BIMCO Warns of Chartering Disputes Due to 2020 Bunker Rules

BIMCO Warns of Chartering Disputes Due to 2020 Bunker Rules

In addition to the many existing concerns about the IMO 2020 sulfur regulations – fuel availability, quality and cost – shipowners can now add one more: who is liable when something goes wrong?

BIMCO’s contract-standards division has warned that the IMO 2020 sulfur regulations could lead to new disagreements between shipowners and charterers over fuel-related mishaps, like fines for using high-sulfur HFO or equipment failures from fuel incompatibility.

In a member circular, BIMCO cautioned that while the charterer may be selecting and buying the fuel, the shipowner could get fined in the event that the authorities catch the ship using HFO. According to IBIA, the IMO is set to adopt an outright carriage ban on high-sulfur fuels aboard ships that do not have scrubbers, and this could take effect shortly after the sulfur rules in early 2020. A failed port state inspection could lead to consequences for the owner, even if they did not have a part in procuring or using the bunkers.

As reported by Ship & Bunker, BIMCO is now working on standard contract clauses that address this concern (and others). This would involve placing the liability for a failed fuel inspection onto the charterer, who would be obligated to protect the shipowner.

“Contracts will need clear wording allocating responsibilities and liabilities for providing appropriate fuel and for potential non-compliance,” wrote Grant Hunter, BIMCO’s head of contracts & clauses, in a recent social media post.

Post-2020 charter party contracts may also have to delve into the specifics of what grades of fuel the charterer is allowed to take on before redelivery – an important question, given that fuel incompatibility issues are expected to be a more common problem after 2020. And contracts will definitely have to specify the maximum allowable sulfur content of any bunker stem during the charter period, according to Hunter, in order to head off any later disagreements between owner and charterer about just what “low sulfur fuel” means.

By MarEx 2018-09-14