The SHIPMAN Ship Management Agreement: A Clause-by-Clause Guide for Owners

The structure

Almost every third-party ship management relationship in the world sits on a BIMCO standard form. SHIPMAN is the general management form; CREWMAN A and B cover crew-only mandates. The forms are well drafted and widely understood, which is exactly why owners stop reading them — and why the amended schedules, not the printed clauses, are where the real agreement lives.

This guide is written for owners and their in-house teams. It is not legal advice; take advice on your specific contract.

The single most important thing an owner can do with a SHIPMAN contract is read the ticked scope schedule against the manager's proposal document. Sales material and contract schedules diverge more often than either party admits.

Clauses that matter most

Scope and authority

The manager acts as agent of the owner. That framing has two consequences: the manager can bind the owner within the agreed authority, and the owner carries the primary obligations under the ISM Code and MLC regardless of who performs the work. Define spending authority thresholds explicitly — a single-signature limit that made sense at 2019 prices does not in 2026.

Budgets

The manager prepares an annual budget; the owner approves it. Two questions decide how this works in practice:

1. What happens if the parties cannot agree a budget? Standard forms usually default to the previous year's budget uplifted by an index. Check the index.
2. What variance can the manager incur without approval? Typically a stated percentage of a budget line. Emergency expenditure is separately carved out.

Liability and the cap

This is the clause owners misread most often. Manager liability is normally capped by reference to a multiple of the annual management fee — a strikingly small number relative to the value of the asset being managed.

The practical implication: your ship management contract is not an insurance policy. If a manager's error causes a USD 4 million machinery casualty, the contractual recovery is nowhere near USD 4 million. Hull and machinery cover, not the SHIPMAN cap, is what protects the asset. Owners who understand this negotiate less about the cap and more about insurance, loss prevention and the quality of the people attending the ship.

Insurance obligations

The form requires the owner to maintain agreed covers and to name the manager as a co-assured with waiver of subrogation. Confirm this is actually done — it is a routine omission and it undermines the whole liability architecture when a claim arrives.

Crew provisions

Where crew management is in scope, the agreement should specify manning scale, nationality mix, wage scales and who employs the seafarers. Under MLC 2006 the shipowner retains ultimate responsibility for seafarer employment conditions, and the 2025 amendments — covering key-worker recognition, shore leave without a visa or special permit, non-discriminatory repatriation, and prevention of violence and harassment on board — tighten those obligations further. Entry into force is expected in late December 2027, so contracts signed now should anticipate them.

Termination

Negotiate the handover obligations attached to termination, not just the notice period. A three-month notice with no data export obligation leaves you starting again.

Data and systems — the modern gap

Standard forms predate the reality that a managed vessel now generates continuous operational data. Add express provisions covering:

• Ownership of PMS records, crew records, performance and emissions data
• Format and timing of export on termination (machine-readable, not PDF)
• Owner's right of direct read-only access during the term
• Retention of MRV/DCS, EU ETS and FuelEU records, and who holds them after termination
• Cyber incident notification obligations, with a stated time limit

The emissions point is not academic. FuelEU compliance balances can be banked, borrowed and pooled across ships; a mid-year change of manager without a clean data handover can put a pooling arrangement at risk.

A ten-point owner's checklist

1. Scope schedule reconciled against the manager's proposal
2. Spending authority thresholds set at current price levels
3. Budget disagreement fallback and index confirmed
4. Liability cap understood and insurance aligned accordingly
5. Manager named as co-assured with subrogation waived
6. Crew employment structure and manning scale specified
7. Emissions compliance responsibility and cost allocated
8. Cyber obligations addressed for both new and existing tonnage
9. Data ownership and export format written in
10. Termination handover obligations detailed, with a timetable