The latest edition of this contract is CREWMAN A (cost plus fee) 2009.
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The construction of CREWMAN A and CREWMAN B follows closely, wherever possible, that of SHIPMAN 98.
A large majority of the clauses relating to the provision of crew management services are common to both CREWMAN A and CREWMAN B and this is reflected in the following explanatory notes.
The main areas where the two Agreements differ are summarised below:
The form uses the standard box layout adopted by BIMCO for users to fill in all the variable items to be agreed. Each box contains a brief explanation of the information required and a reference to the relevant clause or clauses in Part II of the Agreement.
The number of definitions used has been expanded to give a more detailed explanation of some of the terms used in the Agreement such as the ISM Code, STCW 95 and the “Company”, as defined by the ISM Code. In contrast to the original CREWMAN, the Definitions found in CREWMAN A take the form of an actual clause. It should be noted that the term “Vessel” has been redefined to permit the Agreement to be applicable to more than one vessel.
CREWMAN A contains a definition of “Crew Support Costs”, which are applicable only under the Cost Plus Fee Agreement. Please see sub-clause 18.6 for details of Crew Support Costs payable on termination of the Agreement.
In contrast to the approach taken in CREWMAN B, no express reference is made to the employer of the crew in CREWMAN A. While the Sub-committee felt that it was essential under the lump sum version to maintain the clear statement identifying the crew managers as the employers of the crew because of the “principal” basis of the Agreement, such restrictions were considered of less importance in the “agency” version (CREWMAN A). The “agency” nature of CREWMAN A implies that the owners are the employers of the crew. This approach is consistent with that taken in the agency-based SHIPMAN 98, where it is also implied that the owners are the employers of the crew. However, the Sub-committee considered that a “cost plus” agreement could be more easily manipulated to change the employment status than a lump sum agreement. For this reason, CREWMAN A has been drafted to provide the flexibility for parties to agree on the identity of the employer of the crew, should local law or specific commercial circumstances dictate such a change.
Sub-clause 3.1 - Crew Management
This detailed sub-clause provides the core of the services offered by the crew managers to the owners in relation to the provision of suitably qualified crew for the vessel. It should be noted that the provision of suitably qualified crew is now to be done “in accordance with the STCW 95 requirements”. “Suitably qualified” is a standard found in many individual private forms of crew management agreement and is a standard which should be adhered to by the crew managers not just at the time of the employment of the crew, but throughout the duration of the Agreement. Crew training is of paramount importance to ensure that the crew’s qualifications are maintained, particularly during long term agreements.
Sub-clause 3.1(i) - This sub-clause deals with the crew managers’ responsibility in relation to the administrative process of selecting and engaging crew and making adequate provisions for pension arrangements and the paying of appropriate dues in the seafarer’s country of residence.
Sub-clause 3.1(ii) - This sub-clause is self-explanatory.
Sub-clause 3.1(iii) relates to the medical examination of crew and the validity of medical certificates. The original CREWMAN required medical certificates to be dated not more than three months prior to the crew leaving their country of domicile to join the vessel. However, the requirements of certain flag States regarding the issuing of medical certificates mean that some crew managers would not always be able to conform to this rule. To resolve this problem, the sub-clause has been expanded to require that medical certificates should be issued in compliance with appropriate flag State requirements, in the absence of which the three-month provision should apply.
Sub-clause 3.1(iv) - It has to be recognised that language problems do sometimes occur on board vessels which have mixed nationality crews and that such problems can be critical if emergency situations occur. Sub-clause 3.1 (iv) addresses this problem by requiring the crew to have a command of the English language of sufficient standard to enable them to perform their duties safely. While the standard applies to all crew members, it is modified in the sense that the command of the English language has only to be of a sufficient standard for the particular crew member’s specific duties. However, under all circumstances the minimum language requirement onboard must enable the vessel to meet international safety requirements.
The standard of English required of a deck officer, who will have to stand watch and communicate with other ships, pilots, tugs and emergency services will be higher than the standard required of a cook or a deck hand. In accordance with STCW 95 the officers and crew must be able to communicate effectively amongst themselves in a common language, but this language need not be English.
Sub-clause 3.1(v) requires that the crew “obey all reasonable orders of the Owners and/or the Company”. The situation may arise where the owners have made an agreement with a technical manager for the management of the vessel and a separate agreement for crewing. In such circumstances there is no contractual relationship between the operator of the vessel (the “Company” as defined by the ISM Code and STCW 95) and the crew managers. If the owner of the vessel is, for example, a bank then the channelling of communications and orders from the technical manager relating to the safety of the vessel and the protection of the environment may prove unworkable (due to the owners’ lack of resources, working hours, etc.). The additional reference to the “Company” in sub-clause 3.1(v) ensures that where the owners of the vessel are not the actual operators, proper lines of communication are maintained consistent with the principles laid down in the ISM Code.
Sub-clause 3.1(vi) - The term “Connected Person” refers only to persons connected with the “provision and the performance of the Crew Management Agreement”. The CREWMAN Sub-committee decided against including a reference to “any person connected with the Crew” as this was felt to prejudice the common practice of permitting spouses and young children to accompany crew members where circumstances all-owed. Under the provisions of the original CREWMAN, the crew managers could not permit a crew member’s spouse to proceed to sea on board the vessel without the prior express permission of the owners.
Sub-clauses 3.1(vii) to (ix) - These sub-clauses are self-explanatory. Whereas CREWMAN B contains an additional provision under sub-clause 3.1, whereby the crew managers arrange for the supply of provisions at their own expense, under CREWMAN A, it is the owners’ obligation under sub-clause 6.6 to provide and pay for provisions.
Sub-clause 3.1(x) - Under the original CREWMAN, sub-clause 3.9, the crew managers were allowed to conduct their own drug and alcohol policy. Although the crew managers are obliged to conduct drug and alcohol examinations as part of the crew’s medical procedure, before joining the vessel, in compliance with the requirements of STCW 95, the Sub-committee acknowledged that the ongoing responsibility for drug and alcohol testing now rests with the owners and/or the “Company” under the provisions of the ISM Code. The new CREWMAN Agreements now require the crew managers to implement the owners’ drug and alcohol policy for crew serving on board the vessel, unless otherwise agreed. This approach contrasts with the provisions relating to drug and alcohol policies found in sub-clause 3.1(viii) of SHIPMAN 98 which permit the managers to implement their own policy. However, where a vessel is under full technical management, the ship managers are deemed the “Company” as defined by the ISM Code and it is therefore wholly appropriate that their drug and alcohol policy is implemented.
The provisions of Clause 5 define the crew managers’ obligations in carrying out their services as managers and are identical to the provisions found in sub-clause 2.3 of the earlier version of CREWMAN. The sub-clause specifies that the crew managers shall use “their best endeavours” to provide crew management services to the owners in accordance with “sound crew management practice” and to protect and promote the interests of the owners in all matters related to the provision of the services under the Agreement.
First of all, the crew managers’ general obligation to use “their best endeavours” ought not to be taken lightly. Courts would seem to have taken a fairly strict view as to what constitutes “best endeavours” and it can generally be said that the phrase means exactly what it says and does not encompass any lesser degree of endeavour by the crew managers.
“Sound crew management practice” does not depend on what a particular crew manager may regard as sound. In the event of a dispute, acceptable standards of crew management practice may well be determined by the testimony of an independent industry expert.
In recognition of the fact that the crew managers may simultaneously act as crew managers for other vessels on the behalf of other owners, the provisions in the second paragraph of Clause 5 define the overall responsibility of the crew managers in relation to all vessels entrusted to their management. These important provisions allow crew managers acting for a number of different owners to allocate manpower and services in a fair and reasonable manner. In the absence of such provisions the crew managers would be faced with the impracticability of trying to give priority to all owners.
Sub-clause 6.2 - This sub-clause establishes the owners’ responsibility with respect to the ISM Code and other applicable requirements of the law of the flag State. Where the technical management of the vessel is the responsibility of a party other than the owners, then the owners remain responsible for ensuring that the “Company”, as defined by the ISM Code, is identified to the crew managers.
Sub-clause 6.3 - In the event that the owners order the vessel to trade to areas not covered by the current market war risks trading warranties, any additional costs incurred, such as war risks insurance for the crew and/or extra war risk bonuses for the crew, in addition to the lump sum, shall be for the owners’ account. The crew shall not be compelled to trade to war risk areas and therefore any replacement costs, such as crew repatriation and joining expenses for the new crew, shall be absorbed by the owners.
Sub-clause 6.4 - Changing the flag of the vessel under management, even when only crewing is being provided for, can give rise to substantial changes in the prerequisites of the entire Agreement, leading to additional costs for the crew managers. While the owners maintain the right to change the flag of the vessel during the period of the Agreement, before doing so they must agree with the crew managers and pay any additional costs which may be incurred.
Sub-clause 6.5 - In place of the exhaustive list of items that appeared in sub-clause 4.5 of the original CREWMAN, sub-clause 6.5 now simply obliges the owners, at no cost to the crew managers, to provide adequate accommodation and living standards consistent with at least the minimum specified by the law of the flag State.
Sub-clause 6.6 - This sub-clause mirrors sub-clause 3.1(viii) of CREWMAN B, making the arrangement of the supply of provisions the owners’ obligation.
Sub-clause 6.7 - This sub-clause is self-explanatory.
Sub-clause 6.8 - This sub-clause provides for the owners to take out insurances against hull and machinery, war and P&I risks. As will be seen from sub-clause 6.8(i)(b) it has been specifically provided that insurance against P&I risks shall include any diversion expenses. The reason for specifically mentioning diversion expenses is that it is the owners’ responsibility to insure against such expenses and, if not specifically referred to, there is a risk that neither the owners nor the crew managers will take out insurance against such an event. It should also be noted that unlike sub-clause 5.7(i)(b) of CREWMAN B, the parallel provision in CREWMAN A includes insurance cover for crew risks, unless separate cover has been taken out by the crew managers.
Sub-clause 6.8(iii) is the owners’ equivalent to the crew managers’ obligation under sub-clause 3.2(iii) of CREWMAN B, requiring the owners to name the crew managers as joint-assured on the vessel’s insurances. This provision is extremely important as it protects the crew managers against loss, damage or expense incurred as a result of crew negligence.
The approach adopted by most P&I Clubs towards parties who want the benefit of joint-assurance together with the owners differs fundamentally between:
(a) those who are prepared to accept responsibility, together with the owners, for calls (premiums); and
(b) those who are not prepared to accept any such responsibility.
Although there is no universal practice regarding joint-assurance, in most cases a joint-assured within the category (a) is given the benefit of full P&I cover (as opposed to limited cover usually referred to as “misdirected arrow” cover) in the same way as the owners. This cover is similarly unlimited except for any overall limit on the Club’s cover. Normally no premium will be charged for joint-assured cover, but the joint-assured must be prepared to pay any outstanding calls that the owners fail to pay.
Those joint-assured within the category (b) will receive only limited cover which does not extend beyond whatever liability the owners might have had for the claim had it been made against them. Such cover will only respond once, whether to the owners or to the joint-assured crew managers, rather than the crew managers having a full and separate cover of their own. Accordingly, the crew managers will only recover from the Club to the extent that the owners themselves would have been entitled to recover, and if the owners can limit their liability and the crew managers cannot, the crew managers may find themselves uninsured for the amount of the claim beyond the owners’ limit. However, the crew managers will not be held liable for out-standing calls owed by the owners.
Sub-clause 6.8(iii)(a) constitutes what seems to be the practice applied by most P&I Clubs today i.e., that if the crew managers wish to benefit from having full cover as joint-assured, then they must also be prepared to accept liability for outstanding calls unpaid by the owners.
As will be seen, however, sub-clause 6.8(iii)(b) provides for the owners’ insurance to name the crew managers as joint-assured with full cover but where the crew managers shall be under no liability for premiums or calls arising in connection with the owners’ insurances. As indicated above, this may not be possible to achieve, since P&I Clubs in the International Group require that the crew managers assume responsibility for calls when fully covered. However, one cannot rule out the possibility that insurance facilities outside the International Group may offer full P&I cover with no responsibility for calls and it was for this reason that sub-clause 6.8(iii)(b) was included.
The crew managers may, if agreed, place in their own name a separate crew risk insurance to that of the owners who will consequently exclude such risks from their own P&I cover. However, to safeguard them-selves against the full range of P&I liabilities resulting from, e.g., the negligence of crews supplied by them, crew managers may still want to be joint-assured on the owners’ insurance policies.
Crew managers providing crew in whole or part may, nevertheless, be inclined to seek joint-assurance on limited terms without the responsibility to pay for the owners’ unpaid calls. In doing so they should realise that most crew managers would regard the risk of only having this limited cover as being far greater than the risk of being made liable for the owners’ unpaid P&I calls.
While BIMCO decided that it would be inappropriate to make a specific provision dealing with limited cover, it realised that such commercial options exist in the insurance market and so sub-clause 6.8(iii)(c) has been introduced. The commercial parties should make sure, however, that any terms agreed under sub-clause 6.8(iii)(c) are in accordance with their insurances.
As a final observation, where the owners are arranging the crew insurances under Clause 4, it is essential that the crew managers make sure that adequate insurance policies have been taken out by the owners.
Sub-clause 7.1 - To reflect current commercial practice, the fee to cover the crew management services is to be made on a monthly basis, in advance, with the first payment due on the commencement of the Agreement.
Sub-clause 7.2 - The crew management fee is to be renegotiated annually with the crew managers providing the owners with a revised figure for the following year, latest three months prior to the anniversary date of the Agreement. The owners then have one month in which to either accept or reject the revised fee. If the owners fail to respond to the crew managers’ proposal, then the revised fee shall be assumed to be accepted. In the original CREWMAN the lead-in period was four months, but this has been reduced to three to provide a more acceptable negotiation period. As a result of this reduction, the termination provision found in Clause 17 (Duration of the Agreement) has been revised from three to two months to be consistent with a termination triggered by the owners and the crew managers failing to agree on the revised fee.
Sub-clause 7.3 - This sub-clause is self-explanatory.
Sub-clause 7.4 - In the event that, during the currency of the Agreement, the vessel is laid-up or undergoes extensive repairs, the duration of which exceeds the number of months stated in Box 10, the parties may agree to reduce the crew and thereby the crew management fee. Consequential costs of such reduction and later reinstatement are to be for the owners’ account.
The basic philosophy adopted in Clause 12 has been to apportion the liability between the owners and the crew managers on the basis that the owners should not be in a better position than they would have been in if they had provided crew for the vessel themselves. Equally, it has been found that the crew managers ought to be liable, to a certain extent, for negligence.
In the assessment of what would constitute such a balanced solution it was found that compliance with the English Unfair Contract Terms Act, 1977 (and similar legislation existing in other jurisdictions) which states that such clauses must be reasonable, would be a fair guideline as to what would be a reasonable apportionment of liability between the parties.
The following observations may assist in clarifying the provisions of Clause 12:
Sub-clause 12.1 - Force Majeure.
This sub-clause exonerates both parties from any liability in case of non-performance of their contractual obligations due to events over which they have no reasonable control.
Sub-clause 12.2 - Crew Managers’ Liability to Owners.
The reasoning behind this sub-clause is that the crew managers should be able to limit their liability, so that they can insure it, except in particularly culpable situations. The limit of liability has been related to the level of ten times the annual equivalent of the monthly fee (i.e., 12 times the monthly fee) in order to strike a reasonable balance between the funds received by the crew managers on the one hand, and their exposure for insurance purposes (and therefore level of insurance premiums) on the other.
The circumstances in which the crew managers would be exposed to unlimited liability have been related to the wording in the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC), which provides an internationally recognised formula.
Sub-clause 12.2, therefore, operates as follows:
Lines 297-303 begin by excluding the crew managers’ liability generally. Lines 304-307 limit that exclusion in order to make the crew managers liable for negligence, gross negligence or wilful default, whether by themselves, their employees, agents, or sub-contractors.
In the event of negligent action by the crew, the crew managers shall not be responsible for any loss, damage, delay or expense incurred as a result thereof, unless the crew managers have acted negligently in dis-charging their obligations in accordance with Clause 5.
Lines 307 onwards limit the crew managers’ liability in such circumstances to a total of ten times the equivalent annual fee, except where the loss, damage, delay or expense has resulted from the crew managers’ personal act or omission, etc., (in accordance with the concept underlying the 1976 Convention).
In practical terms, therefore, the crew managers will carry unlimited liability in circumstances where they have deliberately or recklessly acted contrary to the owners’ interests, although this is restricted to the crew managers’ personal acts or omissions. In other words, acts or omissions of this nature by employees, agents or sub-con-tractors are still subject to a limitation of ten times the equivalent annual crew management fee.
Sub-clause 12.3 - Acts or omissions of the Crew.
This sub-clause excludes the crew managers’ liability for acts or omissions of the crew, unless it can be demonstrated that such acts or omissions resulted from the crew managers’ failure to discharge their obligations under Clause 5 (Crew Managers’ Obligations). This sub-clause makes it clear that the selection of competent crew always remains the responsibility of the crew managers.
Sub-clause 12.4 - Indemnity .
This is an indemnity clause which is intended to make the reciprocal provision to sub-clause 12.2. Under Scandinavian and Continental systems of law, 12.4 is probably un-necessary because the courts will imply an obligation on the part of the owners to indemnify the crew managers for anything for which the crew managers are not liable under sub-clause 12.2.
Unfortunately, under the English and American systems, this is not the case and it is necessary to incorporate a specific indemnity setting out the extent to which the owners will have to indemnify the crew managers. Lines 323-325 of 12.4 set out the extent of that indemnity by excluding from it any claim for which the crew managers would themselves be liable under sub-clause 12.2.
Sub-clause 12.5 - “Himalaya”. In order to protect the interests of employees, agents or sub-contractors of the crew managers it has been found necessary to incorporate in Clause 12 a so-called “Himalaya” Clause. This Clause is designed to afford such employees, agents or sub-contractors at least the same protection as the crew managers have under the Crew Management Agreement and will thus remove the necessity to ensure the contractual chain of indemnities from sub-contractors, etc., to the crew managers.
As a concluding observation it may be mentioned that the original Clause 8 of CREWMAN was reviewed by Queen’s Counsel and found to be in compliance with the English Unfair Contract Terms Act, 1977. Since no fundamental changes have been made to this Clause under CREWMAN A, the current position is perceived to be the same.
Some owners would perhaps feel more comfortable by having specific procedures detailing the circumstances under which the crew managers are able to obtain expert advice for the owners’ account. However, it should not be overlooked that circumstances may require urgent action from the crew managers without them being able to consult with the owners beforehand. In such cases it will often appear to be in the owners’ best interests that the crew managers have a discretionary right to take such action as the circumstances may dictate.
Sub-clause 18.1 - Owners’ Default
Sub-clause 18.1(i) deals with a default in payment relating to the vessel under the Agreement. The sub-clause entitles the crew managers to terminate the Agreement should the owners fail to pay moneys due to the crew managers within 10 running days of receipt of the crew managers’ written request for funds. This remedy is also available to the crew managers if the vessel is repossessed by the mortgagees.
Sub-clause 18.1(ii) provides a remedy for the crew managers should the owners fail to meet their obligations under Clause 6 (Owners’ Obligations) or permit the vessel to undertake a voyage which the crew managers consider to be improper, unlawful or unduly hazardous. Although the defaults in sub-clause 18.1(ii) are less draconian than those in 18.1(i), the crew managers are nevertheless given an entitlement to term-inate the Agreement. However, this entitlement is softened by permitting the owners a reasonable time to rectify the default which must, in any case, be to the satisfaction of the crew managers.
Sub-clause 18.2 - Crew Managers’ Default
This sub-clause corresponds to the pro-visions of sub-clause 18.1(ii) and gives the owners an express entitlement to terminate the Agreement if the crew managers fail to adhere to their overall obligations under Clause 5 (Crew Managers’ Obligations). The entitlement to terminate the Agreement is subject to the crew managers failing to remedy the default as soon as practically possible after being requested to do so by the owners.
Sub-clause 18.3 - Extraordinary Termination.
This sub-clause lists a number of events which, if they materialise, will automatically entitle either party to terminate the Agreement without further consequences, other than those mentioned in sub-clause 18.6.
Sub-clause 18.6 - It is considered reason-able that, in the event that termination takes place through no fault of the crew managers (i.e., as per sub-clause 18.1 and 18.3), they should be entitled to a number of monthly fee payments and Crew Support Costs as stated in Box 11, following the departure of the crew from the vessel. This sub-clause also deals with the issue of severance costs payable by the owners to the crew managers on the termination of the Agreement. The term “severance costs” refers to payments made to the crew (employed for a fixed period of time as per their individual employment contracts) as a result of early termination.
The owners must pay an equitable proportion of severance costs, not exceeding the crew’s wages for the number of months agreed. As the general trend in today’s crew management industry is towards relatively short term employment contracts, such severance costs are unlikely to be excessive. However, the crew managers must use their best endeavours, possibly through redeployment of crew, to minimise such costs.
Sub-clauses 18.4, 18.5 and 18.7 - These sub-clauses are self-explanatory.
The Clause incorporates the most recently revised BIMCO Standard Law and Arbitration Clause. The revised English law/London arbitration part of the Clause was developed in close consultation with the London Maritime Arbitrators Association (LMAA) and takes into account the English Arbitration Act 1996 and the current LMAA terms.
In line with the earlier BIMCO Standard Law and Arbitration Clause, when forming part of one of BIMCO’s own standard documents, the Clause provides for an optional law system and venue of arbitration by leaving it to the parties to make their own choice in each individual case and to fill in Box 12 in Part I accordingly.
As follows from sub-clause 19.4, if Box 12 is not appropriately filled in, English law and arbitration will automatically apply according to sub-clause 19.1.
Copyright in CREWMAN A is held by BIMCO.
(Printed in BIMCO Bulletin No. 4, 1999)
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