Yong Jin: on the importance of back-to-back indemnities
The Commercial Court has dealt with the issue of whether a guarantee given by sub-charterers to the Master was given to and accepted by the Master in his capacity as a representative of the head owners or on behalf of the intermediate charterers.
The guarantee was intended as an indemnity against any damage caused by the vessel loading a cargo quantity on the basis of a maximum draft of 13.3m. The head owners brought a claim directly against the sub-charterers on the basis of an alleged grounding of the vessel.
The court held that the guarantee was given to and accepted by the Master on behalf of the intermediate charterers, not the head owners, with the result that the claim brought by the head owners failed. The judgment highlights the importance of obtaining any indemnities/guarantees on a back-to-back basis throughout the charterparty chain…
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Where cargo is loaded into a carrier’s containers that are subsequently loaded onto the vessel it is unrealistic to treat this as anything other than a single loading process.
When a contract does not reflect the intention of the parties equitable relief can be sought from the court for the contract to be rectified. It is rarely granted, but in this case it was.