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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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- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Australian Coal Association
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- The Treasury - Australian Government
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