BIMCO’s Documentary Committee has agreed a new standard cyber security charterparty clause that requires the parties to implement cyber security procedures and systems, to help reduce the risk of an incident and mitigate the consequences should a security breach occur.
BIMCO has taken a lead position on cyber security issues through its active role at IMO and by co-authoring the “Industry Guidelines on cyber security onboard ships.” Development of the BIMCO Cyber Security Clause has been an important part of this initiative.
The clause has been written by a small drafting team, led by Inga Frøysa of Klaveness, with representatives from shipowners, P&I clubs and a law firm, and will be published towards the end of May.
“I am very pleased to see BIMCO as the first mover on this important topic. Recent years have shown that there is a clear need for a clause addressing the contractual issues that can arise from a cyber security incident,” says Inga Frøysa.
The clause is drafted in broad and generic language that allows for it to be used in a wide range of contracts and in a string of contracts for easy back-to-back application. It is hoped that the clause will assist parties in obtaining affordable insurance for their cyber security exposure, as the clause introduces a cap on the liability for breaches.
“It was very important to the subcommittee to impose an obligation on the parties to keep each other informed if a cyber security incident should occur, and to share any relevant information, which could assist the other party in mitigating and resolving an incident as quickly as possible,” Frøysa says.
This clause provides for a two-fold notification process. Firstly, through an immediate notification from the party who becomes aware of an incident to the other party. Secondly, through a more detailed notification once the affected party has had the chance to investigate the incident.
The clause also requires the parties to always share subsequent information that could assist the other party in mitigating or preventing any effects from the incident.
The level of required cyber security will depend on many elements such as the size of the company, its geographical location and nature of business.
The clause takes this into account by stipulating that the parties must implement “appropriate” cyber security. The clause also requires each party to use reasonable endeavors to ensure that any third-party providing services on its behalf in connection with the contract, has appropriate cyber security.