Chinese Shipbuilder New Times Declares Force Majeure Due to Coronavirus

February 12, 2020 Updated: February 12, 2020
FONT BFONT SText size

BEIJING—A Chinese shipbuilder has declared force majeure on deliveries of two newcastlemax dry bulk vessels, a company spokesman said on Feb. 12, as a coronavirus outbreak and prolonged holiday impeded workers from returning to work.

Jiangsu New Times Shipbuilding Co., with a production capacity of 5 million deadweight tonnes (DWT) per annum, has issued a force majeure notice to 2020 Bulkers, a Bermuda-based cargo operator, following the coronavirus outbreak.

Force majeure refers to unexpected external circumstances that prevent a party to a contract from meeting their obligations.

The underlying event must be unforeseeable and not the result of actions undertaken by the party invoking force majeure. Natural disasters, strikes, and terrorist attacks can all be force majeure events.

Declaring force majeure may allow a party to a contract to avoid liability for nonperformance.

Two newcastlemax dry bulk vessels due to be delivered in April and May are facing possible construction delays, 2020 Bulkers said in a statement on Tuesday, citing a force majeure declaration from New Times on Feb. 5.

A New Times spokesman confirmed the force majeure on the two vessels. “Workers are still not coming back to their positions due to the coronavirus. It is not known when they will resume work and when the two vessels will be completed.”

Chinese authorities have asked companies to put workers into quarantine for 14 days after returning from their hometowns for the Lunar New Year holiday, which has been extended by a week, in order to rein in the spread of the virus.

The China Association of the National Shipbuilding Industry data shows that around 75 percent of workers have come back to work at key shipbuilding companies in the southeastern provinces of Fujian and Liaoning, but only around 62.5 percent workers returned to Shanghai as of Monday.

However, shipbuilding companies at Guangdong, Shandong and Jiangsu, where New Times is located, are seeing workers “gradually” restart to work, the association said.