A to Z of Shipping Law

This post is inspired by Bharath Chugh’s A to Z of IBC. This is not an exhaustive list of words but a quick reference for those readers who are new to the Shipping industry. The attempt is to simplify the terms and make them sound easier than rocket science.

Arrest – Arrest is an order by the High Court under Section 5 of Admiralty (Jurisdiction and Settlement of claims) Act, 2017. In simple terms, it is a direction to a vessel to remain within the territory of the Court and not to sail away till the order is lifted.  A High Court can order for Arrest of a vessel if there is a maritime claim as per Section 4 of the Admiralty Act,2017.

Bill of Lading – Bill of Lading is an instrument which is issued by a Carrier upon receipt of Cargo. It would contain details such as the name of Consignor, Consignee, Cargo details, Port of Discharge etc.

Consignor – Important parties in a bill of lading are the three ‘C’s. consignor, consignee and the carrier. For example, if Ramu is sending a container full of cashew nuts to Shamu through Maersk Line. Then, Ramu is the consignor and Shamu is the consignee. Maersk is the Carrier.

Demurrage– Demurrage is the charge which is imposed on the time taken to unload the Cargo. Usually the Carriers will provide a free period for unloading the cargo and after that the demurrage charges will be imposed on each day as agreed in the bill of lading. For example, the container reaches the Port at Tuticorin on 1 April,2020. The free period is 14 days. From 15th April, Shamu will be liable to pay demurrage charges till he takes delivery of the Cargo and returns the empty container.

Extended Suit time – The carrier and the ship is discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. This time period can be extended for another three months with the leave of the court. The provision is in the Indian COGSA, 1925.

Freight Charges– Freight Charge is the amount paid to the Carrier for the transport of Cargo.

Ground rent – Ground rent is the charge imposed by whoever stores the container till the consignee takes delivery. It can be either the port or the Container Freight Station (CFS).

Hague Visby Rules– Hague visby rules are international rules for carriage of goods by Sea laying down the rights between parties. In simple terms, it is an international version of Indian COGSA. 

Intermodal Transport – When more than one mode of transport is used, it is called Intermodal Transport.

Joint Survey – An inspection of cargo conducted together by the parties when the Cargo arrives in order to record the state of cargo at its destination when there is a damage is called Joint Survey. This report is a key document when there is  a claim arising from damage to the cargo.

Knot – Unit for speed of the ship

Lien – Maritime Liens are Maritime Claims which have priority over other claims. Section 9 of the Admiralty Act, 2017 lays down what are maritime liens. For example, if a vessel is sold, the priority of claims will decide who will be paid first and what will be the amount that is paid. Maritime Liens have higher priority over other claims. Most Maritime Liens expire in one year. 

Maritime Claim – Maritime Claims are claims that arise from transactions with a ship or due to operation of a ship. The list of Maritime Claims are provided in Section 4 of the Admiralty Act, 2017.

Note of Protest – A note of protest is basically a declaration from the party that their conduct will not be considered acceptance. For example, delivery of cargo is taken by paying certain charges. A note of protest is made so that it can be claim for refund can be made later on. A note of protest is also means a declaration under Oath by the Master of the Ship.

Off-hire – Off hire is the period when the hire is not payable as per charterparty.

Port Charges- Port Charges are the charges paid by operators to the Port for using the facilities of Port.  

Quay – It is a platform like structure for loading and unloading a vessel.

Re-delivery – As per the Charter Party, the vessel will have to be returned to the owner at the place decided  agreed between them in the same condition as it was taken. This returning of the vessel is called re-delivery. If there is a delay in re-delivery, it may be included in the Charter period.          

Salvage – Salvage is rescuing of a wrecked or disabled ship or its cargo. There are parties who provided such specialised services and they are called  ‘salvors’.

Time Charter Party – Charter Party in layman terms is like a rent agreement for a ship. Time charterparty is when ship is hired for a fixed period of time. For example, I hire a ship for a period of three months to go around the world to wherever I please, it would be a time charterparty. If I hire the ship to travel from India to Mauritius, then it would be voyage charterparty. In time charterparty and voyage party, the owner has control over the crew and such matters. In a bareboat charterparty, the Charterer steps into the shoes of the owner and manages everything.

Unseaworthiness – Unseaworthiness means that a ship is not fit to be used for a voyage. It is an important concept in Marine Insurance.

Vessel – Vessel is the term used for Ships, yachts, dredgers etc. Admiralty Act, 2017 defines it as “to include any ship, boat, sailing vessel or other description of vessel used or constructed for use in navigation by water, whether it is propelled or not, and includes a barge, lighter or other floating vessel, a hovercraft, an off-shore industry mobile unit, a vessel that has sunk or is stranded or abandoned and the remains of such a vessel.

Way bill – Way bill is similar to bill of lading but it does not confer title. Unlike bill of lading, it is not negotiable. The purpose of way bill is to avoid the delay and need not be presented in original while taking delivery of the cargo.

X Letter – X letter in International Code of Signals means “Stop carrying out your intentions and watch for my signals”.

York Antwerp Rules  – The York Antwerp Rules are a set of rules that outlines the rights and obligations of both ship and cargo owners in the case that cargo must be jettisoned in order to save a ship. Jettison means to abandon a cargo or to discard it. In such a situation, the cargo owner will be the ‘General Average’ which is the compensation. In simple terms, the loss is divided proportionally between all the parties. York Antwerp rules elaborate on the concept of General average.                                         

Zone – The Maritime zones are divided into territorial waters, exclusive economic zone, contiguous zone and continental shelf. The first 12 nautical miles is the territorial waters of India. The Courts in India will have jurisdiction to arrest a vessel only when the ship enters with in this 12 nautical miles.

So these are some of the common terms in shipping and there are many more terms which I have left out, which will be explained in another post some other day.

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