The following article regarding potential compliance issues for charterers due to IMO 2020 has been written by Wole Olufunwa, Senior Associate, at international law firm HFW and shared with Manifold Times:
The recent spate of vessel bunker contamination cases in the US Gulf and Singapore has brought into sharp focus the unprecedented standards to be affected by MARPOL Annex VI (commonly referred to as "IMO 2020"): the implementation of a global cap of 0.5% sulphur content in marine fuel from 2020. This limit will apply outside designated emission control areas.
Here we outline what MARPOL Annex VI means in practice for shipping industry stakeholders.
Likely incidence of fuel contamination
A global shift from residual fuels, with a maximum of 3.5% sulphur content, to primarily distillate fuel with a maximum of 0.5% sulphur content will undoubtedly catalyse an unwanted vicious cycle.
Bunker suppliers will likely be required to conduct more fuel blending to comply with the new low sulphur cap limit. This is particularly so where players may not be in a position from the effective date (currently stated as 1 January 2020) to produce or supply sufficient quantities of low sulphur fuel to meet global demand.
The increasing incidence of blended fuels inevitably heightens the risk of importing contaminants completing the cycle. 
Use of scrubbers
Many ship owners are now actively weighing the need for purchasing or fitting scrubbers (Exhaust Gas Cleaning Systems) to their vessels to limit sulphur release to the atmosphere, thus complying with the MARPOL regulation.
Whilst scrubbers are admittedly expensive, they enable owners to have the option of continuing to burn high-sulphur fuels, following the effective date, provided their underlying charter contracts permit their use. 
Depending on the overall availability of low sulphur fuels, owners may well benefit from earning increased freight from scrubber fitted vessels in demand which freight could also take into account additional bunker consumption incidental to scrubber usage.
Within the context of time and voyage charters, this brings a fresh perspective for the need of owners and charterers to draft their contracts with certain well thought out eventualities in mind.
The parties' respective obligations or responsibilities should therefore be clearly delineated by the charter in question to limit the likelihood of disputes.
Examples of compliance issues
Take home message
These examples are merely scratching the surface where there are a myriad of other potential eventualities.
That said, the standout message must be for chartering and operational teams to consider re-negotiating existing longer term fixtures and/or focus on the drafting of suitable terms for new fixtures to be entered (including BAF clauses to reflect more closely the fluctuating cost of the contemplated compliant fuels, the specifications of which remain unknown at this point in time).
We have experience in assisting both owners and chartering clients with drafting suitable well-balanced clauses.  For more information as to how MARPOL Annex VI may affect your business, please contact the author of this briefing.
Contacts details of Wole are as follows:
Office Telephone: +65 6411 5300
Office Fax: +65 6411 5355
Direct Dial (Singapore): +65 6411 5344
Photo credit: HFW
Published: 25 September, 2018
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