Voyage Charters

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Chapter 32

General Average and Arbitration/Tovalop/Special Provisions

K. The place of General Average and arbitration proceedings to be London/New York (strike out one).
L. Tovalop: Owner warrants vessel to be a member of TOVALOP scheme and will be so maintained throughout duration of this charter.
M. Special Provisions:

General average

32.1 The provision is to be read in conjunction with clause 20(b)(iii).1


32.2 The provision is to be read in conjunction with clause 24.2 The place of arbitration is also an important pointer to the proper law of the contract. The provision relating to arbitration is independent of that relating to general average, and the arbitration provided for in the clause will extend to any disputes under the charter.3 For wide-ranging discussion of the law of arbitration under English law, see the sister work to this book, Merkin & Flannery’s Arbitration Act 1996 6th ed.

Failure to strike out London or New York

32.3 A failure to complete this section of Part I properly, by striking out London or New York, would probably render the arbitration clause unenforceable in its entirety.4 As far as concerns general average, however, the effect is probably not so drastic. It would be impossible to give any effect to the provisions relating to the place of adjustment, and it would follow that the adjustment would not be governed by the law or practice of London or New York, but by the law of the place where the adventure ended.5 However, it is submitted that there is no reason why the other provisions of clause 20(b)(iii), and in particular the incorporation of the York-Antwerp Rules, should not take effect.

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32.4 The Tanker Owners Voluntary Agreement Concerning Liability for Oil Pollution, commonly known as “Tovalop”, and the Contract Regarding a Supplement to Tanker Liability for Oil Pollution, commonly known as “Cristal”, are now mainly of historical interest only. Tovalop and Cristal do not apply to incidents occurring after 20 February 1997, and are now being wound up. 32.5 Tovalop came into effect on 6 October 1969, prior to the coming into force of the International Convention of 1969 on Civil Liability for Oil Pollution Damage, and the International Convention of 1971 on the Establishment of an International Fund for Compensation for Oil Pollution Damage. Tovalop was established to provide compensation for damage by oil pollution from tankers, prior to the establishment of the international law regime found in the Conventions. Parties to Tovalop agreed contractually to assume obligations for which they might not otherwise be legally liable. When a participating tanker was spilling or threatened to spill persistent oil, the owner or bareboat charterer was obliged under the terms of Tovalop to take appropriate action, or to reimburse persons who incurred costs in responding to the incident, or who suffered pollution damage. Tovalop is administered by the International Tanker Owners Pollution Federation Limited, commonly known as ITOPF. Under the Tovalop agreement, the maximum compensation for claims arising out of any one incident is US$160 per litigation tonne or US$16.8 million, whichever is the less. 32.6 Cristal was established by oil cargo interests to provide additional compensation over and above that available under Tovalop, where the cargo is owned by a party to Cristal. In addition to Tovalop and Cristal, tanker owners in 1986 reached agreement with oil companies whereby increased limits of compensation under Tovalop would be available to claimants through the voluntary agreements. These provisions are contained in the Tovalop supplement, which applied only to incidents where a participating tanker carried a cargo owned by a Cristal member. The supplement increased the available compensation to a possible maximum of US$70 million depending on GRT of the vessel in question. Claims under Tovalop must be notified to the participating owner in writing within two years of the date of the incident. There are a limited number of exceptions to responsibility under Tovalop. ITOPF itself is not liable for the settlement of claims, but requires that the financial capability of Tovalop members to meet valid claims against them be demonstrated by oil pollution insurance cover of a satisfactory nature. 32.7 The International Conventions referred to in paragraph 32.5 have been supplemented by the International Convention on Civil Liability for Oil Pollution Damage of 1992, the International Fund Convention of 1992 and the Supplementary Fund Protocol 2005. Further, as set out in more detail in , new voluntary schemes have been implemented by shipowners by the creation of STOPIA and TOPIA.