an agreement to the captain of the ship . It is a sort of reward to the captain of a
ship taking care of the cargo put on board.
●Lawful Merchandise . This clause stated that the goods loaded by the charterer for carriage shall be lawful and not
dangerous.
●Floating of the ship : The ship owner shall take the ship to the port of loading or port of discharge or so near to these
ports as it can safely remain afloat.
●Name of the Parties : name and address of the ship owner and the Charterer
●Name and nationality
●Position of the ship . In which port the sip now located at
●Seaworthiness of the ship : It is always implied that ship is seaworthy.
●Port of Loading of Cargo
●Delivery of goods at the port of discharge : this clause obliged the ship owner to deliver the goods at the port of
discharge .When the Ship reaches the port of Discharge the ship owner must get out of the ship’s hold and put them
on the Ship’s deck in such a position that the consignee can take delivery of the same..
●Payment of Freight ,Advance Freight and dead freight : Dead freight is payable by the charterer if he fails to load the
agreed quantity of the goods .
●Pro Rata Freight ,Lumpsum Freight and Primage : Primage is a shipping term not found in the other contracts . It is
the extra freight which is payable by an agreement to the captain of the ship . It is a sort of reward to the captain of a
ship taking care of the cargo put on board.
●Lawful Merchandise . This clause stated that the goods loaded by the charterer for carriage shall be lawful and not
dangerous.
●Floating of the ship : The ship owner shall take the ship to the port of loading or port of discharge or so near to these
ports as it can safely remain afloat.
Cont…..
●Shipowner’s lien: stipulated the shipowner’s right of lien - his right to retain goods carried by him till his freight
charges and other expenses are paid.
●Caesar Clauses : this deals with the liability of the chatterer . It provides that his liability will cease as soon as the
goods are loaded on board the ship. Thereafter , the liability of the shipowner arises.
●Excepted Perils this is defined as the risks for which the ship owner is not liable if loss is caused due to such risk.
●Lay days and Demurrages: lay days defined as the days which are allowed for loading and unloading the ship. The
number of lay days are usually mentioned in the charter party. It may be noted that the work of loading and
unloading the ship must be completed within a reasonable time . If the Charterer does not complete the work within
the lay days , then he becomes liable for payment of damages, to the shipowner . Such damages are called
Demurrages.
●Shipowner’s lien: stipulated the shipowner’s right of lien - his right to retain goods carried by him till his freight
charges and other expenses are paid.
●Caesar Clauses : this deals with the liability of the chatterer . It provides that his liability will cease as soon as the
goods are loaded on board the ship. Thereafter , the liability of the shipowner arises.
●Excepted Perils this is defined as the risks for which the ship owner is not liable if loss is caused due to such risk.
●Lay days and Demurrages: lay days defined as the days which are allowed for loading and unloading the ship. The
number of lay days are usually mentioned in the charter party. It may be noted that the work of loading and
unloading the ship must be completed within a reasonable time . If the Charterer does not complete the work within
the lay days , then he becomes liable for payment of damages, to the shipowner . Such damages are called
Demurrages.
Bill of lading
●The first thing to remember is that the bill of lading is a fancy way of saying receipt. The
term “lading” is derived from the Old English word for “loading.”
●As a refresher the BOL serves three functions:
●This is the second type of contract of affreightment.
● Definition : a document acknowledging the shipment of goods and containing the
terms and conditions upon which goods are to be transported by the ship.
●This is signed by the Shipowner and or his agent or by the master of the ship.
●This is generally used for the consignment of goods in a general ship.
●The general ship means : a ship which is plied on a particular route and is used for the
transportation of goods of all merchants who desire to consign the goods to places
where the ship will call in its course of journey on the route.
●Therefore Owner of the general ship is a common carrier as he offers to carry any good
of all the merchants .
●The first thing to remember is that the bill of lading is a fancy way of saying receipt. The
term “lading” is derived from the Old English word for “loading.”
●As a refresher the BOL serves three functions:
●This is the second type of contract of affreightment.
● Definition : a document acknowledging the shipment of goods and containing the
terms and conditions upon which goods are to be transported by the ship.
●This is signed by the Shipowner and or his agent or by the master of the ship.
●This is generally used for the consignment of goods in a general ship.
●The general ship means : a ship which is plied on a particular route and is used for the
transportation of goods of all merchants who desire to consign the goods to places
where the ship will call in its course of journey on the route.
●Therefore Owner of the general ship is a common carrier as he offers to carry any good
of all the merchants .
In nutshell ….
A bill of lading must be transferable,[ Section 1.2 of the Act] and serves three main functions:
●it is a conclusive receipt, i.e. an acknowledgement that the goods have been loaded; and
●it contains, or evidences, the terms of the contract of carriage; and
●it serves as a document of title to the goods, subject to the nemo dat rule.
Typical export transactions use Incoterms terms such as CIF, FOB or FAS, requiring the exporter/shipper to deliver the goods
to the ship, whether onboard or alongside. Nevertheless, the loading itself will usually be done by the carrier or by a third
party stevedore.
The BOL is issued by the carrier to the shipper once their truck or vessel is loaded with freight. This is when the contractual
nature of the BOL comes into play. The carrier then delivers the BOL (along with the freight) to the consignee. The consignee
(or cons) is the the party to whom the goods are shipped and delivered.
To clarify, a BOL is a legal document used between a shipper and a carrier. A BOL specifies the type, quantity, and destination
of the freight a driver is carrying.
The BOL is issued by the carrier to the shipper once their truck or vessel is loaded with freight. This is when the contractual
nature of the BOL comes into play. The carrier then delivers the BOL (along with the freight) to the consignee. The consignee
(or cons) is the the party to whom the goods are shipped and delivered.
A bill of lading must be transferable,[ Section 1.2 of the Act] and serves three main functions:
●it is a conclusive receipt, i.e. an acknowledgement that the goods have been loaded; and
●it contains, or evidences, the terms of the contract of carriage; and
●it serves as a document of title to the goods, subject to the nemo dat rule.
Typical export transactions use Incoterms terms such as CIF, FOB or FAS, requiring the exporter/shipper to deliver the goods
to the ship, whether onboard or alongside. Nevertheless, the loading itself will usually be done by the carrier or by a third
party stevedore.
The BOL is issued by the carrier to the shipper once their truck or vessel is loaded with freight. This is when the contractual
nature of the BOL comes into play. The carrier then delivers the BOL (along with the freight) to the consignee. The consignee
(or cons) is the the party to whom the goods are shipped and delivered.
To clarify, a BOL is a legal document used between a shipper and a carrier. A BOL specifies the type, quantity, and destination
of the freight a driver is carrying.
The BOL is issued by the carrier to the shipper once their truck or vessel is loaded with freight. This is when the contractual
nature of the BOL comes into play. The carrier then delivers the BOL (along with the freight) to the consignee. The consignee
(or cons) is the the party to whom the goods are shipped and delivered.
Functions of a Bill of lading
Receipt of Goods:
The bill of lading acts as a receipt issued by the carrier to the shipper, confirming that the goods have been
received in good condition and detailing their quantity and condition.
Document of Title:
It represents ownership of the goods and can be transferred to others, often being used in trade to transfer
title to the goods while they are in transit.
Contract of Carriage:
The bill of lading outlines the terms and conditions under which the goods will be transported from the point
of origin to the destination. This includes obligations, rights, and liabilities of the shipper and the carrier.
Receipt of Goods:
The bill of lading acts as a receipt issued by the carrier to the shipper, confirming that the goods have been
received in good condition and detailing their quantity and condition.
Document of Title:
It represents ownership of the goods and can be transferred to others, often being used in trade to transfer
title to the goods while they are in transit.
Contract of Carriage:
The bill of lading outlines the terms and conditions under which the goods will be transported from the point
of origin to the destination. This includes obligations, rights, and liabilities of the shipper and the carrier.
Why It Is a Contract
Essential Elements of a Contract
A contract requires certain elements to be valid, which are present in a bill of lading:
1.Offer and Acceptance:
○The shipper offers goods for transport, and the carrier accepts them, agreeing to transport them under
specified terms.
2.Consideration:
○Consideration in this context is the freight payment by the shipper for the carrier's service of
transporting the goods.
3.Intention to Create Legal Relations:
○Both parties intend to create a legally binding agreement regarding the carriage of the goods.
4.Capacity:
○Both parties (shipper and carrier) have the legal capacity to enter into a contract.
5.Lawful Purpose:
○The contract is for a lawful purpose, i.e., the transportation of goods.
Essential Elements of a Contract
A contract requires certain elements to be valid, which are present in a bill of lading:
1.Offer and Acceptance:
○The shipper offers goods for transport, and the carrier accepts them, agreeing to transport them under
specified terms.
2.Consideration:
○Consideration in this context is the freight payment by the shipper for the carrier's service of
transporting the goods.
3.Intention to Create Legal Relations:
○Both parties intend to create a legally binding agreement regarding the carriage of the goods.
4.Capacity:
○Both parties (shipper and carrier) have the legal capacity to enter into a contract.
5.Lawful Purpose:
○The contract is for a lawful purpose, i.e., the transportation of goods.
●Each BOL is assigned a number. That same number appears on both copies of the BOL. Going forward,
all parties use the bill of lading number when
Confirming delivery of a load
Billing/invoicing for a load
Discussing issues and disputes
●It’s important to understand that a BOL is also considered evidence of a contract between a carrier
and a shipper. The BOL legally protects the carrier, who is performing the service of hauling freight and
expects rightful payment.
●Also, in the case of the buyer, a BOL legally constitutes a title of ownership. T
all parties use the bill of lading number when
Confirming delivery of a load
Billing/invoicing for a load
Discussing issues and disputes
●It’s important to understand that a BOL is also considered evidence of a contract between a carrier
and a shipper. The BOL legally protects the carrier, who is performing the service of hauling freight and
expects rightful payment.
●Also, in the case of the buyer, a BOL legally constitutes a title of ownership. T
Bill of lading in a charter party
●Bill of Lading is also used in case of a charter party as well when the whole ship is
chartered by a merchant .
●In such situ , the bill of lading is issued by the shipowner to the chatterer( who
hires the ship) only as an acknowledgment of the receipt of goods loaded on board
the ship.
●However, in this scenario , the terms of contract of affreightment are not in the
bill of lading but included in the chartparty.
●Sometimes , in a charterparty , the Chatterer collects the goods from several
merchants for transportation ,and issues a bill of lading to them . in such event that
bill of lading takes the form of a contract of affreightment between the charterer
and the merchants who consign their goods. So the charterer becomes a common
carrier.
●Bill of Lading is also used in case of a charter party as well when the whole ship is
chartered by a merchant .
●In such situ , the bill of lading is issued by the shipowner to the chatterer( who
hires the ship) only as an acknowledgment of the receipt of goods loaded on board
the ship.
●However, in this scenario , the terms of contract of affreightment are not in the
bill of lading but included in the chartparty.
●Sometimes , in a charterparty , the Chatterer collects the goods from several
merchants for transportation ,and issues a bill of lading to them . in such event that
bill of lading takes the form of a contract of affreightment between the charterer
and the merchants who consign their goods. So the charterer becomes a common
carrier.
●In modern world bill of lading is more popular as the sender is a merchant or a manufacturer
who is interested in transporting his goods and not in the management of the ship.
●The bill of lading is considered as a document of title ( of the goods) and also a contract of
affreightment.
●In hands of a shipper, BOL is evidence of contract of carriage.
❖ The Ardennes [1951] 1 KB 55 – special term of contract of carriage, even if agreed
upon only orally, may overridge general clauses printed in bill of lading. bills of lading
standard –form contracts which are generally seen as the best evidence of the contract
of carriage.
●When bill transferred to third-party, it will be treated as contract of carriage, meaning it will
contain the relevant terms and conditions.
❖Leduc v Ward (1888) 20 QB 475 – any oral agreements between shipper and carrier
will not bind third party.
who is interested in transporting his goods and not in the management of the ship.
●The bill of lading is considered as a document of title ( of the goods) and also a contract of
affreightment.
●In hands of a shipper, BOL is evidence of contract of carriage.
❖ The Ardennes [1951] 1 KB 55 – special term of contract of carriage, even if agreed
upon only orally, may overridge general clauses printed in bill of lading. bills of lading
standard –form contracts which are generally seen as the best evidence of the contract
of carriage.
●When bill transferred to third-party, it will be treated as contract of carriage, meaning it will
contain the relevant terms and conditions.
❖Leduc v Ward (1888) 20 QB 475 – any oral agreements between shipper and carrier
will not bind third party.
●A bill of lading is, therefore, both a receipt for merchandise and a contract
to deliver it as freight. There are a number of different types of bills of
lading and a number of issues that relate to them as a group of
documents.
●
to deliver it as freight. There are a number of different types of bills of
lading and a number of issues that relate to them as a group of
documents.
●
types of bills of lading defined
●STRAIGHT BILL OF LADING (non-negotiable) A straight bill of lading indicates that the shipper
will deliver the goods to the consignee. This is a non-negotiable document. The consignee need
only present identification to claim the goods. A straight bill of lading is often used when
payment for the goods has already been made in advance or when the goods are shipped on
open account. A straight bill of lading, therefore, cannot be transferred by endorsement
●SHIPPER’S ORDER (NEGOTIABLE) BILL OF LADING A shipper’s order bill of lading is a title
document to the goods (negotiable instrument), issued “to the order of” a party, usually the
shipper, whose endorsement is required to effect its negotiation. Because it is negotiable, a
shipper’s order bill of lading can be bought,sold, or traded while goods are in transit. These are
highly favored for documentary letter of credit transactions. The buyer usually needs the
original ora signed copy as proof of ownership to take possession of the goods.
●STRAIGHT BILL OF LADING (non-negotiable) A straight bill of lading indicates that the shipper
will deliver the goods to the consignee. This is a non-negotiable document. The consignee need
only present identification to claim the goods. A straight bill of lading is often used when
payment for the goods has already been made in advance or when the goods are shipped on
open account. A straight bill of lading, therefore, cannot be transferred by endorsement
●SHIPPER’S ORDER (NEGOTIABLE) BILL OF LADING A shipper’s order bill of lading is a title
document to the goods (negotiable instrument), issued “to the order of” a party, usually the
shipper, whose endorsement is required to effect its negotiation. Because it is negotiable, a
shipper’s order bill of lading can be bought,sold, or traded while goods are in transit. These are
highly favored for documentary letter of credit transactions. The buyer usually needs the
original ora signed copy as proof of ownership to take possession of the goods.
Cont…
●BLANK ENDORSED NEGOTIABLE BILL OF LADING A blank endorsed negotiable bill of lading
is one that has been endorsed without naming an endorsee. In simple terms, any person
in possession of a blank endorsed negotiable bill of lading may claim possession of the
goods. Possession of this document equals rights to possession of the shipment.
●MULTI-MODAL BILL OF LADING A multi-modal bill of lading is a single bill of lading
covering a single shipment by more than one mode of transport (for example by truck,
then by rail and then by ship to its final destination).
●CLEAN BILL OF LADING A clean bill of lading is one where the carrier has noted that the
merchandise has been received in apparent good condition (no apparent damage, loss,
etc.) and that does not bear such notations as “Shipper’s Load and Count,” etc. Most
forms of documentary payments require a “clean” bill of lading in order for the seller to
obtain payment.
●BLANK ENDORSED NEGOTIABLE BILL OF LADING A blank endorsed negotiable bill of lading
is one that has been endorsed without naming an endorsee. In simple terms, any person
in possession of a blank endorsed negotiable bill of lading may claim possession of the
goods. Possession of this document equals rights to possession of the shipment.
●MULTI-MODAL BILL OF LADING A multi-modal bill of lading is a single bill of lading
covering a single shipment by more than one mode of transport (for example by truck,
then by rail and then by ship to its final destination).
●CLEAN BILL OF LADING A clean bill of lading is one where the carrier has noted that the
merchandise has been received in apparent good condition (no apparent damage, loss,
etc.) and that does not bear such notations as “Shipper’s Load and Count,” etc. Most
forms of documentary payments require a “clean” bill of lading in order for the seller to
obtain payment.
●CLAUSED BILL OF LADING Opposite of clean bill of lading, a claused bill of
lading is one that contains notations that specify a shortfall in quantity or
deficient condition of the goods and/or packaging. There are some
circumstances in which transport documents with clauses are acceptable. For
example, in the steel trade,such notations are the rule rather than the
exception. If this is the case, the letter of credit should explicitly state which
clause(s) will be deemed acceptable
lading is one that contains notations that specify a shortfall in quantity or
deficient condition of the goods and/or packaging. There are some
circumstances in which transport documents with clauses are acceptable. For
example, in the steel trade,such notations are the rule rather than the
exception. If this is the case, the letter of credit should explicitly state which
clause(s) will be deemed acceptable
Sea Waybill
A ‘sea waybill’ or ‘"waybill" is a non-negotiable receipt which contains contractual
terms’. This definition may mean that this bill performs only the first two functions: a
receipt for the goods and evidencing or containing the contract of carriage. Therefore, a
sea waybill does not perform the third function as ‘a negotiable document of title’.This is
the difference between the sea waybill and the negotiable bill of lading that performs all
functions. In sea waybills, the goods are ‘to be delivered simply to a named person (or
identified person) and not to such a person "or order or assigns".’ The sea waybill maybe
‘marked’ as ‘not negotiable’. It is issued in ‘a short form document with a blank back with
a specific clause incorporating the carrier's standards terms and conditions’.
A ‘sea waybill’ or ‘"waybill" is a non-negotiable receipt which contains contractual
terms’. This definition may mean that this bill performs only the first two functions: a
receipt for the goods and evidencing or containing the contract of carriage. Therefore, a
sea waybill does not perform the third function as ‘a negotiable document of title’.This is
the difference between the sea waybill and the negotiable bill of lading that performs all
functions. In sea waybills, the goods are ‘to be delivered simply to a named person (or
identified person) and not to such a person "or order or assigns".’ The sea waybill maybe
‘marked’ as ‘not negotiable’. It is issued in ‘a short form document with a blank back with
a specific clause incorporating the carrier's standards terms and conditions’.
Passing of the property in the Goods
●The endorsing and transferring of a BOL unconditionally over to a third part can be
a method of passing the property in the goods.
●In CIF sales the customary method of passing property is by endorsing the BOL. But
with FOB sales the custom is for property to pass on shipment so that BOL is not an
instrument.
●Lickbarrow V Mason English Court first ruled that BOL acted to transfer the
property.
●If the Shipper of goods by sea prints in the Box ,bearer , then no further
endorsement is neceassasry as the BOL can pass from hand to hand and whoever
has possession is entitled to take the delivery. - this is rear and then BOL is like a
cash cheque
●The endorsing and transferring of a BOL unconditionally over to a third part can be
a method of passing the property in the goods.
●In CIF sales the customary method of passing property is by endorsing the BOL. But
with FOB sales the custom is for property to pass on shipment so that BOL is not an
instrument.
●Lickbarrow V Mason English Court first ruled that BOL acted to transfer the
property.
●If the Shipper of goods by sea prints in the Box ,bearer , then no further
endorsement is neceassasry as the BOL can pass from hand to hand and whoever
has possession is entitled to take the delivery. - this is rear and then BOL is like a
cash cheque
Cont…
●If the Shipper prints in the Consignee box the words “to order”his intention is to
make a negotiable document. Then the document is ineffective until the shipper
endorse it on the reverse side with his own personal or corporate name known as
open endorsement. That's done , the document may be passed from hand to hand
and whoever holds possession of it at the time the caring vessel is ready to discharge
the goods named on it , entitled to claim delivery.
●If the word to the order of X are printed then the option of disposal will be granted
to X and it will be his endorsement to transfer it to whoever.
●If the Shipper prints in the Consignee box the words “to order”his intention is to
make a negotiable document. Then the document is ineffective until the shipper
endorse it on the reverse side with his own personal or corporate name known as
open endorsement. That's done , the document may be passed from hand to hand
and whoever holds possession of it at the time the caring vessel is ready to discharge
the goods named on it , entitled to claim delivery.
●If the word to the order of X are printed then the option of disposal will be granted
to X and it will be his endorsement to transfer it to whoever.
Who is the Carrier ?
●Hague -Visby Rule define the carrier as “one who enters into a contract with the shipper of goods.
●Is it Ship owner or the Chatterer ?
●The Master of the ship being the owner’s servant/agent , entered in to a contract with the shipper .
● In Starsin [2003] 1 Lloyd's Rep 521 HL , After a shipment of timber and plywood carried on board the vessel "Starsin" was
damaged in transit from Malaysia to Antwerp and Avonmouth, the owners of the cargo who held transferable bills of lading
brought an action against the shipowners for damage to the cargo.
Seventeen bills of lading were issued covering shipments on the vessel STARSIN from three different loading ports in Malaysia to
Antwerp and Avonmouth. The trial judge divided the bills of lading into three groups according to different notify party on the
bills of lading: "the Makros Hout bills"; "the Homburg Hout bills"; and "the Hunter bills". The bills of lading were all on the
Continental Pacific Shipping form. The vessel was at all material times on time charter to Continental Pacific Shipping Ltd.
The signature boxes on the face of the bills are completed in three different ways. The Makros Hout bills have the name of the
signing company -- United Pansar Sdn Bhd -- and the two signatures prefaced by the words "As agents for Continental Pacific
Shipping" ("The Carrier"). The Homburg Hout bills have the stamp of the signing company, PT Katana Line, and its signature
followed by the words "As agents for the carrier Continental Pacific Shipping". The Hunter and Fetim bills have in the
signature box the stamp of Multiport Sdn Bhd, then the signature, then "As Agents for Continental Pacific Shipping as
Carrier". Continental Pacific Shipping is actually the charterer of the vessel “starsin”.
The reverse of the bill, however, identified the owner of the vessel as the carrier by demise clause and identity of carrier clause
●HL held that in fact the contracts were between the cargo owners and the charterers, NOT the ship owners, who could not
therefore be liable. However the cargo owners would be able to ship owners in tort.
●Hague -Visby Rule define the carrier as “one who enters into a contract with the shipper of goods.
●Is it Ship owner or the Chatterer ?
●The Master of the ship being the owner’s servant/agent , entered in to a contract with the shipper .
● In Starsin [2003] 1 Lloyd's Rep 521 HL , After a shipment of timber and plywood carried on board the vessel "Starsin" was
damaged in transit from Malaysia to Antwerp and Avonmouth, the owners of the cargo who held transferable bills of lading
brought an action against the shipowners for damage to the cargo.
Seventeen bills of lading were issued covering shipments on the vessel STARSIN from three different loading ports in Malaysia to
Antwerp and Avonmouth. The trial judge divided the bills of lading into three groups according to different notify party on the
bills of lading: "the Makros Hout bills"; "the Homburg Hout bills"; and "the Hunter bills". The bills of lading were all on the
Continental Pacific Shipping form. The vessel was at all material times on time charter to Continental Pacific Shipping Ltd.
The signature boxes on the face of the bills are completed in three different ways. The Makros Hout bills have the name of the
signing company -- United Pansar Sdn Bhd -- and the two signatures prefaced by the words "As agents for Continental Pacific
Shipping" ("The Carrier"). The Homburg Hout bills have the stamp of the signing company, PT Katana Line, and its signature
followed by the words "As agents for the carrier Continental Pacific Shipping". The Hunter and Fetim bills have in the
signature box the stamp of Multiport Sdn Bhd, then the signature, then "As Agents for Continental Pacific Shipping as
Carrier". Continental Pacific Shipping is actually the charterer of the vessel “starsin”.
The reverse of the bill, however, identified the owner of the vessel as the carrier by demise clause and identity of carrier clause
●HL held that in fact the contracts were between the cargo owners and the charterers, NOT the ship owners, who could not
therefore be liable. However the cargo owners would be able to ship owners in tort.
Cont..
●What is demise Clause : Demise clauses state that if the "carrier" is not the owner of the
vessel or the demise charterer, it merely acts as agent for the vessel owner and has no
liability at all as a carrier albeit that it may have issued the only bill of lading in relation to
the goods. Identity of carrier clauses have similar effect.
●Most reputable liner container operators have discontinued the practice of including a
demise clause or identity of carrier clause in their bill of lading terms but shippers should
be on their guard against such clauses. They may in practice make it much harder to bring
a successful claim for loss or damage to goods
●What is demise Clause : Demise clauses state that if the "carrier" is not the owner of the
vessel or the demise charterer, it merely acts as agent for the vessel owner and has no
liability at all as a carrier albeit that it may have issued the only bill of lading in relation to
the goods. Identity of carrier clauses have similar effect.
●Most reputable liner container operators have discontinued the practice of including a
demise clause or identity of carrier clause in their bill of lading terms but shippers should
be on their guard against such clauses. They may in practice make it much harder to bring
a successful claim for loss or damage to goods
Non production of the BOL at the time of the delivery
●It has long been accepted that letters of indemnity provided by cargo receivers to take delivery of
cargo without production of the original bill of lading are, in principle, enforceable
●One of the primary functions of a bill of lading is that it is a document of title allowing the holder of the
bill of lading to demand delivery of the cargo reflected in that bill of lading from the contractual carrier.
This function underpins the bulk of international trade, particularly in commodities and explains the
value of the original bill of lading to its holder.
●It has long been recognised, particularly in the tanker and short sea trades however that delivery
against presentation of the original bill of lading is not always possible. This is either because it may
have been lost or, more commonly, because it has not yet worked its way through the trading and
banking systems particularly if there have been multiple trades or if the voyage is of a short duration.
To cater for this, letters of indemnity (LOIs) have been developed allowing receivers to take delivery
of the cargo either without production of the original bill of lading, or at a discharge port other than
that named in the bill of lading, or a combination of both.
●Because this practice undermines the primary function of a bill of lading, LOIs have been treated with
some caution by traders, the courts and insurers. This is reflected in the fact that the members of the
International Group of P&I Clubs will not provide liability cover to carriers who release cargo without
production of the bills of lading and against a LOI.
●It has long been accepted that letters of indemnity provided by cargo receivers to take delivery of
cargo without production of the original bill of lading are, in principle, enforceable
●One of the primary functions of a bill of lading is that it is a document of title allowing the holder of the
bill of lading to demand delivery of the cargo reflected in that bill of lading from the contractual carrier.
This function underpins the bulk of international trade, particularly in commodities and explains the
value of the original bill of lading to its holder.
●It has long been recognised, particularly in the tanker and short sea trades however that delivery
against presentation of the original bill of lading is not always possible. This is either because it may
have been lost or, more commonly, because it has not yet worked its way through the trading and
banking systems particularly if there have been multiple trades or if the voyage is of a short duration.
To cater for this, letters of indemnity (LOIs) have been developed allowing receivers to take delivery
of the cargo either without production of the original bill of lading, or at a discharge port other than
that named in the bill of lading, or a combination of both.
●Because this practice undermines the primary function of a bill of lading, LOIs have been treated with
some caution by traders, the courts and insurers. This is reflected in the fact that the members of the
International Group of P&I Clubs will not provide liability cover to carriers who release cargo without
production of the bills of lading and against a LOI.
●In the case of Songa Chemicals AS vs Navig8 Chemicals Pool Limited [2018] EWHC 397
(Comm)
The court accepted that the LOI would be enforceable if delivery had been made to the
named receiver.
The judgment reinforces the fact that traders and carriers must be extremely careful
when negotiating LOIs to ensure firstly that they are not unlawful and secondly that
they cover the contemplated delivery either without production of the original bills of
lading or to a port other than the nominated discharge port and thirdly that they are
presented by the person entitled to do so.
(Comm)
The court accepted that the LOI would be enforceable if delivery had been made to the
named receiver.
The judgment reinforces the fact that traders and carriers must be extremely careful
when negotiating LOIs to ensure firstly that they are not unlawful and secondly that
they cover the contemplated delivery either without production of the original bills of
lading or to a port other than the nominated discharge port and thirdly that they are
presented by the person entitled to do so.
Himalaya Clauses
●A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the
contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya
clauses related to maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and
agents, stevedores in particular.
●The name, Himalaya clause, originates from an English law case concerning a ship called the Himalaya.
●A Himalaya clause benefits those who provide services in completing the duties of the individual directly protected by the
contract. The individuals who benefit from the clause may include the following:
●Employees
●Servants
●Agents
●Subcontractors
●
●The purpose of the clause is to provide a carrier's employees and subcontractors with the advantages of a forum
selection clause while also protecting them from being sued by various jurisdictions.
●
●A Himalaya clause is a contractual provision expressed to be for the benefit of a third party who is not a party to the
contract. Although theoretically applicable to any form of contract, most of the jurisprudence relating to Himalaya
clauses related to maritime matters, and exclusion clauses in bills of lading for the benefit of employees, crew, and
agents, stevedores in particular.
●The name, Himalaya clause, originates from an English law case concerning a ship called the Himalaya.
●A Himalaya clause benefits those who provide services in completing the duties of the individual directly protected by the
contract. The individuals who benefit from the clause may include the following:
●Employees
●Servants
●Agents
●Subcontractors
●
●The purpose of the clause is to provide a carrier's employees and subcontractors with the advantages of a forum
selection clause while also protecting them from being sued by various jurisdictions.
●
The following is an example of a current
Himalaya clause:
It is hereby purposely acknowledged that no agent, employee, or subcontractor
of the carrier will be held liable under any situation, to the owner of the
product, shipper, or any other person applicable to this bill of lading for any
delay, destruction, or loss that happens while carrying out employment duties.
All provisions, limitations, exemptions, rights, and conditions given to the
carrier will also be given to all employees and agents of the carrier. The carrier
is considered to be the acting agent for all individuals who are said to be his or
her employees, agents, or subcontractors, and all these individuals will be
considered covered in the contract discussed in this bill of lading.
Himalaya clause:
It is hereby purposely acknowledged that no agent, employee, or subcontractor
of the carrier will be held liable under any situation, to the owner of the
product, shipper, or any other person applicable to this bill of lading for any
delay, destruction, or loss that happens while carrying out employment duties.
All provisions, limitations, exemptions, rights, and conditions given to the
carrier will also be given to all employees and agents of the carrier. The carrier
is considered to be the acting agent for all individuals who are said to be his or
her employees, agents, or subcontractors, and all these individuals will be
considered covered in the contract discussed in this bill of lading.
International framework of
Bills of lading
Bills of lading
The international framework involves three international conventions in
existence. The first is the International Convention for the Unification of
Certain Rules of Law Relating to Bills of Lading, 1924 (the Hague Rules). The
second is the Protocol to Amend the International Convention for the
Unification of Certain Rules of Law Relating to Bills of Lading, 1924 (the Visby
Amendments). The third the United Nations Convention on the Carriage of
Goods by Sea, 1978 (the Hamburg Rules).
existence. The first is the International Convention for the Unification of
Certain Rules of Law Relating to Bills of Lading, 1924 (the Hague Rules). The
second is the Protocol to Amend the International Convention for the
Unification of Certain Rules of Law Relating to Bills of Lading, 1924 (the Visby
Amendments). The third the United Nations Convention on the Carriage of
Goods by Sea, 1978 (the Hamburg Rules).
The Hague Rules
international Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924 )
●Hague Rules attempted to impose uniformity into contractual terms
relating to the carriage of goods under bills of lading
● set out the rights and liabilities of both cargo-owners and ship-owners
●These Rules were intended ‘to protect cargo-owners from widespread
exclusion clauses frequently incorporated into the contract of carriage by
the shipowner as the stronger bargaining party
●The Hague Rules were adopted by ‘all of the world’s major maritime
nations
international Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924 )
●Hague Rules attempted to impose uniformity into contractual terms
relating to the carriage of goods under bills of lading
● set out the rights and liabilities of both cargo-owners and ship-owners
●These Rules were intended ‘to protect cargo-owners from widespread
exclusion clauses frequently incorporated into the contract of carriage by
the shipowner as the stronger bargaining party
●The Hague Rules were adopted by ‘all of the world’s major maritime
nations
Definitions
●the Hague Rules do not define the term bills of lading
●The Hague Rules define some terms in article 1, for example
‘carrier’, ‘contract of carriage’, ‘goods’, ‘ship’ and ‘carriage of goods’.
●
●the Hague Rules do not define the term bills of lading
●The Hague Rules define some terms in article 1, for example
‘carrier’, ‘contract of carriage’, ‘goods’, ‘ship’ and ‘carriage of goods’.
●
Scope of application
●The Hague Rules ‘apply to all bills of lading issued in Contracting
States’.Article 1(e) states that the ‘"carriage of goods" covers the period from
the time when the goods are loaded on to the time they are discharged from
the ship’.
●Article 1(a) states that the term ‘"carrier" includes the owner or the charterer
who enters into a contract of carriage with a shipper’ and this definition as
‘wide’ and ‘loose’, and says that ‘the definition of carrier is wide, since
reference is made to owner and charterer, who may be a charterer by demise,
or a time
●8 Article 1(c) states that the term ‘"[g]oods includes wares, merchandise, and
articles of every kind whatsoever except live animals and cargo which by the
contract of carriage is stated as being carried on deck and is so carried’ - very
wide scope of definition
●The Hague Rules ‘apply to all bills of lading issued in Contracting
States’.Article 1(e) states that the ‘"carriage of goods" covers the period from
the time when the goods are loaded on to the time they are discharged from
the ship’.
●Article 1(a) states that the term ‘"carrier" includes the owner or the charterer
who enters into a contract of carriage with a shipper’ and this definition as
‘wide’ and ‘loose’, and says that ‘the definition of carrier is wide, since
reference is made to owner and charterer, who may be a charterer by demise,
or a time
●8 Article 1(c) states that the term ‘"[g]oods includes wares, merchandise, and
articles of every kind whatsoever except live animals and cargo which by the
contract of carriage is stated as being carried on deck and is so carried’ - very
wide scope of definition
Obligations of the carrier
●Article 3(1) of Hague Rules obliges the carrier ‘to exercise due diligence
to:
❖ (a) Make the ship seaworthy;
❖:(b) Properly man, equip and supply the ship;
❖:(c) Make the holds, refrigerating and cool chambers, and all other parts
of the ship in which goods are carried, fit and safe for their reception,
carriage and preservation’
●Article 3(1) of Hague Rules obliges the carrier ‘to exercise due diligence
to:
❖ (a) Make the ship seaworthy;
❖:(b) Properly man, equip and supply the ship;
❖:(c) Make the holds, refrigerating and cool chambers, and all other parts
of the ship in which goods are carried, fit and safe for their reception,
carriage and preservation’
●Article 3(2) obliges the carrier to ‘properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods carried’.
●Article 3(3) obliges the carrier, shipmaster or agent of the carrier, after
receiving the goods, to issue a bill of lading to the shipper on the
latter’s demand, as discussed earlier
stow, carry, keep, care for, and discharge the goods carried’.
●Article 3(3) obliges the carrier, shipmaster or agent of the carrier, after
receiving the goods, to issue a bill of lading to the shipper on the
latter’s demand, as discussed earlier
Hague Visby Rules
Article I & Article II
Article I of the Hague Visby rules sets out some of the definitions. It gives the
definitions for Carrier, Contract of carriage, Goods, Ship, and Carriage of goods.
Article II is a statement that carrier cannot shy away from his responsibilities as
set out in the articles of the Hague Visby rules.
Article I & Article II
Article I of the Hague Visby rules sets out some of the definitions. It gives the
definitions for Carrier, Contract of carriage, Goods, Ship, and Carriage of goods.
Article II is a statement that carrier cannot shy away from his responsibilities as
set out in the articles of the Hague Visby rules.
Article III
❖Article III lists the responsibilities of the carrier. To list few the responsibilities includes
❖Make the ship seaworthy
❖The ship should have minimum manning as per Minimum safe manning certificate. The ship
should have all the equipments onboard and in working condition. All the supplies required to
safely run the ship should be onboard.
❖The holds should be clean and fit to receive the cargo
❖Carrier needs to issue bill of lading after loading of the cargo
●Shipper needs to give correct information related to the cargo loaded. Article III indemnify the carrier of all the losses and
delays because of such inaccuracies
❖Article III lists the responsibilities of the carrier. To list few the responsibilities includes
❖Make the ship seaworthy
❖The ship should have minimum manning as per Minimum safe manning certificate. The ship
should have all the equipments onboard and in working condition. All the supplies required to
safely run the ship should be onboard.
❖The holds should be clean and fit to receive the cargo
❖Carrier needs to issue bill of lading after loading of the cargo
●Shipper needs to give correct information related to the cargo loaded. Article III indemnify the carrier of all the losses and
delays because of such inaccuracies
●there are two time-frames that article III (6) talks about.The time frame of 3
days and time frame of one year. Both of these time frames are inter connected.
●As per article 3, rule 6 the carrier will be discharged from all liabilities unless the
shipper sues the carrier within one year from the delivery of the cargo.
●Now the another time frame defines the term “Delivery of the goods”.
●As per article 3, rule 6, the goods will be considered delivered upon removal from
the ship unless notice of loss or damage is given within three days.
●Another important point in article III is the point no 8.that any clause that relieves
the carrier of his responsibilities as per Hague rules shall be null and void
days and time frame of one year. Both of these time frames are inter connected.
●As per article 3, rule 6 the carrier will be discharged from all liabilities unless the
shipper sues the carrier within one year from the delivery of the cargo.
●Now the another time frame defines the term “Delivery of the goods”.
●As per article 3, rule 6, the goods will be considered delivered upon removal from
the ship unless notice of loss or damage is given within three days.
●Another important point in article III is the point no 8.that any clause that relieves
the carrier of his responsibilities as per Hague rules shall be null and void
Article IV
●While article III gives the responsibilities of the carrier, article IV gives some of the exemptions to these
responsibilities.
●a carrier will not be responsible for the damage , loss or delays if he had not caused it intentionally,
provided carrier had exercised due diligence.
●Due diligence is a broad term and several cases has shown that it is not easy for the carrier to show that
they exercised due diligence.
●In most of the cargo claim, shipper would claim damages by trying to prove that carrier did not fulfill his
duties as per article III.
●Carrier will claim innocence by trying to prove that the delay, loss or damages were not in his control. Carrier
would claim exemption under article IV.
●Claiming exemption under article IV is not easy for the carrier though.
●For claiming the exemption as per article IV, carrier would claim that he did whatever possible to prevent the
damage.
●Also that the damages occured because of the factors which were not in his direct control. As per article IV,
the burden to prove this is on the carrier and it can be very difficult to prove.
●While article III gives the responsibilities of the carrier, article IV gives some of the exemptions to these
responsibilities.
●a carrier will not be responsible for the damage , loss or delays if he had not caused it intentionally,
provided carrier had exercised due diligence.
●Due diligence is a broad term and several cases has shown that it is not easy for the carrier to show that
they exercised due diligence.
●In most of the cargo claim, shipper would claim damages by trying to prove that carrier did not fulfill his
duties as per article III.
●Carrier will claim innocence by trying to prove that the delay, loss or damages were not in his control. Carrier
would claim exemption under article IV.
●Claiming exemption under article IV is not easy for the carrier though.
●For claiming the exemption as per article IV, carrier would claim that he did whatever possible to prevent the
damage.
●Also that the damages occured because of the factors which were not in his direct control. As per article IV,
the burden to prove this is on the carrier and it can be very difficult to prove.
Article iv cont…
Example : Assume a situation where damage to the cargo was caused
by the fault of ship’s crew.
The carrier can try to claim exception under article IV(2a). Article
IV(2a) gives immunity to the carrier in case the damages were
caused by the fault of ship crew.
But in reality it is not easy for the carrier to claim exception in this
case. This is because the court would examine many factors to
analyse if the carrier performed due diligence.
Example : Assume a situation where damage to the cargo was caused
by the fault of ship’s crew.
The carrier can try to claim exception under article IV(2a). Article
IV(2a) gives immunity to the carrier in case the damages were
caused by the fault of ship crew.
But in reality it is not easy for the carrier to claim exception in this
case. This is because the court would examine many factors to
analyse if the carrier performed due diligence.
Article IV(5): Compensation for shipper in case of damage or loss
of the cargo.
●Date of actual or probable discharge (in case total loss
on mid voyage) will be the date for which we need to
calculate the price of the commodity.
●Article IV (5a) defines the compensation limit. The
maximum liability for carrier can be 666.67 SDR per
package or 2 SDR per KG of the goods damaged or lost,
whichever is greater.
of the cargo.
●Date of actual or probable discharge (in case total loss
on mid voyage) will be the date for which we need to
calculate the price of the commodity.
●Article IV (5a) defines the compensation limit. The
maximum liability for carrier can be 666.67 SDR per
package or 2 SDR per KG of the goods damaged or lost,
whichever is greater.
Article V :
●as per article III, carrier cannot include any clause in the bill of lading with which he
can lessen his responsibilities,
●Article V gives the liberty to the carrier to increase his responsibilities and liabilities.
Article V also gives the right to the carrier to surrender his rights and immunities
(for example as per article IV) provided by the hague Visby rules.
●If the carrier decides to do so, it need to be included in the bill of ladings.
Article VI:
●Article VI gives complete freedom to the shipper and carrier to enter into any
agreement irrespective of what is required by other articles of hague visby rules
provided
●
●as per article III, carrier cannot include any clause in the bill of lading with which he
can lessen his responsibilities,
●Article V gives the liberty to the carrier to increase his responsibilities and liabilities.
Article V also gives the right to the carrier to surrender his rights and immunities
(for example as per article IV) provided by the hague Visby rules.
●If the carrier decides to do so, it need to be included in the bill of ladings.
Article VI:
●Article VI gives complete freedom to the shipper and carrier to enter into any
agreement irrespective of what is required by other articles of hague visby rules
provided
●
Article VII
●It state that hague visby rules defines the carrier’s responsibilities from the time of loading
to the time of discharge.
Article VIII
●if there is any other statutory law related to the limitation of liability of the carrier, that law
will take precedence over these rules.
Article IX
●This article states that if these rules contradicts any international convention or national
law, that convention or law will have the priority
Article X
●This article states to which contracts or bill of ladings the hague visby rules would apply.
★Application by force of statute (Article X, a & b). That is if the bill of lading is
issued in the country which has ratified the hague visby rule
★Application by agreement between two parties. This mean that even if the hague
visby rules do not apply as per Article X (a or b), if the carrier and shipper has
mentioned in the bill of lading that hague visby rules would apply
●It state that hague visby rules defines the carrier’s responsibilities from the time of loading
to the time of discharge.
Article VIII
●if there is any other statutory law related to the limitation of liability of the carrier, that law
will take precedence over these rules.
Article IX
●This article states that if these rules contradicts any international convention or national
law, that convention or law will have the priority
Article X
●This article states to which contracts or bill of ladings the hague visby rules would apply.
★Application by force of statute (Article X, a & b). That is if the bill of lading is
issued in the country which has ratified the hague visby rule
★Application by agreement between two parties. This mean that even if the hague
visby rules do not apply as per Article X (a or b), if the carrier and shipper has
mentioned in the bill of lading that hague visby rules would apply
Example : A cargo is loaded from Bangladesh (not ratified Hague visby rules) for
discharge in UK (ratified Hague visby rules). The bill of lading is issued in
Bangladesh. Will the Hague visby rules apply to the bill of lading ?
The answer is No.
●Now in the same condition if the shipper and carrier agree to have the
hague visby rules incorporated in the bill of lading, the hague visby rules
would apply to the bill of lading.
●Even though there have been more modernised rules for contract of
carriage such as Hamburg rules and Rotterdam rules, Hague Visby rules
are here to stay.
discharge in UK (ratified Hague visby rules). The bill of lading is issued in
Bangladesh. Will the Hague visby rules apply to the bill of lading ?
The answer is No.
●Now in the same condition if the shipper and carrier agree to have the
hague visby rules incorporated in the bill of lading, the hague visby rules
would apply to the bill of lading.
●Even though there have been more modernised rules for contract of
carriage such as Hamburg rules and Rotterdam rules, Hague Visby rules
are here to stay.
Electronic Bill of Lading
Tech is transforming society. Tech is transforming logistics. Electronic BOLs
are one major area of optimization.
An electronic bill of lading (eBOL or eB/L) “is the legal and functional
equivalent of a paper bill of lading.” Electronic data interchange (EDI) has
become widely accepted throughout the greater business community.
We have always associated technology with the benefit of saving time. As
such, the upside of using an eBOL is velocity. Less paperwork, in general,
means a more streamlined workflow for everyone.
Tech is transforming society. Tech is transforming logistics. Electronic BOLs
are one major area of optimization.
An electronic bill of lading (eBOL or eB/L) “is the legal and functional
equivalent of a paper bill of lading.” Electronic data interchange (EDI) has
become widely accepted throughout the greater business community.
We have always associated technology with the benefit of saving time. As
such, the upside of using an eBOL is velocity. Less paperwork, in general,
means a more streamlined workflow for everyone.
UK and Sri lanka- Recognition of Electronic Documents
●On 20 July 2023 the United Kingdom enacted an important new law that promises to transform the way
international trade is conducted electronically. The Electronic Trade Document Act 2023 means that
businesses that rely on English law are now legally permitted to exchange bills of lading and other trade
documents electronically.
●The aim of the ETDA is to help to rectify deficiencies in the treatment of electronic trade documents under
English law. This will allow businesses to take advantage of reduced costs and accelerated transaction
timelines, increasing trade and access to trade finance..Previously under English law, electronic documents
did not have the same legal recognition as their paper counterparts.
●e ETDA does list out the following instruments as examples of electronic trade documents: bills of lading,
promissory notes, bills of exchange, marine insurance policies, warehouse receipts, mates’ receipts, cargo
insurance certificates and ship’s delivery orders.
●A key feature of the ETDA is that it enables electronic trade documents to be possessed and for possession
to be transferred electronically (on a “reliable” system),and therefore eligible for possessory security
arrangements (such as pledges and liens).
●The ability for an electronic trade document to be used as effective security opens up opportunities for
businesses to have greater access to trade financing structures.
●On 20 July 2023 the United Kingdom enacted an important new law that promises to transform the way
international trade is conducted electronically. The Electronic Trade Document Act 2023 means that
businesses that rely on English law are now legally permitted to exchange bills of lading and other trade
documents electronically.
●The aim of the ETDA is to help to rectify deficiencies in the treatment of electronic trade documents under
English law. This will allow businesses to take advantage of reduced costs and accelerated transaction
timelines, increasing trade and access to trade finance..Previously under English law, electronic documents
did not have the same legal recognition as their paper counterparts.
●e ETDA does list out the following instruments as examples of electronic trade documents: bills of lading,
promissory notes, bills of exchange, marine insurance policies, warehouse receipts, mates’ receipts, cargo
insurance certificates and ship’s delivery orders.
●A key feature of the ETDA is that it enables electronic trade documents to be possessed and for possession
to be transferred electronically (on a “reliable” system),and therefore eligible for possessory security
arrangements (such as pledges and liens).
●The ability for an electronic trade document to be used as effective security opens up opportunities for
businesses to have greater access to trade financing structures.
SriLanakan system is governed by the Electronic Transaction Act 2006
as amended in 2017 .
This legislature armed with required interpretations to cater the E BOL
This Act was extensively discussed in the E commerce Session .
as amended in 2017 .
This legislature armed with required interpretations to cater the E BOL
This Act was extensively discussed in the E commerce Session .
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