Key takeaways
Contractual basis is crucial
End of Voyage rights depend entirely on carriage terms - understand them in advance. Are your related contracts on back-to-back terms?
Notices increasing globally
Geopolitical risks are driving more early voyage termination declarations; issues in one geopolitical arena may cause FM declarations in others.
Act fast on notice
Quick coordination reduces additional costs and operational disruption.
Due to ongoing geopolitical tensions, carriers have recently begun issuing notices declaring 'End of Voyage' (or similar) for vessels unable to complete their intended routes.
These declarations carry significant commercial and legal consequences for all parties in the logistics chain (including the shippers, freight forwarders, consignees and relevant ports), amounting to early termination of the associated contracts of carriage.
End of Voyage is not an English common law concept. It stems from contractual provisions found in the terms of a carrier’s bill of lading or sea waybill. Therefore, on receipt of such a notice, parties are advised to conduct a review of their governing contracts to understand;
what contractual scope carriers have to issue the notice; and
their own resulting obligations.
Overview
An End of Voyage declaration refers to a contractual mechanism by which a carrier is able to bring an end to a voyage before reaching the original discharge port. Specific contracts and situations may vary, but generally, once declared, a carrier may proceed to the next safe port to discharge the cargo and treat that discharge as due delivery.
Following the discharge, the carrier’s obligations in respect of the cargo come to an end and the 'Merchant' (as defined within the contract of carriage) then becomes liable for the cargo. Any further post-discharge movements, storage and local handling will then usually become the responsibility of cargo interests.
Legal basis
As mentioned above, the legal basis for End of Voyage declarations is contractual, pursuant to the carrier’s bill of lading terms. Where ‘special circumstances’ exist that mean the cargo cannot safely or properly be carried without additional risk or cost, relevant terms can include clauses that allow the carrier to:
deviate from contracted voyage routes;
store the goods ashore or afloat;
abandon the carriage of goods entirely; and crucially
incur additional expenses.
The Bill of Lading terms often provide for such special circumstances within the force majeure provisions (FM). In such cases, the fact that the goods cannot be safely or properly carried without incurring additional expenses can entitle the carrier to abandon the carriage of the cargo without notice and take any reasonable steps it thinks are appropriate. This can include incurring extra costs such as, for example, discharging and storing the cargo onshore.
These steps (insofar as they are reasonable) commonly constitute due delivery under the contract of carriage (notwithstanding the fact that the goods may not have been carried to the contractually defined discharge port) and the Merchant is usually also obliged to indemnify the carrier for any additional expenses that arise.
It is worth noting that these terms also absolve carriers of liability for any losses, delays or damage that result from its actions (or inaction) in these special circumstances.
Finally, these clauses can also be bespoke, sitting alongside FM clauses, and their interpretation (and interaction with each other) will depend on the specific drafting
An upward trend
Carriers are increasingly issuing such End of Voyage notices in response to regional disruptions, elevated risk environments, and operational challenges affecting important trade routes. The special circumstances relied upon often including unpredictable war risks, potential cancellations of war risk cover, challenges associated with guaranteeing safe delivery, unsustainable additional costs and general operational disruption and congestion at affected ports.
Carriers are increasingly considering whether the challenges and risks arising from geopolitical and regional considerations may constitute both unacceptable risk to their vessels and amount to the special circumstances necessary to terminate the associated contracts of carriage early. It may prove commercially and legally preferable to terminate voyages early, rather than accepting the risks associated in delivering the cargo to the contractually agreed ports of discharge or via routes directly affected by any prevailing conflict or similar.
Practical points
The issue of such notices is largely uncharted territory for many parties in logistics chains who will have limited experience of dealing with them. As 'special circumstances' continue to arise and evolve, such declarations may well become more common.
In the event an End of Voyage (or similar) notice is received, it is important to take the following steps:
Review both the governing contract of carriage and related contracts to identify:
any FM provisions and / or 'special circumstances' permitting a notice; if so,
determine the circumstances in which the relevant provisions can be exercised;
any notice obligations - in many cases, carriers may reserve the right to act without notice under specific circumstances; and
liability for costs and expenses once such provisions are exercised and the cargo is discharged.
Immediately notify all affected parties, including buyers / customers, banks and logistics providers, insurer(s) etc;
Arrange for prompt collection and onward carriage of the goods in order to minimise any associated storage charges, demurrage or other liabilities relating to the cargo (NB: other cargo interests affected by the special circumstances may be making similar arrangements so prompt action is advisable); and
Mitigate your losses wherever possible in accordance with any obligations you may have under your applicable contracts.
Conclusion
The increasing reliance on End of Voyage declarations makes it vital to understand what they are, how they work and what to watch out for, including allocation of risk and costs under the relevant contracts of carriage.
When in doubt, affected parties should seek early legal advice in order to avoid unforeseen consequences.
