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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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BHP and GCMD trial multi-feedstock B100 bio bunker fuel on bulk carrier

Bio-blend in the BHP and GCMD pilot is being used on a BHP-chartered bulk carrier “Berge Lyngor”, which was bunkered in Singapore in early May.

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BHP and GCMD trial multi-feedstock B100 bio bunker fuel on bulk carrier

BHP and the Global Centre for Maritime Decarbonisation (GCMD) on Wednesday (3 June) said they have blended biofuels from two distinct feedstocks—used cooking oil and waste animal fats —and introduced the lower-emissions marine fuel into a BHP-chartered bulk carrier as part of a pilot project.

The bio-blend in the BHP and GCMD pilot is being used on a BHP-chartered bulk carrier Berge Lyngor, owned and operated by Berge Bulk, transporting BHP iron ore from Western Australia to China. When run on bio-blend, the vessel has the potential to reduce well-to-wake greenhouse gas emissions by approximately 79 per cent per voyage compared to sailing on very low sulphur fuel oil (VLSFO).

The vessel bunkered in Singapore in early May with a B100 bio-blend comprising 50 percent tallow-derived biodiesel, sourced and supplied by HAMR Energy, and 50 per cent used cooking oil (UCOME) supplied by Mitsui & Co Energy Trading Singapore (METS).

Mitsui also blended the fuel and Dan-Bunkering coordinated and executed the bunkering operation, which was performed by Global Energy’s barge MT Maple.

The BHP and GCMD pilot will assess how biofuels from multiple feedstocks can be blended, handled, and introduced under real-world operating conditions using existing used cooking oil bunkering infrastructure.

At the same time, insights from this pilot will help identify solutions to challenges related to fuel quality, handling, traceability, and onboard vessel performance.

Biofuels for global shipping today rely heavily on used cooking oil – a feedstock whose availability is approaching its projected limits. Biofuel from waste animal fats presents a promising option to expand the supply of lower-emissions marine fuels.

The outcomes of the pilot are expected to shed light on the practical steps to integrate biofuel blends from different feedstocks into existing supply chains. The diversity of biofuels will provide shipowners and operators with greater flexibility to optimise fuel procurement based on cost, availability, and lifecycle emissions performance.

Biofuels derived from different feedstocks can exhibit varying properties that may impact operations, including potential corrosion from oxidation, fuel system clogging caused by wax formation, which this pilot aims to assess.

The pilot will trace and verify the biofuel blend’s integrity aimed at bolstering confidence in emissions reductions reporting. The pilot will also provide insights into how robust tracing can support future marine fuel supply chains where biofuels from multiple feedstocks with varying lifecycle greenhouse gas emissions footprints are blended together.

This project is co-funded by the Maritime and Port Authority of Singapore under the Maritime Innovation and Technology Fund (MINT).

 

Photo credit: Global Centre for Maritime Decarbonisation
Published: 3 June, 2026

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Biofuel

NYK starts one-year B100 bio bunker fuel trial on car carrier

In this trial, NYK will operate a car carrier continuously on B100 for one year to evaluate the impact on engines, fuel supply systems, and operational practices.
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NYK starts one-year B100 bio bunker fuel trial on car carrier

Japanese shipping firm NYK on Tuesday (2 June) said it has commenced a one-year long-term trial involving the continuous use of 100% biofuel (B100) on an NYK-operated car carrier. 

In this trial, NYK will operate a car carrier continuously on B100 for one year to evaluate the impact on engines, fuel supply systems, and operational practices. High-purity biofuels such as B100 are known to be susceptible to degradation from oxygen, light, and heat, raising concerns about the stability of such fuels during long-term use.

In this trial, the biofuel primarily comprises FAME (Fatty Acid Methyl Ester) derived from used cooking oil and similar feedstocks.

The initiative is designed to evaluate the fuel’s effects on the vessel’s equipment and verify operational safety under real-world conditions. 

Through this effort, NYK seeks to accumulate technical expertise that will support the broader use of high-purity biofuels and further accelerate efforts to reduce greenhouse gas (GHG) emissions.

NYK has been advancing the use of biofuels through various initiatives. In 2024, the company conducted a trial using biofuel blend B24 and subsequently expanded practical usage to B30. However, the company said there remains limited global experience with the long-term continuous use of B100.

“By collecting long-term operational data through this trial, NYK aims to accumulate valuable technical insights to support both the safe operation of vessels and the wider adoption of high-purity biofuels,” it said. 

 

Photo credit: NYK
Published: 3 June, 2026

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Ammonia

AM Green plans to build green ammonia plant at Indian port

Initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes, says VOC Port Authority.

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June 3, 2026

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VO Chidambaranar (VOC) Port Authority on Friday (29 May) said it has signed a Memorandum of Understanding (MoU) with India’s ammonia producer AM Green Ammonia to collaborate in the development of a green ammonia production plant.

The plant will have a capacity of one million tonnes per annum (MTPA) at Tuticorin.

The initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes. 

The project is expected to support the development of green fuel corridors connecting VOC Port with major ports in Europe and Asia, thereby strengthening India’s position in the global green fuels value chain.

VOC Port also signed a Memorandum of Understanding (MoU) with Bureau Veritas (India) Pvt. Ltd., to collaborate on Green Port certification, emissions accounting, ESG reporting, safety validation, development of green bunkering practices, and establishment of a Centre of Excellence for green fuels and sustainability.

The port also plans for an upcoming 750 m³ green methanol bunkering facility.

 

Photo credit: Naveed Ahmed on Unsplash
Published: 3 June, 2026

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