Ever Given Suez delays – who pays?

BIMCO’s Nina Stuhrmann in Copenhagen, Denmark has written a piece on who might end up footing the bills for the widespread delays caused by the six-day blockage of the Suez Canal from march 23rd to March 29th.

Independent shipowner association BIMCO noted that, although the containership Ever Given was freed after six days, the consequences for owners and operators due to the delays caused might last for several weeks or even months.

Stuhrmann said that who will end up paying for these delays would largely be a matter of what is written in the charter party and what insurance cover is in place

The Time Charter Position

Is an owner potentially exposed to the risk of cancellation if the ship is unable to make the latest delivery date under a time charter party or will be late arriving under a t/c voyage due to the Suez blockage?

BIMCO said that, under a standard time charter party such as NYPE the late delivery or late arrival of a ship might place owners at risk of cancellation.

It was unlikely that owners would be in breach of any obligation to perform the voyage with due dispatch, since owners would be following charterers’ employment orders.

BIMCO recommended that owners and charterers talk to each other as soon as possible to address the practical and financial consequences of the incident.

Can the time charterer of a ship delayed by the Ever Given incident place the ship off-hire for any lost time spent waiting to transit the Suez Canal?

BIMCO said that, where the parties had contracted under a standard time charter party such as NYPE, BALTIME or BOXTIME it was very unlikely that the time charterer sould be able to put the ship offhire due to the delay caused by the Ever Given incident.

This was because the delay had arisen not from an issue directly related to the ship itself (eg a breakdown) but was because of an extraneous event, without the fault of the owners or the ship. Any delays and issues would have arisen from charterers’ order to transit via the Suez Canal. “So, unless there is express wording to the contrary in the charter party, this will not be an off-hire event”, said BIMCO.

Is an owner potentially exposed to cancellation if the ship will not arrive until after the voyage charter cancellation date due to the Suez Canal delays?

BIMCO said that under a standard voyage charter parties such as GENCON, late arrival of a ship might place owners at risk of cancellation, adding that it could be that the laycan could be extended by agreement.

Under a voyage charter party for a vessel, who bears any additional time and costs waiting to transit the Suez Canal due to the Ever Given delays?

BIMCO said that, where the parties had contracted under a standard BIMCO voyage charter party such as GENCON, the likelihood was that time lost and additional costs would be for the owners’ account.

Can an owner be in breach of his obligation to proceed with reasonable/due/utmost dispatch under a voyage charter party or bill of lading?

BIMCO said that, under voyage charter parties and bills of lading, owners had an implied obligation to proceed with reasonable dispatch to the load and discharge ports. “It seems unlikely that owners could be held in breach of such a term where they were physically unable to transit the Suez Canal due to the Ever Given”, said BIMCO

BIMCO pointed out several times the importance for owners to open a dialogue with the charter party counterparty and customers “to help find an amicable solution to practical and cost issues as they arise”.