Sample set of Terms setting ETS “Accountable Party” the Ship Manager

Below is a sample of proposed terms that can be included in the Ship Management Agreements, for the most common case of ETS accountability.

With this section of the Ship Management Agreement/Addendum to the Ship Management Agreement , Owners appoint Managers as the Accountable Party under any applicable Emission Trading Scheme(s) (ETS(s)) for the Vessel. The provisions applying for this appointment are:

1. Owners are obligated to provide Managers, within three (3) days of Managers’ request, with all necessary documents required by Involved and/or Interested Parties (Administering Authorities, Verifiers, Banks, Charterers, etc.) for the performance of their duties as the ETS(s) Accountable Party.
2. Managers have the responsibility to regularly plan. perform and monitor the progress of all ETS(s) related processes until all necessary partial or complete declarations, statements, Certificates and approvals are secured and inclusion in any Registry or opening of any Emissions Allowances Units account, are completed. This includes but is not limited to communicating Emissions information to the Vessel’s ETS Monitoring Reporting & Verification (MRV) assigned entities, including Verifiers, Responsible Organizations, local or other Authorities, Charterers, Administering Authorities (AAs) in the context of EU-ETS or similar for other ETS(s).
3. Owners should be provided with info as per 2, and in addition periodically notified on the required Emissions Allowances Units (EUAs for EU-ETS or equivalent for other ETS(s)), needed for a specific voyage or period.
4. Owners upon periodic or random notification by Managers on the required Emissions Allowances Units as per 3 and other ETS costs, should credit within three (3) banking days from notification, Manager’s designated bank account(s) the amounts related to the cost of:
   1. Previously purchased, unreimbursed, forecasted/planned or excess Emissions Allowances Units related to the vessel’s ETS(s) obligations. An alternative method of compliance to the above is the direct transfer of Units from an Owner’s or an Owner’s nominee to a Managers’ or Manager’s nominee Trading and/or Maritime Operator’s Holding Account.
   2. All other ETS(s) related activities such as:
      1. opening and maintaining a Maritime Operator Holding Account connected to the Accountable Manager.
      2. opening and maintaining one Trading Account at Manager’s discretion
      3. additional insurance against Emissions Trading Risks.
      4. fines/penalties imposed to Manager’s as a consequence of overdue Surrender of Units due to Owner’s delays in remitting the costs as per this term.
      5. Emissions Monitoring Reporting and Verification (MRV) for EU ETS or equivalent for other ETS(s).
      6. Special consultant or legal assistance fees needed during the preparation of ETS (s) procedures, legal claims and other non periodical ETS(s) activities.
      7. Subscription to ETS(s)/EUAs monitoring and transaction facilitation software/ platforms needed for the effective monitoring and transactions facilitation for company;s Emissions Allowances Units transactions.
      8. Training of personnel for performing EU ETS tasks
      9. Participation in “pooling” co-operations for involvement in grouped ETS(s) Activities such as Auctioning of Allowances, to Owner’s final benefit.
      10. Incentives to shore-based personnel or ship crews for optimizing energy efficiency and efforts for reduction of ETS(s) relevant emissions.
      11. Other as required by the ETS respective Regulator, Authorities, Charterers..
   In order to perform their ETS(s) duties, upon their request, Managers should be provided by Owners with a Letter of Bank Guarantee or other form or financial security,
   Final or pro-forma Invoices or other means of proof (such as trading or monitoring platforms’ messages, notes or screenshots, etc) should be forwarded by Managers to Owners before settlement of the above costs.
5. Managers are responsible for promptly Surrendering the required Emission Allowances Units for the Vessel at least one month before the nominal end date, following applicable ETS requirements. Partial surrendering before the maximum Surrender date is not considered sufficient. Failure of Managers to comply with their complete obligation to Surrender Units until end date as the ETS(s) Accountable Party for other Owners due to non-complying other Owners, is not waiving any part of the Accountability towards the Owner signing this Agreement.
6. In case of Termination of this Agreement for reasons other than failure to comply as per 7, Managers are required, within 5 days of the termination notice, to prepare and submit to Owners a detailed calculation of Emissions Allowances Units and other ETS(s) costs to be encountered until the termination date. This should be reviewed and accepted by Owners no later than 10 days before the Termination date, and all costs should be settled by Owners before the Termination date. Excess/ unforeseen costs not included in the above calculation occurred after the Termination date should be settled by Owner’s upon proper justification, within fifteen (15) days of submission of relevant request and documentation by Managers. The obligation of Owners to reimburse Managers for costs as per 2. is terminated upon full settlement of the costs connected to the last period of validity of this Agreement.
7. Failure to comply with any of the above, may result in immediate termination of the Agreement, subject to a two (2) days’ notification.
8. Manager’s may appoint other entities (nominees) to assist at or handle any of their duties as ETS(s) Accountable Party, with info to Owners on the details of this appointment(s) not obligatory. Appointment(s) as per this term is not waiving any part of the responsibility of Managers as ETS(s) Accountable Party.
9. Accountability or duties of Emissions reporting to other entities as well as to entities that are regulating among ETS other similar or connected mechanisms such as the Carbon Border Adjustment Mechanism (CBAM) of the European Union, are not included in Managers’ obligations as the ETS(s) Accountable Party and should be arranged with separate agreement.

NOTICE & WAIVER: THESE TERMS OF AGREEMENT WERE PREPARED BY ETSdesk EXERCISING ALL REASONABLE CARE AND DUE DILIGENCE. HOWEVER, ETSdesk,, REPRESENTATIVES, BOARD OF DIRECTORS AND COUNSEL INVOLVED IN THE PREPARATION SHALL NOT BE LIABLE OR OTHERWISE RESPONSIBLE FOR THEIR USE AND ANY DAMAGES OR LOSSES RESULTING FROM THEIR USE IN ANY PARTICULAR CASE OR JURISDICTION. IT IS THEREFORE THE RESPONSIBILITY OF EACH PARTY WISHING TO USE THESE TERMS OF AGREEMENT TO ENSURE THAT TERMS AND CONDITIONS ARE LEGALLY BINDING, VALID AND ENFORCEABLE AND THAT THEY BEST SERVE TO PROTECT THE USER’S LEGAL INTEREST. USERS OF THIS AGREEMENT ARE URGED TO CONSULT THEIR OWN COUNSEL.