FuelEU Maritime - update on BIMCO Documentary Work

Published: 21 August 2024

The dedicated subcommittee to examine the implications of the FuelEU Maritime Regulation, part of the EU's “Fit for 55”, has made significant progress drafting a clause for time charter parties as well as for SHIPMAN.

In a time charter context, a ship owner generally charters out a vessel to the charterer for a specific time period, and the charterer takes responsibility for procuring the fuel used to trade the vessel.

In the context of FuelEU Maritime, which mandates a reduction in the greenhouse gas intensity of energy used on ships, this contractual relationship becomes central. Compliance with FuelEU Maritime is heavily dependent on the type of fuel used, and as the charterer is in charge of procuring fuel under a time charter, the BIMCO subcommittee has identified this as a crucial area to address.

The new FuelEU Maritime Clause for Time Charter Parties will aim to clearly define the responsibilities of ship owners and charterers in relation to procurement of fuel and compliance with the regulation. The subcommittee is working to ensure the standard clause provides a framework to address the regulation, and an industry consultation has been conducted to gather the wider industry’s feedback. The feedback is expected to assist the subcommittee in developing a more balanced clause which will act as a market standard for the shipping industry.

In addition to this, BIMCO has recognised the necessity to consider the role of ship managers with the introduction of FuelEU Maritime. This need arises from the fact that the ISM (International Safety Management) company remains the responsible entity under this regulation, regardless of whether this entity is the registered owner, bareboat charterer, or a third-party technical manager such as a ship manager. At this point, there are no signs that this responsibility will shift.

Unlike the EU ETS, where the EU was entrusted to interpret the term "shipping company", no such mandate was given under FuelEU Maritime. As a result, the task of drafting a FuelEU Maritime Clause for SHIPMAN, which would regulate the contractual relationship between ship managers and ship owners, has been assigned to a separate subcommittee to accelerate the work. This other subcommittee is composed of ship managers, shipowners and a private practice law firm.

Both subcommittees are working with the aim of having the two clauses ready for adoption later this year. This work represents a significant step forward in ensuring industry-wide compliance with FuelEU Maritime and aligns with BIMCO's commitment to fostering industry-wide collaboration.

BIMCO is also keeping a close eye on contractual developments related to FuelEU Maritime pooling and bunker supply agreements and whether any new contractual solutions should be developed in future to further assist the industry as it comes to terms with FuelEU Maritime in the coming months.

FuelEU Maritime 180 Seminar

9-10 or 18-19 December, Online

The seminar offers a comprehensive analysis and insights into the contractual frameworks that influence compliance and risk management in the evolving regulatory landscape of FuelEU.

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