Introduction

The Baltic and International Maritime Council (BIMCO) recently launched a revised version of its standard time charter party for offshore support vessels – the Supplytime. Considering the form's broad application in practice, the 2017 edition's amendments and new features are likely to have a significant impact on issues facing owners and charterers in this segment. The Supplytime 2017 follows the same structure as the 1989 and 2005 editions, but has undergone a general revision based on experiences gleaned from use of the form over the past decade and recent developments in case law. It also includes certain new standard clauses developed by BIMCO to address existing issues, such as the infections or contagious diseases clause, the anti-corruption clause, the sanctions clause and the Maritime Labour Convention 2006.

Changes

One of the changes that users may see in practice is that the condition of the vessel will not be covered by an independent surveyor on the on-hire survey at the time of the vessel's delivery. The charterers are instead granted a right to conduct a vessel audit, assessment, survey and inspection in the period before delivery, provided that the same can be conducted without hindering or delaying the vessel and the owners' consent (which will not be unreasonably withheld) is obtained.

Another practical change concerns the exchange of fuel, which was previously dealt with by the charterers' purchasing fuel remaining onboard at the time of delivery and the owners' purchasing fuel remaining onboard at the time of redelivery at the prices prevailing at the port of delivery and redelivery, respectively. Supplytime 2017 includes alternative mechanisms in Clause 10 whereby:

  • the parties account for the fuel onboard on delivery and redelivery, but at the substantiated price paid by the other party at the last loading of fuel; or
  • a general settlement is made at the end of the charter period with reference to the difference between the amount of fuel on delivery compared to on redelivery, with payment of the difference by the respective party at a pre-agreed price or the substantiated price paid at the vessel's last bunkering.

Further, the charterers' indemnity for off-spec fuel has been replaced with a right for the chief engineer to stop the loading of fuel if it suspects that it is off-spec (which implies that that the owners should take due care to ensure that such right is indeed exercised when required).

Several noteworthy amendments have also been made to the liability regime in Supplytime 2017, including the following:

  • The definitions of a 'charterers' group' and an 'owners' group' are important for the liability regime, as they define the scope of persons for which each party is responsible. In this respect, the definition of a charterers' group is expanded so that the charterers' clients, co-venturers, contractors and sub-contractors are included "in any tier" (and not only where they have "a contractual relationship with the Charterers"). Affiliates of the charterers and their clients and co-venturers have also been included. Similarly, the definition of an owners' group is expanded to include its affiliates. The definition is also qualified in a similar way as the definition of a charterers' group (as it was in the 2005 edition), so that an entity or person only falls within the definition of an owners' group to the extent that it concerns the work or project on which the vessel is employed.
  • The exclusion of liability Clause 13 (Off-hire) (b), applicable where the vessel is prevented from working, expressly specifies that it applies irrespective of negligence and whether the vessel is off-hire (the latter having caused some discussion in the past).
  • In the knock-for-knock regulation in Clause 14 (a) and (b), several carve-outs have been removed and the application of the regime has been made more robust irrespective of cause.
  • The exclusion of consequential losses in Clause 14 (c) has been revised in line with recommended drafting practice for such clauses following developments under English case law, in particular the Court of Appeal's judgment in Transocean Drilling UK v Providence Resources (The Arctic III) [2016] EWCA Civ 372. Accordingly, the list of excluded losses is extended to include, among other things, marine spread costs, while consequential and indirect loss is set out as a separate category.
  • Regarding physical damage, personal injury and consequential loss, each party's indemnity obligation for such claims originating within its group has been expanded not only to indemnify the other party, but the other party's group.
  • The owners' pollution liability is still confined to pollution due to discharge from the vessel. However, the prerequisite that pollution liability must arise from acts or omission by the owners has been removed and the owners' pollution liability applies irrespective of acts or omissions by the charterers. The liability for pollution emanating from other sources (including the reservoir) is still placed firmly with the charterers, but the expansion of the owners' pollution liability should be noted by owners and their underwriters.

A new Clause 33 has been included regarding lay-up of the vessel. The main principle is still the same (ie, the charterers may require the owners to lay-up the vessel and be credited with any of the owners' cost savings). However, a more detailed procedure for placing the vessel in lay-up has been included, similar to variation order mechanisms used in other contracts.

With respect to the automatic extension of the charter period for completion of a voyage or while a voyage is in progress (up to a specified maximum extension), it has been specified that the charterers will not instruct the vessel to commence a voyage or well unless they reasonably expect it to be completed within the charter period (including the time required for transit to the port or place of redelivery and demobilisation).

A welcomed revision has been made to Clause 34 regarding termination, which previously caused several uncertainties and discussions. It has been clarified that requisition, confiscation, loss of vessel and force majeure give either party the right to terminate, while bankruptcy and the owners' failure to take out insurance gives only the non-defaulting party the right to terminate. A party's repudiatory breach is set out in a separate paragraph, clarifying that no notification period applies for the non-defaulting party's termination in such an event. Finally, the uncertain termination right in the previous forms for breakdown (which caused issues for owners and charterers) has been replaced with a separate and clearer termination right linked to prolonged off-hire for a single consecutive period or combined periods. The notification requirements for termination have also been clarified and changed from what previously seemed to be an obligation on both parties to notify to a right (but not an obligation) for the terminating party to give notice of its intention to terminate within specified periods.

Comment

The Supplytime form is one of the most frequently used BIMCO forms and is considered the industry standard for chartering offshore support vessels. Due to its recognition and balanced distribution of rights and obligations, it has also been used by contracting parties outside its intended scope of application (eg, in the renewable and accommodation segments). The continued success of a contract form requires adaption to changes in market conditions and legal framework, and the modernisation that BIMCO has introduced through Supplytime 2017 seems timely and to the point in this respect. The commercial market for offshore support vessels continues to be challenging, but the new fixtures that are made can now be documented by an improved and updated standard form contract.

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.

For further information on this topic please contact Jonathan Page or Andreas Fjærvoll-Larsen at Wikborg Rein by telephone (+47 22 82 75 00) or email (jpa@wrco.co.uk or afl@wr.no). The Wikborg Rein website can be accessed at www.wr.no.