Indonesia’s decision to allow the consumption of 3.5% sulphur limit marine fuel post IMO 2020 could be possible through a legal loophole, explains the Partner of international shipping-focused legal firm Campbell Johnston Clark.

“Indonesia cannot opt out as such from the IMO 2020 limits but they may choose not to enforce any penalties in relation to Indonesian flagged vessels operating in Indonesian waters,” says Ian Short.

According to Short, under the new global limit prescribed by MARPOL Annex VI, all ships operating outside designated Emission Control Areas (the limit in these areas is 0.10%) will have to use fuel oil on board with a sulphur content of no more than 0.50% m/m, compared with the current limit of 3.50%.

The only exemptions provided are for situations involving the safety of the ship or saving life at sea, or if a ship or its equipment is damaged.

“It is a global limit that applies in relation to all vessels registered with Flag States that have ratified Annex VI, and in all waters belonging to Port or Coastal States that have ratified Annex VI, at which, or through which, a vessel calls or passes,” he states.

“Indonesia as a signatory has signed up to comply. I cannot find any specific exemption in relation to domestic trade.”

The IMO Guidance for Best Practice for Member State/coastal State, which is “intended to assist Member States in carrying out their responsibilities under MARPOL Annex VI” states that “Member States/coastal States should consider actions it deems appropriate, under domestic legal arrangements, with respect to promoting the availability of compliant fuel oils, consistent with regulation 18.1 of MARPOL Annex VI”.

“However, there is a possible loophole when it comes to the penalties for non-compliance. It is up to Member States to enforce any penalties, as a vessel would effectively be in breach of flag state national law by non-compliance,” he concludes.

“So in theory, a Member State could choose not to apply any penalties for their flagged vessels operating within their territories as a way around its provisions. Should those vessels however call at other ports outside of Indonesia, they are likely to face penalties there.

“As such, if a vessel flagged outside of Indonesia calls in Indonesian waters and burns 3.5% sulphur marine fuel, that vessel could still get penalised by its own flag state and, potentially Indonesia if it decides to penalise foreign-flagged vessels entering their waters. 

“However, whilst technically an Indonesian-flagged vessel sailing in Indonesian waters would also be in breach of MARPOL and the IMO 2020 sulphur regulations, the only penalties for non-compliance can be issued by Indonesia which could decide not to penalise such vessels in these circumstances.”

Manifold Times lately spoke to a representative of Singapore-based shipbroking, analysis and consultancy firms AE Marine and Golden Bay Chartering which said Indonesia’s move ‘makes sense’ – considering the unique operational and commercial factors currently faced by the Southeast Asian country.

Related: Indonesia: Use of 3.5% sulphur marine fuel approved for domestic trade
Related: Indonesia: Decision to allow domestic consumption of 3.5%S marine fuel ‘makes sense’

Photo credit: Campbell Johnston Clark
Published: 26 July, 2019