Covid-19 and delays under time charters.

Another London Arbitration award concerning the effects on charterparties of the outbreak of Covid-19 in 2020.

London Arbitration 4/22, involved events in the early stages of the outbreak of Covid-19, before the declaration of a pandemic. The vessel arrived at the discharge port in China on 4 March 2020. Due to anxiety about the outbreak of Covid-19 the third officer checked the temperature of each pilot when they came aboard with a contactless hand-held infrared thermometer and it was alleged that each pilot had temperatures in excess of 37.5C which the master said exceeded the maximum allowed by the owners’ company policy. The master then insisted that the pilots take their temperatures with mercury thermometer before embarking on vessel.  The pilots refused to do so and the vessel missed its berthing slot. After owners had sent an apology for the benefit of the piloting company on an entirely without prejudice basis, replacement pilots boarded the vessel on 13 March to bring it into berth.

The vessel had been chartered for a time charter trip on amended NYPE form and charterers argued that it had gone off-hire for three reasons. First there had been a default of officers or crew under cl. 15. The tribunal held that there was no such default which would involve a refusal by the crew to perform their duties to the shipowner, as defined in The Saldanha [2011] 1 Lloyd’s Rep 187. In contrast, here the master and third officer were clearly seeking to implement company policy. rather than refusing to discharge their duties owed to the shipowners.

Secondly, by reference to cl.58 which provided: “58. Deviation/Put Back: Should the vessel put back whilst on voyage by reason of … the refusal of the Captain, Officers or crew to do their duties without any specific or valid ground for rejection, or any Owners’ matters unless caused by default of Charterers and/or their staff and/or their agents, the payment of hire shall be suspended from the time of inefficiency in port or at sea until the vessel is again efficient in the same position or regains a point of progress equivalent to that the hire ceased hereunder …” The tribunal rejected charterers’ argument as there was no refusal of the master, officers or crew to do their duties within the meaning of clause 58.

Thirdly, by reason of deviation/put back provisions under cl.15 whereby hire would be suspended:  “Should the vessel deviate or put back during a voyage, contrary to the orders or directions of the Charterers, for any reason for other than accident to the cargo..” The tribunal found that there was little logical or practical difference between the vessel being physically diverted away from its course rather than simply failing to proceed forward on that course, and if necessary would have found that the vessel went off-hire under this provision.

In the event, the tribunal was not required to express a firm view on the point and determine the matter on the basis of off-hire. Instead it found that charterers were entitled to damages for owners’ breach of cl.8 as the refusal of the master to allow the pilots to remain on board and, to proceed to berth on 4 March was a failure on the part of the owners to follow the charterers’ legitimate orders and directions. There was no risk to the ship, crew or cargo in those orders to justify the action of those on board the vessel and the delay that resulted from those actions. A general fear of Covid-19 did not provide the owners with carte blanche to refuse to perform under the charterparty, and unilaterally to impose their own conditions for the attendance of the pilots. The charterers were entitled to recover in damages the value of hire and bunkers for time lost.

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Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to five editions and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment. He has also written and taught extensively on commercial law, trusts and environmental law. Simon will be a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he will teach on both the LLM (Carriage of Goods by Sea, Land and Air and Oil and Gas Law) and LLB programmes at Swansea.

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