LEGAL FRAMEWORK
MARPOL Annex VI contains rules limiting the main air pollutants contained in ships’ exhaust gas. Regulation 14 governs Sulphur Oxide (SOx) emissions, and the sulphur content permitted in fuel oil used on board ships has been progressively reduced in stages (see table on right).
Compliance with Regulation 14 is mandatory, and that will continue beyond 2020, though “relevant circumstances”, i.e. mitigating factors, including the non- availability of compliant fuels, will be considered in cases of non- compliance (see below).
Regulation 18 sets requirements in relation to fuel oil quality, and requires amongst other things that a BDN stating the sulphur content of fuel must be kept on board and available for inspection for three years from the date of supply.
COMPLIANCE AND ENFORCEMENT
Compliance is ultimately enforced by Port State Control (PSC) in coastal states which are party to MARPOL.
It is the individual states who are responsible for determining what “control measure” to take against a vessel for non-compliance: this can include the imposition of fines (the level of which will be set by the state finding the breach), and even the detention of the vessel.
It is the ship owner who pays any fines levied for non-compliance in the first instance, and they will be required to show what was done to try and achieve compliance, which will likely impact on the action taken against the ship. Whether or not any fines or other losses incurred on account of non- compliance are recoverable from a charterer will depend on the terms of any charterparty, and the cause of the vessel’s non-compliance.
As far as P&I cover is concerned, members are required to act as
28 | The Report • March 2019 • Issue 87
SOx limit outside ECAs < 4.50% m/m
prior to 1 January 2012 < 3.50% m/m
on and after 1 January 2012
< 0.50% m/m on and after 2020
a prudent uninsured and follow applicable rules and regulations. Furthermore, cover for fines is generally only available where there has been accidental escape of a pollutant from the insured vessel and the Member has satisfied the Club that all reasonable measures have been taken. Other fines are only covered by the P&I insurance on a discretionary basis.
PRACTICAL AND LEGAL ISSUES
New charters entered into prior to 01 January 2020 but which will extend beyond that date will need to contain specific terms to deal with the new regime. However, ship owners should also review the terms of existing charterparties which extend beyond 1 January 2020. If uncertainty exists then it is advisable to agree certain addenda with charterers so as to avoid any potential disputes in the future.
Example:
Your ship is on a long-term time charter, based on the NYPE 46 form.
The charterparty contains a clause paramount, the BIMCO Bunker Fuel Sulphur Content Clause for Time Charter Parties 2005 and the BIMCO Bunker Quality Control Clause for Time Chartering, and also provides:
“ Bunkers on redelivery to be about the same as on delivery: BOD ABT 250 MT HIGH SULPHUR FUEL, ABT 400 MT LOW SULPHUR FUEL”, and
“ HSMGO USD350/MT, LSMGO USD500/MT BENDS”.
SOx limit inside ECAs < 1.50% m/m
prior to 1 July 2010 < 1.00% m/m
on and after 1 July 2010 < 0.10% on
and after 1 January 2015
Below are some of the issues which might arise, and the differences in that regard between ships with scrubbers and those without:
1) SEAWORTHINESS
Clause 1 and the clause paramount impose on owners a duty to exercise due diligence to make the vessel seaworthy at the commencement of each voyage performed under a time charter. As part of that obligation, Owners must maintain the vessel’s class and ensure that she complies with international and national maritime rules and regulations, i.e. is “legally fit” for the chartered service.
i) No Scrubbers If a vessel requires modifications in order to comply with new legislation, then a failure to make such modifications would render the vessel unfit for the chartered service, meaning all down time and associated costs would be for owners’ account. This is as per the court of appeal case of the Ellie & the Frixos [2008] EWCA Civ 584.
Generally, however, unless the terms of the charter require it, an owner is not obliged to install scrubbers. This is on the basis that the vessel will be capable of performing the chartered service using low sulphur fuel. In contrast, if a vessel needed modifications in order to be able to burn compliant fuel, this is for Owners’ cost and account. Provided vessels can burn compliant fuels then the vessel will not fall foul of the new rules and will not be unseaworthy, or unfit for the chartered service simply by virtue of having no scrubbers.
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