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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, 22 July 15
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS | INTERMODAL
In both bulk shipping sectors, there are certain, yet different, reasons and strategies to invest. In the wet, buy once you can charter-out long, w ...
Tuesday, 21 July 15
CHINA'S ENERGY COMMODITY IMPORTS DIVERGING - RICHARD SCOTT | HELLENIC SHIPPING NEWS
Energy commodity imports into China have grown enormously over the past decade, boosting global demand for shipping capacity. But a dramatic change ...
Tuesday, 21 July 15
FOB INDONESIA COAL SWAPS EXTEND LOSS
COALspot.com: Indonesian coal swap for delivery Q3 2015 declined month on month and week over week, this past week. The swaps was lost 0.70%.
...
Tuesday, 21 July 15
Q4'15 FOB RBCT COAL SWAP DECLINES NEARLY 3.13 PER CENT MONTH OVER MONTH
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 declined month over month and week over week.
The Q3 swap was down US$ ...
Monday, 20 July 15
FOB NEWCASTLE COAL SWAP SEE FURTHER DECLINES
COALspot.com: API 5 FOB Newcastle Coal swap for Q3’ 2015 delivery down $ 1.32 per MT (-2.89%) month over month to US$ 44.43 per mt. The swap ...
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Showing 2911 to 2915 news of total 6871 |
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- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- PTC India Limited - India
- Central Electricity Authority - India
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- The University of Queensland
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