Obligations of the Charterer and Shipowner in Bangladesh

Obligations of the Charterer and Shipowner in 2024

The vessel could potentially bear liability for any cargo damage that occurs throughout a voyage. A ship’s cargo could sustain damage from grounding, stranding, or collision. The cargo on the deck may be lost in severe weather. Fire on board has the potential to completely demolish the cargo. A ship may also be held liable for perishable cargo damage resulting from an abnormal transit delay. The vessel could potentially bear responsibility for discharging the cargo in a contaminated state. The cargo is frequently damaged as a result of crew members’ improper management.

Cargo claims can also transpire in the absence of tangible cargo loss or damage. This will occur when the ship misrepresents the quantity, weight, and dimensions of the cargo on the documents attesting to its shipment. If the cargo manifest prepared by the ship’s agent at the load port contains an inaccurate description of the goods, despite the shipper providing a complete description of the cargo, the ship would be held culpable for the error.

The buyer incurs enormous losses and is unable to connect his or her products at the port of discharge due to an inaccurate description of the merchandise. On occasion, the ship might deliver a reduced quantity of cargo, despite the fact that the recipient has remitted the complete invoice amount for the quantity that was packed. This may have occurred as a result of an on-board calculation error or the offloading of surplus cargo at an alternative port.

Nevertheless, attributing liability to the shipper for the loss of products would be challenging, given the inherent characteristics of the cargo (e.g., evaporation, condensation, spoilage caused by inadequate packing or preservation). Additionally, the cargo policy excludes cargo loss or damage caused by its own characteristics.

Obligations of the Charterer and Shipowner

A shipowner may incur liability if, pursuant to a contract of conveyance, he is responsible for cargo damage. When a shipment is scheduled with a multimodal transport operator (MTO), the MTO assumes responsibility for any loss or damage to the cargo in accordance with the Multimodal Transportation of Goods Act of 1993.

A claim may be filed against the carrier with whom the contract of carriage was executed, or against the ship owner in tort for her negligence, in cases where the ship owner is not the carrier under the contract of carriage (e.g., when the contractual carrier is a charterer or NVOC [non-vessel owning carrier]). Nevertheless, in cases where the claim is brought against the non-carrying vessel, it must be brought in tort, since the non-carrying ship and the cargo do not have a contract of carriage.

In cases where the commodities are transported in accordance with a charter party agreement, the Charterer’s liability is governed by the CP agreement’s terms and conditions. Determining whether the recovery proceedings against the Carriers will be initiated under a contract of carriage or in tort is of utmost importance.

The shipowner’s defense will be governed by the conventions established by Hague/Visby, Rotterdam, or Hamburg Rules if the proceedings are instituted under a contract of carriage. However, if the action is brought in tort, the defense will not fall under any of the conventions. Nevertheless, the carrier may invoke a special provision such as the Himalaya Clause or the Circular indemnity clause.

Liability as stipulated in the Charter Party Agreement

The shipping company shall be liable for the obligations outlined in the Bills of Lading if the consignor enters into a direct contract of carriage with them. The Charterer’s liability for the transportation of a vessel is governed by the terms and conditions of the CP Agreement. The agreement of the common charter party will be for a “Time” or “Voyage” charter, as detailed below:

Scheduling: Time Charter

The charterer acquires the vessel from the proprietors for a specified period of time, such as one year or six months, under the terms of a Time Charter. The charterer has no legal standing to file a claim for cargo damage that occurs during the vessel’s employment, as they do not possess ownership of the cargo. In the case of an indemnity-based time charter, cargo claims are submitted to the Charterer in accordance with the CP Agreement. Whether the carrier is the time charterer or the shipowner, either party may assert a claim against the other under the terms of the charter agreement.

The Voyage Charter

The cargo recipient may function as a voyage charter in the event of a voyage charter and acquire the goods under FOB terms. The agreement regarding transportation between the shipowner and the recipient of the products would be governed by a voyage charter rather than bills of lading. As a result, in accordance with the CP Agreement, any claim will be filed against the shipowners, and no further claims will be permitted under the bills of lading. The bills of lading shall solely serve as evidence of delivery of the merchandise.

When products are acquired under CIF conditions, the cargo recipient is not required to charter the vessel. Although the seller will charter the vessel, the Bills of Lading, not the voyage charter, will regulate the contract of carriage between the shipowner and the recipient of the goods. As a result, the initial claim will be submitted in the form of a bill of lading, and it will subsequently be contested between the charterer and the shipowner.

Invoices of Lading

The Master of the vessel issues the bills of lading at the time the products are loaded onto the vessel. Bills of lading are evidence of the contract of carriage and not the contract itself. Two varieties of Bills of Lading exist:

1. Subject to negotiation or order
2. A non-negotiable certificate of lading is required.

The Bill of Lading labelled “Negotiable or To Order” does not include the precise name of the consignee or recipient of the merchandise. “To order” is appended to the name of the notifying entity, such as M/s ABC & Co. or the State Bank of India. The party that has been notified may request the banker to release the title documents in exchange for entire payment of the invoice.

The recipient may authorize the shipping company to release the cargo upon receipt of the title document. The transferability of the title document is precluded in cases where the bills of lading explicitly designate the consignee’s name. The sole individual authorized to file a claim against the shipping company is the holder of the title document.

The moral of the story is to exercise caution.

The underwriters responsible for a marine claim ought to scrutinize the subsequent:

1. The Carrier as Defined in the Bill of Lading
2. Who has obtained the freight for the transportation of goods?
3. What are the provisions outlined in the bill of lading?
4. Within what time frame may a lawsuit be filed against the Carrier?
5. The location in which the lawsuit would be initiated, or jurisdiction

The identity of the carrier as designated on the bill of lading is crucial in determining whether legal action will be taken under the contract of carriage or in tort.