Documentary Committee embraces new wreck forms at autumn meeting


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18 Nov 2010

bimco.jpgBIMCO’s documentary experts gathered in London on 12 November to review a hefty agenda containing a wide variety of documents and clauses. Chaired by Karel Stes of CMB Belgium, the 62 members of the Committee considered and adopted three new wreck removal agreements and two new standard clauses. In addition, the Committee heard progress reports and commented on 12 other on-going projects

The revision of the WRECKHIRE, WRECKSTAGE and WRECKFIXED Wreck Removal
Agreements has taken a little under a year to complete. The initiative
to revise the 10 year old forms came from the P&I Clubs who act on
the behalf of owners to negotiate with salvage experts to remove
wrecks. The P&I Clubs felt that the forms had become dated and no
longer reflected the true commercial imperative. The drafting team
appointed to undertake the revision consisted of P&I Club and
salvage company representatives as well as a representative of the
International Salvage Union (who are co-publishers of the agreements).
Legal guidance was provided by Holman Fenwick Willan. The most commonly
used of the three forms is WRECKHIRE and it was this agreement that was
the primary focus for the revision. The new edition introduces an
incentive scheme for salvors offering a bonus for early completion. To
balance the document, at the other end of the scale the salvors face a
reduction in the daily rate of hire if they fail to complete the task
by a specified date. The delay provision has been expanded to make
clearer the implications of a partial reduction in work. A brand new
feature is the introduction of “expert evaluation” whereby one of the
parties can appoint an SCR to establish the applicable rates in the
event of a delay. The evaluation is not binding on the parties but
allows work to continue and payments to be made. The parties are
thereafter free to resolve any on-going disputes by convention
arbitration or mediation at a later stage if they so wish. Given the
positive and constructive atmosphere in which the revision was
conducted by the salvage and P&I Club representatives, it is hoped
that the new edition of the wreck removal agreements will be warmly
welcomed by the salvage sector when they are published later this year.

On 1 January 2011 new legislation will come into force in EU member
states requiring advance cargo declarations to be made electronically
for cargoes imported into or out of member states. To address the new
EU Rules BIMCO has developed two new standard clauses for the industry
- one for voyage charter parties and one for time charter parties. The
Clauses allocate responsibility for the task of submitting the advance
cargo information in line with current commercial practice. The
Committee reviewed the draft Clauses at its meeting and approved them
for immediate publication so that users can begin to incorporate them
into charter parties for business that extends over the 1 January 2011
implementation date. The Clauses will be issued as a Special Circular
including an explanatory note by the end of November and will be
available to download from BIMCO’s website.

Among the project updates reviewed by the Committee were the
development of two new standard contracts - one for the “green”
recycling of vessels, and the other for the laying up of vessels - both
very topical subjects in the industry.

The recycling contract project began life as a revision of BIMCO’s
DEMOLISHCON contract. At an early stage of the process it was
recognised that what the industry lacks is a niche contract designed
specifically for those owners who want to “green” recycle their vessels
in advance of the coming into force of the IMO Hong Cong Convention on
the Recycling of Ships. It is known that a small but growing percentage
of environment conscious owners are prepared to pay for additional
measures to ensure that their vessels are recycled in a safe and
environment-friendly way and consistent, where possible, with the
requirements set out in the Convention. While it remains difficult to
apply some of the measures set out in the Convention because the State
infrastructure is not yet in place in the main recycling centres of the
world, the Sub-committee drafting the contract is confident that a
useful and relevant contract can be developed to cover the interim
period before the Convention comes into force. The current preliminary
draft of the contract was supported by the Committee and they look
forward to seeing a more developed version at their next meeting in
Vancouver in June 2011.

The development of a standard service contract for the laying up of
vessels is a highly topical project given the current numbers of vessel
being laid up. The intention is to produce a contract that can be used
by owners and third party layup service providers. BIMCO is very
fortunate to have on the Sub-committee two such service providers from
Maersk and BP. The layup contract, code named LAYUPMAN, is being
modelled around SHIPMAN 2009 because it offers a well-structured
agreement with a number of similarities to a service type agreement of
this nature. One of the key issues discussed by the Documentary
Committee was the responsibilities and indemnities clause. The drafting
team has maintained the indemnities clause from SHIPMAN. However, this
presents a number of potential problems because SHIPMAN is an agency
based contract while under the layup contract the service provider will
be providing the services directly. This has an impact on insurance -
co-assurance under the owners’ policy is not possible - so the drafting
team will have to consider at their next meeting how liabilities are
dealt with; perhaps through some form of liability insurance taken out
by the service providers or by incorporating a knock for knock regime.
Work on this project will continue in early January with a view to
submitting a final draft for adoption in June 2011.

BIMCO’s work to develop a standard pooling agreement for the dry bulk
tramp trade was positively received by the Committee. The current draft
of the agreement is now well advanced, although Committee members were
able to submit a number of useful and constructive comments that the
drafting team can take into account at their next meeting. The Working
Group has been keeping the European Commission’s competition authority,
DGCOMP, informed of progress through ECSA. DGCOMP has offered to meet
with representatives of the Working Group to discuss the provisions of
the agreement once the draft is close to completion. This meeting may
take place in early 2011.

The Documentary Committee received the announcement that work will
begin very shortly on the revision of the SALEFORM 1993 agreement
following the go-ahead by the Norwegian Shipbrokers’ Association, who
are the copyright holders. Following a survey conducted by BIMCO and
the NSA earlier this year it was concluded that there is a need in the
industry to revise SALEFORM to ensure that the industry has a modern
and truly global sale and purchase contract to rely on. A Sub-committee
of sale and purchase experts from around the world is currently being
established and it is hoped that drafting work can begin as soon as
December. Input will also be sought from Asia, where valuable work has
recently been done on a Singapore Ship Sale Form. The target completion
date for this important project is November 2011.

Other topics discussed at the meeting included the development of
Slow/Economic Steaming Clauses and the on-going development of a Marine
Risk Assessment Clause for the dry bulk sector. Progress on the
Slow/Economic Steaming Clauses has been hampered by a number of
technical issues relating to the operation of vessel engines below
warranted speeds. The issue has been further complicated by the
original ambition of the drafting team to produce a single clause
covering both liner and bulk trades. The Committee noted that the liner
trade was already making extensive use of slow steaming operations and
that the high performance engines used in many modern container vessels
were easily adaptable to slow speeding. In contrast, the margins of
speed adjustment on a bulk carrier were far narrower and slow speeding
was not yet a common practice in the bulk trades. In view of this
difference, the Committee agreed that to progress the drafting work the
Clause should be split in two, with a liner clause taking development
priority. It is hoped that a final draft of a liner version of the
Slow/Economic Steaming Clause may be ready for adoption at the next DC
meeting in June 2011.

The Marine Risk Assessment Clause was the source of much discussion by
the Committee. The Clause is aimed at the dry cargo sector, where risk
assessments are regularly carried out by companies such as Rightship on
behalf of charterers and terminal operators. The primary purpose of the
Clause is to provide an industry solution to the problem of home-made
clauses that seek to impose on owners a warranty that the vessel will
be “Rightship approved” throughout the duration of a time charter
party. As Rightship does not offer period approvals but simply
recommendations for a forthcoming voyage, such home-made clauses
potentially place owners in a very difficult position whereby they may
find themselves in breach of charter. The Committee recognised that the
draft Marine Risk Assessment Clause does not necessarily address all
the concerns expressed by shipowners in respect of dry cargo vetting
practices. It does, however, offer a potential solution to the use of
home-made “Rightship approved” time charter clauses. Given the
sensitivity of this topic it was agreed to give careful further
consideration to the matter.

Lastly, the Committee agreed to add several new projects to its Work
Programme. These include the development of a standard Bottom Fouling
Clause to address liabilities and responsibilities when a vessel under
time charter spends an extended period in tropical waters with a
consequent effect on performance. Work will also begin on drafting a
clause to address the US Office of Foreign Assets Control List of
Specially Designated Persons (OFAC/SDN). This will be a supplementary
clause to the recently published BIMCO Sanctions Clause for Time
Charter Parties.

The next meeting of the Documentary Committee takes place on 6 June 2011 in Vancouver, Canada.

Source: BIMCO


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