117626472v1

1. 117626472v1

2. EBOLA EPIDEMIC IN THE COMMERCIAL SHIPPING CONTEXTDavid PitlargePartnerMarine, Trade & Energy

3. 1. Introduction • The Problem: • Highly contagious virus : first case in Guinea in February • According to the World Health Organisation, until September 21 there have been 6,263 cases with 2,917 deaths • Widespread in West Africa • Recorded cases intensifying • Problem and responses fast changing ( e.g three cruise lines, Regent Seven Seas, Seabourn and Fred. Olsen, have cancelled port calls in West Africa), difficult to establish a fixed factual background.

4. 1. Introduction • Principal areas affected:

5. 1. Introduction Responses • Port closures, curfews and quarantine restrictions • Singapore: Circular 11/2014. “Plague infected area within 60 days”…wait at quarantine anchorage for PHO clearance. • Mauritania, Gabon, Ivory Coast and Cameron…closed • China- increased vigilance on quarantine • Effect on trade(s) / travel • Recommendations of supra-national bodies – WHO, IMO, ICS Third party states: US intervention • Industry circulars • Recommended clauses

6. 2. Legal Context • Particular problems do not displace principle “There is no relevant concept of fairness other than the contractual balance struck …. construed in accordance with well known orthodoxy”. [Owners’ Counsel in the Saldanha”]

7. 2. Legal Context • Distinguish • Domestic laws/local regulations and/or ad hoc stipulations from • the governing contractual law/terms • and • The position concerning a voyage to an Ebola port from • the subsequent destination

8. 3. Port Safety • Can an Ebola port be unsafe?

9. 3. Port Safety • Classic Definition “…unless ,in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship” “The Eastern City” [1958] 2 Lloyd’s Rep 127

10. 3. Port Safety • Definition concerns “the particular ship”, not crew…BUT • “Political risks” can amount to unsafety, and • Therefore the definition goes beyond “marine” risk -see The “Evaggelos Th” [1971] 2 Lloyd’s Rep 200 • Term implied, but also “vessel can lay safely afloat” wording • ordered to Suez • CTL due to shell fire starting after arrival

11. 3. Port Safety Other political risk cases: • “The Greek Fighter” [2006] 1 Lloyd’s Rep. 99 – risk of confiscation for storing contraband • “The Chemical Venture” [1993] 1 Lloyd’s Rep. 508 – missile damage during Iran/Iraq War • “The Saga Cob” [1991] 2 Lloyd’s Rep. 398 – damage from guerilla attacks at Massawa • “Will not in circumstances such as the present, be regarded as unsafe unless the “political” risk is sufficient for a reasonable ship owner or master to decline to send or sail his vessel there” • Look for characteristics

12. 3. Port Safety • Mixed question of fact of law: • The elements of unsafety are questions of law • Applying them to the given situation is a question of fact

13. 3. Port Safety • Consider how the warranty might be framed without reference to the vessel • is there factually a breach? • Probability? • Abnormal occurrence / characteristic of the port • “The Saga Cob” test? Reasonable for owners not to go (WHO/ IMO recommendations)

14. 3. Port Safety • Due diligence proviso (e.g. cl.4 Shelltime 4) • Context: • Why/when are we asking the question • Before entry to the Ebola port (risk of repudiation) • After – damages for breach • Primary duty/secondary duty • Waiver • Implied indemnity • “port” vs “berth”

15. 4. Off-Hire • Starting point: the clauses/ off wordings themselves • Is it an off hire event? • “Whatsoever” in the NYPE cl 15 type scheme (see the “The Apollo” [1978] 1 Lloyd’s Rep… quarantine after crew members contract typhus) • Shelltime 4 cl 21(a) iv “due to any delay in quarantine arising from the master, officers or crew having had communication with the shore at any infected area without the written consent or instructions of Charterers or their agents…” • See also Supplytime cl.13 (a) (ii)

16. 4. Off-Hire General principles • “preventing the full working of the vessel” ( consider “in the ordinary way an activity required by the charterer”) • Time lost • Deficiency/ default of men • Time lost due to : • a natural result of charterers’ orders • charterers’ responsibility

17. 5. Other Charterparty and Bill of Lading issues (a) Notices of readiness: free pratique, quarantine and doctrine of relative readiness (see “the Delian Spirit” [1972] 1 QB) • Vessel has to be ready, subject to contrary provision e.g. WIFPON • NOR not prevented if only “mere formalities” required… Ebola quarantine unlikely to be a “mere formality” • Specific clauses e.g. Asbatankvoy clause 17(a)

18. 5. Other Charterparty and Bill of Lading issues (b) Additional remuneration/quantum merit • Vessel cannot earn demurrage, say, because cannot tender NOR • Additional remuneration earned in “The Saronikos” [1986] 2 Lloyd’s Rep. 277 • Vessel requested to wait off Aqaba for 9 days – owners entitled to reasonable remuneration • Difficult: emphasis on charterers’ request/ implied contract analysis

19. 5. Other Charterparty and Bill of Lading issues (c) “So near thereto as she can safely get” • Bound to wait a reasonable time before adopting alternative place of loading/discharge • Reasonable time for commercial considerations • Obstacle need not be physical • Can include another port “within an area or zone or within a range of proximity not beyond the reasonable contemplation of the parties as fair and reasonable”

20. 5. Other Charterparty and Bill of Lading issues (d) Deviation • “Art IV r4” “Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or a breach of these rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom” • “The true test seems to be what departure from the contract voyage might a prudent person controlling the voyage at the time make and maintain, having in mind all the relevant circumstances existing at the time, including the terms of the contract and interest of all parties concerned, but without obligation to consider the interests of anyone as conclusive” (Stag Line -v- Foscolo Mango] [1932] AC 328)

21. 5. Other Charterparty and Bill of Lading issues (d) Deviation • Deviation can be reasonable even if planned before the voyage began or BL issued • Significance of deviation

22. 5. Other Charterparty and Bill of Lading issues (e) Breach of contract of carriage/voyage obligations/ HR/HVR • Exclusions within HR/HVR: Art IV r2 • (g) “the arrest or restraint of Princes… or seizure under legal process” • (h) “quarantine restrictions” • Subject to due diligence obligations. Consider applications of recommendations – possible alignment to e.g. issues relating to BMP4 in piracy context

23. 5. Other Charterparty and Bill of Lading issues (f) International Code for the Security of Ships and of Port Facilities/ISPS Code • Basic obligation: owners’ duty to carry out a risk assessment which considers the ship’s crew and considers potential threats including stowaways • ISPS clauses – possible damages for breach • Note current recommendations

24. 6. Adoption of specific clauses • No Bimco clause as yet • Charterers taking up clauses

25. 6. Adoption of specific clauses • Issues to consider: • Actual risk…just Ebola? • Where : define affected area • Terms like “ may or likely to be exposed to” and “such” • Define the liberties • Notice to charterers • Non waiver / no deviation • Additional costs / time…indemnities • Nomination of alternative disport Amend laytime / demurrage clauses

26. 7. Domestic Laws and Local Regulations • These do not re-write any contract, although they might have an effect on the performance • “The Van Gogh” [2008] EWHC 2794 – “dangerously unsafe”, this from s 94 of MSA 1995…is it really relevant?

27. 8. Crew Issues • Consider terms of crew contracts • ITF Collective agreement includes MLC minimum standards • Prompt access to medical care • Owner responsible for costs related to sickness connected to employment • Cannot limit to less than 16 weeks’ pay • Repatriation and compensation for death in service • ITF high risk areas…consider passing on extra costs, if any

28. 9. Sale Contracts • Will impact on the trade • Potential disconnection between force majeure provisions within contract and laytime/demurrage provisions within charterparty

29. 10. Insurance Issues • Some club rules provide exclusions for “imprudent, unsafe, unduly hazardous or improper voyages” • Usually determined as such by the board • Marine Insurance Act 1906 limits the warranty to legality (see s. 41)

30. 11. Some tentative conclusions • Up to date factual situation important to any analysis.. • ..that will feed into difficult questions about going to Ebola port. This will remain an issue. • Questions of delay will arise: these will be determined by considering interaction between facts , as above, and exact wording. Avoid issues by bespoke wording. • Frustration, breach and deviation issues less likely. • However, owners should be vigilant and keep up to date with recommended practice.

31. For further information please contact:David Pitlarge - Partner Hill DickinsonDirect Dial +44 (0)20 7280 9251Email david.pitlarge@hilldickinson.comFax +44 (0)20 7283 1144Website www.hilldickinson.com