UKSC clarifies charterparty clauses in bills of lading for maritime general average declarations

Citation: [2024] UKSC 2
Judgment on


The Supreme Court of the United Kingdom delivered a significant judgement in Herculito Maritime Ltd and others v Gunvor International BV and others [2024] UKSC 2, addressing intricate issues concerning the incorporation of charterparty terms into bills of lading and the implications of general average declarations. The case touches upon the interpretation of voyage charterparty clauses within the bills of lading context and the responsibilities placed upon various parties when a maritime adventure suffers an insurable loss. This article analyses the legal principles applied by the UKSC and explores their rationale.

Key Facts

The MT POLAR vessel was seized by pirates, and a ransom was paid for its release. General average was declared, leading to disputes over who should bear the ransom cost. The cargo interests (appellants) argued no such liability in general average under the bills of lading, asserting that any such liability fell under additional insurance as per the voyage charterparty.

The legal discourse revolved around these central contentions: the interpretation of the war risk and Gulf of Aden clauses in the charterparty, their incorporation into the bills of lading, and the implications thereof in terms of parties’ liabilities for additional insurance premiums and general average contributions.

The UKSC reaffirmed established legal principles in the interpretation of contracts. These included:

  • The significance of the contractual context in interpreting clauses, especially in light of known risks at the time of agreement.
  • The distinction between general and specific words of incorporation within a bill of lading, as well as the extent to which manipulation of charterparty clauses is permissible when read into a bill of lading.
  • The principle that a clause purportedly incorporated into a bill of lading must be directly relevant to the shipment, carriage, and delivery of cargo, or the payment of freight.

The court rejected the notion of an implied ‘insurance code’ within the charterparty that would preclude the shipowner from claiming against the charterer for general average contributions. The UKSC reasoned that there were distinct differences between the clauses in the charterparty and the implied insurance fund concept, leading to the conclusion that no such insurance code existed in the charter at hand.

The court also dealt with the incorporation issue, taking an “iterative” approach and concluded all material clauses of the charterparty related to risks and premiums were incorporated into the bills of lading, considering their direct relevance to the carriage of goods.


On the key issues:

  1. The Court found against the cargo interests’ claim that an insurance code existed in the charterparty, which would have precluded general average claims.
  2. It held that the Gulf of Aden and War Risk clauses from the charterparty were indeed incorporated into the bills of lading, evidencing the parties’ agreement on the allocation of risk and cost-sharing for transiting high-risk areas.
  3. The Court decided against any manipulation of the incorporated clauses to transfer the responsibility of insurance premium payments from the charterer to the bill of lading holders.


The UKSC’s robust analysis affirmed the essence of contract interpretation within the context of international shipping and bills of lading. The judgement underscores the importance of clear contractual drafting and reaffirms that implications of comprehensive ‘insurance codes’ must arise necessarily from such drafting. Notably, the Court emphasized the significance of the contractual allocation of risks and costs, providing clarity regarding the parties’ liabilities and reaffirming longstanding legal principles governing the incorporation of charterparty clauses into bills of lading. This decision solidifies precedents for practitioners concerning charterparty-bill of lading relationships and the risk allocations therein.