Japan is one of the world’s largest importers of commodities, more particularly where it comes to commodities like oil, coal and LNG. As a consequence the impact of the earthquake and tsunami on these trades is severe. The more considering the impact on the infrastructure, a.o. hindering carriers to deliver goods to Japanese based receivers.
This may have serious consequences for traders in that area as well. For example traders who have chartered vessels may be accountable for demurrage up to significant levels. In dealing with this dynamic situation in Japan, the legal consequences under charter parties should be considered.
Safe port of call
Time charter forms typically impose a duty on the charterer to nominate safe ports only, often through an express clause thereto. The classic test is that a port is safe in the relevant period of time so that the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to unavoidable danger. This could mean that a port at which there is a risk of radiation poisoning is unsafe both for the crew and the vessel itself, so that the time charterers are under a duty to nominate an alternative safe port of call.
Some, but by no means all contracts contain force majeure clauses which exclude one or both parties’ liability under specified circumstances. The wording of the clause in question however must be specific enough to cover the particular event.
For example the standard Bimco 'Supply Time' form includes a rather specific force majeure clause which states that neither party shall be liable for any loss, damage or delay due to force majeure events or conditions to the extent that the party invoking force majeure is prevented or hindered from performing any or all of their obligations under the charter party, provided they have made all reasonable efforts to avoid, minimize or prevent the effect of such events or conditions, like: Acts of God, earthquakes, landslides, floods or other extraordinary weather conditions. The events such as those presently occurring in Japan may well come within the ambit of this force majeure clause, which explicitly refers to earthquakes and floods.
However, certainly not all charter forms include such an explicit or specific force majeure clause, and more general worded force majeure clauses do not necessarily provide a valid excuse to avoid demurrage, or to declare the vessel off hire, nor do they necessarily avoid the running of lay-time. So it makes sense to verify whether a charter party specifically provides for force majeure and under what particular circumstances.
In this connection also the issue of deviation of a vessel under a charter party should be considered. In many charter forms deviation is only allowed in case of an actual danger or emergency.
For example the standard Bimco charter form 'Gencon 94' contains a rather liberal deviation clause which states that the vessel's owners have the liberty to call at any other port or ports in any other order, for any other purpose and also for the purpose of saving life or property.
At first hand it may seem straight forward to allow deviation where the vessel was originally destined to call a Japanese port with a risk of radiation poisoning. However, the more remote the location of such port, the more uncertainty exists on the legal position to validly call for deviation. In this connection particular deviation clauses in charter parties, such as the above mentioned Gencon clause, should be assessed where it comes to the liberty to deviate.
In the end it all depends on the particular factual circumstances and the specific conditions of the specific charter party at hand.