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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, 20 July 15
CFR SOUTH CHINA COAL SWAPS GAIN WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for Q3’ 2015 delivery declined US$ 1.18 (2.27%) per MT month over month.
A commodity swap ...
Sunday, 19 July 15
BDI GAINED AND CROSSED 1000 MARK THIS WEEK
COALspot.com: The BDI gained and crossed 1000 mark after many months this Friday. The BDI was up almost 20 pct and closed 1048 points on 17 July 20 ...
Saturday, 18 July 15
INTERVIEW : FRANZ ESCALANTE, CHIEF OF INFORMATION SYSTEMS, MINERA CHINALCO, PERU
We are interested in the technology of Autonomous trucks, the new-generation trucks are not remote controlled, they are truly autonomous - Franz Es ...
Friday, 17 July 15
COAL PRODUCTION IN THE U.S. INCREASES SHARPLY FOR THE WEEK ENDING JULY 11
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 16.4 million short ...
Friday, 17 July 15
INDONESIAN POWER-STATION COAL SWAPS DECLINE CONTINUES THIS PAST WEEK
COALspot.com: Indonesian coal swap for delivery Q3 2015 declined month on month and week over week, this past week.
The Q3 swap was declined $ ...
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Showing 2916 to 2920 news of total 6871 |
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- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- The University of Queensland
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Cement Manufacturers Association - India
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
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