Contractual and Charterparty

Uncertainty still surrounds the issue of enforcement, which has caused a number of problems in cases where sulphur content has been found to be above 0.50%.

However, we have a much clearer idea of the technical and commercial issues that are relevant to the new sulphur requirements. Whether you are an owner or a charterer, you will need to consider  such issues to ensure your time charterparties and bunker supply contracts adequately deal with the new sulphur requirements.

Bunker clauses

a. Specification

Owners and time charterers who want to use a particular type of fuel will need to make sure that this is specified in the charterparty and bunker supply contracts.

Owners of vessels fitted with scrubbers should check with scrubber manufacturers if fuel of a maximum sulphur content should be provided to the vessel to avoid having to reduce the performance of the vessel so that the scrubber system can work effectively. If so, this should be specified in the charterparty.

b. Quality

We have seen a number of cases in which compatibility and stability issues have arisen with these new fuels. Owners and operators should check that quality clauses are wide enough to provide good protection in case there are fuel quality issues.   We recommend that the BIMCO quality clause is included in all time charterparties.

c. Sulphur content

We have dealt with a number of cases where initial commercial testing has shown newly delivered bunkers to have a sulphur content of over 0.50%.  Such cases have been particularly troublesome for both Owners and Time Charterers when the sulphur content has been found to be within 0.51 and 0.53%.  See our article here for further details.

We recommend that the BIMCO 2020 sulphur content clause is included in all time charterparties. This clause provides a balanced regime for both Owners and Charterers.

We also recommend that, where possible, VLSFO is ordered from suppliers at a maximum sulphur content of 0.47%, to allow for compliance even when the allowed ISO tolerance is applied.

Scrubbers

If you are the owner or time charterer of a vessel fitted with a scrubber system then we recommend that you include a clause to deal with issues specific to scrubbers e.g. maintenance, breakdown and off-hire.

If the vessel has a closed loop or hybrid system, then the clause should also cover who will be responsible for discharge of scrubber wash waste and providing consumables. If the vessel has an open loop system, then the clause should cover provision of compliant fuel if the scrubber can’t be used because of local regulations or breakdown.

Please see your usual FD&D contact if you would like to receive the scrubber clauses that we have prepared for our members.

Other clauses

There might be other clauses that you want to review, depending upon the method of compliance, type of vessel and trade.