The parties may also wish to consider the various “climate” clauses published by the Chancery Lane Project which is a not-for- profit organisation where lawyers can collaborate to draft industry appropriate clauses. Amongst those relevant to shipping are clauses dealing with (i) maximising energy efficiency, (ii) incentivising fuel efficiency, (iii) fuel reporting etc.


A clause dealing with the use of alternative fuels is likely to be the next on the agenda for most future contracts and not just for BIMCO.


The club is providing assistance in terms of reviewing and commenting on charter party clauses with regard to how the costs and risks of complying with new measures might best be allocated between the parties.


23. What are the industry bodies doing on this topic?


Various industry bodies including IG, BIMCO, classification societies continue to monitor developments and provide guidance to the shipping community.


24. How is the club supporting members with their transition?


It is not the role of the club to tell members which alternative fuel strategies they should be adopting. That is a complex commercial decision for them. Rather, the club is focused on supporting and guiding its members through the transition, particularly in respect of risk issues, claims advice, loss prevention, and underwriting queries.


As mentioned in the introduction, the club has formed its own Alternative Fuels Working Group (AFWG) and a dedicated advisory panel (SAFAP) comprised of key professionals within the industry. The AFWG helps us to stay abreast of developments and allows us to develop our own internal expertise. It is busy preparing webinars on the subject and tailor- made presentations/briefings for members that request them.


SAFAP comprises representatives from key maritime bodies, shipowner organisations, professional advisory firms and members. SAFAP advises


66 | The Report • September 2022 • Issue 101


and informs the AFWG with the goal of sharing knowledge and assisting the club’s membership through the energy transition.


The club is committed to helping members make a safe, sustainable and successful transition to greener energy solutions, in line with The Paris Agreement and the IMO’s goals.


25. Are there any cover issues associated with the use of alternative fuels generally?


From a club cover perspective, clubs will need to consider matters pertaining to both (i) contractual obligations, such as deviation, and (ii) fines, such as those imposed for non-compliance with the MARPOL regulations. It is anticipated, though currently uncertain, that most cover-related issues will arise in respect of fines.


Other than in cases of purely accidental discharge, P&I cover for pollution fines and associated expenses has only ever been available on a discretionary basis. For a discharge to be accidental, there should be no intention to cause the discharge. Rather, the discharge itself must be accidental. Situations of accidental pollution are rare, and we anticipate this will continue with the advent of alternative fuels.


The club’s board may exercise discretion in favour of the member if it is satisfied that the member took all such steps as appear to the board to have been reasonable to avoid the event giving rise to the fine. This involves a detailed scrutiny of the circumstances surrounding the offence, as well as an assessment of the environmental policies and procedures the member had in place.


There is no exclusion for any particular alternative fuel and a spill of an alternative fuel should involve


similar considerations to a spill of a traditional fuel. As such, cover is anticipated to continue to support members using alternative fuels and to respond in the usual way to liabilities and claims arising from such fuels.


26. Will there be changes to the rules?


As developments in the alternative fuels space continue, there may be scope for additional cover or rule changes.


27. Does Standard Club have any recommendations for members at this time?


Members should be considering the different regulations that may apply to a particular vessel or fleet and the effective date of such regulations to ensure compliance. While the effective dates of the regulations is in some cases only months away, the steps for compliance require thoughtful deliberation and may require lengthy lead time for implementation. Contract reviews are highly recommended, and amendments may be required to mitigate the risk and cost of compliance. Overall, members should ensure they adopt a culture of adherence to the applicable regulations, embrace regular oversight and auditing of their compliance procedures, and maintain effective senior management oversight. Among other things, members will need to consider their overall fuel management strategy and policies, potential investment in vessel modifications and / or emerging technologies, and training of onboard and shore personnel. Members may also want to collaborate with experts and trading partners insofar as risk and cost allocation associated with GHG emission reduction practices.


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