Article | Posted on 31st January 2025
The Sagar Ratan - What is an Affected Area?

Covid-19 remains alive and well in the world of off-hire disputes. In the case of Bunge v Pan Ocean (the “Sagar Ratan”), the court examined the extent to which Charterers can claim a vessel was off-hire on account of its infected crewmembers.
At its simplest, this is a case about apportioning risk: in the event of crew sickness in a pandemic, who ultimately bears the risk of delays at the discharge port?
Background
Bunge SA (“Owners”) chartered the SAGAR RATAN (the “Vessel”) to Pan Ocean (“Charterers”) 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 provided as follows:
- Clause 15: Loss of time due to any other cause preventing the full working of the vessel is for Owners’ account;
- Additional Clause 38: Any time of detention for quarantine due to illness of the crew shall be for Owners’ account;
- Additional Clause 50: Loss of time for sickness of the crew shall mean hire is suspended;
(together, the “Off-Hire Clauses”); and
- Additional Clause 129 (which incorporated, in amended form, the BIMCO Infectious and Contagious Diseases Clause for Time Charter Parties 2015 (the “BIMCO Clause”): If the Vessel visits an “Affected Area”, any costs incurred in doing so are for Charterers’ account (effectively an exception to off-hire).
The Vessel completed loading in Australia and then proceeded to Bayuquan, China to discharge the cargo. This being the height of the pandemic, all vessels entering Chinese ports (as was the case in other global ports) were tested for Covid-19.
Upon arrival at Bayuquan, the Vessel was inspected and four crewmembers tested positive for Covid. As a result, the Vessel was prevented from commencing discharge operations and was ordered to either undergo a 14-day quarantine; or disembark the infected crewmembers elsewhere and return to Bayuquan.
The Owners opted for the latter option and arranged for the infected crewmembers to be replaced at Ulsan, South Korea. Upon return to Bayuquan, the Vessel was permitted to berth, and the cargo was discharged.
Arbitration
The Claimant Owners brought a claim against Charterers for hire deducted for the time during which the vessel had been detained at Bayuquan and spent sailing to and from Ulsan to change crew.
Pursuant to the Tribunal’s Award:
- The Vessel was off-hire for the Disputed Period.
- Owners could not rely on the BIMCO Clause because Bayuquan was not an “Affected Area”. It did not carry any higher risk of quarantine than other ports in China during the pandemic, and the need to quarantine was triggered by the crew, not the port itself.
- Owners’ claim failed. The hire and additional expenses incurred by Charterers were for Owners’ account because the cause of the delay was the infection of the crew.
Appeal
An appeal was brought under section 69 of the Arbitration Act 1996 in respect of the following questions:
- For the purposes of the BIMCO Clause, is a port an “Affected Area” if it carries a risk of quarantine / restrictions? Or does that exclude situations where either the crew were already infected upon arrival; or the risk of going there was no greater than at the time the Charterparty was concluded?
- For the purposes of clause 38, is a vessel to be considered “detained” on account of “quarantine” if it avoids quarantine by going elsewhere to swap its crew?
- For the purposes of clause 50, is a vessel off-hire if it can and does comply with the service immediately required of it (and what was the service immediately required of the Vessel in this case)?
Judgment
Question 1: Was the port an “Affected Area”?
The court held that:
- Bayuquan was not an “Affected Area” (though Charterers were wrong to say that in order to be so, there must be an increased risk of quarantine there than at other ports).
- The Vessel was not delayed on account of having visited an “Affected Area”; it was delayed because the crewmembers were infected with Covid. In other words, it was the crew itself, not the characteristics of the port, that meant the Vessel could not enter Bayuquan. A port does not simply become an “Affected Area” just because an infected vessel is potentially going to call there. If that were the case, any port in the world visited by an infected crewmember would become an “Affected Area”.
- The BIMCO Clause applies where the risk of quarantine “is one of general application arising from the Disease”, e.g. a policy imposed by the port due to the vessel having previously visited a port affected by the Disease. Here, there would have been no risk of quarantine at Bayuquan had the crewmembers not been infected.
- Delays arising from problems with the vessel/crew are for Owners’ account. A vessel cannot remain on-hire where the cause of the time lost is due to the vessel and crew, as opposed to any orders by the Charterers.
- There is a causation requirement in the BIMCO Clause i.e. that there must be a causal link between the visit to the Affected Area and the delay for the clause to apply, which was not satisfied here.
Question 2: Is there “detention for quarantine” if a vessel can and does avoid quarantine by replacing the crew at another port?
The court’s answer was yes because:
- If it were the case that by avoiding quarantine there is no “detention” for the purposes of an off-hire clause, surely all vessels with an infected crew could simply sail off and avoid quarantine.
- The point is whether the detention “impedes the core venture of the charterparty, not by whether it prevents movement in any direction.”
As such the Vessel was off-hire pursuant to Clause 38.
Question 3: After the crewmembers tested positive for Covid, was the Vessel capable of performing the service immediately required of her?
Charterers argued the service immediately required of the Vessel was to discharge at Bayuquan; whereas Owners argued the service immediately required was to change the crew at Ulsan. Importantly, they also argued that the Tribunal found in Owners’ favour on this point.
The court held that:
- The Tribunal had not made an “implied finding of fact” in relation to the service required by finding that the actions of Owners in sailing to Ulsan were not unreasonable. In fact, the finding that Clause 50 was triggered clearly indicates a finding that the Vessel did not perform the service immediately required.
- The Vessel had not performed the service required of her and was off-hire pursuant to Clause 50.
Charterers had therefore brought themselves within the off-hire provisions of Clauses 38 and 50 of the Charterparty, due to the condition of the crew, which Owners were responsible for. Clause 129 did not override the terms of the Charterparty where the cause of delay was the Vessel and crew, not the port to which Charterers directed the Vessel.
As such the appeal was dismissed and the Tribunal’s Award upheld.
Comment
During the Covid pandemic itself, there was much speculation as to whether the whole world may have become an Affected Area under the BIMCO clause, although such speculation was generally directed at the risk of being exposed to the disease itself. This case considered the position where there was no risk of the crew catching the disease in the discharge port, but where there was a risk that if the crew were already infected, the vessel would have to quarantine.
The assessment was therefore between, on the one hand, Owners’ argument as to the literal wording of the BIMCO clause and whether a “risk of quarantine” was enough on its own to render a port an “Affected Area”; and, on the other hand, an approach that looked at the construction of the Charterparty as a whole, with clauses rendering the vessel off-hire in the event of crew infection.
In the event, the court followed the distinction made in previous cases such as “The Doric Pride” between issues for which the Owners are responsible, including the health of the crew; and issues for which Charterers were responsible, such as restrictions imposed by ports without reference to the vessel. To place the vessel off-hire because the vessel was quarantined due to the illness of the crew would be to ignore that distinction.
The Owners also struggled with the finding by the Tribunal that the active cause of the delay was the sickness of the crew and not Bayuquan being an Affected Area. While this necessarily depended on the finding as to “Affected Area”, it was broadly a finding of fact which could not be challenged and was upheld by the Court.
Finally, both the Tribunal and Court gave weight to the practical consideration was given weight by. If Owners’ approach was correct, then any port in the world imposing a quarantine on any vessel where the crew had any disease which fell under the BIMCO definition would become an Affected Area for that ship alone. If the crew of a Vessel had ebola, or bubonic plague, or yellow fever, then standard free pratique procedures would subject the vessel to quarantine. On Owners’ approach in this case, because every port in the world would impose that quarantine, every port in the world would be an Affected Area and Owners could never be responsible for the consequences of the crew being infected with such a disease.
The key findings were, therefore:
- A port does not become an “Affected Area” for the purposes of the BIMCO Clause simply because a vessel’s crew is infected with a qualifying disease;
- A vessel is detained for quarantine if there is a risk of quarantine being imposed on her, even if she does not ultimately undergo quarantine; and
- A vessel which cannot berth at the discharge port due to illness of the crew is off-hire as she is unable to perform the service immediately required of her.
Owners seeking to rely on the BIMCO Clause should therefore be wary of the narrower definition of “Affected Area” applied by the courts. In the event that crewmembers have an infectious disease (be that Covid-19 or otherwise) and the vessel is not permitted to berth, the vessel will be off-hire and the BIMCO Clause does not bite.
For the full judgment, click here.
The Defendant was represented in the arbitration and appeal by Tom Kelly and Georgina Suttie of Preston Turnbull. For the appeal, Counsel was Gemma Morgan of Quadrant Chambers. The appeal was heard before Mr Justice Henshaw on 2 December 2024.
Written by Georgina Suttie and Tom Kelly.