Introduction
In 2022, the Baltic and International Maritime Council (BIMCO) released its own version of a model ship sale contract (SHIPSALE 22). Almost at the same time, it substantially increased the cost of the 2012 Norwegian sales form (NSF), available on BIMCO’s website, which has been used almost exclusively in the market to date. Does BIMCO, which holds the copyright to the SHIPSALE 22, want to drive the NSF 2012, to which the Norwegian Shipbrokers’ Association holds all rights, out of the market? Or was it time, after 10 years, to:
- implement legal developments in English jurisprudence;
- illuminate new geopolitical circumstances, such as the war in Ukraine, from a legal perspective; and
- meet the challenges of a global crisis (ie, covid-19) in a more legally secure way in order to set a new standard?
The SHIPSALE 22 was designed by industry experts from practice (eg, shipbrokers) and academia (eg, lawyers). According to BIMCO, the aim was to provide a clearer draft adapted to other BIMCO contracts, which are already well known, while respecting the certain chronology of a ship transaction. BIMCO’s intention was to provide an alternative to the model sales contracts already known in the market without completely reinventing the wheel, and thus to make the SHIPSALE 22 feel familiar to users.
The SHIPSALE 22 has a new structure. It is divided into two parts:
- part one – essentially a cover sheet, with all important and variable data; and
- part two – the legal provisions.
The other new features of the SHIPSALE 22 are set out below.
Modern practice
The SHIPSALE 22 has introduced the possibility of:
- virtual closing; and
- electronically signing contracts (clause 27).
These have both become common practice in recent years as a result of the lockdowns and complications triggered by the covid-19 pandemic.
Force majeure and anti-corruption
The SHIPSALE 22 introduces new clauses on:
- force majeure in the flow of payments (clause 5(e)); and
- anti-corruption (clause 22).
These new provisions are based on the realities of the global environment in both factual and political terms.
NSF 2012
The SHIPSALE 22 introduces clauses that are often incorporated in NSF 2012, including:
- the designation of guarantors of the seller and buyer (boxes 5 and 6);
- the removal of excluded items to a separate list (annex B);
- subjects (clause 4);
- the establishment of the underwater inspection as a standard rather than an option (clause 8);
- the requirement to carry out a joint survey for the bunkers and oils that are transferred with the sale (clause 13(a));
- the removal of the transfer documentation into an annex to the sale and purchase agreement (annex A, clause 15);
- the exclusion of rights after a total loss (clause 20(b), last half-sentence);
- sanctions (clause 21) and
- confidentiality (clause 23).
These all represent simplifications for the drafters of the contract, so that no important aspect is forgotten. They also make contracts simpler for users, as the innovations and adjustments are now incorporated in the logical context of the contract and do not appear as so-called “rider clauses” at the end of the NSF 2012, as is often the case.
In the first few years after the publication of NSF 2012, there was a reluctance to replace the tried and tested and well-known NSF 1993 that had prevailed until then, even though it had plenty of shortcomings. Even today, this old model contract is still seen in isolated cases. It can only be assumed that this is due to the partly conservative nature of the shipping industry. However, the NSF 2012 has finally prevailed in the market and it is thought that the same will happen with the SHIPSALE 22, especially since:
- the structure is familiar from other model contracts such as BARECON 2017; and
- an estimated 90-95% has been taken over from the content of the NSF 2012.
The adjustments that have been made are not only justified, but will in all likelihood avoid ambiguities and thus create legal certainty. This saves time and money for all involved.
The SHIPSALE 22 addresses many of the deficiencies of NSF 2012, particularly those that have typically been amended by the parties. However, buyers and sellers have become accustomed to using NSF 2012 and many shipping companies, brokers and lawyers have developed their own adapted version of NSF 2012 over the past 10 years. Practice shows that, despite the publication of the SHIPSALE 22, people continue to work almost exclusively with NSF 2012. This is likely to remain the case for the time being.
https://www.lexology.com/commentary/shipping-transport/9e204455-64c0-45a4-9d47-2328ab361be3?utm_source=ILO+Newsletter&utm_medium=email&utm_content=Newsletter+2023-04-26&utm_campaign=Shipping+%26+Transport+Newsletter