SOS+
13.06.2022

Mar­ket de­ve­lo­p­ment: BIMCO’s new SHIP­SA­LE 22

Should it be­co­me the new stan­dard in ship sa­le and purcha­se– and is it right for you?

The vast ma­jo­ri­ty of ship sa­le and purcha­se con­tracts are in our ex­pe­ri­ence pre­sent­ly con­clu­ded on the ba­sis of the SALE­FORM 2012. In our view, this po­pu­la­ri­ty is ju­s­ti­fied. Whilst the SALE­FORM of cour­se re­qui­res amen­ding to meet the spe­ci­fic cha­rac­te­ris­tics of a gi­ven tran­sac­tion, its ba­sic ap­proach is hel­pful­ly prag­ma­tic and one with a strong mo­men­tum towards de­li­very of the ves­sel.

In April 2022, BIM­CO re­leased the SALE­FORM 22, its first own stan­dard ship sa­le and purcha­se con­tract.

Against the back­ground of the po­pu­la­ri­ty of the SALE­FORM 2012, the ques­ti­on ari­ses whe­ther the new SHIP­SA­LE 22 is a sen­si­ble al­ter­na­ti­ve and in­de­ed, whe­ther it should be­co­me par­ties’ pre­fer­red choice, or your pre­fer­red choice, when nego­tia­ting a ship sa­le and purcha­se tran­sac­tion.

If you are fa­mi­li­ar with the SALE­FORM, you should not have too much trou­ble be­co­m­ing fa­mi­li­ar with BIMCO’s SHIP­SA­LE. To gi­ve you a feel for how the new SHIP­SA­LE com­pa­res to the SALE­FORM, we have sin­gled out cer­tain items in the new form and se­pa­ra­ted them out in three part­ly sub­jec­ti­ve ca­te­go­ries: “Main chan­ges”, “No chan­ge”, “Tweaks”.

  1. Main chan­ges
  • Un­der the SALE­FORM 2012, the de­po­sit is 10% of the purcha­se pri­ce un­less the par­ties agree other­wi­se. Un­der the SHIP­SA­LE, the­re is no pre-set amount for the de­po­sit. This chan­ge was pos­si­b­ly gui­ded by the re­la­xa­ti­on of the ru­le on pe­n­al­ties un­der Eng­lish law sin­ce the 2015 ru­ling of the House of Lords in Ca­ven­dish v Mak­des­si. Ac­cord­in­gly, the new form might re­sult in nego­tia­ted per­cen­ta­ge fi­gu­res for de­po­sits va­ry­ing much mo­re than they pre­sent­ly do.
  • The si­gna­tu­re bo­xes of the SHIP­SA­LE ex­press­ly pro­vi­de for the si­gna­tures of any gua­ran­tor. This is a very wel­co­me im­pro­ve­ment as the lack of si­gna­tu­re of the gua­ran­tor jeo­par­di­ses the gua­ran­tee. Un­der the SALE­FORM, the lack of re­fe­rence to a guarantor’s si­gna­tu­re is clear­ly a source of er­ror in this re­gard. Even un­der the new form howe­ver, a gua­ran­tee must be trea­ted with gre­at ca­re, in par­ti­cu­lar in ca­se of any sub­se­quent amend­ment to the con­tract.
  • The new SHIP­SA­LE in­clu­des a de­tail­ed “sub­jects” clau­se which sets out the ef­fect of in­clu­ding a sub­ject in the con­tract. Whilst a sub­ject is of­ten sim­ply sta­ted, e.g. “sub BOD”, its ef­fect is of­ten not ful­ly appre­cia­ted by the par­ties. The new “sub­jects” clau­se in the SHIP­SA­LE is the­re­fo­re a hel­pful pro­vi­si­on for par­ties wis­hing to in­clu­de a sub­ject. It should no­ne­theless be said that a sub­ject is by na­tu­re a de­li­ca­te in­stru­ment and pro­per con­si­de­ra­ti­on should be gi­ven in the first place as to whe­ther its pre­cise ef­fect is in li­ne with the par­ties’ in­ten­ti­ons.
  • The un­der­wa­ter in­spec­tion un­der the new SHIP­SA­LE is no lon­ger struc­tu­red as an op­ti­on which needs to be de­cla­red by the buy­ers wi­t­hin a set time li­mit (which was a ra­ther odd de­ve­lo­p­ment in­tro­du­ced in the SALE­FORM 2012). On the other hand, the un­der­wa­ter in­spec­tion must be at least be com­men­ced wi­t­hin two days of the ves­sel being ma­de avail­ab­le for this pur­po­se, or the right to con­duct an in­spec­tion will be deemed wai­ved.
  • The new SHIP­SA­LE pro­hi­bits set-off ex­cept for any al­lo­wed de­duc­tion in re­spect of the cost of re­pai­ring class-af­fec­ting da­ma­ge found du­ring the un­der­wa­ter in­spec­tion. This is so­me­thing of which buy­ers need to be awa­re, as the SALE­FORM does not con­trac­tual­ly pro­hi­bit set-off.
  • The SHIP­SA­LE in­clu­des a few new “boi­ler­pla­te” clau­ses of va­ry­ing im­por­t­ance. One is a sanc­tions clau­se, a sen­si­ble ad­di­ti­on, though the de­fi­ni­ti­on of what is a “Sanc­tio­n­ing Aut­ho­ri­ty” un­der the clau­se is not en­t­i­re­ly clear. Ano­t­her is a no­ta­b­ly wi­de con­fi­den­tia­li­ty clau­se, ex­ten­ding as it does bo­th to the “pro­vi­si­ons” and to the “exis­tence” of the MOA. Al­so, BIMCO’s elec­tro­nic si­gna­tu­re clau­se is in­clu­ded, which ap­pears to be a so­me­what red­un­dant clau­se at least against the back­ground of Eng­lish law and the EU’s eID­AS re­gu­la­ti­on on elec­tro­nic si­gna­tures.
  1. No Chan­ge
  • One aspect which the new SHIP­SA­LE has not ad­dres­sed is the pos­si­ble de­lay in par­ties pro­vi­ding their KYC to the de­po­sit hol­der which in prac­ti­ce is a pre­re­qui­si­te to the buy­er being ab­le to pay the de­po­sit. The SHIP­SA­LE pro­vi­des that this do­cu­men­ta­ti­on must be pro­vi­ded “wi­thout de­lay”, but de­pen­ding on whe­re a par­ty is do­mic­i­led, com­ply­ing with KYC re­qui­re­ments can be time-con­suming and this might ge­ne­ra­te pro­blems. This aspect the­re­fo­re still re­qui­res in­di­vi­du­al con­si­de­ra­ti­on.
  • Un­der the SALE­FORM the­re is so­me de­ba­te as to whe­ther in ca­se of a “Sel­lers’ de­fault” the buy­ers’ en­ti­t­le­ment to com­pen­sa­ti­on de­pends on whe­ther the de­fault is due to seller’s ne­gli­gence. The SHIP­SA­LE has not cla­ri­fied this point.
  1. Tweaks
  • Cer­tain time li­mits have be­en leng­t­he­ned in the SHIP­SA­LE:
    • The time for lod­ging the de­po­sit can be ex­ten­ded by up to two days in ca­se of a tech­ni­cal ban­king is­sue, which hope­ful­ly will re­main ra­re.
    • If the MOA is en­t­e­red in­to sub­ject to in­spec­tion of the ves­sel, the buy­ers have fi­ve days from their in­spec­tion (ra­ther than 72 hours un­der the SALE­FORM) to ac­cept the ves­sel, which seems ra­ther leng­thy.
    • In ca­se class-af­fec­ting un­der­wa­ter da­ma­ge is found which class does not re­qui­re to be re­pai­red be­fo­re the next sche­du­led do­cking, the par­ties un­der the SHIP­SA­LE have three ban­king days to ob­tain re­pair quo­tes (in­s­tead of two un­der the SALE­FORM), and the can­cel­ling date is ex­ten­ded by three ban­king days in such ca­se (the­re is no such ex­ten­si­on un­der the SALE­FORM).
    • In ca­se of dry-do­cking pri­or to de­li­very, the can­cel­ling date can be ex­ten­ded by up to 21 days un­der the SHIP­SA­LE (in­s­tead of 14 days un­der the SALE­FORM).
  • By con­trast, the pos­si­bi­li­ty for the buy­ers to re­quest ad­di­tio­nals de­li­very do­cu­ments for the pur­po­se of their re­gis­tra­ti­on of the ves­sel ex­pi­res two days af­ter re­ce­i­pt of the sel­lers’ first con­trac­tu­al de­li­very no­ti­ce. Un­der the SALE­FORM the­re was no such fi­xed ex­pi­ry date.
  • When it co­mes to quan­ti­fy­ing a de­duc­tion from the purcha­se pri­ce due to class-af­fec­ting un­der­wa­ter da­ma­ge, the SHIP­SA­LE is ar­gu­ab­ly mo­re ge­nerous to the buy­ers as to what co­mes wi­t­hin the esti­ma­ted di­rect cost of re­pair be­cau­se of the ab­sence of the “(la­bour and ma­te­ri­als)” qua­li­fi­ca­ti­on found in the SALE­FORM.
  • Un­der the SHIP­SA­LE, par­ties are promp­ted to agree on the pe­ri­od of va­li­di­ty which the vessel’s cer­ti­fi­ca­tes must have bey­ond the de­li­very date. The­re is no equi­va­lent to this un­der the SALE­FORM.
  • The war­ran­ties as to free­dom from em­ploy­ment com­mit­ments, se­cu­ri­ty in­te­rests and restraint at de­li­very is wi­der un­der the SHIP­SA­LE than un­der the SALE­FORM and the­re­fo­re mo­re buy­er-friend­ly.
  • As re­gards bun­kers and lub­ri­ca­ting oils ROB, the stan­dard wor­d­ing of the SHIP­SA­LE al­lows the par­ties ea­si­ly to agree se­pa­r­ate­ly for each whe­ther the ap­p­li­ca­ble pri­ces are the pri­ces paid by sel­lers or pri­ces pr­e­vai­ling at the place and time of de­li­very.
  • The rea­li­ty of vir­tu­al clo­sings has found its way in­to the SHIP­SA­LE, as the new form prompts the par­ties to agree on whe­ther the clo­sing is to ta­ke place in per­son or vir­tual­ly. Vir­tu­al clo­sings will re­qui­re spe­ci­fic at­ten­ti­on to the clo­sing pro­ce­du­re.
  • In ca­se of buy­ers’ de­fault or sel­lers’ de­fault, com­pen­sa­ti­on un­der the SHIP­SA­LE might be li­mi­ted to the “di­rect los­ses” of the in­no­cent par­ty. This might amount to a de­via­ti­on from the other­wi­se ap­p­li­ca­ble com­pen­sa­ti­on re­gime and is ac­cord­in­gly so­me­thing to watch out for.

So does the new SHIP­SA­LE de­ser­ve to supplant the SALE­FORM as the new in­dus­try stan­dard, and is it right for you?

Over­all, the new form co­mes across as a sen­si­ble evo­lu­ti­on of the SALE­FORM. As the SHIP­SA­LE is tried and tes­ted its ad­van­ta­ges and any draw­backs will be­co­me clea­rer, but for now the­re seems to be no com­pel­ling re­a­son why par­ties should not re­sort to using the new form as the ba­sis for their sa­le and purcha­se tran­sac­tions. If you would li­ke to know whe­ther the new form is right for you and what amend­ments you should be con­si­de­ring for your tran­sac­tion, we in­vi­te you to speak to us.

Ed­ward Ma­gu­in

Rechts­an­walt, Part­ner

So­li­ci­tor (Eng­land & Wales),

Membre du Bar­reau de Pa­ris, Part­ner

Dr. Sa­rah Gah­len

Rechts­an­wäl­tin, Part­ner

Ak­tu­el­le Mel­dun­gen
zum The­ma:

2022-07-20T10:49:45+02:00

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