Carriage of goods by sea under Charter Party - Case Study Example

The ship owner is also liable for the ship's under capacity and lower-speed than declared to TD. On the other hand the charterer TD is liable to the shippers for the damage caused by fire to the cargo of Smart Clothing which he can claim from the Ship Owner. This could be possibly circumvented by having the shippers' insurance claim settled and ultimately transfer the liability to the Ship owner. The sub-charterer BV similarly can have the insurance claim of V for damage to cargo while loading and ultimately have the liability transferred to ship owner through TD the main charterer.

And the parties who want to initiate claim against the owner, may do so by invoking arbitration as envisaged by the Charter party agreement in clause 21. This case relates to rights and liabilities of parties under the contract of charter party for carriage of goods by sea. The six parties involved are 1)Charterer (Timely Delivery hereafter 'TD', 2)Owner of ship 'The Bulky Whirlwind' (Owners Co) hereafter 'O', 3)Cargo Co, hereafter 'C', 4) Voyage SARL, hereafter 'BV' 5)Vignoble SARl, hereafter 'V', and 6) Smart Clothing Co, hereafter 'SC'.

As against the ship's declared carrying capacity of 12,000 TEU and speed capability of 23 knots, 2000 TEU are occupied by articles of ship's own essential use and speed is short of 3-7 knots. Ship's master refuses to take the shorter and direct route and also to pick up cargo located in the shorter route ordered by TD.for safety reasons. The crew member's careless smoking damages a cargo valued $ 300 000 by fire for which there was no safety trained staff for fire fighting. Due to arrest of the ship, 10 days are lost by stay at the port of Southampton.

It is noted Box No 35 in form of Charter party is left blank. The relevant box relates to applicable Law and Arbitration. The form provides that if the box is not filled in, sub clause (a) of condition no 21 of Charter parry form shall apply. The relevant condition is reproduced below.1 Charter party is contract between the owner of a ship and a hirer of the ship for using it to transport usually cargo. Even though the hirer is using the ship, the ship-owner exercises control over it for the navigation and management while the carrying capacity is in the discretion of the hirer known as charterer.

Four types of chartering in vogue are voyage charter, time charter, bareboat charter and lump-sum contract. 2"A time charter is another common form of agreement, with the owner of the ship operating his ship as instructed by the charterer between certain agreed dates for an agreed daily or monthly rate. During this period, it will be the charterer who will pay for the running costs of the ship such as the fuel and insurance. An analogy would be a contract to hire a car".3A cursory glance at the conditions set out in the Charter party form reveals Master failure to carry out Chatterer's instruction to take Suez route amounts to violation of condition no 7 ( c )4 of the Charter Party.

And damage due to Owner's servant's smoking inside attracts condition no 18(iii) (3)5 The Charterer is also entitled to 10 days off-hire for the arrest of the vessel due to C's claim for O's default in a previous charter attracting Hague-Visby rules and far having lost time (to be estimated) due to longer route as per condition