The BIMCO GENCON charter is the most widely used charter for dry cargo and has been described as BIMCO’s “flagship” charter. It is exactly 100 years since the first GENCON charter, which then had the much longer official title of The Uniform General Charter of the Documentary Council of the Baltic and White Sea Conference, saw the light of day in 1922. Since then, there have been revised forms in 1976 and 1994 but the basic risk allocation between owners and charterers has remained essentially the same.
The charter has traditionally been categorised as being more owner- friendly as evidenced by the well-known (some might say, notorious) clause 2 which provides in essence that the owner is liable only if there is negligence on the part of the higher management of the owning company. However, although shipping people tend to stick to tradition, that balance of risk has progressively been diluted as time has marched on as evidenced by the commonly agreed addition of a Paramount Clause the effect of which is to emasculate clause 2 to a very large degree. It is also true to say that shipowners now operate in an environment which is much more tightly controlled and various international conventions have resulted in the implementation of regulatory codes such as the ISM and IMSBC, all of which have created stresses for the traditional GENCON format. Therefore, it was thought that the time had come when approaching the centenary of the first GENCON to have a thorough re-evaluation rather than just make some further piecemeal amendments such as simply adding a Paramount Clause – a solution described by a judge in one case as a “very slapdash way of doing things”[1] and by another as follows: “The courts have not found it easy to make sense of the Hague Rules in the context of a charter-party since clearly these rules were not designed to be incorporated in such a contract.”[2]
Consequently, some 4 years ago, BIMCO established a sub-committee consisting of much-experienced representatives of all sides of the industry – shipowners, charterers, P&I clubs, brokers, agents and lawyers – to produce a new GENCON for a new age. It was initially thought that the process would not take too long. However, as work progressed, the committee came to realise how much the shipping world has changed since even the last revision was made in 1994. As a result, it became necessary to establish some fundamental principles which would underpin the drafting process. The challenge was, therefore. to produce a modern and balanced contract that would reflect today’s commercial reality but would at the same time retain its familiarity to make the users’ transition from GENCON 94 to the new version as smooth as possible.
With this this goal in mind, and following industry consultation, the subcommittee proceeded on the following premises:
- The charter should like other BIMCO dry cargo charters be based on FIOST principles which place the responsibility for the cost and risk of cargo operations on the charterers unless such operations affect the safety of the ship.
- Laytime and demurrage should be based on the principle that the owners bear the risk of delay caused by navigation risks whilst the charterers bear the risk of delay caused by commercial risks. Consequently, the charter should be based on the concept of a berth charter but with clauses designed to enable the owners to commence the laytime clock if, on arrival at the port, it is not possible for the vessel to berth for reasons other than navigation risks.
- The owners should be protected against liability for cargo loss or damage unless this has been caused by the failure of the owners to satisfy the fundamental duties that they can reasonably be expected to undertake: namely, to exercise due diligence to provide a vessel that is cargoworthy at the commencement of loading and seaworthy at the commencement of the cargo-carrying voyage, and (subject to FIOST) to properly and carefully care for the cargo after loading and before discharging.
- The owners should be protected against liability for delay not only on the laden voyage but also in arriving at the loadport if this has been caused by events which are beyond their control even if such events occur before they commence the approach voyage to the loadport.
- Owners should be able to rely on remedies such as the exercise of a lien, the suspension of their services under the charter or, failing all else, a termination of the charter, if charterers fail without justification to pay sums that are clearly due and owing to owners. It was thought that his is realistically the only way in which owners can ensure that they are paid moneys that are clearly owing to them.
The sub-committee has now produced a draft which will be submitted for adoption by the BIMCO Documentary Committee in May.
Prof Richard Williams – member of the BIMCO Gencon sub-committee.
[1] Anglo-Saxon Petroleum v Adamastos Shipping [1957] 1 Lloyd’s Rep. 79
[2] “Standard Ardor” [1988] 2 Lloyd’s Rep. 159
