Charter Party

Total Page:16

File Type:pdf, Size:1020Kb

Charter Party Charter Party By Capt Sarabjit Butalia August 2009 Type of Charter parties CHARTER PARTY Charter Party (Lat. charta partita, a legal paper or instrument, divided, i.e. written in duplicate so that each party retains half), a written, or partly written and partly printed, contract between a shipowner and a merchant, by which a ship is let or hired for the conveyance of goods on a specified voyage, or for a defined period. CHARTER PARTY A vessel might also be chartered to carry passengers on a journey. Also, a written contract between shipowner and charterer whereby a ship is hired; all terms, conditions and exceptions are stated in the contract or incorporated by reference. CHARTER PARTY Charter party is the contract between the owner of a vessel and the charterer for the use of a vessel. The charterer takes over the vessel for either a certain amount of time (a time charter) or for a certain point-to-point voyage (a voyage charter), giving rise to these two main types of charter agreement. There is a subtype of time charter called the demise or bareboat charter. CHARTER PARTY Time charter- In a time charter, the vessel is hired for a specific amount of time. The owner still manages the vessel but the charterer givers orders for the employment of the vessel, and may sub-charter the vessel on a time charter or voyage charter basis. CHARTER PARTY Voyage charter – In a voyage charter, the charterer hires the vessel for a single voyage, and the vessel's owner (or disponent owner) provides the master, crew, bunkers and supplies. Charter Party The major operation under this function is to find continued and suitable employment for the ships to maximise revenue earnings. These operations are therefore primarily concerned with finding suitable cargoes for ships irrespective of whether the ships are owned or are hired. These operations are concerned with evaluating intended voyages to maximise earning so as to pay for the cost of ship, cost of its operations and to make some profit. Charter Party There are many mutually agreed arrangements between the owners of cargo or shippers and the ship owners or ship operators for transportation of cargoes. The terms and conditions for carriage of cargo can either be on liner terms or under different charter party terms that primarily depend upon the types of ships and cargo. Charter Party Charter party is a contract between the ship- owner and the Charterer. Three important elements are; (a) Description of the ship (b) Description of the trade (c ) Description of time period Charter Party Description of the Ship The type of ship to be hired/chartered very much depends on the nature and whereabouts of the intended trade. Its normal for owners to provide all the details of the ship with a guarantee about its accuracy. An example such as Shell time and Inter tank having appropriate format which is required to contain several pages of information required ship details Charter Party Description of the Ship Many Charterers require the following plans to be supplied by the Owners; (1) General Arrangement Plan ,including loading scale (2) Detailed Cargo manifold arrangement Drawing (3) Pumping Arrangement Plan (4) Plan of Cargo Tank Ventilating System (5) Manufacturers Characteristics Curves of Pumps if centrifugal pumps are installed. Charter Party Description of the Ship Cubic Capacity Speed and Consumption Constant Weights Charter Party Description of the Ship These, apart from the name of the ship, include – year of built, flag, dead weight, maximum dimensions, maximum draught, fresh water allowance, speed, fuel consumption, cargo space in bail and grain capacities, number of hatches and holds, type and safe working load of cargo gear, compliance with international regulations for carriage of specialised cargo and such other important details relevant for the intended cargo and trade. For example some bulk cargoes may require that the holds be equipped with carbon-di-oxide fire protection system, or special requirement of cargo securing in the holds. Charter Party Description of the Ship Name of the Ship Year of Build Name and location of Owners Flag Class Call Letters GRT/NRT Summer Deadweight Fresh Water Allowance Fresh Water Allowance Charter Party Description of the Ship Cubic Capacity Speed and Consumption Constant Weights Charter Party Description of the Trade As much as Charterer is interested to know the details of the ship in the same way the Owner is interested to know about the type of trade the ship will be engaged in. Owners will negotiate an entry to that effect the berths and ports to which the vessel will trade are safe and ship will remain afloat. Charter Party Description of the Trade The Charter Party will guarantee that the vessel will trade within the Institute Warranty Limits(I.W.L)- a trading area defined by Underwriters to prevent the more serious risk of ship causality loss. The dangerous areas such as war zones and ice bound areas may be excluded from the charter party . Charter Party Description of the Trade The Charter Party shall also include certain exclusions for the cargo to be loaded such as asphalt in bulk ,pitch in bulk ,livestock explosives ,fish meal ,scrap , sulphur, and logs. In addition ,a modern phenomena often included in the cargo exclusion clause is nuclear products. Charter Party Description of the Period The period of charter commences with vessel’s delivery to the Charterers and ,like all charters with vessel’s delivery to the Charterers and like all charters, this delivery is either spot Types of Charter Parties There are two types of charters, Non-demise and Demise Charter. The charter by demise is not very frequent in normal day-to-day business but a number of ships are chartered on a so-called ‘bareboat’ basis. This kind of charter ordinarily means that the vessel is put at the disposal of a charterer with out any crew. The charterer thus takes over almost all of the owner’s functions except for the payment of the capital costs and the hull and machinery insurance premiums. Type of Charter parties Reason for Demise Charters( Bare Boat Charters) Demise charters are created not so much with a view to the carriage of goods but more as part of a complicated financing arrangement ,often with the intention that the charterer should become the owner of the ship in due course. Thus, a contract for the purchase of a ship by installments will often incorporate a demise charter into the contract. Type of Charter Parties Demise Charter A variant of this would be for a financing bank lend the funds required to buy the ship ,the bank then acquiring the ownership of the ship but demise chartering it to the borrower for the period of the loan. This would enable the bank to avoid not only the operating costs but also the liabilities which it would otherwise have to bear in relation to the operation of the ship under a mortgage. Demise charters are also concluded between two associated companies for tax or employment reasons. Type of Charter parties Charter parties other than Demise; There are two types; (1) Time Charters i.e. contracts for the use of the ship and her crew for a specified period of time within agreed trading limits as directed by the time charterer in consideration for the payment of hire; (2) Voyage Charter contracts for the use of the ship and her crew to carry an agreed cargo on an agreed voyage regardless for the payment of freight ( and possibly other remuneration such as demurrage if the loading/discharging is delayed beyond the time agreed for such operations) Type of Charter parties Voyage Charter: Voyage charter is an engagement of a vessel for a single voyage between declared ports to transport full shipload of cargo or a certain quantity of cargo. The freight is paid on per tonne of cargo (DWT) bases or on lump sum basis. The ship owner provides for all the ship’s costs with its crew, expenses for fuel, water, canal dues, port dues, loading and discharging expenses etc. in return the charterer pays him the hire charges for carrying the cargo as per described or utilised cargo capacity of the ship. Type of Charter parties Voyage Charter: To compensate for the delays that may be encountered in cargo loading/discharging operations, the ‘demurrage and despatch’ clauses for compensation to the affected parties are inserted in charter party. Type of Charter parties Voyage Charterparty List of Charterparty Clauses 1.Preamble;This can be extensive in some charterparties .In the Multiform much of what may be found in preambles of certain forms is contained in clause 1. There are two important of the brief Multiform preamble however – the place and the date of the charterparty. Type of Charter parties Voyage Charterparty List of Charterparty Clauses Place This can be important as ,in the absence of a clause to the contrary,the place where a contract is deemed to have may govern the law which is to be applied to that contract in the event of dispute. Thus if the place is London ,English Law may be very likely prevail. Type of Charter parties Voyage Charterparty Date equally important the date to be shown is that which by fixture negotiations are concluded with all subjects lifted-in other words ,when all negotiating formalities are complete. Type of Charter parties Voyage Charterparty Clause 1 ;Name and brief description of vessel The Multiform allows for a more complete vessel description in the main ,printed part of the form than many (e.g compare with AMWELSH).
Recommended publications
  • Chartering Terms by Kevin Stephens
    Chartering Terms By Kevin Stephens www.wwproject.net A B C D E F G H I J K L M N O P Q R S T U V W X Y Z ABBREVIATION MEANING AA Always Afloat AAAA Always Accessible Always Afloat AAOSA Always Afloat or Safe Aground. Condition for a vessel whilst in port AARA Amsterdam-Antwerp-Rotterdam Area ABAFT Toward the rear (stern) of the ship. Behind. ABOARD On or within the ship ABOVE DECK On the deck (not over it – see ALOFT) ABSORPTION Acceptance by the carrier of a portion of a joint rate or charge which is less than the amount which it would receive for the service in the absence of such joint rate or charge. ABT About ACCEPTANCE OF GOODS The process of receiving a consignment from a consignor, usually against the issue of a receipt. As from this moment and on this place the carrier’s responsibility for the consignment begins. ACKNOWLEDGEMENT OF RECEIPT A notification relating to the receipt of e.g. goods, messages and documents. Active Inventory covers raw material, work in progress, finished products that will be used or sold within a given period without extra cost or loss. This term does not cover the so-called reserve inventory. ACTUAL DEMAND Customers’ orders and often also the allocation of items, ingredients and/or raw materials to production or distribution. ACTUAL VOYAGE NUMBER A code for identification purposes of the voyage and vessel which actually transports the container/cargo. ADCOM Address Commission ADDED VALUE The value attributed to products, and services as the result of a particular process (e.g.
    [Show full text]
  • Frequently Overlooked Risk Management Issues in Contracts of Affreightment and Sale Contracts
    Frequently overlooked risk management issues in contracts of affreightment and sale contracts 2021 AMPLA Queensland Conference Chris Keane MinterEllison 18 June 2021 The focus of today’s presentation - risk associated with two contracts used to facilitate the export of Australian commodities: . the sale contract / offtake agreement / supply agreement (sale contract) . the contract of affreightment / voyage charterparty / bill of lading (sea carriage contract) Specific focus is on risk and risk mitigation options that are frequently overlooked (both at the time of contract formation and also when disputes arise) 2 Risk arising out of seemingly straightforward issues . Duration of the sale contract - overarching issue that impacts on many other considerations; legal and commercial considerations will overlap . Port(s) of loading and port(s) of discharge - relevant considerations include: access to certain berths; special arrangements regarding loading and unloading; port congestion and other factors likely to cause delay; and the desirability of not requiring a CIF buyer to nominate a specific port of unloading (e.g. “one safe port and one safe berth at any main port(s) in China…”) . Selection of vessel - risk will depend on which party to the sale contract is responsible for arranging the vessel; CIF sellers need to guard against the risk of selecting an unsuitable vessel; FOB sellers need to ensure they have a right to reject an unsuitable vessel nominated by the buyer 3 Risk arising out of seemingly straightforward issues . Selection of contractual carrier - needs to be considered as an issue separate from the selection of the vessel; what do you know (and not know) about the carrier?; note the difficulties the contractual carrier caused for both the seller and buyer in relation to the ‘Maryam’ at Port Kembla earlier this year; proper due diligence is critical; consider (among other things) compliance with anti-slavery, anti-bribery and sanctions laws and issues concerning care of seafarers, safety and environment .
    [Show full text]
  • Eufoafrica-Waybill-14.Pdf
    NON NEGOTIABLE WAYBILL FOR COMBINED TRANSPORT SHIPMENT OR PORT TO PORT SHIPMENT EuroAfrica Shipping Lines Cyprus Limited 3105 Limassol, 229 Arch. Makariou III Avenue, Cyprus Waybill No. SHIPPER Correspondence address: 70-952 Szczecin, ul.Energetyków 3/4, Poland Shippers Ref. Tel. +48 91 81 43 255/256, fax +48 91 81 43 315, e-mail: [email protected], www.euroafrica.com.pl The contract evidenced by this Waybill is subject to the Carrier’s Tariff and Standard Bill of Lading terms and conditions, applicable to the voyage covered by this Waybill and operative on the date of issue, copies of which are available from the Carrier or his agents, incorporated in which is the following LAW AND JURISDICTION CLAUSE. Law and Jurisdiction CONSIGNEE (1) Unless Clause 25 or 27 applies, any claim against the Carrier under this Bill of Lading shall be determined according to English law in the High Court of Justice in London. (2) The Carrier shall be entitled to pursue any claim against the Merchant in London according to English Law or in any jurisdiction in which the Merchant has assets but then in accordance with the local law of that jurisdiction. (3) Nothing herein shall prevent the parties to any claim or dispute under the Bill of Lading from agreeing to submit the claim or dispute to arbitration by mutually acceptable arbitrator(s) on mutually acceptable terms at a mutually acceptable venue. (It is agreed that no responsibility shall attach to the Carrier or The contract evidenced by this Waybill, which is not a document of title to the goods, is deemed to be a his agent for failure to notify the Consignee of the arrival of the contract of carriage as defined in Article 1 (b) of the Hague Rules and Hague Visby Rules, and every NOTIFY PARTY AND ADDRESS goods [see clause 20 of the Bill of Lading.]) reference in the carrier’s Bill of Lading terms & conditions and tariff to the words “Bill of Lading” shall be read and construed as a reference to the words “Non Negotiable Waybill’.
    [Show full text]
  • LINEWAYBILL 2016 NON-NEGOTIABLE LINER SEA WAYBILL Page 2 I
    Shipper Liner Sea Waybill No. Reference No. Consignee (not to order) Notify address Vessel Pre-carriage by Port of loading Place of receipt by pre-carrier Port of discharge Place of delivery by on-carrier Container No./Seal No./Marks and Number and kind of packages, Gross weight, kg Measurement, m3 Nos. description of goods PARTICULARS DECLARED BY THE SHIPPER BUT NOT ACKNOWLEDGED BY THE CARRIER Total number of Containers/Packages or RECEIVED for carriage in apparent good order and condition (unless otherwise stated herein) the total number of Units received by the Carrier SampleContainers/Packages or Units indicated copy in the Box opposite entitled "Total No. of Containers/Packages or Units received by the Carrier" and the goods as specified above, weight, measure, marks, numbers, quality, quantity, contents and value unknown for delivery at the place indicated above. Freight and charges The goods shipped under this Sea Waybill will be delivered to the Party named as Consignee or its authorised agent, on production of proof of identity without any documentary formalities. Should the Shipper require delivery of the goods to a party other than the Consignee stated in this Sea Waybill, then written instructions must be given to the Carrier or his agent. The Shipper shall, however, be entitled to transfer right of control of the goods to the Consignee, Freight payable at the exercise of such option to be noted on this Sea Waybill and to be made no later than the receipt of the goods by the Carrier. The Carrier shall exercise due care ensuring that delivery is made to the proper party.
    [Show full text]
  • WAYBILL Clause (2018.04.01) ”K” LINE LOGISTICS, LTD
    WAYBILL Clause (2018.04.01) ”K” LINE LOGISTICS, LTD. <Face Clause> RECEIVED by the Carrier from the Shipper in apparent good order and condition unless otherwise indicated herein, the Goods or the Container(s) or package(s) said to contain the Goods herein mentioned, to be carried subject to all the terms and conditions provided for on the face and back of this Waybill, from the place of receipt or port of loading to the Port of Discharge or Place of Delivery shown herein and there to be delivered. Particulars furnished by the Merchant. All descriptions contained herein considered unknown to the Carrier. None of the terms of this Waybill can be waived by or for the Carrier except by express waiver signed by the Carrier or its duly authorized agent. IN ACCEPTING THIS WAYBILL, the Merchant agrees to be bound by all the stipulations, exceptions, terms and conditions on the face and back hereof, and the terms and conditions contained in the Carrier's applicable Tariff, whether written, typed, stamped, printed or otherwise incorporated, as fully as if signed by the Merchant, any local custom or privilege to the contrary notwithstanding, and agrees that all representations, agreements or freight engagements for and in connection with the Carriage of the Goods are superseded by this Waybill. Moreover, the Shipper accepts the said stipulations, exceptions, terms and conditions not only on his own behalf but on behalf of the Consignee and the Owner of the Goods and the Shipper warrants that he has the authority to do so. Except as otherwise specifically provided in this Waybill, delivery of the Goods will be made only to the Consignee named on the face hereof, or his authorized agent, on production of proof of identity at the Port of Discharge or the Place of Delivery.
    [Show full text]
  • Review of Maritime Transport 2020 37
    2 The present chapter focuses on key developments related to the supply of maritime transport during this past year. It also assesses the early impact of the COVID-19 pandemic on the supply of maritime transport services and industries and discusses the responses, lessons learned and possible implications of the pandemic in terms of forces shaping supply and the industry’s long-term goal of decarbonization. The pandemic has had a significant impact on the shipping industry. On the one hand, lockdowns and factory closures gradually affected demand for maritime transport, due to reduced cargo volumes (see chapter 1). On the other hand, safety measures applied to contain the spread of the virus, such as lockdowns and travel restrictions, affected the movement of maritime transport workers and procedural changes introduced in ports, and induced operational disruptions in the supply of maritime transport. These prompted changes in shipping operations and requests for government support in the sector. They made the industry reflect on ways to enhance resilience of the sector to future shocks. This chapter reviews world fleet developments such as MARITIME annual fleet growth, changes to the structure and age of the fleet. It considers selected segments of the maritime TRANSPORT supply chain, such as shipbuilding, ship recycling, ship ownership, ship registration and the maritime workforce, SERVICES AND emphasizing the impacts of the pandemic on maritime INFRASTRUCTURE transport and marine manufacturing industries and on the supply of shipping services. SUPPLY It also examines the impact of the pandemic on the container, dry bulk and tanker freight markets; government responses to support shipping; and industry prospects, in particular with regard to accelerated digitalization and the prioritization of environmental sustainability.
    [Show full text]
  • TERMS and CONDITIONS DATED 2010-05-01 Revised December 2014 (§39)
    PREEM AB 1 PREEM AB CHARTERPARTY TERMS AND CONDITIONS DATED 2010-05-01 Revised December 2014 (§39) SECTION 1 1. Basic Provisions 2. Worldscale and Overage 3. Misrepresentation 4. I T F Clause 5. Safe Port/Berth 6. Deviation 7. Agency 8. Expected to Arrive 9. Notice of Readiness 10. Time Bar 11. Statement of Facts 12. Calculation of laytime 13. Weather and seagoing clause 14. Retention 15. Letter of Indemnity and Invocation of Short Form Undertaking 16. Port Authority's Instruction 17. Competent Crew 18. Crew's Duties 19. Bunkers Onboard 20. Charterers Inspection 21. Cleaning 22. Cargo Temperature at Loading/Heating 23. Pumping 24. Closed Loading 25. Insurance 26. Vessel Certification 27. Remaining on Board 28. Pollution Clause 29. P&I Insurance 30. Drug and Alcohol Clause 31. ITOPF Clause 32. Small Claims Arbitration 33. Address Commission 34. Logbooks 35. Vessel Vetting Clause 36. Early Loading Clause 37. ISPS Clause, International Ship & Port Facility Safety Code 38. Charterers Mail 39. Accidents to Vessel and / or Cargo 40. Document of Compliance / ISM Clause, International Safety Management Code 41. Administration Clause PREEM AB 2 SECTION 2 A. Crude Oil Washing B. Inert Gas C. Speed Clause D. Lightering Execution Clause E. Tank Stripping F. Lightering Stability G. Arab Clause H. Early Departure Clause I. Hydrogen Sulphide Clause SECTION 1 1 The clauses hereinafter are, to the extent they are not added to, deleted or otherwise 2 changed by mutual consent, deemed incorporated into the ASBATANKVOY 3 Charterparty part 1 section M or otherwise, as appropriate, deemed incorporated into 4 such other Charterparty form the parties have agreed shall govern the charter.
    [Show full text]
  • Bills of Lading Vs Sea Waybills, and the Himalaya Clause Peter G
    Bills of Lading vs Sea Waybills, and The Himalaya Clause Peter G. Pamel and Robert C. Wilkins Borden Ladner Gervais, LLP Presented at the NJI/CMLA, Federal Court and Federal Court of Appeal Canadian Maritime Law Association Seminar April 15, 2011 Fairmont Château Laurier, Ottawa 1) Introduction Bills of lading and sea waybills are two of the most common forms of transport document used in contemporary shipping. Their similarities and difference, and respective uses, in such trade should be clearly understood by all who are involved in that activity. In particular the meaning of “document of title” used in respect of bills of lading, and whether sea waybills are or are not also such documents of title, have given rise to much debate, which has now largely been resolved in major shipping nations. Also, the impact on these transport documents of compulsorily applicable liability regimes set out in international carriage of goods by sea conventions is also essential to a proper grasp of the role these documents play in international maritime commerce. It is also interesting to examine how parties other than carriers, shippers and consignees can and do benefit from certain clauses in ocean bills of lading and sea waybills which purport to confer on such third parties or classes of them the exemptions from, and limitations of, liability which marine carriers assume in the performance of their functions. This paper will attempt to provide an overview of these issues, with special reference to how they are addressed in Canadian maritime law. 2) Bills of Lading and Sea Waybills in Modern Shipping Bills of lading and sea waybills are the two basic documents that attest to the carriage of goods by water, both domestically within Canada and internationally.
    [Show full text]
  • Volume Contracts of Affreightment – Some Features and Principles
    Volume Contracts of Affreightment – Some Features and Principles Lars Gorton 1 Introduction ………………………………………………………………….…. 62 1.1 General Background ……………………………………………………… 62 1.2 Some Contractual Points …………..……………………………………... 62 1.3 Frame Agreements ………………………………………………………... 64 1.4 Some General Points Related to Distributorship Agreements and Volume Contracts ………………………………………. 66 1.5 Some Further Overriding Points ……………………………………….…. 67 2 Contract Forms ………………………………………………………………… 68 3 Law, Contract and Terminology ……………………………………………… 69 4 The SMC Rules on Volume Contracts ……………………………………..…. 70 5 Characteristics of COA’s ……………………………………………………… 71 6 The Generic Nature of the COA ………………………………………………. 72 7 Some of the Parameters of the COA ………………………...……………….. 76 7.1 The Ships Involved Under the Volume Contract ………………………… 76 7.2 Time Elements in Connection with COA’s ………………………………. 76 7.3 Cargo and Cargo Quantity and Planning of Voyages ………………….… 77 8 Breach and Consequences of Breach …………………………………………. 78 8.1 Generally, Best Efforts and Cooperation …………………………………. 78 8.2 Consequences of the Owners’s Breach …………………………………... 78 8.3 Consequences of the Charterer’s Breach …………………………………. 78 9 Some Comparisons with Distributorship Agreements in English Law ….…. 78 10 Some COA Cases Involving “Evenly spread” ……………………………….. 82 10.1 “Evenly spread” …………………………………………………………... 82 10.2 Mitigation of Damages …………………………………………………… 85 11 Freight, Demurrage and Similar ……………………………………………… 88 11.1 General Points ………..…………………………………………………... 88 11.2 Freight Level ……………………………………………………………..
    [Show full text]
  • IATA Cargo Service Conference Resolutions
    IATA Cargo Service Conference Resolutions Table of Contents RESOLUTION 600(*) - The Consignment ............................................................................................. 2 RESOLUTION 600a (*) - Air Waybill ..................................................................................................... 4 RESOLUTION 600b(*) - Air Waybill—Conditions of Contract ........................................................... 36 RESOLUTION 606(*) - Bar Coded Label ........................................................................................... 39 RESOLUTION 606a(*) - Non-Bar Coded Label ................................................................................. 51 RESOLUTION 607(*) - Standards for Labels and Tags for Special Shipments .................................. 56 RESOLUTION 612(*) - Shipper's Request for Changes to Air Waybill and Shipment Record Amounts .......................................................................................................................................... 60 RESOLUTION 614(*) - Procedures for Disbursements .................................................................... 61 RESOLUTION 618(*) - IATA Dangerous Goods Regulations .............................................................. 61 RESOLUTION 620(*) - IATA Live Animals Regulations ..................................................................... 62 RESOLUTION 622 - IATA Perishable Cargo Regulations .................................................................. 63 RESOLUTION 651 - Consignment
    [Show full text]
  • PERFORMANCE and CANCELLATION of CHARTERPARTIES SUSPENSION / WITHDRAWAL / TERMINATION Notices, Damages and Potential Pitfalls
    PERFORMANCE AND CANCELLATION OF CHARTERPARTIES SUSPENSION / WITHDRAWAL / TERMINATION Notices, damages and potential pitfalls A. INTRODUCTION The minds of owners and charterers alike are presently focused (as they should) on the Covid19 outbreak and how they can either utilise existing clauses or put together new clauses dealing with Covid19 in an attempt to refuse to perform or get out of a charter or prevent their contractual counterparty from doing so. Penningtons Manches Cooper has already issued a number of articles and circulars (as well as a contractual tool kit) in respect of the effect of Covid19, the business interruption aspects of it as well as the way forward. But what happens in circumstances where an existing contract is no longer desirable (or indeed financially viable) and one of the contractual counterparties wishes to no longer be bound it, either because of, for example, the state of the market or because the other party are not performing their end of the deal, whether as a result of Covid19 or otherwise? A number of other considerations will of course be relevant (amongst others, the parties’ commercial relationships, the state of the market, the ability to enforce against the non-performing party) but the purpose of this article is to act as a reminder of the various options available to an owner and charterer in the context of refusing to perform or getting out of a charterparty. The above will be considered against a background of seeking to resolve disputes before they even arise, with a view to limiting (to the extent feasible) the costs and delays incurred where the parties engage in arbitration/ litigation proceedings.
    [Show full text]
  • Marine Charter Default Insurance
    Marine Practice CHARTER DEFAULT INSURANCE In response to shipowners’ increasing concerns about charterers’ solvency, Marsh has developed an industry-first product that protects owners from damaging financial losses. Backed by both insurers and a leading financial institution, Marsh’s Charter Default product provides a mix of fixed recovery guarantee and credit insurance, tailored to the shipowner’s particular requirements. Covering both outstanding debt at the time of an insolvency and the loss of future revenue for a set period, the product de-risks important revenue streams, thereby assisting owners to attract better terms fr om lenders by reducing counterparty credit risk. i • Charter Default Insurance PRODUCT OVERVIEW PROTECTING REVENUE AGAINST THE RISK OF FINANCIAL DEFAULT f Financial default is a recurring problem. Recent high profile cases of shipping companies filing for bankruptcy have again highlighted counterparty risk in the shipping sector f Companies with ships on charter are exposed to loss of revenue if their charterer folds or, at best, to enforced renegotiation of charter hire terms f The risk of default increases at times of global financial uncertainty f Fixed Recovery Guarantees and Credit Insurance protect against the risk of charterer default f For a listed company, de-risking the revenue stream can improve stock prospects f De-risking the revenue stream can also attract better terms from lenders Marsh • 1 CREDIT INSURANCE FIXED RECOVERY GUARANTEE Key FeaTuRes • an insurance policy designed to compensate an owner
    [Show full text]