FD&D insurance will “come into sharper focus” post 1/1/20: Skuld

With the global sulphur limit under MARPOL Annex VI being reduced from 3.5% to 0.5% on January 1st 2020, Skuld vice-president, head of claims Skuld Singapore Mats Segolson has said that there were concerns that there would not be enough compliant bunkers available in some areas when the regulation goes live. Others were concerned about how Port State Control (PSC) and other authorities would verify the sulphur content in bunkers and how the limit would be enforced.

Segolson said that FD&D insurance would come into sharper focus as potential disputes on issues such as cleaning of tanks and removal of non-compliant bunkers were anticipated within this area.

Other issues would revolve around the value of bunkers when a ship was redelivered around January 2020.

There could also be engine damage from new bunker blends, with some issues boiling down to whether or not the bunkers were the cause of the damage. An obligation to provide bunkers that do not exceed the 0.5 % sulphur cap would not necessarily extend to the fitness of the main engine. The description clauses in the charter parties might also need re-working. In this respect, maintenance provisions in the charter and whether the ship was fit for service would be focal areas, said Segolson.

More off-hire and performance related disputes were also anticipated. Other contested areas might be liability for diversion or delays.

Bills of lading should contain or incorporate charter party terms that allow for certain delays and deviations.

Time charterers should also try to obtain back to back charter parties. A time charterer or an owner on a voyage basis would also have to consider recovery prospects against bunker suppliers.

Many potential disputes could be regulated in the charter party, said Segolson, noting that BIMCO and Intertanko were working on several clauses in four phases.

The first is a “compliance clause”, outlining the time charterers’ obligations and liabilities in providing compliant fuel, with owners remaining responsible for fuel management. Further clauses are to follow, relating to the transitional period, on scrubbers, and finally a review of the existing time charter bunker clause.

For existing long-time charter parties, Segolson said that it might be necessary to renegotiate some areas.