Lawyers have welcomed Bimco’s new CII clause but warn of more contractual disagreements relating to various types of existing charter contracts.
Existing time charterparties, voyage charters and contracts of affreightment are amongst the contractual arrangements which could generate disputes between shipowners and their charterers.
Obviously, existing contracts make no provision for CII issues or the operational variables that could affect a particular ship’s CII rating. And although contracts can be renegotiated to incorporate a CII-related revision, that depends on the nature of the relationship between owner and charterer.
The operational factors that could have a direct bearing on a vessel’s CII rating include speed reductions through engine power limitation, deviating from the most direct route and increasing voyage distance, or reducing cargo volumes. But shipowners could find themselves in breach of contractual obligations, such as ‘utmost despatch’ for example. External factors, outside of an owner’s control, include weather conditions, port congestion, and unexpected off-hire.
Much will depend on the nature of the /charterer relationship. Lawyers point to past examples of a collaborative approach adopted by both parties to tackle a particular issue together. However, there are also plenty of contractual relationships in shipping that are more adversarial. And in the event that one party wanted to get out of a contract or change it, the relationship might well prevent cooperation.
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In the case of new transactions, more flexibility and change management provisions are important. But lawyers stress that these must be set out in a framework that is enforceable with default outcomes where parties cannot agree.
