The environmental impact of modern shipping has long been acknowledged to be a negative externality of the industry. However, it is only in relatively recent times that efforts – both state-driven and voluntary – have been focused on actively mitigating or reducing these negative effects. New regulations, primarily emanating from the United Nations' International Maritime Organization (IMO), have been introduced to address aspects such as oil pollution risk, waste disposal and emissions. The rise of environmental regulation has highlighted the need for operators to maximise efficiency to maintain competitiveness. Although compliance is an administrative and financial burden, the received wisdom is that regulations are a necessary step towards the long-term sustainability of the industry.


In 1973, the IMO adopted the International Convention for the Prevention of Pollution from Ships 1973 (MARPOL). MARPOL, currently formed of six Annexes, attempts to address major environmental issues that affect shipping, with a view to improving safety at sea and protection of the marine environment. The Annexes specify operational restrictions for which the responsibility of enforcement falls to individual Member States. Disciplinary measures for infringements vary widely between Member States.

i Annex I – oil

Following the wreck of the Torrey Canyon off the coast of the United Kingdom in 1967, the international shipping community recognised the need to regulate shipping to reduce the incidence of oil pollution, in both frequency and scale. The primary legislative reaction was to allocate the responsibility to owners, using the rationale of the 'polluter pays' principle (see Section III). However, it was soon apparent that the liability regime did not sufficiently promote preventive action.

The IMO's response to tackling incidents of oil pollution (both accidental and operational) has been the formulation of MARPOL Annex I, which is intended to improve tanker safety. Annex I entered into force on 2 October 1983, encapsulating provisions relating to the monitoring and handling of oily water, the segregation of ballast tanks, as well as crude-oil washing systems.

After the Exxon Valdez casualty and the ensuing public scrutiny, the IMO amended Annex I to require double hulls on tankers over 5,000 deadweight tonnage ordered after 6 July 1993.2 The implementation of the double-hull requirement was initially envisaged as a gradual phasing out of the single-hulled fleet, with the inspection of old tonnage and the progressive adoption of new measures. However, these plans were accelerated after the Erika casualty of 2001. A new schedule brought measures prohibiting the carriage of heavy-grade oil by single-hull tankers into effect as of 5 April 2005.

ii Annex II – noxious liquids in bulk

The carriage of noxious liquids by sea poses a substantial environmental risk, addressed by MARPOL Annex II, which entered into force on 2 October 1983. This contains provisions attempting to reduce the likelihood of damage to the marine environment by accidents arising out of the transport of prescribed chemicals. It sets out restrictions and conditions relating to the design, construction, equipment and operation of chemical tankers.

Annex II compels operators of chemical tankers to enter in a cargo record book all operations in connection with noxious liquids being carried. There are also various mandatory conditions that must be followed to ensure that the designated liquids are contained safely and received into certain reception facilities, that discharges are diluted and that these discharges are limited. There is a general prohibition of discharges within 12 nautical miles of nearest land.3 The Antarctic is designated a special area of protection under MARPOL Annex II.4

iii Annex III – harmful substances in packaged form

Annex III requires the identification of harmful substances as marine pollutants, to ensure they are packed and in a manner appropriate to minimising accidental pollution. There is an obligation to use clear marks to distinguish these from less harmful substances. A harmful substance for the purposes of the provision is defined as being a substance that was identified as a marine pollutant in the International Maritime Dangerous Goods Code, or that meets the criteria in the Appendix of Annex III.5 Annex III came into force on 1 July 1992; the IMO's Marine Environment Protection Committee (MEPC) adopted a revised MARPOL Annex III on 13 October 2006.

Annex III prohibits jettisoning cargo that has been identified as harmful, other than in circumstances where it is necessary to do so for the purpose of securing the safety of the ship or life at sea. In addition, owners have to take appropriate measures based on the physical, chemical and biological properties of harmful substances to regulate the washing of leakages overboard, provided that compliance with those measures does not impair the safety of the ship or the persons on board.6

iv Annex IV – sewage

MARPOL Annex IV requires ships to have systems and controls in place to deal with human sewage, for governments to have port reception facilities7 and a requirement for survey and certification.8 Annex IV entered into force on 27 September 2003; a revision entered into force on 1 August 2004.

Every ship is required to have a sewage system up to an approved standard with a comminuting and disinfecting system, and both a temporary storage tank and a holding tank of an appropriate capacity.9

Annex IV prohibits the discharge of sewage into the sea except at a distance of not less than three nautical miles from the nearest land when the ship is discharging comminuted and disinfected sewage using an approved system and not less than 12 nautical miles from the nearest land where the sewage has not been comminuted and disinfected.10 Furthermore, untreated sewage must not be discharged instantaneously, but instead should be moderately released during the course of the vessel's voyage at a rate of not less than 4 knots,11 while not producing any visible floating solids or discolouration in the surrounding water.12

More recently, the MEPC has designated a zone of enhanced limitation in the Baltic Sea (the Special Area).13 These amendments established additional requirements for passenger ships operating within the Special Area. The discharge of sewage from passenger ships within the Special Area is generally prohibited other than when it has been appropriately treated,14 with the additional requirement that a vessel's sewage treatment equipment must meet certain nitrogen and phosphorus-removal standards15 when tested for its certificate-of-type approval.

v Annex V – garbage disposal

The revised MARPOL Annex V, which entered into force on 1 January 2013, attempted to revolutionise the way in which the shipping industry regarded its waste disposal management. Annex V sets out obligations as to crew training and vessel garbage management plans on board, as well as vessel garbage record books. There is a general prohibition on the discharge of garbage into the sea except in some limited circumstances. Annex V imposes a complete ban on the disposal at sea of plastics, domestic waste and cooking oil, and other operational waste.

The scope of MARPOL's definition of garbage includes cargo residues.16 Shipowners accordingly face responsibility for the treatment and disposal of residues while hold washing, which cannot be done at sea. The additional time and expense of doing so can be accounted for with appropriate charter party wording, such as the owner-friendly BIMCO Hold Cleaning/Residue Disposal Clause. Special areas of enforcement are designated in the Mediterranean Sea, the Baltic Sea, the Black Sea, the Red Sea, the Gulf region, the North Sea, the Antarctic, the Caribbean and the Gulf of Mexico.

Amendments to Annex V came into force on 1 March 2018. From this date, the responsibility for determining whether or not a cargo is hazardous to a marine environment will fall on the shipper with cargo to be classified in accordance with the criteria of the UN Globally Harmonized System of Classification and Labelling of Chemicals. Vessels will also be required to keep a garbage record book documenting both the disposal of cargo residues and the disposal of garbage generated on board (including electronic waste items, known as e-waste).

vi Annex VI – prevention of air pollution from ships

On 10 October 2008, the IMO adopted the revised Annex VI, which sets out the framework limiting emissions of nitrogen oxide (NOx), sulphur oxide (SOx) and particulate matter from ship exhausts. The framework provides for zones of enhanced limits, 'emission control areas' (ECAs), which can be designated for SOx, NOx or both emissions.17 The implementation of the limits has been on a graduated basis since 2012.

The rules in force require owners to reduce SOx emissions and particulate matter to 0.10 per cent m/m18 inside SOx ECAs, with levels of 3.5 per cent m/m outside ECAs. As of 1 January 2020, the global limit (outside ECAs) will drop to 0.5 per cent. This was confirmed by the IMO's Marine Environment Protection Committee (MEPC 70) on 27 October 2016, ending years of uncertainty surrounding the effective date.

Options for emissions compliance fall under fuel-based and technology-based solutions. Low and ultra-low distillates are available on the market, although these are more expensive than conventional heavy fuel oil and questions have been raised regarding reliability and their impact on fuel systems that are more suited to conventional fuels. Alternative fuels, including liquid natural gas, biofuels and blended fuels are expected to be the preference for most shipowners. However, there are concerns as to supply of compliant fuels as well as the costly process of retrofitting engines in order to make them compatible with the new fuels. Operators are also investing time and resources in investigating the viability of exhaust gas cleaning systems, otherwise known as scrubbers, which allow vessels to burn conventional fuel by cleaning exhaust gases. A certain category of scrubbers known as 'open loop scrubbers' has been criticised on environmental grounds owing to concerns about the impact of waste water being dumped into coastal waters and scrubber wash water discharges have already been banned by a series of major ports in China as well as Singapore and Fujairah.

During 2019 BIMCO is expected to release new clause wording to accommodate the new regulations, including a '2020 Marine Sulphur Content Clause' (to replace the BIMCO Fuel Sulphur Content Clause 2005) as well as a dedicated 'Scrubber Clause'.

The EU Sulphur Directive had previously implemented its own cap of 0.5 per cent by 2020 and certain coastal states have begun introducing their own emissions standards. In March 2015, the Hong Kong Air Pollution Control (Ocean Going Vessels) (Fuel at Berth) Regulation was accepted, aiming to reduce the emission of air pollutants from ocean-going vessels using high-sulphur fuel while in berth in Hong Kong. The penalties for breaching the new rules include a fine of up to HK$200,000 and imprisonment for six months for burning non-compliant fuel, and a fine of HK$50,000 and imprisonment for three months for failing to record the required particulars without a reasonable excuse.

MARPOL Annex VI also imposes NOx emission limits for diesel engines. The limits depend on the engine's maximum operating speed and are categorised into three levels of acceptable NOx emissions depending on the vessel's age or the engine installation date.19 The emission levels are Tier I (applicable from 1 January 2000), Tier II (applicable from 1 January 2011) and Tier III (applicable from 1 January 2016, in NOx ECAs only). In November 2014, reversing its previous decision for a five-year postponement, the IMO's MEPC 66 affirmed the 2016 implementation date for Tier III. The Tier III levels will be enforced in the North American ECA, US Caribbean ECA and any subsequently designated NOx ECAs.

Ships completed on or after 1 January 2016 will have to comply with more stringent Tier III standards if operating within the North American and US Caribbean ECA-NOx.20

There is a general prohibition under MARPOL Annex VI on the emission of ozone-depleting substances from vessels, although installations that specifically contain hydro-chlorofluorocarbons shall not be subject to the prohibition until 1 January 2020.21

vii Annex VI – vessel efficiency

MARPOL Annex VI also introduced industry-wide efficiency standards in an effort to reduce greenhouse gas emissions (including carbon dioxide). Since 2013, vessel operators have been obliged to comply with the Energy Efficiency Design Index (EEDI) and Ship Energy Efficient Management Plan (SEEMP) rules. The EEDI requires all newbuilds to achieve efficiency greater than an industry average reference line calculated on a five-year basis. The SEEMP requires all vessels to hold an on-board energy efficiency plan. The rise of imposed efficiency standards has led to increased scrutiny of vessel design and technological innovation, not only to achieve compliance but also to save operational costs.

The IMO's ultimate objective is believed to be an industry-wide 'market-based mechanism' of tradable carbon credits. Investigations are being undertaken as regards the implementation of this strategy, including the effects of the projected costs. The European Union is expected to introduce its own rules in furtherance of this objective under its 'Monitor, Report, Verify' policy, which will enter into force in 2019.

Notwithstanding the regulations above, ports have played an active part in improving energy efficiency and making efforts to reduce pollution. These include various tax and fee incentives and the rise of shoreside electrical power sources ('cold ironing').

In light of historically high fuel costs, operators have been able to reduce their fuel expenditure and consequent emissions by 'slow steaming'. By proceeding at a slower or 'eco' rate, there are significant fuel savings to be made.22


i The Civil Liability Convention

The primary international liability framework for oil pollution can be found in the Civil Liability Convention 1969, as amended by the 1992 Protocol (CLC 1992).23 The Convention was formulated following the Torrey Canyon incident in 1967 and imposes strict liability on seagoing vessels constructed or adapted for the carriage of oil as cargo,24 if involved in an incident where there is a discharge of oil within the territorial sea, the exclusive economic zone (EEZ) or a similar area declared by a contracting state.25 The CLC 1992 is implemented in the majority of coastal states, although the United States remains a notable non-signatory.

Under the CLC 1992, a shipowner 26 is permitted to limit the level of its liability for oil pollution incidents on the basis of a reference to the tonnage of the vessel. The CLC 1992 furthermore obliges owners of ships covered by the Convention to maintain insurance equivalent to their maximum liability for one incident.

The 2000 Amendments to the CLC 1992 (which entered into force on 1 November 2003) provide for limits of liability as follows:

  1. for a ship not exceeding 5,000 gross tonnage (GT), liability is limited to 4.51 million special drawing rights (SDRs);
  2. for a ship of between 5,000 GT and 140,000 GT, liability is limited to 4.51 million SDRs plus 631 SDRs for every additional gross tonne over 5,000; and
  3. for a ship over 140,000 GT, liability is limited to 89.77 million SDRs.

ii The US Oil Pollution Act 1990

The oil pollution liability regime in the United States is set out in the Oil Pollution Act 1990 (OPA 1990).27 Liability will attach to a 'responsible party' of a vessel or facility when there is a substantial threat or actual discharges of oil into or upon the navigable waters and shoreline of the United States.28 For the purposes of the OPA 1990, the responsible party of a vessel can be the operator, owners or demise charterer of the vessel, excluding any federal or state governmental bodies. A manager of everyday activities will also most likely be considered to be an operator, and therefore a responsible party within the scope of the Act.29

The OPA 1990 extends to all oil pollution in the United States, including incidents occurring within its territorial sea30 and the EEZ,31 as per the US admiralty jurisdiction.

It imposes strict liability for the discharge of oil upon the responsible parties, with no de minimis principle;32 as such, any oil spill can result in liability. There is no provision for joint and several liability in the OPA 1990, but in light of judicial interpretation of the Clean Water Act 1972, this principle is likely to apply.33

The OPA 1990 allows damages to be recovered from the responsible parties in relation to:

  1. compensation and loss resulting from the loss of natural resources;
  2. damages for injury to and economic loss arising from destruction of real or personal property;
  3. damages for loss of subsistence use of natural resources (available to all who use the natural resources, regardless of ownership);
  4. loss in revenue resulting from loss of property;
  5. loss of profit or earning capacity resulting from the injury or destruction of real property, personal property or natural resources; and
  6. damages for the increased net costs of providing increased and additional public services during or after removal activities.

Punitive damages for maritime claims are also applicable under the OPA 1990, with a cap placed at a ratio of 1:1 punitive-to-compulsory.34


The unregulated discharge of ballast water has been recognised as enabling the transfer of potentially invasive foreign species between marine environments and consequently posing significant environmental harm. The effects of such a discharge can be harmful to localised food webs, and result in the potential extinction of indigenous organisms. In an attempt to minimise these environmental effects, the IMO has formulated the Ballast Water Management Convention (BWMC).35 At the time of writing, 79 countries representing more than 80.94 per cent per cent of the world's tonnage have ratified the BWMC.

The BWMC came into force on 8 September 2017 but, because of a two-year extension granted by the IMO in July 2017, vessels that have already been built will now be required to install a ballast water management system by their first International Oil Pollution Prevention renewal survey after 8 September 2019. Since this survey is required once every five years, some vessels will not be obliged to install ballast water management systems until September 2024. All newly built vessels will be required to be delivered with a ballast water management system.

In this regard, vessels are now required to:

  1. hold a ballast water management plan;
  2. keep on board a ballast water record book and a ballast water management certificate;
  3. conduct any permissible ballast water exchange in line with D-1 IMO standards; and
  4. have on board an approved ballast water treatment system in line with D-2 IMO standards.

Failure to comply with these requirements will result in port state detention, fines and the possibility of criminal prosecution.

The IMO have stated that there are likely to be amendments made to the Convention (the months following implementation have been referred to as the 'experience gathering phase') in order to improve the methodology of data gathering and analysis.36 In terms of the practicalities of implementation, the industry can look to the United States for an indication of how these provisions may work in practice. Ballast water management legislation is already in force there, and the United States Coast Guard Final Rule dated 23 March 2012 on 'Standards for Living Organisms in Ships' Ballast Water Discharged in US Waters' (the US Rules) require vessels calling at US ports to treat ballast water when operating within US territorial waters, or to carry out an exchange of ballast waters before entering the US EEZ. In addition to the federal US Rules, which came into force in June 2012, individual states have also passed legislation, which has proven in places to be more onerous than the federal framework.


In April 2018, the MEPC (convening at MEPC 7237) reached an agreement to target a 50 per cent cut in carbon emissions (compared with 2008 levels) within international shipping by the year 2050. This agreement may lead to some of the most significant regulatory changes in the industry in recent years and is likely to lead to greater investment in the development of zero-carbon dioxide fuels. The IMO hopes that this agreement will pave the way for phasing out carbon emissions from the sector entirely.

The most significant document produced to date is the IMO's Initial Strategy,38 which divides the aims of the IMO into a set of candidate short, medium and long-term measures within a series of specified time frames. The IMO intends to incorporate as many candidate proposals as possible into a more concrete Revised Strategy to be implemented in 2023. The candidate measures have been divided up as follows:

  1. short-term measures to be implemented between 2018 and 2023; for instance proposed improvements to the existing energy efficiency framework;
  2. medium-term measures to be implemented between 2023 and 2030, which include implementation programmes for the effective uptake of alternative low-carbon and zero-carbon fuels; and
  3. long-term measures to be implemented beyond 2030, which includes the development and provision of zero-carbon or fossil-free fuels to enable the shipping sector to assess and consider decarbonisation in the second half of the century.

A number of the candidate short-term measures are subject to further data collection, which is intended to inform the development of the Revised Strategy. As of 1 January 2019 fuel oil consumption data is being collected from a sample of vessels over 5,000 gross tons. The Revised Strategy will also incorporate a Fourth IMO Greenhouse Gas Study, which is now under way and will gather historical emissions estimates for international shipping for the period 2012 to 2018.

More recently, at MEPC 73 in October 2018, the IMO approved the 'Follow Up Program', which is intended to be used as a planning tool for meeting the timelines identified in the initial IMO Strategy. In keeping with the Follow Up Program the MEPC has, in advance of MEPC 74 (due to be held in May 2019), invited committee members to submit:

  1. their concrete proposals for the short-term measures to be included in the 2023 Revised Strategy;
  2. proposed procedures for assessing the impacts of the measures on states, such as their geographic remoteness and connectivity to main markets. The aim is to take these assessed 'impacts' into account before the adoption of a measure; and
  3. further candidates for mid to long-term measures (to be discussed further at MEPC 75).39


With a heightened public focus on the importance of environmental issues, the regulatory framework for the shipping industry is projected to become more restrictive with time. The expectation is for international bodies, such as the IMO and European Union, to have a firmer stance on regulating the operation of vessels through port state inspections and an increased use of maritime spatial planning (such as the MARPOL special areas and ECAs).

Nowhere will this be more apparent than in the regulation of operations in polar areas. With the opening of new polar shipping routes and with considerable mineral deposits and oil and gas reserves being found within the polar territories, investment in these regions is likely to be extensive. However, the high level of care required in these waters is likely to be reflected in a correspondingly in-depth regulatory regime. Already, the IMO has adopted the International Code for Ships Operating in Polar Water (the Polar Code) to address this issue. The Polar Code covers a full range of requirements, including but not limited to, design, construction, equipment, operations, training, and search and rescue, as well as environmental issues. At MEPC 73 the IMO agreed that a ban on heavy fuel oils should be considered for Arctic waters. The Pollution Prevention and Response Sub-Committee has been tasked with carrying out the necessary methodology and impact assessments during the course of 2019. Such a prohibition would bring the Polar Code in line with the Antarctic Code, which already prohibits the use of heavy fuel oil under MARPOL Annex I, Regulation 43.


1 Thomas Dickson is an associate at HFW.

2 Regulation 19, MARPOL Annex I.

3 Regulation 5(1), MARPOL Annex II.

4 Regulation 5(14), MARPOL Annex II.

5 Regulation 1, MARPOL Annex III.

6 Regulation 7, MARPOL Annex III.

7 Regulation 12, MARPOL Annex IV.

8 Regulations 4 and 5, MARPOL Annex IV.

9 Regulation 9, MARPOL Annex IV.

10 Regulation 11, MARPOL Annex IV.

11 Discharge rate is calculated according to the terms of Paragraph 3 of Resolution MEPC 157(55).

12 Regulation 11, MARPOL Annex IV (see Resolution MEPC 157(55)).

13 In July 2011, MEPC 62 adopted new amendments by way of Resolution MEPC 200(62), which entered into force on 1 January 2013.

14 See Resolution MEPC 227(64).

15 See Paragraph 4(2) of Resolution MEPC 227(64).

16 Regulation 1(1), MARPOL Annex V.

17 SOx and NOx ECAs are currently in place on the North American Coastline and US Caribbean, and SOx ECAs are in place in the North Sea and Baltic Sea.

18 Regulation 14, MARPOL Annex VI.

19 Regulation 13, MARPOL Annex VI.

20 Regulation 13, MARPOL Annex VI.

21 Regulation 12, MARPOL Annex VI.

22 Brodie, 'Congestion', Commercial Shipping Handbook (Third Edition, 13 August 2014).

23 International Maritime Organization Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage of 29 November 1969.

24 Article I, 1 CLC 1992.

25 Article II, CLC 1992.

26 Article I(3), CLC 1992: the MSA 1995 defines 'owner' as 'registered owner' at Section 153A(7).

27 Pub L No. 101-380 Section 1, 104 Stat 484 (18 August 1990) Title I, Oil Pollution Liability and Compensation, Sections 1001 to 1020, codified at 33 USC Sections 2701 to 2761.

28 Section 1002, OPA 1990.

29 De La Rue and Anderson, Shipping and the Environment (Second Edition, Informa, 2009), page 656 (for the further categorisation of 'manager').

30 Section 1002, OPA 1990, 33 USC Section 2701(8).

31 The International Marine Carriers v. The Oil Spill Liability Trust Fund 1995 AMC 2072, United States District Court, Southern District of Texas (Houston Division).

32 In re 'Jahre Spray II' 1996 W.L. 451315 (D.N.J.);1997 NMC 845 (D.N.J.1996).

33 De La Rue and Anderson (see footnote 29), page 197.

34 This is to be applied in circumstances when it is found that 'the tortious action . . . is worse than negligent but less than malicious'.

35 The International Convention for the Control and Management of Ships' Ballast Water and Sediments.

36 MEPC 72nd Session.

37 MEPC 72nd Session.

38 Note by the International Maritime Organization to the UNFCCC Talanoa Dialogue – Adoption of the initial IMO strategy on reduction of GHG emissions from ships and existing IMO activity related to reducing GHG emissions in the shipping sector.

39 IMO briefing 18 dated 22 October 2018.