Maritime Law in Relation to Time Charter Hire - Essay Example

? MARITIME LAW IN RELATION TO TIME CHARTER HIRE Maritime Law in Relation to Time Charter Hire Introduction The ultimate aim of this context is to examine two statements and determine which one between them best reflects the law relating to time charter hire. The law being referred to in this case is the maritime law. Therefore, it looks at the statement that best reflects the maritime law. Hence, it begins by providing the statements, which are followed by some basic definitions that give a clear picture of the situation1. This is followed by definition of maritime law and providing a brief explanation to help understand the concept at hand. After looking at maritime law, the context then analyzes the two statements, identifying the best statement that suites maritime law as far as Time Charter Hire is concerned. The statements are: “I have come to the conclusion that hire must be treated in the same way as freight, and that to do so is not an extension of the established exception. It is only in comparatively modern times that the word ‘hire’ has been used. It was formerly known as ‘time freight’ or ‘time-chartered freight’. Indeed, in marine insurance terminology, ‘freight’ still includes ‘hire’.” (The Satya Kamal [1975] 2 Lloyd's Rep 188, per Donaldson J.) “‘Freight' is payable for carrying a quantity of cargo from one place to another. 'Hire' is payable for the right to use a vessel for a specified period of time, irrespective of whether the charterer chooses to use it for carrying cargo or lays it up, out of use. Every time charter contains clauses which are quite inappropriate to a voyage charter, such as the off-hire clause and the withdrawal clause. So different are the two concepts that I do not think the law as to 'freight' can be applied indiscriminately to 'hire.' (Lord Denning MR in The Nanfri [1978] QB 927.) Relationship between Maritime Law and Time Charter Hire Maritime law is a body of laws, treaties and conventions that presides over international confidential business or other matters engrossing ships, shipping or offenses taking place on open water2. Laws between countries controlling things like national versus international waters are regarded as public international law and are well identified as the Law of the Seas. Through these waters is where the business of time charter hire occurs where an individual can hire a vessel and use to transport cargos from one specific port to another. Maritime law, which is also termed as admiralty law, is one of the most developed and oldest types of law. It covers all the laws that rules over contract, tort, ships, marine business, shipping, and employee recompense assertions that take place on the navigable waters of the world. The law is helpful in determining the amount of freight to be issued to the vessel owner when used by a voyage charterer. Subjects of maritime law can encompass towage, salvage, maritime liens, marinas, maritime contracts, and maritime damages. This means that both voyage charter and time charter are covered by these law thus, enhancing contracts made between charterers and owners. Despite the fact that the subjects under the umbrella of maritime laws are many, there are numerous of them that are pretty interesting. For instance, there are rules that preside over what takes place when an individual finds property that had lost. Under international rules, if possession is lost on the water and found by another individual, the finder can assert a salvage present for recovered possession. As a result, if a ship is destructed and loses cargo during an awful ocean storm, the retriever can ask the shipping company to disburse them money for any of the cargo they recover. Note that this takes place after the vessel owner and the charterer have settled the issue of freight or hire. Therefore, if the vessel gets involved in lose of possession, the owner is not involved at all. The case now remains between the charterer and the retriever. In most cases, the salvage present is little than half of the value of the possession that was salvaged. In several nations, towage is a significant part of the transportation of goods3. That is why Lord Denning’s statement is correct and consistent with maritime law in the sense that it clearly defines hire and freight associating the to time charter hire and linking them to the maritime law. A clear understanding of that statement makes understanding of maritime law easy. The contract of towage is wrapped up under maritime contract laws. A towage contract does not require being in writing in several nations, but it is normally a good notion. Several contracts of towage think that sensible care has to be practiced in towing the products. The contract of towage is always signed during the time of hire of a vessel where the charterer agrees to the vessel owner’s rules and policies of the towage contract. This means that when the vessel breaks down in the hands of the charterer, he has to be responsible for mending it. All these process are covered under the time charter hire proving that Denning’s statement is consistent with maritime law. Almost all countries accept the maritime law that affirms the flag that is soared by a specific ship utters which country’s law will be followed. For instance, if a ship wings an American flag in a Grecian sea, the ship will operate as par the American maritime laws. If a ship wings a Venezuelan flag in American waters, the Venezuelan rules will apply. The cases involving maritime laws are handled in different courts depending with the country4. For example, in United States, these cases are heard by federal court system while in nations like New Zealand and India, maritime lawful cases are heard in high courts. The international Maritime Organization was established by the United Nations in 1958 to assist develop international maritime laws. It also developed several international conventions that wrapped up maritime safety. For instance, the International Maritime Organization established the Safety of Live at Sea Convention and the Collision Regulations5. When a nation takes on the laws of a particular convention, they are reinforced by every nation through the nation’s courts. The Best Statement that relates to Maritime Law Now that the concept of maritime or admiralty law is clear, it is now easy to identify the statement that best suites it. Between the two statements by The Satya Kamal (1975) 2 Lloyd’s Rep 188, per Donaldson J. and Lord Denning Mr in the Nanfri (1978) QB 927, the statement by the later is the best in the sense that it covers all the concepts of maritime law related to freight and hire. Donaldson’s statement is correct to some extent because it was very instrumental during the older days when people understood freight to mean the same as hire6. However, with time, modifications occurred in the field of maritime law, which brought about a massive distinction between freight and hire. There is no way that an individual can conclude that hire is similar to freight. According to the definitions above, hire is money disbursed on a Time Charter by the charterer to the owner while freight is the money disbursed on a Voyage Charter by the charterer to the owner. This clearly implies that despite the fact that there are some similarities between time charter and voyage charter, there are massive differences between them. Until these differences are noted, it is not simple to realize that the first statement by Donaldson is wrong. According to the statement, time charter is same to voyage charter when in real sense its wrong. In fact, the statement emphasizes that time charter hire was at one time known as time-chartered freight. This is wrong as far as maritime law is concerned. Differences between Time Charter and Voyage Charter Time charter usually never encompasses loading and unloading prices in the charter rate. Time charter generally encompasses loading and unloading prices in the charter rate. This clearly implies that time charter cannot be similar to voyage charter which means that Donaldson’s statement is wrong. Besides, when the market is at a good position, ships are time chartered for their own account for either trips, short or long-term period7. The main principle of time charter is to take only first class ships on charter, issuing the industry with excellent tonnage for its needs, controlled to the standard anticipated of their own vessels. The voyage charter, on the other hand, is a contract for the wagon of an affirmed quantity and kind of cargo, by a named ship between named ports against a concurred cost, referred to as freight. This is the most broadly extended form of chartering. This also clearly implies that time charter hire was never and will never be similar to the time charter freight. Therefore, Donaldson need to revisit his statement and stop misleading business people who prefer water transportation means. The statement has to be changed because it is interfering and differing with the maritime law concerning charters and charterers8. Some lawful concepts are relevant to both voyage and time charter parties although sometimes with delicate variations. This means that seaworthiness is common to all charter parties and that is the major similarity between voyage charter and time charter. The obligation not to diverge may influence both, specifically where a cargo proprietor not party to a charter party is concerned9. Divergence is not relevant to time charter parties at all because the charter usually selects the voyage and tumults and issues directions to the master, therefore, any divergence is possibly undertaken with the knowledge and permission of the charter. Note that the concepts that specifically associate with time charter are predictably and expectedly distinct from those concepts related to voyage charters. Precisely, it is relevant to talk about difficulties associated with payment of hire, that is, employment and insurance, re-liberation of the vessel and the length of the charter party. The voyage charter party never encompass these concepts because there is a changeable charge centered on the capacity of the vessel for the voyage and the master is usually in charge of the vessel on behalf of the ship proprietor. The port of release is usually decided in the charter party and concurred by the ship proprietor. Therefore, the first statement, which is Donaldson’s conclusion about the law relating to time charter hire. There is no way time charter hire will be similar to the time charter freight as he concluded10. Support for Lord Denning’s Statement The statement by Lord Denning argues that “‘Freight' is payable for carrying a quantity of cargo from one place to another 'Hire' is payable for the right to use a vessel for a specified period of time, irrespective of whether the charterer chooses to use it for carrying cargo or lays it up, out of use. Every time charter contains clauses, which are quite inappropriate to a voyage charter, such as the off-hire clause and the withdrawal clause. So different are the two concepts that I do not think the law as to 'freight' can be applied indiscriminately to 'hire.' This statement is correct because of several reasons. First, the maritime law itself states that freight is the fixed cost or amount of money spent for transporting specific quantity of cargo in a vessel from one named port to another. This statement is more or less similar to the statement by Lord Denning who stated that Freight is payable for transporting a quantity of cargo from one region to another. Hire is actually the amount of money payable for the permission to use a ship or vessel for a particular period. After hiring the vessel, it is upon the charterer to decide what or how to use the cargo11. He may decide to hire a cargo and just leave it stand still until the specified time is over before the owner takes the vessel back again. He may also opt to use it to transport some cargos from one region to another until the specific time agreed is over. In other words, when a charter hires a vessel, it appears like him until the specified period elapses. Therefore, Lord Denning’s statement is very correct and is consistent with maritime law. Conclusion The statement issued by Lloyd Donaldson is not consistent with several principles of maritime law. The concept is wrong in the sense that according to maritime law, there is a big difference between time charter hire and time charter freight. This is because voyage charter, which is consistent with freight, is totally distinct from time charter that is consistent with hire. Probably, Lloyd’s statement was correct during the older days but the modifications in maritime law make it incorrect now. Denning’s statement on the other hand is correct because it is consistent with both time charter hire and maritime law. The statement covers all the modified areas proving that it is indeed correct and should be used when referring to freight and hire issues. Bibliography Baugen S., 2004, Shipping Law. Routledge-Cavendish publication, p254. Dockrey M., 2004, Cases and Materials on the Carriage of Goods by Sea. Routledge-Cavendish, p310. Hodges S., 1996, Law of Marine Insurance. Routledge-Cavendish publication, p32 Huber, M., 2001, "Ch. 9: Chartering and Operations". Tanker operations: a handbook for the person-in-charge (PIC). Cambridge, MD: Cornell Maritime Press, p211, ISBN 0-87033-528-6.  NATO Shipping Centre, 2011, Shipping. P134, Retrieved from www.shipping.nato.int Sohmer E., 2007, Admiralty and Maritime Laws in the Mediterranean Sea (ca. 800-1050): The "Kitab Akriyat al-Sufun" vis-a-vis the "Nomos Rhodion Nautikos"", Medieval Encounters 13: p12  Stamp Act, 1765, D. Pickering, Statutes at Large, Vol. XXVI, p. 179 ff (clause LVII relates to jurisdiction in admiralty). Turpin, Edward A.; McEwen, William A., 1980, "Ch. 18:United States Navigation Laws and Ship's Business". Merchant Marine Officers' Handbook. Centreville, MD: Cornell Maritime Press. ISBN 0-87038-056-X. Wilson J., 2001, Carriage of Goods by sea. Longman publishers, print. P97 Read More