UK P&I Club issues Knowledge bulletin
The UK P&I Club issued a Knowledge bulletin regarding the incorporation charterparty terms into a bill of lading.
In many cases complications in cargo claims arise where there are disputes about which law and jurisdiction governs the contract of carriage. Receivers often seek to bring proceedings against the carrier in the jurisdiction where the goods were delivered; almost always this is the receivers’ local jurisdiction with the local court all too ready to accept jurisdiction. As a result carriers may find themselves far from certain of a fair outcome.
To avoid such uncertainties owners and charterers in the dry bulk and tanker trades will often seek to incorporate the terms and conditions of a charterparty, including the law and jurisdiction clause, into a bill of lading. The questions of how and which terms of the charterparty can be brought into a contract of carriage have been the subject of considerable litigation in the English courts.
Identifying the charterparty
On the front of most standard short-form bills of lading, such as the Congenbill, is a box which provides space for a charterparty to be identified by its date – often with reference to the payment of freight. Alternatively there may be a typed clause on the face of the bill which has words to the effect of “freight payable as per charterparty dated…” The purpose of this is to identify the freight payment terms applicable to the contract of carriage. It also identifies the charterparty associated with the carriage of the goods identified on the bill.
Recently the UK P&I Club has seen a number of cases where no charterparty is identified on the bill of lading. In these circumstances, under English law, where there is only one possible charterparty it is presumed that this is the applicable charterparty to the bill of lading. Where there is a chain of charterparties the presumption is that the head-charter is the incorporated charterparty.
Although English law has attempted to imply some certainty in these situations, in other jurisdictions this is not necessarily case. In a recent case in China, where no charterparty was identified in a short bill of lading, the Chinese courts simply accepted jurisdiction for the claim and treated the bill of lading as not having incorporated any charterparty. Had the charterparty been identified, based on previous cases, the Chinese court may have accepted the English law and jurisdiction clause contained in the charterparty, and declined jurisdiction.
Incorporating terms
Whether or not a charterparty clause is incorporated into a bill of lading will depend on the wording of the incorporation clause printed on the bill. Under English law there are a number of tests designed to protect the receiver from onerous and/or irrelevant charterparty clauses.
Despite many court rulings, the incorporation of charterparty terms into bills of lading remains an uncertain issue in many jurisdictions. In order to best protect their interests,owners and charterersare advised to ensure that:
- the applicable charterparty is clearly identified on the face of the bill of lading, and
- that the incorporation clause is appropriately worded.
Source: UK P&I Club
For more information please read theKnowledge bulletin issued by UK P&I Club
