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News: BIMCO publishes new sanctions clause for container vessel Time Charter Parties 2021

15 February 2021

In January 2021, BIMCO published the long-awaited sanctions clause to be used in the container shipping sector.

The clause is distinct from the sanctions clause for Time Charter Parties 2020, as it is intended to cater for the specific practical and commercial realities of the liner trade. The new clause, together with its associated guidance notes and background information are available on the BIMCO website here.

The new BIMCO Sanctions Clause is intended to address the following two key risks for those involved in the container trade: (1) transactions with a ‘Sanctioned Party’ and (2) voyages involving a ‘Sanctioned Cargo’.

In the first scenario, the clause is intended to address the risk that one of the parties to the transaction is, or becomes sanctioned. Owners warrant that neither they (nor the registered, bareboat or disponent owners), managers or the vessel are subject to sanctions and Charterers provide a warranty in respect of themselves and any sub-charterers. In this scenario, the innocent party has the right to terminate the charter party and/or claim damages resulting from a breach of the warranty.

The second scenario is where the Charterers carry cargo that they know or should have known is sanctioned cargo or the carriage of the cargo could render one or more parties subject to a credible risk of being designated as a sanctioned entity (by the UN, EU, UK , US or any other applicable competent authority or government). In this scenario, Charterers provide an indemnity to Owners (unless the cargo is found to have been secreted in containers by or with the complicity of the Master and/or crew) but it does not provide the innocent party with a right to terminate.

The clause is intended as a template for general application and as with any standard clause it may need to be amended to address specific regulations or risks by the parties, as part of their sanctions risk assessment. In view of the complexity of the subject, we recommend that members should review the clause carefully and obtain legal advice before amending it to ensure that they fully understand the consequences of any amendments.