Combined Transport Documents

A Handbook of Contracts for the Combined Transport Industry

John Richardson

• Publisher: Informa Law from Routledge
• Year: 2020
• ISBN:
  9781000341577
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho marítimo

Combined Transport Documents provides a comprehensive guide to combined transport or multi-modal contracts. It examines the main contracts that deal with combined transport logically, from those concerned with the procuring of tonnage through to those that deal with general average and salvage. It also focuses on the complicated chains of indemnity particular to multimember consortium operations and explains in substantial detail a recommended draft bill of lading contract of carriage which the author himself developed. Combined Transport Documents provides a comprehensive guide to combined transport or multi-modal contracts. It examines the main contracts that deal with combined transport logically, from those concerned with the procuring of tonnage through to those that deal with general average and salvage. It also focuses on the complicated chains of indemnity particular to multi-member consortium operations and explains in substantial detail a recommended draft bill of lading contract of carriage which the author himself developed.

CHAPTER 1

PROCURING TONNAGE

INTRODUCTION

It will never actually happen like this but, for the purpose of placing things in chronological order, let us suppose that someone, with no existing assets, decides to become a combined transport operator. The first decision he must take is whether or not he is going to operate containerships or be an NVOCC (Non-Vessel Owning Common Carrier), procuring space for the cargo, for which he acts as a contracting carrier, by means of slot purchase agreements or cover bills of lading from carriers who do operate tonnage (of which more later).

If he decides to operate containerships, his options are as follows:

(1) He can purchase new or second-hand tonnage (in which case he will need a building contract or purchase agreement, both of which are outside the scope of this book).

(2) He can demise charter tonnage (in which case he will need to crew, manage and operate the vessels—an unlikely scenario for a newcomer). Or

(3) He can time charter tonnage.

The third is the most likely scenario for a new entrant into the business, as the time-consuming business of crewing and managing a vessel is undertaken by the owner (or his ship managers) and all the charterer has to do is give orders and supply bunkers. This leaves him free to concentrate on managing the trade interfaces with other sub-contractors and customers. It also means that he can “test the water” in a trade without putting too much capital at risk, as he can charter for a short period and hope to meet the charter hire payments out of freights collected from customers. The first contract needed, therefore, is a time charter for containerships.

BOXTIME

The remainder of this chapter is adapted from the author’s previous publication “A Guide to the ‘BOXTIME’ Charter Party” published by LLP in 1990, with indications of likely amendments to be considered by BIMCO in the near future.

When containerisation first came upon the scene in the late 1960s, the only charter parties that needed consideration were “in house” arrangements (often demise charters) between related lines for taxation purposes, followed in 1968–69 by the birth of the cross or slot charter party, by means of which lines, who were parties to the consortia that were formed, swopped slots with each other on mutually acceptable terms (see Chapter 3).

It was some years before there was need to consider an “arm’s length” time charter party for a containership and, when the time came, there was no suitable document available.

“Well of course containerships are only another form of dry cargo vessel, so the New York Produce Exchange (NYPE), Baltime, Linertime or some other dry cargo time charter party can easily be converted”, went the reasoning at the time. Those who took this view were clearly unfamiliar with the combined transport operation which had been born on the back of containerisation. How, for example, can an NYPE Inter-Club Agreement operate in a situation where shortage and loss is established away from the vessel’s side? Who is responsible for stowage and lashing? Just what should the respective liabilities of the owners and the charterers of a containership be?

For some years I watched with fascination and increasing frustration as containership time chartering was carried on using manifestly unsuitable documents as a starting base, which then suffered the indignity of having most of their terms and conditions deleted and were then swamped with a plethora of additional clauses that were frequently, and rather obviously, not drafted by professional draftsmen. In support of my chartering manager I argued long and loud with the owners, or the charterers (according to our position), brokers and P & I clubs to try and remove some of the more onerous or manifestly unsuitable provisions and replace them with something better. A long, arduous, uphill battle that was not always successful.

As containerships started to be built for chartering in the late 1970s, I felt sure that a custom drafted document for containerships must emerge, as the requirements are so different from those of breakbulk dry cargo vessels, but none made its appearance. Finally, in desperation, I raised the matter with the Documentary Committee of the General Council of British Shipping (GCBS) in 1982 and, for my troubles, I was invited to prepare a suggested draft working document.

Due to pressure of work and the need for research, it was nearly five years before I submitted my suggested draft to GCBS for consideration. GCBS referred my draft to the Baltic and International Maritime Council (BIMCO), who decided to sponsor the project and appointed a small working party (of which I was invited to be a member) to develop the idea to fruition. Hereafter the project became the joint venture of the working party, who were responsible for producing a recommended draft for presentation to BIMCO’s Documentary Committee for approval and implementation. This approval was granted in May 1990 at the meeting of the Committee in Leningrad.

Section I: Philosophy and aims

When I was invited to prepare a draft for discussion of time charter party designed specifically for containerships, I started by reminding myself of the aims which I hoped to achieve in such a document before proceeding to decide on the philosophy of the document which would achieve those aims.

(1) Simple, readable and well signposted

I was heartily sick of ploughing my way through acres of unsignposted, incomprehensible print (otherwise known as “NYPE amended”) only to find conflicting provisions spread randomly throughout the text without cross-referencing. To me these equated to the conventional bills of lading over 30 years ago in which clauses like the following were common:

“(g) In the event of the imminence or existence of any of the following:—War between any nations or civil war: prohibition, restriction or control by any Government of intercourse, commercial or otherwise, with any country from at or to which the vessel normally proceeds or calls: control or direction by any Government or other Authority of the use or movements of the vessel or the insulated or other space in the vessel: the Carrier and/or his Agents and/or the Master, if he or they consider that the vessel or her Master, Officers, Crew, Passengers or any of them or cargo or any part thereof will be subject to loss, damage, injury, detention or delay in consequence of the said war, civil war, prohibition, restriction, control or direction, may at any time before or after the commencement of the voyage alter or vary or depart from the proposed or advertised or agreed or customary route or voyage and/or delay or detain the vessel and/or discharge the cargo (for delivery or storage or transhipment) at or off any port or ports, place or places without being liable for any loss or damage whatsoever directly or indirectly sustained by the Owner of the goods. If and when the goods are so discharged at such port or ports, place or places, they shall be landed or put into craft or vessels at the expense and risk of the Owner of the goods and the Carrier’s responsibility shall cease on discharge, the Carrier, Master or Agents giving notice of such discharge to the Consignee of the goods so far as he is known. The vessel, in addition to any liberties expressed or implied herein, shall have liberty to comply with any orders or directions as to departure, arrival, route, voyage, ports of call, delay, detention, discharge (for delivery or storage or transhipment), or otherwise howsover, given by any Government or any Department thereof, or any person acting or purporting to act with the authority of any Government or of any Department thereof, or by any Committee or person having under the terms of the War Risks Insurance on the vessel the right to give such orders or directions, and if by reason of or in compliance with any such orders or directions or by reason of the exercise by the Carrier of any other liberty mentioned in this clause anything is done or is not done the same shall be within this contract. Discharge under any liberty mentioned in this clause shall, notwithstanding anything contained in the Bill of Lading, constitute due delivery of the goods under this Bill of Lading and the Owner and/or Consignee of the goods shall bear and pay all charges and expenses resulting from such discharge, and the full freight stipulated herein, if not prepaid, shall on such discharge become immediately due and payable by the Owner and/or Consignee of the goods, and if freight has been prepaid the Carrier shall be entitled to retain the same. The vessel is free to carry contraband, explosives, munitions or warlike stores, and may sail armed or unarmed.”

This sub-clause, taken from a conventional liner bill of lading over 30 years ago, almost defies comment. It reads like a masticated dictionary regurgitated at random. To read and understand it requires the memory of an elephant, the breathing of an opera singer and the logical interpretation of a QC. In short it is a disgrace to the draftsman’s art.

I longed to see something more resembling the approach in my company’s bills of lading, where all clauses have headings and sub-headings and every opportunity is taken to present data in tabulated form to improve readability (see Chapter 6 for details).

(2) Logically organised

Logic, like beauty, is in the eye of the beholder and one man’s logic is another man’s random confusion. Nevertheless, a charter party, like any other contract, ought to impart its information to its reader in some sort of logical sequence. In short, it ought to tell a story in such a way that its user can easily find what he is looking for without the need to have to search through the entire text.

Inevitably some provisions are relevant in more than one place. Where this occurs the detailed provision is set out in the clause considered to be of closest relevance and reference is made to it in the other clause (s) by way of crossreference. Not all the headings in the index are clauses. Some are merely crossreferences (e.g. clauses 5(a) and (g), 6(c), (d), (g) and (j) etc.).

(3) Clear, unequivocal and unambiguous

I have read more gibberish in charter party clauses than I care to remember. Clauses that would guarantee a court case or arbitration if an incident, to which the clause even vaguely applied and involving a sufficiently high sum of money, arose during the period of the charter party. I have seen so many such clauses that I am forced to the conclusion that there are parties involved in chartering who operate, not on the basis of clarity to avoid dispute, but on the basis of “if I cannot get my wording I want something sufficiently vague to give me something to argue over if the subject of the clause becomes the cause of a dispute so I can at least force a compromise”. Hopefully such persons will find little to attract them in “BOXTIME”, which is designed with the unachievable idea of creating redundancy in the ranks of maritime arbitrators.

(4) Consistent language

Part of the discipline I have learned as a contract draftsman of operational transport contracts is the use of consistent language. This is really a branch of (3) above and makes a very important contribution to clarity, particularly in court where a judge is likely to say that different words mean different things and go looking for an alternative meaning where none is intended. One does not have to read many transcripts of commercial judgments to discover just how skilled the judiciary can be in splitting hairs when they have a mind so to do.

A good example of this type of slapdash inconsistency is reference variously throughout a contract to “containership”, “vessel” and “ship” when referring to one and the same subject.

(5) Comprehensive

This is quite a tall order given the plethora of matters requiring attention in the operation of a time chartered containership and, in reality, total comprehensiveness is an impossibility as, whatever and however many points you cover, something which you have overlooked will turn up or something will happen in a way not envisaged. Nevertheless, comprehensiveness is an important goal after which to strive, if the intention is to avoid disputes. If a contract is left silent on any point deliberately after identification and consideration, this should only be on the basis of acceptance of the common law solution which will be applied in the absence of contract.

(6) Unbiased

Bias, like logic, depends on your point of view! This draft has been criticised as being an owners’ charter by some and a charterers’ charter by others, which perhaps indicates that it has found the middle path that has been sought. I genuinely feel that I have no axe to grind. Furthermore, as most containership charter parties are contracts between two carriers and not a carrier and a merchant, I consider that both parties ought to be prepared to accept an equitable document clearly delineating carriers’ responsibilities.

Clearly biases of varying natures will be built into the contract as amendments are mad...