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Ince: Novel Coronavirus (2019-nCoV) Legal issues and Impact on International Trade & Transportation

WHO has declared the outbreak as a Public Health Emergency of International Concern and has proposed certain Temporary Recommendations be issued.

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Wai Yue Loh, Kimarie Cheang, and Cindy Wang, of international law firm Ince on Friday (31 January) published an article reviewing potential contractual issues for the maritime sector due to Novel Coronavirus (nCOV) outbreak:

The novel coronavirus was first reported in late December 2019. The outbreak of the virus originated from the inland city of Wuhan, the capital of the Hubei province, PRC, but has quickly spread to coastal cities within China such as Shanghai, Guangzhou, Shenzhen, Tianjin, etc. Additional cases are identified in a growing number of countries internationally.

By 30 January 2020, the World Health Organisation (WHO) has declared the outbreak as a Public Health Emergency of International Concern (PHEIC) and has proposed certain Temporary Recommendations be issued.

We highlight below some potential contractual issues for consideration.

Safety of the port – Can an Owner refuse to go to an affected port?

Generally, under a time charter, an Owner is obliged to comply with a Charterer’s legitimate employment orders, unless compliance with the Charterer’s order exposes the ship to a safety risk.  It is currently unclear whether the virus is at a stage where it may render a port ‘unsafe’. Although the WHO has declared the outbreak as a PHEIC, it has at the same time recommended that no travel or trade restriction be imposed. However some countries are already implementing a ‘No travel’ policy to China.  Various shipping ports have imposed additional checks and quarantine measures on vessels arriving from China, or those with Chinese crew on board. 

It is accordingly difficult to determine the ‘unsafety’ of an affected port.  This will depend on the facts bearing in mind the evolving situation. If an Owner refuses to follow a Charterer’s order without sufficient grounds, the Charterer may well be entitled to terminate the contract and/or claim damages (depending on whether such conduct can be said to be repudiatory or renunciatory) so an Owner should carefully review its contractual position.   Equally, if an Owner does follow a Charterer’s order(s) and suffers loss as a result, it would most likely be entitled to an indemnity from the Charterer (depending on the terms of the contract).

Quarantine, Off Hire, and Laytime & Demurrage – What happens if a crew member becomes infected?

Under a time charter, an Owner will generally be responsible for matters relating to the crew.  If a crew member becomes infected, the Owners should ensure that the crew member is quarantined and arrange for the treatment and repatriation of the crew member.  Where the illness results from a Charterer’s order, the Owner may be able to claim any costs of repatriation, medical expenses, etc., from the Charterer depending on the terms of the charter. 

Where the ship is in port at the time the symptoms of the virus are discovered on board, it is unlikely that a valid NOR could be tendered.  Laytime & demurrage will therefore not run until a valid NOR can be tendered.

Further, where a vessel has to deviate to obtain medical assistance for its crew member, would the Charterer be entitled to place the ship off hire?  This depends. If the crew member becomes infected as a result of a Charterer’s order, then the deviation may not give rise to off hire unless the Owner is deemed to have accepted the risks of going to an affected port. 

Of course the legal regime is dependent upon individual Charterparty wordings and it would be prudent for all new fixtures to incorporate the BIMCO Infectious or Contagious Diseases Clause.  The provisions were developed following the outbreak of the Ebola virus a few years ago, and are intended for use in response to extreme illness as opposed to more commonly encountered widespread diseases and are based on the principles in BIMCO’s war and piracy clauses.

Force Majeure – Can an affected party rely on FM?

Given the recent declaration by the WHO, force majeure provisions are likely to be increasingly relied upon and invoked by an affected party.  The China Council for the Promotion of International Trade (CCPIT) announced that it would be offering “force majeure certificates” to businesses in China affected by the outbreak of the Coronavirus in Wuhan.  

Whether a party can successfully invoke FM and/or rely on the CCPIT certificates to do so, will depend on the governing law of the contract and the terms of the relevant clause.

As a matter of English law, force majeure is a creature of contract.  Generally a party who seeks to rely on a FM clause bears the burden of showing:

  1. It could not perform its obligations due to the relevant event.
  2. Inability to perform was beyond its control.
  3. There were no reasonable steps the party could have taken to avoid the event or the consequences.

Our initial view is that where the outbreak escalates and has real implications on the operation of businesses (such as the shutting down of business operations as a direct result of the outbreak), this could well fall within the scope of a FM clause. 

Parties are therefore urged to review their FM provisions carefully to ensure that any notification and/or mitigation requirements are complied with, and to gather as much documentary evidence as possible to evidence any relevant FM event. 

Key Takeaways

There is potentially a high degree of business interruption that will ensue, bearing in mind for example that Singapore has now closed its borders to all who have been in China for the last 14 days, the recent British Airways’ suspension of direct flights to and from mainland China, and Hong Kong’s plans to slash cross-border travel between the city and mainland China.  This would all have a significant impact on enterprises, in particular those with staff and management who may have been in China over the festive period. We are already starting to see declarations of force majeure from Chinese entities involved in the shipping and trading spheres.

We reiterate that for your existing contracts, it would be important to identify the risks and exposures arising from the developing situation. Some of these potential issues have been identified above. To reduce the potential for disputes, parties can consider inserting provisions to deal specifically with these issues.  As for your new contracts – if the intention is to insert a clause to deal specifically with the risks of the Coronavirus, it would be important to be clear as to what you are seeking to achieve and to draft the clause(s) accordingly.

This above is not a complete list of issues to be aware of arising from the Coronavirus, and should you have any queries, please do not hesitate to contact the authors of this article.

 

Source: Ince
Photo Credit: Photo by Bill Oxford on Unsplash
Published: 4 February, 2020

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Fuel Testing

Singapore: CTI-Maritec shares testing protocols ahead of mandatory enhanced bunker fuel checks

In light of mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, CTI-Maritec shares recommendations for fuel testing protocols, primarily focused at COCs and SAN detection for bunker supply in Singapore.

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With mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, bunker fuel testing and marine surveying business Maritec Pte Ltd (CTI-Maritec) has published a newsletter providing recommendations on vital pre-emptive fuel testing measures vessels should be taking as part of their routine fuel testing and also recommendations on optimal testing options available when deep-dive analysis is required to determine a root cause: 

Introduction

On 8 February 2024 the Maritime and Port Authority of Singapore (MPA) issued a Port Marine Circular No 3 of 2024 regarding the implementation of enhanced testing parameters for marine fuel batches intended to be delivered as bunkers in the Port of Singapore in addition to the existing quality assurance measures.

In accordance with the MPA’s Port Marine Circular No 3 of 2024, from 1 June 2024 onwards, bunker suppliers in the Port of Singapore must ensure that:

  • Residual & Bio-residual bunker fuel do not contain Chlorinated Organic Compounds (COC) above 50mg/kg and are free from inorganic acids.
  • COC must be tested using the EN 14077 accredited test method and shall be reported in the “Certificate of Quality” (COQ) provided to receiving vessels.
  • Inorganic acids must use the ASTM D664 accredited test method as prescribed in ISO 8217 and the Strong Acid Number (SAN) (in addition to the Total Acid Number (TAN) shall be reported in the COQ (i.e. SAN = 0) provided to receiving vessels. For distillate / bio-distillate bunker marine fuel batches, SAN must be tested as per ASTM D664 test method and reported in the COQ.
  • Residual marine fuels are free from polystyrene, polypropylene & polymethacrylate. These can be tested by filtration, microscopic examination, & Fourier-Transform Infrared spectroscopy analysis.

Testing Recommendations in line with MPA Enhanced Parameters to Protect Your Vessels:

In view of the above, CTI-Maritec recommends fuel testing protocols as depicted in the chart below (as routine pre-emptive measures and/or for deep dive requirements to detect the root cause) to help safeguard vessel health.

Our recommendations are primarily focused at COCs and SAN detection for bunker supply in Singapore, while recommendations for testing Polymers are advised for requirements of reported problem cases or when highly abnormal GCMS findings of chemical compounds like Styrene, DCPD and Indene are detected.

COC & SAN GCMS testing Packages A to E

Related: Singapore: CTI-Maritec publishes whitepaper on upcoming mandatory enhanced bunker fuel tests
Related: Singapore: Marine fuel quality testing agencies applaud move for mandatory enhanced bunker fuel tests
Related: Singapore: MPA tightens testing parameters to reduce contaminated bunker fuels
Related: MPA: Glencore and PetroChina supplied contaminated bunkers to about 200 ships in the Port of Singapore

 

Photo credit: Louis Reed from Unsplash
Published: 29 May 2024

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Methanol

VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Firm was appointed by OCI Methanol Europe to conduct a quantity and quality assessment of a methanol bunker fuel delivery to “Eco Maestro” in Singapore.

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VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Marine fuels testing company VPS on Tuesday (28 May) said it was appointed by OCI Methanol Europe, part of the OCI Global Group, to conduct a quantity and quality assessment of a methanol fuel delivery to Eco Maestro in Singapore.

Captain Rahul Choudhuri, President Strategic Partnerships, VPS, said VPS survey experts Rafael Theseira and Muhd Nazmi Abdul Rahim were at hand during the methanol bunkering to ensure the 300 metric tonnes of methanol transfer was carried out smoothly, having been involved in the first methanol bunkering a year ago. 

Manifold Times recently reported X-Press Feeders, Global Energy Trading Pte Ltd (GET), and PSA Singapore (PSA) successfully completing the first simultaneous methanol bunkering and cargo operation (SIMOPS) in Singapore.

A X-Press Feeder container vessel, Eco Maestro, on its maiden voyage from Asia to Europe was successfully refuelled with close to 300 mt of bio-methanol by GET, a MPA licensed bunker supplier, using MT KARA

The ISCC-certified bio-methanol used for the SIMOPS was produced by green methanol producer OCI Global and supplied via GET, a ISCC-certified supplier.

Captain Choudhuri said the role of the marine, petroleum or bunker surveyor has evolved over the years in shipping and maritime affairs, but the principles have not - and that is to provide independent assessment of the quality and quantity of the product transfer. 

“This may seem obvious but this quality and quantity control is crucial to avoid commercial discrepancies, shortages or fraud,” he said.

“Safety training is critical and we have been on top of this having completed the required MPA fire-fighting course and the IBIA Methanol training course. We will work more with the Singapore Maritime Academy for trainings in future,” he added.

In August last year, Singapore-headquartered independent common carrier X-Press Feeders launched its first ever dual-fuel vessel Eco Maestro in China.

Manifold Times previously reported VPS stating it was the first company to complete a methanol bunker quantity survey (BQS) operation in Singapore on 27 July last year.

VPS was appointed by Maersk and Hong Lam Marine Pte Ltd, to undertake the very first bunker quantity survey (BQS) of a methanol fuel delivery, supplied by Hong Lam to the Maersk vessel on its maiden voyage to Europe. 

Related: First SIMOPS methanol bunkering operation completed in Singapore
Related: VPS completes quantity survey on Singapore’s first methanol bunkering op
Related: Singapore bunkering sector enters milestone with first methanol marine refuelling op
Related: X-Press Feeders launches its first methanol dual-fuel vessel “Eco Maestro” in China

 

Photo credit: VPS
Published: 29 May 2024

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LNG Bunkering

Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Agreement builds on the success of the previous contract Gasum has had with Equinor; Gasum’s bunker vessels “Coralius”, “Kairos” and “Coral Energy” will be used for the bunkering operations.

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Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Nordic liquefied natural gas (LNG) bunker supplier Gasum on Tuesday (28 May) said it signed a long-term contract with Norway-based global energy company Equinor whereby Gasum continues to supply LNG to Equinor’s dual-fuel chartered fleet of vessels. 

The agreement builds on the success of the previous contract Gasum has had with Equinor. Gasum’s bunker vessels Coralius, Kairos and Coral Energy will be used for the bunkering operations.

The agreement also includes additional support services such as cooling down and gassing up, which has also been a part of Gasum’s previous collaboration with Equinor. 

Gasum has organised three separate LNG cool down operations for Equinor in Skagen so far this year.

Both Gasum and Equinor have committed to sustainability goals to enable a cleaner energy future. Equinor’s ambition is to become a net-zero emissions energy company by 2050.

Using LNG in maritime transport means complete removal of sulfur oxides (SOx) and particles, and reduction of nitrogen oxides (NOx) emissions of up to 85 percent as well as a reduction in CO2 emissions by at least 20%. LNG is interchangeable with liquefied biogas (LBG/bio-LNG), which reduces carbon dioxide emissions by 90% compared to conventional fuel such as marine gasoil (MGO).

With LNG and bio-LNG the maritime industry can reduce emissions already today, instead of waiting for future solutions. Gasum’s strategic goal is to bring yearly seven terawatt hours (7 TWh) of renewable gas to market by 2027. Achieving this goal would mean combined carbon dioxide reduction of 1.8 million tons per year for Gasum’s customers.

Related: Equinor Energy AS extends LNG bunkering agreement with Gasum
Related: Gasum expands LNG bunkering business to ARA region through partnership with Equinor

 

Photo credit: Gasum
Published: 29 May 2024

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