BIMCO publishes the Russian Oil Price Cap Scheme Clause 2023

Published: 02 June 2023

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On 3 December 2022, the EU/G7 established a price cap for oil products, falling under CN code 2709 00 and 2710, originating in or exported from Russia. Later the same month, BIMCO formed a dedicated subcommittee tasked with developing the Russian Oil Price Cap Scheme Clause. The subcommittee initially determined that a single, versatile clause usable by multiple industry stakeholders and in charter parties generally would be most effective instead of having several versions of the clause for each possible occasion and party.

The subcommittee's main objective was to address the compliance requirements outlined in the EU/G7 measures considering views of owners, charterers, P&I clubs, and regulators. The Documentary Committee provided comments during the drafting process and points made were taken on board and discussed thoroughly. The Documentary Committee approved the clause on 20 April subject to fine-tuning, which has now been finalised.

The Russian Oil Price Cap Scheme Clause 2023 is published with a set of accompanying explanatory notes to provide further guidance. A few main points can be mentioned:

• The clause requires charterers to warrant and to provide attestation to owners regarding the compliance of their cargo with the relevant measures as further specified in a tier 1-3 system
• The scope is limited to cargo carried in the vessel's tanks, including bunkers or products which can be refined into bunkers after being carried on board. This limitation is due to differing sanction regulations for bunkers among the EU, UK, and US regulators with the subcommittee's understanding that the price cap scheme does not commonly apply to bunkers
• To create certainty and practical solutions, the clause allocates rights and obligations in situations where a breach is suspected or suffered
• After careful evaluation, the term "reasonable grounds to suspect" is kept as the trigger point for owners to terminate the charter party and take other steps in the clause considering the nature of this trade. Also, this term applies to the notification application in order for both parties to be able to act at an earlier stage. Finally, using the term “reasonable grounds to suspect” also ensures alignment with the existing guidelines
• The aim to futureproof the clause whilst aligning it with the existing price cap measures has been determining for the scope of the clause.

The drafting team comprises a panel of esteemed experts, including Katerina Iliakopoulou from Minerva Marine, Jonathan Epstein and Sean Pribyl from Holland & Knight, Leigh Hansson and Alexander Brandt from Reed Smith, Sacha Patel from Steamship Mutual, Mark Church and Mike Salthouse from NorthStandard P&I, and Gareth Austin and Henry Reynolds from Glencore Oil.

BIMCO will be hosting a webinar to provide further information on the clause and its application on 28 June 2023 at 13:00 UTC.

You can find the Russian Oil Price Cap Scheme Clause via BIMCO SMARTCON and a copy of the clause and explanatory notes.