Explanatory notes

BIMCO’s Double Banking Clause for Time Charter Parties has been revised to bring it up to date with modern commercial practice. It has been renamed Ship-to-Ship Transfer Clause for Time Charter Parties to give a clearer indication of the nature of the intended operation of the Clause, and an amendment has also been made to the insurance provisions of the clause in respect of the charterers’ obligation to insure the owners’ deductible. The revised Clause was adopted by the Documentary Committee at its meeting in Copenhagen in November 2008.

The original Double Banking Clause was drafted with dry cargoes trades specifically in mind. The wording of the revised edition has been broadened so that it can be used also in the wet trades.

The revised Clause is divided into six sub-clauses:

Sub-clause (a) establishes the charterers’ right to carry out ship-to-ship operations for cargo transfer purposes only - bunkering operations are excluded from the Clause. Ship-to-ship transfer operations under the Clause are at the charterers’ cost, expense and time – the vessel remains on hire throughout the operation.

Sub-clause (b) directs the charterers to perform the ship-to-ship transfer operations in a safe area, i.e. it does not have to be a defined “protected area” as long as it will be safe for the vessel to reach it, lie there and depart from it, always afloat. This element of the Clause reflects the potential use of the provision in the tanker trades. In any event the area chosen by the charterers will always be subject to the master’s approval. Furthermore, the charterers have an obligation to provide all necessary equipment for the operations, which is also subject to the satisfaction of the Master. Again, the Clause contains a tanker reference in respect of the provision of “hoses”.

Sub-clause (c) deals with the charterers’ obligation to obtain any necessary permission needed to carry out ship-to-ship transfers. In this sub-clause the drafters have also made an attempt to establish a bench mark to which the ship-to-ship transfer operations must be performed. In the tanker trades it would be usual to refer to the OCIMF/ICS Ship-to-Ship Transfer Guidelines. However, as these guidelines were written specifically for the tanker trade and no equivalent for the dry cargo sector exists, it was decided to make a more general reference to “best industry practice” to ensure the broad application of the Clause.

Sub-clause (d) deals with the all important aspect of safety during the operation. The provision makes it clear that such operations will always be carried out subject to the master’s discretion. The ship’s master will be able to suspend or stop the operation if he feels that it can not be carried out safely. In exercising this right the master may, if he so decides in the interest of safety, remove his vessel from the scene of the operation or order the other vessel to move away from his ship.

Sub-clause (e) dealing with insurance has been one of the main areas of focus during the revision process. Under the original wording of the Double Banking Clause some charterers felt that it was unreasonable that they had to pay for the owners’ insurance of their deductible in addition to having to indemnify the owners for all costs, damage and liabilities resulting from the ship-to-ship transfer operation. To provide a more commercially acceptable solution the requirement for the charterers to pay for the insurance of the owners’ deductible has been deleted. Sub-clause (e) requires only that the charterers reimburse the owners for any additional premiums required by their insurers for the operations.

Finally, Sub-clause (f) builds on the provisions of sub-clause (a) in respect of the ship-to-ship transfer operations being at the charterers’ risk, cost etc., by clarifying that the charterers must indemnify the owners against all consequences arising out of such operations. It contains a non-exhaustive list of examples of what sort of losses the owners may incur in connection with ship-to-ship transfer operations including loss of or damage to the cargo and pollution.

Originally published in BIMCO Special Circular No. 3, December 2008 - Ship-to-Ship Transfer Clause for Time Charter Parties (Double Banking Clause for Time Charter Parties Revised).