International Commercial Law Essay

  • Length: 12 pages
  • Sources: 10
  • Subject: Business - Law
  • Type: Essay
  • Paper: #35933824

Excerpt from Essay :

Jurisdiction and Applicable Law

The first issue that Barcelo faces concerns which nation's law governs the contractual rights and duties between himself and George. Because this was an international voyage between England and Spain, and because the contract appears to involve English and Spanish parties, the question is whether the parties' rights and remedies are supplied by English or Spanish law. Although maritime law is primarily governed by international treaties that create uniform rules across national boundaries, there still could be legal differences between England and Spain on crucial issues. Moreover, the correct forum for the dispute could be determined by the answer to the choice-of-law question.

As a general rule, the terms of any charterparty and bill of lading are governed by the law chosen by the parties. This rule emerges from the funamental princple of all contract law that the governing law should be determined by the same considerations that determine the other provisions of the private agreement (Cooke, 1.28, p. 11). If the charter lacks an express choice-of-law clause, their choice can be implied from conduct or other evidence that reveals the parties' intentions about choice of law. . (Cooke, 1.33-1.34, p. 13). If the parties intentions cannot be discerned, he charter will be governed by the system of law "with which the charter has its closest and most real connection." Several factors can determine which law has the closest and most real connection to the charter, including: the transaction which the charter embodies; the circumstances surrounding the contract, as known to both parties at the time of making the contract; the parties' respective places of business; the place of loading and delivery; and the currency in which payment will be made. (Cooke, 1.38, pp. 14-15).

In The Assunzione, [1954] P. 150, the parties, an Italian owner and a French charterer, made a charter on a Gencom form. The charterparty itself was headed "Paris, 7 Oct. 1949." Payment was due in Italy in Italian currency. The bills of lading were issued on a French form. The Court of Appeal concluded that the decisive factors were the currency for payment and the place of payment. Consequently, it ruled that Italian law governed the charterparty.

The Contracts (Applicable Law) Act of 1990 applies to contracts made on or after April 1, 1991. It gives effect to the Rome Convention of 1980. Article 4.4 of the Rome Convention provides that a contract for the carriage of goods is presumptively governed by the law of the place of where the carrier has his principal place of business, if that is also the place of loading or discharge. (Cooke, 1.43, pp. 16-17).

According to these rules, the resolution of the choice-of-law issue in Barcelo's case will be a close one. There is nothing to suggest that either the charterparty or the bill of lading contains a choice-of-law clause. Similarly, there is no information from which to imply an intention by the parties about governing law. Consequently, it seems likely that we will have to identify the country that has the closes and more real connection to the transaction. Given the available information about the transaction between George and Barcelo, many of the relevant factors are in equipoise. The place of loading was England; the place of delivery was Spain. It seems that the parties' respective places of business are England and Spain. The analysis from The Assunzione could supply a tiebreaker, but we do not know the place of payment or the currency in which the payment was to be made. Advice to Barcelo about choice-of-law considerations turns on these two factors.

Deviation and Delay in the Voyage

The next issue concerns whether George breached his contractual duties to Barcelo when he diverted the ship to Baltimore to get rid of the stowaway. This issue includes several sub-issues: whether the terms of the bill of lading permitted George to stop in Baltimore; whether the stop was necessary to the safe conduct of the voyage; and whether the stop in Baltimore actually caused the delay in arrival and delivery.

In general, an owner is permitted to take a reasonable time to complete those formalities that are an ordinary incident of any normal voyage. But the charterer can be liable for delays if the ship is detained by a third party if the detention is the result of some default by the charterer. (Cooke, 9.1, p. 182).

The carrier has a duty to proceed according to an ordinary and customary course and has little discretion to deviate from such a course. (Cooke, 12.1, p. 235; see also Davis v. Garrett, (1830) 6 Bing. 716). The "usual route" will be presumed to be the direct geographical route. (Cooke, 12.2, p. 235; see also Achille Lauro v. Total, [1968] 2 Lloyd's Rep. 247, 251).

Of course, the parties can make an express agreement that gives the carrier the discretion to choose a route. That is what the parties did in this case, agreeing to a clause in terms and conditions to the bill of lading which provided that:

The carrier may at any time and without notice to the merchant...proceed by any route in his discretion (whether or not the nearest or most direct or customary or advertised route) at any speed, and proceed to or stay at any place or port whatsoever, once or more often and in any order...'

In most cases, such a clause would not give the carrier unlimited discretion to take the ship to any port anywhere in the world or to follow any conceivable route. Even broadly framed language such as "any port" or "any route" does not give the carrier unlimited discretion. "Any ports" does not mean any port anywhere in the world. It means any port along the usual route. (Cooke, 12.15, p. 241; see also Leduc v. Ward, [1888] 20 Q.B.D. 475, 482).

The limits on the carrier's discretion are defined by a reading the clause that gives discretion about routes or port of call together with other clauses defining the carrier's general duties. A carrier has the liberty to deviate from customary routes or to call at intermediate ports when it is necessary to accomplish the purpose of the voyage. That liberty does not extend to pursue objectives that are inconsistent with the main object of the voyage. Thus, there is an implied limitation on the liberty to choose routes and ports of call, even when such liberty is relatively unlimited according to the terms of the charterparty or bill of lading. (Cooke, 12.22, p. 244).

In this case, there seems to be little question that it was permissible for the La Tremontaine to deviate from the route to stop in Baltimore. Baltimore is not far from the usual commercial route that the La Tremontaine would have taken directly to Cadiz. Regardless of any limitations that might exist on the La Tremontaine's discretion to deviate from the route to put in at Baltimore.

The next question is whether the stop in Baltimore was necessary. Deviation from the usual route is permissible when necessary to protect the safety of the cargo or crew. Such deviations must be no more than reasonably necessary. Necessity includes the making of repairs to the ship, the avoidance of capture or confiscation, to save a life, or similar reasons. (Cooke, 12.8-12.13, pp. 239-41). Reasonable deviations are those that are consistent with the purpose of the voyage. (Cooke, 12.23, p. 244).

Based on the available information, it is difficult to determine whether the stop to discharge a stowaway really was necessary to maintain the safety of the crew or to preserve the ship's ability to achieve the objective of the voyage. There is no information to suggest that the stowaway was a dangerous person who would necessarily have threatened the safety of the crew if he had remained on board while the voyage was completed. Similarly, there is no information to suggest that the La Tremontaine was under a legal obligation to discharge a stowaway at the first opportunity. If the ship was subject to detention or capture by authorities by having a stowaway on board, then the stop in Baltimore could be characterized as necessary to the voyage's objective.

Finally, there is the question whether the stop in Baltimore was the sole cause of the La Tremontaine's delay in arriving at Cadiz. Courts have ruled that a brief, unscheduled stop is not the sole cause of losses when there is no evidence to suggest that the time spent in making the stop was the decisive factor in the loss. For example, in Connolly Shaw v. Nordenfjeldske, (1934), 49 Ll. L. Rep. 183, there was a contract to ship lemons from Palermo to London. The carrier had the liberty "to proceed to any ports whatsoever although in a contrary direction or out of or beyond the route." The carrier called at Hull for three days before discharging the lemons at London, by which time they were spoiled. The court concluded that…

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