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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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Wednesday, 24 February 16
HOW IS THE FUEL MIX FOR U.S. ELECTRICITY GENERATION CHANGING? - EIA
In recent years, there have been changes in the mix of fuels used to generate electricity in the United States. Natural gas and renewable energy so ...
Wednesday, 24 February 16
PRIVATE EQUITY FUNDS LOOKING TO EXIT SHIPPING, MOST NOTABLY DRY BULK, AS OVERORDERING HAS RESULTED IN EXCESS TONNAGE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The injection of more than $13 billion in shipping from various private equity funds over the past few years has resulted in what many feared would ...
Wednesday, 24 February 16
THIRTEEN - NOT ALWAYS AN UNLUCKY NUMBER? - CLARKSONS
Back in early 1999 the price of a 5 year old Panamax bulkcarrier dipped to $13.5m, and ever since analysts have hailed purchase decisions made at t ...
Monday, 22 February 16
4200 GAR COAL INDEX SETTLES AT $27.02, DOWN 0.07% FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.17 percent week over week to averaging $38.89 per ton on this past Friday, ...
Monday, 22 February 16
FREIGHT MARKETS PICKED UP SLIGHTLY THIS PAST WEEK
COALspot.com: The freight markets picked up slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of gl ...
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Showing 2551 to 2555 news of total 6871 |
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- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- MS Steel International - UAE
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Planning Commission, India
- Orica Mining Services - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
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