IMO 2020 is fast approaching and has the potential to increase legal and administrative burdens on bunker suppliers considerably. The purpose of this article is to provide some recommendations about how to deal with the obligations of the new provisions as we approach the January 2020 deadline.
Notifications from buyers, declarations from sellers
According to Appendix V of Marpol Annex VI as amended, bunker suppliers are bound to provide a declaration in the Bunker Delivery Note (“BDN”) signed and certified by the bunker supplier’s representative when fuel oil is sold, stating the fuel oil complies with sulphur content limits.
Appendix V requires bunker suppliers, if asked to provide fuel exceeding the sulphur limit in Regulation 14.1and 14.4 to a vessel, to do so only on the basis of receiving a notification from the buyer that the fuel is intended to be used compliantly. There is no requirement on the bunker supplier to check if it will in fact be used compliantly, only to obtain a “notification” from the buyer that it will be.
There are therefore two steps. First, the buyer should inform the bunker supplier the fuel oil will be used compliantly (step 1), THEN the bunker supplier supplies the oil and gives a bunker delivery notice with the appropriate information about the quality of the fuel oil (step 2).
The notification to the bunker supplier in step 1 will be vital evidence for the bunker supplier in protecting itself later on. Any bunker supplier should have a robust system of storing all these notifications from buyers.
For example, it might be that the fuel order is carried out using a form on a bunker supplier website or app and the notification in step 1 is given by way of clicking on a box. This click creates data which needs to be stored securely. Further, the act of clicking the box must be connected to the buyer. This could be because the buyer has logged in as a registered user. The point is that the bunker supplier should have some way of connecting the notification in step 1 with the user and then storing that confirmation so it can be accessed later on. A specially built website would be useful.
Fuel Oil Non-Availability Reports (FONARs)
Regulation 18 of Annex VI sets out factors to be taken into consideration by a Member State Party in situations where a ship is found not to be compliant with the sulphur limits. Factors to consider include steps taken by the ship to mitigate the risk of non-compliance. Specifically, a ship may provide records of its attempts to achieve compliance with the limits and evidence of its best efforts to obtain compliant fuel.
If, despite best efforts, a ship is unable to obtain compliant fuel, the ship’s Flag State as well as the competent authority of the port of destination should be notified. This notification is commonly referred to as a Fuel Oil Non-Availability Report (FONAR).
Bunker suppliers will play an important role because FONARs must contain evidence of the efforts the owner made to obtain compliant fuel.
The IMO recently issued a resolution containing “Guidelines for Consistent Implementation of the 0.50% Sulphur limit under Marpol Annex VI”. According to the template provided in the Guidelines, the buyer of fuel oil must provide evidence of the attempts to purchase compliant fuel oil. In particular, they must:
“3.1 Provide a description of actions taken to attempt to achieve compliance prior to entering “country X” waters (and ECA, if applicable), including a description of all attempts that were made to locate alternative sources of compliant fuel oil, and a description of the reason why compliant fuel oil was not available.”
3.2 Name and email address of suppliers contacted, address and phone number and date of contact (dd-mm-yyyy)”.
Preserving this evidence will be crucial for buyers and buyers of fuel oil would be well-advised to have plan in place detailing how evidence is stored.
Risks and risk prevention
There might be a risk bunker suppliers are put under commercial pressure (“duress” in legal-speak) to provide evidence where in fact buyers had made no enquiry.
From a legal perspective, bunker suppliers should make sure that staff have been trained to deal with requests for evidence and are aware that it is against company policy to provide evidence which is fraudulent. As ever, it is best to have written policies that can be pointed to as evidence. It would be advisable for bunker suppliers to have a section in the company handbook and a protocol dealing with this together with evidence that training has been given to staff so that if a question arises later on, the bunker supplier is protected.
Importance of filling out Bunker Delivery Notices correctly
It is important for bunker suppliers to make their staff aware that they should exercise care filling out BDNs. The documents will potentially be scrutinized by port states, flag states and possibly even in court.
According to the IMO Guidelines,
“4.3.2 If non-compliance, such as issuance of an incorrect BDN or a BDN without measurement of sulphur content, was found, the designated authorities should take appropriate corrective measures against the non-compliant supplier. In such case, the designated authorities should inform the Organization for transmission to the Member States of the non-compliant supplier, in accordance with the regulation 18.9.6 of MARPOL Annex VI and paragraph 4.4 of these Guidelines.” (Emphasis added).
This makes it quite clear that the responsibility for the BDN rests with the bunker supplier and mistakes are less likely to be made where the production of the BDN has been automated, for example by using coded templates that can be reproduced easily.
In summary, the points to remember are as follows:
- Bunker suppliers should have a robust system of keeping records of notifications from buyers that they intend to use fuel oil compliantly.
- Owners and charterers will have to rely on Fuel Non-availability Reports at some stage and preservation of evidence regarding the availability of fuel is critical to these reports.
IMO 2020 means more paperwork. However, if stakeholders are prepared and have a system in place which is organized and makes good use of information technology for handling large amounts of data, then perhaps “paperwork” is just a phrase we use to describe a task we have automated.