Voyage Charterparty
See also: Voyage Charterparty, Historical Background;
Distribution of Risks
Waiting costs money and for a very long time the question who is to pay has been a prolific source of litigation. The risk is foreseeable and no doubt in an ideal world the parties to every contract would settle the matter when they contracted. But experience shows that business is not done in that way. Parties are inclined to adopt well tried forms leaving it to the court to determine their meanings.
Per Lord Reid in E.L. Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 3 All ER 148 at p.151
Voyage charterparty is a contract of carriage between the shipowner and the charterer, when the fromer let his vessel to the latter for a specific voyage or a number of consecutive voyages (for comparative analysis of voyage and time charterparties see UNCTAD report here). The shipowner’s renumeration for the services rendered is ‘freight’ which covers its costs, fuel and crew including, and its profit. Legally, freight is a special type of payment, and the usual rules of set off will not apply to it (see Lord Wilberforce statement in Aries Tanker Corp v Total Transport Ltd (The Aries) [1977] 1 WLR 185, HL here).
Lord Diplock in Aldebaran Maritima v. Aussenhandel (The Darrah)[1977] AC 157 at p.165 said:
The commercial interest of the shipowner in a voyage charter is to make profitable use of his vessel". Profiable use of the vessel is evidently affected by delays and other contingencies peculiar to marine adventure, which bring additional liabilities and reduce profit margin. The charterer, on the other hand, is primarily interested in timely delivery of his goods undamaged to the destination. It follows that risks and liablilities of the owner and the charterer are unevenly distributed throughout the voyage.
For example during loading and discharging these liabilities shall probably be apportioned between the parties because both sides take part in operations, while all delays during loaded voyage would fell onto the shipowner alone, since he is the only one responsible for this part of contract. Bearing this in mind the voyage itself can be divided into four stages.
These stages were defined by Lord Diplock in E. L. Oldendorff & Co. G.M.B.H. v Tradax Export S.A. (The Johanna Oldendorf) [1973] 3 All ER 148 as below:
- Sea passage to loading port
- Loading itself
- Sea passage to discharging port
- Discharging itself
Two stages, namely, loading and discharging, are joint operations of the shipowner and the charterer. And another two atcs of performance of the shipowner alone.
Both parties to marine adventure, the shipowner and the charterer alike, when entering into the contract have to contemplate a wide variety of contingencies which may cause delays in performance of contract and, accordingly, bring upon them liabilities resulted thereof.
Despite the transformation that has taken place in shipping, in port facilities and in communications during the last four hundred years, the business nature of the adventure to which the contract between charterer and ship owner relates remains essentially the same. It is an adventure which of its nature has always been exposed to the risk of being prevented, impeded or delayed by a variety of causes beyond the control of either party. If it is known in advance how loss due to delay from any particular cause is to be borne as between charterer and ship owner, account can be taken of the risk in fixing the freight payable. What matters from a commercial point of view is not so much that the risk should be borne by one party rather than by the other, but that it should be known, at the time the charter party is made, by which of them it will be borne.
Disposition of risks which flows from the division of performance of a voyage charter into the four successive stages, 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 loading voyage or the specified place of discharge on the carrying voyage, the contractual obligation to bring the vessel there lies on the ship owner alone; and any loss occasioned by delay in doing so falls upon him .
Such specified place at which risks for delay shift from the owner to the charterer is either the port or the berth depending on the wording of the contract of affreightment. There are accordingly two forms of voyage charters: a port charter and a berth charter.
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