The news about the war between Russia and Ukraine is raising a lot of questions for our members and insured parties. Based on Article 33 of the Class 1 Insured Risks, liabilities or costs or expenditure arising from or caused by war risks may be excluded from the cover. We therefore recommend avoiding the Black Sea ports of both Ukraine and Russia for the time being if possible.
But what if specific plans and agreements have already been made to sail those ports? Do the agreements signed leave possibilities for refusing a trip, for example? In this article, we would like to bring some general clauses to your attention:
1. War risks clauses
We recommend that a war risks clause should be included by default that sets out the obligations on both sides concerning war risks. We advise explicitly incorporating the terms of the chartering contract on bills of lading issued for a cargo and (if possible) explicitly stating the war risks clause on the bill of lading. BIMCO currently recommends using the CONWARTIME 2013 and VOYWAR 2013 clauses, although other (and outdated) clauses are also in circulation. We recommend using the latest version of the BIMCO clauses and checking their content carefully because of the legal implications of the various clauses. GENCON 1994, for example, still refers to the VOYWAR 1993.
Using such a clause may give the master or owner the option of refusing a voyage if the ship would then be exposed to war risks. Proof will then be needed that there was a ‘realistic likelihood’ of the war risks; mere speculation is not sufficient. If this is the case, the master/or owner should inform the charterer and ask for revised sailing instructions. Additionally, the ship may have a contractual right to leave if it is already in a hazardous area.
2. Safe harbour clause
In addition to the war risks clause, there is also a discussion about safe harbours. The general sense is that it is the charterer’s responsibility to ensure that a ship sails to and returns from a safe port for loading/unloading without being exposed to exceptional hazards. This is therefore not only about the safety of the port but also about the safety of the route to it. It could be particularly relevant in the context of e.g. sailing through the Sea of Azov to reach a port there. If that safety is compromised, in the opinion of the master or operator, there is the option of refusing the order. This requires careful consideration, though: should it transpire that the port was safe, the refusal may be deemed unjustified and the shipping company held liable for the damages suffered by the charterer.
3. Force majeure clause
War risks may qualify as force majeure in certain cases. The burden of proof lies with the party seeking to rely on such a clause. The possibilities for invoking it will be limited if the risk was already known or should have been known when the contract was signed.
4. Trade limits clause
If a trade limits clause has been included about sailing to ‘war zones or war-like zones’ e.g. as determined by the Joint War Committee (JWC), it may be possible to refuse the charterer’s instructions as the Black Sea and the Sea of Azov are now designated as such.
5. Sanctions clause
Given the recent sanctions announced by the USA, UK and EU plus the expectation that they will be tightened further (see also our other articles on this subject), we advise including a sanctions clause and carrying out a sanctions check on the charterer, the cargo and parties with interests in the cargo for every voyage. We also recommend checking which banks are involved and whether payment of freight and charges is possible at all. Also consider payment of port fees and agents’ fees.
We would like to advise everyone who is considering sailing to Ukraine or Russia in the near future to contact us for individual advice.