This post first appeared in September 2014 Asdem Newsletter. To see this Newsletter please go to www.asdem.co.uk and look for the ‘Newsletters’ tab
The outbreak of Ebola is a tragedy for the people of West Africa and I hope the virus can soon be contained and those infected treated effectively. I’ve been looking at how this may affect laytime and demurrage in our industry and I have to say the more I think about it the less clear I am. Here are links to the relevant pages at Ince and Skuld, just two of a number of organisations that have put out notes on this subject:
http://incelaw.com/en/knowledge-bank/publications/shipping-issues-arising-out-of-the-ebola-outbreak-in-west-africa
http://www.skuld.com/topics/people/diseases/insight-ebola-virus/
Asbatankvoy at clause 17(a) states ‘QUARANTINE. Should the Charterer send the Vessel to any port or place where a quarantine exists, any delay thereby caused to the Vessel shall count as used laytime; but should the quarantine not be declared until the Vessel is on passage to such port, the Charterer shall not be liable for any resulting delay.’
Other charter parties have similar wording, see ExxonMobil Voy2012 clause 23, Shellvoy6 clause 23 and BPVOY4 clause 29.
What is a port with a quarantine? I found the following definition:
Quarantine: ‘a harbour restriction placed on a ship which has an infectious disease on board or has arrived from a port or country which is notoriously unhealthy’, “Oxford Companion to Ships and the Sea” edited by Peter Kemp, Oxford University Press.
In practice I understand that the restriction placed on a vessel under quarantine is that it would have no physical contact from the shore and therefore would be unable to work cargo until cleared by the health authorities. I have never had experience of a case of quarantine but it would seem to me that quarantine could be declared by ports other than those directly affected by the Ebola virus. I understand that as an example a European port could declare quarantine for all vessels arriving from the infected areas and delays could occur to that vessel irrespective of the state of the health of those on board. The vessel may be free of disease but the authorities may need time to properly establish that. Where does that leave the ship owner?
Under the c/p’s quoted above I would say that generally (and check the wording) if the vessel is ordered to a port where quarantine already exists then any delays will count as laytime and/or demurrage. If, on the other hand, the declaration of quarantine is made while the vessel is on passage any delay will be for the Owner. This is my interpretation even in those cases where the c/p requires the vessel to have Free Pratique in order to tender NOR such as Shellvoy6.
What happens if the vessel fails to obtain Free Pratique or granting of Free Pratique is delayed because the vessel has the disease on board? The clauses quoted above do not differentiate between a delay by the port procedure v. a delay actually caused by the vessel and I assume that they must be read as they are printed in that delays fall to the Owners or Charterers according to the timing of the declaration irrespective of whether Free Pratique is granted or not.
Under common law and following the “Delian Spirit” case the granting of Free Pratique has been considered a formality and the delay in granting Free Pratique should not invalidate the NOR. If, however, the vessels fails Free Pratique then there is a good case for alleging the invalidity of the NOR.
In the dry cargo world charters often incorporate WIFPON which means the NOR can be tendered “Whether in Free Pratique or Not”. Even this clause has doubters on both sides. On the one hand this could be read literally and the NOR is valid whether or not the vessel is able to get Free Pratique. The counter argument is that the NOR never becomes valid and this seems to be supported by Schofield 6th Edition at 3.187 where he considers WIFPON. He says ‘It is doubtful whether the phrase would extend to allowing time to commence where pratique was actually refused or where there were grounds for believing that it would be at a later date.’
I read this week that some specific agreements between Owners and Charterers are being drafted and this article from IHS Maritime 360 may be of interest: http://www.ihsmaritime360.com/article/14411/tanker-owners-charterers-disagree-on-ebola-liability
In summary, I don’t feel that the current printed charter party forms cover all eventualities clearly and I would urge both owners and charterers to get some clear wording agreed to avoid costly disputes later. If you have any comments or experiences of delays and how they have been resolved please post them here.