BIMCO adopts FuelEU Maritime clause for time charter parties

The shipping body, Baltic and International Maritime Council (BIMCO) has rolled out its new FuelEU Maritime clause for charter agreements. 

PHOTO: Cargo being loaded on a container ship in Istanbul. Getty Images

FuelEU Maritime will require a 2% reduction in the greenhouse gas (GHG) intensity of energy consumed onboard ships sailing between two EU ports from 1 January. This reduction target will gradually be hiked to 80% by 2050 and is compared to 2020 levels.

Under the new clause, the entity responsible for compliance with FuelEU Maritime regulation in time charter agreements is the shipowner. 

However, in practice, "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 said.

The shipping body is therefore working to develop another clause for ship management agreements.

The ISM Code aims to boost maritime safety and prevent pollution from ships. Under the code, compliance is compulsory for all vessels of 500 gross tonnage and upwards which sail on international voyages.

According to BIMCO's new clause, charter parties involved in long-period charter agreements (several years) will have the flexibility to decide on their compliance strategy. The clause highlights compliance balance or the vessel’s over- or under-compliance on yearly average emission limits mentioned in FuelEU Maritime. 

Within 15 days of redelivery, shipowners have to inform charterers of the vessel’s compliance balance. If the compliance is in deficit, charterers have to pay a surcharge equal to the expected FuelEU Maritime penalty for that period, to the shipowner within a stipulated time frame. No surcharge needs to be paid if the compliance balance remains the same. However, a surplus in compliance balance would require the shipowner to pay the charterer.

By Manjula Nair

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