Chris Kidd Head of Shipbuilding and Offshore Construction, Joint Head of Energy & Infrastructure, Partner
CONVERSIONCON: An industry first
BIMCO has recently published CONVERSIONCON, a new standard form contract for conversion projects. The authors of this article were honoured to be part of the drafting team tasked with developing and producing the first industry standard form contract for conversion projects.
CONVERSIONCON has been drafted with flexibility in mind, so that it can be used and adapted for projects of varying scale and nature.
Although CONVERSIONCON, in part, draws on inspiration from NEWBUILDCON and REPAIRCON, it has been drafted to specifically address the requirements of a conversion project where different issues can arise compared to a newbuilding or repair project.
In particular, CONVERSIONCON includes provisions which address:
- delays in delivering the vessel to the shipyard for the work to be undertaken (Clause 3);
- title to the vessel, materials and equipment during the project (Clause 3);
- the design responsibility (Clause 15);
- the ability for the owners to carry out work on the vessel during the project (Clause 18);
- liability for the vessel (Clause 35); and
- the insurance obligations of both parties (Clause 37).
Given the wide-ranging nature of conversion projects, CONVERSIONCON also provides a flexible framework (most notably through the use of BIMCO’s box layout in Part I and the proposed annexes) for the parties to tailor the contract to reflect their specific needs. For example, the parties are prompted to:
- include details relating to the design responsibility, subcontractors, approval process and trials in the specification (which is to be included at Annex A);
- confirm which party is responsible for obtaining the necessary approvals from Class and the regulatory authorities (Box 6);
- set out details in Annex F about the contractors’ liability for liquidated damages in respect of deficiencies in technical requirements;
- input the insurance requirements for the project in Annex H; and
- choose which guarantees the parties will provide (in Box 19), with templates for guarantees included in Annexes D and E.
Although conversion projects have been commonplace across the industry for many years, contracts are often based on bespoke contracts or contracts that were originally designed for other purposes but have subsequently been adapted. It is hoped that CONVERSIONCON will provide parties with a well-balanced basis to negotiate conversion projects going forward and to allow the parties the ability to tailor the contract to their specific needs.
Should you have any queries, or require any advice, in relation to the use of CONVERSIONCON (or, indeed, conversion contracts based on other forms), please contact Chris Kidd or David Choy, or your regular Ince contact.
A copy of CONVERSIONCON can be found on BIMCO’s website at:https://www.bimco.org/Contracts-and-clauses/BIMCO-Contracts/CONVERSIONCON#
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