PRINCIPAL AREAS OF CHARTERERS LIABILITY
Its not uncommon for most of the charterers -even the experienced ones- to have a vague understanding of their risk -liabilities-exposure towards head ship owners,disponent owners and other third parties under a CP or a Bill of Lading.
This message is writen with a purpose to offer you -the charterer- a clear 'picture' of your liabilities and risks you are exposed to and the necessity for a Charterers liabilities insurance P&I cover.
Safe port or Safe Berth Warranties
Both voyage and time charterers may assume the responsibility of nominating a safe port or berth at which cargo is to be loaded or discharged. The question of whether a port or berth is unsafe from a legal point of view in a particular case is usually hotly contested between owner and charterer. However, if the chartered vessel suffers physical damage, delay or detention or extraordinary expense as a result of such unsafety the charterer will often be liable for such losses and should financially reimburse the owners.
Usually the liability arises from the physical characteristics of the port, such as insufficient draught at the berth, or exposure of the berth to dangerous weather conditions, but also losses caused by the political situation at a port, such as an outbreak of war may also justify a claim against the charterer for breach of the warranty of safety.
Damage to the Vessel during Loading
Charter parties will often fix the charterer with liability for any damage caused to the vessel’s cranes, hatches, tank tops, etc., during loading operations, unless such damage can be categorized as for wear and tear.
As well as liability for repair costs the charterer may be faced with claims from the owner for losses arising from the detention of the vessel while repairs are carried out.
Bunker Quality
While under the terms of a voyage charter party the provision of bunkers remains the owner’s responsibility, time charterers assume responsibility for provision of bunkers for the time charter voyage or voyages. This responsibility may be discharged by the purchase of bunkers already on board the vessel at the commencement of a voyage originally purchased by the owner.
On the other hand, a time charterer may himself contract with bunker suppliers for the provision of bunkers required. If he does so, he will be assuming a measure of responsibility to the owner for the quality of bunkers supplied. If the bunkers are off specification, and cause damage to the vessel’s machinery, a charterer may find himself paying for the cost of repairs and detention thus incurred.
Stowage of Cargo
Under most charter parties, charterers will assume some responsibility for the loading and stowing of cargo. Negligent stowage of cargo may result in damage to, or even the total loss of, the chartered vessel, through the shifting of cargo or a collapse of stow. The resulting costs and expenses may be for the charterer’s account.
Dangerous Cargo
As the charterer is responsible for furnishing the cargo for the voyage, so he may have a responsibility for the condition of the cargo on loading. If the vessel is lost or damaged because of the dangerous condition of the cargo a charterer may find himself responsible for losses flowing from the casualty. Recent cases of spontaneous combustion of coal cargo, resulting on the total loss of chartered tonnage for which the charterer has been held liable, have received worldwide publicity.
General Average and Salvage
Unless the charterer can show that a general average incident arises from a breach by the owner of his obligation under the charter party, he may have a liability to the owner for general average contributions in relation to the value of any bunkers belonging to the time charterer that are saved and in relation to freight at risk.
Indemnity Claims by the Owner
Breaches of charter party obligations such as those indicated above may not only expose the charterer to claims by the owner himself for, perhaps, damage to his vessel, but also to indemnity claims by an owner who has to respond to a claim by a third party, when the claim arose out of a breach by the charterer. Thus, the loss of a vessel through the break by a charterer of his obligations to nominate a safe port might expose an owner to claims for a wide range of third party liabilities which are traditionally covered by the owner’s P & I Club. These might include claims for loss of or damage to cargo, claims for death or personal injury, pollution claims or, perhaps, claims for removal of wreck in the case of a total loss. Not only, therefore, may the charterer be faced with claims for actual damage to the vessel if the port is unsafe, but also to claims by the owner for indemnity against all the third party claims to which the owner has had to respond as a consequence.
Liability to Third Parties
In addition to the charterer’s exposure to claims by the owner under the terms of a charter party, as outlined above, there may also be an exposure to contractual or tortious claims by third parties.
Claims under Bills of Lading
In many cases a charterer will issue bills of lading in his own name, and assume responsibility under the bill of lading contract to cargo interests, either alone or jointly and severally with the owner of the vessel. Even in cases where an owner issues a bill of lading the charterer may, in some jurisdiction be held liable for loss or damage to cargo. As such, although a charterer’s exposure to a bill of lading claim may be limited by his rights of indemnity against the owner, depending on the terms of the charter party, he nevertheless has a requirement for insurance cover for cargo claims which is very similar to that of the owner himself.
Indemnities
The charterer being the party concerned with the cargo to be carried either on his own behalf or under contract to cargo owners will usually be expected by the owner to provide any indemnities required by port authorities or berth owners for the use of port facilities or to stevedores engaged by the charterers to load or discharge the cargo. It is often the case that there will be no right of recourse against the owner for liabilities that the charterer may sustain under these indemnities even though claims may arise as a result of acts of negligence by the master or crew of the chartered ship.
Claims in Tort
Claims by third parties who suffer loss as a result of negligence by the charterer whether or not such negligence exposes him to claims by the owner for breaches of his charter party obligation, will expose the charterer to liability in accordance with the normal principles of the law of negligence. If anything, the categories of a charterer’s liability cover a wider range than those of an owner. While his exposure may be reduced by charter party clauses giving him rights of indemnity from the owner or defenses against claims brought by the owner against him, the value of rights of indemnity of course depends on the capacity of an owner to respond. Even if a charterer appears to have a clear right of complete indemnity from the owner for a third party claim for example for loss of cargo, he may find himself completely unprotected if the owner is, financially unsound.
Therefore, even full rights of indemnity under a charter party for particular exposure are not an indication that a charterer does not require insurance cover for that risk; they are merely an indication of the probable level of exposure.
You may have a complete and firm offer for your liabilities insurance cover either by communication with MARASCO MARINE at info@marasco-marine.com or by filling our Charterer's Liabilities P&I proposal form at
Sincerely yours
MARASCO MARINE,LTD.
Anastasios Maraslis
President/Insurance Broker since 1983.
S.T.I.C BUILDING
3, Voudouri Str., Piraeus, 18537
GREECE
