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CORONAVIRUS

September, 2020

FROM ‘FREEZER FARMS’ TO JETS, LOGISTICS OPERATORS


PREPARE FOR A COVID-19 VACCINE

Logistics providers are building giant cold-storage facilities, or “freezer farms,” and lining up equipment and transportation capacity as they gear up for the rapid delivery of millions of doses of potential coronavirus vaccines worldwide.

Drugmakers have been racing to build supply chains for their coronavirus vaccine candidates, finding manufacturing sites, and ordering specialized production equipment. As some drugs advance to final-stage clinical trials, logistics providers are making preparations to deliver them securely.

The distribution operation—taking drugs from far-flung manufacturing sites to medical teams via warehouses, cargo terminals, airports, and final storage points, all in a matter of days—promises to be a logistics high-wire act with risks at every stage. Breakdowns in refrigeration equipment, transportation delays, broken packaging, or other mishaps could leave many thousands of doses useless.

Drugmakers with vaccines in final-stage clinical trials expect their products to require strict temperature controls. Moderna Inc. said it expects its vaccine to require minus 20 degrees Celsius storage. Pfizer Inc. said the vaccine it is developing with German partner BioNTech SE will probably have to be stored at minus 70 degrees Celsius, plus or minus 10 degrees. AstraZeneca PLC said it expects the vaccine to develop with University of Oxford researchers to require refrigeration, but declined to give details.

Logistics operators have been expanding their refrigeration and freezing capabilities in recent years, particularly as the health-care industry has grown, and pharmaceutical transport has become a more significant business.


September, 2020

CORONA VIRUS: INVOCATION OF FORCE MAJEURE CLAUSE


TO AVOID LIABILITY FOR NON PERFORMANCE OF OBLIGATIONS UNDER THE CONTRACT

The outbreak of Corona Virus in China, for the last few months, has affected the lives of numerous people which also resulted in the loss of their life, that the World Health Organisation (WHO), on January 2020, declared that the outbreak of this Corona Virus constituted a “Public Health Emergency of International Concern.” The term “Public Health Emergency of International Concern” (otherwise termed as PHEIC) is defined under the International Health Regulations, 2005 as an “extraordinary event which is determined, as provided in these regulations – (1) to constitute a public health risk to other States through the International spread of disease; (2) to potentially require a coordinated international response.

As the said virus continues to spread across China and under the PHEIC declaration by WHO, many International Companies, including the governments, have started to impose business/travel restrictions on their citizens to travel until the current situation stabilizes. Many Governments have also announced the suspension of new visas to those who hold PRC Passports and have also banned entry to those citizens who have visited China in the last couple of weeks. These restrictions have put all the business entities both in China as well as other Countries in a problematic state since China is the second largest economic power and this unexpected outbreak of Corona Virus and its consequences have largely restricted the Individuals to stay at home to avoid spreading of the virus

that has directly / indirectly affected the performance of obligations by the Companies who are bound by various contracts with National /International entities. As the outbreak of the Corona Virus continues, it is likely that the trading business to and from China will continue to be affected, not only because the unavailability of the International / Domestic transport facilities but also because the factory workers have been asked to stay at home to avoid the widespread of the virus. Many companies who had been engaged in business with the Chinese Companies are forced to stop production because they struggle to obtain the required raw materials from China.

In fear of failure to perform contractual obligations that might make them accountable towards the other Party to the Contract, many Companies in and outside China have already commenced looking into the possibility to invoke the Force Majeure Clause in their Contracts / Agreements.

Most of the business contracts include the Force Majeure Clause so that the Parties can either suspend, limit or even terminate their performance of obligations imposed on them under the Contract if any Force Majeure events like any natural Disaster, War, Strike, Act of God occurs unexpectedly, which lawfully excuses their non-performance and/or delay in performance of their obligation under the Contract. However, this Clause is often included with insufficient thought being given as to whether they are appropriate for the Contract or not.

Usually, to invoke the Force Majeure Clause, the Party to the Contract must consider:
a. The performance obligation of the Party invoking the Force Majeure Clause under the Contract;
b. The impact of the Force Majeure Event on their ability to perform the obligations;
c. Whether there are any steps the Parties can take to mitigate or minimize the impact of the Force Majeure event on their obligations, including considering alternative methods performing their obligations under the Contract;
d. Whether the Force Majeure event falls within the scope of the Force Majeure clause of the Contract and whether it can and should be invoked and;
e. If so, what are the requirements, in particular the notice requirement that must be complied with.

In short, the Force Majeure Clause should hold all the Parties safe from any liability for Non-performance, following the Force Majeure Event. Further, the Party invoking the Force Majeure Clause in its Contract must be able to convince that there are no alternative means for performing its obligations or that the Party has taken all reasonable steps to avoid the Clause’s operation. As such whether the Force Majeure Clause in the Contract includes the outbreak of Corona virus and the hindrances due to its outbreak shall depend on the wording of the Clause, steps were taken by the Party who wish to invoke the force majeure Clause to avoid the maximum hindrances, and whether the outbreak constitutes a foreseeable incident.

Many criticizers have suggested that if the parties have entered into a contract with a Force Majeure Clause after the SARS outbreak, it may have been foreseeable that a similar virus could occur again. Then the parties may not be entitled to any relief.

Also, a problem arises when a Contract does not mention a Force Majeure Clause. It is also to be noted that the English Common Law does not imply the Principle of Force Majeure, unless it is specifically mentioned in the Contract itself. However, even where there is no Force Majeure Clause in the Contract, it does not mean that there are no grounds to excuse the performance. The parties whose Contracts do not explicitly contain a Force Majeure Clause, but is governed by the English Law, may opt to invoke the Doctrine of Frustration, which means that if a contract becomes impossible to perform through no fault of either Party, the Contract may be automatically terminated. However, the conditions to prove the existence of Doctrine of Frustration is severe than that included in the Principle of Force Majeure and these conditions shall include –
a. The terms and Condition of the Contract;
b. The factual background to the Contract;
c. The Parties’ knowledge and expectation about the risk when entering into the Contract;
d. The Parties’ calculations as to the ability to perform the Contract in the circumstances which are said to have frustrated the Contract.

In addition to the above-mentioned points of differentiation, the Principle of Force Majeure allows the Parties to suspend the performance of the obligation instead of the complete termination; the Doctrine of Frustration permanently put an end to the obligations between the Parties except for those obligations that had been earned before such termination.

In any case, whether the Party’s obligation under a Contract is hindered due to the widespread of Corona Virus or for any other unforeseen reason, the Party invoking the Force Majeure Clause shall rely on such facts which would help them to prove that they have been prevented or hindered from performing the Contract as a result of such unforeseen Force Majeure Event. In other words, there must be a causal connection between the Force Majeure event and the inability to perform the obligation under the Contract. Further, the companies may, in the future, also opt to include the term “Epidemic” and “Pandemic” in the Force Majeure Clause.

Furthermore, since the World Health Organisation has also declared this outbreak of Corona Virus as the “Public Health Emergency,” the Courts shall also take into consideration WHO’s declaration while deciding on any case against any Company that has invoked the Force Majeure Clause in this scenario.


July, 2020

OFFICE AND WAREHOUSE SANITIZATION DRIVE


Within a few weeks of its emergence, the novel coronavirus has created unprecedented impact on the way people live and work across the globe. While most of our staff are supporting remotely, we need to keep our premises open to facilitate business continuity. As champions of a great work experience, we want to help everyone stay healthy in the office while sharing common workspaces.

At CSS, we lay great emphasis on the health and wellbeing of all our employees. We believe in creating a healthy work culture that will enable us to surmount the challenges that COVID-19 has presented and beyond.For this purpose, we organized an office sanitization drive to help navigate this critical phase of our fight against the unknown and unseen enemy.

Good cleaning and disinfection routines can greatly reduce or eliminate the viral count of COVID-19 on surfaces and objects in the offices and warehouses.

All our offices/facilities in Jebel Ali (HQ & CSLC-1), the office & warehouse premises are being cleaned and sanitized by our housekeeping personnel. We adhere to the best disinfection practices recommended by government bodies worldwide to ensure that our workspaces and warehouses are completely safe and sanitized, always.


March, 2020

CORONAVIRUS AND ITS IMPACT ON THE GLOBAL SUPPLY CHAIN


The news splashed on the front pages of newspapers all over the world is the Wuhan novel coronavirus and alarming rise of its death toll. Reports of confirmed coronavirus cases are coming from all corners of the globe every day, and the disease has taken the scale of a global pandemic.

The coronavirus has closed the doors to China and has put a severe strain on the global economy.  There has been upheaval and disruption in worldwide businesses and supply chains, depressing asset prices. All this has forced multinational companies to make hard decisions with limited information.

Most of all, the impact on the trading, logistics, and shipping industry worldwide due to the widespread coronavirus is quite significant. From the travel bans both in and out of China to a shutdown of production in Chinese factories and global fall in oil prices to a severe slump in China-bound imports, the impact has been stupendous.

The scale of this pandemic has been such that nobody can draw a timeline on how long the quarantine will last and when it will get back to being business as usual.

The industrial city of Wuhan

Wuhan, an inland city about 500 miles from the capital city Shanghai, has grown to be an industrial hub. Wuhan is also home to China’s burgeoning steel industry.  A manufacturing center for global giants like Nissan, Honda, and GM, it also functions as a corporate hub for companies including IBM, HABC, Honeywell, Siemens, and Walmart. The economy of Wuhan has exploded in recent years due to lower living and housing costs and easy availability of labor. Part of your supply chain may originate or pass through Wuhan for manufacturing, assembly, or finishing. It is but natural to expect severe shortages, delays in materials sourced or manufactured in Wuhan.

The risk to your supply chain

Since no one can predict the length of the Wuhan shutdown, your global supply chain for raw materials or finished goods stands at risk.

The impact on supply chains will largely depend on the following factors

  • How long businesses remain closed
  • The extent to which supply chains have been effected
  • Companies and logistics service providers take precautionary measures

Freight volumes, activity levels, processes, and volumes will be impacted to varying degrees. But as always, supply chains do adapt and adjust to the demands of the situation to ensure that freight movements happen unhindered.

Alternate plans

It is in a crisis of such a scale that one realizes the need for alternative sourcing and manufacturing strategies. Many countries have started looking beyond China already and have discovered other Asian manufacturing hubs. The coronavirus is but a rude wakeup call for supply chain service providers to have sourcing and manufacturing hubs in various geographical locations spread across the globe as contingency plans in the case of natural or political upheavals.

China might be back in business in the next few weeks, which might even extend to a month or more. Shippers and logistics service providers should continue to watch how long the gridlock on China will continue and then develop remedial plans to surmount this crisis.


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