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The basic relationship between a vessel owner/operator and a charterer is usually controlled by a master time charter agreement. It provides the basic framework for the relationship and outlines the obligations of each party.
But charterers often bring third-party contractors aboard vessels, and the master time charter may not cover the risk associated with it. What controls the relationship between the owner/operator and third-party contractor?
It is common practice for owners to request that third-party contractors execute a vessel boarding agreement (VBA, or access agreement) to manage the risks. The VBA is usually a simpler document than the master time charter. It incorporates the key risk management provisions needed to provide the owner and third-party contractor protection and predictability in the event of personal injury or property damage on the vessel involving property or personnel belonging to either party.
The critical provisions of VBAs include:
- Indemnity: While an industry standard “knock for knock” is almost always preferable, some form of indemnity should be obtained in order to gain some level of predictability and insurability concerning risks posed by the presence of the third-party contractor.
- Insurance requirements: Both the owner and third-party contractor should request and confirm that each has sufficient coverage and limits, and that the insurance be endorsed with full waivers of subrogation naming both as additional insureds on the other’s policy.
- Possible deletion of the watercraft exclusion: The exclusion should be examined in order to determine whether a request for deletion should be made. Not all watercraft exclusions are created equal, and it can be difficult under some circumstances to obtain deletion.