Case Digest: Bunge S.A. v Pan Ocean Co Ltd [2025] EWHC 168 (Comm)

<center><span class="news-text_italic-underline">Judgment Date: 30 January 2025</span></center>

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Summary

Bunge S.A. (claimant), the owners of a vessel, appealed an arbitration award in favor of Pan Ocean Co Ltd (defendant), the charterers, regarding the off-hire status of the vessel during a period of delay caused by crew members testing positive for COVID-19. The vessel was chartered to travel from the Philippines to Bayuquan, China, to discharge alumina. Upon arrival in Bayuquan, several crew members tested positive for COVID-19. Rather than quarantining the vessel, the owners sailed it to South Korea to replace the crew and then returned to Bayuquan to discharge the cargo. The charterers deducted hire for the 14-day period of delay, which began after the positive tests in Bayuquan. The key issues involved the application of Clause 38 (quarantine-related off-hire) and Clause 50 (inefficiency causing off-hire) and the interpretation of the BIMCO Infectious or Contagious Diseases Clause.

Held

Appeal dismissed.

1. <span class="news-text_medium">Affected Area under Clause 129 (BIMCO Infectious or Contagious Diseases Clause):</span> The court held that a port was not considered an "affected area" simply because there was a risk of quarantine or other restrictions due to crew illness. For a port to be an "affected area", it must have imposed or be likely to impose quarantine or restrictions on incoming vessels in general or based on specific conditions. Bayuquan did not meet this criteria and the period of delay did not arise from a visit to an affected area.
2. <span class="news-text_medium">Detention for Quarantine under Clause 38:</span> The tribunal correctly concluded that the vessel was off-hire under Clause 38 due to "detention for quarantine" resulting from the crew’s illness. While the vessel sailed to South Korea to replace the crew, the original quarantine restriction at Bayuquan, which prevented entry, remained in effect until the crew was no longer infected. The term "detention" under Clause 38 was interpreted broadly, including situations where a vessel could not enter a port due to quarantine-related restrictions.
3. <span class="news-text_medium">Inefficiency for Services under Clause 50:</span> The court found that the vessel was "inefficient" under Clause 50 as it could not perform the immediate service required — discharging the cargo at Bayuquan. The detour to South Korea for crew replacement was considered necessary due to the illness and the vessel did not perform its core service, which was discharging cargo. Therefore, the vessel was off-hire during the delay period, regardless of its off-hire status under Clause 38.

Conclusion

The court upheld the arbitration award, confirming that the vessel was off-hire during the period of delay due to the crew’s illness and the associated quarantine restrictions. The ruling emphasised that the vessel’s inability to perform the core service and the relevant clauses addressing quarantine and inefficiency led to the determination of the off-hire period.