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Web Alert: BIMCO's 2020 Sulphur Clauses for Time Charterparties

19 December 2018

As members will be aware, BIMCO have now published their 2020 Sulphur Clauses for time charterparties, on 10 December 2018.

The wording of the clauses, as well as the associated guidelines, concerning the switch to fuel with a maximum sulphur content of 0.5% as of 1 January 2020 are available to download from the BIMCO website here.

The new clauses are summarised below.

The 2020 Marine Fuel Sulphur Content Clause

This clause refers to the obligation to comply with the sulphur limits under MARPOL Annex VI and can be incorporated into charterparties as of now. Fuels supplied by the charterers have to meet the MARPOL Annex VI requirements and failure to do so provides that the charterers will indemnify the owners for the associated consequences (but not including consequential losses). Members should carefully consider the existing bunker clauses in their charterparties when incorporating the new BIMCO clause in order to avoid any conflicts between the provisions relating to fuel specifications, grades, quality and suitability etc. Please see the full wording of the clause on the right.

The 2020 Fuel Transition Clause

The clause has been specifically designed for time charter parties that will span 1 January 2020 and refers to the allocation of responsibilities amongst owners and charterers in connection to the one-off event of switching from 3.5% sulphur content fuel to 0.5% sulphur content. Achieving a smooth transition will no doubt be challenging and requires careful planning and close cooperation between the parties involved. Members should be particularly vigilant when the vessel’s redelivery is expected to be any date immediately after 1 January 2020, to ensure compliance with the environmental regulations. The clause does not provide for the extent of cleaning required to permit bunker tanks to be used for 0.5% sulphur content fuels, and this should be carefully considered by owners. Please see the full wording of the clause on the right.

The above clauses seek to provide clearly worded and balanced provisions to help owners and charterers comply with the requirements of MARPOL Annex VI relating to fuel sulphur content emission limits.

It should be noted that BIMCO's 2020 Sulphur Clauses are not drafted for use by vessels fitted with and operating exhaust gas cleaning systems (ie scrubbers). Members should consider carefully their terms and conditions with respect to any existing or new charterparties so that relevant clauses relating to fuel are updated or replaced as may be appropriate.

The club appreciates that the upcoming MARPOL Annex VI requirements as of 1 January 2020 will create a number of operational, technical, financial and legal challenges. The club is able to assist members with the potential compliance and contractual issues that will arise because of these new environmental regulations.

Please contact the author or your usual club contact for further information.

BIMCO's 2020 Sulphur Clauses for Time Charter Parties