The latest edition of this contract is CREWMAN B (lump sum) 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 B 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.
The equivalent clause in the original CREWMAN Agreement deals not only with the appointment of the crew managers, but also establishes the employment principle and the Crew Managers’ obligations. In CREWMAN B these provisions have been separated and elevated into three free-standing clauses.
This Clause provides very important provisions regarding the capacity in which the crew managers are acting in carrying out the various management functions contracted for. The preamble to this Clause establishes the basis of employment of the crew under the Crew Management Agreement and was previously dealt with under sub-clause 2.2 of the original CREWMAN. It is important that users appreciate that under CREWMAN B - LUMP SUM, which is a revision of the original CREWMAN Agreement, the crew managers act as principals and are the sole employers of the crew.
In some countries this concept may conflict with domestic law which requires the owners to enter into contracts of employment with the crew. In such cases, regardless of the nature of the agreement between the owners and the crew managers, domestic law may well be determinative as to the actual employer of the crew. However, it should be borne in mind that CREWMAN has been developed to function as an international crew management agreement, despite the absence of any applicable international employment law. Where the crew managers are acting as principals and for the avoidance of doubt, the Sub-committee decided that the CREWMAN B - LUMP SUM Agreement should clearly reflect the intention of the commercial parties in stating that the crew managers are the sole employers of the crew. It should be noted, however, that in the majority of countries there will be no requirement to vary the employment provisions of CREWMAN B.
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 on board 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”. This allows the owners to give orders directly to crew members, even though their actual employer is the crew manager. 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” has been given a narrower definition in the new CREWMAN Agreements and refers only to persons connected with the “provision and the performance of the Crew Management Agreement”. The CREWMAN Sub-committee agreed to remove the 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 allowed. 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 per-mission of the owner.
Sub-clauses 3.1(vii) to (x) - These sub-clauses are self-explanatory. CREWMAN B - LUMP SUM contains an additional provision to “Crewman A - Cost Plus Fee” whereby the crew managers arrange for the supply of provisions at their own expense. Under sub-clause 6.6 of CREWMAN A, it is the owners’ obligation to provide and pay for provisions, unless otherwise agreed.
Sub-clause 3.1(xi) - 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.
Sub-clause 3.2 - Crew Insurance Arrangements
This sub-clause contains the provisions relating to insurance to be taken out by the crew managers. It is strongly recommended that the provisions are studied carefully to ensure that the exact coverage required is properly defined with the insurers.
In the original CREWMAN the crew managers were the party responsible for Crew Insurances under sub-clause 3.8, as this reflected the common practice among crew managers acting as principals. It is recognised that some crew managers performing their services as principals may prefer to take out separate crew risk insurance cover for their crew, as this enables them to handle any crew claims direct with their P&I Club or insurer. This approach also allows the owners to exclude crew risks from their own P&I cover. However, in order to offer greater flexibility to parties in respect of Crew Insurances, the revised CREWMAN B - LUMP SUM now provides Crew Insurance Arrangements under sub-clause 3.2 as an optional service to which the owners must expressly agree to by indicating in the affirmative in Box 6.
The provisions of Clause 4 define the crew managers’ obligations in carrying out their services as crew managers and are identical to the provisions found in sub-clause 2.3 of the earlier version of CREWMAN. The 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 deter-mined 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 4 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 5.1 - Although it would seem fairly obvious that the owners should provide timely and adequate funding to the crew managers in accordance with the agreed services, it was felt that this obligation could not be over-emphasised. Thus, sub-clause 5.1 clearly specifies that the owners shall pay all sums due to the crew managers punctually in accordance with the terms of the Agreement.
Sub-clause 5.2 - 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 5.3 - 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 5.4 - 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 5.5 - In place of the exhaustive list of items that appeared in sub-clause 4.5 of the original CREWMAN, sub-clause 5.5 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 5.6 - This sub-clause is self-explanatory.
Sub-clause 5.7 - 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 5.7(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.
Sub-clause 5.7(iii) is the owners’ equivalent to the crew managers’ obligation under sub-clause 3.2(iii), 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 owner 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 them-selves uninsured for the amount of the claim beyond the owners’ limit. However, the crew managers will not be held liable for outstanding calls owed by the owners.
Sub-clause 5.7(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 5.7(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 5.7(iii)(b) was included.
Where the crew managers are acting as principals, as in CREWMAN B, they may 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 themselves 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 5.7(iii)(c) has been introduced. The commercial parties should make sure, however, that any terms agreed under sub-clause 5.7(iii)(c) are in accordance with their insurances.
As a final observation, in cases where the crew managers are not arranging the insurances themselves under sub-clause 3.2, it is essential that they make sure that adequate insurance policies have been taken out by the owners.
The Sub-committee considered a requirement for a bank guarantee to be commercially impractical and not a common practice in today’s crew management industry.
Sub-clause 6.1 - The lump sum payments to cover the crew management services are to be made on a monthly basis in advance, with the first payment due on the commencement of the Agreement.
Sub-clause 6.2 - Enumerates in detail the costs which are to be covered by the lump sum.
Sub-clause 6.2(iv) - Travelling expenses at the commencement of the Agreement are for the owners’ account, unless otherwise agreed. All other transportation costs during the currency of the Agreement, as well as at its termination, are to be included in the lump sum. The amount of transportation expenses to be included are based on the vessel trading within the area stated in Box 10. In the event that the vessel does not regularly call at ports within that area, any additional costs shall be charged separately to the owners.
Sub-clause 6.2(v) - Port disbursements and fees shall only be included to the extent that they specifically pertain to crew matters.
Sub-clause 6.3 - A certain amount of overtime may be covered by the lump sum in accordance with sub-clause 6.3, to the extent stated in Box 11. Details of overtime rates in excess of the amount stated in Box 11 are set out in Annex “B” of the Agreement.
Sub-clause 6.4 - If it has been agreed that the owners shall bear the initial transportation costs, this only applies from the moment of the crew’s departure from their country of domicile and does not cover travel within that country.
Sub-clause 6.5 - This sub-clause is self-explanatory.
Sub-clause 6.6 - The lump sum 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 lump sum. If the owners fail to respond to the crew managers proposal, then the revised lump sum 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 commercially acceptable negotiation period. As a result of this reduction, the termination provision found in Clause 14 (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 reach an agreement on the revised lump sum.
Sub-clause 6.7 - 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 13, the parties may agree to reduce the crew and thereby the lump sum payments. Consequential costs of such reduction and later reinstatement are to be for the owners’ account.
The basic philosophy adopted in Clause 10 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 10:
Sub-clause 10.1 - 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 10.2 - Crew Managers’ Liability to Owners
The reasoning behind this 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 six times the monthly lump sum 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.
In the CREWMAN B Agreement, the upper limit of the crew managers’ liability has been set at six times the monthly lump sum received by the crew managers. It is considered that this is a reasonable figure, bearing in mind that the lump sum contains the crew’s wages.
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 10.2, therefore, operates as follows:
Lines 283-290 begin by excluding the crew managers’ liability generally. Lines 290-294 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 discharging their obligations in accordance with Clause 4.
Lines 294 onwards limit the crew managers’ liability in such circumstances to a total of six times the monthly lump sum, 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 six times the monthly lump sum.
Sub-clause 10.3 - Acts or omissions of the Crew - This sub-clause is new and expressly 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 4 (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 10.4 - Indemnity - This is an indemnity clause which is intended to make the reciprocal provision to sub-clause 10.2. Under Scandinavian and Continental systems of law, 10.4 is probably unnecessary 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 10.2.
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 309-311 of 10.4 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 10.2.
Sub-clause 10.5 - “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 10 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 (Responsibilities) 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 B, the current position is perceived to be the same.
This Clause gives clear rules as to the termination of the Agreement. It distinguishes between termination by default on the part of the owners (sub-clause 15.1), by default on the part of the crew managers (sub-clause 15.2), and extraordinary termination (sub-clause 15.3).
Sub-clause 15.1 - Owners’ DefaultSub-clause 15.1(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 15.1(ii) provides a remedy for the crew managers should the owners fail to meet their obligations under Clause 5 (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 15.1(ii) are less draconian than those in 15.1(i), the crew managers are nevertheless given an entitlement to terminate the Agreement. However, this entitlement is softened by permitting the owners a reasonable time to rectify the default which must, in any case, be done to the satisfaction of the crew managers.
Sub-clause 15.2 - Crew Managers’ Default - This sub-clause corresponds to the provisions of sub-clause 15.1(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 4 (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 15.3 - 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 15.6.
Sub-clause 15.6 - It is considered reason-able, in the event that termination takes place through no fault of the crew managers (i.e., as per sub-clause 15.1 and 15.3), that they should be entitled to a number of lump sum payments as stated in Box 14 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. Severance costs are only payable where they exceed the total of the agreed lump sum payments on termination. 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 15.4, 15.5 and 15.7 - These sub-clauses are self-explanatory.
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 15 in Part I accordingly.
As follows from sub-clause 16.4, if Box 15 is not appropriately filled in, English law and arbitration will automatically apply according to sub-clause 16.1.
Copyright in CREWMAN B is held by BIMCO.
(Printed in BIMCO Bulletin No. 4, 1999)
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