Sea Traffic Management (STM) Clause for Voyage Charter Parties 2018

BIMCO Sea Traffic Management (STM) Clause for Voyage Charter Parties 2018

(a) The Owners and Charterers shall use their best endeavours to obtain and share information regarding the Vessel’s Arrival Time, this shall include, but not be limited to, information from, or required by, an applicable STM system. For the purpose of this Clause, “Arrival Time” means the time of arrival at the place advised by the STM system.

(b) Notwithstanding any other clause in this Charter Party, the Charterers shall be entitled to request the Owners in writing to adjust the Vessel’s speed to meet the Arrival Time, always subject to the Owners’ consent which shall not be unreasonably withheld and, in the case of an approach voyage, subject to agreeing an amended cancelling date. The Charterers shall not be entitled to request an adjustment of speed that exceeds the Vessel’s speed as set out in the Charter Party.

(c) Any extra time used on a sea voyage as a direct consequence of the Vessel adjusting speed pursuant to the Charterers’ request shall be compensated by the Charterers to the Owners at a rate equal to ___ % of the demurrage rate (if left blank then fifty per cent (50%) shall apply).

(d) The amount of extra time used shall be agreed by the parties, and compensation under Subclause (c) above shall be payable by the Charterers to the Owners, prior to completion of final discharge. Failing such agreement, the amount of extra time used shall be determined by _____________ (“the Expert”), who shall act as an expert and not as an arbitrator and whose decision shall be final and binding upon the parties. Such Expert shall reach a determination, using such data and evidence as deemed appropriate, and which the parties are required to provide, within 30 days of completion of discharge. Payment shall be made by the Charterers immediately on receipt of the Expert’s determination. The costs of such Expert shall be shared equally by the parties.

(e) Where the Vessel proceeds at a speed adjusted in accordance with Sub-clause (b), this shall constitute compliance with, and there shall be no breach of, any obligation as to despatch and shall not constitute a deviation.

(f) The Charterers shall ensure that the terms of the bills of lading, waybills or other documents evidencing contracts of carriage issued by or on behalf of the Owners provide that compliance by Owners with this Clause does not constitute a breach of the contract of carriage. The Charterers shall indemnify the Owners against all consequences and liabilities that may arise from bills of lading, waybills or other documents evidencing contracts of carriage being issued as presented to the extent that the terms of such bills of lading, waybills or other documents evidencing contracts of carriage impose or result in the imposition of more onerous liabilities upon the Owners than those assumed by the Owners under this Clause.

(g) The Owners and Charterers shall give due consideration to environmental factors, including emission reductions, when determining the reasonableness of any orders given under this Clause.

Explanatory notes

Background

Sea Traffic Management (STM) is designed to contribute to a safer, more efficient and environmentally friendlier maritime sector through the development and use of information shared between different stakeholders. STM embraces a range of services including computer-recommended route adjustments and managed berthing through “just-in-time” arrivals. The aim is to address the situation prevalent in, but not exclusive to, the bulk sector where, following a voyage undertaken at utmost despatch, a vessel must often wait on-turn for a berth.

Current transport arrangements and procedures mean that waiting time cannot be eliminated. However, slowing a vessel down or speeding up to arrive at a given time can enhance voyage efficiency leading to improved logistics management. Shorter waiting periods may also lead to lower emissions.

The EU-funded STM Validation Project is seeking to demonstrate the workability of the concept using testing zones in the Nordic and Mediterranean Seas involving some 300 vessels and thirteen participating ports. The validation work includes, inter alia, optimisation of voyages to improve efficiency together with port readiness to accept a vessel without delay.

In order to make progress in this field, BIMCO was invited to develop a functional contractual clause for use with voyage charter party forms. BIMCO provisions are normally drafted to allocate obligations, liabilities, risks, costs and expenses in relation to defined commercial needs or regulatory requirements. However, in order to encourage parties to take part in the STM validation project, the clause has been developed to provide interested parties with a balanced contractual regime for use with STM arrangements.

The content departs from the traditional BIMCO approach as it identifies STM as a named system rather than setting out procedures in conceptual terms. This was a policy decision due to the increasing use and understanding of STM as a shipping industry term and the possible future use of the clause with other similar systems.

BIMCO wishes to thank the following members of the subcommittee for their work in drafting the clause:

  • Mr Roderick White, BP Shipping Ltd
  • Professor Mikis Tsimplis, University of Southampton
  • Professor Filippo Lorenzon, University of Southampton
  • Mr Tomasz Krzynski, Swedish Maritime Administration
  • Mr Claes Möller, Tärntank Rederi A/S
  • Captain Artis Ozols, Tärntank Rederi A/S
  • Captain Stamatis Daskalakis, Dalex Shipping Co. S.A.
  • Mr Steven Cockburn, North of England P&I Association Ltd
  • Captain Ben van Scherpenzeel, Port of Rotterdam

Purpose of the clause

The STM clause is distinct from, and does not supersede or replace, the BIMCO Virtual Arrival Clause. It has been developed with its own features to meet the needs of STM arrangements.

It sets out a self-standing regime for voyage optimisation. The content is without prejudice to other provisions in the underlying charter party which must be read in accordance with the contractual terms. In particular, the STM clause does not affect, or eliminate, the requirement for a notice of readiness to be tendered in accordance with laytime provisions applicable under the charter party.
Voyage optimisation relies on the availability and sharing of information. This is central to the workability of the provision with parties required to use “best endeavours” to obtain and exchange information about a vessel’s arrival time. The clause is binding only between the contracting owners and charterers. However, the obligation means that information which either party may have under STM arrangements or other relevant facts that might impact on the vessel’s arrival should be exchanged. This might, for example, include owners’ knowledge of weather conditions en route, pilotage delays or a tug strike and matters known to charterers including local cargo handling delays and labour shortages as well as matters beyond the port confines such as problems with road transport.

The clause addresses only issues of speed. Requests from charterers for re-routeing or a change of port rotation must be dealt with under the appropriate provisions of the underlying charter party. In the absence of covering charter party provisions, requests should be dealt with on a case-by-case basis taking P&I Club or other legal advice as necessary.

Key features

  • charterers may request owners to adjust a vessel’s speed (up or down) to meet their required arrival time. However, a request for an increase must not be in excess of the charter party speed (or possibly range covering economical and normal speeds) which should be agreed and set out in the contract;
  • “arrival time” means the time when the vessel reaches the place advised by the STM system which, according to the contract and determined by the parties as part of their information-sharing commitments, may be at the berth, the pilot boarding place, anchorage or waiting place;
  • additional voyage time resulting from an adjustment in speed is compensated by charterers at an agreed percentage of the demurrage rate. If there is no agreement, a default figure of 50% applies;
  • benefits to charterers arise from the potential savings they can achieve by carefully managing arrivals to reduce waiting time and their liability for demurrage;
  • at the time of agreeing the clause, owners and charterers must nominate a single named Expert (as opposed to an arbitrator) to determine the quantum of voyage savings made if an amicable settlement cannot be reached by the parties. The Expert must be provided with all necessary data and evidence and is required to reach a determination within 30 days of completion of discharge;
  • owners will not be in breach of their obligations for despatch resulting from any speed adjustment and are protected against claims from bill of lading holders or other third parties by an indemnity to be given by charterers; and
  • it is expressly provided that the parties must take account of environmental factors and reductions in emissions when giving orders under the clause.

Detailed provisions

Subclause (a) requires owners and charterers to use “best endeavours” to obtain and share information from all sources to establish the vessel’s arrival time at the place advised by the STM system;

Subclause (b) entitles charterers to request an adjustment to the vessel’s speed with owners’ approval not to be unreasonably withheld subject to agreeing an amended cancelling date on an approach voyage. A request to increase speed must not exceed the agreed charter party provisions;

Subclause (c) provides for charterers to compensate owners at a stated percentage (or 50% if left blank) of the demurrage rate for any extra voyage time resulting from their orders to adjust speed;

Subclause (d) sets out the mechanism for determining the quantum of compensation either amicably between owners and charterers or by the Expert to be nominated by the parties when agreeing to incorporate the clause in their contract;

Subclause (e) provides that an adjustment in speed will not be a contractual deviation in breach of owners’ obligations as to despatch;

Subclause (f) requires charterers to ensure that all third-party documentation complies with the clause and to indemnify owners against any liabilities beyond those set out in the clause; and

Subclause (g) states the parties’ obligations to take account of environmental factors in relation to orders given under the clause.

 

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