This Chapter tackles clause 19 of Supplytime, which has received very little attention.
The clause consists of six provisions, all of which have been carried forward with only minor changes to the wording from the original (1975) version of Supplytime.
The first three provisions are in wording which is standard in time charters of ordinary cargo vessels. They give owners a lien over cargoes and equipment (in Supplytime 2017, cargoes equipment and fuel, but only if they belong to the charterers, which is likely to give rise to particular complications with regard to fuel) in respect of amounts due from the charterers; give charterers a lien over the vessel (which under English law cannot take effect in accordance with the meaning of “lien”, and will be difficult to enforce) in respect of amounts due from the owners; and prohibit the charterers from making contracts which create a lien over the vessel (a provision which is almost universally flouted by time-charterers of cargo vessels when they stem bunkers). I hope that my discussion of this prohibition, in particular, will be useful in relation to time charters generally, as well as in relation to offshore vessels.
The fourth provision requires the charterers to provide security (“take reasonable steps within a reasonable time”) to obtain the release of the vessel if she is arrested by a third party whose right to arrest arose from the operation of the vessel under the charterparty (that is, the third party’s claim was caused by the work the vessel was doing for the charterers). The fifth provision goes further, and may be considered unreasonable, as it may apply if the third party’s right to arrest the vessel arose during the charter period (even if it was not caused by the work the vessel was doing for the charterers) and by its wording this provision requires the charterers to indemnify the owners in respect of all the consequences of an arrest, which will include the detention of the vessel even if security was provided within a reasonable time, and even if it would be only have been possible to obtain the release of the vessel by providing security for an unreasonable amount or on unreasonable terms.
The sixth provision is intended to fill a gap in the allocation of liabilities under Supplytime. Under the knock-for-knock arrangement each party is responsible for claims from its own personnel and damage to its own property. Towcon (another BIMCO contract with a knock-for-knock regime) also allocates claims from third parties arising physically by way of the tug to the tugowners and claims arising by way of the tow to the hirers; Supplytime partially mirrors this by allocating claims arising by way of any tow or of the cargo to charterers but it does not allocate claims arising physically by way of the vessel (as distinct from the cargo) to the owners. The final provision in clause 19 is intended instead to allocate to the charterers some claims which arise physically by way of the vessel and which are claims by third parties against the owners. But this allocation of claims to the charterers depends on either “the operation of the Vessel by the Charterers” — which proves to be almost impenetrably obscure — or on “neglect by the Charterers”, which makes this provision go contrary to the aims of the knock-for-knock arrangement, both in terms of avoiding expensive legal proceedings about whose negligence caused an incident, and in terms of allowing each risk to which the project as a whole is exposed to be insured only once — the owners and the charterers will both have to insure against the risk that the operation of the vessel will cause injury or damage to a third party.
I am not aware of any arbitration awards with regard to this clause of Supplytime (if anyone feels able to give me sight of any award, it will be gratefully received and treated as confidential). But if there have been no arbitrations on this clause, that may be not because of the clarity of its provisions but because offshore operations have been conducted without giving rise to injury or damage to third parties outside the knock-for-knock arrangement.
