Navigating Perilous Waters - BIMCO Updates War Risk Clauses

BIMCO updates War Risk Clauses for charters — a welcome review in today’s global shipping climate.

Earlier this year BIMCO published updated versions of its War Risk Clauses, both CONWARTIME 2025 (time charters) and VOYWAR 2025 (voyage charters). This has been a long running project which began in 2022, and which is particularly relevant against the current geo-political landscape. With the Russian invasion of Ukraine and the attacks against shipping in the Red Sea, war risk clauses have come under the spotlight. 

The updates whilst not intended to make radical changes, have introduced some changes which make the clauses more charterer friendly than the previous 2013 versions. 

At the outset it is important to note that the revisions do not intend to make any change to the level of risk required or the test for determining whether Owners have the right to refuse to proceed. That remains as per the 2013 version, which was itself amended following the decision in The Triton Lark^[1] . Nor has there been any change to the mechanism for triggering the clauses. Under CONWARTIME and in contrast to VOYWAR, there is no requirement for any escalation in risk/danger since the date of fixing and it is irrelevant whether the war risk existed at the time of entering into the charterparty or arose thereafter. 

The following is a summary of the main changes introduced in the 2025 clauses. 

CONWARTIME

Subclause (a)(i) and (ii) New definitions of “Area” and “Insurance Costs” have been included. The latter is now defined as being additional war risk premiums and additional kidnap and ransom, which are taken out for the specific voyage. 

Subclause (b) The liberty to leave an area has been grouped in with the list of other liberties not to proceed or continue through areas affected by War Risks, to ensure the standard for all is the same. 

Subclause (d) Clarifies the reimbursement provisions. 

Owners are now required to notify Charterers of Insurance Costs “as soon as practicable and, if possible, before the Vessel enters an Area exposed to War Risks”.   

There is a new requirement, which if requested by Charterers, Owners have to demonstrate they have used “reasonable endeavours” to obtain appropriate cover and terms, including premium. This promotes transparency but opens the door to the possibility of Charterers disputing the premium. 

The final paragraph clarifies that Charterers only have to reimburse the net amount, getting the benefit of any discount or benefit applied, such as no claims bonuses. 

Subclause (e) introduces a requirement to provide evidence that payment of any additional wages or bonus has in fact been made to the crew. 

Subclause (f)(vi) has added a new liberty to sail in convoy through an area exposed to War Risks. Whilst convoys have been more associated with piracy, the situation in the Red Sea highlighted the possibility they could similarly be used in war risk areas and affords the same protection to Owners. 

The liberty clause also now states that the Vessel will remain on hire in all of the listed events. 

Subclause (g) The time given to Charterers to nominate an alternative safe load or discharge port has been extended to 72 hours (from 48 hours). 

VOYWAR

For consistency, some of the changes made to CONWARTIME have been duplicated in VOYWAR:

•  The same definitions of “Area” and “Insurance Costs”, subclause (a). 

•  The time given to Charterers to nominate alternative safe ports has been extended to 72 hours, subclause (b) and (c)

•  The requirement to notify Charterers of Insurance Costs “as soon as practicable” and “if possible before entering an Area exposed to War Risks”, along with the clarification that Charterers are only required to pay the net amount and get the benefit of discounts or benefits received for the voyage, subclause (e)(iv). 

•  The requirement to demonstrate, if requested, that Owners have used reasonable endeavours to obtain appropriate cover and terms, including premium, subclause (e)(ii).

Subclause (c) and (d) The previous 2013 version included a pro-rata increase of freight where the route taken increased by 100 miles. With the situation in the Red Sea and the resulting diversion round the Cape, which significantly increased voyage length, it was considered that this created unreasonable results. That regime has now been replaced by a freight adjustment, based on the increase (or saving) in time and/or expenses with, as documented by Owners. The additional 100 mile threshold has been removed. This aims to create a more balanced result. Payment or reimbursement (as the case may be) is due within the later of 7 days of receipt of Owners invoice and issue of bills of lading. Owners have a lien on the cargo for the adjusted freight. Note that the parties need to consider whether the payment terms for the additional freight payment/reimbursement fit with the existing freight payment terms under the charterparty. 

A new liberty has been added, which allows the vessel to leave an area where it is exposed to War Risks, whether the risk existed at the time of or after entering the area, subclause (f)(vi).

Nordisk is always available to assist our Members should they require assistance with issues pertaining to war risks. 

^[1]              Pacific Basin Ihx Ltd v Bulkhandling Handymax AS [2012] EWHC 70 (Comm). For further explanation of  this case see Piracy Update – Sulu Sea : Nordisk Skibsrederforening