Covid-19 and quarantine in an off-hire context

In the latest issue of Triton from The Swedish Club, Haris Zografakis, Partner, Stephenson Harwood, London, and Oliver Hutton, Swedish Club Claims Manager, Team Piraeus took a long an interesting look at how, and why, quarantines might or might not be off-hire events.

The writers observed that a specific reference to “quarantine” did not appear in a widely used time charterparty before 1984, when Shelltime 4 featured the word. However, the writers noted that wordings such as these could create more questions than they answered. What, for example, was ‘legal action against … the vessel’ (and had such action caused the authorities to detain the vessel)? And when, and how, did a vessel return to being in an ‘efficient state’ (assuming quarantine made it inefficient in the first place)?

Several pre-Covid cases were referred to – the Apollo in 1972, the Aquacharm in 1982, and the Laconian Confidence in 1997, which the writers analyzed in detail, focusing in particular on the use of the word “whatsoever”.

In the case of the Laconian Confidence,  the Commercial Court decided that:

“a vessel’s working may be prevented by legal as well as physical means, and by outside as well as internal causes. An otherwise totally efficient ship may be prevented from working’ and can be off hire – but only if the prevention results from any other cause ‘whatsoever’, a word meaning that the ‘other cause’ eventuating a loss of time does not have to be similar to the causes (like deficiencies of men or breakdowns) previously enumerated.”

“In the absence of the word ‘whatsoever’, the unexpected and unforeseeable interference by the authorities at Chittagong at the conclusion of what was found to be a normal discharge was a totally extraneous cause’. And rightly so. A port authority refusing outward clearance due to cargo residues remaining in a vessel’s holds cannot have been within the contemplation of the drafters of the words ‘any other cause”.

The writers said that “the off-hire preventing solution for owners is simple: delete ‘whatsoever’ from clause 15. Owners should also hold on to or amend their exclusion clauses. In most time charters, paramount clauses will incorporate the Hague-Visby Rules, and Article IV rule 2(h) will, or should, relieve owners for loss or damage arising from quarantine restrictions.”

It was noted that so far as Shelltime was concerned, there was a possible conflict in Clause 27 (a) in neither Owners nor Charterers being liable for ‘any loss or damage or delay or failure in performance’ resulting from quarantine restrictions. This confusion could be clarified by deleting ‘Charterers’.

The writers concluded that there might be no generic off-hire clause that would be able to capture the complexities of Covid, and it might well be that quarantine was not an apt term to describe all the nuances of a vessel affected by Covid restrictions. “In the context of an exceptions clause (which an off-hire clause is), this may prove problematic. As viruses mutate, contracts need to evolve.”

https://www.swedishclub.com/media_upload/files/Publications/Triton/Triton_3_2021_WEB.pdf#page=28