CONTRACTS AND CLAUSES March 2020 Politics, innovation and regulation increase demand for contracts and clauses By Christian Hoppe, General Counsel at BIMCO BIMCO has a strategy to provide standard forms for all sectors of the industry, covering the entire life- cycle of ships For the shipping industry, 2020 has become synonymous with the global sulphur regulation – but it is also a key year from a contractual perspective. Not only will BIMCO’s 2020 sulphur clauses for time charter parties be tested in practice, but contracts covering areas such as finance, innovation and technology, and tankers will also be in focus. BIMCO’s Contracts & Clauses team will be busy in 2020, as it bids to keep up with a constantly changing world. Sanctions, political unrest, new environmental regulations and innovation mean ever more demands for contracts and clauses. While continuing to update and improve existing forms, BIMCO will this year develop: a sanctions clause dedicated to the container trade; anti-corruption clauses for standard contracts, such as SHIPMAN and CREWMAN; a shore disposal contract for offshore structures, such as wind turbines; and a standard charter party guarantee and a refund guarantee for shipbuilding contracts. Revising the classics This will also be the year when BIMCO concludes the revision of its widely used standard voyage charter party GENCON 1994. In parallel, the standard contract of affreightment, GENCOA, will be revised to develop a package of up-to-date and complementary “partner forms”. With an ambition to develop what we hope will become a widely used voyage charter party for the gas tanker industry, BIMCO – together with the Association of Ship Brokers & Agents (USA), Inc (ASBA) – will finalise a standard voyage charter party for gas tankers, ASBAGASVOY. ASBA also holds the copyright to ASBATANKVOY, the widely used tanker voyage charter party, which will also be revised with BIMCO. The development of a ship sale and purchase memorandum of agreement (MOA) will be another milestone for BIMCO’s contracts and clauses-related activities. The new standard will offer a novel, comprehensive, and clearly structured alternative to existing forms. “BIMCO has a strategy to provide standard forms for all sectors of the industry, covering the entire life- cycle of ships. It is a natural step for the association to have its own MOA for S&P transactions,” says Francis Sarre, Chairman of BIMCO’s Documentary Committee. From financing to offshore BIMCO will also be cementing its move into the ship financing sector with the development of a term sheet dedicated to ship sale and leaseback transactions. Such transactions are booming, and the project has attracted a lot of attention from the finance sector. The new standard will complete the suite of term sheets available for financiers, shipowners and their advisers, providing a more balanced starting point for their negotiations and enabling them to save time and money. The offshore sector is one of the most successful and progressive in terms of development of BIMCO contracts. In this area, BIMCO will be expanding its already wide range of standard forms with a time charter party for accommodation support vessels and more task-related annexes for the 2017 version of SUPPLYTIME. The international ocean towage agreements, TOWCON 2008 and TOWHIRE 2008 – and our standard barge charter party BARGEHIRE 2008 – will also be revised to ensure they reflect commercial practice. Exploring new horizons In a world where the shipping industry must take into account risks associated with cyber security, and the benefits to be gained from blockchain technology – and where commercial autonomous shipping on a grander scale is a very real prospect – the diversity of BIMCO’s standard forms has to keep up and adapt to this changing environment. “BIMCO has always been at the forefront when it comes to the development of contracts and clauses, and the industry expects us to be one step ahead of the game,” Sarre says. An example of this is the recently launched project to develop a ship-management contract for autonomous ships. The first three inshore autonomous cargo ships in the world are due to be delivered at the end of 2020. The introduction of autonomous ships on a grander scale represents huge opportunities and challenges for the shipping industry, and BIMCO is committed to playing its part to facilitate commercial autonomous shipping operations through the development of specialised contracts. Also under development will be a charter party clause encouraging shipowners and charterers to adopt the use of standard data segments when transmitting port logistic operational data and real-time data – such as information required according to IMO instruments – to ports and other stakeholders before arrival. Minimising the risk of disputes As arbitration plays a key role in international shipping, BIMCO will be reviewing the standard Dispute Resolution Clause 2017, to develop a short “one size fits all” clause. Photo (top): iStock / skynesher Hong Kong is to be added as the fourth named venue in BIMCO’s Dispute Resolution Clause, reflecting its increased popularity as a centre for dispute resolution and that it is currently ranked among the top maritime arbitration centres in the world. The goal is for the clause to be suitable for UK, US, Singapore and Hong Kong arbitration. Parties will be able to select one of the four named venues and the corresponding law – or make another free choice of law and arbitration if they wish. Managing contractual risks BIMCO’s contracts and clauses are clearly worded and consistent, to create legal certainty and manage contractual risk. One of the most enduring challenges is to ensure these benefits are not undermined by users typing up and distributing their own copies of BIMCO’s forms. Unauthorised copies of contracts and clauses not only breach BIMCO’s copyright, but they also have far-reaching and damaging effects for the entire shipping industry. They create uncertainty about the authenticity of the contractual framework in place between the parties, and can give rise to costly disputes if they contain changes that are not readily visible. BIMCO forms are made available on SmartCon, our easy-to-use, secure and cost-effective platform for editing contracts and clauses. In an effort to promote the use of authentic BIMCO forms, we will be developing an authenticity clause, to be included in all our standard contracts, under which parties pledge to use and pay for authentic copies of our forms. Connect with BIMCO Over the years, the Dispute Resolution Clause has become the longest in BIMCO’s library of standard clauses – not least because of the addition of more arbitration venues and the inclusion of the mediation provision in 2001. ever more demands for contracts and clauses Sanctions, political unrest, new environmental regulations and innovation mean About BIMCO’s contracts and clauses BIMCO has provided contracts and clauses to the maritime industry for more than 100 years, and is the world leader in the development of standard forms. The Documentary Committee is the oversight body for all matters relating to the development of contracts and clauses. It has 65 members with shipping, legal, commercial, and broking and insurance expertise. The committee meets twice a year to approve new contracts and clauses for publication, and decide the future work programme based on demands from the industry and BIMCO’s strategy to provide contracts and clauses covering each niche of shipping. The next meeting will take place in London on 27 May. The drafting of contracts and clauses is carried out by subcommittees, under the instruction of the Documentary Committee. Currently, there are about 20 contracts and clauses projects under way. All contracts and clauses are available in SmartCon, BIMCO’s new editing platform, available on the BIMCO website. Facebook Twitter Linkedin YouTube Christian Hoppe is the General Counsel at BIMCO. He has a degree in law from the University of Copenhage and an LL.M. with distinction from the University of Southampton. Christian joined BIMCO in 2009 and represents the association at a number of international meetings, including the IMO’s Legal Committee. He provides legal and policy input on a wide range of shipping- related matters.