SUPPLYTIME 2017

SUPPLYTIME 2017

Overview

SUPPLYTIME is a time charter party for offshore support vessels. It operates on a knock for knock liability regime, which means that each party agrees to bear responsibility for and indemnify the other in respect of loss of or damage to their own property, and injury to or death of their own personnel, regardless of fault. The latest edition of this contract is SUPPLYTIME 2017.

Copyright in SUPPLYTIME 2017 is held by BIMCO.

Supporting documents

The  below explanatory notes for SUPPLYTIME 2017 are also available as an e-book from Witherbys.

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The  explanatory notes for SUPPLYTIME 2017 are available as an e-book from Witherbys.

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Explanatory notes

 

Twelve years after its last revision in 2005, SUPPLYTIME has once again been updated. Now in its fourth edition, BIMCO’s best-selling offshore time charter party has been revised to reflect contemporary shipping practice and legal developments.

The very first edition of SUPPLYTIME appeared in 1975. It was developed to meet the demand for specialist support vessels to serve a rapidly growing offshore oil and gas exploration and production industry. Since then, SUPPLYTIME has become the benchmark for offshore support vessel agreements – and the industry’s contract of choice. It has also been widely adopted by other sectors looking for a contract offering a comprehensive knock-for-knock framework.

The revision of SUPPLYTIME 2005 is part of a periodic cycle of updates by BIMCO to ensure that its standard contracts remain relevant and appealing. Although the offshore sector is currently experiencing a severe downturn, BIMCO contracts are designed to be “market neutral” in the expectation that market conditions will vary over the lifespan of a standard form.

At the very heart of SUPPLYTIME lies the knock-for-knock liability regime – a principle commonly found in many offshore support vessel charters. Over time, we have seen an erosion of the pure knock-for-knock mechanism with the introduction of various exceptions. The revision of SUPPLYTIME 2005 has focused on treating both parties equally by removing almost all the exceptions to create a better balance of liabilities and indemnities and a more effective knock-for-knock regime.

We have reviewed SUPPLYTIME in the light of past legal judgments and attempted to clarify some of the more overly complex or ambiguous language which may have given rise to misinterpretation. New clauses have been added covering the use of common fuel systems, payment for fuel and liability for engine damage. There are expanded provisions dealing with on and off hire surveys, audits, inspections and assessments, including condition of liquid mud and brine tanks.

The wording regarding the right to suspend and/or terminate the contract for the non-payment of any money owed to the owners has been clarified to remove ambiguity.

Maintenance days are a unique feature of offshore support vessel time charters. Under SUPPLYTIME 2017 they are still earned and accumulated as previously, but their use is more clearly defined as being solely at the owner’s discretion. However, days not used may no longer be “cashed in” on redelivery of the vessel except in certain circumstances.

A completely new lay-up clause has been added to identify the key elements that the parties need to address and agree before a ship can enter warm lay-up.

The notice mechanism governing the exercise of the parties’ right to terminate for cause has been reviewed and clarified.

The following guide to SUPPLYTIME 2017 explains all the changes and additions that appear in the new edition. BIMCO is grateful to the many people from the offshore industry and the legal world who contributed comments and suggestions on the draft contract during the revision process. This feedback played an essential role in providing the drafting team with information about the sort of amendments commonly made to SUPPLYTIME which should be incorporated into the new edition.

The revision of SUPPLYTIME would not have been possible without the commitment, dedication and enthusiasm of the drafting team who contributed their valuable time and expertise to this project over two years. BIMCO would like to express its thanks the following people for their efforts in developing SUPPLYTIME 2017:

  • Mr Ian Perrott, ISOA (Chairman)
  • Mr Fredrik Olsson, Maersk Supply Service
  • Ms Aparna Majmudar, Dong Energy
  • Mr Tor Widing, Fearnley Offshore Supply
  • Ms Ursula O’Donnell, The Standard Club
  • Mr Chris Kidd, Ince & Co
  • Mr Simon Ellis/Mr Kaveh Rassouli, Subsea 7 (IMCA)

Structure

The charter party is divided into two main sections. Part I is a box layout used to insert specific contract information such as the name of the parties, basic ship details, scope of work and rates, etc. Part II is the applicable terms and conditions. The text above the signature boxes in Part I was amended in May 2020 (v1.1) to accommodate for the use of the Special Tasks Annexes.

Annex A – Vessel Specification

The ship’s specification where the ship’s details should be recorded has been updated. For example, the term “operator” in SUPPLYTIME 2005 has been replaced with “Company (as defined by the ISM Code)” to clarify that it is the party legally responsible for the operation of the ship (and thereby the duties and responsibilities imposed by the ISM Code) that should be stated here.

Annex B – Insurance

This is where the details about all insurance policies that must be obtained and maintained by the owners in accordance with Clause 17 (Insurance) should be stated. Section 5 (Comprehensive General Automobile Liability Insurance) found in SUPPLYTIME 2005 has been deleted as it is not relevant in the offshore support vessel context.

Definitions

This section includes defined terms that appear several times throughout the contract. Compared to SUPPLYTIME 2005 it has been expanded with more terms. Notable additions include the definitions of “Charterers’ Group” and “Owners’ Group” that have been moved here from Clause 14 (Liabilities and Indemnities) and repositioned here for greater clarity.

“Affiliates” – This definition has been added here mainly because it is used in the definitions of Charterers’ and Owners’ Group, but is also found elsewhere in the charter party.

“Banking Days” – is defined as days on which banks are open in the parties’ place of business. Parties can link the currency of the hire with the place of that currency by amending this definition. For example, if the charter hire is to be paid in US dollars, reference can be added to days on which banks are open in New York.

“Charterers’ Group” – The definition of Charterers’ Group defines the entities that the charterers are responsible for under SUPPLYTIME. In this edition, the term has been expanded to include the defined term “Affiliates”, and “clients, contractors and sub-contractors of any tier”. Thus, all parties operating in the field and which may suffer loss or damage when working at the site are covered by the knock for knock regime. Parties both up as well as down the charterers’ contractual chain are included and owners avoid liability towards the charterers’ contractual counterparties several tiers removed from them. This assists in clarifying which indemnities the charterers have to give and ensures a robust and clear-cut knock-for-knock liability regime. Its scope is limited by the requirement of the listed entities having to be related to the work or project on which the ship is employed.

“Crew” – A definition of crew is included to assist in distinguishing the enumerated people from personnel placed on board by the charterers. Crew also now encompasses the previously used term ‘Master, Officers and Crew’.

“Offshore Units” – This definition has been made more generic. Instead of naming all operations that an offshore unit may be involved in, which carries with it the risk of excluding others, reference is made to “offshore operations”.

“Owners’ Group” – As with the definition of the “Charterers’ Group”, this term has moved from 14 (Liabilities and Indemnities) and restructured for greater clarity. Its scope has been expanded by the addition of the defined term “Affiliates”, as well as “contractors and sub-contractors of any tier”. The scope of this term is limited by the requirement of the listed entities having to be related to the work or project on which the ship is employed.

Clause 1 (Charter Period)

This clause describes the charter period and any agreed extensions with references to the boxes of Part I.

Subclause 1(a) – The period of time that the charterers agree to hire the ship from the owners should be stated in Box 9.

Subclause 1(b) – The charterers can extend the charter period provided that advance notice is given and that an applicable rate of hire for the extended period has been agreed. The period of extension and the number of days’ notice required to declare the option should be stated in Box 10.

Subclause 1(c) – There is an automatic extension if necessary to complete a voyage or a well. If parties want to expand the scope of the automatic extension, clear words should be used to define what such other tasks should comprise of (e.g. ‘Project’). In SUPPLYTIME 2005, the term “Well” was included in the Definitions section. It has now been moved to this subclause as this is the only place where it is used in the contract. For clarification, the final sentence of subclause 1(c) reflects the English common law position that the charterers should not give voyage orders to the ship, or in respect of a well, which they cannot reasonably expect to be completed within the charter period, including the time required for transit to the place of redelivery and the demobilisation of any Charterers equipment.

Clause 2 (Delivery and Redelivery)

Subclause 2(a) (Delivery) – This subclause has been split into two parts to make it clearer and easier to read. Subclause 2(a)(i) provides for the dates within which delivery must be effected and the place. Under subclause 2(a)(ii), the ship at delivery should be free of cargo and the ship’s cargo tanks should be clean to applicable industry standards, and the ship should be able to lie safely afloat at the port or place of delivery. It should be noted that reference is made only to the cargo tanks, and not the fuel tanks. The standard of cleanliness will vary depending on the contents of the tanks and there may be different standards around the world. The words “applicable industry standards” is intended to provide a certain standard without depriving the parties of their required flexibility. In the offshore industry, it is common to have liquid mud and brine cargo tanks cleaned to “brine standard”. However, there are other standards as well and the wording has therefore been kept more general.

Sub-clause 2(b) (Mobilisation) – This subclause deals with payment of the mobilisation fee to cover the cost for owners to bring the ship to the area of operation. The mobilisation fee should be paid as a lump sum without discount concurrent with the delivery of the ship.

Sub-clause 2(c) (Cancelling) – If the ship is not presented for delivery by the cancelling date and time as per Box 6 the charterers have the option to cancel the charter party. If the ship is running late, the owners must notify the charterers of the date and time by which they will be able to deliver it. The purpose behind this clause is that a ship at risk of arriving after the cancelling date and time should not have to proceed on a long voyage towards the delivery place, not knowing whether or not the charterers will accept the ship once it has arrived. Without this provision, the charterers would be able to wait until the ship tenders its notice of delivery before they decide whether or not to cancel. Under the clause, the charterers will have to declare their option within 24 hours from the owners’ notice. If the charterers choose not to cancel, the new cancelling date and time will be the new readiness date and time that the owners stated in their notice.

Sub-clause 2(d) (Redelivery) – The redelivery provision mirrors the delivery clause in that the ship should be redelivery free of cargo and with cargo tanks clean to industry standards. Please see under Subclause 2(a) (Delivery) regarding “applicable industry standards”. The place for redelivery and the number of days’ notices should be stated in Box 8.

Sub-clause 2(e) (Demobilisation) – This provision mirrors subclause (b)(Mobilisation) in that the demobilisation fee should be paid as a lump sum without discount on the expiration or on earlier termination of the charter party. There is one exception to this and that is where the charter party has been terminated because of owners’ repudiatory breach. In such cases, it would be unfair to require the charterers to pay the demobilisation fee.

Subclause 2(f) (Cargo and services) – This provision was part of subclause 2(b)(Mobilisation) in SUPPLYTIME 2005, but has been moved to a separate subclause in the revised edition as it had nothing to do with mobilisation. The clause provides that if the ship carries cargo or perform some other service for the charterers on its way to the delivery port or from the redelivery port, then the charter party will apply to such services as well. However, payment for such additional services should be made as a lump sum in advance, whether ship or cargo lost or not.

Clause 3 (Condition of Ship)

The owners have an absolute obligation to deliver the ship in a seaworthy condition and as described and classed as per Annex A. Thereafter, during the currency of the charter, there is a due diligence obligation on the part of the owners to maintain the ship in a seaworthy condition and in class. Apart from that, there is no continuing obligation to maintain the ship as per Annex A. Rather, Annex A represents an account of the state of the ship at the time of delivery. If it was otherwise, Annex A would have to be amended every time the ship is modified, which would be impractical in the offshore sector where ships are frequently modified.

Clause 4 (Structural Alterations and Additional Equipment)

The charterers may need to modify the ship to be able to perform the services that they have hired it for. This provision gives them the option to make structural changes to the ship or to install equipment. In both cases, the owners’ written consent is required. However, before the ship is redelivered, the charterers must have it reinstated and remove any additional equipment that has been installed.

Regarding the ship’s condition on redelivery, the 2017 edition of SUPPLYTIME no longer requires that the ship should be reinstated to its “original condition”, but only to the “condition on delivery” with an exception for fair wear and tear. This is to avoid the need for it to be returned to its original condition as a new ship but rather, to a condition commensurate with its condition on its delivery to the Charterer and, allowing for the normal wear and tear over the period of the charter.

The modifications and reinstatements should be done in the charterers’ time and at their cost, and they are also responsible for repairing and maintaining the added equipment. Still, the owners have the right to make repairs or maintenance, at charterers’ cost, if necessary for the safety and efficient performance of the ship. For clarification, it is expressly stated that equipment installed by the charterers will not give rights of ownership in favour of the owners.

Clause 5 (Surveys, Audits and Inspections)

Since the SUPPLYTIME 2005 edition, this clause has been updated and expanded to reflect current practice.

Subclause 5(a) – This subclause deals with delivery and redelivery surveys. The parties should jointly appoint a surveyor whose task it is to determine and record the items listed in the clause.

Subclause 5(b) – In practice, it is sometimes a problem that charterers do not survey, inspect or audit the ship before delivery and then argue that the ship should not go on hire until sometime afterwards, when the survey, audit or inspection has been completed, approved and the charterers have accepted the ship. Ideally, the charterers should do this before delivery so that the ship is ready to go on hire at the time of delivery. This provision aims to facilitate this by giving the charterers the right to survey, audit or inspect the ship prior to delivery. Furthermore, it provides the charterers with the right to survey, audit or inspect the ship during the charter period upon giving notice to the owners.

In the final paragraph, the owners are given the opportunity to review and comment on the findings of the surveyors, auditors and inspectors before such information is made publicly available in systems like the OVID (Offshore Vessel Inspection Database) and CMID (Common Marine Inspection Document) databases. Reference is made to “similar systems” to take into account other such possible databases that may exist now or in the future.

Clause 6 (Employment and Area of Operation)

Subclause 6(a) (Employment) – This subclause describes how the ship may be employed. The offshore activities must be lawful and limited to the services as described in Box 17. Furthermore, there is a due diligence obligation on the charterers to order the ship to safe places where it can always lie afloat. The geographical area is limited to the area of operation as described in Box 16.

Subclause 6(b) (ROV operations and diving platform) –The parties can agree in Box 18 that the ship may be used for ROV operations or as a diving platform. However, users should be aware that such operations may require a lot of additional clauses to provide for this. Nevertheless, it was felt to be useful to retain the options in the box so that it was clear at first glance if the parties had agreed to such services.

Subclause 6(c) – It is the charterers’ responsibility to obtain the relevant permissions and licences so that the ship can enter, work in and leave the area of operation. Owners should make reasonable efforts to assist the charterers with this. This is a change from SUPPLYTIME 2005 in order to avoid a potential situation where the owners would be obliged to send their managing director half-way around the world to assist in solving a problem with obtaining a permit. What is reasonable may depend, amongst other things, on the duration of the employment in question. For example, what is reasonable by way of assistance in obtaining a permit for a location where the ship is intended to stay for six months, might not be reasonable in relation to a single cargo run.

A final sentence has been added that charterers, where necessary, should assist owners in obtaining work permits and visas for the crew. In a few jurisdictions, the ship’s crew can only obtain work permits and visas by an invitation and/or sponsorship from the charterers or their clients.

Subclause 6(d) (The Vessel’s space) – This subclause sets out what access the charterers have to the ship’s space. To avoid discussion, the parties should specify in Annex A the number of guaranteed berths that will be available to the charterers’ personnel. The charterers may carry cargo on or under deck as long as it is lawful, and also explosives, dangerous, toxic and noxious cargo as long as owners are notified and relevant regulations are complied with. The indemnity contained in SUPPLYTIME 2005 has been removed to make the contract more balanced and to strengthen the knock-for-knock regime.

Clause 7 (Master and Crew)

Subclause 7(a) – The ship and crew will be at the charterers’ service, the ship always in accordance with its own particular capabilities. Compared to SUPPLYTIME 2005 edition, the keeping of “logs” has been changed to the keeping of “records” as more reflective of practice and technology.

Subclause 7(b) – It is not intended that cargo belonging to third parties should be carried on board the ship in exchange for freight payments. Therefore, no bills of lading should be issued for any charterers’ cargo carried under SUPPLYTIME and the Master should only sign cargo documents which function as a receipt and are non-negotiable. The charterers are required to indemnify the owners against any liabilities that could arise as a consequence of the Master signing such cargo documents, but only to the extent that the liabilities are greater than those assumed under the SUPPLYTIME charter party.

Subclause 7(c) – This subclause sets out the various tasks which the ship’s crew will undertake. If they are prevented by port regulations or unions from performing the listed tasks then the charterers must make other arrangements at their own expense. In SUPPLYTIME 2017, the reference to the hoses which should be connected/disconnected has been made more generic in order not to exclude certain hoses. Furthermore, cargo has to be pre-slung for the crew to handle it.

Subclause 7(d) – The owners are required to investigate and take appropriate action in respect of complaints received by the charterers regarding the behaviour of the owners’ personnel.

Subclause 7(e) – The operational control of the ship remains with the owners throughout the charter party.

Clause 8 (Owners to Provide)

This clause sets out in a straightforward way what the owners must provide and pay for under the contract. In the SUPPLYTIME 2017, the structure of this clause has been amended to make it easier to read.

Subclause 8(a) – The reference to Annex A in subclause 8(a)(ii) has been deleted to avoid arguments that if there was a part of the ship’s hull, machinery and equipment which for some reason (perhaps by accident) was not been included in Annex A, then the owners would not be obliged to maintain or repair it. Furthermore, lubricants have been added as something that the owners should provide and pay for as this reflects more general current practice, see subclause 8(a)(iii)(3). The term “de-ratisation certificates” has been amended to “sanitation certificates” to reflect current terminology, see subclause 8(a)(iii)(4).

The owners are required to refund the charterers for any sums that they or their agents might have paid on their behalf in respect of the enumerated items in the clause.

Subclause 8(b) – On delivery, and when chartered for towing, anchor handling or similar duties the ship must be equipped with towing and anchor handling equipment as per Annex A.

Clause 9 (Charterers to Provide)

This clause sets out in an equally straightforward manner what the charterers must provide and pay for under the charter party.

Subclause 9(a) – As mentioned above, lubricants have been moved to the owners’ list of items to provide and pay for.

Sub-clause 9(b) – This subclause deals with what the charterers should provide and pay for in relation to the loading and unloading of cargoes. In SUPPLYTIME 2017, the wording has been updated to reflect current practice. For example, wording to the effect that the charterers should arrange and pay for disposal of waste deriving from their operations has been included.

Subclause 9(c) – At the time of the agreement, or latest by the time of delivery, the charterers should provide any necessary documents and operational plans to the owners relating to the safe and efficient operation of the ship. On redelivery, the owners must return these documents to the charterers.

Subclause 9(d) – Costs relating to custom clearance and import duties are for the charterers’ account.

Subclause 9(e) – The replacement of anchor handling, towing and lifting wires, together with accessories, are for the charterers’ account, unless the damage or loss has been caused by the negligence of the owners. Subclause 9(e) is carved out from the knock for knock liability regime contained in subclause 14(a) so that the charterers are liable to replace damaged wires even if they belong to the owners. The reason for this is that these wires can be regarded as consumables, albeit very expensive consumables, the wear and tear of which should not be encompassed by the knock-for-knock liability regime. Needless to say, it is open to the parties to negotiate a different balance.

Sub-clause 9(f) – Any fines or other related costs that would arise relating to the discovery of contraband, un-manifested drugs or cargoes that have been shipped in the charterers’ cargo will be for the charterers’ account. They will also be required to put up any financial security. If there is a delay as the result of such a discovery the ship will remain on hire. The reference to containers has been deleted since the containers on board could belong to the owners as well. If the crew has been involved in smuggling, the owners are required to provide financial security in respect of fines and other related costs and the ship will be off-hire for any time lost.

Clause 10 (Fuel)

In the 2017 revision, this clause has undergone a complete overhaul as the previous clause did not properly reflect current practice. The clause has been renamed “Fuel” as the offshore sector does not generally differentiate between fuel carried as cargo and fuel for the ship’s propulsion (bunkers) as there is frequently a common system for both.

Subclause 10(a) (Upon delivery) – The parties should state in Box 19(i) the minimum quantity of fuel that the ship should be delivered with.

Subclause 10(b) (Upon redelivery) – On redelivery, the ship must have on board enough fuel to be able to reach the nearest port where the agreed fuel stated in Box 19(iv) is available.

Subclause 10(c) (Payment for fuel) – The payment regime in SUPPLYTIME 2005 whereby the charterers purchase the fuels on board at delivery at the price prevailing at the delivery port, and the owners buy back the fuels on board at redelivery, at the price prevailing at the delivery port was considered by the revision team not to reflect current practice due to the increased use of Purchase Orders. It may be difficult to say what the prevailing price is since there may be several different prices in one and the same port. The revised clause provides the parties with two options for payment of fuel which should be indicated in Box 19, the default position in case of failure to state an option being subclause 10(c)(i). Lubricants has been deleted as this is generally provided and paid for by the owners in the offshore support vessel sector as explained above.

Subclause 10(c)(i) – Under this option, the charterers buy the fuel that is on board at delivery at the same price as the owners paid for it at the last bunkering. The mirroring provision applies at redelivery where owners buy the fuel from the charterers.

Subclause 10(c)(ii) – Conversely, under this option, the fuel is not bought or sold between the parties during the contract. Instead they should settle the balance at redelivery. If the charterers redeliver the ship with less fuel than it had on delivery, then they pay the owners for the difference. If the ship is redelivered with more fuel than at delivery, the owners credit the charterers for the difference. For calculating the quantity, reference is made to the delivery and redelivery surveys. The price for the fuel can either be agreed and stated in Box 19(iii), or it will be the price paid at the last bunkering of the ship.

Subclause 10(d) – This provision deals with the specifications and grades of the fuel. It requires representative samples to be taken during bunkering. The sampling point should be as close as possible to the receiving ship’s manifold. The representative samples should be divided into a minimum of four samples and should be labelled and sealed by the bunker suppliers. One sample should be retained on board for MARPOL purposes. The remaining samples should be divided between the owners, charterers and the bunker suppliers. Quality claims should be resolved by having the samples analysed by a qualified and independent laboratory which has been jointly selected by the owners and charterers. The cost of this analysis should be borne by the charterers in case the samples are shown to be off-spec. However, if all samples are in compliance, then the owners pay for the analysis.

Subclause 10(e) – What was subclause 10(d) (Liability) of SUPPLYTIME 2005 has been deleted as it was an exception to the knock for knock regime by allocating responsibility for loss or damage caused by the supply of unsuitable fuels on the charterers. Even if it is the charterers that provide the fuel under a time charter party, it is the owners who control taking it on board and are involved in the sampling process etc. If the owners accept a wrong or unsuitable type of fuel, it would be unfair if the charterers should take that risk. Therefore, under subclause 10(e), owners now accept responsibility for consequent damage to the engine. However, the charterers must give owners some time in return, on hire, to stop the bunkering operation if there is reason to believe that the fuel is not compliant. Thus, owners now have the possibility, through the chief engineer of the ship, to stop the bunkering process if he or she reasonably believes that the fuel does not comply with subclause 10(d). When deciding whether or not to suspend loading of the fuel, the chief engineer must be acting in good faith.

Subclause 10(f) – If the fuel is not in compliance with subclause 10(d), the ship will remain on hire and owners will not be liable for any speed, performance or fuel consumption claims.

Clause 11 (BIMCO ISPS/MTSA Clause for Time Charter Parties) 2005

The BIMCO ISPS/MTSA Clause for Time Charter Parties 2005 contains all requirements in relation to Owners and Charterers in respect of the ISPS Code (the International Code for the Security of Ships and Port Facilities and amendments to Chapter XI of SOLAS).

In case of trading to or from the U.S., the Owners are required to comply with the MTSA Act (US Maritime Transportation Security Act 2002). Relevant certificates should be made available and presented to the Charterers upon request. Subclause (c) provides that delays, costs and expenses in relation to security measures required by the ports or relevant authorities are for the Charterers’ account.

Clause 12 (Hire and Payments)

Subclause 12(a) (Hire) – This subclause sets out the charterers’ obligation to pay hire at the rate stated in Box 20(i) from delivery to the end of the contract.

Subclause 12(b) (Extension Hire) – The charterers have the option to extend the charter period. The hire rate for the extended period should be stated in Box 21. If the parties have left Box 21 blank, they must agree on an extension rate, otherwise the charterers lose the option to extend.

Subclause 12(c) (Adjustment of Hire) – If there are changes in law and regulations, or in their interpretation or implementation, which leads to changes in owners’ costs, then hire may be adjusted to cover this. The scope of this possibility to adjust hire is limited by the requirement that it has to be changes of the laws and regulations within the area of operation and they have to be governing the ship, its owners, crew or the charter party.

Subclause 12(d) (Invoicing) – This clause provides for how invoicing should be done. Invoice currencies and exchange rates are to be stated in Box 20. Invoices for hire and other payments should be issued monthly and in advance or in arrears as per Box 22(i). Invoicing for fuel should be done at the time of delivery if the charterers are to buy and pay the owners for the fuel as per subclause 10(c)(i).

Sub-clause 12(e) (Payments) – This subclause requires payment of hire, fuel and disbursements to be received by the owners within the specified number of days in Box 24 from the date of the receipt of the invoice. Account details should be described in Box 23. The charterers are not allowed to make deductions or set-off for claims they may have, with the exceptions for advances for disbursements made on behalf of and approved by the owners, and disputed parts of invoices as per the last paragraph of this subclause. The charterers should notify owners at the earliest opportunity, but not later than the due date, if they reasonably believe that an incorrect invoice has been issued.

Sub-clause 12(f) (Suspension and Termination) – This subclause deals with the consequences of the charterers failure to make punctual payments of hire and other sums due to the owners. The other sums due and payable are intended to cover any sums owed by charterers that remain due and unpaid, for example, mobilisation fees.

Subclause 12(f)(i) – The owners must notify the charterers of their failure to have made any due payment(s) and requiring that such payment(s) be made within five days.

Subclause 12(f)(ii) allows the owners to suspend performance of their obligations under the Charter Party at any time after payment become due and whilst it remains unpaid. During such suspension, the ship will remain on hire. There is no requirement on owners to give notice to the charterers before exercising their right to suspend performance. As a clarification, the words “and/or other sums” were added to the contract in August 2020 (v1.2) to clarify until what point in time the owners are allowed to suspend performance.

Subclause 12(f)(iii) gives the owners the right to terminate the charter party if the charterers have still not paid after five days of the notice that was sent under subclause 12(f)(i). It should be noted however, that if the charterers pay after the five days’ grace period has lapsed, but before the owners have sent the written termination notice, the owners lose the right to terminate. This is a change from SUPPLYTIME 2005.

Subclause (g) (Audit) – In order to verify the validity of the owners’ charges, the charterers may appoint an independent and qualified accountant to audit the owners’ accounts relating to the charter party. The previous reference to “chartered accountant” has been replaced with “qualified accountant” as a more generic wording.

Clause 13 (Off-hire)

The name of this clause has been changed in the 2017 revision to better reflect its content.

Subclause 13(a) (Off-hire and exceptions) – This subclause describes when the ship may be placed off-hire and the exceptions to this. For the ship to go off-hire, firstly, it must be prevented from working. Secondly, this must be due to either the deficiency of the crew or the owners’ stores, or a strike by the crew, or the breakdown of the machinery or equipment (but not the charterers’ equipment), damage to the hull or another accident to the ship. In the 2017 revision, reference to breakdown of equipment has been added. This is intended to cover, for example, DP (Dynamic Positioning) and gear. Hire will only cease for the time that is lost – this is what is generally called a “net loss of time clause”.

Subclauses 13(a)(i)-(vii) – These subclauses contain the exceptions to off-hire. In other words, when the ship does not go off-hire even if it is prevented from working. These are events that fall within the charterers’ area of responsibility or control. To clarify that hire continues to be payable during a force majeure event, reference to this has been added in the latest revision. Clause 35 (Force Majeure) only deals with loss, damage and delay, but not hire. However, if a force majeure event lasts for more than 14 days the charter party may be terminated in accordance with Clause 34 (Early Termination).

Subclause 13(b) (Liability for Vessel not Working) – If the ship is prevented from working, no matter for what reason, even due to negligence on the part of someone within the Owners’ Group, the charterers’ sole remedy for losses is limited to putting the ship off-hire. However, there is one exception to this, and that is where the owners have failed to comply with the ISPS Code/MTSA or Clause 11 (BIMCO ISPS/MTSA Clause for Time Charter Parties 2005). Direct losses from such a failure will be for owners’ account.

In SUPPLYTIME 2017, it has been clarified that this subclause applies generally and not only when the ship is off-hire.

Subclause 13(c) (Maintenance and Drydocking) – This subclause has been rewritten during the 2017 revision of SUPPLYTIME to make it more balanced and clear. Furthermore, it has been restructured so that subclause 13(c)(i) deals with Maintenance Days and subclause 13(c)(ii) deals with drydocking.

Subclause 13(c)(i) (Maintenance) – Owners are given 24 hours per month on hire to do maintenance, surveys, repairs or drydocking. These so-called ‘Maintenance Days’ will start to accumulate from the commencement of the charter period. This is an accepted practice in the offshore industry where ships generally operate with a greater amount of equipment and machinery when compared to other types of ships, and as such require more maintenance and more frequently. It is important for owners to be able to do this maintenance without always being placed off-hire when doing so
The starting point is that it is the owners’ decision when to use their Maintenance Days or not. In SUPPLYTIME 2017, a new concept has been introduced in that if owners decide not to use some or all of their Maintenance Days, they will not be able to claim the value of them at the end of the charter period, as was the case under SUPPLYTIME 2005. However, there is one exception to this, and that is where the charterers have specifically asked the owners not to use them. In such cases, hire will be payable for such unused Maintenance Days on redelivery or at the earlier termination of the charter party. During the Maintenance Days, the charterers’ obligations under subclause 9(a) (Charterers to Provide) will be suspended.

This is a more balanced solution which may encourage owners to use their Maintenance Days within the charter period and at the same time discourage the charterers from not making the ship available for this time.

Subclause 13(c)(ii) (Dry-docking) – The charterers must allow the ship to dry-dock from time to time as required by its classification society. Unless being carried out using accumulated Maintenance Days, the ship will be off-hire during such dry-dockings and, in the 2017 revision, the opportunity has been taken to clarify where and when the ship goes off-hire respectively comes back on hire again, namely from the time the charterers place it at the owners’ disposal until the time it is placed at the charterers’ disposal at the place where it was originally released.

Under SUPPLYTIME 2005, the charterers may have to bring the ship anywhere the owners decide to have it dry-docked and time and fuel in this connection will be for the charterers’ account. For example, the ship could be required to leave a work site in Abidjan to dry dock in Rotterdam, and then return to Abidjan. The 2017 edition now states that the owners’ choice of dry-dock location should always be reasonable, to both parties, when it comes to time and cost.

To promote collaboration between the parties, and facilitate the charterers’ planning, the last paragraph states that the owners must provide the charterers with the ship’s scheduled dry-docking programme for the entire charter period.

Clause 14 (Liabilities and Indemnities)

This clause contains the knock for knock liability regime which is fundamental to SUPPLYTIME. It provides the parties with a clear-cut allocation of risk and responsibility and has worked well in the offshore oil and gas industry for more than 40 years. In this high-risk sector, the knock for knock regime is invaluable in minimising the number of claims and disputes between members of the Owners and Charterers groups. In the 2017 revision, the opportunity has been taken to improve the wording and to strengthen the knock for knock liability regime by, for example, removing some of the previous exceptions. Furthermore, the definitions of “Charterers’ Group” and “Owners’ Group” have been improved and moved to the Definitions section at the beginning of the contract as these terms reappear throughout the contract.

Subclause 14(a)(i) (Knock for knock) – This subclause describes the losses that the owners must bear, namely loss or damage to any property belonging to the Owners’ Group and personal injury and death of anyone in the Owners’ Group. The charterers will not be responsible for these head of losses even if they were caused by, for example, neglect or default on the part of the Charterers’ Group. Furthermore, the owners are obliged to indemnify the charterers if any claims should arise from the losses described in this subclause. This reflects the knock for knock liability regime where the loss lies where it falls at its purest.

However, there are three exceptions where the charterers may be responsible for loss or damage to property belonging to members of the Owners’ Group. In the SUPPLYTIME 2017, the number of exceptions have been greatly reduced to make the knock for knock regime more clear-cut. The remaining exceptions are subclause 9(e) (Charterers to Provide) where the charterers have to pay for replacing owners’ wires; subclause 14(c) (Limitations) under which the parties may limit their legal liability; and subclause 18(c) (Saving of Life and Salvage) in respect of salvage services.

The removal of most of the exceptions, is balanced by the expansion of the definitions of the Charterers’ Group and Owners’ Group. These definitions now encompass all the parties which may suffer a loss and which the owners and charterers will be liable to indemnify each other in respect of.

Furthermore, the knock for knock regime has been reinforced by expanding the description of the included causes of loss. The loss must be one “arising out of or in any way connected with the performance or non-performance of this Charter Party whatsoever and in any circumstances, even if such loss, damage, or personal injury or death is caused wholly or partially by the act, neglect, breach of duty (whether statutory or otherwise)”. The italicised text shows the added wording. The background to these additions is found in court cases since SUPPLYTIME 2005 such as the A Turtle Offshore SA v Superior Trading Inc (The A Turtle) [2009] 1 Lloyd’s Rep. 177.

Subclause 14(a)(ii) (Knock for knock) – This subclause describes the losses which the charterers are responsible for and should indemnify owners in respect of in case of claims. It is not an exact mirror image of subclause 14(a)(i) for the simple reason that the services that the owners and the charterers perform are not identical. Hence, the description of the type of losses of the two parties will differ. The exceptions from the knock for knock liability regime have also been reduced in this subclause and are naturally different from the exceptions in subclause 14(a)(i) describing the owners’ losses. Under subclause 14(a)(ii), the owners will be responsible for replacing wires if they were lost as a result of the owners’ negligence as per subclause 9(e), and for wreck removal and other related measures as per Clause 16 (Wreck Removal).

Apart from that, the description of the included causes of loss has similarly to subclause 14(a)(i) been expanded.

Subclause 14(b) (Excluded losses) – This clause excludes liability of the parties for certain direct and indirect losses as enumerated in the clause. In the 2017 revision, the wording and structure of this provision has been improved. Consequential losses are dealt with separately in subclause 14(b)(ii), and certain specific heads of losses, whether direct or indirect, are covered in subclause 14(b)(i).

Subclause 14(b)(i) – This subclause encompasses certain losses that the parties are excluded from liability for, whether these may be direct or indirect. Direct losses have been defined in English law as meaning losses “which flows naturally from the breach without other intervening cause and independently of special circumstances”, while indirect or consequential losses have been described as “losses which are not the direct and natural result of the breach, (Saint Line Ltd v Richardsons, Westgarth & Co Ltd [1940] 67 Lloyd’s Rep. 62, at p. 103-104). Under English law, loss of use, loss of profits, loss of production will be considered as direct losses because these are losses that will flow naturally from a breach of contract. Marine spread costs (cost of use of property, equipment, materials and services including without limitation, those provided by contractors or subcontractors of any tier or by third parties) have been made part of the exclusion clause. Similarly, so has the loss of financial benefit, sometimes referred to as deferral of production, been excluded from liability.

Subclause 14(b)(ii) – This subclause excludes liability for indirect or consequential losses.

Subclause 14(c) (Limitations) – Under this subclause, the parties retain their rights to limit their liability afforded by applicable law, statute or convention. Furthermore, when the owners and charterers face indemnity claims under the charter party or from each other for third party claims, they are required to try to limit their liability against such third parties.

Subclause 14(d) (Himalaya clause) – The aim of the Himalaya provision is to extend the benefits under the charter party to the Charterers’ Group and their underwriters, and to the Owners’ Group and their underwriters, ship, its registered owners and the crew. The purpose of the agency provision in the final paragraph is to provide the mechanism whereby the protective clauses in the charter party will be applicable to the third parties listed in the previous paragraphs.

Subclause 14(f)(Hazardous or Noxious Substances) of SUPPLYTIME 2005 has been deleted in line with the objective to achieve a more clear-cut knock for knock liability allocation. This is but one risk among several others which does not justify special treatment.

Clause 15 (Pollution)

This clause provides a clear-cut solution in respect of the parties’ liabilities for pollution.

Subclause 15(a) – This subclause sets out that, with the exception of the provisions found in Subclause 18(c)(iii) (Saving of life and salvage), in respect of pollution caused within the offshore site, the owners are liable for pollution damage whether actual or threatened when due to discharge, spills or leaks emanating from the ship (but not from the cargo).

Subclause 15(b) – In line with the knock for knock principle and mirroring subclause (a), this subclause sets out the charterers’ liability for all other cases of pollution.

In SUPPLYTIME 2005, subclauses 15(a) and 15(b) were excluded from the knock for knock liability regime. These exceptions have now been removed in line with the objective for SUPPLYTIME 2017 to strengthen the knock for knock liability regime. Thus, the parties will therefore be liable towards each other in respect of property damage or death and personal injury caused by pollution as per subclauses 15(a) and (b).

Subclause 15(c) – The charterers have the right to place a representative on board the ship or at the site of the pollution or threatened incident to monitor the owners’ and the authorities measures to prevent and minimise the pollution damage. A notice of such attendance should be given to the owners beforehand.

Clause 16 (Wreck Removal)

The responsibility for wreck removal and associated measures should the ship become a wreck rests with the owners. In the latest edition of SUPPLYTIME, the requirement that the wreck is an obstruction to navigation has been deleted as superfluous. It is sufficient that an order of removal had been made by a lawful authority with jurisdiction over the area. It is not required that the ship pose an obstruction to navigation as well.

Clause 17 (Insurance)

Subclause 17(a)(i) – It is the owners’ obligation to obtain and maintain during the charter period the insurances for the ship as stated in Annex B. The owners are required to insure the ship with “reputable insurers” which is intended to provide a benchmark guide indicating that the chosen insurers should be financially sound and have a good market reputation. Adequate insurance is an essential aspect for the proper functioning of the knock for knock regime. Failure to obtain and/or maintain insurance cover may result in the charterers terminating the charter party in accordance with the early termination provisions of subclause 34(b)(vi) (Early Termination – For Cause).

Subclause 17(a)(ii) – The charterers may wish to be named as co-insured on the owners’ policies because of the knock for knock regime. If requested, the owners should ask their insurers to waive rights of subrogation against the Charterers’ Group.

Subclause 17(b) – Upon request from the charterers the owners must provide evidence that they have complied with the insurance requirements of the charter party.

Subclause 17(c) – In order to make the charter party more balanced, a new subclause has been added to the 2017 edition of SUPPLYTIME. The charterers should ensure that their insurers waive any rights of subrogation they may have against the Owners’ Group. The knock for knock allocation of liabilities is built on the idea that each party takes the risk of damage to its own property. If the charterers’ insurers do not waive their rights of subrogation they could claim against the owners for the insurance proceeds paid out to the charterers. The owners could then claim against the charterers again under the indemnity provisions and the parties would keep going around in circles. Hence, this new provision that the charterers’ insurers should also waive rights of subrogation against the Owners’ Group. The waiver only applies to liabilities that are properly the charterers’ responsibility. For example, if anyone within the charterers’ group dies and the family members claim against the owners, leading the owners’ P&I Club to pay out, then the owners’ P&I Club would have a subrogated claim against the charterers.

Clause 18 (Saving of Life and Salvage)

Subclause 18(a) – The ship has the right (and obligation) to deviate in order to save life at sea. No advanced notice to the charterers is required, but the owners should inform them of the deviation as soon as possible.

Subclause 18(b) – In respect of deviation for purposes other than saving life, the ship may only deviate if the charterers have given their consent. If the ship deviates for such other purposes it will be off-hire during the salvage operation, and the charterers will be entitled to half the salvage award.

Subclause 18(c) – The owners waive their right to any salvage award for salvage of the property of anyone included in the Charterers’ Group if the ship was chartered for that purpose. However, this does affect any entitlement of the crew as defined in this contract. This subclause is sometime considered contentious by charterers, but it is nevertheless needed because of the legal requirement to make payments to the crew in a salvage situation and it would not be balanced if owners were liable for this expense. A number of other costs and risks are for the charterers’ account including damage to the ship, spills, seepage and emission of pollutants. Furthermore, since no salvage award will be due to the owners the ship will remain on hire during the operation. Finally, the charterers should indemnify owners for any liability in respect of damage, personal injury and death in connection with the salvage of charterers’ property.

Clause 19 (Lien)

Owners have a lien for claims against the charterers on all cargoes, fuel and equipment. Such a lien can only be exercised if these items are owned by the charterers. The charterers on the other hand have a lien on the ship for monies they have paid in advance but that have not yet been earned by the owners.

The charterers undertake not to permit any lien over the ship and they must secure the release of the ship in case of an arrest, unless the arrest was brought about by an act or neglect by the owners.

With exception of Clause 14 (Liabilities and Indemnities), and if caused by the act or neglect of the owners, the charterers must indemnify and hold the owners harmless if any lien on the ship or other claims arise due to the charterers. The scope of this indemnity is limited by the qualification that the said claims against the owners must have arisen out of the operation of the ship by the charterers or out of any neglect by them in relation to the ship or its operation.

Clause 20 (Sublet and Assignment)

Subclause 20(a) (Charterers) – After approval by the owners, the charterers have the right to sublet, assign or loan the ship to companies that are not competing with the owners. The original charterers will remain responsible to the owners for the due performance of the charter party. The party to which the ship is sublet, assigned or loaned will become part of the Charterers’ Group for the purposes of the charter party. Additional hire should be paid by the charterers to the owners in the amount agreed in Box 29 if agreed due to any change in the intended Workrole or period.

Subclause 20(b) (Owners) – The owners cannot assign or transfer any part of the charter party to a third party without the written approval of the charterers. Even with such approval the owners remain responsible for the performance of the sublet or assigned services.

Wording has been added to Sub-clauses (a) and (b) to prevent delays in decision making by the relevant party in respect of the approval for subletting, assigning or loaning of the ship.

Clause 21 (Substitute Ship)

The owners can at any time substitute the ship provided they receive prior approval from the charterers. In contrast to the equivalent clause in SUPPLYTIME 2005, the wording “of at least equivalent capability” has been inserted with a view to demonstrate more precisely the required particulars and characteristics of the substituted ship and at the same time clarify that it need not be identical to the original ship. Wording has also been added to prevent the charterers from unduly withholding or delaying such approval as owners may have to act quickly to secure a suitable ship in the market.

Clause 22 (BIMCO War Risks Clause “CONWARTIME 2013”)

This is BIMCO’s standard war risks clause for time charter parties. The ship is not obliged to proceed to an area (as defined in the clause) if it may be exposed to war risks by doing so. It does not matter whether the war risks existed at the time of fixing or if they occurred afterwards. The level of danger required to refuse to proceed is intended to be high.

The definition of “Piracy” (subclause 22(a)(ii)) is similar to 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, subclause 22(b) does not require Charterers to obtain Owners’ written consent before ordering the ship 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.

Under the insurance provisions (subclause 22(d)) the Charterers are liable for any additional premium (i.e. beyond Owners’ normal war risk insurance cover) imposed by underwriters as a result of the ship 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.

Insurers may require an assured to comply with reporting arrangements such as UKMTO or follow Best Management Practices. This is reflected in subclause 22(g)(ii) which provides that Owners have liberty to comply with requirements “under the terms of the Ship’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 subclause 22(h). The final sentence makes clear that Charterers are liable for any resulting costs, risk and expenses.

Subclause 22(i) requires Charterers to indemnify Owners against any third party claims under bills of lading or other contracts of carriage.

Clause 23 (War Cancellation Clause)

This clause provides the parties with the option to cancel the charter party if war breaks out between any of the countries stated in Box 30. An outbreak of war does not need to occur between all of the countries stated, the clause will be triggered by the outbreak of war between any two or more of the listed countries.

Clause 24 (BIMCO Ice Clause for Time Charter Parties)

Subclause 24(a) makes it clear that the ship should not be obliged to force ice, but may reasonably be expected to follow ice breakers where other ships of the same size, class and construction are doing so.

Subclause 24(b) – It is in the master’s discretion to assess whether in the ordinary course of events the ship will not be able to safely enter into, remain at or depart from an ice bound port or area. Furthermore, in the event that there is a risk that the ship may be frozen in, the master shall be at liberty to sail to the nearest “ice-free place”.

Subclause 24(c) states that any delay or deviation caused by ice does not place the ship off-hire. After all, under a time charter party it is the Charterers who make the commercial decisions regarding the employment of the ship and it is they, therefore, that must assume the associated risks.

Additional premiums will be for the Charterers’ account (subclause (d)).

Clause 25 (BIMCO Infectious or Contagious Diseases Clause for Time Charter Parties)

This BIMCO standard clause has been developed for use in response to any virulent disease and has therefore been drafted in general terms without reference to specific conditions. The provisions are intended for application only in the most severe cases. A high threshold has therefore been inserted so that the triggering mechanism will take effect only in instances of extreme illness and cannot be misused for commercial purposes in relation to more commonly encountered or widespread viruses. Given the potential for ambiguity, the term “epidemics” has been avoided.

The content and structure is modelled on the BIMCO War and Piracy Clauses where, within limitations, Owners may refuse to trade to an area of danger. If, nevertheless, that option is waived and the ship proceeds, Charterers will be responsible for resulting liabilities and any additional costs of preventative measures taken by Owners to protect the ship and crew. It is important to note that whether an area presents the degree of danger justifying a refusal to proceed is a subjective decision to be taken by Owners in the light of available evidence and information.

Subclause 25(a) sets out two interdependent definitions to trigger the clause. The first, “Disease”, is drafted with closely defined criteria to fulfil the provisions of extreme circumstances of sickness and not everyday occurrences of illness. The accompanying definition, “Affected Area”, means the location where the ship, crew or other person on board may be at risk of exposure to Disease (as defined).

It is important to note that exposure is not limited only to the immediate effects while the ship is within an area of risk, but also anticipates potential future restrictions weeks or months later when the ship calls at a port outside, and possibly remote from, the Affected Area but, because of the earlier trading, may be subjected to quarantine or restrictions on crew changes or movements.

Subclause 25(b) – It is for Owners/master to determine, on the basis of “reasonable judgement”, whether to allow the ship to proceed to, continue to or remain at an Affected Area although, as with the War and Piracy Causes, the level of danger must be real and significant.

Considerations to be taken into account when deciding whether to proceed would be likely to involve making background inquiries and seeking guidance from relevant sources which could be expected to include regulatory or advisory bodies in the Owners’ Flag State as well as reference to guidance issued by specialist intergovernmental organisations, such as the World Health Organization (WHO). The ship’s subsequent trading pattern might also influence the decision.

Subclause 25(c) – The Owners must notify Charterers if they decide not to proceed or continue towards an Affected Area.

Subclause 25(d) – If already at a location that becomes an Affected Area, and provided Charterers are notified, the ship may leave with or without cargo.

Subclause 25(e) requires Charterers to issue alternative voyage orders within 48 hours of Owners’ notification, under subclauses (c) or (d), that the ship will not proceed to, continue to or remain at an Affected Area. If such alternative orders are not given, any cargo already on board may be discharged at any port or place. The ship will remain on hire throughout with Charterers responsible for all resulting costs and liabilities.

Under subclause 25(f), Owners are under no obligation to load cargo or sign (and Charterers may not sign or authorise) bills of lading, waybills or other documentation evidencing contracts of carriage for any Affected Area.

Subclause 25(g) – Charterers must indemnify Owners for costs and liabilities, including claims from third party bill of lading holders, resulting from delay awaiting or complying with Charterers’ alternative orders in accordance with subclause (e).

Subclause 25(h) addresses the position where a ship is nevertheless permitted to proceed to an Affected Area. In such event, Owners do not waive their contractual rights; Owners must endeavour to take reasonable precautionary measures in accordance with World Health Organisation (WHO) recommendations; and the ship remains on hire with Charterers also responsible for any additional cleaning, fumigation or quarantine costs.

Subclause 25(i) is a standard liberty provision permitting Owners to comply with orders, advice or recommendations given by competent authorities as to sailing or routeing to an Affected Area.

Subclause 25(j) provides that the exercise of any rights under the clause is not a contractual or geographic deviation or off-hire event, and also addresses conflict between the clause and underlying charter party.

Subclause 25(k) holds Charterers responsible for any post contractual costs, such as cleaning, quarantining and fumigation, arising from the ship’s trading during the currency of the charter party. According to the circumstances of the contract and relationship with Charterers, Owners should consider the appropriateness of ensuring financial security or guarantees to cover expenses that might arise after redelivery.

Clause 26 (Health, Safety and Environmental)

The owners must comply not only with all statutory regulations relating to health and safety but also the environment. Furthermore, the Owners must comply with any agreed and additional HSE requirements of the Charterers. A qualification has been added that such compliance with the Charterers requirements should not conflict with the ship’s flag state obligations.

Clause 27 (Drugs and Alcohol Policy)

The owners must have a drug and alcohol policy in place which at least meets the standards referred to in the OCIMF (Oil Companies International Marine Forum) Guidelines for the Control of Drugs and Alcohol on Board Ship 1995. More information can be found at www.ocimf.com. The ban on drugs extends to prescription drugs if used or abused for purposes other than those for which they were medically prescribed.

Clause 28 (BIMCO Anti-Corruption Clause for Charter Parties)

This standard BIMCO clause provides users with a regime for responding to unlawful demands for gifts in cash or kind, such as cigarettes or alcohol. The clause sets out a series of steps with the contracting parties working together to resist such demands but if this fails, owners’ rights to hire is protected. Termination, by either party, is the ultimate sanction but a high threshold has been set so that it cannot be easily used as an exit from an inconvenient charter.

Subclause 28(a) sets out the scope of the clause. It applies as between the contracting owners and charterers and this extends to include their respective employees and agents. The provisions are effective in all jurisdictions where the parties are operating and ports and places visited.

It is important to note that the clause addresses criminal law issues and is therefore distinct from the governing law of the charter party. By way of example, the United Kingdom Bribery Act applies to any party based in or with a “close connection to” the United Kingdom. However, if parties that do not fall within the scope of the United Kingdom Bribery Act elect to apply English law as the governing law of the charter party, the United Kingdom Bribery Act will not be applicable. They will, nevertheless, be subject to provisions imposed under their own or other applicable national legislation.

Subclause 28(a)(i) requires the parties to comply with “all applicable anti-corruption legislation”. Since the clause is designed for worldwide trading and is not linked to any specific legal system, this provision aims to encompass any laws or regulations to which the parties are subject under their own national legislation or legislation in the country or jurisdiction where they are operating.

Each party must have in place procedures to ensure that their commercial dealings with counter-parties and cargo interests are designed to prevent any offence being committed by their employees or agents. This is likely to be based on a company’s internal anti-corruption rules and guidance published by industry organisations. While there is no expectation that such procedures will be effective in every case, a certain and high threshold is set and parties should ensure they have robust systems in place for making appropriate background checks and undertaking due diligence in the appointment of agents and other third parties. Company procedures must also set, and enforce, high standards of conduct.

Subclause 28(a)(ii) makes an express provision for record keeping that reflects customary company practice and statutory obligations for keeping and maintaining accounting information. Proper recording of any payments made or gifts provided, along with the circumstances in which they were made or provided, is an essential part of a company’s procedures with regards to unwarranted facilitation payments.

Subclause 28(b) is triggered when a request is received by the owners or the Master, for payment or goods or other items of value (defined in the clause as a “Demand”) from any official, contractor or sub-contractor either engaged by the owners or charterers (such as towage contractors, pilots, hold inspectors) or acting on behalf of any third party (such as port or customs officers). If the Demand is viewed as an illegal payment, the Master or owners must notify the charterers and the two parties are to cooperate in taking reasonable steps to resist the Demand.

This procedure recognises that the Demand is a function of the port call and is a direct result of charterers’ orders for the employment of the ship. It therefore follows that the parties have a mutual interest in resolving the issue as quickly as possible while avoiding any breach of their legal obligations. Parties should, therefore, use whatever influence they can bring to bear.

Subclause 28(c) takes the process to the next stage if the “reasonable steps” in subclause (b) have failed to resolve the position. At this point, the Master or owner may issue a letter of protest. Under normal circumstances, a letter of protest setting out a complaint will be addressed to local interests at the port in question. However, this might not be appropriate where the illegal Demand is being made by a service provider or where it is suspected that the letter or details will be passed on leading to further difficulties for the parties, the Master and crew. It is therefore left to the Master or owners to decide whether, and if so to whom, the letter of protest should be directed. Nevertheless, in all cases, the letter of protest must be sent or copied to the charterers.

The letter of protest is significant as it will provide evidence that the ship is being delayed because of the continuing, and as yet unresolved, Demand. In accordance with the logic that the port of call has been nominated by the charterers, it follows that they should bear the cost of any delay attributable to a Demand. Accordingly, once the letter of protest has been issued, the ship remains on hire or there is no interruption to laytime or demurrage.

Subclause 28(d) provides mutual indemnities whereby a party that has breached anticorruption legislation to which it is subject, must indemnify the other party against any loss or damage suffered as a result by the latter.

Subclause 28(e) sets out the criteria for termination. Termination can be invoked either by owners or charterers but only where the other party has breached applicable legislation in connection with the charter; and that breach has put the other, non-breaching, party in breach of anti-corruption legislation to which it is subject.

It should be noted that:

  • use of the termination provision is optional and any breach committed by one party can be disregarded by the other party;
  • the commission of a breach is limited to the actions of those directly employed by the breaching party and not those of agents or contractors engaged to act on their behalf. If, for example, the owners’ port agent seeks an inducement from charterers to expedite, or not delay, administrative processes, the port agent’s actions would not put the owner in breach;
  • it is expressly provided that termination must be exercised “without delay”. This is to prevent a party using a prior incident as an excuse to bring the charter to an end possibly weeks or months later. The interpretation of “undue delay” will depend on case sensitive facts and circumstances; and
  • termination is expressly “without prejudice” to any other rights under the charter.

Subclause 28(f) provides a self-standing regime warranting that the contract has not been procured by corrupt means. If breached, the innocent party may terminate the contract.

Clause 29 (MLC 2006)

The ILO Maritime Labour Convention 2006 (MLC 2006) entered into force on 20 August 2013 with the aim to provide comprehensive rights and protection at work for seafarers. The MLC 2006 defines “seafarer” as “any person who is employed or engaged or works in any capacity on board”. This definition may create liabilities on the part of the ship owners for any persons working on the ship, including crew employed by the charterers who have not traditionally been regarded as seafarers, for example, concessionaires and entertainers. In the event of doubt whether a particular category of persons on board a ship is considered to be seafarers, the MLC 2006 provides for the question to be decided on a national basis by each flag state, which may give rise to inconsistencies. It is important to note that it is the owners who are ultimately responsible for compliance with the MLC 2006, even in respect of “seafarers” employed by the charterers.

This clause is designed to allocate responsibility between the owners and charterers for personnel on board the ship not directly employed by the owners.

The definition of “Charterers’ Personnel” is intended to identify clearly which persons on board the ship the charterers are responsible for in respect of compliance with the MLC 2006.

Subclause 29(a) sets out the main obligations of the owners and charterers. The owners are required to provide the charterers with a copy of Part I of the Declaration of Maritime Labour Compliance (DMLC) for the ship. The DMLC sets out the owners’ or operators’ plan for ensuring compliance with the MLC 2006 as implemented by the flag state for the ship.

Based on the ship-specific DMLC provided by the owners, the charterers are obliged to comply with a 12-point list of MLC 2006 related requirements that fall within their control for the personnel they place on board the ship.

Subclause 29(b) states that prior to boarding any of their personnel, the charterers are required to provide the owners with written evidence of their compliance with their obligations under subclause 29(a). The owners may also request evidence of compliance from the charterers at any time after the charterers’ personnel have boarded the ship as part of the owners’ responsibility to demonstrate continuing compliance.

Subclause 29(c) provides the owners with an indemnity from the charterers to protect them against the consequences of the charterers failing to comply with their obligations under the clause. Any time lost in this respect is for the charterers’ account and the ship will remain on hire.

Clause 30 (BIMCO Sanctions Clause for Time Charter Parties)

The purpose of the sanctions clause is to provide owners with a means to assess and act on any voyage order issued by a time charterer which might expose the ship to the risk of sanctions. The test is one of “reasonable judgement” by the owners in determining whether the risk of the imposition of sanctions is tangible. As sanctions are often brought into force within a short period of time, the clause covers the application of sanctions after the ship has begun an employment under the charter. Whether the sanctions existed at the time the order of employment was issued or whether they were subsequently applied, the owners will have the right not to comply with such orders or to refuse to proceed.

The owners must advise the charterers promptly of their refusal to proceed with the voyage and the charterers must provide alternative voyage orders with 48 hours of being notified by the owners. Failure by the charterers to issue alternative voyage orders will result in the owners having the right to discharge any cargo on board at a safe port at charterers’ cost. In all circumstances, the ship will remain on hire and the charterers will be obliged to indemnify the owners against any claims brought by the cargo owners or holders of bills of lading or sub-charterers as a consequence of the change of orders or the owners’ discharge of the cargo.

Clause 31 (BIMCO Designated Entities Clause for Charter Parties)

The Designated Entities Clause applies in respect of persons or entities (including designated ships), regardless of where they operate from, whose activities are restricted or prohibited and are identified under United Nations Resolutions, European Union laws and regulations or by the United States of America. It can be seen as a complement to the BIMCO Sanctions Clause for Time Charter Parties above which applies to sanctions imposed against a state.

The clause sets out a requirement for owners and charterers respectively to warrant that they are not designated entities. The warranty continues throughout the currency of the charter party.

Lists of designated persons and entities are liable to be updated and amended at frequent intervals; details are publically available and, as appropriate, can be monitored. In the event that a party is, or becomes, identified as a designated person or entity, or a designated ship, the clause provides flexibility for the innocent party to act as necessary in the circumstances. It is assumed that, in most cases, guidance will be requested from regulatory authorities but, where this is not available, the charter party can be terminated forthwith or any offending cargo on board discharged.

The clause contains the customary liberty and indemnity provisions. However, while owners and charterers each undertake to indemnify the other for any breach of warranty, this is unlikely to be enforceable where one of the two contracting parties is or becomes designated and, therefore, no longer able to receive or make any payments. Nevertheless, the provision could have effect where, for example, a breach is attributable to charterers’ cargo interests.

In contrast to international agreement on designated entities, some states apply their own anti-blocking or similar legislation to counter the effects of a boycott or other targeted action affecting their trading interests. The clause therefore includes a provision that parties shall not be required to break their own laws. This is a potentially difficult area and legal advice is likely to be needed in the event of tension between regulatory obligations.

Clause 32 (Taxes)

The taxes that the owners should be responsible for should be stated in Box 31. All other taxes will be for the charterers’ account. Hire should be adjusted if there is a change in the owners’ tax burden by reason of change in the local regulations or their interpretation after the date of the charter party or the commencement of employment, whichever is earlier.

Clause 33 (Lay-up)

A new and comprehensive lay-up provision has been drafted for SUPPLYTIME 2017. In the previous editions, this was very brief and did little more than to give the charterers the option of laying up the ship. The procedure to lay up a ship requires a lot of decisions to be made and the new clause aims to clearly set out in chronological order those decisions.

The preamble of the clause gives the charterers the option of laying up the ship at any time during the charter period in accordance with the process as set out in the clause.

Under subclause 33(a), the charterers must notify the owners in writing that they intend to lay-up the ship; when the lay-up should start; and for how long it will last. The charterers should also nominate a safe port or place for the lay-up.

Once the charterers have notified the owners in accordance with subclause 33(a), the owners must within a week provide the charterers with the information listed in subclause 33(b). Such information includes, for example, the nature of the lay-up and the reasons for it; the estimated costs; and the amount of reduced hire during the lay-up period. In the clause, reference to cold, warm or hot lay-up has purposely been avoided as there are a variety of permutations for lay-up, hence the requirement on the Owners to provide information on the nature of the intended lay-up.

The charterers then have a week to confirm to the owners if they want to go ahead with the lay-up. Once they have confirmed that they wish to lay-up the ship and upon receipt of instructions to the ship, the owners must take all actions required to effect the lay-up, subclause 33(c).

For reactivation, the notice period is 30 days and the hire will revert to the normal hire rate under the contract at the earliest of either the expiration of the 30 days’ notice period or when the ship again is fully operational and ready, subclause 33(d).

Subclause 33(f) sets out what the charterers should pay to the owners if the ship is in lay-up when the charter party comes to an end.

If any of the owners’ obligations cannot not be complied with because of the ship is laid-up then they will be suspended during the lay-up.

Regarding the Maintenance Days under subclause 13(c), they will not continue to accrue during lay-up, see subclause 33(h). Maintenance Days are given to allow the owners to stop the ship for maintenance, repairs and surveys, but without loss of hire, and without interruption by the charterers. All these conditions are automatically met whilst a ship is in lay-up and the owners continue to be paid hire throughout. Therefore, the effect of granting Maintenance Days whilst a ship was in layup would be that the owner got paid twice. A ship in layup (warm or cold) is not going to sail anywhere within short notice and hence the owners can use the layup crew, or put people on board, at any time and without needing the charterers’ permission nor having any concern that the ship will sail, and all the time being paid charter hire. It would therefore be rather unfair if the charterer were obliged to pay for Maintenance Days during this period.

Clause 34 (Early Termination)

Subclause 34(a) (At Charterers’ Convenience) – This is an optional clause that applies only if the parties have stated as such in Box 13(i). It provides the charterers with the right to terminate the contract before the end of the charter period, provided they give the owners the prescribed notice in Box 14 and pay the agreed early termination fee as per Box 13(ii) together with the demobilisation fee, and hire and other payments due under the charter party at the time of termination.

Subclause 34(b) (For Cause) – This subclause gives the parties the right to terminate the agreement if an event listed in the clause takes place. These events are: requisition of ship by government of state of registry or flag; confiscation of ship other than by way of arrest for security purposes; bankruptcy or similar of either party; loss of vessel; force majeure event as per Clause 35 (Force Majeure); and owners’ lack of insurance for the ship Clause 17 (Insurance).

The termination procedure has been clarified and improved since the SUPPLYTIME 2005 edition. The revised clause operates with two notices and makes clear in which circumstances the parties may terminate; how much time the defaulting party has in which to remedy; and the time frame within which the termination may take effect. If a “Termination Event” as listed in the clause occur, either party may give a written notice of its intention to terminate if the said Event is not cured within 14 days from the receipt of the notice. On expiry of the 14 days the notifying party may terminate with immediate effect by giving a second notice latest within three days of the expiry of the 14 days’ period. This enables the terminating party to give the second notice before the expiry of the 14 days’ notice period so that termination can take effect immediately after that period has lapsed. It also adds some certainty to the non-terminating party as to whether the terminating party will go ahead and terminate. The charterers will still be liable to pay hire and other payments that are due to the owners under the charter party up to the date of termination.

Subclause 34(c) (Repudiatory Breach) – In the event of a repudiatory breach, the party not in repudiatory breach of its obligations may terminate the charter party immediately by following the notice procedure under Clause 38. Repudiatory breach is dealt with in this new subclause (c) which reflects the common law position that in the event of a repudiatory breach the “innocent” party may terminate immediately by giving notice – that party does not have to give a 3 day grace period as per SUPPLYTIME 2005 to permit the party in breach to “rectify”.

Subclause 34(d) (Off-hire) – This new subclause replaces the “Breakdown” provision found in Clause 31(b)(v) of SUPPLYTIME 2005. Rather than attempting to deal with liability for breakdowns of equipment or the ship that prevent the owners from providing the required services, the provision instead focuses on maximum periods of off-hire.

In the new provision, which is not subject to the 14 days’ grace period under subclause 34(b), if there is an off-hire event as per subclause 13(a) that lasts longer than the agreed periods in Box 32, depending on whether single consecutive periods or combined periods are to apply, and the owners have not provided a substitute ship, then the charterers are entitled to terminate the contract. Notice to such effect should be given in accordance with the notice clause, Clause 38. It should be noted that when an off-hire event arises that may be covered by the owners use of any accumulated maintenance days, the owner may use such accumulated days, which are on-hire days, and they will not therefore contribute towards the calculation of off-hire days that lead to any right of termination by the charterers.

Clause 35 (Force Majeure)

This clause is modelled on the ICC (International Chamber of Commerce) model Force Majeure Clause 2003 which BIMCO has used to create a “standard” force majeure provision for its contracts. The clause excuses the performance without liability of the party invoking force majeure if it can show that the alleged force majeure event falls within any of the listed event in the clause; that its performance is prevented by that event; and that it has taken reasonable steps to avoid or minimise the consequences of the event. Courts tend to interpret force majeure clauses narrowly so that only the events listed or similar events will be considered to be force majeure events. In order for force majeure to operate, the event has to have been beyond the parties’ control and they could not have avoided its consequences, nor could it have reasonably foreseen by them. Parties cannot invoke force majeure if they are relying on their own acts or omissions. A party wishing to invoke force majeure must give notice to the other party in writing within five days from when the event occurred. The number of days has been expanded compared to SUPPLYTIME 2005 to take into account if a force majeure event happens, for example, during the weekend or a holiday. The clause, combined with subclause 34(b)(v), can give rise to a right of early termination by either party if the force majeure event continues for a period exceeding 14 consecutive days from the date of the event or notification to the other party.

A ship will not be considered off-hire during a force majeure event. The force majeure provision deals with loss, damage and delay, but not with hire, which will therefore continue to be payable during a force majeure event. This is emphasised in subclause 13(a)(vii) (Off-hire – Off-hire and exceptions).

Clause 36 (Confidentiality)

This clause is designed to protect the parties from the disclosure of confidential information or data to third parties. The owners and charterers are bound by confidentiality in respect of all information and data that they receive about the performance of the charter party. Both parties must try to ensure that any affiliates, sub-contractors, employees or agents also abide by this confidentiality undertaking. The clause provides certain exceptions where the confidentiality undertaking does not apply, for example regarding information that has already been published in the public domain or which is required for legal purposes.

Clause 37 (BIMCO Dispute Resolution Clause 2016)

The dispute resolution clause offers four options for arbitration: London (which applies by default in the absence of a stated alternative in Box 33); New York; Singapore; or an open choice for parties to agree the governing contractual law and seat of arbitration. Mediation procedures are set out for London, Singapore and the open forum. However, mediation has a different position in the USA and it is left to the parties to agree their own procedures.

Clause 38 (Notices)

This is a general notice provision with reference to the contact details that should be used for giving notice to the respective parties and that notices should be given effectively. The words “effectively given” should encompass different methods of giving notices and in that sense, be “future proof”.

Clause 39 (Headings)

This provision has been added to ensure that the headings of the contract are not considered part of the interpretation of the text of the clauses.

Clause 40 (Severance)

This clause which seeks to avoid a situation where the entire agreement is held to be invalid because a provision is deemed by an arbitrator or other competent authority to be illegal, void or unenforceable.

Clause 41 (Entire Agreement)

The purpose of this clause is to limit the rights of the parties to the written terms of the contract. As such it is intended to exclude representations, written and oral, not intended to be part of the final concluded charter party.

Clause 42 (Singular/Plural)

In most BIMCO contracts the parties are labelled in plural, for example in SUPPLYTIME they are labelled as “Owners” and “Charterers” which are merely labels that point to the identity of each of the parties to the contract. However, to provide for situations where singular and plural terms need to apply in a particular context, provision has been made that the singular includes the plural and vice versa as the context admits or requires.

ABOUT: General Average, New Jason and Both-to-Blame Collision Clauses
These clauses have been deleted in the 2017 edition of SUPPLYTIME. They are not relevant in an offshore support vessel context as they deal with cargo-related matters and cargo is not intended to be carried for third parties under SUPPLYTIME. Furthermore, they would be contrary to the knock-for-knock liability regime. Nevertheless, ships trading to the U.S. may want to consider reinstating the Both to Blame Collision Clause.

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