Failure to check charterparty wording catches ship manager off guard

International Transport Intermediaries Club (ITIC) has urged ship brokers and managers to check the terms of their charterparty agreements closely before signing, in order to avoid costly mistakes further down the line.

By way of illustration, ITIC cites the case of the manager of a tanker entering West African waters who believed that the terms of a charterparty provided that armed guards were to be appointed at the charterer’s expense. The manager duly appointed the guards for the voyage at a cost of $170,000, but the charterer refused to pay the invoice.

The terms of the charterparty did in fact include provisions relating to the appointment of armed guards, but their deployment was not mandatory. In addition, the charterparty provided that the charterer was only liable for up to $20,000 of any such costs. The charterer offered to pay that $20,000, and the owner demanded that the managers pay the shortfall.

The owner pointed out that it had sent the manager voyage orders stating that the decision to appoint armed guards was one for the owner to make. It had in fact only appointed armed guards for one out of the last ten calls to the area and on
that occasion the charterparty required the charterer to pay the security bill in full.

ITIC says it has seen a number of claims caused by ship brokers and managers acting on their recollection of a charterparty wording, as opposed to checking what the charterparty actually says. On this occasion, ITIC reimbursed the full claim of $150,000.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
charlotte.kirk@thomasmiller.com

AKD says hiring of armed guards should be left to government

In the wake of an independent report recommending the Netherlands government to provide Dutch shipowners with better levels of protection against piracy, including the hiring of armed guards, Netherlands law firm AKD says that shipowners who directly hire armed personnel themselves could face criminal prosecution.

The so-called De Wijckerslooth Committee report was designed to assess the desirability and possibility of deploying private sector armed security to help protect Dutch ships from the threat of attack by (mainly Somali) pirates. It recommends that the Dutch government moves towards a higher level of protection of its merchant fleet including, “if necessary”, the use of armed private security guards. The report, however, cautions that such security guards should only be hired by the government, and should only perform their security duties as soldiers under the full authority of the Ministry of Defence. The authors of the report add that, under the current circumstances, it is not desirable that shipowners privately hire armed private security guards, an option which should only be considered “in case of special conditions”.

The committee argues that, if the government uses its own resources, or engages reservists or hires armed private security guards who will temporarily be given military status, this will not constitute privatisation of security duties. By creating additional defence capacity in this way, no amendment of legislation and regulations will be required.

It is envisaged that the recommendations of the committee could lead, relatively quickly, to providing the level of protection against piracy considered necessary for merchant vessels. The alternative - whereby shipowners themselves hire private security guards (an approach endorsed by the Royal Association of Netherlands Shipowners) - entails “several problems”, according to the committee, and would require drastic amendment of Dutch legislation and regulations, which under normal circumstances could take “several years”.

Jan Kromhout, a partner with AKD in Rotterdam, says, “Clearly, it is the duty of government to do its utmost to protect the merchant fleet from attacks by pirates. In the event that the government is not able to fulfil its duties, for whatever reason, it will have to employ outside help. It is not desirable that privately owned companies hire armed protection to perform the duties which are the responsibility of government, which should retain its monopoly of force. Furthermore, the cost of providing protection against piracy should be borne by the state. Shipowners should only be allowed to hire private armed guards in special situations, in the event that the government is not able to fulfil its duties.

“In the event that Dutch shipowners do hire armed personnel, or provide weapons to those on board, those directly involved, as well as shore-based personnel (including the ultimate management of the company) could face criminal prosecution. Furthermore, shipowners could be faced with local legislation covering the import and export of weapons in the event that the vessel has weapons on board and enters the jurisdiction of another country.”

AKD’s transport law division provides a full range of legal services to the maritime and transport industry. AKD is a full-service firm with over 250 lawyers. AKD is in the top tier of Legal 500’s Netherlands shipping, aviation and transport section.

www.akd.nl