Öykü Kutluğ
Partner, Kutluğ Hocaoğlu Law Firm

Öykü Kutluğ is a lawyer specialising in maritime law, international trade and marine finance. She has played a key role in major international ship sale and purchase transactions, as well as in complex cross-border finance projects involving leading financial institutions, shipowners and investors. Her practice extends to commercial law, dispute resolution, banking and finance, insurance law and yachting. With wide-ranging experience across multiple jurisdictions, she regularly advises stakeholders on contractual, corporate and financing issues in the shipping sector. Known for her pragmatic and results-oriented approach, Öykü is recognised for her ability to navigate high-value and complex maritime finance structures, delivering tailored solutions to clients operating in a global industry. She provides legal services in Turkish and English, and has advanced proficiency in French.

Financing the Turkish Fleet Through the Energy Transition

Introduction

A ship finance transaction has traditionally begun with familiar questions: what is the vessel worth, what income can it generate, and how effectively can a lender enforce its security? Those questions remain essential. For Turkish shipowners trading internationally, however, they no longer tell the whole story. A vessel’s exposure to emissions rules, the reliability of its performance data and the allocation of compliance costs under its employment contracts can all affect the cash flow on which financing depends.

This shift is particularly relevant to Türkiye’s fleet. Turkish-owned vessels trade under different flags and across many routes, while the country’s shipyards, repair facilities and ports form an important part of the wider maritime economy. Turkish ship finance remains modest in scale compared with established international centres, and domestic lenders have generally taken a cautious approach to vessel lending. Transition-related costs make careful credit analysis more necessary. A vessel need not fly an EU flag for European climate rules to affect it: its trading pattern and operational arrangements are often decisive.

In our view, the legal work begins when these costs are translated into the transaction documents. The relevant exposure must be followed from technical due diligence and valuation through charterparty allocation and finance covenants, and ultimately to sale or enforcement.

A regulatory framework with different clocks

The EU Emissions Trading System (EU ETS) has applied to maritime transport since 2024. For cargo and passenger ships of at least 5,000 gross tonnage within its scope, the rules generally capture all emissions on voyages between covered European ports and within those ports, and half of emissions on voyages between a covered European port and a third-country port. The system is based on routes rather than flag. A Turkish-owned vessel calling at an EU port may therefore create a carbon cost even if it is registered elsewhere.

The timing matters in a financing. Allowances must be surrendered for 40 per cent of reported 2024 emissions, 70 per cent of 2025 emissions and 100 per cent of 2026 emissions, in each case in the following year. Carbon dioxide was the relevant ETS gas in 2024 and 2025; methane and nitrous oxide enter its scope from 2026. Cash-flow projections should distinguish the emissions year from the surrender year and account for the vessel’s fuel and engine profile.

FuelEU Maritime answers a different question. Applied from 1 January 2025, it limits the annual average greenhouse-gas intensity of energy used on board ships over 5,000 gross tonnage calling at European ports, irrespective of flag. It works on a well-to-wake basis and begins with a 2 per cent reduction against the regulatory baseline for 2025, with progressively more demanding targets in later years. Its first monitoring year was 2025, and the first ship-specific reports were due to verifiers in January 2026. Compliance therefore involves fuel records, emissions factors and verification as well as the eventual financial result. The two EU regimes should not be collapsed into a single ‘carbon charge’: they measure different things and require different operational responses.

At the global level, the timing remains uncertain. In April 2025 the International Maritime Organization approved draft text for its Net-Zero Framework, combining a global fuel standard with a greenhouse-gas pricing mechanism. The extraordinary session convened to consider adoption was adjourned in October 2025 for one year. As of the date of this article, the proposed framework should be treated as a prospective measure, not an adopted global levy. Its direction matters for investment decisions, but a forecast should separate existing obligations from assumptions about future rules.

The regimes create different costs and investment needs against an uncertain global timetable. Financiers need scenarios showing what the ship can earn and what it may cost to keep it employable.

From technical data to bankable cash flow

In an acquisition financing, we would start with the vessel and its intended employment. The lender needs a coherent picture of fuel consumption, recent trading, efficiency measures, the dry-docking schedule and realistic retrofit options. Class and statutory records remain indispensable, but emissions figures in the financial model should also be checked against verified regulatory submissions. If the data is incomplete, the model should show the resulting uncertainty rather than assume savings that cannot be demonstrated.

The trade pattern matters as much as the vessel’s design. A ship that has seldom called at European ports may have little historical EU ETS exposure, yet a proposed long-term charter to European destinations could change its cash flow. Conversely, a vessel already trading in those markets may have established monitoring systems and performance records that help a buyer and lender estimate future costs. Forecasts should test different routes, allowance prices, fuel prices, charter rates and periods off hire for upgrades. No single carbon-price forecast can substitute for those cases.

The decision to retrofit, acquire a newer vessel or defer expenditure requires an equally disciplined comparison. A retrofit may reduce consumption and protect earnings but also involve installation cost, downtime, technical risk and an uncertain resale premium. A newbuilding can offer more flexibility while exposing the borrower to delivery risk, technology choices and a longer period before it generates revenue. The sensible financing structure depends on the ship’s remaining useful life, expected employment and the availability of equipment, fuel and supporting port infrastructure. Claims of ‘green’ performance should be tied to measurable characteristics and an identified use of proceeds or performance target.

For Turkish owners, the transition can also create business beyond the fleet itself. The EBRD’s maritime decarbonisation programme for Türkiye, developed with the EU and Turkish authorities, targets vessels and ports alongside technical assistance. In 2026 the EBRD announced a loan of up to US$41 million for a floating dock at Tersan’s Yalova yard to expand repair and retrofit capacity. The Ministry also reported that two ports were preparing shore-power installations with grants under the programme. These examples show how sustainable finance can support vessels, port infrastructure and the technical capacity to upgrade ships; eligibility still depends on the individual project.

What the security package can and cannot do

A ship mortgage remains central to an asset-backed financing. It may be supported by assignments or pledges over earnings, insurances and accounts, as well as guarantees. The creation and perfection of each security interest must be checked against the vessel’s registry, the borrower’s structure and the law governing the relevant asset. These protections remain necessary. They do not answer a separate question: will the borrower have the cash to meet emissions obligations and preserve the vessel’s ability to trade?

The facility should address that question in concrete terms. We would consider undertakings to deliver verified emissions reports and compliance documents, notify material problems, maintain monitoring arrangements and preserve the underlying records. Depending on the transaction, the parties may need an agreed budget or reserve for foreseeable compliance expenditure or a planned retrofit. If the lender requires an upgrade, the documents should identify its funding and account for installation time in the repayment schedule and financial covenants.

Care is needed when turning performance measures into events of default. A single adverse intensity figure or a temporary reporting discrepancy may not justify acceleration, particularly where a contractual cure or operational response is available. Materiality thresholds, cure periods and the difference between an actual legal breach and a missed commercial target should be clear. If financing is described as sustainability-linked, the calculation methodology, data source, verification, observation dates and consequences of revisions should be explicit. A margin adjustment based on an ambiguous metric creates disputes without improving the asset.

Ownership changes add a further issue. During enforcement, a lender may need to arrange continued management and trading or sell the vessel. Missing emissions records, unresolved compliance liabilities or unclear responsibility across a change of operator can delay a sale and depress bids. The ability to obtain historic data and transferable documentation can thus matter to realisable security value. It is preferable to identify these requirements at origination, while the borrower and manager can still put reliable systems in place.

Charterparties determine who bears the cost

The regulated entity and the party whose commercial decisions generate the cost are not always the same. Under the EU ETS, the shipping company remains responsible for surrendering allowances. Depending on the management arrangements, this may be the registered owner or an appropriately mandated entity assuming the relevant responsibilities. EU rules recognise a right of reimbursement where another entity is responsible under a contractual arrangement for purchasing fuel or operating the ship; the shipping company nevertheless retains its regulatory obligation. A clause that merely says the charterer will ‘pay ETS’ does not describe when allowances or money must be transferred, what evidence supports the calculation or what happens if payment is disputed.

In a time charter, we would specify the measurement period, the data used to calculate emissions, when and how the charterer reimburses or transfers allowances, and the treatment of off-hire, deviations, fuel choices and changed voyage orders. The clause also needs to deal with costs falling due after redelivery but attributable to the charter period. Voyage charters call for a different allocation because control over freight, itinerary and speed may be arranged differently. The wording must follow the parties’ actual operational roles.

FuelEU can be harder to allocate on a voyage-by-voyage basis because its measure is annual and ship-specific. A charterer’s fuel and operating decisions during one employment may affect the vessel’s compliance balance beyond redelivery. Contract terms can require the timely provision of fuel documentation, allocate the consequences of non-compliant fuel or agreed trading orders, and set an agreed method for calculating the position at delivery and redelivery. They should also address the value or cost of any compliance flexibility used by the operator. The owner, charterer and manager need compatible data and verification procedures; inconsistent assumptions across the charterparty, management agreement and loan documents invite both disputes and financing gaps.

For the lender, this allocation is more than a legal nicety. If the financial model assumes the owner will recover carbon costs, the charter should provide a workable mechanism and the lender should consider the charterer’s credit. Where earnings and charterparty rights are assigned as security, the lender should review whether the relevant claims and records can be accessed and enforced under the assignment. A projected reimbursement that cannot be collected on time offers limited protection to debt service.

Sale and purchase due diligence at the transition point

When acting on a second-hand sale, we would add emissions records to the familiar technical and documentary review. Buyers should request fuel-use data, EU trading history, monitoring plans, verified reports, allowance surrender and FuelEU compliance records where applicable. They should establish which company was responsible in each period and whether a change of manager or ownership has left obligations outstanding. Warranties should cover the accuracy and completeness of identified records without making the seller responsible for future performance under the buyer’s different routes, fuel choices and operating practices.

The sale contract should allocate liabilities by period and establish a practical mechanism for data delivery. Completion may occur months before an annual compliance calculation or allowance surrender. A general statement that the seller pays all pre-delivery costs can leave the parties arguing about later verification adjustments, missing fuel documents or a balance arising from an annual calculation. The contract may instead specify the relevant reporting periods, a provisional calculation, post-closing cooperation, adjustment rights and the records that must be handed over. Any holdback or escrow should be sized against an identifiable exposure rather than inserted reflexively.

Financed acquisitions add another layer. A bank funding a buyer needs the purchase agreement, management arrangements and facility terms to fit together. It should know who will have access to historic performance data, who is responsible for filings immediately after delivery and whether projected post-delivery employment is compatible with the vessel’s technical condition. Timing at closing is critical: a beautifully drafted covenant signed after a broken data handover will not reconstruct reliable records. The parties should treat emissions documentation as part of the closing package alongside class, registry and insurance materials.

The Turkish opportunity

Türkiye’s position is practical rather than purely geographic. Turkish owners, charterers, yards and ports participate at different points in a vessel’s life, allowing investments in fleet renewal, repair, energy efficiency and shore-side facilities to reinforce one another. The Green Port Certificate regulation provides a domestic framework for port sustainability. In September 2026, the Ministry of Transport and Infrastructure reported four certified ports and described measures covering renewable energy, electrified equipment, shore power, energy efficiency and waste management. It also stated that specified new coastal facilities and facilities expanding their area by more than 25 per cent must meet green port criteria. These are concrete investment and due diligence considerations for port operators and their financiers, not a claim that every Turkish port already has shore power.

There is no need to wait for a single definitive fuel or a final IMO price before financing useful improvements. A lender can support a measured efficiency retrofit, provided the baseline, expected savings, installation risk and verification method are credible. An owner can acquire a vessel with an honest plan for its intended trade and its likely compliance cost. Ports and shipyards can invest in services whose demand follows from owners’ operational needs. Public or development-bank support can reduce barriers in selected projects, but it cannot replace sound contracts or an achievable repayment plan.

The commercial opportunity for Turkish maritime businesses will be strongest where technical evidence, legal allocation and financing terms agree. A lender should be able to trace an emissions assumption from the underlying data to the cash-flow model, through the charterparty, and into the borrower’s undertakings. An owner should be able to explain both the cost of compliance and who is obliged to fund it. A buyer should know what it is acquiring in regulatory as well as physical terms. These are ordinary transaction disciplines applied to a changing risk.

Conclusion

Ship finance has always required a view on markets, asset values and employment. Our assessment is that existing EU obligations now need to be reflected in the same credit and legal analysis, while prospective global measures belong in clearly qualified scenarios. The parties should verify the data, test the cash flow, identify who controls the relevant decisions and state who pays.

The strongest financing will not depend on a generic description of a vessel as green. It will be supported by credible performance data, workable charterparty provisions, proportionate covenants and a security package that remains effective through operation, sale or enforcement. That approach gives capital a clearer route into the renewal and adaptation of Türkiye’s maritime sector, even as the regulatory timetable continues to evolve.