Worldwide there are approximately 3,000 merchant ports and the work of the Harbour Master can vary widely from country to country and from port to port even within the same country.
On 30 January, the China Council for the Promotion of International Trade released a statement confirming that the People’s Republic of China was offering force majeure certificates to local companies unable to fulfil their international contractual obligations due to the coronavirus outbreak. Relevant directives and certificates do not, for the time being, apply to Hong Kong law contracts where the counterparty is a non-Chinese entity.
The widening quarantine restrictions in China, together with airlines suspending and reducing flights to and from China and the closure of ports in Hubei province indicate disruption to import and export of crude, iron ore, soybean and steel, to name but a few. Given the importance of China, in addition to the human cost of novel coronavirus, the financial impact and disruption to global trade look set to continue.
Where parties are trading with Chinese entities, it appears that the Chinese state is endeavouring to facilitate the exercise of force majeure clauses in international sale contracts for local companies. The validity of claiming force majeure will be subject to the scope of the specific contractual provisions and evidence that alternative means of contractual performance were not available. In a statement issued by Hill Dickinson LLP on 5 February it was emphasised that the International Commercial Law Firm highlights the main issues which arise below.
In English law, force majeure is a contractual term that cannot be implied. It arises solely on the basis of provisions which are included in a contract and as such, there is no standard clause and force majeure provisions vary from contract to contract. The effect is usually to relieve a party from performance of their obligations when one of a defined number of events occur.
Whether the delay and disruption resulting from the novel coronavirus is a force majeure event will depend on the particular wording of a contract, and not the parties’ intentions. In circumstances where there is no specific reference to disease, epidemic or quarantine, the same may be caught by ‘Acts of God’, ‘Acts of Government’ or by general wording such as ‘other circumstance beyond the parties’ control’.
If a force majeure event can be identified, then it must be the only effective cause of default.
In Classic Maritime Inc v Limbungan Makmur SDN BHD  EWCA Civ 1102, the charterers argued that they should be relieved of their obligations to provide cargoes for shipment following a dam collapse. The Court of Appeal held that the clause was not a true force majeure clause, but was instead an exception clause and further that the charterers would not have been able to perform in any event. As such, a party may not be excused performance of its obligations under the contract despite the occurrence of an unexpected and extraordinary event, when it would not have been able to perform its obligations even in the absence of such an event.
The effect of a force majeure clause may vary from contract to contract. Some operate to suspend obligations during the period of the applicable event (for example the GAFTA ‘prevention of shipment clause’), some give rise to a right to terminate and some may relieve the non-performing party of liability. Almost all clauses require that notice be given of the force majeure event.
A force majeure clause usually requires the defaulting party to show that it used its reasonable endeavours to prevent, or at least mitigate, the effects of the force majeure.
In Channel Island Ferries Ltd v Sealink UK Ltd  1 Lloyd’s Rep 323, the Court of Appeal held that any clause which included language referring to events “beyond the control of the relevant party” could only be relied upon if all reasonable steps had been taken by aid party to mitigate its results.
If force majeure does not apply, then the doctrine of frustration may provide relief in circumstances where the issue goes to the root of the contract and renders it impossible to perform or the performance or essentially different to the contract envisaged. Whether frustration may apply is both fact and contract sensitive.
As disruption in China, a key market for import and export, is set to continue, traders and shippers alike should:
The information here was provided by Beth Bradley, Partner (London), Damien Laracy, Partner (Hong Kong) and John Agapitos, Paralegal, Hill Dickinson LLP.
About Hill Dickinson
Hill Dickinson LLP is a leading and award-winning international commercial law firm employing 850 including 185 partners and legal directors, with offices in Liverpool, Manchester, London, Leeds, Piraeus, Singapore, Monaco and Hong Kong.
Hill Dickinson delivers advice and strategic guidance spanning the full legal spectrum. The firm acts as a trusted adviser to businesses, organisations and individuals across the globe and from a wide range of market sectors, advising on non-contentious advisory and transactional work through to all forms of commercial litigation and arbitration.
IMO Secretary-General Kitack Lim has welcomed the World Health Organization’s decision to name seafarers as one of the groups of transportation workers that should be prioritised for Covid-19 vaccination in instances of limited supplies. This was reported on 22 July.
Updated guidance for Stage II of its vaccine roadmap from the WHO’s Strategic Advisory Group of Experts on Immunization (SAGE) states: ‘Seafarers and air crews who work on vessels that carry goods and no passengers, with special attention to seafarers who are stranded at sea and prevented from crossing international borders for crew change due to travel restrictions.’
IMO Secretary General Lim commented: ‘I am glad to see that the WHO recognises the importance of vaccinating seafarers on cargo ships.
‘These individuals are responsible for transporting over 80% of all goods around the world, including food, medicine and vaccine supplies – and have continued to do so despite extremely challenging circumstances. Seafarers will play a key role in the global recovery, and barriers to international travel and crew change must be removed.’
On 28 September 2019, a cargo tank containing styrene monomer on board the Cayman Islands registered chemical tanker Stolt Groenland ruptured causing an explosion and fire. The tanker was moored alongside a general cargo berth in Ulsan, Republic of Korea and the Singapore registered chemical tanker Bow Dalian was moored outboard. Ignition of the styrene monomer vapour resulted in a fireball, which reached the road bridge above. Both vessels were damaged, and two crew suffered minor injuries. Fifteen emergency responders were injured during the fire-fighting, which lasted for over six hours.
Rupture of the styrene monomer tank resulted from a runaway polymerisation that was initiated by elevated temperatures caused by heat transfer from other chemical cargoes. Elevated temperatures caused the inhibitor, added to prevent the chemical’s polymerisation during the voyage, to deplete more rapidly than expected. Although the styrene monomer had not been stowed directly adjacent to heated cargo, the potential for heat transfer through intermediate tanks was not fully appreciated or assessed.