Piracy and time charterparty clauses - Risk shifting or risk sharing?
01 SEP 2009
Piracy and time charterparty clauses – Risk shifting or risk sharing?
Vessel owner industry groups Intertanko and BIMCO have published piracy clauses for insertion in time charterparties.
Intertanko and BIMCO clauses
However, the clauses go well beyond making explicit the right of the owner to refuse voyage instructions that pass through pirate-prone waters. The provisions are quite “owner-friendly” in that both provide that the vessel remains indefinitely on hire during preventive measures and actual hijackings. Further, both provisions require the charterer to indemnify owners for liabilities, costs and expenses due to both preventive measures as well as hijackings.2 Liabilities could include crew personal injury claims, pollution, wreck removal and a host of other liabilities already insured by the owner’s entry in a P&I Club (as well as damage to the vessel and ransom payments which are not owner’s P&I risks).3
“Costs” under both clauses allow the owner to pass on the costs of security guards, additional crew expenses and costs of “additional insurance”. In this respect, the Intertanko clause refers to “additional insurance premiums” while the BIMCO clause refers to “additional insurance”.4 It has been clarified in commentary by BIMCO that “additional insurance” does not include kidnap and ransom insurance.5
“Charterers shall have the right to order the vessel to transit via the Suez Canal and/or the Gulf of Aden during the course of this Charterparty. Charterers shall contribute towards additional insurance premiums incurred by Owners in this respect up to an aggregate maximum amount of USD ... any one transit, subject to presentation of usual vouchers if requested by Charterers.
For the avoidance of doubt, whilst under the relevant Clause of this charterparty (NYPE Clause 8) the Captain is under the orders and directions of the Charterers as regards employment and agency, the Charterers shall not be liable for any loss, delay or expense (including but not limited to consumption of bunkers) arising from the capture/seizure or violent robbery or detention or threatened detention or any malicious act by third parties which shall always include but not be limited to acts of piracy during the performance of lawful voyages and transit via the Suez canal and/or the Gulf of Aden. The Vessel shall remain on hire during any such occurrence but for a maximum duration of 60 days, after which the obligation of the Charterers to pay hire shall cease until such time as the vessel is returned to Charterers service at an equivalent position as that at which such occurrence commenced.”
Charterers and owners have also resolved disputes commercially by agreeing to an alternative routing and sharing the additional costs when the danger to crew, vessel and cargo warranted avoiding the area.
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