Green Shipping and Trade: Allocating Costs of the IMO Sulphur Regulation 2020

In January 2020 the International Maritime Organisation (IMO) imposed, down from 3.5% m/m, a new limit of 0.50% m/m Sulphur limit from exhaust gases originating from commercial vessels. This new standard forced the maritime industry to switch to compliant fuels (such as Very Low Sulphur Fuel Oil (VLSFO) and ultra-low sulphur fuel oil (ULSFO) blends) or use an exhaust gas cleaning system (EGCS). Although there may be a consensus that this is a good thing, achievement of benefits has created contractual challenges for the industry. Responsibilities are divided between shipowner and charterer through forming a voyage charter, a time charter, or a bareboat charter (BBC). Baltic and International Maritime Council (BIMCO) and Intertanko provide standard contracts allocating the responsibilities of compliance with IMO Sulphur regulations between shipowner and charterer under the time charter. The compliance obligations under the voyage charterparty and BBC are still unaddressed. Here, we address them and offer an allocation of the responsibility.