pi_circular Insurance & claims Skuld
It is common in the chartering business for a vessel to have three or more parties in the charterparty chain. A relatively simple (and usual) pattern is that the headowner charters the vessel to a time charterer, who then sub-charters vessel to a voyage charterer. Longer charterparty chains are often-seen as well. The chain may include headowner – bareboat charterer – long-term time charterer – medium-term time charterer – time-charter-trip charterer – voyage charterer. Some charterers in the middle may be under a misconception that, as a party in the middle in the chain, they may simply pass claims up or down the line and their exposure is minimal. The purpose of this article is to highlight the exposures of charterers in the middle and recommend precautions which charterers should exercise to avoid or minimise their risks. Essential clauses Whether the charterparty in question is a time charter or voyage charter, it is important for charterers in the middle to check the terms carefully to ensure that the essential provisions concerning the following are back-to-back up and down the chain: governing law arbitration clause Clause Paramount war risks areas safe port warranty general average clause cargo liquefaction clause Both-to-Blame Collision Clause New Jason Clause Some charterers assume that all standard charterparty forms contain the necessary protective clauses, but such assumption is dangerous. For example, Gencon 94 does not contain any clause paramount. Charterers in the middle may put themselves in a dire position if there is a clause paramount in the charter up the chain but none in the subcharter. In the absence of a clause paramount, the owners are deemed to have given an absolute warranty of seaworthiness, as opposed to an obligation to exercise due diligence to make the ship seaworthy. Further, the one-year time limit under Hague-Visby Rules will not be applicable. Therefore, where there is a clause paramount under the head charter but not the s
Charterers in the middle – mind the gap
Skuld
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