Voyage Charters Categories of charters

Under a voyage charter time is money; so it is of commercial importance to the parties to provide by their contract how any loss occasioned by delay due to such causes is to be allocated between them.
Per Lord Diplock in Aldebaran Maritima v Aussenhandel (The Darrah)[1977] AC 157.

Distribution of Risks

Voyage charterparty is a contract of carriage between the shipowner and the charterer, when the latter pays freight for use of the owner’s vessel for a specific voyage or a number of consecutive voyages to ship certain commodities. Such transportation by sea usually forms an essential part of charterer’s commercial activities attaining crucial importance to the delivery of the goods undamaged and in time. On the other hand shipowner’s remuneration for the services rendered covers its operating costs, fuel and crew including, plus profit margin. That makes vessel’s continuous unhindered employment a basic revenue generating factor. Evidently, the owner would be inclined to free himself from all liabilities for delays which result from congestion or unavailability of cargo and/or berth.

The commercial interest of the shipowner in a voyage charter is to make profitable use of his vessel. Unlike the charterer he is not primarily concerned with the choice of ports between which she is used to carry goods, though it may be to his interest that the loading port in any voyage charter is as near as possible to the discharging port in the immediately preceding charter, and that the discharging port in the new charter is not too remote from potential loading ports for subsequent charters. But his primary concern is that his vessel should earn the stipulated freight in as short a time as possible. To the charterer, on the other hand, the identity of the particular ports between which the cargo is to be carried is vital. So if he wants his cargo to be carried to or from ports where there is risk of delay in loading or unloading cargo owing to congestion, it makes good sense commercially that, irrespective of whether it be a berth charter or a port charter, the charterer should assume the financial burden of that risk and compensate the shipowner for the additional time that his vessel has had to be employed in the adventure in the event of delay resulting from this cause.
Per Lord Diplock in Aldebaran Maritima v Aussenhandel (The Darrah) [1977] AC 157 at p.165

But whatever commercial sensibility of the above approach is, it is necessary to remember that, the charterer often has no influence or control over congestions, strikes, government orders, etc. in ports of loading and discharging. Therefore such delays may arise without any fault from his side, same as many delays related to navigation and traditionally on the owner’s account are not results of his failure. Thus, final apportionment of liabilities is not always or necessarily the most feasible scheme from commercial point of view, but it is always an outcome of negotiations between the parties, which usually reflects prevailing market conditions at the time of conclusion of contract.

Disposition of risks flows from the division of performance of a voyage charter into the four successive stages:

1) Sea passage to loading port;
2) Loading itself;
3) Sea passage to discharging port;
4) Discharging itself;
E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorf) [1973] 3 All ER 148, per Lord Diplock.

and rests on assertion that each stage must be completed before the next can begin.

So until the vessel has reached the specified place of loading on the approach voyage or the specified place of discharge on the carrying voyage, all risks for delays borne by the shipowner alone; and any loss occasioned by delay falls upon him irrespective of any fault from his side. Then, during loading and discharging of cargo, liabilities for delays usually fell upon the charterer unless they result from the failure of the vessel’s equipment or machinery. Finally, negotiating parties can expressly relocate any of risks dealt above as it suit them, and if done in clear and unambiguous language such allocation will be binding on both sides and can be enforced by the court. See also Limitation and exclusion of liability.

Share this article on:

Readers’ comments:

Posted by:   

Be first to comment …
Leave your questions and comments here

Although author encourages visitors to leave their comments using this form, but if you unable or unwilling to use it for any reason you can forward your mail to to contact with him.