Because of whose COVID? Quarantine and offhire under a trip time charter.

London Arbitration 27/22 is the latest in a series of arbitration awards being published which deal with the effects of delays due to COVID-19 on vessels under time charter trips. The vessel here was chartered for a time charter trip on amended NYPE form in March 2020 for loading in South America and discharge in the Far East. In April 2020 the vessel arrived at the load port and was quarantined after the bosun tested positive for COVID 19. The charterers argued that the vessel was off-hire for the period of quarantine from 12 April to 1 May 2020. As well as the standard NYPE offhire clause 15, the charter contained two rider clauses, a pestilence and disease clause cl 78; and cl.114 which provided:

“Notwithstanding anything in this charter to the contrary, in the event that, at any time during the currency of this charter, the vessel suffers any loss of time (directly or indirectly) in connection with procedures (including, but without limitation, inspections and/or quarantine and/ or disinfection) imposed on the vessel, cargo or officers/ crew by any port authority or other authorized authority, body or agency, in order to combat avian influenza (or other similar disease) (influenza procedures), the vessel shall not be off hire for any such loss of time and any such loss of time (and the consequences of any such loss of time) shall be for charterers account and, irrespective of whether or not there has been any loss of time charterers shall be liable for the cost of all such influenza procedures which may be charged to or levied against the vessel or owners or officers/crew or cargo provided always that the vessel shall be off hire in respect of any such loss of time and shall be responsible for all influenza procedure costs which arise solely as a consequence of the vessel’s or officers/crew’s history prior to delivery under this charter …”

The tribunal found that the opening wording of cl.114 ‘notwithstanding anything in this charter to the contrary’ meant that the clause provided a complete code to allocate the rights and obligations of the parties as regards loss of time due to quarantine imposed in order to combat avian influenza (or other similar disease) (influenza procedures). Covid-19 being a similar disease, cl.114 covered the off-hire position due to the quarantine at the loading port. The vessel would remain on hire as regards any loss of time due to such quarantine procedures, with the sole exception being that owners would bear the loss of time and associated costs if these arose as a direct consequence of the vessel’s or officer’s or crew’s history prior to delivery.

Entries in the medical log from mid to late March 2020 recorded the third engineer as having a dry cough, a possible indicator of COVID-19,  and this was advised to the port health authorities along with details of the last historical crew shore leave back in December 2019. The vessel arrived on 12 April 2020 but on 16 April 2020 the port health authority decided that due to the log entries regarding the third engineer’s coughing symptoms, which happened prior to delivery, the entire crew should be tested for COVID-19. On 17 April 2020 19 of the 20 crew, including the third engineer, were found to have tested negative, but the bosun tested positive and as a result the vessel was quarantined for 14 days. The bosun tested negative on 27 April but the port authority maintained the quarantine until 1 May when they granted free pratique.

Clause 114 required the tribunal to address whether the quarantine directive was imposed as a result of the ship’s medical records, which disclosed the pre-delivery coughing symptoms of the third engineer, or for some other reason. The port health authority showed no further interest in the third engineer after his negative result on 17 April and its focus of interest was entirely on the bosun due to his positive test. Had all the crew tested negative it is likely that free pratique would have been granted on 17 April. As the quarantine directive did not therefore arise as a consequence of historical events prior to delivery, the charterers had not brought themselves within the exceptions provision of clause 114 and the vessel remained on hire between arrival on 12 April and the granting of free pratique on 1 May.

Published by

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 seven editions (soon to be eight) 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, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

Leave a Reply