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Industry experts get together to give valuable guidance on use of low sulphur fuel

Industry experts get together to give valuable guidance on use of low sulphur fuel | BDM Blog | BDM Law

Followers of our Blog will be aware of the concerns facing ship owners, operators, charterers and suppliers as a result of the rapidly approaching 1 January 2020 MARPOL deadline.

In anticipation of this change, industry experts from the International Chamber of Shipping, BIMCO, the International Group of P&I Clubs, INTERTANKO and others have collaborated to produce valuable operational guidance on the use of low sulphur fuels. It is available to download via this link.

There are also legal issues associated with the switch from high to low sulphur fuel, the removal of non-compliant fuel (which must be removed from all ships without a scrubber by 1 March 2020) and removal of sludge in tanks so that they are ready to use low sulphur fuel. Many of those legal issues turn on the particular charters in operation and we are advising clients on this on a case by case basis.

BIMCO and INTERTANKO have both released new clauses to deal with the change. The BIMCO clauses can be found here and the INTERTANKO clauses can be found here.  We are advising many clients on which clauses are most suitable. However, the new clauses do not help clients faced with problems under existing long term charters negotiated well before the MARPOL changes were even discussed. Consequently, a number of contractual disputes have developed and may well make their way to the Courts.

The other question is what happens after 1 January 2020. Over the years we have been involved in many investigations dealing with alleged MARPOL infringements arising from unauthorised discharges of oily water from ships. Those investigations are complex and time consuming. Are ship owners likely to be faced with similar issues in connection with alleged infringements of the new emissions regulations? There are arrangements in the Convention to address unanticipated non-availability of low sulphur fuel. However, enforcement is in the hands of individual states. It follows that some operators could face fines and legal and operational issues arising from infringement (loss of oil major approvals) as a consequence of factors that may be beyond their control. It is still unclear if the industry will be able to respond to demand for low sulphur fuel post 1 January 2020. They are still watching to see how many owners opt for scrubbers. In our view, it is highly likely that there will be problems in certain areas of the world when it comes to supplies of low sulphur fuel. We are therefore predicting an increase in enforcement cases, which in itself will give rise to numerous legal issues.

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