New contracts and clauses announced for ship sales, security escorts, EEXI transition and Force Majeure

Published: 01 December 2021

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SHIPSALE 22 – Ship Sale and Purchase Agreement

For the first time BIMCO has produced its own ship sale and purchase agreement. The new standard MOA takes a fresh and innovative approach to the sale and purchase contractual procedure and follows more closely the chronology of events that play out in practice. The agreement is split into three distinct parts – the first is a box layout containing and summarising all the key variable information as a ready-reference. The second part contains the terms and conditions of the agreement set out in plain English in an easy to follow structure. The third part contains several annexes dealing with issues such as the documents to be exchanged on delivery.

Francis Sarre of CMB, Belgium, who headed the drafting team said "The BIMCO SHIPSALE 22 form will be a breath of fresh air for sale and purchase transactions. Whilst being a new modern form it will still contain the necessary familiarity for users involved in the buying and selling of vessels.

SHIPSALE 22 will be published together with guidance notes in January 2022. A marketing campaign will take place throughout 2022 in Europe, Asia and the US to introduce the new MOA to the industry.

SEV-GUARDCON – Security Escort Vessel Contract

Against a backdrop of heightened tension in the Gulf of Guinea following recent piracy incidents, BIMCO has developed a standard contract for the hire of security escort vessels to accompany merchant ships in high risk areas. SEV-GUARDCON is an agreement to provide to shipowners and operators with specified security escort services by competent and appropriately insured private maritime security companies (PMSCs). The contract is based on the well-known GUARDCON form and maintains the same minimum insurance requirements for PMSCs. BIMCO has worked closely with owners and operators, PMSCs, P&I clubs, marine insurers and legal experts to produce a contract that fairly represents the interests of the parties and establishes a benchmark for standards when contracting for escort services.

SEV-GUARDCON will be published together with guidance notes in early January.

EEXI Transition Clause

At the very top of BIMCO’s agenda is the development of “carbon clauses” dealing with issues such as EEXI, CII and emission trading systems. The first of these clauses to be approved for publication is the EEXI Transition Clause for Time Charter Parties. The Clause focuses on the likely most common form of engine modification that the industry will use for EEXI compliance – engine power limitation (EPL) or shaft power limitation (SHAPOLI) – but leaves the door open for owners and operators who may wish to modify the ship using other energy saving measures. As the industry moves closer towards the coming into force of the new MARPOL emission reduction regulations, the Clause reflects the need for owners and charterers to take a more collaborative and cooperative approach to meet emission targets. With EEXI compliance the owners and charterers should work together to arrange and implement any modifications without impacting the ship’s service. Information sharing is critical during this process so that charterers are fully aware of the affect of the modifications on the ship’s maximum speed and related consumption while owners are kept advised of the ship’s intended employment for planning purposes. The cost of modifications and any loss of time to the ship are the owners’ responsibility.

The EEXI Transition Clause will be published in early December together with guidance notes.

Force Majeure Clause

With an increasing focus on force majeure driven largely by COVID-19, BIMCO has developed a free-standing “model” force majeure clause that can be adapted for use in a variety of contracts.

Successfully invoking “force majeure” under a charter party or other contract depends on many factors. One essential element for contracts governed by English law is that the agreement must contain a clause that defines what constitutes a “force majeure” event and sets out the circumstances under which the clause can be invoked to excuse liability for non-performance. Although several BIMCO standard contracts such as SUPPLYTIME 2017 and NEWBUILDCON contain tailor made force majeure provisions, the new BIMCO Force Majeure Clause is designed to be incorporated into contracts that are silent on this issue. The new clause is based on the International Chamber of Commerce’s Force Majeure Clause 2020 but adapted to suit the needs of the shipping industry. An important feature of the BIMCO FM Clause is that parties need to adapt it to the context of the contract they are using it for – a force majeure clause in a voyage charter party needs to provide for different consequences than in a ship sale and purchase contract due to the nature of these contracts. Guidance notes will help parties identify amendments and addition to the clause to suit their particular contracts – especially in cases where cargo may be involved.

The Force Majeure Clause will be published together with guidance notes in the second half of December.

 

See the list of upcoming changes and additions to BIMCO contracts and clauses