BIMCO Bunker Terms 2018
The 2018 Terms successfully advance the industry-wide debate that BIMCO’s 1995 Fuelcon began. It is essential now to continue the debate, particularly during the short time until 2020.
On 2 May 2018, the BIMCO Documentary Committee approved the BIMCO Bunker Terms 2018. The primary goal for what is now the 2018 Terms was to create terms answering the ‘OW Problem’ of double payment, or no payment, when a trader became insolvent and did not pay physical and other ‘downstream’ suppliers. The second goal was to continue the ‘interest balancing’ of the 2005 Terms.
Following on from the 2015 Terms, the 2018 Terms continue to pursue a balance between the interests of shipowners, charterers, bunker traders and suppliers. They also introduce new and important terms focusing on ethical and legal compliance in bunkering transactions, clarify the procedures for payment and recovery, look to resolving bunker quality and quantity disputes, and further define liability limitations.
The 2018 Terms clarify from the 2015 Terms that they are not a ‘contract’ and the Anti-Corruption Clause is entirely new coinciding with the International Bunker Industry Association’s (IBIA) initiative to develop an industry-wide code of ethics.
The 2018 Terms also re-work the 2015 Terms’ limits of liability and adopt most of the 2015 Terms’ ‘Payment’ clause adding further benefits for ‘Sellers’ who are unpaid or at risk of not being paid.
A final major addition of the 2018 Terms tackles the problem of demurrage, sometimes arising from a lack of clarity over when a receiving vessel is to take on fuel, and when the ‘Sellers’ are to be ready to provide it.
Percy Spencer was an electrical engineering genius and in 1945, when hoping to improve radio transmissions inadvertently melted a chocolate bar in his pocket and unintentionally discovering the microwave oven. Dr. Spencer Silver was a scientist for the 3M Company wanting to develop a super strong adhesive. Instead, what he made was a re-usable adhesive that could be stuck, and removed from a surface multiple times. Play-Doh began as a product for cleaning wallpaper, however, consumers weren’t interested in it for cleaning and someone noticed that children used the product for craft projects.
Similar to the microwave oven, Post-It Notes or Play-Doh, the unintended positive innovation should not, however, be the final development of bunker sales terms. The Election Sheet is one idea offering positive but potentially difficult application and title retention is address by the 2018 Terms. Remedies in maritime lien in rem, arbitration, and English choice of law are addressed as well. Finally, new BDN requirements take effect 1 January 2019, the ‘confidentiality’ provisions carry over from 2015, and BIMCO retains copyright over the Terms.
Even with the useful and initially unintended improvements of the 2018 Terms, the ‘OW Problem’ remains, but it can be solved where sales terms are carefully crafted to make sure that suppliers retain title, and receive rights to arrest vessels in rem, until traders (or the ultimate counterparty) pays them.
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