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24 July 2013
A new standard form charter party for personnel transfer and support vessels servicing offshore wind farms is expected to be released soon by the Baltic and International Maritime Council (BIMCO) in response to industry requests for standardisation.
Offshore wind is an increasingly important source of renewable energy. Several wind farms are already operational and numerous projects are at various stages of development, in particular in northern Europe, where the United Kingdom, Germany and Denmark have emerged as market leaders.
The installation and maintenance of such offshore wind farms require personnel and equipment, and consequently transportation, to and from the field. Specialised vessels – typically small monohull or catamaran vessels that carry up to 12 passengers – offer such services. These have usually been fixed on the basis of an amended BIMCO Supplytime 2005 – the standard time charter for service vessels in the offshore oil and gas industry.
In a first step towards standardisation, BIMCO is expected soon to release the 'Windtime' standard template for the chartering of such vessels. A consultation draft was released by BIMCO earlier in 2013. This update examines some of the features expected to be included in the new template.
The Windtime follows the traditional time charter structure, whereby the owner procures that the vessel and crew are ready to carry out the charterer's orders for the agreed charter period. However, since the transfer of personnel and equipment to offshore turbines is carried out usually only during daylight, the Windtime provides for the concept of a 'working day', which is defined on the basis of a specified number of working hours a day. Clause 8 establishes that services carried out during the established working day are covered by the general working-day rate payable by the charterer.
However, the charterer may require additional work on any particular day(s), provided that this does not contravene applicable laws and regulations on crew working hours. In such case, an excess hourly rate is payable. Alternatively, the charterer may require a general increase to a 24-hour working day, in which case a pre-agreed 24-hour rate shall apply.
If the owner fails to deliver the vessel to the charterer within the specified cancellation period, the charterer may cancel the charter. Irrespective of whether the charter is cancelled or maintained, the charterer could suffer losses due to delay or non-delivery for example, due to disruption of the charterer's installation operations.
Clauses 2(d), (e) and (f) provide three options regarding the owner's liability in this situation:
The consultation draft does not state which of the above options should be the default position where no selection is made. It is expected that this will be clarified in the final version of the template.
The liability regime in Clause 16(a) of the Windtime is based on a 'knock-for-knock' principle for damage to personnel and property. Designed to avoid duplication of insurance and reduce litigation, this principle provides that each contracting party bears responsibility for:
The allocation of liability applies irrespective of cause. The exception is where the loss, damage, injury or death results from an act or omission of the indemnified party's group committed with the intent to cause such loss or damage, or recklessly and with knowledge that such loss, damage, injury or death would probably result.
Clause 17 splits the risk of pollution so that the owner is liable (and shall indemnify the charterer from) pollution emanating from the vessel as a result of acts or omissions of the owner or its personnel, and the charterer is liable for pollution emanating from anything towed by the vessel or cargo laden on the vessel or her tow, as well as property of the charterer, its contractors, co-venturers and customers, irrespective of the cause.
Clause 16(b) of the charter includes a mutual exclusion of liability for the other party's:
In a situation where, for example, one of the charterer's subcontractors puts forward a claim against the owner for loss of profit due to delays in installation work caused by the vessel, the owner may not have a recourse claim against the charterer for such liability. As these types of liability may be substantial, parties are advised to include a right to be indemnified from such claims from the other party's subcontractors (similar to the equivalent provision in the Supplytime 2005).
The Windtime provides for a mutual liability cap which may be specifically agreed or amount to 20% of the total sum of hire due pursuant to the charter period as per Clause 16(c). However, the exclusions from the cap should be noted when considering the overall risk exposure under the charter.
The Windtime may serve as a practical template for a high number of fixtures of personnel transfer and support vessels for the offshore wind industry. It will be interesting to see to what extent the industry embraces this first step towards standardisation of contracts, and what further efforts may be made in the future.
For further information please contact Oddbjørn Slinning or Guy C Leonard at Wikborg, Rein & Co's Oslo office by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email (firstname.lastname@example.org or email@example.com). Alternatively, contact Andreas Fjærvoll-Larsen at Wikborg, Rein & Co's London office by telephone (+44 20 7367 0321), fax (+44 771 130 4251) or email (firstname.lastname@example.org).
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Guy C Leonard