Lodestar

Circular - Incorporation of charter party terms into bills of lading

We have noted an increasing number of cargo claims are being presented by receivers where the bill of lading covering the delivered cargo makes no reference on its face to the existence of a charter party or it only refers to freight being payable as per the c/p dated ..... Whilst on the reverse page of the standard Congenbill 1994 there is reference to the incorporation of the c/p into the b/l there have been a number of rulings whereby the courts have found against an owner trying to defend b/l claims based on c/p clauses where there is no express incorporation of the specific c/p on the face of the b/l.
In such cases it can be difficult to argue that the c/p terms (such as FIOS or shortages to be determined by draft survey) apply and the claim is in fact not for owners account or can be defended – as such owners can be deprived of the defences available to them entirely and maybe will also be unable to seek an indemnity under the c/p from the charterers depending on the circumstances of the claim.
Specifically when fixing using the gencon c/p form and using congen bills of lading it is very important to ensure the b/l is endorsed on the front side to reflect that all terms and conditions of the relevant fixture are incorporated into the b/l. The wording below should suffice and we would urge owners of vessels to instruct their masters to make sure the b/l is so endorsed on the front side.
“All terms, conditions, liberties, exemptions and exceptions of the charter party dated ... are herewith fully incorporated in this bill of lading including the arbitration clause”.
If owners are unsure as to how to properly incorporate a c/p into the b/l they should contact any member of Lodestar’s claims team accordingly.
Please click on the link below to download the circular as a PDF.

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