Professional Documents
Culture Documents
Incorporation of Charter Party Terms Into Bills of Lading: What Is Incorporated?
Incorporation of Charter Party Terms Into Bills of Lading: What Is Incorporated?
As a matter of English law the extent What is incorporated? Finally, to determine what clauses
to which the incorporation is effective from the charter party are
will depend upon the wording of the Under English law, the extent to which
incorporated, one should look at the
incorporation clause. Some standard terms from the charter party will be
exact wording of the incorporation
form bills, like Congen 2007, are incorporated into the bill of lading
clause. With only general wording
designed to incorporate all terms depend upon several factors including;
like “all terms as per cp dated...” the
including the law and jurisdiction of Whether or not terms that are said entirety of the law and jurisdiction and
the referenced charter party. Congen to be incorporated actually exist at dispute resolution provisions of the
2007 reads: the time the incorporation is said to charter party will not be incorporated.
take place; Whilst the choice of law in the
“ (1) All terms and conditions, liberties
governing charter may be incorporated
and exceptions of the Charter Party, Whether the clause to be
by use of general wording, jurisdiction
dated as overleaf, including the Law incorporated is consistent with other
can only be incorporated by express
and Arbitration Clause/Dispute terms in the bill of lading; and
reference. Some standard forms,
Resolution Clause, are herewith
Whether the bill of lading describes like Congen 2007, include reference
incorporated.”
the clause it seeks to incorporate to terms, conditions, liberties and
Other bills of lading simply state “all exceptions and also expressly refer to
There must be a charter party or
terms as per cp dated...”. Though law, jurisdiction and dispute resolution.
clause in existence before its terms
similar, these two different wordings This wording has developed as a result
can be incorporated into a bill of
can have drastically different results of a string of case law and should
lading. If the charter party does not
as to what terms are incorporated be included where the intention is to
exist prior to issue of the bill of lading,
into the bill of lading contract. The incorporate all terms of the charter
there can be no incorporation of its
following Claims Guide sets out the party insofar as possible.
terms into the bill of lading. There is
position under English law but the
extensive case law on what ‘existence’
caution as to the applicability of these Other Charter Party Terms
means, resulting in the general rule
principles when English law does not Incorporated into the Bill of
that if terms are not reduced to writing
apply contained in the conclusion Lading
before issue of the bill of lading,
should be carefully noted.
they cannot be incorporated. If some Successful incorporation does not
terms, but not all, have been put in mean that consignees will necessarily
writing and are said to be incorporated become liable for all obligations of
in the bill of lading only those which the charterer to the owner. The terms
were in writing at the time the bill is that will apply will be those relevant
issued can be incorporated. to shipment, carriage, discharge of
It is important to note that where terms cargo and payment of freight. As an
in the charter party are inconsistent example, the consignee could be
with those in the bill of lading, the bill responsible for the cargo stowage
of lading terms will prevail. if the charter party stowage clause
Claims Guides
making the charterer responsible for that this was a mistake and could be
it is incorporated into the bill of lading rectified to give effect to the parties’
-see EEMS SOLAR [2013] 2 Lloyd’s intentions. The incorporation in the
Rep. 487, where the bill of lading bill of lading therefore meant ‘law
incorporated a Gencon charter party and Court jurisdiction clause’ despite
which provided ‘The cargo shall be clearly stating arbitration.
brought into the holds, loaded, stowed
In general, the Courts appear to show
and/or trimmed, tallied, lashed and/or
a willingness to stretch language to
secured by the charterers, free of any
give effect to the incorporation of law
risk, liability and expense whatsoever
and jurisdiction clauses in accordance
to the owners.’ The English High
with the modern contextual approach
Court found “The parties must have
of interpretation of commercial
intended responsibility for stowage
contracts that is adopted by the
to be transferred to the shippers/
English Courts.
cargo receivers. That was the natural
consequence of the agreement that
Failure to refer to a specific Conclusion
the owners would not be responsible”.
charter party in the bill of lading
Additionally, a charter party provision Under English law, each circumstance
It is always advisable to expressly and wording will be considered on an
giving ship owners a right to lien
identify the charter party that is to individual basis and the above should
a cargo that does not belong to
be incorporated, for sake of clarity. be considered as a general guide only.
charterers will depend upon whether
Where a bill of lading states that it Additionally, such methodology does
that right to lien is incorporated into
incorporates the terms of a charter not apply in all jurisdictions. If English
the bill of lading. Please see the
party, but then does not refer to that law does not apply and a charter
Claims Guide ‘Liens on Cargo in a
charter party by date or any other party is not referred to specifically,
Nutshell’ for further information on
means, English Courts will generally there is a real risk in some jurisdictions
exercising a right to lien.
apply the following methodology: that no charter party terms would be
Law and Jurisdiction Clauses If only one charter party exists that incorporated at all. This can result in
could be incorporated, those terms a “jurisdiction race” and additional
Law and jurisdiction clauses from expense. If the intention is to have
are incorporated;
a charter party must be expressly the terms of a charter party and in
referred to in the bill of lading to If there is a chain of charter parties, particular the full effect of the law and
be incorporated. This has been the the head charter party will be jurisdiction clause incorporated into a
subject of recent case law. incorporated unless one of the bill of lading, it is highly recommended
following applies; that the charter party is clearly
In the CHANNEL RANGER [2014]
EWCA Civ. 1366 a bill of lading If a sub charterer is the bill of lading identified (eg by stating the date of the
stated that it incorporated a ‘law and carrier, the sub charter party will be charter party) on the bill of lading and
arbitration clause’ from a charter incorporated; or wording such as that provided in the
party identified on the bill. However, Congen 2007 bill of lading is used.
If there is both a time charter party
that charter party actually had an and a voyage charter party, the
English law and High Court jurisdiction voyage charter party terms will
clause -not arbitration. The Court held usually be incorporated (see THE July 2017
NANFRI [1978] 1 Lloyd’s Rep. 287) This article was written by Erin Walton in
the Club’s London office with additional
input from Thomas Cooper LLP.
This note is for general guidance only and
should not be relied upon as legal advice.
Should you require specific advice on
a particular situation please contact the Club.
MCG-ICP-GBR-19-V1