Explanatory notes

Format

Part I

• Variable information
• Annexes 1 and 2 - Important Note
• Conflict of conditions 

Part II

• Clause 1 - Scope of the contract
• Clause 2 - Delivery/re-delivery
• Clause 3 - Notices
• Clause 4 - Cancellation
• Clause 5 - Agents
• Clause 6 - Delivery/re-delivery certificate
• Clause 7 - Vessel’s condition
• Clause 8 - Vessel’s flag
• Clause 9 - Fuel
• Clause 10 - Speed
• Clause 11 - Charterer’s personnel
• Clause 12 - Master
• Clause 13 - Language
• Clause 14 - Communications
• Clause 15 - Commercial cargo
• Clause 16 - Charterers’ equipment
• Clause 17 - Remuneration
• Clause 18 - Deficiency
• Clause 19 - Death and personal injury
• Clause 20 - Ice
• Clause 21 - War Clause (CONWARTIME 1993)
• Clause 22 - Law and arbitration
• Clause 23 - Commission

 

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Format

The NAVEXCON Contract has been designed using the conventional BIMCO “box layout” format. The Contract is divided into two parts with Part I providing a means of entering the variable elements of the agreement such as names, dates and descriptions. Part II contains the standard terms, conditions and other clauses of the contract with the intention that these are left unaltered by the parties - unless they specifically wish to alter the careful balance of provisions.

Part I

Variable information

This Part has been structured to enable information to be entered easily by typewriter or electronic means. For convenience, each box contains a brief description of the particular item and a reference to the relevant clause or clauses found in Part II of the Contract. 

Annexes 1 and 2 - Important Note

It is important to note that there are no pro-forma annexes included with NAVEXCON. This is because the nature of individual exercises and their respective equipment requirements are highly unlikely to be the same from one exercise to the next. Annexes 1 and 2 provide a description of the exercise and a list of equipment required by the charterers and should be individually drafted by the parties to suit each exercise.

Conflict of conditions

To avoid any conflict of conditions that might arise owing to discrepancies between the contents of the Annexes and Parts I and II of the Contract, a statement in the first Part clarifies the prevailing order of conditions. Should a conflict arise then the provisions of Part I, including the Annexes and any additionally agreed clauses, shall prevail over the provisions of Part II - but only to the extent of the conflict in terms of establishing the primacy of contractual provisions.

Part II

Standard terms, conditions and other clauses

Clause 1 - Scope of the contract

This clause provides a basic outline of the agreement with reference to the nature of the exercise (as detailed in Annex 1), the remuneration payable, and the duration of the agreement.

Clause 2 - Delivery/re-delivery

Should a vessel fail to turn up on the specific date and time of delivery then charterers, as sole remedy, have the option to cancel the ship. In reality, a ship is unlikely to be cancelled for late arrival because of the near impossibility of the charterers being able to find a replacement vessel at short notice. The most likely scenario is the shortening of the exercise by the navy in order to accommodate the late arriving vessel. Due to the detailed planning involved in such exercises and the ongoing commitments of naval personnel, exercises are rarely extended beyond the agreed re-delivery date. Late arriving vessels, vessels that do not turn up at all, or vessels that fail to perform as per the contract, are generally blacklisted by navies and excluded from participation in future exercises.

The Contract is based on UTC (Universal Time Co-ordinated). UTC is the inter-nationally recognised standard of time keeping and is the time reference used by all modern navigational equipment such as GPS (Global Positioning System). UTC differs from GMT in being based on the output of a precision caesium clock rather than the less accurate astronomical observations based on the local time at Greenwich, England, of the latter method. For the purposes of this Contract, UTC and GMT can be considered to be equivalent.

Clause 3 - Notices

This clause is self-explanatory.

Clause 4 - Cancellation

See comment under Clause 2, paragraph one.

Clause 5 - Agents

It must be emphasised that if for any reason the owners need to appoint agents, then payment of the agents is for the owners account. Where the owners have appointed their own agents, they should, when giving their seven days notice, provide the charterers with the name and full-style address of their agents.

Clause 6 - Delivery/re-delivery certificate

There is no requirement on delivery or re-delivery for either party to conduct a survey as part of the on-hire/off-hire procedure. The time entered on the joint on/off-hire certificates is intended to be the actual date and time of delivery/re-delivery as distinguished from the date and time stipulated in the contract.

As part of the on-hire certification process the Master is required to supply the Charterers’ Representative with an up-to-date copy of the crew list and also a list of any hazardous cargo onboard. Participation in military navigational exercises of this type is not generally precluded by the carriage of hazardous cargo, but it is essential that the charterers are fully advised of the nature, quantity and location of such material.

Clause 7 - Vessel’s condition

This clause provides that the vessel should be in a seaworthy condition and that she should be suitably equipped for the intended voyage. It should be noted that the term “suitably equipped” does not extend to the  specialist communication equipment that the Charterers’ Representatives may bring aboard themselves and which may be of a classified nature.

Because of the practical difficulty of anticipating the expected delivery draft of the vessel some time in advance of the performance of the Contract, Clause 7 provides that the charterers must stipulate, at the time of fixing, the maximum permissible draft for the exercise.

Clause 8 - Vessel’s flag

This clause is self-explanatory.

Clause 9 - Fuel

Many navies require that merchant vessels should be able to operate at slow manoeuvring speeds, often requiring higher grades of fuel, for extensive periods during navigational exercises. It is essential that the owners, as the party responsible for providing fuel, are fully aware that the vessel should be delivered with the necessary grades and quantities of fuel to perform the exercise at the speed (or speeds) required by the charterers.

Clause 10 - Speed

In contrast to usual contractual speed/performance provisions, Clause 10 does not reference the Beaufort Wind Scale as a means of establishing wave height and wind speed. The reason that the Beaufort Wind Scale is not referred to in NAVEXCON is that most navies consider the method of establishing wind speed by observation of the sea’s appearance to be of questionable accuracy. 

To ensure a consistent approach to defining the maximum parameters within which the vessel is expected to perform, but also to allow the parties to vary the figures by agreement for each contract, the specific maximum wave height and wind speed is to be entered in Box 13 of Part I.

The second paragraph of Clause 10 refers to the term “weather permitting”.  Although this may  appear at first reading to conflict with the owners warranty given in the first paragraph, the use of the term “weather permitting” in this context encompasses weather conditions other than the prevailing wind speed and wave height, such as dense fog, that might affect the performance of the vessel.

Clause 11 - Charterer’s personnel

The owners are obliged to accommodate and feed, at their own expense, the number of charterers’ personnel as agreed and stated in Box 15. The personnel will have boarded the vessel at the outset of the exercise and will generally remain on board for the duration of the exercise.  It should be noted that the term “accommodation” is used as being inclusive of berth and messing space.

The reference to the owners providing space for the charterers’ navigation, communication and administration purposes should not be construed as indicating that space separate from and additional to other ship’s functions need be provided.  The intention of this part of Clause 11 is only to ensure that the charterers’ personnel have at least “elbow room” within the normal navigation and communication working spaces of the ship during the exercise.

Clause 12 - Master

The Master’s and owner’s responsibilities are dealt with in Clause 12. Although the charterers will issue instructions on the conduct of the exercise, this is not to be construed as a demise of the vessel to the charterers.  It cannot be over-emphasised that, at all times, the Master remains responsible for the safety of the vessel, the crew and for any cargo carried. The role of the Charterer’s Representative in the navigation of the vessel can be likened to that of a pilot.

Clause 13 - Language

This clause is self-explanatory.

Clause 14 - Communications

This clause covers the use of the owner’s communication equipment by the charterers’ personnel and the appropriate allocation of communication expenses during the performance of the Contract.  With the exception of calls made via land-lines (e.g., from ship to shore and then via a public telephone network system), all communication expenses are for the owner’s account.

Clause 15 - Commercial cargo

This clause deals with the carriage of commercial cargo during the performance of the Contract.  Sub-clause 15(1) categorically states that the charterers cannot load commercial cargo (i.e. freight earning) on board the vessel. However, provision is made in Sub-clause 15(2) to permit the owners to sail with cargo on board under the express condition that such cargo is carried solely at the owners risk and responsibility. No liability for damage or loss to cargo carried is to be attached to the charterers. Further-more, the owners are required to ensure that the cargo owners and their underwriters agree to the deviation to undertake the exercise. It should be noted that although the charterers do not require details of the nature or description of the cargo to be disclosed (unless a hazardous cargo is being carried), the owners must advise the quantity of cargo carried. Hazardous cargo may be carried only with the express prior approval of the charterers and must be identified in accordance with the provisions of Clause 6(b).

Clause 16 - Charterers’ equipment

In order to cater for the fact that a wide variety of vessel-types are likely to employed using NAVEXCON, Clause 16 provides that the charterers may only load equipment on board where there is suitable space available.

It may prove impractical, on occasion, for the charterers to remove their equipment at the end of the exercise when the vessel is redelivered. Consequently, Clause 16 provides for such equipment to remain in the custody, but not the responsibility, of the Master, until such times as a mutually convenient dropping-off point is reached. 

Clause 17 - Remuneration

Undoubtedly one of the most important clauses of the Contract, Clause 17 details the extent of the elements covered by the lump sum remuneration.

It should be noted that the remuneration covers all expenses incurred whatsoever and is not limited to only crew costs, agency fees, fuel, insurance, port expenses, additional accommodation and victualling for charterers’ personnel.

The second paragraph of Clause 17 provides a mechanism for pro-rata compensation if the vessel is delayed beyond its re-delivery date, other than by delays due to the under-performance of the ship.

If the vessel is delayed less than 12 hours after the re-delivery date, then no compensation is due from charterers.

However, should the delay extend beyond 12 hours, then the owners will be entitled to compensation for the entire excess period (i.e. including the first 12 hours) based on a pro-rata of the original lump sum remuneration.

Clause 18 - Deficiency

Should a deficiency arise that hinders or prevents the use of the vessel or causes her to be no longer fit for the contracted voyage, then the charterers have the sole remedy of terminating the agreement.

It should be noted that termination by the charterers is not an obligation on their part, merely an option which they may choose to exercise. In the event that the charterers terminate the Contract, remuneration will be paid to the owners only for that part of the contracted voyage that has been completed. The charterers are obliged to provide reasons in writing to the owners for the termination of the Contract.

Clause 19 - Death and personal injury

This clause was devised to provide a “knock-for-knock” mechanism whereby each party to the Contract accepts full responsibility and liability for the death or personal injury of its own personnel.

The clause has been reviewed by a number of P&I Clubs from the International Group and they have confirmed that the wording is suitable for this type of contract and will not affect the owners’ P&I cover.

Clause 20 - Ice

This clause is self-explanatory.  

Clause 21 - War Clause (CONWARTIME 1993)

This is BIMCO’s Standard War Clause with all references to “Charter Party” amended to read “Contract”.

Clause 22 - Law and arbitration

NAVEXCON incorporates the 1998 revision of BIMCO’s Standard Law & Arbitration Clause to provide parties with the flexibility of a choice of law and place of arbitration to suit their needs. 

In keeping with earlier versions of the BIMCO Standard Law & Arbitration Clause, the clause has been designed for use with the BIMCO box layout format. Parties must select their agreed choice of law and place of arbitration by filling in Box 19 with the appropriate details. Should the parties omit to fill in Box 19, or complete it inappropriately, then the clause provides that English law and London arbitration will automatically apply by default.

Clause 23 - Commission

This clause is self-explanatory.

Copyright
Copyright in the NAVEXCON Standard Naval Exercise Contract is held by BIMCO.

(Printed in BIMCO Bulletin No. 4, 1998)