Insight

Updated

INSIGHT: Bunker Convention 2001

The following pages contain information about the Bunkers Convention which entered into force in November 2008.

Members are referred to the Circulars issued on 25 April 2008, 10 July 2008, 28 August 2008 and 3 October 2008.

For further information, members, brokers and clients are asked to contact their regular Skuld contact person.

 

Where in force

States where Convention in force

  • Albania
  • Antigua & Barbuda
  • Australia
  • Austria
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Barbados
  • Belgium
  • Belize
  • Bulgaria
  • Canada
  • China
  • Congo
  • Cook Islands, the
  • Comoros
  • Croatia
  • Cyprus
  • Czechia
  • Denmark
  • Djibouti
  • Egypt
  • Estonia
  • Ethiopia
  • Fiji
  • Finland
  • France
  • Georgia
  • Germany
  • Greece
  • Grenada
  • Hong Kong, China (associate member)
  • Hungary
  • Indonesia
  • Iran 
  • Ireland
  • Italy
  • Ivory Coast
  • Jamaica
  • Jordan
  • Kenya
  • Kiribati
  • Korea, Democratic Peoples Republic (North)
  • Korea, Republic of (South)
  • Latvia
  • Lebanon
  • Liberia
  • Lithuania
  • Luxembourg
  • Macao, China (associate member)
  • Madagascar
  • Malaysia
  • Malta
  • Marshall Islands
  • Mauritius
  • Mongolia
  • Montenegro
  • Morocco
  • Myanmar
  • Netherlands
  • New Zealand
  • Nicaragua
  • Nigeria
  • Niue
  • Norway
  • Palau
  • Panama
  • Poland
  • Portugal
  • Romania
  • Russia
  • Saint Lucia
  • Samoa
  • Saudi Arabia
  • Serbia
  • Sierra Leone
  • Singapore
  • Slovakia
  • Slovenia
  • Spain
  • St Kitts & Nevis
  • St Vincent & Grenadines
  • Sweden
  • Switzerland
  • Syria
  • Togo
  • Tonga
  • Tunisia
  • Turkey
  • Tuvalu
  • United Kingdom (UK) - Extended to Cayman Islands, Gibraltar, Isle of Man, Bermuda and British Virgin Islands
  • Vanuatu
  • Vietnam

 

Obtaining a Certificate

 
Stage 1: the "blue card"

 
What is a "blue card"?

  • A document issued by the Club confirming that insurance is in place which meets the requirements of the Convention.

What do I do with the blue card?

  • Send it to the authorities of the state which is issuing the Certificate.

Do I need to request the Club to provide a blue card?

  • Yes. Members are required to submit an application form. This is necessary to ensure that the vessel needs a Certificate and that the information contained in the blue card is correct. Members who require a blue card for the next insurance year must first
       agree renewal terms so that the Club knows that the ship will be entered for the next insurance year, or
       give an undertaking in a prescribed form to renew with the Club or another P&I Club in the International Group.

How are they issued?

  • They are sent out electronically, unless members specifically require a hard copy.

Is it only P&I Clubs in the International Group that can issue blue cards?

  • No, other insurers or providers of financial security can issue blue cards as long as they are acceptable to the issuing authority.

What does the blue card look like?

  • The blue card follows the same format used for CLC blue cards issued for tankers.

What information does the blue card contain about the ship?

  • The ship name, distinctive number or letters, port of registry & IMO number.

What information does the blue card contain about the registered owners?

  • The name and full address of the principal place of business of the registered owner. The registered office will be used as the principal place of business unless members provide an alternative address.

Stage 2: the Certificate

 
If the ship flies the flag of a State Party to the Convention

  • apply to the authorities of that state; members should contact their flag state authority for information about the procedures to be followed. Contact details and other information are available in the Members State information section.

If the ship does not fly the flag of a State Party

  • apply to a state which is party and willing to issue Certificates.

If the ship flies the flag of a state where the Convention has been ratified but not yet come into force

  • Some states are in the process of ratifying the convention.  The convention will come into force three months after the date of ratification. There is a risk that certificates issued by such states will not be recognised as valid until the date when convention enters into force. Members whose vessels fly the flag of a state where the Convention has been ratified but not yet come into force will probably need to obtain a certificate from a state where the convention is in force in order to ensure compliance during the three month period between ratification and entry into force.  Club cover may otherwise be prejudiced if  the vessel is detained or fined.

Which states have agreed to issue blue cards to ships not on their register?

  • Bahamas, Cook Islands, Jamaica, Liberia, Norway, Panama, Samoa, Sierra Leone, UK (including Isle of Man), Vanuatu and Cyprus will issue certificates to vessels registered in states which are not party to the Convention. For more details see Circulars dated 29 August and 3 October and Bunkers Bulletin - Member State information.

What does the Certificate look like?

  • The form is prescribed in the Convention.

 

Who needs a Certificate?

 
Who needs a Bunkers Certificate?

  • The registered owner

Which ships need Certificates?

  • Any seagoing vessel and seaborne craft of any type whatsoever,
  • over 1000 g.t., and
  • which is
     - flying the flag of a state party, or
     - using a port or offshore facility in the territorial sea of a state party

Do tankers with CLC Certificates also need Bunkers Certificates?

  • Yes

Do non self-propelled vessels such as barges and pontoons need Certificates?

  • Yes if they have any hydrocarbon mineral oil on board.

 

Some Convention basics

 
Strict liability

  • Claimants do not need to show fault

Liable parties

  • The owners "including the registered owner, bareboat charterer, manager and operator of the ship"

Type of ship

  • "Any seagoing vessel and seaborne craft, of any type whatsoever"

Compulsory Insurance

  • Owners required to have insurance to meet liabilities under Convention in order to operate in states where Convention in force (unless ship 1000 gt or less)

Exclusions

  • Damage resulting from act of war (terrorism is not included in definition of act  of war)
  • Damage wholly caused by deliberate act of third party or by negligent maintenance of navigational aids

Limitation

  • No separate limitation fund (unlike CLC)
  • Subject to limitation laws applicable in jurisdiction where claim brought
  • Insurer can limit to amount calculated under LLMC 1976 as amended

Supplementary funding available if claims exceed amount available under Bunkers Convention?

  • No (unlike CLC)

Geographical scope

  • Territorial waters and EEZ

Convention text

 

Compulsory Insurance

 
Ship 1000 gt or less

  • No compulsory insurance requirement

Ship over 1000 gt

  • Registered owners required to have insurance or other financial security

Bunkers Certificate

  • Must be carried on board as evidence that insurance is in place

Claimants have right of direct action against insurer

  • Insurers unable to rely on policy defences (except wilful misconduct)

 

Charterparties

 
Do I need to have a Clause in my charterparty?

  • The International Group has updated earlier versions of the Charterparty Clauses dealing with Financial Responsibility in respect of Pollution. This can be found in the Annex to the Circular dated 28 August 2008. A version in pdf format can be found here.

What is the purpose of the Clause?

  • The main purpose is to place an obligation on the owners to meet the financial security requirements of the Bunkers Convention, the Civil Liability Convention (CLC) and OPA 90 when these are applicable but to relieve owners from any obligation to arrange financial security for other pollution liabilities.

Are there a different clauses for tankers and non-tankers?

  • No; although there were previously separate clauses, there is now one clause for all vessel types.

How does the Clause differ from earlier Clauses?

  • 1(a) is new and reflects the coming into force of the Bunkers Convention
     
  • 1(b) follows the provision in the former clause applicable to tankers which are subject to CLC; an addition has been made which defines the circumstances in which CLC applies (i.e. “if the vessel is constructed or adapted for the carriage of persistent oil in bulk as cargo and is carrying more than 2,000 tons of such cargo”).
     
  • 1(c) follows the provisions in the former clauses in relation to OPA 90 and CERLA; an addition has been made which defines the circumstances in which OPA 90 applies (i.e. “if the vessel is over 300 gross tons and is required to enter US navigable waters or any port or place in the US”); a proviso that that the obligation to maintain a certificate only lasted so long as these can be obtained by the owners has been dropped.
     
  • 2 & 3 are the same as previous clauses.

 

War & Terrorism

 
Why is this relevant?

  • Clubs issuing blue cards become exposed to liabilities which they do not cover since
     - there is no exclusion in the Convention for terrorism (though there is for war)
     - terrorism is excluded from standard P&I Club cover

Do I have cover for terrorism?

  • Owners' war risks policies will normally cover terrorism

What is the solution?

  • Clubs in the IG require members requesting blue cards to have in place, and comply with the terms and conditions of, a war risks policy on standard terms with a separate limit for P&I liabilities. The limit should be for at least the proper value of the ship or USD 100 m, whichever the lesser. War risks underwriters will be expected to respond to claims arising out of terrorism. By requesting a blue card, Members will be deemed to have agreed to assign to the Association their rights under such insurance and against any third party

What do I need to do?

  • Check that vessels have P&I war insurance which meets the above requirements
     
  • Notify the war underwriters of assignment of rights