London Arbitration 27/22

The subject vessel was chartered for a voyage estimated to be for 65-70 days, where they would load in South America then discharge and redeliver in the Far East. 

The vessel arrived at the load port on April 12, 2020 and was immediately quarantined by port health authority due to the bosun testing positive for COVID-19. The vessel remained in quarantine until May 1 and was redelivered to the owner on August 14, 2020. 

The owner claimed a balance of hire of $275,108. However, the charterer claimed that the vessel was off hire during the quarantine period and counterclaimed for damages due to the crew’s history before delivery.

Relevant charterparty provisions:

Clause 15

“That in the event of the loss of time from default and/or deficiency of men including strike of officers and/or crew or deficiency… by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost …”

Clause 78 – Pestilence and Illness

“Normal quarantine time and expenses to enter port shall be for Charterers’ account. Any extra time or detention and/or expenses for quarantine due to pestilence and illness of the vessel’s Master, Officers and crew shall be for Owners’ account but if quarantine detention is due to the vessel having been sent by Charterers to an infected port, such detention time and expenses shall be for Charterers’ account.”

Clause 114

“Notwithstanding anything in this charter to the contrary, in the event that, at any time during the currency of this charter, the vessel suffers any loss of time (directly or indirectly) in connection with procedures (including, but without limitation, inspections and/or quarantine and/ or disinfection) imposed on the vessel, cargo or officers/ crew by any port authority or other authorized authority, body or agency, in order to combat avian influenza (or other similar disease) (influenza procedures), the vessel shall not be off hire for any such loss of time and any such loss of time (and the consequences of any such loss of time) shall be for charterers account and, irrespective of whether or not there has been any loss of time charterers shall be liable for the cost of all such influenza procedures which may be charged to or levied against the vessel or owners or officers/crew or cargo provided always that the vessel shall be off hire in respect of any such loss of time and shall be responsible for all influenza procedure costs which arise solely as a consequence of the vessel’s or officers/crew’s history prior to delivery under this charter …”

The tribunal found that the medical log documented coughing symptoms by the third engineer multiple times beginning on March 16, 2020. However, the master submitted documents to the port health authority claiming that no ill persons were aboard, and the last historical shore leave of the crew was October 29, 2019.

Since the third engineer presented one symptom, the port health authority advised COVID-19 testing for the whole crew. The entire crew except for the bosun tested negative for both COVID-19 antibodies, and the bosun tested positive for one of the COVID-19 antibodies on April 17. 

The vessel was ordered to quarantine for 14 days even though the bosun had a negative COVID-19 PCR test on April 24. 

The owner claimed that they were entitled to hire throughout the quarantine period, and clauses 15 and 78 were not relevant due to the implementation of clause 114. The charterer claimed that the loss of time was due to the crew’s history prior to delivery and thus only the exclusion of clause 114 was relevant and clause 15 stated that the vessel would have been off hire. Further, the charterer stated that the cost of the lost time was the responsibility of the owner by clause 78. 

Both parties agreed that Clause 114 was to cover a loss of time due to quarantine procedures imposed by a competent health authority in order to prevent the spread of avian influenza (or similar diseases). In the event of such a quarantine, per Clause 114, the vessel would not be off-hire, with related costs for the charterers’ account.  The sole exception was if the off-hire/loss of time could be directly attributed to the history of the vessel/officers/crew prior to delivery.  If this exception was valid, costs would be for the owners.

The tribunal held that the wording of “Notwithstanding anything in this charter to the contrary” qualified it as a complete code to determine the charterer’s liability to pay hire and the associated costs.  Further, the tribunal had to decide whether quarantine was imposed because of standard procedure or because of what was recorded in the medical log.

The tribunal concluded that despite the history of the third engineer, the port health authority ordered the quarantine solely due to the positive antibody test of the bosun. This aligned with the charterer’s expert evidence that claimed the port health authority’s decision was consistent with the guidance of the World Health Organization at that time. The counterclaim of the charterer, that the quarantine was due to prior history of the crew and was not within the exception provision of clause 114, was also dismissed. 

The tribunal concluded the vessel was on hire through the quarantine period.  The owner was awarded the sum of US$272,088.48 with interest and costs.