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Contactless bunkering operations at Singapore port ‘raises questions’ on remedies in event of breach

21 Jul 2021

The following advice on legal responsibility during contactless bunkering operations at Singapore port amidst the Covid-19 pandemic has been written by Paul Collier, Senior Associate at global law firm Clyde & Co; the write-up was made possible through an arrangement led by the Singapore Chamber of Maritime Arbitration (SCMA):

The risk of COVID-19 spreading during bunkering operations remains a significant concern for vessel operators, bunker suppliers and authorities, particularly where vessels have previously called at ports with high infection rates.

In addition to the health impact on crew and shore staff, the transmission of COVID-19 during bunkering operations can also cause significant financial impact. If cases of COVID-19 are identified, crew are likely to be ordered to quarantine or self-isolate, and vessels and bunker barges prevented from performing their planned future employment. Bunker suppliers are concerned of the risk of repetition of the circumstances of the “NewOcean 6”, where several crew members tested positive for COVID-19 and the bunker tanker was forced to cease operations and quarantine.

Generally, standard bunker terms and conditions do not include express terms dealing with the risk of COVID-19 transmission. However, given the serious consequences and financial impact potentially arising from the transmission of COVID-19 during bunkering operations, bunker suppliers and purchasers may wish to consider including additional contractual obligations requiring their counterparties to comply with COVID-19 protocols.

The Maritime and Port Authority of Singapore has issued circulars which provide that contactless bunker operations must be carried out. The MPA circulars provide (amongst other things) that a receiving vessel’s crew must not board a bunker barge (and vice-versa), and that the receiving vessel’s crew (instead of the bunker barge crew) are to connect the fuel hose at the receiving vessel’s manifold.

It is in the interest of all parties to take all steps to reduce the risk of transmission of COVID-19 and comply with the MPA circulars in Singapore. However, there is a question as to what remedies a bunker supplier or purchaser will have if their counterparty breaches COVID-19 protocols, resulting in COVID-19 transmission. Under the standard wording of many bunker contracts, it may be difficult for bunker suppliers or purchasers to recover any losses which result from a failure or lapse in the counterparty’s compliance with COVID-19 protocols. Further, the ability to claim damages may be limited by contractual provisions restricting the ability to recover consequential losses.

If they are not already doing so, bunker suppliers and purchasers may therefore wish to press for express contractual wording providing that for bunkering operations taking place in Singapore, the other party will comply with all their obligations under the latest MPA circulars, so that if there is a breach of COVID-19 protocols by the other party leading to COVID-19 infection of their crew, there is a clearly identifiable breach of contract which they can use as an avenue to seek to recover losses. Separately, bunker suppliers may wish to consider whether their contractual terms should be amended to protect their position if there is any loss arising from a failure of the receiving vessel’s crew to properly connect the fuel hose, and whether any additional arrangements need to be made in respect of witness sampling at the receiving vessel’s manifold, given the movement restrictions between vessels.

Paul Collier
Senior Associate,  Clyde & Co Clasis Singapore Pte. Ltd.
Direct Dial: +65 6544 6569
Email: Paul.Collier@clydeco.com

 

Photo credit: Manifold Times
Published: 21 July, 2021

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