Both-to-Blame Collision Clause Explained: The Hidden Safeguard in Charter Parties and Bills of Lading

1. Introduction

Imagine a busy shipping lane where two massive vessels collide—both partly at fault. The cargo on one ship is damaged, and before long, legal claims fly across jurisdictions, parties, and insurers. Now imagine being the shipowner or charterer who thought they were protected—only to discover a loophole that could cost millions.

This is where the Both-to-Blame Collision Clause (BTBCC) comes in—a contractual safety net often overlooked, but critically important. If you're involved in shipping, marine insurance, or international trade, understanding this clause can save you from significant legal and financial exposure.

In this blog post, we’ll demystify the BTBCC, explain how it functions, explore its value to shipowners and charterers, and walk through practical scenarios to highlight its protective power.

2. Context and Background

Maritime collisions are unfortunately not rare. With thousands of ships navigating congested waters every day, the probability of collision—particularly in busy ports, canals, or straits—is real. When two ships collide and both share fault, legal and contractual complexities arise, especially in relation to cargo claims.

To manage this, the shipping industry developed standard risk allocation tools—chief among them being the BTBCC, commonly found in charter parties and extended into bills of lading. While it may seem like a niche legal clause, its impact is substantial. Without it, shipowners and charterers may unknowingly become liable for damages they thought were covered or excluded.

Let’s break down what this clause does and why you should care.

3. What Is the Both-to-Blame Collision Clause (BTBCC)?

The BTBCC is a standard contractual provision that allocates risk in the event of a collision caused by the mutual fault of both vessels. Specifically, it addresses a gap in liability that arises when:

• Cargo on Vessel A is damaged.

• Vessel A and Vessel B are both at fault.

• The cargo owner sues Vessel B in tort.

• Vessel B, in turn, seeks contribution from Vessel A.

Here's the problem: Under most carriage contracts (e.g., Hague-Visby Rules), the cargo owner may have agreed that Vessel A is not liable for navigational errors. However, by suing Vessel B and triggering a contribution claim, the cargo owner may effectively recover damages that the contract explicitly exempted.

BTBCC prevents this. It ensures that if a cargo owner recovers damages from the non-carrying vessel (Vessel B), they must indemnify the carrying vessel (Vessel A) to the extent of its fault. In simpler terms, it prevents double-dipping and upholds the original liability agreement between the cargo owner and carrier.

4. Why Is This Clause Essential for Shipowners and Charterers?

Without the BTBCC, shipowners and charterers face legal exposure in three key ways:

• Indirect Liability: Even if a shipowner is contractually exempt from cargo damage liability, they could still be pulled into litigation via third-party claims.

• P&I Insurance Gaps: Many Protection & Indemnity (P&I) Clubs require the BTBCC to be incorporated into bills of lading. Failure to include it may result in uninsured claims.

• Reputational Risk: Legal entanglements and contribution claims can damage the shipowner’s commercial credibility with clients and stakeholders.

Think about it—would you want to be held liable for a claim that your contract clearly excluded? The BTBCC ensures consistency between what’s contractually agreed and what happens in court or arbitration.

5. How Does the Clause Work in Practice?

Let’s say:

• MV Vessel A is carrying electronics from Singapore to Rotterdam.

• MV Vessel B is a tanker headed to Antwerp.

• The vessels collide in the English Channel—both found 50% at fault.

• Cargo aboard MV Vessel A is damaged. The cargo insurer sues MV Vessel B The owner of MV Vessel B pays compensation and then seeks 50% contribution from MV Vessel A.

If MV Vessel A’s bill of lading incorporates a BTBCC, then it can claim indemnity from the cargo owner or their insurer, since the cargo interest already had a contract excluding such liability. If no BTBCC exists, the owner of MV Vessel A may be liable—even though it had an exemption for navigational errors.

This clause thus acts like a “liability firewall”, preserving the integrity of the carrier’s exemptions.

6. Drafting and Incorporation: Where the Devil Lies in the Details

For the BTBCC to be effective, it must be:

• Explicitly included in the charter party, typically using BIMCO-standard clauses.

• Clearly incorporated into bills of lading, either by reference to the charter party or by reproducing the clause in the bill’s terms and conditions.

Failure to do so can lead to enforcement issues. For instance:

• If the charter party includes the clause but the bill of lading doesn’t, cargo interests may not be bound—especially if they are third-party holders.

• Vague or incomplete references may lead to litigation over whether the clause applies.

It’s therefore crucial that legal teams, brokers, and operations personnel ensure the BTBCC is properly worded and fully incorporated across all documents.

7. Common Misconceptions and Clarifications

Misconception 1: “The Hague Rules already exempt me—why bother with BTBCC?”

While it’s true that the Hague and Hague-Visby Rules provide exemptions for navigational errors, they don’t cover indirect third-party contribution claims. The BTBCC closes this loophole by shielding carriers from backdoor liabilities.

Misconception 2: “It’s just boilerplate legalese—won’t matter in real life.”

Actually, it’s been at the center of many high-stakes maritime disputes. Without the clause, shipowners have lost millions defending contribution claims, even when they thought they were contractually protected. What seems like a small clause can have enormous financial consequences.

8. Final Thoughts

The Both-to-Blame Collision Clause is more than just a technical addition to your charter party or bill of lading—it’s a critical defense mechanism in the event of a mutual fault collision. By properly allocating risk and reinforcing carrier exemptions, the BTBCC:

• Prevents unintended liability for shipowners and charterers

• Aligns with global P&I Club expectations

• Supports consistent and fair legal outcomes

• Minimizes disputes and protects long-term commercial interests

As the shipping industry continues to face growing regulatory scrutiny and operational risk, clauses like the BTBCC play an increasingly strategic role in contract management and risk mitigation.

About the Author:
Chintapalli Venkata Balaji is a former Chief Engineer, Marine Surveyor/Auditor, and Maritime Lawyer with over 28 years of experience in the maritime industry. He currently heads the maritime techno-legal consultancy at Beacon Maritime Consultants.