Charterparty Terms Incorporated Into Bill Of Lading

June 2003

(Sea Venture Volume 21)

Charterparty terms evidenced by a re-cap telex may be treated as capable of incorporation into a bill of lading.

In Welex AG v Rosa Maritime Limited¹ the English Commercial Court handed down a judgment which will have a far reaching effect on the interpretation of bills of lading which expressly include the terms and conditions of the relevant charterparty. These bills will now have to be read as incorporating written correspondence between the parties which evidence an agreement for chartering a ship.

The bill of lading in this case was on the Congenbill form and it was stated on the reverse that "All terms and conditions …… of the Charter Party …… including the Law & Arbitration Clause are herewith incorporated".

The re-cap telex sent by an agent of the charterers on 19 March 2001 was, in effect, a summary of the terms agreed. It also included the statement "ARB IN LONDON, ENGLISH LAW TO APPLY". In reply owners stated that the re-cap telex was in order and that the "Epsilon Rosa" was fully fixed.

The dispute related to a shipment of 5394 metric tonnes of steel plates from Mariupol, Ukraine to Szczecin, Poland. On 1 May 2001 the vessel, "Epsilon Rosa", owned by Rosa Maritime Limited arrived at the discharge port of Szczecin. During discharge, the claimant's surveyors found that the cargo was damp, probably as a result of water leaking through faulty hatch covers.

Claimant cargo receivers Welex arrested the vessel (which had by then been sold to a new owner). Welex then instituted proceedings in Poland. The new owners applied to lift the arrest. The application was dismissed. On the following day, Rosa Maritime commenced arbitration proceedings in London and attempted to enforce an arbitration agreement which was evidenced by the re-cap telex. Welex opposed the application by Rosa Maritime on the basis that no arbitration agreement (as contained in the re-cap telex) had been incorporated into the charterparty.

An oral agreement between the parties not evidenced in writing could not have been relied upon by Rosa Maritime as capable of incorporation into the bill of lading.²

The Court considered whether the re-cap telex could constitute a charterparty for the purposes of incorporation into the bill of lading.

The Court found that, while a transferee of a bill of lading should not be affected by oral terms, a written confirmation was an entirely different matter: The Court found itself under a duty to give an "intelligent meaning" to documents surrounding what was a commercial transaction.

It was held that the charterparty referred to in the bill of lading was the agreement contained in the re-cap telex and that the arbitration clause referred to in the charterparty (i.e. the re-cap telex) was therefore incorporated into the bill of lading.

1.[2002] 2 Lloyd's Rep. 81 

2.The Heidberg [1994] 2 Lloyd's Rep. 287: An oral agreement not evidenced in writing was not capable of incorporation into a bill of lading.