Drafting BIMCO Charterparties: SUPPLYTIME 2005 is an essential instrument for Offshore Service Vessels

BIMCO's SUPPLYTIME 2005 is a basic building block of offshore services and is used for ships as varied as crew transfer vessels, tugs and modern offshore service vessels (OSVs). The versatility of the contract is, however, in a way a product of its complexity. Perhaps to "break up" the market, BIMCO has recently released more specifically tailored contracts like WINDTIME for crew transfer vessels, PROJECTCON for heavy lift cargo and an updated TOWHIRE 2008.

However, those contracts definitely still take a back seat to SUPPLYTIME in term of their industry reach and the scope and frequency of their practical application. So, to get a clear view of SUPPLYTIME, the range of inquiry must go, first, from the multitude of boxes on the face to, second, APPENDIX A for a detailed assessment of the ship's capabilities and statistics to, third, APPENDIX B for the various insurances to be obtained by Charterer and Owner and then, finally, to the 38 clauses in the rear which govern the material legal aspects.

Offshore Service Vessel (OSV) VIKING LADY

Offshore Service Vessel (OSV) VIKING LADY

Not an easy charterparty, in other words, to handle in practice.

On the whole, it is fair to say that SUPPLYTIME provides a reasonable balance of the interests of the Owner and Charterer. However, given the nature of offshore services, the liability regime will necessarily be shifted slightly in favor of the Owner, since the charter rate he is presented with for the use of his ship and crew is generally disproportionately small compared to the value of the project (and hence to the potential scope of liability) in which he is involved.

My goal here is to provide a brief overview of the structure of the charterparty.

So let's begin with the face of the contract, the famous "boxes". It's important to recall that, taking a walk down legal history memory lane, in the past, such charterparties were written in long-form. That is to say, there were no boxes. Instead, there were blank sections of contract clauses which had to be filled in with the relevant information. Today, boxes and references (e.g. "...as stated in Box 17...") provide the same functionality, but a different aesthetic.

What's important to comprehend is that the boxes essentially fill in contract clauses. The information placed into the box is later used by the clause that references it, so it's best to think of the boxes as making changes to the operative text of the charterparty.

I sometimes feel like this is my life.

I sometimes feel like this is my life.

In practice, when SUPPLYTIME contracts are negotiated, I've seen "N/A" or "TBA" inserted into these boxes. This is generally an unfortunate choice as "N/A" may negate the clause (i.e. make it inoperative) while "TBA" has the potential to generate disclosure obligations. Neither of the parties generally want this to be the result! Rather, they are trying to slog their way through the contract as quickly as possible, typically due to time pressure, but feel uncomfortable leaving certain charterparty clauses blank. And this discomfort is perhaps a good thing, since it indicates that the parties are - at least, in principle - aware that what they are doing harbors a considerable risk of arriving at a suboptimal legal result.

APPENDIX A is another section of the charterparty where I often find mistakes made. Or worse, I often find that APPENDIX A is not even filled out. While I in principle have no objection to datasheets about the chartered vessel being drawn upon to act in place of APPENDIX A, it is important to remember that the text of the charterparty treats APPENDIX A as the operative section containing information about the nature and attributes of the vessel. Thus the parties ought to make certain that they have validly and unambiguously incorporated the ship datasheet into the charterparty, instead of leaving open questions by, for example, allowing APPENDIX A to continue to exist parallel to the ship datasheet and failing to specify which has priority.

Don't let your charterparty become Dolly the Sheep.

Don't let your charterparty become Dolly the Sheep.

I also sometimes encounter acts of shocking legal violence directed at BIMCO chaterparties in general, and SUPPLYTIME is no exception. One sort of arrangement I have found is massive numbers of rider clauses appended to the charterparty which deal with points which were often already discussed in the charterparty. These are sometimes struck from the face, sometimes not. I think these rider clauses are used because they are more clearly set out than the charterparty and its references to boxes, which actually demand a high level of legal skill to fill out correctly. So, rider clauses and striking the BIMCO standard language provide a way to generate a text which feels more intuitive and tailored. Working with the BIMCO charterparty and making the necessary adjustments takes more effort. But it can also provide more security. When possible, I always encourage that less text be struck and that we try to work within the language of the BIMCO form to ensure that the goals of the parties are adequately addressed.

Another risk that needs to be taken into consideration is that making adjustments and modifications to the BIMCO standard forms, even if done innocently, can lead to problems down the road. Courts do not look favorably upon parties that do not make such modifications clear. So appending rider clauses and deleting the main text, rather than striking it through, can run the risk of fraud. I have seen forms which look essentially like they are from BIMCO, but upon careful comparison with the original BIMCO form, it is obvious that some boxes and language on the face of the contract are missing entirely, and that the form has been manipulated.

APPENDIX B is also an essential part of SUPPLYTIME, especially given the knock for knock rule. We wrote more extensively about knock for knock here some time ago. Essentially, knock for knock is a "shorthand" way to assign insurance risk. APPENDIX B then provides the parties a platform for apportioning this risk and specifying which policies need to be purchased.

As I have been arguing, here also it is essential that the form be filled out and that rider clauses not be used without unambiguously striking through the language in APPENDIX B that the rider clauses are designed to replace. Great caution must be exercised, since otherwise it is possible to create a self-contradicting or unclear contract - which is an open gate to litigation.

In the hope that this has provided some guidance, I refer to the wisdom of the Legend of Zelda:

Will BIMCO's Standard Bunker Contract strike the right balance? We'll look at scope of application, terms and conditions and buyers' and sellers' interests

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