In our Circular of 26 March 2004 we reviewed the latest developments and guidelines as to which party would be regarded as "the Carrier" for purposes of compliance with US Customs Regulations (19 CFR 4.7).
We pointed out that the US Authorities had declined to provide a general ruling as to the identity of the carrier, but instead suggested that the parties themselves agree who should be responsible. We recommended that, in order to avoid uncertainties and disputes as to who should act as the carrier, members entering into new charterparties should insert a clause making it clear who would comply with the Regulations (including the filing of the manifest, SCAC (Standard Alpha Carrier Code), and ICB (International Carrier Bond).
BIMCO has issued U.S. Customs Advance Notification/AMS Clauses for Time and Voyage Charterparties, which can be found at the hyperlinks in this circular.
Time Charterparties with AMS Clause
We endorse the BIMCO AMS clause for time charters for use when it is agreed that it is appropriate for charterers to assume the role of Carrier for AMS purposes. The BIMCO AMS clause, at sub-clause (b), also includes a wide-ranging indemnity in favour of owners for consequential loss and damage for failure to comply with the clause.
We have received enquiries from members requesting a clause to cover the situation where owners are to be AMS Carriers. We have therefore prepared the attached clause. This clause is closely based on the time charter clause published by BIMCO and contains a wide-ranging indemnity in favour of charterers similar to that found in sub-clause (b) of the BIMCO AMS clause.
Voyage Charterparties with AMS Clause
Since a voyage charterparty is a contract of carriage, it is more sensible in general for owners to assume the obligation of the Carrier for the purposes of the US Customs Regulations. We therefore endorse the BIMCO AMS clause for voyage charters. Nevertheless, there will be cases where voyage charterers will prefer to assume this responsibility, particularly if they already have their own SCAC and an ICB in place. The BIMCO AMS clause will then need to be adapted and Skuld Defence Services lawyers can assist here.
Charterparties without AMS Clause
It should be noted that, if there is no express AMS clause (such as the BIMCO AMS clause) in a charterparty, owners and charterers may still have an implied indemnity under general charterparty terms if the other party is in breach of their obligations. The amount of damages will then be determined by general legal principles (and this does not include damages for consequential loss). In other words, the amount of damages could be less under an implied indemnity than under an express indemnity as provided by the BIMCO AMS clauses. Similarly, in the absence of an express AMS clause, any delay to the vessel will be governed by the charterparty off-hire clause/laytime and demurrage provisions or by the charterers establishing that the owners are in breach.
Cautionary Note
Charterer members may frequently charter in tonnage on time charter and then re-let on a time or voyage basis. It is important that any relevant provisions in the sub-charter are no more onerous to members than the equivalent provisions in the head charter. Thus it is important to ensure that sub-charter terms are at least back to back or more beneficial to members than those set out in the head charter.
We are happy to assist defence members in amending any of the standard charterparty clauses to meet their individual requirements.
AMS CLAUSE - Owners as Carrier
(a) The Owners warrant that, at all times during the currency of this Charter Party, the Owners and vessel are fully fitted to comply with AMS (Automated Manifest System) requirements and that the Owners have and will continue to maintain, at all times throughout the currency of the charter, a valid and up to date SCAC (Standard Carrier Alpha Code) and ICB (International Carrier Bond). Owner's SCAC is to be inserted in all bills of lading which may be issued in respect of cargo carried pursuant to this Charter Party. Any changes to Owners' SCAC will promptly be notified to Charterers.
(b) If the Vessel loads or carries cargo destined for the US or passing through US ports in transit, Owners shall comply with the current US Customs Regulations (19 CFR 4.7) or any subsequent amendments thereto and shall undertake the role of the Carrier for the purposes of such regulations. Owners shall, in their own name, time and expense :
(i) notify and provide the US Customs (and any other relevant authority) of Owner's SCAC;
(ii) notify and provide US Customs (and any other relevant authority) of the details of Owner's ICB and provide a copy thereof if requested; and
(iii) submit a cargo declaration by AMS (Automated Manifest System) to the US Customs.
(c) Charterers shall use reasonable endeavours to provide all necessary information to the Owners and their agents promptly after being requested to do so to enable the Owners to submit a timely and accurate cargo declaration.
(d) The Owners shall assume liability for and shall indemnify, defend and hold harmless the Charterers against any loss and/or damage whatsoever (including consequential loss and/or damage) and any expenses, fines, penalties and all other claims of whatsoever nature (including consequential loss and/or damage) including but not limited to legal costs, arising from the Owners' failure to comply with any of the provisions of sub-clauses (a) and/or (b). Should such failure result in any delay to the vessel then, notwithstanding any provision in this Charter Party to the contrary, the payment of hire shall cease for the time thereby lost, and the costs of any extra fuel consumed in consequence thereof and all extra expenses shall be deducted from the hire.
(e) The assumption of the role of the Carrier by the Owners pursuant to this Clause and for the purpose of the US Customs Regulations (19 CFR 4.7) shall not alter the identity of carrier under any bill of lading, other contract, law or regulation.