SEV-GUARDCON

Overview

SEV-GUARDCON is a standard contract for security escort vessels (SEVs) that accompany merchant ships in high threat areas such as the Gulf of Guinea. It has been drafted to enable for cross-border transits where an SEV is needed to accompany the owners vessel through the Exclusive Economic Zone (EEZ) or territorial waters of more than one state. The latest edition of this contract is SEV-GUARDCON, issued in 2022.

Copyright in SEV-GUARDCON is held by BIMCO.

SEV-GUARDCON

The use of security escort vessels (SEVs) for ships operating in the Gulf of Guinea has become an unfortunate but increasing necessity for shipowners and operators. Mindful of the value of creating a standard contract for the use of SEVs, BIMCO has developed SEV-GUARDCON – a standard set of terms and conditions for engaging the services of SEVs.

SEV-GUARDCON is based on GUARDCON, BIMCO’s standard contract for the employment of security guards on vessels published in 2012. As GUARDCON is widely known and accepted by the industry it was decided that it would provide a familiar and “tried and tested” framework for SEV-GUARDCON.

The form has been kept as simple as possible in the sense that it only applies to the use of SEVs. Owners who require escort vessel services combined with armed guards on board their ship should either use a SEV-GUARDCON together with a GUARDCON or use a bespoke contract. The contract is intended to be a multi-functional agreement which can be used for single transits or as a framework agreement for multiple transits.

SEV-GUARDCON provides a well thought through and solid contractual platform on which the parties can base their agreement. It is expected that shipowners and security companies may wish to negotiate and subsequently amend some of the more commercial terms, such as those relating to payments and fees. However, we strongly recommend against any amendments to the key clauses – namely those dealing with insurance and liabilities. Any changes to these provisions may result in a shipowners’ P&I Club cover being prejudiced and so should be avoided.

BIMCO would like to thank the drafting committee for their commitment to the project and their considerable time and efforts in producing SEV-GUARDCON:

Dan Carr, Stolt Nielsen (Chairperson)

Captain Kuldeepak Sethi, Fleet Management Ltd.

George Gabriel, Golden Union Shipping CO S.A.

Captain Panagiotis Y. Drosos, Capital Ship Management Corp.

John Thompson, Ambrey

Gerry Northwood, MAST

Paul Terry, Control Risks

Stephen Askins, Tatham & Co.

Elinor Dautlich, HFW

Chris South, West P&I Club

Brett Hosking, Standard Club

Richard Young, Beazley

Jakob P. Larsen, BIMCO

 

(Dan Carr, Elinor Dautlich, Chris South and Stephen Askins were also on the original GUARDCON drafting team).

BIMCO secretariat support was provided by Søren Larsen, Deputy Secretary General, Grant Hunter, Head of Contracts & Clauses, and Christian Hoppe, General Counsel.

As part of the development work, the drafting committee consulted a selected group of owners, security contractors, P&I Clubs, marine insurance providers and other relevant stakeholders in the SEV business. BIMCO would like to thank them all for their support and valuable input.

Supporting documents

Explanatory notes

Structure

Part I

Part II

SECTION 1 – Basis of the Contract

Clause 1 (Definitions)

Clause 2 (Commencement, Appointment and Duration)

SECTION 2 – Security Services

Clause 3 (Security Services)

Clause 4 (Engagement of Security Services)

Clause 5 (Changes to the Security Services)

Clause 6 (Security Escort Vessel Minimum Requirements)

SECTION 3 – Obligations and Responsibilities

Clause 7 (Contractors’ Obligations and Responsibilities)

Clause 8 (Owners’ Obligations and Responsibilities)

SECTION 4 – Master’s Authority and Responsibilities; and Attacks including Hijacking or Attempted Hijacking

Clause 9 (Master’s Authority and Responsibilities)

Clause 10 (Attacks including Hijacking or Attempted Hijacking)

SECTION 5 – Permits, Investigations and Claims

 

Clause 11 (Permits)

 

Clause 12 (Investigations and Claims)

 

SECTION 6 – Insurance, Fees and Taxes

 

Clause 13 (Insurance Policies)

 

Clause 14 (Fees and Expenses)

 

Clause 15 (Taxes)

 

Clause 16 (Liabilities and Indemnities)

 

Clause 17 (Contractors’ Personnel and SEV Security Personnel Liability)

 

Clause 18 (Contractors’ Personnel – Waiver)

 

Clause 19 (Delay)

 

Clause 20 (Cancellation and Termination)

 

Clause 21 (Compliance with Laws and Regulations)

 

Clause 22 (Health, Safety and Environmental Regulations)

 

Clause 23 (No Salvage)

 

Clause 24 (Anti-Corruption)

 

Clause 25 (Personal Data Protection)

 

Clause 26 (Sanctions)

 

Clause 27 (BIMCO Law & Arbitration Clause 2020)

 

SECTION 8 - General

 

Clause 28 (Assignment)

Clause 29 (Notices and Communications)

Clause 30 (Confidentiality)

Clause 31 (Third Party Rights)

Clause 32 (Partial Validity)

 

Clause 33 (Entire Contract)

 

Clause 34 (BIMCO Electronic Signature Clause 2021)

 

Annex A (Security Escort Vessel Minimum Requirements)

Annex B (Instruction Notice)

Annex C (Individual Waiver)

Annex D (Schedule of Fees for Multiple Transits)

Annex E (Standard Operating Procedures)

 

The following notes are intended to provide a background to the development of SEV-GUARDCON and share some of the drafting committee’s thinking behind key clauses. The notes are not part of the contract and should not be taken as a legal interpretation of any of the terms and conditions set out in the form.

The explanatory notes carry over the guidance provided in GUARDCON, where relevant, while identifying where SEV-GUARDCON differs from GUARDCON. Attention is focused on areas where it is beneficial to provide an explanation as to why the drafting committee has chosen a particular wording.

The terminology used in SEV-GUARDCON has been adapted from GUARDCON to reflect that the contract is for an accompanying escort vessel with guards as opposed to placing guards physically on board the owners’ ship. This means, for example, that terms such as embarkation point and disembarkation point have been replaced with rendezvous point and release point.

Structure

The contract is divided into seven main sections. Part I, Part II and Annexes A to E. Part I is used to insert the contract variables such as the name of the parties, the details of the ship being escorted, and the fees payable. Part II contains the standard terms and conditions. The content and clause numbering in Part II has been maintained, in so far as possible, to ensure consistency with GUARDCON.

The “boilerplate” clauses found in GUARDCON have as far as possible been maintained but with certain logical amendments to take account of the special nature of SEVs. In addition, the drafting team have included clauses dealing with anti-corruption, data protection, sanctions and electronic signatures. These are based on standard BIMCO clauses that have been amended to reflect the nature of the services provided under SEV-GUARDCON.

Part I

The box layout in SEV-GUARDCON is a standard design used by BIMCO. Wherever possible the boxes in SEV-GUARDCON mirror those of GUARDCON. If Box 7 is filled in indicating multiple transits, the contract is considered a framework agreement.

A new box (Box 6) has been added where the parties can include information relating to the SEV. Information can either be included in the box or the instruction notice (Annex B). The contractors should identify the SEV by name, call sign and IMO number or, if such number is not available due to the size of the SEV, the port and local registration number of the SEV. For consistency, the call sign has also been added to Box 5 relating to the owners’ vessel.

Part I incorporates the BIMCO Authenticity Clause above the signature boxes. The objective of the clause is to decrease the frequency of the industry’s – often unknowing – use of counterfeit and often erroneous copies of BIMCO forms. If one of the parties provides the contract template for negotiation and is reluctant to include this clause, then this should serve as a warning that the offered contract may not be a genuine BIMCO standard agreement.

Part II

SECTION 1 – Basis of the Contract

Clause 1 (Definitions)

This section includes defined terms that appear throughout the contract. Due to the nature of the contract and, notably, that it concerns the provision of services by an SEV, a number of additional definitions have been included. These include making a distinction between the client vessel (i.e. the owners’ vessel) and SEV, the client vessel crew and SEV crew, etc. New definitions have also been included to highlight that the SEV will meet and disengage from the client vessel as opposed to security personnel embarking and disembarking the client vessel.

The definition of transit has been changed to reflect the nature of employing the services of SEVs in the Gulf of Guinea which may include cross-border transits and multi-legs between ports, places and/or terminals or fixed offshore facilities, regardless of whether these are located in the same or different jurisdictions.

As is also the case for GUARDCON, SEV-GUARDCON is designed to be a contract between the owners of the client vessel and the security contractors. The liability, insurance and other important provisions are constructed on this basis. While we acknowledge that in some cases it may be the charterers who arrange and pay for the security escort, it is essential that the owners are identified as the contracting party. If the contract is entered into by charterers or ship managers then the names and details of these parties should be added to the “owners” box in Part I along with the details of the client vessel’s owners or the contract should be signed “for and on behalf of owners”.

 

Clause 2 (Commencement, Appointment and Duration)

SEV-GUARDCON is an “evergreen” contract when used as a framework agreement for multiple transits. This means that the contract will continue beyond the initial 12 month contract period until terminated by one of the parties giving 30 days’ notice. For single transit purposes, the contract ends when the SEV disengages from the client vessel.

SEV-GUARDCON has been drafted specifically with cross-border transits in mind where the contractors provide escort services for the owners’ vessel through the Exclusive Economic Zone (EEZ) or territorial waters of more than one state, which may require the use of several SEVs and/or changes in SEV Security Personnel. In such cases, the contract will terminate at the final release point indicated in Part I or the instruction notice.

SECTION 2 – Security Services

Clause 3 (Security Services)

The type of security services provided under SEV-GUARDCON are different from those under GUARDCON because the owners’ vessel will be protected by an independently operated SEV as opposed to carrying a security team on board. A key aspect of the contract is the contractors’ responsibility to arrange for an SEV to protect and defend the owners’ vessel in accordance with the “rules of engagement”, relevant national laws and the contractors’ standard operating procedures (SOP).

Subclause (b) requires the contractors to provide a minimum of seven security personnel – although the parties can agree another number in Box 8. A minimum of seven security personnel has been chosen because this reflects common industry practice for SEVs operating in the Gulf of Guinea.

Subclause (c) takes account of transits involving an interim waypoint to call at a terminal or fixed offshore facility which is within an exclusion zone which prohibits the SEV from accompanying the owners’ ship. Assuming no delays to the ship at the terminal or offshore facility, owners are likely to want to have the SEV wait outside the zone until the ship is ready to proceed with the final part of the transit. However, if delays occur that extend beyond an agreed period of time then owners may prefer to cancel the transit in accordance with subclause 14(i) instead of keeping the SEV on a standby rate.

SEV security personnel are commonly serving military personnel whose “command and control” structure is with the relevant military authorities. Subclause (d) recognises that, as a result, the contractors should exercise their best endeavours to ensure that the security personnel act in accordance with their directions and provide the required security services.

Clause 4 (Engagement of Security Services)

If SEV-GUARDCON is used for multiple transits, the owners must notify the contractors on each occasion by issuing an instruction notice setting out their requirements and intended transit dates. Due to the nature of the services to be provided, it was considered appropriate to give the contractors 24 more hours to prepare for the transit than the 72 hours required in GUARDCON.

Clause 5 (Changes to the Security Services)

New legal and regulatory requirements may dictate a change to the security services supplied by the contractors. This clause ensures that any such changes do not expose the owners to a reduction in the number of security personnel or an increase in fees.

Clause 6 (Security Escort Vessel Minimum Requirements)

The SEV’s capabilities are a key aspect of SEV-GUARDCON. A new clause has been included to ensure that the SEV is approved by local authorities and meets certain minimum requirements such as a sustainable operating speed, range and size/dimensions which are set out in Annex A (Security Escort Vessel Minimum Requirements). Importantly, the clause specifies that the SEV should be in a thoroughly efficient state in hull, machinery and equipment – essential “seaworthy”. Owners are recommended to carry out due diligence to ensure that the SEV lives up to the minimum requirements expected.

The drafting team considered whether the clause should include an obligation on the contractors to list the approvals they have in place to legally perform their services. This would include, where needed, the Memorandum of Understanding (MoU) with the local authorities. A thorough review of such documents in their full version will normally be part of the owners’ due diligence when selecting the contractors. It would also provide the owners with full transparency of the contractors’ obligations to the contractors’ MoU partners. The contractors can list their approvals in Box 12 to substantiate that they have everything required to perform the security services.

SECTION 3 – Obligations and Responsibilities

Clause 7 (Contractors’ Obligations and Responsibilities)

Because of the fundamentally different nature of the security services provided under SEV-GUARDCON compared with GUARDCON, the clause has been revised significantly. The “all reasonable skill and care” benchmark in GUARDCON has been maintained for providing the agreed security services as it is considered appropriate also in relation to the services of SEVs.

Subclause (a)(iii) relates to advice provided by the contractors to the master of the owners’ vessel in respect of routeing. The clause makes it clear that such advice is strictly limited to security related matters concerning the routeing of the vessel and does not undermine the Master’s overall authority in respect of safe navigation.

Under GUARDCON, it is the owners’ responsibility to deviate to a place where any sick or injured security personnel can be taken ashore for medical attention and repatriation. This is not the case in SEV-GUARDCON, where the security personnel will be on board the SEV and an MLO will not necessarily come on board the owners’ vessel. So, subclause (vi) makes the contractors’ responsible for any sick or injured MLO. Arranging for the transportation of any injured security personnel to shore and then home is a cost to be met by the contractors and they will need to be appropriately insured to cover this cost (see Clause 13 (Insurances)).

In view of the importance of the SEV’s capabilities a link has been made between subclause (b) and Annex A (Security Escort Vessel Minimum Requirements) and, notably, that the authorised SEV should be able to maintain the required speed during the transit.

The owners can require the contractors to appoint an MLO to act as liaison between the SEV and the client vessel. There is no obligation on the owners to have an MLO on board the SEV as there might not be a role in terms of command, control and accountability. If this is agreed in Box 8, subclause (c) sets out the qualifications, training and experience required of the MLO.

Subclause (c)(i) relates to the background experience of the MLO. While GUARDCON permits ex-law enforcement personnel and those from other relevant backgrounds to perform security services, SEV-GUARDCON requires the MLO to have prior military or law enforcement service as this is what will be required by the local authorities. Owners should in any case exercise due diligence to ensure that the contractors are able to provide personnel that are appropriately qualified and experienced.

Subclause (c)(iii) covers working languages. It is important that the MLO is able to communicate effectively with the master of the vessel to liaise with the SEV.

Subclause (c)(v) refers to STCW or equivalent training – this is intended to cover basic shipboard fire-fighting skills, personal safety and survival craft proficiency. It is not intended that the MLO should be STCW qualified or certified.

Subclause (d) emphasises one of the key obligations of the contract – that the contractors must have in place adequate insurances to cover their liabilities and contractual indemnities.

The contractors’ do not have an automatic right to sub-contract. Owners will have carried out due diligence on the company that they have contracted with to provide security services. Subclause (e) permits subcontracting with the owners’ consent but does not relieve the contractors of their liability for the performance of the contract.

Clause 8 (Owners’ Obligations and Responsibilities)

The owners’ responsibilities are limited because no guards board the vessel. They essentially consist of paying sums due to the contractors, maintaining communications with the contractors, informing underwriters, charterers and the Flag State that the owners’ vessel is being protected by an SEV, and liaising with MDAT-GoG.

SECTION 4 – Master’s Authority and Responsibilities; and Attacks including Hijacking or Attempted Hijacking

Clause 9 (Master’s Authority and Responsibilities)

The clause dealing with the master’s authority has been simplified because the contract does not need to cater for the presence of armed security guards on board the owners’ vessel to the same extent as GUARDCON.

While the clause is undoubtedly one of the most important provisions in GUARDCON, not least due to the potential use of force, including lethal force, by guards on board the owners’ vessel, the provision in SEV-GUARDCON limits itself to confirming that the master remains in command at all times.

Clause 10 (Attacks including Hijacking or Attempted Hijacking)

Attacks by pirates may not necessarily be aimed at hijacking the owners’ vessel; they can equally be done for the purposes of armed robbery and kidnapping the crew. The title of the clause and Section 4 have been amended to reflect this.

The preamble to the clause makes it clear that the contractors cannot and do not guarantee that the security services they provide will prevent the owners’ vessel from being attacked. The wording is intended to convey that if the vessel is attacked despite the best efforts of the SEV, then it does not mean that all liabilities and losses pass to the contractors.

The clause goes on to deal with what happens if the vessel is attacked or boarded by pirates.

Subclause (a) is intended to avoid situations where the contractors may place the crew of the owners’ vessel at risk through the actions of the SEV and the SEV security personnel.

Subclause (b) clarifies that the contractors are not obliged to contribute to any ransom payment by the owners to secure the release of the vessel and crew. Cargo does not contribute to ransoms as they rely on general average (GA) and similarly crew are not expected to contribute to their proportion in GA.

Owners and contractors will not be contractually responsible for the actions of SEV security personnel who act unlawfully towards unauthorised persons on board or attempting to board the owners’ vessel. Subclause (c) is aimed at actions that are taken deliberately such as mistreating prisoners, as opposed e.g. to negligent discharge of firearms, and has been added because of the SUA Convention (Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation).

SECTION 5 – Permits, Investigations and Claims

Clause 11 (Permits)

If the contractors fail to have the required permits it effectively makes the vessel escort illegal, the consequences of which could result in significant delays to the owners’ vessel. SEV-GUARDCON maintains GUARDCON’s comprehensive clause dealing with permits which places a strict obligation on the contractors to ensure that they meet all such requirements. This is an important clause and parties should take careful note of its provisions. Owners are encouraged to carry out due diligence in coordination with their insurers.

The clause has been adapted from the original GUARDCON version to fit the SEV context. The permits required are those needed for the SEV to provide security services to the owners’ vessel. The specific reference to firearms in the corresponding clause in GUARDCON has been deleted as it is only relevant in relation to armed guards on board the owners’ vessel.

Subclause (e) regarding provision of copies of required permits has been amended because it will not always be possible to provide such copies. While the owners would never be sure to have the complete set of documents, it was decided to maintain the subclause as it highlights that the owners want the contractors to disclose their documents while accepting that some documents will be confidential.

The deletion of “Licences” in the title of the clause and of the section is because the definition of “Permits” already includes licences and there is therefore no need to refer to it in the titles.

Clause 12 (Investigations and Claims)

If there is an incident involving the SEV, this will generally result in an enquiry by the Flag State of the owners’ vessel or, at the very least, by the owners. In such cases, the contractors are obliged to assist in the enquiry – which may entail the submission of written reports from the master of the SEV and the SEV security personnel.

If there is a third-party claim against the contractors or the owners resulting from the security services (for example, a claim by a fisherman for damage to his boat resulting from security measures), subclause (b) provides for the parties to assist each other in defending such claims.

As the owners’ vessel will not be carrying any security personnel the reference which was included in GUARDCON to incidents involving discharge of firearms has been removed.

SECTION 6 – Insurance, Fees and Taxes

Clause 13 (Insurance Policies)

The insurance provisions mirror as closely as possible the original GUARDCON wording as they are considered an industry benchmark in terms of minimum insurance requirements. When GUARDCON was published, BIMCO’s objective was to establish a benchmark on the contractors’ minimum level of insurance cover so that the widespread adoption of GUARDCON might help weed out some of the less well-resourced companies unable or unwilling to meet the insurance obligations. GUARDCON insurance “terms” for contractors are now readily available in the market and BIMCO has decided that much the same terms should apply to the provision of escort vessel protection under SEV-GUARDCON.

Consequential amendments have been made to reflect that the contract is for the provision of security services by SEVs which carry security personnel on board – and that such personnel will not board the owners’ vessel. It is highly recommended that parties carefully read the provisions of Clause 13 to make sure that they fully understand their obligations.

Subclause (a) sets out the types of insurance cover that the contractors must maintain to cover their liabilities during the contract period. The value of the contractors’ personal accident insurance is set at a minimum of US$250,000 per person – the same as GUARDCON. This insurance excludes the SEV security personnel (who are not employed directly by the contractors) but includes any Maritime Liaison Officer (MLO) who may be on board the owners’ vessel during the escort. Contractors should note that the US$ 250,000 sum is a maximum amount payable in the event of a personal accident – the actual sum paid out by the insurance policy will be determined on a case by case basis.

Subclause (b) deals with policy limits (other than personal accident insurance) which are set at a per policy minimum of US$5 million. While the application of deductibles to help reduce premiums is a perfectly acceptable practice, the contract prevents the contractors agreeing deductibles that they may not have the financial resources to meet. All deductibles must reflect market practice. Although the contractors are obliged to provide the owners with copies of cover notes as evidence of the required insurances, owners may wish to consider asking to see the whole policy.

Owners should also be adequately insured and have appropriate P&I cover – this is dealt with in subclause (c).

Subclause (d) is the kidnap and ransom insurance provision from GUARDCON. It has been maintained as a matter of consistency between the two contracts. BIMCO, however, acknowledges that insurers no longer require that K&R insurance should not be disclosed.

Clause 14 (Fees and Expenses)

The fees and expenses provisions of the contract have been simplified in comparison with the daily rate or lump sum methods in GUARDCON. the owners’ obligation is to pay the fees indicated in the corresponding box in Part I to the contractors. The box also sets out the information to be provided and makes a distinction between single and multiple transits.

Subclause (b) deals with mobilisation fees which are an agreed percentage of the agreed “lump sum”. Again, a distinction has been made in relation to whether the contract is for single or multiple transits. For the sake of clarity the subclause specifies that payment of any mobilisation fees should be made against receipt of the contractors’ invoice.

Invoicing of fees is provided for in subclause (c) and is on the basis of latest 30 days after release of the SEV. Except for the mobilisation fee (which is payable on signing the contract), the owners have 21 days in which to settle invoices issued by the contractors. If the owners fail to pay within 21 days, then subclause (d) provides the contractors with various sanctions against the owners.

If the owners decide that they require additional services to those originally agreed, then subclause (g) provides for agreement to be reached in writing setting out what the additional services are and what extra fees the owners should pay for the additional services.

Subclause (h) deals with rescheduling of the transit by the owners if their vessel is delayed. The provision has been simplified as compared with GUARDCON and imposes an obligation on the owners to give the contractors at least 48 hours’ notice of the delay in which case the rendezvous time will be rescheduled to the time and date chosen by the owners.

Subclause (i) should be read in conjunction with subclause 3(c). It concerns situations where the SEV is engaged while the owners’ vessel is at a terminal or fixed offshore facility that has its own exclusion zone prohibiting the SEV from entering. In such cases the owners have the possibility to place the SEV on a standby rate and, if the owners’ vessel remains at the terminal or fixed offshore facility for more than 96 hours after entering the exclusion zone, the owners have the right to terminate the transit and release the SEV.

The subclause is intended to deal with unexpected delays. There would not appear to be a clear practice in the market as to what should be considered an appropriate time before allowing the owners to make the decision to terminate the transit. 96 hours has been chosen as a reasonable starting point but the parties may agree another period of time as appropriate.

The three boxes in Part I which relate to fees (Boxes 14, 15 and 17) include a distinction between single and multiple transits. For single transits, the relevant information can be stated in the box; for multiple transits, the information should be specified in Annex D (Schedule of Charges for Multiple Transits).

Clause 15 (Taxes)

This is a comprehensive mutual clause dealing with taxes payable by the owners and the contractors. The parties should make themselves aware of the specific tax requirements applicable in the jurisdictions relevant for the transits covered by the contract and may need to adjust the tax clause accordingly.

Compared with GUARDCON, the detailed subclause relating to the contractors’ obligation to pay taxes etc. (subclause (b)) has been replaced with a new simplified subclause (c) stating that the contractors are responsible for all other taxes related to the provision of the security services. The reason for this is that the contractors will normally make their payments directly from a Nigerian company whereas the owners will not know what taxes apply; they will only pay one fee to the contractors.

The provision in subclause (d) concerning withholding taxes which the owners are obliged to pay on behalf of the contractors to relevant tax authorities has been maintained but has been qualified in view of the inclusion of the new subclause (c) and its general application.

SECTION 7 – Legal and Liabilities

Clause 16 (Liabilities and Indemnities)

Along with the clauses covering insurances and permits, the liabilities and indemnities provisions are at the very heart of SEV-GUARDCON. This was also the case with GUARDCON and to maintain familiarity as far as possible the provisions and, notably, the knock for knock regime have been left intact, except for a few important amendments.

The “knock for knock” mutual allocation of risk principles applied by the contract means that each party is responsible for loss of/damage to and/or death of/injury to any of its own property and/or personnel or that of the entities within its defined “group”; responsibility is without recourse to the other party; and each party, in respect of the losses, damages or other liabilities it has assumed responsibility for, indemnifies the other party. The MLO has been carved out from the owners’ group. If MLOs board an owners’ vessel they will still be considered part of the “Contractors’ Group”.

It should be noted that subclause (b) is not an exclusion of liability. It is a contractual arrangement whereby two parties agree to hold each other harmless and indemnify each other for this liability (up to the contractual cap). It does not exclude liability to an injured/dead person (such as a fisherman killed by a security guard), who would still claim in the normal way against whichever of the contracting parties is the party at fault (who may then be able to take the benefit of this indemnity to recover from the other contracting party). The contractors are not responsible for loss or damage caused by the unseaworthiness of the SEV.

Subclause (c) concerns third party liability. To be consistent with subclause (b), the provision is reciprocal with each party indemnifying the other against claims by third parties with the exception of claims from third parties arising out of the owners’ or contractors’ own negligence. The reference to “unlawful” act is intended to cover scenarios such as a fisherman being killed by a security guard using unlawful force.

To ensure consistency with subclause 10(c), which specifies that the owners and contractors are not responsible for any actions of the security personnel against any unauthorised person on board or attempting to board the owners’ vessel, subclause (c)(iii) from GUARDCON has not been included. It addressed third party claims (including claims from the crew) in the event of a liability caused as a result of a firearm being accidently or negligently fired by a security guard – which is not relevant in the context of a vessel escort service.

The handling of claims is dealt with under subclause (c)(iii) which provides that the parties have the option to take over the handling of specific claims from the other party for which they would otherwise have to provide an indemnity.

Subclause (d) places a minimum US$5 million contractual cap on the liabilities of each party to the other while recognising that although the owners may have rights of limitation under international conventions and national law, the contractors do not have any such rights. The drafting team carefully considered the contractual cap and whether it should be the same as the one in GUARDCON. It was decided to keep them the same because it is considered one of the benefits of the contract. Also, the market had taken some time to accept the GUARDCON limit which has now become an industry benchmark. It was also considered useful to maintain the cap for consistency and to make it easier to apply in practice.

Subclause (e) is the consequential damages provision carried over unamended from GUARDCON.

Clause 17 (Contractors’ Personnel and SEV Security Personnel Liability)

The clause is basically a “Himalaya” provision that has been carried over from GUARDCON with the exception that it is tailored to the requirements of the contractors’ personnel and security personnel by extending the contractual protections afforded the contractors to their employees.

Clause 18 (Contractors’ Personnel – Waiver)

Given the nature of the contract and, notably, that the contractors’ personnel will not normally come on board the owners’ vessel, the provision from GUARDCON has been amended to clarify that it only applies if the contractors’ personnel come on board. The standard form of waiver has been maintained as Annex C.

Clause 19 (Delay)

The clause, in subclause (a), imposes an obligation on the contractors to keep the owners and their vessel advised of any changes to the SEV’s rendezvous time. It was considered if a grace period should be provided to the contractors similar to the one in GUARDCON whereby the first 24 hours of any delay in embarking the security team and their equipment is absorbed. However, the drafting team considered this would tilt the balance of the clause too much in favour of the contractors and it was better left for the parties to negotiate whether any such grace period should apply.

Subclause (b) deals with delays due to weather which result in the duration of the escort services being extended. In such cases a daily rate should be paid equivalent to the fees payable by the owners divided by the estimated transit period.

Clause 20 (Cancellation and Termination)

In view of the fundamentally different nature of the security services provided by an independently operated SEV as compared with guards embarking the owners’ vessel, the cancellation and termination provision has been significantly amended compared with GUARDCON.

If the SEV does not arrive at the rendezvous point to meet the owners’ vessel within six hours of the agreed time, the owners have the right to cancel the transit in accordance with subclause (a). This is considered a fair compromise to ensure that the owners do not cancel the transit because of minor delays. Delays can happen and it is in the interest of all parties that the transit is successfully carried out.

The sliding scale compensation mechanism for the benefit of the contractors has been maintained, albeit with higher percentages to be paid the closer to the rendezvous time the notice of cancellation is given. This reflects what appears to be the norm in the SEV sector. It is recognised that some parties might wish to make amendments to the sliding scale and this is left for commercial negotiation. If the owners have paid a mobilisation fee to the contractors, the balance of that fee should be returned to the owners.

Termination for cause is dealt with under subclause (b) and is based on standard wording found in other BIMCO contracts.

When SEV-GUARDCON is used as a framework agreement it is an “evergreen” contract. If the parties wish to bring it to an end for reasons other than fault, they are required to give the other party 30 days’ notice in accordance with Clause 2 (Commencement, Appointment and Duration). The minimum contract period is 12 months.

Clause 21 (Compliance with Laws and Regulations)

The clause has been carried over from GUARDCON and is a standard BIMCO wording. It specifies that the laws and regulations to be complied with are those of the flag state and the places where the client vessel trades (as opposed to where the SEV operates). In cases where laws and regulations of the flag state and/or the places where the client vessel trades conflict with international laws and regulations it should be specified which set of rules the contracting parties agree to follow.

Clause 22 (Health, Safety and Environmental Regulations)

While the contractors’ personnel will typically not come on board the client vessel, the owners may request the contractors to deploy an MLO for the performance of the security services. The clause ensures a consistent application of the owners’ HSE policy by everyone on board their ship.

The clause in GUARDCON dealing with drug and alcohol policy has not been included in the contract as the matter is considered sufficiently covered by this Clause 22.

Clause 23 (No Salvage)

The contractors’ waiver in relation to claims for salvage performed on the owners’ ship also applies to the SEV crew. The reason for this is that it might be as a result of the SEV’s crew’s actions in defending the owners’ ship that the ship requires salving.

Clause 24 (Anti-Corruption)

Subclause (a) requires the parties to comply with “all applicable anti-corruption legislation”. This aims to encompass any laws or regulations to which the parties are subject under their own national legislation or legislation in the country or jurisdiction where they are operating.

Subclause (b)(i) provides mutual indemnities whereby a party that has breached anti-corruption legislation to which it is subject, must indemnify the other party against any loss or damage suffered as a result by the latter. This provision is likely to be of assistance in response to incidents of non-compliance where the termination provision in subclause (b)(ii) cannot be or is not invoked. 

Subclause (b)(ii) sets out the criteria for termination. The provision cannot be invoked simply as an excuse to exit an inconvenient contract or used where the actions of the party seeking to rely on it have previously compromised the position of the other party.

Termination can be invoked either by the owners or the contractors but only where the other party has breached applicable legislation; and that breach has put the other, non-breaching, party in breach of anti-corruption legislation to which it is subject.

Clause 25 (Personal Data Protection)

This is the Personal Data Protection Clause taken from GUARDCON.

Subclause (a) sets out the parties’ respective duties for compliance with their data protection obligations for the collection and use, safeguarding, transfer and retention of information and protection of data subjects’ rights.

Subclause (b) requires arrangements to be in place for dealing with, and notifying regulatory authorities about, any breach of data security.

Subclause (c) requires party cooperation in relation to auditing company data protection systems and procedures.

Clause 26 (Sanctions)

Subclause (b) provides mutual warranties whereby each party warrants not to be or act as principal, agent, trustee or nominee of any person who is a sanctioned party.

Subclauses (c) and (d) provides warranties by the owners and contractors, respectively, that the client vessel and SEV, respectively, is not a sanctioned party and will not be employed in any sanctioned activity.

The non-breaching party is entitled to terminate the contract and claim damages further to subclause (e).

Clause 27 (BIMCO Law & 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 20 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 (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 (b) requires the parties to appoint three arbitrators but allows for a different number of arbitrators to be agreed.

Subclause (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 (d) provides for the small claims procedures offered by the named arbitration association, i.e. the LMAA Small Claims Procedure for London, the SMA Rules for Shortened Arbitration Procedure for New York, the SCMA Expedited Procedure for Singapore and the HKMAG Small Claims Procedure for Hong Kong. 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 (e) applies the terms, rules and 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 (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.

SECTION 8 - General

Clause 28 (Assignment)

The clause is taken from GUARDCON and is a standard wording other than the fact that the words “or delayed” have been incorporated as a useful addition.

Clause 29 (Notices and Communications)

This clause takes account of the BIMCO Law & Arbitration Clause 2020 and that the persons meant to receive notices and communications under that clause may be different from the owners and contractors otherwise indicated in Part I of the contract.

Clause 30 (Confidentiality)

Confidentiality is a matter of particular concern to both parties in this type of contract where security is of chief importance. The comprehensive mutual provision included in GUARDCON has been maintained, with the exception that it no longer excludes information that has come into the public domain because of the difficulty of authenticating the source of such information.

Clause 31 (Third Party Rights)

The purpose of this clause is to clarify that only third parties expressly identified in the contract can benefit from it.

Clause 32 (Partial Validity)

The Partial Validity Clause is taken from GUARDCON. It is designed to avoid a potential situation where the entire contract is held to be invalid simply because one provision is deemed by an arbitrator or other competent authority to be illegal, unenforceable or invalid. If the offending clause cannot be interpreted or amended in such a way as to make it valid, then this clause provides for it to be considered deleted but for the rest of the contract to be unaffected.

Clause 33 (Entire Contract)

This is a standard wording found in other BIMCO contracts. The purpose of the clause is to limit the rights of the parties to the written terms of the contract. As such it is intended to exclude representations, written and oral, not intended to be part of the final concluded contract.

Clause 34 (BIMCO Electronic Signature Clause 2021)

In view of the increased digitalisation of the shipping industry it has been found useful to include the BIMCO Electronic Signature Clause 2021 in SEV-GUARDCON, thus enabling the parties to sign the contract and any documents to be signed in connection herewith electronically. This may e.g. be instruction notices (see Annex B) and individual waivers (see Annex C) to be provided. Some jurisdictions may not recognise electronic signatures and in such cases the parties can obtain a physically signed contract further to subclause (c).

The full set of explanatory notes to the BIMCO Electronic Signature Clause 2021 are available here.

Annex A (Security Escort Vessel Minimum Requirements)

This annex is designed for the parties to provide the minimum requirements of the SEV. The annex will normally be filled in by the contractors and sent to the owners who will then inform the contractors if the SEV needs to comply with additional requirements e.g. in relation to sustainable operating speed.

Owners should therefore pay close attention to the information provided in the annex and ensure that, at the time of concluding the contract, the annex has been populated with key characteristics of the SEV and accompanying minimum requirements specified by the owners such as ensuring that the SEV can at all times match the speed of the owners’ vessel.

The drafting team considered whether the annex should include a reference to the minimum manning level but decided not to as in practice it would almost always be left blank. The contractors will in any case have to ensure minimum manning of the SEV because of their obligation to comply with applicable laws and regulations (Clause 21).

The annex also does not include a requirement to state the number of security personnel to be on board the SEV as this information is already sufficiently addressed in Box 8 and Clause 3 (Security Services).

Annex B (Instruction Notice)

When the contract is used as a framework agreement for multiple transits, the owners are required to issue an instruction notice detailing their requirements for each transit. The annex provides a pro forma instruction notice which can be used for this purpose.

The instruction notice highlights that the contractors will need to verify the rendezvous and release points. As compared with GUARDCON, the pro forma includes a possibility to indicate if the transit in question is a cross border transit and specify interim release/rendezvous points.

In line with the information to be provided in Box 6, the instruction notice lists the name, call sign and IMO/local registration of the SEV. If the SEV does not have an IMO number due to its size, the port and local registration number should be stated.

Annex C (Individual Waiver)

As mentioned in the notes above on Clause 18 (Contractors’ Personnel – Waiver), the contractors should, in cases where any of their personnel comes on board the owners’ vessel, use their best endeavours to ensure that these members sign individual waivers before boarding the vessel.

The annex provides a standard wording for the waiver that specifically refers to the terms of the contract. The waiver has been carried over from GUARDCON with appropriate modifications for the provision of security escort services including, notably, that references to weapons licences and Rules for the Use of Force have been deleted and that the waiver takes account of possible multiple transits.

The reference to the payment of US$10 “in consideration” has been deleted as it is not included in similar club waivers and would appear not to be paid in practice.

Annex D (Schedule of Fees for Multiple Transits)

The schedule of fees has been maintained but has been amended for multiple transits. The list included in the corresponding annex in GUARDCON has been deleted as it was specific to port embarkation and disembarkation charges. It is specified that the schedule of fees is to be agreed if not stated in the instruction notice contained in Annex B.

Annex E (Standard Operating Procedures)

This annex is intended for the standard operating procedures (SOP) that apply to the provision of security services under the contract. The SOP should be provided by the contractors.

The drafting team has prepared a list of suggested headers for the SOP. The headers are suggestions only and can be easily adapted for use in other parts of the world.

SUGGESTED MAIN HEADERS FOR Standard Operating Procedures:

 

1.       Introduction

2.       Nigeria Local Regulations

3.       Selection and Management of chartered Security Escort Vessels

3.1     Inspection

3.2     Sea Trial

3.3     Chartering

3.4     Management

4.       Management of owned Security Escort Vessels

4.1     Management & Maintenance

4.2     Sea Trials

4.3     Crewing

5.       Maritime Liaison Officers

5.1     Roles

5.2     Responsibilities

5.3     Training

5.4     Equipment

5.5     Mobilisation & Pre-Departure Checks

5.6     Reporting Protocols

6.       Security Escorting Procedures

6.1     Voyage Planning & Transit Threat Assessment

6.2     Mobilisation

6.3     Rendezvous Procedure

6.4     Security Escort Positioning

6.5     Client Vessel Procedures & Recommendations

6.6     Communications

6.7     Threat Detection & Assessment

6.8     SEV Security Personnel Rules of Engagement

6.9     Incident Response & Actions On

6.10   Offshore Terminal Entry/Exit Procedure

6.11   Port Terminal Entry/Exit Procedure

6.12   Hand-Off Procedure

6.13   Release Point Procedure

6.14   Post Operational Documentation

Copyright and availability

Copyright in SEV-GUARDCON is held by BIMCO.

 

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