RightShip – Change to Age Policy

Background

RightShip is a ship approval system which was formed to improve dry bulk safety and quality standards, to identify suitable vessels for trade and draw on the significant ship vetting expertise of global commodity companies.

Effective from January 2018 RightShip has published a new regulation which changes the age trigger for a dry cargo inspection for vessels over 8,000 dwt downwards from 18 years to 14 years, after which an annual acceptable RightShip inspection will be required. This is partly to address an increase in the loss of bulk carriers in the recent years.

RightShip Approval

Assureds should pay attention when chartering dry bulk vessels aged between 14 to 18 years and check whether they have completed inspection to avoid any issues or delays arising with Shippers/Receivers or Sub-Charterers.

An inspection usually takes approximately two working days (1 – 1.5 days for Handy size vessels) and will cost approximately US$7,500 (US$6,500+/- for Handy vessels). Further Information

Legal Precedent

RightShip has not been the subject of much litigation but in “The Silver Constellation” (2008), Mr. Justice David Steel gave judgment on appeal from a London arbitration award on the requirement to obtain Rightship approval. The vessel was on long-term charter and had previously carried a three star rating but on reaching 18 years was downgraded to two stars.

Whilst the charter made no mention of a requirement to have RightShip approval, it did require the vessel to be kept in a thoroughly efficient state in terms of “hull, machinery and equipment, with all certificates necessary to comply with current requirements of all ports of call.” Clause 8 of the NYPE form, obliging owners to follow charterers’ orders was also present.

Charterers asked owners to complete a vetting questionnaire to allow her rating with RightShip to be upgraded, for which owners sought an increased hire rate. Charterers refused and owners did not allow a RightShip inspection to take place. Charterers argued that owners were obliged to secure RightShip approval as the charter required all documents necessary for trading and that, pursuant to clause 8, owners were obliged to allow the RightShip inspection.

On appeal, Steel J found there was no obligation on owners to obtain RightShip approval. The documentary clauses were restricted to those legally imposed by the law of the flag or the law of the country of call. They could not extend to a privately-owned system like RightShip. However, the Judge held that owners’ refusal to allow the inspection was a breach of clause 8 and charterers’ orders to complete the questionnaire and allow an inspection were orders as to employment and owners’ refusal meant the vessel was effectively unemployable on permissible trades under the charter.

The Future

RightShip do not promote bespoke charterparty clauses however many Charterers have contracts of sale or purchase to consider and some of these place express conditions on a ship to be RightShip approved.

Current and possible future changes in RightShip’s regulations warrant extra caution on the part of Charterers to ensure the chartered ship is always RightShip compliant. This is achieved thorough express charter party clauses though the above English authority suggests that, absent a bespoke clause, a time charterer using an NYPE form can still demand from Owners that the ship has RightShip approval where required.

The following is a possible RightShip Clause that can be used both for time and voyage charters.

RightShip Approval

Owners warrant that the Vessel will at all times and at their expense be RightShip approved including compliance with any related new requirements and/or regulations. Any loss (including delay), damage or expense resulting from the Vessel not being RightShip approved will be strictly for Owners’ account who undertake to exercise due diligence to conduct the necessary acceptable RightShip inspections without delay.

If despite the use of due diligence by Owners to obtain RightShip approval the Vessel is delayed for more than ten (10) days from her arrival at port, Charterers shall be entitled to terminate this charter forthwith by giving written notice to Owners.  

For further information please contact the claims department in London, Dubai or Shanghai.

By Wei Wang

Claims Executive, Shanghai Office

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