Towing contract updates benefit owners

Regular columnist Simon Tatham casts a legal eye over what is to be expected within the 2021 updates of BIMCO’s TOWCON and TOWHIRE standard contracts

Contractual workhorses of the towage world, TOWCON and TOWHIRE 2008 have just been updated with the 2021 editions and are to be published by BIMCO very shortly, after final review by their drafting committee. The finalised forms are eagerly awaited.

That is not to say the existing contracts are defective, far from it. As with any good contract, there comes a time when an update is appropriate.

Moreover, when brokers find themselves striking through words, for example the riding crew and security provisions, or inserting the same additions time and again, it is time to recognise the need for change.

The English courts and arbitrators continue to turn out decisions which also need to be reflected, for example in the liability provisions.

Aside from that, there is a tendency today for contracts to be burdened with an increasingly comprehensive set of boiler-plate clauses which, as the recent pandemic has demonstrated, tend to be overlooked until the unexpected happens, and in some cases are found wanting.

Standard form war, infectious and contagious diseases, sanctions, drugs and alcohol and anti-corruption clauses are examples although these are sometimes tailored to fit the particular trade in question.

These towage contracts have to date been refreshingly free of such small print, but the trend is moving against that. You can at least expect an index to now help pinpoint the clause you need to look at. However, today we look at some of the more practical, day-to-day candidates for change.

One such candidate for amendment is the towing gear provision. Under the existing wording introduced in 2008, the cost of replacing a wire damaged or broken during the tow falls onto the hirer on a new-for-old basis provided this was not caused by the tug owner’s negligence, which is of course difficult to prove. This could operate harshly and takes no account of existing wear and tear.

These are expensive items to replace, quite apart from the deviation and delay rate claims that may go with it.

The new provision contemplated is expected to limit recovery to gear expressly provided for the particular tow moreover allow the parties to take financial account of wear and tear, requiring an inspection and description of the wire’s condition. Let’s hope it proves smooth to administer in practice.

Another is designed to address problems in proving or agreeing delay costs (time and/or extra bunkers) caused by a slow tow. To do so, the new scheme contemplates the tug owner now inserting an estimated average towage speed as a basis for such calculation.

The brokers will then have a tool with which to browbeat the parties into reaching a compromise.

To mitigate against the danger that the estimate becomes in turn a weapon to be used by the hirer as a basis for a claim for under-performance by the tug, or conversely perhaps seek a discount where there is unexpected over-performance, this is not to be performance guaranteed.

An additional ’free time’ provision is to be added for bunkering mid-voyage. Hitherto, the delay rate potentially applied.

Relatedly, it is understood that the sea and port delay rates may be combined into a single rate, the effect of which will avoid arguments as to when a tug is operating in port as opposed to being at sea, for example when having to wait off or very slow steam at an anchorage.

Finally mentioned here is an expected change to deal with a lack of clarity concerning the period during which free time runs at the place of departure.

This can be an issue in large ports, Rotterdam for example, requiring hours of transit to and from the precise place of connection, potentially working to the detriment of the tug owner. Free time under TOWCON 2021 is expected to now run from the pilot station to the place of connection continuing on the tow outwards through the port to when the last outbound pilot disembarks.

Of course, you may expect more, with more changes to TOWCON than TOWHIRE, when you pore over the new forms, and no doubt more commentary.

Simon Tatham is a partner of Tatham & Co and founder member of the TugAdvise.com service

Reproduced with kind permission of International Tug & Salvage