Covid-19 brings new liabilities to forefront Gallagher July View

Covid-19 has brought new liabilities to the forefront of the marine industry’s minds, according to Christine Kershaw, Lawyer/Mediator Director of MC Kershaw & Co Ltd – Consultant to Shipowners. Speaking to broker Gallagher for its July view, Kershaw said that as a result of this it was “natural for insurers/ flag states/class and ports to consider the ramifications. For instance, what happens when the crew of a vessel has Covid?”

Often ports would not permit the entry of the vessels or the transfer of the crew. If they did, then extensive measures would have to be taken to ensure that the vessel was completely sanitized, to enable pilots/ stevedores to come on board.

Kershaw said that this was reasonable, but expensive, costing in the region of $100,000 for some Chinese ports.

She said that it was also likely that many countries would introduce regulations to ensure that the whole crew of ships and cruise liners were vaccinated. This could be difficult, especially as in some countries, it might not be possible, as there were currently insufficient supplies of the vaccines.

“In addition, regulations are being brought in concerning crew changes. For example, this has occurred in Hong Kong, which released a mandate stating that only crew members that have had a Chinese Covid-19 vaccine are able to be changed. One can imagine the difficulties this will cause and, if it were to be breached, the fines that would be levied.”

Gallagher asked Kershaw what new or enhanced legal/liability issues did she see coming to the fore as the size of vessels continues to grow?

Her reply was simply “the bigger the ships, the larger the problem!”

Kershaw observed that the owners of very large vessels were now limited to the ports that were able to facilitate them. Often the vessels would go to ports that were never designed to take vessels of that size. As a consequence, whilst manoeuvring, it would be possible for them to go aground. If this were to occur, then the Owners’ liabilities could be extensive, said Kershaw. Just some of the liabilities could be damage to the vessel, cargo, crew, oil pollution and consequential loss.

Kershaw noted that owners could also be faced with contracting with salvors under LOF or by agreement – “costs of which are always high”.

Also, with larger ships, salvage/GA security had to be obtained from thousands of cargo interests, which could take months to resolve. This could delay delivery of cargo and cause additional expenses to be incurred.

“In addition, containers are being stacked higher and higher on deck. This in itself is causing problems, as if there were a failure in calculating the stowage and/or the securing stanchions fail, the containers may fall over board and/or destabilise the vessel. As a result, insurance premiums are likely to increase substantially”, Kershaw concluded.