It may seem a lot further back, but just over 7 weeks ago on 31 December the first reports of what is now called COVID19, the “new coronavirus”, came from Wuhan in China’s Hubei Province. Since then a total of 75,309 cases in 30 countries have been confirmed, of which 2,014 have resulted in death. Such a thing disrupts everyday and business life alike, with systems adapting and new management strategies appearing. Many have put into place plans to prevent or at least minimise spread, and with such a huge volume of goods carried by sea, and the marine leisure industry still expanding, it comes as no surprise that worldwide shipping has not been spared.

This brief commentary highlights some of the core areas. If you would like more details or to consider a specific issue please contact Helen Schlemminger at h.schlemminger@mtaher.com or Maryam Taher at m.taher@mtaher.com.  

Unsafe ports/berths

Commonly, fixtures provide that charterers can only order the vessel to safe ports, or maybe berths i.e. those that can be reached and used without difficulty, as defined. Unsafety in the face of this new virus will depend on the individual facts that will determine the crew’s likely exposure. Thus whether an owner can refuse to call somewhere will be highly fact-specific. Of course, there may be places that are totally excluded, pre fixture.

Time counting

Under a time charter, depending on specific wording, the vessel might well be off-hire during any deviation, delays or quarantine due to the virus, i.e. due to a crew member contracting it.

Under a voyage charter, local restrictions may prevent the vessel reaching the place for valid tender of NOR, so that should be addressed pre charter, such that NOR might be tendered from elsewhere. Free pratique will probably assume much greater importance, and parties should check actual and proposed provisions, as lack of FP may prevent valid tender and/or time starting.  

Quarantine

This is another seeming old-fashioned notion that is now right back in vogue. Quarantine is a state, period, or place of isolation in which people, animals or goods that have arrived from affected locations are placed, until is proven that they do not carry disease and are, therefore, not contagious. In a maritime quarantine a vessel is usually isolated at an anchorage, and various cruise ships have recently felt the full force of what this means, with the Diamond Princess still held that way and the MS Westerdam having been allowed to berth only after rejection by many countries.

Many standard form trading fixtures address this, but not all do. For example, ASBATANKVOY provides at 17 (a) that any delay caused by the charterer sending the vessel to a port under quarantine counts as used laytime, unless such was not declared until the vessel was on passage to that port.

Note that it is the port’s status that matters here – what if it is the vessel that is quarantined?
 
Force majeure

Charterparties commonly provide for extraordinary events that are beyond the parties’ control and affect contract performance, often by force majeure clauses that free parties from their obligations and/or remove their liabilities. Whether a force majeure clause is triggered not only depends on the facts but also on the precise wording of the clause, and it is vital to remember that (a) force majeure operates in this contractual way, rather than being an independent legal doctrine that can simply be quoted as of right and (b) whether the clause applies will again be very fact-specific – the person wanting to use it will have to show that what has happened comes within it.  

The China Council for the Promotion of International Trade has started to issue intended protective certificates to Chinese businesses who are unable to fulfil their contractual obligations. This, however, does not mean that they are automatically excused. That will depend on considering the facts and the relevant clauses amid the contract’s governing law.

The largely English law principle of frustration is often mentioned together with force majeure, but will generally only help if what has happened has turned the contract performance into something very different to how it started.

Summary

Contracting parties must watch developments closely and constantly reassess their situation, especially pre contract where risks can be assessed and terms still negotiated. The facts are likely to be key and parties looking to trade so as to involve affected areas, businesses or product lines may wish to seek advice on suitable wording.