Last week's focus was on responsibility under FuelEU, a topic that leaves many puzzled. Read on to gain a clearer understanding of today’s newsletter!
Who is responsible under the FuelEU Maritime regulation?
The ISM (International Safety Management Code) company i.e. DoC (Document of Compliance) holder is responsible for ensuring compliance with the FuelEU Maritime Regulation. This does not depend on whether the DoC holder is a ship owner, charterer, or ship manager. It places a significant responsibility on the DoC holder to manage and oversee compliance with the regulation’s requirements.
Differences from EU ETS?
Under the EU Emissions Trading System (EU ETS), an implementing act shifted the responsibility from the DoC holder to the ship owner. This change was made to acknowledge the inability of ship managers to influence the technical and operational setup of ships exposed to the regulation.
Will the same happen for FuelEU?
In contrast to EU ETS, the FuelEU regulation legally doesn't allow for a similar implementing act. This means that, unlike the EU ETS, the DoC holder will remain responsible under FuelEU.
Challenges
The DoC holder, in most cases the technical manager of the ship, has no direct power over the fuel choice or the technical setup of the vessel as the ship owner or operator typically determines it. This lack of control complicates the DoC holder’s ability to ensure compliance with FuelEU requirements while at the same time exposing him/her to extensive financial risks.
At the same time, it raises the question of surplus ownership. While the DoC holder is responsible, the operator bears the increased fuel costs of bunkering alternative fuels and is interested in owning the monetary benefit (the surplus).
Both the regulatory responsibility as well as the surplus ownership require amendments of charter party agreements and further contractual agreements, especially when choosing pooling as a mean of compliance.
Regulatory Context:
The relevant portion of the FuelEU Maritime Regulation regarding responsibility is in Article 3(13):
"Company means the shipowner or any other organization or person such as the manager or the bareboat charterer, which has assumed the responsibility for the operation of the ship from the shipowner and has agreed to take over all the duties and responsibilities imposed by the International Management Code for the Safe Operation of Ships and for Pollution Prevention"
For more detailed information, refer to the full text of the FuelEU Maritime Regulation (EU) 2023/1805 on the EUR-Lex website.
We hope this explanation enhances your understanding of the responsibility under FuelEU. Stay tuned for more info regarding FuelEU this week!
Feel free to reach out if you have any further questions or are interested in learning more about how BetterSea pioneers the legal work around FuelEU and surplus ownership in its streamlined and end-to-end FuelEU software solution.
Best regards,
BetterSea Team
Contact Us: info@bettersea.tech
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