BARGEHIRE is a bareboat charter party specifically designed for unmanned, non-self-propelled seagoing barges. It is a lease agreement whereby the charterer obtains possession and full control of the barge along with the legal and financial responsibility for it. The charterer generally pays for operating expenses such as maintenance and repairs but, unlike bareboat chartered ships, barges are often chartered with owner’s insurances made available to the charterer.
Copyright in BARGEHIRE 2008 is held by BIMCO.
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BIMCO’s widely-used standard barge bareboat charter party was first formulated and published in 1994. It is part of a suite of offshore and marine construction industry related standard documents produced by BIMCO, which includes SUPPLYTIME, TOWCON, TOWHIRE, HEAVYCON and PROJECTCON.
BARGEHIRE is designed to provide a balanced and practical agreement to serve the needs of those involved in the chartering of unmanned non-self-propelled barges used for both offshore and civil work. The charterers of large and smaller barges are usually oil companies, construction contractors and fabrication yards who use the barges for transportation and storage of heavy and voluminous cargoes, such as modules for offshore platforms, in long and short term contracts.
To keep pace with commercial practice it was agreed in 2007 that the form should undergo a modest revision. The key objective of the revision process was to address the insurance provisions of BARGEHIRE which were felt to not be as clearly worded as they could be. In the new edition, Hull and Machinery insurance and P&I insurance have been split into two separate clauses. Because of the way BARGEHIRE is used commercially and in particular where the charterers are permitted to rely on the owners’ P&I insurances, it is essential that the insurance provisions clearly spell out the insurance implications to the parties. The new edition of BARGEHIRE more clearly isolates the various insurance options and their associated liabilities. With the new structure the charterers should not be in any doubt as to the extent of their cover and their liabilities when named on the owners’ P&I cover as joint entrants.
Although the form is based on BIMCO’s standard bareboat charter party, BARECON, barges are often chartered with owner’s insurance made available to the charterers. In this mode the contract is more similar to a time charter. However, it differs from that form of contract in that the owners exercise no control over the barge during the contract period and will rarely even know the location of the barge.
The revision process has also provided the opportunity to update some of the standard BIMCO “core” clauses, such as the Law and Arbitration Clause, to the latest editions. Some new features have been introduced, such as provisions relating to the health and safety of ballast engineers on board the barge.
The subcommittee responsible for revising BARGEHIRE was drawn largely from among BIMCO member companies involved in the barge trade. BIMCO would like to thank all the members of the subcommittee for their assistance:
Geoffrey Potts, Anchor Marine Transportation Limited, UK (Chairman) (Owner)
Øyvind Aasland, Ugland Construction A/S, Norway (Owner)
Willem van Hijstee, Heerema Marine Contractors, Netherlands (Charterer)
Dirk Kwantes, LKL Ocean Trade Inc., Netherlands (Broker)
Robert Dorey, the Standard Club, UK (Club)
The revised BARGEHIRE charter party has been code named BARGEHIRE 2008 and was adopted by the Documentary Committee at its meeting in Copenhagen in November 2008. The form retains the familiar Part I box layout which provides a useful summary of all the key variables of the contract such as details of the parties and payment terms. The main terms and conditions of the agreement are contained in Part II of the form.
Barges are not subject to the ISPS code which excludes crafts with no means of mechanical propulsion; as a consequence, BIMCO’s standard ISPS/MTSA Clause has not been included in the revised BARGEHIRE. However, parties should be aware that local regulations may take precedence over the relevant provisions in SOLAS. We recommend that parties investigate this in each case and add, where necessary, the ISPS/MTSA Clause from BIMCO’s library of free-standing clauses on www.bimco.org.
As with many other recent BIMCO forms, BARGEHIRE contains a definitions section where the most important, recurring terms of the contract are defined. In line with recent BIMCO forms it has been amended to make reference to the parties stated in Part I of the contract instead of describing the nature of the entities.
This clause describes the owners’ consideration for the charterers’ payment of hire, namely to hire the barge to the charterers for the agreed period of time as stated in Part I. Apart from tidying up the wording throughout the clause, sub-clause 2 (b) has been deleted and further wording has been added to reflect the practice to state any extended period of hire in Box 13 of Part I.
The 10 days’ notice period required to declare an optional period has been made the default position which the parties may change by stating their preferred amount of time in Box 13 of Part I. The reason for this is that 10 days is often felt to be too short and the parties now have the opportunity to make the notice period more closely reflect the charter period.
Finally, the words “part thereof” has been deleted with the consequence that the charterers must specify what optional period they are electing and not be able to use only part of that period as they see fit. Otherwise, the owners would be in a difficult position in respect of planning the future employment of the barge.
This clause refers to the agreed place of delivery of the barge as stated in Part I. The words “taken over” and “taking over” have been replaced with “accepted” and “acceptance” as being more legally and commercially correct.
The clause goes on to describe the barge and its condition at delivery and that the delivery to and acceptance by the charterers should be considered full performance by the owners under this clause.
No amendments have been made to this clause. The parties are referred to the Box in Part I to fill out their agreed mobilisation/demobilisation fee and how, where, when, and in what currency, it should be paid.
To make this clause more balanced the owners’ right to substitute the barge up to 15 days before delivery has been made subject to the charterers’ approval.
The substituting barge should be of equivalent size and quality and the substitution should not result in any delay and additional costs for the charterers. Furthermore, the substitution should not affect the terms and conditions of the charter party and any additional costs due to substitution will be for the owners account.
Finally, the charterers must inform the owners of such additional costs within five days from the owners’ notice to use their right of substitution.
To reflect the fact that in the barge industry the contracts are often entered into some time in advance of the actual execution of the agreement, before the actual dates are known to the parties, the parties only have to state in Part I the delivery window within which the barge has to be delivered to the charterers.
Sub-clause (b) refers to Box 18 of Part I which contains a mechanism for narrowing down the initially wide delivery period so that the owners may use its barge efficiently.
Sub-clause (a) of this cancelling provision provides that the charterers are entitled to compensation at a daily rate or an agreed lumpsum by the owners, whichever is the lesser, in case of late delivery of the barge.
The words “day and time” have been replaced with “date” to be consistent with use in the rest of the contract.
Sub-clause (b) provides for non-delivery of the barge and gives the charterers a right to cancel the contract and obtain compensation from the owners as agreed in Part I.
Sub-clause (c) provides the charterers the right to cancel the charter party if the owners negligently or wilfully deliver the barge late. The words “gross” has been deleted from “gross negligence” as this is not an English legal term and it is inconsistent with recent BIMCO forms.
Sub-clause (d) contains the interpellation provision common in BIMCO’s standard charter parties. Its purpose is to avoid the sometimes-harsh result to an owner who cannot make a cancelling date but, nevertheless, is legally obliged to tender its barge, perhaps at a remote port, after having performed a long ballast voyage, only to be cancelled.
The effect of the interpellation is that a barge at risk of arriving after the cancellation date/time shall not have to proceed on a long voyage towards the delivery place, not knowing whether or not the charterers will accept or cancel the vessel once it has arrived. The interpellation provision provides a mechanism whereby the charterers are required to declare their intention to cancel following the owners’ notice that the barge will be late. This is an important provision, since the basic position under English law is that unless there is a relevant clause in the governing charter party the charterers can wait until the barge tenders its notice of readiness before they decide whether or not to cancel, thus obliging the owners to make a potentially useless ballast voyage.
If the owners anticipate with reasonable certainty that the barge will not be delivered by the agreed cancelling date then the owners can demand that the charterers declare whether they wish to maintain or cancel the charter party. The charterers will have to declare their option within 48 hours after the owners have given the notice. If the charterers choose to cancel, the owners may save considerable costs by not bringing the barge to the delivery port and may be able to fix the barge on another charter at an earlier time. If the charterers choose not to cancel the new cancelling date will be the new readiness date that the owners have stated in their notification.
Sub-clause (e) is new and gives the charterers the right to cancel the charter party before delivery on payment of hire for an agreed period as stated in Part I.
Under this clause, the charterers undertake not to employ the barge on terms that are inconsistent with the terms of insurance without having first obtained consent by the owners. Even though the parties may have opted for the charterers to take out insurance on the barge, the charterers should inform the owners of the intended employment of the barge.
The phrase “national sectors” has been replaced with “trading areas” as this is a more commonly used phrase.
The part in sub-clause (a) regarding the safe and afloat mooring of the barge and sub-clause 8(c) has been moved to new sub-clauses in Clause 13 as both provisions relate to operational matters and not to trading limits.
This Clause specifically excludes the loading and carriage of nuclear fuels and radioactive materials or waste, whereas the carriage of stone or similar cargo requires the owners’ consent due to the additional wear and tear or the excessive risk of damage such cargoes involve.
The parties should appoint a mutually acceptable marine surveyor for on-hire and off-hire surveys. The survey reports will constitute conclusive evidence of the condition of the barge and its equipment on delivery and redelivery. The figures supplied by the marine surveyor for the costs and time of repairing any damage to the barge will be binding on the parties, except when covered by the barge’s insurance.
The costs for the above-mentioned surveys should be shared equally between the parties, and the risk for time lost in connection with on-hire surveys is on the owners, while such risk in connection with off- hire surveys is on the charterers.
At delivery and redelivery, the marine surveyor should draw up a complete inventory of the enumerated items in the clause.
The clause has been amended to reflect the fact that in the barge trade, the charterers do not generally take over stores, etc from the owners and return at them redelivery as would happen under a conventional time charter party. The amounts used on barges are small, so it is easier for the charterers to just pay for what they have used and for them to be charged on a cost basis.
This clause provides the owners with the right to inspect or survey the barge throughout the charter period at their own cost.
Time will count during such inspections or surveys, which must not disturb the operations of the charterers. To avoid this, the owners should advise the charterer of any dry dock schedule in advance.
Furthermore, it has been added that the owners should notify the charterers of special surveys or dry dockings prior to the charter by stating them in Part I.
This is of particular importance for shorter hires of a few months which should not result in dry dockings.
Finally, the last paragraph provides an obligation for the charterers to immediately inform the owners in writing of any incidents occurring to the barge.
Akin to a bareboat charter the barge will be in full custody and absolute disposal of the charterers throughout the charter period. It follows that the responsibility for maintenance and operation of the barge rests with the charterers. Breach of this obligation will entitle the owners to withdraw the barge. To reflect the intention of the drafters to make the contract less bareboat-like the word “possession” has been replaced with “custody”.
A warranty by the charterers that the tug or tugs used should be of suitable size and quality for the intended services has been added.
The reference to classification in Sub-clause 13 (a) has been moved to the new clause 16 to avoid inconsistency and because this is a more logical place for that provision. For the same reasons, the reference to financial security has been moved to 17.
The last paragraph of Sub-clause (a) takes into consideration unforeseen requirements for structural changes or new costly equipment that may arise under a long-term charter, especially as a result of new international regulations.
If the changes which have become necessary cost more than five percent of the barge’s marine insurance value, the contract should be renegotiated. In case the parties fail to reach an agreement, the matter should be referred to arbitration in accordance with Clause 33 (BIMCO Dispute Resolution Clause).
The former sub-clause (f) has been deleted as is often done in practice, since cleaning and painting is covered under general maintenance in this Clause anyway.
The new sub-clauses (f) and (g) have been moved from clause 8 (Trading Limits) to this clause as a more logical place for them to be.
Sub-clauses (b) to (e) describe the rights and obligations of the charterers regarding maintenance and operation of the barge.
The charterers must ensure that a competent ballast engineer is always used for ballasting operations. All costs and expenses for the ballast engineer rests with the charterers. As ballast engineers, do not normally have qualifications in the conventional sense the words “fully qualified” have been replaced with “competent”.
Because the ballast engineer is the servant of the charterers, under whose instructions the engineer operates, they will have to indemnify the owners for all costs, expenses etc. that arises due to or in connection with the ballast operation. The liability and indemnity provision has been further clarified by stating that the liability for death and personal injury of the ballast engineer rests with the charterers.
Furthermore, it has been added that the ballast engineer should have safe access to the barge with someone on the charterers’ side in attendance at all times as this has proved a problem in practice.
This clause describes the payment of hire with reference to Part I of the contract. Sub-clause (a) has been amended to clarify that BARGEHIRE is a hire per day contract and not a hire pro rata contract, i.e., the charterers are obliged to pay for a full day’s hire even if the vessel is delivered or redelivered in the middle of a day.
Sub-clause (e) gives the owners the right to withdraw the vessel after a grace period of 96 running hours from receipt by the charterers of the owners’ withdrawal notice.
Under sub-clause 15 (f) the owners are entitled to interest for late payment of hire at a sum agreed and stated in Box 25. The last sentence has been deleted since the parties normally fill out the interest rate in Box 25 themselves.
The two clauses that dealt with insurance and responsibilities in BARGEHIRE 94 - Clause 16 (Owners’ Insurance, Responsibilities and Classification) and Clause 17 (Charterers’ Insurance, Responsibilities and Classification) – have been replaced with two new clauses.
The Sub-committee has divided the insurance options into two new clauses. The first, Clause 16 has been renamed Hull, Machinery and War Risks Insurance, Responsibilities and Classification. As the name suggests the Clause allocates responsibility for H&M and War Risks insurance. The Clause provides the option for either the owners or the charterers to provide such insurances.
The parties should clearly indicate their choice as to who is to provide H&M and War Risks cover by filling in Box 28. If Box 28 is left blank or is filled in with the wrong information, then, to avoid uncertainty, the owners’ marine and war risks cover will apply.
Whichever option is agreed the other party will be named as co-assured on the policy of the insuring party.
Responsibility for maintaining the barge in class rests with whichever party is responsible for H&M insurance.
It should be noted that the old sub-clause 16(f) (along with Boxes 32 and 33) relating to additional insurance taken out by the parties to cover their own exposure has been removed. This has been done because the original intention of the sub-cause was to cover additional war risks premiums. However, on reviewing the contract is has been concluded that such additional premiums are now adequately covered by other provisions in the agreement (such as the War Risks Clause) and therefore sub-clause 16(f) and related Boxes is now superfluous.
The second newly worded insurance clause, Clause 17 provides for P&I cover for the barge and has been renamed “Protection and Indemnity Insurance and Liability”. Similar to Clause 16 the clause sets out two key options. The first option is for the owners to provide P&I cover for the barge, the second is for the charterers to provide P&I cover. The parties should clearly indicate their choice as to who is to provide P&I cover by filling in Box 29. If Box 29 is left blank or is filled in with the wrong information, then, to avoid uncertainty, the owners’ P&I cover will apply.
Clause 17 addresses the most difficult aspect of BARGEHIRE – the ability of charterers to obtain appropriate P&I cover for a barge. Due to the nature of the trade, barges are often contracted on short notice and for relatively short durations. This makes it difficult for charterers to obtain P&I cover and has led to the development of the practice of “bareboat” chartering barges with insurance as part of the package.
Option 17(a)(i) (Owners’ P&I cover) provides for the owners to insure the barge against P&I risks and to name the charterers as joint entrants on the owners P&I cover. Under this option the charterers will operate the unit and be liable for the risks, but the owners’ record will bear the exposure. The risks for which the charterers are liable include traditional owners’ risks such as dock damage and wreck removal. This option is most likely to be used where the charterers are unable to obtain their own P&I cover. For the avoidance of doubt by the charterers as to what insurance cover is provided and what risks the charterers are liable for the revised Clause spells out the charterers’ liabilities and insurance requirements. The owners are also required to provide the charterers with evidence of insurance cover.
Option 17(a)(ii) (Charterers’ P&I cover) represents what most owners are likely to want to use. Here the operational risk lies with the charterers under their own P&I cover. However, as most barge charters are for short durations the owners will most likely choose to maintain their own P&I cover for the barge “in the background” regardless of the cover taken out by the charterers.
Again, as in 17(a)(i) (Owners’ P&I cover) this clause spells out what the charterers are liable for and what they must insure. The charterers must also obtain insurance on terms acceptable to the owners and must provide evidence of such cover being placed.
The BARGEHIRE Revision Sub-committee feels that the revised insurance and liability provisions now clearly and appropriately embrace the “bareboat” concept that underlies the agreement. The new wording of Clauses 16 and 17 should avoid any charterers entering into BARGEHIRE agreements without a full understanding of what is required of them in respect of providing insurance for the barge.
The former Clauses 16 (i) (c-e) and 16 (ii) (c-e) dealt in an almost identical way with repairs; to avoid duplication they have been taken out and added into this new, separate clause.
It is the charterers’ responsibility to do all insured repairs and under the Clause 16 (a) (i) option, where the owners take out insurance on the barge, the charterers should be reimbursed by the owners’ insurers for their expenses (sub-clause (a)).
According to sub-clause (b) the charterers are also responsible for repairs not covered by insurance,
e.g. due to deductibles applicable under the terms of the insurance agreement.
The barge remains on hire during repairs and any deviation necessary to do the repairs (sub-clause (c)).
The costs for class surveys in respect of damages and repairs as mentioned in the clause will be for the charterers’ account.
Ballast water management is an issue which is becoming increasingly important in many jurisdictions. As barges are quite different from other manned ships it has been decided to create a clause especially for the barge industry to deal with this issue, rather than to use a standard clause.
An obligation is placed on the charterers to ensure that ballast exchange operations are conducted in accordance with international conventions or similar legislation, and that an approved ballast water management plan is in place. All liabilities and responsibilities for such operations solely rest with the charterers.
A new force majeure clause used in other recently published BIMCO documents has replaced the former Clause 18 (Force Majeure) which was not really a force majeure clause; it was merely excluding liabilities without stating in what situations the obligations of the parties would cease to exist.
The new clause is more specific and clear. It defines the events constituting force majeure and places an obligation on the party wishing to rely on the clause to inform the other party within two working days of the occurrence of the event.
Furthermore, it provides a high threshold for which events will be considered as force majeure and is limited by the ejusdem generis rule in sub-clause (h) so that only events of the same kind as described in the above sub-clauses will be considered force majeure events.
This clause, which is mutual between the parties, excludes liability for any consequential losses. The clause contains a non-exhaustive list of examples of what may be considered as consequential losses.
This clause deals with the redelivery of the barge. The parties should state a safe and accessible place of redelivery in Part I where the barge should be redelivered in the same condition as when delivered.
Should the charterers redeliver the barge late the owners will be entitled to whichever is the higher of the agreed rate stated in Part I or the market rate for the overrun period, plus an agreed lumpsum, also stated in Part I.
In order to avoid abuse in respect of late redelivery, the final paragraph provides that the owners’ only remedy for late redelivery is the compensation as set out in this clause, unless the late redelivery is caused by the charterers negligence or wilful misconduct. In such cases, any other possible remedies will be available to the owners.
This clause allows the charterers to redeliver early and terminate the charter party. However, the charterers must pay hire for the full charter period as agreed in Part I.
This clause prevents the charterers from incurring any liens on the barge. The provision regarding notice to be fastened to the barge has been deleted as this never takes place in practice.
Should a lien arise anyway in respect of the barge during the charter period, the charterers are obliged to indemnify the owners for any claims made in respect of the lien. In case the barge is arrested, the charterers must put up security to get the barge released.
Furthermore, the clause has been made reciprocal in order to achieve a better balance and to protect the charterers against prior events or claims.
This lien clause grants the owners a lien on any cargo and sub-freights/sub-hires due under the contract, and the charterers a lien on the barge for moneys they have paid in advance under the contract but that have not been earned. The liens on the cargo and the barge are possessory liens while the liens on the sub-freights and sub-hires are not.
The wording of BIMCO’s General Average clause has been incorporated. In line with BIMCO policy it refers to the 1994 edition of the York Antwerp Rules as opposed to the less favourable 2004 edition.
According to the first paragraph, the charterers may assign or sub-charter the barge with written consent from the owners.
Should the owners sell the barge before or during the charter party, with the charterers consent, the owners should assign the charter party to the buyer and give the charterers the full details of the buyers and of the delivery date of the barge to the buyers. From that time onwards it will be the buyers who are responsible towards the charterers under this charter party.
This clause allows the parties to opt for the furnishing of security by the charterers as a guarantee for their performance under the charter party.
In case the barge become requisitioned for hire, the charter party remains in force and hire remain payable. However, any requisitioned hire or compensation that the owners receive should be paid to the charterers.
Should the owners lose ownership of the barge due to compulsory acquisition; the charter party will be terminated from the date of such acquisition. The charter hire will be considered earned and payable up until the acquisition.
BIMCO’s standard war risks clause for time charter parties (CONWARTIME 2004) has replaced the previous War Clause.
It starts with defining “owners” and “war risks” for the purpose of the clause. It then goes on to provide that without the express consent from the owners, the vessel should not be ordered to an area where, in the reasonable judgement of the master or owner, it may be exposed to war risks as defined by the clause.
Paragraph (d) deals with the insurance aspect and states that the owners may take out war risk insurances with their hull underwriters and P&I underwriters at their own cost. If the charterers’ orders the vessel into additional premium areas the charterers must reimburse the owners of such additional premiums.
Paragraph (f) gives the owners the liberty to comply with directions etc given by the vessel’s flag state, other governmental bodies, war risks underwriters, security council of the UN and other supranational bodies.
Furthermore, it should not be considered a deviation when the vessel complies with something mentioned in the clause, (Sub-clause (h)).
This provision allows the owners to limit their liability by applicable statute or law notwithstanding any provisions to the contrary elsewhere in the form
This clause takes into account the brokers who facilitated the making of the fixture and states that the owners should pay them certain, enumerated commissions.
Should the full hire or mobilisation/demobilisation fee not be paid due to a breach of the charter party, the liable party will have to indemnify the brokers for their lost commission.
To reflect the common practice that the parties generally put “as agreed” in Box 33, the words “at the rate indicated in Box 33” have been deleted.
Furthermore, the last sentence has been deleted as being no longer common commercial practice.
The standard wording of BIMCO’s Dispute Resolution Clause has replaced the previous Clause 30 (Law and Arbitration Clause).
It provides the parties with three options: London arbitration and English law, New York arbitration and U.S. law, or the laws of another jurisdiction as chosen by the parties.
Sub-clause (d), which provides for the possibility to refer the dispute to mediation, will always apply no matter what choice of law and jurisdiction the parties have made.
The mediation provision is designed to function in conjunction with the chosen arbitration option, whether that is English law, London arbitration; US law, New York arbitration; or law and arbitration as agreed.
Mediation is a technique that is recognised as offering savings in costs and time over traditional methods of dispute resolution for certain types of disputes. BIMCO’s mediation provision is only triggered once arbitration proceedings have commenced and then runs in parallel with those proceedings, if the parties so choose. This has been done to ensure that one party cannot invoke mediation as a delaying tactic. It also provides for the parties to mediate on all or just some of the issues being arbitrated.
In line with other recent BIMCO forms, the standard Notices Clause has been included in the revised BARGEHIRE to avoid having to repeat in other clauses that notices have to be in writing and also what actually constitutes “in writing”.
The Clause provides that all notices given by either party must be in writing in a readable and understandable way capable of being a record.
It should be noted that e-mail is listed as one of the acceptable methods and if one of parties publishes its e-mail address as part of its contact details then the other party may if it so wishes use that medium for notices.
However, given the importance and gravity of some of the notices that may be sent under the contract the parties may choose to rely on methods which provide a confirmation of delivery to the recipient to avoid disputes at a later stage.
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