Fumigation clause

All marine practitioners would have come across the Fumigation clause at some time or the other. Going by its name, one has a vague understanding that by the addition of this clause, expenses incurred on Fumigation are covered under the policy and the insurer would pay up the expenses quietly. Not totally correct. This being one of the ‘not much in demand’ clause, not many would have deemed it necessary to understand its nuances. Those who made an effort would have come across a similar clause in Charter parties as well.  Confusion sets in as to whether this clause is applicable to marine cargo policies or to charter parties or to both. If applicable to both, are the intent and wordings the same?

As far as marine cargo policies go, the clause is sometimes referred as Fumigation clause with a wider version being termed Fumigation & Decontamination clause. Yes, there are multiple wordings in use. At times, it is simply referred to, as Fumigation expenses.

In its simplest version, the clause states that in the event of a conveyance (usually a vessel) or location being fumigated results in loss or damage to the Assured’s goods, the insurer would make good the loss. The Assured, on his part would subrogate to the insurer any rights or recourse which he may have against others for recovering such loss or damage. A slightly enhanced version of this clause pays not only for loss/damage caused by fumigation but also the fumigation expenses incurred to minimize or avoid losses recoverable under the policy. Customary and mandatory fumigation expenses are not payable under this extension.

In its widest form, the Fumigation & Decontamination clause covers “reasonable costs, charges & expenses of fumigation, decontamination or quarantine, including additional freight charges, incurred at the destination port or any intermediate port where:

•  the cargo is suspected to have been infested or actually infested and
• the appropriate authority orders the goods to be fumigated or decontaminated.”

Then what about the Fumigation clause in charter parties? The BIMCO Cargo Fumigation clause for charter parties, introduced in September 2015 is mainly applicable to fumigation in the dry bulk sector, cargo carried either in bulk or in bagged form. The major aim of this clause is Safety & allocation of responsibility and costs. Brief details of this clause in charter parties  ( both Time & Voyage charters) are as under:

1. The parties to the charter are obliged to follow the safety standards as laid down by The International Maritime Organization (IMO)
2. This clause covers cargo fumigation only and not fumigation of empty holds
3. Fumigation can be carried out in port, after loading, before discharging or while the vessel is in transit. If fumigation is done after loading, the same needs to be declared by the charterers to the owners
4. If fumigation is performed when the ship is in a port, all onshore expenses like boarding and lodging of the crew have to be borne by the charterer
5. Expenses of fumigation as also claims made against the vessel owner by cargo interests, third-parties & owner’s direct and consequential losses will be to the charterer’s account
6. Qualified handlers alone should handle the fumigants & the fumigation operation apart from disposal of the residue
7. Fumigation should not constitute an admission as to the condition of the cargo
8. Time losses resulting from fumigation operations will be to the charterer’s account

So, it stands to reason that should there be a loss/damage to the cargo during fumigation and in terms of the Fumigation clause, the cargo insurers indemnify the assured, they will have recourse against the charterers under subrogation.