The Corona measures are having an increased effect on inland shipping with the number of shipments decreasing and numerous other challenges being faced by shipowners. In several cases referred to us, charterers have attempted to terminate the charter party agreement or to add additional clauses in order to restrict their liability costs and delays caused by corona measures.
Many charter party agreements already contain a clause for force majeure, for example:
“The Parties hereto are not responsible for failure to perform hereunder due to force majeure, which includes, but not be limited to any blockade of waterways, strike, ice, war or threat of war, or any other cause, all of which shall be beyond the reasonable control of such party.”
Under Dutch law an appeal on force majeure may be relied upon when a voyage becomes impossible due to circumstances which are out of their control. A lawful appeal to force majeure holds that a party cannot be held liable for damages arising from the non-performance and it also gives the right to (temporarily) suspend performance. The party invoking force majeure will bear the burden of proof. Whether or not an appeal on force majeure is justified, depends on all circumstances and the relationship between the parties. A charter agreement for cargo should for example be assessed differently than a passengers agreement. For force majeure to apply it is not enough that a voyage will be longer or more expensive, it is necessary that the circumstances have made performance impossible.
Due to the fast changing circumstances and measures we note that a lot of charterers try to limit their liability by adding a new force majeure clause to their charter party agreements, such as the following:
“If the charterer is prevented from fulfilling its obligations under this agreement as a result of the effects of the corona crisis or of corona measures, this shall constitute force majeure. The Charterer shall not be held liable for any delays or damages arising therefrom. The charterer may suspend its undertakings under this agreement as long as the force majeure endures without being liable for any damages.”
By including such a clause it will be easy for the charterer to avoid liability for delay or non-performance caused by effects of the corona crisis.
We do not recommend accepting such unilateral clauses. When it is impossible to avoid accepting such a clause, parties should identify the major risks upfront and mitigate them as much as possible such as by making arrangements beforehand with regard to alternative port or laytime and demurrage. Should you have any questions, please contact EOC or the NNPC.