BIMCO has published updated ocean towage agreements after a thorough revision to bring them up to date with commercial practices and legal developments
These industry standard contracts for ocean towage, TOWCON and TOWHIRE, have needed updating for some time, and were adopted by BIMCO’s documentary committee on 25 January 2021.
BIMCO worked on the revisions in 2020 with a group of industry professionals from Boskalis Offshore Energy, Boluda Towage, Østensjø Rederi, LKL Oceantrade, Clarksons, the Standard Club, Gard and the International Salvage Union.
BIMCO manager for contracts and clauses Anna Wollin provided Riviera Maritime Media with this summary of the main changes to the most widely used of the two towage forms – TOWCON.
“At the heart of TOWCON is the knock-for-knock liability regime which in practice means that each party take responsibility for injury or death of its own employees and for damage or loss of its own equipment,” said Ms Wollin.
She continued, “this has been the favoured risk allocation mechanism in the offshore industry for more than 40 years now as it helps to keep claims down and to avoid litigation.”
To clarify which indemnities the parties must give, and ensure a clear-cut knock-for-knock liability regime, definitions of hirer’s and tug owner’s groups (SupplyTime-style) have been added to the new edition of TOWCON.
“This means that all parties involved in the towage which might suffer loss or damage during towage will be covered by the knock-for-knock regime,” said Ms Wollin.
Parties up and down the hirer’s and tug owner’s contractual chains are included, with the effect that they avoid liability towards the other party’s contractual counterparties several tiers removed from them.
“The provisions relating to free time and delay payments have been written more clearly and provision has been made for bunkering the tug mid-voyage at interim ports or places, for example, at an offshore location,” Ms Wollin continued. “This is of particular importance for very long towages or when a smaller tug is used with limited bunker capacity.”
A new definition for the place of connection has been included to address the scenario where a tug arrives at a pilot station, but is only able to connect to the tow inside the port area which may take several hours to reach.
“Free time will start to count from arrival at the place of departure and not the place of connection and will continue to run until dropping last outbound pilot,” said Ms Wollin. An example of this would be the port of Rotterdam where free time will begin at Maascenter Buoy as the place of departure even if the tug has to transit for some time to the actual place of connection where it will hook up to the tow.
“The provision regarding the hirer’s responsibility to pay for the repair or replacement of damaged or lost towing gear has been made more balanced,” said Ms Wollin. “It is only towing gear that the tug has provided specifically for the services under the agreement that the hirer should pay for.
“When calculating the replacement costs, due consideration should be given to the fair wear and tear of the towing gear,” said Ms Wollin. So, it is no longer on a new for old basis as under the 2008 edition. “This is more in line with the knock-for-knock liability regime of the contract (as the towing gear is the tug owner’s property) and was felt by the drafting team to be a fairer risk allocation, particularly when TOWCON is used for shorter towages,” she said.
“Responsibility for salvage costs has been allocated to the party whose property needs to be salved: the hirer pays for salvage services for the tow and the tug owner pays for salvage services for the tug,” Ms Wollin continued. “This approach is consistent with the knock-for-knock liability regime that governs the contract.
A new insurance clause has been added under which the parties warrant that the tug and tow are properly insured for hull and machinery, basic war risks, and P&I risks throughout the contract.
A frequent source of disputes under TOWCON 2008 is the calculation of compensation for the tug owner to cover delays due to slow steaming and deviation, as there is no requirement for the tug owner to state the expected towage speed for the voyage, which made calculations for extra time used less transparent. “This issue has been solved by the addition of a box in Part I where the tug owner can state the ‘estimated average towage speed’ against which claims for compensation for extra time can be based,” said Ms Wollin.
“It should be noted that this is not a performance guarantee by the tug owner. It has merely been added to make the calculations of extra time used for slow steaming or deviation more transparent.”
The war risks clause has been updated and improved to make it more tug and tow specific.
Tailor-made clauses have been drafted to address piracy, infectious and contagious diseases, anti-corruption and sanctions. Finally, the new BIMCO Law and Arbitration Clause 2020 has been included.
“The drafting team has taken care to maintain the familiarity of the contracts so that the transition to TOWCON and TOWHIRE 2021 should be easy for users to make,” said Ms Wollin.
Sample copies and detailed explanatory notes will be available on BIMCO’s website, as well as editable copies through BIMCO’s contract editing system SmartCon.
The drafting team included:
LKL Oceantrade director Dirk Kwantes, Boluda general manager for offshore and salvage Charo Coll*, Boskalis Offshore Energy sales director Maurice Schreurs, Østensjø Rederi general manager for UK towage Nick Jeffery, Clarksons Platou Offshore director Adrian Goodger, Gard vice president Ivar Brynildsen, The Standard Club, Charles Taylor offshore division head, John Croucher.
*Ms Coll also represented International Salvage Union as former chair
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