ISM Code and Charterparties (Circular 03/04/98)

Our Ref: 97/02

3rd April 1998

To Shipbroker Members and their Insurance Brokers

Members will be aware that the first key date for implementation of the ISM Code is 1st July 1998. Many of our Members' principals have already outlined their views on the likely impact on charterparties. Some charterers have sent circulars to Members reminding them that existing charterparty clauses require owners to comply with all applicable regulations and that they must ensure that vessels have all documentation on board required to enable the vessel to perform the charterparty.

The ISM Code is a mandatory provision under the terms of the SOLAS convention 1974 (as amended) and owners will be obliged to comply with the Code by the laws of their flag states. It is also clear that most charterparties will have a general eligibility clause and will not require the insertion of a new provision specifically dealing with the ISM Code. Some principals will, however, wish to make express provision in charterparties.

It is obviously undesirable for there to be a flood of individually drafted clauses. Owners may be nervous that such clauses could be used to impose greater liabilities than would otherwise be the case. In this regard BIMCO has recently published the "BIMCO Standard ISM Clause for Voyage and Time Charterparties". A copy of the clause is attached. In appropriate cases Members may wish to bring the availability of this clause to the attention of their principals.

ITIC does not intend to issue any specific wording but is available to assist its Members in respect of any problems that may arise. ITIC will be writing separately to its shipmanager Members about the effects of the ISM Code on their business.

for ITIM, Managers
International Transport Intermediaries Club Ltd.