A significant change arises from the case of the “Triton Lark”¹ where the court considered the construction of CONWARTIME (on which the Piracy Clause is modelled) in relation to measuring the risk of attack by pirates. The court placed considerable emphasis on the meaning of “may be” and “are likely to be” for determining the existence of risk and when owners have the right to refuse to proceed. In order to remove potential uncertainty, the test in CONWARTIME 2013 for determining whether to proceed has been amended and is now based on whether an area is dangerous. The level of danger is likely to be high but a stated reference point removes the need for complex analysis of degree of risk and whether or not it is more or less likely to occur. The same approach has been taken in the Piracy Clause for Time Charters where sub-clause (a) has been adjusted accordingly.

Sub-clause (c) sets out owners’ liberties to take appropriate precautions when a vessel proceeds to or through an area exposed to piracy risks. In sub-paragraph (i), covering on-board and navigational preventative measures, express reference has been made to the embarkation/disembarkation of security personal and equipment.

Reference in the 2009 edition of the Piracy Clause to owners’ rights to comply with war risk underwriters’ “orders, directions or recommendations” is not strictly correct. Insurers have no authority to give orders or instructions about routeing or navigation. Insurers might, however, require an assured to comply with reporting arrangements such as UKMTO or follow Best Management Practices. This is now reflected in revised text (sub-clause (c)(ii)) which provides that owners have liberty to comply with requirements “under the terms of the Vessel’s insurance(s)”.

The provisions in sub-clause (d)(iii) for taking out insurance cover are now more clearly stated. Charterers are liable for any additional premium (i.e. beyond owners’ normal war risk insurance cover) imposed by underwriters as a result of the vessel navigating in an area of enhanced risk. Charterers are also liable for the cost of any additional insurances required by owners with the stated, but non-exhaustive, illustrative examples of War Loss of Hire and/or maritime Kidnap and Ransom (K&R) cover.

Sub-clause (f) deals with seizure of a vessel by pirates and the position on subsequent release. The 90 day cap on charterers’ exposure to hire during captivity is maintained - although this does not affect charterers’ other contractual obligations which remain in place no matter how long the period of detention. The cap represents a sharing of risk but it is a starting point and parties are free to negotiate a figure which meets their specific needs. In any event, the capping of hire payments should be viewed together with owners’ option in sub-clause (d)(iii) to take out War Loss of Hire cover with the costs payable by charterers.

A vessel on release is likely to require repairs to make good damage and deterioration arising from the period of detention. However, the 2009 Clause does not deal with this and, in the absence of clear wording to the contrary, any time used for refurbishment could be expected to be an off-hire event. This has now been addressed with the inclusion of an express provision in subclause (f) holding charterers liable for hire, or if after redelivery the equivalent of charter party hire, for any time lost for repairs.

¹ Pacific Basin Ihx Ltd v Bulkhandling Handymax AS (The Triton Lark) (2012)

BIMCO Piracy Clause for Consecutive Voyage Charter Parties and COAs 2013

Adjustments have been made in line with the changes noted in relation to the Piracy Clause for Time Charter Parties. In particular, sub-clause (a) has been amended to reflect the danger-based test for determining whether or not to proceed to or through an area exposed to piracy risks; subclause (b)(i) now makes reference to the embarkation/disembarkation of security personnel and equipment; and in sub-clause (b)(ii) the current reference to following underwriters’ orders is replaced by owners’ liberty to comply with the “terms of the Vessel’s insurance(s)”.

The basis of charterers’ obligation in sub-clause (c)(iii) to reimburse owners half the cost of any additional premiums or additional insurance cover is maintained. However, the provision has been amended to reflect the principles set out in the time charter version with illustrative examples of the type of cover which owners may wish to take out. 

A technical adjustment has been made to the requirement in sub-clause (e) to incorporate the Clause into any bill of lading. The obligation has been broadened to include “waybills or documents evidencing contracts of carriage”, collectively described as “Contracts of Carriage”.

BIMCO Piracy Clause for Single Voyage Charter Parties 2013

In line with the position set out above, sub-clause (a) has been adjusted to reflect the test for determining the risk of piracy; sub-clause (b)(i) now includes reference to the embarkation/disembarkation of security personnel and equipment; sub-clause (b)(ii) sets out owners’ liberty to comply with the terms of the vessel’s insurance; and the incorporation provision in sub-clause (e) has been amended to include waybills and other documents. As this is a voyage charter party clause, the costs of preventative measures and additional insurances are owners’ responsibility and are not therefore addressed.

Originally published in BIMCO Special Circular No. 7, 19 July 2013 - Revised Piracy Clauses.