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take a similar stance in that rather than placing emphasis on the contract of carriage they emphasise the documents that evidence carriage by sea. The advantages are argued to be stability and predictability however it is rigid and doesnt allow for differing interpretations a situation that occurs between the UK and US who consider sea waybills and bills of lading to be the same whereas UK and International law distinguish the two . Voyage and Time Charters are both contracts of carriage under which many will issue Bills of Lading and Sea Waybills and thus attract the liability regime that is included in the legislation but they do not do so as of right. Charterparties are not a homogenous group of contracts that necessarily want to incur liabilities, the BMLA definition of Charterparty is wide enough to include a very large swathe of purposes and documents: Any agreement in writing executed by or on behalf of two or more parties whereby on party agrees to charter from another one or more ships [or any part of proportion of one or more ships] whether on a voyage, time or bareboat basis, whether the ship or ships are named in the agreement or are to be nominated subsequently and whether for the carriage of one cargo or for the carriage of a series of cargoes Therefore a Charterparty for maritime legal purposes is only of concern in a statutory sense when it is incorporated by use of a charterparty bill of lading , by use of some form of Paramount Clause that incorporates the Hague-Visby Rules or in the rare case where the bill of lading is in the hands of a third-party and impliedly invokes the Rules . In this sense both Time and Voyage Charterparties are identical, in that both are denied effect unless incorporated into a bill of lading, this would mean that statutory obligations such as make the ship seaworthy, man and crew the ship, make storage areas fit and safe for carriage of goods and various other standard liabilities that are placed on the carrier which for most purposes will be the ship-owner. A model of the typical basic situation will perhaps see how this operates, a seller concludes a contract of sale for Good A with the buyer, under general contract principles the seller is liable for delivery of the goods and therefore makes a charterparty with a ship-owner to deliver Goods A to Port B. Therefore for statutory purposes the seller also becomes the charterer and the shipper and incurs certain liabilities and is able to limit those liabilities within the statutory relationship. In the above senses there is no sensible distinction between Voyage and Time Charterparties but it is as well to understand the place charterparties occupy in the legal and commercial spheres. However it is also important in a more subtle manner, International documents such as the Hague-Visby rules define very fundamental rights and duties which can mean big commercial liabilities and duties. This can include duties such as safely loading the goods, which protects a charterer from potential damage. The failure to incorporate such statutory schemes when contracting a charterparty can have dire consequences. The rules can override certain clauses such as non-responsibility clauses and notice of suit clauses that are in standard charterparties, whether time or voyage. As Contracts therefore how do Voyage and Time Charterparties alter the duties, responsibilities and liabilities of ship-owners and charterers? It is important to remember that whilst not officially part of the statutory regime they are still covered by general contract law and have binding effect as such. Therefore the very terms of the contract create personal rights and duties as between the ship-owner and charterer which will be at variance from each other. It is fundamental to understand also that the statutory scheme mentioned above applies to Carriers and Shippers who maybe but are not necessarily either the charterer or the ship-owner. This distinction is sometimes hard to grasp, the relationship between the charterer and ship-owner is only regulated by the private contract of a charterparty and thus at an abstract level their obligations towards each other will only be those enumerated within the contract below we have tried to highlight the main differences although some are quite detailed. This very much refers to the fact that under standard time charterparties the rights and duties will be more evenly distributed between the parties including right of control over route and timing, payment of fuel expenses and other sundry expenses that will be caused by the running of the ship in the course of the charter. In a voyage charterparty the charterer will generally only require to pay a sum of money for the boat hire for that individual journey. It ought to be noted at this stage that the search for substantive distinctions between the duties a charterer owes towards a ship-owner in either a voyage or a time charter descends into significant detail because in reality that issue changes very little it is more the liability as relates to third parties that may place the charterer as liable in the ship-owners stead that the distinction makes a substantive difference. In the end the duties a charterer owes a ship-owner will be different in kind in that one is for hire of vessels so the actual goods need not be supplied and the control passes to the charterer whereas in a voyage the ship-owner will require timeous presenting of the goods in a specified warehouse and payment. The most common difference in the rights and responsibilities of the charterer vis--vis the ship owner occurs in relation to clauses relating to wasted time and demurrage. The so called Utmost Dispatch Clause is prominent in Time Voyage Charterparties and has been the subject of numerous legal cases . This issue was thoroughly discussed in Whistler and is worthwhile summarizing here. The court made an interesting observation about the distinction between time and voyage charterparties:
A time charteris not a contract of carriage but a contract for the provision of the services of a crewed vessel This means there is a difference in the construction the courts take to the charterparty, in relation to issues of demurrage. Under a voyage charterparty a ship ought only to take the usual route, this makes no specific requirements of speed whereas under a time-charter the contract will usually require the utmost-dispatch and Lord Hobhouse made clear that the distinction was substantive. The master of the vessels has less autonomy under a time-charterer and therefore it appears that decisions of commercial significance must have the authorisation of the time-charterer. This means as between the ship-owner and the charterer the issue of speed will vary as to who has the responsibility. In real-life this will be undertaken normally by the Master as the Ship-Owners agent but the responsibility shifts. Extrapolating from the dicta in Whistler it would appear that because a time-charterer is commercially distinct from a voyage charterer then under the former any decision that would normally lie with the ship-owner as regards the commercial exploitation of the vessel will transfer, unless specifically reserved, to the charterer. This explanation scratches the surface of the distinction between the two relationships which lies in the legal significance of the distinction between a contract for carriage of goods and a contract for hire of a vessel and crew. In the former the charterer doesnt have the right of direction the ship-owner has this, this means as regards the rights and responsibilities the charterer owes the ship-owner which are few and far between it includes the duty to return the goods as hired in an in tact condition, he is furthermore liable for the administrative running of the ship that a shipowner would commonly undertake in a voyage charter these can include paying port duties, dock charges, canal charges, commissions, arranging stevedores, making sure the stacking and tonnage of the cargo is correct and other such duties. A further duty that changes between the charterer and ship-owner between the two is in relation to payment under a time charterparty the charterer pays a larger hire price whereas the voyage charterparty pay what is known as a freight charge Whilst many of these are not responsibilities and duties towards the Ship-owners they nonetheless imply that the ship-owner is not responsible for such things under a time charter. By virtue of Article 3 (8) of the Hague-Visby Rules the rules may be enforced where the charterparty takes on some or all of the rights and responsibilities in Article 3 of the Rules. An example would be where a time-charterer sublets to another person and makes assurances such as seaworthiness or other such duties . The time-charterer is always more likely to do this than a voyage charterer given that he has more control over the ship and that his quasi-owner status means that he may make representations about the ship to third parties. However this wouldnt seem possible as between the ship owner and a charterer under a time charter-party. However possibly the most fundamental importance in determining the difference between voyage and time-charter parties and the importance of the form on the legal consequences is part of a wider debate on the status of Carriers, the potential tortious and statutory liability that flow from the status as Carrier has huge potential impacts on the liability of charterers towards third parties that suffer damage or loss . We will consider here briefly the legal issues surrounding the identification of the carrier and then move onto show how this is of large relevance to the liabilities between a charterer and a ship-owner. We touched on the issue above in relation to which charterparties fell under the legal framework and the issues are closely related but in this case we are discussing charterparties that might not specifically incorporate the rules and designate themselves as carriers. A carrier is defined unhelpfully by the Hague-Visby Rules as including the owner or the charterer who enters into a contract of carriage with a shipper . The seminal discussion of this issue was in Samuel v. West Hartlepool where the court made the distinction between a demise charterparty which clearly made the charterer Carrier and a very basic voyage charterparty where the only obligations of the charterer are to provide the full goods; pay the agreed fee for carriage and the relationship would effectively end there. In the latter the charterer would not be considered a Carrier. However Walton, J specifically argued that there were a myriad of grey areas in between those two examples, more recent commentators have argued that the time charterparty is one such example whereby the charterer becomes the Carrier. This has come about through numerous cases where the courts have taken the approach to look at the nature of the contract and the real-life operation of who had control , the case law in the area is highly unpredictable and we dont have the space to fully discuss the case law however it would appear that the court tries to make an equitable decisions on the facts without trying to put too much emphasis on the wording of the contractual documents. Canada has a lot of jurisprudence on this exact issue and given the international nature of much of maritime law the authorities make a compelling argument that time charterers are most likely considered carriers for most purposes. The string of cases in the mid to late 1980s in Canada seemed to suggest that time charterers that were named prominently on bill of lading, that
were signed on the behalf of by the Master, that received payment of freight and other such indicators meant that timecharterers were held to be liable as a Carrier. What seems clear from the sources and case-law is that there is support although not direct authority for the proposition that a voyage charterer would not be considered a carrier and a time charterer would, this is concurrent with reality and common legal sense despite the flourish of demise clauses in time charterparties that specifically designate the owners as carriers. The effect this has on the intra-contractual relationship is significant and impacts on the insolvency, bailment and lien claims of the respective parties. If a charter becomes insolvent, as was the case in Samuel above, both the shipowner and the receivers have a claim and the status of carrier can have a bearing on the outcome. The carrier is liable in tort for bailment and claims of lien by third parties, whilst not strictly dealing with the duties and liabilities as between a charterer and ship-owner the issue is of particular importance in insolvency and also in a wider sense it highlights the distinction between voyage and time-charterparties. Conclusion The above has looked at both the legal and physical framework surrounding voyager and time-charter parties. The distinction between these two is of more importance in relation to third parties rather than between the parties. The substantive difference in provisions reflects that one is a contract of hire of vessel and crew and the other is contract for carriage of goods, beyond the substantive differences in the clauses of the charterparty as far as the intra-contractual relationship between the charterer and the ship-owner is concerned there is no great difference in regulation, both can be incorporated into the statutory framework but are not so by necessity and both are considered homogenous by national UK statute law such as in UCTA 1977, therefore the difference is merely a difference in contractual terms. The area surrounding the status of charter-parties as a whole is an are which could do with some sustained treatment at both academic and policy levels, as I stated at the beginning the morass that is maritime law shows contractual principles being stretched to their limit and I believe a study of the particular issues within this work has shown that the status of the two is far from clear and direct sources on the issue are scarce.
Bibliography
Books Institute of Maritime Law Limitation of Shipowners Liability: Sweet & Maxwell / The New Law 1986 Tetley, William Marine Cargo Claims 4th ed. / Due Pub. 2008 / Copies at http://www.mcgill.ca/maritimelaw/mcc4th/
Articles
Australian Income tax: the royalty withholding TR2003 / 2 Taxation Office tax implications of ship chartering arrangements British Maritime Unfair Terms in Contracts: the Maritime 2003 / BMLA Law Assoc. Perspective Giaschi, Chris Who Is Carrier? Shipowner or Charterer 1994 / CMLA Schelin, Johan Freedom of Contract and Carriage UNCITRAL / of Goods London Seminar 2004 Schelin, Johan & The Charterers Right to Order the Master 2002HT Alstergren, Peter www.juridicum.su.se
Internet Resources
www.marlaw.com www.bailii.org www.westlaw.com www.lexisnexis.com www.lawbore.net www.megalaw.com/top/admiralty.php http://www.hmso.gov.uk/legislation/uk.htm www.google.com www.bimco.dk (Standard Charterparty Models) www.bmla.org.uk www.comitemaritime.org www.admiraltylaw.com