The outbreak of war can have serious consequences on charterparties of all kinds and it is therefore no surprise that the industry has developed several standard clauses to clarify the parties’ obligations in such uncertain times.
In the modern era, war is rarely declared formally and solemnly in advance of hostilities, as it was for example by the British government in 1939.
Instead, with disinformation campaigns being a regular feature of foreign policy and the emergence, over the Cold War, of proxy states, affiliated militia and private military corporations, the lines between war and peace have perhaps never been more blurred. This trend has been brought into focus with the gradual invasion of the Ukraine by Russia, starting with the (initially covert) annexation of Crimea in 2014 and culminating in the full-scale invasion of the Ukrainian mainland in 2022.
However, despite being seemingly such a modern phenomenon, the situation is not without precedent. In The Nailsea Meadow ([1939] 2 KB 544) the English courts were asked to decide if a war had broken out involving Japan, and whether this was the trigger for a contractual cancellation clause as Japan had invaded China without there being a formal declaration of war or the nations terminating diplomatic relations.
In The Nailsea Meadow, common sense prevailed and extensive fighting between the armies of Japan and China was held to be sufficient to constitute “war” for the purpose of the cancellation clause. In Ukraine, the Russian invasion obviously falls within the definition of a “war” between Russia and the Ukraine on any reasonable view, but the tactics employed in the surrounding disinformation campaign (and in particular in the earlier invasion of Crimea) make it a useful time to reassess common war risks wording.
CONWARTIME 2013
The most commonly used war clauses in the market are BIMCO’s “war risks clause for time chartering 2013” (“CONWARTIME 2013”) and the “war risks clause for voyage chartering 2013” (“VOYWAR 2013”). The definition of war risks is identical under the clauses:
“War Risks” shall include any actual, threatened or reported:
War, act of war, civil war or hostilities; revolution;
rebellion; civil commotion; warlike operations; laying of mines; acts of piracy and/or violent robbery and/or capture/seizure (…) acts of terrorists; acts of hostility or malicious damage; blockades (whether imposed against all vessels or imposed selectively against vessels of certain flags or ownership, or against certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political group, or the government of any state or territory whether recognised or not, which, in the reasonable judgement of the Master and/or the Owners, may be dangerous or may become dangerous to the Vessel, cargo, crew or other persons on board the Vessel.”
War risks include acts of hostility or malicious damage by “bod[ies]”, including “terrorist” and “political” groups. This would have included the irregular and often unidentified military personnel which took part in, for instance, the annexation of Crimea, and would include the authorities of the disputed regions of Ukraine under Russian occupation, such as Crimea.
VOYWAR 2013
The primary differences between the forms is set out in the BIMCO explanatory notes:
“In contrast to CONWARTIME, where a war risk may exist before or after a charter party has been concluded, VOYWAR focuses on the position before loading or after the voyage has commenced.”
This reflects the difference between a time and a voyage charter – though the difference may become vanishingly small for a time charter trip. In particular, sub-clause (b) of VOYWAR 2013 allows owners to cancel the charter before loading has commenced, if owners or the master are satisfied that the performance of the contract will expose the vessel to war risks, in their reasonable judgement.
This gives owners flexibility to react to changing events.
The situation is different once cargo has been loaded, because at that point owners become bailees of the cargo and cargo interests become entitled to a bill of lading for the cargo under Article III Rule 3 of the Hague and Hague-Visby Rules. This is then covered by sub-clause (c) of the VOYWAR 2013 form.
Both VOYWAR 2013 and CONWARTIME 2013 rely on the “reasonable judgement” of the owners or the master in deciding whether the vessel, cargo, crew or others on board “may be” exposed to war risks. This highlights the difference between CONWARTIME 2013 and the previous CONWARTIME 1993 clause, as the former was amended following the controversial 2012 decision in The Triton Lark [2012] EWHC 70 (Comm), in which the High Court held that a “real likelihood” of danger was required. BIMCO’s explanatory notes to the CONWARTIME 2013 form comment as follows.
“In order to remove potential uncertainty, the test for determining whether to proceed has been amended and is now based on whether an area is dangerous. The level of danger is likely to be high but a stated reference point removes the need for complex analysis of degree of risk and whether or not it is more or less likely to occur.”
Care must be taken therefore when the old CONWARTIME 1993 clause applies. In that case, the Triton Lark test will continue to require a “real likelihood” of danger.
This underlines the bargain struck in the CONWARTIME 2013 clause: before the vessel has proceeded into the area, the test defers to the reasonable judgement of owners and the master. Once the vessel is already there, the clause does not mention the reasonable judgement test, but simply asks whether the area is dangerous or “may become dangerous”.
Key factors in assessing danger
The factors which will be relevant to owners and/or the master will depend on the circumstances of the individual case, and cannot be definitively listed. However, factors which should ordinarily be taken into account include:
- The JWC (Joint War Committee) listed areas, which are areas where owners are required to notify underwriters of voyages. For instance, Ukrainian and Russian waters in the Black Sea and the Sea of Azov were included in the listed areas from 00:00 hours GMT 28 February 2022 during a period of rising tensions, and before the invasion of Ukraine proper began.
- News reports, in particular involving attacks on marine traffic.
- P&I club circulars and other warnings.
- Input from maritime security agencies.
Other standard forms
Similar considerations apply to other common charter forms dealing with war risks.
The BPVOY 4 form copies the definition of war risks from the BIMCO clauses, and includes provisions (in particular Clause 39.4) making it clear that where owners deviate to avoid war risks, the cost of bunkers and additional port charges will be for charterers’ account (unusually for a voyage charter).
Separately, clause 35 of SHELLTIME 4 provides that:
“(a) The master shall not be required or bound to sign Bills of Lading for any place which in his or Owners’ reasonable opinion is dangerous or impossible for the vessel to enter or reach owing to any blockade, war, hostilities, warlike operations, civil war, civil commotions or revolutions.
(b) If in the reasonable opinion of the master or Owners it becomes, for any of the reasons set out in Clause 35(a) or by the operation of international law, dangerous, impossible or prohibited for the vessel to reach or enter, or to load or discharge cargo at, any place to which the vessel has been ordered pursuant to this charter (a “place of peril”), then Charterers or their agents shall be immediately notified in writing or by radio messages, and Charterers shall thereupon have the right to order the cargo, or such part of it as may be affected, to be loaded or discharged, as the case may be, at any other place within the trading limits of this charter (provided such other place is not itself a place of peril). If any place of discharge is or becomes a place of peril, and no orders have been received from Charterers or their agents within 48 hours after dispatch of such messages, then Owners shall be at liberty to discharge the cargo or such part of it as may be affected at any place which they or the master may in their or his discretion select within the trading limits of this charter and such discharge shall be deemed to be due fulfilment of Owners’ obligations of this charter so far as discharge is concerned.”
The definition in (a) is narrower than the definition of “War Risks” in CONWARTIME and VOYWAR, and does not include acts of “malicious damage” but still includes the broad term “hostilities” as well as “civil commotions”.
Final comment
As set out above, there is no real question that the current invasion of Ukraine amounts to war or warlike operations sufficient to trigger the standard war risks clauses.
However, these rules remain open to be tested in the context of more asymmetric warfare in the future, perhaps in a situation where the state-sponsored combatants are unidentified and the violence relatively contained (such as in the initial stages of the invasion of Crimea). In those cases, we expect the wording of these clauses to be tested before the courts, and if necessary (as with the CONWARTIME 2013 form) updated and adapted as necessary.
Fountainhead – https://www.wr.no/en/news/publications/shipping-offshore-update-july-2022/war-and-warlike-operations-in-a–time-of-uncertainty/