Drafting Team

The CII Clause for Voyage Charter Parties is the result of a collaborative and consensual process between owners, charterers, P&I clubs and legal experts. BIMCO is grateful to the following individuals:

Peter Eckhardt, F. Laeisz (Chairperson)                                                                   

Panos Zachariadis, Atlantic Bulk Carriers

Daniel Carr, Stolt-Nielsen

David Sale, BP

Kyriakos Kourieas, Interorient

Henning Babiel, ADM

Ann Shazell, Cargill

Haralambos Fafalios, Greek Shipping Co-operation Committee of London                                 

Caroline Lindfors, Nordisk Defence Club

Alessio Sbraga and Joseph Malpas, HFW    

BIMCO representatives:

Stinne Taiger Ivø
Natalie Wong

Carl Lindahl

Explanatory Notes

These guidance notes are intended to provide an insight into the thinking behind the BIMCO CII Clause for Voyage Charter Parties. They also explain how the clause is intended to operate and the allocation of obligations, rights and responsibilities between the parties.

If you have any questions about the clause, please contact us at contracts@bimco.org and we will be happy to assist.

Key Features of the Clause

In order not to upset the “usual” contractual balance between the owners and the charterers under voyage charter parties, the clause entitles the owners/master to order the vessel to adjust course and/or to reduce speed or RPM in order to reduce the carbon intensity of the vessel. However, the clause does not provide the owners with a “carte blanche” to operate their vessel at any (low) speed. The vessel’s speed can only be reduced within the prescribed limits indicated in subclause (a) as a minimum speed (basis good weather conditions). It is for the owners and the charterers to agree at the time of concluding the charter party what that minimum speed, and the relevant good weather conditions, should be.

It is not possible to prescribe a “default” minimum speed given the wide variety of vessel types, trades and sectors to which this clause can be applied. Therefore, it is essential that the owners and the charterers ensure an agreed figure is inserted into subclause (a) to give effect to the clause. The parties must insert into subclause (a) an agreed definition of “good weather” (which may already be reflected under provisions contained in the charter party).  A "good weather" definition can vary between charter parties for a variety of reasons and should therefore be subject to specific agreement between the parties.

An important aspect of this clause relates to the owners’ “despatch” obligations under the charter party and contracts of carriage. Subclauses (b) and (c) specifically address this issue.

Subclause (b) clarifies that the exercise by the owners of their option to adjust course and/or to reduce speed will not amount to a breach of contract, including any speed and consumption warranties (if incorporated). However, as not all voyage charter parties contain such speed and consumptions warranties, the parties may choose to delete this reference. Furthermore, subclause (b) clarifies that the laycan as stated in the charter party shall remain unaffected by this clause,  because it is considered important for charterers to be able to rely on the agreed laycan to plan the loading of the cargo and thereby enable them to enhance operational efficiency. Furthermore, the laycan and the minimum speed to be stipulated in this clause are agreed when the parties negotiate the charter party.

Under subclause (c), the charterers are obliged to indemnify the owners against claims for breach of contracts of carriage if any such contracts impose or result in the owners facing more onerous liabilities than those which they have assumed under the clause.

Subclause (d) is intended to avoid arguments over whether the vessel is permitted to proceed below the minimum speed agreed in subclause (a) in circumstances where there is an express or implied right to do so under the charter party. For example, it is possible that a vessel going in and out of ports or one following a convoy might be required to proceed at a slower speed for a limited period of time by the relevant authorities. Emergency situations may also necessitate a slower speed.

Finally, subclause (e) addresses the sharing of relevant data and information to the charterers in relation to the type and quantities of fuel used and distance travelled under the charter party. The rationale underlying this subclause is that many charterers request access to such information in order to perform their own CII calculations. This information can also be relevant for charterers' environmental reporting protocols, highlighting the connection between these metrics and sustainable operational practices. The parties are expected to agree a specific timeframe by inserting an agreed number of days into the clause. If no figure is inserted, the default shall be seven days.

BIMCO wants to emphasise the importance of cooperation between industry stakeholders, including shippers and receivers, in relation to the new environmental regulatory landscape, including both the MARPOL Carbon Intensity Regulations and European Union Emissions Trading System. If the market widely accepts the industry’s cooperative efforts to reduce greenhouse gas emissions via practices such as adjustment of course and/or reducing speed or RPM, it will foster a collaborative environment leading to greater understanding and acceptance that such practices may be used as a tool to achieve decarbonisation in the future.

Additional elements to consider:

Virtual arrival/just in time arrival

Charterers may also wish to have a right to request adjustment of the vessel's speed along the lines of the BIMCO Virtual Arrival Clause for Voyage Charter Parties 2013 and/or Just in Time Arrival Clause for Voyage Charter Parties 2021.  The subcommittee did not incorporate such elements into the clause as it thought that introducing these concepts could make the clause overly complicated and cumbersome. Nevertheless, the parties may wish to have a dialogue about this during the negotiation of the charter party in order to see whether it would be beneficial to incorporate some of those elements into the clause. If such elements are to be incorporated, then care should be taken to ensure that there is no conflict with the principles set out in the clause.

Laytime/demurrage

Delays at the loading and discharge ports may have an adverse impact on the vessel's performance under the MARPOL Carbon Intensity Regulations, as the vessel may be staying in position and consuming fuel, yet making no distance through the water (depending on the vessel's location).

Traditionally, delays at the loading and discharge ports may be accounted for by laytime, demurrage and/or damages for detention, depending on the relevant factual circumstances and the terms of the relevant charter party.

However, the relevant laytime/demurrage regime under the charter party might not adequately address any losses or adverse impact in relation to the MARPOL Carbon Intensity Regulations caused by delays.  This will depend on the circumstances involved, the type of vessel, and relevant legal considerations.

There are two potential issues that arise: (i) whether laytime/demurrage is triggered on the specific language of the relevant clause(s) of the charter party; and (ii) whether the compensation for loss of time which forms the basic rationale for laytime/demurrage provisions is wide enough to cover the owners' potential exposure under the MARPOL Carbon Intensity Regulations (including any potential repercussions resulting from the CII rating assigned to the vessel).

The subcommittee decided not to build this into the clause because it would be very complex and difficult to introduce a standard formula for calculating demurrage in the context of different vessel types, trades and markets.  The subcommittee concluded that this should be left to commercial discussions between the parties and perhaps may simply result in this risk being catered for in increased laytime / demurrage rates in the appropriate circumstances.

Revised voyage orders

The clause does not cater for revised voyage orders by charterers (such as "stop and wait for orders" orders, interim port calls and/or back loading traditionally found in wet cargo voyage charters) which do typically lie within the owners’ control.  The extent to which such liberties are used could have an effect on CII, but that effect will be difficult for the owners to estimate at the time of fixing the charter party, without advance information from the charterers or, perhaps, a curb on the charterers’ liberties.

Apart from implications under a Bill of Lading (if already issued), depending on the revised orders in question and the specific facts, this could also have a potential negative impact on CII (that is, shorter or more intense CII voyages and/or not making way but consuming fuel).  The subcommittee decided that it would be inappropriate to include these elements into this clause as they typically arise in the context of wet cargo voyage charters, vary from case to case and there is unlikely to be one common solution. Instead, it should be left to commercial discussions between the parties.