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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, 29 May 15
SOUTH KOREAN STATE-OWNED UTILITY KOREA MIDLAND POWER INVITES BIDS FOR 780K MT OF COAL FOR H2' 15
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 780K Metric Tons (MT) of HCV and LCV ...
Thursday, 28 May 15
TIMEBAR FOR DEMURRAGE CLAIMS - SKULD
KNOWLEDGE TO ELEVATE
English law has traditionally had a strict approach to contractually agreed time bars between commercial parties as well ...
Wednesday, 27 May 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
Earlier in the year I looked at how the market was reacting to the prolonged fall of the price of oil. Back then it was still unclear if the fallin ...
Tuesday, 26 May 15
HOW HAS THE DROP IN OIL PRICES AFFECTED OTHER COMMODITIES? - CLYDE & CO
KNOWLEDGE TO ELEVATE
The effects of the dramatic drop in the price of both Ice March Brent, the international oil marker, and its US counterpa ...
Tuesday, 26 May 15
MINING ASSOCIATION PERHAPI PUSHES FOR 35,000 MEGAWATT ELECTRICITY PROGRAM - JG
The Indonesian Mining Professionals Association, or Perhapi, has announced its support for a 35,000-megawatt national electricity program, saying i ...
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Showing 3001 to 3005 news of total 6871 |
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- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- The University of Queensland
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
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