The shipping organization Bimco has presented two new standard contracts (term sheets), which are intended to give charterers, in particular, more security.
This concerns cases in which shipowners unexpectedly find themselves in financial difficulties. Bimco has now published two so-called Quiet Enjoyment Letters (QEL) to ensure continued use by the charterer. [ds_preview]
These QELs are to be provided by the lender. The background to this is that a charterer does not have a contractual relationship with the lender. In future, these contractual clauses are intended to ensure that the ship can continue to be used without restriction even if the owner as borrower defaults on payment.
In return, the charterer is to undertake not to terminate the charter agreement and to continue to pay the agreed instalments. In turn, the QELs give the lenders the option of reacting to a changed situation and, for example, appointing a replacement owner without affecting the charter agreement.
Bimco fills a gap in the market
“Our new forms close a gap in the market for which there is currently no standard form,” says Nicholas Fell, Chairman of Bimco’s Documentary Committee. They are advantageous for all parties involved – charterers, lenders and owners.
Representatives of owners (Wah Kwong and Oldendorff Carriers), charterers (BHP and Noble), as well as lenders (Danish Ship Finance) and leasing institutions (CMB Financial Leasing), were involved in the formulation of the QEL in order to find a solution that is in line with the market and fair for all parties.
Accordingly, there are two versions of the QEL: a detailed version, which is signed by all three parties, and a “short version”, which is only signed by the lender. They apply to all bareboat and time charter contracts as well as ship leasing structures and complement the Bimco portfolio, which includes the SHIPTERM, SHIPTERM S and SHIPLEASE term sheets.
