Recommendation 2009/1020/EU was issued on 21 December 2009 by the European Commission in response to concerns that few vessels had undergone the necessary modifications to burn compliant fuel, and concerns that there were risks to safety if unmodified vessels burned compliant fuel in boilers not designed for the purpose. The Recommendation suggests Member States consider the existence of a class-approved retrofit plan when applying enforcement penalties. The Commission considers that completion of the retrofitting process should not take more than eight months.
The Recommendation is not binding on Member States. However, several have formally or informally indicated that they will follow it when enforcing the Directive. By way of example, Bremen, whilst not specifically following the Recommendation, has in its implementing law exempted vessels from burning compliant fuel other than for electricity generation, and exempted vessels berthing for less than two hours, even if this is not in accordance with published timetables as the Directive requires. On the other hand, the Italian port of Trieste, having previously followed the Recommendation, announced on 2 March 2010 that non-compliant vessels would be fined between €15,000 and €150,000, and that they might ban repeat offenders from all European ports for up to 24 months! It appears, however, that Trieste will still take retrofit plans into consideration when levying fines for non-compliance.
Some issues arising
Until vessels are modified, charterers may require reduced rates if they cannot trade non-compliant vessels within the EU without incurring penalties. We understand there are already reports of fixtures failing on subjects because vessels are non-compliant, and, conversely, of compliant vessels obtaining higher charter rates in the cross-Mediterranean trade.
We have been involved in a dispute as to whether vessels unable to burn compliant fuel could be tendered for delivery by the shipyard without modification.
As regards long-term time charters, issues have arisen as to whether owners are obliged to incur costs to modify the vessel so that they can trade to the EU without risk of fines or refusal of entry. Aside from the physical ability to burn LSMGO another issue that has arisen in this context is whether the vessel should have more than one storage tank for MDO and what the implications are if she does not.
Other considerations could include the availability of compliant fuel outside the EU when the vessel's next voyage is to an EU port. Also, whether an anchorage off the port where the vessel is ordered to wait is an area where this EU Directive applies. The party paying for the fuel (be that the owner of an unfixed vessel/voyage chartered vessel or a time charterer), might be advised to take local advice as to whether this waiting place is subject to the Directive. The financial implications for a short stay may not be large, but if there is a significant waiting time then the cost differential between burning the different types of fuel may become significant.
The primary concern for both voyage and time charters is of course the allocation of costs and other risks in respect of complying with the Directive. There are some standard clauses, e.g. BIMCO and INTERTANKO but in our experience these may not cater for all the issues that may arise and parties should bear this in mind when negotiating future charter parties.
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.
