We recently commented here on the regulatory challenges faced by shipowners from 1 January 2023.
To ease this burden, BIMCO have released an EEXI transition clause, a copy of which can be found here. More clauses are set to follow to deal with carbon intensity.
It seems we are set for more acronyms as climate change legislation kicks in. To get an overview of the terminology, we would recommend visiting the IMO site here.
Briefly, the EEXI clause obliges ship owners to comply with the new regulations. There are provisions dealing with modifications required ahead of the regulations coming into force and who pays for those and whether the time is on or off hire. There are provisions dealing with the change to the performance of the vessel in the light of new regulations which has a bearing on the existing performance warranties. We expect to see the clause used as a template for further refinement as modifications will benefit those who charter vessels on a long-term basis.
As with any new clause, BIMCO are trying to anticipate the issues that may arise but the scope for disputes remains. We anticipate that we may see disputes similar to those that arose when the new SOX legislation came in on 1 January 2020. That legislation led to many scrubber retrofits and associated disputes relating to design, installation and maintenance, especially where the scrubber was part financed by a long-term time charterer.
The EEXI regulations are very much at the top of our clients’ agenda. The new regulations come into force in just 9 months. We continue to assist clients who are taking the necessary measures to prepare.