Explanatory notes

The BIMCO CONWARTIME and VOYWAR War Risks Clauses, respectively for time and voyage charter parties, were last revised in 2004. However, as a result of views recently expressed by the courts, changes in trading practices during the intervening years and insurers’ response to user demands for specialist cover, a review has been undertaken to determine the basis and extent of changes required to ensure that the provisions remain in line with commercial needs. As a result, the Clauses have been updated and will be incorporated into all new and revised BIMCO charter parties and other documents.

BIMCO recommends that members using standard charter parties or other contracts with the existing 2004 edition (or earlier) of the War Risks Clauses replace these versions with the new 2013 edition.

The revision was conducted in parallel with a review of the BIMCO Piracy Clauses to ensure consistency between provisions common to both sets of Clauses. 

The following is a summary of the main changes.

CONWARTIME 2013 War Risks Clause for Time Charter Parties

A significant change arises from the case of the “Triton Lark”¹ and the construction of CONWARTIME 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 the risk of attack by pirates and when owners have the right to refuse to proceed. In order to remove potential uncertainty, the test 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. Sub-clauses (a) and (b) have been amended to reflect the position. 

The opportunity has also been taken to clarify the mechanism triggering the Clause. It had been understood that CONWARTIME took effect if the identified risks arose after a charter party had been concluded and had not, therefore, been contemplated by the parties. This contrasts with the Piracy Clause for Time Charters (and the parallel provision for Consecutive Voyage Charter Parties and COAs) which expressly applies whether or not the risk in question was known at the time of fixing. However, it was held in the recent case of the “Paiwan Wisdom”² that CONWARTIME did not contain a requirement that a war risk must have escalated since the date of the charter party.

In order to avoid any doubt about the position and remove the inconsistency with the Piracy Clause (given that CONWARTIME also covers piracy risks), an amendment to sub-clause (b) now provides that the Clause applies “whether such [war] risk existed at the time of entering into this charter party or occurred thereafter”.

The definition of “Piracy” (sub-clause (a)(ii)) has been aligned with the provision in the Piracy Clause to include acts of “violent robbery and/or capture/seizure”. Attacks of this type often occur in territorial waters and, while not technically piracy under international law, are treated as such for insurance purposes.

In line with the approach in the Piracy Clause, sub-clause (b) no longer requires charterers to obtain owners’ written consent before ordering the vessel to proceed to or through a war risk area. It is understood that consent is rarely requested in practice. Nevertheless, owners ultimately retain the right to refuse to navigate in an area of danger.

The insurance provisions (sub-clause (d)) have been 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 which, where CONWARTIME is used for piracy risks, is likely to include War Loss of Hire and/or maritime Kidnap and Ransom (K&R) cover.

Reference in the current 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 (g)(ii)) which provides that owners have liberty to comply with requirements “under the terms of the Vessel’s insurance(s)”.

Procedures to be followed in the event that owners invoke their rights to discharge cargo other than at the contractual destination are set out at sub-clause (h). A new final sentence makes clear that charterers are liable for any resulting costs, risk and expenses.

New sub-clause (i) is the standard provision requiring charterers to indemnify owners against any third party claims under bills of lading or other contracts of carriage.

The opportunity has also been taken to streamline the content and layout. A number of words and phrases have therefore been replaced or standardised so as to improve or clarify the text.

¹ Pacific Basin Ihx Ltd v Bulkhandling Handymax AS (The Triton Lark) (2012)
² Taokas Navigation SA v Komrowski Bulk Shipping KG (GMBH & Co) (The Paiwan Wisdom)(2012)

Originally published in BIMCO Special Circular No. 5, 16 July 2013 - Revised War Risks Clauses for Time and Voyage Charter Parties