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Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
Page 1 of 18
Phillips 66 Company GENERAL TERMS AND CONDITIONS
For the Purchase and Sale of
Liquefied Petroleum Gas
1. DEFINITIONS
(a) “Affiliate” means, in relation to any Party, any entity or person directly or indirectly
controlled by the Party, any entity or person that directly or indirectly controls the Party,
or any entity or person directly or indirectly under common control with the Party. For
this purpose, “control” of any Party, entity or person means ownership of at least fifty
percent (50%) of the voting power of the Party, entity or person.
(b) “API” means American Petroleum Institute.
(c) “ASTM” means ASTM International, f/k/a American Society for Testing and Materials.
(d) “Barrel” means 42 United States Gallons measured at a temperature of 60 degrees
Fahrenheit (60°F) and an absolute pressure of 29.92 inches of mercury.
(e) “Business Day” means a day on which U.S. Federal Reserve member banks in New York
City are open for business.
(f) “Buyer” means the Party obligated to buy Product under the terms of a Transaction.
(g) “Confirmation” means any writing evidencing the Transaction, which may be sent by
facsimile or any other mutually acceptable electronic means.
(h) “Day” and “Month” mean a calendar day and a calendar month respectively.
(i) “Delivery Location” means the Port of Freeport in Freeport, Texas, unless otherwise
specified in a Confirmation.
(j) “Delivery Period” means the period specified for delivery of the Product in a
Confirmation.
(k) “Gallons” means 231 cubic inches of liquid measured at a temperature of 60 degrees
Fahrenheit (60°F) and at the equilibrium vapor pressure of the liquid.
(l) “Metric Ton” or “MT” means a mass of one thousand (1,000) kilograms, or two
thousand, two hundred four point six two three pounds of fully refrigerated (1) Propane
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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Product at a temperature of minus forty-two degrees Celsius (-42° C) and a pressure
below the vaporization point of the propane Product, loaded onto the Vessel and (2)
Butane Product at a temperature of minus five degrees Celsius (-5° C) and a pressure
below the vaporization point of the Butane Product loaded onto the Vessel.
(m) “Parties” shall mean Buyer and Seller, collectively, and “Party” means either Buyer or
Seller, individually. “Phillips 66” means Phillips 66 Company and “Counterparty”
means the other Party to a Transaction. For the purposes of Section 14, the term Party or
Parties includes all others for whose actions a Party may be held accountable.
(n) “Product” or “Products” means either or both fully refrigerated butane and/or fully
refrigerated propane, in either case meeting the specifications set forth in the
Confirmation.
(o) “Seller” means the Party obligated to sell Product under a Transaction, and unless
specified otherwise in the Confirmation, shall be Phillips 66.
(p) “Taxes” means any and all federal, state and local, statutory, governmental, impositions,
duties, tariffs, levies, fees and charges of every description, including all aviation fuel,
special fuel, diesel, excise, environmental, spill, gross earnings, gross receipts, sales and
use taxes, in each case, wherever imposed, and all penalties, charges, costs and interest
payable in connection with any failure to pay or delay in paying them and any deductions
or withholdings of any sort, provided, however, that Taxes shall not include (x) property
taxes, which taxes are governed by the state or local law applicable thereto, (y) taxes
based on or measured by the income, gross receipts or net worth of either Party), and (z)
fees, imposts or charges of whatsoever nature (including rates, tolls, and dues of every
description) in respect of a Vessel entering or leaving the loading or discharge port and
approaching and leaving Seller’s facilities, including charges imposed by fire boats, tugs
and escort or other support vessels, the applicable coast guard, linesmen, a pilot, and any
other person assisting a Vessel to enter or leave the loading discharge port and
approaching and leaving Seller’s facilities. The term “Taxable” shall be construed
accordingly.
(q) “Terminal Operator” means the person, which may be Seller or an Affiliate of Seller,
having responsibility for the day to day operations of the terminal, pier, wharf or offshore
loading platform at the Port of Freeport in Freeport, Texas.
(r) “Transaction” means the agreement for the purchase or sale of Products, which may be
evidenced by Confirmation and shall be governed by these General Terms and
Conditions.
(s) “U.S.” means United States of America, and every reference to money or price pertains
to U.S. currency.
(t) “Vessel” means a tankship or barge employed for the purpose of transporting Product.
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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2. TITLE AND RISK OF LOSS
2.1 As of the date of delivery of each cargo of Product sold hereunder, Seller represents and
warrants that it has good title free and clear of any liens or encumbrances to such
Product, and that Seller has full right and authority to transfer such title and effect
delivery of such Product to Buyer.
2.2 All Product sold hereunder shall be “FOB , Port of Freeport, Texas” or “CFR.” The term
“FOB” and “CFR,” shall have the meaning ascribed to such terms in Incoterms-2010
edition for waterborne purchases and sales. Title and risk of loss shall pass from Seller to
Buyer as Product passes the Vessel’s permanent manifold flange at the load port, in
Freeport, Texas.
3. QUANTITY AND QUALITY DETERMINATION
3.1 All Product delivered by Seller to Buyer shall meet the quality specifications set forth in
the Confirmation of the Transaction. Buyer shall have the right to accept or reject
deliveries of off-spec Product.
3.2 Buyer may appoint a mutually acceptable Independent Inspection Company (“IIC”), the
costs of which shall be shared equally by the Parties, to witness and verify the Terminal’s
quantity and quality determination of the of Product received and delivered. Quantity as
determined by the IIC shall be final and binding on all Parties and shall be the basis for
preparing relevant shipping documents and invoices save fraud and/or manifest error. If,
for any reason an IIC is not in attendance, then quantity as determined by the Terminal
Operator shall be final and binding on all Parties and shall be the basis for preparing
relevant shipping documents and invoices absent fraud and/or manifest error. Each Party
shall have the right to witness the measurement processes, provided adequate notification
is given to interested parties.
All measurement & sampling equipment, procedures, calculations, and practices
(whether performed by IIC or by the Terminal Operator) shall be performed in
conformance with the most current International measurement, sampling and analysis
standards (API Manual of Petroleum Measurement Standards (MPMS), The Energy
Institute Hydrocarbon Management (HM), ISO and ASTM. Volumes shall be adjusted
from observed conditions to standard volumes and weight in accordance with the latest
revision of API MPMS Chapter 11 (e.g. Table 24E or 54E, etc. whichever table is
applicable to that loading).
3.3 All measurements for marine cargoes shall be determined by one of the following
methods in descending order of preference;
(a) Meters. Meters at or near the point of transfer shall determine the quantity of
cargo received or delivered. The IIC shall, where possible, verify the accuracy of
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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all relevant metering equipment, including temperature and pressure measurement
devices, transmitters and calculations as well as corresponding meter proving and
calibration documentation.
(b) Vessel Measurements. i.) In the event meters are not available during any part of
the transfer, quantity shall be based on the volumes as determined from
measurements of the Vessel before and after the transfer as per API MPMS
17.10.2 (Measurement of Refrigerated and/or Pressurized Cargoes On Board
Marine Gas Carriers – Part 2 – Liquefied Petroleum and Chemical Gases).
(c) Agreement between Parties. In the event, the IIC determines that the above
custody transfer measurement points are inaccurate or are not representative of
the volume(s) of cargo transferred, the Parties shall be notified by the IIC and the
Parties shall agree to negotiate in good faith and without prejudice, a new basis
for custody transfer volumes.
3.4 Quality determination of all receipts and deliveries for marine cargoes shall be based on a
qualified laboratory’s analyses performed on representative samples obtained by the
following methods in descending order of preference:
(a) In-line Sampler. A representative sample of the cargo delivered or received shall
be obtained via flow-proportional in-line sampler that performs according to API
MPMS 8.2 and/or corresponding GPA (GPA 2166) or ISO standard to comply
with regulatory requirements.
(b) Agreement between Parties. In the event, the IIC determines that the above
custody transfer samples are not representative of the quality of cargo
transferred, the Parties agree to negotiate in good faith and without prejudice, a
new basis for quality determination.
4. CLAIMS
Notice of claim as to defect in quantity or quality with respect to any cargo of Product shall be
made in writing to Seller immediately after such apparent defect is discovered. Any such notice
of claim shall be followed promptly by a formal written claim with all necessary details to
properly process such claim. IF NO FORMAL WRITTEN CLAIM IS RECEIVED WITHIN
NINETY (90) DAYS AFTER DELIVERY OF THE PRODUCT TO THE BUYER, THE
CLAIM SHALL BE DEEMED TO HAVE BEEN WAIVED. The date of the completion of
loading or completion of delivery shall be deemed to be “hoses off” on the pertinent Vessel’s
statement of facts. Laytime and demurrage claims, if any, shall be submitted in reasonable detail
within ninety (90) days from the completion of loading/discharge.
5. PAYMENT
5.1 The payment due date shall be on the date specified in the applicable Confirmation.
5.2 Upon request Seller shall provide the following documents: Seller’s invoice and three of
three (3/3) properly issued and endorsed clean original bills of lading, certificates of
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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quantity, quality, and origin, or equivalent documents as issued by the loading terminal,
or in lieu of temporarily missing documents, Seller’s letter of indemnity in form set forth
herein in Section 5.6. If Seller is unable to determine the actual price at the time of
invoice, Seller shall issue a provisional invoice based upon the prior Month’s price.
Seller shall promptly issue a final invoice after the invoice amount may be calculated,
and the final invoice shall be substituted for the provisional invoice. In the event that
Buyer shall have paid prior to the receipt of the final invoice, then Seller shall refund any
overpayment and Buyer shall pay any deficiency in payment no later than five days after
the final invoice has been sent to Buyer by Seller.
5.3 All payments shall be made by wire transfer of immediately available funds in U.S.
Dollars to Seller at such address or depository as Seller may designate in writing.
5.4 If the payment due date falls on a Day that is not a Business Day, payment shall be made
to Seller on the last Business Day prior to such payment due date.
5.5 Any amount payable for any cargo of Product or otherwise payable by Buyer to Seller
hereunder shall, if not paid when due, bear interest from the due date until the date
payment is received by Seller at an annual rate (based on a 360-day year) equal to the
rate of two (2) percentage points above the prime rate of interest effective for the
payment due date as published in the Wall Street Journal, but not more than the
maximum rate of interest permitted under applicable law. Buyer shall pay such interest
within five (5) Business Days following receipt of Seller’s invoice for such interest. If
Buyer, in good faith, disputes the accuracy of the amount due pursuant to any invoice,
Buyer will timely pay the undisputed amount and provide a written explanation of the
nature of the dispute along with supporting documentation acceptable in industry
practice. If it is determined that Buyer owes the disputed amount, then Buyer shall pay
interest in accordance with this Section on such disputed amount from and including the
originally scheduled due date to but excluding the date paid.
5.6 Form of Letter of Indemnity:
Any letter of indemnity provided by Seller shall be in the following form:
In consideration of your paying for the cargo of [VOLUME] U.S. Metric Tons of
[TYPE OF PRODUCT] which sailed from [PORT] on [VESSEL] on [BILL OF
LADING DATE] loaded with the cargo when the full set of bills of lading and
original shipping documents for the cargo have not been delivered to you at the
time payment is due under our contract dated [CONTRACT DATE]:
We hereby warrant to you that at the time property passed as specified under the
terms of the contract, we had the right to sell the cargo to you, and we had
unencumbered title to the cargo.
We hereby irrevocably and unconditionally undertake to indemnify you and hold
you harmless against any claim made against you by anyone as a result of breach by
us of any of our warranties as set out above; and all loss, costs (including, but not
limited to, reasonable attorneys’ fees), damages, and expenses which you may
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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suffer, incur, or be put to which are not too remote as a result of our failure to
deliver the above document(s) in accordance with the contract.
This indemnity shall terminate on delivery by us of the aforesaid document(s).
This indemnity shall be governed by and construed in accordance with laws of the
State of New York and all disputes, controversies, or claims arising out of or in
relation to this warranty or the breach, termination, or validity hereof shall be
subject to the non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in New York
City.
Signed: [NAME]
[POSITION]
Company: __________________
6. CREDIT
6.1 Phillips 66 shall have the right from time to time to request pertinent financial
information from the Buyer to assure Phillips 66 of the Buyer’s creditworthiness.
6.2 If at any time Counterparty exceeds the credit line then in effect as from time to time
established by Phillips 66, Phillips 66 may immediately require the Counterparty to
provide Performance Assurance. “Performance Assurance” shall mean at Phillips 66’s
option: (a) prepayment for the applicable Transaction(s), (b) cash collateral in an amount
acceptable to Phillips 66, or (c) an irrevocable standby letter of credit in Phillips 66’s
favor in an amount acceptable to Phillips 66 and in a form and substance specified by
Phillips 66 and issued or confirmed by a bank acceptable to Phillips 66 (an “L/C”).
Counterparty grants to Phillips 66 a continuing first priority security interest, lien on and
right of setoff against all Performance Assurance in the form of cash transferred by
Counterparty to Phillips 66. All bank charges attendant to an L/C shall be for the account
of Counterparty. Delivery of the L/C, shall be made within two Business Days of such
request by Phillips 66, but all other Performance Assurances shall be provided by the
close of business on the Business Day following demand. Phillips 66 may immediately
suspend deliveries or receipts to or from Counterparty pending receipt of any
Performance Assurance. Any demurrage resulting from delays to a Vessel pending
receipt by Phillips 66 of Performance Assurance shall be for account of Counterparty.
Counterparty acknowledges that the credit line may be a negative amount and Phillips 66
may require Performance Assurance to be in an amount that is sufficient to cover the
anticipated exposure.
6.3 In addition to the foregoing, Phillips 66 shall have the right at any time to require
Counterparty to deliver a parent company guaranty in the form and substance satisfactory
to Phillips 66. Such guarantee shall be of the prompt payment, when due, of any and all
present or future indebtedness of Counterparty, including any amounts owed for damages
resulting from a failure of Counterparty to perform its obligations hereunder or
otherwise.
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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6.4 Without limiting any other rights hereunder, Phillips 66 may require a separate
agreement pertaining to the margining and collateralization of exposure related all
Transaction between the Parties.
7. FORCE MAJEURE
7.1 Except for an obligation to make payments hereunder for Product received or pursuant to
Sections 8 or 9, a Party shall be excused from the performance of its obligation to deliver
or receive Product, to the extent its performance arises from a cause reasonably beyond
its control, and which, by the exercise of due diligence, such Party could not have
remedied, avoided or overcome. Force majeure may be due to any of the following:
(a) compliance (voluntary or involuntary) with laws, decrees, guidelines, requests, or
the like, of any government or person purporting to act therefore, or of
international organizations of which the United States is a member;
(b) restriction or cessation of production of Product due to the imposition of
conditions or requirements by any government or any person purporting to act
under the color or claim of any governmental authority which makes it necessary
to cease or to reduce the production of the Product;
(c) hostilities of war (declared or undeclared), embargoes, blockades, civil unrest,
riots or disorders, terrorism, or sabotage;
(d) fires, explosions, lightning, maritime peril, collisions, storms, landslides,
earthquakes, floods, adverse weather conditions and other acts of nature that
affect a broad geographic area;
(e) strikes, lockouts, or other labor difficulties (whether or not involving employees
of Seller or Buyer);
(f) disruption or breakdown of production or transportation facilities, equipment,
labor or materials;
(g) closing or restrictions on the use of harbors; and/or
(h) any other cause whether or not of the same class or kind, reasonably beyond the
control of either Party that prevents or interferes with the performance of such
Party’s delivery or receipt obligations.
7.2 Neither Party shall be entitled to declare an event of force majeure if performance is
affected by any or all of the following circumstances: (i) the Party claiming force
majeure excuse failed to remedy the condition and to resume the performance of such
obligations with reasonable dispatch; (ii) Seller’s ability to sell Product at a higher or
more advantageous price than the price, or Buyer’s ability to purchase Product at a lower
or more advantageous price than the price, (iii) the loss of Buyer’s market(s) or Buyer’s
inability to use or resell Product purchased hereunder, except, in either case, as provided
in Section 11.2; or (iv) the loss or failure of Seller’s Product supply or depletion of
reserves, except, in either case, as provided in Section 7.1.
7.3 In the event that either Party must invoke the provisions in this Section, such Party shall
use commercially reasonable efforts to give to the other Party, first verbally and then in
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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writing, notice of the underlying circumstances of the particular cause(s) of force
majeure, and the expected duration thereof. The Party claiming force majeure will also
use commercially reasonable efforts to give the other Party notice of termination of the
events of force majeure and the date when performance is expected to resume.
7.4 The Party claiming force majeure shall also be liable for any costs of transportation that
could not reasonably be prevented, including pipeline imbalance changes, rail detention
charges or similar charges.
8. DELIVERY AND RECEIPT FAILURES
8.1 Unless excused by force majeure or if Seller shall be a Defaulting Party, as such term is
defined in Section 9, if after Buyer has nominated the quantity to be purchased from
Seller, and Buyer actually takes delivery of a quantity of Product that is less than the
Product nominated for delivery, subject to any volumetric tolerance specified in the
Confirmation, Buyer shall pay within five Business Days after receipt of notice of the
amount due, an amount equal to the terminal fee, as specified in the Confirmation, for
each Gallon not received, or if no terminal fee is specified, the difference between the
contract price per Gallon specified for such transaction and the market price for each
Gallon of Product not received. If Buyer notifies Seller prior to nomination that it will
not be receiving all or part of the contract quantity, the remedy shall be as specified in the
applicable Confirmation. If no remedy is set forth, then the provisions of this Section
shall apply as though the entire contract quantity had been nominated.
8.2 Unless excused by force majeure or if Buyer shall be a Defaulting Party, as such term is
defined in Section 9, if Seller fails to deliver the volume of Product nominated by Buyer,
Seller shall pay within five Business Days of receipt of notice of the amount due, an
amount equal to the terminal fee, as specified in the Confirmation, for each Gallon not
delivered, or if no terminal fee is specified, the difference between the market price for
each Gallon of Product not delivered and the contract price per Gallon specified for such
transaction.
8.3 A failure by a non-performing Party to pay the damages set forth herein, shall be a failure
to pay for the purposes of Section 9.
9. DEFAULT
9.1 If either Party (the “Defaulting Party”) or any guarantor, as applicable, shall with respect
to any Transaction or other agreement between the Parties: (a) fail to pay in accordance
with the agreed upon terms, and such failure is not cured within two Business Days after
written notice; (b) breach of any non-payment obligation contained herein or any other
agreement between the Parties, other than either an obligation to deliver or receive
Product, the sole remedy of which shall be specified in Section 8, or otherwise specified
as an Event of Default, if not cured within two Business Days after written notice; (c) fail
to provide Performance Assurances in accordance with Section 6.2; (d) fail to comply
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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with any other credit requirement and such failure continues for two Business Days after
written notice; (e) make an assignment or any general arrangement for the benefit of
creditors; (f) become bankrupt or insolvent, however evidenced, or be unable to pay its
debts as they fall due; (g) file a petition or otherwise commence a proceeding under any
bankruptcy, insolvency or similar law, or have any such petition filed or proceeding
commenced against it; and/or (h) have a liquidator, administrator, receiver or trustee
appointed with respect to it or any substantial portion of its property or assets; (in each
case, an “Event of Default”) then the other Party (the “Non-Defaulting Party”) may on
written notice to the Defaulting Party (except in the case of default specified in clauses
(e-h) above in which case no notice is required):
(a) designate a Day to terminate all Transactions between the Parties (collectively,
the “Terminated Transactions”) and calculate its Termination Payment, as defined
below;
(b) if the Defaulting Party is Buyer and Seller has delivered Products to Buyer under
a Transaction, the Seller may take possession of the Products and/or collect upon
any security provided on behalf of Buyer; and
(c) set off or aggregate as appropriate, all other amounts then owing between the
Parties hereunder or otherwise, and at the election of the Non-Defaulting Party
amounts, if any, owed by the Non-Defaulting Party and/or its Affiliates to the
Defaulting Party or by the Defaulting Party to the Non-Defaulting Party and/or its
Affiliates, so that all such amounts are aggregated and/or netted to a single
liquidated amount payable by one Party to the other.
9.2 The net amount due after such liquidation shall be paid by the close of business on the
next Business Day. The “Termination Payment” in respect of the Terminated
Transactions shall be (a) the amount owed on or before the termination date, whether or
not then due, by each Party with respect to all Product delivered and received under such
Terminated Transaction, but not yet paid for, (b) the difference between the Market
Value and the Contract Value for each Terminated Transaction, (c) any other amounts
owed by the Parties and (d) any other damages, costs or expenses incurred by the Non-
Defaulting Party as a result of the early termination of each Transaction being
terminated, including, without duplication, any damages, losses and expenses incurred in
connection with the liquidation of hedges related to such terminated Transactions.
“Market Value” means the amount of the Product remaining to be delivered or purchased
under a Terminated Transaction multiplied by the market price for an equivalent
transaction at the Delivery Location as determined by the Non-Defaulting Party in a
commercially reasonable manner. “Contract Value” means the amount of the Product
remaining to be delivered or purchased under a Terminated Transaction multiplied by the
agreed upon price.
9.3 After an Event of Default, the Non-Defaulting Party (at its election) shall have a general
right of setoff with respect to any or all amounts owing between the Parties (whether with
respect to any Terminated Transaction, any other transaction or otherwise and whether or
not then due). After an Event of Default, the Defaulting Party is also responsible for any
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Effective July 1, 2016
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other costs and expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) incurred by the Non-Defaulting Party in connection with such Default.
9.4 In addition to the remedies set forth above, immediately upon the occurrence of any
event that would give rise to an Event of Default with either or both the lapse of time or
the giving of notice, the Non-Defaulting Party may suspend all performance under the
affected Transaction and/or any other Transaction between the Parties.
9.5 The Parties intend that: (a) each Transaction shall constitute a “forward contract”; (b)
these General Terms and Conditions shall constitute a “master netting agreement”; (c)
each Party shall be a “forward contract merchant” and a “master netting agreement
participant”; (d) all payments made or to be made by one Party to the other Party
pursuant to any Transaction and/or these General Terms and Conditions constitute
“settlement payments”; and (e) any transfer of credit support, including Performance
Assurance, constitutes “margin payments” as such terms are defined in Title 11 of the
United States Code, as amended from time to time (the “Bankruptcy Code”).
Additionally, each Party’s rights under this Section constitute a “contractual right to
liquidate” the Transactions within the meaning of Section 556 of the Bankruptcy Code.
All Transactions are entered into in reliance on the fact that the General Terms and
Conditions and all Transactions thereunder form a single integrated agreement between
the Parties. Upon a Party becoming bankrupt, the other Party shall be entitled to exercise
its rights and remedies under these General Terms and Conditions in accordance with the
safe harbor provisions of the Bankruptcy Code.”
9.6 The Non-Defaulting Party’s rights under this Section shall be in addition to, and not in
limitation or exclusion of, any other rights which the Non-Defaulting Party may have
(whether by agreement, operation of law or otherwise).
10. GOVERNING LAW
10.1 These General Terms and Conditions, and each Confirmation and/or Transaction shall be
governed by and construed in accordance with the laws of the State of New York without
reference to its law on conflicts other than §5-1401 of the New York General Obligations
Law.
10.2 The Parties agree that the United Nations Convention on Contracts for the International
Sale of Goods shall not in any way apply to, or govern any Transaction, Confirmation
and/or these General Terms and Conditions.
10.3 The Parties will attempt in good faith to resolve any controversy or claim (“Dispute”)
arising out of or relating to these General Terms and Conditions, any Confirmation
and/or Transaction promptly by negotiations. If a Dispute should arise, the
representatives of the Parties who negotiated the same, or their respective successors
(“Principal Contacts”), will meet at least once and will attempt to resolve the Dispute.
Either Principal Contact may request that the other meet within fourteen (14) Days, at a
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
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mutually agreed time. If the Dispute has not been resolved within twenty (20) Days of
their first meeting, the Principal Contacts shall refer it to senior executives of their
respective companies who shall have authority to settle the Dispute (the “Senior
Executives”). The Principal Contacts shall promptly prepare and exchange memoranda
stating the issues in dispute and their positions, summarizing the negotiations which have
taken place, and attaching relevant documents. The Senior Executives will meet for
negotiations within fourteen (14) Days of the end of the 20-day period referred to above,
at a mutually agreed time and place. If the Dispute has not been resolved within thirty
(30) Days of the meeting of the Senior Executives (which period may be extended by
mutual agreement), the Dispute will be determined by binding arbitration in accordance
with the Dispute Resolution Procedures attached hereto as Exhibit A.
11. TAXES
11.1 Seller shall pay, reimburse, indemnify, defend and hold harmless Buyer for any and all
applicable Taxes, including all taxes assessed on or in connection with production,
extraction, processing, manufacture or transport of Product (including, without limitation,
assuring that severance taxes, royalties, working interest payments and similar burdens
imposed with relation to extraction and production of same are borne by Seller or prior
suppliers of same) with respect to the Product(s) delivered hereunder, the taxable incident
of which occurs before the transfer of title to the Product(s) to Buyer. Seller shall not be
obligated to indemnify or hold harmless Buyer for any Taxes levied or imposed by any
governmental authority in any country and payable by Buyer (i) which do not directly
relate to the performance by Buyer of its obligations hereunder, or (ii) resulting from the
creation of a permanent establishment, trade or business or presence by Buyer (or any
Affiliate thereof).
11.2 Buyer shall pay, reimburse, indemnify, defend and hold harmless Seller for: any and all
applicable Taxes with respect to the Product(s) delivered hereunder, the taxable incident
of which occurs at or after transfer of title to the Product(s), including, but not limited to,
all Taxes related to the export of the Product. Buyer shall not be obligated to indemnify
or hold harmless Seller for any Taxes levied or imposed by any governmental authority
in any country and payable by Seller (i) which does not directly relate to the performance
by Seller of its obligations hereunder, or (ii) resulting from the creation of a permanent
establishment, trade or business or presence by Seller (or any affiliate thereof). If Buyer
claims exemption from any Taxes or fees, Buyer shall provide Seller with the
appropriately executed exemption certificates.
11.3 In the event either Buyer or Seller becomes aware of a potential or actual liability to
make any payment of Taxes which might give rise to a claim, it shall give notice of the
circumstances to the other Party as soon as reasonably practicable, in order to allow both
Parties reasonable opportunity to seek to minimize their liability for such Taxes, acting
always in compliance with the laws of the relevant governmental authority. Each Party
shall give the other Party such assistance as is reasonable in the circumstances in this
regard, and Buyer or Seller (as appropriate) shall not make any payment of such Taxes
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
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until the due date on which such Taxes are due and payable in accordance with the
relevant tax regulations unless an early payment could result in a reduction of the liability
to such Taxes.
11.4 Seller reserves the right to claim, to receive, and to retain drawbacks on imported duty-
paid merchandise used in the manufacture of Product it delivers to Buyer, and to the
extent Buyer has such rights, Buyer hereby assigns such rights to Seller. Whenever
Product is exported, the Buyer shall promptly notify the Seller and shall, on request,
execute claim forms in favor of Seller to enable it to establish its drawback rights under
custom regulations. When applicable to Product produced by Phillips 66, Buyer shall
furnish Seller a copy of the non-negotiable bill of lading for the export of the Products,
an assignment of export drawback rights for U.S. Customs and Border Protection and any
forms required by governmental authorities covering each batch of Products sold to and
exported by Buyer or any of Buyer’s subsidiaries or licensees, each fully completed and
properly executed by all necessary parties and endorsed to Seller, where appropriate.
12. SAFETY DATA SHEETS
Seller has provided or shall provide Buyer upon Buyer’s request with Seller’s Safety
Data Sheets (“SDS”) for the Product to be delivered hereunder. Nothing herein shall
excuse Buyer from complying with all laws, regulations and decrees which may require
Buyer to provide its employees, agents, contractors, users and customers who may come
into contact with the Product with a copy of the SDS and any other safety information
provided to it by Seller, and/or which require Buyer to ensure that the recommendations
relating to the handling of the Product are followed. Compliance with any
recommendation contained in the SDS or other safety information shall not excuse Buyer
from complying with all laws, statutes, regulations or decrees of any state or territory
having jurisdiction over Buyer.
13. INDEMNITY, LIMITATION OF LIABILITY AND INSURANCE
13.1 Seller and Buyer mutually covenant to protect, defend, indemnify and hold each other
harmless from and against any and all claims, demands, suits, losses, expenses (including
without limitation, costs of defense, attorney’s fees and interest), damages, fines,
penalties, causes of action and liabilities of every type and character, including but not
limited to personal injury or death to any person including employees of either Party or
loss or damage to any personal or real property, caused by, arising out of or resulting
from the acts or omissions of negligence or willful acts of such indemnifying Party, its
officers, employees or agents with respect to the purchase and sale of Product hereunder.
In the event the Parties are jointly and/or concurrently negligent, each Party shall
indemnify the other Party to the extent of its negligent acts or omissions or willful acts.
13.2 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL BE
LIABLE FOR ANY PROSPECTIVE OR LOST PROFITS OR SPECIAL, INDIRECT,
INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.
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13.3 Unless Buyer is self-insured and has provided Seller evidence of such self-insurance
reasonably acceptable to Seller, Buyer agrees at its own expense to procure and maintain
or cause its agents, contractors and their subcontractors, and representative to procure
and maintain insurance coverage. Such insurance shall be in compliance with the
requirements of the law of the state in which delivery of the Product will occur with
respect to the receipt of Product hereunder and/or activities related thereto. Buyer
acknowledges and agrees that Seller shall not insure Buyer’s products, servants and/or
property of others in connection with these General Terms and Conditions, any
Confirmation and/or Transaction.
14. EXPORT COMPLIANCE, SANCTIONS, ANTI-CORRUPTION AND ANTI-
BOYCOTT
14.1 Each Party warrants to the other that it will comply with all applicable laws, regulations,
rules and requirements relating to export and re-export control and sanctions, including
but not limited to the U.S. Export Administration Regulations, U.S. Treasury
Department’s Office of Foreign Assets Control regulations, the U.S. International Traffic
in Arms Regulations (together, “Export and Sanctions Law”). Nothing shall be shipped
to, transshipped through, or sourced from, directly or indirectly, any country, company or
individual or for any end-use that is prohibited under Export and Sanctions Law. If
either Party is or becomes identified on any government export denial, blocked, debarred,
Specially Designated National, or other similar list, the other Party may terminate any
Transaction subject to these General Terms and Conditions upon written notice to the
other at any time. Each Party shall be excused from performance of any obligation under
the affected Transaction if such performance is prohibited under Export and Sanctions
Law.
14.2 The Parties warrant to each other that they shall comply with all applicable anti-bribery
and anti-money laundering laws, rules, and regulations of the United States, European
Union or any member state, the Republic of Singapore, and any other similar laws in all
applicable jurisdictions. These laws include, without limitation, the currently effective or
successor versions of the U.S. Foreign Corrupt Practices Act; the UK Bribery Act 2010;
the UK Money Laundering Regulations 2007; the UK Anti-Terrorism, Crime, and
Security Act 2001; the Proceeds of Crime Act 2002; and the Singapore Penal Code.
14.3 Nothing in these General Terms and Conditions is intended to be, or shall be construed
as, an agreement by either Party to take or refrain from taking any action that is or would
be prohibited by or penalized under U.S. anti-boycott laws or regulations.
14.4 Neither Party shall directly or indirectly, pay salaries, commissions, or fees, or make
payments or rebates to employees or officers of the other Party, nor favor employees,
officers, or the designees thereof of the other Party with gifts or entertainment of
unreasonable cost or value, or with services or goods sold at less than full market value,
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
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or enter into business arrangements with employees or officers of the other Party, unless
such employees or officers are acting as representatives of the other Party.
14.5 Either Party may terminate the affected Transactions immediately upon written notice to
the other, if the other Party is in breach of the above clauses or fails to cooperate by
providing information demonstrating compliance. Violation of these clauses shall be
deemed a material breach of these General Terms and Conditions. Each Party agrees to
indemnify the other for any fines, penalties, claims, losses, damages, costs (including
legal costs), expenses, and liabilities that may arise as a result of the indemnifying
Party’s breach of its obligations under these clauses.
14.6 In the event of a conflict between this section and any other provision, the terms of this
Section 14 shall prevail.
15. NEW OR CHANGED REGULATIONS
15.1 It is understood by the Parties that Seller is entering into each Transaction in reliance on
the laws, rules, regulations, decrees, agreements, concessions and arrangements
(hereinafter called “Regulations”) in effect on the date hereof with governments,
governmental instrumentalities or public authorities affecting the Product sold hereunder
including, but without limitation to the generality of the foregoing, those relating to the
production, acquisition, gathering, manufacturing, transportation, storage, export, trading
or delivery thereof, insofar as such regulations affect Seller or Seller’s Supplier.
15.2 In the event that at any time and from time to time any regulations are changed or new
regulations become effective, whether by law, decree or regulation or by response to the
insistence or request of any governmental or public authority or any person purporting to
act therefore, and the material effect of such changed or new regulations (a) is not covered
by any other provision hereunder, and (b) has a material adverse economic effect upon
Seller, Seller shall have the option to request re-negotiation of the prices or other pertinent
terms hereunder. Such option may be exercised by Seller at any time after such changed
or new regulation is promulgated, by written notice of desire to re-negotiate, such notice
to contain the new prices or terms desired by Seller.
15.3 If the Parties do not agree upon new prices or terms satisfactory to both within thirty (30)
days after Seller gives such notice, Seller shall have the right to terminate the affected
Transaction at the end of the said 30-day period. Any Product delivered during such 30-
day period shall be sold and purchased at the price and on the terms applying hereunder
without any adjustment in respect of the new or changed regulations concerned.
16. AUDIT
In addition to provisions set forth in Section 14, during the Audit Period at any reasonable time,
but not more than two times per year, each Party shall have the right to audit the books and
records of the other Party relating to performance of the Transactions. The audited Party shall
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
Page 15 of 18
fully cooperate with the auditing Party to accomplish the audit as expeditiously as possible.
Either Party may retain outside auditors or inspectors, the costs and fees of which shall be borne
by the Party employing the outside auditor or inspector. Each Party agrees to be bound and shall
cause any independent auditors or inspectors to be bound by the confidentiality obligations
contained herein. Either Party may witness any inspection at its own expense. Each Party shall
retain all such books and records during the Audit Period. Unless a claim had been made during
the Audit Period, upon the conclusion of the Audit Period, all statements, invoices and charges
shall be conclusive and final.
17. CONFIDENTIALITY
Neither Party shall disclose the terms or conditions of any Transaction to any third party (other
than the Party’s employees, lenders, counsel, accountants or advisors that have a need to know
such information and have agreed to keep it confidential), except in order to comply with any
applicable law, regulation, any exchange or in connection with any court or regulatory
proceeding; provided, however each Party shall, to the extent practicable, use reasonable efforts
to prevent or limit the disclosure. Notwithstanding the foregoing, a Party may elect to report a
Transaction to a price index publication in which case the Product description, volume, price,
delivery point and delivery date may be disclosed but the identity of the counterparty shall
remain confidential. The Parties shall be entitled to all remedies available at law or in equity to
enforce, or seek relief in connection with this confidentiality obligation.
18. MARKET DISRUPTION
If the price of the Product specified in a Confirmation is based upon a specified index and there
is a Market Disruption Event, as defined below, the Parties shall negotiate in good faith to agree
on a replacement price or on a method for determining a replacement price for the affected Day.
If the Parties have not so agreed on or before the second Business Day following the affected
Day, then the replacement price for the original contract price shall be determined within the
next two following Business Days with each Party obtaining, in good faith and from non-
affiliated market participants in the relevant market, up to two quotes for prices of Product for
the affected Day of a similar quality and quantity in the geographical location closest in
proximity to the Delivery Location and averaging the quotes received. If either Party fails to
provide up to two quotes, then the average of all quotes obtained shall determine the replacement
price. A “Market Disruption Event” means, with respect to an index specified for a Transaction,
any of the following events: (a) the failure of the index to announce or publish information
necessary for determining the contract price; (b) the failure of trading to commence or the
permanent discontinuation or material suspension of trading on the exchange or market acting as
the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the
temporary or permanent closing of any exchange acting as the index; or (e) both Parties agree
that a material change in the formula for or the method of determining the contract price has
occurred.
19. REPRESENTATIONS AND WARRANTIES
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
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19.1 Each Party represents and warrants to the other Party that: (a) it is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its formation; (b) the
execution, delivery and performance under each Transaction is within its powers, have
been duly authorized by all necessary action and do not violate any of the terms and
conditions in its governing documents, any contract to which it is a party or any law, rule,
regulation, order or the like applicable to it; (c) these General Terms and Conditions and
each Transactions constitute its legally valid and binding obligation enforceable against it
in accordance with its terms, subject, as to enforceability only, to applicable bankruptcy,
moratorium, insolvency or similar laws affecting the rights of creditors generally and to
general principles of equity; and (d) it is not bankrupt and there are no proceedings
pending or being contemplated by it or, to its knowledge, threatened against it which
would result in it being or becoming bankrupt.
19.2 UNLESS OTHERWISE EXPRESSLY STATED IN THE CONFIRMATION OF A
TRANSACTION, SELLER MAKES NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS OF THE PRODUCTS FOR ANY PARTICULAR
PURPOSE, EVEN IF SUCH PURPOSE IS KNOWN TO SELLER.
20. MISCELLANEOUS
20.1 No Transaction shall be assigned by either Party without the prior written consent of the
other Party, which consent shall not be unreasonably withheld. Each assigned
Transaction shall be binding upon and shall inure to the benefit of the Parties and their
permitted successors and assigns. Notwithstanding the foregoing, Phillips 66 shall have
the right to assign any Transactions to a creditworthy Affiliate without the necessity of
obtaining the Counterparty’s consent thereto. Such assigned Transactions shall be
subject to General Terms and Conditions that are identical to those set forth herein,
except that references to Phillips 66 shall be to the assignee.
20.2 No waiver by either Party of any breach by the other Party of any of the covenants or
conditions of these General Terms and Conditions or any Transaction shall be construed
as a waiver of any succeeding breach of the same or of any other covenant or condition
hereof.
20.3 No statement or agreement, oral or written, made prior to or at the time of entering into a
Transaction, shall vary or modify the written terms hereof, and neither Party shall claim
any amendment to, modification of, or release from any provisions by mutual agreement
unless such agreement is in writing, signed by the other Party.
20.4 Except as provided in the next sentence, all notices, invoices and other communications
by one Party to the other under these General Terms and Conditions and any Transaction
shall be in writing and shall be delivered personally, by overnight courier, by certified
mail, return receipt requested, by facsimile, or e-mail to the Party’s address set forth in
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
Page 17 of 18
the Confirmation or otherwise in the sending Party’s records. Notwithstanding the
foregoing, a notice of an Event of Default may not be sent e-mail. Notices will be
deemed given when received, or in the case of notice sent by facsimile, at the time of
transmission if sent during normal business hours, or the following Business Day if sent
after normal business hours.
20.5 The section headings are for convenience only and shall not be interpreted in any way to
limit or change the subject matter of these General Terms and Conditions.
20.6 If any court of competent jurisdiction holds any terms or condition herein invalid or
unenforceable, the remaining terms and conditions shall remain in full force and effect
The invalidity of any one or more covenants or provisions of these General Terms and
Conditions shall not affect the validity of any other provisions hereof or these General
Terms and Conditions, and the Transactions thereunder as a whole, and in case of any
such invalidity, these General Terms and Conditions shall be construed to the maximum
extent possible as if such invalid provision had not been included herein.
20.7 Each Party (i) consents to the recording of telephone conversations between the trading,
marketing and other relevant personnel of the Parties in connection with any potential
Transaction, (ii) agrees to obtain any necessary consent of, and give any necessary notice
of such recording to, its relevant personnel and (iii) agrees, to the extent permitted by
applicable law, that recordings may be submitted in evidence in any Proceedings.
20.8 Any Confirmation and any other related document, including any recordings, may be
scanned and stored electronically, or stored on computer tapes and disks, as may be
practicable (the “Imaged Agreement”). The Imaged Agreement, if introduced as
evidence on paper, any recording, if introduced as evidence in its original form and as
transcribed onto paper, and all computer records of the foregoing, if introduced as
evidence in printed format, in any judicial, arbitration, mediation or administrative
proceedings, will be admissible as between the Parties to the same extent and under the
same conditions as other business records originated and maintained in documentary
form. Neither Party shall object to the admissibility of any Imaged Agreement (or
photocopies of the transcription of such Imaged Agreement) on the basis that such were
not originated or maintained in documentary form under the hearsay rule, the best
evidence rule or any other rule of evidence. However, nothing herein shall be construed
as a waiver of any other objection to the admissibility of such evidence.
20.9 Neither Party shall disclose the terms or conditions of any Transaction to any third party
(other than the Party’s employees, lenders, counsel, accountants or advisors that have a
need to know such information and have agreed to keep it confidential), except in order
to comply with any applicable law, regulation, any exchange or in connection with any
court or regulatory proceeding; provided, however each Party shall, to the extent
practicable, use reasonable efforts to prevent or limit the disclosure. Notwithstanding the
foregoing, a Party may elect to report a Transaction to a price index publication in which
case the Product description, volume, price, delivery point and delivery date may be
Phillips 66 Company – Liquefied Petroleum Gas General Terms and Conditions
Effective July 1, 2016
Page 18 of 18
disclosed but the identity of the counterparty shall remain confidential. The Parties shall
be entitled to all remedies available at law or in equity to enforce, or seek relief in
connection with this confidentiality obligation.
21. ATTACHMENTS/ADDENDA
Attached hereto and incorporated by reference herein, are certain addenda providing further
terms and conditions as applicable:
(a) Dispute Resolution
(b) Marine Provisions for Natural Gas Liquids
Page A-1
EXHIBIT A DISPUTE RESOLUTION PROCEDURES
Arbitration
1. Arbitration. Any dispute arising out of or relating to any Transaction, including its
existence, validity, interpretation, performance, breach, or termination, will be determined by
binding arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") before a panel of three arbitrators, or before a sole
arbitrator if (a) the amount in dispute, inclusive of all claims and counterclaims, totals less than
five million dollars ($5,000,000); or (b) the amount in dispute is five million dollars
($5,000,000) or greater and the Parties agree in writing to arbitration before a sole arbitrator. The
panel of three arbitrators will be chosen as follows: (y) upon the written demand of either Party
and within fifteen (15) Days from the date of such demand, each Party will name an arbitrator;
and (z) the two Party-appointed arbitrators will thereafter, within thirty (30) Days from the date
on which the second of the two arbitrators was named, name a third arbitrator who will act as
chairperson of the arbitral tribunal. In the event that either Party fails to name an arbitrator
within fifteen (15) Days from the date of a written demand to do so, then upon written
application by either Party, that arbitrator will be appointed by the AAA in accordance with its
Commercial Arbitration Rules. In the event that the two Party-appointed arbitrators fail to
appoint the third arbitrator within thirty (30) Days from the date on which the second of the two
arbitrators was named, then upon written application by either Party, the third arbitrator will be
appointed by the AAA in accordance with its Commercial Arbitration Rules. If the arbitration
will be before a sole arbitrator, then the sole arbitrator will be appointed by agreement of the
Parties within fifteen (15) Days upon written demand of either Party. If the Parties cannot agree
to a sole arbitrator, then upon written application by either Party, the sole arbitrator will be
appointed by the AAA in accordance with its Commercial Arbitration Rules.
2. Discovery. The Parties adopt the initial disclosure requirements embodied in Rule
26(a) of the Rules of Federal Civil Procedure, without regard to any local rule or order
suspending the effect of such initial disclosure requirements. The nature and extent of any
further discovery to be conducted by the Parties will be determined by the arbitral tribunal or
sole arbitrator based on a showing by the Party seeking additional discovery that such additional
discovery is required to present the dispute properly for final resolution. In determining the
scope of discovery, the arbitral tribunal or sole arbitrator will consider that in adopting this
Section was the intent to limit discovery appropriately.
3. Procedure and Place of Arbitration. Notwithstanding the selection of choice of
law, the procedure of the arbitration proceedings will be conducted in accordance with the
Commercial Arbitration Rules of the AAA. The place of arbitration will be Harris County,
Houston, Texas.
4. Award. The arbitral tribunal or sole arbitrator will submit a written, reasoned
award within a reasonable period of time after the naming of the third arbitrator, or in the case of
a sole arbitrator, within a reasonable period of time after the naming of that sole arbitrator. In no
event will the award be submitted more than twelve (12) Months after the naming of the third
Page A-2
arbitrator or sole arbitrator, except in extraordinary circumstances as reasonably determined by
the arbitral tribunal or sole arbitrator. The award will be final and binding on all Parties. Special,
punitive and exemplary damages are not recoverable, notwithstanding any other provision in
these General Terms and Conditions.
5. Costs & Expenses. All fees and expenses in connection with such arbitration
proceedings (except the fees and expenses of counsel, witnesses, and employees of each Party,
which will be borne solely by the Party incurring them) will be divided equally between the
Parties, provided that the arbitral tribunal or sole arbitrator may award the prevailing Party all or
a portion of its reasonable fees and expenses (including the fees and expenses of counsel,
witnesses, and employees).
6. Confidentiality. The arbitration proceedings, including any (a) discovery; (b)
award; (c) evidence, statement, conduct, or action; (d) hearing, and (e) offers to settle in
connection with the arbitration, are confidential and will not be disclosed to third parties except
(x) in connection with a suit for enforcement of the award, (y) as required by law or as part of
good-faith compliance with disclosure obligations under applicable law, or (z) when reasonably
necessary to explain the terms and conditions of the award to outside attorneys, auditors, and
insurers. Any offer, promise, conduct, statement, or evidence made in the course of the
arbitration by any of the Parties, their agents, employees, experts, or attorneys are confidential
and shall be considered inadmissible under Rule 408 of the Federal Rules of Evidence, and any
similar state provisions, for any purpose, including impeachment. Evidence that is otherwise
admissible shall not be rendered inadmissible as a result of its use in the arbitration proceedings.
7. Consent to Judgment. Judgment on the award may be entered by any court of
competent jurisdiction. The prevailing Party shall be entitled to recover all reasonable fees and
expenses, including attorneys’ fees, in connection with any enforcement of the award.
Page B-1
EXHIBIT B
MARINE PROVISIONS
FOR NATURAL GAS
LIQUIDS
I) General - Except where specifically provided otherwise in the Confirmation, these Marine Provisions shall govern as to the matters covered herein.
II) Definitions - Capitalized terms used, but not defined herein, shall have the meaning
set forth in the General Terms and Conditions. As used in these Marine Provisions:
1) “All Fast” means at such time as the Vessel is completely moored at the Cargo Custody Transfer Point with the gangway, if it is to be utilized, down and secured.
2) “Cargo” means any Product(s) described in the Contract.
3) “Cargo Custody” Transfer Point means the Delivery Location designated in the
Confirmation where custody of the Cargo is transferred from Terminal Party to Vessel
Party or Vessel Party to Terminal Party.
4) “COC” means Certificate of Compliance.
5) “COI” means United States Coast Guard Certificate of Inspection or similar
documentation for other flag or port states.
6) “Confirmation” means the specific transaction terms and conditions of the Contract
including but not limited to provisions relating to quantity, quality, term, delivery and
price and which manifests a contract for sale of a Cargo.
7) “Contract” means and includes the following documents in connection with each
Transaction involving waterborne delivery of Cargo entered into by and between
Buyer and Seller to which these Marine Provisions are attached: (A) the Confirmation
(including amendments thereto); (B) these Marine Provisions; and (C) the General
Terms and Conditions (then latest edition).
8) “Controlled Tonnage” means Vessels that are owned/operated or bareboat or time
chartered by a Party.
9) “Customary Anchorage” means a recognized anchorage within the designated port
for a Cargo Custody Transfer Point.
Page B-2
10) “Delivery Window” means the Delivery Period set out in the Confirmation or the
scheduler’s nomination which designates the time period during which the Vessel is
to endeavor to tender NOR at the Cargo Custody Transfer Point, or as near thereto
as she may safely get, as established by the Contract.
11) “ETA” means estimated time of arrival.
12) “General Terms and Conditions” means the General Terms and Conditions of
Phillips 66 Company for the applicable Product as in effect or modified from time to
time. 13) “IGS” means an inert gas system.
14) “IIC” means an independent inspection company.
15) “Inland Vessel” means a United States Coast Guard-approved or American Bureau of
Shipping inspected tow and/or tank barge and/or a tug that is restricted to operations in the inland waterways of the United States.
16) “Lightering” or “Ship to Ship operations” means the process of transferring cargo
between vessels.
17) “LPG” means liquefied petroleum gas
18) “Marine Claims” means any dispute or claim arising under these Marine Provisions,
including but not limited to demurrage claims disputes.
19) “NGL” means natural gas liquids
20) “Non-Controlled Tonnage” means any Vessel that is not Controlled Tonnage of a Party, such as spot or voyage chartered Vessels.
21) “NOR” means Notice of Readiness.
22) “Ocean-Going Barge” means a United States Coast Guard approved or American
Bureau of Shipping inspected tank barge that has an ABS Load Line Certification and
is certified to operate in offshore waters.
23) “Ocean-Going Vessel” means an Ocean Tanker or Ocean-Going Barge.
24) “Ocean Tanker” means any ship, tanker or combination carrier that is certified to
operate in offshore waters.
25) “OCIMF” means the Oil Companies International Marine Forum.
26) “Open Period for Berthing” means a window for berthing, which either has not
already been assigned by the Terminal to some other vessel, or for which some other
vessel cannot claim priority on the basis that her NOR was given earlier than the NOR
of the Vessel performing under the Contract.
Page B-3
27) “Security Regulations” means, collectively, the International Ships and Port Facility Security Code and the U.S. Maritime Transportation Security Act of 2002.
28) “Service Vessel” means the maneuvering or Lightering vessel, which will receive the
cargo from the Ship to be Lightered, and transport its cargo to its discharge berth.
29) “TVE” means Tank Vessel Examination.
30) “Terminal” means any refinery or terminal facility delivering Cargo to or receiving
Cargo from a Vessel.
31) “Terminal Party” means the Party taking delivery from, or making delivery to, a Vessel
at a Terminal.
32) “Tow” means an Inland Vessel or an Ocean-Going Barge.
33) “Vessel” includes any Ocean-Going Vessel or Inland Vessel.
34) “Vessel Owner” means the Vessel Party if the Vessel Party is the owner/operator of
the Vessel. If the Vessel Party is not the owner/operator of the Vessel, then “Vessel
Owner” means the then current owner/operator of the Vessel.
35) “Vessel Party” means the Party nominating a Vessel to perform under the Contract.
36) “Vessel Vetting” is the technical risk assessment and evaluation process prior to
Vessel acceptance/rejection by the Vessel Party and/or the Terminal.
37) “Ship to be Lightered” means the Vessel which will deliver the cargo to the Service
Vessel.
III) Vessel Requirements
A) Phillips 66 Vessel Vetting: Each Vessel to be nominated under these
provisions shall always be of an acceptable condition that complies with the P66
Marine Vetting and Audit Criteria Summary for Vessel Operators, and each
Party involved in the Transaction, including the Terminal(s), reserves the right
to inspect (or not to inspect) and accept the Vessel(s) nominated for use, including
vessels used in Lightering operations and the company utilized for lighterage
support, except in the case of Transactions where both of the following conditions
exist: a) FOB Transactions where P66 is Seller or DES Transactions where P66 is
Buyer AND b) where the Delivery Location is a third party terminal where P66
leases tankage (unless specifically otherwise required by contractual agreement).
The Vessel(s) so nominated must be accepted in all respects and by P66 Marine
Vetting before officially tendering its valid NOR. The acceptance or rejection of
the Vessel will not be unreasonably withheld and shall be communicated to the
other Party within twenty-four (24) hours (1 business day) after receipt of
nomination and all required vetting data or in the case tugs/towboats and/or barges
shall be done within a timely manner. An acceptance of a Vessel will not
constitute a continuing acceptance of the Vessel for any subsequent loading
Page B-4
or discharging operations. Further, P66 reserves the right to rescind a Vessel
acceptance on any reasonable ground if such Vessel is involved in any incident
or if more recent information regarding the Vessel s status or similar becomes
available at any time after a Vessel is accepted but prior to tender. The
Seller/Terminal Party reserves the right, but not the duty, to have a
representative(s) attend onboard the Vessel at any loading and/or discharging
location at their expense and the Master, Vessel Owner, operators, managers
and/or agents shall cooperate to facilitate the attendance.
Note: The P66 Marine Vetting and Audit Criteria Summary for Vessel Operators
document is accessible through the P66 link at www.SIS3.com. Vessels not
meeting the requirements in this Article III may be rejected by Terminal Party at
Terminal Party’s sole, but reasonably applied, discretion and neither review nor
failure to review these requirements shall be deemed to waive or diminish
Terminal Party s rights or Vessel Party s obligations herein.
B) Vessel Regulatory Compliance. The Vessel Party shall exercise due diligence to
ensure that, throughout the Cargo transfer operation, the Vessel shall fully comply,
or hold authorized waivers for non-compliance, with all applicable flag or port
state or other regulations (ex. United States Coast Guard regulations) in effect as
of the date Vessel berths. All expenses and time lost during any period when this
warranty has been breached shall be for Vessel Party’s account.
C) Environmental Compliance.
i. The Vessel Party shall exercise due diligence to ensure that the Vessel shall
comply with all applicable local, state and federal environmental laws and
regulations covering water, air and land pollution while at the place(s) of the
Cargo Custody Transfer Point. If the Vessel fails to comply with such laws
and regulations, the Vessel may be required to vacate her berth and proceed to
the Customary Anchorage or waiting place. All expenses and time lost during
any period when this warranty has been breached and until the Vessel
reberths and is found to be in compliance with the aforementioned laws and
regulations shall be for Vessel Party’s account. ii. The Vessel Party must have current hydrogen sulfide (H2S) and benzene
policies and procedures for handling excessive levels of H2S and benzene. It must be recognized that petroleum products have the potential to contain H2S and/or benzene.
D) Oil Pollution Responsibility Certificate. The Vessel Party shall exercise due
diligence to ensure that the Vessel complies with the U.S. Federal Water
Pollution Control Act, as amended, the U.S. Federal Oil Pollution Control Act
of 1990 (OPA 1990), and regulations issued pursuant thereto effective during
the term of the Contract, and has secured and carried onboard the Vessel a
current U.S. Coast Guard Certificate of Financial Responsibility (COFR) (Water
Pollution). The Vessel Party shall exercise due diligence to ensure that a Vessel
also have onboard any other applicable local, state or federal Proof of Financial
Responsibility Certificate that may be required at the Cargo Custody Transfer
Point.
Page B-5
E) Insurance. This provision shall be applicable only between Parties and shall not
affect any liability of the Vessel to third parties, including but not limited to governments. i. For Ocean-Going Vessels, the Vessel Party shall exercise due diligence to
ensure that throughout the Vessel's service under the Contract, the Vessel shall: 1. be entered in a P&I club, being a member of the International Group of
P&I Clubs and have in place insurance cover for oil pollution for the greater of the maximum on offer through the International Group of P&I Clubs or 1 billion U.S. dollars; and
2. carry hull & machinery insurance at least equal to the “agreed” value of the Vessel.
ii. For Inland Vessels, the Vessel Party shall exercise due diligence to ensure
that throughout the Vessel's service under the Contract, the Vessel shall:
1. have protection & indemnity insurance, including pollution liability
insurance, procured from a P&I Club in the International Group of P&I
clubs, WQIS, or another insurer(s) with a minimum rating by A.M. Best
Company of A minus to be reasonably approved by Terminal Party with
a minimum of 100 million U.S. dollars per incident; and 2. carry hull & machinery insurance at least equal to the “agreed” value of the
Vessel. iii. All such insurance shall be at no cost to the Terminal Party. Upon request of
the Terminal Party, the Vessel Party shall promptly furnish to the Terminal
Party reasonable evidence of required insurance.
iv. To the extent applicable, all Ocean-Going Vessels shall carry on board a valid
certificate of insurance as described in the 1969 Civil Liability Convention
for Oil Pollution Damage or the International Convention of Civil Liability
for Oil Pollution Damage 1992.
v. The Vessel Owner representations and warranties set forth above are an
essential part of the Contract, and the obligations of the Terminal Party under
the Contract are conditional on the truth and performance of such
representations warranties. Any breach of the above representations and
warranties shall entitle the Terminal Party to terminate the Contract and/or to
recover any damages allowable in law, admiralty or equity.
F) Vessel Connection Construction. Vessel Party shall exercise due diligence to
ensure that all piping, valves, spools, reducers and other fittings comprising that portion of the Vessel’s manifold system outboard of the last fixed rigid support to
the Vessel’s deck and used in the transfer of Cargo, bunkers or
ballast, will be made of steel or nodular iron. The fixed rigid support for the
manifold system must be designed to prevent both lateral and vertical
movement of the manifold. Further, Vessel Party shall exercise due diligence to
ensure that no more than one reducer or spool piece (each in compliance with the
American National Standards Institute ANSI standard) will be used between the
Vessel s manifold valve and the Terminal hose or loading arm connection and this
cantilever length should not exceed the standard for the size of the manifold
piping.
G) Carrier Alpha Code. Where bills of lading are issued, the Vessel Party shall
Page B-6
exercise due diligence to ensure that the Bill of Lading issuer shall have and use a
standard carrier alpha code (SCAC) required by the U.S. Customs regulations.
H) U.S. Customs and Border Protection Compliance. The Vessel Party shall exercise
due diligence to ensure that the Vessel shall fully comply or hold waivers for
non-compliance with all applicable U.S. Customs regulations in effect as of the
date Vessel berths. The Vessel Party shall provide all required Customs
information to the U.S. Customs and/or the Terminal Party prior to Vessel
arrival. Without limitation, Vessel Party shall exercise due diligence to ensure
that the Vessel shall comply with all obligations imposed upon her or the Vessel
Owner under the Security Regulations. Terminal Party shall exercise due diligence
to ensure that the discharge Terminal shall comply with any obligations imposed
upon it or the Vessel Owner under the Security Regulations.
I) Drug and Alcohol.
i. Vessel Party shall exercise due diligence to ensure that the Vessel Owner of a
US flag Vessels has in force a drug and alcohol policy that meets or exceeds
the standards set forth by the U.S. Coast Guard Regulations, and any other
applicable federal, state or local laws, and that such a policy includes: pre-hire,
random/unannounced, and post-incident testing adequate to act as an effective
abuse deterrent. Vessel Party shall exercise due diligence to ensure that this
policy will remain in effect during the term of the Contract with regard to the
applicable Vessel(s), and the Vessel Party shall require the Vessel Owner to
exercise due diligence to ensure that such a policy is complied with.
ii. Vessel Party shall exercise due diligence to ensure that Vessel Owner of a non
US flag Vessel has in force a drug and alcohol policy that meets or exceeds
the standards set forth by their flag state and also meets or exceeds the
Standards set in the most recent edition of the “Guidelines for the Control of
Drugs and Alcohol on Board Ship” as published by the OCIMF. Vessel Party
shall exercise due diligence to ensure that this policy will remain in effect
during the term of the Contract with regard to the applicable Vessel(s), and the
Vessel Party shall require the Vessel Owner to exercise due diligence to ensure
that such a policy is complied with, unless not permitted by the Flag state. IV) Nominations and Pre-Arrival Conditions
A) Delivery Window Nomination. Unless otherwise agreed in writing by the Contract
parties, the Vessel Party shall nominate, in writing, a three (3) day Delivery
Window not less than forty five (45) days before the first day of the delivery
month. The Terminal Party will notify the Vessel Party not later than the close of
business on the third business day after receipt of such nomination as to actual
Delivery Window and will make best efforts to accommodate Vessel Party’s
nomination.
B) Vessel Nomination. Unless otherwise agreed in writing, not less than six (6) days
before a Tow’s arrival at the Cargo Custody Transfer Point, nor less than
Page B-7
t w e l v e (12) days before arrival of any other t a n k v e ssel at the Cargo
Custody Transfer Point, the Vessel Party shall nominate for acceptance by the
Terminal Party a suitable Vessel which is proposed to perform under the Contract.
Provided however, that if upon execution of the Contract there is less than s i x
(6) days before a Tow’s arrival at the Cargo Custody Transfer Point or less than
twelve (12) days before arrival of any other LPG Vessel at the Cargo Custody
Transfer Point, then the Vessel Party shall, as soon as reasonably practicable,
nominate for acceptance by the Terminal Party a suitable Vessel which is proposed
to perform under the Contract. The Vessel Party shall furnish, as required by the
Terminal Party, data about the Vessel’s dimensions, equipment, winches and lines,
and such other data or documents as the Terminal Party may reasonably require.
C) LPG Tank Readiness. Unless otherwise agreed, Vessels proceeding to the
Terminal for the purposes of loading refrigerated gas liquid Cargo are to arrive with
their tanks, pumps, lines compressors and condensers liquid free under the vapors
of last cargo which shall be propane and/or butane with butadiene content not
exceeding 0.5 percent by weight. Vessel’s designated tanks to be under a slight
overpressure and fully cooled down ready to receive the nominated Cargo to IIC’s
inspector satisfaction. If Vessel fails to arrive with tanks ready for loading, any
NOR acceptance will be rescinded and all time and expenses required for Vessel to
have its tanks in a load ready condition will be for Vessel Party’s account.
D) Vessel Substitution. If a Vessel nomination is rejected by the Terminal Party,
the Vessel Party must promptly nominate another, suitable Vessel for acceptance
by the Terminal Party. If a Vessel nomination is accepted by the Terminal Party,
the Vessel Party may substitute another suitable Vessel by nominating it for
acceptance by the Terminal Party. Unless otherwise agreed in writing,
nomination of a substitute Vessel shall be made not later than four (4) days before
the Vessel s arrival at the Cargo Custody Transfer Point or four (4) days before
the first day of the Delivery Window, whichever is earlier. A Vessel
nomination that has been accepted by the Terminal Party is not superseded until
the Terminal Party has accepted a substitute Vessel nomination. Tug substitution
must be done within twenty-four (24) hours’ notice and only after Vessel
clearance as above. However, a twelve (12) hour notice period will be
considered by the Terminal Party for inland and cross harbor movements. Tugs
must be of the similar size, capacity, capability and costs. Terminal Party will have
the option to approve or reject any substitute.
i. ETAs.
1. At no time shall the ETA constitute an agreement to alter the Delivery
Window in the Contract or in the scheduler’s nomination, if different.
2. Unless otherwise agreed in writing, the Vessel Party shall give notice in
writing to the Terminal Party of the Vessel’s ETA at the Cargo Custody
Transfer Point. When applicable, such notice must be received by the
Terminal Party at least four (4) days in advance of such arrival by a
Tow, and at least seven (7) days in advance of such arrival by any
other Vessel. When applicable, such notice shall be actually received by
the Terminal Party 72, 48, 24 and 6 hours before Vessel’s expected
Page B-8
arrival at the Cargo Custody Transfer Point.
3. The Vessel Party shall promptly notify the Terminal Party in writing
about a new ETA if the ETA advances or recedes by two (2) hours or
more after the twenty-four (24) hour ETA notice has been given.
ii. Pre-Arrival Information. The Vessel Party shall furnish, as reasonably
requested by the Terminal Party, additional data in writing, about the Vessel’s
dimensions, loading temperature of the Vessel’s cargo tanks, the Vessel’s last
three previous cargoes carried in all tanks, seaworthiness, equipment, and
certificates, as well as the nature and estimated duration of the Vessel s
anticipated Cargo handling and other operations at the Cargo Custody Transfer
Point, such information to be actually received by the Terminal Party not later
than forty-eight (48) hours, if reasonably possible, before the Vessel’s arrival
at the Cargo Custody Transfer Point.
iii. Terminal Regulations. If the Cargo Custody Transfer Point is a marine
Terminal, a Vessel must comply at all times with the applicable Terminal
regulations. Copies of such regulations should be requested of the Terminal. V) Delivery Window/Berthing
A) Priority in Berthing.
i. Subject to subparagraph B. of this Paragraph V.1., priority in berthing shall be
given to a Vessel that tenders NOR within her agreed Delivery Window over
a Vessel that tenders NOR outside her agreed Delivery Window.
ii. Vessels will be accorded priority in berthing in the order in which each
Vessel’s valid NOR is received by the Terminal, provided NOR is tendered
within the agreed Cargo Window. The Terminal Party reserves the right to
berth Vessels consistent with its operating and Terminal requirements.
B) Notice of Arrival of Vessel After Delivery Window. As soon as it becomes apparent
that the nominated Vessel will arrive after its Contractual Delivery Window, the
Vessel Party will immediately notify the Terminal Party in writing of this delay
along with the expected new ETA. The Terminal Party will evaluate and advise
within two (2) business days if the new ETA can be accommodated in the Terminal
schedule. If the Vessel can be accommodated, such accommodation does not and
will not constitute a new Delivery Window under the original Contract and Vessels
arriving after their original Delivery Window will be scheduled for loading at the
earliest practicable time. Laytime for Vessels arriving after their original Delivery
Window will not commence until the vessel is All Fast at the terminal. Vessels
arriving after their original Delivery Window without the required notification to the
Terminal Party or if the, Terminal cannot accommodate the new ETA of the Vessel
in its schedule, the Terminal Party can refuse to deliver or receive the Cargo, as
applicable, without prejudice to any other rights which the Terminal Party may have
pursuant to the Contract. VI) Vessel at the Berth/Cargo Transfer Operations
Page B-9
A) Non-Compliance with Terminal Regulations or Breakdown of Vessel Safety or
Environmental Systems.
The Terminal Party may instruct the Vessel to vacate her berth if (i) it appears that
the Vessel will not, because of disability or any other cause on the part of the
Vessel, be able to complete loading or discharge within the “allowed laytime”; (ii)
if the Vessel fails to comply with the Terminal’s regulations or (iii) there is a
deficiency in the Vessel’s safety, mooring, or environmental systems, processes or
management. Allowed laytime is the number of hours that the Terminal is
permitted for all activities associated with loading or discharging a Vessel without
paying demurrage. Used laytime is the number of running hours between the
beginning of laytime and the ending of laytime less certain exclusions. Upon
receipt of instructions from the Terminal Party that the Vessel is to vacate the
berth, laytime or demurrage shall cease. The Vessel, after tendering NOR to
recommence loading or discharging, shall be reberthed in accordance with
Terminal Party’s assignment. Laytime or demurrage will only resume counting
upon the recommencement of Cargo operations. If the Vessel does not vacate the
berth following said instructions, the Vessel Party agrees to reimburse the
Terminal Party for any consequential demurrage claims received from other
parties.
B) Pollution Prevention and Responsibility. In the event an escape or discharge of
Cargo or bunkers, or risk of escape or discharge of Cargo or bunkers occurs from
the Vessel and causes or threatens to cause pollution damage, the Vessel Party
will, or will ensure that the Vessel will, promptly take whatever measures it
determines are necessary to prevent or mitigate such damage. Any of the
aforementioned measures shall be at the Vessel Party’s time and expense,
provided that if the Terminal caused or contributed to such escape or discharge,
the expense of the aforementioned measures shall be borne by the Terminal Party
in proportion to its negligence or willful misconduct in causing or contributing to
the escape or discharge. This provision shall be applicable only between the
Parties hereto and shall not affect any liability of either Party to third parties,
including, but not limited to, governmental agencies.
C) Inert Gas System. Unless the Terminal prohibits Vessels from arriving with
Cargo tanks inerted, all Vessels fitted with an IGS will not be permitted to tender
NOR or berth or discharge of any Cargo unless the IGS is fully operational and
all Cargo tanks are inerted with an oxygen level at or below eight (8) percent.
For a Vessel intending to handle Cargoes that could be adversely affected by
inert gas, the Vessel Party may request from the Terminal Party an exemption
from this clause, this request to be made at least three (3) Business Days prior to
the Vessel’s arrival at the Cargo Custody Transfer Point. Such exemption request
shall not be unreasonably withheld. All measurement equipment, procedures,
calculations, and practices performed while Vessel is inerted shall conform to the
most current API Manual of Petroleum Measurement Standards (MPMS), to the
satisfaction of the IIC. Should the IGS fail after the Vessel has berthed, Cargo
Page B-10
handling shall be terminated immediately and the Terminal notified, and the
Vessel may be ordered to vacate the berth until her IGS is fully operational and
tanks are inerted to the requisite pre-arrival condition. Temporary or substitute
equipment or procedures to correct IGS malfunctions may not be used without the
Terminal Party s approval. All expenses during IGS failure and between berthings
in connection with IGS failure are for Vessel Party s account. Laytime or
demurrage shall cease counting upon the stoppage of Cargo operations as a result
of IGS failure and will only resume counting upon the recommencement of Cargo
operations.
D) Shifting of Vessels. Unless otherwise provided in the Contract including
Paragraph VI(1) hereof, all expenses and time during any shifting of the Vessel
shall be for the Vessel Party’s account unless done at the request of the Terminal
Party. The Terminal Party may otherwise, at its option, shift the Vessel within a
berth or between berths, as well as to and from the anchorage, and any expenses
and time lost during such activities shall be for the Terminal Party’s account.
E) Ballasting and Cargo Slops.
i. If the Cargo Custody Transfer Point has ballast water and/or slops handling
facilities, the Vessel may discharge ballast water and/or Cargo slops up to the
maximum capacity available. Unless concurrent with Cargo handling, all time
used during ballasting, deballasting or offloading slops, any charges for these
services, and any delay due to waiting for service facilities shall be for the
Vessel Party’s account. If the Vessel must shift to and/or from such facilities,
all time used by the Vessel in shifting as well as the shifting expenses shall be
for Vessel Party’s account. Title to Cargo slops shall pass to the Terminal Party
at the first permanent flange on shore. Vessel Party shall exercise due
diligence to ensure that the Cargo slops do not contain any Vessel-generated
waste. The Terminal Party reserves the right to lab test the slop tank contents
prior to acceptance, provided that any resulting costs of delay, including
demurrage, shall be for the Terminal Party’s account.
ii. Vessel Party will or will cause Vessel to minimize the loading of ballast into
Cargo tanks previously containing crude oil (dirty ballasting) at discharge
Terminal . When ballasting is conducted simultaneously with discharge
operations, Vessel will maintain at least double valve segregation. During
dirty ballast operations, vapor balancing must be utilized between dirty ballast
loading compartments and discharging Cargo compartments, thereby
eliminating emission of Cargo vapors to the atmosphere. All delays, losses
and expenses incurred due to Vessel s non-compliance with this provision will
be for Vessel Party s account.
F) Special Provisions for Foreign Cargo Slops. Terminal Party shall be notified at
least three (3) Business Days in advance of discharge when a Vessel desires to
discharge foreign Cargo slops. Such notification shall include identity, description,
or chemical properties of components; country of origin; estimated value; and
estimated quantity. If advance notification is not received by Terminal Party, any
time lost in discharging Cargo slops from the Vessel because of a delay in securing
Page B-11
government clearance shall be for Vessel Party’s account. Additionally, regardless
as to when notification of the Vessel’s desire to discharge foreign Cargo slops
was received, all expenses, including but not limited to customs fees,
chemical analysis, removal and proper disposal of Cargo slops shall be for the
account of the Vessel Party.
G) Vessel-Generated Waste. Fees associated with the testing, removal or reception
of Vessel-generated waste, including fuel and lube oil sludge and oil bilge water,
shall be for the account of the Vessel Party. Any waiting for reception facilities
at a Terminal for Vessel-generated waste shall be for Vessel Party’s account. If
the Vessel must shift to and/or from such facilities, all time consumed by the
Vessel shifting as well as shifting expenses for tugs, mooring line handlers, and
pilots shall be for Vessel Party’s account. The Vessel Party shall retain title to
the waste material until it is tested and commingled with Terminal waste or,
alternatively, delivered to a waste disposal company possessing a valid permit. VII) Terminal-Related Conditions
A) Safe Berth Availability and Charges.
i. The Terminal Party shall exercise due diligence to provide a safe berth to
which the Vessel may proceed to, lie at, and depart always safely afloat.
However, if the Vessel cannot, in the Terminal Party’s sole opinion, maintain
its moor safely at the dock, then the Terminal Party at its sole discretion may
order hold-in tugs, and the cost of such tugs shall be for Vessel Party’s
account. The Terminal Party shall provide a safe berth for the Vessel free of
wharfage fees for normal Cargo transfer. The Terminal Party shall be entitled
to charge a wharfage fee for Vessels that cause or otherwise contribute to
unreasonable delays or expenses while in port. Dockage and service fees,
including mooring, booming, fresh water, steam and oily slops receipts will be
charged to the Vessel Party. In addition, all duties and other charges on the
Vessel, including, without limitation, those incurred for tugs and pilots, and
other port costs shall be for the Vessel Party’s account.
ii. Notwithstanding anything contained in this clause or the Contract, the Terminal
Party does not warrant the safety or draft of public channels, fairways,
approaches thereto, anchorages or other publicly- maintained areas either
inside or outside the port area where the Vessel may be directed. Terminal
Party shall not be liable for (i) any loss, damage, injury or delay to Vessel
resulting from the use of such waterways not caused by the Terminal Party’s
fault or negligence or willful misconduct or which could have been avoided by
the exercise of reasonable care on the part of the Vessel or her Master, or (ii)
any damage to Vessels at the Terminal caused by other vessels passing in the
waterway.
B) Representative. Terminal Party and Terminal may, at their option, place a
representative or representatives on board the Vessel to observe loading and/or
discharging of Cargo and related operations during the period after the Vessel has
Page B-12
arrived at the port wherein the Cargo Custody Transfer Point is located. In
addition, Terminal Party and Terminal may, at their option, place a representative
or representatives on any Vessel involved in a Lightering operation. The
representatives will advise the Vessel Master(s) or Mooring Master about
avoidance of pollution, unsafe acts, or violation of Terminal regulations.
Terminal Party's or Terminal’s representative will not however, under any
circumstances order or direct the Vessel, her officers or crew to take any particular
action, or interfere in any way with the Master's exercise of his authority. The
responsibility and liability for any pollution, unsafe acts, or violation of Terminal
requirements remains with the Vessel and her Master.
C) Hoses and Simultaneous Discharge.
i. Hoses between a Vessel and the shore flanges shall be furnished by the
Terminal Party, unless otherwise specified by the Terminal. Flanges for hose
connections should be at or near the Vessel’s dockside rail and should comply
with OCIMF recommendations. Crossover hoses between barges, or hoses at
crossover offshore manifolds of Vessels (i.e.,”jumpers”), shall be furnished and
connected by the Vessel at the risk and expense of the Vessel Party.
ii. Vessel’s Cargo hoses, including marine vapor recovery (“MVR”) and
offshore manifold crossover hoses (or jumpers), must be tested annually and
be in service for less than five years. Documentation of annual hydrostatic
testing and service age must be aboard the Vessel and available to the Terminal
Party on request. Any delay arising from Vessel s failure to provide
aforementioned complete and up to date documentation shall not count as used
laytime or as time on demurrage.
iii. If requested by the Terminal Party, Vessel shall load or discharge Terminal
Party’s grades simultaneously whenever the Cargo Custody Transfer Point
allows. Any delay arising from Vessel’s failure to work Terminal Party’s
grades simultaneously shall not count as laytime or as time on
demurrage.
D) Damage to Terminal Party’s Property. Vessel Party shall be liable for any damage
sustained by wharves, berths, docks, tugs, or vessels owned or maintained by the
Terminal Party, or for which the Terminal Party is responsible, arising out of the
negligent or improper operation of the Vessel or any other waterborne craft
ordered by, or being operated for the account of, the Vessel Party. The Vessel
Party will indemnify the Terminal Party for any such damages. Nothing in
these Marine Provisions or the Contract shall prejudice or deprive the Parties of
their rights or limitation or exclusion of liability under applicable laws or
regulation.
E) Shore Lines. If requested by the Vessel Party at least three (3) Business Days
prior to the Vessel’s arrival, the Terminal Party shall use best efforts to perform
a line press or line displacement prior to load or discharge to determine status
of shorelines and ensure accuracy of Cargo measurement.
Page B-13
F) In-Harbor Lightering. In-harbor Lightering shall not be permitted without prior
approval of the Terminal Party and the P66 Marine Vetting team. In-harbor
Lightering shall be performed at Vessel Party’s sole expense, time and risk.
Terminal Party’s approval shall not relieve Vessel Party of the obligation to
indemnify and hold the Terminal Party harmless for any loss or liability
arising from or attributable to Vessel Party’s fault or negligence or willful
misconduct. VIII) Inland Vessels
A) Notice of Readiness.
i. After the Vessel has arrived at the customary waiting area or other place of
waiting as required by the shore facilities for the designated Cargo Custody
Transfer Point, and is in all respects ready to proceed to the berth to
commence loading or discharging the Cargo in accordance with the terms of
the Contract, the Captain or Barge representative shall promptly give such
shore facilities and the Parties hereto notice, berth or no berth via
electronic mail, fax, letter, telegraph, wireless radio or satellite
communication available, radio telephone or telephone.
ii. If, immediately prior to giving NOR, at hoses off, the Vessel is discharging or
loading another cargo in a berth at the port wherein the Cargo Custody
Transfer Point is located, or waiting at a layberth there, NOR may be tendered
at such berth, but time used in shifting from such berth to the anchorage or to
the loading or discharging berth shall not count as laytime or time on
demurrage.
B) Allowed Laytime
i. If not otherwise specified in the Contract or scheduler’s nomination,
allowed laytime for a pressurized Inland Vessel shall be calculated basis the
Cargo volume as follows: 2500 Bbls / Hour + 3 free hours
ii. In no event shall allowed laytime be less than twelve (12) hours, which
includes three (3) hours of free time.
C) Laytime Counting.
i. If an Inland Vessel tenders NOR prior to the commencement of the
Delivery Window, laytime shall commence at 0001 hours local time on the
first day of the Delivery Window or upon All Fast, whichever occurs
first, except in instances where the Vessel is berthed prior to such date
with the Terminal Party’s consent, laytime shall commence when All Fast.
ii. If an Inland Vessel tenders NOR within the Delivery Window, then laytime
shall commence upon NOR, berth or no berth, or upon All Fast, whichever
occurs first.
iii. If an Inland Vessel tenders NOR after the Delivery Window expires, then
laytime shall commence upon All Fast.
iv. Laytime shall cease when the Inland Vessel is released by the Terminal and/or
the IIC.
Page B-14
v. If more than one barge is utilized, barges will be expected to load or discharge
simultaneously.
1. If the Cargo Custody Transfer Point requires barges to berth
individually, time consumed in shifting the barges shall count as used
laytime or as time on demurrage.
2. If the Tow requires barges to berth individually, time consumed in
shifting the barges, from hoses off to All Fast, shall not count as used
laytime or as time on demurrage.
D) Pumping Warranties.
i. Inland Vessels, other than pressure barge units, will maintain an average of
100 psi at the Vessels manifold or maintain a pumping rate of 2500 barrels per
hour.
ii. Any time consumed due to the inability of the Vessel to discharge the Cargo
throughout the bulk of the discharge, within the specified warranties listed
above, shall not count as laytime or time on demurrage. IX) Ocean-Going Barges
A) Notice of Readiness.
i. After the Vessel has arrived at the Customary Anchorage or other place of
waiting as required by the shore facilities for the designated Cargo Custody
Transfer Point, and is in all respects ready to proceed to the berth to
commence loading or discharging the Cargo in accordance with the terms of
the Contract, the Captain, or Barge representative shall promptly give such
shore facilities and the Parties hereto notice, berth or no berth, via
electronic mail, fax, letter, telegraph, wireless radio or satellite
communication available, radio telephone or telephone.
ii. NOR may not be tendered until the Ocean-Going Barge has a current and valid
TVE, COC, COI and/or equivalents as required under current regulations.
iii. If, at hoses off, the Vessel is discharging or loading another cargo in a berth at
the port wherein the Cargo Custody Transfer Point is located, or waiting at a
layberth there, NOR may be tendered at such berth, but time used in shifting
from such berth to the anchorage or to the loading or discharging berth shall
not count as laytime or time on demurrage.
B) Allowed Laytime.
i. Unless otherwise provided in the Contract or scheduler’s nomination,
laytime shall be the number of hours as specified in the table below at the
Cargo Custody Transfer Point(s).
Cargo Quantity Laytime
UP to 29,999 barrels 15 hours
30,000 to 39,999 barrels 16 hours
40,000 to 49,999 barrels 17 hours
50,000 - 59,999 barrels 18 hours
60,000 - 69,999 barrels 19 hours
70,000 - 79,999 barrels 20 hours
Page B-15
80,000 - 89,999 barrels 21 hours
90,000 - 99,999 barrels 22 hours
100,000 - 109,999 barrels 23 hours
110,000 - 119,999 barrels 24 hours
120,000 - 129,999 barrels 25 hours
130,000 - 139,999 barrels 26 hours
140,000 - 149,999 barrels 27 hours
150,000 179,999 barrels 30 hours
180,000 or more 36 hours
C) Laytime Counting.
i. If an Ocean-Going Barge tenders NOR prior to the commencement of the
Delivery Window, then laytime shall commence at 0001 on the first day of
the agreed Delivery Window, except in instances where the Vessel is berthed
prior to such date with the Terminal Party’s consent, then laytime shall
commence when All Fast.
ii. If an Ocean-Going Barge tenders NOR within the agreed Delivery Window,
then laytime shall commence, berth or no berth, after tender of NOR, or when
All Fast, whichever occurs first.
iii. If an Ocean-Going Barge tenders NOR after the Delivery Window expires,
then laytime shall commence only when All Fast.
iv. Laytime shall cease when the Vessel is released by the Terminal and/or the IIC.
D) Pumping Warranties
i. Ocean-Going Barges, other than pressurized units, will maintain an average of
100 psi at Vessels manifold or discharge its entire Cargo within twenty-four
(24) hours.
ii. Any time consumed due to the inability of the Vessel to discharge the Cargo
throughout the bulk of the discharge, within the specified warranties listed
above, shall not count as laytime or time on demurrage. X) Ocean Tanker
A) Notice of Readiness.
i. After the Vessel has arrived at the Customary Anchorage or other place of
waiting as required by the designated Shore Facilities, and is in all respects
ready to proceed to the berth to commence loading or discharging the Cargo in
accordance with the terms of the Contract, the Master, Captain, Master’s
Agent or Tanker representative shall promptly give such Shore Facilities and
the Parties hereto notice, berth or no berth, via electronic mail, fax, letter,
telegraph, wireless radio or satellite communication available, radio telephone
or telephone. Unless otherwise agreed, the Customary Anchorages for the
following Cargo Custody Transfer Points shall be deemed to be as indicated
and all other Customary Anchorages and Cargo Custody Transfer Points shall
be provided upon request:
ii. If NOR is tendered orally by an Ocean Tanker, confirmation in writing shall be
made within twelve (12) hours when required.
iii. NOR may not be tendered until the Ocean Tanker has a current and valid TVE,
COC, and COI.
Page B-16
iv. If, immediately prior to giving NOR, at hoses off, the Vessel is discharging or
loading another cargo in a berth at the port wherein the Cargo Custody
Transfer Point is located, or waiting at a layberth there, NOR may be tendered
at such berth, but time used in shifting from such berth to the anchorage or to
the loading or discharging berth shall not count as laytime or time on
demurrage.
B) Allowed Laytime.
Unless otherwise provided in the Contract or scheduler’s nomination, forty-eight
(48) running hours for cargo quantities equal to or greater than 40,000 cubic
meters and thirty-six (36) running hours for cargo quantities less than 40,000 cubic
meters shall be permitted to the Terminal Party as laytime at the Cargo Custody
Transfer Point(s) for a fully refrigerated, semi-refrigerated or pressurized LPG
cargo or pro rata thereof for part cargo based on the total cubic meters of cargo
carried by the Ocean Tanker on that voyage.
C) Laytime Counting.
i. If an Ocean Tanker tenders NOR prior to the agreed Delivery Window, then
laytime shall commence at 0600 on the first day of the agreed Delivery
Window, except in instances where the Vessel is berthed prior to such date,
with the Terminal Party’s consent, laytime shall commence when All Fast.
ii. If an Ocean Tanker tenders NOR within the agreed Delivery Window, then
laytime shall commence, berth or no berth, six (6) hours after the tender of
NOR, or when All Fast, whichever occurs first.
iii. If an Ocean Tanker tenders NOR after Delivery Window expires, then laytime
shall commence when All Fast.
iv. Laytime shall run until the cargo hoses have been finally disconnected upon
completion of loading or discharging, provided always that if the Vessel is
detained solely for the purposes of awaiting Cargo documents at load port for
more than three 3 hours beyond the final disconnection of cargo hoses,
laytime shall recommence after such three 3 hours and terminate upon
completion of Cargo documentation. If after completion of loading the Vessel
is required to proceed to an anchorage for the Vessel Party s purposes, then the
time spent moving from the berth to the anchorage shall not count as part of
the three 3 hours referred to above or as laytime.
D) Pumping Warranties.
i. Ocean Tankers, other than LPG tankers carrying pressurized or refrigerated
cargoes, will maintain an average of 100 psi at Vessels manifold or discharge
its entire cargo within twenty-four (24) hours.
ii. Any time consumed due to the inability of the Vessel to discharge the Cargo
throughout the bulk of the discharge, within the specified warranties listed
above, shall not count as laytime or time on demurrage. XI) Deviation
Page B-17
If Buyer elects to change Delivery Location or adds additional ports, it will be subject
to the governing charter party restrictions, if any, and all cost will be for Buyers
account, including additional steaming time at the demurrage rate plus bunkers,
additional expenses at the port, and port time from end of sea passage until start of sea
passage at the demurrage rate. XII) Interim Ports
Buyer shall pay for any interim load/discharge port(s) at cost. Time for additional
steaming, which exceeds direct route from first load port to furthest discharge port,
shall be paid at the demurrage rate plus bunkers consumed, plus actual port costs.
Time used at each additional port shall be paid at the demurrage rate beginning at
end of sea passage and ending at start of sea passage. XIII) Global Lightering or Ship to Ship Transfer
A) If Lightering is performed at any customary Lightering anchorage designated by
the local port authority, time used in such Lightering to count as used laytime.
Such anchorage shall not be considered as a second discharge port or second
discharge berth and running time from such anchorage to berth shall not count as
laytime, or time on demurrage if the allowed laytime has expired. Laytime at
anchorage (whether or not the Vessel is on demurrage) shall begin after receipt of
NOR by Vessel Owner.
B) Any and all expenses incurred at lighterage anchorage, except Vessel Party’s items
if Buyer is not Vessel Party, are to be for Buyer’s account, including but not
limited to deviation to and from said lighterage area, if any, and all port costs at
lighterage area providing acceptable supporting documentation provided.
C) Laytime and demurrage shall cease when all booms, fenders, hoses, reducers, and
all unmooring operations have been completed and workboat or Service Vessel(s)
have been separated.
D) All Lightering and Ship to Ship operations shall be performed according to OCIMF
guidelines.
E) Communication Information.
i. Notices: Where applicable, Vessel is to advise ETA to Lightering area 5-4-3-
2-1 days prior to arrival via telex, telephone, fax or email as per port state (ex.
United States Coast Guard) requirements and OCIMF STS Transfer Petroleum
latest edition and shall also give notice to the Terminal Party at the same
time.
ii. NOR to be tendered at the Customary Anchorage or designated Lightering
zone as specified by the local port authority. NOR's will be considered invalid
if not met with this requirement. Vessel should be anchored and ready to load
upon arrival to this Lightering zone. XIV) Shared Delays (Excluding Lightering)
Page B-18
A) Laytime shall be reduced to one-half for the following conditions:
i. Delays due to weather and/or sea conditions shall include, but not be limited to
lightning, ice, fog, frost, storm, wind, waves and/or swells;
ii. Daylight restrictions, channel blockage and/or port closures associated with the
shore facilities for the designated Cargo Custody Transfer Point;
iii. Breakdown or failure of equipment or machinery in or about the shore
facilities for the designated Cargo Custody Transfer Point;
iv. any delay for which laytime/demurrage consequences are not specifically
allocated in this or any other clause of these Marine Provisions and are
beyond the reasonable control of the Vessel or Terminal Party. XV) Laytime Exclusions
A) Time shall not count as laytime or time on demurrage if lost or spent due to:
i. Inward passage from a Lightering or waiting area to the Customary
Anchorage or berth, even if Lightering has taken place; or proceeding from
the Customary Anchorage to the berth, such time commencing at the earlier
of pilot on board or anchor aweigh and ending at All Fast.
ii. Awaiting pilots, tugs, or tides.
iii. Inability of the Vessel to discharge or receive Cargo safely or have the
IGS working properly, if applicable.
iv. The Vessel requiring separate and/or additional shore tank gauges for any
reason, or the Vessel’s failure to comply with Terminal regulations.
v. Prohibitions of Cargo transfer at any time by the Vessel, or the Vessel Party or
port authorities, unless such prohibition is caused by the Terminal Party’s
failure to comply with applicable laws or regulations.
vi. Vessel Party’s failure to have required documentation on board.
vii. Awaiting customs or immigration clearance, or free pratique.
viii. Strike, lockout, fire, explosion, torts of third parties, stoppage or restraint of
labor of the Master, officers and crew of the Vessel or towboat or pilots.
ix. Any delay for which the Vessel Party, the Vessel (including breakdown or
inefficiency of the Vessel), her Master or crew is responsible, including
without limitation, any delays occasioned by any failure of the Vessel to meet
the requirements of these Marine Provisions or the Contract.
x. Bunkering, ballasting, deballasting, or discharging slops unless concurrent
with loading or discharging of Cargo.
xi. A result of a labor boycott arising in connection with the business of the
Vessel or Vessel Party, the terms or conditions of employment of the Vessel or
Vessel Party’s servants, or employment, trades, or Cargoes of the Vessel.
xii. Restraint or interference in the Vessel’s operation by any governmental
authority in connection with the ownership, registration, or obligations of the
Vessel Party or the Vessel, or in connection with stowaways or with
smuggling or other prohibited activities of the Vessel’s or Vessel Party’s
servants.
xiii. Cargo contamination or damage caused by unseaworthiness or negligence or
Page B-19
willful misconduct of the Vessel or, servants of the Vessel or Vessel Party.
xiv. The Vessel’s unclean tanks, o r t ank no t coo led down read y to l oad
re f r i ge r a t ed LP G car go es , or inability to maintain heating or pumping
warranties, or the need for Vessel repairs.
xv. Any delay caused by the Vessel Party’s failure to comply with financial and/or
credit responsibilities to the Contract. XVI) Cargo Sampling and Analysis
A) If the quality of the Cargo is called into question (for example, quality as
determined by independent certified laboratory is evaluated as not meeting the
applicable specifications for the Cargo loaded or to be loaded as specified in the
sale/purchase agreement), any delays, including but not limited to, re-sampling
and/or analysis, shall be for the account:
i. of the Seller, should the Cargo in question fail to meet the applicable
specifications as per the Contract;
ii. of the Buyer, should the Cargo in question be in compliance with the
applicable specifications as per the Contract. XVII)Demurrage
A) Rate Determination. Demurrage shall be payable by the Terminal Party for all
laytime that exceeds allowed laytime at the following demurrage rates:
i. For Controlled Tonnage:
1. The demurrage rate will be as stipulated in the Contract or scheduler’s
nomination.
2. Should the demurrage rate not have been stipulated within the
Contract or scheduler’s nomination, then the daily hire rate for the
Vessel applies.
ii. For Non-Controlled Tonnage:
1. The demurrage rate will be the demurrage rate or daily hire rate included
in the charter party for the Vessel.
B) Demurrage Claims on Ocean Tankers shall be accompanied by:
i. A laytime statement,
ii. Vessel Owner’s demurrage calculations if applicable,
iii. Vessel Owner’s invoice if applicable,
iv. Copy of the Vessel s NOR document(s),
v. Vessel’s Statement of Facts (SOF) and agent’s SOF if applicable,
vi. Vessel pumping logs if the claim is for a discharge,
vii. Charter party if applicable,
viii. Bill of Lading if the claim is for a pro rata portion,
ix. Letters of Protest (if applicable) signed by or on behalf of Master and Terminal,
x. Such other supporting documentation as reasonably may be requested by the
Terminal Party.
Page B-20
C) Demurrage Claims on Inland Vessels and Ocean-Going Barges shall be
accompanied by:
i. A laytime statement,
ii. Pumping logs or pumping documentation in the barge logs if the claim is
for a discharge and only if needed to verify compliance with the pumping
warranty,
iii. Vessel Owner’s demurrage calculations if applicable,
iv. Vessel Owner’s invoice if applicable,
v. Barge logs with NOR,
vi. Such other supporting documentation as reasonably may be requested by the
Terminal Party.
D) Demurrage Claims Processing.
Demurrage claims must be submitted electronically by email before 1200 noon on
the last Business Day prior to the ninety (90) day time bar, such time period
commencing upon completion of loading/discharge. The demurrage claim will be
deemed waived and extinguished in its entirety if not submitted electronically via
the manner noted below along with reasonable supporting documentation within
the allowed time bar.
For demurrage claims to P66, demurrage claims
must be submitted to:
AmericasDemurrageClaims@p66.com
In no instance will P66 ever be liable for demurrage in excess of that amount
paid to the Vessel Owner.
E) The agreed demurrage amount shall be paid within 30 days of the settled
demurrage claim.
F) Public Dock Clause. Vessels loading or discharging at a public dock are accepted on a first come, first
served basis. Therefore, laytime at a public dock commences only when the Vessel
is All Fast at the nominated berth.
G) New York Arbitration. Marine Claims shall be resolved pursuant to arbitration as provided herein
notwithstanding anything in the General Terms and Conditions to the contrary.
For Marine Claims where the total amount claimed by either Party does not
exceed U.S. $300,000 (exclusive of interest on the sum claimed, costs of the
arbitration, and legal expenses), the dispute is to be governed by the ''Shortened
Arbitration Procedure'' of the Society of Maritime Arbitrators, Inc. (SMA) of New
York, as defined in the SMA's current Rules for such procedure. For Marine
Claims where the total amount claimed by either Party exceeds U.S.$300,000, such
Page B-21
arbitration shall be referred to three (3) persons in New York City, New York, one
(1) to be appointed by each of the Parties hereto and the third, who shall be the
Chair, by the two (2) so chosen. Their decision, or that of any two of them, shall be
final and binding, and for the purpose of enforcing any award, the Contract may
be made a rule of the Court. The arbitrators shall be persons conversant in
marine matters and may be attorneys and need not be members of the SMA. All
arbitrations shall be governed by the Rules of the SMA. Judgment upon any
arbitration award may be entered by any court of competent jurisdiction. Any
Party may bring a legal action to compel arbitration of any claim to which this
arbitration clause applies in any court of competent jurisdiction.
The panel or single arbitrator hearing the Marine Claim shall have the authority to
provide in any award for the allocation of the costs of arbitration, including
reasonable attorney’s fees, and arbitrator’s fees.
XVIII) Miscellaneous
A) Compliance with Law. Vessel Party and Terminal Party shall be in full
compliance with all applicable governmental laws, regulations, and orders, and
shall maintain records that demonstrate compliance with the applicable regulations
and standards. Vessel Party and Terminal Party shall have the right to inspect and
copy any and all such records of the other Party at any reasonable time or
times during normal business hours. This provision shall survive termination of
the Contract for a period of two (2) years.
B) Interpretation. Irrespective of anything in the Contract to the contrary, these
Marine Provisions and any other document constituting a part of the Contract shall
not be interpreted or applied so as to require either Party to do, or refrain from
doing, anything that would constitute a violation of or result in a loss of
economic benefit under, any applicable laws or regulations, including without
limitation, United States anti- boycott laws or regulations.
C) In the case of any conflict in the various provisions of the Contract, terms shall
prevail in the following order: the Confirmation and, scheduler’s nomination, and
these Marine Provisions; except for narrowing or revising the Delivery Window for
which the scheduler’s nomination shall prevail.
D) The Section and Paragraph headings are for convenience only and shall not be
interpreted in any way to limit or change the subject matter of the Contract.
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