The BIMCO CII Operations Clause for Time Charter Parties 2022

As part of shipping’s ambition to tackle climate change, the IMO has both mid-term and longer-term targets when it comes to reduction of CO₂ emissions and greenhouse gas emissions from ships. The purpose of these regulations is to reduce the CO₂ emissions of a vessel by changing the way it is operated. Therefore, it cannot be business as usual; both employment orders and sailing directions are likely to directly and significantly impact a ship’s carbon intensity, as will the proper maintenance of a ship.

Amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI require that as of 1 January 2023 all applicable vessels must start collecting data for the reporting of their annual operational carbon intensity indicator (CII) and CII rating. At the end of 2023 and the end of each following year, vessels must calculate and report their attained annual operational CII for the calendar year. Vessels will then be given a CII Rating of A, B, C, D or E, with ratings A – C indicating compliance.

Existing (unamended) time charterparties are not geared to deal with the CII regime, which by its very nature likely imposes restrictions on a vessel’s operation if the vessel is to achieve at least a compliant CII Rating of C. As such, the CII Operations Clause for Time Charter Parties seeks to provide the necessary building blocks for the parties to operate ships in accordance with the new CII playing field.

Reducing carbon intensity is a shared responsibility between owners and charterers which needs to be reflected clearly in a time charter party context. The clause aims to promote collaboration, transparency, and flexibility between these parties, especially in circumstances where the employment of a ship as determined by the charterers may have a direct and significant impact on a ship’s carbon intensity. It also appreciates the role that the owners play in maintaining the energy efficiency of the vessel.

The clause is intended to be a “stand-alone” clause that can be incorporated into existing or new time charter parties. However, it is stressed that both the CII regulations and the CII Operations Clause for Time Charter Parties need to be properly understood by both owners and charterers. There are certain parts of the clause which need to be expressly discussed and agreed between the parties, such as the “Agreed CII” and whether off-hire periods are to be excluded from the “C/P Attained CII” calculation.  The clause is not a “compliance” clause and so just because owners and charterers comply with their obligations under the clause, it will not necessarily lead to compliance with the CII regulations. Owners will have to monitor two sets of data when it comes to assessing the ship’s carbon intensity: one for the purposes of the charter party and the other for regulatory compliance. The parties will have to familiarise themselves with the CII regulations and the exact requirements applicable to the ship.

Because the clause envisages slow steaming, as well as possibly taking alternative and more fuel-efficient routes, as being a key operational tool to achieve CII compliance, it will be important for charterers to ensure that an appropriate liberty clause is included in the bills of lading etc. so that compliance with this clause would not result in a breach of the contract of carriage.

BIMCO will review the clause when there is a clear understanding of how the CII regulations are working in practice.

The clause, with guidance notes can be found here