Explanatory notes

PART I

PART II

• Definitions
• 1. Slot and Weight Allocation
• 2. Period
• 3. Trading limits
• 4. Permitted Cargoes
• 5. Slot Charter Hire
• 6. Itinerary
• 7. Opening Containers
• 8. Stowaways
• 9. Drugs
• 10. Repairs
• 11. Owners' Obligations
• 12. Charterers' Obligations
• 13. Indemnity and Agency
• 14. Owners' Responsibilities and Liabilities
• 15. Charterers' Responsibilities and Liabilities
• 16. Mutual Exemption Clause
• 17. Lien
• 18. Dues, Charges and Taxes
• 19. General Average
• 20. Salvage
• 21. Deck Carriage
• 22. Sub-letting
• 23. Law and Arbitration
  

 

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The SLOTHIRE Charter Party follows the usual pattern used by BIMCO for a number of years in the preparation of modern charter parties for various trades, i.e., the "Box Layout" system with a separate Part I and Part II.

The main idea behind this division is to have a charter party where the filling-in and all amendments and special provisions are made by the parties in Part I, leaving the printed text of Part II unaltered. In this context it may be useful to emphasize that a standard charter party constitutes an integrated whole and that a change or changes to some of the printed clauses may destroy the overall balance of the charter party, a fact which should never be overlooked when attempting to introduce changes or amendments to standard clauses. In particular, it is important that any additional clauses should not conflict with the terms and conditions of Part II and that they should be in the same terminology as that used in Part II.

PART I

As far as Part I is concerned, all items to be agreed for the particular fixture and to be filled in by typewriter or computer have been arranged in boxes in Part I. The boxes contain a brief description of the particular item and a reference to the relevant clauses in the printed body of Part II.

Additional clauses covering special provisions, if necessary and agreed for a particular fixture, may be added as a rider to the Charter Party and the clauses should be referred to in Box 24 in Part I.

Some of the boxes to be completed in Part I may call for special observations; however, in view of the fact that the details to be written into the boxes should be considered against the background of the provisions in the corresponding clauses in Part II, it has been considered more practical to make these observations together with the comments on the standard clauses in Part II.

PART II

The following is a brief description of the standard clauses contained in Part II, to give some background explanation to the clauses so as to assist owners, slot charterers and other interested parties in the practical use of the charter party.

Definitions

In line with other recent BIMCO standard documents the SLOTHIRE Charter contains a set of definitions.

1. Slot and Weight Allocation

Careful consideration must be given by the slot charterers to the weight allocation provided by the owners. It is often the weight allocation and not the number of slots hired which determines the ultimate limit of the number of containers to be shipped on board the vessel if some of the containers are heavy. Therefore, in the event the total weight allocation as stated in Box 8 has been reached without full use having been made of all the slots hired by the slot charterers such slots will have to remain unused by the charterers. In this connection it may be useful to recall that slots, whether or not used, shall be paid for by the slot charterers.

Sub-clause (b) reflects the practice within slot chartering i.e. that slots may be hired for use between two ports only or that slots may be hired continously for a round voyage. Box 15 should show the voyage legs contracted for and the relevant slot charter hire per leg.

Sub-clause (c) permits the owners to make free use of any slot or weight allocation unused by the slot charterers. Accordingly, if the owners know long enough in advance of the departure of the vessel that the slot charterers are not going to make full use of their slot allocation the owners may hire out such slots to other customers or they may wish to make use of the slots for the transportation of their own goods and containers provided that such slot allocation is available to the slot charterers at the next port of call at which the slot charterers are entitled to load. Again, this reflects common practice within slot chartering.

2. Period

According to the provisions of this Clause, the owners and the slot charterers may agree that the period of the slot charter party shall run for an indefinite period of time until terminated by either party giving notice of termination as per Box 12.

However, to reflect the fact that the parties may agree that slots shall be hired on a voyage-related basis, i.e., for one round voyage, alternatively for a single voyage only, or that slots may be hired on a time charter-related basis, alternative provisions of this Clause provide that the termination of the slot charter party shall be effected upon discharge at a port and on a scheduled date or within a scheduled period as agreed in Box 14.

3. Trading limits

According to this Clause the employment of the vessel is subject to the following restrictions:
(i) Lawful Trades; i.e. the vessel must not be engaged in smuggling of passengers or goods, trading with the enemy, etc.
(ii) Within Institute Warranty Limits; i.e the vessel must only trade within the limits defined by the Institute of London Underwriters as being the normal trading limits imposed on vessels for hull insurance purposes without the payment of additional premium.

4. Permitted Cargoes

The preamble of this Clause suggests that the primary purpose of vessels engaged in the container trade is to carry goods in containers which comply with the International Convention for Safe Containers.

However, recognising that the container trade can be quite diversified and that container vessels are not always used exclusively for the carriage of goods in containers of standard specifications, this Clause provides that, subject to the owners' approval, items such as uncontainerised goods, containers of non-standard specifications, live animals etc., may also be carried.

It is, however, important to note that the approval which may be given by the owners to ship such items as listed in (a) to (e) of this Clause is, again, subject to the conditions established in sub-sections (i) to (iii) being complied with. An increasing number of regulations to enhance the safe handling and carriage of goods enter into force and it is therefore of utmost importance for the slot charterers to ensure that all relevant requirements related to the carriage of such goods are met before tendering them for carriage.

5. Slot Charter Hire

Slot charter hire may be expressed either as a daily rate per slot or as a Lump Sum rate per slot, the latter being common in the case of port to port movements. The additional rate for the use of refrigerating machinery or power supply is usually given as an amount per day, but can also be expressed as a surcharge on the basic rate.

As will be seen, and again in accordance with common practice within slot chartering, slot charter hire shall be deemed earned upon the commencement of the voyage and shall be non-returnable in any event.

In the event of late payment of slot charter hire and if the parties have omitted to fill in Box 19 stating the late payment interest rate, the official discount rate on bills of exchange as valid at the place of payment, plus 3 per cent, shall apply.

6. Itinerary

In order for the slot charterers to plan their shipments of goods and containers the owners shall as per sub-clause (a) of this Clause, provide the slot charterers with the schedule of the vessel's itinerary as early as possible together with details of all amendments thereto as they are made.

7. Opening Containers

This Clause is self-explanatory.

8. Stowaways

Stowaways have become one of the problems of our time. In particular the container trade has become the target for an increasing number of stowaway attempts despite measures taken by shipowners to prevent stowaways getting access to their vessels.

Considering that the slot charterers are responsible for the packing and sealing of containers and that stowaways may gain access to the vessel by hiding away in goods and/or containers prior to their being received for shipment from the slot charterers, it is reasonable that not all costs incurred as a result of stowaways shall rest solely with the owners and that slot charterers should be responsible for costs incurred as a result of stowaways gaining access to the vessel via the slot charterers goods and containers.

9. Drugs

The increasing smuggling of narcotic drugs is another problem which has burdened the shipping industry during recent years. Many owners have been confronted with the unpleasant surprise of having unmanifested narcotic drugs on board, which have in some instances proved to be a costly experience not least when the trading limits have involved the United States. As in the matter of stowaways, the slot charterers may be responsible, albeit unknowingly, for narcotic drugs coming aboard the vessel. Accordingly, in accordance with this Clause, slot charterers have to absorb liabilities incurred in the event that unmanifested narcotic drugs are found to have been shipped as part of the slot charterers' goods and/or in the slot charterers' containers.

10. Repairs

This Clause is self-explanatory.

11. Owners' Obligations

Attention is drawn to sub-clause (a) of this Clause according to which the owners shall arrange for the loading, securing and discharging of the slot charterers' goods and containers. As will be seen, the SLOTHIRE Standard Slot Charter Party is based on Free In and Out Stowed (FIOS) terms. However, in accordance with usual commercial practice within slot chartering, it is the owners who will be contracting with the stevedores as agents for the slot charterers regarding the loading and discharging of the containers received from the slot charterers. It is noteworthy that "securing" for the purpose of this Clause is meant to include the lashing of containers.

12. Charterers' Obligations

It is crucial that the slot charterers provide complete, accurate and timely documentation regarding the goods and/or containers to be loaded on board the vessel. This in particular applies to those items mentioned in Clause 4 (Permitted Cargoes) and which require the owners' prior approval in order to be shipped.

In order to secure the prompt loading of the slot charterers' goods and containers sub-clause (b) provides that the slot charterers must ensure that goods and containers within their allocation must be delivered latest 24 hours before the arrival of the vessel.

13. Indemnity and Agency

Whilst a slot charter party governs the relationship between the owners and the slot charterers, there is no contractual relationship between the owners and any third parties such as the slot charterers' customers. Sub-clause (a) recognises that, despite contractual provisions to the contrary, claims may well be made against the owners or any of their servants, agents or sub-contractors by third parties. However, in the event of such a claim being made, this sub-clause provides that the slot charterers shall indemnify the owners, their servants, agents or sub-contractors for the consequences thereof.

As the owners are not the party preparing the bills of lading with the owners of the goods and containers shipped under the SLOTHIRE Charter Party the owners may wish to be assured that the slot charterers' bills of lading with their customers contain the usual protective clauses. Accordingly, the second paragraph of sub-clause (a) lists a few protective clauses which must always form part of the slot charterers' bills of lading. Another requirement of the owners must be that no identity of carrier clause which purports to put the owners in a direct contractual relationship with the cargo interests should form part of the slot charterers' bills of lading.

Sub-clause (b) seems similar to the first paragraph of sub-clause (a), however, whilst sub-clause (a) concerns claims made by third parties against the owners or any of their servants, agents or sub-contractors this sub-clause concerns claims made against the owners' servants, agents or sub-contractors by the slot charterers themselves, thereby limiting the slot charterers' claims to the owners only. Thus, only the slot charterers may claim and they can claim only against the owners.

Sub-clause 13 (c) is a general agency appointment provision whereby the owners appoint the charterers as their agent, so that the slot charterers stipulate for the owners to have the benefits from any immunities, exceptions or liberties in the slot charterers' bill of lading terms and conditions. This is to give the owners the benefit of the Himalaya or Circular Indemnity Clause in the slot charterers' bill of lading.

14. Owners' Responsibilities and Liabilities

This Clause is a very important clause to which great attention should be paid.

As will be seen, the Hague-Visby Rules, as a widely accepted liability regime, has been applied in determining the owners' responsibilities and liabilities vis-a-vis the slot charterers under this Charter Party.

However, whilst it was hoped that the Hague-Visby Rules could be applied in extenso, this attractively simple approach did not appear to be a viable solution in the SLOTHIRE Charter Party. For instance, Article III, Rule 2 of the Hague-Visby Rules provides that the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods to be carried. Recognising that the SLOTHIRE" Charter Party is based on FIOS terms, it would not be appropriate to make reference to this Article of the Hague-Visby Rules.

Also, the drafting committee considered it appropriate to include separate limitation of liability provisions not provided for in the Hague-Visby Rules.

The approach adopted in the SLOTHIRE Charter Party is to provide full indemnity to the slot charterers for claims they have to pay to their customers but for which the owners are ultimately liable in accordance with the terms of the SLOTHIRE Charter Party. Accordingly, if the slot charterers, having issued a bill of lading to their customers to which the Hague or Hague-Visby Rules are mandatorily applicable, are obliged to settle a claim with their customers for damage caused to goods in the containers but for which the owners are liable, the owners must reimburse the slot charterers on the basis of the Hague or Hague-Visby Rules limits, whichever is mandatorily applicable. There is one notable exception to this rule.

In the event that the slot charterers, if no mandatory law applies, contractually apply the Hague Rules in extenso in their bills of lading with their customers, there have been court decisions in the United Kingdom, and also in other jurisdictions, which have interpreted Article IX (the Gold Clause) of the Hague Rules as applying the gold value of GBP 100 sterling leading to a package limitation of more than GBP 6,000 Sterling. Slot charterers can carefully avoid this situation by incorporating Articles I to VIII of the Hague Rules only, when contractually applied. However, some slot charterers may not be careful enough to avoid this situation. Therefore, in order to safeguard the owners against a back-to-back recovery being made by the slot charterers under the these circumstances, sub-clause 14 (f) (iii) provides that the limitation sum for the purpose of Article IV Rule 5 of the Hague Rules shall be GBP 100 sterling in these circumstances (if Hague Rules are mandatorily applicable then the relevant law provides for the limitation sum).

15. Charterers' Responsibilities and Liabilities

Just as in Clause 14, this is a very important clause to which careful attention should be paid.

Sub-clause (a) of this Clause concerns damage caused by the stevedores to the vessel or to other goods and containers and for which the slot charterers shall be liable.

However, recognising the practice within slot chartering that it is the owners who will be contracting with the stevedores and that the slot charterers have no control over the stevedores during the loading and discharging operations, the slot charterers shall not be liable to reimburse the owners for stevedore damage unrecovered from the stevedores.

According to sub-clause (b) the slot charterers shall, however, be fully responsible for damage caused to other goods and/or containers or to the vessel as a result of improper stowage, lashing and securing of goods inside the containers.

Sub-clause (c) merely provides that if the slot charterers' goods and containers, or any inaccurate or incomplete documentation relating to such goods and containers, result in any fines or costs etc. to the owners then the slot charterers must indemnify the owners for such fines and costs.

In a liner service, where a wide range of small claims can arise, the slot charterers need a degree of flexibility to handle claims arising from their customers. At the same time the owners want to control such matters and ensure that they get the earliest advice of claims so that they can advise their P & I Club to avoid a claim being rejected by reason of late notification. Sub-clause (e) attempts to satisfy this requirement in a reasonable manner

Sub-clause (f) provides that the owners must progress any claim they may have against the slot charterers within 15 months of occurrence of the incident giving rise to the liability or the date when the owners became aware of such occurrence or be time barred.

16. Mutual Exemption Clause

Sub-clause (a) contains the usual provisions as regards mutual exemption.

Sub-clause (b) provides for the usual provisions relating to indirect or consequential loss.

17. Lien

This is self-explanatory.

18. Dues, Charges and Taxes

This Clause provides for a reasonable sharing of dues, charges and taxes customarily levied on the vessel, goods and containers as the case may be.

19. General Average

Similar to time charter hire and bareboat charter hire, slot charter hire shall not contribute in general average. Provision is made for the slot charterers to guarantee contribution to the owners in respect of goods and containers in defined circumstances. This facilitates early release to the slot charterers in the event of a General Average.

20. Salvage

This Clause addresses the situation which arises if the vessel needs to engage salvage services from a third party. If the owners are required to give any undertaking to the salvors to assist in the collection of security and not to release goods and containers, before acceptable security has been provided, slot charterers undertake to exercise a lien until security is provided in order to secure early release of goods and containers for on-carriage to final destination, thereby reducing delay.

21. Deck Carriage

This Clause is self-explanatory.

22. Sub-letting

This Clause is self-explanatory.

23. Law and Arbitration

In a standard charter party intended for use on a worldwide basis, it has not been considered reasonable to let the Charter Party be governed by one law system only or to fix only one venue of arbitration which may restrict the use of the Charter Party in practice.

It has therefore been found reasonable to let Clause 23 provide for optional law systems and venues of arbitration by leaving it to the parties to make their own choice in each individual case and to fill in Box 23 accordingly.

As follows from sub-clause 23 (d), if Box 23 is not filled in, sub-clause (a) of this Clause (i.e. English law and arbitration in London) will automatically apply.