Shipping lines apply "Ebola clause" to fend off virus risks

U-Ming Marine Transport

04/11/2014 14:30

* Ebola clauses becoming more common in shipping contracts 
    * Concerns about who would be liable in event of disruption 
    * West African iron ore miners already hit by Ebola problems 
 
    By Jonathan Saul and Edward McAllister 
    LONDON/NEW YORK, Nov 4 (Reuters) - As Ebola persists in West 
Africa, shipping lines and traders are tweaking their contracts 
to protect themselves if the disease puts crews at risk of 
infection or prevents vessels calling at affected ports. 
    Ebola has not yet forced ports to close, but uncertainties 
about the spread of the virus are adding to legal and financial 
concerns for those involved in shipping oil, cocoa and minerals 
from the region. 
    Iron ore miners have already been hit by logistics problems 
exacerbated by the Ebola outbreak.  ID:nL6N0RU59K     
    "Ebola clauses have now become a very common phenomenon," 
said a senior freight manager with a leading commodities trader. 
"It is to protect the safety of the crew and also the earnings 
of owners." 
    Shipping lines active in West Africa, such as oil tanker 
firm Stena Weco, have written clauses into their contracts 
requiring charterers to nominate alternative safe discharge 
ports if Ebola means they cannot call at the intended port, 
according to a contract seen by Reuters. 
    Global trade house Trafigura  TRAFGF.UL  said it also had 
inserted Ebola clauses, although it declined to give details.    
    With the Ebola outbreak -- that has killed nearly 5,000 
people since March, mostly in Guinea, Liberia and Sierra Leone 
-- still evolving, companies are concerned that any disruption 
it does cause would not be covered by standard contracts. 
    "It may be unclear whether contracts as currently drafted 
address the rights and obligations of parties in this unique and 
constantly evolving situation," said Jonathan Moss of law firm 
DWF. 
    "Parties may disagree as to whether the adverse consequences 
of Ebola fit within 'force majeure' or other provisions in 
contracts." A force majeure frees a company from contractual 
deliveries due to actions beyond its control. 
    Among the stipulations in the various Ebola clauses being 
adopted by ship owners are requirements for firms chartering 
their ships to find alternative ports if there is risk to the 
crew, to keep protective equipment on board, pay for medical 
expenses that crew members may incur, as well as other 
unforeseen costs including possible fines and delivery delays. 
    "Exactly how a situation will look like if the ship is 
ordered to a place where the crew will be in danger is yet to be 
seen, but we will not take any risks to crews going there if we 
ever come to such a situation," said Stena Weco's Managing 
Director Erik Hanell. 
    
    POTENTIAL DISPUTES 
    The International Maritime Organization has urged against 
any general ban on international travel or trade due to Ebola. 
    "The movement of ships, including the handling of cargo and 
goods, to and from the affected areas, should continue as 
normal, in order to reduce the isolation and economic hardship 
of the affected countries," the IMO's Andy Winbow said. 
    U.N. Secretary-General Ban Ki-moon reiterated that message 
on Monday, saying: "I have been urging all major international 
airlines and major shipping service lines to continue their 
normal trade and movement and transportations." 
    But ports across the globe have tightened entry procedures 
for ships that have sailed from West Africa. Some have halted 
entry altogether in some instances. 
    Malta stopped a cargo vessel that was travelling from Guinea 
to Ukraine from entering its harbour for a medical emergency in 
September due to fears the sick person on board could have been 
infected with Ebola.  ID:nL6N0RJ3UN  
    Last month, Mexico and Belize refused to allow the Carnival 
Magic cruise ship to dock, over Ebola concerns.  ID:nL2N0SD0QJ  
    The restrictions have so far been limited, but that has not 
stopped some shipping companies altering their strategies to cut 
the possible risks from Ebola.  
    Ong Choo Kiat, president of U-Ming Marine Transport 
 2606.TW , one of Taiwan's largest shipping companies, said it 
was excluding calls to countries affected by the disease.  
    Precious Shipping  PSL.BK , one of Thailand's largest dry 
cargo owners, states in its new charters that its ships are not 
to trade to Ebola infected countries, Managing Director Khalid 
Hashim said.  
    "There will be disputes aplenty should any ship get infected 
on board with Ebola due to calling at any country under the 
orders of charterers, or should a ship that has called an Ebola 
infected country get quarantined/delayed at a subsequent port," 
Hashim said in an email to Reuters.  
    In a September regulatory filing, shipping group Star Bulk 
Carriers Corp  SBLK.O  said that if there was a risk to crews 
from Ebola, its vessels might not be able to call at ports in 
affected areas, potentially hitting its bottom line.   
     "These uncertainties could also adversely affect our 
ability to obtain additional financing on terms acceptable to us 
or at all," Star Bulk said.          
    Oil and gas group Kosmos Energy  KOS.N  said in a regulatory 
filing in October its exploration, development and production 
projects in West Africa could be delayed or interrupted should 
Ebola continue to spread, which could "significantly increase 
costs".   
 
 (Additonal reporting by Keith Wallis in Singapore and Fredrik 
Dahl in Vienna; Editing by Robin Pomeroy) 
 ((jonathan.saul@thomsonreuters.com; + 44 207 542 4357 ; Reuters 
Messaging: jonathan.saul.thomsonreuters.com@reuters.net)) 
 
Keywords: HEALTH EBOLA/SHIPPING