Mr. Lianjun Li is a partner and head of the International Transportation Group at Reed Smith Richards Butler, a well-known international law firm in Hong Kong with other 27 overseas offices in Asia, Europe and America. He qualified as a solicitor in Hong Kong, England and Wales. He illustrated risks faced by shipowners and charterers under IMO 2020 in 2019 International Ship Management and Technology Forum on 4th Dec.
Mr. Lianjun Li summarized the risk of disputes over bunker quality.
“The key issue in these disputes will be: Who (shipowner/ charterer) bears the risk related to the supply of low sulphur fuel? General position is that charterer shall bear the risk”.
He said that in terms of Bareboat charter and time charter, general position is that charterer shall bear the risk. And for Voyage charter and Long term Contract of affreighment, general position is that owners shall bear the risk.
As for Negotiation of bunker clause to allocate risks, Mr. Li said that Owners and charterers may adopt model bunker clauses to allocate risks and costs on compliance with IMO 2020, and some popular model bunker clauses are INTERTANKO Bunker Compliance Clause for Time Charterparties, BIMCO 2020 Marine Sulphur Content Clause as well as BIMCO 2020 Fuel Transition Clause. But that all depends on the specific circumstances.
He also stressed the allocation of risk relating to scrubbers.
“A key consideration for the shipowner adopting the scrubber option is the estimate of the payback period for the initial capital expenditure (capex) of fitting a system – typically around US$2–5 million.
Then, assuming the parties decide to install scrubbers, they will face the following risks:
Who bear the cost on installation of scrubber?
Who bear the cost of burning low sulphur fuel if the scrubber breaks down?
Who bear the cost of maintenance & repairs of scrubber?”
Mr. Li said the Guidance on Contractual Issues for Scrubber-fitted Ships issued by BIMCO and INTERTANKO addresses issues related to these risks. And the answers of these questions depend on the different kind of charters and different situations.
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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