Handling voyage charters in times of crisis

Beneath the great humanitarian concerns underlying the evacuations from Libyan territory over the past weeks lies a steadily turning commercial cogwheel that few may be aware or appreciate the magnitude of. As of the 25th April, 615,939 persons have fled violence in Libya, whether 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 on the request of Governments in Europe, Latin America and the Far East.

While tragic in its humanitarian and socio-political implications, it is undeniable that a crisis such as this, presents those having the requisite resources and expertise with a commercial reality that warrants attention. Equally undeniable is that were it not for these operators, tens of thousands would still be stuck in a war zone and the humanitarian consequences would potentially be even more severe.

The relevance of this subject in the local context is that Malta’s geographical positioning has attracted a number of persons to the realm of chartering vessels for this very purpose of 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 and 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 charterparty 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. As is amply 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 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 MYBA (Mediterranean Yacht Brokers Association) Charter Agreement. Once again however, these contracts fall short of addressing the specific circumstances faced in the evacuation of persons in that 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 alternatively a port charter party. In the case of a berth charter party, 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 in respect of which is included in the lump sum freight – would commence to run only upon 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 such as those relating to 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 being a port charterparty. In such a 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 charterparty, this is to the owner’s advantage and to the charterer’s disadvantage since laytime would commence to run as soon as the vessel is deemed to have arrived at the port and not necessarily at the berth i.e. ultimately irrespective of whether the passengers are indeed being loaded or discharged from the vessel.

Both the laytime allowed for the charterer to load and discharge passengers and also the rate at which demurrage (the pre-agreed rate of liquidated damages) will be charged by the owner once the said laytime is exceeded, are to be clearly expressed in the agreement.

These are just some of the important considerations which unfortunately persons who may be unfamiliar with this sector would not even contemplate when entering into charterparties in emergency scenarios.

It is crucial therefore 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.