Reed Smith Client Alerts

As 2021 comes to a close, the shipping industry is starting to gear up for the new Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations. As readers will know, these regulations have been adopted by the International Maritime Organization (IMO) through the Marine Environment Protection Committee (MEPC) and are due to come into force on 1 January 2023.

BIMCO has just published its eagerly awaited EEXI Transition Clause for Time Charter Parties 2021, together with explanatory notes. This is a ‘transition’ clause intended for use in existing time charters or any new time charters entered into in 2022. Here, we take a look at the key features of the clause.

Container ship in harbor

Overview of the clause

The clause provides that any ‘EEXI Modifications’ (a defined term) required to comply with the regulations must be completed by owners prior to the vessel’s next annual, intermediate or renewal survey (whichever comes first) on or after 1 January 2023.

Modifications have been split into two categories:

  1. EEXI Modifications that are limited to engine power limitation (EPL) or shaft power limitation (SHAPOLI)
  2. EEXI Modifications that are not, or that are in addition to, EPL or SHAPOLI.

For the first category of modifications, owners do not need charterers’ permission but instead, have an unfettered right to take the vessel out of service in order to effect the necessary modifications (subject only to using reasonable endeavours to avoid a loss of time to charterers if possible).

Conversely, with the second category of modifications, charterers’ prior agreement and approval must be obtained, although charterers may not unreasonably withhold or delay providing it.

The cost of the work itself must be paid by owners, and clause (c)(iv) adds that “any actual loss of time to the Vessel … due to the installation and trials of such modification … shall be for Owners’ account”. This provision explicitly includes deviation and any bunkers consumed during this period and will also cover hire.