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Web alert: Magellan Strait Pilotage - is it compulsory or not and who pays for the pilotage fees?

News & Insights 23 February 2015

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If the owner of a vessel employs pilots when it is recommended but not compulsory, who is responsible for the pilotage fees?

The Pilotage Regulations of the Chilean Hydrographic and Oceanographic Service ('the Regulations') provide that pilotage through the Magellan Strait is compulsory. However, assistance will not be required in the area between Felix and Punta Arenas for those vessels crossing the Strait from ocean to ocean and which are not sailing in internal waters before or after that area, or arriving to ports of the Republic. Nevertheless, in order to ensure the safety of the ecosystem, the Regulations provide that pilotage is still highly recommended in these cases, especially for oil tankers, gas carriers, chemical tankers and passenger cruises and those vessels whose crews do not speak English or Spanish.

The charterparty will cover the payment of pilotage fees and responsibility will usually rest with the charterer - for example, under both the NYPE and Shelltime form, the charterer must provide for and pay all pilotage fees. However, under the Shelltime form, all charges shall be for the owner's account when incurred for the owner's purposes. Therefore, depending on the provisions of the charterparty, uncertainty may be created in situations where the pilotage is recommended but not mandatory and the owner chooses to employ pilots.

Therefore, if the owner of a chemical tanker fixed under a Shelltime charterparty employs pilots for passing between Felix and Punta Arenas, who is responsible for the pilotage fees?

As far as we are aware, there are no binding authorities on this issue. In a reported London arbitration[1], the Tribunal when considering a NYPE charterparty held in the owner's favour and charterers were to pay for the non-compulsory fees. But the position may have been different if the charterparty contained further qualification as regards the payment of pilotage fees, such as in the Shelltime charterparty, where the owner should pay if the employment of pilotage is for the owner's purposes and the owners have chosen to employ pilots despite their not being compulsory.

If the owner can evince that the pilotage was recommended in the Magellan Strait and that it was required in order to ensure the safety of the vessel, the cargo and the ecosystem, the owner may have a strong argument.

In reality, most disputes will be settled amicably between the parties. However, in order to protect themselves from claims, members are strongly recommended to use clear wording in their charterparties to ensure that responsibility will be allocated accordingly.

This article intends to provide only general guidance on the above issues, arising as a matter of English law. It is not intended to provide legal advice in relation to any specific query. In case of any doubt, the member should not hesitate to contact the authors, or their usual club contact. The law is not static and if in any doubt The Standard Club is always on hand to assist.


[1] London arbitration 09/80 (LMLN 3 Apr 1980)

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