Hydro and BIMCO update standard shipping contract. Hydro has updated existing standard voyage charter party. The new version of “Hydrocharter” is effective from March 1, 2017, and has been established in close cooperation with the shipping association BIMCO.
Op-Ed by Erik Kravets
BIMCO's SUPPLYTIME 2005 is a basic building block of offshore services and is used for ships as varied as crew transfer vessels, tugs and modern offshore service vessels (OSVs). The versatility of the contract is, however, in a way a product of its complexity. Perhaps to 'break up' the market, BIMCO has recently released more specifically tailored contracts like WINDTIME for crew transfer vessels, PROJECTCON for heavy lift cargo and an updated TOWHIRE 2008.
However, those contracts definitely take a back seat to SUPPLYTIME in terms of their industry reach and the scope and frequency of their practical application. So to get a clear view of SUPPLYTIME, the range of inquiry must go, first, from the multitude of boxes on the face to, second, APPENDIX A for a detailed assessment of the ship's capabilities and statistics to, third, APPENDIX B for the various insurances to be obtained by charterer and owner and then, finally, to the 38 clauses in the rear that govern the material legal aspects.
Not an easy charter party, in other words, to handle in practice.
On the whole, it is fair to say that SUPPLYTIME provides for a reasonable balance of the interests of the owner and charterer. However, given the nature of offshore services, the liability regime will necessarily be shifted slightly in favor of the owner since the charter rate he is presented with for the use of his ship and crew is generally disproportionately small compared to the value of the project (and hence to the potential scope of liability) in which he is involved.
My goal here is to provide a brief overview of the structure of the charter party.
The Famous “Boxes”
So let's begin with the face of the contract, the famous 'boxes.' It's important to recall that, in the past, such charter parties were written in long-form. That is to say, there were no boxes. Instead, there were blank sections of contract clauses, which had to be filled in with the relevant information. Today, boxes and references (e.g., '...as stated in Box 17...') provide the same functionality but a different aesthetic.
What's important to understand is that the boxes essentially fill in contract clauses. The information placed in the box is later used by the clause that references it, so it's best to think of the boxes as making changes to the operative text of the charter party.
In practice, I've seen 'N/A' or 'TBA' inserted into these boxes when SUPPLYTIME contracts are negotiated. This is generally an unfortunate choice as 'N/A' will, in general, negate the clause (i.e., make it inoperative) while 'TBA' has the potential to generate disclosure obligations. Neither of the parties generally wants this result. Rather, they are trying to slog their way through the contract as quickly as possible, typically due to time pressures, but feel uncomfortable leaving certain clauses blank. And this discomfort is perhaps a good thing since it indicates that the parties are - at least in principle - aware that what they are doing harbors a considerable risk of arriving at a suboptimal legal result.
APPENDIX A
APPENDIX A is another section of the charter party where I often find mistakes. Or worse, I often find that APPENDIX A is not even filled out. While in principle I have no objection to data sheets about the chartered vessel being drawn upon to act in place of APPENDIX A, it is important to remember that the text of the charter party treats APPENDIX A as the operative section containing information about the nature and attributes of the vessel.
Thus the parties ought to make certain that they have validly and unambiguously incorporated the ship’s data sheet into the charter party instead of leaving open questions by, for example, allowing APPENDIX A to continue to exist parallel to the ship’s data sheet and failing to specify which has priority.
I also sometimes encounter acts of shocking legal violence directed at BIMCO charter parties in general, and SUPPLYTIME is no exception. One sort of arrangement I have found is massive numbers of rider clauses appended to the charter party, which deal with points that were often already discussed. These are sometimes struck from the face, sometimes not. I think these rider clauses are used because they are more clearly set out than the charter party and its references to boxes, which actually demands a high level of legal skill to fill out correctly.
So rider clauses and striking the BIMCO standard language provide a way to generate a text which feels more intuitive and tailored. Working with the BIMCO charter party and making the necessary adjustments takes more effort. But it can also provide more security. When possible, I always encourage that less text be struck and that we try to work within the language of the BIMCO form to ensure that the goals of the parties are adequately addressed.
Another risk that needs to be taken into consideration is that making adjustments and modifications to the BIMCO standard forms, even if done innocently, can lead to problems down the road. Courts do not look favorably upon parties that do not make such modifications clear. So appending rider clauses and deleting the main text, rather than striking it through, can run the risk of fraud. I have seen forms which look essentially like they are from BIMCO, but upon careful comparison with the original BIMCO form it is obvious that some boxes and language on the face of the contract are missing entirely and that the form has been manipulated.
APPENDIX B
APPENDIX B is also an essential part of SUPPLYTIME, especially given the knock-for-knock rule. Essentially, knock for knock is a 'shorthand' way to assign insurance risk. APPENDIX B then provides the parties a platform for apportioning this risk and specifying which policies need to be purchased.
As I have been arguing, it is essential that the form be filled out and that rider clauses not be used without unambiguously striking through the language in APPENDIX B that the rider clauses are designed to replace. Great caution must be exercised since otherwise it is possible to create a self-contradicting or unclear contract, which is an open gate to litigation.
In the hope that this has provided some guidance, I refer to the wisdom of the Legend of Zelda. – MarEx
Erik Kravets is a maritime lawyer based in Cuxhaven, Germany.
Editor’s Note: The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
Software and apps can be found for almost all aspects of shipping including some which few owners would have considered as needing any modern intervention. The advent of smart phones and app stores with almost anyone able to develop an app and market it has brought some new ideas into shipping but commercial success for app producers will be much harder to come by because of the difficulty in advertising to the diverse shipping audience. Apps produced by established organisations will have more success and these are increasing in number.
As well as new apps, there are plenty of older offerings some of which have been constantly updated and upgraded but others which have remained perfectly adequate and which have stood the test of time.
Chartering/Broking
Shipbrokers have been crunching numbers comparing voyage estimates, customising standard charter party forms and calculating demurrage and despatch from laytime statements for centuries. Until quite recently all of this was done without any form of electronic assistance, but brokers were quick to recognise the advantages of computers at a very early stage in their development. Many brokers developed in-house voyage estimating software in the days when DOS was the standard operating platform speeding up the calculations that previous generations had done using simple calculators and mental arithmetic.
Voyage estimating is an ideal subject for software not least because basic information is often repeated. Details such as ships’ tonnages, capacity and consumption as well as marine distance tables can be held on databases and recalled at the click of a mouse button. Since most estimating involves comparing two or more employment offers, the simpler this becomes the better allowing for fast offers and counter offers to be made. It can also help prevent costly errors by requiring important fields such as reply by times, freight rates etc to be completed before sending any offer.
Voyage estimating has become more complex over recent years with the advent of ECAs and some older versions are now probably obsolete because they do not include the need to account for low-sulphur or alternative fuels for use in ECAs. Another factor that needs to be considered in relation to ECAs is whether it is worth selecting a slightly longer route that avoids entry into ECAs for as long as possible allowing cheaper fuel to be used. The lost time and extra fuel used can sometimes be more than offset by the price of fuels.
A voyage estimate is usually done simultaneously with charter negotiations. When negotiations are complete the charter party has to be produced. Rarely is this the standard form as distributed by the likes of BIMCO or trade bodies but will be a heavily altered version of such a form.
Charter party editing programs can store basic standard forms as well as the various amended versions thereof drawn up by charterers and owners for completion with ship details and dates as appropriate. A comprehensive editing program will often be an online service where amended documents are available to both parties to view.
IDEA2is a web based portal from BIMCO the ship owners trade body that gives subscribers full access to BIMCO’s entire range of standard contracts and clauses. To work on any of BIMCO’s standard contracts users simply log into their company account, select one of the many contract template for editing. Users can access charter parties and other documents where there is access to the internet.
The IDEA2program and all user files are centrally stored on BIMCO’s secure web servers. High volume users can pay an annual subscription fee and then pay a small fixed fee for each final contract produced. Draft copies are always free. Small users that only need IDEA2 for a few contracts can simply sign up to pay an individual fee for each one printed.
The IDEA2program and all user files are centrally stored on BIMCO’s secure web servers. High volume users can pay an annual subscription fee and then pay a small fixed fee for each final contract produced. Draft copies are always free. Small users that only need IDEA2 for a few contracts can simply sign up to pay an individual fee for each one printed.
ASBA is the US trade body for brokers and agents and has developed its own charter party editor. This software is designed specifically to be extremely easy and intuitive to use offering a variety of features such as direct typing into the document, cut/paste text from a recap/text document directly in the CP form, emailing of both the executed form as well as the rider clause to a third party, offer a principle a “read only” version of the editor for checking the draft forms on-line, without the ability to edit the form itself.
At the end of the charter laytime calculating and demurrage and despatch are also mostly about number crunching and in straightforward cases, software does provide the potential for time saving in making the calculations. However, the software does not exist that can yet deal with the ingenious reasons and excuses put forward as to why the calculation result is ‘wrong’ and the sum of money claimed is therefore erroneous.
Whether proprietary or in house software, voyage estimate, charter party editors and laytime calculators are often developed as stand-alone products but they are of course all interconnected. There are a number of modular programs that do combine two or more of the elements and add in some additional features. One of the earliest and best known of these is Veson Nautical which over more than three decades has extended the modules and add-ons to its IMOS range. Since March 2015, Advanced Weather Technology which produces weather routeing software and Veson have tied up to offer an enhanced version to users of both software products.
Whether proprietary or in house software, voyage estimate, charter party editors and laytime calculators are often developed as stand-alone products but they are of course all interconnected. There are a number of modular programs that do combine two or more of the elements and add in some additional features. One of the earliest and best known of these is Veson Nautical which over more than three decades has extended the modules and add-ons to its IMOS range. Since March 2015, Advanced Weather Technology which produces weather routeing software and Veson have tied up to offer an enhanced version to users of both software products.
Frequently charterers have standard lists of questions that are used for assessing potential ships for charter. In the tanker trades, Intertanko’s standard questionnaire known as Q88 from the number of questions on the original document is accepted as an industry standard replacing a number of similar but different proprietary forms. The dry sector has more variety in requirements from major charterers but software and cloud-based systems from the likes of US-based Q88 can be useful in maintaining a central database of questionnaire responses, certificates and other documents for use by potential charterers. In addition, Q88 has another product called Milbros which is a database for chemical tanker operators containing details of more than 12,000 commodities providing cargo, cleaning, handling and safety information accessible around the clock.
Port Documentation and Reporting
This is an aspect of shipping where port agents rather than the ships’ officers actually do most of the work although some regulators and industry bodies take an opposite view. Completing basic FAL forms is something an experienced port agent can do in a matter of minutes especially if they gather and retain the needed information on ships that are regular callers or if they take a few minutes to collect the information at the time of their appointment. There are some commercial programs available as well with DNV GL’s Navigator being one of the pioneers in the field. Navigator Port is tailor made for carrying out the planning and preparation of documents needed for entry and departure from ports and sailing through controlled waters. The Arrival and Departure Checklists are unique to each and every port and regulated waters. The module covers more than 11.000 ports and terminals worldwide and is regularly updated.
The IMO has embarked on making electronic transfer of FAL forms along with cargo and passenger documentation mandatory. At present the port states that allow electronic reporting, do so using a range of different formats and there is no standard method. Therefore, until a standard is agreed upon, any owner will need to be able to prepare electronic documents in the same range of formats that ports demand. This may mean that the time saving suggest may be illusory.
Medical records and Pharmacy
All ships are obliged to carry medical stores and have on board personnel trained in first aid or even doctors depending on ship size and purpose. Managing the ship’s medical stores can be a complicated and time consuming task as many medicines have expiry dates and different stores can be needed depending on area of operation. Flag states also have rules that may be unique.
Specialist software for aiding in the medical aspects of the ship is not common but there are some including that developed by Medi 3 ShipMed of Ålesund, Norway. The software offered by the company is primarily intended to monitor and control a vessel’s medical supplies, but it can also be used as a source of medical advice. A full subscription to the service will also give access to telemedicine.
ShipMedSafety System manages the medical stores and provides a full overview of the stock, expiry dates, distribution and purchase of medicines and medical equipment, as well as reports for stock, consumption and purchase. The software also provides a guide to use of medicines and medical equipment, a quick reference for medical equipment for different injuries and video clips showing various medical procedures. It is available in Norwegian, English and Portuguese and covers lists of ships medicine for a wide variety of flag states.
Apps for all purposes
Since the advent of tablets and mobile devices, programs seem to have given way to apps and more and more of these are appearing. They cover all aspects of shipping and are often produced by amateurs although there are several online services that have now been re-jigged as apps.
One of the latter is the cargo information website cargohandbook.com developed by BMT Surveys. It claims to be the world’s largest database on transportation of cargoes in the marine industry and is aimed at providing a platform acceptable for everyone to provide and share the best knowledge available on cargo transportation, thereby hoping to contribute to awareness and prevention of loss. The website provides information on commodities with emphasis on those characteristics which may be relevant during sea transport. The guidelines are general in nature and the amount of information largely depends on availability and level of transport-related research done. Specific information provided by manufacturers, shippers, authorities and shipping lines may differ and the user of the site may be advised to do further research in some cases.
One of the latter is the cargo information website cargohandbook.com developed by BMT Surveys. It claims to be the world’s largest database on transportation of cargoes in the marine industry and is aimed at providing a platform acceptable for everyone to provide and share the best knowledge available on cargo transportation, thereby hoping to contribute to awareness and prevention of loss. The website provides information on commodities with emphasis on those characteristics which may be relevant during sea transport. The guidelines are general in nature and the amount of information largely depends on availability and level of transport-related research done. Specific information provided by manufacturers, shippers, authorities and shipping lines may differ and the user of the site may be advised to do further research in some cases.
The Cargohandbook App can be downloaded, free of charge, both in the App Store (iOS) and Play Store (Android). It gives direct access to the carriage guidelines for the more than 800 commodities on Cargohandbook.com.
An app developed for the ‘unattached’ seafarer not employed directly by shipowners or who are registered with multiple crewing agencies and who is responsible for managing his own certification has been developed by Jesper Holmgren Sveegard himself a seafarer and co-founder of Odense, Denmark-based C-Alarm. C-alarm is a web-based app which is effectively a digital discharge book. A seafarer’s certificates are scanned in and the details of appropriate dates entered after which C-Alarm acts as an online web-app reminder service for monitoring the seafarer’s certificates and documents and which issues reminder by e-mail and SMS at predetermined times before a certificate expires.