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22 June 2011
Beneath the great humanitarian concerns underlying the evacuations from Libyan territory over the past few weeks lies a steadily turning commercial cogwheel, the magnitude of which few commentators appreciate. As of April 25 2011, more than 600,000 persons had fled violence in Libya by road, sea or air. Numerous shipping companies reacted to the crisis by operating round-trip charters to Benghazi and Misurata from Crete and Malta, mainly on the request of governments in Europe, Latin America and the Far East.
While tragic in its humanitarian and socio-political implications, a crisis such as this presents those with the requisite resources and expertise with a commercial opportunity. Were it not for these operators, tens of thousands of people would still be stuck in a war zone and the humanitarian consequences would be even more severe.
Malta's location has attracted a number of persons wishing to charter vessels for the purpose of evacuation. From a shipping perspective, the carriage of passengers onboard commercial vessels out of a high risk zone may present delicate legal problems and such operations should not be entered into blindly or without a clear awareness of the legal intricacies involved.
There is no standard form contract which caters for the carriage of passengers in such a scenario.
In contracting a voyage charterparty for the carriage of goods, the parties would normally resort to the terms of standard form contracts, most notably Gencon 1994. As is evident from the type of language used, these contracts do not by their nature contemplate the carriage of persons.
The charter of a vessel for the carriage of passengers (as opposed to cargo) for a specified trip or series of trips is the subject of a number of standard form agreements formulated by the international shipping industry - namely, the Baltic and International Maritime Council Cruisevoy and the Mediterranean Yacht Brokers Association Charter Agreement. However, these contracts fall short of addressing the specific circumstances faced in an evacuation, as they focus on the carriage of passengers onboard leisure vessels, such as cruise liners and superyachts.
It is therefore necessary to formulate an ad hoc agreement between the owner and the charterer. One of the main considerations to be addressed by the parties at the initial stage of their negotiations is whether the voyage charterparty will be a berth charterparty or a port charterparty. In the case of a berth charterparty, the vessel would be considered as an arrived ship, and therefore ready to take on passengers upon its arrival at a designated berth. In such a case, laytime and therefore the time allowed to the charterer to load and discharge passengers - the consideration included in the lump-sum freight - would commence only on the ship's arrival at a particular berth. This would disadvantage the owner, since any time spent outside the berth due to the inability of the vessel to berth - especially where, for example, a ship is waiting to enter a Libyan port before returning to Malta - would be at the owner's expense.
Alternatively, the voyage charterparty can be designated as a port charterparty. In such a case, the vessel is deemed to be an arrived ship as soon as it arrives at the 'port', which could be the anchorage. In contrast to a berth charterparty, this is to the owner's advantage and to the charterer's disadvantage, as laytime would commence as soon as the vessel is deemed to have arrived at the port and not necessarily at the berth - that is, ultimately irrespective of whether the passengers are embarking or disembarking 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 laytime is exceeded are to be clearly expressed in the agreement.
Unfortunately, these are just some of the important considerations that persons who may be unfamiliar with this sector may not begin to contemplate when entering into charterparties in emergency scenarios, such as the current evacuations to Malta.
It is crucial therefore that specialised professional legal advice is sought before a contract is finalised. This can go a long way in preempting problems in a business venture that can turn to litigation once the immediate urgency has died down or, even worse, lead to complex legal wrangling during the running of the contract. These negative effects increase in gravity where the consequences of a failed contract may stretch beyond the legal and commercial and touch human lives.
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