The new ultra low sulphur fuel regulations under MARPOL Annex VI will require more than ship side preparations, they will also require existing and future charterparties to be reviewed and claused appropriately in order to reduce the risk of disputes between owners and charterers from a number of angles. Therefore, the Skuld P&I Club, with sources from Chalos & Co, New York, has issued an update on the ultra low sulphur fuel and charterparty terms which will be effective from January 2015.
There are a number of issues that could give rise to disputes between owners and charterers that have their root in the new MARPOL Annex VI regulations which mandate the use of ship fuel not exceeding 0.10% sulphur content by mass in designated Emission Control Areas (ECAs) in North America and Northern Europe from 1 January 2015.
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Issues include:
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Above issues should considered closely before concluding new fixtures and indeed for any existing charters, too.
Fuel specifications
Bunker clauses have always been important for charterparties, given that MARPOL compliance is just one issue of many that concern bunker fuel. Despite the very significant price falls this autumn for bunkers (following the drop in the price of crude oil), fuel still is a very large factor in a vessel’s daily running costs and ULSF costs can be double that of residual fuels.
Bunker clauses need therefore to be carefully drafted and inter alia address the following:
- the ISO specification and other specific features / properties that the fuel should possess
- price setting formulas for delivery and redelivery bunkers
- bunker consumption criteria (typically found in vessel performance clauses)
- bunkering / fuel supply arrangement clauses
- bunker sampling and testing provisions
- specific MARPOL compliant fuel provisions (often cited in a separate specific MARPOL clause)
Loss prevention adviceCareful contracting is very important to loss prevention as an unsuitable contract or an overlooked clause could have an unexpected and very undesired effect that will hit the bottom line as sure as a mechanical breakdown could. Taking the time to review existing arrangements in the light of the upcoming regulations and ensuring new contracts are drafted appropriately will limit the scope and risks for disputes in the future. The time and effort spent on this will yield dividends, even if it is not possible to “measure” the value of the dispute avoided. |
Source: The Skuld P&I Club
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