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BIMCO's Documentary Committee is expected to adopt a new version of the standard contract Bunker Terms in New York on May 2.

The Bunker Terms 2018 have been drafted by representatives from across the bunker industry and are claimed to be "a balanced set of terms and conditions designed to be fair for both buyers and sellers".

In a statement, BIMCO explained: "The aim is to reduce the large number of supplier's terms and conditions used in the industry which slow down the contractual process and create uncertainty due to differing terms. Standard terms and conditions will also help reduce the number of bunker-related contractual disputes."

Key changes

The new form contains detailed delivery provisions for when the bunkers must be delivered, both in situations when the vessel is ready to receive fuel within the agreed delivery window and when it is not.

In terms of payment, the default credit period is 30 days, which corresponds to general market practice. BIMCO argues that to remove the credit period altogether "would not be realistic" given the amount of financing provided to the marine fuel sector, so "buyers would not have the liquidity to cope without the credit".

The BIMCO Bunker Terms also include comprehensive provisions regarding claims management for quantity, quality and delay claims.

New liability cap

According to BIMCO, the main stumbling block to the previous BIMCO Terms 2015 gaining a stronger foothold in the market was that it did not include a maximum limit of the parties' liabilities - something that is invariably negotiated and included in bunker contracts.

The BIMCO Bunker Terms 2018 therefore includes a default limit of the invoice value or USD 500,000, whichever is higher.

"The USD 500,000 is just a default minimum figure that can be discussed by the parties and increased if appropriate," BIMCO noted.

Participants in the drafting process

Drafting a new version of Bunker Terms is said to have been a complex process, with discussions going back and forth between the committee members and the experts on the subcommittee that worked on the document for almost three years.

The BIMCO Documentary Committee consists of over 60 people from across the shipping industry, including: shipowners, ship operators, representatives from P&I clubs and national shipowner and shipbroker associations. The committee also has several observers including the International Group of P&I Clubs, the International Chamber of Shipping, Intertanko, FONASBA and the Maritime Law Association of the US.

Each subcommittee is composed of relevant industry and legal experts. Ship owners Norden and J. Lauritzen also participated in the drafting process.

The trader representatives who helped draft the contract are said to jointly account for 25 percent of the total bunker volume sold globally, which BIMCO sees as "a very strong sign of support for the final result".

The Bunker Terms 2018 also have the support of the International Bunker Industry Association (IBIA), BIMCO noted.

Francis Sarre, chairman of the BIMCO Documentary Committee, commented: "A lot of work has gone into developing a contract that strikes the right balance between the needs of the bunker suppliers and the buyers, and I believe we've been successful."

The BIMCO Documentary Committee has its meeting on May 2, in New York, hosted by the Maritime Law Association of the United States.