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Evaluating the Legal Risks and Potential Responses of the Time Charterer Which Sub-Charters on Voyage Terms

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Evaluating the Legal Risks and Potential Responses of the Time Charterer Which Sub-Charters on Voyage Terms The Legal Position of the Time Chartered Operator: Evaluating the Legal Risks and Potential Responses of the Time Charterer Which Sub-Charters on Voyage Terms James Russell Wereley Thesis submitted to the Faculty of Graduate and Postdoctoral Studies in partial fulfillment of the requirements for the degree of Doctor of Laws Faculty of Law University of Ottawa © James Russell Wereley, Ottawa, Canada, 2015 TABLE OF CONTENTS Dedication............................................................................................................... v Acknowledgements...................................................................................................vi Abstract .................................................................................................................vii Introduction ............................................................................................................ 1 1. Delivery and Readiness.........................................................................................37 1.1 Introduction ...........................................................................................37 1.2 Seaworthiness ........................................................................................40 1.3 Time Charters: Delivery ...........................................................................43 1.4 Voyage Charters: Readiness .....................................................................44 1.5 Risks Surrounding Laycan and Expected Ready to Load Dates........................47 1.6 Potential Risk Management Approaches for the Time Charterer ......................51 1.7 Conclusion .............................................................................................56 2. Off Hire and Suspension of Laytime ........................................................................59 2.1 Introduction ...........................................................................................59 2.2 Off Hire .................................................................................................61 2.2.1 Physical efficiency and Off Hire ....................................................67 2.2.2 Conclusions Regarding Inefficiency...............................................74 2.3 Laytime .................................................................................................75 2.4 Comparison of Laytime and Off Hire...........................................................81 2.5 Interruption of Discharge due to Cargo Damage or Arrest .............................84 2.6 Cargo Handling Equipment Breakdown .......................................................91 2.7 Quarantine.............................................................................................96 2.8 Time Lost Due to Ballasting and Deballasting ............................................100 2.9 Security Detention ................................................................................104 2.10 Certificates.........................................................................................108 2.11 Vessel Cleaning...................................................................................111 2.12 Recoverability of Delays Related to Notice of Readiness ............................111 2.13 Conceptual Comparison of Laytime and Off Hire.......................................116 2.14 Suspension of Laytime, Off Hire and Seaworthiness..................................118 2.15 Steps the Time Charterer May Take to Reduce Risk ..................................122 2.16 Conclusion .........................................................................................125 3. Cleanliness of Vessel Cargo Spaces ......................................................................126 3.1 Introduction .........................................................................................126 3.2 Time Charters: Cleaning at Different Stages of the Voyage..........................129 3.3 Cleaning and Voyage Charters ................................................................131 3.4 Time Charters: Cargo Space Cleanliness on Delivery ..................................135 3.5 Legal Position of Intermediate Cargo Space Cleaning..................................136 3.6 Differentiation Between Cleaning and Maintenance.....................................138 3.7 Time Charter Intermediate Cleaning Clauses .............................................142 3.8 Risks for the Time Charterer ...................................................................144 3.9 The Bunga Saga Lima Decision................................................................146 3.10 Assessment of Risk and Steps the Time Charterer May Take ......................148 3.10.1 Delivery ...............................................................................149 3.10.2 Intermediate Hold Cleaning.....................................................152 3.11 Expenses Related to Cargo Space Cleaning .............................................155 3.12 Redelivery..........................................................................................156 3.13 Dunnage and Securing Material .............................................................157 3.14 Conclusion .........................................................................................161 ii 4. Safe Ports and Berths Under Charter Parties ..........................................................164 4.1 Introduction .........................................................................................165 4.2 General Rights and Obligations With Respect to Safe Ports ..........................166 4.3 Comparison of Explicit Safety Warranties..................................................167 4.4 Comparison of Safe Port with Safe Berth Warranties ..................................170 4.5 Safe Ports and Berths Under Time Charters...............................................172 4.6 Safe Ports and Berths Under Voyage Charters ...........................................177 4.7 Circumstances That May Lead to legal Unsafety.........................................180 4.7.1 Physical Unsafety ....................................................................181 4.7.2 Political Unsafety.....................................................................184 4.7.3 Regulatory Unsafety ................................................................185 4.8 Implications for the Time Charterer .........................................................187 4.9 The Relationship Between Safe Ports, Off Hire and Laytime .........................195 4.10 Steps the Time Charterer May Take to Reduce Risk ..................................200 4.11 Special Circumstances..........................................................................205 4.11.1 Time Charter Trips .................................................................205 4.11.2 Liner Terms ..........................................................................206 4.12 Conclusion .........................................................................................206 5. Time Chartered Operators and Bills of Lading.........................................................208 5.1 Introduction .........................................................................................208 5.2 The Bill of Lading ..................................................................................211 5.3 Clean and Claused Bills of Lading ............................................................214 5.4 Bills of Lading Under Charter Parties ........................................................216 5.5 Identity of the Carrier............................................................................217 5.6 Terms of the Contract............................................................................221 5.7 Time Charterer's Right to Give Orders Relating to Bills of Lading ..................223 5.8 Antedated Bills of Lading........................................................................227 5.9 Package Limitation ................................................................................229 5.10 Letters of Indemnity for Clean Bills of Lading under Time Charters. ............231 5.11 Letters of Indemnity for Clean Bills of Lading under Voyage Charters ..........237 5.12 Incorrect Bill of Lading: Identity of the Carrier .........................................238 5.13 Master's Mis-Issuance of Bills of Lading ..................................................240 5.14 Potential Risk Management Approaches for Time Charterers ......................242 5.15 Conclusion .........................................................................................256 6. Issues Regarding Redelivery................................................................................259 6.1 Introduction .........................................................................................259 6.2 Primary Issue: Relationship Between Late Redelivery and Final Voyage.........260 6.2.1 Redelivery and Final Voyage Orders.................................................261 6.2.1.1 Definition of a Legitimate Last Voyage...................................263 6.2.1.2 The Point at Which Legitimacy is Judged................................264 6.2.1.3 Timing of Last Voyage Orders ..............................................266 6.2.1.4 Two Obligations with Respect to Redelivery............................267 6.2.1.5 Determination of the Charter Period: Overlap/Underlap ...........267 6.2.1.6 Final Redelivery Date
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