Arbitration Clause

For a clause in the bill of lading to incorporate some or all of the terms of the charter party, such a clause must be clear and express. Whether the terms of a charter party have been incorporated into the bill of lading is in each case a matter of construction. What can be said, however, is that the former interpretation of such clauses as ‘all terms, conditions, clauses and exceptions contained in the charter party will apply to the bill of lading’ will not today be considered as sufficient to incorporate any term of the charter party which is inconsistent with any express term in the bill of lading. It can be seen, therefore, that extreme care must be taken with such incorporation clauses to avoid the likelihood of disputes arising at a later time. This issue will, of course, become important when the bill of lading is transferred from the charterer to a third party because the indorsee is not a party to the charter party thus this is where a new contractual situation arises. The language of the bill of lading is the starting point. A clause in a charter party which is not directly germane to the shipment, carriage or delivery of the goods should not be incorporated into the bill of lading contract unless by express words. Even a term which is germane may not be incorporated if that is the proper construction of the relevant contract. In order to ascertain which if any terms of the charter are incorporated into the bills of lading: The incorporating clause must be construed in order to see whether it is wide enough to bring about the incorporation of the relevant term. General words of incorporation will be effective to incorporate only those terms of the charter which relate to the shipment carriage or discharge of the cargo. The term to be incorporated must make sense in the context of the bill of lading; if it does not it must be rejected. The term must be consistent with the express terms of the bill of lading. If it is not it will be rejected. The arbitration clause, for example,  should be directly spelt out in the bill of lading. The parties should not rely upon general words to achieve incorporation.