Exemptions of penalties & Force Majeure

31 Mar 2020 / India

The Ministry for Home Affairs, Government of India, issued an order on 24.03.2020 to impose lockdown for a period of 21 days to contain COVID-19.

Further, an addendum [was issued] giving exceptions to the operations of seaports for cargo movement and inter-state movement of goods/cargo for inland and exports to ensure regular supply of goods in the country...

...However, given the nationwide lockdown, there is an inevitable impact in the form of delays in evacuation of cargo and inability to fulfill obligations by various parties/stakeholders due the effect on the downstream services.

Major Ports are directed that:
(i) each Major Port shall ensure that no penalties, demurrage, charges, fees, rentals, are levied by the Major Ports on any other port used (traders, shipping lines, concessionaires, licensees, etc) for any delay in berthing, loading/unloading operations or evacuation/arrival of cargo caused by the reasons attributable to lockdown measures from 22 March to 14 April 2020.
(ii) Therefore, each major Port shall exempt or remit demurrage, ground rent over and above the free period, penal anchorage/berth hire charge and any other performance related penalties that may be levied on port related activities including minimum performance guarantee, wherever applicable…

...The COVID-19 pandemic can be considered as a ‘natural calamity’ that would entitle invocation of ‘force majeure’ provisions in as much as obligations in all respects.

Major Ports are directed that:
(i) The period for completion of any project under implementation in PPP mode or otherwise, can be extended by the Ports.
(ii) For existing and operations PPP projects, the Major Ports can permit waiver of all penal consequences on a case-by-case basis along with deferment of performance obligations as per relevant provisions of Concession Agreement.
(iii) The period of Force Majeure starts form the date of order of Ministry of Finance referred above and will end when the competent authority so orders…

(For information about operations in India, contact GAC India at [email protected])

Source: Extracts from the Indian Ministry of Shipping guidelines to major ports dated 31 March 2020

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