At a recent Vessel Efficiency Conference held in London, delegates were interested to hear about BIMCO’s suite of slow steaming clauses.
In a presentation by BIMCO’s Chief Officer for Legal and Contractual Affairs, Grant Hunter, the delegates heard that the incorporation of a slow steaming clause was strongly recommended for anyone contemplating implementing a slow speed regime under a time charter party. It was important to balance the wishes of the time charterers to exercise control over the vessel’s speed against the owners’ concerns about the consequences of operating at reduced speeds, such as the safety of the crew, vessel and cargo. In addition, owners need to be aware of their legal obligation to prosecute voyages with due despatch – an obligation not only under the terms of the time charter party but also towards third party bill of lading holders.
BIMCO’s Slow Steaming Clauses for Time and Voyage Charter Parties have been well received by the industry since their launch last year in response to the increased implementation of slow steaming regimes in the market. The Clauses are the result of a thorough two year drafting process involving not only owner, charterers and legal/insurance specialists, but also technical experts from several major engine designers. The capabilities of various engine types and ages has been assessed in terms of what can be given general application to various vessel types in terms of slow steaming. What is important for owners to be aware of when considering using the slow steaming clauses, is that they should ensure that their vessel is “slow steam ready”. This means that any discussions between the owners and charterers concerning any possible modifications or additional equipment are taken prior to agreeing the clause. This will help avoid any possible subsequent disputes about changes required to allow the vessel to slow steam in accordance with charterers’ orders. The time charter clause makes it clear that should the engine manufacturers issue new requirements after the charter party is agreed that oblige the owners to buy new equipment, the Master will not be obliged to comply with the charterers’ slow steaming instructions – an additional protection for the owners.
The Slow Steaming Clauses offer two levels of protection for owners. Firstly, they expressly provide that a reduction in speed in response to specific orders will not be considered a breach of the owners’ due despatch obligation. Secondly, they require the charterers to ensure that any bills of lading issued under the charter also permit slow steaming and that they provide an indemnity to the owners for any liability for claims for breach of their due despatch obligation.
The present market conditions that have ushered in a slow steaming era across many sectors of the industry are likely to remain for several years to come. As a result, BIMCO recommends to owners the incorporation of the relevant Slow Steaming Clause in charter parties if they are either contemplating a slow steaming regime or are already operating such a regime.
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BIMCO, February 21, 2013