BIMCO CII and Emissions Clauses

Background

Why standard clauses matter

Charter-party contracts (time charter, voyage charter, contract of affreightment) are the principal commercial framework through which shipping services are bought and sold. The contracts allocate operational responsibilities (manning, maintenance, fuel supply, port costs) and commercial risks (delays, off-hire, weather) between the owner and the charterer in a structured legal way.

Until approximately 2020, the contracts were largely silent on climate compliance costs because there were almost no climate compliance costs to allocate. The introduction of the CII rating framework in 2023, the EU ETS for shipping in 2024, the FuelEU Maritime in 2025, and the IMO Net-Zero Framework in 2027 collectively created substantial new compliance costs that needed to be allocated. The costs include direct financial costs (EUA surrender, FuelEU penalties), indirect financial costs (capex for retrofits, additional fuel cost for compliant fuels), and operational impacts (slow steaming, route optimisation, schedule constraints).

The BIMCO standard clauses provide a widely-recognised contractual framework that:

• Reduces transaction costs by avoiding bespoke negotiation of each cost-allocation issue.
• Provides legal certainty through tested wording and case-law-developed interpretation.
• Allocates costs based on the underlying cause and control principle (the party that controls the underlying activity bears the related cost).
• Provides flexibility for the parties to vary the allocation by mutual agreement.

BIMCO’s role

BIMCO is a non-governmental international association headquartered in Copenhagen, with approximately 1,900 member companies in over 130 countries representing approximately 60% of the world fleet by tonnage. BIMCO’s principal activity is the development and maintenance of standard contracts, with over 250 standard contract forms covering all major commercial shipping segments.

BIMCO’s standard contract drafting process involves:

• Sub-committee comprising representatives of owners, charterers, brokers, lawyers and Class societies.
• Public consultation through BIMCO’s website and via BIMCO Documentary Committee.
• Approval by the BIMCO Documentary Committee.
• Publication on the BIMCO website with explanatory notes (the “Explanatory Note”).
• Periodic review and update as legal and regulatory contexts evolve.

The CII, ETS and FuelEU clauses were each developed through this process between 2020 and 2024.

Why CII created a split-incentive problem in time charters

CII broke the clean allocation logic that time charters had used for a century. The split is structural, not a drafting oversight. Under MARPOL Annex VI Reg.28, read with MEPC.336(76), the regulated party is the ship’s “company” as defined in the ISM Code, almost always the registered owner or the bareboat charterer that holds the Document of Compliance. That party owns the Statement of Compliance obligation, files the annual attained CII, takes the rating from A to E, and must write a CII corrective action plan into its SEEMP Part III if the ship lands a D for three consecutive years or a single E.

The owner holds that document obligation. The owner does not hold the throttle. On a time charter the charterer directs the commercial operation: it sets the speed, picks the route, orders the port rotation, decides how long the ship idles at anchor waiting for a berth, and chooses the cargo intakes that fix the deadweight-distance the ship actually moves. Every one of those choices feeds the attained CII. The annual attained figure is an Annual Efficiency Ratio: total CO2 mass over a year divided by deadweight times distance sailed. The numerator is fuel the charterer burns by ordering 14 knots instead of 11. The denominator collapses when the charterer parks the ship at anchorage for 40 days, because waiting time burns auxiliary fuel and adds zero transport work.

So the party legally on the hook for the rating can’t move the levers that set it, and the party that moves the levers carries none of the regulatory liability. Economists call this a split-incentive problem. Without a contractual bridge, the charterer has every reason to steam fast, keep tight schedules, and ignore the ship’s annual rating, because the rating is the owner’s name on the certificate, not the charterer’s. The 2% year-on-year tightening of the required CII line through 2026, set by MEPC.338(76) and continued under the reduction-factor table, means a ship that scrapes a C in 2023 drifts toward D by 2026 on identical operations. The clause is the instrument that re-attaches the charterer’s hand on the throttle to the owner’s exposure on the certificate.

The BIMCO CII Operations Clause for Time Charter Parties 2022

Scope and effect

The BIMCO CII Operations Clause for Time Charter Parties was published in November 2022, ahead of the CII regime taking effect on 1 January 2023. It’s a bolt-on clause for an existing or new time charter party: NYPE 2015, BIMCO’s own SHELLTIME or GENTIME forms, or a bespoke recap. It does not amend MARPOL; it can’t shift who the regulated company is. What it does is build a private cooperation-and-data machine on top of the public rating regime so the owner can ask the charterer to operate the ship in a way that protects the rating, and so both sides know what happens when they disagree.

The clause is deliberately a framework, not a tariff. BIMCO’s drafting sub-committee chose cooperation over a hard speed cap because a single number, say “do not exceed 12.5 knots”, would be wrong for half the trades the ship might enter over a three-year charter. Instead the clause sets up a procedure: agree a target, share the data, project the rating, and confer on remedies before the year runs out. The explanatory note is explicit that the parties must fill the blanks; an unamended clause with no agreed target rating and no agreed procedure does very little.

Structure and the duty to cooperate

The operative spine is a mutual duty to cooperate in good faith to achieve an agreed minimum CII rating for each calendar year of the charter. The cooperation duty is reciprocal, which matters: the owner can’t demand a rating the ship is physically incapable of holding, and the charterer can’t order an operating pattern that makes the target unreachable and then walk away from the consequences. Good faith here is a working obligation, not a pious recital. It requires each party to do the specific things the rest of the clause spells out, and the early arbitration commentary treats a refusal to share data or to discuss a remedy as a breach of the cooperation duty itself.

The agreed target is a blank the parties complete. Most fixtures insert C, the regulatory floor that avoids the corrective-action machinery. Quality charterers, oil majors vetting under their own matrices, and owners financing under the Poseidon Principles sometimes push for B, which gives headroom as the required line tightens 2% a year and protects the ship’s RightShip GHG rating, a separate A-to-G score that many dry-bulk and gas charterers screen on before they’ll fix a ship at all. The choice of target is the single most negotiated number in the clause, because a B target asks the charterer to give up speed the C target would have allowed.

Data sharing and the role of voyage instructions

The clause makes data flow in both directions. The charterer supplies the operational data the owner needs to project the rating: intended speeds, routes, expected port rotation, and waiting times. The owner supplies the projection: where the ship is tracking against the agreed target given the orders received, and a warning when the projection slips. This is where the clause leans on the same reporting plumbing the ship already runs for IMO DCS and EU MRV, so the numbers in the cooperation loop reconcile with the numbers the company will later verify and submit.

Voyage instructions are the live control surface. Under a standard time charter the charterer’s right to give “lawful and reasonable” orders as to employment is the contractual root of its operational control. The CII clause sits underneath that right: it gives the owner a contractual basis to flag when a specific order, say a demand to maintain 14 knots across a ballast leg, will push the projected rating below the agreed target, and to ask the charterer to revise the order. The clause does not let the owner refuse a lawful order outright. It creates a structured conversation that must happen before the order is executed, with the burden on the charterer to either revise the order or accept the rating consequence.

Remedies and cost allocation

When the projected rating drops below the agreed target, the clause routes the parties into a remedy discussion before year-end, because the rating is annual and a January overrun can still be clawed back by November. Typical remedies are slow steaming, route optimization through weather routing, reduced waiting time by sequencing port calls better, and on the owner’s side, hull cleaning and propeller polishing to recover the speed-power curve. The clause sorts the cost by who controls and who benefits. Slow steaming cuts the charterer’s bunker bill, so the charterer wears the schedule cost; hull and propeller maintenance is the owner’s class-and-condition obligation, so it stays on owner’s account. Energy-saving devices retrofitted during the charter sit in a grey zone the parties have to allocate by hand, which is why the EEXI Transition Clause was written to handle exactly that capex-and-speed question.

The off-hire interaction is the clause’s sharpest edge. A standard time charter puts the ship off-hire, suspending the charterer’s payment, when the ship can’t perform through the owner’s fault. The CII clause carves out the rating consequence: where the charterer’s own operating orders drive the ship below the agreed target, the resulting corrective-action-plan work and any related administrative delay don’t put the ship off-hire. Without that carve-out a charterer could starve the rating with fast steaming, then stop paying hire while the owner files the corrective plan the charterer’s orders made necessary.

Variation and dispute resolution

The clause lets the parties vary the agreed target by mutual consent, which is the pressure valve for the reference-line problem. IMO is reviewing the CII reference lines and the reduction factors under the regime’s built-in review, due to report by 2026, and a mid-charter change to the required line can make a target agreed in 2023 either too soft or unreachable. Sophisticated fixtures bolt on an adjustment mechanism so the agreed rating moves with the regulation rather than freezing a 2023 assumption into a 2026 voyage. Disputes go to arbitration, London under LMAA terms by default, the same forum that handles speed-and-consumption and off-hire fights, so the CII dispute lands in front of arbitrators who already know the underlying charter.

Adoption

By end-2024 the clause, or a substantively equivalent bespoke version, appeared in the majority of new period fixtures for bulk carriers, chemical tankers, crude tankers and LNG carriers, the segments where the period market is large and standardized. Adoption ran lower in the container ship trades, where charters are more bespoke and operators manage CII across a fleet rather than ship by ship, so a per-vessel target in a single charter fits the commercial reality less neatly. The clause’s traction tracks the strength of the charterer’s vetting discipline: where a charterer already screens on RightShip and reports to the Sea Cargo Charter, accepting a CII target is a small step.

The BIMCO EEXI Transition Clause for Time Charter Parties 2021

Why a separate clause for EEXI

EEXI and CII are siblings from the same 2021 package, MEPC.328(76), but they hit a running charter in completely different ways. CII is an annual operational rating the charterer’s orders drive. The Energy Efficiency Existing Ship Index is a one-time technical certification: every cargo ship above 400 GT had to attain a required EEXI value by its first annual, intermediate or renewal survey on or after 1 January 2023, and most ships hit that floor by capping installed power. The common fix is an Engine Power Limitation, a mechanical or software cap that limits the engine to a fraction of its maximum continuous rating, or Shaft Power Limitation. EPL is cheap to fit but it cuts the ship’s top speed.

That speed cut is the charter problem. A ship fixed on a three-year time charter in 2021 at a warranted 14.5 knots could find itself, mid-charter, physically unable to make 14.5 because the owner had to install an EPL to pass its EEXI survey. Who pays for the box, and who eats the lost speed against a speed-and-consumption warranty written before EEXI existed? BIMCO published the EEXI Transition Clause for Time Charter Parties in 2021 to answer exactly that, ahead of the survey deadline, so charters spanning the 2023 cutover had a default allocation rather than a fight.

What the clause does

The clause does three things. First, it gives the owner the right to carry out the EEXI modification, the EPL or ShaPoLi or other approved measure, during the charter period, so the charterer can’t block a modification the owner needs to keep the ship trading legally. Second, it allocates the cost of that modification: the capital cost of the EEXI measure is for the owner’s account, because EEXI compliance is the owner’s regulatory and certification obligation, the same logic that keeps the ship’s class condition on the owner. Third, and this is the heart of it, it adjusts the speed-and-consumption warranty so the new, power-limited performance figures replace the pre-EEXI warranty from the date the modification takes effect.

That warranty adjustment is what stops a stale warranty from turning compliance into a breach. A speed warranty is a continuing contractual promise; if the ship was warranted at 14.5 knots and an EPL drops her physical maximum to 13.2, holding the owner to 14.5 would make EEXI compliance an automatic underperformance claim. The clause substitutes the limited figures so the warranty tracks the ship’s lawful capability. It also addresses the time the modification takes: the period the ship is out of service for the EPL installation is handled so the work itself doesn’t become an open-ended off-hire dispute.

Interaction with the off-hire and performance regime

The EEXI clause and the underlying charter’s performance regime have to be read together. Once the EPL is fitted and the warranty is restated, the charterer’s just-in-time arrival planning and voyage estimates run off the new lower maximum, and any speed claim is measured against the restated figure, not the original. The clause’s logic dovetails with the CII clause, because an EPL that caps power also caps the worst-case fuel burn, which usually helps the annual CII rating. A ship that can’t physically exceed 13.2 knots is harder to push into a D rating than the same hull free to run at 14.5. The two clauses are often inserted together for that reason: the EEXI clause sets the lawful speed ceiling, the CII clause manages the operating pattern under it.

Adoption and the EPL economics

The EEXI clause saw concentrated use in 2022 and early 2023 as the survey deadline approached and owners scheduled EPL installations into existing period charters. Its relevance is now front-loaded: a ship fixed today is already EEXI-certified, so a new charter warrants the post-EPL speed from the start and needs no transition clause. The clause still matters for older long charters that straddled the cutover and for second-hand sale-and-charterback structures where the EEXI status changes hands. The underlying EEXI required value and the speed-power penalty of a given EPL setting are what the parties argue over, because a tighter power cap buys a better EEXI margin at the cost of more lost knots.

The BIMCO Emission Trading Scheme Allowances Clause

Scope and effect

The BIMCO Emission Trading Scheme Allowances Clause for Time Charter Parties, issued in July 2023, is designed for inclusion in time charter contracts and addresses the EU ETS for shipping cost.

The EU ETS extension to maritime requires the shipping company (defined as the entity entered in the EU ETS register, typically the owner) to surrender EU Allowances (EUAs) equal to the CO2 emissions of the vessel on EU-related voyages. The EUA cost in 2024 is approximately EUR 70 to EUR 100 per t-CO2, equivalent to approximately EUR 250 to EUR 350 per tonne of fuel burnt on EU voyages.

The Clause provides for:

• Cost passthrough: the charterer reimburses the owner for the EUA cost of voyages performed during the charter period.
• EUA price determination: the EUA cost is calculated using the EUA daily settlement price on a defined date (typically a business day after the voyage ends).
• Voyage allocation: the EUA cost is allocated between the charterer and any subsequent charterer for voyages spanning charter changes.
• EUA delivery vs cash settlement: the parties may agree on either physical delivery of EUAs to the owner (less common) or cash settlement at the EUA market price (more common).
• Charterer EUA management option: the charterer may, at their option, deliver EUAs in lieu of cash payment.

Key provisions

The principal sub-clauses cover:

1. Definitions: EU ETS, EU Allowance, Voyage, Surrender Obligation, Phase-In Schedule (40% surrender for 2024 emissions, 70% for 2025, 100% for 2026 onwards).
2. Charterer’s obligation: charterer to compensate owner for EUA surrender obligations attributable to voyages.
3. Calculation: detailed methodology for calculating the EUA cost per voyage.
4. Payment terms: payment due [insert days] after the end of the calendar quarter.
5. EUA in lieu of cash: charterer may opt to deliver EUAs.
6. Audit rights: each party has audit rights over the calculation.
7. Disputes: London arbitration.

Phase-in schedule

The EU ETS phase-in is a critical contractual element:

• 2024 emissions: 40% surrender obligation (charterer pays for 40% of EUA cost).
• 2025 emissions: 70% surrender obligation.
• 2026 onwards: 100% surrender obligation.

The Clause incorporates the phase-in schedule and provides for adjustment if the phase-in is changed by EU regulation.

Adoption

The ETS Clause has very wide adoption (approximately 90% of new time charter contracts for vessels calling EU ports), reflecting the magnitude and certainty of the EUA cost. Charterers have largely accepted the cost passthrough as a normal cost of EU trade.

The BIMCO FuelEU Maritime Clause for Time Charter Parties

Scope and effect

The BIMCO FuelEU Maritime Clause for Time Charter Parties, issued in December 2023, addresses the FuelEU Maritime Regulation (Regulation (EU) 2023/1805, effective January 2025).

FuelEU Maritime requires that the annual GHG intensity of energy used onboard by vessels above 5,000 GT calling EU ports does not exceed a specified maximum (89.34 g-CO2eq/MJ in 2025, declining to 18.23 g-CO2eq/MJ in 2050). Non-compliance triggers a compliance deficit that can be remedied through pooling, banking, or penalty payment (EUR 2,400 per t VLSFO-equivalent of deficit).

The Clause provides for:

• Cost allocation: the cost of FuelEU compliance is allocated based on the underlying responsibility for the fuel choice and the operational pattern.
• Compliance balance management: the owner manages the FuelEU compliance balance for the vessel.
• Charterer information: the charterer provides voyage and bunker information needed for the calculation.
• Pooling option: the parties may agree to pool the vessel’s FuelEU compliance balance with other vessels in the same company or with third parties.
• Penalty pass-through: any FuelEU penalty is allocated based on the cause.

Pooling complexity

A novel feature of FuelEU Maritime (compared to EU ETS) is the pooling mechanism: a vessel with surplus compliance can pool with a vessel with deficit compliance, with both vessels deemed compliant. The pooling can be internal (within the same shipping company) or external (between companies via a third-party pooling agreement).

The Clause provides a framework for owner-charterer cooperation on pooling decisions, with the value of any pooling surplus allocated based on the agreed split (typically 50/50 or based on the underlying contribution).

The FuelEU pooling negotiation calculator implements the pooling economics.

Multiplier complexity

A second novel feature is the 2x multiplier for RFNBO fuels: each MJ of RFNBO counts as 2 MJ for compliance through 2034. The Clause addresses the allocation of the RFNBO cost premium and the corresponding compliance benefit.

Adoption

The FuelEU Maritime Clause is rapidly being adopted (approximately 60% of new time charter contracts for vessels calling EU ports as of end-2024). The complexity of the underlying regulation has slowed adoption relative to the simpler ETS Clause.

Other BIMCO climate-related clauses

EU Emission Trading Scheme Recap Clause

The BIMCO Emission Trading Scheme Recap Clause (July 2023) is a shorter alternative to the full ETS Clause, designed for inclusion in voyage charter contracts and in the recap of fixture (the brief summary of agreed terms exchanged between brokers). The Recap Clause is approximately 200 words long and provides only the essential cost-allocation provisions without the detailed calculation methodology.

Bunker Quality and BDN Clauses

BIMCO maintains several bunker quality and bunker delivery note (BDN) clauses that govern the contractual aspects of bunker supply, including FuelEU compliance information requirements. The clauses are integrated with the FuelEU Maritime Clause to ensure that the BDN provides the certified WtW intensity data needed for the FuelEU compliance calculation.

Virtual Arrival Clause

The BIMCO Virtual Arrival Clause (originally 2010, updated 2018) provides a contractual framework for just-in-time arrival, allowing the charterer to instruct the owner to slow the vessel for arrival at a specified time, with related cost adjustments.

Sea Cargo Charter Recommendations

BIMCO is a co-sponsor (with the Sea Cargo Charter Secretariat) of recommended language for charterers signed up to the Sea Cargo Charter to incorporate the Charter’s reporting requirements into their charter contracts.

Green Fuel Premium and Carbon Cost Clauses

BIMCO has published green fuel premium clauses for use in charter contracts that contemplate the use of higher-cost low-carbon fuels (RFNBO methanol, ammonia, biofuels). The clauses allocate the premium cost between owner and charterer based on the underlying compliance benefit.

How the CII clause interacts with the rest of the charter

The CII clause doesn’t live alone in the recap. It rubs against three pre-existing parts of every time charter, and the friction is where disputes start.

The speed-and-consumption warranty is the first. A classic warranty promises, say, “about 13 knots on about 30 metric tonnes of fuel in good weather”. The charterer relies on it to plan voyages and to claim against the owner for underperformance. The CII clause can pull the other way: holding a low CII rating often means steaming below the warranted speed, so the owner who slow-steams to protect the rating risks an underperformance claim, while the charterer who insists on the full warranted speed risks the rating. Well-drafted recaps reconcile the two by stating that operation at a reduced speed under the CII clause isn’t a warranty breach, mirroring the carve-out the EEXI clause uses for the post-EPL warranty.

Off-hire is the second. The clause’s carve-out keeps charterer-caused rating consequences from triggering off-hire, but the boundary is fact-heavy. If the corrective-action-plan work overlaps with a maintenance off-hire the owner would have taken anyway, apportioning the lost time is a real fight. The clause sets the principle; the arbitrators draw the line.

Just-in-time arrival is the third and the most constructive. JIT, slowing on passage to arrive when a berth is actually free, cuts both the charterer’s bunker bill and the anchorage waiting time that wrecks the CII denominator. The CII clause and a JIT or virtual-arrival clause point the same way, which is why operators that have adopted one usually adopt the other.

Comparison with other forms and bespoke clauses

BIMCO’s clause isn’t the only allocation in the market, and the alternatives reveal what the BIMCO drafting chose to do. Many oil majors and large dry-bulk charterers run bespoke CII clauses inside their proprietary forms, often with a hard speed band rather than the BIMCO cooperation-and-target structure, because a fleet operator wants a predictable operating envelope it can program into its scheduling rather than a year-end conferral. The trade-off is rigidity: a fixed speed band that’s right for a North Atlantic trade is wrong for a short-sea coastal run, and the ship gets locked into a sub-optimal CII either way.

Charterers signed up to the Sea Cargo Charter layer reporting obligations on top of, or instead of, a target rating, because their commitment is to disclose and benchmark emissions intensity rather than to hit a contractual rating per ship. The RightShip GHG rating does similar work from the vetting side: a charterer that won’t fix below a RightShip C gets de-facto CII discipline without a clause, because the owner has to keep the ship’s efficiency up to stay charterable. Against all of these, the BIMCO clause’s selling point is that it’s a known, off-the-shelf allocation that two parties who don’t otherwise trust each other can drop into a recap without bespoke negotiation, which is the whole point of a BIMCO standard form.

Data-sharing and verification mechanics

The clause runs on data the ship already generates for two regulators, so the mechanics matter. IMO DCS requires the company to collect fuel-oil consumption by fuel type, distance traveled and hours under way for the calendar year, have it verified by the flag administration or a recognized organization, and report it; the attained CII is computed from that verified DCS dataset. The CII clause’s information flow piggybacks on the same numbers, which keeps the contractual projection reconciled with what the company will eventually submit and certify.

EU MRV adds a parallel, partly overlapping dataset on a per-voyage basis for EU-related calls, verified by an accredited verifier. The two regimes don’t use identical scopes, DCS is global and annual, MRV is EU-linked and voyage-level, so a careful clause specifies which dataset governs the contractual rating and how the gap is treated. The verification dependency is the soft spot: the charterer controls a lot of the raw input, the noon reports, the bunker delivery notes, the port logs, and the owner has to reconcile that against the ship’s own meters. The clause gives each party audit rights over the calculation precisely because the underlying data lives partly on the other side of the owner-charterer line.

Practical negotiation points

For the owner, the priorities are a target no higher than the ship can physically hold under realistic trading, a firm data-supply obligation on the charterer with a deadline, and the off-hire carve-out drafted tightly enough that charterer-caused rating work never suspends hire. The owner also wants the warranty-reconciliation language so protecting the rating can’t be turned into an underperformance claim.

For the charterer, the priorities are the reverse: a target it can hit without crippling the schedule, cost allocation that keeps owner-side maintenance, hull fouling, propeller condition, on the owner where it belongs, and an adjustment mechanism so a tightening of the required line or a change to the reference lines doesn’t strand it against a target that was reasonable when fixed but isn’t by year three. Both sides want the variation right, because both will need it when IMO’s 2026 review lands. The single most common deadlock is the B-versus-C target: the charterer prices a B target as lost speed and lost cargo intakes; the owner prices a C target as a slow drift toward a D rating as the line tightens 2% a year. The BIMCO CII clause cost-allocation calculator models the cost split under different target and remedy assumptions.

The dispute and arbitration outlook

The clause is young and largely untested in published arbitration. CII took effect 1 January 2023; the first full attained ratings land in mid-2024 reporting, so the first genuine year-end rating disputes only began to mature through 2024 into 2025. Charter disputes that reach a reasoned, citable LMAA award typically run years behind the events, and most charter arbitration is confidential anyway, so the body of interpretation will build slowly and mostly out of public view.

The likely battlegrounds are already visible from the clause’s seams. Expect fights over whether a charterer’s specific voyage order breached the cooperation duty; over apportioning off-hire when corrective-action work overlaps owner maintenance; over which dataset, DCS or MRV, governs the contractual rating; and over the speed-warranty-versus-CII tension when an owner slow-steams. Because these land in front of LMAA arbitrators who already handle speed-and-consumption and off-hire claims daily, the interpretation will probably graft CII onto existing charter doctrine rather than invent a new framework. Until a handful of awards or a market-moving commercial dispute crystallizes the standard, the prudent course is to draft the blanks fully and not rely on the clause’s defaults to resolve the hard cases.

Implementation across charter party types

Time charter

The BIMCO clauses are designed primarily for time charter use, where the charterer has operational control of the vessel for an extended period (typically 6 months to 5 years). The clauses fit naturally into the standard NYPE 2015 (New York Produce Exchange) and BIMCO Standard Time Charter forms.

Voyage charter

The Recap Clause provides a simpler version for voyage charter inclusion. Under voyage charter, the owner typically pays for fuel and bears the direct compliance cost, but the standard freight rate is increasingly determined with the compliance cost factored in. The Recap Clause provides for the transparent passthrough of incremental costs.

Contract of Affreightment (COA)

Long-term contracts of affreightment (typically 1 to 5 years, with a series of voyages) increasingly include BIMCO climate clauses as part of the master COA. The complexity of allocating compliance cost across multiple voyages with potentially different vessels is addressed through specific provisions.

Pool agreements

For commercial pools (where multiple owners pool vessels under a common operator, sharing earnings), the BIMCO clauses provide a basis for the pool agreement to allocate compliance costs back to participating vessels.

Implications for owners, charterers and insurers

Owners

Owners benefit from the clarity and certainty provided by the BIMCO clauses but bear the operational complexity of managing the compliance reporting. The standard clauses incentivise owners to:

• Maintain an efficient operating profile (good CII rating, low FuelEU intensity).
• Invest in bulbous bow retrofits, energy-saving devices, air lubrication and other SEEMP measures to maintain charter attractiveness.
• Develop charter party negotiation expertise covering the climate clauses.

Charterers

Charterers benefit from the standard cost allocation but face increased complexity in voyage planning and bunker selection. The clauses incentivise charterers to:

• Provide accurate voyage data to the owner for compliance calculation.
• Cooperate on remedial steps when CII compliance is at risk.
• Consider the FuelEU and ETS cost in voyage economics, not just the bunker cost.

Insurers

Marine insurers (P&I clubs and hull underwriters) follow the BIMCO clauses to allocate insurance liability appropriately. The clauses do not transfer regulatory liability but do affect the financial exposure of each party.

Banks and finance

Ship-finance banks signed up to the Poseidon Principles increasingly require borrower owners to use the BIMCO climate clauses in their charter contracts, as evidence of structured climate-cost management.

Future developments

IMO Net-Zero Framework Clause (in development)

BIMCO is developing a standard clause for the IMO Net-Zero Framework GHG Fuel Intensity (GFI) standard for use from 2027. The clause is expected to be finalised by approximately mid-2026 to allow charters spanning the 2027 effective date to be properly drafted.

Pooling and compliance trade clauses

BIMCO is developing pooling and compliance trade clauses to address the secondary market in FuelEU compliance balances and IMO Net-Zero Framework remedial units. The market is expected to grow from 2025 onwards.

Standard clauses for non-EU jurisdictions

BIMCO is monitoring the development of analogous regulations in the UK ETS for shipping (UK ETS), Korean ETS, Japanese carbon pricing and other jurisdictions, and is expected to develop standard clauses for each as the regulations crystallise.

Charter party reform

The cumulative effect of the BIMCO climate clauses is reshaping the standard charter party forms themselves. Discussions are underway about a revised NYPE form (potentially “NYPE 2030”) that integrates the climate clauses into the main body rather than as appendices.

Limitations

The clause is a contractual allocation, not a technical fix. It re-attaches the charterer’s operating control to the owner’s regulatory exposure, but it can’t make a 2008-built Panamax with a fouled hull and an old main engine hold a B rating against a line that tightens 2% a year. If the ship physically can’t reach the agreed target under realistic trading, the clause just relocates the argument to who pays for the miss; it doesn’t conjure the missing efficiency.

Agreeing the target and the baseline is genuinely hard. The parties have to pick a rating before they know the ship’s real trading pattern over a multi-year charter, and the attained CII swings with trade route, laden-ballast ratio and waiting time, none of which are fixed at fixture. A target that looks like a comfortable C on a steady liner run becomes an unreachable stretch on a spot-driven tramping pattern with long anchorage waits.

Voyage-order disputes sit at the core and the clause softens rather than settles them. The charterer’s right to give lawful employment orders and the owner’s interest in the rating point in opposite directions, and “cooperate in good faith” is a standard, not a rule. When the charterer wants 14 knots and the owner wants 11, the clause forces a conversation but doesn’t dictate the outcome, so the hard cases still turn on negotiation or arbitration.

There’s a structural gap between a single charter and the ship’s annual aggregated CII. The rating is computed over a full calendar year across whoever operated the ship; a charter that covers eight months of that year shares the rating with the periods before and after it. Allocating a single annual rating across consecutive charterers, and across owner-operated gaps, is messy, and a charterer fixed for the back half of a year can inherit a rating already half-spent by another party’s fast steaming.

The clause leans on data the charterer largely controls. Noon reports, port logs and waiting times originate on the operational side, and the owner has to reconcile them against the ship’s own meters and the verified DCS dataset. Audit rights help, but a clause whose central calculation depends on the counterparty’s inputs carries an irreducible verification risk.

Finally, it’s effectively untested in arbitration as of this writing. The defaults haven’t been pressure-tested by reasoned awards, the off-hire carve-out and the cooperation duty haven’t been judicially defined, and the parties are relying on drafting and good faith rather than settled doctrine. The same caution applies to the EEXI Transition Clause, whose warranty-substitution mechanism has had little public testing because most of its work happened quietly around the 2023 survey deadline.

See also

Additional calculators:

• BIMCO CII Clause Cost Allocation Calculator
• Charter Clause - NYPE Cl. 8
• Three-Regime Compliance Cost Bridge
• EU ETS - Annual Allowance Cost

Additional formula references:

• Commercial Charter Party Standard
• Fueleu Compliance Balance
• Eca Fuel Cost Premium
• Index Sea Cargo Charter

Additional related wiki articles:

• Voyage charter party
• Time charter party

Regulatory frameworks

• MARPOL Annex VI
• IMO Net-Zero Framework
• IMO GHG Strategy
• EEXI, EPL and ShaPoLi
• SEEMP I, II, III
• CII corrective action plan
• EU MRV Regulation
• EU ETS for shipping
• FuelEU Maritime
• FuelEU penalties, pooling and multipliers
• UK ETS for shipping
• China DCS
• IMO DCS vs EU MRV
• CARB at-berth rule
• Emission control areas
• NOx Tier I, II, III
• IMO 2020 sulphur cap
• Well-to-wake intensity
• RFNBO under EU rules

Voluntary frameworks

• Poseidon Principles
• Sea Cargo Charter
• RightShip GHG Rating
• Green Shipping Corridors
• EUA market mechanics for shipping
• Voluntary carbon credits in shipping

Marine fuels

• LNG as marine fuel
• LNG fuel system
• Methanol as marine fuel
• Ammonia as marine fuel
• Biofuels in shipping
• Heavy fuel oil
• Marine gas oil
• Methane slip from LNG dual-fuel
• N2O emissions from marine engines
• Black carbon and Arctic shipping

Operational and technical efficiency

• Wind-assisted propulsion
• Air lubrication systems
• Just-in-time arrival
• Weather routing
• Trim optimisation
• Slow steaming
• Bulbous bow retrofits
• Energy-saving devices
• Battery-hybrid propulsion
• Onboard carbon capture
• Cold ironing / shore power

Cargo and ship operations

• Bill of lading
• Cargo securing manual
• IMSBC Code
• IBC Code
• Ballast Water Management Convention
• MARPOL Convention
• SOLAS Convention
• COLREGs Convention
• ISM Code
• ISPS Code
• Classification society

Ship types

• Bulk carrier
• Container ship
• Chemical tanker
• LNG carrier
• General cargo ship

Calculators

• CII clause cost-allocation calculator
• EU ETS voyage cost calculator
• FuelEU pooling negotiation calculator
• Three-regime compliance cost calculator
• CII Attained calculator
• WtW intensity calculator
• GFI compliance calculator
• SEEMP Measures Combined calculator
• EEXI Required calculator
• Calculator catalogue

References

• BIMCO. BIMCO CII Operations Clause for Time Charter Parties. BIMCO, 2022 (updated 2023).
• BIMCO. BIMCO Emission Trading Scheme Allowances Clause for Time Charter Parties. BIMCO, July 2023.
• BIMCO. BIMCO Emission Trading Scheme Recap Clause. BIMCO, July 2023.
• BIMCO. BIMCO FuelEU Maritime Clause for Time Charter Parties. BIMCO, December 2023.
• BIMCO. BIMCO Virtual Arrival Clause. BIMCO, 2018 update.
• BIMCO. NYPE 2015: New York Produce Exchange Time Charter. BIMCO, 2015.
• BIMCO. GENCON 2022: Voyage Charter Party. BIMCO, 2022.
• IMO Resolution MEPC.328(76): 2021 Revised MARPOL Annex VI. International Maritime Organization, 2021.
• IMO Resolution MEPC.336(76): 2021 CII Guidelines (G1). International Maritime Organization, 2021.
• Regulation (EU) 2023/1805 of the European Parliament and of the Council of 13 September 2023 (FuelEU Maritime). Official Journal of the EU, 2023.
• Regulation (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 (EU ETS Maritime). Official Journal of the EU, 2023.
• LMAA (London Maritime Arbitrators Association). Annual Reports and selected awards. LMAA, 2023 and 2024.

Further reading

• BIMCO. BIMCO Chartering Update. Quarterly publication.
• BIMCO. Explanatory Notes to the BIMCO CII, ETS and FuelEU Clauses. BIMCO, 2023.
• ICS. Catalysing the Fourth Propulsion Revolution. International Chamber of Shipping, 2022.
• DNV. Maritime Forecast to 2050. DNV Energy Transition Outlook, 2023.

Related calculators

• CII - SFOC & Fuel Mix Quick Check
• CII - Required Line by Year
• MARPOL Annex VI - CII Rating by Year
• CII - Year-on-Year Improvement
• CII Voyage Adjustments & Exclusions
• CII Required - target carbon intensity for the year
• CII Rating - Carbon Intensity A to E grade
• CII Fuel Mix Correction

Related formulas

• BIMCO CII Operations Clause Cost Allocation
• CII Rating (MEPC.339(76))
• CII Fuel Mix Correction
• CII Corrective Trajectory
• CII Attained vs Required (Headroom / Deficit)
• CII Attained (MEPC.336(76))
• CII - SFOC & Fuel Mix Quick Check
• CII - Required Line by Year