CHAPTER IV. FREIGHT RATES

Article 12 Criteria for Freight-Rate Determination

In arriving at a decision on questions of tariff policy in all casesmentioned in this Code， the following points shall， unless otherwiseprovided， be taken into account：

（a） Freight rates shall be fixed at as low a level as is feasible fromthe commercial point of view and shall permit a reasonable profit forshipowners；

（b） The cost of operations of conferences shall， as a rule， beevaluated for the round voyage of ships， with the outward and inwarddirections considered as a single whole. Where applicable， the outwardand inward voyage should be considered separately. The freight ratesshould take into account， among other factors， the nature of cargoes， theinterrelation between weight and cargo measurement， as well as the valueof cargoes；

（c） In fixing promotional freight rates and/or special freight ratesfor specific goods， the conditions of trade for these goods of thecountries served by the conference， particularly of developing andland-locked countries， shall be taken into account.

Article 13 Conference Tariffs and Classification of Tariff Rates

1. Conference tariffs shall not unfairly differentiate betweenshippers similarly situated. Shipping lines members of a conference shalladhere strictly to the rates， rules and terms shown in the tariffs andother currently valid published documents of the conference and to anyspecial arrangements permitted under this Code.

2. Conference tariffs should be drawn up simply and clearly，containing as few classes/ categories as possible， depending on thecommodity and， where appropriate， for each class/ category； they shouldalso indicate， wherever practicable， in order to facilitate statisticalcompilation and analysis， the corresponding appropriate code number of theitem in accordance with the Standard International Trade Classification，the Brussels Tariff Nomenclature or any other nomenclature that may beinternationally adopted； the classification of commodities in the tariffsshould， as far as practicable， be prepared in co-operation with shippers'organizations and other national and international organizationsconcerned.

Article 14 General Freight-Rate Increases

1. A conference shall give notice of not less than 150 days， oraccording to regional practice and/or agreement， to shippers'organizations or representatives of shippers and/or shippers and， where sorequired， to appropriate authorities of the countries whose trade isserved by the conference， of its intention to effect a general increase infreight rates， an indication of its extent， the date of effect and thereasons supporting the proposed increase.

2. At the request of any of the parties prescribed for this purpose inthis Code， to be made within an agreed period of time after the receipt ofthe notice， consultations shall commence， in accordance with the relevantprovisions of this Code， within a stipulated period not exceeding 30 daysor as previously agreed between the parties concerned； the consultationsshall be held in respect of the bases and amounts of the proposed increaseand the date from which it is to be given effect.

3. A conference， in an effort to expedite consultations， may or uponthe request of any of the parties prescribed in this Code as entitled toparticipate in consultations on general freight-rate increases shall，where practicable， reasonably before the consultations， submit to theparticipating parties a report from independent accountants of repute，including， where the requesting parties accept it as one of the bases ofconsultations， an aggregated analysis of date regarding relevant costs andrevenues which in the opinion of the conference necessitate an increase infreight rates.

4. If agreement is reached as a result of the consultations， thefreight-rate increase shall take effect from the date indicated in thenotice served in accordance with Article 14， paragraph 1， unless a laterdate is agreed upon between the parties concerned.

5. If no agreement is reached within 30 days of the giving of noticein accordance with Article 14， paragraph 1， and subject to proceduresprescribed in this Code， the matter shall be submitted immediately tointernational mandatory conciliation， in accordance with chapter VI. Therecommendation of the conciliators， if accepted by the parties concerned，shall be binding upon them and shall be implemented， subject to theprovisions of Article 14， paragraph 9， with effect from the datementioned in the conciliators' recommendation.

6. Subject to the provisions of Article 14， paragraph 9， a generalfreight-rate increase may be implemented by a conference pending theconciliators' recommendation. When making their recommendation， theconciliators should take into account the extent of the above-mentionedincrease made by the conference and the period for which it has been inforce. In the event that the conference rejects the recommendation of theconciliators， shippers and/or shippers' organizations shall have the rightto consider themselves not bound， after appropriate notice， by anyarrangement or other contract with that conference which may prevent themfrom using non-conference shipping lines. Where a loyalty arrangementexists， shippers and/ or shippers' organizations shall give notice withina period of 30 days to the effect that they no longer consider themselvesbound by that arrangement， which notice shall apply from the datementioned therein， and a period of not less than 30 days and not more than90 days shall be provided in the loyalty arrangement for this purpose.

7. A deferred rebate which is due to the shipper and which has alreadybeen accumulated by the conference shall not be withheld by， or forfeitedto， the conference as a result of action by the shipper under Article 14，paragraph 6.

8. If the trade of a country carried by shipping lines members of aconference on a particular route consists largely of one or few basiccommodities， any increase in the freight rate on one or more of thosecommodities shall be treated as a general freight-rate increase， and theappropriate provisions of this Code shall apply.

9. Conferences should institute any general freight-rate increaseeffective in accordance with this Code for a period of a stated minimumduration， subject always to the rules regarding surcharges and regardingadjustment in freight rates consequent upon fluctuations in foreignexchange rates. The period over which a general freight-rate increase isto apply is an appropriate matter to be considered during consultationsconducted in accordance with Article 14， paragraph 2， but unless otherwiseagreed between the parties concerned during the consultations， theminimum period of time between the date when one general freight-rateincrease becomes effective and the date of notice for the next generalfreight-rate increase given in accordance with Article 14， paragraph 1shall not be less than 10 months.

Article 15 Promotional Freight Rates

1. Promotional freight rates for non-traditional exports should beinstituted by conferences.

2. All necessary and reasonable information justifying the need for apromotional freight rate shall be submitted to a conference by theshippers， shippers' organizations or representatives of shippersconcerned.

3. Special procedures shall be instituted providing for a decisionwithin 30 days from the date of receipt of that information， unlessmutually agreed otherwise， on applications for promotional freight rates.A clear distinction shall be made between these and general procedures forconsidering the possibility of reducing freight rates for othercommodities or of exempting them from increases.

4. Information regarding the procedures for considering applicationsfor promotional freight rates shall be made available by the conference toshippers and/or shippers' organizations and， on request， to theGovernments and/or other appropriate authorities of the countries whosetrade is served by the conference.

5. A promotional freight rate shall be established normally for aperiod of 12 months， unless otherwise mutually agreed between the partiesconcerned. Prior to the expiry of the period， the promotional freightrate shall be reviewed， on request by the shipper and/or shippers'organization concerned， when it shall be a matter for the shipper and/orshippers' organization， at the request of the conference， to show thatthe continuation of the rate is justified beyond the initial period.

6. When examining a request for a promotional freight rate， theconference may take into account that， while the rate should promote theexport of the non-traditional product for which it is sought， it is notlikely to create substantial competitive distortions in the export of asimilar product from another country served by the conference.

7. Promotional freight rates are not excluded from the imposition of asurcharge or a currency adjustment factor in accordance with Articles 16and 17.

8. Each shipping line member of a conference serving the relevantports of a conference trade shall accept， and not unreasonably refuse， afair share of cargo for which a promotional freight rate has beenestablished by the conference.

Article 16 Surcharges

1. Surcharges imposed by a conference to cover sudden or extraordinaryincreases in costs or losses of revenue shall be regarded as temporary.They shall be reduced in accordance with improvements in the situation orcircumstances which they were imposed to meet and shall be cancelled，subject to Article 16， paragraph 6， as soon as the situation orcircumstances which prompted their imposition cease to prevail. This shallbe indicated at the moment of their imposition， together， as far aspossible， with a description of the change in the situation orcircumstances which will bring about their increase， reduction orcancellation.

2. Surcharges imposed on cargo moving to or from a particular portshall likewise be regarded as temporary and likewise shall be increased，reduced or cancelled， subject to Article 16， paragraph 6， when thesituation in that port changes.

3. Before any surcharge is imposed， whether general or covering only aspecific port， notice should be given and there shall be consultation，upon request， in accordance with the procedures of this Code， between theconference concerned and other parties directly affected by the surchargeand prescribed in this Code as entitled to participate in suchconsultations， save in those exceptional circumstances which warrantimmediate imposition of the surcharge. In cases where a surcharge has beenimposed without prior consultation， consultations， upon request， shall beheld as soon as possible thereafter. Prior to such consultations，conferences shall furnish data which in their opinion justify theimposition of the surcharge.

4. Unless the parties agree otherwise， within a period of 15 daysafter the receipt of a notice given in accordance with Article 16，paragraph 3， if there is no agreement on the question of the surchargebetween the parties concerned referred to in that Article， the relevantprovisions for settlement of disputes provided in this Code shall prevail.Unless the parties concerned agree otherwise， the surcharge may， however，be imposed pending resolution of the dispute， if the dispute stillremains unresolved at the end of a period of 30 days after the receipt ofthe above-mentioned notice.

5. In the event of a surcharge being imposed， in exceptionalcircumstances， without prior consultation as provided in Article 16，paragraph 3， if no agreement is reached through subsequent consultations，the relevant provisions for settlement of disputes provided in this Codeshall prevail.

6. Financial loss incurred by the shipping lines members of aconference as a result of any delay on account of consultations and/orother proceedings for resolving disputes regarding imposition ofsurcharges in accordance with the provisions of this Code， as compared tothe date from which the surcharge was to be imposed in terms of the noticegiven in accordance with Article 16， paragraph 3， may be compensated by anequivalent prolongation of the surcharge before its removal. Conversely，for any surcharge imposed by the conference and subsequently determinedand agreed to be unjustified or excessive as a result of consultations orother procedures prescribed in this Code， the amounts so collected or theexcess thereof as determined herein above， unless otherwise agreed， shallbe refunded to the parties concerned， if claimed by them， within a periodof 30 days of such claim.

Article 17 Currency Changes

1. Exchange rate changes， including formal devaluation or revaluation，which lead to changes in the aggregate operational costs and/or revenuesof the shipping lines members of a conference relating to their operationswithin the conference provide a valid reason for the introduction of acurrency adjustment factor or for a change in the freight rates. Theadjustment or change shall be such that in the aggregate the member linesconcerned neither gain nor lose， as far as possible， as a result of theadjustment or change. The adjustment or change may take the form ofcurrency surcharges or discounts or of increases or decreases in thefreight rates.

2. Such adjustments or changes shall be subject to notice， whichshould be arranged in accordance with regional practice， where suchpractice exists， and there shall be consultations in accordance with theprovisions of this Code between the conference concerned and the otherparties directly affected and prescribed in this Code as entitled toparticipate in consultations， save in those exceptional circumstanceswhich warrant immediate imposition of the currency adjustment factor orfreight-rate change. In the event that this has been done without priorconsultations， consultations shall be held as soon as possible thereafter.The consultations should be on the application， size and date ofimplementation of the currency adjustment factor or freight-rate change，and the same procedures shall be followed for this purpose as areprescribed in Article 16， paragraphs 4 and 5， in respect of surcharges.Such consultations should take place and be completed within a period notexceeding 15 days from the date when the intention to apply a currencysurcharge or to effect a freight-rate change is announced.

3. If no agreement is reached within 15 days through consultations，the relevant provisions for settlement of disputes provided in this Codeshall prevail.

4. The provisions of Article 16， paragraph 6 shall apply， adapted asnecessary to currency adjustment factors and freight-rate changes dealtwith in the present Article.

CHAPTER V. OTHER MATTERS

Article 18 Fighting Ships

Members of a conference shall not use fighting ships in the conferencetrade for the purpose of excluding， preventing or reducing competition bydriving a shipping line not a member of the conference out of the saidtrade.

Article 19 Adequacy of Service

1. Conferences should take necessary and appropriate measures toensure that their member lines provide regular， adequate and efficientservice of the required frequency on the routes they serve and shallarrange such services so as to avoid as far as possible bunching andgapping of sailings. Conferences should also take into consideration anyspecial measures necessary in arranging services to handle seasonalvariations in cargo volumes.

2. Conferences and other parties prescribed in this Code as entitledto participate in consultations， including appropriate authorities ifthey so desire， should keep under review， and should maintain closeco-operation regarding the demand for shipping space， the adequacy andsuitability of service， and in particular the possibilities forrationalization and for increasing the efficiency of services. Benefitsidentified as accruing from rationalization of services shall be fairlyreflected in the level of freight rates.

3. In respect of any port for which conference services are suppliedonly subject to the availability of a specified minimum of cargo， thatminimum shall be specified in the tariff. Shippers should give adequatenotice of the availability of such cargo.

Article 20 Head Office of a Conference

A conference shall as a rule establish its head office in a countrywhose trade is served by that conference， unless agreed otherwise by theshipping lines members of that conference.

Article 21 Representation

Conferences shall establish local representation in all countriesserved， except that where there are practical reasons to the contrary therepresentation may be on a regional basis. The names and addresses ofrepresentatives shall be readily available， and these representativesshall ensure that the views of shippers and conferences are rapidly madeknown to each other with a view to expediting prompt decisions. When aconference considers it suitable， it shall provide for adequate delegationof powers of decision to its representatives.

Article 22 Contents of Conference Agreements. Trade ParticipationAgreements and Loyalty Arrangements

Conference agreements， trade participation agreements and loyaltyarrangements shall conform to the applicable requirements of this Code andmay include such other provisions as may be agreed which are notinconsistent with this Code.

PART TWO

CHAPTER VI. PROVISIONS AND MACHINERY FOR SETTLEMENT OF DISPUTES

A. GENERAL PROVISIONS

Article 23

1. The provisions in this chapter shall apply whenever there is adispute relating to the application or operation of the provisions of thisCode between the following parties：

（a） A conference and a shipping line；

（b） The shipping lines members of a conference；

（c） A conference or a shipping line member thereof and a shippers'organization or representatives of shippers or shippers； and

（d） Two or more conferences.

For the purpose of this chapter the term “party” means the originalparties to the dispute as well as third parties which have joined theproceedings in accordance with （a） of Article 34.

2. Disputes between shipping lines of the same flag， as well as thosebetween organizations belonging to the same country， shall be settledwithin the framework of the national jurisdiction of that country， unlessthis creates serious difficulties in the fulfilment of the provisions ofthis Code.

3. The parties to a dispute shall first attempt to settle it by anexchange of views or direct negotiations with the intention of finding amutually satisfactory solution.

4. Disputes between the parties referred to in Article 23， paragraph 1relating to：

（a） Refusal of admission of a national shipping line to a conferenceserving the foreign trade of the country of that shipping line；

（b） Refusal of admission of a third-country shipping line to aconference；

（c） Expulsion from a conference；

（d） Inconsistency of a conference agreement with this Code；

（e） A general freight-rate increase；

（f） Surcharges；

（g） Changes in freight rates or the imposition of a currencyadjustment factor， due to exchange rate changes；

（h） Participation in trade； and

（i） The form and terms of proposed loyalty arrangements

which have not been resolved through an exchange of views or directnegotiations shall， at the request of any of the parties to the dispute，be referred to international mandatory conciliation in accordance with theprovisions of this chapter.

Article 24

1. The conciliation procedure is initiated at the request of one ofthe parties to the dispute.

2. The request shall be made：

（a） In disputes relating to membership of conferences： not later than60 days from the date of receipt by the applicant of the conferencedecision， including the reasons therefor， in accordance with Article 1，paragraph 4 and Article 4， paragraph 3；

（b） In disputes relating to general freight-rate increases： not laterthan the date of expiry of the period of notice specified in Article 14，paragraph 1；

（c） In disputes relating to surcharges： not later than the date ofexpiry of the 30-day period specified in Article 16， paragraph 4 or， whereno notice has been given， not later than 15 days from the date when thesurcharge was put into effect； and

（d） In disputes relating to changes in freight rates or the impositionof a currency adjustment factor due to exchange rate changes： not laterthan five days after the date of expiry of the period specified in Article17， paragraph 3.

3. The provisions of Article 24， paragraph 2 shall not apply to adispute which is referred to international mandatory conciliation inaccordance with Article 25， paragraph 3.

4. Requests for conciliation in disputes other than those referred toin Article 24， paragraph 2， may be made at any time.

5. The time-limits specified in Article 24， paragraph 2 may beextended by agreement between the parties.

6. A request for conciliation shall be considered to have been dulymade if it is proved that the request has been sent to the other party byregistered letter， telegram or teleprinter has been served on it withinthe time-limits specified in Article 24， paragraphs 2 or 5.

7. Where no request has been made within the time-limits specified inArticle 24， paragraphs 2 or 5， the decision of the conference shall befinal and no proceedings under this chapter may be brought by any party tothe dispute to challenge that decision.

Article 25

1. Where the parties have agreed that disputes referred to in Article23， paragraph 4 （a）， （b）， （c）， （d）， （h） and （i） shall be resolved throughprocedures other than those established in that Article， or agree onprocedures to resolve a particular dispute that has arisen between them，such disputes shall， at the request of any of the parties to the dispute，be resolved as provided for in their agreement.

2. The provisions of Article 25， paragraph 1 apply also to thedisputes referred to in Article 23， paragraph 4 （e）， （f） and （g）， unlessnational legislation， rules or regulations prevent shippers from havingthis freedom of choice.

3. Where conciliation proceedings have been initiated， suchproceedings shall have precedence over remedies available under nationallaw. If a party seeks remedies under national law in respect of a disputeto which this chapter applies without invoking the procedures provided forin this chapter， then， upon the request of a respondent to thoseproceedings， they shall be stayed and the dispute shall be referred to theprocedures defined in this chapter by the court or other authority wherethe national remedies are sought.

Article 26

1. The Contracting Parties shall confer upon conferences and shippers'organizations such capacity as is necessary for the application of theprovisions of this chapter. In particular：

（a） A conference or a shippers' organization may institute proceedingsas a party or be named as a party to proceedings in its collectivecapacity；

（b） Any notification to a conference or shippers' organization in itscollective capacity shall also constitute a notification to each member ofsuch conference or shippers' organization；

（c） A notification to a conference or shippers' organization shall betransmitted to the address of the head office of the conference orshippers' organization. Each conference or shippers' organization shallregister the address of its head office with the Registrar appointed inaccordance with Article 46， paragraph 1. In the event that a conference orshippers' organization fails to register or has no head office， anotification to any member in the name of the conference or shippers'organization shall be deemed to be a notification to such conference ororganization.

2. Acceptance or rejection by a conference or shippers' organizationof a recommendation by conciliators shall be deemed to be acceptance orrejection of such a recommendation by each member thereof.

Article 27

Unless the parties agree otherwise， the conciliators may decide tomake a recommendation on the basis of written submissions without oralproceedings.

B. INTERNATIONAL MANDATORY CONCILIATION

Article 28

In international mandatory conciliation the appropriate authorities ofa Contracting Party shall， if they so request， participate in theconciliation proceedings in support of a party being a national of thatContracting Party， or in support of a party having a dispute arising inthe context of the foreign trade of that Contracting Party. Theappropriate authority may alternatively act as an observer in suchconciliation proceedings.

Article 29

1. In international mandatory conciliation the proceedings shall beheld in the place unanimously agreed to by the parties or， failing suchagreement， in the place decided upon by the conciliators.

2. In determining the place of conciliation proceedings the partiesand the conciliators shall take into account， inter alia， countries whichare closely connected with the dispute， bearing in mind the country of theshipping line concerned and， especially when the dispute is related tocargo， the country where the cargo originates.

Article 30

1. For the purposes of this chapter an international panel ofconciliators shall be established， consisting of experts of high reputeor experience in the fields of law， economics of sea transport， or foreigntrade and finance， as determined by the Contracting Parties selectingthem， who shall serve in an independent capacity.

2. Each Contracting Party may at any time nominate members of thepanel up to a total of 12， and shall communicate their names to theRegistrar. The nominations shall be for periods of six years each and maybe renewed. In the event of the death， incapacity or resignation of amember of the panel， the Contracting Party which nominated such personshall nominate a replacement for the remainder of his term of office. Anomination takes effect from the date on which the communication of thenomination is received by the Registrar.

3. The Registrar shall maintain the panel list and shall regularlyinform the Contracting Parties of the composition of the panel.

Article 31

1. The purpose of conciliation is to reach an amicable settlement ofthe dispute through recommendations formulated by independentconciliators.

2. The conciliators shall identify and clarify the issues in dispute，seek for this purpose any information from the parties， and on the basisthereof， submit to the parties a recommendation for the settlement of thedispute.

3. The parties shall co-operate in good faith with the conciliators inorder to enable them to carry out their functions.

4. Subject to the provisions of Article 25， paragraph 2， the partiesto the dispute may at any time during the conciliation proceedings decidein agreement to have recourse to a different procedure for the settlementof their dispute. The parties to a dispute which has been made subject toproceedings other than those provided for in this chapter may decide bymutual agreement to have recourse to international mandatory conciliation.

Article 32

1. The conciliation proceedings shall be conducted either by oneconciliator or by an uneven number of conciliators agreed upon ordesignated by the parties.

2. Where the parties cannot agree on the number or the appointment ofthe conciliators as provided in Article 32， paragraph 1， the conciliationproceedings shall be conducted by three conciliators， one appointed byeach party in the statement（s） of claim and reply respectively， and thethird by the two conciliators thus appointed， who shall act as chairman.

3. If the reply does not name a conciliator to be appointed in caseswhere Article 32， paragraph 2 would apply， the second conciliator shall，within 30 days following the receipt of the statement of claim， be chosenby lot by the conciliator appointed in the statement of claim from amongthe members of the panel nominated by the Contracting Parties of which therespondent （s） is （are） a national（s）。

4. Where the conciliators appointed in accordance with Article 32，paragraphs 2 or 3 cannot agree on the appointment of the third conciliatorwithin 15 days following the date of the appointment of the secondconciliator， he shall， within the following five days， be chosen by lot bythe appointed conciliators. Prior to the drawing by lot：

（a） No member of the panel of conciliators having the same nationalityas either of the two appointed conciliators shall be eligible forselection by lot；

（b） Each of the two appointed conciliators may exclude from the listof the panel of conciliators an equal number of them subject to therequirement that at least 30 members of the panel shall remain eligiblefor selection by lot.

Article 33

1. Where several parties request conciliation with the same respondentin respect of the same issue， or of issues which are closely connected，that respondent may request the consolidation of those cases.

2. The request for consolidation shall be considered and decided uponby majority vote by the chairmen of the conciliators so far chosen. Ifsuch request is allowed， the chairmen will designate the conciliators toconsider the consolidated cases from among the conciliators so farappointed or chosen， provided that an uneven number of conciliators ischosen and that the conciliator first appointed by each party shall be oneof the conciliators considering the consolidated case.

Article 34

Any party， other than an appropriate authority referred to in Article28， if conciliation has been initiated， may join in the proceedings：

either

（a） As a party， in case of a direct economic interest；

or

（b） As a supporting party to one of the original parties， in case ofan indirect economic interest，

unless either of the original parties objects to such joinder.

Article 35

1. The recommendations of the conciliators shall be made in accordancewith the provisions of this Code.

2. When the Code is silent upon any point， the conciliators shallapply the law which the parties agree at the time the conciliationproceedings commence or thereafter， but not later than the time ofsubmission of evidence to the conciliators. Failing such agreement， thelaw which in the opinion of the conciliators is most closely connectedwith the dispute shall be applicable.

3. The conciliators shall not decide ex aequo et bono upon the disputeunless the parties so agree after the dispute has arisen.

4. The conciliators shall not bring a finding of non liquet on theground of obscurity of the law.

5. The conciliators may recommend those remedies and reliefs which areprovided in the law applicable to the dispute.

Article 36

The recommendations of the conciliators shall include reasons