Sat, Oct

Cesser clause


Cesser clause. It is customary to insert a special clause in voyage charterparties, where the charterers' liability ceases as soon as the cargo is shipped and the advance of freight, deadfreight and demurrage in loading (if any) are paid, the owners have a lien on the cargo for freight, deadfreight, demurrage and general average contributions.

The clause is sometimes called a "Cesser and Lien Clause".

The clause in the MULTIFORM voyage charterparty states:

"24. The Owners shall have a lien on the cargo for freight, deadfreight, demurrage and average contributions due to them under this Charterparty Charterers' liability under this Charterparty shall cease on the cargo being shipped except for payment of freight, deadfreight and demurrage and except fox all other matters provided for in this Charterparty where the Charterers' responsibility is specified."

The clause in the GENCON voyage charterparty is somewhat different because it does not explicitly state that the charterers' overall liability ceases at any instant but the liability at the discharging port is subject to the owners' inability to obtain payment from the cargo owners by exercising their lien on the cargo. If the owners do exercise their lien on the cargo at the discharging port, the charterers' liabilities cease. The clause states:

"8. Lien Clause Owners shall have a lien on the cargo for freight, deadfreight, demurrage and damages for detention. Charterers shall remain responsible for deadfreight and demurrage (including damages for detention) incurred at port of loading. Charterers shall also remain responsible for freight and demurrage (including damages for detention) incurred at port of discharge but only to such extent as the owners have been unable to obtain payment thereof by exercising the lien on the cargo."

If the necessity arises to exercise the lien at the port of discharge, it is imperative that the shipowners retain control of the cargo; for instance, by having the cargo stored in their name. As soon as the goods pass under the control of third parties, the lien is lost. In contrast with British law, shipowners are not allowed under some other European law to retain control of the cargo, but are entitled to claim a guarantee for payment of the amounts due, before delivery of the cargo. Should interested parties refuse to issue such a guarantee, the delivery of the goods may be suspended until the required guarantee is given. This rule is compulsory and any deviation from this legal provision is null and void.

If it is necessary to exercise the lien on the cargo, the value of the quantity of cargo must be amply sufficient to meet all outstanding claims. The lien clause should be included in the bills of lading, preferably in full or otherwise by a general reference to the conditions of the charterparty.

In case demurrage has been incurred at the port of loading, which for some reason or other has not been paid by shippers, it is important to insert the amount in question in the bills of lading so that consignees are fully conversant with the position.

The signing of the bills of lading by the master or charterers'/shipowners' agents, requires close consideration. It is true that the charterparty provides for an absolute right of the master and/or owner to exercise a lien on the cargo for freight, deadfreight and demurrage.

It may occur that shippers of different parcels under a charterparty request that bills of lading be signed within 24 hours after loading. Such requests should be declined because it would only be possible to determine after completion of loading whether charterers have fulfilled their obligations to ship a full and complete cargo, as laid down in the charterparty - if so, no deadfreight is due - or whether the agreed laytime has been exceeded or not or, in other words, whether demurrage is due or not. By signing bills of lading for parcels before loading has been completed, without any reservation, the situation may arise that when the master becomes aware that demurrage and/or deadfreight will be incurred, there remains no bill of lading to be signed. It should be borne in mind that in some countries the right of lien is not admitted if the bills of lading are signed without showing the amounts of demurrage and/or deadweight, which may be due. As far as the master and/or shipowners are concerned, only one shipper exists, the charterer. There is no obligation to sign bills) of lading until the entire cargo has been loaded. Requests made by shippers to sign bills of lading for each particular parcel, loaded before the loading of the entire cargo has been completed, should therefore be declined.