Owners may also have an implied indemnity if they can show that
the loss arose out of a risk which they had not agreed to bear. The scope of the
indemnity is however narrow as owners will have to show that the risk was one
which was not reasonably foreseeable. It is arguable whether there is even any
implied indemnity when there is a specific protective clause relating to the
BIMCO protective clause: charterers responsible for resulting liabilities when trading to an
area or zone of danger
waters Piracy hotspot, zone of danger
Members will be aware that BIMCO has drafted specific clauses
for infectious or contagious diseases for both voyage and time charter parties.
In these clauses owners may refuse to trade to an area or zone of danger. If,
nevertheless, that option is waived and the vessel proceeds, charterers will be
responsible for resulting liabilities and any additional costs of preventative
measures taken by owners to protect the vessel and crew. It is important to
note that whether an area presents the degree of danger justifying a refusal to
proceed is a subjective decision to be taken by owners in the light of
available evidence and information.
will need to consider the most effective means of obtaining appropriate
financial guarantee from the charterer
Under the time charter party clause, and recognizing charterers’
commercial control over the vessel, charterers’ obligations are expressly
stated to include post contractual costs such as cleaning, quarantine or
fumigation arising from the vessel’s previous trading pattern. In this respect
and in order to secure their interests, owners will need to consider the most
effective means of obtaining appropriate financial guarantees either at the
time of fixing or when agreeing to allow the vessel to proceed to an area
considered to be at risk.
should know about events that arise prior to or during negotiations
The voyage charter version expressly limits application of the
clause to situations arising after the date of the charter party. This is
because parties should know about events that arise prior to or during
negotiations and make appropriate arrangements accordingly. Events arising
post-fixture may be more problematic and so the clause sets out a regime to
address such changed circumstances. Any delay due to the outbreak will count as
laytime and/or demurrage.
and charterers should consult their respective P&I Club to ensure
The provisions in the clauses might result in contractual or
geographic deviation. Accordingly, when considering incorporating the clause,
owners and charterers should consult their respective P&I Club to ensure
that inclusion will be compatible with their cover and also to discuss any
special considerations or requirements that might be applied.
of care towards to crew
Closer Collaboration Needed
on Seafarer Welfare; Report launch with Kitack Lim (IMO Secretary-General), Nusrat
Ghani MP (UK Shipping Minister), Captain Esteban Pacha (AoS Vice Chair of
Trustees) and Martin Foley (AoS National Director).
Employers owe a duty of care towards their crew. Recommended
precautions need to be followed.
Notice Of Readiness; when NOR is given, vessel must be both physically and legally
When the NOR is given, the vessel must be physically ready but
also legally ready. It is common to provide for the commencement of laytime
“whether in free pratique or not”. Even where there is no such express
provision, if those matters are reasonably believed to be “mere formalities”
and routine, NOR may be given without having obtained the necessary clearances.
However, where there is a known, or even perhaps just a suspected problem, this
“mere formalities” exception to the general principle of readiness will not
the purpose of saving life is justifiable
A deviation for the purpose of saving life is justifiable. Many
standard charters will give the owner the right to deviate in such
circumstances (Gencon 1994 clause 3 and NYPE 1946 clause 16). Unless the
charter states otherwise, the vessel will not be off hire if the ship has to
deviate in order to save the life of an infected crew.
need to add a clause providing for additional freight when a vessel deviates to
save the life of a crew
With regards to owners under a voyage charter, although the
deviation would be justifiable, owners would not be able to claim additional
freight. Owners may want to add a clause providing for additional freight if
the vessel is forced to deviate to save the life of a crew who was infected as
a result of visiting a port.
a bill of lading contract, a similar deviation would be justifiable (article IV
rule 4 of the Hague Visby Rules).
Safe Port: coronavirus could render the port unsafe
The coronavirus could render the port unsafe. Under most
standard charter party forms charterers are generally obliged to nominate a
safe port. The owners must generally comply with the order to proceed to a port
unless there is an unacceptable risk that the port is unsafe. The master does
not have to instantly obey charterers’ orders if he is in doubt of the
prospective safety of the port. He will have reasonable time to make
the port becomes unsafe during the stay, charterers to order the ship to leave
under time charter parties
Under time charter parties, if the port becomes unsafe after the
first nomination, charterers then have an obligation to nominate another (safe)
port. If the port becomes unsafe during the stay, charterers must order the
ship to leave.
In the case of a voyage charter party, where the port has already
been nominated, the view is that charterers have no general duty or right to
re-nominate. If the charter (and the B/L) have a liberty clause (e.g. “so near
thereto as she may safely get”), then the owner may discharge the cargo at some
Frustration and force majeure
Frustration occurs when without default of either party; the
performance of a contract is rendered impossible or changes the party's
principal purpose for entering into the contract so as to render it “radically
charter is frustrated, main factor is whether the interruption substantial in
relation to the remainder of the charter period.
The outbreak of the virus could leave to substantial delays due
to quarantine for example. A charter may be frustrated if the performance of
the charter is sufficiently delayed. The main factor is whether the
interruption will be, (or likely to be) substantial in relation to the
remainder of the charter period. The length and effect of the interruption must
be assessed at the time that the cause of the delay operates and without the
benefit of hindsight. If at the outset of an event, the delay appears likely to
be of short duration, the contract will be frustrated when subsequently it
appears that the delay will be inordinately lengthy.
may frustrate a voyage charter while it
may not a time charter
Princess quarantined off Japan coast
The virus may not necessarily render the charter frustrated
depending on the terms of the charter. The coronavirus may frustrate a voyage
charter whilst it may not have any effect on a time charter with a wider
trading limit. In effect, if the charter permits the ship to trade between
other places then the charter will not be frustrated even though the charterer
may find it hard to find an employment for the ship.
With regards to whether this disease would be a force majeure
event, this would greatly depend on the wording of the clause.