New BIMCO anti-corruption clause is a welcome step forward for the industry

bimco

The context

Developments in worldwide anti-corruption legislation, including the UK’s draconian and wide-reaching Bribery Act 2010, have led to a variety of anti-corruption clauses being introduced into charterparties and other contracts in recent years, many of them heavily weighted in favour of one of the parties. In this new clause, BIMCO aims to provide the shipping industry with a wording that balances owners’ and charterers’ responsibilities.

The clause

The clause is comparatively short and self-explanatory but, notably, it contains a mechanism for shipowners to issue a Letter of Protest to charterers in the event that a demand for payment, goods or another thing of value is made by a third party and, despite the parties cooperating in taking reasonable steps to resist it, such a demand is not withdrawn. In those circumstances, unless there is evidence to the contrary, it will be deemed that any delay will be as the result of resisting the demand and the vessel will remain on-hire, or time lost will count as laytime/demurrage.

The consequences of failure to comply

If either party fails to comply with anti-corruption legislation, it is to reimburse the other for any fines, penalties or other losses incurred as a result of the breach. It also allows the innocent party to terminate the charter.

Related developments

The release of the new clause comes on the heels of recent guidance from the Chamber of Shipping that moves forward the difficult issue of reconciling the zero-tolerance approach to facilitation payments of the UK’s Act with the realities of where the shipping industry operates, and the widely reported suspension of a senior executive in a shipping company for alleged corruption (albeit when he was previously working in the telecommunications sector). Click here for the new BIMCO clause (available from them free of charge) and here for the related press release.

How we can help

Ince & Co advises a range of clients, including shipowners, charterers, insurers and maritime security companies, on compliance with international anti-corruption standards (including the harsh extra-territorial effect of the UK’s Act) and other regulatory and compliance issues, in relation to charterparties and other contracts that are under negotiation, and designing or updating anti-corruption policies (using a variety of our own templates that deal with the issues in a practical, common sense way, and pricing models suitable to our clients’ needs and wishes).

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