UK: Sulphur Directive Becomes Law in the UK

Last Updated: 19 May 2010
Article by Anthony Woolich and Cécile Schlub

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The marine aspects of the Sulphur Directive (the "Directive") have been implemented into English law with effect from 20 April 2010, through the Merchant Shipping (Prevention of Air Pollution from Ships) (Amendment) Regulations 2010. The Directive is one of many EU led initiatives to reduce the pollution generated by sea-going ships.

Requirements of the Directive

The Directive requires that the fuel oil used by ships while "at berth" in EU ports is limited to 0.1% m/m maximum sulphur content. Marine gas oils which have a sulphur content exceeding this limit can no longer be marketed.

The prohibition applies to use in all equipment including main and auxiliary engines and boilers, and to all ships in UK ports (and ports of all other EU jurisdictions where the Directive has been implemented), irrespective of whether or not they are flagged in an EU Member State.

There are limited exceptions to the Directive. The Directive will not apply to (i) ships which are due to be at berth for only short shops (i.e. less than two hours), and (ii) ships that switch off all engines and use shore-side electricity while at berth in ports.

Under certain conditions, ships may also be exempt from complying with the rules if this is necessary for the purpose of securing the safety of a ship, but this will not apply where the ship's equipment has not been modified to accept low sulphur fuel, or where modifications to the ship's equipment have been made but the modified equipment has not been used.

Any exemption from the requirements of the Directive in the UK may be considered by the Maritime and Coastguard Agency on application. Owners should be prepared to produce documentary evidence in support of their application, including evidence that the owner is aware of the requirements of the Directive, that all reasonable steps have been taken to comply with it, and setting out the reasons for non-compliance.

Legal issues

Some questions will inevitably arise from the implementation of the Directive on the responsibility for complying with the new rules. Owners have an implied obligation to ensure that ships are fit for service, from a technical as well as legal point of view. Owners often warrant that the ship is in full compliance with all laws, regulations, etc.

Additional obligations which may be triggered by the Directive include obligations to pay additional off-hire for time lost as a result of maintenance of the ship, and conversion of the ship's equipment.

If necessary, specific provisions will need to be inserted in new contracts to ensure that liability for both the time and cost of any necessary vessel alterations and the higher cost of purchasing suitable bunkers is clearly laid out.

Owners will also have to ensure that any required documentation evidencing the ship's compliance with the Directive is carried on board. Details of fuel changeover operations must also be recorded appropriately in the ship's logbook under the Directive.

Disputes are likely to arise where existing contracts are terminated for breach of contract and non-performance where parties have failed to comply with their obligations on seaworthiness, maintenance, off-hire, termination, etc. Issues may also arise on the payment for low sulphur fuel, as these tend to be more expensive than most ordinary fuels and parties may find themselves unexpectedly liable for the cost of complying with the Directive.

Operational and Safety issues

The implementation of the Directive means that engines must be capable of burning the right grade of bunkers in order to comply with the Directive. This has raised some operational and safety concerns about the use of low sulphur fuel where ships' equipment such as boilers may not be designed to use low sulphur fuel.

Action will need to be taken to ensure that where necessary, ships, including boilers, management systems and auxiliary engines, are converted to handle low sulphur fuel safely. Such transitional measures may include segregated storage tanks and dual pumping systems. The recommendation from the European Commission indicates that these technical adjustments "should not take more than eight months", but boiler manufacturers have not necessarily been able to adapt on time for the implementation of the Directive.

On timing, the Directive allows "sufficient time" to complete change-over operations by ships at berth as soon as possible after arrival at berth. Various factors such as safety, the need for maintenance, and the operating circumstances of the ship will be considered when determining what is "sufficient time".

The risks of non-compliance

Owners and charterers may find themselves in breach of their contractual arrangements if they do not comply with the obligations which result from the Directive, and be made liable to pay damages.

The sanctions for non-compliance with the "at berth" requirements will vary from country to country. Within the EU, types of penalties will range from financial penalties to orders to comply. Ultimately, some shipowners or masters may be prosecuted and ships banned from a port, region or country. In the UK, breach of the Regulations is an offence by the master of the ship in question, and punishable on summary conviction by a fine not exceeding the statutory maximum, or on conviction on indictment by a fine.

Further considerations

It is worth noting that the recent amendments to MARPOL Annex VI will impose lower limits on the sulphur content in fuel oils from 1 July 2010 (1.00% rather than the current 1.50 %) and 1 January 2015 (0.10 %) in Sulphur Emission Control Areas, including the Baltic and the North Sea.

HFW tips

We recommend that:

  • All necessary modifications to ships's equipment be carried out.
  • Owners and charterers should be prepared to provide evidence that all reasonable steps have been taken to comply with the Directive.
  • All existing charterparties are reviewed to ensure that liabilities for complying with the Directive are appropriately allocated.
  • Owners and charterers should ensure that the liabilities for complying with the Directive are adequately allocated in all new contracts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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