chapter  2
18 Pages

Third party protection in shipping: risk allocation and management

WithCarlo Corcione

This chapter introduces the traditional view of the carriage of goods by sea as a bilateral relationship and allocation of risks between the two parties, with third parties serving a risk. The intention of the parties is precisely stated in clauses such as a Himalaya clause, where the parties to the contract essentially list all the other parties to whom they wish to extend their limitation of liability. Limitations of liability and protection clauses are perceived as tools to facilitate the transactions and negotiations between two parties of a business. The extension to third parties of this and other forms of legal protection has been necessary since third parties have been substantially utilised to circumvent the agreement between the parties. Protection clauses can be criticised because they allow negligent third parties to have the same protection as the parties of the contract. However the corporate reality intensifies the need for a scheme of partnership, outsourcing agreements, and corporate management separated by ownership.