Across Africa, the continent is experiencing a steady increase in the cases of coronavirus including African coastal countries These increased cases have resulted in many African countries taking proactive steps to stem the spread of the virus within their territories including instituting lockdowns and closure of ports. These measures are impacting the businesses of maritime companies in those jurisdictions particularly those that have entered into some form of charter party arrangement or the other. This in turn will result in many maritime services companies making certain important considerations such as: the effect of COVID-19 on obligations under the contracts; whether force majeure can be relied on as a protection or a defence to the non-performance of the contract terms; and what factors are necessary to make a successful force majeure claim. This commentary attempts to answer these questions.
Some African countries and their responses to maritime activities during COVID-19
Considering the contractual issues for maritime companies that arise due to COVID-19 in Africa requires a brief explanation of the approach of African governments to maritime and port related matters across the continent. In Nigeria, the president on 29 March, 2020 declared a lockdown and banned movement of people and goods in some states of the Federation (Lagos, Abuja and Ogun States) excepting some category of persons and goods such as those engaged in the provision of essential services and those in the maritime sector. The exceptions covered certain seaports as well, providing for all seaports in Lagos to remain operational including a further mandate that all vehicles and drivers transporting essential services from these ports to other parts of the country be screened thoroughly by the Ports Health Authority.
The Nigerian Maritime Administration and Safety Agency (NIMASA) released a communique that only international marine vessels which had planned and informed the agency of their call into a Nigerian Port not later than 1st February, 2020 may be allowed to call on such port. No international marine vessel or any member of its crew or passenger therein having a travel history of visiting any of the COVID-19 affected countries since 1st Feb, 2020 shall be permitted to enter any Nigerian port from 30th March, 2020 till 12th of April, 2020. In addition, only international marine vessels having thermal screening facilities for passenger and crew may be allowed in the ports and shipping agent/master of vessels must submit all documents related to crew and passengers regarding their travel to or from the COVID-19 affected countries.
NIMASA also directed all passengers and crew members to fill the Self Reporting Form as prescribed by Nigerian Port Health Authorities, adding that Port Health officers shall carry out thermal screening of all the passengers and crew members on board ships, and none would be allowed ashore until clearance is given. The NIMASA press update can be found here.
In Cameroon, the government closed all borders to all passengers from 18 March 2020 and ordered that vessels from “countries at risk” must wait at buoy for a minimum of 14 days before being allowed to proceed into the channel. The country also put in place other measures including that after 14 days, port health service will board vessel at base buoy to consider clearance. Upon berthing, the port health service will be the first to board while other services will wait for the clearance before boarding. Delivery to the vessel at base buoy is prohibited while crew changes must be carried out under the full supervision of port health service. Only ships carrying consumer daily goods as well as essential goods and materials will be allowed in the ports with limited and supervised stop-over times.
South Africa, as at the date of this commentary has closed two of its eight seaports. It has also insisted that the two ports will only be closed to passengers. Passengers from ships that dock at Saldanha and Mossel Bay will not be allowed to disembark, and crew changes will be disallowed. However, the country will continue to allow the export and import of goods as it recognizes the importance of export to its economy and the need to keep up with imports of essential goods.
Although international flights have been banned in Kenya, the country is yet to declare a lockdown. However, its seaports are functioning at much reduced levels. The situation in Algeria is similar, where all air and sea links to Europe have been closed. The Port Management Association of West and Central Africa, a sub-regional intergovernmental organization, has stated that port platforms cannot shut down in the wake of the coronavirus crisis because they are critical infrastructures and necessary for the survival of nations and vital to the population and the economy. This however is subject to the decision of the government in an African country.
Across the African continent, there has been a significant reduction in the operations of some seaports. This reduction will invariably impact on the operations and contracts of maritime service companies. Considering the responses of African governments to maritime activities at this time, this commentary will, in subsequent paragraphs examine the commonly asked questions that players in the maritime sector are asking with a view to proffering solutions.
Charter party Arrangements
A charter party is a contractual document that sets out the terms on which a shipowner will allow the use of its vessel by persons requiring a ship for a specific time or voyage. Charter party arrangements are divided into three types: voyage charter party, time charter party and demise charter party with the most popular being time and voyage charter parties. In simple terms, a voyage charter is the hiring of a vessel from port of loading to port of discharge, and a time charter is the hiring of a vessel for a specific period. A bareboat charter or demise charter is the hiring of the vessel, without the crew, bunkers and provisions included in the agreement.
Where a port mandates a vessel to wait in buoy for a minimum of 14 days before being allowed to berth, does this amount to off-hire?
Generally, time charter party arrangements make provisions for what amounts to off-hire and a vessel will only be deemed to be off-hire where such circumstances fall within the off-hire provisions in the contract. The New York Produce Exchange Form (NYPE) 2015 for example, provides the circumstances where a vessel will be deemed to be off-hire. According to the NYPE, a vessel shall be deemed to be off-hire when the vessel experiences loss of time from deficiency and/or default and/or strike of officers or ratings, or deficiency of stores, fire, breakdown of, or damage to hull, machinery or equipment, grounding, detention by the arrest of the Vessel (unless such arrest is caused by events for which the Charterers, their sub-charterers, servants, agents or sub-contractors are responsible), or detention by Port State control or other competent authority for vessel deficiencies, or detention by average accidents to the vessel or cargo, unless resulting from inherent vice, quality or defect of the cargo, drydocking for the purpose of examination, cleaning and/or painting of underwater parts and/or repair, or by any other similar cause preventing the full working of the vessel.
Other instances where a vessel may be deemed as off-hire under the NYPE include:
- where the cargo handling gear of the vessel has been disabled or where there is insufficient power to operate the cargo handling gear and time is actually lost to the Charterers;
- where the vessel is requisitioned by the government of the vessel’s flag or other government to whose laws the owners of the vessel are subject during the period of the charter party; and
- where any time is lost due to a vessel being delayed or rendered inoperative by strikes, labour stoppages or boycotts, stowaways (where the Owner is culpable), smuggling (caused by the Master, officers and rating of the vessel), or any other difficulties arising from the vessel’s ownership, crew or terms of employment of the crew of the chartered vessel or by other vessel under the same ownership, operation and control.
Thus, under the NYPE, a government’s mandate that a ship be delayed for 14 days before being allowed to berth would generally not trigger the off-hire provision in the time charter party as it does not fall within any of the specific requirements for claiming off-hire nor would it qualify as an off-hire event under the “any other similar cause preventing the full working of the vessel” provision in the contract. However, where a sufficient number of the crew on a vessel were to be infected and thus, rendered unable to perform their duties, such a situation could constitute a “deficiency of staff or ratings” under the off-hire clause. It is important to note that where an event is not specifically named an off-hire event under contract, such event must qualify as a “similar cause” to other events specifically named, and must be capable of “preventing the full working of the vessel, in order to qualify as an off-hire event.”
Where a vessel is delayed not because of the 14 days berthing mandate of some countries but because there happens to be a queue of vessels waiting to berth and a vessel is required to join this berthing queue, loss of time in this regard would not qualify as off-hire under the NYPE. This is because in this case, it may be argued that a berthing in a queue with other vessels does not prevent the full working of a vessel. Thus, unless a party can bring itself within the off-hire provisions in the charter party, the ship will remain on hire.
Does COVID-19 trigger the Infectious or Contagious Diseases clause?
BIMCO Infectious or Contagious Diseases (IOCD) Clause for time or voyage charter parties 2015 permits the owner of a vessel to refuse to proceed to or remain at a port or place which “in the reasonable judgement of the Master/Owners” is an “an Affected Area”. Where the Infectious or Contagious Diseases clause is included in a voyage or time charter party, the provisions of the IOCD clause will govern situations when there are infectious or contagious diseases, such as the COVID-19 pandemic. BIMCO’s IOCD clauses were written at the time of the Ebola outbreak in 2014/2015 but drafted in deliberately general terms with the intention that they could be used for outbreaks of other virulent diseases in the future.
For the IOCD clause to be invoked, two factors must be present. There must be a disease which must fall within the IOCD clause’s definition of “Diseases” and there must be an “Affected Area.” The IOCD defines “Diseases” to mean a highly infectious or contagious disease that is seriously harmful to humans while “Affected Area” is defined as a port or any area in which the crew or other officers of a vessel run the risk of exposure to the Disease or a risk of being quarantined or other restrictions being imposed in connection with the Disease. Where a vessel under a voyage charter party is at risk of being quarantined at the load port, the owners of such vessel are allowed to cancel the cancel the charter party only if this risk did not exist at the date of the charter party.
Does COVID-19 Qualify as a Disease Under the IOCD?
COVID-19 may be considered as a Disease under the IOCD based on some of the actions taken by national and international bodies to classify the virus as an infectious disease and constrain its spread. The World Health Organisation has declared COVID-19 a pandemic and a Public Health Emergency of International Concern (PHIEC). PHIEC is defined as “an extraordinary event which is determined to constitute a public health risk to other States through the international spread of disease and to potentially require a coordinated international response”. This means that a PHIEC is a situation that is serious, sudden, unusual or unexpected; carries implications for public health beyond the affected State’s national border; and may require immediate international action.
African countries are also acting to declare COVID-19 an infectious disease within their jurisdictions. In Nigeria for example, the president, invoking the powers granted him by the Quarantine Act, issued the COVID-19 Regulations 2020, which declared COVID-19 an infectious disease. By virtue of these Regulations, the president issued certain directives to combat the spread of the disease and declared, amongst others, a state of lockdown in Abuja, Lagos and Ogun states. However, the directives provide that seaports should remain operational with the movement of persons and cargoes being screened by the Ports Health Authority. This generally exempts the Lagos seaport from designation as an an infected area within the definition of the Quarantine Act.
Which Ports may be Designated as Affected Areas under the IOCD?
The application of the principle of “Affected Area” will be treated on a case by case basis as courts and arbitrators will be tasked with deciphering whether the situation at a relevant port falls within the definition of Affected Area described above.. For example, it could be argued that where a vessel is unable to change its crew at a port in South Africa due to government restrictions regarding change of crew, such port may qualify as an affected area under the IOCD. It may also be argued that vessel crews run the risk of exposure to COVID-19 and/ or the risk of quarantine in ports across Africa as African countries impose tighter restrictions on port activities in response to the COVID-19 pandemic. Generally, a port or an area may therefore be declared an Affected Area where the public health authority of a country has declared such port as an infection risk area or that a port authority has placed arrival restrictions on ships coming from certain countries.
The Effect of designating a port an Affected Area
Where an area is declared as an Affected Area, the onus is on the owners of the vessel to decide whether or not the vessel should proceed or continue to the Affected Area and invoke the IOCD clause. The charterer under a time charter party is to be immediately made aware of the decision of the owners. The charterers are however entitled to issue alternative voyage orders where the vessel has been ordered not to proceed or continue to the Affected Area. Under a voyage charter party, where the owners invoke the IOCD clause, they have the right to cancel the voyage charter party before loading has commenced and without any further liabilities towards the charterers and vice versa.
If the loading port was already a known Affected Area when the charter party was concluded, the owners would not be entitled to cancel the charter party and the charterers would have a claim against the owners for breach of contract. If the loading port becomes an Affected Area only after the date of the charter party, then the owners’ cancellation would be in accordance with the IOCD clause and the charterers would not have a basis for a claim against the owners.
Will COVID-19 trigger a force majeure?
A force majeure event is an event which is unforeseeable and outside the control of a party claiming and which effect is to prevent the party from fulfilling its contractual obligations. It is the usual practice for parties to make provisions for force majeure events in their contracts and to also provide that such events, when they occur will not a make a defaulting party liable if they prevent it from performing its obligations under the contract. The concept of force majeure is derived from civil law and not fully recognised under common law. The concept recognised under common law is frustration and unlike force majeure, frustration brings the contract to an end “forthwith, without more and automatically.”
Since force majeure clauses are creation of contract, parties are free to include circumstances, which in their opinion, constitute force majeure events. Thus, a force majeure event is based on the provisions of contract. BIMCO has a standard force majeure clause which is based on the International Chamber of Commerce Model of Force Majeure Clause 2003. The force majeure clause of the International Chamber of Commerce Model of Force Majeure Clause 2003 indicates that plagues and epidemics constitute force majeure. For example, the force majeure clause in BIMCO’s 2015 Standard Time Charter Party for ROPAX Vessels (ROPAXTIME) includes plagues and epidemics in its definition of a force majeure event. Other events listed in its force majeure clause include acts of God, acts of Government, war, terrorism, sabotage, earthquake, fire etc. ROPAXTIME also includes a broad provision which caters for “any other similar cause beyond the reasonable control of either party.”
Where epidemics or pandemics are specifically mentioned as constituting a force majeure event, then a party may rely on the clause as a defence. However, where no relevant event is specifically mentioned, it will be a question of interpretation of the clause for the courts to decide whether the parties to the contract intended that such event be covered. This involves considering whether the list of events included was intended to be exhaustive or non-exhaustive. Unless specific words are used to suggest that a list is non-exhaustive, it may be difficult to argue that parties who have set out a list of specific events but did not include a particular event, such as an epidemic, nonetheless intended that event to be covered. Where “epidemic” or “pandemic” or “any other similar cause beyond the reasonable control of either party” is included in a charter party, proving a successful claim for force majeure will require that a party relying on the clause prove that:
- the force majeure event was the cause of the inability to perform its contractual obligations or caused a delayed performance;
- the non-performance of the contractual obligations was due to circumstances beyond the seeking party’s control; and
- the seeking party had taken every reasonable step to mitigate or avoid the event or its consequences.
In other to further rely on the force majeure clause, a party needs to fulfil the procedural requirements of the force majeure clause. In the case of ROPAXTIME, a party seeking to invoke force majeure shall notify the other party in writing within two days of the occurrence of any such event or condition. 
The effect of successfully relying on a force majeure clause is that the seeking party is excused from its obligations and/ or liability under the contract without incurring any liability for damages. This, to a very large extent, depends on the express terms of the force majeure clause. In some cases, parties could agree to suspend performance or excuse liability for non-performance. A long-stop may or may not be included in the clause. For instance, ROPAXTIME indicates that where a force majeure event has continued for a period of more than 15 days and such event prevents or hinders the performance of the charter party, the charter party may be terminated by either party.
What if there is no force majeure provision in the contract? – The doctrine of frustration
A party is only entitled to rely on a force majeure clause where it is set out in the contract. This is because force majeure, as a concept is a creation of contract and circumstances amounting to force majeure are as agreed between the contracting parties. In the event of absence of force majeure provisions from a charter party, parties may consider relying on the doctrine of frustration. The doctrine of frustration, a common law defence, is different from the principle of force majeure. Whereas the defence of force majeure in the first instance entitles the parties to suspend obligations or performance of the contract pending the time the force majeure event will be resolved and to terminate the contract when the force majeure has not been resolved for a period of time, the doctrine of frustration entitles the parties to terminate the contract in the first instance.
Frustration is said to occur whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Force majeure arises where it is the purpose of the contract that has been frustrated, whereas frustration will be relied on where the performance of contractual obligations has been declared impossible or illegal. This distinction is important in relying on the doctrine of frustration as a defence to non-performance of maritime contracts during COVID-19. In proving frustration, courts and arbitrators will consider whether:
- the agreed performance of the contract become impossible
- the mutually agreed purpose of the contract has become impossible (impossibility of the “commercial adventure”); and
- there has been a significant change to a mutually agreed state of affairs (for example, destruction of the subject matter of the contract or cancellation of an event).
A successful claim for frustration of a maritime contract will require the claimant prove these considerations in the affirmative. In the consideration of facts and evidence for the purposes of a frustration claim, the courts will treat each contract on its facts and circumstances.
African governments understand that shipping and ports are essential to the continued functioning of their economies and are working to keep the ports open. African maritime companies will therefore have to consider the effect of compliance with COVID-19 policies of African countries on the performance of their contractual obligations.
Adetayo Adetuyi, LLM
Senior Consultant, Brooks & Knights Legal Consultants
Nnanke Williams, LLM
Senior Consultant, Brooks & Knights Legal Consultants