Introduction

On October 15 2015 the Association of Ship Brokers and Agents, the Baltic and International Maritime Council (BIMCO) and the Singapore Maritime Foundation jointly published a revision of the New York Produce Exchange (NYPE) form. This revision comes 27 years after the 1993 revision of the NYPE charterparty form was issued.

In addition to NYPE 1993, earlier NYPE forms – such as NYPE 1946 – are still in use in some trades although typically they incorporate a number of amendments and include extensive additional rider clauses. The drafting committee's aim with the 2015 revision was, in the words of BIMCO, to create a "version of NYPE that will have global appeal and which takes proper stock of the most commonly applied amendments and additional clauses used by practitioners in the dry cargo sector", while also ensuring that the newly incorporated clauses were "relevant, balanced and consistent".

NYPE 2015 is undoubtedly more extensive than its predecessors. While NYPE 1946 contains 28 clauses, NYPE 2015 runs to a total of 57 clauses together with an appendix of four pages where the vessel's description is to be inserted and 32 pages of explanatory notes. NYPE 2015 therefore provides far greater standardisation of commonly used clauses.

Notable changes

In addition to a number of new clauses, the NYPE 2015 form amends standard clauses found in earlier versions of the NYPE form. The most notable changes are as follows:

  • Duration/trip description (Clause 1) – owners and charterers are now given a choice between selecting a trip or period time charter. Previous forms provided for period charters only.
  • Redelivery (Clause 4) – after serving an approximate notice of redelivery to the owners, charterers are permitted to employ the vessel only up until the time specified in the redelivery notice. This is a departure from the general position under English law where such approximate notices, if qualified by phrases such as 'without prejudice' or 'without guarantee', do not prevent a charterer from employing the vessel up until the final date specified for redelivery under a charter.
  • Bunkers (Clause 9) – all matters relating to bunkers are regulated by detailed provisions. Owners and charterers alike should therefore review the clause carefully before entering into a charter on the new form.
  • Hire payments (Clause 11) ­– owners are now given the right to withdraw the vessel from service and claim damages for the loss of the remainder of the charter should the charterer fail to pay hire within a three banking day grace period. The grace period no longer refers to "due to oversight, negligence, errors or omission on the part of the Charterers or their bankers" as was stipulated in NYPE 1993. The grace period now relates to a simple failure to make payment on time. However, NYPE 2015 does not explicitly state that the payment of hire is a condition of the charter; therefore, this might be the subject of an amendment when using the charter to avoid disputes on this issue – in particular, in light of the Court of Appeal's recent decision that, unless clearly expressed, the obligation to pay hire under a time charter is not a condition of the charter.
  • Speed and consumption (Clause 12) this clause now includes a continuing warranty by the owners that the vessel as at the date of delivery and "throughout the duration" of the charter complies with the speed and fuel consumption description specified in the new Appendix A. In previous NYPE forms the speed and consumption warranty applied only as at the date of delivery and was not a continuing warranty. In addition, the warranty no longer includes the phrase "without guarantee". Therefore, owners have an increased obligation, although any claims by charterers for underperformance are now expressly limited to compensation for time lost and additional fuel consumed. In relation to speed and consumption, Clause 38 of the new form entitles charterers to give slow steaming orders.
  • Off-hire (Clause 17) – the exceptions to the vessel being placed off-hire are now extended to include events for which sub-charterers are responsible. The clause also includes named events which will result in the vessel being placed off-hire.
  • Liens (Clause 23)this clause now covers liens over sub-hires and sub-freights from sub-charters (sub-freights also expressly include dead freight and demurrage).
  • Law and arbitration (Clause 54)a broad choice is given in respect of law and arbitration. The parties can choose between New York (US law), London (English law) or Singapore (Singapore law or English law) or any other place and law. If no choice is made by the parties then US law and New York arbitration will apply by default.

The form also includes a number of new clauses regarding:

  • oil pollution;
  • hold cleaning and residue disposal;
  • hull fouling;
  • stevedore damage;
  • sanctions;
  • electronic bills of lading; and
  • piracy.

Using NYPE 2015

While the detail included in NYPE 2015 is impressive, it remains to be seen whether owners and charterers will make use of the new form. Due to the length of NYPE 2015, using the form is likely to require extensive review work from owners and charterers alike to ensure that they incorporate any necessary amendments to the new form and develop shorter rider clauses which do not conflict with the standard wording.

When reviewing the new form certain points should be borne in mind:

  • Changes have been made to previously standard NYPE clauses so no assumptions should be made in respect of their wording;
  • There may be conflicts between owners' and charterers' existing rider clauses and the new form clauses. These conflicts will need to be resolved (the preamble of NYPE 2015 states that the provisions of any additional clauses shall prevail over those in the main body in the event of any conflict); and
  • Some clauses apply default choices, should the parties not make a choice. Careful review is therefore needed to ensure the parties have made the choices they want.

It remains to be seen how the NYPE 2015 revision will be received by the dry cargo industry. However, once the form is taken up by the industry, a number of the new and amended clauses may be the subject of review by arbitration tribunals in London, New York and Singapore.

For further information on this topic please contact Herman Steen at Wikborg Rein's Oslo office by telephone (+47 22 82 75 00) or email (hst@wr.no). Alternatively, contact Emilie Christiansen at Wikborg Rein's London office by telephone (+44 20 7367 0300) or email (aec@wr.no). The Wikborg Rein website can be accessed at www.wr.no.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.