BIMCO has now added a new ‘standalone’ force majeure clause to its library. This clause addresses force majeure events occurring under contracts used by the shipping industry that affects the performance of the parties.
The BIMCO Force Majeure Clause 2022 is a generic clause that may be incorporated into various types of contract, including charter parties, ship building / repair contracts and sale and purchase agreements.
The parties seeking to incorporate the clause will need to look carefully at the wording and the explanatory notes in order to adapt it to fit the nature of their agreement
said BIMCO.
More specifically, according to the Standard Club, it is suggested that the clause may not be so suited to period time charter parties with a broad trading range, while it could be relevant where the charter party is for a dedicated trade.
When one of the listed force majeure events takes place, that prevents a party from performing one or more of its obligations under the contract, the clause provides that party with protection to avoid breach of contract and a method for resolving the situation.
The ‘spirit’ of the clause is that the parties should cooperate and discuss to minimise the effects of the event on performance.
In addition, either party’s payment obligations – unless the payment itself is directly affected by the force majeure – will continue.
Only as a last resort does either party have the right to terminate the contract, for example, if performance under the contract has become impossible, illegal or radically different, or the force majeure has substantially affected the performance of the contract as a whole for an agreed number of days
explains Philip Stephenson, Regional Director, Standard Club.
There are also additional clauses (h) and (i) included in the explanatory notes which are recommended where the force majeure clause is used in a charter party or contract of affreightment.
These clarify that the force majeure would not affect time on hire, or laytime/demurrage provisions within the contract. They also describe what should happen if cargo has been loaded on a ship.
As force majeure clauses are becoming more prevalent in the supply chain, as well as at ship yards and within memoranda of agreement, it is helpful for ship operators to have a balanced clause to negotiate with
concludes Standard Club.
