NYPE 2015 – a major revision

On 15 October 2015, the Association of Ship Brokers and Agents, Baltic and International Maritime Council (“BIMCO”) and the Singapore Maritime Foundation jointly published a revised New York Produce Exchange (“NYPE”) 2015 form.

In addition to NYPE 1993 earlier NYPE forms, such as NYPE 1946, are still in use in some trades although typically they incorporate a number of amendments and include extensive additional rider clauses. The drafting committee’s aim with the 2015 revision was, in the words of BIMCO, to create a “version of NYPE that will have global appeal and which takes proper stock of the most commonly applied amendments and additional clauses used by practitioners in the dry cargo sector” whilst ensuring that the newly incorporated clauses were “relevant, balanced and consistent”.
NYPE 2015 is undoubtedly more extensive than its predecessors. Whilst NYPE 1946 contains 28 clauses, NYPE 2015 runs to a total of 57 clauses together with an appendix of four pages where the vessel’s description is to be inserted. There are also 32 pages of explanatory notes. NYPE 2015 therefore provides far greater standardisation of clauses commonly used.

Notable Changes

In addition to adding a number of new clauses the NYPE 2015 form also amends standard clauses found in earlier versions of the NYPE form. The most notable changes are:

  • Duration/Trip Description (Clause 1) – Owners and charterers are now given a choice between selecting a trip or period time charter. Previous forms provided for period charters only.
  • Redelivery (Clause 4) – After serving an approximate notice of redelivery to owners charterers are only permitted to employ the vessel up until the time specified in the redelivery notice. This is a departure from the general position under English law where such approximate notices, if qualified by the words such as “without prejudice” or “without guarantee”, do not prevent a charterer from employing the vessel up until the final date specified for redelivery under a charter.
  • Bunkers (Clause 9) – All matters relating to bunkers are regulated by very detailed provisions. Owners and charterers alike should therefore review the clause carefully before entering into a charter on the new form.
  • Hire Payments (Clause 11) – Owners are now given the right to withdraw the vessel from service and claim damages for the loss of the remainder of the charter should the charterer fail to pay hire within a three banking day grace period. The grace period does no longer refer to “due to oversight, negligence, errors or omission on the part of the Charterers or their bankers” as was stipulated in NYPE 1993. The grace period now relates to a simple failure to make payment on time. However, NYPE 2015 does not explicitly state that the payment of hire is a condition of the charter so this might be the subject of an amendment when using the charter to avoid disputes on this issue where the English law position is not fully settled.
  • Speed and Consumption (Clause 12) – This clause now includes a continuing warranty by the owners that the vessel as at the date of delivery and “throughout the duration” of the charter complies with the speed and fuel consumption description specified in the new Appendix A. In the previous NYPE forms the speed and consumption warranty only applied as at the date of delivery and was not a continuing warranty. It is also worth noting that the warranty now does not include the words “without guarantee”. Thus the obligation on owners is more although any claims by charterers for underperformance are now expressly limited to compensation for time lost and/or additional fuel consumed. In relation to speed and consumption clause 38 of the new form entitles charterers to give slow steaming orders.
  • Off-Hire (Clause 17) – The exceptions to the vessel being placed off-hire are now extended to include events for which sub-charterers are responsible. The clause also includes named events which will result in the vessel being placed off-hire.
  • Liens (Clause 23) – This clause now covers liens over sub-hires and sub-freights from sub-charters (sub-freights also expressly include dead freight and demurrage).
  • Law and Arbitration (Clause 54) – A broad choice is given in respect of law and arbitration. The parties can choose between New York (US law), London (English law) or Singapore (Singapore law or English law) or any other place/law. It should be noted that if no choice is made by the parties then US law and New York arbitration will apply by default.

The form also includes a number of new clauses in relation to, amongst others, oil pollution, hold cleaning/residue disposal, hull fouling, stevedore damage, sanctions, electronic bills of lading and piracy.

Using NYPE 2015

Whilst the detail of NYPE 2015 is impressive it remains to be seen whether owners and charterers will make use of the new form. Due to the length of NYPE 2015 using the form is likely to require extensive review work from owners and charterers alike to ensure that they incorporate any necessary amendments to the new form and develop shorter rider clauses which do not conflict with the standard wording.

When reviewing the new form certain points should be borne in mind:
Changes have been made to previously standard NYPE clauses so no assumptions should be made in respect of their wording.

There may be conflicts between owners’ and charterers’ existing rider clauses and in the new form these conflicts will need to be resolved (it is worth noting the preamble of NYPE 2015 states that the provisions of any additional clauses shall prevail over those in the main body in the event of any conflict).

Some clauses apply default choices, should the parties not make a choice. Careful review is therefore needed to ensure the parties have made the choices they want.

It remains to be seen how the NYPE 2015 will be received by the dry cargo industry. It is certain however that once the form is taken up by the industry a number of the new and amended clauses may be the subject of review by arbitration tribunals in London, New York and Singapore.