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Covid, demurrage and force majeure

Covid-19 has led to unprecedented disruptions to logistical chains. Either the goods can’t arrive in port or where they can, pick up can't be arranged. Where does that leave buyers, charterers, vessel owners etc. as regards discharge of contractual obligations? In The Vega Aquarius [2020], the Delhi High Court shed some light on a few issues.

Vessel tendered NOR on the same day a national lockdown was announced, & had to wait a month to discharge. Sellers / charterers, relying on contractual provisions, wanted demurrage for the waiting period. Buyers, looking for interim relief, contended that the lockdown constituted a force majeure event. Moreover because of concessions granted by Govt., vessel owners would not have to pay demurrage. As such, these costs could not trickle down.

Regarding applicability of force majeure cl, it had to be left to arbitration proceedings. As regards demurrage, court said that advisories issued by Govt. were not binding on private parties. Contractual obligation for demurrage payment had to be complied with. A bank guarantee cannot be a substitute. Whether charterers would have to compensate vsl’s owners for the demurrage due, was a question for arbitrators. If the answer was no, then buyers' loss would have to be made good.

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