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This article is written by Sailee Rane who is pursuing a Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.

Introduction

The word dock is derived from a Dutch word ‘dok’ which means an enclosed area of water between or next to one or a group of human-made structures that are used for handling of boats or ships usually on or near a shore or such structures themselves for the loading, unloading and repair of ships. It may also be referred to as dockyard. A dockage is a charge levied upon ships for the usage and occupation of a dock.

A dockage agreement is a type of maritime contract, it is an agreement between the vessel owner who is usually an independent and the dockyard company. A dockage agreement is very essential in maritime law because ships are docked to load and unload cargo or passengers, as well as the building and repairing of the ships, takes place at a dock. The owner of the vessel has to pay a certain amount of fee at the dock which in maritime terms is called “Dockage”. This article specifically aims to provide a detailed analysis of the clauses incorporated in order to denote the intent and perspective behind framing a dockage agreement.

Purpose of a Dockage Agreement

Nowadays a contract is prerequisite before entering into any kind of transaction, any purchase and sell have a contract but Maritime contracts stand on different footing then general sell and purchase agreements. The parties engaged in trade where the transportation is through sea then, those contracts formed are called Maritime contracts. There are various kinds of Maritime contracts dealing with various aspects of Maritime law such as Charter Agreements, Ship Repair Contracts, Preferred Ship Mortgages, Dockage Agreement, Seafarer Employment Contracts, Marine Insurance Contract, Dredging Contracts etc. We are specifically dealing with the importance and purpose of Dockage agreement in order to understand the essential provisions involved in Dockage Agreements as well as how to draft one efficiently.

 A dockage agreement provides an effective memorialisation of the dockage terms between the dock owner and the vessel owner throughout the term of docking. The main purpose of behind making such agreement is to make sure to avoid situations like unwarranted use of the dock, to establish liability of the dock owner, to establish liability of the dock company towards the vessel and the employees on board, to ensure security of the vessel, maintenance of the vessel, to set forth a specific rental fee, to prescribe well-drafted conditions and provisions regarding relocation of vessels, acknowledging the risk involved, to establish assurance of indemnity, to specify measures to be taken in case of breach of agreement, measures to take in case of default in payments and provisions regarding sublease, etc. are some of the significant issues dealt under Dockage Agreements.

Dockage Agreements are a vital part in protecting the interests of both the contracting parties. They not only serve as a record of commitments by both parties but also prevent future conflicts and mitigate risks. They help in maintaining compliances thereby increasing operational efficiency. 

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Procedure to draft a Dockage Agreement

1. A dockage agreement must clearly specify the following information which is as follows:

  • Name of the vessel;
  • Registration number;
  • Length of the vessel;
  • Make of vessel year of vessel;
  • Features of the vessel such as its colour, length of its inboard and outboard
  • Whether it is coast guard approved;
  • Information of the owner which includes contact and business details;
  • Details about vessel insurance.

2. Some of the most important clauses in a Dockage Agreement between the Dockage authority/company (Port) and the vessel owner are as follows:

  • The dockage term- Under this clause term of docking is fixed it has to clearly specify the commencement date and the termination date and leases a boat slip, boat slip differ from dock and are mainly parking stalls for water watercrafts and docks are more open. A boat slip is leased solely for the purpose of loading and unloading.
  • Permitted use of the dock- This clause is of utmost importance because under this clause the dockage authority can restrict the vessel owner from carrying out certain activities other than loading or unloading in order to protect their interest.
  • Bailment- It describes a legal relationship where a personal property or a chattel is physically transferred from one person to another person who has the possession of the property but not total ownership. Under the bailment clause the Port may deny any liability or obligation towards the vessel or even goods docked at the port.
  • Relocation- This clause is to ensure that the Port authorities have right to relocate or change vessels for reasonable grounds and only within the purpose of boat slip. Also, any failure to give notice in case of emergency may not make port liable.
  • Rental fee- This clause is between the vessel owner and dockage company where a specific amount is to be paid by the vessel owner towards the service provided by the dockage company.
  • Recompense fee for late payment- Certain Dockage Agreements may have a clause for recompensing fee as a charge for not paying the rental fee in stipulated time decided.
  • Lien- It is a legal right against assets that are typically used as collateral to satisfy a debt. In most dockage agreements the company has the right to lien in case of any damages or default in payment of rental fee. The lien can be over the whole vessel, goods and material in the vessel or both. An example of a lien is a bank holding the title to a house until the housing loan has been completely paid.
  • Rules and Regulations- This clause constitutes of the Rules and Regulations as well conditions if any attached to the agreement and what would prevail if there is a clash between the both.
  • Indemnity Clause- It is an essential clause in an agreement to make the vessel owner indemnifier towards company for any damages occurred to company due to any acts of the vessel owner. It is a contractual transfer of risk between two parties in order to prevent loss or compensate for a loss which may occur due to any specified event. An example of an indemnity would be insurance contracts, where the insurer is contractually bound to compensate for any damages that the entity protected by the insurer experiences.
  • Risk acknowledgement by vessel owner- This clause constitutes that damages caused due to risks that do not arise out of the acts of vessel owner but employees of vessel owner or any unforeseeable circumstances, the vessel owner must acknowledge it. It is an important clause for informing the parties to contract about potential risks involved.
  • Insurance – This clause is mandatory to make sure that the vessel owner has an insurance of vessel so that the company will not be insurer for the vessel or material in the vessel. It is an important clause and must be framed meticulously.
  • Sublease of Agreement- It means substituting the party, a sublease clause will constitute only when a company has given prior consent. For instance, if the agreement is subleased to the new owner of the vessel then the company will not be bound to frame a new agreement or even change the agreement.
  • Doctrine of severability- It basically means that when a particular clause of a contract or a particular part of it is against the rules and regulations then only the part offending the rules and regulations will be declared void. The severability clause makes it easy and favourable for both the parties especially for the vessel owners. For instance, if the sublease clause of an agreement is held unenforceable or illegal in a judicial proceeding, then only that clause will be severed and will be inoperative, the remainder of that agreement shall remain operative and binding on the parties.
  • Arbitration- An arbitration clause is important in agreement to make sure that any dispute arising out of agreement between the parties will settle the matter, arbitration is a private dispute resolution procedure instead of going to court and is preferred by most people.
  • Jurisdiction- A jurisdiction clause in an agreement is included to clarify where the parties want all disputes arising under their agreement to be resolved by a court of a specified jurisdiction. It is important to constitute a jurisdiction clause as it limits the power of certain courts to hear certain cases thereby avoiding confusing and contradictory judgements. 
  • Amendments- An amendments clause is an extremely important clause in a contract as it sets forth the procedure to be followed to amend the contract, if the parties to a contract agree. Amendments can add, remove or update parts of an agreement for better.
  • Termination of contract- An agreement may have a termination clause which allows an agreement to be terminated under circumstances which are mentioned under this clause. It also establishes how the parties may end their business relationship and it also mentions what their respective responsibilities are when the relationship ends.
  • Emergency- An emergency clause in an agreement enables the company to take appropriate measures necessary in an emergency situation, agreeing to this clause the vessel cannot forbid the company from taking necessary measures during an emergency.

The above-mentioned clauses have been referred from a sample dockage agreement of Spanish Wells Yacht and Haven Resort and Piershare.

Conclusion

A dockage agreement deals with issues that are far different from any other agreement one can come across, it specifically deals with Maritime law and issues pertaining to seafarers. The issues and provisions in a dockage agreement are quite different from those that arise in any other agreement, dockage agreements are an essential part of Maritime law.

It is to be noted that the clauses incorporated in a dockage agreement are pertaining to maritime issues that prove effective for the dock company and vessel owner to maintain harmonious and mutually beneficial relationship between them. Dockage agreements are important and mandatory for smooth functioning of the ports and solving issues such as port congestion and port security more efficiently, they also help in carrying out smooth negotiations of terms between the contracting parties.

References

  1. https://www.marinelink.com/articles/maritime/maritime-contracts-100150
  2. https://www.latestlaws.com/articles/analysis-of-international-maritime-disputes-of-india-law-and-role-of-courts/
  3. https://piershare.com/terms/dockage

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