Much emphasis has also been placed on making Incoterms easier to understand, and for that reason a few key changes have been made.

For a full summary of the changes, please contact your usual broker at FP Marine Risks or email info@fp-marine.com

Here is a brief overview of some of the key changes:

Two categories of rules
The rules now come in two categories:

1. Rules for any mode of transport
2. Rules for sea and inland waterway transport

Number of ‘D’ terms reduced
DAF, DES, DEQ and DDU have all been abolished and replaced with:

DAT – Delivered at Terminal (replaces Delivered Ex Quay)
DAP – Delivered at Place (replaces Delivered At Frontier, Delivered Duty Unpaid and Delivered Ex Ship).

A fifth ‘D’ term, Delivered Duty Paid, remains unchanged.

Insurance
The rules and terminology relating to insurance for the transport of goods have been harmonised with the 2009 Institute Cargo Clauses.

Security
The rules now provide specific obligations for the buyer and seller to supply the other party with information or to provide assistance in obtaining security related import, export and transport documentation.

Terminal Handling Charges
The rules have been amended so that the risk of the buyer being charged twice for terminal handling costs is minimised.

E-communications
The new rules allow for paper communication or an “equivalent electronic record or procedure” where agreed or customary, “customary” meaning that in some cases parties will be unable to refuse electronic communications (for example, email).

String Sales
Previously the Incoterms meant that the seller had to theoretically ‘ship’ the goods, notwithstanding that the goods were being bought and sold on the high seas. The new rules allow for a seller to ‘procure goods shipped’ and not just to ‘ship’ the goods, in line with existing commercial practice.

Exclusions

1. Insufficiency of Packing or Preparation has been widened and made more favourable to the Assured.  Prior to the revisions, loss caused by insufficient packing was not covered.  Now the exclusion only applies when the goods are packed by the assured or their employees.

2. Insolvency and Financial Default has been amended to the advantage of the Assured.  If the Assured was neither aware of the insolvency or financial default of the owners, managers, charterers or operators of the vessel nor should have been so aware in the ordinary course of business, this exclusion does not apply.  Moreover, the clause now provides that the exclusion will not apply where the contract of insurance has been assigned to a purchaser of the insured cargo acting in good faith.

3. Nuclear Fission and/or Fusion exclusions have been widened in light of the increased use of nuclear material bringing them in line with the opening words of causation in the extended radioactive contamination clause.

4. Unseaworthiness and Unfitness exclusion clause has been amended and is more favourable to the Assured as it will no longer apply when the benefit of the insurance has been assigned to a purchaser of the insured cargo acting in good faith.

5. Terrorism has been defined with the intention of clarifying causation.  For the exclusion to apply, Clause 7.3 now requires the act of  terrorism to be undertaken by a person acting on behalf of, or in connection with, an organization and does not apply to the actions of a ‘lone terrorist’.  However, Clause 7.4 does include lone operators and increases the scope of terrorist related activities.  These are no longer confined to “political motives” but now also include “ideological” and “religious” motives.

Duration

1. 1. The Transit Clause has seen a large revision, again more favourable to the Assured.  The insurance now attaches within the warehouse or place of storage when the goods are “first moved… for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit” whereas previously the insurance would not attach until the goods left the warehouse.  Furthermore, the insurance now terminates on completion of unloading from the vessel at (rather than delivery to) the final warehouse or at a warehouse prior to the destination named in the contract of insurance which the Assured or their employees elect to use either for storage or distribution.
2. 2. The Change of Voyage clause has been amended by the removal of the words “held covered” because it was considered that these could be misunderstood by the Assured as providing cover even where it would not be available.  Clearer words are now used explaining the circumstances in which cover may be available from underwriters

Generally

1. 1. New definition of “Assured” appears and now expressly includes either the person by or on whose behalf the contract of insurance was effected or an assignee.
2. 2. The word “goods” does not accurately describe the range and type of cargoes now insured under the ICC so it has been replaced with the term “subject-matter insured”.

At the same time, the Institute Strike Clauses have been renamed the Institute Strike and Terrorism Clauses.  This change in name was intended to identify where terrorism cover is found.

It has been over 25 years since the clauses were updated, and in that time the nature of trade has evolved with new realities brought about by modern logistics, the ever-changing threats of terrorism, and maritime fraud.   We therefore see these as necessary, common sense changes, many of which we had previously included as a matter of course in our own wordings.  We are pleased to see these improvements to the basic Institute Cargo Clauses and hope they will be widely accepted worldwide.

It has been over 25 years since the clauses were updated, and in that time the nature of trade has evolved with new realities brought about by modern logistics, the ever-changing threats of terrorism, and maritime fraud. We therefore see these as necessary, common sense changes, many of which we had previously included as a matter of course in our own wordings. We are pleased to see these improvements to the basic Institute Cargo Clauses and hope they will be widely accepted worldwide.