Dry Bulk Marine Risk Assessment Clause for Time Charter Parties
A new standard clause published by BIMCO challenges the widespread use of so-called “Rightship approval” provisions commonly inserted into time charter parties. Dry cargo shipowners have for some time been under pressure to accept “home-made” clauses that oblige them to warrant that their ship will be “Rightship approved” throughout the term of the charter party.
In reality, the Rightship vetting agency does not issue and never has issued period approvals for vessels. Instead, their dynamic system relies on publicly available information about merchant vessels to provide a “snapshot” recommendation of a vessel for a particular voyage based on data currently held on their databases.
To help owners and operators avoid falling into the trap of warranting continuing compliance by their vessel when factors affecting its status at any given time may be outside their control, BIMCO has prepared a clause setting out a contractual regime for the application of marine risk assessments. Key to the clause is that while the charterers have every right to conduct desk-top based risk assessments to assess the suitability of the vessel for prospective employment, the owners do not warrant the acceptability of the vessel. This means that if the outcome of the risk assessment does not result in a recommendation for the vessel for the prospective employment then the time charterers will have to seek alternative employment. Provided the owners have otherwise met all their obligations under the time charter, the charterers will have no right to place the vessel off-hire if a risk assessment or vetting does not result in a recommendation or approval.
An important feature of the new Clause is that it is designed to encourage a greater level of communication between the charterers and the owners as a key part of the risk assessment process. In order that the owners can wherever reasonably practicable and within the confines of their charter party obligations, assist the charterers in resolving any issues arising out of a risk assessment, the Clause provides for reports to be sent to the owners by the charterers on completion of the assessment. By working together and sharing information the owners and charterers can increase the prospect of the vessel receiving the required recommendation.
Physical inspections of vessels by vetting agencies on behalf of charterers are a contentious issue. To avoid frivolous inspections by charterers the Clause limits such activities to cases where there are clear grounds demonstrated by the initial desk-top assessment to warrant a physical inspection of the vessel.
BIMCO is confident that the publication of the Dry Bulk Marine Risk Assessment Clause for Time Charter Parties will greatly assist those in the dry cargo sector in establishing a fair, balanced and workable regime for the application of marine risk assessments under time charter parties.
The Text of the Dry Bulk Carrier Marine Risk Assessment Clause for Time Charter Parties read as follows :
(a) The Charterers may, at their time, risk, cost and expense, conduct a marine risk assessment of the Vessel in accordance with this Clause. However, the Owners do not warrant or represent that the Vessel is or will be acceptable or recommended as a result of any such marine risk assessment. (b) The Owners shall assist the Charterers in the marine risk assessment process by submitting such documentation as is in the possession of the Owners and readily available. There shall be no obligation to provide confidential information. (c) Inspections (i) The Charterers shall not be entitled to physically inspect the Vessel unless there are particular grounds under the marine risk assessment process and that those grounds are specified to the Owners. The Charterers shall provide the owners with a checklist for the inspection in advance. The above shall be subject to the Owners’ express approval, which shall not be unreasonably withheld. The time and place of all inspections shall be mutually agreed by the parties. (ii) The Charterers shall indemnify and hold harmless the Owners against any consequences of the inspection including any costs, expense, risk, delay, loss or damage occasioned thereby. (iii) The Master shall endeavour to co-operate with the inspector to facilitate such inspection. The inspection shall be planned and carried out in a manner that does not interfere with the safe operation or working of the Vessel or other inspections. (iv) A copy of the inspection report shall be given to the Master on completion of the inspection. (d) The Charterers shall provide the Owners with a copy of the marine risk assessment report, if any, without delay. (e) The Owners shall exercise due diligence to comply with recommendations arising out of the assessment provided that they are consistent with and do not exceed the Owners’ obligations under this Charter Party including the rules, requirements, guidelines, directives or any other relevant regulations of the Vessel’s Classification Society and/or Flag State administration, which shall always prevail. (f) Nothing in this Clause shall create any right to place the vessel off-hire and its provisions shall be without prejudice to all other rights, exceptions, obligations and defences of the parties under this Charter Party. |
A Special Circular by BIMCO containing a short explanatory note and a copy of the Clause is available by clicking here.