UK: The Japanese Natural Disaster And Its Consequences: Legal Issues Arising For The Shipping And Trade Industries

Last Updated: 5 April 2011
Article by Nick Burgess

The earthquake that struck off the northern Pacific coast of Honshu, Japan's largest main island, in the early hours on Friday 11 March was the fourth largest recorded in the world since 1900. It caused extensive damage to property within several hundred kilometres of its epicentre. However, the greatest impact of the earthquake was from the resultant tsunami which swept through many coastal towns causing significant loss of life and human suffering.

The tsunami also affected the ports and coastlines of Fukushima, Miyagi, Iwate and Aomori, collectively known as the Tohoku region. In addition to tsunami damage to ports, shipyards and the regional fishing fleet, there were various reports of ships and ferries running aground and suffering damage.

Furthermore, the nuclear power station at Fukushima was damaged and this has caused considerable concern over the risk of uncontrolled radiation leaking from the damaged nuclear reactors. The authorities have evacuated the immediate area and are monitoring radiation levels to ensure that those in the area do not suffer the effects.

The tsunami has proven to be the biggest natural disaster to affect Japan since an earthquake levelled Tokyo and Yokohama in 1923. The Japanese Cabinet Office reported on Wednesday 23 March that direct losses of between 16 trillion yen (US$198 billion) and 25 trillion yen (US$309 billion) have been incurred as a result. If this estimate is correct, the resultant losses will exceed those resulting from Hurricane Katrina in New Orleans in 2005, which the insurance industry assessed to be in the region of US$125 billion.

Beyond the unimaginable human cost of the disaster, there has been and will continue to be significant impact on the Japanese economy and widespread repercussions for the shipping and international trade industries. This briefing aims to set out some of the issues that have been encountered by these industries as a result of the tsunami and that will continue to be faced in the immediate future.


The principal effects of the tsunami on the shipping industry relate to port infrastructure and the flow of import and export cargoes. Japanese ports, which handle about 7 percent of the country's industrial output, were badly hit. The ports in the northern part of Japan were severely damaged, although the Japanese transport ministry reported on 23 March that most key ports (12 out of 15) had re-opened and were usable for recovery efforts and general use. Only the ports of Ofunato, Ishinomaki and part of Ibaraki remained too damaged to be used, although the ministry stated that it was working to re-open the sea routes at those three ports. It has further been reported in the press that grain cargoes are reaching Japanese ports after disruptions at terminals, the shipments having been transferred to southern Japanese ports without much difficulty. Nonetheless, there remain a number of concerns for ship-owners and charterers.

Safe port issues

Various safe port issues arise, including as a result of damage to port facilities and equipment, the risk of damage to vessels, the possibility of aftershocks and potential radiation risk from the Fukushima nuclear plant. Owners might also be concerned that if they call at a Japanese port, they may subsequently not be allowed to trade in another country for fear of radiation risk.

Ship-owners may be reluctant to call at particular Japanese ports in case they have become unsafe. Parties to charterparty contracts which provide for loading or discharging at a Japanese port should review the terms of the charterparty carefully before deciding on which course of action to take.

Where the charterparty contains a safe port warranty, the warranty will be prospective. This means that at the time of nomination, the port should be prospectively safe to approach, use and depart from for the period of the vessel's likely visit, in the absence of some abnormal and unexpected future event.

In the case of a time charter containing a safe port warranty, where the Japanese port was nominated prior to the earthquake but the port is likely to have become unsafe by the time the vessel is due to load or discharge there, then the time charterer may be obliged to give new voyage orders, so long as the vessel can effectively comply with those new orders. In the case of a voyage charter, the position is less clear and a detailed review of the terms of that charter will need to be undertaken before any conclusion is reached.

Regarding radiation risk, it is not at present clear how wide this risk is in physical terms. A ship-owner may be reluctant to sail near the plant and especially within the exclusion zone for radiation, arguing that the risk of radiation makes the port unsafe. However, if the radiation risks prove to be exaggerated and unjustified, an owner may find himself in breach of charter for refusing orders to go the relevant Japanese port, particularly if it is out of the "immediate" risk zone. Ship-owners should therefore not refuse voyage orders to call at any Japanese port lightly, because many ports outside the earthquake and tsunami area are operating normally. The fact that grain shipments have been successfully diverted to southern Japanese ports supports this view.

It is recommended that potentially affected ship-owners keep a close eye on developments and update themselves in terms of the prevailing conditions at the relevant port before taking any decisions as to whether charterers' orders are legitimate or illegitimate. Port authorities and local agents should be consulted for updated reports relating to the situation on the ground and Japanese government website consulted in respect of radiation risks.


Parties to the charter party should also consider whether it contains any liberty to deviate to a different port although, absent such an express provision, the ship-owner (in the guise of the Master) has an implied right to deviate in order to avoid danger to the vessel, cargo or those on board. As to whether the risk of radiation will be deemed sufficient justification for a deviation, this will depend on the relevant facts in the particular circumstances.

It may be that the parties to a voyage charter party wish to come to a new agreement and vary their charterparty to allow discharge at a different port. Any such variation should, among other things, also allocate responsibility for any additional expenses arising out of the deviation.

Where a decision is made to tranship cargo, consideration must be given as to who bears the costs of such transhipment.

Bills of lading

Where the cargo is going to be delivered at a substitute port, then the bill of lading terms should be examined to see whether the bill incorporates the terms of the charterparty in question. Alternatively, the bill of lading may contain its own liberty clause, which permits deviation in these circumstances to another port. In the absence of such a provision, it may be that discharge at a port other than the one named in the bill amounts to a breach of the owner's / carrier's obligations under the bill of lading. Clearly also, the owner must make sure that even where there is a liberty to deviate, any delivery of the cargo at an alternative port is made only to a party entitled to take such delivery.

Any additional expenses incurred by the owner as a result of the deviation may be recoverable from cargo interests but this will depend on the terms of the relevant liberty clause in the contract of carriage.

Frustration / Force Majeure

The parties to the charterparty should check whether their contract contains a provision that allocates risk as between the parties in the case of supervening events. If so, such a provision would specify where responsibility lies in the case of such an event. However, where there is such a provision, but it does not expressly cover the earthquake / tsunami scenario, then one or other of the parties might seek to rely on frustration of the contract.

Under English law, it is rare for a party successfully to demonstrate that its contract has been frustrated. This will require the party alleging frustration to establish that circumstances have changed to such a radical extent since the contract was concluded that the contractual obligation in question can no longer be performed or, if performed, would be very different to the obligation which was originally undertaken. Mere inconvenience, hardship, additional expense or delay will not generally amount to sufficiently frustrating factors. However, where the vessel itself is damaged as a result of the tsunami, there may be an argument for frustration. Furthermore, in certain circumstances, a delay may be such as to amount to frustration and this will depend in part on the length of delay as against the length of the charterparty, although this is not a conclusive factor. By way of example, in The Sea Angel [2007] EWCA Civ 547, the Court of Appeal held that a delay of three or so months towards the end of a short (20 day) time charter caused by the unlawful detention of the vessel by the port authorities did not frustrate the charter.

Whilst there is no general concept of force majeure in English law, there may be a force majeure clause in the charterparty and it is arguable that an exception such as "Act of God" would cover the Japanese disaster. Again, however, the relevant provision and the prevailing circumstances would have to be considered closely by the party seeking to rely on force majeure before concluding whether or not there was a force majeure event.


The congestion at Japanese ports (and possible damage to equipment / facilities) that will have resulted from the disaster will mean that any vessels already at Japanese ports, or due to call there, are likely to experience delays in loading or discharging their cargoes. Time charterers might seek to argue that the vessel is off-hire in such circumstances but, generally speaking, hire will continue to run unless the charterparty is frustrated or the vessel is ordered to an alternative port pursuant to any relevant charterparty provisions. However, the wording of the off-hire clause in the charterparty will need to be reviewed carefully. For example, the standard un-amended clause 15 of the NYPE time charter lists specified off-hire events and ends with the words "or by any other cause". The amended (and expanded) version adds the word "whatsoever" to the end of that phrase. It is arguable that, in the case of the former un-amended wording, the off-hire clause will not cover a port closure, whereas the latter amended wording might. On the other hand, damage to the vessel resulting in a loss of time might arguably be covered by the unamended wording.

As regards a voyage charterparty, where notice of readiness has been validly tendered and laytime has already commenced, then the vessel is liable to be on demurrage unless the voyage charterer can rely on any exception or interruption to laytime.

Dangerous goods

The radiation from the damaged nuclear reactors has been known to have affected food and water within the surrounding area. There arises therefore the possibility that certain cargoes on board vessels may have been affected by the leaking nuclear radiation. This may give rise to subsequent cargo claims. Alternatively, there may be claims that affected cargoes are dangerous cargoes entitling owners to refuse to load them. Again, parties need to review their contractual provisions carefully and assess the actual exposure to radiation before deciding how to proceed.

International Trade

Japan is the world's third largest oil importer and the largest purchaser of thermal coal and LNG in the world. Japan also has a large steel industry, ranking second only to China in steel production. Japan is furthermore a major importer of commodities, including agricultural products. It was reported on 24 March that Japan has secured enough extra LNG supplies to compensate in the short-term for reduced power generation capacity as a result of a number of coal-fire and nuclear power plants going offline. Furthermore, as stated above, shipments of grain have been rerouted to alternative Japanese ports in the South. Nonetheless, there remain a number of legal concerns for traders and others in the commodities business.

Frustration / Force Majeure

As outlined above, frustration of contract is a difficult argument to advance successfully under English law. The fact that a sale contract may have become more expensive or burdensome to perform, for example, because of difficulties in production or transportation issues, will not generally amount to frustration. By way of example, in the case of The Mary Nour [2008] EWCA Civ 856, the Court of Appeal held that the seller of a cargo of cement was liable to the buyer for failure to supply the cement as required under the sale contract, notwithstanding that this was due to the commercial pressure exerted by a third party, a state-owned company that operated a cartel in the relevant area. The fact that the original supplier chose not to make the goods available did not amount to an event frustrating the sale contract.

Traders who anticipate problems in fulfilling any contractual obligations should check their sale contracts for any force majeure provisions to establish whether any such provisions cover the Japanese disaster.

Payment for goods

To date, there have been no reports of major disruption to the Japanese banking system. Therefore, payment under sale contracts by letter of credit should not have proved problematic.

Shipment of goods

Traders who are also charterers of the ship nominated to transport the goods under a sale contract may find themselves liable for demurrage. The charterparty should be reviewed carefully to check whether its provisions expressly provide for the interruption of laytime or demurrage in the case of a force majeure event. Alternatively, traders may face cancellations where the laycan period expires without loading having commenced. Again, contractual provisions should be considered carefully to assess the legal consequences.

Condition of goods

It should also be noted that some concerns have arisen with regard to cargoes becoming affected by radiation, so that they may no longer meet their specifications under the sale contract. The buyers may consequently refuse to pay for and / or take delivery of the goods. The sellers may be required to provide alternative goods from another source, depending on the terms of the sale contract. Alternatively, there may be countries which refuse to allow the discharge of goods which may have been affected by radiation even though the goods might in fact be perfectly sound.


Traders should check whether their cargo insurance covers the type of risks being encountered in Japan, including additional forwarding costs and the potential damage or deterioration to any goods, for example stored in warehouses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.