Background

In view of the increased digitalisation of the shipping industry, BIMCO has developed a standard clause for inclusion in charter parties and other contracts which makes it possible for the parties to sign their contracts and accompanying documents electronically.

The publication of the clause should be seen in the context of BIMCO’s general support for digital contractual solutions, including the joint development with the International Chamber of Commerce to develop an electronic bill of lading standard and the update in 2020 of its contract editing system SmartCon adding features enabling users to add electronic signatures to their finalised contracts.

Drafting team

The BIMCO Electronic Signature Clause has been developed by a team representing shipowners, charterers, brokers, FD&D and P&I clubs as well as legal experts. BIMCO is grateful to the following individuals for assisting us with this important project:

• Mr Søren Berg, J. Lauritzen (Chairperson)
• Ms Kelly Vouvoussiras, Rio Tinto
• Mr Jack Richards, Braemar ACM Shipbroking
• Ms Helenka Leary, Gard
• Ms Susan E. Clark, Nordisk Legal Services
• Mr Jonathan Page, Wikborg Rein

BIMCO secretariat support was provided by Christian Hoppe, General Counsel and Mads Wacher Kjærgaard, Manager, Contracts & Clauses.

Explanatory Notes

The following explanatory notes are intended to provide some background to the thinking behind the BIMCO Electronic Signature Clause. If you have any questions about the clause that we have not answered in the explanatory notes, please contact us at contracts@bimco.org and we will be happy to assist.

The clause is designed to enable parties to a contract to sign the contract, and any documents to be signed in connection with it, electronically. The clause also provides for parties to require a handwritten signature on any relevant document in case an electronic signature is not recognised in any applicable jurisdiction. To provide a full “code” for how contracts should be signed electronically, the clause also includes a provision relating to counterparts.

Subclause (a)

The definition of “Electronic Signature” ensures that users of the clause are aligned as to what means of signing can be used. It was considered appropriate to keep the definition as broad as possible, mindful that the purpose of the clause is to be a framework which enables the commercial parties to sign their contracts electronically and it is not for BIMCO to dictate how this should be done.

The current definition largely mirrors the relevant EU legislation (EU Regulation no. 910/2014 on electronic identification and trust services for electronic transactions in the internal market) which has also been incorporated into English law. The allowed methods of signing range from inserting an image of a signature into a document to using dedicated software that uses encryption technologies such as DocuSign and Adobe Sign.

Subclause (b)

This subclause is the main operative part of the clause and allows the parties to sign the contract, and any documents to be signed in connection with it, electronically. Documents to be signed in connection with the contract include, for example, bills of lading and letters of indemnity.

The drafting team considered whether also covering documents in addition to the contract could present challenges in relation to electronic bills of lading and notably whether there could be a conflict with an electronic bill of lading clause (such as the BIMCO Electronic Bills of Lading Clause 2014). It was concluded that the electronic signing of a bill of lading does not in itself transform it into an electronic bill of lading as such a bill can be issued in paper form. Consequently, there should not be a conflict between the two clauses. If, however, electronic bills of lading are issued, users are reminded that P&I cover may be prejudiced unless an electronic trading system approved by the International Group of P&I Clubs is used.

Electronic signatures will only be enforceable if this is permitted by applicable law. Whilst electronic signatures are valid under English law, this may not be the case in all jurisdictions (or for all types of documents). The parties should therefore be aware that, regardless of whether they have included the clause, they should ensure that electronic signatures are recognised not only by the law of the contract but also the relevant law of the jurisdictions of the parties. If electronic signatures are not recognised in such jurisdictions, the parties may obtain a handwritten signature according to subclause (c).

To ensure that an electronic signature would have the same effect as a physical signature, it is stated that the “Electronic Signature is conclusive evidence of the parties’ intention to be legally bound as if such signature had been written by hand”. The word “intention” has been chosen to illustrate that it will ultimately depend on local law, and not the agreement between the parties, whether the electronic signature will be legally binding or not.

The drafting team discussed whether a waiver should be included at the end of the subclause to avoid any objections to the validity of the electronic signature. It was not found necessary as the parties’ intentions should be sufficiently clear by the inclusion of the Electronic Signature Clause in their contract, not to mention that subclause (b) specifically covers “enforceability”.

Subclause (c)

Subclause (c) allows the parties to obtain a physically signed contract in case they need it, for example, in a jurisdiction that does not recognise electronic signatures. It was considered practical and helpful to include such wording to assist the parties if faced with a situation where electronic signatures are not recognised by the governing law of the contract or the parties’ jurisdictions.

Subclause (d)

Whilst counterparts do not relate specifically to electronic signatures, it has been considered helpful to include a full “code” for how a contract should be signed when the parties have agreed the clause.

Whereas subclause (b) applies to the contract and any documents signed in connection with it, subclause (d) is limited to only the contract. This would avoid any potential problems with bills of lading when the clause is used in charter parties as bills will only be signed by one party in three copies, all of which will be considered originals.