The Conditions Of UCP 600 And ISBP As To Charter Party Bills Of Lading
The Conditions of UCP 600 Art. 22 (a) (i) As To Capacity of the Signer
The Charter Party Bills of Lading may be signed either by the Master or by the shipowner or by the charterer or by the ship`s agents.
The Charter Party Bills of Lading signed by the Master
If the Charter Party Bills of Lading are signed by the Master, then the signer must indicate that it signs in the capacity of the Master, i.e. "as Master".
Art. 22 of UCP 600 does not mention whether it is necessary or not to be indicated the name of the Master in the signature box of Charter Party Bill of Lading so that the Master can be identified in any of the following ways:
- "John Johnson …(signature) … as Master"
- "…(signature) … as Master"
- "Master of M/V …….., Captain John Johnson"
- "Master of M/V …….."
The Master signs the Charter Party Bills of Lading as legal representative of his employer which could be either the shipowner or a bareboat charterer, as the case may be. Since both the shipowner and bareboat charterer have the navigational control of the vessel, they are "legal carriers", so that it is not deemed necessary that the Charter Party Bills of Lading signed by the Master identifies the carrier.
The Charter Party Bills of Lading signed by the port agents on behalf of the Master
If the Charter Party Bills of Lading are signed by a named agent for and/or on behalf of the Master, then the signer must indicate that it signs in the capacity of agent for and/or on behalf of the Master, i.e. "as Agents for the Master" or "as Agents for and on behalf of the Master".
The former requirement stipulated in the previous editions of UCP (UCP 500) and ISBP (ICC Publication No. 645) to state the name of the Master on whose behalf the agent is signing has been eliminated in the current editions of UCP (UCP 600) and ISBP1 (ICC Publication No. 745E) so that the agent may sign in any of the following ways:
"ABC Shipping Agency Ltd. …(signature)….
As Agent(s) for the Master"
"ABC Shipping Agency Ltd. …(signature)….
As Agent(s) for the Master, Captain John Johnson"
Whenever presented to a bank under letter of credit, the Charter Party Bills of Lading signed by ship`s port agents on behalf of the Master must be accompanied by a copy of the Master`s letter of authorisation given to the ship`s port agents for signing the Charter Party Bills of Lading.
The Charter Party Bills of Lading signed by the shipowner
If the Charter Party Bills of Lading are signed by the Owner, then the signer must indicate that it signs in the capacity of the Owner, i.e. "as Owner".
Provided that the name of shipowner is stated in the signature box, the identification of carrier is not deemed necessary since it is clear that the shipowner is the carrier.
The Charter Party Bills of Lading signed by the port agents on behalf of the shipowner
If the Charter Party Bills of Lading are signed by a named agent for and/or on behalf of the Owner, then the signer must indicate that it signs in the capacity of agent for the Owner and quote the name of the Owner as follows:
"ABC Shipping Agency Ltd. …(signature)….. as Agent(s) for the Owner
ATA Shipping Corp … Owner".
Whenever presented to a bank under letter of credit, the Charter Party Bills of Lading signed by ship`s port agents on behalf of the shipowner must be accompanied by a copy of the shipowner`s letter of authorisation given to the ship`s port agents for signing the Charter Party Bills of Lading.
The Charter Party Bills of Lading signed by the charterer
If the Charter Party Bills of Lading are signed by the Charterer, then the signer must indicate that it signs in the capacity of the Charterer, i.e. "as Charterer".
In commodity trade, the Charter Party Bills of Lading are signed by charterers either to avoid prolonged disputes with the shipowner over the condition or weight of bulk cargoes or when the vessel has been sub-chartered. Art. 22 of UCP 600 does not make a distinction between the various types of charterers, i.e. bareboat charterers, time charterers, voyage charterers, nor does specify under what conditions the charterers may sign the Charter Party Bills of Lading.
In a bareboat charter party or charter party by demise, the shipowner transfers (demises) to the bareboat charterer the possession of the vessel so that the bareboat charterer has both the navigational and commercial control of the vessel2. The consequence is that in the Bills of Lading signed by the bareboat charterer or its agents, the bareboat charterer is deemed to be the carrier.
In a time charter party, the shipowner does not transfer to the charterer the possession of the vessel, but only the commercial control of the vessel, which means that he can determine the ports of call to which the shipowner is bound to proceed.
If the vessel has been sub-chartered for a voyage by the time charterer and the time charterer signs the Charter Party Bills of Lading, then it must indicate in what capacity the time charterer signed the Charter Party Bills of Lading, i.e. as carrier or just as an agent on behalf of the Master3 or shipowner, otherwise there is a risk that in case of loss or damage to the cargo during the sea carriage, the holder of Charter Party Bills of Lading will sue the wrong party and any subsequent legal action will be time barred.
This is the reason why the forms of Charter Party Bills of Lading adopted by INTERTANKO, i.e. INTANKBILL 78 and INTANKBILL 2003, to be used with the cargoes of oil and vegetable oils in bulk, require the identification of carrier on the face of the Bill of Lading. The difference is that whilst INTANKBILL 78 requires the identification of the carrier as a party to the charter party4, INTANKBILL 2003 requires the identification of the carrier in a separate box, perhaps in an attempt to avoid doubt when the vessel is in a chain of charters and the issuer of Bill of Lading is not a party to the charter party5.
The Conditions of UCP 600 and ISBP As To Description of Ports of Loading and Discharge in the Charter Party Bills of Lading
Would Charter Party Bills of Lading showing two ports of loading be acceptable?
Art. 22 of UCP 600 has no provisions on this matter, but ISBP paragraphs G5 (g) and (h) provide that:
"g. When a credit indicates a geographical area or range of ports of loading (for example, "Any European Port" or "Hamburg, Rotterdam, Antwerp Port") a charter party bill of lading is to indicate the actual port or ports of loading, which are to be within that geographical area or range of ports. A charter party bill of lading need not indicate the geographical area.
h. When a charter party bill of lading indicates more than one port of loading, it is to evidence an on board notation with the relevant on board date for each port of loading, regardless of whether it is pre-printed "received for shipment" or "shipped on board". For example, when a charter party bill of lading indicates that shipment has been effected from Brisbane and Adelaide, a dated on board notation is required for both Brisbane and Adelaide."
Showing two ports of loading is customary in the Charter Party Bills of Lading issued for Australian grain cargoes due to the draft restrictions and limited storage capacity at Australian ports.
Why the Charter Party Bills of Lading may show the port of discharge as a range of ports or a geographical area
The port of discharge in the Charter Party Bills of Lading can be stated either as a particular port, as one of a range of possible discharge ports or as a geographical area. The UCP 600 Art. 22 (a) (iii) stipulates that:
"The port of discharge may also be shown as a range of ports or a geographical area, as stated in the credit."
ISBP paragraph G9 provides that:
"When a credit indicates a geographical area or range of ports of discharge (for example, "Any European Port" or "Hamburg, Rotterdam, Antwerp Port"), a charter party bill of lading may indicate the actual port of discharge, which is to be within that geographical area or range of ports, or it may show the geographical area or range of ports as the port of discharge."
The Charter Party Bills of Lading state the port of discharge as one of a range of possible discharge ports or as a geographical area when they are issued for bulk commodities such as crude oil, LPG or coal which are traded afloat during carriage, the ultimate destination of commodity being unknown at the time of shipment. If the Charter Party Bills of Lading state the port of discharge as a range of ports or a geographical area, the charterers can order to shipowners to discharge the cargo at any of the ports within the range of ports or geographical area stated in the Bills of Lading.
For similar purposes, the port of discharge is stated in the Charter Party Bills of Lading as a destination for orders. Such destination is either a port or a geographical area. The port for orders is a port on the route to the intended destination region, usually a bunkering port, where the vessel has to proceed to and wait the charterer`s nomination of discharge port.
The practice of stating a port for orders in the Charter Party Bills of Lading originated in grain trade in the first half of twentieth century and was later adopted in oil trade. In the grain trade of the first half of twentieth century, the customary ports for orders in Europe were Malta, Gibraltar, Falmouth and Plymouth. In the oil trade of the second half of twentieth century and first two decades of twenty first century, the customary ports for orders in Europe were Gibraltar and Rotterdam6.
Nowadays, for Russian crude oil cargoes shipped from the Black Sea port of Novorossiysk the customary destination for orders is Pachi Megara, an oil terminal in the Megara Bay in southern Greece, while for Russian crude oil cargoes shipped from the Baltic Sea ports, the customary destination for orders is Rotterdam.
For Azeri crude oil cargoes the destination for orders is either Augusta, in Sicily, or Rotterdam because most CIF sales are basis Augusta or Rotterdam.
Most of the tanker voyage charter party forms include provisions that give the charterer the option of nominating a discharging port to the Master on the vessel`s arrival at a destination for orders7.
The best example is the Clause 4(b) of Asbatankvoy charter party which has the following provisions:
"If lawful and consistent with Part I and with the Bills of Lading, the Charterer shall have the option of nominating a discharging port or ports by radio to the Master on or before the Vessel`s arrival at or off the following places:
Place On a voyage to a port or ports in:
LAND`S END United Kingdom/Continent (Bordeaux/Hamburg range) or Scandinavia (including Denmark)
SUEZ Mediterranean (from Persian Gulf)
GIBRALTAR Mediterranean (from Western Hemisphere)."
Hence, the practice of stating the destination as "Suez for orders" or "Gibraltar for orders"8 in the Charter Party Bills of Lading issued for crude oil cargoes.
by Vlad Cioarec, International Trade Consultant
This article has been published in Commoditylaw`s Oil Trade Review Edition No. 2.
Endnotes:
1. See ISBP paragraph G4(c)(i).
2. The bareboat charterer is responsible for the technical operation, the commercial management and operation of the ship. Because the shipowner has no control over the use of the vessel, the shipowner is not liable for the acts of bareboat charterer or its crew which result in loss of or damage to cargo during the carriage.
3. In Australian law case Hunter Grain Pty Ltd. v. Hyundai Merchant Marine Co. Ltd. and Malaysian International Shipping Corporation BHD (1993) 117 ALR 507 the time charterer`s agents signed the Bill of Lading based on Master`s letter of authority and indicated in the Bill of Lading that they signed as "Authorized Rep. of Carrier or Master". Nevertheless, because it was the time charterer`s name stated in the heading of the Bill of Lading and the Conditions of Carriage on the back of the Bill of Lading indicated the time charterer as carrier, the Court held that the carrier was the time charterer, and not the shipowner.
4. On the reverse page of INTANKBILL 78 form, there is a paragraph providing explanations as to the meaning of terms used in the Bill of Lading which stipulates that: "For the purpose of this Bill of Lading: SHIPPER means the person consigning the cargo for the carriage on Charterer`s behalf; CHARTERER means the person entering the Charter Party contract with the Carrier; CARRIER is equivalent to terms like Shipowner, Owner, Disponent Owner, whichever is used in the Charter Party referred to in this Bill of Lading to define a person undertaking the carriage."
5. See also CONGENBILL 2007 form.
6. In Phillips Puerto Rico Core Inc v. Tradax Petroleum Ltd, 782 F.2d 314 (5th Cir. 1985), Court noted that it was a common practice for Bills of Lading issued for oil cargoes shipped at Skikda, Algeria to show the destination as "Rotterdam for Order", regardless of the vessel`s actual destination.
7. Clause 9(a) of VELAVOY2005 has the following provisions: "Charterer shall nominate loading or discharging port(s) and/or place(s) or order Vessel to a destination for orders. If Vessel is ordered to a destination for orders, Charterer shall thereafter nominate loading or discharging port(s) and/or place(s)." Clause 9(a) of ExxonMobilVOY2005 and Clause 5 of Texacovoy 94 have identical provisions.
8. In the English law case Albacruz v. Albazero, [1977] A.C. 774 House of Lords, the port of delivery was stated as "Gibraltar for orders" in the Charter Party Bills of Lading. Mr. De Korver, then Shipping Coordinator of Courtage Occidental, said that: "[T]he description of the port of delivery as "Gibraltar for orders" was done for flexibility, so that, if it became necessary to change the port of discharge, the ship could be diverted without the necessity of new shipping documents being issued."