Following swiftly on the heels of the recent Ocean Victory judgment by the UK Supreme Court, the BARECON revision team has reviewed the insurance clauses of this widely used contract.
BARECON allows either the charterers or the owners to insure the ship for marine, war risks and P&I – with the other party named as co-assured with full cover. The latest draft now includes wording to clarify that the purpose of the co-assured cover is to ensure payment of the loss without excluding or settling liability between the owners and the charterers. And any rights of recovery against third parties by the owners or the charterers, or their insurers, are expressly permitted.
The insurance clauses of BARECON have been re-structured. In previous editions of the charter there were two alternate clauses. The first gave the owners the responsibility to maintain insurances for the ship with the charterers named as co-assureds. The second gave the responsibility to the charterers and was the most common insurance arrangement under a bareboat charter party. The effect of the two alternatives was intended to be the same in terms of repairs and total loss. The newly structured insurance provisions set out the responsibilities as they apply to both alternative insurance arrangements. Subsequent clauses provide the alternatives for the owners or the charterers to insure the ship.
The drafting team has benefited from a large number of comments and suggestions sent in by commercial practitioners and lawyers during a recent industry consultation. The team will be circulating copies of the new draft insurance clause during the summer for further feedback from the industry. They recognise the importance of getting these clauses correctly phrased against the backdrop of the complex issues raised by the Ocean Victory case – so input will be very welcome.
The new edition of BARECON will be presented to BIMCO’s Documentary Committee in November 2017 for adoption. It is a full review and revision of BARECON 2001 to bring it up to date with the latest legal developments and commercial changes in bareboat chartering practice.
The BARECON revision team is Ajay Hazari (Anglo Eastern Shipmanagement)(Chairman); Robert Almstrom (Stena RoRo); Stephan Bade (Leonhardt & Blumberg); Karl Even Rygh (Nordisk); and Adrian Moylan (GARD AS).
PHOTO: UK Supreme Court in session.