The team of cross-industry bunker experts tasked with reviewing BIMCO’s standard bunker contract has been expanded to include a major physical bunker supplier.
Bunker traders, buyers and suppliers are all now represented on the BIMCO Terms 2015 subcommittee together with legal and P&I input. The review of the bunker contract is being done primarily to investigate whether there are any viable contractual solutions to protect buyers and physical suppliers in the event of another OW Bunker type bankruptcy. The BIMCO Terms 2015 have gained widespread approval in the industry and have a good foothold in the market.
BIMCO’s Grant Hunter says:
It’s really important for us to involve all the key stakeholders in this process. We want transparency and we want a commercially workable contract that is fair to both parties. All of the people on the review team share the common objective of producing an industry-acceptable set of terms and conditions for the purchase and delivery of marine fuels. We are really fortunate to have a group of like-minded individuals involved who are able to set aside their company interests and engage in an open-minded debate about what’s best for the industry as a whole.
The review of the BIMCO Terms 2015 bunker contract began late last year. The project team are wary of introducing “protective” clauses that are designed to avoid the potential of OW Bunker type double payments. Their concern is that in a fuel purchasing contract designed for global use, the clauses may give a false sense of comfort because they might not work in every jurisdiction.
We can’t write clauses that allow the parties to somehow avoid the application of national bankruptcy laws – it’s not possible says Hunter.
It may be that the group concludes that the most pragmatic approach is to provide advice and guidance on protective clauses on a jurisdiction basis – leaving it to the parties to decide what the most appropriate amendments should be to their bunker contract in each case. The team will also discuss possible improvements to the wording of the BIMCO Terms 2015 – but maintaining the flexibility that the contract currently provides. This will mean, in some cases, accepting compromise solutions that are acceptable to all stakeholders – often not an easy task.
The review process continues next month with a full day meeting in London at the offices of Clyde & Co, who are providing legal guidance.