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War risk clauses and other reflections from the ongoing Russia-Ukraine conflict
Russia’s invasion of Ukraine has created myriad headaches for shipping lawyers. However, there is “quiet optimism” for a sector that has much to look forward to, says one award-nominated lawyer.
Jerome Doraisamy
When asked how the onset of war in eastern Europe has impacted upon shipping work, Cusack & Co principal Alison Cusack (pictured) said that approximately one in 10 seafarers are from impacted countries.
In conversation with Lawyers Weekly, Ms Cusack – who appeared on The Boutique Lawyer Show earlier this year to discuss supply chain issues and the importance of being known across your chosen sector – said that clients now have greater delays, and are seeing “that the old ‘near miss’ or ‘one and done’ marine incident is a notion of the past”.
As such, she said, they need to be proactive in their risk assessment and diversify their supply chain.
Work for shipping lawyers has ramped up significantly, Ms Cusack continued, noting that congestion issues in the US continue to persist that lead to impact around the world as the supply chain is interconnected.
“Additionally, we are seeing a shortage of seafarers due to issues with length of time aboard (11+ months continuous), trouble setting up vaccination programs and ports having to have full or partial shutdown with any COVID surge,” she said.
Helping lawyers in this space manage, she said, is the existence of war risk clauses in the commercial contracts.
These, Ms Cusack noted, are “very familiar to me”, given her experience in reviewing “countless” time charters.
“Sanctions and the catch all of ‘mandatory law’ are more common in broader commercial clauses. Originally designed to proactively capture issues that were on the horizon (e.g., carbon tax and the like) to be able to rachet price increases it is worth looking at how force majeure and frustration will affect more general commercial contracts,” she said.
“Shipping touches every country (even landlocked countries!) and so the delicate balance of inter country diplomacy is always on a shipping lawyer’s radar. Australia was hit with sanctions from Russia a few years ago that overnight impacted fresh produce exports so this is not new territory for us shipping lawyers!”
When it comes to lessons learned from shipping lawyers for those in other sectors, it is far better, Ms Cusack espoused, “to have a standardised clause that lives in the standard framework of your contracts for 10 years and not need them than to be caught off-guard”.
Reflecting on how work for shipping lawyers might pan out in the rest of the year, she said that the biggest – but also quietest – issue on the horizon right now is US President Joe Biden’s spotlight on liner trade agreement.
“Containerised trade is made up of various competitors that have government permission to jointly operate trades (with strict protocols), and if the US pulls the ability to have liner trades this will have major implications for all importers and exporters in Australia,” she outlined.
“That will be a space to watch. Despite the situation in Eastern Europe, there is quiet optimism that congestion and demand will ease to untangle the supply chain snarl and pinch points.
“However, this is predicated on having a year with the average number of incidents (2020 and 2021 had significantly above average marine incidents) and shipping line Evergreen (of the infamous Suez Canal EverGiven) had a ship the Ever Forward ground outside a US port.”
This all said, the “visibility of shipping is very exciting”, Ms Cusack mused.
“The industry is getting more visibility within businesses and managers and supply chain staff are getting more support and are able to start building proactive solutions rather than wait with [bated] breath,” she concluded.
“The IMO is also celebrating its inaugural international Women in Maritime Day on 18 May, and as the Women’s International Shipping and Trading Association president, it’s great to hopefully attract more gender balance into the industry.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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