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