The upsurge in piracy in the Gulf of Aden has continued since the beginning of this year, despite increased security measures. During March 2009, four vessels were reported captured by pirates, and several more vessels were attacked. Against this background, charterers and ship owners have been seeking to develop contractual provisions dealing with piracy, particularly in time charters.
Earlier this month BIMCO published its new Piracy Clause for Time Charter Parties. The Clause is avowedly intended to provide protection to shipowners. However, it helpfully identifies the issues arising from the risk of piracy which charterers should pay heed to when negotiating charters.
The BIMCO Piracy Clause is based on the CONWARTIME 2004 provision. It begins with a general stipulation that a vessel may not, without the shipowners' prior written consent, be ordered through places "where it appears that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable judgement of the Master and/or the Owners, may be, or are likely to be, exposed to any actual, threatened or reported acts of piracy". The Piracy Clause differs from CONWARTIME 2004 in making clear that this shipowners' consent is required even if the risk of piracy exists when the charter, including trading routes, is agreed.
The Piracy Clause also provides that chartered vessels which are attacked or seized by pirates, and even vessels which are simply diverted by charterers following a refusal by shipowners to enter areas affected by piracy, shall at all times remain on hire, so that any time lost as a result of piracy or the threat of piracy will be for the charterers' account. The issue of hire has been, and is likely to continue to be, the focus of much negotiation between shipowners and charterers. The current state of the charter market may afford charterers opportunities for agreeing more favourable terms in this regard.
A further consideration is how piracy clauses such as the BIMCO Piracy Clause will operate alongside war risks clauses such as CONWARTIME 2004. The BIMCO Piracy Clause is intended to complement and supplement CONWARTIME 2004, and there is substantial overlap between the two. There is a concern that where parties seek to negotiate bespoke piracy clauses there is the potential for such provisions to conflict with standard war risks clauses which generally do not attract as much attention. Care is needed to ensure consistency between such provisions. This is not simply a technical, legal consideration. Contractual uncertainty is, for obvious reasons, to be avoided at all costs wherever there are issues arising from piracy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
