Signing Bills of Lading "As Presented" By Jeffrey Weiss I The Master of a vessel, or another authorized agent of the shipowner, that is chartered under any one of a number of pro forma charter parties, is obligated to sign bills of lading ?as presented? by the charterers or their agents. For example, Clause 8 of the New York Produce Exchange Time Charter (NYPE) requires the Captain to ?sign bills of lading for cargo as presented, in conformity with mate's or tally clerk?s receipts.? So long as the charterer is also the cargo interest, the bill of lading is, under most circumstances, not the contract of carriage. The charter party is. The bill of lading will generally serve as a receipt for, and document of title to, the cargo. However, the relationships become more complex when a bill of lading issued under a charter party is endorsed to a third party consignee or holder in due course. This  is because as a general rule, the bill of lading, and not the charter party, becomes the contract of carriage between the vessel and the third party. Thus, the rights and obligations of both shipowner and consignee, with respect to the carriage of the goods, will be governed by the contents of the bill of lading, and not the charter party. It is evident that a vessel's owner will be concerned if the.bi1l of lading presented for signature gives the owners more onerous responsibilities, and less protection, vis a vis, cargo interests, than what the owners consented to in the charter party. It is for this reason that shipowners will insist upon language in the charter party that describes, with some particularity, the terms and conditions that must be included in all bills of lading issued under the charter party, or even that a specific form of bill of lading be used. Nevertheless, there are occasions when an inconsistent bill is presented for signature. A renowned commentator has stated that ?the provision in the charter party that the Master is to sign bills of lading is not a mere authority to do so, but an agreement that it shall be done, for a breach of which the owner is liable.? So under what circumstances can a bill of lading presented for signature be refused? Obviously, the Master, or someone on the Master's behalf, may take such action if it is believed that the bill of lading contains provisions that are adverse to owner's interests and go beyond what is required of the vessel in the charter party. Unfortunately, this can result in the vesse1's delay and consequent off?hire disputes. The purpose of this article is to briefly describe the rights and responsibilities of the parties with respect to this issue. The PACBARON I was attorney for a time charterer in an interesting dispute. The case involved a vessel called the M.V. PACBARON, which was time chartered under the NYPE form for an 11?to?13?month period. The time charterer subchartered the vessel for one voyage to transport bulk sugar from Bangkok to one port in the Black Sea. The relevant charter party clauses were: ?The Captain, who is to sign bills of lading for cargo as presented in conformity with mates or tally clerk's receipts?? ??The USA and. Canadian Clause Paramount, as applicable, or the Hague Rules as enacted in countries other than Canada or the USA, as applicable, to be incorporated in all bills of lading.? The bills of lading presented for signature contained the following clause which the vessel?s owner found objectionable: "This bill of lading shall have  effect subject to the provision of the Merchant shipping code of the USSR, or the Hague Rules,  the International Convention for the Unification of Certain Rules Relating to Bills of Lading  (1924)?.? The vessel completed loading. But the Master refused to sign the bills of lading because the vessel?s owner had insisted that references to the Merchant Code of the USSR (USSR Code) be deleted. The owner believed that reference to the USSR Code would affect its insurance cover and further believed that the USSR Code may increase its obligations to the bill of lading holders. The vessel was delayed for close to four days, until the charterer agreed to give the owner a letter of indemnification, holding owner harmless for any loss which owner might incur, as a result of the disputed reference to the USSR Code. A subsequent off hire dispute concerning the four day delay was referred to arbitration in New York. The owner unsuccessfully argued that it had every riight to delay the vessel because its staff was diligent in making inquiries on whether the USSR Code was in any way materially different from the Hague Rules, which was required by the governing charter party to be in all bills of lading issued thereunder. We pointed out on behalf of the time charterer that the Master was under an affirmative duty to sign bills of lading ?as presented? and that the USSR Code for all intents and purposes, was identical to the Hague Rules. We further argued that there was no valid reason to delay the vessel for any time duration because, if there was any discrepancy between the bill of lading's terms and the charter party, which in any way increased owner's responsibilities, time charterer would be bound to indemnify the owner as a matter of law. The arbitration panel agreed with our position and allowed the off hire claim. The message here is that delays to vessels arising out of refusal to sign bills of lading will only be tolerated under limited circumstances and must be well founded. The circumstances under which bills may be rejected, as well as an explanation of owner?s right to  indemnity, will be described below. The Obligation to Sign The general rule is that the Master is required to sign bills of lading as presented by the charterer, even if they conflict with terms of the charter party or potentially expose the vessel?s owner to liabilities other than those imposed by the charter party. However, certain bills of lading, when presented for signature, may be rejected. For example, the Master is not obliged to sign bills of lading for cargo which has not in fact been presented for loading. The Master may also refuse to sign a ?clean? bills of lading when it is known that the cargo is not in good order and condition. There are obvious public policy considerations, namely the prevention of fraud, which allow the Master to take such action. The Master may refuse to sign a bill of lading which names discharge port outside the trading limits agreed to in the charter party. Similarly, the Master will probably be entitled to refuse to sign bills of lading presented for signature which do not incorporate terms which the time charter expressly requires to be incorporated in all bills of lading issued under it. There are no absolute rules here. The problems have been addressed on the a case-by-case basis by courts and arbitration panels. It is well settled that the Master may not refuse to sign freight prepaid bills of lading nor require a lien clause to be included in bills of lading in order to preserve shipowner?s lien on freights or subfreights for amounts of hire due, but unpaid, under the charter. This was the holding in the case involving the M.V. NANFRL. She was under charter in the grain trade on the Great Lakes. The charterer had made certain deductions from the payment of full hire, over owner's protests. The owner subsequently advised the Master not to sign bills of lading  which were marked freight prepaid, in order to preserve owner's right to lien on freights and subfreights to be paid by third party shippers to the charterer. The Court ruled that the owner had unlawfully tried to protect against loss of hire revenue by ignoring its contractual duty to sign bills as presented. This was a breach of contract. Owner's Right to Indemnity As explained in the PACBARON decision, even though signature of the bill as presented is usually required, the maritime law will protect owner's interest by allowing for a claim of indemnity from the charterer. The owner has a right of indemnity against the charterer for any loses sustained by the owner because the 'bill of lading does not conf6rm to the charter party requirements. A famous case  involved the S.S. EASTFIELD. The charter party required the Master to sign bills of lading ?without prejudice to the charter party?. It further provided that ?general average, if any, was payable in accordance with the York?Antwerp Rules 1890.? These rules provided inter alia that no jettison of deck cargo shall be allowed as a general average. Nevertheless, the Master was compelled by the charterer to sign three bills of lading (which he did under protest) for a cargo of lumber which contained a provision: "jettison of deck cargo for the common safety shall be allowable as general average.? Other bills presented for the Master's signature strictly complied with the charter party's general average requirements. During the voyage heavy weather was encountered and it became necessary, to save ship, cargo and life, to jettison some of the lumber on deck. The vessel's owner was forced to contribute toward a general average in favor of the three nonconforming bills of lading without being able to seek contributions from the other bill of lading interests. The Court subsequently held that: ?the charterers had committed a breach of contract in presenting for signature bills of lading which imposed a greater liability on the shipowners than that imposed by.the charter party, and that they were liable to indemnify the shipowners for the loss which they had incurred.? The lesson derived from the PACBARON, NANFRI and EASTFIELD decisions among many others is that the duty to sign bills of lading as presented, while not one hundred percent absolute, cannot be taken lightly. Owners may be faced with bill of lading terms that appear inimical to their interests. Owners' basic protection will be the right. to indemnification from charterer, which, if possible, should be backed by an acceptable form of guarantee. However, refusing bills of .lading as presented may result in subsequent off hire disputes or other claims.