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Chapter 2 CHARTERPARTIES 2.1 INTRODUCTION The charter party is the written agreement between the Ship Owner and the charterer and is in fact the enactment (or charter) of their negotiations that contains the agreed terms and conditions. It is signed by both parties and as such, forms a very important chartering document, which is not only of great utility to the parties concerned but also to the officers on board and to the port agents and hopefully, as little as possible to the lawyers. The charter party can adopt any form and can be drawn up by anybody (individual, company, etc.); however it is preferable to use standard charter parties. Such charter parties can be established in function for a specific use (for well defined cargoes and specific routes) or adopt a more general character. Some charter parties are specific for a time charter or a bareboat charter, whereas others are restricted to the transport of dry cargoes or are adapted to the requirements of tanker transport. In a previous paragraph we already wrote that there are three important chartering modes, viz.: the voyage charter, the time charter and the bareboat charter. The voyage charter can be further subdivided in function of the specific goods which are transported (e.g. coals, ore, grain, etc.). Although each charter party has its own wording, terms and conditions, they all have nevertheless a number of elements in common. Those elements will be discussed in the relevant charter parties in detail. See also: Packard, W., Sea-trading, Vol. 3, Trading, London, Fairplay Publications, 1986, 49 and following. 2.2 STANDARD FORMS A distinction must be made between the standard forms of charter parties which are recognized officially by national or international organizations such as the BIMCO and the Chamber of Shipping, London, and other forms, which are not recognized officially but are nevertheless regularly used. The official charter parties have come into being because in former days, the different provisions in the charter parties, have frequently given rise for a lot of arguments. Several international groups of Ship Owners have tried to get round these difficulties by issuing uniform charter parties for specific types of goods and routes. These groups such as BIMCO have examined a number of existing charter parties and after approval, recommended them to their members (or as a worldwide service). In certain cases they have drawn up and issued charter parties themselves. Recommended charter parties offer numerous advantages:
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- they are used commonly; - they are suited for several traffics and are everywhere available; - their wording is nearly watertight and they are generally accepted by the courts; - they are without any doubt fair to both parties. The different types of recommendations, which are printed in the heading of each charter party are: Agreed - Adopted - Recommended and Approved, and can be defined as follows: (These different form of recommendations have been taken over from: Forms of Approved Document published by BIMCO.) Important Note Some names of the charterparties are coloured bleu. A model of these charterparties can be found in my site http://maritimeknowhow.com > all topics > Charterparties or on the website of the BIMCO. "Agreed". The charter has been agreed between BIMCO (or the Chamber of Shipping of the United Kingdom) or Comité Central des Armateurs de France or other associations of Ship Owners) with one or more groups of charterers or other institutions (for instance, the Polish Coal Charter Committee, the Timber Trade Federation of the United Kingdom, the Syndicat National du Commerce Exterieur de Céréales, Paris or CMEA, Moscow). The printed conditions of an "Agreed" charter must not be altered or deleted without the express approval of all the organizations who have agreed the charter. An "Agreed" document is compulsory for the trade for which it is intended. Examples of “Agreed” charter parties: – –
– –
The Baltic and International Maritime Council Coal Voyage Charter 1971 (Revised May 1997. Code name: POLCOALVOY The Baltic and International Maritime Council Scandinavian Voyage Charter 1956. (To be used for fixtures with Scandinavian Charterers for trades for which no other approved form specially drafted for the trade in question is in force). Code name: SCANCON. The Baltic an International Maritime Conference Standard Ore Charter Party. Agreed with Malmexport AB, Stockholm and Rohstoffhandel G.m.b.H. Düsseldorf. Code Name: OREVOY. The Baltic and International Maritime Council Baltic Wood Charter Party 1973 (Revised 1997). Baltic and North Sea –with the exception of Russian ports – to the United Kingdom and the Republic of Ireland. Agreed with: The Swedish Wood Exporters Association; The Finish Forest Industries Federation; The Timber Trade Federation. Code name: NUBALTWOOD.
"Adopted". If a charter "Agreed" in that way following negotiations between, for instance, BIMCO and one or more groups representing charterers is officially supported by another association of Ship Owners, for instance, the Chamber of Shipping
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of the United Kingdom, it is stated that the Chamber of Shipping of the U.K. has "Adopted the charter; or on the other hand, if BIMCO wants to support one or the other charter negotiated and "Agreed" between the Chamber of Shipping of the U.K. and one or more groups of charterers, then it is stated that the charter has been "Adopted" by BIMCO. Moreover, a document issued by an organization of Ship Owners, for instance, INTERTANKO, for use in a special trade without having actually been "Agreed" with any particular group of charterers, may be "Adopted" by BIMCO. An "Adopted" document is compulsory for the members of the organization who have adopted it if it is an "Agreed" document. Examples of “Adopted” charter parties: – – –
–
– – –
The Documentary Committee of the Japan Shipping Exchange, Inc. Coal Charter Party. Adopted by the Documentary Council of the Baltic and International Maritime Conference (BIMCO), Copenhagen. Code name: NIPPONCOAL. Gas Voyage Charter Party to be used for Liquid Gas except LNG. Adopted by the Documentary Committee of the Chamber of Shipping of the United Kingdom. Code name: GASVOY (Box Layout). The Baltic and International Maritime Conference Standard Ore Charter Party. Adopted by the Documentary Committee of the General Council of British Shipping, London and The Federation of National Associations of Ship Brokers and Agents (FONASBA), London. Code name: OREVOY. The Baltic and International Maritime Conference Uniform Time Charter Party for Vessels Carrying Chemicals in Bulk. Adopted by the Documentary Committee of INTERTANKO, Oslo and the Documentary Committee of the General Council of British Shipping, London. Code name: BIMCHEMTIME. Uniform Time Charter Party for Offshore Service Vessels. Adopted by International Support Vessel Owner’s Association (ISOA), London. Code name: SUPPLYTIME 89. BIMCO Time Charter Party for Offshore Service Vessels. Adopted by International Support Vessel Owner’s Association (ISOA), London. Code name: SUPPLYTIME 2005. Continent Grain Charterparty. Adopted Paris1957 du Syndicat National du Commerce Extérieur des Céréales. Amended 1960, 1974, 1990 and 2000in agreement with Comité Central des Armateurs de France, in corporation with the Chambre Arbitrale Maritime de Paris and the French Chartering and S. & P. Brokers’ Association. Code name: SYNACOMEX 2000.
"Recommended". When there has been no proper group or groups of charterers with whom to negotiate a particular charter, for instance, the "Gencon" Charter, it is issued as a "Recommended" charter. The same is the case if the parties with whom a certain charter has been negotiated will not be able to bind their members to use the charter as a clean document. This is the position, for instance for the "Norgrain" Charter and the "Nuvoy" Charter. Whereas BIMCO naturally wishes the printed text of a "Recommended" charter to be followed by charterers and Ship Owners, there is no compulsion in this respect.
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The charter party is recommended without any obligation of the members. With a "Recommended" charter party the printed text may be altered or deleted. Examples of Recommended charter parties: – – – –
– –
– –
The Americanized Welsh Coal Charter. Recommended by The Baltic and International Maritime Council (BIMCO), The Federation of National Associations of Ship Brokers and Agents (FONASBA). Code name: AMWELSH 93. North American Fertilizer Charter Party 1978/88. Recommended by The Documentary Council of the Baltic and International Maritime Council (BIMCO), Copenhagen. Code name: FERTIVOY 88. Recommended. The Baltic and International Maritime Council Uniform General Charter (as revised 1922,1976 and 1994) – (To be used for trades for which no specially approved form is in force). Code name: GENCON. Universal Voyage Charter Party 1984. (Revised Voyage Charter Party 1964). Recommended by the Documentary Council of the Baltic and International Maritime Conference, Copenhagen and the Documentary Committee of the General Council of British Shipping, London. Code name: NUVOY-84. Australian Wheat Charter 1990. Recommended by The Documentary Committee of the Baltic and International Maritime Council (BIMCO), Copenhagen. Code name: AUSTWHEAT 1990 (amended 1991). North American Grain Charterparty 1973. Recommended by The Baltic and International Maritime Council (BIMCO) and The Federation of National Associations of Ship Brokers and Agents (FONASBA). Code name: NORGRAIN 89 (Amended May 1989. Time Charter. New York Produce Exchange Form. Recommended by The Baltic and International Maritime Council (BIMCO) and The Federation of National Associations of Ship Brokers and Agents (FONASBA). Code name: NYPE 93. Hydrocharter Voyage Charter Party (amended 1975 and 1997). Recommended by The Baltic and International Maritime Council (BIMCO), Copenhagen. Code name: HYDROCHARTER.
"Approved". This is the expression used for charters - whether "Agreed", "Adopted" or "Recommended". Examples of Approved charter parties: – –
United Nations World Food Programme Voyage Charter Party. Approved by The Documentary Committee of the Baltic and International Maritime Council (BIMCO), Copenhagen. Code name:WORLDFOOD 99. Continent Grain Charterparty. Approved by The Documentary Committee of the Baltic and International Maritime Council (BIMCO). Code name: SYNACOMEX 2000.
"Issued". A form of charterparty for the establishment of which it might be said that BIMCO is responsible, is referred to as "issued" by BIMCO. "Copyright". In several charterparties printed during recent years it has been shown that the copyright is held by "X", usually the party which has issued the document. This has been done in order to discourage sundry parties from printing copies without
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having proper authority and possibly in such copies deviating from the "official" wording. * (From 1975: the General Council of British Shipping). So-called private charter parties are used in traffics for which the volume of transport is relatively limited. It is desirable that the wording of charter parties, which do not belong to the standard charter parties are closely examined before proceeding to their acceptance, so that no misunderstanding would arise with respect to the correct interpretation of less clearly drawn up clauses. The use of standard charter parties is usually made compulsory by the P&I Associations to restrict the chance of disagreements, resulting from different interpretations of unclear clauses to minimum. Below, the list of the main recommended charter parties is given, with their code name and the organization which publishes them. VOYAGE FORMS GENERAL PURPOSE Title
Date
Codename
Publisher
Cruise Voyage
1998
CRUISEVOY
BIMCO
Uniform General (Box Layout)
As revised 1922 1976, 1994
GENCON
BIMCO
General
1982
MULTIFORM
FONASBA
Universal
1984
NUVOY-84
Polish Chamber of Foreign Trade
Scandinavian Voyage
1956
SCANCON
BIMCO
World Food Programme
1999
WORLD-FOOD 99
UN Worldfood
Approved Baltimore Berth Grain C/P Steamer
1913 (adapted 1971)
BALTIMORE FORM C
North American Grain
1973
NORGRAIN
ASBA
Voyage
GRAIN
& 1989
Grain voyage
2003)
GRAINVOY
BIMCO
Continent Grain
2000
SYNACO-MEX 2000
Syndicat National du Commerce Extérieur des Céréales
Australian Wheat
1991
AUSTWHEAT
Australian Wheat
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Board Australian Barley
1975 (revised 1980)
AUSBAR
Australian Barley Board
River Plate
1914
CENTROCON
U.K. Chamber of Shipping
Fertilisers Charter
1942 (amended 1950)
FERTICON
U.K. Chamber of Shipping
North American Fertilisers
1988
FERTIVOY
Canpotex Shipping Service Vancouver
Hydrocharter
1997
HYDRO-CHARTER
BIMCO
Coal Charter party
1983
NIPPON-COAL
Japan Shipping Exchange
Americanised Welsh Coal
1993
AMWELSH
ASBA
Coal Voyage Charter
1997
POLCOAL-VOY
BIMCO
Standard Coal and Ore
2003
COAL-OREVOY
BIMCO
Standard Coal and Ore
2003
OREVOY
BIMCO
NIPPONORE
Japan Shipping. Exchange
FERTILIZERS
COAL
ORE
Iron Ore
WOOD Baltic Wood
1997
NUBALT-WOOD
U.K. Chamber of Shipping
C/P for logs
1991
BEIZAI
Japan Shipping Exchange
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CRUDE OIL & PRODUCTS Tanker Voyage C/P
1976
INTERTANKVOY
Int. Ass. of Independent Tanker Owners, Oslo
Tanker Voyage C/P
1984
ASBA II
ASBA
Voyage C/P
1983
BEEPEEVOY 2
BP Tanker Co., London
Voyage C/P
1980
SHELLVOY 4
Shell Int. Petroleum, London
1972
GASVOY
BIMCO
BIMCHEM-VOY
BIMCO
GAS Gas voyage (for LPG)
CHEMICALS Standard Voyage C/P for the Transportation of Chemicals in Tank Vessels
TIME FORMS DRY CARGO Uniform Time-charter
1939 (Revised 2001)
BALTIME 1939
BIMCO
Uniform Time-charter for Container Vessels
1990
BOXTIME
BIMCO
Uniform Time-charter
1968
LINERTIME
BIMCO
General Time Charter
1999
GENTIME
BIMCO
New York Produce Exchange T/C
1993
NYPE 93
ASBA
New York Produce Exchange T/C
1981
ASBATIME
ASBA
Uniform Time-charterparty for Offshore Service Vessels
1989
SUPPLYTIME 89
BIMCO
Uniform Time-charterparty for Offshore Service Vessels
2005
SUPPLYTIME 2005
BIMCO
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TANKER Chemicals in Bulk
1984
BIMCHEM-TIME
Intertanko
Tanker Time C/P
1980
INTERTANK-TIME
Int. Ass. of Independent Tanker Owners, Oslo
Time C/P
1984
SHELLTIME
Shell Int. Petroleum, London
ASBATANK-TIME
ASBA
2001
BPTIME3
BP Shipping Ltd.
1974
BARACON A
BIMCO
Tanker Time C/P BPTIME 3 Time C/P
BAREBOAT Standard Bareboat Charter
2.2.1 Parts of a Charter Party As explained in the paragraph Standard Forms, there are two important types of official charter parties, namely. The "Agreed" and the "Recommended" charter parties. The printed text of an "Agreed" charter party cannot be altered whereas the printed text of the "Recommended" charter party can be altered to adapt it to the specific requirements of the negotiating parties (e.g. the Gencon charter party). In principle, Charter parties have two parts: 1. the printed text; 2. the additional clauses (generally typed). The printed text contains a number of clauses with or without blank spaces which must be filled in by the contracting parties (e.g. the name of the ship, cargo to be loaded, the freight, etc.). Those printed clauses form the terms and conditions of the contract and frequently they must be completed, changed or even deleted (except in case of Agreed charter parties) to reflect the correct agreement of the parties (e.g. the laydays, the demurrage, the brokerage, etc.). A number of additional clauses, either written or typed, which are called "riders" or "side clauses" are generally added to the filled in and adapted printed text . Those additional clauses (riders, side clauses) are generally typical of a certain traffic, and over rule the printed clauses, also sometimes called main clauses. An "addendum" or "side letter" is frequently enclosed with the charter party, containing confidential clauses which one does not wish to divulge to certain employees of one of the contracting parties. This is quite prevalent with regard to the freight or hire which, in that case, is entered in the printed text of the charter party with the words "as agreed. For the real amount the side letter must be consulted. Port agents and other persons who are involved in the chartering, are therefore not
39
acquainted with the freight or hire and must only know the content of the printed charter party and the additional clauses to carry out their task as intermediary to one's satisfaction.. Usually, the number of additional clauses is given at the end of the printed text. For this, standard sentences can be used in box 26, Additional clauses covering special provisions, if agreed (GENCON charter as revised 1922, 1976 and 1994, box 26) such as: Additional clauses 18-35, as per attached rider, are deemed to be fully incorporated in this charter party. (Worked out GENCON charter party as revised 1922 and 1976, box 21.) If there are addendums or side letters, then they must be numbered, e.g. Addendum no. 1, 2, etc. In chartering, it is customary not to start a charter party from zero but to base the negotiations on previously fixed charter parties by adapting existing clauses (main or additional clauses) to the new situation. Generally this is very laboursaving and efficient and it has the advantage that certain important elements are not overlooked. In case of sublet, it is possible that the sub-charterer is obliged to conclude the new charter party under the same terms and conditions as the head-charter party. In that case he must use identical clauses called back-to-back clauses as in the head charter party. In case of a sublet, the first charterer (he who concluded the contract of affreightment with the owner) remains in every way responsible toward the owner and therefore, the sub-charterer does not take any responsibility towards the owner for the implementation of the charter party. 2.2.2 Drawing up a Charter Party Charter parties come in two different forms: a. in an older form or traditional form; b. in a new form, in boxes, called the "box layout". In the older charter parties the clauses succeed each other in the form of an unbroken text with the necessary blank spaces which must be filled in by the contracting parties. The AMWELSH 93 shows such a charter party (Figure 2.1). More and more the so-called box arrangement or box layout is used (see the GENCON) (Figure 2.2). This charter party has two parts: part I is composed of a number of boxes that must be filled in by the contracting parties (e.g. the name of the ship, the characteristics of the ship, the port of loading, the discharging port, etc.). Part II gives all the printed clauses which can be adapted if necessary. As said before, a number of additional clauses can be added and eventually also addenda or a "side letter". A voyage charter party GENCON in "box layout" and a typical time charter party BALTIME will be discussed in detail. The charter party is usually drawn up by the Shipbroker or by the chartering broker. He must do this with the greatest care by filling in the blank spaces, by amending the
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THIS CHARTER PARTY, made and concluded in this day of
19
Between
1 2 3 4
Charterers of the city of
5 6 7 8 9 10 11 12 13 14
1.
15
Owners of of classed at
of
the
(flag) Vessel built (year) at (where) tons of 1000 kilos total deadweight on summer freeboard, inclusive of bunkers, in and registered under No The Vessel's length overall is and beam is The Vessel's fully laden draft on summer now and ,
freeboard is
Loading Port(s)/Discharging Port(s)
That the said Vessel being tight, staunch and strong, and in every way fit for the voyage, shall, with all convenient speed, proceed to and there load, always afloat, and in the customary manner from the Charterers, in such safe berth as they shall direct, a full and complete cargo of coal tons of 2240 lbs/1000 kilos* % more or less in the Owners' option; and being so loaded, shall therefrom proceed, with all convenient speed, to or so near thereunto as she can safely get, and there deliver her cargo, as ordered by the Charterers, where she can safely deliver it, always afloat, on having been paid freight at the rate of US $ per ton of 2240 lbs/1000 kilos* on bill of lading quantity.
16 17 18 19 20 21 22 23 24 25
*) Delete as appropriate
26
2.
Freight Payment
27
The
FREIGHT
shall
be
paid
in
28 29 30
AMWELSH 93 Page 1
Figure 2.1 - Voyage charterparty Amwelsh 93
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1. Shipbroker
RECOMMENDED THE BALTIC AND INTERNATIONAL MARITIME COUNCIL UNIFORM GENERAL CHARTER (AS REVISED 1922, 1976 and 1994) (To be used for trades for which no specially approved form is in force) CODE NAME: "GENCON"
Part I 2. Place and date 3. Owners/Place of business (Cl. 1)
4. Charterers/Place of business (Cl. 1)
5. Vessel's name (Cl. 1)
6. GT/NT (Cl. 1)
7. DWT all told on summer load line in metric tons (abt.) (Cl. 1)
8. Present position (Cl. 1)
9. Expected ready to load (abt.) (Cl. 1) 10. Loading port or place (Cl. 1)
11. Discharging port or place (Cl. 1)
12. Cargo (also state quantity and margin in Owners' option, if agreed; if full and complete cargo not agreed state "part cargo") (Cl. 1)
13. Freight rate (also state whether freight prepaid or payable on delivery) (Cl. 4)
14. Freight payment (state currency and method of payment; also beneficiary and bank account) (Cl. 4)
15. State if vessel's cargo handling gear shall not be used (Cl. 5)
16. Laytime (if separate laytime for load. and disch. is agreed, fill in a) and b). If total laytime for load. and disch., fill in c) only) (Cl. 6)
17. Shippers/Place of business (Cl. 6)
a) Laytime for loading
18. Agents (loading) (Cl. 6)
b) Laytime for discharging
19. Agents (discharging) (Cl. 6)
c) Total laytime for loading and discharging
20. Demurrage rate and manner payable (loading and discharging) (Cl. 7)
21. Cancelling date (Cl. 9) 22. General Average to be adjusted at (Cl. 12)
23. Freight Tax (state if for the Owners' account) (Cl. 13 (c))
24. Brokerage commission and to whom payable (Cl. 15)
25. Law and Arbitration (state 19 (a), 19 (b) or 19 (c) of Cl. 19; if 19 (c) agreed also state Place of Arbitration) (if not filled in 19 (a) shall apply) (Cl. 19)
(a) State maximum amount for small claims/shortened arbitration (Cl. 19)
26. Additional clauses covering special provisions, if agreed
It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter Party which shall include Part I as well as Part II. In the event of a conflict of conditions, the provisions of Part I shall prevail over those of Part II to the extent of such conflict. Signature (Owners)
Signature (Charterers)
Printed by The BIMCO Charter Party Editor
Figure 2.2 - GENCON charterparty Box-Layout
42 a
printed text where necessary and by adding the necessary additional clauses and addenda to the printed text. Nothing may be crossed out, added or changed to the charter party without the preceding authorization of the other party (the freight broker or the Shipbroker if the freight broker establishes the charter party). If certain clauses have been added to the charter party (e.g. the New Jason Clause, the Both to Blame Collision Clause, e.a.) it is not enough to simply refer to those clauses but the complete text of such clauses must be incorporated in the charter party so that everyone, who is involved in the chartering, can become acquainted with them. Drawing up a charter party is in fact a labour-intensive task whereby, frequently, oral agreements must be confirmed, checked, possibly improved via telex or any other means of communication and the going back and forth of sometimes endless messages can often take much time so that the core of the matter is frequently already settled before the parties concerned, which find themselves sometimes thousands of kilometres apart have a chance to read the final charter party, not to mention to sign it. Several times we referred to the atmosphere of trust in which parties must act and it goes without saying that dishonest persons will immediately be put out of business. The introduction of fax and e-mail have made things a lot easier. We insist once more to the fact that when the broker acts in the name of his principal his signature or name must followed by the words "as agent (or broker) ........ only". If several original charter parties must be delivered (e.g. in case of a documentary credit) then each original must bear the mention "First Original", "Second Original" etc.
