BARGEHIRE 2021

Overview

This is the latest edition of BARGEHIRE which is a bareboat charter party specifically designed for unmanned, non-self-propelled seagoing barges. It is a lease agreement whereby the charterer obtains possession and full control of the barge along with the legal and financial responsibility for it as further detailed in the BARGEHIRE. The charterer generally pays for operating expenses such as maintenance and repairs but, unlike bareboat chartered ships, barges are often chartered with owner’s Hull & Machinery insurance made available to the charterer. Although not as often, Protection & Indemnity insurance can also be made available to charterers, especially when the duration of the contract is short.

Copyright in BARGEHIRE 2021 is held by BIMCO.

Supporting documents

Background

BIMCO’s widely-used standard barge bareboat charter party was first formulated and published in 1994 and subsequently revised in 2008 and again in 2021. It is part of a suite of offshore and marine services standard documents produced by BIMCO, which includes SUPPLYTIME, TOWCON, TOWHIRE, HEAVYCON, HEAVYLIFTVOY, PROJECTCON, DISMANTLECON and, most recently, ASVTIME.

BARGEHIRE is designed to provide a balanced and practical agreement to serve the needs of those involved in the chartering and operation of unmanned non-self-propelled barges. The charterers of barges are usually energy companies, construction contractors and fabrication yards who use the barges for transportation and storage of heavy and voluminous cargoes, such as modules for offshore platforms, in long- and short-term contracts.

The revision of BARGEHIRE 2008 was initiated following a consultation among frequent users of BARGEHIRE 2008.

Feedback from the consultation indicated that improvements could be made to the provisions for the redelivery of barges, primarily the clauses dealing with survey, repair and redelivery. One of the key elements in resolving some of these issues is having a clear process for on- and off-hire surveys. It has been clarified that the charterers must redeliver the barge in the same or as good structure, state and condition as on delivery. Further, it has been made clearer that the charterers remain responsible for all costs related to restoring the barge to an acceptable condition – regardless of whether the contract has expired or been terminated early.

BARGEHIRE 2021 has been modernised to bring it in line with current commercial practices. An example of this is making charterers take out P&I insurance by default. A lot of effort has gone into making the contract easier to understand and more user friendly by rearranging clauses so they follow the sequence of events more closely. An example of this is the new Clause 9 (Trading Area, Employment and Excluded Cargoes) which now contains all provisions limiting the charterers trade of the barge. Another example is the new Clause 14 (Ballasting Operations) which is a combination of the two clauses in BARGEHIRE 2008 covering ballast operations Clause 14 (Ballast Engineer) and Clause 19 (Ballast Water Management).
BIMCO is grateful for the time and effort put in to the revision of BARGEHIRE and would like to thank the members of the subcommittee for their assistance:

  • Dirk Kwantes, LKL Ocean Trade (Chairman)
  • Tommy Christensen, Ugland
  • Jonathan Bawden, Cashman Equipment Corporation
  • Guillaume Vassout, Subsea 7
  • Merlijn Hijzen, Heerema
  • Alexander McCooke, Shipowners’ Club

BIMCO secretariat support was provided by Grant Hunter, Head of Contracts & Clauses, Mads Wacher Kjærgaard, Manager, Contracts & Clauses and Nina Stuhrmann, Manager, Contracts & Clauses.

The revised BARGEHIRE charter party has been code named BARGEHIRE 2021 and was adopted by the Documentary Committee at its meeting in January 2021.

These explanatory notes are intended to explain the drafting team’s thinking behind some of the clauses with a focus on the differences between BARGEHIRE 2008 and BARGEHIRE 2021. This document is intended as a living document and, if and when, BIMCO receives questions on some of the clauses we will expand these notes.

Explanatory Notes

Box 20 – When filling in this box, parties should not only state the fees but also when and how they are payable.

Box 27 – BARGEHIRE 2008 in Box 31 refers to franchise and deductibles. However, franchise insurance is rarely used by insurers today and as a consequence, “franchise” has been deleted from the box.

Clause 1 – Definitions

“Barge” – in addition to referring to the relevant boxes, this definition now includes a reference to the new Annex A (Barge Specification). Most barge owners already have detailed specification sheets of their fleet and will simply add their own specification sheet as Annex A to this agreement. For those who do not, Annex A sets out the minimum requirements that should be contained in a barge specification.

For the sake of consistency, a definition of “Equipment” has been added. Under BARGEHIRE 2008, references to the barge’s equipment is mentioned in several places in the contract but the wording used is not consistent.

Clause 2 – Period of Charter Party

The principle that the barge will be at the possession and disposal of the charters was previously found in Clause 13 (Maintenance and Operation) of BARGEHIRE 2008 and has now been moved to a more prominent position in subclause 2(c). This is a fundamental point of the contract and basically means that in all respects the charterers are acting as owners of the barge subject to the terms and conditions of the charter party.

Clause 3 - Delivery

The obligation for charterers to accept delivery of the barge has been removed from subclause (a) and has been made a separate subclause (c) which requires them to accept the delivery if the owners have met their obligations under subclauses (a) and (b).

From an operational point of view sediments in water can cause issues. For clarity it has been added that both the cargo spaces and the ballast tanks must also be free of any sediments which arguably would not necessarily be obstructions.

Clause 4 - Substitution

“Equivalent barge” does not mean an identical barge but a barge of similar size and quality as the original barge.

Clause 5 – Time for Delivery

As barge contracts are often entered into in advance of the actual performance of the agreement, the parties should agree a sufficiently broad delivery window. Subclauses (b), (c) and (d) set out the procedure for narrowing the initial delivery period down to a specific date: the delivery date. The new edition includes a mechanism for a sequence of notices for narrowing the delivery window. For spot fixtures where a fixed delivery date has been agreed the narrowing down mechanism will not apply.

Clause 6 – Hire

In subclause 6(f), the sentence “Time is of the essence in relation to payment of hire hereunder” emphasises the absolute obligation for charterers to pay hire punctually. Recognising that there may be delays in the for example the banking system, the contract allows for a five days grace period if charterers fail to pay on time. The owners’ right to terminate will only arise after the expiry of the five days grace period.

In the second paragraph of subclause 6(f) the words “without prejudice to any other rights or claims the Owners may have against the Charterers” also include charterers obligations to redeliver the barge in the agreed condition set out under Clause 17 (Redelivery).

In subclause 6(g), a potential ambiguity has been eliminated by clarifying that the default position is LIBOR+3% (i.e. LIBOR percentage rate+3%) and not LIBOR increased by 3% of the applicable rate (i.e. LIBOR rate*1.03).

Clause 8 – Cancelling

Parties can agree to either a daily rate (Box 14) or a lumpsum (Box 15) for late delivery. If the parties want to put a cap on the maximum rate for late delivery, they should fill in Box 15 as well as 14.

In subclause (a), a reference to subclause (d) has been included to clarify that the clause still applies in case the agreed delivery date has been amended in accordance with subclause (d)

In subclause (b), it has been clarified that compensation from owners is only triggered if charterers exercise their option to cancel.

In subclause (c), BARGEHIRE 2021 uses the expression “gross negligence” as the concept is now more widely recognised by the English courts.

The purpose of the interpellation clause in subclause (d) is to avoid a that a barge at risk of arriving after the cancellation date is obliged to proceed on a ballast voyage towards the delivery place, not knowing whether the charterers will accept or cancel the barge once it has arrived. The interpellation provision provides a mechanism whereby the charterers are required to declare their intention to cancel following the owners’ notice that the barge will be late. This is an important provision, since the basic position under English law is that unless there is a relevant clause in the governing charter party the charterers can wait until the barge tenders its notice of readiness before they decide whether to cancel.

The charterers must declare their option within 72 hours after the owners have notified them. This has been increased from 48 hours in the 2008 form as the subcommittee considered that the additional time was necessary to take into account weekends and holidays.

Clause 9 – Trading Area, Employment and Excluded Cargo

All clauses related to restrictions in the trading of the barge, whether based on technical capabilities, geographical region, war, ice conditions or cargo exclusions, have been combined in this new Clause 9. 

Subclause 9(f): “Stone or similar cargo” is intended to cover heavy and potentially sharp cargo which can damage the barge during the loading process.

Subclause 9(e): Clause 30 (War Risks (CONWARTIME 2004)) from BARGEHIRE 2008 has been replaced by this much simpler clause stating that the barge cannot be traded in Listed Areas unless the owners have approved it. It was felt that CONWARTIME 2004, which was developed for time charter parties, was not appropriate for an unmanned barge. The clause covers the rights of the master, while a barge has no master. Instead, the parties should consider including a more detailed war risks clause in the underlying towage agreement, see for example Clause 26 (War Risks) of TOWCON 2021. 
If owners approve of the barge being traded in Listed Areas, it should be noted that subclause 15(c) states that any additional war risk premium arising from the trading will be for the charterers’ account.

The Joint War Committee means Lloyd’s Market Association’s Joint War Committee and the Listed Areas are the areas designated by the Committee. These are areas where owners are required to notify underwriters of voyages.

Clause 10 – Surveys 

The condition of the equipment and spares referred to under subclause (a) is the condition of the items found in the inventory produced by the marine surveyor under subclause (c).

In subclause 10(b), the cost for surveys is intended to include any cost related to the on- and off-hire surveys such as for example cost associated with opening and closing of manholes and obtaining gas free certificates.

Clause 11 – Inspection and reporting during period of Charter Party

Although owners are entitled to inspect their barge at any time, subclause (a) is now consistent with commercial practice by stating that owners must ensure that their inspections do not interfere with charterers’ operations.

Clause 12 – Maintenance and Operation

This clause has been restructured. Some of the wording previously found in subclause (a) of the 2008 version has been moved to subclauses 2(c) and 13(a). 

The phrase “good commercial maintenance practice” is not intended to imply an obligation on the charterers to maintain the barge in a better state and condition than it was on delivery.

It should be noted that if the owners approve of structural changes under subclause 12(d), charterers’ restoration obligation also includes costs such as class approval.

Clause 13 - Repairs

One of the drivers for the revision of BARGEHIRE 2008 was to bridge the issue of the marine surveyor in the off-hire survey providing estimated repair prices that are inconsistent with the actual prices an owner ends up paying at a yard. The position has been clarified in subclause 13(b) by adding that the marine surveyor’s assessment of the costs shall be “with substantiation as appropriate”. The wording is intended to ensure that the marine surveyor obtains actual quotes from repair yards when appropriate.

Clause 14 – Ballasting Operations

To keep everything related to ballast operations in one place, this new clause combines the two clauses in BARGEHIRE 2008 dealing with ballast engineers and ballast water management.

Clause 15 – Hull, Machinery and War Risks Insurance, Responsibilities and Classification

Taking out H&M insurance does not imply an obligation to also maintain class. The parties should clearly indicate their choice as to who is to provide H&M and War Risks cover and who is responsible for maintaining classification by making a choice from the dropdown menus in Box 24(i) and (ii).

Clause 16 – Protection and Indemnity Insurance and Liability

The default position of this clause has been changed from owners to charterers to reflect market practice. It should be noted that this may not work for shorter charters, say of less than 30 days, because it might not be possible for the charterers to obtain P&I cover.

A “waiver of subrogation” has not been expressly included as this is unnecessary when a party is a joint assured.

If charterers are responsible for taking out P&I cover, this does not preclude owners from taking out additional fallback P&I insurance to cover risks that could arise if the charterers were to prejudice the primary P&I policy.

The “Ocean Victory [2017] UKSC 35” dealt with, among other things, claims between co-assured parties, and resulted in additional wording in BARECON 2017. This wording has not been included in BARGEHIRE 2021 as the subcommittee did not consider it necessary in respect of the demise charter of a barge. The preference was to maintain the simplicity of the present insurance framework. If the parties want to address these issues this is the wording from BARECON 2017:

BARECON 2017 – Clause 17(a)

(ii) Notwithstanding that the parties are co-assured, these insurance provisions shall neither exclude nor discharge liability between the Owners and the Charterers under this Charter Party, but are intended to secure payment of the loss insurance proceeds as a first resort to make good the Owners’ loss. If such payment is made to the Owners it shall be treated as satisfaction (but not exclusion or discharge) of the Charterers’ liability towards the Owners. For the avoidance of doubt, such payment is no bar to a claim by the Owners and/or their insurers against the Charterers to seek indemnity by way of subrogation.

(iii) Nothing herein shall prejudice any rights of recovery of the Owners or the Charterers (or their insurers) against third parties.

Clause 17 – Redelivery

This clause has been amended to mirror the delivery clause (Clause 3) to the extent possible.

To clarify the different responsibilities of the charterers on redelivery, they have been split into separate subclauses. With regards to subclause 17(a)(ii), covering the state of the barge on redelivery, it was considered helpful to make a cross-reference to subclause 13(b) which covers damages that are not repaired during the period of the charter party.

Many issues have been reported where a barge would be considered redelivered by the charterers before the off-hire survey was conducted. To clarify the position, and to tie redelivery and the off-hire survey together, a cross-reference between Clause 10 (Surveys) and the off-hire survey has been included in this clause.

Clause 19 – Late Redelivery

For clarity, this clause has been separated from the redelivery provision where it was subclause (b) in BARGEHIRE 2008.

Clause 20 – Force Majeure

While “pandemics” are likely to be covered by “epidemics” it has been found appropriate to include them given the COVID-19 outbreak and to avoid disputes as to whether the clause applies.

Clause 21 – Excluded Losses

The consequential losses clause in BARGEHIRE 2008 has been replaced with the excluded losses clause from SUPPLYTIME 2017. This clause excludes liability of the parties for certain direct and indirect losses in subclause (a) and consequential losses are dealt with separately in subclause (b).

Clause 24 – General Average

This clause has been updated to refer to the York-Antwerp Rules 2016 which are endorsed by BIMCO.

Clause 27 – Requisition/Acquisition

This clause has been replaced with that of BARECON 20017. The 2008 clause had an open-ended timeframe, and the barge could be kept on hire indefinitely. The BARECON wording is considered more balanced as hire would only continue to run until the charter period would otherwise come to an end under the contract.

An additional sentence was added to the end of subclause (b) to ensure that any compensation from compulsory acquisition goes to the owners.

Clause 29 – Commission

Two sentences have been added to the effect that the broker can contractually rely on the clause and exercise its right to payment of commission in case commission is not paid.

Clause 30 – BIMCO Law and Arbitration Clause 2020

This is BIMCO’s 2020 edition of the law and arbitration clause which offers four named arbitration venues and a free choice of law and forum. When using SmartCon, the option chosen by the parties in Box 32 will appear automatically in the body of this clause. If the parties fail to make a choice, English law and London arbitration will be the default position.

Subclause 30(a) determines the governing law; the place of arbitration; the applicable arbitration legislation; and the seat of arbitration (where the arbitration takes place in a jurisdiction other than the agreed place of arbitration). It is an “exclusive” arbitration agreement. This is emphasised by the addition of the phrase “referred exclusively to arbitration”.

Subclause 30(b) requires the parties to appoint three arbitrators but allows for a different number of arbitrators to be agreed.

Subclause 30(c) applies the terms (or rules) of the chosen arbitration association to the conduct of the arbitration. An appointment procedure is no longer included in the clause because the terms of the named arbitration venue contain a procedure to which parties should refer when making appointments of arbitrators.

Subclause 30(d) provides for the small claims procedures offered by the named arbitration association. Parties are free to decide on the maximum applicable sum for small claims, but otherwise the clause will display the default amount used by each of the named venues. If the London arbitration version of the clause is chosen then an additional “intermediate claims procedure” provision will apply optionally.

Subclause 30(e) applies the terms, rules procedures of the chosen arbitration association current at the time that arbitration proceedings are commenced. This is the common approach for arbitration in London, Singapore and Hong Kong. In New York the rules are different and it is those current at the time the contract was concluded that will apply.

Subclause 30(f) addresses the correct service of arbitration notices and communications. Parties are free to serve notices by whatever effective means they choose, but if they choose email then they must provide the email address of someone authorised to receive arbitration notices (and advise the other party of any change of address during the period of the agreement). Notices are considered effectively served immediately on sending by email.

Clause 31 – Notices

The former notices clause has been replaced with a more up to date notices clause found in BARECON 2017. Notices given under Clause 30 (BIMCO Law and Arbitration Clause 2020) have been excluded from the clause as it contains its own notices regime.

Clause 32 – Entire Agreement

This is a new clause that is commonly found in BIMCO agreements.

Clause 33 – Singular/Plural

This is a new clause that is commonly found in BIMCO agreements.

Additional Clauses

During the industry consultation, several suggestions were made for the inclusion of additional and trade specific clauses such as sanctions clause, anti-corruption clause and cyber security clause. The subcommittee appreciates the suggestions but found it inappropriate to include these in the standard form and instead parties should consider on a case-by-case basis to include such clauses.

 

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