In light of the approaching IMO 2020 sulphur cap, the International Group Clubs acknowledged that the regulation presents crucial challenges for the shipping industry; Thus, they focused on informing what the penalties for non compliance will be, while also highlight that they closely monitor the situation.
Specifically, penalties for non-compliance consist of fines, detentions and possibly, in extreme cases, PSC banning orders.
In the meantime, the 2020 sulphur cap does not require any amendments to be made to existing club rules. Yet, liabilities, including fines for purely accidental discharge of non-compliant emissions, are capable of P&I cover subject always to the Rules and any terms and conditions of cover.
In addition, cover in respect of other fines for breach of documentary or other MARPOL requirements, including inaccurate or inadequate record keeping or carriage or use of non-compliant bunker fuel, is only available at the discretion of a Club’s Board of Directors at the conclusion of a case.
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Yet, the International Group Clubs highlight that unless a decision has been made by the Board on cover on such discretionary cases, Clubs may be unable to provide security and, even if they do, this will only be in exchange for acceptable counter-security, which would usually be in the form of cash or a bank guarantee.
The position in this respect is the same as set out in previous International Group circulars issued on the subject of MARPOL breaches.
Moreover, there’s a possibility that the 2020 Sulphur cap could result in P&I liabilities not previously seen which may arise in limited circumstances, for example where there is a technical failure of an otherwise approved scrubber undetectable by the exercise of due diligence that causes the accidental discharge of non-compliant emissions or the discharge of polluting wash-water.
As Swedish P&I Club highlights that there have been suggestions that non-compliance with the Sulphur Cap provisions in MARPOL may have the effect of rendering a vessel unseaworthy which in turn would prejudice the availability of cover.
Concluding, the International Group Clubs made clear that
An infringement of the Regulations will not necessarily be characterised as unseaworthiness and, to the extent it were to be, it is not a necessary consequence that it would deprive a Member of cover.
