BIMCO CII Clause For Time Charter Parties – Division Of Responsibility

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The CII regulations came into force on 1st January, 2023 and  rate ships A, B, C, D or E on the basis of the intensity of their carbon emissions. The way that a ship is operated (speed, amount of cargo, number of voyages etc) will of course have a large impact on a ship’s carbon intensity, so owners and time charterers have for some time been grappling with how to allocate risk and responsibility for this issue, reports Maritime Cyprus.

The Clause

To assist with the issue, BIMCO has published its CII Operations Clause for Time Charter Parties 2022. The clause is long, but the basic structure of rights and responsibilities is reasonably clear. However, there remain several outstanding issues, primarily relating to sub-clauses (g) and (i) which are considered further below.

Access the BIMCO CII clause for Time Charter Parties, HERE

A key concept in the clause is that as per sub-clause (d) there will be an agreed carbon intensity for the ship (expressed in gCO2/dwt.nmile) for each year or part year of the charterparty (defined as the “Agreed CII”). In theory, the parties should specifically agree on the Agreed CII but, if they do not, the clause assumes carbon intensity figures necessary to hit the mid-point of a “C” rating (defined as the “Required CII”).

This raises the possibility of the parties agreeing CII figures that are worse than the Required CII, which could lead to the ship’s CII rating dropping, without any penalty for the charterer. A note in the clause recommends that the Agreed CII be the Required CII or better, but there appears to be no sanction for not doing so. One would however expect that an owner would insist on use of the Required CII if there is no agreement on the Agreed CII.

The division of responsibility

With the Agreed CII in place, there is a general obligation on the parties to co-operate “in good faith” to maximise the ship’s efficiency and share emissions data (sub-clause (b)). Further, an owner is required to maintain the ship in line with the CII regulations and also optimise, monitor and report to the charterer the ship’s CII performance (sub-clause (f)). The charterer meanwhile is obliged to give orders which do not breach the CII regulations or mean that the ship will perform worse than the Agreed CII (sub-clause (c)(i)).

In short, the owner must keep the ship as efficient as possible, and the charterer must not order her to be employed in such a way that her carbon intensity for any given year ends up higher than the Agreed CII.

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Source: Maritime Cyprus


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