1. (a) Incorporating clause: The agreement between the Tugowner and the Hirer is and shall at all times be subject to and include each and all of the conditions hereinafter set out.

KOTUG Canada’s standard towing conditions have been developed by combining the internationally recognized UK Standard Conditions for Towage and Other Services, Eastern Canadian Tug Owners’ Association (ECTOA) Standard Towing and Insuring Conditions (2015)), towing conditions prevalent on the west coast of Canada and additional terms for Trans Mountain Tanker Escort.

(b) Definitions: For the purposes of these conditions:

1. ‘towing’ is any operation in connection with the holding, pushing, pulling, moving, escorting (either tethered or non-tethered) or guiding of or standing by the Hirer’s vessel, and the expressions ‘to tow’, ‘being towed’ and ‘towage’ shall be defined likewise.

2. ‘vessel’ shall include any vessel, craft or object of whatsoever nature (whether or not coming within the usual meaning of the word ‘vessel’) which the Tugowner agrees to tow or to which the Tugowner agrees at the request, express or implied, of the Hirer, to render any service of whatsoever nature other than towing.

3. ‘tender’ shall include any vessel, craft or object of whatsoever nature which is not a tug but which is provided by the Tugowner for the performance of any towage or other service.

4. The expression ‘whilst towing’ shall cover the period commencing when the tug or tender is in a position to receive orders direct from the pilot or Hirer’s vessel to commence holding, pushing, pulling, moving, , escorting, guiding or standing by the vessel or to pick up ropes, wires or lines, or when the towing line has been passed to or by the tug or tender, whichever is the sooner, and ending when the final orders from the Hirer’s vessel to cease holding, pushing, pulling, moving, ice-clearing/breaking, escorting, guiding or standing by the vessel or to cast off ropes, wires or lines has been carried out, or the towing line has been finally slipped, whichever is the later, and the tug or tender is safely clear of the vessel.

5. Any service of whatsoever nature to be performed by the Tugowner other than towing shall be deemed to cover the period commencing when the tug or tender is placed at the disposal of the Hirer at the place designated by the Hirer, or, if such be at a vessel, when the tug or tender is in a position to receive and forthwith carry out orders to come alongside and shall continue until the employment for which the tug or tender has been engaged is ended. If the service is to be ended at or off a vessel the period of service shall end when the tug or tender is safely clear of the vessel or, if it is to be ended elsewhere, then when any persons or property of whatsoever description have been landed or discharged from the tug or tender and/or the service for which the tug or tender has been required is ended.

6. The word ‘tug’ shall include ‘tugs’, the word ‘tender’ shall include ‘tenders’, the word ‘vessel’ shall include ‘vessels’, the word ‘Tugowner’ shall include ‘Tugowners’, and the word ‘Hirer’ shall include ‘Hirers’. Where more than one tug is employed these terms shall apply to each individually. If there is more than one Hirer each is jointly and severally deemed to be the Hirer hereunder and employer of the crew in accordance with clause 3.

7. The expression ‘tugowner’ shall include any person or body (other than the Hirer or the owner of the vessel on whose behalf the Hirer contracts as provided in Clause 2 hereof) who is a party to this agreement whether or not he in fact owns any tug or tender, and the expression ‘other Tugowner’ contained in Clause 5 hereof shall be construed likewise.

2. Hirer’s warranty of authority: If at the time of making this agreement or of performing the towage or of rendering any service other than towing at the request, express or implied, of the Hirer, the Hirer is not the Owner of the vessel referred to herein as ‘the Hirer’s vessel’, the Hirer expressly represents that he is authorised to make and does make this agreement for and on behalf of the owner of the said vessel subject to each and all of these conditions and agrees that both the Hirer and the Owner are bound jointly and severally by these conditions.

3. Vicarious liability of tow for tug: Whilst towing or whilst at the request, express or implied, of the Hirer, rendering any service other than towing, the master and crew of the tug or tender shall be deemed to be the servants of the Hirer and under the control of the Hirer and/or his servants and/or his agents, and anyone on board the Hirer’s vessel who may be employed and/or paid by the Tugowner shall likewise be deemed to be the servant of the Hirer and the Hirer shall accordingly be vicariously liable for any act or omission by any such person so deemed to be the servant of the Hirer.

4. Whilst towing, or whilst at the request, either expressed or implied, of the Hirer rendering any service of whatsoever nature other than towing:

(a) Exemption clause: The Tugowner shall not (except as provided in Clause 4 (c) hereof) be responsible for or be liable for

1. loss or damage of any description whatsoever, done by or to the tug or tender; or done by or to the Hirer’s vessel or done by or to any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or the tug or tender or to or by any other object of property; or

2. loss of the tug or tender or the Hirer’s vessel or of any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or the tug or tender or any other object or property; or

3. for any personal injury or loss of life howsoever and wheresoever caused including personal injury or loss of life of the master and/or crew of and/or any person on board the tug or tender; or

4. any claim by a person not a party to this agreement for loss or damage of any description whatsoever;

arising from any cause whatsoever, including (without prejudice to the generality of the foregoing) negligence or failure to perform the services contracted for regardless of cause at any time of the Tugowner, his servants or agents, unseaworthiness, unfitness or breakdown of the tug or tender, its machinery, boilers, towing gear, equipment, lines, ropes or wires, lack of fuel, stores, speed or otherwise and whether pre-existing or not.

(b) Indemnity Clause: The Hirer shall (except as provided in Clause 4{c)) be responsible for, pay for and indemnify and hold harmless the Tugowner, its servants or agents, (including the tug’s master and crew) against and in respect of any loss or damage and any claims of whatsoever nature or howsoever arising or caused, whether covered by the provisions of Clause 4{a) or 4(b) hereof or not suffered by

or made against the Tugowner and which shall include, without prejudice to the generality of the foregoing any loss of or damage to the tug or tender or any property of the Tugowner even if the same arises from or is caused by the negligence of the Tugowner, his servants or agents.

(c) Tug’s liability: The provisions of Clauses 4(a) and 4(b) hereof shall not be applicable in respect of any claims which arise in any of the following circumstances:

1. Personal fault of tugowner as to seaworthiness: All claims which the Hirer shall prove to have resulted directly and solely from the personal failure of the Tugowner to exercise reasonable care to make the tug or tender seaworthy for navigation at the commencement of the towing or other service. For the purpose of this Clause, the Tugowner’s personal responsibility for exercising reasonable care shall be construed as relating only to the person or persons having the ultimate control and chief management of the Tugowner’s business and to any servant (excluding the officers and crew of any tug or tender) to whom the Tugowner has specifically delegated the particular duty of exercising reasonable care and shall not include any other servant of the Tugowner or any agent or independent contractor employed by the Tugowner.

2. Tug not in a position of proximity or risk: All claims which arise when the tug or tender, although towing or rendering some service other than towing, is not in a position of proximity or risk to or from the Hirer’s vessel or any other craft attending the Hirer’s vessel and is detached from and safely clear of any ropes, lines, wire cables or moorings associated with the towing or other service. Provided always that, notwithstanding the foregoing, the provisions of Clauses 4(a) and 4(b) shall be fully applicable in respect of all claims which arise at any time when the tug or tender is at the request, whether express or implied, of the Hirer, his servants or his agents, carrying persons or property of whatsoever description (in addition to the Officers and crew and usual equipment of the tug or tender) and which are wholly or partly caused by or arise out of the presence on board of such persons or property or which arise at any time when the tug or tender is proceeding to or from the Hirer’s vessel in hazardous conditions or circumstances.

(d) Delay: Notwithstanding anything hereinbefore contained, the Tugowner shall under no circumstances whatsoever (including, without prejudice to the generality of the foregoing negligence or failure to perform the services contracted for regardless of cause at any time of the Tugowner, his servants or agents, unseaworthiness, unfitness or breakdown of the tug or tender, its machinery, boilers, towing gear, equipment, lines, ropes or wires, lack of fuel, stores, speed or otherwise and whether pre-existing or not) be responsible for or be liable for any loss or damage of any description whatsoever caused by or contributed to or arising out of any delay or detention of the Hirer’s vessel or of the cargo on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or of any other object or property or of any person, or any consequence thereof, whether or not the same shall be caused or arise whilst towing or whilst at the request, either express or implied, of the Hirer rendering any service of whatsoever nature other than towing or at any other time whether before during or after the making of this agreement.

5. Substitution of Tug: The Tugowner shall at any time be entitled to substitute one or more tugs or tenders for any other tug or tender or tugs or tenders. The Tugowner shall at any time (whether before or after the making of this agreement between him and the Hirer) be entitled to contract with any other Tugowner (hereinafter referred to as ‘the other tugowner’) to hire the other Tugowner’s tug or tender and in any such event it is hereby agreed that the Tugowner is acting (or is deemed to have acted) as the agent for the Hirer, notwithstanding that the Tugowner may in addition, if authorised whether expressly or impliedly by or on behalf of the other Tugowner, act as agent for the other Tugowner at any time and for any purpose including the making of any agreement with the Hirer. In any event should the Tugowner as agent for the Hirer contract with the other Tugowner for any purpose as aforesaid it is hereby agreed that such contract is and shall at all times be subject to the provisions of these conditions so that the other Tugowner is bound by the same and may as a principal sue the Hirer thereon and shall have the full benefit of these conditions in every respect expressed or implied herein.

6. Reservation of Special Rights: Nothing contained in these conditions shall limit, prejudice or preclude in any way any legal rights which the Tugowner may have against the Hirer including, but not limited to, any rights which the Tugowner or his servants or agents may have to claim salvage remuneration or special compensation for any extraordinary services rendered to vessels or anything aboard vessels by any tug or tender. Furthermore, nothing contained in these conditions shall limit, prejudice, or preclude in any way any right which the Tugowner may have to limit his liability.

7. Further exemption clause: The Tugowner will not in any event be responsible or liable for the consequences of ice, war, riots, civil commotions, acts of terrorism or sabotage, strikes, lockouts, disputes, stoppages or labour disturbances (whether he be a party thereto or not) or anything done in contemplation or furtherance thereof or delays of any description howsoever caused or arising, including by the negligence of the Tugowner or his servants or agents.

8. Non-suit clause: The Hirer of the tug or tender engaged subject to these conditions undertakes not to take or cause to be taken any proceedings against any servant or agent of the Tugowner or other Tugowner, whether or not the tug or tender substituted or hired or the contract or any part thereof has been sublet to the owner of the tug or tender, in respect of any negligence or breach of duty or other wrongful act on the part of such servant or agent which, but for this present provision, it would be competent for the Hirer so to do and the owners of such tug or tender shall hold this undertaking for the benefit of their servants and agents.

9. Law and Jurisdiction:

(a) The agreement between the Tugowner and the Hirer is and shall be governed by Canadian maritime law and the Tugowner and the Hirer hereby accept subject to the proviso contained in sub-clause (b) hereof the exclusive jurisdiction of the Federal Court of Canada.

(b) No suit shall be brought in any jurisdiction other than that provided in subclause (a) hereof save that either the Tugowner or the hirer shall have the option to bring proceedings in rem to obtain the arrest of or other similar remedy against any vessel or property owned by the other party hereto in any jurisdiction where such vessel or property may be found.

10. Warranty of Tow-worthiness: The Hirer represents and warrants that the Hirer’s vessel and its equipment is fit to be towed and of sufficient strength and capacity to withstand the towage or any other service hereunder.

11. Hirer’s Insurance: The Hirer of the tug or tender undertakes to contract full insurance against all risks of loss or damage to the tow, its cargo and its crew, and third party liabilities equivalent to the coverage provided by a member of the International Group of P&I Clubs and hereby waives any insurers right of subrogation against the Tugowner, his servants and agents (including the tug’s master and crew).

12. Title and Headings. Titles and headings to clauses herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of these Terms and Conditions.

13. ADDITIONAL TERMS FOR TRANS MOUNTAIN TANKER ESCORT

Where the Tugowner is providing Trans Mountain Tanker Escort services (as defined below) to Trans Mountain Tankers (as defined below) following terms and conditions shall apply in addition to the KOTUG Canada Standard Towage Conditions as set out in clauses 1 through 11 :

(a) The word “towing” as defined at clause 1(b)(i) shall include providing the Trans Mountain Tanker

Escort services in the Area of Operation.

(b) The word “vessel” as defined at clause 1 (b)(ii) shall also include a Trans Mountain Tanker.

(c) The following definitions will be added to clause 1(b):

“Area of Operation” means the Exclusive Economic Zone of Canada and the United States of America, in the coastal waters of southern British Columbia.

“Trans Mountain Tanker” means an oil tanker destined to or from the Westridge Marine Terminal, Burnaby, BC, Canada.

“Trans Mountain Tanker Escort” means those services necessary for a contracted tow-capable vessel suitable for foreseeable meteorological and ocean conditions and based on tanker and cargo size to safely escort a loaded Trans Mountain Tanker in transit within the Area of Operation, including:

1. travelling in proximity of the Trans Mountain Tanker, whether tethered or untethered;
2. taking the Trans Mountain Tanker in tow in case of a malfunction or accident involving the Trans Mountain Tanker; or
3. any other service taken to prevent or reduce pollution or harm to the marine environment caused by a malfunction or accident involving the Trans Mountain Tanker and maintaining safety of the Trans Mountain Tanker but always related to the work on which the tug is employed.

“Tug Matrix” means the matrix of tug bollard pull combined with weather as depicted below with which the tug must comply:

Figure 1: Tug Matrix

(d) Any tug or tender substituted for the tug or tender pursuant to Clause 5 above shall at all times be in compliance with the Tug Matrix.

(e) The crew shall carry out their duties promptly and the tug shall render all Trans Mountain Tanker Escort within her capabilities by day and by night and at such times and on such schedules as the Hirer may reasonably require without any obligation on such Hirer to pay to the Tugowner or the crew any excess or overtime payments.

(f) The tug or tender will be operated, and the towage will be rendered as requested by the Hirer, subject always to the exclusive right of the Tugowner or the Master of the tug to determine whether operation of the tug may be safely undertaken. In the performance of the agreement between the Tugowner and the Hirer, the Tugowner is deemed to be an independent contractor.

(g) At any time while any invoice or other sums due and payable by the Hirer to the Tugowner remains unpaid or outstanding for a period of more than thirty (30) days, the Tugowner shall be entitled to suspend the performance of any or all of their obligations under this agreement for services requested by the Hirer until such time as such unpaid invoices have been paid and all the sums due to the Tugowner from the Hirer have been received by the Tugowner from the Hirer. The Tugowner’s right to suspend performance under this clause shall be without prejudice to any other rights they may have under these terms and conditions.

(h) The tug or tender shall be permitted to deviate for the purpose of saving life at sea without prior approval of, but with notice to, Hirer. Prior to deviating for this purpose the Tugowner must have confirmed that if already engaged in Trans Mountain Tanker Escort Services or scheduled to provide Trans Mountain Tanker Escort Services, there will be no delay, hazard or impediment caused to the continued safe transit of the Trans Mountain Tanker. The Tugowner shall immediately arrange a substitute tug or tender in accordance with clause 5 above to ensure there is no interruption to towage under this agreement.

(i) The Tugowner shall waive their right to claim any award for salvage performed on any property owned by or contracted to the Hirer including the Trans Mountain Tanker, always provided such property was the object of the operation the tug was engaged to provide Trans Mountain Tanker Escort for, and the Tugowner shall be entitled to the applicable Daily Rate when rendering salvage services to such property. This waiver is without prejudice to any right the crew may have under any title.

If the Tugowner renders assistance to a vessel in distress owned by or contracted to the Hirer, including the Trans Mountain Tanker, on the basis of “no claim for salvage”, then, notwithstanding any other provisions contained in this agreement, and even in the event of neglect or default of the Tugowner or crew, the Tugowner shall have the right to file claim against the owner of the property at risk, which may include the Trans Mountain Tanker, for:

1. payments made under any legal rights, to the crew in relation to such assistance, and
2. any loss or damage sustained by the tug or her equipment by reason of giving such assistance and also, payment of Tugowners’ additional expenses thereby incurred, and
3. any liability, cost and/or expense whatsoever in respect of any loss of life, injury, damage or other loss to person or property howsoever arising from such assistance.