Master time charter agreements control the relationship between and detail the provisions for a vessel owner and a charterer. This contract provides the framework for the two parties for a given amount of time.
In many instances, a charterer will need to bring third-party contractors aboard the vessel, which master time contracts do not adequately cover. To manage risk in this situation, the owner must implement a vessel boarding agreement to dictate the relationship between the owner and third-party contractor.
What provisions does a vessel boarding agreement include?
Vessel boarding agreements, which are simpler than master time charter agreements, are critical to minimizing an owner’s risk. A well-devised agreement should lay out the specifics of various matters such as insurability, regulations and compliance, liability, dispute resolution, acknowledgement of potential dangerous conditions aboard the vessel, and the limits on the third-party’s access, amongst other matters.
Several of the critical provisions of vessel boarding agreements that owners must carefully consider before entering into a contract with the charterer or third-party contractor include:
The industry standard indemnity agreement is typically reciprocal or knock-for-knock in nature, where both parties agree they will bear their own losses and hold the other harmless, irrespective of fault. Still, it is important for vessel owners to ensure the indemnity clauses in the vessel boarding agreement are clear, complete, and unambiguous. Any errors, gaps, or vagueness will increase risk posed by the presence of the third-party contractor.
Insurance coverage is at the core of a vessel boarding agreement. The agreement should detail the types of coverages and the limits that each party will keep during the contract. For the owner’s and third-party contractor’s protection, both parties should confirm the coverages and that the policies are endorsed with full waivers of subrogation that name both as additional insureds.
- Watercraft exclusion deletions
Owners should also carefully weigh their options when deciding whether to agree to a marine contractor’s request to delete the watercraft exclusion of the vessel boarding agreement. In some cases, a deletion is not practicable; many insurers are unwilling to delete the exclusion. However, the exclusion may be amendable, depending on the circumstances.
How can owners minimize risk associated with third parties?
Third-party contractors are an integral part of many maritime operations, but pose an inherent risk that vessel owners must address. As part of their risk management structure, owners should work with an attorney to ensure that their vessel boarding agreement is thorough and explicit, that it harmonizes with the existing master time charter agreement, and that all associated certificates and documents align with the provisions.
After all, nothing causes larger liability disputes than ambiguous contracts, misrepresentations, and careless agreements.
Owners should diligently verify the provisions and representations in any contract to reduce exposure to risk. Failure to do so may result in costly consequences. Classic case in point: Johnson v. Seacor Marine. In this case, the defendant requested that the third-party contractor delete the watercraft exclusion from the vessel boarding agreement. The contractor acquiesced.
However, the insurance certificate that Seacor received did, in fact, include the watercraft exclusion; it was never deleted as the agreement stipulated. The contractor’s employees later sustained injury, sued Seacor, and prevailed because the court found that the exclusion prohibited coverage.
The plaintiff prevailed primarily because of a simple error on the vessel owner’s part: failing to carefully review the insurance certificates. Had Seacor spotted the exclusion and addressed it at the onset, it would have mitigated its liability.
The Moeller Law Firm Can Help Manage Risk for Maritime Companies
Risk management and sound legal defense is essential to any maritime company’s continued success. The Moeller Firm New Orleans maritime law and litigation attorney and legal team are dedicated to providing excellent service to all types of maritime businesses. As both a litigator and transactional attorney with a long history of successful cases, the firm can facilitate the breadth of vessel owners’ needs. The firm can counsel owners/operators on minimizing risks and on negotiating contracts, including vessel boarding agreements and third party access, master service agreements, master time charter agreements, and vessel construction contracts.
The Moeller Firm is well-equipped to litigate on companies’ behalves at both the state and federal level. The firm represents clients in a variety of disputes, including contractual disputes, premises liability, personal injury and Jones Act claims, toxic torts, and commercial disputes. When an issue arises, the firm looks for practical and creative solutions, mindful of minimizing litigation costs for clients. The Moeller Firm’s top priority is to resolve clients’ issues as cost-effectively and favorably as possible. Excellence and efficiency are two of the firm’s core values.
Contact the Moeller Firm in New Orleans today at 504-702-6774 and schedule a consultation.