Qatar update - important information for Members

The recent severing of diplomatic ties with Qatar by several countries (the "Alliance Countries") is having a knock on effect on trade between Qatar and the Alliance Countries, and also an impact on the international carriage of goods to or from Qatar.

Presently, the TT Club is aware that the carriage of goods by sea has been affected as certain ports in Alliance Countries are refusing to admit Qatari flagged vessels and vessels intending to call at Qatar. They are also refusing to handle transhipment vessels and/or cargoes bound to or coming from Qatar.

We are aware of reports that some banks may refuse to deal with Qatari banks and / or refuse to recognise the Qatari Riyal but we understand that there are not currently any material restrictions on trade or financial dealings between entities in Qatar and in the Alliance Countries.

Members are likely to have entered into contracts of carriage that may be affected by the transportation restrictions, but over which they may not have any control as the actual carriage is being performed by third parties such as shipping lines and airlines. Members may also have entered into contracts for the provision of other types of services that may become affected by the current restrictions. Members' positions under such contracts are outside the scope of this guidance note.

It is unclear as to how long the current transportation restrictions may be in place, or whether their scope may increase. There is no right or wrong answer as to how Members should respond to this situation and manage existing contracts of carriage. We hope that the following guidance is of assistance to Members.

What can I say to my customers?

Probably the most helpful recommendation we can make in this situation is that Members keep their customers informed as to any problems, delays and developments: an informed customer is generally a less upset customer. Members should, however, ensure that any updates provided do not admit liability for any delays, or create promises as to performance on which customers may rely. One option may be to simply pass on any updates from performing carriers. Alternatively, Members could ask their customers for specific instructions about what they want to do with the cargo and, depending upon the nature of those instructions, request that the customers pay up front any extra charges that are likely to be incurred.

Can I abandon the carriage?

Members using the TT Series 100 bill of lading (the "TT B/L") may be entitled to deliver Qatar bound cargoes at intermediate ports if they are unable to complete the carriage as a result of the restrictions. This right arises from Clause 13 of the TT B/L. Other bills of lading may have similar clauses.

If Members elect to deliver cargoes at intermediate ports, they should be aware that they should provide notice to their customer to take delivery of the cargoes and, if the customer does not do so, the Member should look at arranging storage of the cargoes. Under the terms of the TT B/L, Members are entitled to recover the reasonable costs of such storage, but the TT Club cautions Members that recovery of these costs may not be straightforward and is not guaranteed. Members may also find that their customers elect to abandon the cargoes themselves, leaving the Members to arrange disposal.

Can I make alternative arrangements for the carriage?

There may be opportunities for Members to re-route carriage to avoid or minimise the disruption. The TT Club understands that a number of the major shipping lines are already considering the available options in this respect and Members are likely to be bound by the decision of those lines.

If, however, Members are able to take control of and re-route cargoes, then the terms of the TT B/L give them an argument that they are entitled to do so, and also to recover the costs of such re-direction. Again, the recovery of these costs may not be straightforward and is not guaranteed.

Can I just wait to see what develops?

The TT B/L also gives Members an argument that they are entitled to allow the current situation to develop and see if solutions present themselves, and arguably be able to defend any claims for loss or damage arising out of delay as a result. However, the TT Club would urge caution before taking this approach.

Is any option better than another?

In considering how to deal with any disruption, Members' should give thought to the terms of the relevant contracts, the value of the cargo being carried or services being provided, and also the importance of the customer and the commercial relationship. As we have said before, there is no right or wrong answer. The decision is ultimately an operational one for each Member, but the TT Club is, of course, available to discuss these options or any other issues that may arise.

If you have further questions please contact your TT Club representative.

Staff Author

TT Club