Authored by Susan Riitala and Angelina Shum.

SHIPMAN, the BIMCO standard ship management agreement, is widely used as the global standard ship management agreement for both commercial and technical management. Changes in ship management practices and new legislative frameworks have brought about the need for an updated SHIPMAN form since the last update in 2019. The SHIPMAN 2024 was adopted on 22 March 2024. The new form reflects input from a wide range of industry participants. 

Below are some of the key changes that have been included in the new SHIPMAN 2024:

1. EU ETS Provision (Clause 10)

The new Clause 10 deals with responsibility for compliance with EU ETS. In particular, clause 10(d) emphasises the importance of compliance with EU ETS regulations, as a breach of the requirements of Clause 10 allows the innocent party a right to terminate the management agreement. 

2. Management Fee (Clause 13) 

The management fee structure has been updated. It is now split into two parts: 1. an annual management fee payable from vessel delivery from the owner to the manager and 2. a predelivery management fee. This reflects the fact that managers often start work before the date of commencement of the agreement. This fee is payable even if delivery of the vessel does not occur for any reason and is designed to cover in particular any force majeure events. The clause also provides for no set-off and a grossing up requirement. 

3. Change of Control (Clause 18)

This new clause allows parties to terminate the management agreement by serving no less than one month’s notice to the party that had a change of control. This new clause is largely driven by a sanctions compliance perspective. 

4. Managers’ Information System (Clause 21) and Vessel’s information and data (Clause 22)

Clause 21 has been introduced to allow owners access to ship-related data, via their digital platform. However, this platform and information on platform remains the managers’ property. Clause 22 clarifies that all vessel information is the owners’ property. Once the ship management agreement is terminated, all such information will be released by the managers to the owners. These changes have been warranted by the increased use of digital platforms for storing vessel information and the need to regulate the use of this information. 

5. Personal Data Protection (Clause 26)

Clause 26 addresses the need for compliance with data protection legislation (including obligations for monitoring and auditing compliance) by requiring owners and managers to comply with any applicable data protection regulations, including the EU GDPR. 

6. Cyber Security (Clause 27)

An amended version of the BIMCO Cyber Security Clause 2019 has been incorporated to ensure that both parties implement appropriate measures to protect digital environments from cyber-security incidents. This includes the requirement for prompt notification to the other party of the occurrence of a cyber security incident, in order to mitigate its effects. 

7. Sanctions (Clause 28)

The new SHIPMAN has been updated to reflect the sanctions clause used for the Time Charter Parties 2020 and ensure that owners and managers all comply with international sanctions laws and do not engage in/support any activities, services, or trades subject to sanctions. Both managers (and any entity they subcontract services to) and owners (and their vessel) warrant that they are not a sanctioned party. If one party breaches this warranty, the other party may terminate the SHIPMAN and the party in breach must indemnity the other party for all claims, losses, damages, costs and fines. These types of clauses are already regularly seen in existing ship management agreements, so this inclusion is not particularly surprising. 

Conclusion

While it remains to be seen how quickly and to what extent the industry will adopt the new SHIPMAN form, the recent changes are reflective of the increased focus on regulatory compliance, ranging from EU ETS to sanctions and cyber security and will inevitably result in shipowners and managers becoming more aware of the risks associated with these issues.