BIMCO Publishes The Russian Oil Price Cap Scheme Clause 2023

By June 13, 2023 No Comments

Bimco has published the Russian Oil Price Cap Scheme Clause 2023.

The clause sets forth a uniform structure that charterers and owners can agree upon and incorporate into their charter agreements. It deals with implementing Russian oil and petroleum product regulation in response to EU/G7 actions that imposed an oil price cap on particular oil products imported or exported by Russia. In order to meet the interests of many industry stakeholders, BIMCO has created a comprehensive and flexible clause. It encourages safe shipping practices and ensures compliance with the ever-changing regulatory environment.

The clause encourages safe shipping practices and ensures compliance

The EU/G7 established a price cap on oil products with the CN codes 2709 00 and 2710 that originate in or are exported from Russia on December 3, 2022. Later that month, BIMCO established a specific subcommittee with the responsibility of creating the Russian Oil Price Cap Scheme Clause. The panel initially concluded that it would be more effective to have a single, flexible clause that could be used by various industry stakeholders and in charter parties generally as opposed to having several copies of the clause for multiple scenarios and parties.

A few salient points that provide further guidance should be mentioned:

• The provision mandates that charterers guarantee and certify to owners that their cargo complies with the pertinent laws as further outlined in a tier 1-3 system.

• The focus is only on cargo that is transported in a ship’s tanks, such as bunkers or goods that can be processed into bunkers after being transported. This restriction results from the fact that the price cap mechanism does not often apply to bunkers, as understood by the subcommittee, and that the EU, UK, and US regulators have different sanctions policies for bunkers.

• The clause allocates rights and obligations in cases where a breach is suspected or experienced to establish certainty and workable solutions.

• After careful consideration, the phrase “reasonable grounds to suspect” is retained as the moment at which owners may dissolve the charter party and take other actions in accordance with the clause’s provisions. In order for both parties to be able to act sooner, this phrase also applies to the notification application. Additionally, referencing “reasonable grounds to suspect” assures compliance with current regulations.

• The breadth of the clause was chosen with the intention of future-proofing it while keeping it consistent with the current price cap measures.

Full details of the clause can be read on the Bimco website: BIMCO publishes the Russian Oil Price Cap Scheme Clause 2023

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