This article examines the impact of the recent Ebola outbreak in West Africa and its effect on parties’ contractual obligations under time charterparties.
Ebola is a viral disease which spreads through contact with bodily fluids, or via contaminated environments. A recent World Health Organisation report records more than 6,000 deaths in Guinea, Liberia and Sierra Leone.
Refusal to call at Ebola-affected ports
Masters may be reluctant to call at ports in Ebola-affected regions. Under a time charter, however, Owners must comply with Charterers’ employment orders and can only refuse to do so where compliance may expose the vessel or crew to danger.
Time charterers are usually under an express obligation to order the vessel to “safe” ports. Factors to consider when deciding whether an Ebola-affected port is safe are:
- Risk of infection - proximity to infected areas, previous cases of infection, risk of stowaways, risk of shore personnel contact;
- Risk of vessel detention or quarantine either at the port or a subsequent port;
- Protective measures in place.
The evolving geographical spread of Ebola can make it difficult to evaluate any particular port’s safety at any one time. The question of safety, therefore, is largely one of fact and degree.
Owners should consider the facts and their contractual rights carefully before deciding to deviate. An unjustified deviation would probably constitute a repudiatory breach following which the Charterer could terminate and claim damages (which may be substantial).
A deviation may also prejudice a vessel’s P&I cover. Accordingly, it is recommended that Owners’ P&I Clubs are consulted before a deviation is contemplated.
Owners may also have a contractual obligation to deliver cargo to third parties at a named discharge port recorded in a bill of lading. Failure to do so could result in cargo claims, and claims for losses arising in respect of deviation and transshipment.
Whilst Charterer’s primary obligation is to pay hire throughout the charter term, the vessel may be off-hire in cases of quarantine, vessel detention, crew illness, port closures etc.
For example, the “off-hire” clause in the NYPE 1946 provides that off-hire shall arise for loss of time resulting from “deficiency of men…preventing the full working of the vessel." Where there is no numerical deficiency, but a number of the crew are ill, it is doubtful that there would be a "deficiency of men" under the clause. Even if such illness constituted a "deficiency of men", this deficiency would still have to prevent the full working of the vessel for her to be offhire.
A vessel may also be off-hire where the catch-all wording "any other cause" is qualified with the word"whatsoever", in which case “any other cause" could include the actions of the port authorities, e.g. in detaining the vessel.
The off-hire provisions of Shelltime 4 may allow Charterers to place the vessel off hire if delay results from her quarantine. However, this will only apply where the delay arises from the master or crew communicating with the shore of the infected area without the prior written consent of the Charterer or Charterers’ agents.
Owners should consider this when considering whether to allow crew shore leave involving disembarkation in Ebola-affected regions. If Charterers have not consented to this and the vessel is subsequently detained, the vessel may be off-hire.
It should not be presumed that the presence of Ebola in a particular country will necessitate deviations or trigger off-hire clauses. A director of a coastal West African oil trader commented: “The Western media appears to have overplayed the Ebola outbreak...it is certainly business as usual for the locals.”
We recommend obtaining advice on the incorporation of bespoke Ebola clauses in charterparties to manage risk. Ebola clauses can clarify the parties’ obligations relating to time lost, costs arising from fumigation, quarantine, medical treatment (including deviation) and preventative measures. Ebola clauses can also make clear when a vessel is obliged to proceed to an Ebola-affected region and conversely, when the Charterers are obliged to nominate an alternative port.
Research by Joanne Button, Trainee Solicitor.