Challenging the Undesired Outcome of FIOST Clauses on Cargo Interests
| Autore | Ahmet Gelgec |
| Carica | Istanbul Medeniyet University |
| Pagine | 29-47 |
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OLOGNA
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Chaenging the Impact of FIOST Causes on Cargo Interests
A
HMET
G
ELGEC
Ahmet Gelgec is a Lecturer in Maritime and Commercial Law at Istanbul Medeniyet University
(Turkey).
@ahmet.gelgec@medeniyet.edu.tr
ID 0000-0002-6075-7211
ABSTRACT
Loss of, or damage to goods is a frequent occurrence in the shipping industry, which may often
occur as a result of improper cargo-handling operations during loading, discharging or even
stowing. This highly concerns cargo interests, as they will seek to reimburse their loss from their
carriers under bills of lading. Often, the bill of lading may well contain terms of a charterparty by
way of incorporation that allow the carrier to contract out their cargo-related operations. Once
this is the case, the cargo interest is unjustly left without a remedy for loss of, or damage to his
goods vis- the carrier under English law. This paper, instead of challenging the correctness
of the law firmly established concerning the transfer of these obligations via Free In and Out
Stowed and Trimmed (FIOST) clauses, rather, aims to propose ideas to tackle the impact arising
out of the status quo under English law. Finally, it offers some plausible suggestions for cargo
interests to surmount this undesired outcome.
KEYWORDS
Fiost clauses; The Hague Rules; Cargo Interests; Shipowners; Charterers
TABLE OF CONTENTS
Introduction ............................................ 30
1. Fiost Clauses and Their Incorporation Into Bills of Lading . . . . . . . . . . . . . . . . . . 31
2. Contention Between Fiost Clauses and the Hague Rules . . . . . . . . . . . . . . . . . . . 32
3. The Approach Taken by Other Jurisdictions . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4. Quest for Re-Striking the Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.1. InterveningAct of the Shipowner . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.2.ActioninTort..................................... 38
4.3. Implied Contract and Agency Principle . . . . . . . . . . . . . . . . . . . . . . . 39
4.3.1.AgencyPrinciple................................. 39
4.3.2. Implication of a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3.2.1. Termsof the Implied Contract . . . . . . . . . . . . . . . . . . . . . . . . 42
4.4. Analogy with Transhipment Cases . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.ConcludingRemarks....................................... 47
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CHALLENGING THE IMPACT OF FIOST CLAUSESON CARGO INTERESTS
The International Convention for the Unification of Certain Rules of Law relating to Bills
of Lading, and Protocol of Signature [hereinafter Hague Rules] or the Hague-Visby Rules1
as amended by the Protocol to Amend the International Convention for the Unification
of Certain Rules of Law Relating to Bills of Lading signed at Brussels in 1968 apply either
by way of paramount clause agreed in or compulsorily, by force of law to the contracts
contained or evidenced in bills of lading. The Rules prescribe the rights and liabilities
arising out of the desired voyage starting from loading to discharge operations, including
the core obligations of the carrier, like providing a seaworthy vessel2and other
responsibilities caring for the cargo such as loading, handling, discharging and stowage
operations.3Hence, when failing to deliver one of these responsibilities, the carrier may
become subject to liabilities against cargo interests under the bill of lading.
However, sometimes the shipowner may not be willing to undertake some of these
obligations that would normally fall upon him as defined under the Rules. Accordingly, as
a result of freedom of contract, when drafting charter party terms, by virtue of free-in and
free-out clauses, these responsibilities may have been shifted to charterers who often are
not the bill of lading holders. Sometimes even a term may have been inserted into the bill
of lading transferring these responsibilities to cargo interests, like shippers or receivers.
And it is not uncommon in practice that some germane terms of the charterparty may have
as well been incorporated into the bill of lading by general words of incorporation. When
this is the case, under English law, as it will be shown below, cargo interests’ claims vis-
vis carriers arising out of breach of these obligations appear to be falling short of success,
as they are allowed to contract out them. It is, however, submitted that this undermines
the balance that is struck out by the Rules between cargo interests and carriers, making
the former weaker and the latter even stronger, as the former are left without a remedy,
whereas the faulty party escapes liability.
It is worth noting that by no means, does this paper seek to challenge the
correctness of the law firmly established concerning the transfer of these obligations via
Free In and Out Stowed and Trimmed [hereinafter FIOST] clauses, but rather aims to
1The Hague Rules of 1924 are not in force in the UK. The Hague-Visby Rules as amended by the Brussels
Protocol 1968 are in force in the UK by the Carriage of Goods by Sea Act 1971. Unless otherwise stated, the
arguments are to coverboth the Hague and the Hague-Visby Rules, asthe relevant provisions on the subject
of this paper bear no difference under both the Hague and the Hague-Visby Rules.
2Art.III(1) of the Rules prescribes an obligation that requires the carrier to exercise due diligence before
or at the beginning of the voyage to make the vessel seaworthy to undertake the intended voyage.
“Seaworthiness” covers all aspects that put the vessel in a condition to perform properly the contractual
voyage. For detailed explanations on seaworthiness, see The EurasianDream [2002] EWHC 118; [2002]1 Lloyd’s
Rep 719, 735.
3Art.III(2).
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