GENCON 2022 – BIMCO’s new flagship contract
On 25 October 2022, BIMCO published an updated version of GENCON, the most widely used dry bulk voyage charter party form worldwide. BIMCO also took the opportunity to update the accompanying CONGENBILL.
The update coincided with the 100th anniversary of the first version of GENCON and was the first revision to the form since 1994.
As a result of both technological, regulatory and commercial developments, and new legal precedents, standard forms have been revised from time to time in order to stay current. Whilst such updates can sometimes be limited to addressing or clarifying fairly narrow points, the BIMCO drafting committee has, in this instance, approached the task with a more ambitious aim of developing the form to be a comprehensive bargain between owners and charterers, that should not require use of extensive additional rider clauses.
The result of that ambition is a much more extensive form that sets out the parties’ obligation in more detail and, in many respects, using clearer language than before. Whilst it remains to be seen how quickly the new form will be adopted – or how popular BIMCO’s box-ready commercial compromises will turn out to be – it is not too early to say that GENCON 2022 contains several improvements that should be welcomed by both owners and charterers.
Users of GENCON 1994 will find the 2020 form familiar and easy to navigate, despite some significant changes and a near doubling in length. The form continues with the “boxes and clauses” format now characteristic of BIMCO standard forms. There has been limited reshuffling of the order of the clauses, and much of the familiar language from previous versions has been retained.
Scope of Contract Voyage and Owners’ Responsibilities
Clause 1 has received a helpful reformatting that makes it easier to read than before. There is also one significant change in that the existing obligation to commence the approach voyage “as soon as [the vessel’s] prior commitments have been completed” is now subject to an exception if the vessel is “prevented or hindered by events beyond the Owners’ control”.
This is a helpful clarification that avoids the harshness of the rule in Monroe Brothers Limited v Ryan that the general exceptions cannot be relied upon before the approach voyage has commenced. As such, owners will not be in breach if they are prevented from immediately departing from the previous discharge port due to, for example, tug strikes or blockages.
On the face of it, the scope of the owners’ responsibilities, as set out in Clause 2, have been significantly increased in the 2022 form. This clause had not materially changed since 1922 and pre-dated the Hague-Visby rules, which meant that the clause provided owners with protection against loss, damage or delay to the cargo, but did not specify protection given in other events such as accidents or financial liabilities outside of the carriage of goods. The uncertainties of risk allocation between owners and charterers often caused parties to replace the allocation with other standards, most commonly by incorporating the Hague-Visby Rules through a Clause Paramount.
In recognition of this, the new Clause 2 has been amended to reflect the benefits owners are afforded in the Hague-Visby Rules, including the important exceptions to carrier liability in Article 4.2 and the 12-month time bar on claims in respect of carried goods. Similarly, the requirement for owners to exercise due diligence to make the vessel seaworthy and to take care of the cargo has now been aligned with the Hague-Visby rules.
The new Clause 2 therefore avoids the need to include a Clause Paramount to ensure that the minimum requirements needed by P&I cover are met and also avoids the confusion on how to apply owners’ Hague-Visby obligations to non-cargo carrying voyages. Given time, this is likely to prove to be a popular development that achieves the aims of the Clause Paramount with much more straightforward language.
Clause 3 is a new clause which regulates all aspects related to cargo during a voyage. Since the last revision of GENCON in 1994, the shipping industry has evolved considerably with increasingly extensive cargo and vessel regulations, such as the IMSBS Code. The new Clause 3 aims to define and clarify the obligations between the parties in relation to risk and liability for damage to cargo during loading, carriage, stowage and discharge. Referencing specific types of cargo carried, such as bulk cargo, environmentally harmful cargo, or cargo not filling vessel holds completely, Clause 3 is a welcome clarification for parties transporting various types of cargo and clearly sets out responsibilities for charters and owners at various points in a voyage.
The 2022 form also includes a new Clause 5, which specifically refers to cargo fumigation and makes it clear that this is at charterers’ risk and cost. Since the previous 1994 form made no specific reference to cargo fumigation at all, this new Clause should improve certainty for both parties when fumigation is required or desirable.
Laytime and Demurrage
The laytime provisions have been expanded significantly since the 1994 form. In the new 2022 form, laytime issues are divided into three sections – Clause 10 (Laytime), Clause 11 (Commencement of Laytime), and Clause 12 (The Running of Laytime). Laytime and demurrage disputes under GENCON have historically been centred around ambiguities in the more economical wording of GENCON 1994, and it is hoped that the more expansive wording will decrease the scope for time-consuming disputes between parties.
As a significant development, Clause 10 incorporates the BIMCO Laytime Definitions for Charter Parties 2013. This expands the definitions of relevant terms and allows the form to be expressed with short terms such as “working day” without the need for a separate definition to avoid ambiguity. A potentially significant consequence of this is that the BIMCO definition of demurrage is “an agreed amount payable to the owner in respect of delay to the Vessel once the laytime has expired”. Accordingly, under GENCON 2022, demurrage would arguably not be the only remedy owners can claim if they have also suffered other losses consequent on the delay such as cargo claims, regardless of the outcome in the pending Supreme Court appeal in the Eternal Bliss case on the meaning of demurrage in charterparties that do not define the term.
Clause 11 deals with the commencement of laytime (subject to the early commencement of loading provisions in Clause 9(d)), which is often a contentious issue among owners and charterers. The new version simplified the question of when laytime commences by reference to the tender of a notice of readiness (NOR) and adopts detailed provisions in Clause 9 (Notice of Readiness) dealing with common issues regarding the timing for serving the NOR. The separation of these questions will arguably make it easier to determine when the laytime regime starts, however, BIMCO has also introduced new complexity by making the commencement of laytime dependant on whether laytime is expressed as SHINC (Sundays and Holidays Included) or SHEX (Sundays and Holidays Excepted) without providing for a default choice if this is not specified.
Clause 12 addresses issues associated with the running of laytime and time for completion of cargo documents and specifies special circumstances which will or will not be considered in the laytime. Clause 12(b), which states that charterers will be liable for delay in loading or discharging as a result of environmental or public health concerns, is the first in the GENCON form’s history to refer directly to delay as a result of environmental issues.
Standard BIMCO Language and Missed Opportunities
GENCON 2022 also includes or incorporates eight BIMCO standard clauses, either for the first time or in an updated version: the Electronic Bills of Lading Clause 2014, the Himalaya Clause 2014, the Ice Clause 2005, the ISPS/MTSA Clause 2005, the Sanctions Clause 2020, VOYWAR 2013, the Piracy Clause 2013 and the Law and Arbitration Clause 2020.
Whilst we expect that this expanded suite of clauses will be welcomed, it could be said that a better approach would have been to incorporate these clauses by reference and with wording to incorporate the latest version at all times. Having the full text set out may be better for readability, however it has the unfortunate effect of making forms fall behind developments sooner than may otherwise be the case. This can particularly be expected to be the case with the VOYWAR and Piracy Clauses which are due for an update already in 2023.
The suite of standard clauses also has some notable omissions, including the AIS Switch-Off Clause and the Infectious or Contagious Diseases Clause. Both these clauses have received significant attention lately, and it is surprising to see a form aiming to be comprehensive that does not address such issues.
BIMCO’s decision not to include a slow steaming or virtual arrival clause also stands out as a missed opportunity. With the industry increasingly focused on finding ways to cut high fuel costs and improve on carbon-intensity, we would have expected a modern form to at least make some provision to encourage the parties to consider the perhaps most obvious way of doing so.
The CONGENBILL is designed to be used with GENCON, and Clause 19 of GENCON 2022 provides that Bills of Lading presented to the Master shall be “no less favourable to the carrier than those of CONGENBILL 2022”.
The CONGENBILL has been kept more up-to-date than GENCON, and had revisions in 2007 and 2016. The amendments in the 2022 version are minor but represent clear improvements. Clause 1 now specifies that if the Charterparty date is blank, the incorporated Charterparty terms will be from the relevant voyage charterparty. Clause 9 now expressly incorporates the law and jurisdiction clause of that Charterparty and this is referenced on the front page.
Whilst none of these points change the position that already follows under English law, these clarifications should in theory reduce the frequency of jurisdictional conflicts as a result of different national rules and/or differing law and jurisdiction clauses in a chain of charterparties.