Security concerns
Personal Data Protection (Clause 26): A new Personal Data Protection clause was introduced requiring owners and managers to comply with any applicable data protection regulation including the European Union General Data Protection Regulation (GDPR). This provision deals with the collection, use, safeguarding, transfer and retention of personal data and the protection of Data Subject’s rights. This clause ties in with the Managers’ Information System (Clause 21) and Vessel’s Information and Data (Clause 22), which BIMCO introduced in SHIPMAN 2024.
Cyber Security (Clause 27): An amended version of BIMCO’s Cyber Security Clause 2019 has been included in Shipman 2024. This amended clause does not include a liability cap as this is already covered in Clause 19 (Responsibilities). The Cyber Security clause was introduced to help managers and owners appropriately implement measures to protect digital environments and provide a procedure for responding to cyber security incidents. The key aspect of this provision is the requirement to promptly notify the other party of the occurrence of a cyber security incident to help mitigate its effect.
Sanctions (Clause 28): A revised version of the BIMCO Sanctions clause used for the Time Charter Parties 2020 with logical amendments to reflect the nature of a ship management agreement has been introduced in SHIPMAN 2024. Owners and managers had to introduce their own sanctions clauses in SHIPMAN 2009 to deal with various sanctions regimes. The need for a sanctions clause in SHIPMAN became even more necessary following Russian sanctions by the EU, UK and US.
Under the new Sanctions clause, owners warrant that neither themselves nor the vessel are a sanctioned party and managers warrant that neither themselves nor any entity which they subcontract services to are a sanctioned party. If during the term of the SHIPMAN, either party breaches the warranty they have given, the other party may terminate the SHIPMAN and the party in breach must indemnify the other party for all claims, losses, damages, costs and fines incurred.
Termination (Clause 31): SHIPMAN 2024 has amended the following provisions of the Termination clause:
Clause 31(b)(iii) – if either party (the Defaulting Party) fails to meet their obligations under Crew Insurances or insurance policies, the other party may give notice to the Defaulting Party requiring them to immediately remedy the default compared to the previous 10-day period under SHIPMAN 2009;
Clause 31(f) – if the parties fail to agree on a change of flag or change of control, either may terminate the SHIPMAN with 1 month’s notice, the result of which will be the termination of the agreement upon the change of flag or change of control or on expiry of the notice period, whichever is earlier; and
Clause 31(i) – if the managers provide crew services in respect of the vessel, the owners shall pay “any severance costs which may be incurred”, not to exceed an agreed amount, whilst in SHIPMAN 2009, the owner’s liability in respect of severance costs was limited to “an equitable proportion of any severance costs incurred”.
Miscellaneous: Finally, there are various more boilerplate provisions that have now been added to SHIPMAN 2024, including anti- corruption, waiver, confidentiality and an electronic signature clause.
This overview has been prepared by international law firm Watson Farley & Williams.
Conclusion
SHIPMAN 2024 introduces necessary updates to the ship management agreement, and it makes it a more solid starting point for the discussions between ship owners and ship managers. It will be the maritime industry that will determine whether SHIPMAN 2024 has enough practical benefits for ship owners and ship managers to move away from SHIPMAN 2009 and adopt SHIPMAN 2024.
120 | ISSUE 109 | SEP 2024 | THE REPORT
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