28 years later:

The Latest GENCON Sequel

For the first time since 1994, the GENCON voyage charterparty has been re-visited. ‘GENCON 2022’ is now twice as long, and contains some provisions which are significantly different.

BIMCO’s new voyage charter form ‘GENCON 2022’ is out for a while now and although GENCON is the most widely used voyage charterparty in the dry bulk and general cargo sectors on a worldwide basis, it remains to be seen whether the market will actually prefer this new version over the older ones which we are all so familiar with.

Cancelling clauses
Vessel in open sea

GENCON 2022

A first look at GENCON 2022 shows immediately that there are quite some novelties which charterers should carefully consider before incorporating it into their business. Together with Alex Davey and Naomi Butt of Birketts we have reviewed the new charterparty contract in order to identify the changes. This article is intended to highlight some of the key changes for charterers to be aware of (under English law), which are:

  • A significant change to the Owners’ responsibility clause (and scope of voyage),
    which is similar but not identical to the Hague-Visby regime.
  • An express right of the Master to supervise cargo operations and a different way of
    dealing with stevedore damages.
  • Changes to the NOR and laytime provisions, with new rights of termination and a
    different way of dealing with weather.
  • A new/enhanced right by Owners to suspend and/or terminate the charter if due
    payments are not made.

There are also changes included to the wording relating to Cargo fumigation, Deck cargo, Strikes, General exceptions, Bills of Lading and E-Bills, Substitution, Sub-letting, Agents and Limitation of liability. In addition, BIMCO have incorporated a number of its standard clauses relating to ice, ISPS, sanctions, war risks and piracy. Parties should review these carefully. The are, broadly speaking, considered to favour Owners.

Clauses 1 and 2 – Scope of Contract Voyage and Owners’ Responsibilities

Clause 2 of GENCON 1994 provided Owners with particular protection in the events of
claims, requiring a Charterer to show that there had been “personal” want of due diligence
by Owners. Often the clause was overridden by the Hague or Hague-Visby Rules, by way of
the incorporation of a Clause Paramount.

This has all changed. “Personal” want of due diligence has gone entirely. Instead the clause
appears to incorporate the Hague-Visby Rules for ALL claims (with some amendments), and
to explicitly require the Owners to exercise due diligence to make the vessel seaworthy and
to properly and carefully carry, keep and care for the Cargo.

What is interesting, however, is that the trigger in clause 2(a) is “at the commencement of
loading Cargo” and “at the commencement of each Cargo-carrying voyage”, rather than
“before and at the beginning of the voyage” in the Hague-Visby Rules. The courts referred
to the different stages of voyage charters, the first stage being the approach voyage. There
have been a number of cases involving delays and accidents on approach voyages and the
application and protection (or not) of the Hague-Visby Rules.

It is therefore likely that Owners’ responsibility is intended to be more limited under this new regime. Indeed, clause 1 has also been amended as well and now refers, in particular, to the Vessel being ready to commence loading “unless prevented or hindered by events beyond the Owners’ control”. How this all plays out will remain to be seen.

Therefore, it is likely that the overall approach and application of clauses 1 and 2, to ALL
claims by Charterers before and during the charter will need to be considered carefully, also
remembering the one year time limit under article III(6), the time limit for indemnity claims
under article III(6bis), and the limits of liability in the Hague-Visby Rules, and possibly also
burdens of proof, amongst other things. Therefore, in most cases, please be aware that
Charterers’ claims for breach of charter by Owners may be subject to the one year time bar
of the Hague-Visby Rules.

Clause 4 – Loading and Discharging; Stevedore Damage

The risk, responsibility and expense of loading and discharging operations are still for
Charterers. What is new is that these operations are now subject to the supervision of the
Master. Charterers who also do business in time chartering are probably already familiar
with this concept, which is usually found in time charterparties like NYPE. This is likely to
mean that the Master’s supervision or intervention is only required where the vessel’s
seaworthiness may be affected, but if the Master does intervene and loss or damage is
attributable to that intervention, then the Owners bear the consequences.

There is a change in the Stevedore Damage clause which does not look unfavourable for
Charterers. Whereas GENCON 1994 made Charterers responsible for the physical “repair”
of stevedore damage, GENCON 2022 makes Charterers responsible for the repair “costs”
(and time lost thereby). We assume that the costs must be reasonable, but other than that
this new provision sounds more practical to us. We have experienced that quite some issues
can arise between the parties if charterers take care of repairs of the vessel instead of
owners.

Clause 9 – Notice of Readiness

The standard rule is that if a Vessel tenders an NOR and, subsequently, the Vessel is found
not to be ready at an inspection, then the original NOR was invalid, and no time can start at
all until a new valid NOR is given. However, under clause 6(c) of GENCON 1994 time DID
run from the original NOR, and then stopped from the first “failed” inspection until the vessel
was ready again. (This was intended to prevent a charterer inspecting a vessel after a
lengthy delay, finding that it was not ready, and arguing that no time counted.)

GENCON 2022 provides a much more comprehensive set of clauses in clause 9 which go
one step further and provides that “only such time as is actually lost” is not counted between
the failed inspection and passing inspection. Therefore, for example, if the Charterers
cannot berth or work the vessel anyway, time would probably continue to count.

In addition, there is now a right of termination if the vessel is not found ready after 96 hours
(or 23.59 on the cancelling date) by a joint re-inspection (although it is not clear what
happens if the result of that joint inspection is not agreed).

Clause 10b – Laytime

In GENCON 1994, “weather permitting” was a description of the laydays (like weather working day), so the question was if the weather would have prohibited work, not if it actually caused the delay. This has now changed. Weather is now an exception to laytime running, rather than a description. The actual loading or discharging must be delayed or prevented by weather and it is likely that if there is another, more dominant, reason for delay, bad weather cannot be relied upon to stop laytime. This will mean that laytime is more likely to be running.

Laytime

Clause 16 – Suspension and Termination

This is another significant change. Those handling time charters will be familiar with rights of
withdrawal for non-payment of hire, and so-called “anti-technicality” clauses to prevent very
draconian results from arising. It is a highly contentious area of law, with a lot of court
decisions to provide guidance, and some important tactical considerations that come into
play.

Whilst GENCON 1994 contained a limited right to terminate if demurrage was not paid after
a 96 hours’ notice, and if the vessel was still in or at the load port, clause 16 of GENCON
2022 goes much further. Clause 16 covers non-payment of any freight, demurrage,
deadfreight or any compensation, and is irrespective of where the vessel is. Clause 16(a)
provides for a right to suspend the service, and may not be too controversial. However,
clause 16(b) provides a right to Owners, upon giving 96 hours of receipt by Charterers of
written notice (and Charterers having failed to pay or provide security), to terminate a charter and discharge a cargo, and that this is “not to be considered a breach or deviation under any
Bills of Lading”.

If this clause is included, both Charterers and Owners are strongly advised to take legal
advice on the operation and implications on this right (and the (likely) strict requirement for
any notices to be compliant). Furthermore, the implications under contracts of carriage
evidenced by Bills of Lading which may, or may not incorporate the terms of the voyage
charter, and could well involve different parties from those under the voyage charter, should
not be assumed. Neither should the right to claim damages, losses, expenses or liability.

Key changes in GENCON 2022

These are some of the key changes which we think Charterers should be aware of, but there are more. In summary, GENCON 2022 is a very different charterparty from GENCON 1994. It is likely that, as a matter of English law, some clauses will need the assistance of the courts to assist with interpretation. Care should be taken to try to anticipate the various issues and changes in risk sharing between Charterers and Owners. We recommend that serious consideration is given to the full and complete wording of any charter (and any rider clauses) and, if appropriate, detailed legal advice is taken.

We wish to thank Alex Davey and Naomi Butt of Birketts for their valuable contribution to this article. Please do not hesitate to get in touch with Alex or Naomi or us if you have any questions.

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