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Tuesday, 16 June 15
MERS: POTENTIAL CHARTERPARTY IMPLICATIONS - CLYDE & CO
 KNOWLEDGE TO ELEVATE
South Korea's current outbreak of Middle East Respiratory Syndrome (MERS) has been the focus of much international attention. The local impact of the outbreak has been severe, leading to nearly 3,000 schools being closed and over 5,500 people being quarantined as a result of possible contact with infected persons. The virus has so far infected over 150 people in the country and the World Health Organization (WHO) anticipates that cases will continue to surface despite indications that the outbreak is now being brought under control. Whilst public health experts do not anticipate any form of worldwide pandemic to result from the situation in South Korea, it is feared that there is scope for a regular pattern of MERS outbreaks to occur over the coming years.
The Potential Legal Impact of MERS on Charterparties
With cruise ships having cancelled calls to South Korean ports and confirmed cases of MERS in the port of Pyeongtaek, the outbreak may understandably give rise to concerns on the part of shipowners whose vessels are due to call in South Korea or the charterers of such vessels. Whether the outbreak will have legal implications on a charterparty will very much depend on the wording of the charterparty in question; standard form charterparties are unlikely to include wording dealing with outbreaks of infectious/contagious disease.
Safe Port Warranties
Shipowners are obliged to follow charterers' legitimate orders unless to do so would expose the crew to unacceptable risk. Whilst charterers under a time charter are obliged to nominate safe ports, in the absence of specific wording it is unlikely that an outbreak of MERS will render a port unsafe.
Even if an outbreak of disease is in the port city itself, as in Pyeongtaek, the port may remain safe as long as there are appropriate protective measures in place. As such, there is significant risk involved in an owner refusing an order to a port on the basis of unsafety owing to disease risk, since to do so wrongly would amount to breach of the charter for failure to follow a legitimate order.
If the facts are such that there is a significant risk to the health of the crew, then charterers may be asked to nominate an alternative port, but this may have knock-on consequences particularly if there are bills of lading issued. The best approach for owners will be to keep in close contact with their P&I Club who will be able to give timely and appropriate guidance as the situation develops.
Where a vessel is subject to a voyage charter, the prospective safety of a port is also an issue and the arguments are similar to those detailed above; as with time charters, it is likely to be difficult to demonstrate that a South Korean port is unsafe on account of MERS.
Quarantine and Deviation
In the event that a time-chartered vessel becomes subject to quarantine delays or is forced to deviate to land an ill crew member, the hire/off-hire provisions may result in the vessel being placed off-hire. The specific charterparty wording would need to be carefully considered to assess whether this might be the case.
Similar concerns also arise in relation to voyage charters. Shipowners may deviate for the safety of the crew but in such a scenario no additional freight will become payable, so such deviation is at their own expense. A defence of 'reasonable deviation' may come into play where the Hague or Hague-Visby Rules apply. In terms of quarantine, the usual position is that time spent/lost at the time of charterers' orders will count as laytime/demurrage, although this too will depend on the charterparty terms agreed.
Free Pratique
In order to commence laytime, a vessel requires free pratique clearance. Absent wording to the contrary in the charterparty, the usual position is that a master can give a valid notice of readiness (NOR) without first having all the customs documents and obtaining free pratique, provided that he has no reason to suppose that being document ready is anything other than a mere formality.
However, if the vessel has recently called to a port in an infected area, then the mere formality test may not assist, since the vessel is likely to be subject to quarantine delays while the health of the crew is ascertained. In such a scenario, unless a charterparty provision states otherwise, owners bear the risk of the delay, since they would be unable to give a valid NOR to start laytime running until free pratique clearance is obtained.
Force majeure
If the charterparty in question contains a force majeure clause, the question may also arise whether the MERS outbreak fulfils the requirements of a force majeure scenario. A typical clause of this type suspends and/or terminates performance of the charterparty on the occurrence of an extraordinary event, which is beyond the parties’ control and which impacts the ability of one or both of the parties to fulfil their contractual commitments. As such, force majeure is usually a high evidential hurdle to clear.
Whilst the WHO has described the MERS outbreak as 'large and complex', the organisation has not issued a travel ban relating to South Korea and although Hong Kong, Macau and Taiwan have advised against travelling to the country, their notices amounted to recommendations rather than official travel alerts. If the MERS outbreak becomes more widespread and/or travel bans are put in place, the possibility of the situation amounting to a force majeure event may strengthen, however, at present, the scope for force majeure appears limited, unless the wording of a particular clause is quite broadly drafted.
Comment
The South Korean government is working alongside the WHO to bring the current MERS outbreak under control, however as with any outbreak of infectious/contagious disease, the situation may raise concerns for shipowners and charterers who are aware of the potential disruption such incidents can cause.
Parties may wish to consider managing the risk associated with such outbreaks by inserting contagious/infectious disease clauses into prospective charterparties, thus avoiding the ambiguity which can arise in this area.
By Ik Wei Chong, Bethan Bradley and Aislinn Fawcett
About Clyde & Co
Clyde & Co is a dynamic, rapidly expanding global law firm focused on providing a complete legal service to clients in our core sectors.
Clyde & Co advises businesses that are at the heart of worldwide commerce and trade.
If you believe an article violates your rights or the rights of others, please contact us.
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Monday, 18 April 16
INDONESIAN 5000 GAR COAL INDEX DECLINE 1.43 PERCENT WEEK OVER WEEK - CS (I) COAL INDEX
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 1.43 percent week over week to averaging $38.65 per ton on this past Friday, ac ...
Monday, 18 April 16
SOUTH KOREA STATE-OWNED UTILITY KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 70,000 Metric Tons of 4,600 kcal/kg NAR coal for ...
Monday, 18 April 16
SOUTH AFRICA RB1 COAL HAS LOST GROUND IN INDIA; RB2 MAY LOSE GRIP IF THE PRICE CROSSES US$ 50 A TON - TRADERS
COALspot.com: Indian coal consumers preferred to buy South Africa RB2 coal instead of RB1 coal recent months due to RB2's low CFR price level. ...
Monday, 18 April 16
CAPESIZE INDEX ROSE 44.66 PER CENT WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 15 April 16
PANAMAX MARKET CONTINUES TO FIRM - FEARNLEYS
Cape
It has been a positive freight market for the past few weeks, however, this week the market is taking a small breather, says Fearnleys in it ...
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Showing 2471 to 2475 news of total 6871 |
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- Australian Coal Association
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- PTC India Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Baramulti Group, Indonesia
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