Updated BIMCO versions of TOWCON, TOWHIRE and BARGEHIRE forms. Work in progress on new Force Majeure clause.

BIMCO have released new versions of their TOWCON, TOWHIRE and BARGEHIRE forms. New to TOWCON 2021 are a provision for mid-voyage bunkering on longer tows, and a mechanism for calculating compensation due to slow steaming or deviation. BARGEHIRE 2021 now contains clearer wording relating to off-hire surveys, repairs and redelivery. These have often been a source of dispute in the past.

BIMCO has also announced details of progress on its new Force Majeure clause. It takes the approach that neither party may terminate the contract while the vessel is carrying cargo. It notes that termination by owners with cargo on board will entail their continuing responsibility for the cargo as bailees, with no rights of recourse against charterers for discharge costs.

The new bolt-on to the clause sets out a number of liberties if force majeure prevents the completion of loading, or the departure from the load port, or discharge, for more than 21 days from when force majeure notice was declared. Extra costs incurred thereby should be allocated in accordance with the contract, in particular terms as to allocation of responsibility for loading or discharge, such as FIOST terms.

Any extra costs incurred in exercising any of the liberties should be allocated in accordance with the contract. This will require examining how the responsibility for loading and discharge has been allocated in the underlying contract, for example, if it is on FIOST (Free In Out Stowed and Trimmed) terms.

The BIMCO sub committee also considered how the draft clause would relate to other BIMCO clauses in the same contract such as the war, piracy and infectious or contagious diseases clauses. These allow owners to reject proceeding to a risk area, and if they do, to provide a cost allocation mechanism. By contrast the purpose of the Force Majeure clause is to protect a party from liability in damages in case of force majeure, and as a last resort to allow termination, something complementary to the other BIMCO clauses, and not in conflict with them.

The sub-committee noted that it is for the parties to decide whether a Force Majeure clause belongs in a period time charter, and the triggers for the clause have been set deliberately high. Firstly, the party claiming force majeure must prove the existence of the force majeure event; that the event was beyond its control; that it could not have been foreseen; and that its effects were unavoidable. Secondly, the right to terminate will only be available if performance becomes impossible, illegal or radically different, or substantially affects the whole contract during an agreed number of days.

This second aspect is similar to the doctrine of frustration but BIMCO state that “However, there is an important difference – if a party can bring itself within that termination provision, it will be able to terminate immediately, from day one. Under frustration, the contract would only be considered frustrated and terminated after a very long time compared to the overall contract period. There are two termination provisions in the clause and the other one provides a longstop right to terminate after an agreed amount of time has passed. The number of days will have to be negotiated depending on the contract in question.”

The BIMCO Force Majeure Clause and the additional bolt-on provision will be presented for adoption in May this year.

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