When chartering a vessel, a charterer takes on various responsibilities, including liabilities related to cargo handling, port selection, and fuel quality. While shipowners often claim damages, not all claims are justified. Charterers must navigate these risks carefully, supported by expert handling and legal guidance. This article explores key aspects of charterers’ liabilities, common claims and disputes, and best practices for mitigating risks
Charterers and damage to chartered vessels
Charterers can be held liable for damage to the chartered vessel under both voyage charters and time charters. The extent of this liability depends on the terms of the charter party and applicable jurisdiction.
Key areas of liability include:
- Cargo handling: Improper loading or unloading can cause structural damage.
- Cargo itself: Certain cargoes may damage the ship’s holds or equipment.
- Unsafe ports or berths: If the charterer designates a port or berth that proves unsafe, liability may arise.
- Off-Spec bunkers: If a charterer supplies bunkers (fuel) that are found to be defective, resulting in engine damage, they may be responsible.
Beyond physical damage, charterers are also liable for time lost during repairs, which can lead to significant financial exposure.
Investigating and defending claims
When a shipowner raises a claim for vessel damage, careful investigation is required. Shipowners often inflate claims, making it essential to scrutinise both the cause and quantum of damage. The assessment includes:
- Technical and legal investigation: Establishing the root cause and whether liability rests with the charterer.
- Review of the charter party and communications: Determining contractual obligations and responsibilities.
- Challenging exaggerated claims: Ensuring that repair costs and downtime claims are fair and justified.
IMU has handled numerous cases of alledged damages to the chartered vessel. A detailed assessment is critical to ensure fair outcomes.
Unsafe ports and berths: When is the charterer liable?
One of the most common disputes involves allegations that a charterer nominated an unsafe port or berth. However, in certain cases:
- The port itself is not inherently unsafe.
- The ship’s navigation decisions played a role in the incident.
- There is no clear causal link between the alleged port conditions and the damage.
Shipowners often persist in pursuing claims despite weak grounds, leading to unnecessary legal expenses. Such claims must be defended notwithstanding, and may cause substantial legal and expert costs.
Bunker quality claims: Who is responsible?
Another frequent dispute concerns bunker quality. If off-spec bunkers cause engine damage, the shipowner may hold the charterer liable. These claims can be complex:
- The actual cause of damage must be established through fuel testing.
- It must be determined whether the bunkers truly deviated from specifications.
- The bunker supplier may ultimately be responsible, requiring them to be brought into the dispute.
IMU regularly assists clients in handling bunker-related claims by ensuring proper sampling, testing, and contractual assessment. Involving the bunker supplier at an early stage can be crucial for cost and claim recovery.
Managing liability and external service providers
Effective claim management requires collaboration between IMU, charterers, legal experts, and technical specialists. External service providers, such as surveyors, correspondents, and legal counsel, must be carefully selected to ensure:
- Efficient investigation and cost control
- Transparent and structured communication
- Alignment with commercial interests
IMU follows a structured approach by engaging service providers based on service level agreements, ensuring that expertise is effectively utilised while maintaining cost-efficiency.
Risk mitigation: The importance of insurance
Given the complexity and financial exposure involved, charterers’ liability and marine defence (FDD) insurance is essential. A well-structured policy provides:
• Protection against shipowners’ claims
• Legal defence coverage
• Support for dispute resolution
IMU specialises in providing comprehensive insurance solutions, ensuring that clients receive proper risk coverage and expert guidance to handle claims effectively.
Conclusion
Charterers must be vigilant about their potential liabilities, particularly concerning cargo handling, port safety, and bunker quality. Shipowners may inflate claims, making thorough investigations and expert defence strategies essential. By working with experienced claims professionals and securing the right insurance coverage, charterers can effectively manage risks and protect their commercial interests.
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