Piracy Clause for Single Voyage Charter Parties 2013

BIMCO Piracy Clause for Single Voyage Charter Parties 2013

(a) If, after entering into this Charter Party, in the reasonable judgement of the Master and/or the Owners, any port, place, area or zone, or any waterway or canal (hereinafter “Area”) on any part of the route which is normally and customarily used on a voyage of the nature contracted for becomes dangerous, or the level of danger increases, to the Vessel, cargo, crew or other persons on board the Vessel due to any actual, threatened or reported acts of piracy and/or violent robbery and/or capture/seizure (hereinafter “Piracy”), the Owners shall be entitled to take a reasonable alternative route to the discharging port and, if they so decide, immediately give notice to the Charterers that such route will be taken. Should the Vessel be within any such place as aforesaid which only becomes dangerous, after entry, it shall be at liberty to leave it.

(b) In any event, if the Vessel proceeds to or through an Area exposed to the risk of Piracy the Owners shall have the liberty:

(i) to take reasonable preventative measures to protect the Vessel, crew and cargo including but not limited to re-routeing within the Area, proceeding in convoy, using escorts, avoiding day or night navigation, adjusting speed or course, or engaging security personnel and/or deploying equipment on or about the Vessel (including embarkation/disembarkation);

(ii) to comply with the requirements of the Owners’ insurers under the terms of the Vessel’s insurance(s);

(iii) to comply with all orders, directions, recommendations or advice given by the Government of the Nation under whose flag the Vessel sails, or other Government to whose laws the Owners are subject, or any other Government, body or group (including military authorities) whatsoever acting with the power to compel compliance with their orders or directions; and

(iv) to comply with the terms of any resolution of the Security Council of the United Nations, the effective orders of any other Supranational body which has the right to issue and give the same, and with national laws aimed at enforcing the same to which the Owners are subject, and to obey the orders and directions of those who are charged with their enforcement.

(c) This Clause shall be incorporated into any bill of lading, waybills or other documents evidencing contracts of carriage (hereinafter “Contracts of Carriage”) issued pursuant to this Charter Party. The Charterers shall indemnify the Owners against all consequences or liabilities that may arise from the Master signing Contracts of Carriage as presented to the extent that the terms of such Contracts of Carriage impose or result in the imposition of more onerous liabilities upon the Owners than those assumed by the Owners under this Clause.

(d) If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfilment of this Charter Party. In the event of a conflict between the provisions of this Clause and any implied or express provision of the Charter Party, this Clause shall prevail.

Explanatory notes

Background

Specialist Piracy Clauses setting out party rights and obligations in response to piracy risks were first issued in 2009. Three provisions were drafted respectively for time charter parties, consecutive voyage charters/COAs and single voyage charters. However, following a recent court case, changing trade practices, the need for clarifying charterers’ liabilities after a vessel is released following seizure and insurers’ response to user demands for specialist cover, a review has been undertaken to determine adjustments required to ensure that the provisions remain in line with commercial requirements. As a result, the Clauses have been updated. The 2013 editions of the Piracy Clauses are now available for market use in charter parties. BIMCO strongly recommends that members use the latest versions of the Piracy Clauses.

BIMCO is grateful to the following members, together with a specialist adviser on market insurance issues, for their work in developing updated provisions:

Mr Jean-Pierre Laffaye, Cetragpa, France (Chairman)
Mr Peter Eckhardt, F.Laeiz, Germany
Mr Georg Scheel, Nordisk, Norway
Mr Chris South, West of England P&I Club, UK
Mr Neil Roberts, Lloyd’s Market Association Joint War Committee, UK

The revision was conducted in parallel with a review of the BIMCO War Risks Clauses to ensure consistency between provisions common to both sets of Clauses. Commentary on the updated War Risks Clauses is set out in Special Circular No. 5, dated 16 July 2013.

The main changes to the BIMCO Piracy Clauses are summarised below:

General

As part of the review, the opportunity has been taken to streamline the content and layout of all three Clauses. A number of minor and consequential amendments have therefore been made to ensure consistency and improve or clarify the text.

BIMCO Piracy Clause for Time Charter Parties 2013

A significant change arises from the case of the “Triton Lark”1 where the court considered the construction of CONWARTIME (on which the Piracy Clause is modelled) in relation to measuring the risk of attack by pirates. The court placed considerable emphasis on the meaning of “may be” and “are likely to be” for determining the existence of risk and when owners have the right to refuse to proceed. In order to remove potential uncertainty, the test in CONWARTIME 2013 for determining whether to proceed has been amended and is now based on whether an area is dangerous. The level of danger is likely to be high but a stated reference point removes the need for complex analysis of degree of risk and whether or not it is more or less likely to occur. The same approach has been taken in the Piracy Clause for Time Charters where sub-clause (a) has been adjusted accordingly.

Sub-clause (c) sets out owners’ liberties to take appropriate precautions when a vessel proceeds to or through an area exposed to piracy risks. In sub-paragraph (i), covering on-board and navigational preventative measures, express reference has been made to the embarkation/disembarkation of security personal and equipment.

Reference in the 2009 edition of the Piracy Clause to owners’ rights to comply with war risk underwriters’ “orders, directions or recommendations” is not strictly correct. Insurers have no authority to give orders or instructions about routeing or navigation. Insurers might, however, require an assured to comply with reporting arrangements such as UKMTO or follow Best Management Practices. This is now reflected in revised text (sub-clause (c)(ii)) which provides that owners have liberty to comply with requirements “under the terms of the Vessel’s insurance(s)”.

The provisions in sub-clause (d)(iii) for taking out insurance cover are now more clearly stated. Charterers are liable for any additional premium (i.e. beyond owners’ normal war risk insurance cover) imposed by underwriters as a result of the vessel navigating in an area of enhanced risk. Charterers are also liable for the cost of any additional insurances required by owners with the stated, but non-exhaustive, illustrative examples of War Loss of Hire and/or maritime Kidnap and Ransom (K&R) cover.

Sub-clause (f) deals with seizure of a vessel by pirates and the position on subsequent release. The 90 day cap on charterers’ exposure to hire during captivity is maintained - although this does not affect charterers’ other contractual obligations which remain in place no matter how long the period of detention. The cap represents a sharing of risk but it is a starting point and parties are free to negotiate a figure which meets their specific needs. In any event, the capping of hire payments should be viewed together with owners’ option in sub-clause (d)(iii) to take out War Loss of Hire cover with the costs payable by charterers.

A vessel on release is likely to require repairs to make good damage and deterioration arising from the period of detention. However, the 2009 Clause does not deal with this and, in the absence of clear wording to the contrary, any time used for refurbishment could be expected to be an off-hire event. This has now been addressed with the inclusion of an express provision in subclause (f) holding charterers liable for hire, or if after redelivery the equivalent of charter party hire, for any time lost for repairs.

1 Pacific Basin Ihx Ltd v Bulkhandling Handymax AS (The Triton Lark) (2012)

BIMCO Piracy Clause for Consecutive Voyage Charter Parties and COAs 2013

Adjustments have been made in line with the changes noted in relation to the Piracy Clause for Time Charter Parties. In particular, sub-clause (a) has been amended to reflect the danger-based test for determining whether or not to proceed to or through an area exposed to piracy risks; subclause (b)(i) now makes reference to the embarkation/disembarkation of security personnel and equipment; and in sub-clause (b)(ii) the current reference to following underwriters’ orders is replaced by owners’ liberty to comply with the “terms of the Vessel’s insurance(s)”.

The basis of charterers’ obligation in sub-clause (c)(iii) to reimburse owners half the cost of any additional premiums or additional insurance cover is maintained. However, the provision has been amended to reflect the principles set out in the time charter version with illustrative examples of the type of cover which owners may wish to take out. 

A technical adjustment has been made to the requirement in sub-clause (e) to incorporate the Clause into any bill of lading. The obligation has been broadened to include “waybills or documents evidencing contracts of carriage”, collectively described as “Contracts of Carriage”.

BIMCO Piracy Clause for Single Voyage Charter Parties 2013

In line with the position set out above, sub-clause (a) has been adjusted to reflect the test for determining the risk of piracy; sub-clause (b)(i) now includes reference to the embarkation/disembarkation of security personnel and equipment; sub-clause (b)(ii) sets out owners’ liberty to comply with the terms of the vessel’s insurance; and the incorporation provision in sub-clause (e) has been amended to include waybills and other documents. As this is a voyage charter party clause, the costs of preventative measures and additional insurances are owners’ responsibility and are not therefore addressed.

Originally published in BIMCO Special Circular No. 7, 19 July 2013 - Revised Piracy Clauses.

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