The New SEV-GUARDCON 2022

The New SEV-GUARDCON 2022

THE NEW SEV-GUARDCON 2022

BIMCO has published the new SEV-GUARDCON contract in January 2022. This is not just a mere update of the 2012 Guardcon, but rather a different type of contract. One could say that it is a version of the 2012 Guardcon specifically thought for the employment of Security Escort Vessels (SEV).

As stated by BIMCO, the new SEV-GUARDCON “has been drafted to enable for cross-border transits where an SEV is needed to accompany the owners’ vessel through the Exclusive Economic Zone (EEZ) or territorial waters of more than one state.” And maybe more importantly, BIMCO adds “it only applies to the use of SEVs. Owners who require escort vessel services combined with armed guards on board their ship should either use a SEV-GUARDCON together with a GUARDCON or use a bespoke contract.”

This very first difference between the two Guardcons can therefore be found right there, in its mean and purpose. Guardcon was and continues to be the standard BIMCO contract for the employment of security wards on board vessels, whereas the new SEV-GUARDCON 2022 is called out to be the standard contract for security services to be provided by Security Escort Vessels.

For those not familiar with this industry, this service consists of, not a group of armed guards on board the very vessel they aim to protect but, rather, a group of armed guards on board a patrol boat which sails as close as practically and legally possible to the vessel they aim to protect, during a transit through waters which are considered to be dangerous and subject to piracy attacks. This patrol boat is what we technically refer to as a Security Escort Vessel. The company that provides these services is technically referred to as a Private Maritime (or sometimes Military) Security Company (“PMSC”), but the SEV-GUARDCON of course refers to it as the “contractor”.

Let’s see which we consider to be the main features of the SEV-GUARDCON 2022.

Owners

Box 3 of the contract defines “Owners” as the owner or the disponent owner of the vessel. This is to allow not only registered owners to contract these security services, but of course to allow those effectively operating the ship to do so. For example, a charterer by demise or bareboat charterer.

There is one problem with this concept of “owner” however when the contract deals with payment of the services contracted to the contractor. That company, and no other, named there in that box, is the one responsible for the payment of the security services (Clause 8(a)).

It sometimes happens that it is not the Owner proper but another company which contracts these services to the security services provider. It can be for example a manager of the Owner’s fleet. This other company has assets and would think twice before leaving a security service unpaid. But if that company puts the name of the registered owner in box 3, an owner who can sometimes be, say, just a post code in the Bahamas, the contractor is left unprotected for unpayment.

We therefore consider sensible to advise contractors to seek legal advice and to take any necessary payment security measures prior to entering into an SEV-GUARDCON 2022.

The SEV

A new Box 6 has been introduced to identify the SEV. This box requires to  identify her by name, call sign and IMO number.

Questions arise as to whether the contractor will be breaching the contract if, once having confirmed that a given vessel will be delivering the service, it actually delivers a different vessel.

The initial logical answer would have to be affirmative. The same principle that applies in other shipping contracts may be invoked, say a charterparty, in which where the owner has agreed to provide vessel A but in fact delivers vessel B.

Quite conveniently, the SEV-GUARDCON impliedly foresees the need in some transits to deploy not one but several SEVs, despite the fact that box 6 does not seem to offer sufficient space to include them all. Nor does the contract make express provision to actually allow for a change of the SEV should any circumstances arise that make such a change necessary. But in any event, as it is not expressly prohibited and, in the end, it is the norm in the industry, we should conclude that it is of course allowed.

We believe therefore sensible to provide PMSCs with the following options. They can of course not provide the name, call sign and IMO number of any SEV they operate. Instead, they could include the usual acronym “TBN”. Also, they could include a rider clause granting the contractor the right to deploy any SEV despite having provided one specific vessel in box 6, and the right to change the SEV at any time and for any reason, provided of course the services contracted are not put at risk.

The Maritime Liaison Officer

The contract includes a new Box 8 in which some specifics of the security services to be provided are to be detailed. This is a confirmation of whether arms will be on board the SEV, of the number of officers on board the SEV and of the name of the Maritime Liaison Officer (MLO).

It is the first time that the figure of the MLO comes regulated in a Guardcon type contract, and it is good news that its role is incorporated in the agreement.

The first question is again what happens if the MLO has to be replaced, once his name has already been expressly agreed in that box. The definition of MLO provided by the contract in Clause 1 does not refer to one person, but to “personnel”. And the contract also says that if the MLO needs to be taken out of service, his transportation costs must be paid by the contractor (Article 7(a)(vi)). Although no express provision is provided, the above could, and should, be interpreted in that the contract allows for an MLO replacement.

However, it is good advice to contractors that a clause expressly allowing for the change of MLO is included in the agreement, in order to avoid unwanted claims.

 

The contract quite helpfully clarifies that the MLO is part of the contractor’s personnel. It is not a member of the crew of the vessel which is being protected, nor it is considered part of the crew of the SEV protecting the vessel. It is the person deployed on the SEV (or on the Owner’s vessel) for the performance of the contracted security services.

Spread over many other clauses (see for example Clause 7(a)(v)), one can see what the role of the MLO is. Essentially, what the SEV-GUARDCON 2022 has done is to compile the role which the MLO has been undertaking in the industry over the past years. By way of example, the contractor has a duty to maintain constant contact with the MLO to ensure the security services are provided in accordance with what has been agreed, so as to deal with operational issues and queries arising out of the performance of the security services.

Not everyone can be an MLO under the new SEV-GUARDCON 2022 though. Its position comes quite thoroughly regulated in Article 7(c), as the contractor is under a duty to make sure that its MLO:

  1. Has prior military or law enforcement service
  2. Has not been discharged for any disciplinary reasons in that service
  3. Speaks English and the language of the SEV’s Master and personnel
  4. Is mentally and physically able to perform the role
  5. Has STCW training
  6. Has all passport, visas and medical documents in order

Contractors therefore must make sure that they appoint an MLO that meets all the above criteria, and that such requirements are not lost at any time during the provision of the security services contracted.

Rendezvous Point

The new SEV-GUARDCON provides two boxes to make sure the specific point in which the SEV will meet the vessel is properly defined. Box 10 imposes a duty on the contractor to be there at a given time and date whereas box 11 requires the parties to include the exact point of meeting and disengaging the SEV. Details which can be further detailed in Annex B.

This is important because the contract terminates at the Release Point (Article 2(b)), and the Owner will have to pay the contractor for its services up until there, where disengagement will usually take place.

Contractor’s permits and Compliance

Compliance has been an important issue in the drafting process of the new SEV-GUARDCON 2022. The industry is indeed concerned that all security service providers such as PMSCs do have all the necessary permits to do so. The Guardcon 2012 also required the contractor to list the permits it had, so one may be tempted to conclude that nothing new has been added on this front.

However, the new SEV-GUARDCON does not list the precise permits, under the required laws, which the contractor should be in possession of. The Guardcon 2012 does so in its clause 10. This should not be seen as a watering down of this important aspect of the contract, but rather maybe a will not to limit those permits to the list in the 2012 contract.

Significantly however, whilst Clause 11 of the SEV-GUARDCON makes the contractor responsible for any fines or losses caused to the Owner for not having these permits in place, an opportunity may have been lost to clarify that the alleged absence of any given permit cannot be used by the Owner not to pay for the security services effectively provided.

The industry has sadly seen that some Owners put payment of services on hold whilst they fish into some technical aspect of the permits or of the agreements under which PMSCs provide their services, leaving these companies out of pocket during all the time in which these disputes go on, which can be years. It is understandable that BIMCO wants to protect the interests of shipowners for any fine impose to them for the lack of a permit, but it is also true that there are not many PMSCs out there and that if services have effectively and successfully been provided, payment of the price should be protected as payment of freight is protected in all other shipping contracts. We believe that when it comes to alleging such a permit defect, the principle should be pay first, argue later.

Standby rate and off-shore terminals exclusion zones

The writer shared a suggestion to the BIMCO drafting committee, which has been incorporated into the final published version of the SEV-GUARDCON.

When a PMSC provides the contracted services, it of course needs to abide by local laws, but also by applicable rules and regulations. PMSCs are sometimes contracted to “stand by” certain off-shore terminals. Here, one may see a clash between the PMSC’s Guardcon duties (which require close protection), and the applicable rules of those off-shore terminals (which do not allow SEVs to enter their exclusion zone). This can mean that the SEV has to wait several miles away from the vessel, which of course does not mean that the PMSC is breaching the contract. But sadly, some Owners have used this not to pay the PMSC for the period of waiting time, alleging that the SEV failed to stay sufficiently close to the vessel so as to provide the contracted security services.

It is an accepted fact that the PMSC cannot be asked to breach the off-shore terminal’s rules, who indeed have their own security services, but the Guardcon 2012 did not sufficiently clarify this.

The writer of this article made the suggestion that this should be addressed in the contract and the good news is that BIMCO has indeed done so in the published version of the SEV-GUARDCON.

Clause 14(i) states that “Where the Security Escort Vessel is engaged while the Client Vessel is at either a terminal or fixed offshore facility as set out in subclause 3(c), the Owners shall have the right to place the Security Escort Vessel on the Standby Rate specified in Box 17. If the Client Vessel remains at the terminal or fixed offshore facility for more than ninetysix (96) hours after entering the exclusion zone, the Owners shall have the right to cancel this Transit.”

The right of the contractor to charge this “standby fee” is only triggered by Owners. This seems to be a reasonable approach, given that the contractor can always agree the standby rate it deems appropriate and, at the end of the day, what a PMSC wants is to get paid.

Further, and to make things even better with this regard, clause 3(a) effectively vanishes the possibility of Owners to argue that they did not know about the internal rules of off-shore terminals, and makes very clear that it is prohibited to enter the off-shore terminals exclusion zone with the SEV to protect the vessel.

With the introduction of this wording in the standby clause, BIMCO has no doubt made a valuable contribution to providing certainty in the fees to be earned by PMSCs and to how the services are provided when an off-shore terminal is involved.

Arbitration

There is an interesting new feature for lawyers in relation to arbitration. Clause 27(f) states that arbitration will be considered effectively served from the date an email is sent to the email address which the parties can add there.

This is quite a smart solution to avoid the situation in which a party may deny it knew nothing about a dispute because the arbitration was served on its agent or manager, and not to itself, and that agent or manager had no power to bind the Owner with regards to legal disputes.

It may also help avoid Award execution problems in jurisdictions where still today parties are allowed to argue that it is against public policy to conduct a legal dispute by email, in jurisdictions in which, for example, legal correspondence must go through some sort of court official.

It is indeed an interesting feature which the parties should take advantage of.

 

All in all we can conclude that the new SEV-GUARDCON must be cheerfully greeted, as it will no doubt bring certainty to the maritime security services’ industry.

Please contact LMA Legal for any clarification or legal advice needed.

 

Dr. Miquel Roca

Solicitor at LMA Legal
mroca@lmalegal.co.uk
www.lmalegal.co.uk