The new Supplytime 2017

On 21 June 2017 BIMCO released the latest version of their bestselling contract, the Supplytime form. This is the fourth version of Supplytime, following its predecessors Supplytime (1975), Supplytime 89 and Supplytime 2005.

In their press release, BIMCO points out that over the past 10 years or so the gap between the terms of Supplytime 2005 and the terms required by charterers have widened, making the time appropriate for a revision. The revision project was started in 2015. The BIMCO drafting team held several meetings and in August 2016 a consultation draft was distributed to certain industry participants for comments. Further work was carried out by the drafting team, and at a meeting on 6 June 2017 the BIMCO Documentary Committee adopted the document.

As a side point, in 2013 BIMCO released the Windtime, a standard time charterparty for transfer of windfarm personnel and equipment. This document was based on the Supplytime 2005 but included several changes and updates. After the release of Windtime many believed that the next version of Supplytime would be a further development of the Windtime, but as it turned out, BIMCO decided to use Supplytime 2005 as their basis rather than Windtime when drafting the new version. Accordingly, users of Supplytime 2017 will recognise significant parts from the Supplytime 2005, and it is fair to say that Supplytime 2017 includes a number of well-known clauses and concepts. However, as pointed out by BIMCO in their press release, the document “has been updated to reflect contemporary shipping practice and legal developments in the offshore sector”, and they also highlight that it has “a purer knock-for-knock regime and is more neutrally balanced than its predecessor”.

Although the structure and solutions from Supplytime 2005 have largely been maintained, the new contract also includes important changes and updates. We will highlight a few:

Since the introduction of Supplytime 89 the liability and indemnity regime has been based on a knock-for-knock principle. Not surprisingly this has been maintained in the 2017 version, but the knock-for-knock regime has now also been strengthened by deleting several exceptions to it in the 2005 version. Further, the scope of application of the knock-for-knock regime has been extended, by making the definitions of “Charterer’s Group” and “Owner’s Group” wider than in the 2005 version. Another amendment to the liability and indemnity regime in clause 14 is the change of the previous “consequential damages” clause. Clause 14 (b) is now headed “excluded losses”, and has been amended to take account of certain shortfalls in the previous clause that have become apparent through English case law in recent years.

In clause 5 (b) the charterers have now been granted much wider rights of audits and inspections than in the 2005 version. This change is in line with market developments and clauses found in contracts with oil majors and other major charterers.

Another area where the document has been substantially upgraded is in relation to fuel. The traditional approach in time charters is that charterers shall take over and pay for fuel on board on delivery and that owners shall take over and pay for fuel on redelivery. This is still the default position under Supplytime 2017 clause 10, but in addition, the clause now provides an alternative whereby payment of fuel on delivery and redelivery shall only be dealt with upon redelivery, so that the charterers shall pay the owners, or the owners shall credit the charterers, for the difference in quantity on delivery and redelivery respectively. Similar options are found in the Windtime form as well as the dry cargo form NYPE 2015. Presumably, the alternative arrangement is best suited for short term charters such as a cargo run or rig move. The clause now also has more comprehensive provisions about procedures for bunkering etc.

Clause 13 of Supplytime 2017 deals with off-hire, maintenance and dry-docking etc. The structure from the previous form is maintained, but a number of amendments have been made. According to clause 13 (c) of the 2005 form, owners were entitled to 24 hours on hire per month or pro rata for maintenance, repairs etc., and to the extent there were unused maintenance days at the end of the charter period, owners were entitled to be compensated for the same at the charter rate. In the 2017 form owners are still entitled to a 24 hours maintenance allowance per month. However, whilst the vessel is considered on hire when accrued maintenance days are used, the clause now provides that during such periods charterers’ obligations under the “charterers to provide” provision in clause 9 (a) shall be suspended, meaning that charterers do not have an obligation to provide and pay for fuel etc. in such periods. Further, and contrary to the 2005 version, the clause now makes it clear that owners are not entitled to be compensated for unused maintenance days at the end of the charter period. The previous version was of course favourable to owners, but it is fair to say that the new version is more in line with existing practice among major oil companies and other major charterers. Another significant change is that the previously generous arrangement, whereby the vessel was on hire on its way to and from a dry-docking port, has now been amended so that the vessel goes off-hire at the time and place where she is placed at owners’ disposal, and remains off-hire until she is placed at the charterers’ disposal at the place where she was originally released.

While the 2005 form only had a rather limited clause dealing with layup, perhaps as a result of the challenging times with numerous layups over the last few years, the new form has a more comprehensive layup clause. According to clause 33 there is now a regime where charterers shall notify owners of the intention to put the vessel into layup, following which owners shall provide charterers with a description and justification of the nature and extent of the layup, owners’ reasonable estimate of costs and time required to place the vessel in layup, and owners’ reasonable estimate of daily savings and of the costs to reactivate the vessel at the end of the layup period. Upon receipt of owners’ information as aforesaid, charterers shall confirm whether they require the vessel to be laid up. The arrangement is fairly similar to what is otherwise found in change order/variation clauses in other types of contracts. The clause also has provisions related to reactivation, and deals with the situation where the vessel is still in layup on the date of expiry or earlier termination of the charter, where owners shall be entitled to a certain amount of hire as well as the costs of reactivating the vessel etc.

Finally, a number of new standard BIMCO clauses adopted after 2005 have been inserted in the 2017 version, including clauses dealing with infectious or contagious deceases, anti-corruption, sanctions, MLC 2006 etc. Further, the 2017 form now includes the BIMCO dispute resolution clause 2016, which includes Singapore arbitration as an alternative to London and New York.

Overall, we consider the Supplytime 2017 to be a thorough and well-written document, and given its solid foundation in the 2005 form, which has been widely accepted and used in the market, we see no reason why Supplytime 2017 should not become equally successful. However, as we have seen many times when new charterparty revisions are released, the previous versions continue to be used by some for quite a long time. It would not be surprising therefore, if it takes a couple of years before the new form is more frequently used than the previous one.