Charterparty Considerations
Following charterers’ employment orders
The Master must obey the Charterers’ employment orders with utmost despatch. This obligation is however subject to the Master’s responsibility for the safety of ship, crew and cargo in which case the master will be entitled to disobey a routing instruction from charterers. Before obeying an order and if the Master has reasonable doubts as to the safety of the Charterers’ orders, the Master is entitled to delay the execution of the order for a reasonable period of time to assess to situation before agreeing/continuing to proceed or not (see the HOUDA). If Owners decide to deviate in view of an actual danger, this will be considered a “reasonable deviation”.
Safe ports
Where an express safe port clause is included in the charterparty, the classic test under English law is set out in The Eastern City [1958], namely that a port will only be safe if “the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship” and see here.
Accordingly, Owners will need to gauge whether, in each case, by following Charterers’ orders, their ship is likely to be exposed to danger, not just when approaching the berth or alongside the berth, but also looking ahead to when the ship is anticipated to leave port limits.
It therefore results that a port or berth will be unsafe if the ship is unable to reach and depart the port safely. The safety of the port can therefore extend to areas far removed from the actual port. For example, the port of Umm Qasr could be considered dangerous if crossing the Straits of Hormuz is considered dangerous.
English law interprets “danger” not just as physical danger but also as legal “danger” such as where the vessel’s trading or cargo becomes illegal or where the vessel’s subsequent trading will be “blighted” or the vessel blacklisted due to having called at that port, with that cargo.
Where a safe port obligation is incorporated, Charterers have an absolute obligation to nominate a prospectively safe port. The fact that Charterers do not reasonably know of the danger is no defence. The port does not need to be safe at the time of the nomination, however, it must be safe when the ship is due to reach, stay and leave the port.
If the port becomes unsafe after the port is nominated, in the case of a time charter party, Charterers will have to cancel the original order and nominate a safe port. If Charterers persist in giving the order, Owners may be entitled to terminate the charter. In the case of a voyage charter party, where the port has already been nominated, the view is that Charterers have no general duty or right to re-nominate. If the charter (and the B/L) has a liberty clause (e.g. “so near thereto as she may safely get”), then the Owner may discharge the cargo at some other port.
Members are reminded that deviation can result in a breach of contracts of carriage and loss of P&I cover. Please contact the Club prior to the commencement of the deviation.
Implied terms and frustration
Even without express charter clauses, English law may entitle an Owner to various remedies, as outlined below.
Implied indemnity
An Owner may be entitled to claim damages for any loss suffered by following charterers’ orders by means of an implied indemnity (GRAND AMANDA [2025]).
Frustration
If performance of the charterparty becomes impossible or radically different, for example, if the vessel is fixed only to load or discharge at nominated port/s which are closed or where the cargo becomes illegal and the charterparty does not give the parties an alternative method of performance such as a contractual right to sail to an alternative port/s, an owner may be able to argue that the charterparty has been frustrated. And see here.
However, frustration of a contract under English law is extremely difficult to prove and is assessed in context, so the vessel may well have to wait for a long time, for example, the nominated port/s opens up again before an Owner is in a position legitimately to argue that the charterparty has been frustrated. In addition, frustration simply brings the charterparty to an end and does not itself give rise to a claim in damages by or against either party to the contract. Equally, contracts of carriage are also capable of frustration under English law, although where there is cargo onboard Owners/Carriers may be placed in a difficult position due to the duty of bailment owed to the cargo interests to safely carry the cargo to destination.
Force majeure
Force majeure is not a doctrine that is readily recognised in English law. Accordingly, many charterparties include express force majeure clauses.
If in such clauses only the words ‘force majeure’ are used then the court will try to give meaning to the words based the usual rules of commercial contractual interpretation. More commonly, force majeure clauses are more detailed and include specific provisions such as “war, blockades, civil commotion, strikes or acts of god”. And see here.
Force Majeure clauses are interpreted strictly by the court and where there is ambiguity they are interpreted against the party trying to rely on them.
Liens
Owners may also be able to exercise a lien on the cargo in order to recoup the cost of additional bunkers and expenses incurred as long as such a lien is provided for in the charterparty, in the bill of lading, and under the local law where the lien is being exercised.
In the event that a vessel is delayed, particularly if she has a perishable cargo on board, the Club’s advice should be sought to ensure that adequate steps are being taken to take care of the cargo. Each incident will be considered on its own particular facts to determine what may need to be done; for instance, whether the owner should make an application to sell the cargo or, alternatively, to discharge it elsewhere.
A less risky option for Members, which the Club would in nearly all situations recommend, is for all the parties is to negotiate alternative methods of performance of the charterparty, for example discharging the cargo at an alternative port.
War risk clauses
Under English law there is no precise definition of what a “war” is. Nor does a conflict have to be declared by any international or Government body in order to be viewed as “war” under English law.
Definition of a war risk
If the charter party and/or bill of lading contains a war risk clause then the clause itself will define what a war risk is. The Bimco Conwartime and Voywar clauses, for example, generally define war as war, civil war, hostilities, revolution, rebellion, piracy, terrorism, blockades.
Parties to charterparties will therefore need to consider whether the situation – as based on the facts reasonably known to the parties when the question arises – is likely to fall within the definition of “war” in their contracts.
Timing
Conwartime covers war risks whether they existed at the time of entering the charterparty or occurred afterwards. Voywar does not apply if the risk already existed at the time of entering into the charterparty. If the risk already existed there must have been a significant escalation of the risk for the clause to apply. A small or even intermediate change in risk will not be sufficient.
Owners’ right to refuse orders
Under Conwartime and Voywar, Owners can refuse to proceed to or remain in any port, place, area, or zone deemed dangerous due to war risks. Under Voywar, Owners can at any time before loading starts, cancel the charterparty or ask Charterers to nominate an alternative safe port within the charterparty range. Charterers must nominate safe port within time limit: 48 hours of Owners’ notice (Conwartime and Voywar 2013) and72 hours of Owners’ notice (Conwartime and Voywar 2025). If Charterers do not nominate within time limit, Owners can discharge cargo at any safe port of their choice. Owners also have liberty to comply with insurers’ requirements or orders from the vessel’s flag state or government authorities.
Risk assessment
Under Conwartime 1993 the clause requires a "real likelihood" of danger. Under Conwartime 2013/2025 the Owners must prove that the ship, crew and cargo “may be” or “are likely to be” exposed to risks. This is arguably a lower standard than “real likelihood” of danger. Under the later versions of the clause, the test now hinges on whether an area is dangerous, based on the Master’s or Owners’ reasonable judgment. A similar test is required under Voywar clauses.
It is crucial that a risk assessment is undertaken before making a decision. Members must make all necessary enquiries. It is not sufficient to just rely only on the news / social media. Members should also keep in mind that a risk may be specific to the vessel (Flag/nationality to the owner, type of vessel etc). It is therefore important to make a vessel-specific risk assessment. Decisions must be made in good faith and be objectively reasonable.
Members should gather as much contemporaneous evidence and risk analysis as possible to show what the situation is locally and what the anticipated risks are of the vessel calling to the port in question. For example, Members should ask local correspondents and agents about local port restrictions and the crew may wish, if possible, to take photos/videos of conditions at the port and gather information from other ship operators about what steps they are taking and whether any damage has been suffered by other vessels and, if so, where this occurred.
Financial implications
Under Conwartime, Charterers must reimburse Owners for any additional war risk premiums or insurances (e.g., kidnap and ransom insurance). Charterers do not get the benefit of the Owner’s war risk insurance. Costs such as extra hire days or increased fuel costs due to rerouting (e.g., avoiding a war risk area) will be for Charterers’ account. In addition, under Conwartime, if Owners become liable under the terms of the crew’s employment contract to pay any bonus or additional wages to the crew as a result of sailing into a war risk area, Charterers are liable to reimburse owners for such additional crew costs.
Under Voywar, Charterers are responsible for reimbursing additional war risk premiums if they order the vessel to a dangerous area. Charterers do not get the benefit of the war risk insurance. Under previous versions, Charterers were liable for additional freight if deviation was more than 100-miles. Voywar 2025 introduces a new method for calculating extra freight based on “estimated time and/or extra expenses incurred or saved,” removing the previous 100-mile threshold to make costs more proportionate.
Further information and articles on war risks can be found here:
“Outbreak of war” clauses
As with unsafe ports, English law does not include an implied right of cancellation of charter if war or warlike hostilities breaks out. For this reason, express charterparty cancellation clauses in the event of ‘war” are common.
However, such clauses are often triggered only if war breaks out between specific stated countries, eg between two or more of the US, UK, Russia, France or China.
Cargo and bill of lading implications
As bills of lading are contracts relating to the carriage of goods as between the Carrier and cargo interests, they may incorporate the same terms and conditions which are contained in the charterparty. If so, the comments above regarding war clauses may be applicable.