Explanatory notes

The following Explanatory Notes are intended to highlight some of the key issues and provisions of BIMCHEMTIME 2005 and to provide background information in respect of the thinking behind some of the clauses.

Layout

Commercial provisions

• Preamble and Clause 1 (Charter Period)
• Clause 2 (Port or Place and Date of Delivery)
• Clause 3 (Cancelling)
• Clause 4 (Port or Place of Redelivery)
• Clause 5 (Bunkers on Delivery/Redelivery)
• Clause 6 (Trading Area)
• Clause 7 (Hire)

Owners’ Rights and Obligations

• Clause 8 (Owners to Provide)
• Clause 9 (BIMCO Vetting and Inspection Clause for Chemical Tankers)
• Clause 10 (Employment)
• Clause 11 (Bills of Lading or Waybills and Indemnity)
• Clause 12 (Cargo Temperature)
• Clause 13 (Performance of the Vessel)
• Clause 14 (Tank Cleaning and Sweeping)
• Clause 15 (Compliance with Regulations)
• Clause 16 (Drug and Alcohol Policy)
• Clause 17 (Cargo Segregation)
• Clause 18 (Employment of Pilots and Tugboats, etc.)
• Clause 19 (Drydocking)
• Clause 20 (Change of Class, Flag and Management)
• Clause 21 (Insurances)
• Clause 22 (AIS)
• Clause 23 (ISGOTT/ICS Tanker Safety Guide (Chemicals))
• Clause 24 (Incident Reporting)
• Clause 25 (Communications Costs)
• Clause 26 (Lien)
• Clause 27 (Representation)
• Clause 28 (Stowaways)
• Clause 29 (Oil Pollution Prevention)
• Clause 30 (Financial Responsibility for Pollution)

Charterers’ Rights and Obligations

• Clause 31 (Charterers to Provide)
• Clause 32 (US Trade Additional Premiums)
• Clause 33 (Vessel’s Condition on Redelivery)
• Clause 34 (Ship to Ship Transfer)
• Clause 35 (Technical Requirements)
• Clause 36 (Off-Hire)
• Clause 37 (Lay Up)
• Clause 38 (Loss of Vessel)
• Clause 39 (Sublet)
• Clause 40 (Charterers’ Representative On Board)
• Clause 41 (Advances)
• Clause 42 (E-mail Communication and Software Programs)
• Clause 43 (Painting of Funnel Mark/House Flag)

Special Provisions

• Clause 44 (Salvage)
• Clause 45 (Exceptions)
• Clause 46 (War Risks)
• Clause 47 (BIMCO General Ice Clause for Time Charter Parties)
• Clause 48 (Protective Clauses)
• Clause 49 (Demise)
• Clause 50 (BIMCO ISPS/MTSA Clause for Time Charter Parties)
• Clause 51 (BIMCO Bunker Fuel Sulphur Content Clause for Time Charter Parties 2005)
• Clause 52 (War Cancellation)
• Clause 53 (Claims Time Bar)
• Clause 54 (Requisition)
• Clause 55 (Confidentiality)
• Clause 56 (Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006))
• Clause 57 (Liability)
• Clause 58 (General Average)
• Clause 59 (BIMCO Dispute Resolution Clause)
• Clause 60 (BIMCO Notices Clause)

Annexes

• Annex A - Protective Clauses
• Annex B - Technical Form

 

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Layout

The charter party consists of a single part containing all the terms and conditions of the contract plus two annexes. Unlike most other BIMCO charter parties, BIMCHEMTIME 2005 does not use the trademark box layout system but requires the parties to enter the variable information of the form into the appropriate blank spaces in the terms and conditions. The non-box layout format has been adopted at the request of the sub-committee who felt that this style would be more acceptable to the trade. BIMCHEMTIME 2005 has been organized into four main sections and contains an index of clauses for easy reference. The four sections are as follows:

• Commercial Provisions
• Owners’ Rights and Obligations
• Charterers’ Rights and Obligations
• Special Provisions

Annex A contains protective clauses for incorporation into contracts of carriage issued under the charter party. Annex B is a Technical Form containing a detailed description of the vessel.

Commercial provisions

Preamble and Clause 1 (Charter Period)

The preamble sets out the date of the agreement and the basic details of the two parties and the vessel. The Charter Period provision provides for the parties to enter the duration of the time charter party and any optional periods or tolerances.

Clause 2 (Port or Place and Date of Delivery)

If a range of ports or places for delivery has been agreed it is in the owners’ option to nominate the actual port or place by giving an agreed advance notice to the charterers.

The clause also provides for the owners’ obligation to give advance notice stating the expected and later the definite date of delivery.

Clause 3 (Cancelling)

Sub-clause (a) contains the usual provision stating that should the vessel at the end of the cancelling date not be presented for delivery and comply with the criteria for delivery (see Clause 13 (Performance of the Vessel)) the charterers have the option to cancel the charter party within 24 hours following the expiry of the cancelling date.

The well-known interpellation provisions are found in Sub-clause (b) providing for the owners, in the event of the late running of the vessel, to notify the charterers requesting them to declare if they intend to invoke their option to cancel the charter party or agree to a new cancelling date should it be obvious that the vessel, despite the exercise of due diligence by the owners, will not be able to reach the place of delivery by the canceling date.

Clause 4 (Port or Place of Redelivery)

The actual place of redelivery is in the charterers’ option and the owners are to be advised by proper notice at an agreed number of days in advance of the estimated and subsequent definite place and date of delivery.

If the vessel suffers a delay and the last voyage is prolonged beyond the redelivery date for reasons beyond charterers’ control (and which could not be reasonably calculated) the charterers are to have the full use of the vessel on the last voyage at the agreed contract rate of hire until redelivery is made.

Clause 5 (Bunkers on Delivery/Redelivery)

To avoid disputes on bunker prices forming the basis for settlement the commonly used reference to “prevailing prices” has been substituted by a provision stating that payment of bunker quantities on board at delivery/redelivery are to be settled by the parties at the prices actually paid, supported by relevant invoices.

The amount of bunkers at delivery/redelivery has to be sufficient to enable the vessel to reach the nearest recognized bunkering port.

Clause 6 (Trading Area)

This Clause provides for worldwide trading always subject to countries and areas affected by UN embargoes. In addition space has been made for the parties to agree on any excepted areas/countries.

The reference to “Institute Warranties Limits” has been replaced by “International Navigating Limits” which, subject to owners’ prior consent may be breached against payment by charterers of any additional insurance incurred as a consequence.

In Sub-clause (d) the provisions reflect the terms commonly found in tanker time charter parties that clarifies that the charterers’ liability for loss or damage not caused by their failure to exercise due diligence does not constitute a breach of their warranty to provide safe ports or places.

Clause 7 (Hire)

The payment of hire on the due date is fundamental to all time charter parties. To avoid that errors and mistakes occurring in the payment process are not be unduly abused to invoke sanctions, Sub-clause (c) contains a so-called “anti-technicality” provision based on terms similar to those found in the BPTIME3 Tanker Time Charter Party.

Clause 7(c) requires the owners to notify the charterers in the event of a failure to pay hire in time requesting them to rectify such a default within an agreed number of days failing which the owners may either suspend performance or withdraw the vessel.

Should the owners elect to suspend performance and hire is still not received by the expiration of their notice they are obliged to give a further notice of 24 hours before they can invoke their right of withdrawal. This further notice has been introduced to reflect the fact that withdrawal of a vessel under a time charter party is a serious undertaking and that the owners should fully contemplate all the potential consequences before acting.

Suspension of performance will not be construed as a waiver by owners of their right to subsequently withdraw. This is important since under English law the owners may otherwise have no right to withdraw in respect of a continuing failure to pay hire or in case of subsequent late hire payments.

During any period of suspension the vessel remains on hire and the charterers are to indemnify the owners from liability of any or all of their obligations under bills of lading, waybills or any other contract of carriage.to

Owners’ Rights and Obligations

Clause 8 (Owners to Provide)

The opening words of this Clause provides for owners to hand over to the charterers the vessel’s Tank Coating and/or Stainless Resistance List which is to form part of the charter party.

The balance of the clause contains the usual provisions for the disbursement of expenses by the owners.

Clause 9 (BIMCO Vetting and Inspection Clause for Chemical Tankers)

This is a key clause in BIMCHEMTIME 2005 and therefore a more extensive explanatory note than normal is provided to give a better understanding of its provisions.

On a number of occasions the vetting clauses that appear in various chemical tanker charter parties have given rise to disputes. These disputes have been due primarily to a lack of clarity in the contractual language used to identify liability in the event of non-approval, failure of a vetting inspection and/or loss of an approval.

From a practical perspective the situation for owners is fraught with difficulty. Charterers expect that a vessel offered for time charter will have in place vetting approvals from all the various majors in order that they may trade the vessel. In fact, charterers are unable to offer a vessel to a major unless it has been vetted and approved, but a major will not inspect and/or vet a vessel unless it has a “commercial interest” in that vessel, i.e., it forms the basis for a contractual or potential contractual relationship with the charterers. This situation leaves the owners in a quandary as they are unable to comply with the requirements of the charter party without the direct co-operation of the majors to vet and approve the vessel.

The consequence of this situation is that adequate provisions need to be made in charter parties to establish clearly what the owners warrant by way of obtaining and/or maintaining approvals and what they will exercise due diligence to obtain and/or maintain. Liability in the event of non-compliance with vetting requirements also needs to be adequately addressed so that the vetting clause as a whole properly reflects the expected commercial outcome.

BIMCO’s Vetting and Inspection Clause for Chemical Tankers forms a cornerstone of the BIMCHEMTIME 2005 Time Charter Party and is a worthy attempt to deal in a reasonable way with a fundamentally unreasonable situation. The Vetting and Inspection Clause provides a significant improvement and a viable alternative to the vetting clauses in current use in the chemical sector.

The following notes are given as guidance on some of the thinking behind the Clause:

Sub-clause (a)
The opening words of the Clause establish the commercial importance of the charterers’ co-operation with the owners to assist in obtaining inspections by the major oil and chemical companies when so required. The use of the word “co-operation” is meant to convey the charterers’ active participation in the process.

As has been mentioned above, owners have often been caught in the difficult position of being obliged to obtain approvals from major oil and chemical companies to comply with the charter party, but the oil majors refusing to carry out an inspection because they have no commercial interest in the vessel. The link between the two parties in this respect is the charterer and the opening words emphasize the importance of collaborative effort. The scope of the Clause is limited to obligations which the owners can actually fulfil in today’s market.

The reference to annual inspection under the CDI scheme reflects measures that the owners are able to initiate themselves. In contrast, inspection under the SIRE scheme can only be initiated by the oil majors. It is important to note that the preamble of the Clause deals only with the obligation to have the vessel inspected - the obligations in respect of approvals/acceptances are dealt with in subsequent sub-clauses. It should also be noted that the reference to CDI is specific to the chemical industry - it is not BIMCO’s intention that this Clause should be used in any other trade as vetting requirements vary significantly from trade to trade.

The second paragraph of the Vetting Clause consists of three parts, (i), (ii) and (iii) relating to owners’ obligations under the Clause, covering all relevant scenarios. Parts (i) and (ii) are designed to be used by vessels presently trading. Part (iii) is to be used primarily for newbuildings, but also in connection with presently trading vessels entering into new trades. It should be noted that all three parts may not necessarily be filled in, but are offered as options to cover most scenarios.

Sub-clause (a)(i)
This Sub-clause contains the list of acceptances valid at the time of delivery of the vessel. It provides a strict obligation on the part of the owners that the vessel has been vetted and is “acceptable” to the named major oil and chemical companies. The use of the term “acceptable” instead of the more commonly found “approved” is deliberate. Following the Erika incident it transpired that the vessel was “approved” or “partly approved” by almost all the oil majors. During the drafting of the Vetting and Inspection Clause it was agreed that while that words “approved” and “approvals” were generally acknowledged to be the generic term used throughout the industry, a number of the oil majors had deliberately removed the word from their contracts because of fears of adverse legal connotations.

On a long term charter the owners cannot be expected to know whether the major oil and chemical companies will introduce other requirements, say 4 years from the delivery of the vessel, which would result in them revoking their acceptances for the vessel. For this reason the owners’ obligation to maintain throughout the period of the charter party the acceptances in place at the time of delivery is one of due diligence.

It should be noted that the phrase “is acceptable” has been used in place of the more common “shall be accepted”. This has been done to avert concerns that the latter phrase could turn the provision into a condition precedent. The provision also distinguishes between the two processes of vetting and acceptance; vetting always preceding acceptance.

Sub-clause (a)(ii)
Like Sub-clause (a)(i) this provision distinguishes between the two processes of vetting and acceptance. The Sub-clause is designed to reflect situations where a specific acceptance of a vessel has not been issued following an inspection and vetting, but where the owners firmly believe that if they were to seek formal acceptance for a particular voyage during the charter period, it would be given without any further need to inspect or vet the vessel. Such case-by-case acceptances are often given by companies following OCIMF guidelines whereby they reserve the right to “retract” the nominal acceptance.

The provision reflects the policies of some major oil and chemical companies that no longer issue what used to be termed “period approvals” but instead often advise the owners simply that “the vessel does not need to be inspected by us for the next 12 months”. While this is not a positive acceptance, the assumption is that the vessel has met the required standards of the major and, should the vessel be presented to that major by the charterer, it would be accepted.

The obligation on owners to maintain such “case-by-case” acceptances, as they are commonly known, is one of due diligence - again reflecting the commercial realities of what the owners can actually warrant in today’s market.

Sub-clause (a)(iii)
The intention behind this Sub-clause is to cover scenarios such as newbuildings and vessels currently trading entering new trades, which do not have acceptances in place at the time of delivery. The issue of newbuildings and vettings is problematic because of the practical difficulty of warranting that the vessel has the necessary acceptances in place when delivered.
It will generally not be possible to obtain vetting and acceptance for a newbuilding until the vessel is in service and inspectors are able to see cargo discharging operations in progress. If acceptances are made a strict obligation then owners would immediately be in breach of their obligation as soon as a newbuilding was delivered into the time charter. The obligation in Sub-clause (iii) is, therefore, to exercise due diligence to obtain the listed acceptances. In part (d) of the clause, the charterers are obliged to give the owners a “reasonable time” to arrange for the vetting and CDI inspection of the vessel, if she is a newbuilding delivered directly into the charter.

Consideration was given to the issue of a possible change of management during the charter period and the subsequent need to allow the owners reasonable time to have the vessel re-vetted and inspected. However, such a provision has not been included as it is unlikely in today’s market that any major charterer would accept a change of management.

Sub-clause (b)
This part of the Clause allocates the responsibility for arranging and the costs of inspections with the named oil and chemical companies to the owners. However, should the charterers require inspections by companies not named in the list (a)(i)-(iii), the costs associated with the inspections must be paid for by the charterers. This is felt to be a fair allocation of costs for inspection and vetting.

Sub-clause (c)
The third part of the Clause deals with CDI reports and the owners’ obligation enter the details of CDI inspection Report into the CDI’s database, thus making it available for review by the charterers’ clients. CDI inspections are initiated by the owners and, being a points-based inspection system, it is common practice for owners to add their own comments to the report. Such comments may refer to the renewal of a particular certificate since the inspection or the fact that a particular aspect of the inspection could not be achieved due to the nature of the particular cargo operation.

All comments on the CDI report must be filed promptly by the owners and uploaded to the CDI database with a notification to the charterers that the report and owners’ comments are available for their review.

Sub-clause (d)
Sub-clause (d) ties in with Sub-clause (a)(iii) where recognition is given to the situation where the vessel is a newbuilding at the time of delivery. The owners will not be in breach by delivering the vessel without acceptances and CDI inspection in these circumstances as the provision recognizes that inspections cannot take place until the vessel discharges her first cargo. However, once the vessel has reached her first discharge port then the owners must act with due despatch to obtain the necessary acceptances and CDI inspection.

Sub-clause (e)
The opening sentence of Sub-clause (e) echoes the sentiments of the preamble text in Sub-clause (a) which emphasizes the need for co-operation of the charterers in getting the vessel vetted. The use of the phrase “shall assist” places an obligation on the charterers to participate actively in the process. The very real likelihood of major oil and chemical companies declining to inspect the vessel claiming a “lack of commercial interest” or lack of an available inspector is dealt with in the second sentence. Where the owners have made diligent efforts to make their vessel available for inspection by an oil major, but have been rejected for the above reasons, then by virtue of this provision they will not be held liable and hire will not be reduced.

Sub-clause (f)
Sub-clause (f) provides that the vessel will remain on-hire while carrying out inspections. If the vessel fails an inspection, however, then the costs of re-inspection are to be met by the owners and the vessel will be off-hire for any time lost conducting re-inspections. This also applies to the vessel’s CDI score which, if it falls below the agreed minimum percentage, will result in the vessel going off-hire until the minimum CDI score is once again reached. It should be noted that it is possible for a vessel to have all the acceptances required but to have a CDI score that has fallen below the agreed level.

Sub-clause (g)
The sanctions placed on the vessel for failing to obtain/retain acceptances is addressed in the opening lines which acknowledge that the consequences of failure are notwithstanding the exercise of due diligence on the part of the owners, The sanctions, however, are limited to failure to obtain or retain acceptances by the companies listed in Sub-clauses (a) (i) through (iii) and not to unnamed companies.

Sub-clause (g) contains a provision for the parties to agree a daily reduction in hire for each non-acceptance until acceptance is achieved. Similarly, if the vessel’s CDI score falls below an agreed minimum then the reduction in hire will apply until the required score is achieved.

In order to avoid the owners being unduly penalised with a reduced hire over an extended period due to the charterers being unable to arrange an inspection, Sub-clause (g) introduces a capping mechanism where-by the owners can put the charterers on notice that the vessel is in all respects ready and eligible for re-inspection. Should the vessel not be re-inspected within 30 days of that notice the reduction in hire will cease.

To ensure that the owners are not caught in a position where it is not possible to retain an acceptance or where the owners prefer for pure economic reasons not to make the vessel “fit” for new acceptance requirements, Sub-clause (g)(ii) provides that the charterers shall have the option to cancel the charter party if the missing acceptance is not gained within the agreed time span and following a grace period within which the owners must rectify the situation.

From the charterers’ point of view, the provision also covers instances where a vessel might be barred permanently by a particular oil or chemical company - thus effectively making the vessel unusable for the intended trade.

Sub-clause (h)
Sub-clause (h) excludes from the provisions of Sub-clause (g) the consequences of non-acceptances due to repairs to the vessel following an accident.

Clause 10 (Employment)

The Employment Clause provides the usual time charter party obligation on the Master to employ the vessel in accordance with the orders of the charterers. The Clause also obliges the Master to allow the charterers to inspect all log books relating to the voyages under the time charter party including cargo handling, gas freeing and cargo changing operations.

Clause 11 (Bills of Lading or Waybills and Indemnity)

This Clause contains the usual provision for the Master to sign Bills of Lading or Waybills as presented but with the owners indemnified by the charterers against consequences or liabilities arising from any inconsistency between such documents and the charter party.

Although it is recognised that it has become common practice in the tanker trade to include provisions requiring the owners to deliver cargoes without presentation of original Bills of Lading against a Letter of Indemnity (LOI), BIMCHEMTIME 2005 contains no provision to that effect.

It is felt that it should be left to the owners themselves to decide on a case-by-case basis whether they are prepared to accept the commercial risk of delivery against an LOI without the Bill of Lading by satisfying themselves of the financial standing of the party offering the indemnity. This is consistent with BIMCO Policy on the issue of Letters of Indemnity.

Clause 12 (Cargo Temperature)

It is warranted by the owners that the vessel is capable of maintaining an agreed maximum cargo temperature and that the charterers warrant that cargo to be loaded will not exceed an agreed temperature.

The Clause also provides an indemnity from the charterers to protect the owners from responsibility for any loss of or damage to the cargo resulting from their compliance with the charterers’ heating instructions.

Clause 13 (Performance of the Vessel)

In addition to the usual owners’ obligations to exercise due diligence to deliver the vessel in a seaworthy condition in all respects and be in conformity with the description in the Technical Form attached to the charter party, Sub-clause (a)(ii) provides that the vessel is to be in every respect fit to carry the products listed in the Certificate of Fitness/Noxious Liquid Substances Certificate including any subsequent amendments to that list.

The owners’ obligation to maintain the vessel as described during the currency of the charter period is one of due diligence.

Sub-clause (c) deals with owners’ warranty regarding speed and consumption. The tanker sector has traditionally taken the approach to attempt to describe the underlying principles and spell out precisely how speed and bunker performance should be determined in any given event leading to an exhaustive list of possible events and combinations likely to affect the performance. There is little evidence to suggest that taking such a highly detailed and exhaustive approach actually leads to fewer disputes as actual events rarely match precisely those described in the Clause.

The Performance Clause in BIMCHEMTIME has therefore been drafted concisely following the same principles as found in BPTIME3 regulating the basic principles without detailing the techniques for calculating speed and bunker consumption.

The first part of Sub-clause (c) establishes the owners’ warranty that the vessel will remain capable throughout the currency of the charter period of the speeds and related bunker consumptions for propulsion as stated in the Technical Form under weather conditions up to and including Force 4 on the Beaufort Scale.

Should the vessel fail to maintain this warranted capability the charterers have the right to make deductions in hire for any time lost and any additional bunkers consumed.

The second part of the Sub-clause provides for speed and bunker calculations to be excluded from the performance review should the vessel, in accordance with charterers’ instructions, be lying idle off ports or places for more than 30 consecutive days within any 60-day period.

In such case the performance review is to be reinstated following the vessel’s next drydocking and bottom cleaning.

Sub-clause (d) provides for the vessel to be delivered with cargo tanks, pumps and pipes clean and gas-free and with last 3 cargoes consisting of clean, unleaded products “undarker” than 2.5 NPA and being ready to load water-white chemicals which is a known and acceptable standard of cleanliness in the chemical trade.

Clause 14 (Tank Cleaning and Sweeping)

Sub-clause (a) provides for the cleaning of cargo tanks to be performed in charterers’ time by the vessel’s crew, at any time day or night, but subject to the prevailing weather conditions and port regulations.

The Clause further provides for sufficient time for cleaning to be allowed to obtain the necessary cleanliness taking into account last cargo, regulatory requirements, industry standards and practices and/or cargo owners’ requirements for the cargo to be loaded all in accordance with the vessel’s cleaning capabilities as described in the Technical Form.

Cleaning is to be performed in compliance with the stainless steel/coating manufacturers’ resistance list.

In the event that after sufficient time has been used for cleaning purposes the vessel fails inspection the crew is required to resume cleaning and any time lost as a result of this additional cleaning will be for the owners’ account.

Material required for cleaning is to be supplied and paid for by the charterers and time and/or materials needed for passivation of stainless steel tanks after the carriage of Phosphoric-/Sulphuric Acid or similar cargoes is also to be for the charterers’ account and in their time.

In Sub-clause (b) a provision has been made that should last cargo require sweeping of the cargo tanks by the vessel’s crew a fee per tank is to be agreed for such work and be payable by the charterers directly to the Master.

Clause 15 (Compliance with Regulations)

As a prerequisite for the charterers’ free use of the vessel, Sub-clause (a) provides that the owners warrant that the vessel, both on delivery and throughout the currency of the charter party, is in possession of all valid documentation required within the defined trading area.

If the vessel at time of delivery is a newbuilding or for reasons of her previous trading all such documentation has not been obtained or renewed beforehand the owners are not to be considered in breach of the charter party but the vessel will be placed off-hire for the time required until the necessary documentation is in place.

The above warranty of compliance is extended in Sub-clause (b) to cover also continued compliance with regulatory bodies as far as practically possible provided, however, that such compliance does not require major structural alteration or addition to the vessel.

For long term charter periods it is virtually impossible for the parties to visualize possible new rules and regulations coming into force during the currency of the contract period. In Sub-clause (c) it has therefore been provided for the owners and the charterers to each have an option to arrange and pay for such alterations.

Should within a 60 day period neither party elect to undertake and pay for such structural alteration or addition to the vessel or should they fail to reach an agreement on a cost sharing basis then the charterers are within 7 days to declare if they will maintain or cancel the charter party. Such cancellation can, however, only take effect earliest 30 days prior to the new regulations coming into force.

In Sub-clause (d) the expression “major structural alteration or addition” has been explained to mean structural work or addition or replacement which is required by any regulatory body applicable to the vessel to be performed within any 12-month period and that the cost and loss of time for complying with such requirements exceed an agreed amount.

Clause 16 (Drug and Alcohol Policy)

The provisions of this Clause for the prevention of drug and alcohol abuse are identical to the terms generally accepted by the industry.

Clause 17 (Cargo Segregation)

In the Technical Form attached to the charter party the vessel’s cargo handling system is described in detail stating how many types and/or grades the vessel can carry with fully segregated tanks, pumps and pipes.

Should, however, a specific cargo composition as ordered by the charterers, make it necessary for the vessel to share any part of the cargo handling system, Clause 17 requires the Master to notify the charterers accordingly. Provided such notification is given the owners will not be held liable for any consequences arising from the sharing of the cargo handling system.

Clause 18 (Employment of Pilots and Tugboats, etc.)

The general time charter party principle is that the charterers are to provide and pay for pilots and tugs although they are in the service and under the instructions of the owners. This principle is reflected in Clause 18 which provides an indemnity from the owners to the charterers in respect of the employment of pilots and tugs.

Clause 19 (Drydocking)

Sub-clause (a) provides the owners’ right and obligation to drydock the vessel at intervals in accordance with class requirements.

Provided proper advance notice is given by the owners the charterers are to place the vessel at the owners’ disposal where suitable drydock accommodation is available, free of cargo and gas-free and where tank washings can be disposed of.

The vessel will be off-hire from arrival at the drydocking port or yard until she is again ready to resume service from that port or yard. Sub-clause (b) allows the owners to perform drydocking at an alternative port selected by them (a “special port”). In such case off-hire will include time lost and bunkers consumed during deviation calculated from her release by the charterers until she again presents for loading at her next loading port, less time and bunkers used on the notional passage from actual last discharging port till next actual loading port calculated at the guaranteed service speed and consumption.

Clause 20 (Change of Class, Flag and Management)

In this Clause owners undertake not to make any change of vessel’s classification society, flag, ownership, management or P&I Club without the charterers’ consent.

It is also provided that by giving such consent the charterers do not prejudice any of their rights under Clause 9 (Vetting and Inspection).

Clause 21 (Insurances)

Sub-clause (a) requires the vessel’s insured value for Hull, Machinery and basic War Risks to be inserted.

Sub-clause (b) provides for the owners to be covered for P&I risks and cover for standard oil pollution that is up to the level customarily offered by the International Group of P&I Clubs. The charterers are to arrange for cover of their liability risk with insurers approved by owners.

Clause 22 (AIS)

Clause 23 (ISGOTT/ICS Tanker Safety Guide (Chemicals))

Clause 24 (Incident Reporting)

These Clauses provide for the vessel to have on board an Automatic Identification System (AIS) and for the Master/owners to comply with guidelines as per ISGOTT/ICS Safety Guide and to adhere to incident reporting procedures as required by the charterers.

Clause 25 (Communications Costs)

This Clause simply provides for the vessel’s communication costs to the charterers’ offices and port agents to be paid for by the owners.

Clause 26 (Lien)

This Clause provides the owners with a contractual possessory lien for any amounts owed by the charterers.

Clause 27 (Representation)

Expenses associated with representation by the Master on the charterers’ behalf are covered by the provision of a lumpsum.

Clause 28 (Stowaways)

All costs and expenses incurred in connection with stowaways are for the owners’ account and the vessel will be off-hire for any time lost as a result of stowaways having gained access to the vessel.

Clause 29 (Oil Pollution Prevention)

This Clause is a standard P&I Club wording (the Post-TOVALOP Clause). The vessel is required to be a member of the International Tanker Owners’ Pollution Federation Limited (ITOPF) throughout the charter party period.

Otherwise this Clause contains the usual option for the charterers at their own risk, and subject to owners’ approval and applicable law, to participate in the prevention of or minimization of pollution damage.

Clause 30 (Financial Responsibility for Pollution)

This Clause is a standard P&I Club wording. The owners’ responsibility to establish and maintain certificates for financial security or responsibility for pollution has been provided for in Sub-clauses (a), (i) and (ii) i.e. CLC, OPA and US Coast Guard. The owners are not required to establish any further certificates in this connection.

Charterers’ Rights and Obligations

Clause 31 (Charterers to Provide)

Sub-clauses (a) - (e) provide for the usual expenses to be disbursed by the charterers under a time charter party including any material (referred to in Clause 14) required for cleaning/preparing the cargo tanks.

With particular reference to chemical products Sub-clause (f) stipulates that when cargoes are inhibited, due to the risk of their polymerization, the charterers are to furnish the Master with a Certificate of Inhibition with all relevant details. Such Certificate should usually specify:

• Name and amount of inhibitor added
• Date inhibitor was added and the duration of effectiveness.
• Any temperature limitations qualifying the inhibitor’s effective lifetime.
• The action to be taken should the length of the voyage exceed the effective lifetime of the inhibitor.

Sub-clause (g) states that any material required for cargo handling purposes including nitrogen blanket of the cargo beyond the vessel’s own production is to be supplied and paid for by the charterers.

As certain products, in accordance with MARPOL 73/78 Regulations, require pre-wash before the vessel can leave the discharge port, Sub-clause (h) states that reception facilities for such pre-wash are to be arranged and paid for by the charterers.

The same Sub-clause makes flexible hoses as on board available for free use by the charterers. However if the hoses need to be replaced due to excessive wear and tear, this is to be arranged and paid for by the charterers.

Clause 32 (US Trade Additional Premiums)

This Clause provides for additional premiums paid by the owners relating to oil pollution cover required by virtue of loading or discharging the vessel in the United States or US-controlled territories to be reimbursed by the charterers against proper evidence of payment. This provision is an established practice for time charter parties and is also found in BPTIME3.

Clause 33 (Vessel’s Condition on Redelivery)

Sub-clause (b) provides for the vessel’s cargo tanks on redelivery to be in the same condition as on delivery (see Clause 13(d)) i.e., clean and gas free with last 3 cargoes consisting of clean unleaded products (“un-darker” than 2.5 NPA) and ready for loading water-white chemicals.

Clause 34 (Ship to Ship Transfer)

The charterers have the right to perform Ship to Ship (STS) operations at safe and protected areas provided such operations are carried out in conformity with the OCIMF/ICS Guidelines and that the necessary fenders and hoses are supplied by the charterers. Any additional expenses including possible additional insurance premiums in connection with STS operations that the owners may pay are to be reimbursed by the charterers.

Clause 35 (Technical Requirements)

Sub-clause (a) provides for the trading of the vessel to be conducted in accordance with the technical characteristics described in the Technical Form and that the charterers are to provide the Master with proper cargo handling instructions for the treatment of the cargo.

In accordance with Sub-clause (b) the operation of the vessel is always be in compliance with the IMO International Bulk Chemical Code and the US Coast Guard Compatibility list. Similarly, the charterers are required to observe the provisions of the vessel’s Tank Coating and/or Stainless Steel Resistance List(s) which have been provided by the owners.

In sub-clauses (d) it should be noted that the parties must agree a maximum weight for the carriage of fresh water (for domestic purposes), lube oils and stores.

Clause 36 (Off-Hire)

This Clause contains the usual provisions for off-hire caused by loss of time through interruption/cessation in the vessel’s services. It should be observed that in Sub-clause (d) exception is made for “legal actions misdirected against the owners” where a claimant against the charterers might arrest/detain the vessel.

It is expressly provided that off-hire counts as part of the charter period.

Clause 37 (Lay Up)

The charterers are permitted under this Clause at any time and for any period during the currency of the charter party to order the vessel into lay-up at a safe berth or place. The owners are obliged in advance to provide the charterers with estimated economies in their operating costs as a consequence of such a lay-up.

The costs for preparing the vessel for lay-up and subsequent reactivation are for charterers’ account and should the period of lay-up exceed a number of days agreed by the parties and vessel’s bottom is fouled, then the owners’ speed and consumption warranty as provided for in Clause 13(c) will not apply until following the vessel’s next drydocking.

Clause 38 (Loss of Vessel)

This is a standard provision dealing with the termination of the charter party in the event of the vessel being lost or becoming a total constructive loss.

Clause 39 (Sublet)

The Clause while granting the charterers the right to sub-let all or part of the vessel, emphasises that the charterers’ obligations to the owners under the charter party are not in any way diminished by the exercise of such a sub-let of the vessel.

Clause 40 (Charterers’ Representative On Board)

The charterers have the right to place a representative on board who is permitted to travel with the vessel against payment of an agreed daily lumpsum to cover expenses.
The charterers’ representative is to be given full access to observe operations and examine records.

The representative is required to sign the owners’ usual indemnity form at the time of embarkation

Clause 41 (Advances)

This Clause establishes a commission payment of 1.5% on any money advanced to the Master or for payments made on the owners’ behalf.

Clause 42 (Email Communication and Software Programs)

The vessel is to be equipped with a system capable of communicating using e-mail with Internet or X400 format. The charterers may also install additional PC software on board as required, subject to the owners’ agreement.

Clause 43 (Painting of Funnel Mark/House Flag)

This is a standard time charter party wording providing the charterers with the right to fly their house flag and paint the funnel with house colours during the charter period provided that all such “customisation” is done, and latterly restored on redelivery, in the charterers’ time and at their expense.

Special Provisions

Clause 44 (Salvage)

This Clause provides for an equal division of costs incurred in saving or attempting to save life or property. Similarly, the proceeds from any salvage are to be divided equally subject to the prior deduction of the share allocated to the Master, officers and crew of the salving vessel.

Clause 45 (Exceptions)

This Clause provides the usual exception provisions in respect of responsibility for loss, damage, delay or failure in the performance of the charter party. In Sub-clause (a) it prevents the parties from raising any claims for damages against each other if the loss, damage, delay or failure in the performance results from any of the causes listed. In Sub-clause (b) relating to the owners’ exceptions, the provision follows the principles of the Hague-Visby Rules.

There are two important issues to be emphasised in connection with this Clause. Firstly, this Clause deals with all claims other than cargo claims, which are dealt with in Clause 48 (Protective Clauses). Secondly, the provisions of this Clause do not in any way affect the off-hire provisions of Clause 36 (Off-Hire).

Clause 46 (War Risks)

This Clause is BIMCO’s CONWARTIME 2004, which is generally acknowledged and used by the industry.

Clause 47 (BIMCO General Ice Clause for Time Charter Parties)

This Clause has recently been approved and published by BIMCO and provides a balanced clause affording sufficient protection for the owners and the vessel in cases of ice formation, while also maintaining the charterers’ free use and operation of the vessel worldwide under such circumstances.

When ice breaker assistance is available the approaches to a port cannot be considered as “ice bound” and in the opening words of Sub-clause (a) it provides that the vessel may follow ice-breakers’ cut subject, however, to the owners’ approval with due regard to the vessel’s size construction and class.

Sub-clause (b) deals with circumstances where the port or area is icebound or where navigational aids are or will be withdrawn or where in the Master’s sole discretion he considers it unsafe to enter or remain at the port of loading or discharging. In such case the charterers are obliged to give alternative instructions not jeopardizing the safety of the vessel.

In Sub-clauses (c) and (d) any delay caused by ice is not considered as off-hire and any additional insurance charged by vessel’s underwriters by reason of ice is to be reimbursed by charterers.

Clause 48 (Protective Clauses)

The Protective Clauses to be incorporated in all Bills of Lading and Waybills issued under the charter party are set out in Appendix “A” attached to the charter party. This Clause also provides that any cargo claim is to be subject to the BIMCO General Clause Paramount and that if no Bills of Lading or Waybills are issued then the Hague-Visby Rules and the SDR Protocol 1979 are to apply to such claims.

Clause 49 (Demise)

This is a usual time charter party provision stating that the contract is for the hire of the services of the vessel and is not a bareboat charter agreement.

Clause 50 (BIMCO ISPS/MTSA Clause for Time Charter Parties)

This clause is the BIMCO ISPS/MTSA Clause for Voyage Charter Parties 2005, adopted by the Documentary Committee in May 2005. The clause contains all requirements in relation to owners and charterers in respect of the ISPS Code (the International Code for the Security of Ships and Port Facilities and amendments to Chapter XI of SOLAS). Similarly, in case of trading to/from the USA, the owners are required to comply with the MTSA Act (US Maritime Transportation Security Act 2002).

Relevant certificates are to be made available and presented to the charterers upon request. Sub-clause (c) provides that delays, costs and expenses in relation to security measures required by the port(s) or relevant authorities are for the charterers’ account.

Clause 51 (BIMCO Bunker Fuel Sulphur Content Clause for Time Charter Parties 2005)

Following the implementation of Regulations 14 and 18 of MARPOL Annex VI BIMCO has published a clause in which charterers warrant to supply bunkers in conformity with these regulations as well as to comply with maximum sulphur content requirements of any emission control zone as stipulated in MARPOL, but also in zones regulated by regional and/or national authorities by e.g. the EU and the US Environmental Protection Agency.

Clause 52 (War Cancellation)

In addition to the right of cancellation in case of war between any two or more of the permanent members of the UN Security Council, space has been provided for the parties to agree to insert additional countries as may be agreed. It should be noted that cancellation of the charter party only takes effect once the vessel is free of cargo.

Clause 53 (Claims Time Bar)

The Claims Time Bar Clause provides for a 12 months time bar after redelivery on all claims or 6 years after the relevant incident, whichever occurs first.

Clause 54 (Requisition)

This Clause allows the parties to agree on a maximum number of days for the vessel to be under requisition after which either party can elect to cancel the charter party.

Clause 55 (Confidentiality)

This is a non-disclosure provision preventing either party from reporting the details of the contract without the express approval of the other party.

Clause 56 (Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006))

The owners warrant that they are participating in the STOPIA scheme and that the vessel is appropriately entered.

Clause 57 (Liability)

This provision confers on owners the benefit of limitations and exemptions extended in accordance with applicable statute or current rule of law.

Clause 58 (General Average)

This is a conventional time charter party General Average provision. If the parties fail to choose a place for general average to be adjusted and settled then London applies as default.

Clause 59 (BIMCO Dispute Resolution Clause)

This clause is the latest edition of BIMCO’s standard suite of dispute resolution provisions. The Clause is unchanged from the previous Law and Arbitration Clause 1998 with the exception of the incorporation of a mediation provision in Sub-clause (d). 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 and is a method that is gaining use in the shipping industry. 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 60 (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.

Annex A - Protective Clauses

This Annex contains five standard clauses that are to be incorporated into all contracts of carriage issued under BIMCHEMTIME 2005. The Clauses are the BIMCO General Clause Paramount; Both to Blame Collision Clause; General Average and New Jason Clause; War Risks Clause (VOYWAR 2004); and a Himalaya Clause.

Annex B - Technical Form

This Annex contains a technical form to be attached to the charter party giving a full and detailed description of the vessel.

Copyright
Copyright in the BIMCHEMTIME 2005 Time Charter Party is held by BIMCO.