BIMCO Infectious or Contagious Disease Clause 2015 or 2022? Key updates
December 15th, 2022
The world has virtually reopened following the Covid-19 pandemic. However, Mills & Co continues to receive a high volume of instructions related to issues arising from Covid-19.
One common query is that of the apportionment of costs as between an owner and charterer, under time charterparties for delays arising from, for example the Vessel or crew being put into quarantine (as a result of either suspected or confirmed Covid-19 infection, or simply strict measures in place to combat the spread of the pandemic.)
One factor that can make the apportionment of costs easier to address is whether or not the charterparty has the BIMCO Infectious or Contagious Disease Clause (IOCD) incorporated.
The original version of this clause was drafted in 2015, prior to the global Covid-19 pandemic. BIMCO has now revised its IOCD clause and released a 2022 version. The revised IOCD clause was designed to cater for:
- The threat of Covid-19 reappearing in localised areas; and
- Epidemics and regional outbreaks of other viruses (such as Ebola and SARS).
However, BIMCO does not intend for the clause to be applicable in the event of a minor virus or other disease outbreak (as this may create skewed or commercially unfair results).
The 2022 clause introduces a number of changes from the 2015 clause with which those in the industry will have become familiar over the last two years.
We examine a number of the key changes below:
2015 Clause |
| 2022 Clause |
| Comment |
“Disease” means a highly infectious or contagious disease that is seriously harmful to humans. |
| “Disease” means a highly infectious or contagious disease that may cause serious illness to humans.
|
| In an effort to prevent the IOCD clause being read only as a clause dealing with Covid-19, BIMCO have altered the ‘serious harm’ requirement to one of ‘serious illness’. Arguably, this heightens the threshold for a virus/disease to come within the clause, as causing serious illness to humans places greater focus on the medical effect of a virus/disease, as opposed to the requirement to be ‘harmful’ which could be construed more broadly.
|
“Affected Area” means any port or place where there is a risk of exposure to the Vessel, crew or other persons on board to the Disease and/or to a risk of quarantine or other restrictions being imposed in connection with the Disease. |
| “Risk of Exposure” means a risk of exposure to a Disease which arises or substantially increases at a port or place nominated by the Charterers which in the Owners’ reasonable judgement cannot be avoided by Owners/Master taking Preventative Measures, whether such risk of exposure existed at the time of entering into this Charter Party or occurred thereafter. |
| Whilst still referencing a ‘port or place’ the 2022 clause moves away from a defined ‘affected area’. Provided the port or place presents a ‘risk of exposure’ to the disease, which cannot be overcome by preventative measures, Owners will be entitled to refuse to call at that port or place. BIMCO guidance states that to enjoy the protection of the clause, Owners must make necessary enquiries on:
(1) whether there is an outbreak of a “Disease” at the port, and gauge the severity of the outbreak; (2) whether the crew is at danger from an infection; and (3) whether Preventive Measures would protect the crew. This can be done by obtaining information from local authorities, agents or the media.
In a significant amendment to the wording of the 2015 clause, the 2022 clause also omits the wording that a risk of ‘quarantine or other restrictions’ may qualify a port or place as presenting a risk of exposure. |
|
| “Exposure Risk Notice” means a written notice from the Owners to the Charterers of a Risk of Exposure that includes supporting evidence thereof. |
| The 2022 clause introduces an all-new requirement. Owners must now give notice of their decision not to call at a port or place due to the risk of exposure to the disease. BIMCO’s guidance on what that exposure risk notice should look is very limited at this stage. However, it is understood that the notice must communicate to the charterers that (a) Owners are not willing to enter or remain at that port/place due to the risk of the disease which cannot be overcome by taking preventative measures, and (b) provide supporting evidence. |
The Owners shall endeavour to take such reasonable measures in relation to the Disease as may from time to time be recommended by the World Health Organisation. |
| “Preventative Measures” means all reasonable, applicable and available measures to prevent exposure to the Vessel, its crew or other persons on board to a Disease. |
| The 2015 clause did not define ‘reasonable measures’ and allowed any measures taken to be at the discretion of the Owners, in line with recommendations from the WHO. However, the 2022 clause does define the ‘measures’ that must be taken as “reasonable, applicable and available”. The new clause does not refer to guidance from any organisation. Instead, the information that Owners may draw upon is much broader. This will likely be well received by Owners who can (presumably) tailor their information sources on the disease/risk of exposure to more localised sources and implement measures accordingly. BIMCO hope to better reflect ‘commercial practices’ with this new sub-clause.
Interestingly, to try and limit the effect of this clause, BIMCO suggest that Owners and Charterers should agree a threshold for Owners’ obligations in terms of applying a financial ceiling, and what to do in circumstances were specific items of PPE are undeliverable or unobtainable. |
We hope that the above article will be useful to those contracting on charterparty terms which incorporate either the 2015 or 2022 clause. However, for further guidance on the BIMCO clauses or for shipping matters pertaining to Covid-19 more generally, please don’t hesitate to contact Mills & Co.
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