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ANALYSIS | INSURANCE & COMPLIANCE


access or permission issues. “Sometimes project cargo has been more susceptible because the projects can be one-offs. Tere is not a continuous involvement, so it has been more risky and vulnerable. But now we can capitalise on the high- profile status. People know any exposure would be embarrassing. No one wants to be the one in the photo next to the person who just got caught in a major corruption scandal.”


Compliance evolution Tis is a meaningful change. “Te extractive industries have been worked over because they have to go where the resources are. Some governments handle that well, and some do not.” It can be a fine distinction. Many energy or mining companies are happy to build new roads, rail lines, schools, and hospitals as part of a big project. Tose benefit the local communities around the investment and often the workers and their families. “Sovereign governments can ask for whatever they want,”


said Wrage (pictured right). “When that is roads and schools near the plant or mine, that is fine because of the direct link. Even scholarships for local students. But when the scholarship request is for a local official’s kids to go to school in the USA that is very different. Ten years ago we could not get anyone to focus on compliance with anti-corruption laws. Now there is definitely an appetite for this. We are often seeing people talk about the benefits of compliance.” Te evolution of compliance has also accelerated, said


Dalton at IUMI. “More than ten years ago contracts used to rely on just what was ‘lawful’. Now full compliance is essential to operating. Tere are cases where operators can come into conflict with sanctions between countries or jurisdictions, but there is always reference to the contracts.” Tere is also now much more “robust screening of


insureds,” added Dalton. “Tat is to ensure an operator is not knowingly transacting business that may be prohibited. Tere is always a market that is willing to do it cheaper, but expertise and ability to execute remains a differentiator in project cargo.”


In 2009 the Joint Cargo Committee at IUMI issued an


update on delay-in-start and project cargo contracts. Te major source for marine contracts remains the Baltic


& International Maritime Council (Bimco). “We try to be market neutral, and don’t write in relation to market conditions,” said Grant Hunter, head of contracts and clauses for Bimco. Indeed the three major contracts the council sees used most often in project cargo have changed little in the past ten years. “Te SUPPLYTIME Charter that is used for


offshore vessels was updated in 2005 because it was thought to favour owners, so we tried to rebalance it,” said Hunter. “Te major contract


for one large item is the HEAVYCON, specifically designed for that sector. Tat contract has not seen much change in a decade.” For multiple


project cargoes, Bimco has a HEAVYLIFTVOY contract. “Tat was revised in 2007, to tidy it up based on what we have seen in the sector. Overall I can say that users are very commercially minded. Tey try to find solutions within the contract and don’t run off to arbitration or litigation. Tey just get on with it.” Another contract used often for project cargo is the


PROJECTCON. Tat is still in its original form and is most often used for barge movements because it comprises barge, tug, and cargo components. “Contracts do not have to change much as ships get bigger and more complex,” said Hunter. “Also the industry has become comfortable with the contracts. Tey know them well. People add their own clauses, but there is a commonality that everyone understands.” Dalton at IUMI is a supporter of new technology as it applies to crew and vessel safety, but noted that the trend to ‘smart machines’ that protect themselves has a potential to increase risk. “If you have a motor or pump that shuts itself off to prevent damage or overheating, that may put vessels or operators at risk,” he noted. “Navigation or cargo-handling equipment has to maintain a human interface.” He stressed that there are no major instances of loss or damage due to such a situation, but that he has heard from pilots and vessel officers that it is an increasing concern of theirs.


HLPFI10 | 37


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