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  1. MASTER ORAL (2)

  2. How many standard charter party forms do you know? Voyage Charter Cementvoy cement, clinker cement Amwelsh 93, Polcoalvoy, Nipponcoal – Coal Ferticon, Fertivoy 88, Qafcocharter – Fertilizer Gencon, Worldfood – GC Austwheat, Synacomex 90, Norgrain 89, Grainvoy - Grain

  3. Voyage Charter (continued) Nipponore, Orevoy – Ore Panstone – Stone Nubaltwood, Russwood, Nanyozai 1997 - Wood

  4. Time Charter Baltime 1939 – amended 1950, 1974 BIMCO Uniform Linertime – BIMCO TC for liners Boxtime = BIMCO TC for containers NYPE 93 – Newyork Prudence Exchange Barecon 89 – BIMCO Bareboat charter

  5. What is Documentary Credit System? The documentary credit can also be called a "commercial credit" and the system is one that is controlled by banks, which provide finance for buying and selling goods. Commercial letters of credit have been used as a most common method of payment, in international trade. Letters of credit used in international transactions are governed by the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits (UCP).

  6. A commercial letter of credit is a contractual agreement between a bank (issuing bank), on behalf of one of its customers (buyer), authorizing another bank (advising or confirming bank), to make payment to the beneficiary (seller). The issuing bank, on the application of its customer (buyer), opens the letter of credit, and makes a commitment with the buyer to honour the credit on the presentation of the documents, conforming to the terms and conditions of the credit, by the beneficiary(seller). Thus, the issuing bank pays on behalf of the buyer.

  7. Elements of a Letter of Credit • A payment undertaking given by a bank (issuing bank) • On behalf of a buyer (applicant) • To pay a seller (beneficiary) for a given amount of money • On presentation of specified documents representing the supply of goods • Within specified time limits • Documents must conform to terms and conditions set out in the letter of credit • Documents to be presented at a specified place

  8. Step-by-step process • Buyer and seller agree to conduct business. • The seller wants a letter of credit to guarantee payment. • Buyer applies to his bank for a letter of credit in favour of the seller. • Buyer's bank approves the credit risk of the buyer, issues and forwards the credit to its correspondent bank (advising or confirming). • The correspondent bank is usually located in the same geographical location as the seller (beneficiary).

  9. Advising bank will authenticate the credit and forward the original credit to the seller (beneficiary). • Seller (beneficiary) ships the goods, then verifies and develops the documentary requirements to support the letter of credit. Documentary requirements may vary greatly depending on the perceived risk involved in dealing with a particular company. • Seller presents the required documents to the advising or confirming bank to be processed for payment. • Advising or confirming bank examines the documents for compliance with the terms and conditions of the letter of credit.

  10. If the documents are correct, the advising or confirming bank will claim the funds by: • Debiting the account of the issuing bank. • Waiting until the issuing bank remits, after receiving the documents. • Reimburse on another bank as required in the credit. • Advising or confirming bank will forward the documents to the issuing bank. • Issuing bank will examine the documents for compliance. If they are in order, the issuing bank will debit the buyer's account. • Issuing bank then forwards the documents to the buyer.

  11. What is Running down (Collision Liability) Clause; What is ¾ Running down Clause? Marine Insurance Hull and Machinery • The Underwriters agree to indemnify the Assured of any sum or sums in full (4/4th RDC) paid by the Assured to any other person or persons by reason of the Assured becoming legally liable by way of damages for • loss of or damage to any other vessel or property on any other vessel • delay to or loss of use of any such other vessel or property thereon • general average of, salvage of, or salvage under contract of, any such other vessel or property thereon, where such payment by the Assured is in consequence of the vessel hereby insured coming into collision with any other vessel.

  12. When the Underwriters agree to indemnify the Assured for three quarter of any sum or sums paid by the Assured to any other person or persons it is called (3/4th RDC) P&I P&I covers 1/4th Collision liability when not covered by Hull and Machinery. Also covered liability caused by collision with Fixed and Floating Objects F.F.O.

  13. What kind of Certificates that can’t be issued by Classification Society? Certificates that are required to be issued by Flag State a) Certificate of Registry b) Minimum Safe Manning Document/ Certificate Ship sanitary exemption Certificate issued by Port Health

  14. What are Safe Port, Safe Berth, Laycan, Reversible layday and arrived ship? Safe Port -any port where a ship and its cargo can be protected from the hazards of the sea as well as perils of political, natural, or other nature   Safe Berth- a berth where the ship can be protected from the hazards of the sea. Laycan- This is an abbreviation for the "Laydays and Cancelling" clause in a charterparty. This clause establishes the earliest date, when the ship is required by the charterer, (e.g. "Laytime for loading shall not commence before . . .") and the latest date for the commencement of the charter (e.g. “ . . . and should the vessel's Notice of Readiness not be given before . . . ") when the charterers have the option of cancelling the charter. Reversible laydays and arrived ship See Part 1

  15. What will you do when Cargo owner run away in GA? The process of adjusting a general average sacrifice or expenditure begins with the "declaration" of general average, which is ordinarily made by the shipowner through his underwriters. Where cargo has been sacrificed, the shipowner must obtain security from other cargo before delivering it. Such security normally takes the form of a “general average bond” (often a Lloyd's Average Bond), GA cash deposit, or an undertaking from a cargo underwriter. The ship has a possessory lien for the general average contribution payable by cargo in most jurisdictions if the cargo owner run away.

  16. What are the Marine Losses? Marine Losses Total loss a) Actual total loss or b) Constructive total loss. Actual total loss -subject matter is completely destroyed or so damaged that it ceases to be a thing of the kind insured. e.g. sinking of ship, complete destruction of cargo by fire Constructive total loss -the ship or cargo insured is not completely destroyed but is so badly damaged that the cost of repair or recovery would be greater than the value of the property saved. e.g. a ship dashed against the rock and is stranded in a badly damaged position. If the expenses of bringing it back and repairing it would be more than the actual value of the damaged ship, it is abandoned.

  17. Partial loss  A partial loss occurs when the subject matter is partially destroyed or damaged. Partial loss can be (a) General Average (b) Particular Average (c) Salvage Charges

  18. GENERAL AVERAGE There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure. There must be a common adventure (the ship, freight, cargo) The common adventure must be in peril There is a sacrifice or expenditure The sacrifice/expenditure is made or incurred reasonably and intentionally for the sole purpose of preserving the adventure from the immediate peril. This attempt to avoid the imminent common peril must be successful.

  19. Particular average may be defined as a loss arising from damage accidentally caused by the perils insured against. If a ship is damaged due to bad weather the loss incurred is a particular average loss.

  20. Salvage charge Salvage is payment by the owner of property to other person for saving cargo or ship from damage. Sometimes the ship is in danger on the sea and it is saved from the loss or damage by third party. Such party, therefore has right to receive reward from the owner in exchange for its efforts. If the owners refuse to pay salvage, the third person can enforce a claim in the competent court according to the maritime laws.

  21. What is Classification Society? A classification society is a non-governmental organization that establishes and maintains technical standards for the construction and operation of ships and offshore structures.  Classification societies set technical rules, confirm that designs and calculations meet these rules, survey ships and structures during the process of construction and commissioning, and periodically surveyvessels to ensure that they continue to meet the rules. 

  22. SOLAS 74, Load Lines 66, MARPOL 73/78 and STCW 78 and other Conventions allow Administrations to entrust the inspections, surveys and the issue of certificates to Recognized organizations (RO), which are Classification Societies. Administrations authorize classification societies, which are already Recognized Organizations for conducting statutory survey , for approving SSP and issuing ISSC as Recognized Security Organizations (RSO).

  23. SOLAS 74, Load Lines 66, MARPOL 73/78 and STCW 78 and other Conventions allow Administrations to entrust the inspections, surveys and the issue of certificates to Recognized organizations (RO), which are Classification Societies. Administrations authorize classification societies, which are already Recognized Organizations for conducting statutory survey , for approving SSP and issuing ISSC as Recognized Security Organizations (RSO).

  24. What is IMO? • The International Maritime Organization (IMO), known as the Inter-Governmental Maritime Consultative Organization (IMCO) until 1982,[3] was established in Geneva in 1948,[4] and came into force ten years later, meeting for the first time in 1959. • The Organization consists of an Assembly, a Council • and five main Committees: • the Maritime Safety Committee; • the Marine Environment Protection Committee; • the Legal Committee; • the Technical Co-operation Committee and the • Facilitation Committee • and a number of Sub-Committees support the work of the main technical committees.[6]

  25. The governing body of the International Maritime Organization is the Assembly which meets every two years. In between Assembly sessions a Council, consisting of 40 Member States elected by the Assembly, acts as the governing body. 

  26. What is tacit/ explicit acceptance, amendments and Protocols? Technology and techniques in the shipping industry change very rapidly these days. As a result, not only are new conventions required but existing ones need to be kept up to date by means of amendments. The amendments once agreed are set out as Protocols (Rules/ agreement) To avoid long delays in bringing amendments into force a new amendment procedure was devised in IMO called "tacit acceptance" procedure.

  27. The "tacit acceptance" procedure provides that an amendment shall enter into force at a particular time unless, before that date, objections to the amendment are received from a specified number of Parties. The “explicit acceptance” procedure is that an amendment shall enter into force when being accepted by all member state.

  28. What considerations are to be made by Master before accepting Salvage Assistant? There are different Classes of Salvage; Offshore Salvage Harbour Salvage Cargo and Equipment Salvage Wreck removal Afloat salvage Clearance salvage Contract salvage Pure salvage In pure salvage (also called "merit salvage"), there is no contract between the owner of the goods and the salvor. The relationship is one which is implied by law.

  29. In order for a claim to be awarded three requirements must be met: The property must be in peril, the services must be rendered voluntarily (no duty to act), the salvage must be successful in whole or in part. The Salvage award considered on; the difficulty of the operation, the risk involved to the salvor, the value of the property saved, the degree of danger to which the property was exposed, and the potential environmental impacts.

  30. In order for a claim to be awarded three requirements must be met: The property must be in peril, the services must be rendered voluntarily (no duty to act), the salvage must be successful in whole or in part. The Salvage award considered on; the difficulty of the operation, the risk involved to the salvor, the value of the property saved, the degree of danger to which the property was exposed, and the potential environmental impacts.

  31. Pure salvage claims are divided into "high-order" and "low-order" salvage. In high-order salvage, the salvor exposes himself and his crew to the risk of injury and loss or damage to his equipment in order to salvage the property that is in peril. Examples of high-order salvage are boarding a sinking ship in heavy weather, boarding a ship which is on fire. Low-order salvage occurs where the salvor is exposed to little or no personal risk. Examples of low-order salvage include towing another vessel in calm seas, supplying a vessel with fuel, or pulling a vessel off a sand bar.

  32. A vessel is considered in peril if it is in danger or could become in danger. Examples of a vessel in peril are when it is aground or in danger of going aground. Prior to a salvage attempt the salvor receives permission from the owner or the master to assist the vessel. If the vessel is abandoned no permission is needed.

  33. Before Salvage assistant is accepted the master should depending on the nature of assistant he needs, shall consider; The Vessel and its cargoes are in peril (real danger) The losses likely to occurred to ship and cargoes, from said perils and likeliness of pollution. Whether the situation actually needs assistant. Seeking owner’s instruction if time permit.

  34. What is Policy Proof of Interest (PPI)? Wagering or Honour policy:- In marine insurance, a provision whereby the insurer agrees not to deny coverage for lack of insurable interest. This creates an honorable rather than legally enforceable agreement.( insurable interest မ႐ွိေသာ္လည္း ႐ွိသကဲ႕သို႕ေပးေလ်ာ္ရန္သေဘာတူထားေပးေသာအာမခံ) . Such policies are also known as 'Policy Proof of Interest(P.P.I). A notation on an insurance policy used to indicate that the policy itself is proof of an Assured insurable interest in the property; no further proof of such interest need be submitted by the Assured to collect a covered loss. 

  35. What is “MOLOO” and MOLCO”? It is an agreement in voyage charter between a charterer and a shipowner, disponent owner or carrier for the carriage of a stated minimum quantity to be loaded, with a “more-or-less” margin at the option of either the owners (More or less owner’s option, MOLOO) or the charterers (More or less charterer’s option, MOLCO). If the cargo loaded is within this range no dead freight or liability is applicable on the quantity.

  36. What is Peril? In Marine Insurance a peril is something that can cause a loss. "Maritime Perils" mean perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the sea, fire, war perils, pirates and rovers, thieves, captures, seizures, restraints and detainment of princes and peoples, jettisons, barratry and any other perils which are either of the like kind or may be specified by the policy. Perils of the seas cover losses caused by seawater, stranding, cyclone, storm, lightning, fog, rough weather, collision with other ship, striking upon a sunken rock or icebergs.

  37. What is Deadfreight and Demurrage? Dead Freight- a form of compensation payable by thecharterer or shipper to the shipowner when the charterer is unable to load the cargo quantity agreed in thecharterparty; the amount payable is the loss of freight equivalent to the cargo unavailable

  38. Demurrage- The sum payable by the charterer to the shipowner when the latter's ship is detained beyond the specified date (agreed number of laydays) agreed in the charterparty In usual practice the charterer’s liability is limited to an agreed sum in respect of each day and/or fraction of a day of the delay.Opposite of despatch Days during which the ship is delayed are referred to as Demurrage days Once on Demurrage always on Demurrage Means Demurrage days are always Running Days, irrespective of the kind of Laydays contracted for.

  39. What is a Franchise Clause? Provision in marine insurance policies that disallows claims below a certain minimum amount or percentage of loss except, a ship sinks or is stranded.

  40. What is Liner trade? A service that operates within a schedule and has a fixed port rotation with published dates of calls at the advertised ports.. A liner service generally fulfills the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.

  41. What is a Tramp ship? Tramp Service or tramper on the other hand is a ship that has no fixed routing or itinerary or schedule and is available at short notice (or fixture) to load any cargo from any port to any port..

  42. What is Arbitration? Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. 

  43. Advantages of Arbitration when the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as one cannot "choose the judge" in litigation) arbitration is often faster than litigation in court  arbitration can be cheaper and more flexible for businesses arbitral proceedings and an arbitral award are generally non-public, and can be made confidential in arbitral proceedings the language of arbitration may be chosen, whereas in judicial proceedings the official language of the country of the competent court will be automatically applied

  44. What is SCOPIC Clause? In 1989 representatives from the Governments of 65 nations agreed to a new Salvage Convention, which created a new concept, Special Compensation. This provided salvors with a safety net whenever there was a "threat of damage to the environment". It encouraged Salvorsto proceed to the assistance of a ship which threatened damage to the environment secure in the knowledge they would at least recover their expenses; by the Owners and Hull Underwriters,

  45. It was immediately adopted by Lloyds, who amended the Standard Form of Salvage Contract Lloyds Open Form ("LOF") in 1990 and produced LOF 90 before Convention came into force. The Contract was subsequently amended to LOF 95 when the Salvage Convention actually came into force in the UK. The Special Compensation Provisions have, therefore, applied to all LOF cases since 1990.

  46. The concept of Special Compensation, the experience gained from the cases that have arisen since 1990 has shown that the mechanics of assessing Special Compensation in accordance with the provisions of Article 14, has proved to be time consuming, cumbersome, expensive and uncertain. The problems may be summarised as follows:

  47. The SCOPIC Clause is meant to be an alternative option for the contracting parties to agree to replace the salvage convention article 14 when signing a Lloyd’s open form salvage contract

  48. SCOPIC to Lloyd’s Open Form has been designed so that it can be incorporated into a LOF Contract by the contracting parties (the shipowner and the salvor) simply agreeing that the LOF Contract includes the SCOPIC Clause. This can be done verbally, but ideally should be in writing.

  49. The SCOPIC Clause itself has 15 clauses which set out the basis scheme, and 3 appendices. It sets out the position between the salvors and insurers of the shipowners and the cargo, are not parties to the Contract. Their position has been dealt with by two Codes of Practice. One between the ISU and the International Group of P&I Clubs, and another between the Internal Group of P&I Clubs and the Property Underwriters. In the interest of completeness, both Codes are set out, later in this paper.