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Bimco's Supplytime 2017 – a less owner-friendly form?

Wed 09 Jan 2019 by Alex McCooke, The Shipowners' Club

Bimco's Supplytime 2017 – a less owner-friendly form?

The Shipowners' Club's Offshore/LCC claims syndicate manager Alex McCooke considers the ways in which Bimco's Supplytime 2017 contract differs from its predecessors

Bimco’s Supplytime charterparty form has been in use since 1975. It was released to provide a time charter specifically tailored to supply vessel owners. Over the years the form has been improved, developed a knock-for-knock regime and reflected changes in industry practice. There is no doubt that it has been widely successful. It is the most common standard form contract we encounter in the Offshore Syndicate, and it is often used for non supply-vessel operations. Of Bimco’s more than 200 standard form contracts we understand that it is by some way their best seller.

The 1975 version has long since fallen out of use, and the 1989 version now reportedly accounts for only around 2% of Supplytime contracts entered into. So it is the 2005 form that has for some time been the industry standard, accounting for the vast majority of Supplytime work. However, there is a growing interest in Bimco’s new version of the form, Supplytime 2017, released in June 2017. As we visited our offshore members in 2018 one common question was whether this revision is less owner-friendly. In order to answer that fully, we have summarised three different ways in which the form has been updated.

Firstly, many of the changes made are just plain improvements to the wording. They make the charter party more comprehensive and clear, which arguably benefits both the charterers and owners. For example:

  • Providing express definitions of key terms like affiliates, banking days and crew.
  • Inserting clauses to deal with recent legislative changes (MLC 2006, anti-corruption, sanctions, designated entities etc).
  • Rearranging and rewording the consequential loss clause. Arguably the 2005 version only excluded the named heads of loss to the extent they could also be categorised as ‘indirect’ losses under English law; whereas the parties’ intention was probably to exclude such losses entirely.
  • Providing a specific clause dealing with the lay-up of the vessel, which clarifies in advance the relevant notice periods, obligations, reduced rates of hire and effect of expiry of the charter party during lay-up.
  • Modernising the language throughout (‘fuel’ instead of ‘bunkers’), and tightening the drafting generally (eg ‘with cargo tanks clean to applicable industry standards’ instead of ‘with clean tanks’).
  • Revising the termination clause to make the rights and mechanics of termination clear. 

Secondly, a number of the changes could be said to be owner friendly. For example:

  • The parties caught by the knock-for-knock regime have been widened considerably. Under 2005, a charterer’s indemnity to owners included their property and that of their contractors, subcontractors and customers. Owners of property in the field often fell outside this direct-link test by being further along a chain of parties. The new regime extends the indemnity to the charterer’s contractors, subcontractors and clients ‘of any tier’ (ie regardless of how far along the chain they are). As co-venturers, affiliates and employees are also named, all property expected to be in the field should now be covered by the indemnity.
  • The brief wording on epidemic/fever has been replaced with the very comprehensive and clear protections for owners in Bimco’s infectious or contagious diseases clause for time charter parties.
  • A new survey and audit regime aims to mitigate the risk of charterers arguing that the vessel is not on hire because it has not yet been surveyed or inspected. Some owners have expressed a view that the new regime goes too far in providing for ongoing surveys throughout the charter period, at the charterer’s request. However, in the 2008 'Silver Constellation' case similar ship inspections were held to be allowable even without an express provision in the time charter agreement.

Finally, there are a number of changes which were designed to rebalance the knock-for-knock, and make the form leaner, which are beneficial to the charterers. For example:

  • There were previously 12 carve outs from the indemnity owners provide the charterers with in relation to damage to the vessel. In other words, 12 circumstances where the owners retained a right of claim against the charterers, despite the knock-for-knock provisions. These have been reduced to just three. Notable previous carve outs lost are in respect of explosives and dangerous cargo, loading and unloading cargo, carrying contraband and off-spec bunkers.
  • The general average (GA), new Jason and both-to-blame collision clauses are now absent. The GA clause set out the rules by which owners could make GA claims. The new Jason clause allowed GA recoveries to be made under US law, where statute could otherwise have prevented them. And the both-to-blame collision clause prevented cargo interests under US law circumventing the error of navigation defences in the Hague Visby Rules. If owners are carrying cargo, and in particular if US law may be involved, they will wish to reinsert these provisions.
  • The owners’ pollution liability was previously limited to cover only the ‘acts or omissions of the owners or their personnel’. This narrowing text has now been removed from clause 15(a).
  • The ability of the owners to ‘cash in’ unused maintenance days at the conclusion of the charter has been removed. Owners are only able to claim the value of any days unused if they have been asked not to take them by the charterers.

It is hard to describe the entirety of the changes in the Supplytime 2017 form as either owner or charterer friendly, but in some circumstances owners may feel that some of what the new form provides in benefits is outweighed by the elements given up. It would not therefore be surprising for the 2017 form to quickly develop its own set of common amendments.

In releasing any improved charterparty text, one of the desired outcomes must be that new users are attracted to use the form. So there may be occasions where owners will welcome receiving an unamended 2017 form, particularly where it is provided in place of a more onerous contract.

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