Shipping Lawyer Shipping Lawyer 3 — Questions and Answers
Question 1: In admiralty law, what is a 'maritime lien' and what makes it unique compared to other liens?
- A lien that requires filing in the vessel's home state to be valid
- A privileged claim against the vessel itself that travels with the ship and does not require possession (Correct answer)
- A contractual security interest granted by the vessel owner to a creditor
- A lien that can only be enforced by the US Coast Guard
Correct answer: A privileged claim against the vessel itself that travels with the ship and does not require possession
A maritime lien is a non-possessory, secret lien that attaches to the vessel itself by operation of law and follows the vessel into the hands of subsequent owners.
Question 2: Which type of bill of lading transfers title to the goods and allows the holder to demand delivery from the carrier?
- Straight bill of lading
- Negotiable (order) bill of lading (Correct answer)
- Sea waybill
- Express bill of lading
Correct answer: Negotiable (order) bill of lading
A negotiable or order bill of lading is a document of title; the carrier must deliver only to the lawful holder who presents the original instrument.
Question 3: A vessel collides with another ship due to both vessels' negligence. Under the admiralty rule of proportionate fault, how are damages allocated?
- Each vessel pays its own damages regardless of fault percentage
- Damages are split 50/50 between the vessels
- Each vessel is liable in proportion to its degree of fault (Correct answer)
- The vessel that first initiated contact bears full liability
Correct answer: Each vessel is liable in proportion to its degree of fault
Following United States v. Reliable Transfer Co. (1975), US admiralty courts apportion collision damages in proportion to each vessel's comparative fault rather than applying the old equal-division rule.
Question 4: What is a 'non-vessel operating common carrier' (NVOCC) and how does its liability differ from a freight forwarder?
- An NVOCC owns vessels but subcontracts crewing; it has no cargo liability
- An NVOCC issues its own bills of lading and assumes carrier liability to shippers (Correct answer)
- An NVOCC is exempt from FMC licensing requirements
- An NVOCC can only operate in domestic inland waterway trades
Correct answer: An NVOCC issues its own bills of lading and assumes carrier liability to shippers
An NVOCC acts as a carrier to the shipper (issuing its own HBL) while acting as a shipper to the ocean carrier (holding a master B/L), making it liable for cargo loss or damage as a principal.
Question 5: Under the Hague-Visby Rules, what is the per-package limitation of carrier liability for cargo damage?
- $500 USD per package
- 666.67 SDRs per package or 2 SDRs per kilogram, whichever is higher (Correct answer)
- £100 sterling per package
- Unlimited liability for gross negligence
Correct answer: 666.67 SDRs per package or 2 SDRs per kilogram, whichever is higher
The Hague-Visby Protocol of 1968 raised the liability limit to 666.67 SDRs per package or 2 SDRs per kilogram of gross weight of the goods lost or damaged, whichever is greater.
Question 6: Which clause in a charter party typically allows the vessel owner to cancel the charter if the charterer fails to pay hire on time?
- Demurrage clause
- Cesser clause
- Anti-technicality clause or withdrawal clause (Correct answer)
- Deviation clause
Correct answer: Anti-technicality clause or withdrawal clause
A withdrawal clause gives the shipowner the right to withdraw the vessel from the charterer's service upon failure to pay hire, though anti-technicality provisions may require notice before withdrawal is effective.
Question 7: What does 'demurrage' mean in the context of a voyage charter party?
- Damages payable to the charterer for vessel delays caused by the shipowner
- Agreed liquidated damages payable by the charterer for detaining the vessel beyond the agreed laytime (Correct answer)
- Port charges levied by the terminal for vessel berthing
- Extra freight charged for carrying hazardous cargo
Correct answer: Agreed liquidated damages payable by the charterer for detaining the vessel beyond the agreed laytime
Demurrage is a pre-agreed rate of compensation that the charterer must pay the shipowner for each day (or part day) the vessel is detained beyond the contractual laytime for loading and discharging.
Shipping Lawyer Shipping Lawyer 3
In admiralty law, what is a 'maritime lien' and what makes it unique compared to other liens?