Tug owners’ gold standard conditions updated

The UK’s 1986 standard conditions for towage and other services have earned respect, for their considerable antiquity and certainly for the density of the prose, and some might also say for their elegance, and invariably because these conditions seldom failed to deal with a set of circumstances on the water. This document is the gold standard for tug owners and the template for other similar conditions that have followed.

These conditions are adopted by the major international operators not by random chance or habit, but because they work, and have proven to be solid and reliable. As testament to this, the tug owner-favourable terms have yet to be successfully challenged in court.

Nevertheless, there always comes a time when even a good piece of work needs an overhaul to keep it up to date. So it was that the British Tugowners Association, as custodians of the standard conditions, has overseen a root-and-branch review culminating in the launch in November of the new 2024 Conditions. No comma was left unturn.

By way of overview, nothing fundamental has changed. It remains highly protective to the tug owner and the wording has been improved across the piece.

First, the conditions have been modernised. A subtle example is in the terms determining when towing and services other than towing commence. As most caselaw has tended to revolve around whether the conditions applied to an event or not, this is particularly important.  

Uncertainties around whether a tug was in a position physically to receive orders directly from a vessel (in the past often this meant being within hailing distance) have been replaced by the simple test of when the tug is in a position to commence towing or the service in question. These words have a dual meaning: a physical proximity to the job but also readiness in material respects to do it.

Another example is the substitution of a rather complex exclusion of liability test with a modern test that has been gradually implemented in international conventions and elsewhere since around 1976. This is respected by the courts and fits neatly with typical insurance coverage terms.  

The broad and generous protections afforded to the tug owner are available unless the loss has resulted from a tug owner’s act, or omission, committed with the intent to cause such harm, or recklessly with the knowledge that such harm would probably result, with the onus of proof resting on the hirer.

Those protections not only shield the tug owner from claims brought by the vessel or its cargo, as well as providing an indemnity if a third party brings a claim, but also permit the owner to claim for his own damage and losses, even if caused by the tug’s negligence, breakdown or unfitness.

Similarly, the force majeure protections, still in clause 7, have been brought in line with a wording now established in other common marine services contracts.

In these and other respects, the draughtsmen of the 2024 Conditions have drawn from recognised, industry standard wordings, moving away from some of the contract-specific wording found in the former conditions.

These UK conditions remain unique in many respects. Clause 5, a provision frequently not appreciated by claimants, is a prime example. Under this clause the tug owner first engaged may substitute another tug owner, creating a binding contract between the hirer and the owner who eventually carries out the job on the terms of the conditions.  

This is done via the legal concept of agency – that is to say the tug owner is authorised to act as the hirer’s agent in so doing – and this is now clarified under the 2024 Conditions. The substitute tug owner can meanwhile pursue the hirer direct for his losses and costs.

The 2024 Conditions are subject to English law and the jurisdiction of the English courts providing tug owners with a route straight into court in London to obtain an international restraining order if the hirer decides to try his luck elsewhere.  

Furthermore, as the wording draws from legal precedent, the English court will be quick to impose terms that might be less readily enforced elsewhere. The choice of another law and/or jurisdiction is of course an option for the parties but must come with that caveat.