Explanatory notes

Part I 

Part I I

• Clause 1 - Definition 
• Clause 2 - The Services
• Clause 3 - Company Representative 
• Clause 4 - Change of Method of Work and/or Personnel, Craft and Equipment
• Clause 5 - Miscellaneous
• Clause 6 - Permits
• Clause 7 - Termination
• Clause 8 - Delivery
• Clause 9 - Price and Conditions of Payment
• Clause 10 - Time of Payment and Interest
• Clause 11 - Extra Costs 
• Clause 12 - Security
• Clause 13 - Liabilities
• Clause 14 - Himalaya Clause
• Clause 15 - Lien
• Clause 16 - Time for Suit
• Clause 17 - Governing Law and Arbitration 

 

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It should be noted that the nature of WRECKFIXED 99 as a Fixed Price - “No Cure, No Pay” Agreement means that there is no provision for weather delays, or other delay payments and that all Extra Costs are for the account of the Contractor.

Part I

The layout and structure of WRECKFIXED 99 follows closely that of WRECKSTAGE 99. It should be noted that Box 10 (Payments) is a much simplified version of the equivalent box in WRECKSTAGE 99as it deals only with a single lump sum payment.

Because of the payment structure in WRECKFIXED 99, there are no equivalent boxes to WRECKSTAGE 99 Box 13 (Delay Payment Rate), Box 14 (Security Requirements), and Box 16 (Number of Unworkable Days).

Part II

There are 17 clauses, all of which are derived from the original WRECKCON Agreement, but which have been specifically tailored to cater for the fixed price, “no cure, no pay” nature of WRECKFIXED 99.

The line numbering adopted in this article relates to the new WRECKFIXED 99 Agreement, unless otherwise stated.

Clause 1 - Definition

No reference is made to Mobilisation Costs since the “fixed price” is intended to be all inclusive. It should be noted that, in order to give the Agreement as wide an application as possible, the term “Vessel” not only includes the ship, but also cargo, containers, stores and bunkers.

Clause 2 - The Services

This clause deals with the obligations on the Contractor in rendering the services set out in Part I, Box 7, as well as the provision of personnel, craft and equipment, the method of work, and any change in the method of work, or provision of personnel, craft and equipment.

Line 12 of this clause establishes the nature of the Agreement and expressly states that the “services shall be rendered under the principle of no cure, no pay”.

Clause 3 - Company Representative

This clause provides for a representative of the Company to be available during the services, with full authority to act on behalf of the Company. It also deals with the provision of information required by the Contractor and for the attendance of sufficient officers, or equivalents, who are fully conversant with the layout of the Vessel and its cargo system. The wording of this clause makes it clear that the primary role of the ship’s officers, or equivalents, is to provide advice and not assistance to the Contractor.

Clause 4 - Change of Method of Work and/or Personnel, Craft and Equipment

This clause deals with the circumstances under which the Contractor may seek a variation to the “lump sum” price.

Clause 5 - Miscellaneous

This clause deals with matters such as the marking of the Vessel; use of the Vessel’s machinery and equipment; removal or jettison of parts of the Vessel and/or its cargo, and provision of plans and manifests.

The original WRECKCON sub-clause 5.4 providing indemnity for the removal, disposal or jettison of property has not been included in WRECKFIXED 99, as it is considered that the “hold harmless” provisions of sub-clause 13.2.2 adequately deal with this matter.

Clause 6 - Permits

This clause deals with the need to obtain licences, approvals, authorisations and permits. In practice this clause has frequently caused problems in WRECKHIRE and WRECKCON as the Clubs have always been of the opinion that the Contractor should arrange all permits, licences, etc., necessary for his operations.

The Clubs wanted to reverse the obligation in the new and revised Agreements by placing the burden on the Contractor to obtain any Permits, etc. However, the agreed wording of WRECKFIXED 99 leaves it to the parties to decide this matter on a case by case basis by nominating, in Box 9, the party who will be responsible for obtaining permits, licences, etc.

Clause 7 - Termination

This clause sets out the circumstances under which the Agreement may be terminated by the Company, prior to mobilisation, or by the Contractor if the services become technically or physically impossible to perform.

In particular, the clause has been drafted to reflect the fixed price, “no cure, no pay” nature of the Agreement.

Clause 8 - Delivery

This clause is concerned with delivery of the Vessel on completion of the services. Sub-clause 8.1 has been amended to differentiate between delays on re-delivery caused by the Company as distinct from delays occasioned by the actions of governments or authorities.

It will be seen at lines 126 - 130 of WRECKFIXED 99 that it is for the Contractor to satisfy himself that his operations will not be subject to governmental control or interference, and this will clearly impose an additional burden upon the Contractor.

In sub-clause 8.2 there is provision for delivery by the Contractor at an alternative place, if the nominated place becomes impossible or unsafe to enter, and the Company is unable to nominate another place. However such delivery is subject to approval by governmental or other authorities.

Sub-clause 8.3 provides for delivery under control of pumps, generators, compressors, etc. and payment for same. The consequences of a failure by the Company to take delivery, and the right of the Contractor to sell the property in such a situation are dealt with under sub-clause 8.4. Finally, sub-clause 8.5 explains that references to the “Vessel” includes parts of the Vessel and/or its cargo and that delivery of such may take place at different times and at different places.

Clause 9 - Price and Conditions of Payment

This clause is fundamental to the proper working of WRECKFIXED 99 and deals with the price for the services, referred to as the “lump sum” (sub-clause 9.1); provides for payment to be made to the Contractor without deduction (sub-clause 9.2); deals with the agreed currency and bank account details for payment (sub-clause 9.3); and gives a right of termination in the event that payment is not made in accordance with the terms of the Agreement, or if security is not provided in accordance with the provisions of Clause 12 (sub-clause 9.4).

Clause 10 - Time of Payment and Interest

Clause 10 enables the Contractor to charge the Company interest at the rate stated in Box 12 in the event that payment is not made in accordance with the terms of the Agreement.

Clause 11 - Extra Costs

It should be noted that under this Agreement, all such costs are for the account of the Contractor.

Clause 12 - Security

The Security Clause of WRECKFIXED 99 requires the Company to provide an irrevocable and unconditional security, which can be in a form and amount as agreed between the parties. Unlike WRECKCON and “Wreck-hire”, the security need not be in the form of a bank guarantee. The Company is required to provide satisfactory security to cover monies due to the Contractor. The Contractor may also commence operations without the provision of initial security, but can request it to be provided at a later stage.

Clause 13 - Liabilities

This clause has proved particularly troublesome throughout the history of the original WRECKCON.

The clause establishes the position between the parties with regard to liability for their own personnel, craft and equipment. The Clubs raised objections to the wording of the WRECKCON Liabilities Clause, in particular to the indemnities in respect of wreck removal or third party claims. The Clubs reasoned that third party claims should be covered by the common law of negligence for which a Contractor can obtain suitable insurance cover, the cost of which will form part of his lump sum price, and that the party liable to remove a subsequent wreck should meet such claims through his own P&I Club cover, or other liability insurance. The result of the discussions with the Clubs is a new and much shorter clause which deals only with loss or damage to property of the Contractor/ Company.

It should also be noted that sub-clause 13.2.1includes the words “excluding portable salvage equipment, materials or stores which are reasonably sacrificed during the disposal or other operations on the Vessel”.

The P&I Clubs have expressed somewhat mixed views regarding this provision. They consider that a “Fixed Price” should be mean a fixed price, but they recognise that problems regarding the deliberate sacrifice of equipment might occur. They are unwilling to agree to a change which imposes a definite liability on the owner for such losses in this version, but the current wording does leave the door open for negotiation.

It is important to note that if it becomes apparent that the Vessel may have to be, for example, sunk with portable salvage equipment remaining on board, and this situation was not originally anticipated, then the details and costs of such equipment should be drawn to the attention of the Company at the earliest opportunity.

In addition, the Clubs requested that WRECKFIXED 99 should not have an equivalent provision to WRECKCON sub-clause 14.4, as it could be used to argue that if the Contractor is liable to a third party and is unable to limit his liability, then the Company should indemnify the Contractor for any excess liability. This could, potentially, result in the Company accepting liabilities in excess of his own limit of liability.

Clause 14 - Himalaya Clause

This standard clause is common to all three Wreck Removal Agreements and has been slightly amended (lines 256-257) from the version currently found in WRECKCON in order to clarify the position if the Company is the demise of bareboat charterer of the Vessel.

Clause 15 - Lien

The Lien Clause provides that the Contractor has a possessory lien on the Vessel for any amounts due to him under the Agreement.

Clause 16 - Time for Suit

Clause 16 deals with the period within which a claim, arising under WRECKFIXED 99 may be brought by either party.

The wording of the clause has been slightly amended from that found in the WRECKCON Agreement in that a claim must be brought either within 12 months of completion or termination of the services, or within 12 months of notification of a claim by a third party, but any suit must be brought within one year of the notification to the party against whom the claim is made.

Clause 17 - Governing Law and Arbitration

The Governing Law and Arbitration Clause is common to WRECKFIXED 99, WRECKSTAGE 99 and WRECKHIRE 99. The clause is largely unchanged from the wording used in WRECKCON and WRECKHIRE, other than reference is now made to the Arbitration Act 1996 and LOF 1995. Although BIMCO normally endeavours to have its Standard Law and Arbitration Clause incorporated into approved forms, the specialised nature of the WRECKFIXED 99 Agreement makes it more sensible to provide for arbitration in London before a member of the existing Panel of Lloyd’s Arbitrators, who are experts in this field.

However, Clause 17 follows the traditional pattern of the BIMCO Law and Arbitration Clause in providing parties with the option to agree to a different jurisdiction and place of arbitration. In addition, should the parties fail to indicate their preference for a particular alternative jurisdiction and place of arbitration then, by default, the dispute will be referred to London arbitration subject to English law.

Copyright
Copyright in WRECKFIXED 99 is held jointly by the ISU and BIMCO.  

(Printed in BIMCO Bulletin No. 6, 1999)