BIMCO: Standard Bunker Contract is Balanced for Both Parties, Will Help Manage Risk, Reduce Disputes

Grant Hunter, BIMCO's chief officer for legal and contractual affairs, was speaking at SIBCON 2014 earlier this month.

By having a harmonised set of fair and balanced terms and conditions as the starting point for bunker contract negations, BIMCO's new Standard Bunker Contract will help manage risk and reduce disputes, according to Grant Hunter, BIMCO's chief officer for legal and contractual affairs.

Speaking this month at SIBCON 2014, Hunter told delegates that previous attempts at a standard bunker contract had failed because of a bias towards buyers.

With the new contract, Hunter said BIMCO had "very thoroughly" thought through factors such as sampling provisions and issues of quality, but critically it made sure the contract was fair and balanced in terms both parties' obligations and responsibilities.

"Although BIMCO is a shipowners organisation, this is not a shipowners contract. It is simply not in our interest to produce contracts that are one sided or biased," Hunter stressed.

"What we've produced here is something we believe is fair and balanced for both parties."

Hunter said is was important to understand that the BIMCO Standard Bunker Contract has been designed to be a starting point for negotiations, rather than be a fixed set of terms.

"It is not cast in stone. You are free to make amendments to a BIMCO contract," he said.

"You can make changes to it, you can add your own particular house rules and things that would normally be in your terms and conditions. What we're selling here is a base, boilerplate contract that's fair to both parties and it is a starting point for your negotiations. You can make changes but it is a fair and balanced contract, not an owner's contract."

Hunter said that it had also considered situations where bunkering took place where there were local rules to be adhered to.

"If you go to somewhere like Singapore where there are mandatory, local provisions, they will prevail over the provisions of the contract," he said.

Why Harmonise?

Explaining why the new contract should be used, Hunter said that using a standard set of terms would greatly simplify matters for shipowners, help manage risk, and ultimately reduce disputes.

"From a shipowner's perspective they have to deal with many, many suppliers as they go around the world. Every supplier has got their own set of terms and conditions. It is a very difficult thing to manage," explained Hunter.

"You've got so many different sets of terms and conditions, perhaps over 100 different contracts to deal with, all with different terms and conditions contained within the contract.

"If we're all working from the same set of terms and conditions that have been carefully thought through, that are balanced, that are thorough and comprehensive, that deal with both party's concerns, that has got to be a benefit for the industry."

"So effectively what we're creating with a new standard contract is a way of better managing risks. If more people use standard forms, and this is how its transpired in other areas of shipping ... they're able to manage their risks better."

Hunter noted that by managing risk using such standard terms and conditions, it would also reduce the likelihood of disputes arising from contractual terms.

Work on the new Standard Bunker Contract began last year following requests from the shipping industry, a process that has also seen extensive involvement from the Singapore Shipping Association (SSA) with support from the Singapore Maritime Foundation (SMF).

As Ship & Bunker reported last month, in September the parties met to review the contact, and Hunter says a final version of the Standard Bunker Contract is now almost ready to be published.

"The next step now is for us to put it up for adoption for BIMCOs own documentary committee which meets on the 7th of November, and once its adopted it will be published and it should be available to the industry by the end of the year. So it is very, very imminent indeed," he said.

A copy of the draft version of the contract can be downloaded by clicking here.