Using liquefied natural gas (LNG) rather than fuel oil is one of a range of options available to owners seeking to comply with the International Maritime Organisation's 2020 regulations. Given that shipbrokers have long predicted the emergence of a two-tier shipping market with 'greener' ships commanding a premium over older, less eco-friendly vessels, what is the future for LNG bunkering and what challenges does it present?
Most parties involved in the shipping industry will by now have a clear picture of the requirements under the International Maritime Organisation (IMO) 2020 global sulphur cap on marine fuels. Therefore, attention has turned to the steps that must be taken to put these requirements into practice. Two clauses recently introduced by the Baltic and International Maritime Council aim to address certain contractual aspects of the IMO requirements as they apply to time charterparties.
Third-party ship managers are often required to issue letters of undertaking to financiers of a managed vessel on relatively unfavourable and financier-friendly terms. The Baltic and International Maritime Council's new standard ship manager's letter of undertaking, which was recently published, seeks to redress the balance and gives ship managers a more equitable set of terms, which may be used as a starting point for negotiations.
Quiet enjoyment letters are often used where a ship, rig or other unit being financed is subject to a long-term charterparty to govern the interrelationship between the owner, its financiers and the charterer. They provide the charterer with a right to the undisturbed use and enjoyment of the ship, independent of whether the owner in its capacity as borrower is in default of its obligations towards its lender under the loan agreement. But do quiet enjoyment letters have any benefit for lenders?
International conventions and local regulations combine to create a complex legal regime, which is often overlooked. The sale of a ship or rig to an intermediate buyer, which then sells the asset on to a shipbreaking facility, will not necessarily insulate the original owner from future liability or reputational damage. This article addresses a number of frequently asked questions which owners and other parties involved in transboundary movements of marine assets for recycling may find helpful.
The Baltic and International Maritime Council recently published two new clauses which require time charterparties to reduce sulphur emissions. The clauses regulate the effects of Annex VI of the International Convention for the Prevention of Pollution from Ships, which stipulates that, from 1 January 2020, vessels will be able to consume only fuel with a sulphur content less than or equal to 0.5%.
Fishing remains one of the most dangerous occupations in the world. According to International Labour Organisation statistics, at least 24,000 people die and 24 million are injured each year on commercial fishing vessels. The International Union of Maritime Insurers 2018 Conference, which was recently held in Cape Town, provided a platform for discussing some of the issues and challenges currently facing the international marine insurance market.
The Comite Maritime International (CMI) has been aware that there are challenges relating to the international recognition of judicial sales of ships. As such, the CMI approached the United Nations Committee on Trade Law in order to encourage it to embark on future work on cross-border issues relating to judicial sales. The committee, on its part, encouraged the CMI to hold a colloquium to provide additional information to the commission. This colloquium was recently held in Malta.
Irrespective of how the construction of a vessel is financed, the shipyard and its financiers will require that the buyer pays a percentage of the contract price before delivery. This pre-payment may be lost to the buyer if proper security is not put in place. The provision of refund guarantees is the most common way in which this is achieved, but progressive title transfer may in some cases be an alternative method for securing the buyer's position.
The commercial practice of delivering cargo to a recipient against a charterers' letter of indemnity without the production of bills of lading has long been commonplace in the shipping industry. The split of the delivery process into two stages can cause issues for owners that rely on the standard letter of indemnity wording, which refers only to the delivery of cargo and not its discharge. Given this risk, it is sensible for shipowners to ensure that discharge is explicitly covered in any letters of indemnity issued in their favour.
The Baltic and International Maritime Council recently released Barecon 2017, which represents an important update of one of the most commonly used maritime contracts. While several new features have been included, the basic structure of the form remains the same. However, several of the simplifications, clarifications and other updates should make the form easier to use in conjunction with rider clauses crafted for a specific transaction.
The Baltic and International Maritime Council recently launched a revised version of its standard time charter party for offshore support vessels – the Supplytime. Considering the form's broad application in practice, the 2017 edition's amendments and new features are likely to have a significant impact on issues facing owners and charterers.
Keeping pace with the changing nature of the liquefied natural gas (LNG) sector, the traditional long-term LNG time charter market is evolving and charter periods are becoming shorter. The fixing of LNG carriers on shorter-term and more flexible contracts is a sign that the LNG industry is becoming much less rigid. It has resulted in owners and banks having to adjust their traditional approach to LNG ship financing and agreeing to more market exposure.