United States: BIMCO Releases New Contract Template For Commercial Vessel Sales And Purchases

The Baltic and International Maritime Council (BIMCO) has released SHIPSALE 22, a new standard contract form for use by commercial sellers and purchasers of vessels. SHIPSALE 22 is intended to replace the popular SALEFORM 2012 contract form.

The new SHIPSALE 22 form follows the contents of SALEFORM 2012, but is expected to be easier to use. SHIPSALE 22 adds the "box" format of most other BIMCO forms, which aggregates the key deal-specific inputs in boxes on the first page; the sale clauses have been rearranged to appear in a sequence that follows more closely the manner in which many ship sale transactions are conducted; and several clauses have been updated to reflect modern practices and issues (e.g., conditions precedent, international sanctions and electronic signatures).

Cautions and Considerations

Although SHIPSALE 22 does not dramatically depart from the substance of SALEFORM 2012, there are a number of changes in details, rights and obligations, and time frames that should be carefully reviewed. One specific point for clarification pertains to the changes to applicable law and dispute resolution.

The posted sample form of SHIPSALE 22 appears to materially change the format for selection of applicable law and forum for dispute resolution.

The prior SALEFORM 2012 allowed parties to select one of three clauses and cross out the two unused clauses, with the first option being choice of English law, the Arbitration Act of 1996 and London Maritime Arbitrators Association (LMAA) arbitration in London; the second option being New York law and arbitration in New York under the Society of Maritime Arbitrators (SMA); and the third option being a general choice of law clause with no arbitration provision. Of course, the parties could also modify these clauses, or substitute different agreed language or select a designated court in lieu of arbitration.

In SHIPSALE 22, the language of Box 26, Part I states: "26. Law and arbitration (choose law and arbitration venue. If alternative (g)(Other) is chosen, Clause 26 must be appropriately filled in or replaced, failing which alternative (a)(English law/London arbitration) shall apply)." Clause 26, Part II, however, just gives the first option of English law and LMAA arbitration in London. And there is no "alternative (g)" in Clause 26. The language in Box 26, Part I, or the language in Clause 26, Part II, may be subsequently clarified or revised, and/or it may be BIMCO's intent that designating a choice in Box 26 would generate alternative language in Clause 26 based on one of the versions of the "BIMCO Law and Arbitration Clause 2020" that BIMCO has developed for four venues – London, New York, Singapore and Hong Kong.

Ultimately, the form should facilitate election of applicable law and dispute resolution provisions that are appropriate for the parties and the circumstances of the vessel and transaction at issue. Certainly providing for New York is an option of the prior form that should be retained. It may be useful to provide optional model clauses for arbitration in other leading locations, such as Singapore, and a model choice of law clause such as option "c" in SALEFORM 2012 for parties that elect not to use arbitration, in addition to the "supply your own" option.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.