Time Charter International Regulations Change

Changes in International Regulations Occurring In The Middle Of The Time Charter. In August 2007 judgment was delivered in the case of ELLI & FRIXOS. The novel question in that case was which of the two parties to long-term time charters, the owners or the charterers, should bear the commercial risk of a change in international regulations coming into effect in the middle of the charter period, the result of which was to restrict the cargoes that the vessels ELLI and FRIXOS could carry. The regulations in question were MARPOL Regulations 13F, 13G and 13H, which set out requirements for the carriage of fuel oil. The regulations entered force on 5 April 2005, a date which fell 19–20 months before the end of the two charter periods. The modifications required to each tanker to enable them to continue to be eligible to carry fuel oil were estimated to cost US$600,000 per vessel (not counting the time off-hire, if such works were carried out). Owners claimed that they were not obliged to convert their vessels in the middle of the charter period. The court held in favor of charterers. The continuing obligation under the maintenance clause was that owners exercise due diligence to restore the vessel to a fit state for the service for which they were chartered which service included the carriage of fuel oil cargoes throughout the charter period. The decision was upheld by the Court of Appeal in May 2008.