Time Bars

The rights and responsibilities enumerated in the notes about the Hague Rules and the Hague-Visby Rules apply to carriers and cargo owners/shippers whether or not the vessel is employed on voyage or on timecharter terms and conditions. However, where timecharter applies, there is a complication because the “carrier” can be defined as either the timecharterers in the role of “disponent owner”, or the actual owners themselves. Indeed some claims can arise due to default by the timecharterers whilst others may be entirely the ship’s fault. Accordingly, and in order to avoid any misunderstanding where simultaneous dual negotiations might be carried out between an aggrieved cargo-owner and both the actual and the disponent owners, a code of practice has grown up around the New York Produce Time Charterparty, into which it is common to incorporate the ‘Inter Club New York Produce Exchange Agreement’. The ‘Inter Club Agreement’ was last amended in 1984 and sets out what is to happen in the event that cargo claims are lodged against the carrier. It also sets out the responsibilities and liabilities in the relationship between the timecharterer and the shipowner. It is important to take the time to read and understand the Inter-Club Agreement, especially if becoming involved with timechartering, and particularly to realise the significance of the inclusion or absence of the words “and responsibility” in Clause 8 of the NYPE C/P and/or the words “cargo claims” in the second sentence of Clause 26. Under English law there is a one-year time limit for charterers and/or cargo owners to bring claims against carriers or shipowners. This may, however, be exceeded in certain circumstances under the terms of the ‘Arbitration Act, 1950’, if an English arbitration applies and if the claimant can show the court that ‘undue hardship’ might otherwise occur. Generally though, one year time limitations means what it says for charterers, although many feel it to be unfair that shipowners are not prevented from bringing claims against charterers in similar circumstances. However, in regard to the ‘Inter Club Agreement’, there is a provision in respect of a time-bar in which claims are subject to a time-bar of two years, no matter whether they are made by owners or by charterers.