Lectures on shipping practice and voyage charter
based on GENCON form
SMU—ADB Training Program 2011
姚洪秀 教授
Pro. Yao Hongxiu
2011-06-18
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Lectures on shipping practice and voyage charter
based on GENCON form
Section One
—Chartering Operation
(a) Voyage charter (single v/c, return v/c, consecutive single/return v/c,
COA)
(b) Time charter
(c) Bareboat/Demise charter
—Chartering market
London Market
New York Market
Hamburg Market
Oslo Market
Tokyo Market
Hong Kong Market
—Shipbroking practice
(a) Business Scope of Shipbroking
Chartering
Sale and purchase of shipping property
Agency
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(b) Individuals of shipbrokers
Owner’s broker
Chartering agent / charterer’s broker
Cable broker
Loading broker / liner broker
Port agent
Sale and purchase broker
(c) Commission
(d) Shipowners/charterers v. brokers
Principal and agent relationship governed by the laws of agency
—Negotiation of charter parties
(a) Order/Enquiry
Firm/Prospective order
(b) Offer
Firm offer—binding on offerer
—time limit for reply(which time to be specified, e.g.
local time/owner’s or charter’s side, GMT)
Conditional firm offer—subfree / subopen / sub unfixed elsewhere
(c) Counter offer/New offer
(d) Acceptance
Main term fixture, but subdetails—whether a c/p is established or not
between owner and charterer?
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English law: no
;
American law: yes
;
PRC law: yes
Other subs:
sub board approval
sub receiver’s/shipper’s approval
sub L/C obtainable
substem
subcontract
(e) Fixture Recap
(f) Signing the charter party
—Legal functions of various charter party clauses
English law: condition, warranty, intermediate
PRC law: main /minor obligations
Interpretation of main clauses of a voyage charter based on
GENCON form 46/94
—Vessel’s Particulars/ Descriptions:
Name of the vessel, flag, class, DWT & capacity (bale/grain), ship’s
type, LOA/BEAM, others
—Seaworthiness Clause
Clause 2 of GENCON form (Owner’s responsibility clause)
an intermediate clause
Standards of seaworthiness:
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absolute warranty of seaworthiness
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seaworthiness by exercising due diligence(Hague Rules 1924 or
Hague-Visby Rules 1968 or CMC article 47)
- seaworthiness under GENCON form
Personal want of due diligence on the part of the owners or their
manager to make the vessel in all respects seaworthy……
—Deviation clause(clause 3 of GENCON form)
(a) implied obligation for the shipowner under English law—
no unjustifiable deviation
(b) Deviation provision under Hague/Hague-Visby Rules and CMC
article 49
(c) Clause 3 of GENCON form
(d) P&I Bunkering clause
—LAYCAN clause (clause 9 of GENCON form)
(a) Laydays clause - Laydays not to commence before……
Cancelling clause - should the vessel not be ready to load(whether in
berth or not) on the cancelling date indicated in box 21, the charterers
shall have the option of cancelling this C/P.
(b) The right of the charterers to cancel the C/P
(c) The right of the charterers to claim damages against the owners
(d) Interpellation provision under clause 9 of GENCON
—Clauses relating to the cargo
(a) Cargo description
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(b) Cargo quantity
(c) Dead freight
(d) Charterers’ obligation to provide cargo
—Safe Port/Safe berth clause
(a) Definition of a safe port(the “Eastern city”1958)
(b) Interpretation of the safe port
(c) Whether the owner or the charterer is liable to the safety of a port
(d) Interpretation of a safe berth
—Loading/Discharging cost(GENCON clause 5)
(a) FI, FO, FIO, FIOS, FIOT, FIOST, Liner term/Gross term, Gross Load,
Gross Discharge, scale Load/Discharge
(b) Who bear the risks, liabilities arising from cargo handling under
FIO/FIOS/FIOT/FIOST term? e.g., cargo damage/stevedore damage to
the vessel
Section Two
—Laytime/ Demurrage/ Despatch
(a) Laytime
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Definition of laytime (rule 4 of LAYRULES 1993)
(b) calculation of laytime
Days/Running Days(Rule 7 of LAYRULES 1993)
Working Days/WD(Rule 10 of LAYRULES 1993)
Weather Working Days/WWD/WWD of 24 hours/WWD of 24
consecutive hours(Rule 12 of LAYRULES 1993)
-SHEX/UU/EIU/SHINC
-Weather permitting
Cargo to be loaded/discharged at the average rate of …tons per
day/per WWD/per workable hatch/per hatch
Customary Quick Despatch(CQD)
(c) The commencement of laytime
(1)A vessel should be an arrived vessel
Port charter: commercial area, the“Johanna Oldendorff”[1973] 2
Lloyd’s Rep.285,
The definition of “port” (Rule 1 of LAYRULES 1993)
Berth charter: A vessel being berthed becomes an arrived vessel.
The definition of “berth”(Rule 2 of LAYRULES1993)
“WIBON” (whether in berth or not) or “Berth or no berth” (Rule 22
of LAYRULES 1993).The“Kyzikos”[1989] 1 LR.
“A berth reachable on her arrival/always accessible”
“WIPON”=whether in port or not
“Time lost in waiting for berth to count as laytime”(Rule 21 of
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LAYRULES 1993 / Paragragh(c) of clause 6 of GENCON 1994
(2)Ready to load or discharge in every respect
Readiness just for loading or discharging
Physical/documentary readiness
Whether idle formalities are a part of readiness?
The “Nikolas”(1987)Hong Kong Arbitration
Some CMAC arbitration cases and maritime courts cases
WIFPON/WCCON(free pratique and customs clearance)
(3)To tender notice of readiness (NOR)
To whom must the NOR be given?
How NOR is given?
When may NOR be given?
(d) Laytime exception
(e) Demurrage
- Definition (Rule 24 of LAYRULES 1993)
- Once on demurrage, always on demurrage
(f) Despatch
- Definition (Rule 25 of LAYRULES 1993)
- ATS/WTS(AWTS)
(g) To average laytime/Reversible laytime
(Rule 17/18 of LAYRULES 1993)
—Owners’ s responsibility clause(GENCON clause 2)
Responsibility for cargo
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GENCON1976–stowage (unless stowage performed by shippers/
charterers or their stevedores and servants) or by the
personal act or default of the owners or their manager
GENCON1994–no responsibilities of management of cargo, but by the
personal act or default of the owners on their manager
Rider clause (paramount clause/Hague or Hague Visby Rules) changes
the Responsibilities of the owners under GENCON
—Cesser and lien clause
Cesser clause: “charterers’ liability under this charter to cease on cargo
being shipped”(clause 31,Baltimore Form C Berth
Grain Charter Party 1974)
Lien clause:
(Clause 8 of GENCON76) The Owners shall have a lien
on the cargo for freight, dead-freight, demurrage and
damages for detention...
(Clause 8 of GENCON94) The Owners shall have a lien
on the cargo and on all sub-freights payable in respect
of the cargo, for freight, deadfreight, demurrage, claims
for damages and for all other amounts due under this
Charter Party including costs of recovering same.
(In order to reflect common practice nowadays, the old
reference to damages for detention has been deleted. In
addition, the Clause has been brought up to date in
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accordance with the more modern lien clauses making
no reference to cesser type provisions (i.e. provisions
effectively providing that all responsibility of the
charterers ceases on shipment of the cargo).)
Liens provided by CMC(Article 87)
Owners’ lien on cargo (possessory lien)
Owners’ lien on subfreight (equitable assignment)
Owners’ lien for freight, deadfreight, claims for damages (including
demurrage and detention and other owners’ rights of credits)
The importance of “Incorporation clause” for the owners to exercise
liens on cargo belonging to the holder of a B/L who is not a party to the
C/P.
Co-existence doctrine
—Freight clause (clause 4,GENCON 76/94)
(1) Payment of freight under English common law
(2) Prepaid/advanced freight:“Freight to be prepaid within __banking
days after COL/signing & releasing bill of lading/final sailing”.
When the owners are entitled to earn the freight?
The“Lorna 1”[1982]LMLN NO.79
Clause 4 of GENCON 1994
Article 314 of PRC contract law 1999
(3) Freight to collect/Freight payable at destination
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Freight payable BBB
Freight payable on discharge
Freight payable X days after discharge
(4) Lumpsum freight
(5) Some legal issues regarding payment of freight under V/C
“Freight payable as per C/P” or “Freight as per C/P” stated in the
Bill of Lading.
owners
V/C
charterers
(Head charter)
owners
T/C
sub V/C
subcharterers
(sub charter)
time charterers
V/C
voyage charterers
The “Costanza M” [1980] 1 LLR 505
It is a condition clause under English law.
Freight is untouchable, no deduction to freight.
Oil Retention Clause
—Bills of Lading Clause(clause 9/10 of GENCON 76/94)
Master to sign Bills of Lading
Master’s right to refuse to sign Bills of Lading
- Bills of Lading manifestly inconsistent with charter
- Bills to be illegitimate, e.g. advanced bills or back-dated bills or
signing clean bills with LOI
Master to sign bills of lading as presented (implied indemnity of
GENCON 76 and express indemnity of GENCON 94)
Master to sign “Congenbill” (GENCON 94)
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Incorporating C/P into the Bills of Lading (incorporation clause)
Owner
V/C
Charerer(e.g. CIF seller)
B/L
B/L
B/L
Consignee (e.g. CIF buyer)
e.g. clause 1 of “Congenbill”edition 1994
who is the carrier of a B/L issued under a V/C?
—Exception clauses
General strike clause (clause 16 of GENCON 94)
War Risks clause (clause 17 of GENCON 94)
General Ice clause (clause 18 of GENCON 94)
—Agency clause (clause 14 of GENCON 94)
—Brokerage clause (clause 15 of GENCON 94)
—Law &Arbitration clause (clause 19 of GENCON 94)
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