When a vessel owner enters into a contract of carriage he is obviously obliged to perform that contract and his primary obligation is to perform the contract of carriage in the same vessel. However, in certain instances, it may become necessary to arrange for the cargo which has been loaded on board his vessel to be transhipped on board a different vessel. 

One such instance could be following a collision, for example, which resulted in significant damage to the carrying vessel. Whether the damage would be such as to entitle the carrier to abandon the voyage would be a question of fact and usually, in practice, it is difficult to determine. Ideally, the contract of carriage should contain a clause which confers a liberty to tranship in certain circumstances.

A carrier will only be entitled to abandon the voyage if the damage is such that the carrier could not reasonably be called upon to repair the damage[1]. Even if the facts are such that the carrier is entitled to abandon the voyage, he is not obliged to do so – he has a right to do so and he must elect to exercise that right. The alternative to abandoning the voyage is to elect to tranship the cargo to complete the voyage. A carrier may elect to tranship in order to earn his freight.

If a carrier elects to tranship, then the terms of the original contract of carriage, as evidenced by the bill of lading, will continue to govern his relationship with the owners of the cargo. The relationship with the owner of the vessel into which the cargo is transhipped will be determined by the contract which the carrier makes with the owner of the transhipment vessel.

The question may then arise as to how delivery is to be effected against the original bill of lading (OBL) and what other documents should be issued to record what has been done.

The answer is that delivery at the discharge port is to be made in the ordinary way against production of the OBL. There is no need to cancel the OBL and to issue new bills of lading. However, a secondary bill of lading will need to be issued in order to record the carriage on board the transhipment vessel but this serves to reflect the contract of carriage which the original carrier enters into with the sub-contracting transhipment vessel carrier.

The best way to explain the process is to illustrate it by way of an example:

If we take a scenario whereby the original carrying vessel, M/V "CLYDE", (Vessel) loads a cargo of 50,000 MT bagged rice in Thailand for discharge in Abidjan, Cote d'Ivoire, and the Master issues a set of original bills of lading for the cargo which shows the owners of the Vessel (Owners) as Carriers.

During the course of the voyage to Abidjan, the Vessel is so seriously damaged in a collision that she is unable to complete the voyage. The cargo must be transhipped. Owners enter into a contract with the owners of a second vessel, (Transhipment Vessel) to tranship the cargo and to deliver it at Abidjan.

Once the cargo has been transferred from the Vessel to the Transhipment Vessel, the owners of the Transhipment Vessel will issue an original bill of lading (Transhipment Bills) to the Owners, which will name the Owners as the "Shipper" and as the "Notify Party".

The underlying guiding principle for all bills of lading is that they should accurately tell the story. The description of the cargo on the face of the Transhipment Bills should be along the following lines:

"50,000 MT bagged rice [use the same description as the OBL] loaded by STS from M/V "CLYDE" on [insert date on which the transhipment is completed] and which was originally loaded on board the MV "CLYDE" at [insert place and date of original loading]".

The discharge port should remain the same. Ideally the terms of the contract of carriage should be as per the OBL and it is essential to incorporate the Hague / Hague Visby Rules (Rules) in order for the protections afforded by the Rules to continue to apply to the carriage (N.B. the Owners as Carriers under the OBL remain liable to the cargo interests in the event that anything should happen to the cargo).

In theory, once the Transhipment Vessel arrives at the discharge port, the owners of the Transhipment Vessel will deliver to the Owners on production of the original Transhipment Bills. However, in reality, the Owners will only present the Transhipment Bills to arrange for delivery once they have themselves received the OBL. So, in effect, the Transhipment Vessel will actually deliver to the original consignee against presentation of the OBL.