Cesser Clause

This clause may be found in many forms of voyage charter parties by which provision is made that the charterer’s liability shall cease upon the shipment of the cargo on the vessel. This clause has also been described as a cesser/lien clause because of the reason that it is co-extensive with the right of the shipowner to have a lien on the cargo for any outstanding demurrage and deadfreight. On one hand the charterer is allowed, under the terms of the contract, to know precisely at what stage his liability towards the shipowner shall cease, but in return for this advantage the shipowner retains the right to have a lien on the cargo for outstanding demurrage and deadfreight payments. In effect, this means that the owner not only has a lien on the cargo for the freight itself, but additionally for other ancillary matters such as deadfreight and demurrage incurred at the port of loading. The charterer also remains responsible for freight and demurrage, if any, incurred at the port of discharge but only to such extent as the owners have been unable to obtain payments thereof by exercising the lien on the cargo. A cesser clause in the charter party will not free a charterer who is also a shipper and is sued as such from liability to pay freight arising on the bill of lading and this was so even though the bill of lading provides for freight “as per charter party” since the cesser clause protects only the charterers as such and not the shippers. It is not enough to include in the bill of lading a clause purporting to create a lien. The charterer’s liability will not cease unless the lien is in fact effective. Thus, if the local law or practice at the port of discharge is such that no lien can be exercised by the owner, then the cesser clause does not protect the charterer from liability. The rule that the cesser clause does not protect the charterers against claims for which no lien is given by the bill of lading applies even when the form of bill of lading to be signed is specified in the charter and one is signed in other specified form. The fact that the charterer is also the consignee of the cargo will not destroy his exemption under such a clause. The strict contra proferentum (against he who seeks to rely upon it) approach adopted by the courts towards the construction of cesser clauses is not surprising in view of the criticism levelled at such clauses in the commercial world. Where the question arose as to the reconciliation of a cesser clause (relied on by the charterers) and a lien clause (in favour of the ship owners), the court will hold that the reconciliation is to be effected by holding that the cesser clause only applies in so far as the lien clause is effective. It has been held that the cesser clause did not avail the charterers where owners had a lien on cargo which they could not enforce owing to local conditions. If the owners had no alternative remedy against the receivers of the cargo, or for that matter anyone else, the cesser clause could not be construed as cutting out the charterers’ primary liability  in respect of damage to the cargo.