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In light of the unprecedented challenges faced by the shipping industry in recent years, BIMCO has recently released its long-awaited model force majeure clause for inclusion in charterparties and other shipping contracts.

Reed Smith first reported on the clause in January 2021 in our article ‘All eyes on BIMCO’s new clauses’ .  

Now that the clause is finally here, what does it say and how can it support the industry?

The context

BIMCO’s new clause aims to provide a comprehensive regime for parties to follow if certain circumstances arise, beyond their reasonable control, that prevent performance of a charterparty or other shipping contract. Force majeure clauses in carriage contracts are traditionally quite rare, with English law preferring to treat the issue as one of risk allocation.

A clearly drafted force majeure clause offers a party the flexibility to suspend performance, and potentially terminate a contract, without, in theory, facing a claim from the unaffected party for breach of contract.Continue Reading Expecting the unexpected – BIMCO releases force majeure clause

Traditionally, the most common way of financing ships has been through debt and equity financing.  However, over the past decade, ship leasing has become a very significant competitor and alternative for the provision of finance for the acquisition of ships.  Recent market studies are expecting the global ship lease market to grow at a significant pace over the next five years – and that is already taking into account the expansion of Chinese leasing companies into the market over more recent years as well as the potential impact of Covid-19.

Recognising this growth and appetite for ship leasing transactions, the world’s largest international shipping association, BIMCO, set its sights on developing the industry’s first ship sale and leaseback standardised term sheet.  The sale and leaseback term sheet ‘SHIPLEASE’ was released last month and will be rolled out to support shipowners, leasing companies, financial brokers and lawyers when negotiating and drawing up sale and leaseback agreements.

But what is ship leasing and why is it such a strong trend in shipping? We explore this growing market and look at what is in store for market players in these new and challenging times.
Continue Reading A new world of ship leasing and sale and leaseback transactions

In response to the evolving challenges facing the shipping industry in 2019, BIMCO has released new standard sanctions clauses for time and voyage charter parties. The release attempts to respond, in particular, to the United States’ more aggressive sanctions regimes for Iran and Venezuela, which have strained the previous BIMCO language. BIMCO states that the…

On 21 December 2018 we commented on the newly released BIMCO clauses intended to address the International Maritime Organization’s revised sulphur content limits with regard to the consumption and carriage of marine fuel (in accordance with Regulation 14 of Annex VI of the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978, MARPOL), which enter into force on 1 January and 1 March 2020 respectively.
Continue Reading Update on BIMCO 2020 Fuel Transition Clause for Time Charter Parties

BIMCO has recently published its Laytime Definitions for Charter Parties 2013. This sets out the meaning and commentary of certain specialist terms such as “reachable on arrival”, “always accessible” and “weather working day”.

BIMCO states that the definitions have been developed “to provide practitioners with a set of meanings of commonly-used words and phrases. The…

BIMCO has published a precedent clause designed to address some concerns about sanctions. Most major sanctions regimes, including those of the US and EU, include lists of designated parties with whom it is effectively prohibited to do business. Under the EU regime, for example, all assets of designated parties must be frozen and it is…

BIMCO has published a standard form Charterparty Guarantee, in respect of the guarantee of Charterers’ payment obligations and liabilities under a time charterparty. As well as payments due to Owners by Charterers, the document also incorporates a guarantee in respect of Charterers’ liabilities for other items including bunkers, port charges and stevedoring costs. Owners may…