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Web Alert: Qatar diplomatic crisis - legal implications

12 June 2017

As set out in the web alert on 8 June 2017 (here) the governments of Bahrain, Saudi Arabia, the United Arab Emirates, Egypt, Yemen, Libya and the Maldives have restricted or prohibited sea traffic between ports in their respective countries and ports in Qatar.

As set out in that briefing any members currently committed to fixtures involving calls at Qatar are advised to seek local advice from their agents and the club’s correspondents to confirm the applicable restrictions.

Terms Of Carriage
Members who have contracted to carry cargo to or from Qatar, but are unable to do so due to the restrictions, are advised to check carefully the written terms upon which they have agreed to carry the cargo (bill of lading, charterparty or other terms) and to take legal advice on how best to proceed if the terms are unclear.

In some contracts of carriage there will be provisions specifically dealing with the parties’ obligations, where government action will prevent cargo from being shipped or delivered. Members who are affected by the restrictions that have been put in place should check their contract terms carefully for such provisions.

For example, the BIMCO Sanctions Clause For Time Charterparties, to be found in some time charter terms, clearly sets out the rights and obligations that the owners and time charterers will have in the event of the charter being affected by 'any sanction or prohibition imposed by any State, Supranational or International Governmental Organisation'.

Change Of Destination
In particular, members should examine the relevant terms of carriage to see if, as a result of the restrictions put in place, they are entitled to deliver the cargo to a destination other than the destination originally agreed.

Prior to carrying cargo to a destination other than that originally agreed, it is essential that members check with the club that they have cover from the club to carry the cargo to the revised destination.

Liberty To Deviate
If it will assist members in dealing with the restrictions that have been put in place to deviate the vessel from its originally intended route, for example by changing the order in which the vessel will call at certain ports, many contracts of carriage contain clauses that allow this (commonly known as liberty clauses).

Prior to deviating a vessel from its intended route, members are advised to check carefully whether any relevant contract of carriage contains a liberty clause and, if so, the extent to which the clause allows the vessel to deviate.

Deviation And The Hague / Hague Visby Rules
Most bills of lading, and many charterparties and other contracts of carriage, incorporate the Hague or Hague Visby Rules or national legislation that gives effect to those Rules.

The Rules deal with the matter of deviation at Article IV Rule 4 which states:

'Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss of damage resulting therefrom'.

Members whose contracts of carriage incorporate the Hague or Hague Visby Rules or national legislation giving effect to those Rules will therefore be entitled - in the absence of any contrary terms in the contract that take precedence - to deviate vessels to deal with the restrictions that have been put in place, but only to the extent that the deviation is 'reasonable'.

Whether a deviation is reasonable, however, will depend upon the exact circumstances in which the deviation is made, and may be a difficult matter to judge.

embers are also advised to check with the club that they will not prejudice their club cover if they deviate a vessel from its originally intended route.

Defence Of Claims
If claims are made by cargo interests against members as a result of the restrictions that have been put in place, the nature of those claims may well be such that the terms of carriage (often incorporating the Hague or Hague Visby Rules) will give members a defence.

Members entering into arrangements with cargo interests to deal with cargo affected by the restrictions are therefore advised to state that any such arrangements are strictly without prejudice to the members’ legal rights under any relevant contracts of carriage.

Defence Of Claims And The Hague / Hague Visby Rules
As set out above, most bills of lading and many charterparties and other contracts of carriage incorporate the Hague or Hague Visby Rules, or national legislation that gives effect to those Rules.

Article IV of the Hague Rules and the Hague Visby Rules provides that:

'Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from-
...(g) Act or restraint of princes, rulers or people, or seizure under legal process...
...(q) Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of the this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage...'

The above provisions may offer a defence to members if a claim has been brought against them by cargo interests as a result of the restrictions that have been put in place, and the relevant contract of carriage incorporates the Hague or Hague Visby Rules or similar national legislation.

Charterparty Orders
Members whose vessels have been ordered by charterers to proceed to ports to which it is no longer possible to proceed, as a result of the restrictions that have been put in place, may be entitled to demand revised orders from those charterers: the written terms upon which the vessels are on charter should be examined closely in that respect.

For the same reason, members who have chartered vessels and ordered them to proceed to ports which it is no longer possible to proceed should closely check the relevant charter terms to see what obligations they may have to give revised orders.

The BIMCO Sanctions Clause For Time Charterparties (see above), to be found in some time charter terms, provides a clear regime for the giving of revised orders.

Time Charter Hire
Under time charters a question will also arise as to whether hire will continue to be payable for the vessel during any delays caused by the restrictions that have been put in place. In some time charter terms there will be a clear answer to this question (for example as set out in the BIMCO Sanction Clause For Time Charterparties). In others, however, there may not be a clear answer.

Termination Of Contracts Of Carriage
Members are advised to take legal advice before terminating any contract of carriage on the basis that the restrictions put in place have made the contract impossible to perform. Whether or not there is an entitlement to terminate a contract of carriage affected by the restrictions may involve difficult legal issues, and wrongfully terminating such a contract may result in heavy liability.

Where it is agreed that a contract of carriage affected by the restriction is to be terminated, care should be taken to specify the exact terms upon which it is to be terminated, and in particular whether either party is to have any liability to the other.

Further Guidance
The above notes are intended only for the general guidance of members in dealing with the restrictions that have been put in place, and their impact upon contracts of carriage. They are not a substitute for legal advice.

If members have a concern about their position under any particular contract of carriage (bill of lading, charterparty or other contractual arrangement) as a result of the restrictions that have been put in place, members are advised to seek legal advice, as the wording of any relevant contracts will vary widely.
If members have a concern about club cover, as a result of the restrictions that have been put in place, they are encouraged to contact their usual club contact or Matthew de Plater (Matthew.deplater@ctplc.com).​

The club is very grateful to Jon Boaden of Mills & Co Solicitors for providing this guidance note (jon.boaden@mills-co.com telephone: +44 191 233 2222).