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Rodyk & Davidson LLP
SEPTEMBER 2010  

STARBOARD

Maritime News 

"Free In Stowed": A Transfer Of Loading Expenses Or A Transfer Risk Of Loading?

The Singapore court recently considered whether the addition of the term "free in stowed" followed by the letters "l/s/d" (standing for "lashed, secured and dunnaged") to a "Conlinebooking" Liner Booking Note (1978 standard form) was sufficient for a shipowner to transfer to the charterer the responsibility for loading the cargo and the risk of cargo operations at load port.

Subiaco, owner of Singapore-registered tweendecker vessel Achilles, contracted through its agents with a division of charterer Baker Hughes to carry bagged barite from Vietnam to two discharge ports in Australia on FOB Incoterms. Subiaco’s agent added the term "free in stowed l/s/d" to the printed form "freight" clause in Box 10 of the Booking Note. This additional term was not present in the subsequent bill of lading, which superseded the Booking Note.

Subiaco relied on this added term to claim Baker Hughes was responsible for a negligent stevedore who, unauthorised by Subiaco, operated the Achilles’ crane to load cargo at the port and damaged both the crane and the starboard bridge wing of the Achilles.

The judge began by observing that the Hague or Hague-Visby Rules make the proper and careful loading of goods the carrier’s responsibility. Contracting parties are of course allowed to depart from or vary their respective responsibilities. However any attempt to transfer this obligation to the charterer must be done expressly, with clear words to this effect.

The judge rejected Subiaco’s interpretation of "free" in the "f.i.s. l/s/d" term to mean free of expense as well as risk. The judge distinguished between a transfer of loading expenses and a transfer risk of loading, and noted that the term "f.i.s. l/s/d" term was added at the part of the Booking Note dealing with freight rate. The judge found that natural meaning of "free" to be limited that of transferring the cost of loading to Baker Hughes, with no cost to Subiaco.

What Subiaco is essentially asking the court to do was to find an extended meaning in this term to also effect a transfer of responsibilities. Subiaco claimed Baker Hughes’s conduct justified this extension, since Baker Hughes arranged and paid for agents at the load port which appointed stevedores to load the cargo. Consequently Baker Hughes was responsible for the incompetent stevedores. Alternatively, the extension was based on the previous established course of dealings between Subiaco and Baker Hughes.

The judge was not persuaded. Having found that responsibility for stowage is not effectively transferred from Subiaco to Baker Hughes, the judge considered it probable that the stevedore, although appointed or nominated by Baker Hughes’ agent, was nonetheless still the servant of the shipowner. This follows that Baker Hughes were not responsible for the stevedore’s negligence.

As for the claim of established course of dealings, the judge found the facts did not support this claim. Subiaco could not say there was a "usual practice" because Subiaco did not own some of the vessels used in Baker Hughes’ earlier shipments, nor were the "Conlinebooking" standard form used.

The judge dismissed Subiaco’s claims. Any departure from the shipowner’s duty to load and stow must be clearly expressed and cannot arise by implication of law or by implication from the charterparty or, in this case, the term "free in stowed l/s/d" in the Booking Note.


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