BIMCO publishes EEXI transition clause for time charterparties

What is EEXI?

As part of its decarbonisation strategy, the International Maritime Organization (IMO) will introduce a new regulation, which enters into force on 1 November 2022, with the requirements for EEXI coming into effect in 2023 and requires all ships to calculate their EEXI.

Existing ships of 400 GT and above will be required to calculate its attained EEXI, which indicates its energy efficiency. The vessel must then meet a specific required EEXI, which is based on a required reduction factor to reduce its carbon emissions over time.

It is expected that most existing ships will meet the required EEXI by engine power limitation (EPL) or shaft power limitation (SHaPoLi) or by installing energy saving devices.

The EEXI Transition Clause

Effecting power limitation modifications to a vessel is likely to require co-operation between shipowners and charterers. Therefore, BIMCO has developed a new clause to address the changes.

The new EEXI Transition Clause can be used in both existing and future time charterparties which span 2023. The certification of the EEXI is currently a one-time event and, therefore, once the vessel has been certified as required by the regulations the clause will not be required.  It addresses the relationship between shipowners and charterers in the context of compliance with the new regulation where technical modifications and logical amendments to charterparty descriptions and warranties are required.

The clause is suitable for use where the ship will meet the required EEXI by implementing either EPL or SHaPoLi.

If shipowners meet the required EEXI by undertaking modifications other than EPL or SHaPoLi, then the clause leaves it to owners and charterers to agree on this separately.

The clause provides that the cost and any loss of time resulting from the EPL or SHaPoLi modification to be for Owners’ account, but also provides for amendment to the vessel’s warranted maximum speed and consumption (where relevant) following the modification, as well as consequential amendments to the vessel’s description. The clause also requires cooperation between owners and charterers as to the timing of the modifications. There is great industry demand for an EEXI clause, and this has been drafted with input from both owners and charterers and is believed to provide a fair position between the parties.  Helen Barden, senior solicitor in North’s FD&D team and who is part of North’s Navigating Decarbonisation working group, was part of the drafting committee.

Find out more

• Visit our Navigating Decarbonisation expertise area at https://www.nepia.com/topics/navigating-decarbonisation/
• Read more about limiting engine and shaft power in our article here: https://www.nepia.com/articles/imos-carbon-reductions-push-power-limits-down/
• Learn more about the IMO’s EEXI regulation here: https://www.nepia.com/articles/imo-takes-first-steps-to-decarbonise-shipping/