BARECON update ponders co-assurance issue
Overview
16 years after its last update, the new edition of BARECON is close to completion.
Useful feedback from industry consultation will help ensure that the updated version reflects changes in commercial bareboat practice as well as legal and insurance developments. The new edition benefits from more clearly defined and easier to apply terms.
Whilst the revision of BARECON was not directly prompted by the UK Supreme Court’s judgment in respect of the Ocean Victory unsafe port claim, the revised BARECON nonetheless aims to clarify the rights and obligations where the owner and bareboat charterer are co-assured under the same insurance(s) and thus hopefully reduce the uncertainty among hull insurers about the consequences of such co-assurance agreements.
Gard representative Adrian Moylan, who is a member of the drafting team revising BIMCO’s BARECON Bareboat Charter Party, said
It’s important to have insurance provisions that preserve the right of the insurers to pursue legally valid claims against third parties, who are external to the insurance arrangements.
Moylan added
Although a co-assurance agreement under a bareboat charter is by no means unique to BARECON, the BIMCO charter party forms are widely used by the shipping & finance industry and it therefore makes sense to clarify the issue in the new edition of BARECON. It may also help the industry to issue suitably worded amendments that can be applied to the insurance provisions of the older BARECON ’89 and 2001 forms.
Grant Hunter, Head of Contracts and Clauses at BIMCO said
The Ocean Victory case is probably something that will draw the attention of hull insurers much more than owners and charterers. The insurers paid out to the owners for the loss of the ship, but were prevented by the co-assurance clause from pursuing their subrogated claim against the third party time charterers who were operating the ship when it was lost. But a timely amendment to the standard wording will not only assist insurers but also hopefully reduce the possibility of increased insurance premiums.
The updated BARECON will be presented to BIMCO’s Documentary Committee when it next meets on 14 November in Copenhagen.
Adrian Moylan, Gard
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Posted:
22 September 2017
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