Readiness for global sulphur cap – BIMCO’s new IMO 2020 clauses

Most parties involved in the shipping industry will by now have a clear picture of the requirements under the International Maritime Organisation (IMO) 2020 global sulphur cap on marine fuels. Therefore, attention has turned to the steps that must be taken to put those requirements into practice. Two clauses recently introduced by the Baltic and International Maritime Council (BIMCO) aim to address certain contractual aspects of the IMO 2020 requirements as they apply to time charterparties.

There has been a significant amount of focus and discussion on the technical and commercial aspects of compliance with the reduction in the global sulphur cap from 3.5% to 0.5%, which will come into force on 1 January 2020 pursuant to the Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL). There has also been much debate with respect to scrubbers and the best technical solutions for compliance with IMO 2020. However, the contractual aspects of preparation for IMO 2020 have arguably received less attention. Nonetheless, the allocation of risk and costs relating to compliance must still be regulated in charterparties – in particular, in time charterparties, where owners remain responsible for operating vessels while the charterers are responsible for supplying fuel.

BIMCO has recently published two new standard clauses aimed at tackling some of these issues – namely, the 2020 Marine Fuel Sulphur Content Clause and the 2020 Fuel Transition Clause.

Marine Fuel Sulphur Content Clause

This clause deals with the allocation of responsibility and obligations between charterers and owners with respect to the provision of bunkers that comply with the new requirements. The clause replaces the BIMCO Fuel Sulphur Content Clause 2005 and forms part of BIMCO’s Suite of Standard Bunker Clauses for Time Charterparties.

In summary, the clause stipulates that charterers must supply fuel which at all times complies with applicable sulphur content requirements and that such fuel must comply with the specifications and grades set out elsewhere in the relevant charterparty. The charterers’ responsibilities under the provision also extend to warranting that bunker suppliers comply with the sulphur content requirements.

Although the provision places obligations mainly on charterers, owners will nonetheless have to warrant that the vessel can comply with sulphur content requirements.

The relevant ‘sulphur content requirements’ are defined as “MARPOL Annex VI (as amended from time to time) and/or by any other applicable lawful authority” and, therefore, cover the applicable regulations from time to time, including:

• the current 3.5% global cap;
• the new 0.5% global cap (once applicable);
• the 0.1% limit in emission control areas;
• particular regulations in port states; and
• any amendments to the foregoing.

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