CMS NEWSLETTER                                       Ref: 02/14

December 15, 2014

Newly Revised IG Recommended Spill Response Contract

Outline

★    International Group published a revised recommended spill response contract recently.

★    China MSA’s attitude and requests on the spill response contract does not change.

Dear Sir,

In the last month of this year, most owners will face the renewal of spill response contract which was concluded in accordance with the Regulations of the People’s Republic ofChinaon the Prevention and Control of Marine Pollution from Ships. We noticed that International Group (IG) published a revised recommended spill response contract with footer “IG Sample Agreement dated 20 November2014”.

The changes are limited in Article 3 Fees and Expense as follows.

Article 3.3 3 When a pollution control and cleanup action lasts more than 5 working days, to ensure the smooth performance of the actions by Party B, Party B may demand Party A to pay a reasonable interim sum every 15 working days for the actions that has been carried out by Party B. Party A shall have the right to raise reasonable disputes in relation to any interim sum demanded. Any undisputed interim payment shall be remitted to the account appointed by Party B within 15 working days after Party B issues the invoice to Party A and such interim payment shall be deducted from the final invoice.

Any reasonably disputed sum shall be dealt with in accordance with the provisions relating to payments due upon termination of pollution control and cleanup actions, in accordance with 4 below.

Article 3.4 Upon terminating the pollution control and clean-up actions, Party B shall present to Party A a breakdown and evidence for the expenses incurred, such invoice shall be fully supported by attaching bills showing money expended or details of payment to personnel . Party A shall within 30 working days pay the undisputed sum and provide an appropriate security for the sum in dispute if required, such security to be in the form of a letter of undertaking from a P&I Club if offered. Any dispute between the parties shall be resolved

IG Sample Agreement dated 20 November 2014 page11 inaccordance with the agreed procedure in Article 7.

A new term is added as Article 3.5 “If party B does not receive ship pollution response fee within 2 months after party B finishes pollution control and clean up actions, party A shall bear bank loan interest up to max LIBOR plus 1% from the third month until party B receive all outstanding payment”.

We are contacting with the SPROs for their comments on the revised IG recommend contract wording and will persuade them to adopt it if possible.

As far as we know, neither related laws on spill response contract nor China MSA’s requests on this issue changed. Therefore, we still suggest your good company should conclude contract with qualified SPRO when calling a PRC port.

Last by not the least, thank you for your cooperation and support in the year of 2014 and wish you a happy and prosperous new year.

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