BIMCO's Time Charter Clause is Published
BIMCO has now published its long-awaited FuelEU Maritime clause for time charter parties, 2024.
Unsurprisingly, the clause follows the structure of the FuelEU Maritime Regulation and applies or “translates” the responsibilities that the Regulation applies to “companies” (ie the shipowner or, if a ship manager is the vessel’s ISM DoC holder, the ship manager) into the time charter party structure.
Therefore, for example, the clause:
- Sets out owners’ responsibilities under the Regulation to monitor and have verified the GHG intensity of fuel used by the vessel and to have the vessel’s monitoring plan recorded in the FuelEU database;
- States that owners are to keep charterers notified periodically during the charter party (either each month or after each voyage - this is for the parties to select in the charter party) and on redelivery as to the vessel’s Compliance Balance* for each period;
- Gives charterers the option of complying with the Regulation by supplying low GHG intensity fuels and energy to the vessel, provided that the fuel/energy supplied to the vessel complies with the bunker specification clause in the charterparty and provided that the bunker delivery notes for the fuel comply with the Regulation requirements and are “certified and documented” by the independent verifier (please see our ‘Alternative Fuels’ section for further comments on this;
- Provides a mechanism whereby owners are to be compensated by charterers if the vessel’s “Compliance Balance” is negative. This compensation is in the form of a “Surcharge” (fixed at the expected FuelEU penalty amount) that is payable either monthly or per voyage (this is for the parties to select in the charter party) or, if neither option is selected by the parties, when the final hire payment is due or (if earlier) by the first 7 days in June of the Verification Period, ie of the following year;
- Provides a mechanism whereby charterers are to be compensated by owners if the vessel’s “Compliance Balance” is positive;
- Where the charter party spans 1 January to 31 December (ie the charter party spans a complete “Reporting Period” under the Regulation), provides a mechanism whereby charterers are entitled to bank or pool any positive “Compliance Balance”.
BIMCO’s helpful explanatory notes have also now been published and can be found in the above link.
* The vessel’s “Compliance Balance” is defined in the clause. Broadly, it refers to the amount by which the vessel over-complies or under complies with the yearly GHG intensity limit set out in the Regulation.