Claims Guides Bills of Lading 5 - Cargo Claimants’ Rights and Liabilities Disputes may occur at the discharge port between owners and cargo interests. Cargo interests will often claim What is the contract of carriage? which charter party applies as a matter against the owners under the bills of construction, and if they do not have Owners should check which of lading, as the contract of carriage. this already, obtain a full copy of it. The documents comprise the terms The intention of this note is to provide answer may not be straightforward if and conditions of the contract of owner Members with some general there are multiple charter parties. carriage, and ensure they have all the guidance on the key issues to consider documents containing such terms to Under English law, there is a presumption when such claims are presented. Such hand. Is the bill of lading the contract that if the parties to a bill of lading issues include what obligations cargo of carriage or are the terms contained neglect to insert the date of the interests may have with regards to in another document? applicable charter party, or insert an the cargo, and what recourse owners incorrect reference (i.e. to a charter party may have against cargo interests or In order to check what the contract that does not exist) the head time charter Charterers, if cargo interests behave of carriage is, consideration should party will apply and be incorporated, unreasonably with respect to delivery be given to the relationship of the because this is the charter party to which of the cargo. parties involved. the owner is a party (unless the vessel is If a claim is asserted against owners (i) Relationship between Cargo demise chartered). as the carrier under a bill of lading, Receiver and Carrier: This presumption is displaced if there owners should consider the standing A transferrable bill of lading may be is a sub voyage charter party, in which of the parties involved, whether the transferred from a person with title, case the sub voyage charter party is the bill of lading is indeed the correct to a person without title i.e. from a applicable charter, because this is more document to determine the contractual consignee named in the bill of lading closely connected with the carriage of relationship between the owners and to a consignee not named in a bill the goods and the particular voyage the party making the claim. of lading. This allows trading of the performed under the bill of lading. goods on the voyage. Owners should seek to obtain a copy of the sub voyage charter to check A transferable bill of lading will be the terms as soon as possible. The the contract of carriage as between a presumption is also displaced if the bill carrier and a cargo receiver, to whom of lading is a charterers’ bill, in which the original bill of lading has been case the charterer is the carrier. lawfully transferred. Owners should also consider the Owners should ensure they obtain a wording of the incorporation clause in complete copy of the original bill of the bills of lading. General words of lading (both front and back pages) to incorporation check the terms, and any incorporated documents, such as the applicable (i.e. “all terms, conditions…”) are only charter party, including the applicable capable of incorporating the germane law and jurisdiction provisions or any terms of a charter party, such as those agreement for arbitration. relating to loading, carrying, discharge and payment of freight. Terms which (ii) Applicable terms referenced have no connection to the carriage in a bill of lading: of the cargo, or onerous terms, such Owners should check whether any as demurrage obligations and liens, charter party terms are said to be are not likely to be incorporated. incorporated into the bill of lading: is Ancillary clauses, such as entire a specific charter party referenced agreement clauses, will generally not (usually by date) in the incorporation be incorporated into a bill of lading clause? If not, owners need to consider Claims Guides unless specifically mentioned. There the master’s signature is likely to bind and a person shall be regarded for the must also be specific express wording the demise charterer. purposes of this Act as having become to incorporate a jurisdiction clause or the lawful holder of a bill of lading Pursuant to the Hague and Hague-Visby an arbitration agreement; a statement wherever he has become the holder of Rules the carrier will be a named party that all terms are incorporated is the bill in good faith. in the contract of carriage and this not sufficient to incorporate these could be the owners or charterers; the Often a party who brings a claim provisions. carrier is not necessarily the physical against the carrier and may even (iii) Relationship between carrier. The distinction may not be so arrest the ship is not the lawful holder a shipper and a carrier: important in some jurisdictions where of the bill of lading, and may be, for the receiver may pursue a claim against example, the buyer of the cargo under In the case of the contractual the owner as the physical carrier as well a sale contract, who has not received relationship between a shipper and a as the named carrier under the bills of by way of transfer or indorsement a carrier, the bill of lading will generally lading. The Hamburg Rules impose a right to assert a claim under the bill only be evidence of the contract of joint and several liability on the named of lading. carriage. This is because the contract carrier and the actual physical carrier. of carriage will have been arranged The fact that the claimant is a However the determination of the prior to the issue of the bill of lading, party to a sale contract does not applicable law and jurisdiction for a and other documents, such as a necessarily mean he is the lawful cargo claim, in each case, will be fact booking note or fixture note may be holder of the bill of lading. specific, the scope of which is not relevant to determine the terms agreed covered in this article. The distinction is important. The sale between a shipper and carrier. contract determines title to the goods, Where the shipper is also the Do the claimants have title to sue? but this is immaterial to the transfer charterer, the contract of carriage of contractual rights under a bill of The contract of carriage will assist with will be the charter party and the bill lading. “Title” in the context of bills identifying whether the claimants have of lading itself has no contractual of lading means the right to receive title to sue. Where the bill of lading is effect. However the bill of lading will possession of the goods from the the contract of carriage, only the lawful still serve as evidence of receipt of carrier. The lawful holder of a bill of holder of a bill of lading is the party to the goods, and will still function as a lading is entitled to take delivery of the the contract of carriage with the carrier, document of title, if transferable. goods upon surrender of the original and has title to sue the carrier. bill of lading, and the carrier has no Once the terms of the contract of Under English law, section 5(2) of the obligations to deliver the cargo at the carriage are identified, Members Carriage of Goods by Sea Act 1992 discharge port to anyone else. should check: defines a lawful holder of a bill of A party to a sale contract, who is not (a) Whether the claim is being made lading, and states the following: the lawful holder of the bill of lading, against the contractual carrier; (a) a person with possession of the may have recourse against their (b) Whether the cargo interests have a bill who, by virtue of being the counterparty to the sale contract for right to sue under the contract person identified in the bill, is the any alleged losses, but will have no of carriage. consignee of the goods to which right to sue the carrier under the bill the bill relates; of lading. Who is the carrier? (b) a person with possession of the It is important to check the contract of bill as a result of the completion, carriage to see whether cargo interests by delivery of the bill, of any have claimed against the right party. indorsement of the bill or, in the The contractual carrier may not case of a bearer bill, of any other necessarily be the owner, because transfer of the bill; the bills of lading may name the (c) a person with possession of the charterers or another party as the bill as a result of any transaction carrier. This is a question of analysing by virtue of which he would have the wording in the bill of lading and become a holder falling within applying the rules of construction. paragraph (a) or (b) above had not Under English law the form of the bill the transaction been effected at a of lading is not necessarily conclusive. time when possession of the bill no Where the bill of lading is signed by longer gave a right (as against the the master, the carrier will usually carrier) to possession of the goods be held to be the registered owner. to which the bill relates; Where the vessel is demise chartered, Claims Guides Owners should demand the surrender In the case of negotiable bills of Potential liabilities of cargo by the cargo claimants of the original lading, the contractual rights of each claimants under bills of lading bill of lading for verification.