Explanatory notes

The following notes provide a background to the thinking behind many of the provisions of the charter party and are provided as guiding notes to users:

• Format
• Clause 1 (Definitions)
• Clause 2 (Voyage)
• Clause 3 (Deviation and Delays)
• Clause 4 (Barge Engineer)
• Clause 5 (Loading and Discharging)
• Clause 6 (Permits/Licences)
• Clause 7 (Taxes) 
• Clause 8 (Quarantine)
• Clause 9 (Commencement of Loading/Cancelling)
• Clause 10 (Notices to the Charterers)
• Clause 11 (Marine Warranty Surveyor(s)/Approval of the Vessels and Condition of the Cargo)
• Clause 12 (Freight)
• Clause 13 (Free Time/Delay Payment)
• Clause 14 (Canal Transit)
• Clause 15 (Bunker Escalation)
• Clause 16 (Ice)
• Clause 17 (Dangerous Cargo)
• Clause 18 (Lien)
• Clause 19 (Substitution)
• Clause 20 (Termination)
• Clause 21 (Liability and Indemnity)
• Clause 22 (Bills of Lading, Cargo Notes and Receipts)
• Clause 23 (Insurance)
• Clause 24 (Himalaya Clause)
• Clause 25 (Both-to-Blame Collision Clause)
• Clause 26 (General Average and New Jason Clause)
• Clause 27 (War Risks – VOYWAR 2004)
• Clause 28 (Interests)
• Clause 29 (Agency)
• Clause 30 (Brokerage)
• Clause 31 (BIMCO Dispute Resolution Clause)
• Clause 32 (BIMCO ISPS/MTSA Clause for Voyage Charter Parties)
• Clause 33 (BIMCO Notices Clause)

Format

PROJECTCON is divided into two parts – Part I is a box layout form following the well-known BIMCO style. The box form provides a “summary” of the key variable information of the charter party – such as the names and contact details of the parties, agreed rates, and tug/barge and cargo details. Part II of the form contains the main terms and conditions. Where appropriate the boxes in Part I are cross-referenced to the relevant clauses in Part II and vice versa.

Additional clauses covering special provisions, if necessary and agreed for a particular contract, may be added as a Rider to the contract and the clauses should be referred to in Box 29 in Part I. It should be noted that the incorporation of additional clauses, as with amendments to the standard text, may alter the balance of responsibilities and liabilities between the parties in the pre-printed form and, potentially, prejudice P&I cover.

Clause 1 (Definitions)

This Clause contains a list of defined terms commonly used in the charter party.

It should be noted that the term “Vessels” is used collectively to cover both the tug and the barge. In addition, your attention is drawn to the definition of “Transportation” which does not include mobilisation/demobilisation elements. This is because these are considered as items built into the freight rate. The risk of delay in connection with mobilisation and demobilisation rests with the owners under PROJECTCON and such risk is intended to be reflected in the agreed freight.

Clause 2 (Voyage)

Clause 2(a) sets the scope of the voyage. The provision does not allow the vessels to lie “safely aground” – only “safely afloat”. This is because the nature of the trade would require the preparation of the bed for the barge to sit aground. Consequently, if a situation arises where the parties want the barge to be able to sit safely aground they must provide for this separately in a rider clause.

It is important to note that in Clause 2(b) the owners are to exercise due diligence in making the vessels seaworthy before and at arrival at the loading port, but not at the commencement of the laden voyage (which would be the usual assumption under a conventional voyage charter party).

The special nature of the trade means that there are circumstances where the barge, after arrival at the loading port, is not in a seaworthy condition due to the loading operations. This applies not only to submersible barges when submerged but also to ballastable barges. In the latter case a ballastable barge may be trimmed excessively or ballasted below her marks to accommodate the requirements of the loading operation.

In addition the owners may not necessarily be required to be in attendance during loading operations as the tug is not involved in this part of the procedure. However, after arrival at the loading port, the barge must be “towworthy”, the responsibility of which rests with the party responsible for loading the cargo onto the barge - usually the charterers.

While the owners may not be able to guarantee the seaworthiness of the barge, they will still be in breach of contract if the lack of seaworthiness of either the tug or barge results in the owners not being able to fulfil their contractual obligations. As in TOWCON, the owners are only obliged to exercise due diligence to tender the tug at the place of departure in a seaworthy condition; but the tugowner gives no warranties, express or implied, beyond this point.

Clause 3 (Deviation and Delays)

Clause 3(a) provides the normal liberty to deviate on the basis that the deviation must be reasonable.

Clause 3(b) takes account of the situation where the tug master decides to deviate for the purpose of the safety of the cargo, in which case additional compensation can be claimed from the charterers. The owners are obliged to inform the charterers promptly of any delay or deviation. Any claim for additional compensation must be supported by appropriate documentation. This is done to protect the charterers against potential abuse by an owner who could reduce speed to save bunkers and still be compensated for the delay caused.

Finally, Clause 3(c) deals with delays beyond the owners’ control for which the charterers must pay compensation to the owners. However, such delays do not cover delays caused by the late or non-arrival of the tug for whatever reason.

Clause 4 (Barge Engineer)

This Clause has been inserted to deal explicitly with liability for ballasting the barge and the use of barge engineers. The Clause permits the charterers to use barge machinery and ballasting equipment provided they do so using a fully qualified barge engineer provided by the owners.

Clause 5 (Loading and Discharging)

In the tug and barge trade it is common practice that loading and discharging operations are carried out by and are the responsibility of the charterers. The only requirement that the owners have is to present the tug and barge load-ready at the nominated place. Clause 5 reflects this practice; Clause 5(a) requires the charterers to have the cargo ready by the agreed delivery date and Clause 5(b) requires the owners to present the barge in load-ready condition with relevant certificates, class and equipment.

Clause 5(c) puts an obligation on the charterers to place the cargo on board the barge and position it to the full satisfaction of the owners and the Marine Warranty Surveyor. Furthermore, Clause 5(c) provides the procedures to be followed in case the parties have agreed to load the cargo by means of the “float-on” method.

Clauses 5(d) and (e) are the equivalent provisions concerning the discharging operations and, again, it is important to note that the operations must be done to the full satisfaction of the Marine Warranty Surveyor.

Finally, Clause 5(f) sets out clearly that all charges, dues, expenses, and the cost for loading, seafastening, release, discharging and “clean off” are for the charterers’ account.

It is important to note that Clause 5 must be read in conjunction with Clause 9 (Commencement of Loading/Cancelling) which regulates the owners’ obligation to present the vessels to the charterers.

Clause 6 (Permits/Licences)

This clause requires the charterers to arrange at their cost all necessary permits and licences relating to the Transportation, as required, and also deals with the loss of time if there is a delay in providing such permits/licences. The owners are obliged to assist the charterers in obtaining licenses and permits if so required by the charterers.

Clause 7 (Taxes)

Clause 7 provides a balanced approach to the issue of taxes. A Box-reference is included in the clause whereby the owners are responsible for the taxes stated in the relevant box in Part I and the charterers are responsible for all other taxes. If the box in Part I is left blank the charterers are responsible for all taxes. This approach has been taken so that the tax burden is clear from the outset.

Clause 8 (Quarantine)

This clause is a standard provision and stipulates how time lost as a result of quarantine formalities and/or health restrictions is to be dealt with between the parties.

Clause 9 (Commencement of Loading/Cancelling)

Whereas the term “Vessels” is used throughout the form, it will be noted that it is only the “barge” that is mentioned in this clause. This is so because there is no particular requirement for the tug to be delivered before the commencement of loading of the barge (see comments on Clause 2 (Voyage)).

It is common practice for tug and barge charters to be entered into well in advance of the charter period and actual dates being known. The parties, therefore, typically agree on an Initial Delivery Period (the so-called "delivery window" referred to in Clause 9(a)) with an option for the charterers to specify subsequently their firm requirements. In order to match the charterers' requirements for a wide initial period with the owners' need to ensure that the barge is efficiently utilised, Clause 9(b) provides a built-in mechanism for narrowing down the period within which the barge is eventually to be placed at the Charterers' disposal.

Non-delivery of a barge by the owners, or even a small delay, may have serious consequences for the charterers, not least when they are engaged in large construction projects in the offshore industry. However, it appears to be common practice in the industry to contractually limit the owners' liability towards the charterers in the event of non-fulfilment of their obligations to deliver the barge which results in claims made against the charterers by third parties.

Therefore, contrary to what is normally found in BIMCO standard documents, this Clause effectively limits the owners' liability in the event they fail to deliver the barge as agreed.

A distinction has been made between claims for damages caused by late delivery of the barge and those caused by non-delivery resulting in subsequent cancellation of the charter. Accordingly, Clause 9(c) provides that late delivery entitles the charterers to an agreed daily compensation capped at no more than the number of days stated in Box 14. Such compensation is deemed liquidated damages for the purposes of this charter and is the charterers’ sole remedy for late delivery.

In the event of non-delivery of the barge within the number of days stipulated in Box 14, Clause 9(d) provides that the charterers shall have the option of cancelling the charter party.

An “interpellation” provision in Clause 9(e) sets out that if the owners are unable to meet the cancelling date they are to give the charterers notice as soon as possible of the revised readiness date and request confirmation from the charterers as to whether they intend to cancel the charter. If the charterers do not react within 48 hours of receipt of the notice, the notified new readiness date becomes the new cancelling date. It should be realised that the procedure in Clause 9(e) are also be helpful to the charterers because it may allow them to re-arrange their loading schedules.

In case the charterers choose to cancel the charter party according to Clause 9(d), Clause 9(f) exonerates the owners from responsibility for any loss or damages incurred by the charterers.

Clause 9(g) gives the owners the right to cancel the charter party if the cargo, for reasons beyond their control, is not loaded within fourteen days from tendering notice of readiness.

Clause 10 (Notices to the Charterers)

Clause 10(a) sets out the procedures for tendering notice of readiness. Notices can be given at any time of day or night. If the vessel is discharging offshore the tug will take instructions from the offshore installation as to how close the tug should approach. Once that point has been reached the tug will tender NOR. Similarly in the case of ports it is not always considered prudent to have a tug and barge anchored amongst other ships in the waiting area or steaming close to the port entrance. In such circumstances it is the practice in the trade to tender NOR at a time when the vessel would have arrived at the customary waiting area.

Clause 10(b) stipulates that the owners must keep the charterers duly advised of the expected time of arrival of the barge at the loading port and Clause 10(c) requires the owners to keep the charterers advised on a daily basis of the estimated time of arrival at the discharging port.

Clause 11 (Marine Warranty Surveyor(s)/Approval of the Vessels and Condition of the Cargo)

A careful study of this clause is strongly recommended as the Marine Warranty Surveyor(s)’ role is of great importance in the tug and barge trade.

Clause 11(a) takes into account that it is invariably the charterers who appoint the surveyor. However, the appointment is made subject to the owners’ approval which is not to be unreasonably withheld.

Clause 11(b) provides that the marine warranty surveyor is to approve the suitability of the vessels for the transportation. In the event that approval is not given by the agreed date, either party has the right to terminate the charter party.

Clauses 11(c) and (d) emphasise that the marine warranty surveyor is a servant of the charterers and that the charterers are to arrange and pay for all the marine warranty surveyors’ services.

Finally, the provisions of Clause 11(e) provide for charterers to warrant that the full description of the cargo (as per Box 5) is correct. If the cargo does not comply with the description then the owners have the option to terminate the charter party.

Clause 12 (Freight)

Clause 12 provides that freight must be paid in instalments according to an agreed payment schedule (as stated in Box 17). The freight payment provisions further stipulate that freight is fully and irrevocably earned when due and is non-returnable whether cargo or vessels are lost or not lost.

Clause 13 (Free Time/Delay Payment)

In most other trades the recognised term for expressing time allowed for loading and discharging is “laytime”. In the tug and barge trade, however, the term “free time” is more commonly used, so it has been adopted in PROJECTCON. In addition, the term “delay payment” is used in place of the traditional shipping term “demurrage”.

According to Clause 13(a), “free time” starts counting as soon as notice of readiness has been tendered, unless loading/discharging has commenced earlier. Furthermore, the provisions stipulate that any time lost in waiting for a berth counts as “free time” or “time on delay”, whereas time used for the actual loading and discharge operations in connection with float-on/float-off method will not count subject to certain exceptions.
“Free time” also includes the removal of seafastenings and lashings and the cleaning of the deck to ensure that the barge is in all respects ready for sea.

Clause 13(b) states that the Delay rate, referred to in Box 20, will be calculated per day or pro rate for part of a day.

According to Clause 13(c), time lost on account of other reasons, such as strike or lockout of master, officers or crew, or breakdown of the vessels or of the owners’ equipment, will not count.

Clause 14 (Canal Transit)

This clause gives clear rules as to time counting, tolls, etc. if the transportation is scheduled to pass through a canal. Clause 14(b) also regulates the situation of an increase of canal tolls in excess of the amount indicated in Box 21; whereas Clause 14(c) contains provisions to cover the situation where a canal transit becomes impossible for reasons beyond the owners’ control.

Clause 15 (Bunker Escalation)

This clause has been drafted on the basis that it works both ways depending on whether the price per ton for bunker oil stated in Box 22 goes up or down.

Clause 16 (Ice)

This clause is identical to the BIMCO General Ice Clause for Voyage Charter Parties with the exception of a few amendments needed to reflect the specific characteristics of the PROJECTCON Charter, such as “Vessels” being used in plural and the fact that bills of lading are not be issued under PROJECTCON. The BIMCO General Ice Clause for Voyage Charter Parties was adopted by the Documentary Committee in November 2004.

Clause 17 (Dangerous Cargo)

This clause covers various contingencies if part of the cargo is of a dangerous nature.

Clause 18 (Lien)

The wording of this Clause is identical to HEAVYCON Clause 18 (Lien) and reflects current commercial practice.

Clause 19 (Substitution)

This Clause provides the owners with the opportunity to substitute the vessels with other similar vessels if such substitution has been approved by the charterers in advance and given that the substituting vessels have been approved by the Marine Warranty Surveyor.

Clause 20 (Termination)

Whether the charterers have the right to terminate the contract is subject to negotiation in each particular case and, depending on such negotiations, Box 23 may or may not be filled in.  If not filled in, Clause 20 does not apply.

As freight is usually paid according to a schedule as the job progresses and as some of it may even be paid during the ballast voyage, the termination fee payable by the charterers must be paid in full without deduction of any pre-paid freight. The termination fee is meant to compensate the owners for the loss of earning opportunities as they are unlikely to be able to find any immediate new business if terminated (due to the long term planning involved in this trade). If the termination fee was calculated less any earned freight, the owners would be hit twice: firstly from the loss of business and secondly from not being compensated for the work already undertaken.

Clause 21 (Liability and Indemnity)

The provisions contained in Clause 21 take care of the allocation of liabilities as between owners and charterers.

Clause 21(a) contains an owners’ group and charterers’ group structure. This has been done to help make the clause easier to read and understand.

Clauses 21(b) and (c) set out owners’ liability and charterers’ liability in a knock-for-knock liability regime (based on similar provisions found in SUPPLYTIME 89 and the new SUPPLYTIME 2005). This means that each party pays the claims of its own group following an accident. The principle applies irrespective of blame and seeks to save time and expense in connection with casualties.

Clause 21(d) concerns performance claims under the charter party and a mutual obligation for each party to defend the other if a claim for which the other party is liable is claimed from the non-liable party. The obligation is extended both to claims under knock-for-knock and performance claims under the charter party.

Clause 22 (Bills of Lading, Cargo Notes and Receipts)

In the tug and barge sector it is common for the cargoes being carried to belong to the charterers and it is rarely the case that third party cargoes are carried. As a result, bills of lading or cargo receipts are rarely issued and Clause 22(a) reflects this practice. Should a cargo note or receipt be issued at the request of charterers then Clause 22(c) provides for the terms and conditions and dispute resolution clause of PROJECTCON to prevail in the event of a conflict of conditions.

Clause 23 (Insurance)

Closely related to the matters covered by Clause 21 (Liability and Indemnity) are the provisions concerning insurance. The clause is derived from HEAVYCON Clause 22 (Insurance) with the addition of a qualifying statement to avoid potential problems with “mis-directed arrow” on co-insurance.

Clause 24 (Himalaya Clause)

This clause is for the protection of all servants and agents of the owners and/or charterers (including independent contractors and sub-contractors) participating in the performance of the transportation and is not limited to stevedores.  It is designed to afford such servants or agents at least the same protection as the owners and/or charterers have under the charter party or by any applicable statute, rule or regulation.

Clause 25 (Both-to-Blame Collision Clause)

Although this standard clause rarely comes in to play its incorporation into charter parties is required under the Club rules of P&I Clubs in the International Group of P&I Clubs. Consequently, the clause is included in PROJECTCON.

Clause 26 (General Average and New Jason Clause)

This is a standard clause which forms part of many standard charter parties. As will be seen, in accordance with other General Average Clauses, General Average is to be adjusted in London and in accordance with York-Antwerp Rules 1994, unless otherwise agreed. Although a new set of York-Antwerp Rules were published in 2004, BIMCO’s Documentary Committee feels that the new rules are less favourable to owners and that, as a result, all new and revised charter parties should maintain the reference to the York-Antwerp Rules 1994. For further information please refer to BIMCO Special Circular No. 2, 24 February 2005.

Clause 27 (War Risks – VOYWAR 2004)

This is BIMCO’s VOYWAR 2004, adopted by the Documentary Committee in November 2004. The clause makes reference, inter alia, to acts of terrorism.

Clause 28 (Interests)

This Clause provides a mechanism for interest to be paid on amounts due which are outstanding.

Clause 29 (Agency)

This Clause requires the owners to use for the vessels agents appointed and paid for by the charterers at both the loading and discharging ports.

Clause 30 (Brokerage)

The stipulation in the second paragraph of this Clause covers the brokers against loss of brokerage in the event of breach of contract by either of the parties.

Clause 31 (BIMCO Dispute Resolution Clause)

This clause is the latest edition of BIMCO’s standard suite of dispute resolution provisions. In addition to BIMCO’s Law and Arbitration Clause 1998, the provision incorporates a mediation clause. The mediation provision is designed to function in conjunction with the chosen arbitration option, whether that is English law, London arbitration; US law, New York arbitration; or law and arbitration as agreed. Mediation is a technique that is recognised as offering savings in costs and time over traditional methods of dispute resolution for certain types of disputes. BIMCO’s mediation provision is only triggered once arbitration proceedings have commenced and then runs in parallel with those proceedings, if the parties so choose. This has been done to ensure that one party cannot invoke mediation as a delaying tactic. It also provides for the parties to mediate on all or just some of the issues being arbitrated.

Clause 32 (BIMCO ISPS/MTSA Clause for Voyage Charter Parties)

This clause is the BIMCO ISPS/MTSA Clause for Voyage Charter Parties 2005, adopted by the Documentary Committee in May 2005.

Clause 33 (BIMCO Notices Clause)

This is a standard BIMCO clause dealing with the methods to be used for writing and sending notices. It should be noted that the Clause permits the use of e-mail as an acceptable method of written communication for the purposes of giving notices under the charter party.