Ship-owner's liability towards the third party : with focus on bills of lading and charter parties

Abstract

Abstract When a ship is fixed on a voyage charter or time charter, the charterer may use tonnage which has been chartered to him to transport goods owned by third-party cargo owners. This thesis will discuss this situation: the charterer entered into the contract of carriage of goods by sea with sender, but it is the ship-owner who actually performs the carriage of goods as actual carrier. If the cargo is damaged or lost, whether the ship-owner shall be liable to the third party? If it is the case, on what legal basis third-party cargo owners can claim against ship-owners? What is the nature of ship-owner s liability to the third party? How does such ship-owner s liability system apply to business practice? All these questions will be analyzed in this paper. Firstly, I will present the legal relationship between parties involved in the carriage where the charterer uses the chartered vessel to carry third party cargo owner goods. It is known that the ship-owner has no contractual obligations to cargo owners, as the ship-owner is not the contracting party to the head contract of carriage of goods by sea. However Section 286 of NMC imposes statutory liability on ship-owners and Section 285 and 287 of NMC cause ship-owner and charterer jointly and severally liable to third-party cargo claimants. Such mandatory liability system aims to strengthen the economic position of cargo interests, but ship-owners and charterers are still free to insert clauses to allocate risks between them as long as such the clauses do not derogate from mandatory provisions. This paper will discuss two common clauses regarding ship-owner s liability, that is, demise clause and incorporation clause. I will analyze whether these clauses are caught by obligatory provisions and if they are not, how those clauses apply in practical business. Finally I will discuss indemnification claims between ship-owner and charterer. When the ship-owner is found liable under a bill of lading, and if such claim under the charter party would have allowed him to avoid of at least limit liability, the ship-owner has rights to seek indemnity from charterer according to Section 338 of NMC. However Section 338 does not provide cargo claimants with an absolute right to redress and certain requirements must be satisfied, that is, the greater obligations assumed by the ship-owner must result from different terms contained in the bill of lading and there must be contractual basis for indemnity in the charter party. All these issues mentioned above will be discussed mainly under Norwegian maritime law, but some comparison will be made between Norwegian maritime law and Chinese maritime law. Besides that, I will also take relevant international conventions into consideration including the Hague/Visby Rules and the Hamburg Rules.