Background

REPAIRCON is the standard contract for use in connection with major ship repairs, in a wet or dry dock, at a shipyard or similar facility. The form was originally issued in 2002. In the light of experience and changes in practice over the intervening period, a Subcommittee, comprising representatives of shipowners, contractors and specialist legal advisers, was formed to review the content. A number of changes have been made to improve the basis of the agreement and parties’ respective responsibilities, liabilities and obligations have been clarified. The updated form has been reissued as “REPAIRCON 2018”.

BIMCO is grateful to the following Subcommittee members for their work in the development process:

• Mr Søren Berg, J. Lauritzen, (Chairperson) 
• Mr Mikael Abrahamsson, Stena RoRo
• Mr Donald McLean, Lisnave
• Mr Frank Riley, Skuld P&I Club
• Ms Nicola Jeanes, Mills & Co

Explanatory notes

The following Explanatory Notes provide background information to the structure and content of the contract.

PART I

Part I follows the customary BIMCO box-layout style. The boxes are used to enter details of the main terms that the parties agree when the contract is concluded. As a matter of convenience, the boxes, where appropriate, contain cross-references to the relevant clauses found in Part II.

Particular attention is drawn to the fact that the REPAIRCON 2018 is a self-standing contract to the exclusion of any other provisions or parties’ own standard terms and conditions that are not expressly included. Accordingly, all technical and related issues specific to the contract must be set out in Annex A (Scope of Work) while numbers of specifically agreed additional clauses (such as parties’ own clauses or provisions specific to the work to be undertaken) must be listed in Box 21 and set out, in full, in Part II.

Box 1 - Place and Date 

The date and place (normally the name of the city) of the formation of the contract is entered in this box. 

Box 2 - Owners (Full style and address)

The shipowners’ name and full postal address is to be entered together with contact details such as phone and e-mail. If a third-party ship manager concludes the contract on behalf of the owners, the name of the vessel’s owners “c/o” (i.e. “care of”) the manager’s details should be inserted. The owners’ signature box at the foot of Part I should indicate clearly, if signed by ship managers, that the managers are signing as agents for and on behalf of the owners. 

It is important to note that Box 2 requires the owners to declare whether or not they are the bareboat charterers of the vessel. This distinction is made to ensure that the contractors are aware of any potential credit risks that may arise as a result of contracting repairs with a party other than the registered owners of the vessel.

Box 3 - Contractors (Full style and address)

The contractors’ name and full postal address must be entered together with contact details such as phone and e-mail.

Box 4 - Vessel’s Name

The vessel’s full name and any prefixes such as “m.v” or “t.s.s” must be entered. 

Box 5 - Contractors’ Yard

As the contractors identified in Box 3, may be remote from their facility or operate more than one repair yard, the location of the yard where repairs will take place must be stated.

Box 6 - Contract Period 

This is the agreed time for the repairs and runs from the first working day after delivery of the vessel to the yard. The stated period will be adjusted in the event of additional work or reductions in the work agreed or due to delays in accordance with Clause 11 (Disruptions).

Box 7 - Vessel’s Description 

A list of required information is set out for completion.

 Box 8 - Delivery Date 

This covers the anticipated date of the vessel’s delivery to the contractors’ yard. However, the date may change after the contract has been concluded and it is the owners’ responsibility to keep the contractors fully advised of any change to the expected delivery date (Subclause 5(a)).

Box 9 - Cancellation Date 

The Cancellation Date is the agreed latest date on which the vessel can be delivered to the contractors’ yard. If the vessel is delivered after 1500 hours on the stated date, the contractors will have the right to cancel the contract and recover certain costs and expenses incurred (Subclause 5(b)(i)).

Box 10 - Contract Price and currency 

The Contract Price is the amount agreed by the parties for the work to be carried out under the contract. The actual amount may vary from the Contract Price depending on any subsequently agreed additions or reductions to the specified repair work. The currency in which the owners will pay the Contract Price should also be stated. If any reductions are agreed then the owners will be credited with any cost savings (Subclauses 1, 6(a)(i) and 6(b)(i)). 

Box 11 - Overtime Periods and Rates 

As the Contract Price in Box 10 is based on the work being carried out during normal working hours, details of periods outside “normal working hours” and the applicable rates must be set out at Box 11 (Subclause 2(a)(ii)).

Box 12 - Owners’ Representatives 

The Owners’ Representative must be stated and the Contractors informed, in writing, of any change of representative during the performance of the contract. In the absence of a stated nomination, the Vessel’s Master will fulfil the role on owners’ behalf (Subclause 3(a)).

Box 13 - Guarantee Period in Months 

The period of the guarantee, to be agreed by the parties, must be entered (Subclause 10(b)).

Box 14 - Payment Terms 

The basis of and arrangements for making payments, including any special provisions agreed for credit transactions or bareboat charterers, must be inserted (Subclause 6(b)). 

Box 15 Contractors’ Bank Account

This should be completed with full details. In order to prevent fraudulent activity, any changes must be agreed in writing between the parties (Subclause 6 (b)(ii)).

Box 16 - Total Liability 

Liability limits for both parties must be agreed and inserted at (a) for the Contractors and at (b) for the Owners (Subclauses 9 (a) and (b)).

Box 17 - Liability for Late Redelivery 

An agreed daily rate of liability must be entered at (a) and maximum liability at (b). A default maximum of 10% of the Contract Price applies if (b) is not completed (Clause 7). 

Box 18 - Interest Rate 

The agreed rate applies to sums repayable in the event of owners’ cancellation or for delay in settling payments due (Subclauses 5(b)(ii), 6(b)(iii) and (b)(iv)). 

Box 19 - Dispute Resolution 

It is for the parties to determine which of the four options for arbitration (London, New York, Singapore or an agreed choice) is to apply. In default of a stated alternative, London arbitration applies (Clause 16).

Box 20 - Redelivery Termination Date 

If a date is agreed, it might nevertheless be extended or shortened by Additional Works or Reductions or Disruptions (Subclauses 2(a)(iii) and 12(a)(iii)).

Box 21 - Numbers of Additional Clauses Attached, if any

Numbers of additional clauses must be listed and set out in full in Part II.

PART II

Clause 1 Definitions 

This sets out a list of terms that are used in different parts of the agreement.

Clause 2 Performance and Approval of the Work

(a) Performance of Works
The agreed repair works, as set out at Annex A (Scope of Work), must be performed “to the reasonable satisfaction of the owners” and in accordance with all relevant or expressly agreed regulatory bodies. Overtime rates will apply where owners request working outside normal hours. 

Any variations to the original specification must be recorded in writing on a Work Variation Form (Annex B). If an agreed change impacts on the Redelivery Termination Date, the contractual period will be extended or shortened accordingly. The Contract Price will be adjusted by agreement so that, where there is a reduction from the original specification, the Contractors are not placed at a financial disadvantage in relation to their costs and charges exceeding the amount to be credited to the owners. 

(b) Contractors’ Right to Subcontract 
This is designed to cover the situation where it is necessary to bring in outside sub-contractors to undertake specialised work. However, liability cannot be devolved and the Contractors remain responsible for their subcontractors. 

(c) Approvals and Certificates
The contractors and owners are each responsible for obtaining any approvals or certificates required by their respective regulatory bodies with a mutual obligation to assist the other as necessary. 

Clause 3 Owners’ and Contractors’ Representatives

(a) Owners’ Representatives
An Owners’ Representative must be appointed to supervise the Works with any change of nominee to be agreed with the contractors in writing. If not otherwise agreed, the Master will assume the role. The Owners’ Representative must be present at the yard with full authority to act on the owners’ behalf and agree any variations to the works. Office accommodation is to be provided at the contractors’ expense and reasonable access granted to working areas.   

(b) Contractors’ Representative
As their nominee might not be known when the contract is concluded, the Contractors’ Representative must be appointed prior to the delivery of the vessel. The Contractors’ Representative must be available throughout and have full authority to act and agree to any changes or variations in the works.

(c) The representatives must hold daily meetings.

Clause 4 Owners’ Work

The owners may undertake their own work subject to the contractors’ approval. It follows that outside contractors must comply with the contractors’ security and health and safety requirements. The yard must be made aware of the nature of such work to avoid dangerous situations, conflicts or delays. Owners should check with their P&I Club to ensure the adequacy of their cover to respond to any potential liabilities.

Clause 5 Delivery, Redelivery and Acceptance of the Vessel 

(a) Delivery
The owners must deliver the vessel in the agreed condition and at the agreed place and time. The contractors must be kept informed of any changes to the agreed schedule.  

(b) Cancellation
If the vessel is not delivered by 15.00 hours, local time, on the agreed date, the contractors may, within two hours, cancel the contract and recover certain costs. Their right to cancel is lost if it is not exercised as set out.

If the contractors fail to commence work within forty-eight hours of the delivery date, the owners may cancel the contract and recover certain costs.

(c) Redelivery
Inspections, tests and/or trials specific to the work carried out by the contractors are to be undertaken in the presence of the owners’ representative. It is, however, left open as to who will carry out such inspections, tests and/or trials. Any defects or faults in the performance of the works are to be listed and corrected by the contractors before redelivery, unless agreed otherwise. 

Clause 6 Financial provisions

(a) Price
It is for the parties to determine whether the costs will be on a fixed price basis or, where not so agreed for some or all of the works or additional works, by reference to a stated tariff or rates. 

(b) Payment
This sets out the payment arrangements as agreed and stated by the parties in Box 14. Interest is payable on late payments and, under certain circumstances, work may be suspended by the contractors.

(c) Title to the Vessel
The owners retain title to the vessel throughout the contract period. The contractors must not permit a lien to be created on the vessel due to their work or that of their subcontractors. However, the contractors may exercise a possessory lien on the vessel for unpaid sums due on or before redelivery. 

Clause 7 Liquidated Damages for Delay

In the event that the vessel is delayed beyond the end of the contract period, Liquidated Damages are to be paid to the owners at the agreed daily rates stated in Box 17(a) up to the agreed maximum stated in Box 17(b). However, in default of a stated upper limit, a cap of ten (10) per cent of the contract price will apply. (This is separate from and therefore in addition to the Contractors’ Total Liability in Clause 9(a)),

Clause 8 Liabilities and Indemnities

(a) Liability for Loss or damage
The contractors and the owners are liable to each other only where proved loss or damage results from the negligence or wilful misconduct of the other party or those for whom they are responsible such as subcontractors and agents. The contractors’ liabilities cease on redelivery or completion other than in relation to claims under Subclause 5(b), Cancellation, Clause 10, Guarantee, Clause 12 Termination and Subclause 14(e), Intellectual Property. 

(b) Liability for Death or Personal Injury
This is a traditional “knock for knock” provision with each party agreeing to accept responsibility for its own personnel and those for whom they are responsible. Party liability arises whether or not an incident is due to the other party’s negligence. In line with other BIMCO contracts, which either exclude or are silent on the issue of wilful misconduct in the context of “knock for knock”, the issue is not addressed in REPAIRCON. Current legal understanding is that, in the absence of clear wording to the contrary, “wilful misconduct” will fall outside the knock for knock regime. The parties are therefore likely to be responsible for wilful misconduct. However, a high threshold is likely to be set with wilful misconduct arising in the context of misdeeds of the directing mind or will of a company and not by the misbehaviour of a disaffected or deliberately careless employee.   

The responsible party must take over the conduct of, and indemnify the non-liable party against, any misdirected claim.

(c) Third Parties
A mutual indemnity provides that each party is responsible for any third-party claims arising from its own negligence or wilful misconduct.

Clause 9 Limitation

Subclauses (a) and (b) 
The contractors’ and the owners’ maximum liability is limited to the amount agreed and inserted in Box 16(a) and (b) respectively.

(c) Employees, Servants, Agents and Subcontractors
This is a “Himalaya Clause” extending limits of liability to employees, servants, agents and subcontractors to protect them from personal action being taken as a means of circumventing the contractual provisions.

(d) Exclusions of Liability
There is no recovery for losses such as loss of hire or profit, whether they are direct or indirect. Moreover, all consequential losses are expressly excluded.

(e) Limitation
Parties may invoke any rights of statutory limitation.

Clause 10 Guarantee

The contractors remain liable for any defects in their work, or parts supplied, provided written notification is given within the period stated in Box 13. The contractors must undertake the necessary remedial work and repair or replace any other parts damaged as a direct consequence. If it is not practicable to return the Vessel to the original yard then, in consultation with the contractors, the work can be carried out at the contractors’ expense elsewhere. The owner is responsible for the costs of taking the vessel to the original yard or agreed location.

The guarantee provisions extend to any repairs or renewals undertaken by the contractors in accordance with the guarantee. This means that if a guarantee period of six months has been agreed and a defect is found and rectified two months after redelivery, then the repair or renewal will continue for a further six months from the date of completion of the repair.

Clause 11 Disruptions

The contract period may be extended due to force majeure events listed in Subclause (a)(i) or because of delays on the owners’ part listed in Subclause (a)(ii). The contractors must, however, make all reasonable efforts to avoid or minimise the effects of the stated events. The contractors’ right to a claimed extension will be lost if the notification provisions are not followed. The owners must be informed once the cause of the delay has come to an end.

Clause 12 Termination

(a) Contractors’ Default 
The agreement may be terminated in the event of the contractors’ deemed insolvency, failure to perform the agreed work, failure to redeliver the vessel by the agreed date or where they are responsible for damage to the vessel. A mechanism is set out for the settlement of accrued payments and recovery of certain allowable losses.

(b) Owners’ Default
The right to terminate arises from owners’ deemed insolvency, failure to make payments due or because of damage to the contractors’ property for which the owners are responsible but where the repair costs will exceed their agreed total liability.

All prior sums due for work carried out up to the date of termination must be paid. However, payment may be set-off against any liquidated damages due under Clause 7 and non-excluded losses or claims suffered as a result of the termination. On settlement, the vessel can be removed from the contractors’ yard.

(c) Termination does not affect party rights to claim against each other.

(d) The circumstances giving rise to “deemed insolvency” are set out.

Clause 13 Insurance 

The contractors must maintain ship repairers’ liability insurance and owners P&I cover together with hull and machinery and war risks insurance.  Cover must be to the full extent required with details made available to the other party on request.

Clause 14 Sundry Provisions

Subclauses (a) to (e) set out standard provisions covering, respectively, Assignment, Severance, No Waiver, Entire Agreement and Intellectual Property.

(f) Scrap Materials states that apart from certain identified large pieces of equipment, scrap metal removed from the vessel will become the contractors’ property.   

Clause 15 Anti-Corruption Clause

The BIMCO Anti-Corruption Clause for Charter Parties has been modified to meet party needs in the context of shipyard activity. The clause provides users with a regime for responding to unlawful demands for gifts in cash or kind, such as cigarettes or alcohol. It sets out a series of steps to assist the contracting parties, working together, to resist any demands. However, if this is unsuccessful termination, by either party, is the ultimate sanction. Nevertheless, a high threshold has been set so that termination cannot be easily used as an exit from an inconvenient contract.

Clause 16 BIMCO Dispute Resolution Clause 2017

Four options are offered for arbitration: London (which applies by default in the absence of a stated alternative in Box 19); New York; Singapore; or an open choice for parties to agree the governing contractual law and seat of arbitration. Mediation procedures are set out for London, Singapore and the open forum. However, mediation has a different position in the US and it is left to the parties to agree their own procedures. 

Clause 17 BIMCO Notices Clause 

This is a standard provision setting out the basis of and procedures for inter-party communications.

ANNEX A (SCOPE OF WORK)

This is to be used for recording full technical details of the work to be undertaken as agreed between the owners and the contractors. 
Parties “house” terms and conditions must not be included. If the parties wish to include any such provisions, they must be listed in Box 21 and set out in full in Part II.

ANNEX B (WORK VARIATION FORM)

In accordance with Subclause 2(a), all changes to the original specification, and resulting adjustments to the contract price, must be recorded in writing and signed by both parties.

ANNEX C (TARIFF RATES)

In accordance with the tendering process, contractors might be requested to quote costs for parts and labour where a fixed price has not been agreed or for possible additional works. The Tariff is designed to provide a basis for making comparisons and reducing the scope for disputes over the cost of additional works that might be commissioned during the repair process.