Coronavirus and Shipping – What to expect

20 march 2020




Although we all have health concerns arising from the Covid-19 virus, we must also gauge how to react in a business setting and be prepared to deal with the crisis now and going forward.

At PMC, we think that past financial crises offer warnings and some guidance to the shipping sector. A severe economic slow-down will engender payment issues for many businesses, and as in the financial crises of 2008-9, even sound businesses can run into trouble if others default. Where payment issues arise, quick action will need to be taken to ensure that security is in place and experience tells us that, despite the massive international government interventions, insolvency events will follow.

In the next few weeks international shipping by sea will be increasingly crucial to the economy as goods, particularly foodstuffs, need to continue to move notwithstanding quarantines and disruption to transport. For our economic well-being as a whole, trade must continue, or at least must restart as quickly as possible when disrupted. Just as the virus has moved very quickly due to modern transport methods, we all remain dependent on maintaining international transport links for goods notwithstanding the disruption.

It is particularly important for shipping companies to have awareness of legal issues that could affect their ability to trade as part of their crisis management planning. We believe that these will be some of the critical legal issues in the shipping sector in the weeks and months to come:

  • Ensuring cash-flow and taking decisive and early steps to secure claims or assets where necessary
  • Dealing with insolvency of counterparties
  • Handling quarantines or embargoes
  • Providing a safe place of work for crew and shore staff
  • Resolving logistical difficulties for transport
  • Managing immigration clearance of crew
  • Maintaining certification and understanding insurance coverage
  • Considering the implications of requisitions and other state intervention in the sector


In addition to these general themes, we are advising clients on how to manage more sector specific issues. In the cruise industry, we are supporting our clients through difficult decisions relating to their operations and the Package Travel Regulations. Our Ship and Yacht Finance team have produced guidance and tips on how to manage transactions in the current climate and our Trade Finance team has produced a thought leadership article on the issues that may arise in Trade Finance, please see below for both articles.

PMC are working on these and other issues for clients in shipping and other sectors and our latest guidance on the legal and practical implications of the Coronavirus outbreak is here. This page will be updated regularly with guidance on the issues as they arise in shipping and more widely.

Where it is thought that existing contracts may be affected by Coronavirus they should be checked carefully and urgently to review whether there are termination or force majeure provisions that apply. Difficult decisions may need to be taken and all stakeholders should keep abreast of the latest Government and WHO advice as this will impact on how contracts will be construed. There may also be changes in local laws which make the performance of existing contracts impossible and this should be monitored closely.

PMC is ready to help in all of these areas and is actively monitoring current developments to assist you with your strategy going forward.

Please feel free to contact any of our team if you require advice or guidance on these or any other issues. Contact a member of the team.


COVID-19 – safe ports and international sale of goods


The current outbreak of the novel coronavirus (Covid-19) said to have originated from Hubei province in China, has spread far and wide in recent weeks. Such a wide and almost unprecedented outbreak has raised serious health concerns globally and no doubt it has caused tremendous impact on shipping industry, international trade, and beyond. READ MORE.


COVID-19 ship and yacht finance


As the current pandemic emergency continues to develop around the globe, businesses involved in the world of ship finance, sale and purchase, and construction are beginning to feel the impact on the industry. From shipyard and port closures, to travel restrictions for surveyors, to volatile markets and currency exchange rates, the issues facing businesses are varied and rapidly changing. READ MORE.


Performance and cancellation of charterparties



The minds of owners and charterers alike are presently focused (as they should) on the Covid19 outbreak and how they can either utilise existing clauses or put together new clauses dealing with Covid19 in an attempt to refuse to perform or get out of a charter or prevent their contractual counterparty from doing so.

Penningtons Manches Cooper has already issued a number of articles and circulars (as well as a contractual tool kit) in respect of the effect of Covid19, the business interruption aspects of it as well as the way forward.

But what happens in circumstances where an existing contract is no longer desirable (or indeed financially viable) and one of the contractual counterparties wishes to no longer be bound it, either because of, for example, the state of the market or because the other party are not performing their end of the deal, whether as a result of Covid19 or otherwise?

A number of other considerations will of course be relevant (amongst others, the parties’ commercial relationships, the state of the market, the ability to enforce against the non-performing party) but the purpose of this article is to act as a reminder of the various options available to an owner and charterer in the context of refusing to perform or getting out of a charterparty.

The above will be considered against a background of seeking to resolve disputes before they even arise, with a view to limiting (to the extent feasible) the costs and delays incurred where the parties engage in arbitration / litigation proceedings. READ MORE.


COVID-19 and trade finance: demand guarantees, standby & documentary letters of credit


The Covid-19 pandemic may affect different instruments commonly used in the finance of trade transactions worldwide. Here we provide a brief overview of the ways in which the virus could make an impact READ MORE.


Court updates from France and Spain



As of midday 17 March 2020 the French government imposed a nationwide confinement upon the entire population of France. This “lockdown” has an initial duration of two weeks, although it could well be extended.

One of the effects of this emergency law is that all non-essential work is now restricted to being undertaken remotely, ie from home. Furthermore, public offices, and places such as the French tribunals, are closed.

What therefore is the effect upon proceedings already underway in France, and will it be possible to commence proceedings during the lockdown? READ MORE.


Coronavirus will be responsible for steep increase in insurance claims


The worldwide spread of coronavirus, now named COVID-19, will give rise to insurance claims in many traditional lines of insurance. On 11 March 2020, the World Health Organisation (WHO) officially labelled COVID-19 as a pandemic. Insurance policy exclusions for "pandemic" are likely to be triggered by insurers and reinsurers in many traditional lines of insurance. READ MORE.


Coronavirus and business interruption insurance: notifiable diseases, public authority actions, and denial of access extensions


On 5 March 2020, the UK’s Department of Health and Social Care issued a notice that Covid-19 was included in the list of notifiable diseases and SARS-COV-2 in the list of notifiable causative agents, by adding them to the Health Protection (Notification) Regulations 2010. As a result, GPs are now required by law to report all cases of Covid-19 to Public Health England. READ MORE.






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