A member recently informed BIMCO that their ship, being employed on time charter, had been granted what appeared to be an exemption from the regulations on sulphur content of fuel on its arrival to an EU emission control area (ECA) port.
The charterer of the ship had applied for and seemingly received an exemption from an authority, the wording of which they had quoted to the owners in an e-mail.
The exemption stated that the ship was allowed to arrive without low sulphur MGO on board, provided it stemmed enough of this grade at its destination port to navigate out of the ECA burning low sulphur MGO only. The owners had not accepted the charterers attempt to avoid stemming compliant fuel prior to entering the ECA and had neither been involved in, nor approved the charterers’ application for an exemption due to non-availability.
BIMCO investigated the issue of exemptions from the low sulphur requirements in general and for this case specifically.
It turns out that the authority having provided the charterers with the exemption had no authority in this matter, not to mention that they obviously could not issue an exemption for a ship, which destination was in an entirely different country (as in this case).
The ship was fixed on a time charter trip with redelivery in a European country. The charterers probably had the opportunity to stem (expensive) compliant bunkers in the load port, but chose not to. They could have called a main bunkering port en-route, but again decided to postpone the bunkering and last, but not least, they could have stemmed bunkers in Falmouth as a last resort before entering the ECA. It would consequently seem, as there would not be a very strong argument for getting an exemption based on the criteria for claiming non-availability, which is stated in the pertinent Directive of the European Union (1999/32 as amended):
5b. If a ship is found by a Member State not to be in compliance with the standards for marine fuels which comply with this Directive, the competent authority of the Member State is entitled to require the ship to:
(a) present a record of the actions taken to attempt to achieve compliance; and
(b) provide evidence that it attempted to purchase marine fuel which complies with this Directive in accordance with its voyage plan and, if it was not made available where planned, that attempts were made to locate alternative sources
for such marine fuel and that, despite best efforts to obtain marine fuel which complies with this Directive, no such marine fuel was made available for purchase.The ship shall not be required to deviate from its intended voyage or to delay unduly the voyage in order to achieve compliance.
If a ship provides the information referred to in the first subparagraph, the Member State concerned shall take into account all relevant circumstances and the evidence presented to determine the appropriate action to take, including not taking control measures.
A ship shall notify its flag State, and the competent authority of the relevant port of destination, when it cannot purchase marine fuel which complies with this Directive.
A port State shall notify the Commission when a ship has presented evidence of the non-availability of marine fuels which comply with this Directive.
BIMCO has not been able to determine on which grounds the charterers obtained the exemption in this particular case and what evidence they provided for obtaining it. It does, however, raise an important concern:
- May parties other than the ship’s owner or manager apply for an exemption for a ship when this other party is handling the commercial operation?
- If this is the case, does this other party need the owner’s consent to make such an application?
As the particular case shows, an action taken by the charterers may have an influence on the owners’ trading of the ship after redelivery, in the sense that the ship could end up being redelivered without compliant fuel to proceed from the point of redelivery.
It was consequently believed to be important to determine whether a charterer may actually be able to obtain an exemption for a ship, with the risk that the owners could end up with a problem in their lap. Any sanctions by the authorities will be against the ship, not the charterers, and it may as mentioned cause delay, as well as extra costs, also after the ship is redelivered.
Having checked this issue in more detail, we have received a reply from the competent authority of the country of destination port in the above-mentioned case. They confirm that the ship owner or the owner’s representative, such as the master or agent, must apply for an exemption due to non-availability of the compliant fuel. In accordance with the IMO regulation and the EU directives the ship owner and master is responsible for complying with the sulphur regulation.
BIMCO will continue investigating this issue further and would be pleased to hear if members are incurring other irregularities.
For more information please visit BIMCO website.
Source: BIMCO
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