What’s on the agenda at the upcoming BIMCO Documentary Committee meeting

Published: 05 October 2023

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BIMCO’S documentary work will primarily be focused within three main pillars in the coming two years:  

• decarbonisation 
• future fuels 
• offshore energy.  

As part of this, the development of a CII Clause for Voyage Charter Parties and an ETS Allowance Clause for SHIPMAN have been prioritised. 

CII Clause for Voyage Charter Parties 

The industry is getting more familiar with CII and what it means to individual companies and their fleets. 

The CII Clause for Voyage Charter Parties up for adoption at the meeting is modelled on BIMCO’s Slow Steaming Clause for Voyage Charter Parties published in 2012 and the basic premise of the clause is that the owners Master are entitled to adjust course and/or to reduce the speed of the vessel in order to reduce the carbon intensity of the vessel. 

Ship Sales Further Trading Clause (formerly On-Trading Clause for MOAs) 

This clause is a standalone clause which can be negotiated and included in SHIPSALE 22 or other standard MOAs. Agreeing to this clause means that the buyers of the vessel will commit themselves to continue to trade the vessel for a period to be specified.  

ETS Allowances (ETSA) Clause for SHIPMAN 

The purpose of the clause is to allocate responsibilities and liabilities between owners and managers for complying with applicable emission schemes. This includes the provision and reporting of emission data as well as the purchase, transfer and surrender of emission allowances for ships operating under an emissions scheme such as the EU ETS. 

On 1 January 2024, the EU’s Emission Trading System (EU ETS) will be extended to cover CO2 emissions from all large ships (5,000 GT and above) entering EU ports, regardless of the flag they fly. It covers ships engaged in voyages between two EU ports as well as voyages between the EU and a third country. 

The EU ETS will apply to the “shipping company” which is the shipowner or any other organisation or person, such as the manager or the bareboat charterer, who has assumed the responsibility for the operation of the ship including duties and responsibilities imposed by the ISM Code. 

The European Commission is in the process of adopting an Implementing Regulation which provides an interpretation of the notion of “shipping company”. BIMCO has developed an Emission Trading Scheme Allowances (ETSA) Clause for use with ship management agreements. The clause has been developed for use with any applicable emission scheme and is not limited to the EU ETS, to ensure that it can be used with any future schemes that may be developed in future.  

Quiet Enjoyment Letters 

Letters of Quiet Enjoyment are well-known documents used in ship financing transactions. The subcommittee decided to draft a set of two documents letters: 

1. a standard letter of quiet enjoyment signed by the mortgagee, acknowledged by the mortgagor, and agreed by the charterer who, in consideration of the mortgagee’s grant of quiet enjoyment, will give a number of undertakings to the mortgagee 
2. a “short form” unilateral letter of quiet enjoyment signed only by the mortgagee.  

The drafts have been distributed to a sounding board of approximately 75 stakeholders. The Quiet Enjoyment Letters fit into the existing suite of BIMCO’s term sheets for ship financing and leasing. 

SYNACOMEX

The SYNACOMEX charter party now includes BIMCO’s anti-corruption clause and updated versions of the war risks and sanctions clauses. SYNACOMEX is not a BIMCO contract but has been developed by joint copyright holders SYNACOMEX and Armateurs de France (respectively the French Union for Grains and Seeds Trade and the French Shipowners’ Association). It is widely used by grain traders in areas including the Baltics, the East Coast of South America and the Black Sea. As this is not a BIMCO contract, the Documentary Committee will consider the approval of the SYNACOMEX charter party.  

WRECKSTAGE

The subcommittee chaired by Richard Janssen of Smit Salvage has finalised WRECKSTAGE and agreed that it is now ready for adoption. Both the International Salvage Union (ISU) and the International Group of P&I Clubs have been represented in the drafting committee.  

One of the new features of the revised WRECKSTAGE is an optional “Risk Allocation Procedure” that sets out the parties’ obligation to agree on the allocation of risk at the beginning of the agreement. A risk allocation matrix is set out in a new Annex V. All costs related to the risks accepted by the contractor form part of the lump sum with no additional remuneration.  

After the finalisation and adoption of WRECKSTAGE, BIMCO will continue work on the two other wreck removal agreements, WRECKHIRE and WRECKFIXED, and revise them to include logical amendments following from the updated version of WRECKSTAGE.  

Finally. BIMCO is in the process of improving its processes for the documentary work to continue to match the need to create contractual standards for the industry in a timely manner. In addition to the large number of items up for adoption, the Documentary Committee will also review several projects, including an annex to SUPPLYTIME for dynamic positioning, revised War Risk Clauses, ASBATANKVOY and a ETS Allowance Clause for Voyage Charter Parties.