FERTICON 2007 is a standard fertiliser voyage charter party. It is accompanied by its own bill of lading, FERTICONBILL 2016. The latest edition of this contract is FERTICON 2007.
Copyright in FERTICON 2007 is held by BIMCO.
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The following explanatory notes are given for the guidance of users to help them complete the relevant boxes in Part I of the form and to better understand the thinking behind the provisions of Part II of FERTICON 2007.
It should be noted that this places an obligation on both parties to meet the draft requirements – for the vessel to arrive at the discharge port at the appropriate draft and for the charterers to ensure that the agreed arrival draft is available on the vessel’s arrival. If either of the parties fails to meet their obligations in respect of draft then the provisions of Clause 18 (Lighterage) take effect.
It was decided to maintain the option in the original Clause 1 of FERTICON for the vessel to lay safely aground. Accordingly, the clause now reads “as it may safely get and lie, always afloat or safely aground” in relation to both loading and discharging.
The freight is to be calculated on the quantity of cargo stated on the bill of lading. The important issue in this clause is the time when freight is payable. The normal practice regarding when freight should be paid is for the charterers to pay 90 % on the issue of Bills of Lading with the balance paid on settlement of the documents or within 150/180 days. The payment of the balance of freight has been linked to the owners’ submission of documents as this reflects the method of payment in India. That way the payment is not dependent on the parties reaching a final agreement on demurrage and despatch.
Sub-clause (a) deals with the payment of freight on shipment, its equivalent in GENCON 1994 is called pre-paid. Reference is made to Box 14 describing the time allowed for payment of the balance of freight. Sub-clause (b) deals with payment of freight on arrival at or off the first port of discharge. Reference is made to Box 15 that describes method and time allowed for payment. Sub-clause (c) deals with what the final freight account is to include in terms of supporting documentation.
Consequently, the owners and the master are obliged to make sure that the vessel’s holds are thoroughly clean at the loading port, before giving the notice of readiness. This reflects the position under English law which requires a vessel to be “ready” to load when a notice of readiness is given in order for the notice to be valid. The vessel will be “ready” even if there are some routine formalities left to be done, but only if it is completely ready immediately when it arrives at the loading place. The cleaning of the vessel’s holds would not count as a routine formality.
In the event that the holds are be found not clean after a notice of readiness has been given the owners must at their own expense and time make the vessel clean. It should be noted that it is assumed that the original notice of readiness is given in good faith – so laytime or time on demurrage ceases to count only from the time that the vessel is rejected until once more ready in all respects.
The third paragraph deals with the situation where the charterers have rejected the vessel one or more times after additional cleaning by the owners. In this situation, the parties are to appoint jointly an independent surveyor whose decision will be final. Sub-clauses (a) and (b) provide for a division of costs between the parties for the surveyor in the situations where the surveyor accepts respectively rejects the vessel’s holds. Sub-clause (c) deals with the counting of time.
Sub-clause (b) deals with cargo segregation and states that different cargoes should be separated by being loaded in different holds.
Sub-clause (c) deals with the vessel’s cargo handling gear, the default position being that the owners shall give free use of the vessel’s gear which should be in good working order. It should be noted that the vessel is required to carry a test certificate covering the Vessel’s gear in accordance with the International Dock Safety Convention and that the certificate must remain valid for the duration of the charter party.
Lines 99-104 deal with time lost by breakdown of the vessel’s gear. Unless the breakdown is caused by the negligence of the stevedore’s, time will not count as laytime or time on demurrage. The owners have been given the option to hire shore cargo handling equipment of similar or better capacity at their risk – in which case laytime or time on demurrage would not be affected as the charterers have not been disadvantaged. This is considered to be fair and practical to both parties.
The last paragraph of Sub-clause (c) divides the responsibilities and costs for the stevedores and for labour to operate the vessel’s cargo handling gear. The default position is that it is the charterers’ obligation to provide and pay for shore labour to operate the vessel’s cargo handling gear; however, the owners have an option to provide their own cranemen/winchmen unless local regulations prevent that. This provision reflects that many owners would prefer that their cargo gear was operated by their own personnel.
Lines 116-119 deal with the discharge of bagged cargo. The default position is that a declaration by the master or chief officer that all the consigned bagged cargo to that port has been discharged is conclusive evidence of the number of bags. This position is modified, however, if the receivers in advance of the discharge notify the master of their intention to tally the cargo at the hatchway and such tally is carried out.
Sub-clause (a) states the earliest date of when laydays can start with reference to the exception in Clause 10 (Laytime).
Sub-clause (b) gives the charterers the right to cancel the charter party in the event that no notice of readiness has been given latest on the agreed cancelling date. No time is given within which the charterers should cancel the charter party after the cancelling date has passed.
Sub-clauses (c) and (d) contain a so-called “interpellation” provision, the purpose of it being to avoid the sometimes harsh result to an owner who cannot make a cancelling date but, nevertheless, is legally obliged to tender his vessel, perhaps at a remote port, after having performed a long ballast voyage, only to be cancelled. Similarly, the provision benefits the charterer because advance notice of a delayed vessel will provide greater opportunity to find an alternative vessel in sufficient time.
The effect of the interpellation is that a vessel at risk of arriving after the cancellation date/time will not have to proceed on a long voyage towards the delivery place, not knowing whether or not the charterers will accept or cancel the vessel once it has arrived. The interpellation provision provides a mechanism whereby the charterers are required to declare their intention to cancel following the owners’ notice that the vessel will be late. This is an important provision, since the basic position under English law is that unless there is a relevant clause in the governing charter party the charterers can wait until the vessel tenders its notice of readiness before they decide whether or not to cancel, thus obliging the owners to make a potentially unnecessary ballast voyage.
If the owners anticipate with reasonable certainty that the vessel will not be ready to load by the agreed cancelling date then the owners can require the charterers to declare whether they wish to maintain or cancel the charter party. The charterers will have to declare their option within two working days after the owners have given the notice. If the charterers choose to cancel, the owners may save considerable costs by not bringing the vessel to the delivery port and may be able to fix the vessel on another charter at an earlier time. Similarly the charterers will have advance notice of the delay and be able to look for substitute tonnage to lift the cargo on the dates requires. If the charterers choose not to cancel the new cancelling date will be the second day after the date that the owners have stated in their notification that the vessel will be ready.
The paragraph after sub-clause (d) applies to all sub-clauses and states where the notice of readiness is be given, that is, when the vessel is within the commercial area of the port or at the usual waiting place.
Sub-clause (b) regulates when laytime starts at first or sole loading port. The parties have been given the option in Box 21(i) to state when laytime will start and only if they have not made such an agreement will the default position in this sub-clause apply (which is six hours after tendering notice of readiness).
Sub-clause (c) provides for when laytime starts at the first or sole discharging port and at second or subsequent loading or discharging ports. At the first or sole discharging port and unless the parties have agreed otherwise, laytime will start 24 hours after tendered notice of readiness. At the second or subsequent loading or discharging ports, laytime or time on demurrage will start when the vessel arrives at the port.
Sub-clause (d) clarifies that at loading and discharging ports actual time used before commencement of laytime and during excepted periods will count as laytime. It should be noted that Sub-clause 10(a) deals with time used for loading before the commencement of laydays (i.e. outside the laycan). In contrast Sub-clause 10(d) deals with the situation where loading is within the laydays window but prior to the contractual commencement of laytime and accordingly also applies to discharging.
Sub-clause (e) states that laytime will not count when the loading or discharging of cargo into or from the Vessel is actually prevented by weather conditions, including surf days officially declared by a port authority.
Sub-clause (f) provides that the time used for moving from the place of waiting to the loading or discharging berth will not count as laytime.
Regarding sub-freight, this means that the owners are given the right to intercept these sub-freights before they are paid to the charterer. Once they are in the hand of the charterer the lien is lost. The most convenient way to exercise this kind of lien is by notifying the bill of lading holder or sub-charterer that any freight due from it should be paid direct to the owners.
The words “legal fees and other” has been inserted before “costs” in order to clarify what the costs shall include and to make sure that it includes the same thing in both USA and Europe.
Sub-clause (b) provides for the situation where the owners do not comply with the agreed maximum draft. The owners will be liable to pay the costs of reducing the draft and the cost of any lightening operation.
Thus, when the charterers do not comply with the agreed maximum permissible draft, the time, risk and costs of lightening operations are for their account. Conversely, when the owners fail to comply the time, risk and costs for any lightening operation will be for their account.
Sub-clause (c) states that delivery of cargo over side will constitute right and true delivery.
The owner will be regarded as carrier for the purposes of this clause; however that will not affect the identity of the carrier in other respects.
Sub-clause (a) is BIMCO’s General Clause Paramount which makes the Hague-Visby Rules applicable to the charter party and the bills of lading. The Owner’s Responsibility Clause found in GENCON 1994 was replaced with BIMCO’s General Clause Paramount as the latter reflects modern, commercial practice and is more acceptable to charterers because of its liability regime.
Sub-clause (b) contains the both-to-blame collision clause. It will be relevant only in a situation where the liability for a collision in which the vessel has been involved during the currency of the charter party is to be resolved under US law. The clause protects the owners from cargo claims for which it would not be liable for under the Hague-Visby Rules because of art. IV, r.2 (a), (the error in navigation defence).
The charterers' position in a mutual collision situation is that they cannot claim for loss of or damage to its cargo directly from the owners. The charterers can however claim against the other vessel involved in the collision.
As there are few collisions where only one vessel has contributed to the accident it is normal for courts to apportion the blame. For example 70% fault on the cargo carrying vessel and 30% fault on the other vessel. In such circumstances the non-carrying vessel may claim from the carrying vessel their portion of blame i.e., 30% of the cargo owner's (the charterers) claim. As the charterers have obtained the entire claim for their losses from the non-carrying vessel they are required under the clause to indemnify the owners of the carrying vessel for the 30% claimed by the non-carrying vessel. The end result is that the owners of the carrying vessel are not indirectly exposed to claims for cargo damage for which they are not liable under the Hague Rules (error in navigation defence).
Sub-clause (c) contains a General Average Clause and the New Jason clause. In accordance with BIMCO’s recommendations general average should be adjusted according to the York/Antwerp Rules 1994. The adjustment and settlement of general average is by default in London unless the parties agree otherwise.
The New Jason clause is relevant only when general average is to be adjusted in accordance with US law. This clause allows the owners to claim a contribution for general average even if the event that created the general average situation was due to negligence on part of the owners. The clause will apply to both the charter party and any bills of lading issued there under, thereby the owners bind all cargo owners directly.
In sub-clause (d) BIMCO’s Standard War Risks Clause for Voyage Charter Parties (VOYWAR) is found. It starts with defining “owners” and “war risks” for the purpose of the clause. In the following three paragraphs (b-d) it deals with the owners rights in war risk situations before and during loading as well as during the voyage. Paragraph (e) deals with the insurance aspect and states that the owners may take out war risk insurances with their hull underwriters and P&I underwriters at their own cost. If the charterers’ orders the vessel into additional premium areas the charterers must reimburse the owners of such additional premiums. Paragraph (f) gives the owners the liberty to comply with directions etc given by the vessel’s flag state, other governmental bodies, war risks underwriters, Security Council of the UN and other supranational bodies. Furthermore, the owners have the liberty to deviate for certain enumerated reasons and it should not be considered a deviation when the vessel complies with something mentioned in the clause.
Paragraph (b) deals with strikes and lockouts affecting the discharging of the cargo. The charterers have the option of keeping the vessel waiting against paying half demurrage after the expiry of laytime or ordering the vessel to a strike free port.
Paragraph (c) contains an exception which is triggered by strikes and lockouts and may be invoked by either the owners or charterers.
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