The overall aim was to develop a practical clause, which includes addressing the requirement of obtaining attestations and price information and enabling parties to carry Russian oil products in compliance with the Price Cap Scheme of the EU/G7 coalition. It was considered that the existing BIMCO sanctions clauses would not be workable in this context with the new regulations, which is why BIMCO decided to develop a specific clause for this purpose, enabling the carriage of Russian oil products in compliance with Price Cap Measures as may be applied.
As background information, the Council of the European Union (the “Council”) decided in December 2022 to set a price cap on products falling under CN codes 2709 00 and 2710 which originate in or are exported from Russia. The level of the cap was established in close cooperation with the Price Cap Coalition (the EU, G7, and other coalition partners such as Australia).
The G7/EU and other coalition partner nations have implemented measures prohibiting persons subject to their jurisdiction from transporting Russian oil products unless it has been sold at or below the applicable Price Cap. The relevant price caps are currently $60 per barrel for crude oil, $45 per barrel for petroleum products traded at a discount to crude oil, and $100 per barrel for petroleum products traded at a premium to crude oil. The Price Cap Scheme permits the maritime transportation of Russian-origin crude oil or petroleum products and associated services from Russia to a third country, or from a third country to another third country, provided that the price per barrel of oil or petroleum products is at or below the relevant price cap from the time they are loaded on board the vessel until they have cleared customs at the port of destination. Further, the Price Cap Scheme aims to provide protection from possible penalties for non-compliance for owners, charterers, insurers, and other parties, provided they have complied with the information and attestation requirements as set forth in the associated guidance issued.
The Coalition has indicated that the Price Cap mechanism will be reviewed every two months to respond to developments in the market and will be set at least 5% below the average market price for Russian oil products, calculated on the basis of data provided by the International Energy Agency. For this reason, BIMCO aimed to develop a clause that is suitable for the current scope of the Price Cap Measures and is also aiming to be future-proof.
The Charterers warrant that the employment of the Vessel under this Charter Party shall at all times comply and accord with restrictions and requirements adopted by the EU/G7 and other nations that may from time to time adopt the EU/G7 Price Cap Scheme (the “Price Cap Coalition”), that relate to the trading or maritime transportation and provision of related services, (together the “Price Cap Measures”), of cargoes (including but not limited to Russian origin cargoes falling under CN Codes 2709 00 and 2710) that are subject to Price Cap Measures ( “Price Cap Cargo(es)”).
Prior to each loading of any Price Cap Cargo during the Charter Party, the Charterers will provide an attestation, in the form set out in Annex 1, that shall apply to any Price Cap Cargo to be loaded on the Vessel.
any member of the Price Cap Coalition and/or the Owners request evidence of compliance with the Price Cap Measures, the Charterers shall promptly (and in no case later than three (3) business days after the request) provide all relevant price information and/or attestations relied upon by the Charterers.
either the Owners or the Charterers have reasonable grounds to suspect that the Vessel is or may be involved in any activity, under the Charter Party, which is contrary to the Price Cap Measures, they shall immediately notify the other party in writing.
In the event of a breach by the Charterers of subclauses (a) and/or (b) and/or (c) and/or (d), and/or if the Owners have reasonable grounds to suspect that the Vessel is or may be involved in any activity contrary to the Price Cap Measures, then without prejudice to any of the Owners’ other rights under the Charter Party (including the Owners’ rights to demand lawful orders):
() The Owners shall have the right to terminate the Charter Party; and
(ii) The Charterers shall indemnify and hold harmless the Owners, the Vessel and its Managers against any losses, damages, fines, penalties, and reasonable expenses arising from a breach; and
(iii) Within forty-eight (48) hours of being called upon to do so, the Charterers shall give relevant orders and at their time and expense shall make arrangements for the discharge of the cargo at any safe port or place so directed by any member of the Price Cap Coalition or, in the absence of any such direction, at the nearest safe port or place in a manner that does not breach any other provision of the Charter Party, always without prejudice to subclause (e)().
f. The Charterers shall procure that this Clause shall be incorporated into all sub-charter parties and bills of lading, waybills or other documents evidencing contracts of carriage issued pursuant to this Charter Party.
Charter Party Date:
The Charterers confirm and undertake that any Price Cap Cargo(es) loaded under the Charter Party are compliant with the Price Cap Measures and any other applicable restrictions on and/or licences or exceptions applicable to the trade, supply, delivery and/or the provision of services related to the maritime transport of Price Cap Cargoes as amended from time to time.
The Charterers warrant and attest that:
The Charterers have received and retain price information from their counterparts demonstrating that the Price Cap Cargo(es) was/were purchased at or below the cap; or
Where not practicable to request and receive such information, the Charterers have obtained a signed attestation that the Price Cap Cargo(es) was/were purchased at or below the cap; or;
The Charterers have received a signed attestation that the purchase of the Price Cap Cargo(es) was/were pursuant to a licence, exception, or other relevant derogation.
Any relevant price information/attestation on which the Charterers rely shall be retained for a minimum of five years.
Any applicable reporting obligations have been complied with.
The BIMCO Russian Oil Price Cap Scheme Clause has been developed by a team comprised of owners, managers, charterers, P&I clubs, and legal experts. BIMCO is grateful to the following individuals for assisting us with this important project:
Katerina (Minerva Marine),
Jonathan Epstein and Sean Pribyl (Holland & Knight),
Leigh Hansson and Alexander Brandt (Reed Smith),
Sacha Patel (Steamship Mutual),
Mark Church and Mike Salthouse (NorthStandard P&I),
Gareth Austin and Henry Reynolds (Glencore Oil).
The following explanatory notes are intended to provide some background to the thinking behind the BIMCO Russian Oil Price Cap Scheme Clause 2023. If you have any questions about the clause that we have not answered in the explanatory notes, please contact us at email@example.com and we will be happy to help.
There may be situations where countries impose sanctions that directly conflict with those of other countries. BIMCO recommends seeking legal advice before incorporating it into contracts and exercising any rights under this clause and checking the obligation to comply with specific or extra-territorial sanctions to avoid the risk of wrongfully withdrawing from contractual obligations.
Subclause (a) – This subclause sets out the definitions of terms used throughout the clause.
“Price Cap Coalition”- The definition is widely cast and is intended to identify the authorities that can impose regulations, restrictions, and measures that are currently part of the EU/G7 coalition or may adopt the measures of the EU/G7 coalition as a coalition partner. This also aims to be a catch-all provision covering other authorities that are not specifically mentioned in the clause with “and other nations that may from time to time adopt the EU/G7 Price Cap Scheme” which may have the authority to impose restrictions.
“Price Cap Measures” - The definition specifies the regulations, measures, and restrictions that are enacted and enforced by the relevant authorities in the EU/G7 coalition.
“Price Cap Cargo(es)” - The definition shows which products are subject to the Price Cap Measures. Although only the products under CN Code 2709 00 and 2710 are currently included in the Price Cap Measures implemented by the EU/G7 coalition, a part in brackets “including but not limited to Russian origin cargoes falling under CN Code 2709 00 and 2710” has been added to demonstrate that the clause would apply to other cargoes that may be brought within the scope of the Price Cap Measures. The clause aims to cover only the products carried onboard as cargo and does not intend to cover bunkers.
Subclause (b) – This subclause stipulates the obligation of charterers to provide attestation(s) to the owners. The part which reads as “Prior to each loading of any Price Cap Cargo during the Charter Party” acknowledges that during a time charter party, there could be more than one loading.
Whereas subclause (a) is an ongoing warranty from charterers, subclause (b) provides for a specific warranty applicable to each individual cargo loaded on the vessel.
Subclause (c) – Under this subclause, the charterers undertake to provide evidence of compliance with the Price Cap Measures within three business days to any member of the Price Cap Coalition and/or Owners upon request. “Business days” have been subject to interpretation in case law and it was therefore decided to refrain from defining this term, as this may not be looked at in the same manner in different jurisdictions.
Subclause (d) – This subclause stipulates the obligation to notify the other party if there is a breach or if the relevant party has reasonable grounds to suspect that there is a breach.
Subclause (e) – This subclause aims to stipulate the owners’ rights without prejudice to any of the owners’ other rights under the charter party, in case there is a breach, or the owners have reasonable grounds to suspect that there is or may be a breach by the charterers. It was considered that the owners’ burden of proof should be framed as “reasonable grounds” in this context as the owners should not be able to invoke this part of the clause unless they have sufficient information to raise this suspicion.
The main reasons why this term was chosen were that (i) the term is included in the relevant guidelines of the Price Cap Coalition as they currently stand and (ii) a certain level of suspicion is required for owners to exercise the rights stated in the clause. It was considered that this would minimise the risk of abuse of this clause.
Subparagraph (i) of the subclause states that the owners have the right to terminate the charter party based on having reasonable grounds to suspect a breach, while subparagraph (ii) stipulates the charterers' obligation to indemnify and hold the owners harmless against the listed consequences due to a breach. Subparagraph (iii) of the subclause aims to provide a ground for a dialogue with the authorities and where guidance would be required in respect of the discharge of the cargo without prejudice to or any other provision of the charter party. A time limit of 48 hours was determined for the charterers to give orders under this subparagraph, aligning with the time period applied in the BIMCO Sanctions Clause for Time Charter Parties 2020.
Subclause (f) – This subclause stipulates the obligation of charterers to incorporate this clause into their contracts of carriage.
Annex 1 – This attestation was developed as an annex to the Russian Oil Price Cap Scheme Clause, and it was decided to have one umbrella attestation which follows the wording of the Price Cap Coalition’s guidelines. A section is reserved for the details of the charter party and cargo at the beginning of the annex for the parties to fill in. The wording of the attestation reflects the charterers’ obligation to provide an attestation prior to each loading to ensure compliance with the Price Cap Measures.
Under the charterers’ warranties, the first three bullet points were drafted as options and parties may strike out the options that are not warranted by the charterers.
The first bullet point includes a requirement on charterers to “retain price information”, which extends to charterers being obliged to keep themselves updated as to price information throughout the course of the particular voyage. That information must be kept by charterers for a minimum of 5 years, to ensure that they and others involved with a carriage can comply with the information requirements of the Price Cap Measures.
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