The impact of EU ETS on contractual relationships between shipping companies and operators

Abstract

While the EU Emissions Trading System was first introduced in 2005 as a “cap-and-trade” system to reduce greenhouse gas emissions across industrial sectors, it wasn’t until January 2024 that maritime transport was brought within its regulatory scope through Directive (EU) 2023/959. Following this extension, there has been a great impact on the contractual relationships between shipping companies and operators. This dissertation explores how these changes affect legal responsibilities, risk allocation and dispute resolution within the maritime industry. The research is divided into five different chapters, with an introduction outlining the research questions and methodology employed, and a background to the ETS by setting the legal context for emissions reregulation in the EU. Chapter two discusses the MRV requirements imposed on shipping companies and the main compliance challenges arising from the implementation of ETS obligations, while also evaluating the financial and administrative burdens. The contractual implications of ETS are discussed in chapters three and four by analysing how Directive (EU) 2023/959 allocates emissions obligations between shipowners, charterers and managers. Standard clauses are also evaluated, such as those issued by BIMCO (e.g. ETSA and SHIPMAN clauses). These attempt to regulate responsibility and cost recovery. The discussion then moves on to the directive’s broader legal and enforcement implications, including statutory penalties for non-compliance and dispute resolution mechanisms. The concluding chapter draws together the main findings, noting that while the inclusion of shipping under ETS contributes to the EU’s environmental goals, it also creates legal uncertainty regarding cost allocation challenges in maritime contracts. This dissertation proposes that clearer contractual drafting and wider adaptation of emissions clauses can ensure a more equitable and effective compliance landscape.