May 17, 2023
On continuation of our previous insight on charterparty and termination of charterparty, we now turn to the other common causes of disturbance for both Owners and Charterers during the charter of a vessel.
During the term of the charter party, perhaps no one wishes to, but has always anticipated beforehand that there will be time when Owners and Charterers stand on opposite ends. It may lead to unwanted and unpleasant consequences for both parties, even the termination of the charter party, as discussed previously, or the outburst of an arbitration or litigation proceeding. Under any circumstances, the proper understanding and application of the provision of law and international practice to resolve the conflict are extremely crucial in finding practical solutions for both sides. Thus, we shall briefly discuss the primary cases of shipping disputes easily arising out of charter parties in general.
Redelivery the vessel
A common issue when both parties engage in a charter party of all kinds is the delivery and redelivery of the vessel, which unfortunately may be defiant to what inscribed already in the charter party. A promise, made, but not kept, could very be the start of a dispute between the parties.
Even though the terms of the charterparty are clearly set, it is unavoidable and unfathomable in many cases, whether the Charterers could redeliver the vessel on time as provided in relevant charter party(es), and delay may be expected due to various reasons. One suggestion is that the hire agreed in the charter party would not be applicable for the over hire period, instead, the then market price of hire could be applied.
However, there are certain controversy regarding this, as many parties also argued that this practice is unviable due to following reasons: (i) the Owners, due to the delay of delivery, would not be able to deliver the vessel on time for the next charter, thus would be subject to the fine imposed by the next Charterers; (ii) the Charterers take advantage of this practice to refuse redelivery of the vessel at the time when the market price of hire is low, so that they would be able continuously hire the Vessel with the lower hire rate without having negotiation with Owners against.
Another reason for potential disputes between parties in a chain of charter parties is seaworthiness, or the vessel, upon delivery of Owners, is unseaworthy. In general, unseaworthiness is commonly known as a concept that warrants that the vessel is favorably fit for the intended use at sea. Thus, if this standard is not met, it is potentially unsafe to operate said vessel on the waters.
However, the issue, often the center of the dispute, is whether the vessel is actually unseaworthy or not, and which party should bear the responsibility for such defect(s). When a vessel is shown to be unseaworthy, either Charterers or Owners have to take responsibility to restitute for loss, damages of the cargo during the voyage or for the injury or death of individual, if any unfortunate event took place. When commencing an arbitration or litigation proceeding for the reason of unseaworthiness, the burden of proving unseaworthiness rests on the party bringing the claim against the others.
These are many charter party disputes that we have and are assisting our client to resolve in the last two years. For many years, we have supported and acted for numerous Owners and Charterers resolving their disputes, either via the forum of court and arbitration, or negotiation and mediation. Ultimately, our lawyers aim to minimize the commercial loss for our clients, and strive to retain the business relationship, if possible, between the parties, but still offer a way out for the parties to settle their dispute.
ANHISA’s personnel are all equipped with skills and insight knowledge to amicably handle disputes and respond to client’s inquires in a vast sector, from seaworthiness, late redelivery, GA, loss and damage due to maritime incidents, or the very on-paper dispute arising out of parties’ conduct during the charter. We offer assistance for our clients both in wet work and dry work, with the mandate to serve with our might and efficiency.
Through the years, our value and stand in the shipping industry have been proved by countless appointments and reference for our clients, both returning and first-time, from shipowners, charterers, international underwriters, and IG P&I Clubs. We have successfully resolved charter party disputes in courts and before arbitral tribunals, or in front of settlement agreements signed by the disputing parties.
Should you be in need of consultation for any, immediate or imminent charter party dispute, please don’t hesitate to reach out to us at:
Mr. Dang Viet Anh
T: +84 28 5416 5873
M: +84 983 467070
Mr. Huynh Hoang Thinh
T: +84 28 5416 5873
M: +84 834 813 100
January 17, 2023