Indemnity to Ship Owners

Baltime form expressly provides an indemnity to the owners for compliance with charterers’ orders in the following terms (see lines 123 to 127 of clause 9): ‘The Charterers shall indemnify the Owners against all consequences or liabilities arising from the Master, offices or Agents signing Bills of Lading or other documents or otherwise complying with such orders … ‘ Although the NYPE forms of charterparty do not contain an express indemnity an indemnity will normally be implied against liability incurred by the owners as a consequence of complying with the charterers’ orders or directions. However, it will depend on the facts of the individual case and the express terms of the charterparty (an indemnity will not be implied where it would be inconsistent with an express term in the charterparty). The general rule is that the owners are entitled to an implied indemnity unless the act of the Master in complying with the charterers’ orders and/or directions was manifestly wrongful or ‘manifestly tortious’. Similarly an indemnity will usually be implied unless the loss in respect of which the indemnity is sought arises from a risk which under the terms of the charterparty the owners agreed to bear. However, no indemnity will be implied in respect of navigational risks. The indemnity (whether express or implied) usually covers both liabilities which the owners incur as a result of complying with the charterers’ orders and other loss and damage they have suffered (for example loss and damage to the vessel, or the reasonable costs of defending legal proceedings). In all cases in order to claim under the indemnity (whether express or implied) the owners must show that there was an unbroken chain of causation between the compliance with charterers’ orders and directions and the loss and damage which resulted.