What is Maritime Law?

 It is also called “admiralty law” or “the law of admiralty,” the laws and regulations,
including international agreements and treaties, which exclusively govern
activities at the sea or in any navigable waters.

 It is a system of law which relates to the affairs of the sea, such as seamen,
ships, shipping, navigation and the like.

 Maritime Law
 A body of laws, conventions and treaties that governs international private
business or other matters involving ships, shipping or crimes occurring on open
water. Laws between nations governing such things as national versus
international waters are considered public international law and are known as the
Law of the Seas.

Also known as "admiralty law".


 INVESTOPEDIA EXPLAINS 'Maritime Law'
 In most developed nations, maritime law is governed by a separate code and is a
separate jurisdiction from national laws. The United Nations, through the
International Maritime Organization, has issued numerous conventions that can
be enforced by the navies and coast guards that have signed the treaty outlining
these rules. Maritime law governs many of the insurance claims relating to ships
and cargo, civil matters between shipowners, seamen and passengers, and
piracy.

Admiral Law

Admiralty law or maritime law is a distinct body of law that governs maritime
questions and offenses. It is a body of both domestic law governing maritime
activities, and private international law governing the relationships between private
entities that operate vessels on the oceans. It deals with matters including marine
commerce, marine navigation, marine salvaging, shipping, sailors, and the
transportation of passengers and goods by sea. Admiralty law also covers many
commercial activities, although land based or occurring wholly on land, that are
maritime in character.

Admiralty law is distinguished from the Law of the Sea, which is a body of public
international law dealing with navigational rights, mineral rights, jurisdiction over
coastal waters and international law governing relationships between nations.

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 Although each legal jurisdiction usually has its own enacted legislation governing
maritime matters, admiralty law is characterized by a significant amount of
international law developed in recent decades, including numerous multilateral
treaties.

Pre-history of Maritime Law/Admiral Law

Seaborne transport was one of the earliest channels of commerce, and rules for
resolving disputes involving maritime trade were developed early in recorded
history. Early historical records of these laws include the Rhodian
law (NomosRhodionNautikos), of which no primary written specimen has
survived, but which is alluded to in other legal texts (Roman and Byzantine legal
codes), and later the customs of the Hanseatic League. In southern Italy
the Ordinamentaetconsuetudomaris (1063) at Train and the Amalfian Laws were
in effect from an early date.

Bracton noted further that admiralty law was also used as an alternative to the
common law in Norman England, which previously required voluntary submission
to it by entering a plea seeking judgment from the court.

Islamic law also made major contributions to international admiralty

law, departing from the previous Roman andByzantine maritime laws in several
ways. These included Muslim sailors being paid a fixed wage "in advance" with
an understanding that they would owe money in the event
of desertion or malfeasance, in keeping with Islamic conventions in which
contracts should specify "a known fee for a known duration." (In contrast, Roman
and Byzantine sailors were "stakeholders in a maritime venture, inasmuch as
captain and crew, with few exceptions, were paid proportional divisions of a sea
venture's profit, with shares allotted by rank, only after a voyage's successful
conclusion.") Muslim jurists also distinguished between "coastal navigation,
or Cabot age", and voyages on the "high seas", and they made shippers "liable
for freight in most cases except the seizure of both a ship and its cargo". Islamic
law "departed from Justinian's Digest and the Nomo’s in condemning slave
jettison", and the Islamic Quad was a precursor to the
Europeancommenda limited partnership.The "Islamic influence on the
development of an international law of the sea" can thus be discerned alongside
that of the Roman influence.

Admiralty law was introduced into England by the French Queen Eleanor of
Aquitaine while she was acting as regent for her son, King Richard the Lionheart.
She had earlier established admiralty law on the island of Oleron (where it was

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 published as the Rolls of Oleron) in her own lands (although she is often referred
to in admiralty law books as "Eleanor of Guyenne"), having learned about it in the
eastern Mediterranean while on a Crusade with her first husband, King Louis VII
of France. In England, special admiralty courts handle all admiralty cases. These
courts do not use the common law of England, but are civil law courts largely
based upon the Corpus JurisCivilis of Justinian.

Admiralty courts were a prominent feature in the prelude to the American

Revolution. For example, the phrase in the Declaration of Independence "For
depriving us in many cases, of the benefits of Trial by Jury" refers to the practice
of Parliament giving the Admiralty Courts jurisdiction to enforce The Stamp Act in
the American Colonies. Because the Stamp Act was unpopular, a colonial jury
was unlikely to convict a colonist of its violation. However, because admiralty
courts did not (as is true today) grant trial by jury, a colonist accused of violating
the Stamp Act could be more easily convicted by the Crown.

Admiralty law became part of the law of the United States as it was gradually
introduced through admiralty cases arising after the adoption of the U.S.
Constitution in 1789. Many American lawyers who were prominent in the
American Revolution were admiralty and maritime lawyers in their private lives.
Those included are Alexander Hamilton in New Yorkand John
Adams in Massachusetts.

In 1787 John Adams, who was then ambassador to France, wrote to James
Madison proposing that the U.S. Constitution, then under consideration by the
States, be amended to include "trial by jury in all matters of fact triable by the laws of
the land [as opposed the law of admiralty] and not by the laws of Nations [i.e. not by
the law of admiralty]". The result was theSeventh Amendment to the U.S.
Constitution. Alexander Hamilton and John Adams were both admiralty lawyers and
Adams represented John Hancock in an admiralty case in colonial Boston involving
seizure of one of Hancock's ships for violations of Customs regulations. In the more
modern era, Supreme Court Justice Oliver Wendell Holmes was an admiralty lawyer
before ascending to the bench

Public International Law

International law is the set of rules generally regarded and accepted as binding in
relations between states and between nations. It serves as a framework for the
practice of stable and organized international relations.International law differs from
state-based legal systems in that it is primarily applicable to countries rather than to
private citizens. National law may become international law whentreaties delegate

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 national jurisdiction to supranational tribunals such as theEuropean Court of Human
Rights or the International Criminal Court. Treaties such as the Geneva
Conventions may require national law to conform to respective parts signed and
ratified.

Much of international law is consent-based governance. This means that a state

member of the international community is not obliged to abide by this type of
international law, unless it has expressly consented to a particular course of
conduct.

Public law is that part of law which governs relationships between individuals
and the government, and those relationships between individuals which are of
direct concern to the society. Public law comprises constitutional
law, administrative law, tax law and criminal law, as well as all procedural law. In
public law, mandatory rules prevail. Laws concerning relationships between
individuals belong to private law.

The relationships public law governs are asymmetric and unequal – government
bodies (central or local) can make decisions about the rights of individuals.
However, as a consequence of the rule of law doctrine, authorities may only act
within the law. The government must obey the law. For example, a citizen
unhappy with a decision of an administrative authority can ask a court for judicial
review.

Rights, too, can be divided into private rights and public rights. A paragon of a
public right is the right to welfare benefits – only a natural person can claim such
payments, and they are awarded through an administrative decision out of
thegovernment budget.

Matters of Safety and Protection of Maritime Environment

 A.596(15), by which it requested the Maritime Safety Committee to develop, as a

matter of urgency, guidelines, wherever relevant, concerning shipboard and
shore-based management and its decision to include in the work programme of
the Maritime Safety Committee and the Marine Environment Protection
Committee an item on shipboard and shore-based management for the safe
operation of ships and for the prevention of marine pollution.

 The most important means of preventing maritime casualties and pollution of the
sea from ships is to design, construct, equip and maintain ships and to operate
them with properly trained crews in compliance with international conventions
and standards relating to maritime safety and pollution prevention.

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SOURCES OF MARITIME LAW

 International conventions and treaties

 International model laws
 Standard form contracts
 Standard terms
 International custom
 The Lex Maritima, being part of the Lex Mercatoria
 Doctrine - writings of leading authorities on the law
 Decisions of international courts and international arbitral tribunals
 Decisions of national supreme and other courts and arbitral tribunals of
international reputation.
Conventions of Maritime Law

 International Maritime Organization (IMO).

 International Convention for the Safety of Life at Sea (SOLAS)
 International Convention for the Prevention of Pollution from Ships (MARPOL)
 International Convention on Standards of Training, Certification and Watch
keeping for Seafarers (STCW)

International Maritime Organization (IMO)

 Since its creation, IMO has been busy in formulating and promoting new
conventions and updating existing conventions related to maritime safety and
pollutions. Majority of conventions adopted by IMO usually fall into three main
categories - maritime safety, prevention of marine pollution, and liability and
compensation, especially in relation to damage caused by pollution.

 At present, IMO is responsible for implementing and promoting over fifty

international conventions and agreements related to safety, pollution and other
maritime issues. These international regulations must be followed by all shipping
nations to improve maritime safety and environment.
International Convention for the Safety of Life at Sea (SOLAS)

 The International Maritime Organization (IMO) adopted a new version of SOLAS

in 1960 with the intention to keep the convention up to date by periodic
amendments. But the amendment procedures appeared to be slow taking
several years. As a result, IMO introduced a new version of SOLAS in 1974 to
include the tacit acceptance procedure - which provides that an amendment shall
enter into force on a specified date unless, before that date, objections to the
amendment are received from an agreed number of Parties. The new procedure

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 has led to numerous amendments in SOLAS since 1974. The Convention in
force today is often referred to as SOLAS, 1974, as amended.
International Convention for the Prevention of Pollution from Ships (MARPOL)

 The International Convention for the Prevention of Pollution from Ships

(MARPOL) is the most important international regulation for preventing pollution
of the marine environment by oil from ships due to accidental or operational
reasons. MARPOL was adopted by IMO in 1973, which incorporated much
of OILPOL 1954 and its amendments into Annex I. Annex I of MARPOL contains
most important regulations for preventing pollution by oil from ships. But before
its implementation, a series of tanker accidents occurred in 1976-77, leading to
the formulation of the 1978 MARPOL Protocol that fully absorbed the 1973
Convention. The combined version, referred to as (MARPOL 73/78), was finally
implemented in October 1983. Since then, MARPOL has been updated through
the years.
International Convention on Standards of Training, Certification and Watch
keeping for Seafarers (STCW)

 The International Convention on Standards of Training, Certification and Watch

keeping for Seafarers (STCW) was adopted by IMO in July 1978. As the name
suggests, the Convention has been created to set training and certification
standard for masters, officers, and watch personnel on seagoing merchant ships.
The Convention came into effect in 1984 after the ratification by pre-requisite
number of countries. At the behest of US Coast Guard, IMO had to make a major
amendment to STCW Convention in 1995.

List of the Main Originators of International Conventions for Maritime Law

1. International Maritime Organization (IMO)
As a specialized agency of the United Nations, IMO is the global standard-setting
authority for the safety, security and environmental performance of international
shipping. Its main role is to create a regulatory framework for the shipping industry that
is fair and effective, universally adopted and universally implemented.
2. International Labour Organization (ILO)
The unique tripartite structure of the ILO gives an equal voice to workers, employers
and governments to ensure that the views of the social partners are closely reflected in
labour standards and in shaping policies and programmes.The main aims of the ILO are
to promote rights at work, encourage decent employment opportunities, enhance social
protection and strengthen dialogue on work-related issues.

3. Comite Maritime International (CMI)

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 The Comité Maritime International (CMI), formed in 1897, is the oldest international
organisation in the field of maritime law. It was founded with the prime view of promoting
uniformity in maritime law, and to that end it now has 53 national maritime law member
associations. The South African Maritime Law Association (SA MLA), itself in existence
for over a quarter of a century, was admitted to the CMI in 1995. The national
associations' memberships comprise a broad spectrum of those interested in the
shipping industry in general, and in maritime law in particular. It is common to find
judges, legal practitioners and academics in the ranks of member associations.
4. United Nations (UN)
The United Nations is an international organization founded in 1945. It is currently
made up of 193 Member States. The mission and work of the United Nations are
guided by the purposes and principles contained in its founding Charter.
What is Jurisdiction?

 The state to which the ship is entitled to fly its flag has to exercise jurisdiction and
control over the ships administrative.
 The flag state shall maintain a register of ship.
 The flag states has to assumes its jurisdiction over the ships, the master of the
ship and the crew on relation to administrative.
 The Flag state shall take measures to ensure that all ships entitled to fly its flag
will ensure safety at sea.
 The Flag state shall exercise measures to ensure that ships are entitled to fly its
flag follow registration procedure, surveys interval requirements and comply with
the requirements for complete navigational aids.
Coastal State Jurisdiction
Over Vessel-Source Pollution
Deals with prescriptive and enforcement jurisdiction in international law aimed at
preventing, reducing and controlling pollution of the marine environment. The focus is
on a single source of pollution, viz. that by vessels, from the perspective of the coastal
State. Prominent in the international legal framework of vessel-source pollution are the
LOSC, regulatory conventions such as MARPOL 73/78 and SOLAS 74, and a multitude
of other international instruments such as IMO Resolutions.
Port State jurisdiction
Ports are an obvious place to verify if visiting foreign vessels are in compliance
with certain types of national or international technical standards, or if they have
engaged in certain illegal behavior in the port state's own maritime zones, in the
maritime zones of other states, or on the high seas.
Private law speaks of the rules concerning the rights and duties between
individuals or group of individuals

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  Law of Contracts
 Refers to the contractual duties that are imposed and stated in the contract itself.
 Law of Torts
 Concern rules in dealing civil wrongs committed by a person against another
person
 Law of Personal Property
 It embraces the law concerning the choose in possession and class in action
Explains that public maritime law is enforced
Enforcing laws and keeping the peace, but today's maritime law enforcement
personnel do much more than that. With missions expanding, and budgets shrinking,
police boats find themselves involved in search and rescue missions, basing SCUBA
operations, conducting harbor safety patrols, assisting disabled boaters, and even
responding to HAZMAT emergencies. These missions can happen any time, and in
any weather. Day and night, in good weather and bad, police boats need to be
equipped to answer the call.
Distinguishes between private and public international law
Public international law (or the law of nations) is a body of customary or
conventional rules which are considered as legal binding by civilized states in their
intercourse with each other and is concerned solely with the rights and obligations of
sovereign states. Private international law (or the conflict of laws) may be defined as the
rules voluntarily chosen by a given state for the decision of cases which have a ‘foreign’
element or complexion.

Penal sanction
The project, which is due to be completed in March ‧ aims at strengthening the
legislative and institutional capacities of the juvenile justice system and formulating a
strategy on the improvement of prison conditions for young offenders while ensuring
that measures for protection, assistance and education prevail over penal sanctions.
Penal Sanctions (Indigenous Workers) Convention, 1939 (shelved) is an International
Labor Organization Convention.It was established in 1939, with the preamble stating.
States that differences of detail usually exist in the national laws of different states
implementing the same convention
States that, when serving in a ship flying a foreign flag, it is essential that the master,
chief mate and chief engineer familiarize themselves with the laws and regulations of
the flag States, States that, when in port, a ship must also comply with the appropriate
laws and regulations of the port StateDescribes the importance of keeping up to date
with developments in new and amended legislation
Convension of the law on the sea

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 The Law of the Sea Convention defines the rights and responsibilities of nations
with respect to their use of the world's oceans, establishing guidelines for businesses,
the environment, and the management of marine natural resources. It deals with
matters including marine commerce, marine navigation, marine salvaging, shipping,
sailors, and the transportation of passengers and goods by sea.
Territorial seas
Territorial waters, or a territorial sea, as defined by the 1982 United Nations
Convention on the Law of the Sea.is a belt of coastal waters extending at most 12
nautical miles (22.2 km; 13.8 mi) from the baseline of a coastal state. The territorial sea
is regarded as the sovereign territory of the state, although foreign ships (both military
and civilian) are allowed innocent passage through it; this sovereignty also extends to
the airspace over and seabed below.
Contiguous zone
A band of water extending from the outer edge of the territorial sea to up to 24
nautical miles (44.4 km; 27.6 mi) from the baseline, within which a state can exert
limited control for the purpose of preventing or punishing "infringement of its customs,
fiscal, immigration or sanitary laws and regulations within its territory or territorial sea".
International straits/waters
This are free for navigation by ships of all nations, regardless of whether or not
they overlap with the territorial waters of littoral states.
Strait of Gibraltar

 also known in Spanish “Estrecho de Gibraltar”

 it is a narrow strait that connects the Atlantic Ocean to the Mediterranean Sea
and separates Gibraltar and Peninsular Spain in Europe from Morocco Ceuta
(Spain) in Africa.
Exclusive Economic Zone/EEZ
An exclusive economic zone extends from the outer limit of the territorial sea to a
maximum of 200 nautical miles (370.4 km; 230.2 mi) from the territorial sea baseline,
thus it includes the contiguous zone. A coastal nation has control of all economic
resources within its exclusive economic zone, including fishing, mining, oil exploration,
and any pollution of those resources. However, it cannot prohibit passage or loitering
above, on, or under the surface of the sea that is in compliance with the laws and
regulations adopted by the coastal State in accordance with the provisions of the UN
Convention, within that portion of its exclusive economic zone beyond its territorial sea.
Continental Shelf
The continental shelf is an underwater landmass which extends from a continent,
resulting in an area of relatively shallow water known as a shelf sea.

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High Seas
Oceans, seas, and waters outside of national jurisdiction
Protection and Presentation of Marine Environment
Watercourse states shall, individually and, where appropriate, in cooperation with
other states, take all measures with respect to an international watercourse that are
necessary to protect and preserve the marine environment, including estuaries, taking
into account generally accepted international rules and standards.
International Convention on Load Lines
The Contracting Governments, desiring to establish uniform principles and rules
with respect to the limits to which ships on international voyages may be loaded having
regard to the need for safeguarding life and property at sea; CONSIDERING that this
end may best be achieved by conclusion of a Convention; several articles and
regulations were made
Freeboard
Depth for freeboard” or “D” means the distance equal to the moulded depth
amidships plus the thickness of the stringer plate, with no allowance for sheathing.
However, in the case of a vessel that does not have right-angled gunwales or that has
rounded gunwales with a radius greater than four per cent of the breadth, that distance
shall be adjusted so that the area of the topside section is equal to that of a vessel with
right-angled gunwales and with the same round of beam.
Freeboard Regulation
 The correction for thickness of sheathing on the exposed freeboard deck T(L-
S)/L is
 Applicable only when deck is completely sheathed between superstructures. In
other cases
 The correction should be Tl/L, where l = length of sheathed area which extends
from side to
 Side. Only wood sheathing should be considered.

THE VOYAGE

UNREASONABLE DEVIATION

Deviation has been defined in the previous chapter as a departure from the
prescribed ordinary trading route. It could also be defined as the voluntary substitution
of the contracted voyage with another voyage.

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 The contracted voyage is the one, which has been expressly agreed, or in the
absence of a specifically prescribed route which is normally not prescribed the ordinary
trading route for ship engaged in similar circumstances.

Deviation Allowed By The Hague-Visby Rules

Article 4 of the Hague-Visby rules define what is not an unreasonable deviation

is.

Any deviation in saving or attempting to save life or property at sea or any

reasonable deviation shall not be deemed to be an infringement or breach of this
convention or of the contract of carriage shall not be liable for any loss or damage
resulting there from.”

The corresponding definition in the Hamburg rules reads (Art 5(6)). The carrier is
not liable, except in general average, where loss, damage or delay in delivery resulted
from measures to save life or from reasonable measures to save property at sea”.

In any case of deviation, it is necessary to first determine the route which has
been contracted. Normally, the bill of lading only declares the ports of loading and
discharge and rarely specifies the route but could. The bill of loading is not the whole
contract but it is evidence of the contract. Other “sources” for determining the ordinary
trading routes used by the line in the past are notices and advertisements, the booking
note and the charter party.
Deviation Allowed In Common Law

In common law, the deviation is justified when it is necessary for the safety of the
adventure. A vessel may, therefore, deviate in order to avoid threatening danger
(Hurricanes, Icebergs, Pirates, etc.) or when, due to a breakdown, she is urgent need of
repair. In the latter case, the vessel does not necessarily have to go to the nearest port,
but it should go to the nearest port where the repair can be reasonably carried out
(considering danger, distance, repair facilities, expense, and total time etc.).

Deviation Allowed By a “Deviation Clause”

It is common, that contracts of carriage contain an express deviation clause.

Courts will normally permit and uphold such clauses unless the effect of the deviation
would render the whole performance of the contract impossible or destroy the
commercial object of the contract.

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 The effect of a non-permissible deviation is that the carrier loses the right to
invoke the exemptions of the liability (in the convention or the contract of carriage)
regarding the loss. However the claimant will have proved that.

1. There was a deviation.

2. The deviation was unreasonable.
3. The loss or damage was a result.

EFFECTS OF UNREASONABLE DEVIATION

When the ship deviates from her proper route, the charterer has the right to sue
him in court for breach of contract. The charterer is discharged from terms and
conditions of the contract and can claim damages from the shipowner.

a. The defenses of the shipowner such as Act of God, the queen’s enemies inherent
vice of goods, defective packing and general average sacrifice against claims from
cargo owners could not be invoked when the ship departed from its proper route.

b. A shipowner, who has deviated from the contracted route, has in effect, revoked
the contract and, therefore, cannot claim to be remunerated. With regards to the
freight, the shipowner cannot claim the contracted rate of freight under the charter
party.

c. On general average, the shipowner cannot claim contributions from the charterer.

d. On limitations of liabilities, a shipowner cannot rely on any clause in the charter

party entitling him to limit his liability.

STOPPAGE IN TRANSIT

There might be instances, when after receiving the cargo, the buyer becomes
insol vent and the seller instructed the shipowner carrier to redeliver the goods to him
instead of the buyer.
Or it may be a third party claiming to stop them in transit.

In case there are two parties claiming the goods as a result of stoppage in transit,
the shipowner is placed in very difficult situation. The case should be brought to court to
determine the rightful claimant. The shipowner wants to avoid the risk of giving on
delivering the goods to the wrong person. His only interest is on freight for the cargo.

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DISCHARGE/DELIVERY AND PAYMENT

DISCHARGE

At the end of the voyage is discharge of goods and subsequent delivery to the
consignee. Like the loading port, the port of discharge is also nominated in the bill of
lading.

Sometimes there are clauses in the bill of lading that state that the goods may be
discharged on the quay and into lighters at the consignee’s risk and expense. Discharge
operation depends on the agreement made by the parties as well as the practices in the
port of discharge.

DELIVERY

Delivery means the actual passing of possession of the cargo to the

consignee. Obligation of carrier to deliver the goods is not imposed under the Hague-
Visby rules. There are cases when the carrier gave the information regarding the place
and date of the vessel’s arrival where the consignee is ready to receive the cargo
immediately after discharge.

Delivery is made to the claimant after presentation of the bill of lading. If bill of
lading is lost or delayed, the goods may be delivered against a letter of indemnity issued
by a bank.

PAYMENT

After delivery of cargo, the shipowner is entitled to the payment of freight for the
carriage of goods or hire for the use of the ship. The freight shall be payable after the
carrier has performed his duty under the contract of the delivery of goods. While in time
charter, hire is commonly paid at regular intervals, say, monthly.

Ordinarily, the carrier is not entitled to freight if it has not delivered the goods.
However, if he is prevented from performing his duty, by acts of shipper, consignee or
other bill of lading holder, the freight becomes payable on discharge of cargo.

Back freight is defined by Brodie (1997) as the “freight payable to a shipowner for
the carriage of goods back to the port or to another convenient port when the vessel is

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unable to reach the port of destination because of an excepted peril or because the
consignee fails to take delivery of the goods or provide instructions for their disposal.

Time and Bareboat Charter Parties

Introduction

The contract of time charter and the contract for bareboat charter of a ship are
different from the voyage charter. Unlike in the voyage charter, the charterer who hires
the ship under bareboat and time charter contract has the oppurtunity to control the use
of the ship.

The contract for a bareboat charter is conluded because the charterer wants to
hire a vessel for a period of time from the shipowner without the latter supplying the
necessary equipment and crew. This kind of chartering from the time and voyage
charters because the charterer leases the ship and becomes a temporary owner of the
ship.

This chapter therefore presents the general characteristics of bareboat charter

party including the most important terms and conditions of the contract.

Likewise, the topics in the time charter party presented in this chapter center of
the meaning and general characteristics of time charter, the reasons why this type of
contract are concluded and the explanations of the important clauses in the contract
that legally bind the parties to the contract and masters of the vessels.

The Time Charter Pary

By definition, time charter party refers to “a contract for the hire of a ship for use
by a charterer (the party who hires the ship) for a certain period of time” (IMO CML,
1993). The other name of charter party is charter contract. Sometimes, it is simply
called as the charter.

In general, the time chartering process follows closely similar steps to the steps in fixing
ship and cargo. Sometimes, the process of chartering or fixture of the ship is easy and
can be completed by in a day. There are times, however, when the market is tough and
ships are not always available. During this time, the broker will have to work hard in
order to facilitate the fixture of ships.

Also, there are times when the shipowner and the shipper cannot agree right on many
terms This becomes difficult for the broker. The problem in time chartering is when the
market for the ship is high, the transactions shift to the advantage of the shipowner, and
the charterer has to pay up beyond his estimated budget. When the market is down, the

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shipowner will have to accept lower rate, which is sometimes too low to cover cost of
maintaining and owning ships.

Reasons why a Time Charter is Concluded

There are reasons why time charter party is preffered by the charterer. Some of the
common reasons are as follows:

1. The cost of maintaining and manning a ship is high and the charterer hires a ship
because he has advantages of controlling the ship and saving from the costs of
maintaining and manning her. Likewise, he can control the ship without actualy
spending a big amount of money for either purchasing or building a ship of his
own.
2. Sometimes, a shipping company hires a ship on charter because it needs
additional ships immediately to substitute other ships in its fleets.. The shipping
line may also charter some ships to add to new liner routes. In this way, the
shipping line need not spend much money to purchase a new ship or order for
new shipbuilding which takes two or three years.
3. If a shippng line is interested in a new venture, which requires specially-built
ships and these ships are not available in this fleet, it hires a ship on charter
party. This gives the shipping line the advantage of obtaining a ship that is
suitable for the specialized trade needed by the joint venture. It also avoids
spending much amount of money to buy a new ship.

From the three reasons gives above, it becomes very clear that the major reason for
hiring a ship on time-charter basis is to reduce costs.

The Standard forms of Time Charter Parties

Time charter parties use standard forms. For tankers, the oil companies such as Shell,
Caltex, Mobil, etc, have their own forms. For dry cargo trade, the most commonly used
are the Baltime (1939), New York Produces Exchange (1946, revised in 1994) and Liner
Time.

In the charter market, it is commonly considered that the contents of the Baltime (1939)
clauses are “friendly to shipowners”, whereas those of the New York Product
Eexchange (1993) are “friendly to charterers”. The clauses in the time-chartered parties”
forms are numbered and these proveide the vital terms and conditions of the charter.
The clauses, however, also reveal characteristics of the time charter parties.

In 2000 the Federation of National Association of Ship Brokers and Agents (FONASBA)
issued a uniform interpretation of some provisions or clauses of time charter party to
resolve maritime disputes applicable to Engand uSA France, Germanny, Italy and other
maritime countries. Specifically, the interpretations deal with the terms and phrases

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concerning speed and consumption, withdrawal for late/non payment of hire, off hire,
deviation, and legitimacy of the last voyage.

The seaworthiness of the vessel under standard time charter party is implied (not
expressly written in the contract). This means that the shipowner is obliged to make the
vessel seaworthy at the beginning of the time charter. This obligations is ensured prior
to the beginning of the voyage. Prior to delivery, a survey is made on this condition.

Description of a Ship in the Time Charter Party

In this time charter, the statement of clauses are numbered. The first portion of the
charter is where the names of the parties to the contract are supposed to appear,
including the datte when the contract was concluded. Immediately following this portion
are the provisions pertaining to the description of the ship or the vessel.

The description of the vessel is more important in a time charter agreement than in a
voyage charter because the details or specifications of the ship should be clearly written
down. All details about the ship such as carryinh capacity, speed, fuel, construction, fuel
consumptions, nationality, flag, and relevant information must appear in the charter.

In voyage chartering, both cargo and ports are known to the parties prior to the signing
of the agreement so the charterer and the shipowner can just pick out details about the
ship that are relevant. This is not practiced in time chartering, the time charterers often
do not known what cargo they will carry aboard the ship as well as the names of the
ports to visit. Thus, charterers usually demand all information and details about the
vessel.

The New York Produce Echange Form 1993 (Code Name NYPE, 93) is one of the
most popular form used for time charter party in cargo trade. Details or information on
the vessel that are required to be revealed in the form, appears in the following except:

Cargo Capacity, Speed, and Fuel Consumptions

The description of the ship is important to a time charter because the capacity of a ship
determines his earnings. Based on the description of the characteristics of a ship, the
charterer can calculate the costs of using the ship. For example, if the speed in knots is
given and the type of engine used and fuel are described, the charterer would be able to
compute fuel consumption and operating expenses. The vessel’s speed is a very
warranty in the time charter party.

The most common disputes between the charterer and the shipowner are thse
pertaining to the description of the vessel, especially when it comes to deadweight,
speed and fuel consumption. The deadweight information must be exact as much as

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possible because the income of charterer comes form cargoes that will be carried
through the vessel.

The cargo may either be owned by the charterer or byy a third party. A
misunderstanding of the deadweight bears considerable reduction to the income of the
charterer. If the deadweight is declared by the shipowner to be 25, 000 but in reality it is
20, 000 only, the charter would be unable to load about 5,000 tons.

In case of speed and fuel consumption, the vessel that is declared by the shipowner
consume 25 tons instead of 30 tons means loss to the charterer. The misdeclaration is
possible because pariculars of the description are only estimated. In the estimation, the
word “about” in the speed of the ship appears in the contract.

The Period of the Time Charter

The period of a time charter varies from three months up to three years or even up to
ten years. The period may also refer to a trip usually “round trip” crossing the oceans.
Example of the round trip period of is the “Trans-Pacific round trip”. The term”without
guarantee” is added to the period.

The estimated duration of the trip may or may not be included in the time charter party if
the estimated period appears in the contract the word “about” is placed before the
number of years or months (as the case may be). The word “about” here means the
charterer may “end or terminate the contract before the period stated has expired or
even after the period has expired, provide that it is within reasonable time.

Example:

The contract is concluded between the shipowner and the charterer. The period defined
is “about one year.” The question is: When can the charterer end or terminate the
contract

The end of termination of the contract means the charterer will return the ship to the
owner (also called the redelivery of the vessel) at an agreed port. In our example of
“about one year” the charterer can return the vessel t the shipowner perharps a few
days before (e.g. two days) the one-year period ends or two days after the one-year
period expires.

Underlap is the term used by the charterers when the vessel is returned or redelivered
to the shipowner before the expiration of the agreed period.

Overlap is the term used when the charterer redelivers to the shipowner the vessel
after the agreed period has expired.

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Obligations of the Charterer to pay Hire

Hire is an important obligation of the charterer stated as a clause in the contract. It

refers to the payment for the hire of the ship. Hire or charter hire is the money paid for
the hire of a ship. When the vessel is delivered b the shipowner to the charterer on
agreed time, place and seaworthy, conditions, the vessel is said to be “on hire”.

Although it is the obligation of the charterer to pay hire, there are circumstances when
be has the right to suspend (not pay) the owner. The conditions for non-payment of hire
are stated in the “off hire” clause of the time charter party.

By the definition, the off hire is a period during the contract for hire whent the charterers
obligation to pay hire to a shipowner is suspended for the time being in view of some
circsumstances. This means that under those circmstances, the ship has been
temporarily unused by the charterer, resulting in some expenses. These expenses shall
be borne by when the vessel was not used for the reasons contracted for.

Not all circumstances entitle the charterer to claim “off hire”. Specifically, some
conditions allowable to suspended the payment of hire are as follows:

1. Loss of time from deficiency and/or default of officers or crew

2. Deficiency of ship’s stores
3. Fire or breakdown of machinery
4. Damages to hull resulting in temporary repair
5. Grounding of the ship
6. Detention by average accidents to ship or cargo unless resulting from defect of
cargo
7. Deviation of the vessel that is contary to the order or direction of the charterer.

All expensives incurred by the charterer under the above reasons are to be claimed
from the shipowner. When the vessel is considered as “off hire” the charterer has the
right not to pay the shipowner for the hire of a ship. Normally, the off hire period is
calculated into monetary value and the shipowner deducts the sum from the total hire.

The Baltiomore and NYPE forms have different conditions with regard to “off hire”. In
practice, if the charterer and the shipowner have special arrangements with the regard
to “who will shoulder what” during off period, no disoute between the two will arise.

The hire is usually paid for a period agreed upon by the charterer and the shipowner.
Hire must be paid punctually, which means, not delayed. If the charterers payment is
late, the shipowner has a right to cancel the charter party. The charterer can pay the
hire in whatever form and means agreed between him and the shipowner. It could be
paid in cash or through a back account of the shipowner.

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The basis of hire depends on the deadweight of the ship. In some cases the cubic
capacity of paying hire is followed. In usual practice, the payment of hire depends singly
on whatever agrrement is made between the shipowner and the charterer. It could be
paid yearly or monthly or semi-monthly, etc. Baltimore form uses monthly full payment
of hire. New York Produce Exchange (NYPE) from uses semi-monthly. Other forms use
various arrangements agreed upon by the shipowner and the charterer.

Escalation Clause

There are times when the shipowner incurred additional or increased expenditures in
operating the ship. In order to avoid suffering from losses, the parties to the contract
insert in the charter party a clause that the products the shipowner from unexpected
losses. The clause is called escalation clause.

In the escalation clause, it is cited that if the wages of the crew increase during the
period that the charter hires the vessel, the increase is borne by the charterer. The
provision of the escalation clause may also state that the percentage of increase of
salary of crew shall the borne by the charterer depending on the declared inflation rate
of the countr where the ship is registered. It is a general practice, how ever that the
shipowner and the charterer their own accepted terms regarding the crew’s salary
increases.

Delivery of the Ship

A clause in the standard time charter contract gives the conditions for the conditions for
the delivery of the vessel. Delivery of the ship means the placing of a ship by the
shipowner at the disposal of the time charterer at the beginning of the period of the
charter, usually specifying the time and place agreed upon.

Before the delivery of the vessel, the independent ship surveyors sent jointly by the
charterer and the shipowner do a surevey or check-up. They spend for this survey. The
surveyors check the conditions of the ship (hull,machinery,equipment, gears, bunkers,
holds, tanks, etc.)

With regard to legal liabilities, the sshipowner is responsible for the delay in the delivery
of the vessel or during the charter or for loss or damage of goods onboard, only if there
are caused by lack of due diligence on his part or on the part of his managers to make
the ship seaworthy. The shipowner is exempted from liabilities if these exception
clauses indicate that he is not responsible for any delay caused by the neglience or
defaults of his servants (master and officers included) nor for loss opr damage resulting
from inwelcome events such as strikes, lockouts, etc.

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Redelivery of the Ship

The redelivery or return of the ship is written i the charter contract. It is a clause in the
contract that obliges the charterer to return the vessel to the shipowner in the same
good order and condition, as when the vessel was delivered by tthe shipowner to the
charterer in the beginning of the hire period. The procedure in the redelivery of the ship
is similar to the procedure in the delivery.

The charterer and the shipowner will have to survey the ship jointly. They hire a team of
independent surveyors. Bunker quantity is also included in he survey to determine how
much shall be paid by the shipowner to the charterer for the oil onboard the returned
vessel. A redelivery certificate is issued and signed by the surveyor to the shipowner.

Any damage to the vessel, which was not repaired by the charterer upon delivery of the
ship, entitles the shipowner to claim damages and possible loss of profit only and not to
repairs to be carried out before delivery. After delivery, the shipowner cannot claim from
the charterer payment for the hire for he time lost for repair. With regard to the date of
redelivery, if the margin is not indicated in the contract(e.g.margin is 25 days more or
less) and a dispute appears, the court usually implies for the margin.

The Bunkers Clause

This is a clause in the contract of time charter stating the quantity of fuel that is to be
kept on board at the time of delivery of the vessel by the shipowner to the charterer and
when the vessel is returned or redelivered by the charerer to the shipowner. The
charterer pays the required quantity of bunker fuel to the shipowner at the time of
delivery of the ship. The charterer onboard the vessel maintains the same quantity
during the time of redelivery. The costs of bunker are paid by the shipowner to the
charterer.

The Sub-Chartering Aagreement

There is clause in the time charter party that gives freedom to the charterer to “sublet”
the vessel on time charter to another party during the contract period. This is called the
sub-chartering clause.

Sub-chartering is allowing a third a party to use the vessel that is hired on time charter
party by the charterer from the shipowner. Under the sub-chartering system, the
charterer who has a contract with the shipowner reamains responsible for all of the
obligations written down in the contract between him and the shipowner.

The contract between the charterer and the sub-chartering is a contract between the
two of them. The shipowner is not a party to the contract between them (charterer and

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sub-charterer). The obligations of the sub-charterer are legally bound him and the
charterer only.

Shipowner

Charter
Contract Sub-
Contract Charterer Sub-Charterer
Charttering

Trading Areas and Safe Port

The charterer has the right to decide on how to used the vessel on time charter,
provided that the vessel is used within the described trading areas the contract. This is
a warranty in the time charter contract.

TUG, TOW AND TOWAGE

It is always important to distinguish a contract of towage from one of carriage as

different legal regimes apply. A contract of towage is one where the tug owner supplies
a tug to tow (or push or assist) a ship, barge or other object belonging to someone else.
Examples of towage are where a tug owner assists a ship in docking or undocking or
when a tug owner is hired to tow a barge (loaded or unloaded) provided by the
customer from point A to Point B. In contrast, a contract of carriage is one where the tug
owner agrees to supply both the tug and the barge for the transportation of the
customer's goods from point A to point C. Where the contract is one of carriage, the
duties and liabilities of the tug owner are those of a carrier and the legal regime
applicable is that governing contracts for the carriage of goods by sea.

COMPULSORY TUG ASSISTANCE

Under a normal conditions, towage service are not compulsory or mandatory, which
means that the government or the port authority does not require the ship to avail of the

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towage service at the port. Towage service become an avail when the following
conditions are present:
1. The approaches to the anchorage or the berth or the port facilities or the water
space of the berth are too limited which make the ship difficult to maneuver by
herself safety.
2. There is a strong wind or current factors affect the velocity of the vessels speed.
3. There is a inclement weather or the tropical depression or the typhoon is present
within the immediate vicinity of the port.
4. The vessel has the mechanical defect due to engine trouble or malfunctioning of
navigational equipment, which puts her at risk in maneuvering her.

Responsibilities and Liabilities of Tug Owner

The responsibilities and liabilities of a tug owner at common law are: (1) to provide a
seaworthy tug, properly manned and equipped to carry out the work in the weather and
circumstances reasonably to be expected; and (2) to carry out the work with due care
and skill. (Wire Rope British Columbia v BC Marine Shipbuilders, [1981] SCR 363 at p.
392) This duty would appear to include an obligation to inspect the tow. (Fraser River
Pile & Dredge Ltd. v. Empire Tug Boats Ltd., 92 F.T.R. 26) If the tug owner fails to
provide a seaworthy tug or fails to carry out the work with due care and skill, it will be
liable for any resulting loss caused by such failure.

It is uncertain whether the tug owner's obligation to provide a seaworthy tug is an

absolute obligation or one that can be discharged by the exercise of reasonable care
and skill. The decision of the Supreme Court of Canada in the Wire Rope case would
seem to support the view that the obligation is an absolute one. In that case the
Supreme Court held that the inclusion of an exemption clause in the towage contract
which required the owner to exercise due diligence to make the tug seaworthy replaced
the implied warranty. (pp.392-3) Implicit in this reasoning is that the implied warranty is
something different than due diligence.

In The West Cock, [1911] P 208, it was said that where the tow is lost or damaged
during the course of the tow, the onus is on the tug owner to relieve himself of liability by
proving there was no negligence or want of reasonable care or skill on his part. This is
likely true for an unmanned tow where the tow has been transferred to the possession
and control of the tug owner (a bailment), however, it is questionable that such a
presumption should apply where there is no transfer of possession. For example, the
presumption should not apply where a tug is merely assisting a manned vessel. (Fraser
River Pile & Dredge Ltd. v. Empire Tug Boats Ltd., 92 F.T.R. 26)

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Responsibilities and Liabilities of Tow Owner

The owner of the tow has an obligation to ensure that proper skill and diligence is
exercised by those on board the tow (Hamilton Marine & Engineering Ltd. v. CSL Group
Inc., (1995), 95 F.T.R. 161), that the tow is fit for the towing operation and to disclose
any fact or matter which could affect the towing operation. However, this will not absolve
a tug owner from liability where a reasonable inspection of the tow would have
disclosed the defect. (Again see Fraser River Pile & Dredge Ltd. v. Empire Tug Boats
Ltd., 92 F.T.R. 26)

Additionally, where the tow is manned, there is a presumption that the tow is in control
of the towing operation and will be liable for any resulting damage (The Queen v. The
Delta Pride et al., 2003 FCT 11). However, the question of who has control is one of fact
and the vicarious liability of the tow will depend upon the nature of the negligent act that
caused the damage. (Grieg Shipping A/S v. Fortune Marine Ltd. (The Dubai Fortune),
2013 FCA 218)

Towing Conditions

It is quite usual for the common law duties to be varied or eliminated entirely by the
terms and conditions of the specific contract between the tug owner and the owner of
the tow. There are a variety of common standard conditions that are in use for this
purpose. The most well known internationally are the UK Conditions for Towage of
which there are various versions. There are essentially three main elements to standard
towing conditions: first they provide that the master and crew of the tug are deemed to
be the servants of the tow and under the control of the tow (this makes the tow owner
vicariously liable for the negligence of the tug crew); secondly, they provide a very
broad exemption clause in favor of the tug owner exempting the tug owner from liability
for loss or damage however caused, including negligence; finally, they provide that the
tow owner shall indemnify the tug owner against and in respect of any claims for loss or
damage made against it.

Provided the towing conditions are drafted in a clear and unambiguous fashion, they will
be given effect to by Canadian courts. However, if they are unclear or ambiguous, they
will be interpreted strictly against the interest of the tug owner or disregarded entirely
(Meeker Log and Timber Ltd. et. al. v. The Sea Imp VIII, 1996 CanLII2229 ).

It is also today quite common to find clauses in towage contracts that require one party
or the other to have insurance on either the tug, tow or cargo. Such clauses are
generally considered to be for the benefit of the other party and have been held to have
the effect of relieving that party from liability for damage that is covered by the
insurance. (St. Lawrence Cement Inc. v. Wakeham& Sons Ltd., 1995 CanLII 2482)

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Limitation of Liability

Tug owners are entitled to take advantage of the limitation of liability provisions of the
Marine Liability Act. An issue which sometimes arises in the context of limitation of
liability and towage is whether the tonnage to be used in the calculation is that of the tug
or tow or both. In The "Rhone" v The "A.B. Widener", [1993] 1 S.C.R. 497, the Supreme
Court affirmed that the limitation fund should be calculated on the combined tonnage of
the tug and tow when the tug and tow are in common ownership (the "flotilla principle").
In the absence of common ownership and where the barge is a "dumb barge", the fund
is to be calculated on the basis of the tonnage of the tug alone.

Operations

The operational requirements for tug owners are, for the most part, contained in the
Canada Shipping Act, 2001 and the Regulations passed under that Act. Particular
regard should be paid to: the Hull Construction Regulations, CRC c. 1431, Part VIII,
which provide construction standards for tug boats; The Safe Working Practices
Regulation, CRC c. 1467; the Marine Personnel Regulations, SOR/2007-115, which
mandate the number and qualifications of crew; and, the Towboat Crew
Accommodation Regulations, CRC c. 1498, which contain other standards specific to
tug boats.

It is also possible that Provincial statutes and regulations relating to safety, hours of
work and other aspects of tug boat operations need to be complied with. Such statutes
have been held to apply to fishing vessels (see, for example: Jim Pattison Ent. v.
Workers' Compensation Board, 2011 BCCA 3, and R. v. Mersey Seafoods Ltd., 2008
NSCA 67) and would likely be held to be equally applicable to tug boat operations
unless there is a conflicting Federal statute. In particular, in British Columbia, the hours
of work and overtime requirements contained in the Employment Standards Act have
been held by the Employment Standards Tribunal to be applicable to tug boat
operations except in limited circumstances. (See: Williston Navigation Inc. v. British
Columbia, 2000 Carswell BC 3836, and Wichito Marine Services Ltd., Re, 2015
Carswell BC 379, but note that the correctness of these particular decisions is
debatable and a court has not yet ruled on the issue.)

BOARDING PILOT
It is compulsory for all domestic/foreign flag vessels over 200 GRT, to use pilot for
entering/departing, as well as shifting between berths in the port.
Pilot boarding takes place 1.5 miles NW of breakwater. Vessel must arrange a pilot
ladder 2 meters above water level on starboard side.

TUG ASSISTANCE

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It is compulsory for all vessels over 2,000 DWT to have tug assistance for berthing,
unberthing, anchoring, mooring to buoys and entrance/sailing maneuvers to dikes. Pilot
may request a second tug, depending on sea & weather conditions.
Due to strong river current and wind conditions in certain periods of the year, port
authority has determined that vessels fitted with bow thruster / controllable pitch
propeller are still required to have tug assistance when maneuvering inside port
premises.

For vessels below 2,000 dwt, tug assistance will be decided by master & attending pilot
depending on weather conditions.

BERTHING SIDE
Due to Port Authority requirements, vessels must berth on starboard side to any of the
berths in this port. Vessels with loa less than 100 meters can dock portside, only with a
previous authorization from harbour master and a letter of indemnity to the pilot
company.

STEVEDORING SERVICES CONTRACT

Who are the parties to the stevedoring contract? It is not easy to identify to a
stevedoring contract unless the common policies of the ports where the stevedores
work are clearly defined. Oftentimes, the policy of the ports gives the conditions for
hiring the stevedores.

In the ports that classified as comprehensive ports, everything is owned and operated
by the state. Therefore, cargo handling equipment’s and gears, manpower and ports
facilities are owned and provided by the government through a port authority.

In the countries where the government owns everything in the port, the government
normally have the contract with a port labor union, who directly supplies stevedores.
Thus, the stevedoring contract is executed between port authority and the ship owner or
the charterer.

STEVEDORES DAMAGE TO SHIP

One of the most common types of the damage in the ship is caused by the stevedores.
The liability of the charterer is embodied in the charter party but some laws in the ports
also apply. There provision or clauses in the charter party in which the liabilities of the
charterer for the damage caused by the stevedores on the ship are stated. Oftentimes,
the damage to the ship is detected weeks after the ship has departed to the port and the
owner finds its difficulties to get acceptance or admission of such damage for concerned
stevedores. Usually, the master of the ship provide assistance to the charterer for
collecting evidences of the stevedore damage that would support the damage in the

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court. It is also the duty of the master of the ship and his officers to supervise the
loading, stowing, trimming and discharging of the cargoes to ensure that the stevedores
would do such task in a safe and orderly manners.

Salvage

Salvage, Salvage Contract and Salvors

The right to salvage may arise (through not necessarily) out of an actual contract it is
legal liability arising out of the fact that property has been saved and that the owner of
the property who had the benefit of it should make remuneration to those who have
cpnferred the benefit upon him notwithstanding that he had entered into any contract on
the subject

By definition a salvage contract refers to a wqriten agreement which confers a benefit

by saving or helping to save a recognized subject of salvage when in danger. the
situation is such that the subject of salvage is in a dangerous situation from which it
cannot be freed and released without aid or assistance

Contractual salvage service means a service rendered by someone under the terms of
a contract which preserves the principles of salvage law and contractually obliges the
contractor to salvage the property in danger even through this may prove at the end of
the day to be unprofitable

The act of salving must be voluntary and due to pre-existing obligations and for the
interest of the salvors (Gaskell et al.,1987). the processes of salvage operation is don
“when any ac or activity is under taken to assist a vessel or any other property in danger
in navigable waters or in other water whatsoever” (ICS, 1989, Art. 1)

The contract salvage must be voluntary and parties who are performing the act of
salvage must have no pre-existing duty to help a distress ship. the subject of salvage
must be a maritime property such as a ship apparel cargo or wreckage. this is clarified
because not all property are not maritime property.

The salvors (parties performing the salvage operation) should be saving the lives of
persons endangered on a ship but the reward is based on properties saved. Generally
the action of salvage is based on the principle that something must be saved more than
life.

Difference between Salvage and Towage

Salvage reward is naturally greater than towage service fees. for this reason tug officers
and crews usually want to convert a towage service into a salvage contract. Both action
(to salvage and to tow) have one element in common- to render assistance to the ship.

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In principle and practice these two services are different, there are circumstances when
towage service are convert into salvage service. this happens for examples, when an
accident makes it possible for the tug to render assistance to the ship. The contract for
towage is terminated in this instances.

Despite the situation if the officer and crew of the tug decided to rescue the ship which
places the tug and its crew at great danger then the towage is converted into salvage,
The tug in this case is performing a service which is beyond the normal towage
undertaking

Form the above-described examples two important conditions can transform a contract
of towage to salvage and these are as follows

1. There is a danger on the part of the tow, The tugowner and the hirer did not
anticipate this danger when they concluded the towage contract.

2. The tug performed a task to assist the ship and place her to safety. The act
performed by the tug place the tug at a very risky position. the duties and
responsibilities undertaken by the crew of the tug are not within the normal coverage of
their contract towage service

However there are factors that have to be present to be entitled to the rewards these
are as follows:

1. The item being salves is recognized as a subject of salvage

2. The subject of salvage has been exposed to a degree of danger.
3. The salvor (Person performing the salvage operation) must be a volunteer
4. The salvage operation must be a successful one.

Who concludes the salvage contract?

“The master of the ship has the authority to conclude contract for salvage operations in
behalf of the owner of the vessel”(ICS, 1989 Art. 6). With regard to the rewards anybody
can claim for salvage rewards provided that he meet the conditions prescribed in the
subject convention

Coast Guard or Port Authorities personnel and government pilots who are given
permanent duties and responsibilities within the scope of their employment to perform
salvage operations are generally not entitled to rewards. However these government
personnel can claim for rewards if salvage operations are not within the scope of their
permanent functions

A tug master or his crews can claim for salvage reward under certain conditions. First if
they can prove that the act of salving is not within the scope of their tug assistance
duties and responsibilities. Second the act put them in a degree of danger that was not
expected

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Duties of the salvor and Master or shipowner

The following duties of the salvor are laid down in Article 8 of the 1989 Salvage
Convention:

1. To carry out salvage operations with due care

2. To exercise due care in carrying out salvage operation in such a way that danger
to the environment could be either prevented or minimized.
3. To seek assistance from other salvors when needed
4. To accept the assistance of other salvors when reasonably requested by a mater
or an owner of the ship or property in danger

The duties of the master or the shipowner are as follows:

1. To cooperate fully with the salvors during salvage operation

2. To exercise due care in cooperating during salvage operations to prevent
damages to environment or reduce such kind of damage
3. When the vessel or other property has been brought to a place of safety the
master or owner must accept redelivery when reasonably requested by the
salvor to do so.

Criteria for fixing danger

Article 13 of the 1989 Salvage Convention further gives the following criteria for fixing
the rewards to salvors:

1. According to the value of salved vessel and other property

2. Skills and efforts by the salvors in preventing or minimizing danger to the
environment
3. Measure of success obtain by salvor
4. Nature or degree of danger
5. Skill and efforts in salving the vessel other property and lift
6. Time used and expenses and losses incurred by salvors
7. Risk of liability and other risk met by the salvor or his equipment
8. Promptness of service rendered
9. Availability and use of vessel or her equipment intended for salvage operations
10. State of readiness and efficiency of the salvors equipment and value thereof

The country which is a party to the convention may enact law regarding the payment of
reward depending on the above criteria. The payment of a reward fixed in accordance
to the foretasted criteria for fixing danger shall be made by all of the vessel and other
property interested in proportion to their respective salved values. The rewards shall be
free from interests and recoverable legal cost that may be incurred. The rewards shall
not exceed the value of the salved vessel and other salved properties.

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If the salvor has carried out salvage operation with respect to a vessel which by itself or
its cargo threatened damage to the environment but failed to earn a reward under the
conditions laid down in Article 13 (describe above) special compensation must be guven
to the salvors by the owner of the vessel. The amount of compensation must be
equivalent to some percentage of expenses incurred by the salvors

The “NO-CURE , NO-PAY” Principle

The “no-cure, no-pay principle” refers to the principle that rewards are not given to
salvors if the salvage operation is not successful. This was explained in the beginning of
this chapter. Although this seems to be unfair for salvors the principle encourages them
to do their best to succeed so that rewards can be given to them. If salvage operation
are a success the salvor has an incentive in the form of exercising maritime lien on the
salved ship and cargo.

Lien refers to the legal right to retain control on the property of another until a claim or
debt relating to the property is settled or paid to a claimant. The salvor can have a lien
or control over the salved ship and properties util after the cargo owners and the
shipowner pay them for their rewards,

Lloyd’s open form of salvage agreement

The most frequently used form of contract for salvage operation is Lloyd’s standard form
of salvage agreement, which is also called Lloyd’s open form or LOF. The first page of
the form emphasized the principle of “no-cure no-pay”. the committee of Lloyd’s first
issued this form in 1892.

Lloyd’s is not an insurance company. It is a club with a board and statute etc. and has a
market for insurance base in London. In 1890 a number of salvage services were being
rendered to ship in the black sea and Dardanelles. The London underwriting market
became concerned as to the manner in which cases were being resolved by the courts
in that county.

They entered into an arrangement with a number of salvors who operated in the
Dardanelles. The arrangement includes that with a number of salvors who operated in
that area whereby any salvage service rendered would be determined by way of
arbitration in London in case there is no amicable agreement made.

The arrangement resulted in the formulation of the Lloyd’s Open Form (LOF), The form
was standardized and became available for use worldwide. The first printed form was
made in 1908.

The contents of the LOF 2000

The “no-cure no-pay” is printed on the first page of the form. The amount of reward to
the salvor if the salvage operation becomes successful is left blank. This means that the
parties executing the contract can engage in compromise agreement. This is also the

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reason why Lloyd’s Standard form is also called Lloyd’s Open Form or LOF. In case the
parties cannot agree in the amount of rewards the case is fixed through arbitration in
London

The form contains nine(9) boxes which have to be filled out by the contractors.
Immediately below the boxes are the terms and condition of the agreement
consecutively state in English Alphabet from A to L. These are followed by two
important notices pertaining to salvage security and incorporated provisions. Specially
the provision of the LOF 2000 includes the following:

1. Contactors’ basic obligations

2. Environmental protection
3. Scopic clause
4. Effect of other remedies
5. Prior service
6. Duties of Properties owner
7. Rights of termination
8. Deemed performance
9. Arbitration and LSSS Clauses
10. Governing law
11. Scope of authority
12. Inducements prohibited

The following is the format of the boxes on the first page of LOF 2000 and the
information contained therein:

LOF is known to many by most seafarer and shipowner. It is frequent used by salvage
contractors who operate internationally even those operating in the USA. However in
the coastal waters of the USA the work and labor contracted are based on fixed teriffs
and the LOF therefore is not very popularly used. The salient advantage of using LOF
includes the following

1. Fast and easy facilitation of a contract of salvage.

2. Exertion of the best efforts by the salvors to save property
3. Reinforcement of contractors’ obligations
4. Consideration for all work undertaken by salvors
5. Ultimate reward does not exceed salved value
6. Pro-rata apportionment of final reward
7. Security and arbitration mechanism.

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Reflection paper

In the start of prelim period my proctor started to teach about the rules and

regulation onboard/ship. Like the four pillars of maritime law like the SOLAS, STCW,

MARPOL, MLC, we also learn their different meaning and their responsibility in the field

of the seafaring world and also there organization. This some topic in the prelim period

is very important to us to be aware what are the does and don’ts while on board and to

know about the responsibilities while onboard.

In the start of midterm period, we learned further discus about the SOLAS that

was about the safety onboard. The safety onboard I important to have a knowledge

about it so that we can avoid some accident while on board, because accident onboard

is very prone to us marine engineer because of the large and heavy machinery. Being

healthy on board is very important onboard because if you have a deficiency you can’t

go on board.

Then month later the final period has arrived. The finals we talked about the way

of delivering, discharge and payment, the duties of towing and also the laytime. Then

we tackle up the salvage when the ship is drawn. Now the requirements, etc. Even

though we have a lack of time in the requirements, we are still here trying to study about

our major courses like the maritime law.

Overall I felt that very happy in taking this subject. And I thank Engr. Reginio for

giving us a wonderful knowledge about this subject.

-Miranda, Toby V.

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