February, 2025 - The Sagar Ratan: What is the meaning of 'Affected Area'?

In Bunge S.A. v Pan Ocean Co., Ltd. (The Sagar Ratan) [2025] EWHC 168 (Comm), the Admiralty Court considered Bunge S.A’s (the Owner) appeal against an arbitration award made in favour of Pan Ocean Co. Ltd (the Charterer), in which the tribunal found that the ship was off-hire during a period of delay caused by the crew testing positive for COVID-19.

Background

The ship was chartered by the Owner to the Charterer by a fixture recap and amended NYPE form dated 17th February, 2022 for one time charter trip from the Philippines via Australia to China with a cargo of alumina in bulk.

The relevant clauses in the charterparty were as follows:

• Clause 38 Quarantine/Radio Pratique :

“Normal quarantine time and expenses for the Vessel’s entering port shall be for Charterers’ account, but any time of detention and expenses for quarantine due to pestilence, illness and etc. of Master, officers and crew shall be for Owners’ account. […]”

• Clause 50 Deviation/Put Back:

“In the event of loss of time either in port or at sea, deviation from the course of the voyage or putting back whilst on voyage, by reason of … sickness or accident to the Master, officers, crew … the hire shall be suspended from the time of the Vessel’s inefficiency in port or at sea until the time when the Vessel is again efficient in the same position or equidistance position to the destination.[…]”

• Clause 129, BIMCO Infectious and Contagious Diseases Clause for Time Charter Parties 2015 (the “Bimco Clause”) as amended, with the following key provisions:

“(a) For the purposes of this Clause, the words: […]

“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 […]

(h) If…the Vessel does proceed to or continue to or remain at an Affected Area: […]

(iii) Any additional costs, expenses or liabilities whatsoever arising out of the Vessel visiting or having visited an Affected Area… shall be for the Charterers' account and the Vessel shall remain on hire throughout. […].

(j) If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, nor shall it be or give rise to an off-hire event, but shall be considered as due fulfilment of this Charter Party. In the event of a conflict between the provisions of this Clause and any implied or express provision of this Charter Party, this Clause shall prevail to the extent of such conflict, but no further.”

During the voyage, the ship arrived at Bayuquan, China, where four crewmembers tested positive for COVID-19. As a result, the ship was required to either undergo a 14-day quarantine at Bayuquan or disembark the infected crew members elsewhere. The Owner chose to sail to Ulsan, South Korea, in order to replace the infected crew before returning to Bayuquan to discharge the cargo. This led to a delay of approximately 14 days (the “period of delay”) during which the Charterer claimed that the ship was off-hire.

The arbitration

The central issue was the interpretation of the BIMCO Infectious and Contagious Diseases Clause, specifically whether Bayuquan qualified as an "Affected Area" such that the ship was not off-hire for the period of delay. The following questions were also considered: (i) whether there is any detention for quarantine if the ship avoided the quarantine by replacing the crew at another port and (ii) if the ship was capable of performing the next service immediately required despite crew members having tested positive for COVID-19.

The arbitration tribunal found against the Owner and decided that the ship was off-hire for the period of delay.  The Owner could not rely on the BIMCO Clause, as Bayuquan was not an ‘’Affected Area’’. The ship was not delayed due to visiting Bayuquan and the need to quarantine was solely the result of the crew members being positive for COVID-19.

Admiralty court

The Owner appealed the tribunal’s decision under section 69 of the Arbitration Act 1996on the basis of the following questions of law:

1. Under the BIMCO Clause, is a port considered an "Affected Area" if it poses a risk of quarantine or restrictions? Or does this exclude situations where the crew was already infected upon arrival, or the risk of going there was no greater than when the Charterparty was agreed upon?
    
2. According to clause 38, is a ship deemed "detained" due to "quarantine" if it avoids quarantine by going elsewhere to change its crew?
    
3. Under clause 50, is a ship off-hire if it can and does perform the service immediately required of it (and what was the service immediately required of the ship in this case)?

In dismissing the Owner’s appeal, the court confirmed the tribunal's ruling that Bayuquan was not an “Affected Area” and that the delay was due to the crew's infections rather than the port itself.

In reaching this decision and considering questions 1 to 3 above, Mr Justice Henshaw found as follows:

1. The general principle is that delays caused by issues with the ship and crew are typically the owner's responsibility. This means that under the BIMCO Clause, the ship would not be off-hire due to problems that would not have occurred if the crew had not been infected. The BIMCO Clause requires a causal connection between the visit to the affected area and the resulting delay. In this case, that connection was not established.
   
   The quarantine was imposed solely due to the crew's actual infection status, not because of a general policy on quarantining incoming ships or those coming from specific countries. It was essentially due to a characteristic of the ship/crew, rather than the destination to which the Charterer ordered the ship. Bayuquan was not an affected area and the delay was not caused by the ship having visited an affected area.
    
2. The deviation to replace the infected crew members was considered a detention, which rendered the ship off-hire. The key issue is whether the detention ‘’impedes the core venture of the charterparty, not by whether it prevents movement in any direction’’.
    
3. The deviation to change the crew was not considered to be the next service immediately required, which rendered the ship off-hire for the duration of the delay. The fact clause 50 of the charterparty was triggered clearly demonstrates that the ship failed to perform the service immediately required.

Accordingly, the court held that Charterer’s claim fell within the off-hire provisions of clauses 38 and 50 of the charterparty due to the crew's condition, for which the Owner was responsible. The BIMCO Clause did not supersede the charterparty terms since the delay was caused by the ship and crew, not the port to which the Charterer ordered the ship.

Conclusion

In light of the above, it is important to note the narrow definition applied to “Affected Area” by the court: a port is not classified as an "Affected Area" under the BIMCO Clause solely because the ship’s crew is infected with a qualifying disease. There has to be a causal connection between the visit to the port and the resulting delay. Moreover, a ship is considered detained for quarantine if there is a risk of quarantine being imposed, even if it does not ultimately undergo quarantine. Finally, a ship that cannot berth at the discharge port due to crew illness is rendered off-hire, as it is unable to perform the service immediately required.