BIMCO Publishes Quiet Enjoyment Letters

BIMCO has revealed two normal Quiet Enjoyment Letters (QELs), the primary normal kind QELs accessible to the trade, to supply a software that may make sure the charterers’ uninterrupted use of a ship if the proprietor defaults below the financing facility.  

The QELs can be supplied by the lender to the charterer to make sure that the charterer, who doesn’t have a contractual relationship with the lender however solely with the proprietor, can proceed to “quietly take pleasure in” the ship in case of the proprietor’s default.  

In return, the charterer offers a sure variety of undertakings, together with to not cancel the constitution celebration and to proceed to pay quantities due below the constitution celebration. The QELs additionally provide lenders a possibility to safe their rights, reminiscent of appointing a alternative proprietor in case of a default.

“The 2 new kinds fill a niche available in the market the place no such normal kind is at the moment accessible. They’re distinct as a result of they’re useful to charterers, lenders and homeowners,” says Nicholas Fell, Chairperson of BIMCO’s Documentary Committee. 

The QELs have been developed in a collaborative course of involving representatives of householders (Wah Kwong and Oldendorff Carriers), charterers (BHP and Noble Assets Worldwide), lenders (Danish Ship Finance), leasing establishments (CMB Monetary Leasing Co. Ltd.) and authorized specialists (Linklaters LLP and Holland & Knight LLP).

“The target of the subcommittee in command of the undertaking was to create a balanced normal that displays market follow and pretty represents the rights and obligations of all events,” says Catherine Smith, Chairperson of the BIMCO QEL subcommittee.

Two variations of the QEL have been developed: a normal quiet enjoyment letter signed by the lender and agreed by the proprietor and charterer, and a “brief kind” model which is signed solely by the lender.  

The QELs have been drafted to be used with bareboat and time constitution events, in addition to ship leasing constructions, and complement BIMCO’s current portfolio of time period sheets for ship financing and ship sale and leaseback transactions which incorporates the SHIPTERM, SHIPTERM S and SHIPLEASE time period sheets.