BIMCO recently released two standard Quiet Enjoyment Letters, filling a previously unmet need for an industry standard. Developed collaboratively by industry stakeholders, these standard forms aim to offer a balanced solution in line with current market practices.
A Quiet Enjoyment Letter (QEL) establishes a direct contractual relationship between a vessel's lender and the charterer, ensuring the charterer's uninterrupted use of the ship as long as the charterer fulfills its obligations under the charter contract. In the absence of an industry standard, the terms of each QEL have hinged on the relative bargaining power of the parties involved.
With the introduction of these standard forms, BIMCO aims to balance the interests of charterers, lenders, and owners. The new QELs serve as a safeguard for charterers, ensuring their continued use of a vessel if the shipowner fails to meet their financial obligations. For lenders, these QELs provide a structured mechanism to secure their rights, including the appointment of a replacement owner to uphold the integrity of the charter agreement.
BIMCO has drafted two versions of the QEL: a comprehensive standard form that requires agreement by the lender, owner, and charterer, and a short form that is only signed by the lender. These documents are adaptable for use with bareboat and time charters, as well as ship leasing structures. As these are the first standards that have ever been introduced, it seems likely they will also be used as basis for other types of units than vessels.
The new standard forms are available on BIMCO's website.
