Legal advice from Reed Smith following delays at Australia’s Port of Newcastle

Vessel owners, charterers, buyers and sellers would be anticipating “significant delays” at Newcastle and other Australian bulk export ports on account of the flooding affecting much of Australia, particularly railways linking producers with the ports, said Jeb Clulow, a London-based partner in Reed Smith’s Transportation Industry Group.

He said that questions inevitably would arise as to how contracts allocated risk for delay.

Clulow recommended that interested parties should consider whether:

  • the contract contains a Force Majeure (FM) clause;
  • it operates in the event of delay in performance;
  • the relationship with any laytime & demurrage clause;
  • the FM event falls within the scope of the FM clause;
  • the invoking party could have performed but for the event, and;
  • whether any failure to perform could not be overcome through alternative means.

“To the extent the FM clause applies the invoking party must comply precisely with the notice requirements laid out in the clause”, said Clulow.