War Risks Clause for Time Chartering 2013 (CONWARTIME 2013)


War Risks Clause for Time Chartering 2013 (CONWARTIME 2013)

BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013)

(a) For the purpose of this Clause, the words:

(i) “Owners” shall include the shipowners, bareboat charterers, disponent owners, managers or other operators who are charged with the management of the Vessel, and the Master; and

(ii) “War Risks” shall include any actual, threatened or reported:

war, act of war, civil war or hostilities; revolution; rebellion; civil commotion; warlike operations; laying of mines; acts of piracy and/or violent robbery and/or capture/seizure (hereinafter “Piracy”); acts of terrorists; acts of hostility or malicious damage; blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the government of any state or territory whether recognised or not, which, in the reasonable judgement of the Master and/or the Owners, may be dangerous or may become dangerous to the Vessel, cargo, crew or other persons on board the Vessel.

(b) The Vessel shall not be obliged to proceed or required to continue to or through, any port, place, area or zone, or any waterway or canal (hereinafter “Area”), where it appears that the Vessel, cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Master and/or the Owners, may be exposed to War Risks whether such risk existed at the time of entering into this Charter Party or occurred thereafter. Should the Vessel be within any such place as aforesaid, which only becomes dangerous, or may become dangerous, after entry into it, the Vessel shall be at liberty to leave it.

(c) The Vessel shall not be required to load contraband cargo, or to pass through any blockade as set out in Sub-clause (a), or to proceed to an Area where it may be subject to search and/or confiscation by a belligerent.

(d) If the Vessel proceeds to or through an Area exposed to War Risks, the Charterers shall reimburse to the Owners any additional premiums required by the Owners' insurers and the costs of any additional insurances that the Owners reasonably require in connection with War Risks.

(e) All payments arising under Sub-clause (d) shall be settled within fifteen (15) days of receipt of Owners’ supported invoices or on redelivery, whichever occurs first.

(f) If the Owners become liable under the terms of employment to pay to the crew any bonus or additional wages in respect of sailing into an Area which is dangerous in the manner defined by the said terms, then the actual bonus or additional wages paid shall be reimbursed to the Owners by the Charterers at the same time as the next payment of hire is due, or upon redelivery, whichever occurs first.

(g) The Vessel shall have liberty:

(i) to comply with all orders, directions, recommendations or advice as to departure, arrival, routes, sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery, or in any other way whatsoever, which are 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 of any state or territory whether recognised or not, body or group whatsoever acting with the power to compel compliance with their orders or directions;

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

(iii) 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;

(iv) to discharge at any alternative port any cargo or part thereof which may expose the Vessel to being held liable as a contraband carrier;

(v) to call at any alternative port to change the crew or any part thereof or other persons on board the Vessel when there is reason to believe that they may be subject to internment, imprisonment, detention or similar measures.

(h) If in accordance with their rights under the foregoing provisions of this Clause, the Owners shall refuse to proceed to the loading or discharging ports, or any one or more of them, they shall immediately inform the Charterers. No cargo shall be discharged at any alternative port without first giving the Charterers notice of the Owners’ intention to do so and requesting them to nominate a safe port for such discharge. Failing such nomination by the Charterers within 48 hours of the receipt of such notice and request, the Owners may discharge the cargo at any safe port of their own choice. All costs, risk and expenses for the alternative discharge shall be for the Charterers’ account.

(i) The Charterers shall indemnify the Owners for claims arising out of the Vessel proceeding in accordance with any of the provisions of Sub-clauses (b) to (h) which are made under any bills of lading, waybills or other documents evidencing contracts of carriage.

(j) When acting in accordance with any of the provisions of Sub-clauses (b) to (h) of 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.

Explanatory notes

The BIMCO CONWARTIME and VOYWAR War Risks Clauses, respectively for time and voyage charter parties, were last revised in 2004. However, as a result of views recently expressed by the courts, changes in trading practices during the intervening years and insurers’ response to user demands for specialist cover, a review has been undertaken to determine the basis and extent of changes required to ensure that the provisions remain in line with commercial needs. As a result, the Clauses have been updated and will be incorporated into all new and revised BIMCO charter parties and other documents.

BIMCO recommends that members using standard charter parties or other contracts with the existing 2004 edition (or earlier) of the War Risks Clauses replace these versions with the new 2013 edition.

The revision was conducted in parallel with a review of the BIMCO Piracy Clauses to ensure consistency between provisions common to both sets of Clauses. 

The following is a summary of the main changes.

CONWARTIME 2013 War Risks Clause for Time Charter Parties

A significant change arises from the case of the “Triton Lark”1 and the construction of CONWARTIME 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 the risk of attack by pirates and when owners have the right to refuse to proceed. In order to remove potential uncertainty, the test 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. Sub-clauses (a) and (b) have been amended to reflect the position. 

The opportunity has also been taken to clarify the mechanism triggering the Clause. It had been understood that CONWARTIME took effect if the identified risks arose after a charter party had been concluded and had not, therefore, been contemplated by the parties. This contrasts with the Piracy Clause for Time Charters (and the parallel provision for Consecutive Voyage Charter Parties and COAs) which expressly applies whether or not the risk in question was known at the time of fixing. However, it was held in the recent case of the “Paiwan Wisdom”2 that CONWARTIME did not contain a requirement that a war risk must have escalated since the date of the charter party.

In order to avoid any doubt about the position and remove the inconsistency with the Piracy Clause (given that CONWARTIME also covers piracy risks), an amendment to sub-clause (b) now provides that the Clause applies “whether such [war] risk existed at the time of entering into this charter party or occurred thereafter”.

The definition of “Piracy” (sub-clause (a)(ii)) has been aligned with the provision in the Piracy Clause to include acts of “violent robbery and/or capture/seizure”. Attacks of this type often occur in territorial waters and, while not technically piracy under international law, are treated as such for insurance purposes.

In line with the approach in the Piracy Clause, sub-clause (b) no longer requires charterers to obtain owners’ written consent before ordering the vessel to proceed to or through a war risk area. It is understood that consent is rarely requested in practice. Nevertheless, owners ultimately retain the right to refuse to navigate in an area of danger.

The insurance provisions (sub-clause (d)) have been 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 which, where CONWARTIME is used for piracy risks, is likely to include War Loss of Hire and/or maritime Kidnap and Ransom (K&R) cover.

Reference in the current 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 (g)(ii)) which provides that owners have liberty to comply with requirements “under the terms of the Vessel’s insurance(s)”.

Procedures to be followed in the event that owners invoke their rights to discharge cargo other than at the contractual destination are set out at sub-clause (h). A new final sentence makes clear that charterers are liable for any resulting costs, risk and expenses.

New sub-clause (i) is the standard provision requiring charterers to indemnify owners against any third party claims under bills of lading or other contracts of carriage.

The opportunity has also been taken to streamline the content and layout. A number of words and phrases have therefore been replaced or standardised so as to improve or clarify the text.

1 Pacific Basin Ihx Ltd v Bulkhandling Handymax AS (The Triton Lark) (2012)
2 Taokas Navigation SA v Komrowski Bulk Shipping KG (GMBH & Co) (The Paiwan Wisdom)(2012)

Originally published in BIMCO Special Circular No. 5, 16 July 2013 - Revised War Risks Clauses for Time and Voyage Charter Parties

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