International Group issues 2020 sulphur cap notice

The International Group of P&I Clubs has issued a notice relating to the 2020 global sulphur cap, which it said would ensure a significant reduction in the sulphur emissions from ships “and thereby demonstrate that the shipping industry is committed to meeting its environmental obligations”.

Several of the P&I Clubs have shared the notice on their web sites.

The International Group clubs said that it recognized that the 2020 global sulphur cap presented important challenges to the shipping industry. It added that it was closely monitoring discussions at the IMO. Penalties for non-compliance were likely to include fines, detentions and possibly, in extreme cases, PSC banning orders. IG said that the 2020 global sulphur cap did not require any amendments to be made to existing club rules.

The Group emphasized that, “as has always been the case, clubs do not condone breaches of MARPOL”. This notwithstanding, liabilities, including fines for purely accidental discharge of non-compliant emissions, were capable of P&I cover subject to the rules and any terms and conditions of cover. “This would also include the obligation to reimburse liabilities for fines incurred by another party”.

Cover in respect of other fines, for example for breach of documentary or other MARPOL requirements, including inaccurate or inadequate record keeping or carriage or use of non-compliant bunker fuel, would only be available at the discretion of a club’s board of directors at the conclusion of a case.

Until a decision has been made by the board on cover in such discretionary cases, clubs might be unable to provide security and, even if they did, this would only be in exchange for acceptable counter-security, which would usually be in the form of cash or a bank guarantee.

It was recognized that the 2020 global sulphur cap could result in P&I liabilities not previously seen, which might arise in limited circumstances, for example where there was a technical failure of an otherwise approved scrubber undetectable by the exercise of due diligence that causes the accidental discharge of non-compliant emissions or the discharge of polluting wash-water.

The Group noted that there had been suggestions that non-compliance with the sulphur cap provisions in MARPOL might have the effect of rendering a vessel unseaworthy which in turn would prejudice the availability of cover. “While every case will depend on its individual circumstances, the International Group clubs wish to make clear both that an infringement of the regulations will not necessarily be characterized as unseaworthiness and, to the extent it were to be, it is not a necessary consequence that it would deprive a Member of cover”.