Complete clarity called for on ISPS Code clauses

The BIMCO ISPS Clauses for time and for voyage charterparties were first introduced in response to concerns over the impact of the International Ship and Port Facility Security Code on charterparties. In 2005, to address feedback from the industry, BIMCO revised the wording and published the ISPS/MTSA Clauses which replaced the ISPS Clauses, which were officially withdrawn. London Arbitration 5/14 examined the question of which of the two Clauses was incorporated into a charterparty where a general reference to ISM/ISPS Clauses was used.

A Charterer chartered a vessel from an owner on an amended GENCON form, which was evidenced by a fixture recap email, for the carriage of a cargo of corn in bulk from a Turkish port to a US port. A dispute arose in relation to which party was to bear the cost of security guards ($34,340) ordered by US Customs & Border Protection for the duration of the vessel’s stay at the US discharge port.

The fixture included the provision: “VSL/OWNRS/MANAGERS ARE ISM/ISPS FITTED AND CERTIFIED …VSL TO BE IN POSSESSION OF ALL REQUIRED DOCUMENTATION IN ACCORDANCE WITH LOCAL AND INTERNATIONAL REGULATIONS …OWNER SATISFY THEMSELVES ABT ANY RESTRICTION FOR CALLING MENTIONED L/D PORT DIRECTLY WITH THE AGENTS …BIMCO ISM/ISPS CLAUSES FOR VOYAGE CHARTERS TO APPLY …”

Which version?

The parties disagreed over which of the BIMCO Clauses had been incorporated into the charterparty by the wording “BIMCO ISM/ISPS CLAUSES.” Was it the earlier ISPS Clause or the later ISPS/MTSA version? The BIMCO ISPS Clause, section (d) provides: “Notwithstanding anything to the contrary provided in this Charter Party, any additional costs or expenses whatsoever solely arising out of or related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code including, but not limited to, security guards… shall be for the Charterers’ account, unless such costs or expenses result solely from the Owners’ negligence.”

The BIMCO ISPS/MTSA Clause provides that the cost of security guards is to be for the charterers’ account, “unless such costs or expenses result solely from the negligence of the Owners, Master or crew, or the previous trading of the Vessel, the nationality of the crew or the identity of the Owners’ managers”.

The Charterer submitted that:– The BIMCO ISPS Clause was replaced by the BIMCO ISPS/MTSA Clause in June 2005, and therefore, the latter was incorporated into the charterparty– The US Customs & Border Protection Unit (USCBP) required security guards because the owner had been negligent in failing to ensure that all, or at least a sufficient number, of the crew members had US visas, in order to stand gangway watch while the vessel was in port. This, combined with the nationality of the crew, who were all non-US nationals, rendered the owners liable for the costs of the security guards under the BIMCO ISPS/MTSA ClauseThe Owner argued that:

– It was the BIMCO ISPS Clause which was incorporated into the charterparty
– Where the fixture recap expressly provided that the BIMCO ISPS Clause was to apply, it was irrelevant that the Clause may have been withdrawn by BIMCO; the withdrawal did not prevent the parties from incorporating the original Clause into the charterparty
– In any event, there was no difference between the BIMCO Clauses in relation to the cost of the security guards; under both Clauses it was for the charterers’ account.

Charterparty clarity

With regards to which BIMCO Clause was incorporated into the charterparty, the Tribunal held:

1. The fixture recap referred to two BIMCO provisions, the terms of which were readily ascertainable
2. The original wording of the ISPS Clause had been superseded as BIMCO’s preferred wording by the ISPS/MTSA Clause. However, the new wording was not simply an updating or new edition of the ISPS Clause; the re-naming of the Clause was clearly intentional and reflected the broader scope of its provisions, giving it a distinct identity to the earlier Clause
3. It was not appropriate, to consider the reference to the BIMCO ISPS Clause as generic and, consequently, as including later variations. Although withdrawn, it was open to the parties to agree to incorporate the BIMCO ISPS Clause in its own right. If the parties had wanted the BIMCO ISPS/MTSA Clause to apply, they might have referred (1) to it by its proper name, or (2) to the ISPS Clause (or any later revision thereof). As they did neither, the BIMCO ISPS Clause applied.

Regarding the question of liability for payment of the security guards’ costs, the Tribunal held that it was not negligent for the vessel to arrive at the discharge port without US visas for all crew; as long as the crew stayed on board the vessel, they could not have been considered to have entered the US and, therefore, did not require a valid US visa.

The evidence also fell short of establishing why the USCBP required security guards while the vessel was in port, therefore, defeating the charterer’s case regardless of which BIMCO clause was incorporated. For these reasons, the cost of the security guards fell for the charterer’s account, under the terms of the BIMCO ISPS Clause.

Author information

Nick Austin is a partner in Clyde & Co’s Marine and International Trade department in London. He specialises in the resolution of shipping and commodities disputes through mediation, domestic and international arbitration and litigation. Sabina Ćehajić is a solicitor at Clyde & Co. They can be contacted on nick.austin@clydeco.com and sabina.cehajic@clydeco.com respectively.