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How much flexibility is there in a voyage charter? – An eclectic cornucopia!

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Chapter 8

How much flexibility is there in a voyage charter? – An eclectic cornucopia!

Professor Richard Williams*

8.1 Introduction

This article continues a theme that was initially promulgated by Professor Rhidian Thomas in Chapter 1 of ‘The Evolving Flexibility of Voyage Charterparties’ that followed the Fourth International Colloquium organised by the Institute of International Shipping and Commercial Law at Swansea University in 2008.1

The nature of a voyage charter is very different from that of a time charter. In a voyage charter the focus is on the carriage of a designated cargo or cargoes from a port or ports of loading to a port or ports of discharge whereas, in a time charter, the focus is not on any particular cargoes or voyages but on the time for which the charterers are allowed to have the use of the ship and crew. Consequently, a time charter has by its very nature a substantial degree of flexibility ingrained in it since, in order to achieve its commercial purposes, a time charterer is required to give a continuous series of voyage instructions to the ship to perform the tasks required by it from time to time and, provided that the instructions are legitimate, the shipowners have agreed to comply with such orders. In contrast, once the parties have agreed the main terms of the voyage charter relating to the cargoes and voyages, the role that the voyage charterer has in relation to the performance of the charter is far more restricted since, apart from the loading and discharging of the cargo, the shipowner generally has the control over the manner in which the voyages are performed. Therefore, in a voyage charter, the rights and duties of the shipowner and charterer are more rigid and, to some degree, more ossified.

However, this element of rigidity may be unduly restrictive of the interests of the parties to the voyage charter. Contracts need to be flexible in order to allow for various contingencies. Furthermore, life being life, things have a habit of changing, often without the fault of either party, thereby requiring modification of even the best laid plans for, otherwise, the charter may be deemed to be frustrated.

The shipowner will need to protect his ship, the crew and his commercial interests should the risks that he contemplated when agreeing to the voyage charter increase because of political or market developments. The voyage charterer will in many instances be an international seller or buyer or supplier of goods and the voyage charter will, insofar as he is concerned, merely be the transportation element of the underlying international sale or supply contract. Therefore, the trader/voyage charterer will wish to ensure insofar as possible that the terms of the voyage charter will reflect this involvement and ensure performance of the international sale contract according to its terms. Furthermore, the voyage charterer will wish to ensure that he has the flexibility under the voyage charter to cater for any amendments or alterations that may be required to the cargo sale or supply contract.

Since charterparties are not subject to compulsory regulation by any international conventions such as the Hague, Hague-Visby or Hamburg Rules (nor by the Rotterdam Rules should they come into force) the freedom of contract principle means that, despite the predominantly rigid nature of a voyage charter, parties, nevertheless, have scope to introduce a substantial degree of flexibility by the imaginative use of special terms. The Supreme Court has emphasised recently that:

Leaving aside challenges going to the reality of consent, such as those based on fraud, duress or undue influence, the courts do not review the fairness of men’s bargains either at law or in equity.2

Therefore, this article is intended to give some examples of the degree of flexibility which parties have (or can have) under voyage charters.

8.2 The right to re-nominate ports or berths

Professor Thomas commented in some detail in his article on the rights and duties that charterers have to nominate ports or berths out of a range of ports or berths and I do not intend to comment further on the basic rules therein explained other than to reiterate that, once a valid nomination has been made, the charterparty is subsequently to be read as though it had always provided expressly for that location and for no other. Consequently, unless the charter provides otherwise, it is not open to the charterers to subsequently amend their nomination.

This well-established rule has been succinctly summarised as follows:

In the absence of any special provision in a charterparty, the effect of the nomination of a loading or discharging port by the charterer is that the charterparty must thereafter be treated as if the nominated port had originally been written into the charterparty and that the charterer has neither the right nor the obligation to change that nomination.3

This rule often places unacceptable rigidity on the ability of the trader to amend the terms of the charter to implement their commercial interests under the cargo sale contract. For example, the charterers may not wish to send the ship to a port that is congested and thereby have to pay substantial amounts in demurrage, or the charterers’ original sale contract may be terminated after the cargo has been loaded and bills of lading issued and the charterers subsequently re-sell the cargo to another customer who requires delivery of the cargo at another location. In such circumstances, the freedom of contract principle makes it possible for parties to include terms that vary the traditional common law rules. Consequently, it has become common for charters (particularly tanker charters) to include clauses that give charterers the contractual right to re-nominate.

For example, clause 4 (b) of the ASBA II charter provides that:

After loading or discharging port(s) have been nominated, charterers may change such port(s) and/or vary their rotation consistent with Part I and bills of lading, if any, and owner shall issue instructions necessary to give effect to such change.

Some such revised orders clauses are extremely wide in scope. For example, the following clause was considered by the court in the case of The Jasmine B:4

Notwithstanding anything else to the contrary in this charterparty and notwithstanding what loading and/or discharging ports may have been nominated and bills of lading issued, charterer shall have the right to change at any time its nomination of the loading and/or discharging ports in accordance with Part I of the charterparty.

The words in italics emphasise the fact that the charterers have the right to re-nominate loading and/or discharging ports at any time even after the ship has tendered NOR at the previously nominated port and on more than one occasion.

However, if a bill of lading has already been issued and released before the charterers exercise their right to re-nominate, the shipowner may also be the carrier under the bill and will have the duty to the holder of the bill to proceed to deliver the cargo at the port specified in the bill. Bills of lading do not normally include such Revised Orders Clauses. However, it is arguable that bills such as the ASBATANKVOY5 or CONGENBILL6 which purport to incorporate all the terms of the charterparty may do so by virtue of such incorporation clauses, in which case the carrier may not be held to have deviated when acting in accordance with such clauses. However, the precise wording of the charter clauses is important since it may be difficult for the carrier to enforce against ‘receivers’ terms which expressly bind ‘charterers’ under the relevant charter clauses.7

Therefore, the exercise of such a right of re-nomination under the charter may in many cases cause the shipowners as carriers under the bill of lading to commit a deviation under the bill of lading. For example, if, pursuant to a charterparty that contains such a revised orders clause, a bill of lading has been released which obliges the shipowners as carriers to deliver the cargo at port ‘A’, and the charterers subsequently exercise their right to order the vessel to proceed to deliver the cargo at port ‘B’, compliance by the shipowners with such revised orders may mean that they are committing a deviation under the bill of lading by proceeding to port ‘B’. It further follows that the shipowners may prejudice their right to rely on any contractual defences that would otherwise give them protection against claims that may be brought against them under the bills of lading8 and, perhaps even more importantly, prejudice their right to rely on P&I cover in such circumstances.9

Therefore, since the exercise by charterers of such rights may cause the shipowners to prejudice their P&I cover, shipowners will normally be prepared to grant charterers such wide flexible rights only if they are provided with satisfactory alternative security terms. Therefore, many clauses now provide a ‘package’ of rights: they oblige the shipowners to comply with any re-nomination which may be made by the charterers but also provide that the shipowners will be reimbursed for any additional losses or expenses that they may suffer as a result of complying with such orders and that they will be indemnified by the charterers against any liability that they may incur as a result of complying with the charterers’ re-nomination orders.

For example, clause 24.1 of the BPVOY5 charter (Revised Voyage Orders) provides that:

charterers may issue revised Voyage Orders and instruct the Vessel to stop and await orders and/or proceed to an alternative loading or discharging port within the Charter Ranges

Clauses 24.3 and 30.1 then go on to provide the shipowners with protection against the consequences of complying with such revised orders. Clause 24.3 provides that:

  1. a) charterers shall pay all increased costs and charges following compliance with such revised Voyage Orders, in particular: any time awaiting orders shall count as laytime or demurrage;
  2. b) the difference in steaming time, at the Charter Speed, between the vessel’s route if it had gone directly to the revised location and the Vessel’s actual route to that location, shall count as laytime or demurrage. charterers shall also pay owners for the additional bunkers consumed.

Clause 24 itself does not specify whether the revised orders can be given at any time or after bills of lading have been released for the initially required location. However, the definition of ‘Voyage Orders’ in the ‘Interpretation and definitions’ section of the charter provides that:

‘Voyage Orders’ – means any instructions issued by charterers in respect of the Vessel at any time in connection with this Charter, including any amendments, corrections or revisions to such instructions issued by charterers.

(emphasis added)

Consequently, it appears that revised orders can be given even after bills of lading have been issued and such a conclusion is reinforced by the fact that clause 30.1 provides that charterers will indemnify the shipowners against any liability that the shipowners may incur to the holders of such bills for deviation as a result of compliance with the revised orders:

Bills of Lading shall be signed as charterers direct, without prejudice to this Charter. charterers hereby indemnify owners against:

  1. c) claims brought by holders of Bills of Lading against owners alleging deviation or diversion because of any order from charterers under Clauses 24, …

SHELLVOY6 has similar provisions. However, clause 26 (1) has the following underlined wording which should be distinguished from that of clause 24.3 of BPVOY5:

If, after loading and/or discharging ports have been nominated, charterers wish to vary such nominations or their rotation, charterers may give revised orders subject to Part I clause (D) and/or (E), as the case may be. charterers shall reimburse owners at the demurrage rate provided in Part I clause (J) for any deviation or delay which may result therefrom and shall pay at replacement cost for any extra bunkers consumed.

charterers shall not be liable for any other loss or expense which is caused by such variation.

This is an important difference. Clause 24.3 of BPVOY5 provides that any extra time that will be taken as a result of compliance with such revised orders ‘shall count as laytime … or demurrage’ whilst clause 26 (1) of SHELLVOY6 provides that the shipowner will be compensated in such circumstances ‘at the demurrage rate’. The wording of the SHELLVOY6 clause could mislead since the effect of the two formulations is very different. The BPVOY5 clause provides that laytime (or demurrage if the ship is on demurrage at the time that delay occurs) shall run during the period of delay which means that the charterers are entitled to benefit from any charter laytime or demurrage exceptions that interrupt the running of laytime or demurrage. However, the SHELLVOY6 clause provides that a sum that happens to be the same as the demurrage rate is immediately payable for any delay that results from the giving of the revised orders despite the fact that the charterers may not yet have used up all their allowed laytime at that time, which sum is then payable throughout the period of delay without the benefit of any laytime or demurrage provisions that are otherwise intended to interrupt the running of laytime or demurrage.10 The distinction between the two types of clause (albeit not in the context of these two charters) has recently been recognised by the Singapore Court of Appeal in the case of Freight Connect v Paragon.11

The degree to which any restriction should be placed on the scope of such revised orders clauses depends to a large extent on the wording of the clause. For example, it has been mooted whether the giving of a notice of readiness to load or discharge by the ship on arrival at a port precludes the subsequent exercise by charterers of any right to nominate a different port or berth. In Batis Maritime Corp v Petroleos Mediterraneo SA (The Batis)12 arbitrators found as a fact that the giving of NOR had this effect and in the subsequent case of The Jasmine B, Judge Diamond was not obliged to decide the issue but said obiter:

I can see possible reasons for adopting the test that, when a notice of readiness has been given at a port, that port has become an effective port of loading or discharge. Once a vessel has arrived at a port, is ready to load or discharge and has given a notice of readiness, the owner has placed his vessel at the disposal of the charterer for loading or discharge.13

However, it is submitted that this cannot always be the case. If the terms of the charter provide expressly that the nomination of an alternative berth or port can or cannot be made after such NOR has been given then the position is clear.14 Similarly, if charterers have accepted the NOR, it is difficult to see any justification for an argument that they have not accepted that berth or port as being the contractually agreed location. However, if a NOR is merely given by the shipowner but is not yet accepted by the charterers by word or conduct, it is difficult to see how it can be said that the charterers have, per se, precluded their right of re-nomination. It is submitted that the correct rationale in such circumstances is that the charterers retain their right to re-nominate an alternative port but that the shipowners may have a claim against the charterers for damages for any additional losses or expenses that they may have suffered as a result of the charterers’ failure to exercise their right of re-nomination within a reasonable time.15

8.3 Payment of freight

It is up to the parties to decide the basis upon which freight is to be charged. The basis of calculation is usually determined by the nature of the cargo and can be calculated in accordance with quantity, weight or volume but may also be determined with reference to published scales16 or even as a lump sum. However, since there appears to be no clear authority that has determined in the absence of express agreement whether freight should be based on the intaken or delivered quantity it is important that the parties should give express thought to this issue since some cargoes such as crude oil or gases lose weight naturally during the course of the voyage.17

Traditionally, the shipowner is obliged, in order to earn the freight, to bear not only the voyage costs but also any port and stevedoring costs that may be incurred in performance of the charter. However, it frequently happens that the charterers have ‘better connections’ or special influence at the ports of loading and/or discharge with the result that they can obtain better stevedoring rates than the owners could secure if they were to appoint the stevedores. In such circumstances, the parties will often agree to vary the traditional basis for the charging of freight and may agree, for example, a FIOS (‘free in and out stowed’) rate whereby in exchange for paying a lower freight, the charterers agree to appoint and pay stevedores to load, stow and discharge the vessel at their cost. The benefit and legitimacy of such arrangements has been repeatedly recognised and approved by the courts of England and Wales18 and the arrangement has now secured the approval of the drafters of the Rotterdam Rules.19

8.3.1 When is freight earned?

At common law, no freight is earned unless and until the goods are delivered at the port of discharge. The principle is of long-standing duration and was explained by Willes J in Dakin v Oxley in 1864 as follows:

the true test of the right to freight is the question whether the service in respect of which the freight was contracted to be paid has been substantially performed; and according to the law of England, as a rule, freight is earned by the carriage and arrival of the goods ready to be delivered to the merchant, though they may be in a damaged state when they arrive. If the shipowner fails to carry the goods for the merchant to the destined port, the freight is not earned.20

More recently, Lord Donaldson MR stated that:

Freight is the consideration payable for the carriage of goods to and their delivery at the destination.21

Since the traditional consideration for the payment of freight is the carriage and delivery of the goods, the risk of earning freight lies on the shipowner until he successfully completes the voyage. Therefore, in the event of salvage during the course of the voyage, that proportion of any salvage award that is payable in respect of unearned freight must be paid by the shipowner.

8.3.2 Advance freight

However, the traditional rule means, in effect, that the shipowners are obliged to incur the cost and risk of performing the whole voyage before they can earn a penny of freight. Such a result is commercially unattractive and shipowners would normally prefer to receive some funds in advance to enable them to defray the expenses that they must incur in order to perform the voyage.22 Therefore, the traditional rule is often modified and it is now common (particularly in dry cargo voyage charters) to see clauses which provide for payment to be made on or within a specified number of days after loading or release of bills of lading. However, if the traditional rule that freight is not earned until delivery at the discharge port is not amended but the charter states, nevertheless, that freight is payable before that time, there would appear to be a potential conflict if the vessel does not in fact deliver the cargo at the relevant discharge port. It has been debated in such circumstances whether any payment that has been made in advance is irrecoverable or merely a loan that must be repaid to the charterers if the vessel does not in fact deliver the cargo at the relevant discharge port. It appears that if payment has in fact been made in advance in such circumstances it is irrecoverable even if the ship does not deliver the cargo at the relevant discharge port. The House of Lords so held in Allinson v Bristol Marine Ins Co, in which case Lord Selborne referred to:

The peculiar rule of English Mercantile Law, that an advance on account of freight to be earned, made at the commencement of the voyage, is, in the absence of any stipulation to the contrary, an irrevocable payment at the risk of the shipper of the goods, and not a loan repayable by the borrower if freight to that amount be not earned.23

However, the position may be different if the freight has not yet been paid within the stipulated period and an incident occurs which makes it impossible for the ship to deliver the cargo thereafter at the relevant discharge port. In such circumstances, it is important to see whether the charter provides that freight is merely payable within the stipulated period or that freight is earned on shipment and is payable within the stipulated period. In the former situation, the rule stated by Lord Selborne does not apply since payment has not been made, in which case, it would appear that the shipowner cannot demand payment since he will not have satisfied the primary pre-condition for payment i.e. the delivery of the cargo. However, if the charter provides that freight is earned on shipment then the shipowner will have provided the consideration that is necessary to earn the freight and has the right to claim it even if the ship does not subsequently deliver the cargo at the relevant discharge port.24

Therefore, there is likely to be an important difference between clauses which provide for example, that:

freight deemed earned on shipment, ship or cargo lost or not lost, 90% payable within three days of signing and releasing bills of lading and the balance on true and complete delivery of the cargo.

and clauses which provide merely that:

90% of freight is payable within three days of signing and releasing bills of lading and the balance on true and complete delivery of the cargo.

Under the first clause 90% of the freight is earned on shipment rather than on delivery at the discharge port with the result that the risk of loss of that 90% of freight is passed from the owner to the charterer.25 This has the following results:

  1. (i)   if the ship is lost before the 90% of freight is paid, the charterer is still obliged to pay the 90% of freight on the agreed date;
  2. (ii)  if the 90% of freight has been paid and the ship is subsequently lost through no fault of the owner, the charter may be considered as frustrated but monies which have accrued due and are payable before the frustrating event are not recoverable;26
  3. (iii)  if the ship is lost as a result of a breach of contract on the part of the owner, the charterer is still obliged to pay the freight27 but may be able to claim the freight which has been paid as part of his general damages. However, such claims may be defeated if there is an exception clause upon which the owner can rely28 or they may be reduced by limitation provisions.

However, if the clause provides merely that ‘90% of freight is payable within three days of signing and releasing bills of lading and the balance on true and complete delivery of the cargo’ without specifying that the freight has been earned on shipment, it is more likely if delivery is never made at the discharge port that the shipowner is not entitled to demand payment if payment has not been made within the stipulated period and must repay any freight that has actually been paid within the stipulated period.29

8.3.3 The rule against set-off

At common law it is not permissible to set off claims for damages for breach of contract against the shipowners’ claim for freight. The freight must be paid in full and the charterers must bring their cross-claim in separate proceedings.30 This is so even though the charterers’ claim is for a liquidated sum which does not need to be proved or quantified by the court.31 The rule applies generally to all types of claim, e.g. cargo claims,32 claims for failure to proceed with reasonable dispatch,33 or for a failure to make available the full extent of the ship’s cargo holds,34 or for a failure to complete the voyage.35

The rule has been criticised as being anachronistic and unjustifiable in a modern trading environment but is clearly of great advantage to ship owners. It means that if charterers fail to pay freight when due, shipowners may apply to the court or to arbitrators for summary judgement or an interim award.36 The traditional justification for such a rule was that shipowners needed to maximise their cash income in order to enable them to finance the voyages that traditionally had to be undertaken at their cost in order to earn freight that was payable on completion of each voyage.

However, the result of the traditional rule is that any cross-claim which the charterers may have against the shipowners for repayment of the freight as part of their claim for damages will be subject to the same exception, limitation or time limit clauses as all other claims under the charter. Therefore, should a charter be subject to the Hague or Hague-Visby Rules by virtue of a clause paramount and should the charterers not commence proceedings against the shipowners for cargo damage within one year of the delivery of the cargo as required by Article III Rule 6 of the Rules, the shipowners should normally be entitled to sue for immediate payment of the freight whilst the charterers’ cross-claim for cargo damage may be time-barred.37

8.3.4 Cargo Retention (or ROB) Clauses

It is obvious that the traditional rule also affects the financial resources of charterers who may feel aggrieved that they have to satisfy their financial responsibilities to shipowners notwithstanding the fact that the shipowners are not required at the same time to satisfy their financial responsibilities to charterers. It is true that charterers have the comfort of knowing that since shipowners are insured by their P&I Club against liabilities that they may incur for cargo damage or loss, their claim is most often secured by the Club. However, this does not provide charterers with an immediate remedy and does not avoid the risks that are inherent in litigation. Therefore, it has become common in the case of tanker charters to include clauses that expressly allow voyage charterers to deduct from freight the value of any cargo that remains unpumpable or in liquid form on the vessel on completion of discharge.

Such clauses have been in existence for some time. For example, the following clause was considered by the Court of Appeal in the case of Lakeport Navigation Co Panama SA v Anonima Petroli Italiana S.p.A. (The Olympic Brilliance):

If there is a difference of more than 0.5% between bill of lading figures and delivered cargo as ascertained by Customs Authorities at discharge port, charterers have the right to deduct from freight the CIF value of the short delivered cargo. owners have the right to appoint an independent surveyor in order to check the cargo figures in conjunction with Customs Authorities.38

Most of the Oil Majors charter forms now include similar clauses which have become increasingly more complex.39 The rights that are given to charterers depend on the precise wording of the particular clause. However, the following factors are normally relevant:

  1. Unless the clause provides otherwise,40 the deduction from hire is not merely provisional or by way of security for a final award or judgment in due course on the merits of the cargo claim. The deduction is final and there is no need for the charterers to prove in due course that the shortage has been caused by any breach of contract on the part of the owners. Indeed, even if the owners prove that there is no breach of contract on their part, they cannot claim back the amount deducted. By agreeing to the clause, the owners have agreed to such final deduction once and for all.41
  2. Many clauses provide that the relevant facts are to be determined by an independent inspector whose judgment is final.42 Provided that the inspector acts in a bona fide manner and uses the inspection method agreed by the parties in the charter, his finding is binding and conclusive even if he has been negligent in reaching that conclusion.43
  3. Since the deduction that is made under the Cargo Retention (or ROB) clause is by its nature not a cargo claim but an agreed diminution of the freight that is payable under the charter there is:

    1. a) nothing to prevent third party receivers under a bill of lading from putting forward and recovering damages for a separate and independent shortage claim under the bill if they can prove that the shortage has indeed been caused by a breach of contract on the part of the carrier. Therefore, there is a danger that although there is no double recovery for the same claim in the strict sense since the claims that are made under the charter and under the bills are different in nature, the shipowners may in fact suffer twice for the same incident.44
    2. b) a danger that any sums so deducted by charterers under the Cargo Retention (or ROB) Clause cannot be recovered by the shipowners from their P&I club on the basis that the club does not provide cover for loss of freight.

8.4 Regulating the speed of the vessel

The traditional rule of the common law is that a vessel should proceed to the load and/or discharging port with reasonable dispatch failing which the shipowner may be liable in damages for any losses that may be suffered by the charterers45 and may in addition have committed a deviation if the delay occurs on the laden voyage.46 However, this traditional rule may not always be in the interests of either party. It may not be in the interests of the charterers if the vessel arrives at the loading port before the cargo is available for loading or if it arrives at the loading or discharging port during a period of congestion since the charterers may consequently, have to pay more demurrage than would otherwise be the case. Similarly, the shipowners may prefer to conserve port costs and, depending on the then current fuel prices, fuel costs by proceeding slower on approach voyages to such ports rather than arriving early and earning demurrage whilst waiting to berth. Consequently, the parties may decide to include clauses such as the BIMCO Virtual Arrival Clause that enables the charterers to direct the owners to regulate the speed of the vessel to ensure arrival at a planned date.47

The BIMCO Virtual Arrival Clause gives the charterers the right to order the vessel to slow down or speed up to ensure arrival at a planned date at either a load port or a discharge port.48 Such clauses provide both parties with a welcome degree of flexibility in the operation of the charter. However, whilst some Virtual Arrival clauses that have been produced by industry organisations enable the parties to share both the time saved and the bunker savings in such circumstances,49 the BIMCO clause merely seems to provide for sharing time saved and does not provide for the sharing of fuel savings since clause (a) provides as follows:

Any extra time used on a sea voyage as a direct consequence of the Vessel adjusting speed pursuant to the charterers’ request shall be compensated by the charterers to the owners at a rate equal to ___% of the demurrage rate (if left blank then fifty per cent (50%) shall apply).50

Furthermore, the BIMCO Virtual Arrival Clause provides that all bills of lading are to incorporate the clause and that the shipowners agree to indemnify the charterers to the extent that they incur liability because the bills do not do so. Paragraph (d) of the clause states that:

The charterers shall ensure that the terms of the bills of lading, waybills or other documents evidencing contracts of carriage issued by or on behalf of the owners provide that compliance by owners with this Clause does not constitute a breach of the contract of carriage. The charterers shall indemnify the owners against all consequences and liabilities that may arise from bills of lading, waybills or other documents evidencing contracts of carriage being issued as presented to the extent that the terms of such bills of lading, waybills or other documents evidencing contracts of carriage impose or result in the imposition of more onerous liabilities upon the owners than those assumed by the owners pursuant to this Clause.

By way of contrast, clause 27 (Virtual Arrival) of BPVOY5 (which applies solely to arrival at the discharge port and not also to the loadport)51 has no provision requiring the clause to be incorporated into any bills of lading that may be issued pursuant to the charter, and it is noteworthy that whilst clause 30 (Bills of Lading) obliges the shipowners to indemnify the charterers against ‘claims brought by holders of Bills of Lading against owners alleging deviation or diversion because of any order from charterers’, such an indemnity is restricted to claims arising in relation to clauses 24 (Revised Voyage Orders), 25 (Interim Ports) and 29 (Vessel/Cargo Inspections/Bunker Surveys) but, significantly, with no reference to claims arising under clause 27.

The Virtual Arrival Clause gives the control to the charterers and should be contrasted with the BIMCO Slow Steaming Clause for Voyage Charterparties which confers a right on the shipowners to be able to reduce the speed of the vessel within certain parameters. However, for the reasons explained above, the shipowners could be in breach of their duty under the bills of lading to prosecute the bill of lading voyage with reasonable dispatch (and might possibly be liable for deviation), if they were to reduce the vessel’s speed pursuant to their agreement with the charterers. Therefore, clause (c) of the BIMCO ‘Slow Steaming Clause for Voyage Charterparties’ provides expressly that:

The charterers shall ensure that the terms of the bills of lading, waybills or other documents evidencing contracts of carriage issued by or on behalf of the owners provide that the exercise by owners of their rights under this Clause does not constitute a breach of the contract of carriage. The charterers shall indemnify the owners against all consequences and liabilities that may arise from bills of lading, waybills or other documents evidencing contracts of carriage being issued as presented to the extent that the terms of such bills of lading, waybills or other documents evidencing contracts of carriage impose or result in the imposition of more onerous liabilities upon the owners than those assumed by the owners pursuant to this Clause.

8.5 Delaying the commencement of loading

The BIMCO Laytime Definitions for Charterparties 2013 define laytime and demurrage as follows:

1. LAYTIME shall mean the period of time agreed between the parties during which the owner will make and keep the Vessel available for loading or discharging without payment additional to the freight. …

30. DEMURRAGE shall mean an agreed amount payable to the owner in respect of delay to the Vessel once the Laytime has expired, for which the owner is not responsible. Demurrage shall not be subject to exceptions which apply to Laytime unless specifically stated in the Charterparty.

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