Liability and compensation for the use of alternative marine fuels under international law

Alina Butrim
Kazakh Legal Consultant (Astana Chamber of Legal Consultants)
EMVE Trading, Dubai
butrim@emc2.ae

The International legal context of shipping decarbonisation

After the IMO revised its greenhouse gas reduction strategy in July 2023, alternative marine fuels ceased to be a purely technical or environmental issue. The question moved into the field of private-law risk allocation, as accelerated decarbonisation entails wider use of LNG, biofuels, hydrogen, methanol and ammonia, while international liability rules still reflect a framework built around mineral hydrocarbons.[1] In this context, the Comité Maritime International established its International Working Group on Maritime Decarbonisation and, by the time of the Gothenburg Colloquium in May 2024, had developed a separate Green Fuels workstream addressing civil liability for incidents involving new marine fuels.[2]

The central proposition of the CMI Gothenburg paper is that international maritime law has historically developed compensation regimes only after major casualties. In the case of oil, that evolution produced sophisticated compensation mechanisms after a series of disasters. In the case of alternative fuels, such delay appears particularly problematic, because technological deployment is moving faster than the development of international private-law limits of liability, insurance cover and compensation rules.[3] No specialised international regime currently covers alternative fuels when used as bunkers. The 2010 HNS regime has already met the conditions for entry into force, but it will not take effect until 29 November 2027 and addresses carriage by sea as cargo.[4]

This also explains the current structure of the international debate. Within the IMO, public-law regulation continues to develop through safety rules, crew requirements and design standards. The private-law question remains fragmented. That question concerns who bears the financial consequences of a leak, ignition or toxic exposure involving alternative fuel, and to what extent. The CMI expressly notes that work on safety under SOLAS, MARPOL and related instruments remains necessary, but does not itself create a civil liability and compensation regime.[5]

Existing liability regimes and their limits

Existing convention regimes show that international maritime law can build multi-layered compensation structures once the subject matter has become legally settled. For oil carried in bulk, the Civil Liability Convention (CLC) combines the shipowner’s strict liability with limitation of liability, compulsory insurance and a direct right of action against the insurer. The Fund Convention and the Supplementary Fund add the second and third tiers of compensation. The limit of this model for alternative fuels lies in the CLC definition of oil, which refers to persistent hydrocarbon mineral oil. As a result, alternative fuels, including biofuels, do not fall within this regime in its current form.[6]

A similar problem arises under the Bunkers Convention. That regime applies to hydrocarbon mineral oil used, or intended to be used, for the operation or propulsion of a ship.[7] It requires compulsory insurance for ships above 1,000 gross tonnage and establishes the basic liability framework for the shipowner. It does not create a separate compensation fund. Nor does it set a specific liability limit, leaving limitation to the LLMC or to domestic law. For that reason, ship fuel forms the clearest gap in international law when new energy carriers are used as bunkers.[8]

The HNS regime remains the closest legal analogue for any future regulation of alternative fuels. It covers pollution, damage caused by fire and explosion, death, personal injury, property damage, economic loss, preventive measures and reasonable measures of environmental reinstatement. Its architecture combines the shipowner’s strict liability, compulsory insurance, direct action against the insurer and a two-tier compensation system involving the HNS Fund.[9] Yet the HNS regime addresses the carriage by sea of hazardous and noxious substances as cargo and rests on a contribution model linked to receivers of contributing cargo. For that reason, the entry into force of the 2010 HNS regime does not automatically resolve the problem of alternative fuels used as bunkers on board ships.[10]

The current status of the HNS regime gives this conclusion practical significance. The official status page states that all conditions for the entry into force of the 2010 Protocol had been met by 29 May 2026, that the total volume of contributing cargo reported for 2025 amounted to 49,484,117 tonnes, and that the regime will enter into force on 29 November 2027.[11] The international compensation mechanism for hazardous and noxious substances is therefore moving out of its long preparatory phase at a time when the energy transition in shipping is already well under way, while the bunker use of alternative fuels still lacks a comprehensive international solution.

Pathways for modernising the international regime

The Green Fuels Discussion Paper has particular value because it goes beyond identifying the gap and sets out possible paths for reform. CMI first considers the inclusion of alternative fuels within the Bunkers Convention through a dedicated protocol. The appeal of this approach lies in the use of an established international structure. Its limits remain clear. The Bunkers Convention covers pollution damage, creates no compensation fund of its own and contains no autonomous limitation system. That framework cannot adequately address incidents in which fire, explosion, personal injury, death or toxic exposure play a central role.[12]

The HNS model offers a closer fit with the risk profile of new fuels. It already covers a broader range of damage and combines strict liability, compulsory insurance, direct action and two-tier compensation. The same structural difficulty remains, however. HNS developed around cargo and around a fund financed by receivers of contributing cargo. Bunker use of alternative fuel follows a different economic and legal logic. The entry into force of the 2010 HNS regime therefore cannot resolve the issue of alternative fuels as bunkers unless the first tier of liability receives further adjustment and the fund-based model is reconsidered.[13]

CMI also considers a stand-alone convention on alternative fuels. On that view, a separate regime could bring strict liability, compulsory insurance, adequate limits, direct action, jurisdictional rules and a broad category of compensable damage into a single instrument. Such damage would include pollution, fire, explosion, death, personal injury and property loss. The strongest solution therefore lies in a specialised convention for alternative fuels, or in a hybrid HNS protocol that regulates bunker use separately, rather than in the simple extension of oil pollution conventions to materially different energy carriers.[14]

These models support a measured conclusion. Since 2023, international regulation of alternative marine fuels has developed along two tracks. One track strengthens technical and operational safety. The other has only begun to develop the language of civil liability and compensation. Until those tracks converge in a single international mechanism, shipping decarbonisation will remain legally incomplete.

Fuel quality, bunkering and handling before delivery on board

Once the analysis has shown the incompleteness of the international compensation framework, legal certainty shifts to the part of the chain that the parties can still describe and prove through their own documents. In the case of alternative fuels, the dispute will rarely begin with convention classification. It will more often begin with the question of what substance was supplied, in what condition, at what point and on what contractual basis. The publicly available description of ISO 6583:2024 for methanol follows that practical line by linking fuel requirements to the point of custody transfer before any required treatment on board.[15]

This boundary does not create a freestanding basis for a financial claim. The standard serves an evidential and operational function. It gives the parties a legally intelligible point from which the analysis can begin. If a dispute arises after the fuel has entered the ship’s fuel system, it is not enough to point to a malfunction, ignition or vapour release. The parties must establish whether the fuel deviated from the agreed specification at the point of custody transfer, or whether the deviation arose later during storage, mixing, conditioning, equipment calibration or operation. For this reason, the specification, certificate of quality, storage and handling history, sample integrity and accompanying documents cease to be background material and become the starting point of the civil-law analysis.[16]

Commercial practice has already begun to express this boundary in contractual language. BIMCO materials on methanol bunkering and LNG bunkering show that the market links legal consequences to fuel specification, sampling, delivery documents, the transfer of risk and subsequent claims. For incident analysis, these materials matter not as a universal solution for every new fuel, but as confirmation of a narrower point. The transfer of control over fuel cannot remain an indistinct fact of delivery. The contract should describe it through specification, verifiable operational steps, documents and an agreed moment for the transfer of risk.[17]

MSC.1/Circ.1621 gives this point the necessary operational depth. The guidelines define bunkering as the transfer of fuel from land-based or floating facilities into a ship’s permanent tanks, or the connection of portable tanks to the fuel supply system. They require the parties to agree the transfer procedure, emergency actions and bunker safety checklist in writing before the operation begins. Bunkering control must take place from a safe remote location. Detection, alarms, shutdown functions and the related documentation attach to particular parts of the system and to specific points of observation.[18]

This leads to a practical conclusion for disputes. Delivery documents do not replace an international convention framework, and a technical standard does not become a civil liability regime. They create an evidential chain through which the parties can later identify where the risk arose, who held the relevant information at the point of transfer, who could have stopped the dangerous development of the operation, and at which stage of handling the substance the non-conformity became legally significant. Once fuel quality and the transfer of control have been recorded, the next question concerns the legal character of the event after the substance has left its safe handling regime.[19]

Grey areas in the classification of alternative fuel incidents

Legal analysis begins before the calculation of loss. The event must first receive a form that can support later analysis of admissibility, causation and recoverable heads of loss. The oil pollution regime shows how far such an architecture can develop. The IOPC Funds Claims Manual structures the handling of a case through categories of claim, admissibility criteria, written submission, supporting documentation and an assessment process. The Environmental Damage Guidelines add a further level of detail by linking an environmental claim to post-incident studies, reinstatement measures, sound science and supporting reports.[20]

For an alternative fuel incident, this starting point is less stable. The word ‘spill’ imposes an oil-based logic too early and may artificially narrow the analysis. Wang, Zhang, Huang and Zhang describe not only spills on water in the context of alternative-fuel-powered ships, but also vapour dispersion, pool fires, methane slip-induced atmospheric contamination, and harm to health and property linked to ammonia toxicity. At the initial classification stage, the more useful starting point is the neutral category of loss of containment. It does not create a freestanding cause of action and does not replace the applicable legal regime. Its function is to mark the moment when the substance leaves the controlled system and the legal character of the event and subsequent harm must be determined.[21]

This neutrality matters because the same substance can perform different legal functions at different stages of the same chain. MSC.1/Circ.1621 distinguishes bunkering, the fuel tank, the tank connection space and the fuel preparation space.[22] That structure directs the analysis to the function of the substance at the moment control is lost, rather than to its chemical name alone. Methanol or ammonia may appear as cargo, bunker fuel, fuel in storage, fuel in transfer or a substance inside the ship’s fuel system. HNS terminology can assist as a working language for hazardous substances, but it does not provide a ready-made classification, because the HNS Convention generally operates as a regime for HNS as cargo and its application to marine fuels remains contested.[23]

At this stage, IMO technical documents operate as evidence of the expected standard of conduct, not as a ready route to recovery. As of June 2026, the IMO Future Fuels and Technology portal brings together approved or current safety guidance on methanol and ethanol, LPG, ammonia, fuel cells and generic seafarer training. Generic STCW.7/Circ.25 requires familiarisation before assignment, basic and advanced training according to duties, the use of risk analyses in training and regular emergency exercises. This body of guidance defines the standard of prudent conduct and proper preparation for the crew and ship systems. It does not, by itself, determine the form or extent of compensation for the financial consequences of a particular incident.[24]

This also requires stricter discipline in describing the event. An operational report may refer to an alarm, shutdown, leakage, ventilation failure, emergency isolation or port exclusion. The legal file must connect those facts to a specific category of harm and to the legal function of the substance now, it leaves the safe handling regime. Only then can the analysis turn to property damage, personal injury, preventive measures, interruption losses, medical costs, environmental monitoring or any other head of claim. Once the event is described through loss of containment and the function of the substance, the analysis necessarily moves to the next question: within whose sphere of factual control did the risk arise, and which actors may be linked to its consequences.

Grey areas in the allocation of liability among participants

In relation to alternative fuels, the allocation of financial consequences will rarely coincide with the geography of visible harm. Foretich, Zaimes, Hawkins and Newes assess alternative fuels by reference to bunkering, production levels, engine compatibility, storage convenience, fuel standards, toxicity, flammability limit, explosion risk and spill risk.[25] This leads to a direct legal conclusion. One cannot assume in advance that the place where damage appears is the same point at which the risk arose and could have been prevented. For one fuel, storage and conditioning may prove critical. For another, compatibility with equipment may determine the outcome. For a third, the toxic or explosive behaviour of the substance during transfer may carry the greatest legal significance. The analysis must therefore remain fact-specific from the outset.[26]

The first grey area lies between supply and shipboard operation. The publicly available description of ISO 6583 links methanol specifications to the point of custody transfer and to the period before any required treatment on board. The general logic of the BIMCO Bunker Terms 2018 connects specification, sampling, pre-delivery documentation, the bunker delivery note (BDN), remarks and protest, transfer of risk and title, and later claims.[27] Gard, in turn, stresses the need for an express fuel specification, a detailed sampling and testing regime, accredited laboratories, workable time bars for quality claims and prompt notification to insurers. Much of the same logic applies to alternative fuels. The practical conclusion is straightforward. The file should reconstruct not only the sequence of the casualty, but also the history of the fuel before it entered the ship’s fuel system.[28] The second grey area arises during bunkering. The bunkering process itself creates risk and involves several actors, including the ship, bunkering facilities, suppliers, coastal and port State actors and insurers. MSC.1/Circ.1621 makes this multi-party structure legally visible. Before the operation begins, the person in charge on the receiving ship and the representative of the bunkering source must agree the transfer procedure, emergency action and checklist in writing. Bunkering control must take place from a safe remote location. Leakage detection, gas detection, overfill alarms, and manual and automatic shutdowns attach to specific parts of the system and to defined points of observation. At this stage, the initial record does not matter as a formal bundle of papers. It matters as a reconstruction of the sequence of factual control.[29]

The third grey area concerns intervention by public authorities. Wang links the regulation of bunkering infrastructure to the safety and environmental concerns of coastal and port States and refers to safety zones around bunkering facilities. In practice, such intervention may involve closure of a berth, evacuation, access restrictions, measurements, monitoring and compulsory direction of the emergency response. For private-law analysis, that intervention matters, but it does not provide a final answer. It shows who assumed public control of the response, and at what point. The question of who should ultimately bear the financial consequences still depends on the original risk, causation and the sphere of factual control.[30]

The fourth grey area concerns the insurance framework of the event. The International Group of P&I Clubs states that Clubs cover a wide range of third-party liabilities and play a leading role in coordinating the response to maritime casualties. The Group also recognises that its Alternative Fuels Working Group works to raise awareness of the gap in the existing international liability and compensation regime.[31] The practical conclusion should remain measured. P&I cover, or another insurance structure, creates a channel for response and claims handling. It does not replace the legal classification of the case or the analysis of causation. Notification to insurers should therefore focus on the facts of the event and the preservation of evidence, without applying a premature label that may later prove inaccurate.[32]

The nature of the harm further complicates the allocation of consequences. Wang and co-authors associate alternative fuels with spills, vapour dispersion, pool fires, methane slip and ammonia toxicity.[33] They also identify the difficulty of proving significant or material damage and its causal link with the operation of, or an incident involving, a ship. The IOPC oil model remains useful as a point of reference. It shows how post-incident studies, monitoring, reports and supporting documentation can turn a technical consequence into a claim before admissibility receives final assessment.[34] For alternative fuels, a map of factual control becomes a preliminary condition for contractual drafting, because without it the parties cannot sensibly determine what data must be preserved, who should fund the first measures and how the later causation dispute should be framed.[35]

Implications for contractual drafting

Contractual drafting at this point should not begin with an abstract indemnity clause. Existing bunker practice offers a more reliable starting point. The BIMCO Bunker Terms 2018 connect the pre-delivery document, the bunker delivery note (BDN), sampling, remarks and protest, transfer of risk and title, and later claims. Their pollution clause also provides for immediate joint clean-up during bunkering, with losses then reallocated according to causation or degree of fault. For alternative fuels, this logic requires a broader factual description of the event, rather than a literal transfer of oil pollution language. The definition of an incident should cover the release of a substance from its safe handling regime before the parties finally classify the event as pollution, fire, toxic exposure or property damage. Only that structure allows the parties to avoid a mistaken legal label on the first day after the casualty.

The contract should state the power to stop work during bunkering in express terms and link it to a single response order. MSC.1/Circ.1621 requires written agreement on the transfer procedure and emergency action, a signed bunker safety checklist, remote bunkering control and an effective architecture for leak detection and shutdown. Specific BIMCO solutions for methanol bunkering confirm that the market has already begun to add more detailed rules on sampling, measurements and control procedures during fuel transfer. The practical drafting point is therefore clear. The contract should identify in advance who may suspend the fuel transfer in a manner binding on all participants, who notifies the port, insurers and public authorities and in what sequence, who admits response contractors and surveyors, and who must immediately preserve samples, alarms, communications, P&ID data and other operational records.

First-response costs require separate treatment. The IOPC claims architecture shows that a payable claim emerges only after documentation and admissibility review, not at the same moment as the emergency response. The BIMCO working formula can also serve this purpose if the contract expresses it in technology-neutral terms. The parties should first take reasonably necessary measures to contain and mitigate the consequences. They can then reallocate the losses according to causation and fault. For alternative fuels, this means that the costs of isolation, monitoring, medical examination, treatment where required, disposal, temporary safety barriers and specialist emergency contractors should be funded without prejudice to liability. Early funding does not amount to an admission of final responsibility. It serves a procedural function by ensuring that response begins before the causation dispute can realistically be resolved.

The final contractual task is to bring quality, custody transfer, operational control, evidence preservation, cooperation and insurance notification into one coherent procedure. Gard rightly stresses the importance of express fuel specifications, a detailed sampling regime, accredited testing and early insurer notification, and notes that much of the same logic applies to alternative fuels. Read together with ISO 6583, this means that the quality undertaking should attach to the point of custody transfer. Read with MSC.1/Circ.1621, it means that the records generated during bunkering and immediate response should be identified in advance, rather than collected after the dispute has already begun. Such a contract does not replace an international liability regime. It creates a manageable procedure until a specialised convention framework is in place.

Conclusion

Alternative fuels have already entered the operational fabric of shipping, while the civil-law architecture for the consequences of incidents has not reached comparable maturity. Until a specialised international regime emerges, practical certainty will depend on the precision with which the parties record the specification and quality of the fuel, the point of custody transfer, the sequence of factual control during bunkering, the neutral description of loss of containment, the emergency response procedure and the funding of first measures without prejudging the final legal assessment.

Decarbonisation changes the fuel carried in ships’ tanks and at the same time requires parties to design, in advance, the map of consequences after an incident. Where the law has not yet provided a stable external solution, the internal architecture of the transaction and response becomes decisive. The party with the practical advantage will be the one able to show where the risk arose, who actually controlled the transfer operation, what measures were taken immediately after the substance left its safe handling regime, and why the later harm is legally connected with that part of the chain.

Notes

[1] ‘International Working Group on Maritime Decarbonisation’, Comité Maritime International. Accessed 11 June 2026.