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Shipowners should prepare for charter party issues from Wuhan coronavirus

As the Wuhan coronavirus crisis in China deepens rapidly shipowners have been warned to be prepared to face issues such as quarantine and closures and resulting charter party issues.

Beth Bradley, a partner with law firm Hill Dickinson, outlined various issues owners could face based on previous outbreaks such as SARS and Ebola.

If a crew member is believed to be exposed to the virus it raises the possibility of quarantine for the entire crew and vessel.

Bradley explained that under charter parties if a vessel is delayed by quarantine or forced to deviate due an infected crew member the ship can be placed off hire depending on the wording of the charter party.

“Common wordings of charter parties have been held to place the vessel off-hire due to legal or administrative restraints if they related to the efficiency or condition of the vessel or crew. In spite of this, should the delay be the inevitable result of orders resulting from how the charterers chose to employ the vessel, the vessel may remain on hire.”

Under a voyage charter any deviation will be at the shipowners expense and no additional freight is payable unless a “reasonable deviation” defence can be raised under the Hague or Hague-Visby rules Hill Dickinson explained.

A contagious disease such as the coronavirus could render a port legally unsafe, however, safety measures can be taken to enable a port to remain safe.

“Such measures were taken during both the Ebola and MERS outbreaks, and numerous ports remained open despite being affected by the outbreak,” the law firm said.

“At present, the Wuhan virus is not at a stage where it may render a port unsafe, and the severity of the outbreak would need to escalate significantly before owners could reasonably refuse to call at scheduled or nominated ports on the basis of the ports being unsafe.”

There is the possibility of a ‘Force Majeure’ clause being invoked where the contract is suspended by an extraordinary event beyond the parties’ control.

John Agapitos, Hill Dickinson paralegal, explained:” At this time, there have only been internal transport bans affecting certain Chinese cities around the centre of the outbreak. There has not yet been a travel ban to China or any other neighbouring countries. It is unlikely that any given situation will fall within the scope of a force majeure clause, unless the wording of a particular clause is quite broadly drafted.

‘However, if the outbreak escalates in the future and/or travel bans are imposed, questions of whether it amounts to a force majeure event may come to the fore."

China is scrambling to contain the virus which has now claimed 80 lives with more than 2,700 cases confirmed.

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