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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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Showing 26 to 30 news of total 6871 |
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- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Parliament of New Zealand
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
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