Glossary of shipping, claims and recovery terms.

A

ArbitrationDispute resolution

A private process in which a dispute is decided by one or more arbitrators instead of a court. The decision (an award) is binding and is generally enforceable internationally under the New York Convention. London, Singapore and Hong Kong are leading seats for maritime and trade arbitration.

B

Bill of ladingShipping

A document issued by or for the carrier that acts as a receipt for cargo, evidence of the contract of carriage and, if negotiable, a document of title to the goods.

Bunker delivery note (BDN)Bunkers

The document recording the quantity and key specifications of marine fuel supplied to a ship. It is central to any bunker quantity or quality dispute, together with the samples taken at delivery.

BunkersBunkers

Fuel supplied to a ship for its own propulsion and machinery. Quality is usually specified by reference to ISO 8217.

C

Charter partyShipping

The contract under which a shipowner lets a vessel to a charterer, either for a voyage (voyage charter) or for a period of time (time charter). Standard forms include GENCON, NYPE, ASBATANKVOY and BPVOY.

CounterclaimDisputes

A claim brought by the defending party against the party who made the original claim, for example for defective goods or delay. A counterclaim can reduce or extinguish the amount payable.

D

Dead freightShipping

Compensation payable to the shipowner when the charterer fails to load the full cargo agreed, leaving space on the vessel unused.

Deductions from hireShipping

Amounts a time charterer withholds from hire, for example for off-hire periods or underperformance. Under English law, some deductions may be made by way of equitable set-off, but unjustified deductions can give the owner a claim and, in some cases, a right to withdraw the vessel.

DemurrageShipping

Liquidated damages payable by the charterer to the shipowner, at an agreed daily rate, for time the vessel is detained beyond the laytime allowed for loading and discharging. In container shipping, “demurrage” also describes charges for containers held inside a terminal beyond the free time.

DespatchShipping

A sum, usually half the demurrage rate, payable by the owner to the charterer when loading or discharging is completed in less than the laytime allowed, if the charter party provides for it.

DetentionShipping

Damages for delay to a vessel that is not covered by an agreed demurrage provision, for example after the demurrage period has expired. In container logistics, detention is the charge for keeping a carrier’s container outside the terminal beyond the free time.

E

Equitable set-offDisputes

A defence under English law that allows a party to reduce a payment by the amount of a closely connected cross-claim, so that it would be unfair to require payment in full.

F

FreightShipping

The payment due to a carrier for carrying goods. Depending on the contract it may be earned on loading, on delivery or at another stage.

H

Hague-Visby RulesShipping

An international convention governing the carriage of goods by sea under bills of lading. Among other things, it gives carriers a one-year time bar for cargo claims and limits their liability.

HireShipping

The payment made by a time charterer to the shipowner for the use of the vessel, usually calculated per day and paid in advance.

I

IncotermsTrade

Standard trade terms published by the International Chamber of Commerce (such as FOB, CIF and DAP) that allocate costs, risk and responsibilities between buyer and seller.

ISO 8217Bunkers

The international standard specifying the requirements for marine fuels. Bunker contracts commonly require fuel to comply with a specified edition of ISO 8217.

L

Late Payment ActDebt recovery

The Late Payment of Commercial Debts (Interest) Act 1998, which allows UK businesses to claim statutory interest (8% above the Bank of England reference rate) and fixed compensation on late business-to-business payments, unless the contract provides a substantial remedy.

LaycanShipping

The laydays and cancelling window: the period within which the vessel must arrive and tender notice of readiness. If the vessel arrives after the cancelling date, the charterer may usually cancel.

LaytimeShipping

The time allowed under a voyage charter for loading and discharging the cargo without payment beyond the freight. Once laytime is exceeded, demurrage usually becomes payable.

Letter before actionDebt recovery

A formal letter setting out a claim and the amount due, and warning that proceedings may be issued if the matter is not resolved. Courts in England and Wales expect such a letter before most claims are started.

Letter of creditTrade

A bank’s undertaking to pay the seller on presentation of documents that strictly comply with the credit’s terms. Discrepancies in the documents can delay or prevent payment.

LienShipping

A right to retain property, such as cargo, or to intercept payments, such as sub-freights, until a debt is paid. Liens are often available to owners under charter parties for unpaid freight, hire or demurrage.

Limitation periodDisputes

The statutory time limit for bringing a claim. Under English law, most contract claims must be brought within six years of the breach, although contracts and conventions often impose much shorter time bars.

LMAADispute resolution

The London Maritime Arbitrators Association, whose terms and procedures govern a large proportion of maritime arbitrations worldwide, including small-claims and intermediate-claims procedures.

M

MARPOL sampleBunkers

The fuel sample retained on board under MARPOL Annex VI to verify compliance with sulphur limits. It is distinct from the commercial samples used to resolve quality disputes.

N

Notice of readiness (NOR)Shipping

The notice given by the master that the vessel has arrived and is ready to load or discharge. A valid NOR is usually required before laytime can start.

O

Off-hireShipping

A period during which hire under a time charter is not payable, typically because of a breakdown, deficiency or other event listed in the off-hire clause that prevents the full working of the vessel.

P

P&I clubShipping

A mutual insurance association that covers shipowners and charterers for third-party liabilities, such as cargo claims, pollution and crew injury. Many clubs also provide freight, demurrage and defence (FD&D) cover for legal costs.

Pre-action conductDebt recovery

The steps courts in England and Wales expect parties to take before starting proceedings, including exchanging key information and considering settlement. Unreasonable failure to comply can lead to costs penalties.

Q

QuantumDisputes

The amount of a claim: what is actually owed or recoverable once principal, interest, deductions, set-offs and costs are calculated.

R

RecapShipping

The fixture recap: the message summarising the main terms agreed for a charter, which together with the referenced pro forma form the charter party.

Retention of titleTrade

A contract clause under which ownership of goods stays with the seller until they are paid for, giving the seller potential rights to recover the goods if the buyer does not pay or becomes insolvent.

S

Set-offDisputes

The netting of mutual debts between two parties so that only the balance is payable. Its availability depends on the contract and the type of set-off claimed.

Statement of facts (SOF)Shipping

A record, prepared by the port agent, of the times of every relevant event during a vessel’s port call. It is the foundation of any laytime and demurrage calculation.

Statutory demandDebt recovery

A formal demand under the Insolvency Act 1986 for an undisputed debt. If a company fails to pay or secure a debt of £750 or more within 21 days, the creditor may petition to wind it up.

Statutory interestDebt recovery

Interest that the law allows on a late payment even where the contract is silent, such as interest under the Late Payment Act on business-to-business debts.

T

Time barDisputes

A contractual or statutory deadline after which a claim is lost or cannot be enforced. Time bars in charter parties and bunker contracts can be very short.

Time charterShipping

A charter under which the charterer hires the vessel for a period and directs its employment, paying hire, while the owner continues to operate and crew the ship.

V

Voyage charterShipping

A charter for the carriage of a specified cargo between named ports, paid by freight, under which laytime and demurrage provisions govern delays in port.

W

Winding-up petitionDebt recovery

An application to court for a company to be wound up (liquidated), commonly on the ground that it cannot pay its debts. It is a serious step and should not be used for genuinely disputed debts.

Without prejudiceNegotiation

A rule under English law that generally prevents genuine settlement communications from being used as evidence of liability, allowing the parties to negotiate openly.

Without prejudice save as to costsNegotiation

An offer that cannot be shown to the court on liability, but can be shown when the court decides who pays the costs of the proceedings.