BIMCO released a new NYPE form on 15 October 2015 which is radically different from the 1993 and 1946 forms. We comment on key changes.

Implications

The NYPE 2015 form is designed to be more suitable for current chartering practice and should eliminate the need for a number of common additional clauses.

However, parties and brokers may still wish to use their existing additional clauses, in which case care must be taken to avoid inconsistency between the new NYPE pro forma and additional clauses.

In addition, the alterations to the form may mean that existing case law should be viewed with caution.

Key changes

  • Redelivery (new clause 4) – subsection (b) of new clause 4 provides that after an approximate notice of redelivery is given, charterers may only employ the vessel up to the notified redelivery date. The clause will be attractive to owners. Without it, the position under English law is that an approximate notice of redelivery which contains the words “without prejudice” or “without guarantee” does not prevent charterers from legitimately retaining the vessel later than the notified redelivery date (but within the last permitted date for redelivery under the charterparty: The Zenovia [2009]).
  • Bunkers (clause 9) – this is now a comprehensive clause intended to deal with all bunker matters, including quantity, quality, testing, sampling, price and permission to bunker prior to delivery/redelivery. As usual, the clause provides that charterers will take over and pay for bunkers on delivery and owners on redelivery. In light of the decision in Res Cogitans there may be some scope for argument as to whether ownership of the bunkers passes (as is the intention of Clause 9) and, if not, whether this would be a breach of charter.
  • Hire payment and withdrawal (clause 11) – any failure by charterers to pay hire punctually is a breach of charter: the requirement for this to be due to oversights, errors or omissions, is removed (clause 11(b)). This protects owners from wrongful withdrawal claims where it can be shown that the non-payment was due to something else. Under sub-clause 11(c) any failure by charterers to pay hire within a grace period of three banking days will entitle owners to withdraw and claim damages for loss of bargain. This is regardless of whether charterers’ conduct amounts to a repudiation of the charterparty. (A mere failure by charterers to pay hire punctually would not ordinarily entitle owners to damages for the loss of the remainder of the charter if owners choose to withdraw: The Brimnes [1972].)
  • Speed and consumption (new clause 12) – sub-clause 12(a) provides that the description of the vessel’s speed and fuel consumption rates is a continuing warranty of performance. This increases the burden on owners as it means the vessel must perform as described throughout the charter (rather than only at the time of delivery). Also, the words “without guarantee” do not appear.
  • Liens (clause 23) – the updated clause 23 says that owners shall have a lien over sub-hires and sub-freights due under “any sub-charters”. This reflects the English courts’ view (The Cebu [1983]; The Western Moscow [2012]) that, in a chain of charters each containing lien clauses, owners have a lien not only over hire/freight directly payable to their charterer under its sub-charter but also arising under charterparties lower down the contractual chain (sub-sub-hires/freights).
  • Solid bulk cargoes/dangerous goods (new clause 29) – this new clause seems aimed at reducing liquefaction risks. Charterers must provide sufficient advance information about any solid bulk cargo as required by the IMSBC Code, and are required to provide dangerous goods transport documents in accordance with the IMDG Code. The master is entitled to refuse to load/unload cargo at charterers’ risk and expense if charterers fail “to fulfil” their IMSBC/IMDG Code obligations. However, owners should not view this clause as absolving them of their own IMSBC Code and IMDG Code obligations, or as protecting them where it should have been apparent to the master that cargo was excessively wet on loading and/or the master has failed to conduct a “can test” to check for liquefaction risks.
  • Hull fouling (new clause 30) – under this new clause, where (on charterers’ orders) the vessel is idle in warm waters for more than the stipulated maximum period (15 days unless otherwise agreed in writing), the performance warranty shall be suspended pending underwater inspection. The effect of the clause will be limited, in our view. The pre-existing condition of the hull and the reasons for the stay in warm waters will remain relevant to determining liability for fouling losses.
  • Stevedore damage (clause 37) – owners should be particularly aware of this clause. It means they will have only 24 hours to notify charterers of stevedore damage, running from the occurrence of the damage or, in the case of hidden damage, the time when owners could have discovered it by exercising due diligence.
  • Sanctions (new clause 46) – this clause gives owners the right to refuse to comply with employment orders which - in owners’ reasonable judgment - could lead to a breach of international sanctions. It also provides a regime for dealing with situations where charterers refuse to give alternative orders. Using a ‘reasonable judgement’ test, rather than fixed criteria, is not ideal as it is open to competing interpretations. However, owners will welcome the additional protection afforded them. There are complementary provisions in new clause 47 relating to “Designated Entities”.
  • Law and arbitration (clause 54) – US law and New York arbitration are the default provisions for dispute resolution under the new form. If owners and charterers have an alternative preference they must agree this at the time of fixture and record their agreement clearly.