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BIMCO contract updates to provide greater clarity

ContractShiprepair & Maintenance: January 2019

 

In December, international shipping association BIMCO updated two of its widely-used standard ship repair contracts, REPAIRCON and MINREPCON. Approval was granted at a meeting of BIMCO’s Documentary Committee, which sat in Copenhagen on 13 December.

 

As the contracts were first published in 2002, it was felt that they were ripe for an update to reflect changes in commercial practice, according to BIMCO communications director Rasmus Nord Jørgensen. Recommendations for updates were devised by a specialist sub-committee which featured a number of shipowners, legal advisers, and a contractors’ representative. Repairers and other interested parties were also consulted.

 

REPAIRCON is used when a shipowner contracts major repair work at a shipyard, and is one of the most commonly-used standard contracts in the industry. In its new 2018 guise, the contract ensures greater clarity and certainty with regard to each party’s interests and obligations.

 

For instance, a reference to work being conducted in accordance with the requirements of “the Parties’ regulatory bodies” has been re-written and is now significantly expanded, citing “the Contractors’ regulatory bodies, the Vessel’s Flag State, Classification Society and any other regulatory bodies stated in the Scope of Work”. Aspects of the contract regarding liabilities and their exclusion, indemnities, and limitation and relevant provisions, have also been re-stated for improved clarity.

 

One major update is the addition of a new provision requiring shipyards to appoint a representative able to agree matters on the contractors’ behalf. This follows the existing requirement for an owner's representative, usually the vessel’s master, to be present. Both representatives must now meet on-board daily to ensure the smooth progress of the contracted repair.

 

MINREPCON is designed for minor repair and maintenance, and was devised as a standardised alternative to the highly variable and sometimes problematic terms offered by contractors. Whereas REPAIRCON was subject to modification and improvement, MINREPCON underwent a full review, particularly regarding its liability and limitation regime.

 

Under MINREPCON’s new previsions, contractors are only liable if it can be proved that loss or damage resulted from their negligence of wilful misconduct. This liability is limited in most cases to ten times the contract price. A clause to prevent false claims by contractors regarding damaged or lost tools is also included, stating that owners have no responsibility for contractors’ property. As in REPAIRCON, knock-for-knock liability still applies in relation to death or personal injury, ensuring that each party is responsible for their own personnel. With regard to limitation, contractors’ rights are balanced by the necessity to hold insurance to cover potential liabilities.

 

Changes not related to liability and limitations include clarification in determination of the contract price. Contractors’ obligations to comply with vessel safety procedures have also been stated more firmly. Further amendments relate to provisions for law and jurisdiction, which were previously linked to the place, such as the port, where the work was undertaken. However, issues faced by owners regarding the application of local law means that this clause has been updated, and now requires both parties to expressly agree the applicable law and jurisdiction for the work to prevent unexpected surprises.

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