The extent of ship owners’ indemnity claims for complying with charterers’ employment orders: The English and Norwegian Perspectives

Abstract

In time charterparties, owners let their vessel together with its crew members at the dis- posal of charterers in return for hire. For the purpose of protecting ship owners’ interests from possible losses or damages that may follow, most model time charterparties and laws provide for either implied or ex- pressed indemnity clauses. An indemnity clause therefore serves as a mechanism of shift- ing liabilities or losses from ship owners to charterers. The vital importance of indemnity makes it one of the most heavily negotiated terms in commercial contracts. Despite the thorough negotiation and careful draft, the scope of this right is far from being clear, as the right is incorporated in a more general nature. The general nature of the right is said in a way to be advantageous for the purpose of flexibil- ity. On the contrary, this makes the interpretation and application of its scope unpredicta- ble and often creates confusion for the contracting parties. The work follows a classic structure, in that, issues such as the extent of ship owners’ right of indemnity for complying with charterers’ employment orders in a time charterpar- ty, criterion that need to be fulfilled in order for the ship owners to benefit from this right and possible limitations that are imposed to their application will be studied. More specif- ically, the types of damages that could fall under this right are also given importance. In so doing, the English and Norwegian laws, some model charterparty clauses, relevant court decisions and cases both from the English and Norwegian legal systems will be dis- cussed.