BIMCO adopts new FuelEU and ETS clauses for ship sales

With FuelEU Maritime and the EU ETS affecting ship transactions, BIMCO says it aims to provide more certainty for both buyers and sellers during the process.

IMAGE: A large cargo container ship out to sea. Getty Images

BIMCO has approved FuelEU Maritime and EU Emissions Trading System (EU ETS) clauses covering ship sales and purchases.

It said the clauses are designed to set out responsibilities, costs and data-sharing requirements.

"The new clauses offer parties the tools they need to manage compliance obligations and avoid uncertainty during ship transactions," said Stinne Taiger Ivø, director of contracts at BIMCO. 

The EU ETS clause can also be used for similar emissions trading schemes that may come in the future, the global shipping association said.

Allocating responsibilities

The FuelEU clause requires sellers to disclose verified compliance balances for previous reporting periods. They must also share a partial FuelEU compliance report for the period up to the date the ship is delivered, and not for the full reporting year.

Based on either positive or negative compliance balances, the clause has mechanisms for adjusting compliance costs. It also sets restrictions on borrowing advance compliance balance before delivery and obligations for buyers to supply post-delivery data.

At delivery, buyers will assume full responsibility for FuelEU compliance.

The EU ETS clause provides a framework for allocating responsibilities related to greenhouse gas emission allowances during ship sale and purchase transactions.

Ship sellers will have to comply with all EU ETS reporting requirements leading up to delivery of a ship. They have to submit a verified partial emissions report for the year to the date the ship is delivery, and surrender emission allowances for emissions incurred before transfer of ownership. 

As in the FuelEU clause, buyers using the EU ETS clause will assume responsibility for emission compliance - and in this case EU Allowances - from the time the ship is delivered.

The EU ETS clause also includes a provision to protect buyers against claims or liabilities arising if a seller has been non-compliant before delivery. 

By Gautamee Hazarika

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