The project to develop two standard escrow agreements was kicked off this week with a subcommittee meeting in BIMCO House.
The project to develop two standard escrow agreements was kicked off this week with a subcommittee meeting in BIMCO House. Two agreements will be created:
• one for depositing money with a deposit holder as security in a ship sale and purchase transaction and
• one for depositing money as security for a claim in a dispute.
There are no standard contracts for these purposes in the market, and it is hoped that the new forms will fill a gap and save parties the time and effort of drafting individual contracts each and every time.
The first meeting focused on the sale and purchase escrow agreement. It has become more and more common that law firms and brokers, as opposed to banks, provide the service of holding the deposit for the buyers until delivery of the ship. The agreement will include operative clauses such as the appointment of the deposit holder, opening of the deposit account and release of the funds to the sellers. In addition, the subcommittee will consider provisions that protect the deposit holder in case the money turns out to have an unethical origin, which would trigger a requirement under money laundering regulations that the deposit holder withdraws from its undertakings.
The drafters of the escrow agreements is a small group of experts with long experience in this area: Ms Lisa-Marie Perrella of Fednav, Mr Stuart Plotnek and Mr Paul Herring of Ince & Co , Mr Christoph Bruhn of Bruhn Shipbrokers, and Mr Magne Andersen of Nordisk Defence Club.
The subcommittee will meet again in January 2017. It is hoped that the new agreements will be ready for publication in a year from now.