Overview of the Implied Obligations in a Contract of Affreightment

What is a Contract of Affreightment?

A Contract of Affreightment is an agreement between a Shipowner, Disponent Shipowner or Charterer (the “Carrier”) and Shipper for the carriage of goods by sea, usually evidenced by way of Charter party and/or Bills of Lading. These commercial documents outline the apportionment of risks that parties assume in respect of their duties, rights and liabilities, and generally feature, among other things, the vessel, price, freight, demurrage and indemnity. However, against the backdrop of unequal bargaining position between Carrier and Shipper and freedom of parties to negotiate their own terms, a commercially fair and balanced contract is often unattainable.

In Singapore, Contracts of Affreightment have been broadly provided for under the Merchant Shipping Act and the Carriage of Goods by Sea Act with an aim to safeguard the interests of the shipping community and ancillary industries (e.g. Insurers, P&I Clubs and Banks). Legislation seeks to provide a minimum degree of security by, among other things, (1) requiring parties to adopt certain expressed terms into their contracts but preserving parties’ self-determination in the management of their affairs, (2) defining the risks which must be borne by the Carrier, and (3) specifying the maximum protection one could claim from exclusion and limitation of liability clauses.

Implied Obligations in a Contract of Affreightment

Despite a long and rich history of Shipping law, disputes over Contracts of Affreightment in Courts and tribunals are common. Disagreements over interpretation of contracts and implication of customary law are fiercely contested especially when one’s legal position, if not watertight, can cost millions.

Here are some implied obligations that a Carrier should be mindful of: to provide a seaworthy vessel, ensure that the vessel is properly manned, equipped and supplied, ensure that the vessel is fit for the receipt, carriage and preservation of the cargo, be obliged with reasonable dispatch, to nominate a safe port, and not to deviate from the agreed route. Conversely, a shipper shall not carry dangerous goods without notice or consent of the Carrier. Be cautioned that implied obligations ordinarily derived from customary law are absolute and a breach of contract which relieves both parties from any future obligation, yet such effects may be lessened by applying the Hague Rules or exemption or liberty clauses, if applicable.

How DennisMathiew can help

If you’d like to consider your intentions and rights are sufficiently protected or if you intend to enter into a Contract of Affreightment but are unsure of the obligations it entails or if you are unsure of how to proceed, consider seeking advice from DennisMathiew. Founded by two commercial shipping lawyers Dennis Tan and Captain Mathiew Christophe Rajoo in 2005, the firm takes pride in its extensive knowledge and experience across various industries, including shipping, oil and gas, and global logistics. With its primary area of business being shipping, DennisMathiew is confident that its team of competent commercial lawyers can provide you with appropriate legal advice. Click on this link to get in touch with us and discover how our team can assist with your queries.

Singapore’s Maritime Sector and Maritime Law

Singapore’s unrivaled maritime connections to the rest of the world have elevated it to the status of a significant global hub port, with links to 600 ports in more than 120 nations. This is corroborated by the city’s consistently high annual port numbers which have earned it the distinction of being the second busiest container port and top maritime city in the world, according to an announcement made at the Singapore Maritime Foundation New Year Event.

If you are interested in learning more about our thriving maritime sector and the laws that govern it, continue reading this article.

An Introduction to Singapore’s Maritime Industry

The maritime industry in Singapore has experienced rapid growth, and it now accounts for a sizeable portion of the city’s GDP. In 2022, Singapore handled the second-highest number of containers on record, 37.3 million 20-foot equivalent units (TEUs), to retain its position as the world’s largest transshipment port

With the opening of the ambitious new Tuas Mega Port, also referred to as the largest fully automated terminal in the world, Singapore has continued to evolve as a center for international shipping. In order to meet the needs of shipping mega-alliances as the industry consolidates and to ensure the maritime sector’s continued success, the project is a crucial investment by the Singaporean government. It will be the largest automated container terminal in the world, allowing for greater economies of scale and reducing inter-terminal haulage of containers, when the final phase is completed after 2040.

Overview of Singapore’s Shipping Law

Singapore’s shipping laws broadly cover those that apply to commercial shipping, admiralty law, and the shipping of goods. The body of law governing maritime transportation of goods is composed of the Bills of Lading Act, also known as the Carriage of Goods by Sea Act, along with common law principles.

Singapore’s High Court (Admiralty Jurisdiction) Act, which is based on the UK Administration of Justice 1956, is another important piece of legislation that governs admiralty law and jurisdiction. It deals with specific claims made against ships, shipowners, or ship charterers that fall under the General Division of the High Court’s admiralty jurisdiction.

The Merchant Shipping Act is another piece of legislation that addresses a wide range of topics, including manning, crew matters, safety concerns, and registration of shops in Singapore.

How DennisMathiew can assist in providing maritime and commercial solutions

In 2005, DennisMathiew was founded by two shipping attorneys from Singapore named Dennis Tan and Captain Mathiew Christophe Rajoo. Since that time, Dennis and Mathiew have provided legal services in a variety of industries, primarily drawing on their expertise in shipping, oil and gas, as well as the global logistics sector. With capabilities spanning the traditional wet-dry split, shipping is still DennisMathew’s main line of business. When providing legal guidance in cross-border disputes and business transactions, the firm takes advantage of its cross-experience to the benefit of its clients. The company has a thriving dispute resolution practice, and Singapore courts and international arbitration tribunals frequently retain the firm’s attorneys as counsel.

To learn how our team’s expertise in maritime and shipping law can help you find solutions and guide you through disputes, fill out our contact form on our website https://www.dennismathiew.com/ or contact us by email at dennis@dennismathiew.com or mathiew@dennismathiew.com

The Significance of Maritime Arbitration in Singapore

How Singapore became one of the world’s busiest trading ports

Singapore’s strategic location has allowed it to flourish into one of the busiest commercial ports in the world, drawing a large number of ships into its port and ranking as the second-busiest port in terms of total shipping tonnage. This is due to the Asian maritime routes directly passing through Singapore. Additionally, it continues to be the busiest transshipment port in the world, transhipping half of the annual supply of crude oil and a fifth of all shipping containers.

To address the shifting needs of the shipping industry, Tuas Port was officially opened in 2022. At its targeted completion in the 2040s, Tuas Port will have a handling capacity of 65 million twenty-foot equivalent units (TEUs), almost double the volume of 37.5mil TEUs handled in 2021. It will also be the world’s largest fully automated port,1 making Singapore a leading global player in the maritime space.

What is Arbitration in Singapore?

Arbitration is an alternative dispute resolution mechanism whereby the parties submit their dispute to a neutral tribunal to render a legally binding decision on the dispute. Instead of going to court, the parties arbitrate their disagreement in private and confidentiality. All types of civil disputes can be settled through arbitration. In addition to the traditional dispute resolution areas like construction and business, arbitration can settle disagreements in fields such as employment, tenancy and renovation projects.

Several factors come together to make Singapore an attractive location for arbitration. Not only does it have an independent judiciary that excels at handling challenging legal issues related to arbitration, but it also provides first-rate facilities and infrastructure that are tailored specifically to handle arbitrations.

What is Maritime Arbitration?

Maritime arbitration refers to arbitration involving a ship, such as the chartering of an offshore support vessel. Due to its diversity and scope, maritime arbitration is regarded as the pinnacle of international commercial arbitration. However, it has occasionally been described as a specialised industry-based form of arbitration that would only be useful to the shipping industry. Yet, the truth is that anyone who interacts with ships, including those involved in international trade, may be subject to maritime arbitration.

Arbitration versus courtroom litigation

Arbitration is more appealing to parties in business disputes than courtroom litigation due to its many inherent advantages. One benefit is speed; whereas the latter can take up to years depending on court schedule, the former can take months to resolve once an arbitrator is chosen. Cost is another important consideration; while the former has relatively low fees, the latter can be very expensive due to high court costs and high attorney fees. The former also offers more privacy because it is handled privately between the two parties, whereas the latter occurs in a courtroom open to the public.

How DennisMathiew can guide you through the arbitration procedure

At DennisMathiew, we take pride in being an experienced and capable law firm that provides legal services in a variety of industries, primarily using expertise and knowledge in shipping, oil and gas, as well as the global logistics industry, and with shipping as its primary area of business. Our group of knowledgeable arbitration lawyers frequently helps clients seize ships for security purposes or to enforce their maritime claims.

If you are unfamiliar with arbitration but want to enter into an arbitration agreement, you can trust that we can guide you through the procedure and make it less intimidating for you. Visit https://www.dennismathiew.com/ or fill out the contact form on our website to learn more about the arbitration process.