Explanatory notes to FERTICON 2007 - BIMCO Page 1 of 7

Explanatory notes to FERTICON 2007

The following explanatory notes are given for the guidance of users to help them complete the relevant boxes
behind the provisions of Part II of FERTICON 2007.

Part I
The boxes in Part I are all labelled to guide the parties as to the information to be inserted.

Boxes 1 to 8
These boxes require the parties to fill-in the usual details required in a charter party such as place and date of
description/present position.

Box 10
Reflecting the fact that the draft of both the vessel and the port has a direct bearing on the vessel’s earning ca
Box 10 allows the parties to state the maximum permissible drafts for the discharge ports.

It should be noted that this places an obligation on both parties to meet the draft requirements – for the vesse
the charterers to ensure that the agreed arrival draft is available on the vessel’s arrival. If either of the parties
provisions of Clause 18 (Lighterage) take effect.

Boxes 14 and 15
There are two alternative freight payment methods available under COAL-OREVOY – on shipment or on arriv
fail to state which of the two options are to apply.

Box 16
This box requires the parties to state the type and capacity of vessel’s cargo handling gear. This will make it c
cargo operations in India where grabs are almost the only method of loading fertilizer. It will still be possible in
vessel’s gear.

Box 22
In the box for demurrage the possibility of agreeing on a despatch rate has been added.

Box 26
This important box deals with the parties’ choice of how disputes under or arising out of the charter party are t
charter party and the location of the place of arbitration then English law and London arbitration will prevail.

Part II
Part II starts with a contents page in order to give an overview of the document and to be consistent with othe

Clause 1 Preamble
The preamble states the basic purpose of the agreement between the owners and the charterers that the vess
the agreed cargo and then proceed to the agreed discharge place within a reasonable time.

It was decided to maintain the option in the original Clause 1 of FERTICON for the vessel to lay safely agroun
lie, always afloat or safely aground” in relation to both loading and discharging.

Clause 2 Advance Notices

The Clause describes in two sub-clauses what kind of notices and information that the owners should give to

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structured approach to the giving of ETA notices and cargo requirements. The restriction to the charterers’ agen
their nominees and/or agents”.

Clause 3 Freight
Payment of freight is dealt with in three sub-clauses where (a) and (b) are alternatives which the parties have to
freight payable on shipment, will apply.

The freight is to be calculated on the quantity of cargo stated on the bill of lading. The important issue in this cla
regarding when freight should be paid is for the charterers to pay 90 % on the issue of Bills of Lading with the ba
days. The payment of the balance of freight has been linked to the owners’ submission of documents as this ref
is not dependent on the parties reaching a final agreement on demurrage and despatch.

Sub-clause (a) deals with the payment of freight on shipment, its equivalent in GENCON 1994 is called pre-paid
for payment of the balance of freight. Sub-clause (b) deals with payment of freight on arrival at or off the first po
method and time allowed for payment. Sub-clause (c) deals with what the final freight account is to include in te

Clause 4 Cleanliness of Vessel

This Clause has been inserted in order to deal with the issue of hold cleanliness – ensuring that the vessel tend
condition. The cleanliness of the vessel has an impact on when a valid notice of readiness can be given and ulti
scale and residues of previous cargoes must be removed – this more clearly establishes the standard of cleanli

Consequently, the owners and the master are obliged to make sure that the vessel’s holds are thoroughly clean
This reflects the position under English law which requires a vessel to be “ready” to load when a notice of readin
be “ready” even if there are some routine formalities left to be done, but only if it is completely ready immediatel
vessel’s holds would not count as a routine formality.

In the event that the holds are be found not clean after a notice of readiness has been given the owners must at
be noted that it is assumed that the original notice of readiness is given in good faith – so laytime or time on dem
rejected until once more ready in all respects.

The third paragraph deals with the situation where the charterers have rejected the vessel one or more times af
parties are to appoint jointly an independent surveyor whose decision will be final. Sub-clauses (a) and (b) provi
in the situations where the surveyor accepts respectively rejects the vessel’s holds. Sub-clause (c) deals with th

Clause 5 Loading/Discharging
Sub-clause (a) has been divided into two sub-clauses; (i) providing for the loading and discharging of bulk cargo
discharging is for the charterers account; (ii) dealing with the loading and discharging of bagged cargo, the resp
and discharging on the charterers. The last paragraph of sub-clause (a) provides for the responsibility for the pro

Sub-clause (b) deals with cargo segregation and states that different cargoes should be separated by being loa

Sub-clause (c) deals with the vessel’s cargo handling gear, the default position being that the owners shall give
working order. It should be noted that the vessel is required to carry a test certificate covering the Vessel’s gear
and that the certificate must remain valid for the duration of the charter party.

Lines 99-104 deal with time lost by breakdown of the vessel’s gear. Unless the breakdown is caused by the neg
time on demurrage. The owners have been given the option to hire shore cargo handling equipment of similar o
on demurrage would not be affected as the charterers have not been disadvantaged. This is considered to be fa

The last paragraph of Sub-clause (c) divides the responsibilities and costs for the stevedores and for labour to o
is that it is the charterers’ obligation to provide and pay for shore labour to operate the vessel’s cargo handling g
own cranemen/winchmen unless local regulations prevent that. This provision reflects that many owners would
personnel.

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Clause 6 Draft Survey and Tallying

The Clause is divided into two sub-clauses; (a) dealing with draft survey regarding the weight of bulk cargo and
discharging ports. The charterers must at each loading port provide and pay for independent tallymen acting on

Lines 116-119 deal with the discharge of bagged cargo. The default position is that a declaration by the master
port has been discharged is conclusive evidence of the number of bags. This position is modified, however, if th
their intention to tally the cargo at the hatchway and such tally is carried out.

Clause 7 Stevedore Damage

This is a standard wording found in many BIMCO voyage charter parties. Under the provisions of the Clause the
The master has an obligation to give notice of the damage to the charterers, their port agents and to the stevedo
damage affecting the seaworthiness of the vessel and other damage. The former must be repaired before the ve
latter must be repaired before the completion of the voyage. The costs of the repairs and any time lost are for th

Clause 8 Laydays/Cancelling Date

In order for the clauses to follow a logical structure the Laydays/Cancelling Date Clause has been inserted befo
and cancellation in four sub-clauses.

Sub-clause (a) states the earliest date of when laydays can start with reference to the exception in Clause 10 (L

Sub-clause (b) gives the charterers the right to cancel the charter party in the event that no notice of readiness h
is given within which the charterers should cancel the charter party after the cancelling date has passed.

Sub-clauses (c) and (d) contain a so-called “interpellation” provision, the purpose of it being to avoid the sometim
date but, nevertheless, is legally obliged to tender his vessel, perhaps at a remote port, after having performed a
provision benefits the charterer because advance notice of a delayed vessel will provide greater opportunity to f

The effect of the interpellation is that a vessel at risk of arriving after the cancellation date/time will not have to p
knowing whether or not the charterers will accept or cancel the vessel once it has arrived. The interpellation pro
required to declare their intention to cancel following the owners’ notice that the vessel will be late. This is an im
is that unless there is a relevant clause in the governing charter party the charterers can wait until the vessel ten
not to cancel, thus obliging the owners to make a potentially unnecessary ballast voyage.

If the owners anticipate with reasonable certainty that the vessel will not be ready to load by the agreed cancelli
whether they wish to maintain or cancel the charter party. The charterers will have to declare their option within
the charterers choose to cancel, the owners may save considerable costs by not bringing the vessel to the deliv
at an earlier time. Similarly the charterers will have advance notice of the delay and be able to look for substitute
charterers choose not to cancel the new cancelling date will be the second day after the date that the owners ha

Clause 9 Notice of Readiness

The intention behind this Clause is to give the parties a choice between SHINC and SHEX for both loading and
four sub-clauses, (a) and (b) are alternatives regarding when and how the notice of readiness shall be given at t
the SHEX option. Sub-clauses (c) and (d) are alternatives for when and how the notice of readiness shall be giv
(d) is the SHEX option. The parties have to indicate their choices, otherwise the default position of (a) and (c) w

The paragraph after sub-clause (d) applies to all sub-clauses and states where the notice of readiness is be give
the port or at the usual waiting place.

Clause 10 Laytime
This Clause is split into six sub-clauses. Sub-clause (a) provides for the situation when loading is carried out be
cases half time actually used before the commencement of laydays shall be counted as laytime. The intention is
as possible by giving them some discount. For the time actually used to count as half laytime the charterers mus
commencement of laydays.

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Sub-clause (b) regulates when laytime starts at first or sole loading port. The parties have been given the option
have not made such an agreement will the default position in this sub-clause apply (which is six hours after tend

Sub-clause (c) provides for when laytime starts at the first or sole discharging port and at second or subsequent
port and unless the parties have agreed otherwise, laytime will start 24 hours after tendered notice of readiness
laytime or time on demurrage will start when the vessel arrives at the port.

Sub-clause (d) clarifies that at loading and discharging ports actual time used before commencement of laytime
be noted that Sub-clause 10(a) deals with time used for loading before the commencement of laydays (i.e. outs
situation where loading is within the laydays window but prior to the contractual commencement of laytime and a

Sub-clause (e) states that laytime will not count when the loading or discharging of cargo into or from the Vesse
days officially declared by a port authority.

Sub-clause (f) provides that the time used for moving from the place of waiting to the loading or discharging ber

Clause 11 Demurrage/Despatch
The charterers will be liable to pay demurrage at an agreed rate in Part I when the laydays are used up. The iss
on demurrage and despatch rates. Thus, the owners will have to pay despatch money to the charterers if loadin
at, unless otherwise stated, a rate of one half the demurrage rate daily or pro rata.

Clause 12 Undue Delay

This clause gives the owners a possibility to cancel the charter party in a situation where the vessel has been on
loaded. If the owners decide to cancel under this clause its other claims, e.g. for freight, demurrage etc. will still
in cases where no cargo has been loaded. Once cargo is on board the vessel the owners will have liabilities and
voyage cannot simply be cancelled.

Clause 13 Lien Clause

The owners have a lien on the cargo, certain enumerated sub-freights and other amounts due under the charter
of the cargo at the port of discharge as security for the payment of the enumerated items in the clause. The own
the cargo remains in their possession; the right is lost as soon as the cargo comes into the hands of a consigne
and not against others who are not a party to the charter party.

Regarding sub-freight, this means that the owners are given the right to intercept these sub-freights before they
charterer the lien is lost. The most convenient way to exercise this kind of lien is by notifying the bill of lading ho
paid direct to the owners.

The words “legal fees and other” has been inserted before “costs” in order to clarify what the costs shall include
and Europe.

Clause 14 Bills of Lading

A new bill of lading with the codename FERTICONBILL 2007 has been drafted to be used together with the FER
issue bills of lading which will be binding on the owners who will be regarded as the carrier against whom cargo
present bills of lading imposing a greater liability on the owners than that contained in the charter party, the char
greater liability.

Clause 15 Shifting
This Clause takes effect where Boxes 9 and/or 10 provide for the use of more than one berth or anchorage. In s
time used counts as laytime. However, if the charterers require further moving it will be for their account.

Clause 16 Warping
The owners are allowed to move the vessel up and down alongside the berth in order to make loading or discha
expense, but the time used is for the charterers’ account.

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Clause 17 Seaworthy Trim

The charterers should make sure that the cargo is stowed so as to not render the vessel unseaworthy during the
their account.

Clause 18 Lighterage
The Clause on lighterage is divided into three sub-clauses, sub-clause (a) deals with the situation where the cha
will count from arrival at the lightening place and the lightening operation will be at the charterers’ time, risk and

Sub-clause (b) provides for the situation where the owners do not comply with the agreed maximum draft. The o
the cost of any lightening operation.

Thus, when the charterers do not comply with the agreed maximum permissible draft, the time, risk and costs of
when the owners fail to comply the time, risk and costs for any lightening operation will be for their account.

Sub-clause (c) states that delivery of cargo over side will constitute right and true delivery.

Clause 19 Liberty
This Clause replaces the deviation clause in GENCON and includes a reference to bunkering. The owners have
save life and property and for other reasonable purposes. One should bear in mind that under English law the c
deviate clauses and will give them a very restrictive interpretation. They have been given full effect by the courts
the voyage must not be frustrated.

Clause 20 Overtime
This Clause is divided into two sub-clauses; (a) explains who will be liable to pay overtime. Sub-clause (b) state
during periods that are excepted from laytime the actual time used will count as laytime. If the charterers or the
ordered the overtime the actual time used will not count, unless the vessel is already on demurrage. If ordered b
laytime, unless the vessel is already on demurrage.

Clause 21 Trading History

This Clause provides a warranty by the owners that the vessel’s trading history will not preclude the vessel from

Clause 22 Taxes and Dues

In four sub-clauses it is clarified who pays the taxes and dues on the vessel, cargo, freight and other taxes.

Clause 23 Agency
The vessel should be consigned to agents at the loading and discharging ports. Box 27 gives the parties a choic

Clause 24 Address Commission/Brokerage

This Clause provides for the address commission and the brokerage commission with cross references to the re

Clause 25 BIMCO AMS Clause for Voyage Charter Parties

This is a standard BIMCO Clause providing for compliance with US customs regulations in the event the vessel
the requirements of the clause will assume liability for such failure and also indemnify the other party for any los
compliance will be at the risk of the failing party.

The owner will be regarded as carrier for the purposes of this clause; however that will not affect the identity of t

Clause 26 Protective Clauses

This clause lists a number of protective clauses that will apply to the charter party and to any bills of lading issue

Sub-clause (a) is BIMCO’s General Clause Paramount which makes the Hague-Visby Rules applicable to the c
Responsibility Clause found in GENCON 1994 was replaced with BIMCO’s General Clause Paramount as the la
acceptable to charterers because of its liability regime.

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Sub-clause (b) contains the both-to-blame collision clause. It will be relevant only in a situation where the liability
the currency of the charter party is to be resolved under US law. The clause protects the owners from cargo cla
Rules because of art. IV, r.2 (a), (the error in navigation defence).

The charterers' position in a mutual collision situation is that they cannot claim for loss of or damage to its cargo
against the other vessel involved in the collision.

As there are few collisions where only one vessel has contributed to the accident it is normal for courts to appor
vessel and 30% fault on the other vessel. In such circumstances the non-carrying vessel may claim from the ca
owner's (the charterers) claim. As the charterers have obtained the entire claim for their losses from the non-car
the owners of the carrying vessel for the 30% claimed by the non-carrying vessel. The end result is that the own
for cargo damage for which they are not liable under the Hague Rules (error in navigation defence).

Sub-clause (c) contains a General Average Clause and the New Jason clause. In accordance with BIMCO’s rec
according to the York/Antwerp Rules 1994. The adjustment and settlement of general average is by default in L

The New Jason clause is relevant only when general average is to be adjusted in accordance with US law. This
average even if the event that created the general average situation was due to negligence on part of the owner
of lading issued there under, thereby the owners bind all cargo owners directly.

In sub-clause (d) BIMCO’s Standard War Risks Clause for Voyage Charter Parties (VOYWAR) is found. It starts
clause. In the following three paragraphs (b-d) it deals with the owners rights in war risk situations before and du
deals with the insurance aspect and states that the owners may take out war risk insurances with their hull unde
charterers’ orders the vessel into additional premium areas the charterers must reimburse the owners of such a
to comply with directions etc given by the vessel’s flag state, other governmental bodies, war risks underwriters,
Furthermore, the owners have the liberty to deviate for certain enumerated reasons and it should not be conside
mentioned in the clause.

Clause 27 Strike Clause

This is BIMCO’s standard strike clause. Paragraph (a) is concerned with strikes and lockouts affecting the loadi
charterers to agree to reckon the laydays as if there were no strike and if no such agreement is reached the own
already been loaded the owners must continue with that part, but have the liberty to complete with other cargo.

Paragraph (b) deals with strikes and lockouts affecting the discharging of the cargo. The charterers have the op
demurrage after the expiry of laytime or ordering the vessel to a strike free port.

Paragraph (c) contains an exception which is triggered by strikes and lockouts and may be invoked by either the

Clause 28 BIMCO General Ice Clause for Voyage Charter Parties

This is BIMCO’s general ice clause for voyage charter parties dealing with the parties’ rights and obligations in i

Clause 29 ISPS/MTSA Clause for Voyage Charter Parties 2005

This is BIMCO’s ISPS/MTSA Clause for Voyage Charter Parties 2005 which provides for the compliance with th
Act.

Clause 30 BIMCO Dispute Resolution Clause

This is BIMCO’s Standard Dispute Resolution Clause. The parties should make a choice between (a), (b) and (c
Otherwise, sub-clause (a) which provides for English law will apply. Sub-clause (d) which provides for the referr
observed that the arbitration provisions of the Dispute Resolution Clause are identical to those of BIMCO’s Law
the two Clauses is that the Dispute Resolution Clause contains a mediation provision.

Clause 31 BIMCO Notices Clause

All notices must be in writing in a readable and understandable way, capable of being a record.

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