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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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Tuesday, 15 March 16
PORT OF NEWCASTLE SHIPPED 12.78 MMT OF COAL IN FEBRUARY 2016
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped AU$1,110.5 mi ...
Tuesday, 15 March 16
ADARO ENERGY LOWERED ITS COAL CASH COST BY 16% TO US$ 27.98 PER TONE IN 2015
Difficult Coal Market Condition Persists in 2015, Adaro Lowers Costs, Reduces Capital Spending and Maintains Solid Liquidity.
PT Adaro E ...
Monday, 14 March 16
THE CS 50 INDEX ROSE $0.16 OR, 0.41% TO $38.82 A TON
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.41 percent week over week to averaging $38.82 per ton on this past Friday, ac ...
Monday, 14 March 16
THE BALTIC EXCHANGE CONTINUED TO ROSE THIS PAST WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rise this week helped by higher rates for pa ...
Saturday, 12 March 16
PLN, COAL COMPANIES IN TALKS ABOUT PRICES - THE JAKARTA POST
Following a study that predicted that Indonesia would struggle to provide coal for its power stations in the near future, the government will facil ...
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Showing 2521 to 2525 news of total 6871 |
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- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Economic Council, Georgia
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Baramulti Group, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- The University of Queensland
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
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