July, 2020 - New BIMCO COVID-19 Crew Change Clause
As governments world-wide have grappled with the COVID-19 pandemic, implemented travel restrictions and increased border controls to insulate themselves from the risk of imported transmissions, the human cost to the shipping industry has been and remains significant. BIMCO has recently developed a clause for time charterparties which attempts to address some of the problems that have been encountered.
Reports have emerged of crew effectively stranded on ships for months after their contracts have reached an end, with an adverse impact on their wellbeing, whilst owners’ attempts to repatriate their crew have been frustrated by the reluctance of governments to permit international travel. Consequently, owners face the practical problem of only being able to repatriate crew from certain ports and the legal problem of potential deviations under the relevant contract of carriage, whether that is a charterparty or a bill of lading.
The new BIMCO clause allows owners to deviate to a port for the purposes of repatriating crew if they cannot be repatriated from a port nominated by the charterer. The clause assists owners by making such a deviation lawful under the relevant charter and by protecting them from any resulting losses or damages. There is a requirement for owners to take into account their charterers’ interests in their decision-making and they have to provide written notice as soon as possible for the intended deviation.
One of the potential areas of dispute which the clause seeks to address is the issue of which party bears the time and costs of any such deviation. In this regard, the clause permits the parties to elect either to share the time and costs of the deviation or for the owners to absorb the relevant costs. This is a matter for negotiation at the drafting stage, otherwise the clause will be ineffective, but it is noted that the possibility of persuading charterers to make a contribution may not be realistic in the present market.
However, there is no provision for owners being able to claim a credit in respect of any progress towards the contractual voyage during the deviation. As such, where owners agree to absorb the costs of the proposed deviation, they may want to add some additional wording to ensure that charterers are still required to contribute to the deviation to the extent that they gain any benefit.
For the charterers’ part, they are required to procure the incorporation of the right to deviate in any bills of lading or similar contracts of carriage issued under the charterparty. However, in practice, these types of contracts of carriage are usually issued on standard forms which may not lend themselves to the incorporation of additional clauses. If the clause is not properly incorporated, charterers would be in breach of their charterparty obligations and potentially be left with an exposure to losses sustained by the owner as a result of the deviation not being permitted. If the clause has not been incorporated into the relevant bills of lading, owners may wish to purchase additional P&I cover in respect of the intended deviation and to claim the cost of the premium from their charterers as a cost which is the direct consequence of their breach of the charterparty requirement.
The text of the clause is set out below. Members may, as always, contact the Managers for further information relating to the Covid-19 epidemic.
BIMCO COVID-19 Crew Change Clause for Time Charter Parties 2020
(a) In addition to any other right to deviate under this contract, the Vessel shall have liberty to deviate for crew changes if COVID-19-related restrictions prevent crew changes from being conducted at the ports or places to which the Vessel has been ordered or within the scheduled period of call. Any deviation under this clause shall not be deemed to be an infringement or breach of this contract, and Owners shall not be liable for any loss or damage resulting therefrom.
(b) Owners shall exercise the right under subclause (a) above with due regard to Charterers’ interests and shall notify Charterers in writing as soon as reasonably possible of any intended deviation for crew changes purposes.
(c) Charterers shall procure that subclause (a) shall be incorporated into any and all sub-charter parties, bills of lading, waybills or other documents evidencing contracts of carriage issued pursuant to this Charter Party.
(d) During the period of such deviation the Vessel shall:
(i)* remain on hire, but at a reduced rate of hire of USD ……….. per day. In the absence of an agreed amount, fifty per cent (50%) of the hire rate shall apply. The cost of bunkers consumed shall be shared equally between Owners and Charterers.
(ii)* be off-hire and the cost of bunkers consumed shall be for Owners’ account.
(e) While the Vessel is at the port of deviation all port charges, pilotage and other expenses arising out of such crew changes shall be for the Owners’ account.
*(d)(i) and (d)(ii) are alternatives. Delete whichever is not applicable. In the absence of deletions alternative (d)(i) shall apply.