Maritime Law

​Key Principles in Maritime Law

Atty. Edmar D. Lerios​

​Meaning of Maritime Law

​Maritime Law

is a system of laws that particularly relates to the affairs and business of the sea​, to ships, their crews and navigation, and to maritime conveyance of persons and property.

​Limited Liability Rule

Real and Hypothecary Nature of Maritime Law​

​Real and Hypothecary Nature of Maritime Law

It is the right to retain the cargo and the embargo and detention of the vessel. It means that the ship agent has the right to abandon the vessel, and free him from liability, while the maritime creditor has the right to attach the vessel to secure his claim without waiting for a settlement of his right by final judgment.​

​Limited Liability Rule

" The liability of the agents is limited to the actual value of the vessel which is hypothecated for such obligation, its appurtenances, the freight money and insurance, if any."

​Rationale

The Maritime trade and sea voyages are attended by innumerable hazards and perils especially during the medieval ages. To offset such adverse conditions and to encourage shipbuilding and maritime commerce​, it was deem necessary to confine the liability of the owner or agent arising from the operation of a ship to the vessel, equipment, freight, and insurance, if any, so that if the shipowner abandons the ship, his liability is extinguished.

​no vessel, no liability

Article 837. The civil liability incurred by shipowners in the case prescribed in this section, shall be understood as limited to the value of the vessel with all its appurtenances and the freightage served during the voyage.​

Limited Liability Rule | Real & Hypothecary Nature

Article 837 of the Code of Commerce

​right of abandonment

Article 537. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of goods which he loaded in the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage.

Limited Liability Rule | Real & Hypothecary Nature

Article 537 of the Code of Commerce

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Article 537. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of goods which he loaded in the vessel; but he may exempt himself therefrom by abandoning the vessel with all the equipment and the freight it may have earned during the voyage.

Limited Liability Rule | Real & Hypothecary Nature

Article 537 of the Code of Commerce

​1. The injury or death to a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain.

​Exceptions to the Limited Liability Rule

​2. The vessel is insured.

​3. In workmen's compensation claims.

​4. Expenses for repairs and provisioning of the ship prior to the departure thereof.

Multiple Choice

What does the real and hypothecary nature of maritime law means?

• The liability of the vessel owner and agent arising from the operation of such vessel is confined to the vessel itself, its equipment, freight, insurance, and personal assets of the owner.

• The liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which is hypothecated for such obligations or which stands as the guaranty for their settlement.

• The liability of the ship owner is equivalent to the value of the vessels the owner owns, its equipment, and freight. The rule is "more vessel, more liability."

Multiple Choice

If the ship owner or agent is found civilly accountable for passenger's injury or death caused by the captain's carelessness in cases of collisions or shipwrecks, his culpability is not limited to the extent of his stake in the vessel, such that its absolute loss results in its extinction. This is one of the exceptions to the limited liability rule.

• True

• False

• It depends.

Multiple Choice

The steamer S.S. Bidyuhiko, owned by XX Corp., left the port of Cebu despite the captain’s knowledge of the Typhoon Signal No. 2 advisory. The passengers called the captain’s attention regarding the typhoon advisory, but the captain still pursued the trip. Aside from this, the ship was overloaded and overcrowded. Rough weather conditions caused the ship to capsize and sink. Many of the passengers died in the mishap. The heirs of the passengers instituted separate civil actions against XX Corp. to recover damages for the death of the passengers. May XX Corp., the shipowner, be held liable for the death of the passengers notwithstanding the total loss of the vessel as a result of the negligence of its captain?

• No, Sophia Corp. may not be held liable. If the shipowner or agent may in any way be held civilly liable at all for injury to or death of passengers arising from the negligence of the captain in cases of collisions or shipwrecks, his liability is merely co-extensive with his interest in the vessel such that a total loss thereof results in its extinction.

• Yes, Sophia Corp. may be held liable. Being the common carrier, Sophia Corp. is the person who is primarily liable for damages and death sustained by the passengers in the operation of it vessel. It cannot escape liability be confining it to the vessel or its existence, otherwise, it will be unfair and illegal under the Code of Commerce.

​Captain and Vessel

​Vessel

​A ship or a vessel

is any​ kind, class, or type of craft or artificial contrivance capable of floating in water, designed to be used or capable of being used as a means of water transport for the carriage of passengers or cargo or both, utilizing its own motive power or that of another.

​Registered with MARINA

​Vessels are personal property

​Article 585. For all purposes of law not modified or restricted by the provision of this Code, vessels shall continue to be considered as personal property,

​Vessels contemplated by the Code

A motor boat engaged in conveying passengers and luggage back and forth from landing to boats at anchor propelled by a second-hand motor originally used for a tractor plow and had a capacity of only 8 persons is not a maritime vessel contemplated in Article 835 of the Code of Commerce.​

​Captain

​A ship captain

is the person in charge of everything that happens on a commercial boat, whether that vessel is involved in commercial f​right work, passenger transport, or pleasure cruises for sightseeing or fishing.

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those who command smaller ships engaged exclusively in the coastwise trade.​

​Masters

​Captain, Master, Commander

​For purposes of maritime commerce, the words 'captain' and 'master' have the same meaning; both being the chiefs or commanders of vessels.

​Triple Roles of a Captain

​2. The commander and technical director of the vessel.

• ​operate the vessel

• ​protect the passengers, cargo, and crew

​commander

​1. The general agent of the shipowner.

• sign ​bills of lading

• ​agree on freight rates

• ​decide whether to take cargo

• ​enter into contracts with respect to vessel

​agent

​Triple Roles of a Captain

​3. Government representative of the country whose flag he navigates

​flag bearer

​discretionary authority of the captain

​The captain has management and fiduciary functions and as such has a reasonable measure of discretionary authority to decide what the safety of the ship and of its crew and cargo specifically requires on a stipulated ocean voyage.

​liability for acts of captain

The shipowner and the ship agent ​shall be civilly liable for the acts of the captain and for obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein.

​liability for contracts

The shipowner shall be liable for contracts made by the captain (1) when duly authorized, (2) for ship repairs, equipping, or provisioning the vessel for the latter's benefit even if there was no express authority.

​liability for culpa contractual

• The owner ​of the property which has been jettisoned or cast overboard by order of the captain should have a right of action against a shipowner for the breach of any duty which the law may have imposed on the captain with respect to such cargo.

​liability for culpa contractual

• In case the captain, without a valid cause or reason, and without any unforeseen accident or stress of weather, wilfully abandoned the lorcha under a contract of towage resulting in the loss thereof, the shipowner or the ship agent are liable for the acts of the captain.

​liability for culpa contractual

• The shipowner and ship agent are liable for negligence of the captain in unloading the cargo on the pair on account of which the cargo accumulated thereon sank.

​The shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the shipmaster or captain is merely the representative of the owner who has the actual or constructive control over the conduct of the voyage.

Multiple Choice

A, the shipowner, chartered his ship to B Corporation. The charter was for the term of one year for the use of B Corporation in conveying petrol from Manila to Cebu. On the course of  the  ship’s journey,  a  strong typhoon passed the region and the captain was compelled to jettison 500 cases of petroleum. Unfortunately, only 10  cases were recovered. B Corporation now  filed  an action against A as the shipowner to recover the amount of the unrecovered cases of  petroleum.  A,  however,  contends that only the captain should be held liable because only the captain had been delinquent in performing the duty which the law imposes on him. Is A correct?

• Yes, A is correct. The owners of the vessel is not civilly liable for the acts of the captain unless there is negligence in the supervision of his acts. He can escape from liability by abandoning his property in the ship but this does not apply in a case where the fault in the loss of the petroleum was on the part of the ship captain.

• No, A is not correct. The owner of the vessel is civilly liable for the acts of the captain; and he can only escape from this civil liability by abandoning his property in the ship and any freight that he may have earned on the voyage. It is sufficient to say that the captain is required to take the necessary steps to effect the adjustment, liquidation, and distribution of the general average.

Multiple Choice

The shipowner and ship agent are liable for negligence of the captain in unloading the cargo on the pair on account of which the cargo accumulated thereon sank.

• True

• False

• None of the above

Multiple Choice

What is the role or function of a ship captain?

• the general agent of the ship owner

• the representative of the government or country under whose flag he navigates

• the commander and technical director of the vessel

• all answers are correct

Multiple Choice

The shipowner ​shall be criminally liable for the acts of the captain and for obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein.

• True

• False

• Maybe

Multiple Choice

Which of the following does not make the shipowner liable for contracts entered into by the captain?

• when the captain is duly authorized

• when the captain made expenses for ship repairs, equipping, or provisioning the vessel for the owner's benefit

• when the captain made a side voyage without the knowledge of the owner

Multiple Choice

The owner ​of the property which has been jettisoned by order of the captain does not have a right of action against a shipowner for the breach of any duty because the captain's act is ultra vires .

• True

• False

• It depends

​Special Contracts

Charter Parties in Maritime Commerce

​Charter Party

​A charter party

is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use.​

​demise or bareboat charter

the owner lets the whole or part of a vessel to a merchant for the conveyance of goods, on a particular voyage or a specified time, in consideration of the payment of freight.​

​contract of affreightment

​Types of Charter Parties

involves the transfer of full possession or control of the vessel for the period covered by the contract, including the master and the crew who are his servants.

​voyage charter

the vessel is leased to the charterer for a fixed period of time

​time charter

​Types of Affreightment

the ship is leased for a single voyage.​

The ship owner remains to be a common carrier.​

​

The rights and responsibilities of ownership still rests on the owner and the charterer is free from liability to third persons.​

​Nature of Affreightment

The carrier becomes a private carrier.​

​

It is only when the charterer includes both the vessel and the crew, as in a bareboat or demise, that a common carrier becomes private.​

​Nature of Bareboat

​"owner pro hac vice"

​In a bareboat or demise, the charterer becomes the 'owner pro vac vice'--owner of the vessel for a voyage or service stipulated since he mans the vessel with his set of master and crew.

​Liabilities

the charterer ​is liable for loss or damage sustained by the goods transported.

​

the shipowner ​has no liability to the passengers or cargo owners who contracted with the charterer.

​Bareboat or Demise

the charterer is free from liability ​to third persons in respect of the ship.

​

the shipowner ​retains possession and control of the ship and will incur liability for loss or damage to the goods

​

​

​

​Affreightment

Multiple Choice

In a contract of affreightment, the charterer is considered the owner pro hac vice--manning and equipping the vessel and assuming all responsibility for navigation, management, and operation.

• True

• False

• Sometime

Multiple Choice

The owner of a time-chartered vessel retains possession and control through the master and crew, who remain his employees.

• True

• False

• It depends

Multiple Choice

In a voyage charter, the owner who keeps ownership of the ship retains liability and is responsible for the loss or non-delivery of goods or commodities received for carriage.

• True

• False

• Maybe