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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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Friday, 07 August 15
COAL PRICE DEVELOPMENTS CAN ONLY BE DESCRIBED, SUCCINCTLY AS "OVERSUPPLY MEETS SUBDUED DEMAND" - VDKI
Coal Outlook 2015 – International
Regarding the outlook for global coal trading, two questions arise: firstly, “ whether the years of ...
Friday, 07 August 15
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 528.1 MMST; DOWN 8.7% Y/Y - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 06 August 15
THE RATES FOR CAPES SHOOT UP LAST WEEK; GIVING THIS RECENT RALLY SOME MUCH NEEDED LEGS - INTERMODAL
COALspot.com: The Dry Bulk market noted another positive closing last week, entirely supported by Capesize performance, which managed to balance th ...
Thursday, 06 August 15
HARD COAL AND COKE IMPORTS TO GERMANY REACH NEW ALL-TIME HIGH OF 56.2M TONES IN 2014
Demand for German and imported hard coal In 2014, in 2014 fell by almost 8%, or 4.8m TCE, to 56.2m TCE.
According to German Coal Importer ...
Thursday, 06 August 15
SEABORNE WORLD TRADE IN STEAM COAL GROWS BY 3% YOY - GERMAN COAL IMPORTER ASSOCIATION
Global trade with hard coal, at 1,272m tones in 2014, increased by 35m tonnes or 3% in comparison with the previous year.
According to associa ...
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- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- The University of Queensland
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
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