This chapter supplies the background (the “factual matrix”) to interpreting Supplytime, and in particular to the knock-for-knock provisions. It falls into four parts:
- sections 1 and 2 introduce the characters likely to be involved, other than the owners and charterers themselves; what is said in these sections will be well-known to those in the industry, but may be needed by lawyers
- section 3 speaks about the terms of the liability insurance provided to owners of vessels by the P&I Clubs, and includes a detailed commentary on the wording of the “specialist operations” exclusion from the basic cover provided by the Clubs
- section 4 discusses the motivations for a knock-for-knock arrangement — under English law, the commercial purpose of a contractual provision is part of what goes into the interpretation of the wording of the provision
- sections 5-7 deal with how Supplytime as a standard form should be interpreted. Section 5 is factual, and explains the process by which BIMCO charterparty forms are produced and revised. Sections 6 and 7 discuss the interpretation of standard-form contracts, and the use of BIMCO’s “Explanatory Notes”, and are intended for those who wish to see the justification of the methods used in interpreting the clauses of Supplytime in the chapters which follow.
Two detailed discussions have been relegated to endnotes, which on this website are separate files:
- The first endnote deals with some legal consequences of the relationships between the characters introduced in sections 1 and 2.
- The second endnote speaks about the definition of “specialist operations” in the Clubs’ exclusion, where over the last two years there has been a kaleidoscopic variety of wordings.
Explanations of the topics of sections 3, 4 and 5 are often given by committed advocates of the P&I Clubs, or of BIMCO’s work in producing charterparty forms and clauses. I have wanted rather to test these justifications. This does not mean that I am opposed to the institutions themselves. In particular, the main justification often given for the knock-for-knock, in terms of reducing the total cost of insurance for the project, is very clear in the case of a construction project where there is Construction All Risks insurance, but may be less strong in other contexts. However, knock-for-knock arrangements are definitely favoured by those in the industry and I have no doubt that overall there are good reasons for this.
