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Thursday, January 18, 2018

FREIGHT PAYMENTS - CHARTERERS’ DEVIATION FROM CONTRACTUAL PROVISIONS

In the majority of trades for tankers, freight is due upon completion of discharge. The modern forms of voyage charters reiterate this principle, for example, clause 31.4 of BPVOY 4 states:

‘’ Freight shall be payable immediately after completion of discharge…”

Although from an owner’s perspective it would be preferable for freight to be paid before breaking bulk, given the current freight provisions owners understandably do not wish to see payment being delayed beyond the stipulation in the charter. There are of course several reasons for preferring early payment of freight – the most notable from a legal perspective would be the protection of a realistic right to exercise a lien if payment is not forthcoming.

From time to time owners are faced with situations where either additional clauses permit charterers to pay freight well after completion of discharge or where unfortunately charterers do not adhere to the provisions agreed.

One specific charterer presents the following freight payment provision for acceptance:

“…the freight will be remitted after reception of the agreement by the  Exchange Control and the Central Bank but this not to exceed seven (7) banking days after completion of discharge.”

This clause is but one example of a charterer altering the general principle that freight is payable on completion of discharge. Another troublesome aspects of this clause is that this specific charterer has a quite problematic and well documented history of delayed freight payments from before.

Where members are considering letting their vessels to charterers that they have not had any previous course of dealing with or charterers that have a history of delayed payments then consideration should be given to making special provisions in the charter, or involving INTERTANKO’s FDIP as soon as payment is overdue.

The problem of delayed payments is not confined to freight and encompasses demurrage as well. INTERTANKO’s Freight and Demurrage Information Pool (“FDIP”) has since it was established in 1983 sought to assist its members by upholding the contractual rights of owners to the timely payment of freight and demurrage. Should a freight payment not be forthcoming at the agreed time, members of the FDIP may immediately solicit the assistance of john.fawcett-ellis@intertanko.com.

Members are referred to one of the following articles which sets out an analysis of the legal position concerning freight payments and also puts forward some possible methods of seeking to ensure that freight is paid without delay.