Old habits die hard in the towage world

12th January 2013

Simon Tatham explores the differences between the two revised agreements and their older forms, and states ‘neither set is likely to be agreed without amendment’. Here he explores the issues and explains his standpoint.

In 2008 the TOWCON and TOWHIRE agreements were revised. Why is it then that the older forms are still being occasionally used? As always, the devil is in the detail, but I thought it might be helpful to look at the main differences.

Inevitably after 24 years tugowners had become intimately familiar with the old forms, their own regular amendments and standard additional clauses, and old habits die hard. When contracts like this are reviewed by a committee, the end result is often a longer document. Some users might simply prefer the apparent simplicity of the older forms:  some 100 lines less, and no Annex A tug specifications are required which can be seen as a hostage to fortune in case an innocent description becomes an alleged misdescription.

In practice, the main objection to the 2008 forms is the requirement that the hirer pay for damage to the towing gear (which is not insurable). This is often seen as unfair, unless for example on a rescue tow in bad weather, since the condition of the wire and handling of the tow are squarely in the hands of the tug, and the clause might be deleted.

On the other hand, if bunker prices are fluctuating wildly, the later agreements strike a better balance. Similarly if the voyage is to include transits in canal or restricted waters, the 2008 forms are the ones to go for. It is not that frequently that a tow will encounter ice, but if that is the case, again the 2008 forms should be used.  The war and “other risks” clause was also substantially updated although not specifically in contemplation of the security problems now plaguing the industry in the Middle East and elsewhere.  Therefore where the risk of piracy exists, further and additional clausing will be needed in any case.

There are certainly improvements in the wording of the amended forms, for example where a riding crew is necessary, and there is a new provision that if salvage becomes a necessity the parties are to consult with each other first. Bimco has reviewed the liability or knock for knock standard provisions and the later agreements contain minor changes. These are mainly points for us lawyers, but can of course be very important where significant losses, in particular consequential losses, arise. Guaranteed to send most of us to sleep is the new ISPS and (for the U.S. only) MTSA clause, but then these standard Bimco clauses are also to be found in all new Bimco contracts.

Under TOWHIRE specifically, there are further changes made to the bunker provisions, potentially important where the Hirer is picking up the cost of fuel, and designed also to respond to the wave of bad bunker problems in recent years.

Last but not least, the dispute resolution provisions, and that’s where we marine solicitors come in, have been brought into line with modern practice including mediation, which can be no bad thing.

In conclusion, the old contracts dealt adequately with most situations and have been the subject of regular amendment in practice.  The revised forms generally follow the old forms, with the main exceptions I mention above, tighten up the wording in places and certainly do cover a wider range of potential scenarios. Neither set is likely to be agreed without amendment, and a clause that the hirer arrange and pay for local tug assistance at the delivery place is one such example of a common addition. I suspect however we are likely to see a continuation of the older forms for some time if for no other reason than familiarity.

Simon Tatham

Simon Tatham is a partner at Tatham Law and founder member of the www.tugadvise.com service. He has more than 30 years’ experience of shipping law.

Reproduced with kind permission of International Tug & OSV magazine, January/February 2013.