Charterparty territorial exclusions

In the previous section, one of the claims arose because the insurance policy excluded Cuba. Territorial exclusions in charterparties regularly give rise to claims against shipbrokers and managers.

A pool manager fixed a ship to carry oil to the USA, but the bareboat charter contained a provision that no US business should be arranged. The cargo had to be transferred to another ship and the pool manager faced a claim for the costs involved including the ship-to-ship transfer, the hire of the second ship and time lost by the owners.

A shipbroker fixed a ship for four period charters – one main and three re-lets. The negotiations were conducted within a very short period. The shipbroker omitted to include in the second re-let a provision that the ship could not trade to South Africa. This was the result of an existing legal dispute involving the head owner who faced the prospect of the ship being arrested in that jurisdiction. They had therefore excluded South Africa in the head charter. The ship was redelivered from the final sub-let in the Red Sea/Aden, where the most natural and cost effective loading area for the next cargo was South Africa. The head owner refused to go to South Africa and pointed to the terms of their charterparty. Ultimately, a different fixture was arranged, but the end-charterers claimed substantial losses from the shipbroker.

A shipbroker was negotiating on the basis of the load port being “one safe port Russian Black Sea”. The charterers asked whether this included Odessa. Unfortunately, the broker failed to appreciate that Odessa was in the Ukraine and not Russia and answered that the ship was able to load at Odessa. The owners refused to accept orders to Odessa saying it was outside the description "Russian Black Sea". They finally agreed to go, but only on the basis that the charterers would pay the other additional charges. Due to the fact that the ship flew a flag of convenience, these charges were increased by local punitive tariffs.