Image credit: BIMCO

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As anticipated, BIMCO's Documentary Committee approved a new set of standard bunker terms in New York on May 2.

The BIMCO Bunker Terms 2018 have been drafted in an effort to improve on the previous edition, and now include a maximum limit of the parties' liabilities - a key change that BIMCO expects will lead to a wider adoption of the contract.

"I think it is a positive step for the industry that representatives for the bunker traders and shipowners have agreed on a standard set of terms, which both parties consider fair and balanced," said Francis Sarre, Chair of the BIMCO Documentary Committee.

The trader representatives who helped draft the contract together are said to account for 25 percent of the total bunker volume sold globally, which BIMCO sees as "a very strong sign of support for the final result".

The BIMCO Bunker Terms 2018 also have the support of the International Bunker Industry Association (IBIA), BIMCO noted.

Francis Sarre hopes the changes to the terms and the broad support will lead to a wide adoption of the standard terms across the industry and help improve and speed up bunker transactions and reduce disputes.

"We all need to improve efficiency and cut costs. With a widely used standard contract all parties involved should save time on drafting contracts and get greater clarity on the contractual obligations and liabilities in the contract. This will hopefully bring more transparency to the bunker industry," Sarre remarked.

Cap on liabilities

The BIMCO Bunker Terms 2018 include a default limit of the invoice value, or USD 500,000, whichever is higher. The USD 500,000 is a default minimum figure that the parties can increase, if appropriate.

Other key changes

The new form also contains detailed delivery provisions for when the bunkers must be delivered, both in situations when the vessel is ready to receive fuel within the agreed delivery window and when it is not.

In terms of payment, the default credit period is 30 days, which corresponds to general market practice. BIMCO argues that to remove the credit period altogether "would not be realistic" given the amount of financing provided to the marine fuel sector, so "buyers would not have the liquidity to cope without the credit".

The BIMCO Bunker Terms also include comprehensive provisions regarding claims management for quantity, quality and delay claims.

Documentary Committee

The BIMCO Documentary Committee consists of over 60 people from across the shipping industry, including: shipowners, ship operators, representatives from P&I clubs and national shipowner and shipbroker associations.

The committee also has several observers including the International Group of P&I Clubs, the International Chamber of Shipping, Intertanko, the Maritime Law Association of the US and FONASBA.

Wednesday's New York meeting was hosted by the Maritime Law Association of the US.