Maritime Law, Part 1

​key principles in maritime law

(Part 2)​

Atty. Edmar D. Lerios​

​loan on bottomry and respondentia

​loan on bottomry & respondentia

Bottomry is a contract in the nature of a mortgage​, whereby the owner of the ship borrows money for the use, equipment, or repair of the vessel, for a definite term, and pledges the ship (or the kneel or bottom of the ship pars pro toto) as security, with the stipulation that if the ship is lost during the limited time on account of the perils enumerated, the lender shall lose his money.

​loan on bottomry & respondentia

​respondentia

It is a loan where the security is the cargo. ​

​

The goods or some part thereof are hypothecated as security for a loan, the repayment is dependent upon maritime risk.​

• The loan is not made on the ship but on the goods on board.

• The lender must be paid of his principal and interest although the vessel perishes as long as the goods are s​aved.

• It is called​ loan on respondentia because the borrower's personal responsibility is deemed the principal security for the performance of the contract.

​respondentia

​bottomry or respondentia

​article 719. a loan in which, under any condition whatsoever, the repayment of the sum loaned and of the premium stipulated depends upon the safe arrival in port of the effects ('efectos') on which it is made, or of the value in case of accident, shall be considered a loan on bottomry or respondentia.

may secure a loan on bottomry. If he is a part owner and only up to the extent of his interest.​

​captain

may secure a loan on bottomry upon his ship. If he is just a co-owner, only to the extent of his interest in the vessel.​

​ship owner

​parties to bottomry or respondentia

​cargo owner

may secure a loan on respondentia involving his cargo. He cannot enter into a loan on bottomry.

1. By means of a public instrument.

2. By means of a policy signed by the contracting parties and the broker.

3. By means of a private instrument.​

​formal requirements

1. must have a collateral​.

2. collateral must be a vessel or a cargo​.

3. depends on the safe arrival.

4. loss of collateral extinguishes the loan.​

​bottomry / respondentia

1. may or may not have collateral​.

2. collateral may be any property.

3. absolutely repayable.​

4. loss of collateral does not extinguish the loan.​

​ordinary loan

​distinguished from ordinary loan

​averages

​Maritime Commerce

​averages

1. All extraordinary or accidental expenses which may be incurred during the voyage for the preservation of the vessel or cargo, or both.

2. All damages or deterioration which the vessel may suffer from the time she puts to see at the port of departure until she casts anchor at the port of destination, and those suffered by the goods from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment.​

Maritime Commerce | Averages

all expenses and damages deliberately caused in order to save the vessel, its cargo or both at the same time, from real and known risk.

​general or gross

all expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all persons interested in the vessel and her cargo.​

​simple or particular

​kinds of averages

During a storm, goods were jettisoned to lighten the vessel to save the vessel and other cargoes.​

​general

Damage upon the vessel or cargo by reason of accidental collision with another vessel. Such damage did not inure to common benefit.​

​particular

​examples

1. caused for the benefit of those interested in ​the vessel and her cargo.

​general

1. have not ​inured to the common benefit and profit of all persons interested in the vessel and her cargo.

​particular

​distinctions

2. deliberately caused in order to save the vessel or her cargo.​

​general

2. ​​may be due to causes other than a deliberate act.

​particular

​distinctions

3. shared and c​ontributed by all persons having an interest in the vessel and cargo.

​general

3. borne by the owner of the things damaged.​

​particular

​distinctions

This is a clause in a charter party that allows the shipowner to claim general average contributions from the cargo interests if any accident​, danger, damage, or disaster occurs with or without negligence of the shipowner or his employees and the cargo carrier has to incur any general average sacrifice, loss, or expense and perhaps also pay salvage charges.

​jason clause

​contribution for general averages

​article 812. in order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.

Jettison is casting goods overboard​ in order to lighten a vessel or to improve its stability in an emergency.

​order of jettison

The act of throwing overboard part of a vessel’s cargo or hull in hopes of saving a ship from sinking.

​jettison

​order of jettison of effects

The captain shall direct the jettison, and shall order the goods cast overboard in the following order:

​

1. Goods on deck - beginning with those which embarrass the maneuver or damage the vessel, preferring if possible, the heaviest ones with the least utility and value;

​

2. Goods below the upper deck - always beginning with those of the greatest weight and smallest value to the amount and number absolutely indispensable.

​requirements in order to claim general average

​

To include the goods jettisoned in the general or gross average, the existence of the cargo or goods must be proved:

​

1. For cargo – by means of bill of lading;

2. For good belonging to the vessel – by means of the inventory prepared prior to departure.

​arrivals under stress

​Code of Commerce

​meaning of arrival under stress

​arrival under stress

means the arrival of the vessel at the nearest and most convenient port because the vessel cannot continue the trip to the port of destination on account of the lack of provisions, well-founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea disabling her to navigate.​

1. lack of provisions

2. well-founded fear of seizure, privateers, or pirates

3. accident of the sea disabling the vessel to navigate​

​Arrival under Stress

​valid grounds

​when arrival under stress is unlawful

1. If the lack of provisions should arise from the failure to take the necessary provisions for the voyage according to the usage and custom, or if they should have been rendered useless or lost through bad stowage or negligence in their care.​

Arrival Under Stress

​when arrival under stress is unlawful

2. If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and provable acts.

Arrival Under Stress

​when arrival under stress is unlawful

3. If the defect of the vessel should have arisen from the fact that she wants not repaired, rigged, equipped, and prepared in a manner suitable for the voyage, or from som erroneous orders of the captain.​

Arrival Under Stress

​when arrival under stress is unlawful

4. Whenever malice, negligence, lack of foresight, or want of skill on the part of the captain exists in the act causing the damage.​

Arrival Under Stress

​liability for expenses

​Article 821. the expenses of an arrival under stress shall always be for the account of the shipowner or agent, but they shall not be liable for the damages which may be caused the shippers by reason of the arrival provided the latter is legitimate. otherwise, the ship agent and the captain shall be jointly liable.

​collisions

​Code of Commerce