Book Review - Bills of Lading Incorporating Charterparties by Melis Ozdel

• Author: David John Goodwin
• Pages: 120-121

(2018) 32 A&NZ Mar LJ 120

BOOK REVIEW

Melis Ozdel, Bills of Lading Incorporating Charterparties (Hart Publishing,

2015) ISBN: 978 – 1 – 84946 – 679 – 0

David Goodwin

Dr. Melis Ozdel’s book is concerned with a complex, but in practice very impo rtant, backwater of maritime la w

– the set of hurdles which need to be overcome if charterparty terms are to be incorporated within a bill of lading

applicable to a particular carriage of goods, known as the ‘rules of incorporation’. Across five substantive chapters,

this area of law is explored in great dep th, beyond the level of detail it is po ssible for more general texts, such as

Scrutton on Char terparties, to achieve.

In a dispute about loss or damage to cargo, the cargo interest – the hold er of a bill of lading – will be faced with

the challenge of ascertaining the actual conditions of carriage. Bills of lading often refer to charterparty terms

negotiated between shipowners and charterers, even t hough the cargo interest has never been provided with a

copy of the charterparty referred to in the bill of lading. In these circumstances it i s difficult for parties to obtain

a complete picture of their obligations under bills of lading.

Important questions arise. What terms govern the legal relations of the cargo interests with the carrier? To what

extent can the terms of a charterparty be carried across to a bill of lading? Does merely directing holders of a bill

of lading to a charterparty suffice to bind them to the terms of this contract , even though the cargo interest has

never been provided with a copy of the charterparty terms?

The answer, broadly, is that holders may be bound by charterparty p rovisions, as long as the ‘rules of

incorporation’ are overco me. This raises the spectre of the ‘unseen’ charterparty which may become part of the

contract of carriage.

As the conclusion of the book highlights, these questions matter, from a shipowner perspective, because owners

who have placed their vessel under charter wish to optimise their position against the charterers a nd third party

cargo interests who hold the bill of lading as their contract of carriage. Shipowners often seek to link charterparties

and bills of lading by inserting incorporation clauses into bills of lading which can create additional scope for an

owner to recover against a bill of lading holder, as an alternative to recovery against the shipper who was the

original party to the bill.

From a charterer point of view the practice of placing incorporation clauses in bills of lading is a concern because

of the fact they rarely have visibility of the terms of potentially applicable charterparties. Charterers generally lose

their interest in cargo upon submission of the bill of lading to third parties.

Conflicting approaches are taken on opposite sides of the Atlantic on the key issues under study in this book.

Ozdel illuminates striking differences of approach under English and United States law. She carefully explains

the areas of difference between the English and United States rules of incorporation, as well as the numerous

instances of similarity across the two jurisdictions. For this reason, the opening chapter addresses a threshold issue

in disputes arising from the carriage of goods by sea of determining which legal s ystem should be selected as the

law governing the dispute in question. The conflict of law rules of the English and United States systems are

considered.

The book is practical as well as conveying an impressive understanding o f legal theory. For example, Chapter 2

provides guidance to carriers regarding the formal requirements of incorporation that need to be fulfilled in order

to use the provisions of a charterparty against the holders. An issue addressed is whether a particular charterparty

needs to be specified in the incorporation clause in order for it to be incorporated into the bill of lading. Generally

the position under English law is that there is no requirement for the charterparty to be identified whereas US law

requires the c harterparty to be identified, other than in exceptional circumstances. The Chapter details both the

ways charterparties may be incorporated, and how they should ideally be identified.

Chapter 2 concludes by dra wing attention to the extraordinary po sition that a cardinal rule of contract law – that

parties can only be bound by terms they have seen a nd agreed to - has no application when the incorporation of

charterparties into bills of lading is being considered. US law adopts variable rules of incorporation mainly