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BIMCO Documentary Committee Meeting: November 2013

The Documentary Committee, under Chairman Mr. Karel Stes, met in Copenhagen on 7 November to approve new documents and clauses, review work in progress and identify projects for future development.

Ship owner and Club representatives from BIMCO’s membership in Asia, Europe, the Middle East and North America were joined by observer organisations FONASBA, the International Group of P&I Clubs and INTERTANKO.

The following is a brief round-up of the discussions. Proposals for guidelines concerning the use of GUARDCON in areas other than the Indian Ocean and a revision of SUPPLYTIME 2005, will be the subject of separate articles.

Agency-based Pool Agreement
Pooling arrangements to provide the optimal and efficient use of tonnage are a feature of dry and liquid bulk tramp trades. In order to complement BIMCO’s POOLCON A contract, where owners time charter their vessels into a pool and the managers contract as principals in third party transactions, an alternative agency-based POOLCON B contract was adopted. Under POOLCON B, pool managers operate pool vessels but enter into charter parties as agents acting on behalf of the pool member who will, therefore, be the principal in the contract. The document will be published, together with explanatory notes, before the end of the year.

Vessel Vetting and Inspection Clause
Demands by charterers in dry cargo trades for vessel inspections, has seen the emergence of often unsound clauses with the potential to prejudice owners’ contractual interests. Work has therefore been underway to develop a standard provision to limit the scope and extent of such inspections, formulate procedural arrangements and ensure that the outcome cannot be used to impose requirements beyond owners’ charter party, class and flag state obligations. The process has now been completed and approval given to the BIMCO Dry Bulk Carrier Marine Risk Assessment Clause for Time Charter Parties.

HME Hold Cleaning/Cargo Residue Clause
A revised version of the BIMCO Hold Cleaning/Residue Removal Clause for Time Charter Parties was adopted at the Paris meeting to take account of new MARPOL Annex V provisions for the removal and disposal of cleaning agents and hold washing additives which are harmful to the marine environment (HME). Under a voyage charter party, removal and disposal would normally be for owners’ account. However, the special circumstances of harmful residues and products coupled with the lack of port reception facilities, argue for reversal of the normal position and for charterers to be responsible for the costs and disposal obligations. The principle was endorsed. Detailed work to refine a draft clause will now continue through a sub-committee, which will consider the scope, practical application and financial liability provisions.

Bunker Non-Lien Clause
Charterers’ default on payment for bunkers often leads to the supplier arresting an innocent owner’s vessel as security for the amount claimed. In order to reduce owners’ exposure, work has been underway to draft a Bunker Non-Lien Clause for Time Charter Parties whereby charterers undertake to protect owners against the exercise of any lien by bunker suppliers. Nevertheless, the issues are not straightforward. Problems to be considered include jurisdictions where a contractual provision cannot defeat a third party’s right to a statutory lien and the extent to which bunker suppliers will be willing to surrender their perceived ability to act against a vessel as a tangible asset in the event of non-payment. Further consideration needs to be given to the legal and procedural points of this clause.

NYPE 93 revision
The New York Produce Exchange (NYPE) 1993 Time Charter continues under review in joint negotiations with copyright holder ASBA and the Singapore Maritime Foundation. BIMCO is represented by a widely-based sub-committee drawn from members in Europe and Asia. Incorporation of a range of BIMCO standard clauses in the body of the document will cover issues which at present rely on agreed rider provisions. A number of important issues remain outstanding for further negotiation but it is hoped that a final draft will be ready for adoption at the next meeting.

FUELCON revisited
The sub-committee established to review and update the Standard Bunker Contract, held its first meeting at the beginning of November. The project is distinct from the Bunker Non-Lien Clause, referred to elsewhere, as the Contract covers the allocation of respective party rights, liability and responsibility for and during the supply of bunkers. The market value of an industry document was confirmed by the fact that some individual suppliers have incorporated certain of the BIMCO terms into their company contracts. A second meeting of the sub-committee will take place towards the end of the year in Singapore in conjunction with representatives of local interests.

Canadian Customs Bonds
Changes to reporting procedures are being introduced by the Canada Border Service Agency. Marine agent carrier codes are being replaced by a requirement for owners to obtain an individual carrier code, although the original implementation date has now been put back to early 2014. Contact is being maintained with Canadian interests to clarify the requirements, particularly the regime for Customs Bonds, so that appropriate modifications can be made to the North American Advance Cargo Declaration Clauses for endorsement through the fast-track approval system.

SALEFORM Designated Entities Clause
The Designated Entities Clause for Charter Parties was adopted at the Paris meeting to provide counterparty protection in the event that a contracting partner is declared subject to restrictions or prohibitions imposed by the United Nations, European Union regulations or the USA. Similar considerations apply to sale and purchase agreements. Accordingly, work is now in hand to develop a parallel provision, for fast track approval, to cover the period between entering an agreement and completion of the transaction.

Anti-corruption/Anti-bribery Clause
Consideration was given to the increasing use of market-driven charter party clauses requiring compliance with anti-corruption policies where any breach may to lead to termination of the contract. However, the issues are complex, particularly the age-old problem of officials and contractors asking for an inducement before they will fulfil their duties and the very real risk of repercussions if their demands are denied. It was agreed to establish a Sub-committee to explore the position and make recommendations on whether a specialist clause should be developed.

New Ro/Ro Charter/Ballast Water Clause
Reports were made on the first meeting of the sub-committee drafting the new Standard Ro/Ro Passenger Vessel Time Charter. It was noted that work was about to start on a new Ballast Water Management Sampling Clause in anticipation of new regulations in the USA and eventual entry into force of the Ballast Water Convention.

York-Antwerp Rules
BIMCO and ICS continue to monitor and participate in discussions about possible changes to the York Antwerp Rules (YAR) which will be debated at the Comité Maritime International (CMI) Conference in 2016. While there appears to be little support from constituent Maritime Law Associations for fundamental reform, salvage in general average remains controversial with continuing ship owner opposition to the changes unilaterally adopted in 2004. BIMCO will take part in discussions being taken forward through a series of specialist Working Groups.

Rotterdam Rules
Acceptance of the Rotterdam Rules has been slow with only two ratifications so far. However, there are possibly encouraging signs in the United States and if this leads to adoption, other nations can be expected to follow.

New projects
A number of new projects were identified, including an LNG Voyage Charter Party to be developed in consultation with the International Group of Liquid Natural Gas Importers (GIIGNL); updating BIMCO bills of lading to incorporate the Himalaya Clause revised by the International Group of P&I Clubs in 2010; drafting a Ship to Ship Transfer Clause for Voyage Charter Parties to complement the time charter provision issued in 2008; revision, in conjunction with FONASBA, of the Liner Agency Agreement to take account of changes in commercial practice since it was adopted in 2001; and updating the SLOTHIRE Standard Slot Charter Party 1993. It was also agreed that work should begin on a clause covering the use of electronic bills of lading.

Consideration is being given to the development of a Standard Ship Financing Agreement. This will be a major undertaking and before any decision is made to go ahead, the background will be thoroughly researched to establish the likely demand, user requirements and technical and legal aspects of financing arrangements.

Marketing and promotion
BIMCO’s work is a function of anticipating members’ documentary requirements, meeting the identified needs and promoting documents and clauses. In order to ensure that the objectives continue to reflect members’ needs and demands and that the most effective use is made of available resources, the Documentary Committee endorsed a marketing and promotion plan to take forward the Documentary Strategy agreed in 2010. The issues will be for further review at the next meeting.

The next meeting will take place in Dubai in April 2014.
Source: BIMCO