Charterer

 

1. Does a charterer of a ship have any legal liability?

A charterer has liability to the shipowner and also has liability to other contracting parties such as stevedores and port authorities.

 

2. What particular or usual liabilities is a charterer exposed to?

- Loss or damage to the vessel (claim by shipowner)

- Loss or damage to cargo (claim by shipowner or cargo owner)

- Loss or damage to shore equipment (claim by shipowner or port authority or third party)

- Injury or death of crew (claim by shipowner)

- Injury or death of stevedore, pilot or other persons (claim by shipowner or port authority or other third party)

- Oil pollution (claim by shipowner)

- Wreck removal if the vessel is a total loss (claim by shipowner)

- Salvage charges of the vessel (claim by shipowner)

- Contribution to general average expense (claim by shipowner)

- Stowaways (claim by shipowner)

 

3. Are the above liabilities of the charterer insurable?

Yes. These risks fall under a standard charterers' liability insurance cover.

 

4. Does a charterer under a voyage charterparty have any legal liabilities?

A voyage charterer may be exposed to the same type of liabilities as a time charterer but liabilities arising from poor quality bunkers and unsafe ports will not remain with the charterer under a voyage charterparty.

 

5. Will a clause in a charterparty allowing the charterers to make use of the owner's insurances mean the charterer has no need to arrange his own insurance?

No. Such a clause is ineffective as a charterer is in a different legal capacity to an shipowner and can never make use of the shipowner's insurances. Further the shipowner's insurances will never allow this.

 

6. Will a back to back charterparty mean the charterer has no need to arrange his own insurance?

No. The charterer is still primarily liable under his own charterparty to the shipowner. The liability is less as the charterer will have a legal recourse to his sub charterer but there is still a risk the sub charterer will not perform under the charterparty, disappears or goes bankrupt.

 

7. Can a bareboat charterer purchase charterers' insurance?

No. A bareboat charterer has full and complete control of the vessel and should be included as a coinsured under the shipowner's insurances.

 

8. What is defence insurance cover?

This is an insurance cover available as an option to pay the charterers' legal costs in pursuing or defending a dispute which is not covered under the charterers' insurance. These disputes are usually commercial in nature concerning deduction of hire, recovery of freight, demurrage, dispatch and may relate to the shipowner, sub charterer or another third party such as a bunker supplier.

 

9. Will a charterers' insurance provide security in respect of a claim or dispute?

Although all liability insurers have no legal liability to provide security, as a matter of practice such security is provided if claim falls under the insurance cover.

 

10. What sort of situations will a charterer be asked to provide security?

- For a cargo claim in jurisdictions which look to the charterer as a carrier.

- For general average security.                                    

- For salvage security.                                   

- Security for legal costs.