At the end of October, BIMCO issued its revised “flagship” GENCON voyage charter form, GENCON 2022.
First developed in 1922, GENCON underwent its last revision in 1994. That version has since been the most widely used voyage charter party in the dry bulk sector on a worldwide basis, and BIMCO’s hope and expectation is that the new GENCON 2022 will now assume that role. While that remains to be seen, BIMCO’s aim has been to draft a new GENCON charter fit for the modern age – recasting a number of familiar clauses, and adding new ones (including several established BIMCO standard form clauses) aiming to reflect current operating standards and regulatory requirements and to avoid the need for parties to negotiate additional rider clauses on a case by case basis.
Features of the new GENCON 2022
The new GENCON 2022 charter runs to around twice the length of its predecessor, which reflects a substantial enlargement of Part II of the charter, a number of the new clauses themselves being BIMCO (frequently “owner-friendly”) standard clauses.
Key features of GENCON 2022 include:
- A reworking of the former Owners’ Responsibility Clause, now in large part mirroring the regime under the Hague-Visby Rules, and avoiding the need for incorporation of a Clause Paramount
- Addressing responsibility for various cargo-related matters arising from new regulations imposed on shipowners
- Provision for loading to take place at charterers’ risk, responsibility and expense, but now under the supervision of the Master
- Restatement and revision of the laytime provisions, including to incorporate BIMCO’s Laytime Definitions, and to provide charterers with a “renewed” right of termination where the vessel fails an initial holds inspection and then also a subsequent joint re-inspection
- Restatement and revision of the cancelling provisions in the event of anticipated delay in the vessel’s ability to tender Notice of Readiness
- New and expanded rights of owners to suspend performance or terminate the charter in the event of failure by charterers to pay or provide security for sums due under the charter
- Restatement and revision of the strike provisions, including to cover demurrage or other compensation payable in the event of extended delay caused by strikes
- A new mutual general exceptions clause excusing owners and charterers from breaches of charter occurring by reason of events beyond their control
- A new option to charterers as of right to use e-bills
- New rights of owners to nominate a substitute vessel, and of charterers to sub-let or assign the charter
BIMCO Clauses – previous Charterers Club/MECO Group Guidance
A number of the new clauses are, or are based on, BIMCO’s standard clauses. We have previously commented on each of the clauses as they were released pointing out many of the pitfalls from a voyage charterers perspective:
- BIMCO Electronic Bills of Lading Clause 2014 (new Clause 20)
- BIMCO Ice Clause for Voyage Charter Parties 2005 (new Clause 30)
- BIMCO ISPS/MTSA Clause for Voyage Charter Parties 2005 (new Clause 31)
- BIMCO Sanctions Clause for Voyage Charter Parties 2020 (new Clause 32)
- BIMCO War Risks Clause for Voyage Chartering (VOYWAR 2012) (revised Clause 33; formerly Clause 17)
- BIMCO Piracy Clause for Single Voyage Charter Parties 2013 (new Clause 34)
- BIMCO Law and Arbitration Clause 2020 (revised Clause 37; formerly Clause 19)
The Club wishes to highlight a number of key points on GENCON 2022:
We express scepticism that any new GENCON charter would ever avoid the need for parties to include additional rider clauses, not least because of the number of different trades for which this charter form is presently used, and the need in many instances to tailor charter provisions to those particular trades. So we would caution Assureds not to treat GENCON 2022 as a “one size fits all” charter form (any more than GENCON 1994 was). We do appreciate however that operator Assureds may wish to put forward GENCON 2022 at least as a basis for negotiation.
GENCON 2022 includes a number of revisions favouring owners, including as follows:
- The new “Owners’ Responsibilities” clause (Clause 2) effectively dispenses with the need for the incorporation of a Clause Paramount, entitling owners to rely on relevant protections available to a carrier under the Hague-Visby Rules, but at the same time limiting owners’ responsibility to exercise due diligence to two “snapshot” points in time: “at the commencement of each cargo loading”, and “at the commencement of each cargo-carrying voyage” – a more restricted regime than under the Hague-Visby Rules/under a Clause Paramount, where owners’ obligation to exercise due diligence applies “before and at the beginning of the voyage”. However, these protections are deemed to apply to any claim of whatsoever nature, the effect of which appears to be that all claims by charterers for breach of charter are now subject to a one (1) year time bar, not just those related to cargo.
- The new “Suspension and Termination” clause (Clause 16) entitles owners to suspend or to terminate the charter in the event of non-payment of – or at least a failure to provide security for – any sums under the charter, including freight, deadfreight and demurrage. The exercise by owners of associated rights then to discharge the cargo is said “not to be considered to be a breach or deviation under any relevant bills of lading”, but this does not sit comfortably with fact that the exercise of such rights would undoubtedly have implications for intended receivers, and impact the relationship between charterers who were also sellers and their buyers. Other points on these rights aside, charterers agreeing to be bound by this new clause will want to take care to ensure that it is also included in any associated sale contract, in order that so far as possible charterers’ position remains back-to-back under charter and sale contract. Commodity traders will nevertheless need to give some thought to whether bills of lading incorporating these sorts of provisions would satisfy the requirement of a CFR seller to tender shipping documents that are “usual and customary”.
- Under the revised “Laytime” clause (Clause 10 b)), the term “weather permitting” used in GENCON 1994 – previously part of the description of laytime, like the term “weather working day” – has been replaced by “except to the extent that the actual loading [or discharging] is delayed or prevented by bad weather” – i.e. an exception to the running of laytime. So that it is no longer enough to prevent the running of laytime that there be bad weather; that bad weather must now be the operative cause of delay to vessel operations. In summary, unlike under GENCON 1994, where there is bad weather but the berth is occupied by another vessel, under GENCON 2022 laytime will run.
- Under the revised “Cancelling” clause (Clause 14), there is some uncertainty as to the precise operation of the interpellation clause, i.e. the possibility of fixing of a new cancelling date where owners serve a notice dealing with anticipated delay meeting the original cancelling date and charterers choose to accept that delay. Under GENCON 1994 the new cancelling date was deemed to be the seventh day after the new readiness date specified by owners. Under GENCON 2022 the new cancelling date may be as early as the date specified in owners’ notice as to when the vessel is expected to be able to tender Notice of Readiness.
- The new “Strikes” clause (Clause 17) can entitle owners to enhanced compensation (at or above the demurrage rate) in the event of extended delay at the loadport or discharge port caused by strikes. It also provides for demurrage to be payable by charterers in situations where previously it would not, eg. where there was a strike affecting loading, and in response to a request made by owners to charterers to affirm that laytime and demurrage would count as if there was no such strike, charterers did not provide that affirmation and owners did not then exercise their option of cancelling the charter. Under GENCON 1994 there was some authority to suggest that laytime did not then count until the strike ended. Under GENCON 2022, demurrage will be incurred, though at half rate for the first 10 days. Similarly for a strike affecting discharging, demurrage will be incurred at half rate – but importantly now only for the first 10 days, not as previously under GENCON 1994 until the conclusion of the strike.
- A new “Cargo Fumigation” clause (Clause 5) provides for any fumigation carried out on board to be at charterers’ risk, responsibility and cost/time cost, and further provides that charterers will indemnify owners for all liabilities, losses or costs arising out of or resulting from the fumigation. Voyage charterer Assureds should be aware that Club cover will not be available under this or similar wording.
- A new “Deck Cargo” clause (Clause 6) provides that the carriage of cargo on deck is at charterers’ risk and responsibility – even where loss and damage arises from owners’ negligence. In these circumstances, Assureds should be aware that Club cover is conditional on their having the ability to pass liabilities on to another party, for example the shippers or receivers, by ensuring bills of lading are marked accordingly.
- As with NYPE 2015, BIMCO has taken the opportunity to incorporate a number of its existing standard form clauses, including covering Ice, ISPS, Sanctions, War Risks and Piracy (many of which can be viewed as “owner-friendly”).
However, not all of the revisions favour owners. Some favour charterers, including as follows:
- Under a revised “Loading and Discharging” clause (“Clause 4), Charterers remain responsible for loading and discharging operations, but following the approach adopted by the NYPE time charter these operations are now subject to the supervision of the Master. However, GENCON 2022 does not spell out the effect of this provision, the intention seemingly being to draw on the available body of law related to supervision under the NYPE time charter form, where generally any duty of the Master to intervene arises only where the seaworthiness of the vessel may be impacted by charterers’ proposed methods of loading or discharging.
- Under GENCON 1994, where Notice of Readiness was given from a waiting place and the vessel’s holds were then found on an initial inspection not to be ready in all respects to load, charterers’ only remedy was that time lost thereafter until the vessel was again ready would not count as laytime. Now under a new “Notice of Readiness” clause of GENCON 2022 (Clause 9), charterers also have the option of terminating the charter if after a subsequent joint re-inspection the holds are still found not to be ready “upon the expiry of … 96 … hours or by 23.59 hours local time on the cancelling date, whichever is the later”.
- Under the new “Strikes” clause (Clause 17) – in contrast to the position under GENCON 1994 – owners’ option to cancel the charter applies only prior to commencement of loading of cargo. The effect of the new clause – again in contrast to the position under GENCON 1994 – appears to be to cover delay in discharging caused by the after effects of a strike which has ended.
- GENCON 2022 now gives charterers an option as of right to use e-bills, though this is subject to an express indemnity in owners’ favour for any additional liability arising from the use of relevant electronic systems (Clause 20).
As always with revisions of charter forms in widespread use, the question is whether GENCON 2022 offers a better starting point for negotiation than an amended GENCON 1994 charter. Some more detailed observations are set out below, but of course it is not possible to provide specific guidance or to cover each and every component or every clause in the new form, and Assureds should consider the specifics of each potential charter when deciding on which wording to use.
For its part the Club suggests that Assureds’ own specific rider terms may be more appropriate for their business and the particular risks they face, having been developed over time. That said, charterers may wish to use the GENCON 2022 form to cross-check/ensure their own terms are up-to-date and extend to cover all relevant issues dealt with in the new GENCON. Assureds acting as disponent owners may be more attracted to GENCON 2022 and wish to put forward the charter form at least as a basis for negotiation.
Selected Clauses of Interest
What follows reflects a focus on some of the main points of interest within certain clauses of GENCON 2022, and does not purport to be a comprehensive summary of all of the relevant changes.
Owners’ Responsibilities (new Clause 2)
This replaces the former “Owners’ Responsibility Clause” (Clause 2 of GENCON 1994), which – at least in the absence of a Clause Paramount – provided owners with a very wide defence to claims for loss, damage or delay to cargo. It does away with the need to incorporate a Clause Paramount into the charter by making owners’ responsibility for loss and damage in large part mirror the regime under the Hague-Visby Rules – essentially by borrowing relevant provisions of those Rules.
However owners’ responsibility is now limited to two “snapshot” obligations to exercise due diligence to make the vessel (i) (in substance) “cargo-worthy” at the commencement of each cargo loading, and (ii) seaworthy at the commencement of each cargo-carrying voyage – what have been said to be the two points in time that really matter to charterers. This contrasts with the position under Article III rule 1 of the Hague-Visby Rules, which requires owners to make the vessel “cargo-worthy” and seaworthy “before and at the beginning of the voyage” – so for the continuous period of time at least from the beginning of loading until the time when the vessel starts on her voyage, but potentially effectively earlier than this.
In addition owners agree properly and carefully to carry and care for the cargo while it is on board the vessel – mirroring the relevant portion of Article III rule 2 of those Rules.
There is also now an express entitlement of owners to rely on relevant protections available to a carrier under the Hague-Visby Rules – those available in any event, notably the one year time bar for the bringing of claims under Article III rule 6; and where there has been no breach of the above two “snapshot” obligations to exercise due diligence, also those that under the Hague-Visby Rules rely on owners satisfying their obligations as to seaworthiness by the exercise of due diligence, notably the exceptions from liability under Article IV rule 2.
These protections extend, not just to claims for loss and damage related to cargo, but to any claim for loss, damage, delay or failure in performance of whatsoever nature. The effect appears to be that all claims for breach of charter by charterers are now subject to a one (1) year time bar. Assureds should be alert to this change as it varies the six (6) year English contract law time bar that might otherwise be applicable.
This reworking of the former “Owners’ Responsibility Clause” is perhaps the biggest change of real substance under the new GENCON, so much so that BIMCO felt it prudent to circulate the proposal to the industry before making any final decision on the change – though they have indicated that they received almost unanimous approval to this. But query the extent of consultation with representatives of (voyage) charterers and traders.
BIMCO have also said that the International Group of P&I Clubs have confirmed that the change should not prejudice Club cover.
Cargo (new Clause 3)
GENCON 2022 also now includes a new Clause 3 which defines the parties’ responsibilities for various cargo-related matters – it has to be said, largely allocating these to charterers.
This is intended to deal with responsibility for compliance with a raft of new regulations imposed on shipowners, including affecting such matters as advanced cargo declarations; methods of packing, loading, stowing and securing cargo; the treatment of dunnage; the disposal of harmful cargo residues etc., which because of the broad division of risk and responsibility under GENCON, BIMCO have indicated are seen as matters for which charterers should bear responsibility.
However, BIMCO recognise that this clause may require review according to the particular type of cargo concerned, and also to take account of any further relevant regulations that may be published in future.
Loading and Discharging (revised Clause 4; formerly Clause 5)
Like its predecessor, GENCON 2022 continues to be framed as an FIOST (Free In/Out, Stowed, and Trimmed) charter, so that the risk, responsibility and expense of loading and discharging operations lies with charterers. But following the approach adopted by the NYPE time charter, these operations are now subject to the supervision of the Master. This is aimed at reconciling charterers’ responsibility for cargo operations, with the Master’s responsibility for the seaworthiness of the vessel. The alignment with the approach under the NYPE charter form seems intended to enable the parties to draw on the available body of law related to such supervision under that form.
The clause includes a revised sub-clause dealing with Stevedore Damage, as previously making charterers responsible for the repair of stevedore damage and for the associated time cost of such repair. While this is not unusual in a time charter, it is much less common in voyage charters where charterers’ obligations are often limited to cooperating with owners and the stevedores with a view to resolving these types of claims and rider clauses often make clear that ultimate responsibility for stevedore damage rests with owners.
Cargo Fumigation (Clause 5)
New to GENCON 2022, this clause provides for any fumigation carried out on board to be at charterers’ risk, responsibility and cost/time cost, and further provides that charterers will indemnify owners for all liabilities, losses or costs arising out of or resulting from the fumigation. Voyage charterer Assureds should be aware that Club cover will not be available under this or similar wording.
Deck Cargo (Clause 6)
Under GENCON 2022 the carriage of cargo on deck is at charterers’ risk and responsibility. In these circumstances, Assureds should be aware that Club cover is conditional on their having the ability to pass liabilities on to another party, for example, the shippers or receivers, by ensuring bills of lading are marked accordingly.
Freight (revised Clause 7; formerly Clause 4)
This clause now seeks to draw a clearer distinction between how freight is to be paid, and how it is to be earned, freight other than lumpsum freight being earned progressively throughout loading, and lumpsum freight being earned only on completion of loading.
Notice of Readiness (new Clause 9; formerly Clause 6(c))
In general terms the laytime and demurrage regime under the charter reflects the principle that owners should bear the risk of delay resulting from issues of navigation, while charterers should bear the risk of delay resulting from commercial issues, with owners accordingly being entitled to have laytime begin to run upon arrival at the load or discharge port where it is commercial issues that prevent the vessel from berthing. So as previously, the new GENCON contains a mixture of berth charter and port charter terms for the tendering of the Notice of Readiness.
What was previously a single “Laytime” clause has now been divided up to make the associated practical arrangements clearer, the first of the relevant new clauses dealing with Notice of Readiness, which can only be tendered once owners have exercised due diligence to make the holds (in substance) “cargo-worthy”.
One aspect now dealt with under Clause 9 (formerly dealt with in Clause 6) is the situation where, after the vessel gives Notice of Readiness from a waiting place because the berth is not reachable on arrival, the vessel’s holds are then found on an initial inspection not to be ready in all respects to load.
Under GENCON 1994, charterers’ only remedy was that time lost thereafter until the vessel was again ready would not count as laytime.
Now, under the new GENCON, charterers also have the option of terminating the charter if after a subsequent joint re-inspection the holds are still found not to be ready “upon the expiry of … 96 … hours or by 23.59 hours local time on the cancelling date, whichever is the later”. In practice this will often lead to an extension of the cancelling date under the charter. Charterers’ option is available for 12 hours “thereafter”, i.e. after the holds are still found not to be ready, provided that the vessel remains cargo free at the time that the option is exercised – but subject always to charterers compensating owners at the demurrage rate for all time spent waiting for a berth after tendering Notice of Readiness.
Laytime (new Clause 10; formerly Clause 6)
This now incorporates the BIMCO Laytime Definitions for Charter Parties 2013, except where these are otherwise inconsistent with other terms of the charter.
One particular point to note on this clause is that the expression “weather permitting” used in GENCON 1994 to define the allowed period of laytime has now been replaced with the phrase “except to the extent that the actual loading [or discharging] is delayed or prevented by weather”. This is intended to make clear that laytime will run continuously unless the actual working of the vessel is delayed or prevented by bad weather. Put another way, that bad weather is an exception to the running of laytime, not a description of how laytime is calculated. So bad weather has to be the operative cause of delay if it is to affect the running of laytime. It is not enough simply that there is bad weather if other matters are causative of delay over the period of that bad weather.
Given the significant monetary consequences this amendment may have on the parties, charterer Assureds are advised by the Club to rely on the 1994 wording.
Commencement of Laytime (new Clause 11); The Running of Laytime (new Clause 12)
The latter clause provides that laytime or time on demurrage shall run continuously until completion of cargo operations, and permits charterers three hours after completion of cargo operations at each load port in which to provide a full set of cargo documents, failing which laytime or time on demurrage will recommence and run until such documents are received.
Cancelling (revised Clause 14; formerly Clause 9)
The right to cancel is now framed by reference to the failure to tender a Notice of Readiness within the cancelling date, rather than by reference to the vessel not being ready to load, as previously under GENCON 1994. Charterers now have 48 hours after the end of the cancelling date in which to decide whether or not to cancel.
The operation of the provision of notice by owners of anticipated delay in meeting the cancelling date, and of charterers’ associated option then to cancel the charter or to agree a new cancelling date, is slightly amended under revised Clause 14 (often referred to as an interpellation clause).
Previously charterers had 48 running hours after the receipt of owners’ notice to exercise their option to cancel, failing which there would be a new cancelling date of the seventh day after the new date of readiness specified in owners’ notice.
Under the new revision, owners’ notice must state when the vessel is expected to be able to tender Notice of Readiness and ask charterers whether they will exercise their option of cancelling the charter party or agree to a new cancellation date “on 23.59 hours local time on the date notified by the Owners”. Charterers’ option must then be declared within 48 hours of the receipt of owners’ notice “or by 23.59 hours local time on the cancellation date”, whichever is the earlier. If charterers do not exercise their option to cancel, then “the proposed new cancellation date” will replace the previous cancellation date. As previously, this opportunity to extend the cancelling date operates only once.
Under GENCON 1994 the new cancelling date was deemed to be the seventh day after the new readiness date specified by owners. Under GENCON 2022 it seems the new cancelling date may be as early as the date specified in owners’ notice as to when the vessel is expected to be able to tender Notice of Readiness. Further clarification is expected from BIMCO in this regard. In the meantime the Club recommends Assureds to use the 1994 version.
Suspension and Termination (new Clause 16)
In the event of non-payment of any sums due under the charter – including freight, deadfreight and demurrage – owners now have an entitlement to suspend performance of their obligations at any time thereafter. In the event of a failure by charterers to rectify this non-payment or at least to provide security for the relevant sums in terms acceptable to owners within 96 hours of a notice from owners requiring them to do so, owners now have the rather draconian entitlement “at any time thereafter” to terminate the charter and/or to discharge the cargo “at any port or place”.
Rather courageously perhaps, the clause records that such action “shall not be considered to be a breach or deviation under any relevant bills of lading” – a point on which bill of lading holders might beg to differ, particularly given that owners are generally considered to be bailees of the cargo under the bill of lading contract!
Previously there was a right of termination only in the event of non-payment of demurrage within 96 hours of a notice from owners requiring charterers to rectify the non-payment.
This new clause gives owners enhanced rights in the event of non-payment of sums due under the charter, in a manner similar to that existing under the NYPE time charter form.
In addition, charterers must indemnify owners for all costs or liabilities they may incur in exercising their rights under the charter, including any liability owners may incur to third parties – such as bill of lading holders. And charterers are also required to provide security to avoid any delay to the vessel in the event of its actual or threatened arrest.
The rights under this clause do not affect owners’ separate entitlement to exercise a lien on the cargo and on all sub-freights for amounts due under the charter.
All in all, quite a draconian clause that will require careful consideration by charterer Assureds.
Strikes (revised Clause 17; formerly Clause 16)
This clause has been amended in a number of respects, and is said by BIMCO’s drafting sub-committee now to be “more consistent with modern industry practice”.
Where prior to the commencement of loading of cargo there exists a strike (or lockout) which is likely to delay or prevent loading, as previously under GENCON 1994 owners may invite charterers to agree that laytime and time on demurrage should count as if there were no strike. Unless charterers provide that confirmation within 24 hours (in which case they will be bound by it), owners have the option of cancelling the charter – now even if the vessel has tendered its Notice of Readiness within this period of 24 hours.
But (including where charterers have not provided any relevant agreement prior to commencement of loading as above, and owners have not then exercised their option to cancel the charter) the clause goes on to prescribe at what rate(s) demurrage or other compensation will then be payable in the event of strikes that in fact delay or prevent the loading or discharging of cargo. In summary, the clause provides for “half rate” demurrage for the first 10 days, “full rate” demurrage thereafter up to day 25, and then from day 26 onwards compensation at the higher of (i) a daily rate equivalent to the demurrage rate, and (ii) the prevailing market rate of hire plus bunkers consumed until the completion of loading or discharging (the last of these applying in all cases, so even where charterers have provided agreement prior to commencement of loading as above).
All sums due under the clause are to be paid every 7 days.
In this way, the clause seeks to ensure that in the event of delay caused by strikes, charterers are able to retain the use of the vessel, but at the same time owners are protected from losses caused by excessive delay.
Note that there is no longer any provision similar to that appearing in GENCON 1994 by which charterers had the option of keeping the vessel waiting at the discharge port until the strike was at an end against paying “half demurrage” until the strike terminated and full demurrage thereafter until discharge had completed, or instead of ordering the vessel to a (different) safe port where the vessel could discharge without risk of being detained by a strike.
Note also that the provisions of the new Strikes clause – in contrast to the position under GENCON 1994 – cover delay in discharging caused by the after effects of a strike which has ended. Under GENCON 1994, where there was a strike affecting or preventing the discharge of the cargo, charterers had the option of keeping the vessel waiting “until such strike … is at an end against paying half demurrage after expiration of the time provided for discharging until the strike … terminates”, with full demurrage payable after the strike was at an end . Under GENCON 2022, demurrage at half rate will be incurred for the first 10 days where a strike “delay[s] or prevent[s] the actual loading [in appropriate circumstances] [or discharging]”, so that it should be sufficient that delay is caused by a strike even after this has ended, including where the vessel is delayed in berthing due to congestion that has arisen as a result of such a strike.
General Exceptions Clause (new Clause 18)
Previously, and unlike in many other charter forms, there was nothing in the GENCON to excuse a charterer from a breach arising from events beyond his control. And indeed nothing dealing with breaches other than those directly related to the cargo.
The new GENCON includes a General Exceptions Clause which operates for the benefit of both owners and charterers. But this makes clear that it excuses only the breach itself, and will not interrupt the running of laytime or time on demurrage, nor affect charterers’ obligations to make payment of any sum due to owners under the charter.
Bills of Lading (revised Clause 19; formerly Clause 10)
This clause now prescribes the use of bills of lading, not in any particular form, but “in terms no less favourable to the carrier than” those of CONGENBILL 2022 – in place of the previous prescription of the use of bills in the form of CONGENBILL 1994. BIMCO say this is a recognition of the existence of various forms of bill of lading in the market.
Given the wide indemnity contained in this clause, Assureds should exercise caution when issuing bills of lading other than in the standard CONGENBILL format.
CONGENBILL 2022 includes on its face an express reference to a new exclusive Law and Arbitration clause forming part of the Conditions of Carriage set out on the reverse side of the bill. Those Conditions of Carriage have also been amended to make clear that if the date of the relevant charter party whose terms are to be incorporated into the bill is not specified by the completion of the relevant box on the face of the bill, then that charter party is deemed to be “the voyage charter party that regulates the carriage of the cargo in respect of which [the bill] has been issued”.
BIMCO Electronic Bills of Lading Clause 2014 (new Clause 20)
The new GENCON now gives charterers an option as of right to use e-bills, though in order to avoid prejudicing owners’ Club cover there is a requirement that any associated Electronic (Paperless) Trading Systems be approved by the International Group of P&I Clubs. And charterer Assureds should be aware that they are required to indemnify owners for any additional liability arising from the use of relevant electronic systems.
Substitution (new Clause 23)
This is a new clause giving owners a right to nominate a substitute vessel within the laydays. This requires the prior written consent of charterers, but such consent is not to be unreasonably withheld.
Sub-let and Assignment (new Clause 24)
This is a further new clause giving charterers the right to sub-let or assign the charter party, always on the basis that they will remain responsible for its due performance. This requires the prior written consent of owners, but again such consent is not to be unreasonably withheld.
Agency (revised Clause 26; formerly Clause 14)
This clause makes clear that agents “in any and all matters relating to …” the cargo, will be deemed to be the agents of charterers even though the agents, nominated by charterers, may be appointed and paid for by owners. The clause requires that agents appointed under the charter should meet certain minimum international quality standards, thus imposing extra due diligence obligations – mostly on charterers.
Limitation (Clause 27)
As with NYPE 2015, with the release of GENCON 2022, BIMCO has taken the opportunity to incorporate a number of its existing standard form clauses, including covering Ice, ISPS, Sanctions, War Risks and Piracy (many of which can be viewed as “owner-friendly”).
Overall it would seem that BIMCO’s intention was not to effect any seismic change to the broad legal framework of the GENCON – at least as this had ordinarily been adapted for use in the past by the addition of rider clauses. Rather the focus has been on clarifying the responsibilities of owners and charterers in today’s trading environment, and against the background of current operating standards and regulatory requirements. A case of evolution perhaps, rather than revolution.
While we as a Club have no objection to adapting standard contract forms to modern times, the various revisions to the new GENCON 2022 seem to us largely to favour owners, who overall enjoy greater protections, and to the detriment of charterers.
The extent of the overhaul is such that it seems unlikely that at least some new issues will not arise in relation to the operation and/or interpretation of GENCON 2022. And certainly those contemplating negotiating new voyage charters based on the GENCON 2022 proforma are going to want to review this carefully to ensure that it fully meets their requirements.
The expectation, at least by owners’ organisations such as BIMCO and the International Group of Clubs, is that the market will embrace GENCON 2022 in time – if perhaps with some partial reinstatement of clauses with whose operation parties are more familiar from previous trading. Certainly there seems likely to be a period over which market participants will want to reflect on the terms of the new charter and what these mean for their particular business – as well as on what revisions they might themselves wish to propose to these terms appropriate to such business in the course of ordinary fixture negotiations. Time will tell how prevalent the use of the new charter form will become.
In the meantime, we would ask charterer Assureds inclined or otherwise compelled to negotiate fixtures on the basis of the new GENCON 2022 form to exercise caution as, at least in its printed/unamended form, their overall exposure is significantly greater than under GENCON 1994, and one or two clauses may also give rise to Club cover issues.
We are grateful to Brian Perrott and Patrick Knox of HFW for contributing to this commentary.
London December 2022