On January 1, the FuelEU Maritime regulation will come into force. With this in mind, global shipping organisation BIMCO has released a FuelEU Maritime clause for time charter parties, which has been developed to help stakeholders align their contractual frameworks.
“The FuelEU Maritime regulation will significantly impact the shipping industry, even more so than the EU Emissions Trading System. The clause we have adopted today is the result of a collaborative process between owners, charterers, P&I and legal experts and other stakeholders,” says Nicholas Fell, chair of BIMCO’s documentary committee.
The company responsible for compliance with FuelEU Maritime under the new BIMCO clause is the shipowner. In reality, however, it may be a third-party shipmanager who has agreed to take over all the duties and responsibilities imposed by the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM). BIMCO is therefore working on developing a clause for BIMCO’s shipmanagement agreement, SHIPMAN.
Antonia Panayides, partner in Reed Smith’s transportation industry group who serves on the BIMCO drafting committee for FuelEU Maritime, said: “The new FuelEU Maritime clause is important for the industry, as the regulation expressly provides that parties should look to their contractual agreements to implement the polluter pays’principle.”
It is not only time charter contracts that need to take FuelEU Maritime into account, Panayides explained, many shipping contracts will need to consider the impact of FuelEU Maritime such as contracts of affreightment, shipmanagement agreements, bunker supply agreements and sale and purchase contracts.
“The clause for time charter parties introduces an approach whereby charterers pay a surcharge to owners if the vessel incurs a compliance deficit during the charter period. The parties are to agree when such payment should be made. The surcharge represents the owners’ exposure to a FuelEU penalty, proportionate to the charter period,” Panayides said.
Where the charterer redelivers the vessel with a surplus, the parties can agree on a sum to be paid by owners to charterers for generating such surplus, where that surplus remains with the vessel and has value.
