First appeared, Times of Malta, Sunday, May 15, 2011. Author: Alison Vassallo .
The carriage of passengers on board commercial vessels out of a high risk zone is not to be entered into blindly or without a clear awareness of the legal intricacies involved. Beneath the great humanitarian concerns underlying the evacuations from Libya over the past weeks lies a steadily turning commercial cogwheel that few may be aware of.
By April 25, 615,939 people had fled violence in Libya by road, sea or air. Numerous shipping companies reacted to the crisis by operating round-trip charters between Benghazi and war-torn Misurata and Crete and Malta, mainly at the request of governments in Europe, Latin America, and the Far East. The crisis poses tragic humanitarian and socio-political implications but it also presents organisations with the requisite resources and expertise with a commercial reality. Were it not for these operators, tens of thousands of people would still be stuck in a war zone and the humanitarian consequences would potentially be more severe.
Malta’s geographical positioning has attracted a number of people to the realm of chartering vessels for evacuation. From a shipping perspective, the carriage of passengers on board commercial vessels out of a high risk zone may present a delicate legal scenario. This operation is certainly not one to be entered into blindly or without a clear awareness of the legal intricacies involved. The reality is that there is no standard form contract which caters for the carriage of passengers in such a particular scenario.
In contracting a voyage charter party for the carriage of goods, the parties would, in the normal course of events, resort to the terms of standard form contracts, most notably Gencon 1994. These contracts do not, by their nature, contemplate the carriage of people. The charter of a vessel for the carriage of passengers as opposed to cargo for a trip or a series of trips is the subject of a number of standard form agreements formulated by the international shipping community, namely the Bimco Cruisevoy and the Mediterranean Yacht Brokers Association Charter Agreement.
However, these contracts fall short of addressing the specific circumstances faced in the evacuation of people: they contemplate the carriage of passengers on board leisure vessels such as cruise liners and superyachts. This leads to the necessity of formulating what would essentially be an ad hoc agreement between the owner and the charterer. One of the main considerations which must be addressed by the parties at a very initial stage in their negotiations relates to whether the voyage charter party will be a berth charter party or a port charter party. In the case of a berth charter party, the vessel would be considered an arrived ship, and therefore ready to take on passengers upon its arrival at a designated berth.
In such a case, laytime (the time allowed to the charterer to load and discharge passengers) which is included in the lump sum freight, would start to run only on the ship’s arrival at a particular berth. This would obviously disadvantage the owner since any time spent outside the berth due to the inability of the vessel to berth – especially in scenarios like the evacuation of passengers from a high risk zone – would be at the owner’s expense. Alternatively, the voyage charter party can be designated as a port charter party.
In this case the vessel is deemed to be an arrived ship as soon as she is considered as having arrived at the ‘port’ which could be the anchorage. As opposed to a berth charter party, this is to the owner’s advantage and to the charterer’s disadvantage. Laytime would start to run as soon as the vessel is deemed to have arrived at the port and not necessarily at the berth – ultimately irrespective of whether the passengers are being loaded or discharged from the vessel. Both the laytime allowed for the charterer to load and discharge passengers and the rate at which demurrage (the pre-agreed rate of liquidated damages) will be charged by the owner once the laytime is exceeded, are to be clearly expressed in the agreement.
These are just some of the important considerations which people who may be unfamiliar with in this sector would not even contemplate when entering into charter parties in emergency scenarios. It is crucial that specialised professional legal advice is sought before a contract is finalised. This can go a long way in preventing a hastily approached business venture which can turn to litigation once the immediate urgency has died down or, even worse, lead to complex legal wrangling during the actual running of the contract.
These negative effects increase in gravity in scenarios where the consequences of a failed contract may stretch beyond the legal and commercial and touch human lives.
Dr Vassallo is an associate within the Litigation department at Fenech and Fenech Advocates.