BIMCO has introduced a new Biofuel Clause for Time Charter Parties, establishing a contractual framework for the supply and use of biofuels.
The clause addresses a range of issues associated with biofuel use, including fuel quality, engine compatibility, performance warranties and the allocation of responsibilities between contractual parties.
The use of biofuels has raised practical and contractual questions, in particular regarding fuel specifications, storage requirements and liability where operational problems occur.
Stinne Taiger Ivø, Deputy Secretary General and Director of Contracts at BIMCO, said: ‘The Biofuel Clause for Time Charter Parties will support the industry’s transition to low-carbon fuels. The clause is the product of thorough consideration of safety and technical requirements following extensive consultation with shipowners, charterers, fuel experts, and P&I clubs.’
The BIMCO clause introduces fuel definitions and specifications aligned with ISO standards, including provisions linked to the ISO 8217 marine fuel specification. It also sets out procedures for sampling, testing, storage and handling. The framework includes mechanisms for adjusting speed and consumption warranties when fuels with different calorific values are used.
Under the framework, charterers are responsible for ensuring that supplied biofuels comply with the agreed specifications. Where a charterer wishes to supply a biofuel outside those specifications, owner approval is required following testing by a jointly appointed laboratory at the charterer’s cost.
The clause also addresses the handling of non-compliant fuels as parties are required to use reasonable efforts to explore corrective measures before non-compliant fuel is offloaded. Owners retain discretion over whether such fuel is ultimately consumed.
Several provisions focus on operational risks associated with biofuels, such as requirements relating to fuel segregation, storage life and stability. Charterers must provide instructions on the period within which supplied biofuels should be consumed, while degraded fuel found to be non-compliant may be offloaded at the charterer’s cost.
Nicholas Fell, Chair of BIMCO’s Documentary Committee, said: ‘The new clause provides a clear framework for the safe use of biofuel. It includes definitions, specification standards and the respective obligations of owners and charterers when biofuels are supplied and consumed.’
The Biofuel Clause is the latest addition to BIMCO’s suite of alternative fuel contracts and clauses. BIMCO has previously published LNG and methanol annexes and related charter party provisions. Work on an ammonia annex is expected to begin later this year.
