BIMCO clause makes charterers liable for biofuel quality

Shipping industry association BIMCO has adopted a new biofuel clause for time-charter agreements that holds charterers liable for losses and damages caused by unsuitable biofuel supplied to a vessel.

IMAGE: GoodFuels delivers first biofuel stem to an ocean-going ship in Singapore in April 2021. GoodFuels

A time charter agreement allows a charterer to hire a vessel from a shipowner for a fixed period. The new clause sets out a clear framework for what each side is responsible for when biofuel is used onboard.

The clause covers fuels made wholly or partly from biomass. This includes FAME and HVO blends with distillate or residual marine fuels.

The clause states that charterers will be liable for damage to engines or fuel systems, lost time, operational delays, and costs associated with testing, tank cleaning and removing unsuitable fuel, only if these losses result from their failure to supply compliant fuel to the vessel.

The clause defines compliant biofuel as one that meets agreed specifications aligned with ISO standards, and must be stable, properly blended and suitable for the vessel’s engines and other machinery.

Charterers may also be liable for losses and removal costs if biofuel becomes unsuitable after remaining onboard beyond the agreed consumption period, unless the delay was caused by the shipowner.

The clause says shipowners must ensure the vessel is properly equipped and approved to use the agreed biofuels and that the crew is trained to handle them safely. Owners will also be responsible for segregating different biofuel grades, specifications and batches onboard.

The clause allows vessel speed and fuel-consumption warranties to be adjusted where a biofuel’s lower calorific value increases consumption or prevents the vessel from maintaining its conventional-fuel speed.

By Nachiket Tekawade

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