Informing Marine Engineers about legal matters
Authored by: Darren Williams, Williams & Company
Brought to you by www.dieselduck.net, comments to [email protected]
A glossary of common legal terms
Abandonment: a term used in marine insurance to refer to the insured giving up property rights (in a vessel or other insured property) to the insurer in exchange for payment of monies for the constructive total loss or an actual total loss of the vessel or other property.
Action in personam: a legal action taken against a person, including a company, as opposed to an action against property (which is an action in rem).
Action in rem: a legal action taken against property, such as a vessel or its cargo.
Actual Total Loss: a term in marine insurance law referring to property that is completely destroyed, or lost and irretrievable.
Allision: the collision of a vessel with a fixed object such as a rock or a pier - primarily an American term.
Appraisement: the valuation of a ship, typically by a court appointed surveyor, before its judicial sale. This allows the court to make an informed decision as to whether the judicial sale price is fair to the parties, particularly where there are competing claims for the proceeds of sale.
Arrest: the legal procedure where a vessel or cargo may be seized by an admiralty court (such as the Federal Court of Canada or the BC Supreme Court), after the commencement of an action in rem, to provide pre-judgment security for the plaintiff's maritime claim. The arrest prevents the vessel from being moved except by the consent of all the parties, but does not legally prevent the vessel from being sold.
Athens Passenger Convention: The "Convention Relating to the Carriage of Passengers and Their Luggage by Sea" which govern the timing and limitation of claims for passengers and their luggage. Contained as an annex to the Marine Liability Act, it is the marine equivalent to the Warsaw Convention in the airline industry.
Bail: security provided to the court by a defendant to prevent the arrest of a ship or cargo, or to secure its release from arrest. The security typically takes the form of a bail bond, or letter of credit or letter of undertaking that is usually equivalent in value to the claimant's reasonably best arguable case, plus interest and costs. Bail must not exceed the value of the item arrested.
Barratry: the damage caused to the ship or cargo by the intentional act of the master or crew.
Beneficial owner: a term referring to a party, other than the registered owner, having the equitable ownership of the vessel.
Bottomry: a form of security given by the master of a ship when away from home port that allowed money to be borrowed to preserve the ship, such as for repairs.
Cabotage: a French term referring to the coasting trade (shipping that occurs within one nation, as opposed to international trading).
"Canadian Maritime Law": a broad and comprehensive area of law defined by the Supreme Court of Canada, in The Buenos Aires Maru (ITO - International Terminal Operators u. Miida Electronics)  I S.C.R. 752, as having two major components:
- the admiralty law of England received into Canada in 1934, upon the adoption of Canada's Admiralty, 4ct, S.C. 1934 c. 31, as subsequently developed by Canadian statutes and jurisprudence; and...
- that body of law which would have been administered by the former Exchequer Court of Canada (now the Federal Court of Canada) on its admiralty side, if that Court had had an "unlimited jurisdiction in relation to admiralty and maritime matters" (ibid. at p.774).
Carrier: a party who contracts to carry goods or passengers by water.
Charterparty: a contract of lease of a ship in whole or in part, for a long or short period of time, or for a particular voyage.
Charterparty by Demise: a charterparty where the shipowner appoints the master and the crew, although they are paid and controlled by the demise charterer. The shipowner places a ship in the control of the charterer in exchange for paying hire at specified intervals during the term of the charter. A "bareboat charter" is a demise charter where the bareboat charterer names, pays and controls the master and the crew.
C.I.F.: or "cost, insurance, freight," is a term of the contract of sale of goods being shipped where the seller pays the cost of the insurance and transport of the goods to the destination; legal delivery occurs when the goods cross the ship's rail in the port of shipment. The purchaser takes actual delivery of the goods at the place named in the contract as the place of destination.
Classification societies: classification societies are organizations which inspect, study and report on the seaworthiness and the general and particular condition of individual ships - typically at the request of insurance companies or regulatory authorities such as Transport Canada.
Collision Regulations 1972 (COLREGS): the "International Regulations for the Prevention of Collisions at Sea." These form a regulation under the Canada Shipping Act 2001.
Common venture: a basic theme in maritime law, reflecting the understanding of maritime commerce as a joint undertaking on the part of shippers, carriers and consignees.
Consignee: under a contract for the carriage of goods by water, the party to whom delivery of the goods is to be made.
Constructive total loss: a constructive total loss occurs when the insured property is reasonably abandoned because its actual total loss appears to be unavoidable, or because it could not be preserved or repaired without an expenditure which would exceed its value.
"custodia legis" ('custody of the law'): expenses in custodia legis are incurred, in the common interest of the creditors, to preserve the ship during the period of its arrest or attachment. Such expenses, including moorage and insurance, together with costs of arrest and sale of the ship, are ordinarily ranked immediately after "special legislative rights," such as pilotage fees, and ahead of all other maritime claims.
Deadweight tonnage: is the actual cargo carrying capacity of the ship, when she is fully loaded with cargo so that the hull is immersed in water up to her Plimsoll marks.
Demurrage: in the course of shipping, an amount paid for the cargo waiting in one location before being shipped on - usually as a result of unintentional delay.
Deviation: A departure by the carrier of goods by sea from the agreed or usual geographic route without the consent of the cargo interests.
Displacement tonnage: is a term used to measure the weight of the water displaced by the ship when she is fully loaded with all her crew, bunkers, stores and equipment.
Dock receipt: a receipt issued by the carrier (supra) attesting to the delivery of the goods to the dock prior to their loading aboard the ship.
Dunnage: material (usually lumber or strapping) used to secure cargo in containers and ships' holds in order to prevent shifting and resulting damage during the voyage.
Flotilla principle: the principle whereby the tonnage of both the tug and the tow were taken into consideration in calculating the shipowner's limitation of liability arising out of collisions between the tow and another vessel or a stationary object.
Flotsam: items found floating after a ship has been lost.
F.O.B. (Free on Board): a term of the contract of sale and shipping meaning that the seller delivers when the goods pass the ship's rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The F.O.B. term requires the seller to clear the goods for export.
Freight monies payable for the carriage by the vessel of property or passengers or for the use of the vessel. Also known as "hire".
Freight forwarder: a party who arranges for the carriage of other people's goods by sea, for a fee, usually charged as a percentage of the freight cost plus the forwarder's expenses.
General Average act: an action where cargo or part of a ship is sacrificed in order to save the remainder of cargo or ship as a whole. "There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure."( York/Antwerp Rules 1994, Rule A). The ship owner and the cargo interests share in the loss.
General Average contribution: the monetary contribution required of shipowners and cargo owners (or their respective insurers) in respect of general average expenditures and sacrifices.
General Average expenditure: an extraordinary expenditure incurred by the shipowner intentionally and reasonably to preserve from peril the property (ship or cargo) involved in a common maritime adventure.
Gross tonnage: the actual carrying capacity of the ship's hull below the upper deck, in cubic feet, divided by 100.
Gross register tonnage (g.r.t): the volumetric cargo capacity of the ship according to its certificate of registry.
Himalaya clause: a clause in a bill of lading extending the benefit of the exemptions, limitations, defences and immunities of the carrier under the bill of lading to specified third parties, such as servants or agents of the carrier and independent contractors (e.g. longshoremen) employed by the carrier.
Hire: the consideration in bareboat, demise and time charterparties.
In personam (against the person): a type of legal proceedings directed against the defendant personally, as opposed to against property.
In rem (against the thing): a type of legal proceedings, taken in an admiralty court in a common law jurisdiction, against the ship (and sometimes against cargo and/or freight) (the res) as defendant, in respect of particular types of maritime claims.
Inchmaree Clause: a clause in the hull policy extending the perils to include negligence of master and crew and other additional perils.
Jetsam: refers to things intentionally thrown overboard.
Laches: a common law term derived from the Courts of Equity, referring to the failure of a plaintiff to assert their claim within a reasonable time, which causes prejudice to third parties, resulting in the dismissal of his delayed lawsuit on equitable grounds.
Laytime: the period of time (the "lay days") agreed between the parties during which the shipowner will keep the vessel available to the charterer for loading or discharging without having to pay additional freight.
Letter of Undertaking (LOU): a written undertaking provided by a P. & I. club (often in place of bail) to secure the release of a ship belonging to one of the Club's shipowning members from arrest or attachment, or to prevent such arrest or attachment. The letter provides the seizing creditor with a guarantee that his claim will be satisfied up to the amount specified by the letter.
Ligan: (lagan) things thrown overboard with a float or buoy attached to mark their location.
Limitation fund: a fund which is constituted in court by the party seeking to limit its liability under the Limitation Conventions 1957 (art. 2) or 1976 (art. 11) - typically a vessel owner. Once constituted, the limitation fund is available only to pay claims subject to limitation, so that other claims must be asserted separately, and claimants against the fund are barred from proceeding against other assets of the defendant.
Load lines: lines painted on the side of a ship, indicating the maximum depth to which the vessel may safely be loaded.
LOF 2000 (Lloyd's Standard Form of Salvage Agreement): form of salvage contract approved and published by the Council of Lloyd's which provides for salvage services to be rendered on the principle of "no cure - no pay" subject to the provisions of the Salvage Convention 1989.
Maintenance and cure: expenses incurred for food and lodging during recovery (maintenance) and necessary medical services (cure) for a seaman suffering from an illness or injury sustained in the service of the ship.
Maritime law: is a comprehensive system of law, both public and private, substantive and procedural, national and international, with its own jurisdiction, which pre-dates both the civil and common laws. Maritime law is composed of two main parts - national maritime statutes and international maritime conventions, and the general maritime law as developed in the courts.
Maritime lien: a secured claim against a ship or its cargo for services provided to the vessel or damages done by it. A maritime lien is a substantive right in the property, derived from the general maritime law. A maritime lien arises without notice, registration or other formalities, at the time the services are rendered or the damages are done. Unlike a common law possessory lien, it does not depend for its existence on the possession of the res by the creditor. A maritime lien travels with the property, and encumbers the title of subsequent owners or possessors and survives the conventional sale of the vessel - it can only be discharged by a court ordered sale.
MARPOL 1973/1978: the International Convention for the Prevention of Pollution from Ships (MARPOL), adopted by the IMO at London, November 2, 1973.
Marshalling: the judicial process where the court orders a creditor who has a secured right on more than one piece of property, or more than one fund belonging to the debtor, or security from two or more debtors for the same debt, to exercise his right on the security in a manner which will be in the best interests of all the creditors.
Master's disbursements: expenditures made by the master and paid lor with his own funds for the ship.
Nautical assessors: court-appointed marine experts (usually on matters of navigation and seamanship) who give their opinions to the judge, at the court's request, on matters relating to their field of expertise.
Net tonnage: is the gross tonnage less the number of cubic feet reserved for crew's quarters, ships stores, bunkers, engine room space, and such.
No cure no pay: the historic salvage principle which prohibited the payment of any salvage reward where the salvage operations had been unsuccessful.
P. & I. Insurance: mutual insurance which covers shipowners' liability to third parties for damage to their ship or cargo, and statutory liabilities such as pollution and wreck removal, but does not cover direct losses to the shipowner's own ship or cargo.
Particular Average: a marine insurance term meaning a partial (and not total) loss suffered by an insured. ("particular" means percentage, and "average" means loss).
Peril of the sea: peril of the sea is some catastrophic force or event that would not be expected in the area of the voyage, at that time of year and that could not be reasonably guarded against.
Plimsoll line (Plimsoll mark): a mark painted on the side of shipping vessels showing the various draught levels to which the ship may be loaded, usually including tropical fresh water, fresh water, tropical sea water, summer sea water, winter sea water and winter North Atlantic Ocean water.
Port State Control: Port State Control is the system where the authorities of a State responsible for marine safety are empowered to inspect vessels entering its ports, even if they do not fly the flag of that State, in order to identify ships not complying with applicable norms, especially with respect to safety.
Possessory liens: the right of a bailee to retain property in his possession belonging to another until certain claims of the bailee are satisfied. The ship repairer may have a possessory lien for the value of work completed on the vessel.
Register tonnage: is the gross tonnage and/or the net tonnage, as entered on a ship's certificate of registry.
Replevin: an action for the repossession of personal property wrongfully taken by the defendant. The plaintiff gives security for and holds the property until the court decides who owns it.
Respondentia: the pledging of the ship's cargo by the master while away from the vessel's home port, as security for a loan to pay for goods or services needed to preserve the ship or complete the voyage.
Rules of the Road: a term often used to refer to the Collision Regulations 1972 (supra).
Safety of Life at Sea (SOLAS) Convention 1974: International Convention for the Safety of Life at Sea, amended 1974, in force May 25, 1980, as amended.
Salvage: the salvor has a claim of salvage reward if he has successfully and voluntarily salvaged maritime property in danger.
Seaworthiness: a common theme in maritime law, referring to the obligation of shipowners and carriers to provide a vessel and crew fit to confront the perils of the sea.
Shipper: the party who contracts with a carrier for the carriage of goods.
Sister-ship arrest: a procedure where a ship, which is not the ship to which the claim relates, but which is beneficially owned at the time the action is brought by the party who was personally liable on the claim when it arose, may be arrested in an action in rem as security for the claim.
Special (Salvage) compensation: compensation payable under art. 14 of the International Convention on Salvage, 1989, in respect of salvage operations carried out in respect where there is threatened damage to the environment
Statutory right in rem: in Canada, a right against a vessel that arises as a result of grant by a statute, and is accompanied by the right of arrest. For example, s.22 of the Federal Courts Act provides for statutory rights ln rem against vessel for claims in respect of repairs made to the vessel, towage, bunkers, or stevedoring. Statutory rights in rem rank after maritime liens and are referred to as "statutory liens."
Strict liability: liability without regard to mens rea (mental intent) or scienter (knowledge). In a strict liability offence the Crown need only show (beyond a reasonable doubt) the illegal act was committed, not that it was intended to be committed. Once this is shown, the defendant can avoid conviction by showing (on the balance of probabilities) they exercised due diligence.
Subrogation: a legal function where an insured is deemed to have assigned his rights and claims against a third person to their insurer (after the insurer has paid for the loss caused by the third party), thus allowing the insurer to recover the insured losses from the third party.
"Sue and labour" clause: a clause in a marine insurance policy which allows the insured to recover from the insurer any reasonable expenses incurred by the insured in order to minimize or avert a loss to the insured property, for which loss the insurer would have been liable under the policy.
Total loss: "an actual total loss of the vessel or such damage to the vessel that the cost of saving and repairing her would supersede her market value at the time of the collision." (Lisbon Rules 1987, supra).
Towage: is a contract whereby one ship moves another. Towage is a service contract, which does not necessarily involve a marine peril, the consideration for which is an hourly or daily rate.
"Uberrimae fidei": latin for "utmost good faith," refers to a basic principle of insurance, requiring the insured to disclose accurately every material circumstance of risk to the underwriter. A breach of "utmost good faith" entitles the underwriter to avoid the contract.
Wreck: refers to a vessel or part of a vessel which is still afloat, stranded or aground. A derelict is a wreck that has been abandoned.
Writ: a form of written command in the name of a court or other legal authority to do (or abstain from doing) a specified act. Writs can be in personam or in rem.
Darren Williams is a Barrister and Solicitor (Lawyer) specializing in Admiralty Law, which has jurisdiction over maritime matters. Darren has worked extensively on the water as well as in the courtroom. He is based out of Victoria, British Columbia, Canada, practicing at the Law Firm of "Williams & Company".
On this webpage, he brings us timely and relevant articles on the legal aspects of being a Marine Engineer in today's world. Although the articles have a predominately Canadian flavour, we are sure you will find his legal point of view enlightening where ever you ship sails. Darren has also published other legal articles on general admiralty law, view them all at the Williams & Company website.
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