Legal assessment of BIMCO’s infectious or contagious diseases (IOCD) clauses for voyage and time charter parties

Abstract

The impact of the Covid-19 pandemic on the shipping industry is still severe, ranging from vessels being denied entrance to ports to crews on board ships being trapped for many months. To counter and regulate those emerging issues, the shipping industry presently incorporated into the charter parties the BIMCO’s Disease Clause originated from the 2015 Ebola outbreak, the so-called BIMCO’s Infectious or Contagious Diseases (IOCD) Clauses. While proved successful during the Ebola outbreak, those Clauses were inadequate to regulate a global pandemic such as Covid-19 effectively. Specifically, the IOCD Clauses, while they successfully establish the concepts of ‘Disease’ and ‘Affected Area’, fail with the allocation of liability, especially when the crew on board is affected by Covid-19 and the ship needs to deviate from course to change the crew. In that instance, the shipowner, provided that he exercised due diligence in proactively avoiding the infection of his crew, is excluded from liability. In contrast, it is deemed that the liability between shipowner and charterer should be at least shared. For voyage charter parties BIMCO’s Infectious or Contagious Diseases Clause 2015, applied both to the Ebola and the Covid-19 outbreak, allocates the right of termination and the liability for deviations and excessive costs strictly to charterers. In contrast, for the time charter parties, BIMCO has imposed the ‘BIMCO Infectious or Contagious Diseases Clause for Time Charter Parties 2022′ amended presently. According to those regulations, the liability can and should be shared between charterers and ship owners. As a result, the shipowner is forced to exercise due diligence more effectively, especially when he is initially liable for the excessive costs.