Wed, Oct

Anti-pollution clauses


Anti-pollution clauses. These are clauses inserted in a charterparty and generally place responsibility on the shipowner to ensure that he obtains suitable insurance cover or can provide alternative security for compensation he may become liable to pay for pollution, by oil (or similar substances) and for clean-up costs. 

These clauses are common in charters for oil tankers. An example is the "TOVALOP Clause" in the TANKERVOY 87 voyage charterparty. The owner agrees that he is and will remain a "Participating Owner" in TOVALOP (the "Tanker Owners' Voluntary Agreement Concerning Liability for Oil Pollution"). The remainder of the clause deals with limits of liability for payment of damages for oil pollution and clean-up operations.

Another, slightly different, example can be found in cl. 38 of the ASBATIME charterparty which can be used for tankers and also for non-tankers. The clause states that:

"The vessel shall be off hire during any time lost on account of vessel's non-compliance with government and/or state and/or provincial regulations pertaining to water pollution. In cases where vessel calls at a U.S. port, owners warrant to have secured and carry on board the vessel a Certificate of Financial Responsibility as required under U.S. law."

Even more stringent clauses, imposing severe obligations on shipowners, came to be used in 1990 after a number of oil tankers experienced casualties in and near United States' waters causing severe escape of oil and pollution or threats of pollution. One clause, for example, required shipowners to maintain insurance cover (from P. & I. Associations) for US$700 million to meet liability for oil pollution caused by the owner's ship. The International Group of P. & I. Associations became very concerned because such large liabilities would be uninsurable or insurable at excessive cost to the owner.
In 1990, legislation was introduced in the U.S.A: to control such pollution from ships. This imposes severe liabilities in the oil tanker trades to and from U.S. ports. In order to reduce their own liabilities, charterers of vessels in these trades attempted to impose very wide obligations on shipowners. These mainly concerned the suitability of the vessels in the trades and the certification and insurance of liabilities for oil pollution.

Charterparties can contain clauses as follows:

"Financial Responsibility Concerning Oil Pollution Owners warrant that throughout the currency of this charter they will provide the vessel with the following certificates:
(a) Certificates issued pursuant to the Civil Liability Convention 1969" (CLC).
(b) Certificates issued pursuant to the U.S. Federal Water Pollution Control Act.
(c) Certificates which may be required by, U.S. Federal legislation at any time during the currency of this charter provided always that such legislation incorporates the CLC as amended by the 1984 Protocol or contains equivalent provisions.

Notwithstanding anything whether printed or typed herein to the contrary:
(i) Save as required for compliance with the above, Owners shall not be required to establish or maintain financial security or responsibility in respect of oil or other pollution damage to enable the vessel lawfully to enter, remain in or leave any port, place, territorial or contiguous waters of any country, state or territory in performance of this charter.
(ii) Charterers shall indemnify Owners and hold them harmless in respect of any loss, damage, liability or expense (including but not limited to the cost of any delay incurred by the vessel as a result of any failure by Charterers promptly to give alternative voyage orders) whatsoever and howsoever arising which Owners may sustain by reason of the vessel's inability to perform as aforesaid.
(iii) Owners shall not be liable for any loss, damage, liability or expense whatsoever and howsoever arising which Charterers and/or the holders of any Bill of Lading issued pursuant to this Charter may- sustain by reason of the vessel's inability to perform as aforesaid. Charterers warrant that the terms of this Clause will be incorporated effectively into any Bill of Lading issued pursuant to this Charterparty."

Anti-technicality clause. In a time charter the charterer is obliged to pay hire for the vessel in the agreed manner, for example, in U.S. currency, semi-monthly in advance, in a prescribed bank on or before the end of a specified number of "banking days". The charterparty also allows the owner to withdraw the vessel if the punctual and regular payments of hire are not made. To be fair to charterers, an "anti-technicality clause" can also be inserted in the charterparty. This can state:

"Where there is any failure to make `punctual and regular payment' due to oversight or negligence or error or omission of Charterers' employees, bankers or agents or otherwise, for any reason where there is absence of intention to fail to make payment as set out, Charterers shall be given by Owners three bank working days notice to rectify the failure. Where so rectified, the payment shall stand as punctual and regular payment. Charterers' bankers to send a direct telex to Owners' bank confirming said hire/monies paid with value date and appropriate references."

Such a clause giving the Charters a "grace period", can also contain a provision to compensate the owners with interest. These words can be added to the above clause:

"Payment received by Owners' bank after the original due date will bear interest at the rate of 0.1 percent per day which shall be payable immediately by Charterers in addition to hire."