Bill of Lading

HEAVYCONRECEIPT

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Non-Negotiable Cargo Receipt to be used with Heavycon Contract

HEAVYCON Contract

(printed in BIMCO Bulletin No. 1, 1986)

Standard Transportation Contract for Heavy and Voluminous Cargoes

Introduction
There has been a remarkable development in heavy lift shipping operations over the past ten years in regard to type of cargoes carried and the type of ships which have come on to the market, notably the semi-submersible ships almost unheard of a couple of years ago, but a type which has become a major element in the movement of heavy lift cargoes.

Much of the growth in heavy lift shipping over the past ten years is due to the expansion of the oil industry, particularly off-shore exploration and production. Moving oil rigs around the world to drilling sites and the transportation of equipment such as platforms and modules are typical examples of heavy lift shipping operations. Many of the newer types of ships in the heavy lift trade cover a wide spectrum of loading and discharging methods such as float-on/float-off, roll-on/roll-off or lift-on/lift-off methods.

Concurrent with the growth of the heavy lift trade an increase in chartering activities has been witnessed; as a result, the need for a uniform contract with standard terms and conditions reflecting the peculiarities and hazards of this particular trade had become imminent. In the absence of such a uniform document, each and every heavy lift company had their own contract form varying from an almost book-size contract to a simple booking note, to the detriment of clarity of entailing serious shortcomings.

On that background, BIMCO was approached some years ago by a shipping company specialised in this particular trade, suggesting that the Documentary Committee of BIMCO should be instrumental in developing a standard document for the heavy lift trade stating, inter alia, as follows;

“With an expected and increasing growth within this particular transportation market, we feel that the various charterers, operators and owners should be interested in reaching a standard contract, which at least would give the advantage of a common bid basis for all.”

As a result of this approach, BIMCO contacted all the important shipping companies known to be engaged in the heavy lift trade in order to establish whether there was general support for the idea of developing such a uniform standard contract. It was encouraging to learn that, in response to this inquiry, each and every company consulted expressed full support for the idea and the following quotation from one of the replies received is most illustrative of the reaction of the trade:

“Our company has indeed a very positive approach to the creation of a world wide accepted standard form of contract for transportation of cargoes such as drilling units, barges, modules, etc. and we will gladly assist in setting up such a form.”

On the background of such clearly demonstrated support from the trade, the Documentary Committee of BIMCO responded to the suggestion of developing a standard contract for heavy lift cargoes by deciding some time ago to set up a sub-committee with the task of preparing a standard contract for the transportation of heavy and voluminous cargoes. The sub-committee was composed of experts from shipping companies with great experience in this particular field, including a broker expert specialised in the chartering of heavy lift tonnage as well as a P&I/ Defence Club representative.

The Baltic and International Maritime Council Standard Transportation Contract for Heavy and Voluminous Cargoes, code name HEAVYCON, is the final result of the work of the sub-committee after proper consultation with trade interests.

The HEAVYCON Contract was officially adopted by the Documentary Committee at its meeting held in Copenhagen in November, 1985.

General Background
Throughout the preparatory drafting work, the sub-committee has been guided by the following principles:

To cover the need for a uniform contract in the heavy lift trade by preparing a modern contract form which takes into account all the peculiarities and hazards of the trade;
To take into account and to take advantage of the general terms and conditions found in various existing private contract forms hitherto used in the trade;
To try to clarify the document by use of apt words and trade terminology so as, hopefully, to obviate or reduce the possibility of disputes on interpretation of clauses;
To prepare a document which aims at striking a fair balance between owners and charterers;
To seek the views of the trade on this project in recognition of the fact that such a document could only be accepted and become a standard document of the trade if a broad consultation with the users in the trade be made; this procedure is in accordance with the general policy of the Documentary Committee of BIMCO when preparing special documents for a special trade.

In compliance herewith, the drafting committee invited and received comments from trade interests, including some of the major charterers regularly using heavy lift ships for their cargoes.

It is encouraging to report that a great number of proposals for improvements or amendments were received from those who were invited to comment. The co-operation with industry on this project has been much appreciated by the drafting committee and every suggestion and recommendation received was carefully considered and, whenever possible, taken into account in the finalisation of the document, bearing in mind the objective of preparing a reasonably balanced and clear document.

Special Observations
The HEAVYCON Contract follows the usual pattern used by BIMCO for a number of years in the preparation of modern charterparties for various trades i.e. the “box-layout” system with separate Part I and Part II.

The main idea behind this division is to have a contract where the filling-in and all amendments and special provisions are made by the parties in Part I, leaving the printed text of Part II unaltered. In this context it may be useful to emphasise that a Standard Contract constitutes an integrated whole and that a change or changes to some of the printed clauses may destroy the over-all balance of the contract as such, a fact which should never be lost sight of when attempting to introduce changes or amendments in the standard clauses in Part II which have been carefully drafted to take care of the contractual and legal aspects.

Part I
As far as Part I is concerned, all items to be agreed for the particular fixture and to be filled in by typewriter have been arranged in boxes in Part I. The boxes contain a brief description of the particular item and a reference to the relevant clause in the printed body of Part II.

If, exceptionally, one or more additional clauses covering special provisions are needed for a particular fixture, Box 28 in Part I may be filled in accordingly.

Some of the boxes to be filled-in in Part I may call for special observations; however, in view of the fact that the details to be written into the boxes should be considered on the background of the provisions in the corresponding clauses in Part II it has been considered more practical to make these observations together with the comments on the standard clauses in Part II, as set out below.

Part II
Clause 1 – Definitions
The point here is to define precisely who are the parties to the contract and to define as well the extent and meaning of some of the words and expressions used in the contract.

Clause 2 – Voyage
The provisions in 2.2 are based upon the presumption that the owners shall perform the voyage “with due despatch” unless otherwise agreed. This would mean that in cases when parties may agree upon the vessel performing at reduced speed, for instance, for the purpose of conserving bunker fuel oil, it must be expressly agreed.

Clause 3 – Deviation/Delays/Part Cargo
3.1 The provisions of this sub-clause are the normal liberty to deviate on the basis that the deviation must be reasonable.
The remaining sub-clauses are more specifically dealing with delays resulting from deviation from the normal route which is supposed to be stated in Box 7 in Part I(sub-clause 3.2) and other delays (sub-clause 3.3.).
3.4 gives the owners the right to load other part cargo(es) in case cargo contracted for is not a full and complete cargo; it is perhaps true to say that in the heavy lift trade the possibility of carrying part cargo only may be rather exceptional.

Clause 4 – Loading and Discharging
It is advisable to study very carefully all the provisions contained herein.
This clause is in two main sections dealing with loading (4.1. to 4.3(c)) and 4.4. to 4.6(c) dealing with discharging. Both sections provide for the charterers to nominate the precise loading (discharging) area or place within an agreed loading (discharging) port, area or place which shall be suitable for the loading (discharging) operation, always subject to the approval of the Owners and the Master.

Moreover, as will be seen, both the loading and discharging sections provide for optional loading and discharging methods and related allocation of costs as between the parties. It is, therefore, important in each individual case, to agree upon and indicate clearly in Box 8 in Part I which loading method shall apply for the particular fixture and the same goes for the discharging section in respect of which Box 9 in Part I should clearly reflect what has been agreed in respect of discharging method to apply.
4.7. defines various costs pertaining to harbour dues, pilotage, etc. payable by the owners, save as otherwise provided for in the contract.

Clause 5 – Permits/Licences
This clause requires the charterers to arrange at their cost all necessary permits and licences pertaining to the loading and discharging operations and for the carriage of the cargo, as required, and also deals with the loss of time if there is a delay in providing such permits/licences.

Clause 6 – Taxes, Charges, etc.
This clause sets out who is responsible for payment of duties, taxes and charges.

Clause 7 – Quarantine
The provisions contained herein clarify the responsibility as between the parties for time lost as a result of quarantine formalities or imposition of health restrictions.

Clause 8 – Commencement of Loading/Cancelling Date
This clause sets out in detail, in five sub-clauses, the provisions for first layday and cancellation including a right vested in owners according to 8.5. to cancel the contract if the cargo, for reasons beyond their control, is not loaded within fourteen days from tendering notice of readiness.
8.2. includes an interpellation provision, the idea of which is that the vessel shall not have to proceed on a long ballast voyage towards the loading port not knowing whether or not the charterers will accept the vessel once she has arrived. With the high capital investment in modern vessels, including heavy lift vessels, combined with high daily running costs, this has not been considered fair or equitable. The interpellation provisions in 8.2. which give clear conditions as to new cancelling date, may therefore be said to reflect the modern tendency in as much as it has become a practice during recent years to include in modern charterparties such an interpellation provision. It should be realised that the procedure foreseen in 8.2. may also be helpful to charterers because it may often allow them to re-arrange their loading schedules.

Clause 9 – Notices
This clause is divided into two parts, i.e., one dealing with advance notices of expected load readiness (9.1.) whereas 9.2. deals with actual notice of reasiness when the vessel is ready to commence loading and discharging as well as notification about expected time of arrival (see 9.3.). Boxes 12 and 13 in Part I should be carefully filled in and adhered to as the notice procedures in the heavy lift trade are important.

Clause 10 – Marine Surveyor/Condition of the Vessel and Cargo
A careful study of this clause is strongly recommended as the Marine Surveyor’s role is of great importance in the heavy lift trade. The owners and the charterers, as principals, must ensure that the marine surveyor(s) be properly instructed and will receive the necessary documentation.

The clause also lays down what are the consequences if transportation approval is not given by the marine surveyor(s) including a cancellation right vested in both parties (10.4.).

In addition, the provisions of 10.5. provide for charterers to warrant that the full description of the cargo in Part I is correct and Box 5 in Part I should carefully and accurately describe the cargo. This sub-clause also spells out what will be the consequences if the cargo is not in accordance with the description in Box 5.

Clause 11 – Freight
This clause covers freight and freight payment procedures and care should be taken to fill in Boxes 15 and 16 in Part I in a proper manner.

Clause 12 – Free Time/Demurrage
Whereas in most other trades the recognised term for expressing time allowed for loading and discharging is “laytime”, the term “Free Time” has been chosen for the HEAVYCON Contract as reflecting a well established and fully recognised trade terminology in the heavy lift trade and which term is also commonly used in the closely related towage business. As will be seen from Box 17 in Part I, the “free time” shall in any case be expressed in total number of running hours. As also follows from 12.1., the free time also covers canal transit time, if applicable.

The clause also includes provisions concerning rate of demurrage and payment of same and parties should ensure that Boxes 17 and 18 in Part I be filled in in a correct manner to reflect what has been agreed during the chartering negotiations in regard to free time and demurrage.

Clause 13 – Mobilisation/Demobilisation
Attention is called to the fact that payment of mobilisation and demobilisation fees is made optional and, thus, subject to negotiation in each individual case; if agreed, Boxes 19 and 20 in Part I should be filled in accordingly.

Clause 14 – Canal Transit
This clause gives clear rules as to time counting, tolls, etc. if transportation is scheduled to pass through a canal according to Box 7 in Part I.
14.2. also regulates the situation of an increase of canal tolls in excess of the amount indicated in Box 21, whereas 14.3. and 14.4. contain provisions to cover the situation that a canal transit becomes impossible for reasons beyond the owners’ control.

Clause 15 – Bunker Escalation
This clause has been drafted on the basis that it works both ways depending on whether the price per ton for bunker oil stated in Box 22 goes up or down.

Clause 16 – Ice
This clause is modelled on the basis of ice clauses found in modern charterparties but adapted to take into consideration the special nature of cargoes to be carried under the HEAVYCON Contract, thus providing, inter alia, that in case of nomination of an alternative safe and ice-free port, such port must have facilities for loading or discharging the cargo in question.

Clause 17 – Dangerous Cargo
This clause covers various contingencies if part of the cargo is of a dangerous nature.

Clause 18 – Lien
The main objective of this clause is to preserve the owners’ contractual right to lien the cargo and any of charterers’ equipment.

Clause 19 – Substitution
According to this clause, a contractual right is vested in the owners to substitute the vessel contracted for but, if exercised, the substitute vessel must be approved by the Marine Surveyor. On the other hand, it follows from the provisions of this clause that there is no contractual obligation imposed upon the owners to make such substitution.

Clause 20 – Termination
Whether the charterers shall have the right to terminate the contract is subject to negotiation in each particular case and, depending on such negotiations, Box 23 may or may not be filled in. If not filled in, Clause 20 does not apply.

Clause 21 – Liability for Cargo – Bill of Lading or Cargo Receipt
In many instances, cargoes carried by heavy lift ships are carried on deck and although often carrying some dramatic looking cargoes such as, for instance, a drilling rig weighing more than 10,000 tons placed on deck, the loading and discharging of which calls for considerable skill, it is probably true to say that there have been comparatively few serious accidents to ships or cargoes in the heavy lift trade, considering the wide variety of heavy weight cargoes carried.

Nevertheless, it is of importance to ensure that the matter of liability for loss of or damage to vessel and cargo be properly covered in the contract and much care has been taken by the drafting committee in the drafting of Clause 21 with a view to ensuring that the subject matter be covered in a clear and equitable manner.

As will be seen from sub-clauses 21.1. and 21.2., the provisions contained herein take care of the allocation of liabilities as between owners and charterers.

Special attention is called to the provisions of sub-clause 21.3., according to which the owners and charterers shall agree and state in Box 24 in Part I whether a bill of lading or a non-negotiable cargo receipt will be issued for the transportation in question. It is understood that in the heavy lift trade it applies in many instances that a bill of lading is not required because no on-sale of the cargo during transit is contemplated.

In such cases and in order to avoid the present-day trauma of non-availability of the original bill of lading at the time of vessel’s arrival at port of discharge, the HEAVYCON Contract offers the possibility of using a non-negotiable cargo receipt when it is certain that a bill of lading is not required. The immediate advantage of a non-negotiable cargo receipt is that it need not be presented at the port of discharge as a condition for receiving the cargo. Without having to wait for the document to arrive, the cargo will be delivered to the party nominated by the charterers on production of proof of identity without any documentary formalities.

It is, therefore, of importance that when negotiating their business, owners and charterers agree as to whether a bill of lading is needed or whether a cargo receipt would suffice and to fill in Box 24 in Part I accordingly. As will be seen, sub-clauses 21.4. and 21.5. are alternative clauses and, depending on what has been agreed and stated in Box 24, one or the other of the alternatives will apply. Both sub-clauses have been drafted on the presumption that, unless otherwise agreed, the cargo shall be shipped on deck; however, to take care of the possibility that in some instances cargo may be shipped under deck, suitable provisions have been included in both 21.4. and 21.5. to cover such a contingency. Attention is also called to the provisions of 21.5.(e) according to which the cargo receipt shall always be claused “All Risks Insurance has been placed for the full value of this cargo by the Charterers and in the name of the Charterers and the Owners”.

In order to ensure harmony between the terms of the HEAVYCON Contract and the Bill of Lading or the Cargo Receipt, as the case may be, a special Bill of Lading form called HEAVYCONBILL Bill of Lading as well as a Cargo Receipt called HEAVYCONRECEIPT Non-Negotiable Cargo Receipt have been prepared by the drafting committee and, as will be seen from sub-clauses 21.4.(a) and 21.5.(a) of the HEAVYCON Contract, either of these forms are prescribed for use in connection with shipments under the HEAVYCON Contract. The HEAVYCONBILL Bill of Lading and the HEAVYCONRECEIPT Cargo Receipt are both reprinted at the end of this article. As will be noticed, in both documents special fill-in boxes marked (a) and (b) have been provided on the front page of each document for the purpose of inserting correct details as to quantity carried on deck (a) and quantity, if any, carried under deck (b); it is important to ensure that the relevant details be inserted in either of the boxes in the correct manner.

A careful study of the provisions of Clause 21 of the HEAVYCON Contract as well as the HEAVYCONBILL and the HEAVYCONRECEIPT documents is recommended.

Clause 22 – Insurance
Closely related to the matters covered by Clause 21 are the provisions concerning insurance laid down in Clause 22 and parties using the HEAVYCON Contract are advised to study carefully the provisions of Clause 22.

Clause 23 – Himalaya Cargo Clause
This clause is for the protection of all servants and agents of the owners (including independent contractors) participating in the performance of the transportation and is not limited to stevedores. It is designed to afford such servants or agents at least the same protection as the shipowners have under bills of lading issued by them or on their behalf.

Clause 24 – Both-to-Blame Collision Clause

Clause 25 – General Average and New Jason Clause
These are standard clauses.

Clause 26 – Strike
This clause is largely taken from strike clauses found in modern charterparties, suitably adapted to take care of the very special nature of cargoes carried under the HEAVYCON Contract and the pattern of this particular trade.

Clause 27 – War Risks
The multitude of different war situations with which the world has been confronted during recent years has shown that some of the war clauses presently used in private contract forms have serious shortcomings and do not explicitly cover all the various situations which may arise nowadays as a result of war or warlike operations.

It has, therefore, been considered necessary to present an up-to-date and explicit war clause with suitable provisions as laid down in Clause 27 which would generally fulfil most requirements, which takes into account the peculiarities of the heavy lift trade and which, it is submitted, is in the interests of both owners and charterers.

Clause 28 – Limitation of Liability
The provisions of this clause intend to cover, inter alia, the special problem of the American “Personal Contract Doctrine”.

Clause 29 – Interests
This is self-explanatory.

Clause 30 – Agency
This is a standard clause which gives the owners the right to appoint the agents at ports of loading and discharge.

Clause 31 – Brokerage
The stipulation in the second paragraph covers the broker(s) against his or their loss of brokerage in the event of breach of contract by either of the parties.

Clause 32 – Law and Arbitration
In a standard contract intended for use on a world-wide basis, it has not been considered reasonable to let the contract be governed by only one law system or to fix only one venue of arbitration which may restrict the use of the contract in practice.

It has, therefore, been considered reasonable to let Clause 32 provide for optional law system and venue of arbitration by leaving it to the parties to make their own choice in each individual case and to fill in Box 27 in Part I accordingly.

As follows from the stipulation in sub-clause 32.4 (line 718) if Box 27 is not filled in, sub-clause 32.1., i.e., English law and arbitration in London will automatically apply.

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