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The Shipowners’ Club: Legal costs cover and IMO 2020

Maritime insurer discusses potential commercial disputes it foresees post IMO 2020, and outlines response parameters for legal costs covers.

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Cameron Shepherd, Claims Executive of The Shipowners’ Club, on Thursday (5 March) published a news article discussing the eligibility of legal costs cover (LCC) provided vis a vis the possible disputes that could arise in the foreseeable future:

Members will be aware, that from 1 January 2020, the MARPOL permitted limits for sulphur content in vessels’ bunker fuel were reduced from 3.50% mass by mass (m/m) to 0.50% m/m for vessels operating outside designated Emission Control Areas (‘Global Sulphur Cap’).

The Club anticipates that the implementation of the Global Sulphur Cap will result in an increased number of commercial disputes between Members and associated parties, including charterers, bunker suppliers, and fitters of scrubbers and the costs associated with such disputes can be high. The Club’s Legal Costs Cover (LCC) provides cover for Members’ legal fees and other related costs, in pursuing or resisting claims which arise out of these disputes.

This article highlights some of the potential types of disputes that the Club expects to arise over the coming months and outlines how LCC can respond.

Disputes over bunker quality

With the 2020 Global Sulphur Cap now in force, the demand for low sulphur fuel has increased. Inevitably, there have been concerns about the quality of certain blends of low sulphur fuel. The blends often have increased levels of catalytic fines (cat fines), which can embed in the soft metal surfaces in engines and act as an abrasive, escalating the rate of wear of engine components.  Furthermore, there are also concerns about the stability levels of blended low sulphur fuel and the risk that asphaltene content may precipitate out of solution. This can form sludge in engines, which can block engine filters and pipes.

Typically, under most time charterparties, it is time-charterers’ “absolute” obligation to provide bunkers that are of reasonable general quality and suitable for the vessel’s engines. The charterparty may also include an express provision stipulating the grade and type of fuel to be supplied is to be in conformance with relevant ISO 8217 standards. However, charterers are not obliged to meet any special requirements of the vessel’s engines, unless those requirements have been brought to charterers’ attention and specified in the charterparty.

Given these circumstances, the Club anticipates that there will be an increased number of disputes between owners and charterers over the quality of fuel supplied to the vessel by charterers. Conversely, charterers may allege defects with (or lack of maintenance of) the vessel’s engines and other machinery after the bunkers have been stemmed.

The Club recognises that many Members engage in operations in which they bear the responsibility for obtaining suitable bunkers. As such, Members may find themselves in a situation whereby a claim is made against the bunker supplier for damage to the vessel’s engines or machinery, on the basis that the bunkers supplied were unsuitable.

Claims involving damage to the vessel’s engines or machinery may be covered by the Club’s LCC, where the amount of the claim is below the applicable deductible under the relevant Hull &Machinery (H&M) policy.

Additionally, LCC may be available where the claim is above H&M deductible, but the H&M underwriters confirm they do not wish to pursue a recovery. In such cases, LCC can respond to help Members to recover their deductible amount from the responsible bunker supplier.

The merits of a recovery action against a bunker supplier may be dependent on the bunker supplier’s terms. Bunker suppliers often seek to impose strict terms as regards the notification of claims and very short time bars. The time limit for raising a claim can sometimes be as short as 15 days from delivery. Particularly in the case of larger bunker deliveries Members should, where possible, obtain samples at the vessel’s manifold to assist with identifying and dealing with any bunker quality issues that may arise.

Such disputes would fall within LCC, which covers the legal and technical/expert costs incurred in respect of claims, disputes or proceedings brought:

  1. Under any charterparty, bill of lading, contract of affreightment or other contract;
  2. In respect of the supply of inferior, unsatisfactory or unsuitable fuel, materials or equipment, or other necessaries.

Disputes in respect of scrubbers

Notwithstanding the Global Sulphur Cap, ships fitted with exhaust gas cleaning systems (scrubbers) can continue to carry and burn fuel with a sulphur content of more than 0.50%, subject to local port regulations or additional requirements relating to the use of open loop scrubbers and dealing with wash water.  With speculation that the shift to 0.50% sulphur content in fuel could result in an oversupply of high sulphur content fuel on the market (and associated price drops), some owners have elected to invest in retrofitting their vessels with scrubbers.

Whilst the vast majority of scrubbers will likely be installed with no issues, there is the possibility of scrubbers malfunctioning after installation, as can be seen in this video example.

Disputes or proceedings in respect of the supply of inferior, unsatisfactory or unsuitable scrubbers (or the negligent or unsatisfactory installation of a scrubber system) would fall within LCC offered by the Club.

Please contact the Club for further information regarding IMO 2020, and how LCC can assist in certain disputes that may arise.


Source:
The Shipowners’ Club
Photo credit: Helloquence on Unsplash
Published: 6 March, 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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