Voyage Charters

Timothy Young KC; Michael Ashcroft; Julian Cooke; Andrew Taylor; John Kimball; LeRoy Lambert; David Martowski; Michael Sturley

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Chapter 34 Freight

2. FREIGHT. Freight shall be at the rate stipulated in Part I and shall be computed on intake quantity (except deadfreight as per Clause 3) as shown on the Inspector’s Certificate of Inspection. Payment of freight shall be made by Charterer without discount upon delivery of cargo at destination, less any disbursements or advances made to the Master or Owner’s agents at ports of loading and/or discharge and cost of insurance thereon. No deduction of freight shall be made for water and or sediment contained in the cargo. The services of the Petroleum Inspector shall be arranged and paid for by the Charterer who shall furnish the Owner with a copy of the Inspector’s Certificate.

Rate of freight

34.1 The rate specified in Part IF is frequently expressed by reference to Worldscale, as to which see and .1

Computed on intake quantity

34.2 For a general discussion of the calculation and the earning of freight see . The effect of clause 2 is that the owner is entitled to freight on the intake quantity although cargo is lost on the voyage, and this is so even though freight is not payable until delivery. The only requirement is that some cargo should be delivered: see The Metula.2 The Court of Appeal in reaching that decision placed reliance on the provisions of the charter that the quantity of cargo upon which freight was payable should be determined at the loading port, and the absence of any provision for deduction or adjustment at the port of delivery. Lord Denning M.R. observed that the clause had the characteristics of a provision for lumpsum freight. 34.3 There is no English authority on the owner’s right to freight if no Certificate of Inspection has been obtained, nor as to who should give the certificate, nor as to his qualifications or independence nor as to what precisely he should certify.3 It would be absurd that no freight at all were payable simply because there was no document entitled “Certificate of Inspection”. It is submitted that there is an implied obligation on the charterers to give proper instructions as to the production of a certificate to the inspector, whom they are to arrange and pay for (see below), and, if necessary, a further implied obligation to secure such a certificate from him. Any failure to obtain a relevant certificate would entitle the owners, under these circumstances, to damages equal to the amount of any freight which the owners are

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thus prevented from recovering4 and the intaken quantity would be assessed on the basis of all available evidence. However, there are no particular formal requirements beyond a document stating what has been intaken by the vessel (or perhaps even one saying what has been loaded onto her); such documents would be a normal prelude to the production of a bill of lading and, where there is a substantial difference between ship and shore quantities, it would be usual to have the respective quantities certified in some form of document. The cases on short delivery, discussed in , should be compared. For the weight to be attached to the bill of lading as evidence of the quantity, see .

Payment of freight upon delivery

34.4 See generally paragraphs 13.73 et seq.

“without discount”

34.5 See paragraph 13.61.

“disbursements or advances”

34.6 The only deductions from freight permitted under clause 2 are disbursements or advances made to the master or owner’s agents at ports of loading or discharge, together with costs of insurance. The provision is similar to the disbursements provision in clause 4 of the Gencon charter, as to which see . The advances are at the charterer’s risk, and the cost of insurance is therefore added to the amount advanced. The main difference between the Asbatankvoy charter and the Gencon in their treatment of disbursements and advances is that under the former, the charterer is under no obligation to make any advances, and the clause only applies to such disbursements and advances as he agrees to make. No doubt for this reason, the deduction provisions in the Asbatankvoy charter are expressed in wider terms; they extend to advances and disbursements at the discharging port as well as the loading port, and there is no requirement that they should be in respect of the vessel’s ordinary disbursements.

No deduction for water or sediment contained in the cargo

34.7 The ordinary rule against deduction from freight of claims for loss of or damage to cargo5 undoubtedly applies to the Asbatankvoy charter. The provision against deduction for water or sediment may be intended to make this clear by express words, but if that is its purpose it is surprising that it does not deal with other kinds of loss or damage. More likely is that the provision was intended to make it clear that the owner is entitled to freight on the gross intaken quantity, although some of that quantity may consist of water and sediment rather than the cargo described in the charter. However, the provision applies only to water and sediment which comes on board with the cargo; it does not entitle the owner to freight on any water or sediment in the vessel’s tanks prior to loading.

Cargo retention clauses

34.8 It is becoming increasingly common to stipulate for a right to retain sums from freight when pumpable cargo is retained on board the vessel after the conclusion of discharging. A

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common form is to allow the deduction of the f.o.b. value of the retained cargo plus the freight attributable to that part of the cargo, but it is usual to provide for some independent surveyor to certify the ROB figure, as under the Amoco Cargo Retention Clause.6 34.9 However, such clauses fall into two main classifications, which must be carefully distinguished: (i) those where the right of retention is merely for the purposes of cash-flow so that the precise quantity of retained cargo may be finally ascertained later and made the subject of a separate claim for freight by the shipowner; and (ii) those where the determination by the independent surveyor is finally dispositive of all aspects of the issue of how much cargo is retained, so that there is no subsequent scope for arbitration or for the matter to be resolved later. Which group a particular clause falls into may affect its construction. The Protank Orinoco was chartered on terms including:

L8. In the event that any cargo remains on board upon completion of discharge, charterers shall have the right to deduct from freight an amount equal to the FOB port of loading value of such cargo plus freight due with respect thereto provided that the volume of cargo remaining on board is liquid and pumpable and reachable by vessel’s pumps (or would have been … but for the fault or negligence of the master vessel or her crew …) as determined by an independent surveyor whose estimate shall be final and binding … any action or lack or action in accordance with this provision shall be without prejudice to any rights or obligations of the parties …

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