The team of industry experts working on the project, headed by Captain Ajay Hazari of Anglo Eastern Shipmanagement, have concluded that several of the annexes dealing with hire purchase and bareboat registry options are no longer in tune with current commercial practice. According to Captain Hazari the complexities of modern hire purchase agreements cannot realistically be covered in a “one size fits all” approach. These agreements are generally tailor-made on a case by case basis and it’s better to leave it to the parties to formulate and attach their own agreement. Similarly with bareboat registries which were dealt with in an annex to BARECON, the project team feels that this is an issue often dealt with by ship registries in subtly different ways not easily captured in a standard wording.
VIDEO: BARECON chairman Ajay Hazari talks to BIMCO’s Grant Hunter about the changes to the new edition
Although the new BARECON will be a leaner document with fewer annexes, it will be strengthened by a number of new clauses. Contemporary issues such as sanctions, designated entities and anti-corruption are dealt with in new clauses. A new clause introduces a sharing of costs mechanism for structural changes to the ship due to new class requirements or compulsory legislation during long term charters. This is often a contentious issue and one which the project team felt would benefit from a standard formula to calculate a ratio that takes into account the age and expected life of the ship, the remaining period of the charter, and the cost of the modification.
The updated form separates the insurance provisions from the classification and maintenance requirements. This makes BARECON easier to read and understand without removing any of the previous flexibility to use the charter party, if required, for short season charters where the owners retain the obligation to insure the ship.
The team has also spent time looking at one of the most important clauses in BARECON – the delivery clause. This clause has been the source of disputes concerning the condition of the ship on delivery and the owners’ potential liability for the costs of repairing “hidden” defects which might not appear until the ship has been in the charterers’ service for many months. The new edition includes for the first time a definition of “latent defect” which should assist contractual parties in identifying possible liabilities for costs and reduce the likelihood of disputes on this important issue.
The revised BARECON will be available for review during an industry consultation that will take place during the second or third quarter of 2017. The target completion date for the new edition is November 2017.
The project teams is:
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