Contractual Clauses that Seek to Mitigate the Costs, Expenses or Liabilities of COVID-19 and Other Contagious Outbreaks: A Matter to Pay Heed to

Since the outbreak of COVID-19, commercial parties in the shipping industry have increasingly incorporated clauses dealing with infectious diseases into their contracts. In the chartering context where such clauses are commonplace, they are primarily designed to deal with and allocate the risks (as between owner and charterer) of the vessel calling at a place where there is a risk of infection to the crew and vessel. However, parties have been known to incorporate modified versions and, in certain cases, wholly bespoke infectious diseases clauses. Unsurprisingly, infectious diseases clauses have given rise to a trend of disputes surrounding the application and interpretation of such clauses.

It will thus be prudent for parties to conscientiously review the ambit and scope of such clauses prior to contract, to mitigate against the risk of unwittingly bearing responsibility for infectious diseases related costs, expenses or liabilities. In this Update, we look at the scope of infectious diseases clauses and the key considerations when negotiating such clauses.