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Clyde & Co: After Wakashio, is the Bunker Convention fit for purpose?

It is time to reconsider the Bunker Convention’s applicable limits given the devastating effect that as little as 1,000 tonnes of heavy fuel oil can cause, says lawyer.
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Martin Hall, Head of Marine Casualty, Associate Legal Executive and Partner Equivalent at international law firm Clyde & Co on Tuesday (18 August) published an article explaining how the 2001 Bunker Convention is insufficient cover for clean-up operations and pollution damage and questions its relevance given the impact of Wakashio’s oil spill in a sensitive marine environment:

What has happened in the Indian Ocean provides confirmation that increased payouts cannot come soon enough, and governments of coastal states should enact any available increased limits in their own jurisdiction without delay.

As the ecological and environmental disaster that has resulted from the grounding of Wakashio unfolds in Mauritius, questions are already being raised as to how this could have happened.

But thoughts will ultimately turn towards compensation for those who are cleaning up the mess and have suffered the consequences of pollution from the vessel’s bunkers.

The owners have been quoted as saying that they will respond “in good faith” to any damages “in accordance with applicable law”. However, this may not be as comforting as it first seems.

As Wakashio is not a laden tanker, the well-established compensation regime under the Civil Liability Convention 1992 — as topped up if required by the IOPC Fund Convention 1992 — will not apply, and any compensation claims seem likely to be dealt with under the 2001 Bunker Convention.

The Bunker Convention applies to vessels carrying bunkers not covered by the CLC and IOPC Fund Conventions.

It provides for mandatory third-party insurance cover, and allows claims of third parties for clean-up expenses and other losses caused by pollution from bunkers to be made directly against the insurers.

The convention also imposes strict liability on the part of the vessel owners and their insurers for such losses, which means there is no need to prove responsibility for the pollution, only that the pollution emanated from the vessel.

Consequently, if more than one party was potentially involved in causing the pollution, there would be joint and several liability if the original source was from the stricken vessel (Article 3 of the convention).

The owners of the vessel are, under Article 6 of the convention, entitled to limit their liability in accordance with the Convention for Limitation of Liability for Maritime Claims 1976 or as amended.

Many countries have now enacted the 1996 Protocol, which significantly increases the limitation fund that was originally applied in the 1976 Limitation Convention.

The limit is based on the gross tonnage of the vessel, which in this case appears to be 101,932 tonnes.

That means that currently under the 1976 Limitation Convention the limit for third-party claims including costs of prevention and clean up following the grounding of Wakashio would be around $18m, whereas under the 1996 Protocol the limitation fund would be just over $43m.

By contrast, the IOPC supplementary fund can pay out as much as $1bn in certain circumstances.

All claims of third parties must be brought against the owner or directly against the insurer in the country where the pollution has occurred, in this case Mauritius. Therefore the law of Mauritius will apply.

According to the latest IMO published data, Mauritius has enacted the Bunker Convention and the 1976 Limitation Convention. It does not appear that Mauritius has enacted the 1996 Protocol.

If this is correct then the lower limit of around $18m would apply, which seems hardly enough to cover the sort of losses that might now be envisaged from the impact of some 1,000 tonnes of heavy fuel oil on the pristine ecological environment of Mauritius.

One can anticipate a significant impact not only on the environment but also the wildlife and fishing industry on which Mauritius so heavily relies, as well as on the tourist industry.

The logic behind the lower limits that apply under the Bunker Convention compared with the combination of CLC and IOPC Fund limits is, presumably, because the quantities of bunkers that could potentially cause pollution are significantly less than would be the case than for an oil cargo.

However, that is of no comfort to those in Mauritius who are already suffering the consequences and may continue to do so for a long time to come.

There is only one means of breaking the limit in the event that claims exceed the limitation fund under the 1976 Limitation Convention (or indeed under the 1996 Protocol if enacted).

That entails proving that “the loss resulted from his [the owner’s] personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”. This is a very difficult burden to discharge.

The authorities’ investigations in Mauritius will presumably determine whether or not there is any prospect of breaking the limit, so that any compensation to be obtained could exceed the level of the limitation fund.

Although the Bunker Convention is dated 2001, it only came into force as recently as 2008.

Nevertheless, it is perhaps already time to reconsider the applicable limits, given the devastating effect that as little as 1,000 tonnes of heavy fuel oil can cause in a sensitive environment, as we are now seeing.

There has already been recognition that the 1996 Protocol limit is inadequate. The International Maritime Organization — in the 2016 edition of Limitation of Liability for Maritime Claims — advised that it had adopted a resolution increasing the limits under the 1996 Protocol.

This was due to the Pacific Adventurer incident, which occurred in the waters of southern Queensland in Australia in March 2009. In the case of Wakashio this would have increased the limit for pollution claims to almost $65.2m.

The UK enacted the increased limits to the 1996 Protocol in November 2016.

But what has happened in the Indian Ocean provides confirmation that such further increases cannot come soon enough, and highlights the need for governments of coastal states to enact any increased limits in their own jurisdiction without delay.


Source: Clyde & Co
Photo credit: International Maritime Organisation
Published: 19 August, 2020

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.
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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.
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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.
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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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