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Article: Beirut explosion
News & Insights 12 August 2020
This article is intended to provide brief guidance to members on some issues which may arise as a direct consequence of the explosion in Beirut.
On 4 August 2020, an explosion in Beirut caused loss of life, damage to property and disruption to shipping. The explosion which occurred in a warehouse at the port storing nearly 3,000 tonnes of ammonium nitrate is yet another reminder of the fatal consequences that can result from improper storing of dangerous cargoes. This article is intended to provide brief guidance to members on some issues which may arise as a direct consequence of this incident.
Vessels calling to Beirut, Lebanon and issues of unsafe ports
We have been advised by our local correspondents that, save for the container terminal where some operations are being carried out, the Port of Beirut has been closed due to ongoing investigations and debris removal. Members are strongly encouraged to check the status of the port with their local agent before calling there as the situation is likely to change over time.
A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship. This is the test for port safety set out in the case of The Eastern City.
Unsafe port cases need to be examined individually depending on the factual circumstances and the terms of the applicable charterparty. Standard charterparty forms (for example the NYPE 1946) typically incorporate an express obligation (safe port warranty) on charterers to only nominate safe ports. In the absence of a safe port warranty in the charterparty, an implied obligation may be assumed by the charterers depending on the circumstances of the case and the terms of the relevant charterparty.
We recommend that members closely monitor the developments at Beirut before nominating or considering a call to Beirut. For more information on unsafe ports, please refer to the club’s publication 'Unsafe ports, a claims handling guide'.
As the Port of Beirut is closed, vessels due to call there are unable to do so. We understand that many are seeking to divert to Tripoli to discharge cargo. This could potentially give rise to issues under the relevant bills of lading and charterparties, and could also have consequences for P&I cover.
Careful consideration needs to be taken when reviewing the terms of the charterparty and the bills of lading. If the relevant charterparty / bills of lading incorporate a liberty clause, then calling at an alternative port may be justified. This, of course, would depend on the wording of the liberty clause, as some liberty clauses could have a limited scope. It should also be noted that courts have in the past interpreted the liberty clause against the party seeking to rely on it, where there is an ambiguity in respect to the wording of the clause.
Cargo liabilities arising as a result of deviation are excluded from club cover, per the exclusion to rule 3.13 (2), which states that ‘unless the board otherwise determines, there shall be no recovery in respect of liabilities arising out of a deviation, or as a consequence of a deviation from the contractually agreed voyage, which may deprive the member of the right to rely on defences or rights of limitation which would otherwise have been available to him, unless the managers have agreed that cover may continue unprejudiced.’ We would encourage members to liaise with their usual P&I contact if more information is required with respect to this exclusion, or if any additional cover may be required. In particular, members are reminded that club approval of a deviation must be sought and obtained in advance of the deviation being performed, in order to avoid the potential for cover to be prejudiced.
In addition, it should be noted that club cover may cease to apply due to the war risks exclusion (rule 4.3) if it becomes apparent that the explosion at Beirut was a deliberate act of terrorism. At present, it is believed that the explosion was unintentional, and club cover would consequently remain in place (subject to the usual exclusions, including as to deviations, referred to above).
Given the exceptional nature of the event, parties may seek to characterise the event as an example of force majeure, and to defend possible claims arising out of this incident on that basis. Members should note that force majeure as a legal doctrine is not recognised in all jurisdictions. Under English law, for example, there is no automatic right to vary or avoid contractual obligations when events occur that might be thought of as force majeure, and there is no standard definition as to what would constitute force majeure. Instead, courts or tribunals applying English law would look to the wording of the contract, and an express force majeure clause would usually be required if a party wishes to invoke force majeure successfully under the contract.
Consequently, if seeking to rely on a force majeure clause in a charterparty or other contract as a result of the events at Beirut, members should review the clause carefully to ensure that it encompasses the events in question.
The recent catastrophe in the Port of Beirut may give rise to issues in respect to the member’s contractual rights and obligation. Members are encouraged to carefully consider the terms of the charterparties and contact their usual club contact if they have any questions or concerns.