How Shipowners insure against loss of or damage to their ships with hull underwriters

Introductory guide to P & I Cover 

Shipowners insure against loss of or damage to their ships with hull underwriters. They look to their P&I club for insurance in respect of third party liabilities and expenses arising from owning ships or operating ships as principals.

The term “P&I” stands for Protection and Indemnity. It is not hull insurance, war risk insurance, loss of profit/freight insurance, detention insurance, strike insurance or uninsured legal expenses (Defence) cover.

The following risks typically covered by P&I Clubs are briefly described in this 'layman's guide' to the Rules of the Club
 
• Personal injury to or illness or loss of life of
crew members
• Personal injury to or loss of life of stevedores
• Personal injury to or illness or loss of life of
passengers and others
• Loss of personal effects
• Diversion expenses
• Life salvage
• Collision Liabilities
• Loss or damage to property other than cargo
• Pollution
• Towage contract liabilities
• Liabilities under contracts and indemnities
• Wreck liabilities
• Cargo liabilities
• Cargo's proportion of general average or salvage
• Certain expenses of salvors
• Fines
• "Omnibus" cover

Freight, demurrage and defence risks can be insured with the UK Defence Club. For example, The UK Defense club provide insurance for the legal and other costs of pursuing and defending claims related to entered ships where the sum in dispute is not insured.

1. Personal injury to or illness or loss of life of crew members

The shipowner may be exposed to such claims in tort or under statute law, although it is more usual for the claims to be made under the crew member's collective agreement or particular contract of employment. The cost of medical treatment and of repatriation is covered, as are the funeral expenses of dead seamen and also the cost of sending abroad a substitute for a seaman who is sick or injured or for a seaman who dies. Where there is a particular employment contract and this provides for unusually generous compensation in the event of death, injury or illness, the shipowner will normally be expected  to have cleared it in advance with the managers of the Club so that his additional exposure under the contract can be taken into account in the assessment of his premium.

2. Personal injury to or loss of life of stevedores

This is a frequent source of heavy claims in tort or under statute law against shipowners and thus by them against their Clubs. Claims have been specially heavy in US ports, although the number of these claims has been reduced somewhat since the introduction of the 1972 Amendments to the Longshoremen's and Harbour Workers' Compensation Act which narrowed the circumstances in which the shipowner, as opposed to the employer of the stevedores, is liable for stevedore deaths and injuries.

3. Personal injury to or illness or loss of life of passengers and others  

The shipowner may be exposed to claims in respect of passengers carried on board his ship in respect of injury, illness or death. These claims may in certain jurisdictions be defeated or limited in amount by the terms of the passenger ticket but, whether this is so or not in the particular case, the shipowner is covered for this risk. He may also be liable in tort to persons other than crew, stevedores and passengers who come on board his ship for one purpose or another, including surveyors, Customs officials, pilots and so on. Cover in respect of liability to these persons is also included.

4. Loss of personal effects
 
Liability of the shipowner to crew, passengers and others in respect of loss of or damage to the personal effects of these persons is also covered.
 

Typical Application for Free Pratique

APPLICATION FOR FREE PRATIQUE

Name of vessel __________________________
 
Call Sign _____________________________
 
Registration / IMO No. _______________________
 
Line __________________________
 
Nationality___________________________
 
Type of vessel _______________________
 
E.T.A.  ______________________ (hours)
 
on __________________________ Anchorage
 
No. of crew_____________

No. of passenger _______________________

Is there a ship surgeon on board?     Yes / No
 
Did your vessel visit any ports in Our Country on or after "Date" ?  Yes / No
 
If Yes, please list out all ports of call since the last 30 days

If No, please list out all ports of call for the last 30 days:


Name of Port and Country

Date of departure

Name of Port and Country

Date of departure

(please use supplementary sheet if the above spaces are not enough)

Has any case of infectious diseases occurred on board during the past 30 days?   Yes / No
Has the total number of ill passengers during the past 30 days been greater than normal / expected?   Yes / No

Is there any ill person on board now?  Yes / No

Has any person died on board during the past 30 days? Yes / No 
Have any stowaways been found on board?  Yes / No
 
Is there any sick animal or pet on board? Yes / No
 
Has any sanitary measure (e.g. quarantine, isolation, disinfection or decontamination) been applied on board?  Yes / No
 
Date, port and country of issue of Ship Sanitation Certificate under the IHR(2005): _______________________

Did any port health authority make any recommendations/comments on the Certificate? If yes, please state particulars:

I certify that the above statements are true. A copy of Maritime Declaration of Health (D.H. 168) and Ship Sanitation Certificate together with crew and passenger lists will be forwarded for inspection within 24 hours of arrival.
 
Name of applicant (in block letters)

Signature
 
Agent / Owner
Fax. No.     Date
Tel. No.
 

FREE PRATIQUE

FOR OFFICIAL USE ONLY

To: Applicant  (Ref No. )

Free Pratique is hereby granted to the above-named vessel subject to the following conditions:
 
(a) the Maritime Declaration of Health, Ship Sanitation Certificate, and crew list and passenger list from the Master should be delivered to this office within 24 hours after the ship’s arrival.
 
(b) if there is any change in health conditions on board, this pratique will automatically become invalid and the vessel should proceed to the Quarantine Anchorages for Port Health clearance.
 
(c) this Free Pratique is valid up to 24 hours after the expected time of arrival. It will automatically expire after this period.

Free Pratique is not granted to the above-named vessel. 

Remarks:
 
Date: 

D.H. 1418J (Rev. Apr 2011)

for Chief Port Health Officer

The Fixing or Unfixing of a Charter Party

I. INTRODUCTION

"Fixing or unfixing " are two little words are used by brokers when we are negotiating between shipowner and charterer for a contract for the carriage of goods by sea.

A ship broker, as you are aware, is the channel which brings together, in a series of negotiations, the two parties who hopefully will confirm into a successful fixture, evidenced by a charter party.

There is nothing new or secretive in shipbroking, which like ship-owning, has its roots based on precedent which stretches from before the times of the Pharaohs. Therefore, apart from the odd problem or dispute which might occur due to the recent advances in technology where both vessels or cargoes are concerned, most dispute  have occurred before, albeit in a slightly different guise. So when a broker is approached by his principal, be it owner or charterer, to find a ship for a cargo or a cargo for a ship, he will use his extensive network of connections both here in Australia and overseas to supply the wants of his client. Having circulated his contacts the broker will arrange for a firm offer to be passed between the clients in order to commence negotiations.

From a commercial point of view, in day to day dry cargo chartering, negotiations with the object of concluding a charter party between the two principals are very roughly divided into two basic sections.
 
THE MAIN TERMS

The main terms of a voyage charter speak for themselves, in that the parties agree to the details of the vessel, quantity and description of cargoes, loading and discharging ports and loading and discharging terms, laydays and cancelling, freight rate, freight payment, demurrage and despatch and charter party form. Put that basic way such terms should be very simple and easy to accept by both parties. So having happily achieved this goal, the broker will forward to both principals a telex, or facsimile message, giving a recap of the fixture so far. From a commercial practice our learned judges are correct when they say that this is not a fixture (although I must admit to some surprise not everyone agrees, as at a recent gathering of brokers I overheard a junior broker announce to the world that he considered he had concluded a fixture, even though it was obvious to me that sub-details had not been approved by both parties).

Here I must interject and point out to our legal colleagues present, that shipping, like the law has retained many of the old traditions that have grown up with the profession over the centuries, and which are practiced and used for particular reasons. In broking many of our customs and practices are in use today for clarity, economy and sound commercial sense, built up over many years' use.

So when in that future time you find yourself sitting on the bench in your ermine robes and wig, please spare a thought for us laypersons who are trying to follow the custom of our craft, which was laid down by our predecessors, and please do not disregard the fact that certain clauses or statements are included in charter parties for commercial rather that legal reasons. For, like Ian Timmins in his letter to Fairplay, some decisions given from the bench have caused deep concern in that, whilst as brokers we appreciate the legal judgment must be totally impartial, no weight appears to have been given to commercial factors that are placed before the court.

AGREEMENT ON OUTSTANDING MATTERS

Many lawyers with whom I have discussed the problem of "those two little words", state that in effect the broker is announcing that the main terms being agreed, all further terms are "subject to contract". I feel that this could not be the intention of the parties, or their brokers, at that time in the negotiations.

From a practical chartering view the parties in agreeing to the main terms, as enumerated earlier, are agreeing to the fact that one individual will carry and care for another individual's cargo from one port to another for a fee. That is the basis of the contract and having agreed to the first stage then both parties are in a position to conclude their main business. The charterers can finalize the sale or purchase of the cargo and all its requirements, whilst the shipowner can adjust his schedules, replenish his vessel and issue orders for the next trip. Certain trades really do require that breathing space to finalize their operations and need to have tonnage firm fixed with subjects at their disposal, thereby making subject details only a formality.
Whilst there is no definite gap between main terms and details, as we have already said, it is usual for the broker to send a recap of fixture to both parties. At one time it was the custom to send a fixing letter to both principals, but technology and the decline in the efficiency of the postal services have made such a document obsolete. Brokers now rely on a fixing telex or fascimile or internet communication.

In addition a pro forma charter party is produced for joint consideration and acceptance by the two principals. The transmission problems of years ago when pro forma charter parties were sent word for word by telex have now been overcome by the introduction of the facsimile machine. This is where the "i's" are dotted and the "t's" are crossed, and where the broker is required to have a creditable knowledge of maritime law. In case of later dispute the law itself must be seen to be totally impartial and will not take into account the personality of the individual, which is one of the skills of the broker at this important time during the negotiations and when drawing up the charter party.

Both the law and the shipbroker hope from the outset that the parties to the contract are persons of integrity and able to comply fully with the requirements of the terms, conditions and exceptions of the charter party. However, it is my experience that one should change the word "integrity" to read "training" or "professionalism" because it is very obvious when discussing with various principals their background, that the better the training the more professional the approach they have to their business. Little or no training quickly reveals a very imprecise attitude towards the various terms placed before them. In general they will accept anything provided the rate is right, and are prepared to run for cover should a dispute arise later. It really is alarming to see how many charterers' representatives are appointed to their positions with no previous training or any idea regarding their function in the charter market. These clients find very early in their career that the magic words "subject details" are the salvation of all their problems and that such a clause could be readily activated if extraneous conditions or events, outside of the negotiations with the shipowner, were not successful. 

Unfortunately whilst such principals might convince some brokers of the validity of their actions I have noticed with some concern and alarm that very experienced shipowners now appear to be taking the easy way out of a conflict by accepting the most ludicrous attempts by some charterers to invoke a "get out clause". The answer from the owners, when questioned why they appear to condone such unethical conduct, is a shrug of the shoulders and a comment that, if this is that individual's normal behaviour, they feel that, whilst they might have expended money and time during negotiations, such unsatisfactory working methods only highlight circumstances that confirm that it is prudent to let the fixture drop with that individual and save the extra heavy expenses of litigation later. A point, I suggest, the legal fraternity should note.

I was extremely fortunate at the outset of my career in that my mentor in the early 50s took the time and trouble not only to teach me my craft but also to recognise the various traits and characteristics of the clients that I would be representing in the future. I well remember this admonition to me one day, after his usual quick visit to the wine bar whilst returning from the Baltic Exchange: "My son, when you can persuade a shipowner to fix a cargo he hates, from a port he doesn't like, to a discharge port he doesn't know, at a rate which is below last done, then my son you can call yourself a broker". Some 38 years later that is a goal I have yet to achieve, although I have been near it on a couple of occasions. It is always the rate that lets me down. Mention was made by our learned judges about standard charter parties, such as the "Gencon charter party". Originally all charter parties were drawn up by hand. When I started in broking the first thing I was handed was a copy of Teach Yourself Copper Plate Handwriting as all our charter parties, including the copies, were completed by hand in pen and ink (we were past the quill stage). 

At the early part of this century a few owners and charterers decided that it would be beneficial if they drafted some standard charter party form. This policy expanded over the years, enhanced by both world wars and the development of groups of owners and charterers combining in certain trades or associations and standardizing their documentation to comply with the special needs of their trades. Such charter parties are not the answer to the sub details problem because in many cases the parties are offered optional clauses from which they may select a clause, or part of a clause, to cover their requirements. Consequently, having the opportunity to select the options tends to confound the object of the standard charter party.

To overcome the subject details problem I always endeavour to encourage my special, regular clients to build up their charter party terms to a level that is freely acceptable to the market without alteration. Thereafter, all that is required is a statement within the main terms "otherwise XYZ Company's usual charter party". It is not my intention to indicate to you that the Subject Details sections of negotiations are easy. 

In many cases they are not. Again, the more professional the charterer the quicker the result, whilst other charterers appear to delight in changing their minds and their clauses as often as, we hope, they change their socks. One particular individual after ten days solid work only requiring the master's approval of stowage, and having agreed that we were fixed with recap telex transmitted, slept on it and next morning decided to change everything to liner terms load and discharge. Or others, agreeing that they were fixed subject to the receivers' agreeing to the vessel, asked the owner for an extension to obtain this approval - only to sight a distressed ship at a lower rate overnight  which they fixed, being quite oblivious as to how their actions could be accepted.

It is these principals who worry me as it would appear that, should the owners in both cases attempt to hold the charterers to the concluded fixture, they face the prospect that the courts may support such behavior on the part of charterers.


 

General Charter Party Conditions - Imaginary Shipowners Limited

1) PARTIES TO THE CONTRACT: in this charter party the Imaginary Shipowners Limited, in its capacity as lessor, will hereinafter be called the “Owner”; the client stipulating the charter party will be called the Charterer; any licensed captain other than the Charterer will be called the “skipper”.

2) ASSIGNMENT OF THE CHARTER PARTY: the Charterer is not permitted to assign the use of the craft in question, nor the rights arising from the charter party hereto, to third parties.

3) MATTERS PERTAINING TO THE CHARTER PARTY: the Charterer may withdraw from the charter party but will lose the right to the return of the amounts paid by him to the Owner as a deposit to confirm his exclusive reservation; the Charterer loses the right to withdraw from the charter party from the sixtieth day prior to the start of the charter and from that time the Owner will still be entitled to 100% of the tariff should the Charterer subsequently declare he is unable to use the craft. Should the charter of the craft be interrupted at the request or due to the

Charterer, the latter will not be entitled to any refund: failure to use the craft during the stipulated period does not entitle the Charterer to any refund whatsoever.The Owner who, due to a break down or any other reason beyond his control, is unable to deliver the contracted craft, has the faculty of delivering - within three (3) days - another of similar characteristics and must refund to the Charterer only the daily rate for the days the craft was not at his disposal. Should the delay protract beyond said period the Charterer will be entitled to demand the cancellation of the charter party and the refund of any amount paid with legal interests thereon, but will not be entitled to any other form of damages.

4) OWNER’S OBLIGATIONS: the Owner delivers the craft and her pertinence in a seaworthy condition, complete with accessories, fittings and safety equipment and with her navigation documents, together with all that may be necessary to render the craft in question seaworthy and to allow her to serve the stipulated use. At the time of delivery the Charterer, after inspecting the craft and ascertaining the presence of all pertinences necessary to render her seaworthy and to allow her to serve the stipulated use, will sign a list containing an inventory of the aforesaid pertinences. By signing said inventory the Charterer expressly confirms having received the craft in a good state of maintenance, seaworthy and suitable for the stipulated use: it follows that he will no longer be able to present any protests and the Owner will be free of all liability in this respect. The parties expressly agree that the detailed nautical charts supplied by the Owner only cover the ‘area recommended’ for navigation, taking into reasonable account the dimensions of the boat and the distances, as well as the port and tourist structures present along the coasts; this area covers (*). The delivery of the boat takes place on the date, at the time and in the place provided by the charter party. Time required for explanation or clarification of use falls within contract time. Obligation to deliver becomes effective and enforceable on the Owner only after the Charterer has paid the entire amount of the hire, has paid the security deposit and has signed the inventory.

5) CHARTERER’S OBLIGATIONS: the Charterer is liable for the craft to all effects of the law for the entire period indicated in the present charter party; in particular he is bound to use the craft with particular prudence, care and diligence in compliance with the stipulated use and with the technical characteristics reported in the craft’s documents, as well as to fulfill all those obligations assumed under the present charter party for the duration of the charter. The Charterer who intends to navigate outside of the recommended area must equip himself with the detailed nautical charts relative to the areas where he intends to sail. The Charterer also undertakes to redeliver the boat on the established date, the place and the time, in the same condition as when he took delivery, with the same characteristics and suitable for the same use, with all the accessories, equipment, fittings and documents received from the Owner at the time of delivery. The Charterer expressly undertakes :

1) to destine the boat solely to himself and the crew and takes due note that the carriage of goods and passengers is forbidden as is any other type of commerce or financial activity; 
2) to respect the minimum crew requirements as well as the maximum number of persons who may be carried on board;

3) to use the boat solely within the scope of his qualification or that of the designated party;

4) not to participate in regattas or nautical manifestations of whatever nature;

5) not to request to wage or to tow another unit except in the case of absolute emergency;

6) to respect Port Authority orders in respect of bad weather or danger at sea; in any case to refrain from sailing with seas greater than force six and each and every time that the weather bulletins inform or forecast situations dangerous to navigation in the near future. Any breach of this obligation will result in the Charterer undertaking liability for any damages suffered by the craft;

7) to anchor the craft off the coast in a safe position and to maintain a continuous surveillance;

8) to sail the craft with sails appropriate to the force of the wind so that they do not suffer damage;

9) to refrain from keeping any animals on board;

10) to refrain from using any materials for the outer and inner cleaning of the boat which might damage it;

11) to turn the engine off when the boat’s trim is greater than 15°;

12) to contact the Owner at least once a week communicate the boat’s position;

13) by virtue of this charter party the Charterer undertakes to use the chartered craft solely for pleasure purposes.

All costs relating to the use and consumptions of the boat, and in particular fuel, lube-oil, water, electricity, port, customs, service and/or mooring taxes/fees even in private harbours, as well as any radio-telephone costs will be for Charterer’s account. The Charterer undertakes to take care of the boat, to keep its accessories and furnishings in order and to re-deliver it clean and in excellent condition. The Charterer also undertakes to carry out the usual maintenance work and will consequently be held liable for any damages deriving from a failure to comply with this obligation. Any obligations relating to the craft contracted by the Charterer with third parties must be assumed in the Charterer’s name, without spending the name of the Owner, and the Charterer will remain the sole party liable for the fulfillment of any such obligations. The Charterer must refund to the Owner all and any amounts which the latter may have to pay to third parties consequent to illicit deeds committed by the said Charterer and the latter will not be entitled to raise any objection whatsoever.


6) DAMAGES, AVERAGE, ACCIDENTS, REPAIRS: in the case of damage, average or accident the Charterer must immediately notify the Owner; he may continue navigation only if this will not aggravate the damage or provoke peril to persons and the craft. He may not carry out any repairs without the prior authorization of the Owner. The costs necessary for the repairs are on Charterer’s account and he will be refunded only if the cause cannot be attributed to him under the conditions of the present charter party. The Owner may withhold the security deposit to safeguard his rights until such time as said liability has been fully established, without any obligation to pay any amounts on account of interests, damages or other reasons. Should - without there being any liability on the part of the Charterer - the boat suffer any average solely in respect of the engine, the transmission, the reversing gear, the standing and running rigging, the sails, the batteries and/or the alternators which may prejudice its full use for over 12 hours (excluding the first night following the average) the Owner will only be held to allow the Charterer to recover those hours not enjoyed and all other forms of compensation and/or refund are thus excluded. This recovery will take place, at the Owner’s discretion, at the end of the charter period or by means of the issue of a credit note for subsequent charters. Any form of monetary refund is expressly excluded. It is hereby specified that this warranty is applicable solely in the case that the average occurs in the sea between (**) and the warranty is therefore excluded should the average occur in a different area of sea. The Charterer may not demand repairs and/or assistance except in the hours between 08.00 and 20.00. It is agreed that the cost of any repairs and assistance not chargeable to the Owner under the conditions of the present charter party must be paid by the Charterer at the usual current market rates, plus the cost of the materials used. Due notice is hereby given to the effect that any average to the echo sounder, log, refrigerator, autoclave, tender, outboard engine, anchor winch - be it electric or manual, stereo and any other equipment or fitting not included in the second paragraph of this present clause will not give rise to the foregoing warranty rights, i.e. to the recovery of the hours of hire not enjoyed nor prejudice the exclusion of any right on the part of the Charterer to compensation and/or refund. In the cases foreseen any demand for refund must be made by the Charterer directly to the Owner at time of re-delivery of the craft and in any case on the same day. Once this term has elapsed, or if the claim is presented to a party other than the Owner, the Charterer’s right to claim refund will expire.

7) INSURANCE: the boat will be delivered insured: a) with a kasko (fully comprehensive) policy for the Mediterranean, up to total loss; this policy has an allowance which is covered by the Charterer’s security deposit; b) with a third party civil liabilities policy, obligatory under the current laws, for damaged accidentally caused to third parties by the navigation or by the lying afloat of the craft: this insurance does not cover: the loss or damages to the property of the Charterer and of the parties carried on board; any of the damages and compensations due under Art. 8 hereto. In any case the Charterer remains liable for any damages whatsoever which may not be indemnifiable by the underwriter by reason of deed or fault of the Charterer, as well as for the allowance.

8) REDELIVERY, OBSERVANCE OF ESTABLISHED TERM: if the charter is scheduled to terminate in the morning, the Charterer undertakes to return to the port of redelivery by and no later than 1800h of the day prior to the redelivery date, to punctually return the boat at the established date, time and port and to have already extinguished each and every obligation regarding the boat which may have been contracted during the period of the charter. The Charterer will answer to the Owner for failure to redeliver, even in the case of mere accident, force majeure or average. The cruise itinerary must therefore be planned in such a way as to allow the return of the boat within the established time, even by bringing forward the re-entry to the port of redelivery should there be bad weather forecasts. In the case of failure to comply with this obligation the Charterer must pay the Owner an amount equivalent to the weekly hire of the same craft in that period, and to refund all the financial damages arising from that delay, such as board and lodgings ashore for the subsequent Charterer and his crew.To the effects of the foregoing re-delivery of the craft in a port other than that foreseen in the charter party is considered as a delay. In this latter instance the Charterer is also liable for all the costs involved in transferring the boat to the redelivery port.

9) SECURITY DEPOSIT : failure to pay the security deposit will result in the automatic cancellation of the charter party hereto and the Owner will be entitled to withhold, by way of penalty,all those amounts paid to him by the Charterer on account of hire. The security deposit will be returned once it has been established that there are no damages, no breaches of contract and no breaches of obligations contracted during navigation. Charterer’s financial liability is limited to the sole amount of the security deposit solely in respect of material damages caused to the craft,and the Owner is fully entitled to demand from the Charterer - who will respond with his personal estate - the refund of the entire amount of any other and different damages suffered.

10) SKIPPER: the skipper is the captain of the boat, responsible for it and for the crew in all things pertaining to navigation, handling, mooring manoeuvres and all else relating to the duties of a good and expert captain; the charter party must be signed by the skipper; should the latter be a party other than the Charterer he must sign this charter party, together with the Charterer, expressly in his capacity as skipper; The Owner is entitled to ask for the skipper’s sea-brief and if the skipper has no sea-brief, or if it is insufficient, or if his knowledge and capacities are not, in the Owner’s incontestable opinion, sufficient for the type of boat and for the safety of the persons on board, the Owner - unless the Charterer finds another, suitable skipper - may refuse to deliver the boat and may withhold 100% of the tariff and the charter party will be considered as automatically cancelled. Should, at Charterer’s request, the Owner find a skipper it is expressly declared that the Owner merely provides the contact between the Charterer and the skipper and that the Owner is therefore entirely extraneous to the service relationship between said parties; as is common usage the skipper’s board is on Charterer’s account . If, as stated above, the Charterer is not the skipper the latter will answer directly to the Owner for any damages or average related to his specific duties as indicated at the beginning of this present article, whilst the remaining liabilities will be for Charterer’s account.

11) BREACH OF CONTRACT: the Charterer and/or the skipper (in so far as he may be concerned) are directly liable for every breach of this present charter party and they jointly undertake to hold the Owner harmless of any claims whatsoever presented against him for facts occurring during the use of the boat by the Charterer or consequent to same. Should the boat be arrested or blocked for reasons attributable to the Charterer the latter must pay the Owner a compulsory contractual indemnity equivalent to the charter rate applicable for the period, for the entire duration of the arrest/blockage

12) GOVERNING LAWS AND REGULATIONS: The relationship between the parties hereto involves only the charter of the craft and in respect of any matters not expressly established in the present charter party said relationship is therefore governed by the regulations of the Italian Civil Code and of the Code of Navigation relating to the hire of mobile properties.

13) EXCLUSIVE NATURE AND VALIDITY OF THIS CONTRACT: this charter party is the sole valid instrument by which to charter a craft belonging to Owners ; any other contracts signed by the Charterer in respect of the charter of the same craft, drawn up by brokers or agencies, is null and in any case does not bind Owners. The fact of any of the individual provisions of this present charter party being void will not result in the entire charter party becoming void. Any agreements departing from the present charter party must be in writing failing which they are void; the Owner will provide information based on science and knowledge but without warranty.

14) DISPUTES AND EXCLUSIVE DEROGATION FROM THE COMPETENT FORUM: for each and every dispute arising from the present charter party the Tribunal of Milano will be the sole forum.

15) REFERENCES: The parties reciprocally acknowledge that the present general charter party conditions are intended as integrated with the phrases, referred to by means of asterisk,indicated on the first page, to the contents of which phrases express and full reference is made..

16) FORMATION OF THE CONTRACT: the parties hereto declare that they have carefully perused the present charter party and that each clause has been specifically agreed.

17) TRANSLATION: The Italian Version of this Bare Boat Charter Party will prevail over all other language versions 

Charterer’s Signature___________________________

Skipper’s Signature _______________________________ 

Owner’s Signature_____________________________
 

In compliance with Articles1341 and 1342 C.C., IV volume, II chapter, II par., I section, the undersigned expressly declares he has examined and approved the clauses of point 2) Assignment of the charter party, 3)Matters pertaining to the charter party, 4) Owner’s Obligations, 5) Charterer’s obligations, 6) Damages, average, accidents, repairs, 7) Insurance, 8) Redelivery, observance of the terms, 9) Security deposit, 10)Skipper, 14) Disputes and exclusive derogation from the competent forum, 17) Translation.
 

Charterer’s Signature___________________________

Skipper’s Signature _______________________________ 

Owner’s Signature_____________________________

Ports and Harbours

Ports and Harbors

Ports and harbors are principal establishments on sea coasts that generally serve as beginning, intermediate and end points of a cargo ship’s voyage. (* Dry ports are similar establishments but exist in non-coastal areas). Ocean trade routes across the world are serviced by ports as points of cargo handling, ship maintenance and gateway storage. Most of today’s busiest ports existed since the ancient times. Many have been built and rebuilt during and following world war periods. Ports employ thousands of skilled and unskilled workers directly and indirectly in the vicinity of the port area. 

Many more thousands are employed in the hinterland.

Ports can sometimes appear even to support the entire economy of a country like Singapore. Ports are high security zones and highly specialized cargo handling operations are performed 24 X 7. The best way to understand the overwhelming significance of ports to general economy and shipping industry in particular is to read through the available on-line material and if possible, directly witness the activities by taking necessary permissions from the relevant Authorities.

Today’s ports measure their success in terms of total TEUs (Twenty Equivalent Units) handled through their container terminals. Ideal measure would be the actual value of cargo handled but ports claim that their specialization is in handling heavy boxes and large quantities of cargo than caring about their underlying value.

Ports are generally adjoined by huge warehouses, both private and public. This is necessary because the entire cargo that arrived in the port may not have immediate takers for final consumption. Similarly, the export cargo may have to wait before it is directed to specific destinations in designated ships, in which case it will be temporarily stored in the warehouses. Sometimes cargo facing duty / tax or freight related disputes will also be held in designated warehouses before the solution is arrived at.

Few nautical miles away from the port’s ‘mouth’ or entrance channel, limited areas in the Sea are designated as ‘roads’ where the incoming ship anchor and wait for customs clearance (permissions and approvals) to enter the harbour. Ships at the roads undergo Customs verification of their documents and cargo, a process known as ‘rummaging’. In India, Customs officers of the rank of an Assistant Commissioner of Customs perform these verifications.

Ports such as Visakhapatnam, India have what is known as an Outer harbour that provides more depth to ships that are heavily laden. Depth to which a laden ship’s bottom can submerge to is known as ‘draft or even ‘draught’. The asset collection of wharves and Jetties and the pavement marking the ship’s mooring positions may be generally considered as the harbour area.

Ports and harbours primarily exist to principally service a two important entities. One the cargo and two the ship. Both ships and cargoes exist in various shapes, sizes, types and purposes. A beginner can view the port as a facility for receiving ships and transferring cargo. But as we delve more in to the subject, we expand our scope of the definition.

They are usually situated at the edge of an ocean, sea, river, or lake. Ports often have cargo-handling equipment such as cranes (operated by longshoremen) and forklifts for use in loading/unloading of ships, which may be provided by private interests or public bodies. Often, canneries or other processing facilities will be located nearby. Harbor pilots and tugboats are often used to maneuver large ships in tight quarters as they approach and leave the docks. Ports which handle international traffic have customs facilities.

The terms "port" and "seaport" are used for ports that handle ocean-going vessels, and "river port" is used for facilities that handle river traffic, such as barges and other shallow draft vessels. Some ports on a lake, river, or canal have access to a sea or ocean, and are sometimes called "inland ports". A "fishing port" is a type of port or harbor facility particularly suitable for landing and distributing fish. A "dry port" is a term sometimes used to describe a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road. A "warm water port" is a port where the water does not freeze in winter.

Because they are available year-round, warm water ports can be of great geopolitical or economic interest, with the ports of Saint Petersburg and Valdez being notable examples. A "port of call" is an intermediate stop, for example to collect supplies or fuel. Cargo containers allow efficient transport and distribution by eliminating loading of smaller packages at each transportation point, and allowing the shipping unit to be sealed for its entire journey. Standard containers can easily be loaded on a ship, train, truck, or airplane, greatly simplifying intermodal transfers. Cargo often arrives by train and truck to be consolidated at a port and loaded onto a large container ship for international transport. At the destination port, it is distributed by ground transport.

The world's busiest port is contested by several ports around the world, as there is as yet no standardized means of evaluating port performance and traffic. For the past decade the distinction has been claimed by both the Port of Rotterdam and the Port of Singapore. The former based its measurement on cargo tonnage handled (total weight of goods loaded and discharged), while the latter ranks in terms of shipping tonnage handled (total volume of ships handled). Since 2005, the Port of Shanghai has exceeded both ports to take the title in terms of total cargo tonnage. According to various sources the following ports have variously made claims to be largest world port: Port of Shanghai, Port of Singapore, Port of Rotterdam, Port of HongKong, Port of New York/New Jersey.

Various dictionaries give the following main entries for the word ‘port’:

• a place on a waterway with facilities for loading and unloading ships.

• a city or town on a waterway with such facilities.

• the waterfront district of a city.

• a place along a coast that gives ships and boats protection from

storms and rough water; a harbor.

In what follows several aspects of ports worldwide will be discussed (port structures, port terminals, basic port information, port regulations, etc.).

Port Systems

The terms port, harbor and haven are more or less synonymous, but each of them also has specific meanings. A harbour (US spelling "harbor") is a place of security and comfort, a small bay or other sheltered part of an area of water, usually well protected against high waves and strong currents, and deep enough to provide anchorage for ships and other craft. It is also a place where port facilities are provided, e.g. accommodation for ships and cargo handling facilities.

The term port or seaport normally includes the harbour and the adjacent town or city suitable for loading goods and embarking men. A haven is a type of harbour used in literature or in names and adds the idea of refuge. Ships are accommodated and handled, i.e. loaded and unloaded, at such port structures as; wharves or quays, piers and jetties, and sometimes alongside moles or breakwaters. Any place where a ship can safely lie alongside a quay, pier or dock, at anchor or a buoy, and where she can carry out loading/discharge operations or embark and disembark passengers is called a berth.

A dry dock is a type of dock consisting of a rectangular basin dug into the shore of a body of water and provided with a removable enclosure wall or gate on the side toward the water, used for major repairs and overhaul of vessels. When a ship is to be docked, the dry dock is flooded, and the gate removed.

A port may be defined or characterized by several criteria. It is both a frontier and a link between the two worlds of water and land. They are physically totally different and in many cases have different and sometimes specific laws, customs and usages. While international exchanges are the very essence of the sea and river world, the land-based world is marked by the specific features of the laws of each State. Ports are places of intense commercial activity, rest and safety for ships, and natural or man-made shelters where ships can load or unload their cargo. Ports are also places that are equipped to provide a link between water transport and land or air transport.

There are probably over 2,000 ports in the world, varying in size from wharves handling at most a few hundred tonnes of cargo a year, to large international ports being true multi-modal hubs in which are concentrated the full range of logistical services, from warehousing to total management of the supply chain, and through which up to 300,000 tonnes of cargo may pass each year. It has also proved very difficult to obtain precise figures concerning the number of dockworkers in specific countries or in the world. Only a few countries have provided in their reports an estimate of the number of dockworkers in their national ports. There are several factors which may explain this lack of statistics, in particular the diversity of methods of defining dockworkers, which may vary from country to country or from one port to another, and also the existence or otherwise of a system of registration or
maintenance of statistics. 

Dock Labor Establishments

Two things that a learner must concentrate on are what the labor boards do to protect the interests of the labor and how the labor boards streamline and regulate the supply of trained labor to partoicipate in the cargo handling operations. 

The Indian Dock Workers (Regulation of Employment) Act, 1948 serves as a basis for this chapter on Dock Labour Establishments. This law essentially works to ensure regular employment of workers in the Docks and Harbours. Most countries have their own Dock Labour laws that safeguard the interests of the dock workers in their own country.

A Dock Worker is a person employed or to be employed in, or in the vicinity of any port on work in connection with the loading, unloading, movement or storage of cargoes, or work in connection with the preparation of ships or other vessels for the receipt or discharge of cargoes or leaving Port.

An Employer in relation to a dock worker, is the person by whom he is employed or to be employed as explained in the above definition. A Dock Labour Board (DLB) functions in association with the port or harbour administration to regularise the employment of dock labour. Thus a DLB is the establishment that implements the Dock Labour Law. 

The law provisions for several schemes for the registration or dock workers and employers with a view to ensuring greater regularity of employment and for regulating the employment of dock workers whether registered or not in a Port. It is important to note that the law is clear about circumstances or conditions subject to which the employees and employers will enjoy the application of the law, meaning that there could be obligations to both parties.  




 

Understanding Shipping Business

Top points to remember about shipping before reading ahead

01. Many activities grouped under the term
02. Key national economic activity, so ministry level administrations function in maritime countries
03. Infrastructure both on shore and offshore is massive and permanent, often shared with navies.
04. Interaction between operators belonging to several nationalities is unavoidable. Trust plays a key role.
05. Trained man-power at every level.
06. Safety and security are important issues facing challenges
07. Business occurs in cycles, each lasting sometimes a decade or more, directly influenced by world economy.
08. Communication is the backbone for the industry.
09. Carries 90% of global trade cargo. 
10. High value cargoes include aviation fuel, industrial gases and containers carrying medical supplies
11. Low value cargoes include coal, ores and minerals.
12. Highly regulated industry, international, national and regional level laws and agreements very common.
13. Regulation is effected through extensive documentation activity, both manual and electronically transmitted.
14. Highly competitive, with syndicates often controlling freight rates with so called ‘conferences’
15. Insurance is a hugely important activity.
16. Due to existence throughout recorded history, the field is a subject of popular art and culture.
17. The way to understand is to continuously collect important educational material, read and discuss. 
18. The way to acquire working knowledge is to actually work for a company that undertakes complex shipping and cargo handling activity.

Shipping Industry, the industry devoted to moving goods or passengers by water. Passenger operations have been a major component of shipping, but air travel has seriously limited this aspect of the industry. The enormous increase, however, in certain kinds of cargo, for example, petroleum, has more than made up for the loss of passenger traffic. Although raw materials such as mineral ores, coal, lumber, grain, and other foodstuffs supply a vast and still growing volume of cargo, the transportation of manufactured goods has increased rapidly since World War II.

HISTORY
Commercial shipping began perhaps with the activities of the Phoenician merchants who operated their own vessels, transporting goods in the Mediterranean. The practices they developed were adopted by the merchants of ancient Greece and Rome and were continued by the maritime powers through the Middle Ages to modern times. The Venetians, from 1300 to 1500, owned a huge merchant fleet that served the interests of the merchant traders and the city-state exclusively. From 1600 to 1650 the Dutch ranked first in shipping activity, operating a globe-circling tramp service for merchants of western Europe.

Advances in the 19th Century
Until the 19th century, ships were owned by the merchant or by the trading company; common-carrier service did not exist.

On January 5, 1818, the full-rigged American ship James Monroe, of the Black Ball Line, sailed from New York City for Liverpool, inaugurating common-carrier line service on a dependable schedule. A policy of sailing regularly and accepting cargo in less-than-shipload lots enabled the Black Ball Line to revolutionize shipping.
Two technological developments furthered progress toward present-day shipping practices: the use of steam propulsion and the use of iron in shipbuilding. In 1819 the American sailing ship Savannah crossed the Atlantic under steam propulsion for part of the voyage, pioneering the way for the British ship Sirius, which crossed the Atlantic entirely under steam in 1838. Iron was first used in the sailing vessel Ironsides, which was launched in Liverpool in 1838.

The opening of the Suez Canal in 1869 was of great economic importance to shipping. Coinciding with the perfection of the triple-expansion reciprocating engine, which was both dependable and economical in comparison with the machinery of the pioneer vessels, the completion of the canal made possible rapid service between western Europe and Asia. The first steam-propelled ship designed as an ocean-going tanker was the Glückauf, built in Britain in 1886. It had 3,020 deadweight tons (dwt; the weight of a ship's cargo, stores, fuel, passengers, and crew when the ship is fully loaded) and a speed of 11 knots.

R Vijayan  Supply Chain Specialist  -  Lesson Sponsor 

With close to 40 years of experience in the field of Purchase, Warehousing, Export, Import, Customs clearance and training and development, R Vijayan is one of the most senior executives that Indian shipping and logistics Industry is blessed with. He worked with reputed Indian and multinational companies in India ranging from pharmaceuticals, chemicals, aviation to third party logistics segment.   He has have hands on experience of commissioning many warehouses across various organizations on a turnkey basis.  An expert in customs procedures, he trains his staff to independently undertake the responsibility in the areas of customer service, imports, exports, document clearance and warehousing. He started the career with Management consultants in Mumbai ,  assisting selection process of candidates in 1973.  After a rigourous training in selection process, moved to quality control operation in E Merck. Accepted the challenges of supply chain in 1976 and worked with many multinational and Indian companies ie E Merck, CIPLA,  Johnson and Johnson, Geoffrey Manners, Marico Industries, Rhone Poulenc, Smith and Nephew, and Jet Airways.  Retired from Jet Airways and continues the professional life by joining Uniworld Logistics as Vice President, Operations. He conducted several In-house training for various departments on Imports, Exports, Warehousing and customs clearance. Specialized in supply chain and handled all key areas such as Purchase, warehousing,  Import, Export, distribution, customs clearance and transportation. In all, he has have 40 years of experience in the supply Chain Management.  He is a science Graduate  with Diploma  in Materials Management, Diploma in Central Excise Management and Diploma in EXIM management. He is also  a Lead Auditor in ISO 9001-2008. He can be reached at rvijayan99@yahoo.co.in

Early Technological Advances 

Among the technological advances at the turn of the century was the development by the British inventor Charles A. Parsons of the compound steam turbine, adapted to maritime use in 1897. In 1903 the Wandal, a steamer on the Volga River, was powered by the first diesel engine used for ship propulsion. The Danish vessel Selandia was commissioned as the first seagoing motor ship in 1912. After World War I significant progress was made especially in the perfection of the turboelectric drive. During World War II, welding in ship construction supplanted the use of rivets. The keel of the first nuclear-powered passenger-cargo ship, the Savannah, was laid in Camden, New Jersey, on May 22, 1958, and the ship was launched in 1960. In 1962 it was chartered to a private company for experimental commercial use, but it did not prove financially successful.

Nature of the Shipping Industry

Shipping is a private, highly competitive service industry. The activity of the industry is divided into several categories, namely, liner service, tramp shipping, industrial service, and tanker operation, all of which operate on certain well-established routes.

Trade Routes
Most of the world's shipping travels a relatively small number of major ocean routes: the North Atlantic, between Europe and eastern North America; the Mediterranean-Asian route via the Suez Canal; the Panama Canal route connecting Europe and the eastern American coasts with the western American coasts and Asia; the South African route linking Europe and America with Africa; the South American route from Europe and North America to South America; the North Pacific route linking western America with Japan and China; and the South Pacific route from western America to Australia, New Zealand, Indonesia, and southern Asia. The old Cape of Good Hope route pioneered by Vasco da Gama and shortened by the Suez Canal has returned to use for giant oil tankers plying between the Persian Gulf and Europe and America. Many shorter routes, including coastal routes, are heavily traveled.

Coastal  Shipping
Technically, coastal shipping is conducted within 32 km (within 20 mi) of the shoreline, but in practice ship lanes often extend beyond that distance, for reasons of economy and safety of operation. In the U.S., coastal shipping is conducted along the Pacific, Atlantic, and Gulf coasts. Under the restriction known as cabotage, the U.S. and many other nations permit only vessels registered under the national flag to engage in coastal trade. Among many small European countries cabotage does not apply, and short international voyages are common. A special feature of coastal shipping in the U.S. is the trade between the Pacific coast and the Atlantic and Gulf coasts. Vessels engaged in this trade traverse the open sea and utilize the Panama Canal; however, they are covered by cabotage laws. In coastal and short-distance shipping, special-purpose ships are often employed, such as car ferries and train ferries.

Inland Waterways
A major part of all the world's shipping moves on inland waterways—rivers, canals, and lakes. Usually such shipping employs smaller, lighter vessels, although in some cases oceangoing ships navigate inland waterways, for example, the St. Lawrence Seaway route to the Great Lakes of North America. Containerization, lighter-aboard-ship, and barge-aboard-ship operations have facilitated the shipping of cargoes between oceangoing vessels and those of the inland waterways.

Liner Service

Liner service consists of regularly scheduled shipping operations on fixed routes. Cargoes are accepted under a bill-of-lading contract issued by the ship operator to the shipper. Competition in liner service is regulated generally by agreements, known as conferences, among the shipowners. These conferences stabilize conditions of competition and set passenger fares or freight rates for all members of the conferences. In the U.S., steamship conferences are supervised by the Federal Maritime Commission in accordance with the Shipping Act of 1916. Rate changes, modifications of agreements, and other joint activities must be approved by the commission before they are effective. Measures designed to eliminate or prevent competition are prohibited by law.

Tramp Shipping

Tramps, known also as general-service ships, maintain neither regular routes nor regular service. Usually tramps carry shipload lots of the same commodity for a single shipper. Such cargoes generally consist of bulk raw or low-value material, such as grain, ore, or coal, for which inexpensive transportation is required. About 30 percent of U.S. foreign commerce is carried in tramps.
Tramps are classified on the basis of employment rather than of ship design. The typical tramp operates under a charter party, that is, a contract for the use of the vessel.

The center of the chartering business is the Baltic Exchange in London, where brokers representing shippers meet with shipowners or their representatives to arrange the agreements. Freight rates fluctuate according to supply and demand: When cargoes are fewer than ships, rates are low. Charter rates are also affected by various other circumstances, such as crop failures and political crises.

Charter parties are of three kinds, namely, the voyage charter, the time charter, and the bare-boat charter. The voyage charter, the most common of the three, provides transport for a single voyage, and designated cargo between two ports in consideration of an agreed fee. The charterer provides all loading and discharging berths and port agents to handle the ship, and the shipowner is responsible for providing the crew, operating the ship, and assuming all costs in connection with the voyage, unless an agreement is made to the contrary. The time charter provides for lease of the ship and crew for an agreed period of time. The time charter does not specify the cargo to be carried but places the ship at the disposal of the charterer, who must assume the cost of fuel and port fees. The bare-boat charter provides for the lease of the ship to a charterer who has the operating organization for complete management of the ship. The bare-boat charter transfers the ship, in all but legal title, to the charterer, who provides the crew and becomes responsible for all aspects of its operation.

The leading tramp-owning and tramp-operating nations of the world are Norway, Britain, the Netherlands, and Greece. The carrying capacity of a typical, modern, well-designed tramp ship is about 12,000 dwt, and its speed is about 15 knots. The recent trend is toward tramps of 30,000 dwt, without much increase in speed.

Industrial Carriers
Industrial carriers are vessels operated by large corporations to provide transportation essential to the processes of manufacture and distribution. These vessels are run to ports and on schedules determined by the specific needs of the owners. The ships may belong to the corporations or may be chartered. For example, the Bethlehem Steel Corp. maintains a fleet of Great Lakes ore carriers, a number of specialized ships that haul ore from South America to Baltimore, Maryland, and a fleet of dry-cargo ships that transports steel products from Baltimore to the Pacific coast. Many oil companies maintain large fleets of deep-sea tankers, towboats, and river barges to carry petroleum to and from refineries.

Tanker Operation
All tankers are private or contract carriers. In the 1970s some 34 percent of the world tanker fleet, which aggregates about 200 million dwt, was owned by oil companies; the remaining tonnage belonged to independent shipowners who chartered their vessels to the oil companies. So-called supertankers, which exceed 100,000 dwt, are employed to transport crude petroleum from the oil fields to refineries. The refined products, such as gasoline, kerosene, and lubricating oils, are distributed by smaller tankers, generally less than 30,000 dwt, and by barges.

General Ship Types
Merchant ships are classified as passenger carriers, cargo ships, and tankers. During the height of passenger travel by ship, the largest as well as the most glamorous ships afloat were the famed liners of the North Atlantic, which, beginning in the mid-19th century, sailed regular schedules between the Americas and Europe. Competing in speed as well as in size and appointments, such ships as the Mauretania, the Queen Mary, the Queen Elizabeth, the United States, and the France gradually reduced the time for the North Atlantic crossing to less than four days. Their size, from about 45,000 to 75,000 metric tons and up to 300 m (1,000 ft) in length, was gigantic by the standards of the first half of the 20th century, but they have been dwarfed by the oil tankers of the 1970s and '80s. Today's passenger liners operate principally in the cruise trade.

Cargo Ships
Cargo ships carry packaged goods, unitized cargo (cargo in which a number of items are consolidated into one large shipping unit for easier handling), and limited amounts of grain, ore, and liquids such as latex and edible oils. A few passengers are accepted on some cargo liners. Specialized ships are designed and built to carry certain types of cargo, for example, automobiles or grain.

Container Ships

In the late 1950s container ships set the pattern for technological change in cargo handling and linked the trucking industry to deep-Sea shipping. These highly specialized ships carry large truck bodies and can discharge and load in one day, in contrast to the ten days required by conventional ships of the same size. The rapid development of the container ship began in 1956, when Sea-Land Service commenced operations between New York City and Houston, Texas. Barge-aboard, or lighter-aboard, ships, also called seabees (sea barges) or LASH (lighter-aboard ships), resulted from an evolutionary development of the container ship. They are capable of carrying about 38 barges, or up to 1,600 containers, or a combination of containers and barges. Their design enables them to deliver cargo to developed or undeveloped ports, without the need for berthing.

Tankers
Tankers, designed specifically to carry liquid cargoes, usually petroleum, have grown to many-compartmented giants of a million metric tons and more. Despite their great size, their construction is simple, as is, for the most part, their operation. A major problem with the giant tankers is the severe environmental damage of oil spills, resulting from collision, storm damage, or leakage from other causes.
Specialized tankers transport liquefied natural gas (LNG), liquid chemicals, wine, molasses, and refrigerated products.

Treaties and Conventions
Many treaties and conventions have been adopted over the years with the objective of increasing the safety of life at sea. One of the most important agreements provided for the establishment of the International Iceberg Patrol in 1913, after the Titanic disaster. Under the International Load-Line Convention of 1930, ship loading was regulated on the basis of size, cargo, and route of the vessel. The International Convention for the Safety of Life at Sea, which governs ship construction, was ratified by most maritime nations in 1936, and updated in 1948, and again in 1960 and 1974.