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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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Showing 41 to 45 news of total 6871 |
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- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Aditya Birla Group - India
- MS Steel International - UAE
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- The University of Queensland
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
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