J.M William Turner – The Shipwreck, 1805, London - Tate Britain

Shipwrecks and other disasters at sea were frequently painted during the Romance period.

Costa Concordia Salvage Operation

It is expected to be the biggest salvage operation ever attempted. As of September 2013 the salvage has cost over $800 million.

The Bulk Carrier Double Fortune

The Panama flagged bulk carrier Double Fortune was built in 2010. Gross tonnage and deadweight are 50617 t and 95790 t respectively.

Manoeuvring Container Operations

Containerisation and multimodal transport: the development of door-to-door transport.

Fire Onboard Vessel

Fire on board ship is one of the most dangerous risks for vessels and cargos. Electrical equipments, flammable liquid on board, engines and boilers often cause it.

Monday, 15 December 2014

Power ships: what are they and what does the law say?


December 15, 2014.

Power ships today represent the cutting edge of innovation, making the source and production of energy movable. Increasing and variable demand for energy has caused local authorities to face new demands for production. Immediate energy demands must be met but investment should not lead to long-term entrenchment of infrastructure likely to be outdated quickly.

A solution is to use short-term structures while promoting investment in more sustainable energy resources. In this context, floating power installations may be a useful option.


To read the rest of this article you can request a free access to Shipping and Trade law.

Source: http://www.shippingandtradelaw.com

Tuesday, 9 December 2014

ICS Publishes New Chemical Tanker Safety Guide

December 9, 2014.

A fully updated edition of the definitive industry guidance on the safe operation of chemical tankers has just been published by the shipping industry’s global trade association, the International Chamber of Shipping (ICS).

The new edition of the ICS Tanker Safety Guide (Chemicals) replaces the previous edition issued in 2002.  ICS recommends that a copy is carried on board every tanker engaged in the carriage of chemical cargoes, and that copies are also held within shipping company technical departments.

Since its first publication over 40 years ago, the ICS Guide has become the standard reference work on best practice for chemical tanker operations, with an emphasis on how best to comply with additional International Maritime Organization (IMO) regulations to ensure the prevention of pollution in the safest manner possible.

ICS Secretary General, Peter Hinchliffe, explained “The production of this new edition has been a major project taking many years and drawing on expertise throughout the industry.  As well as taking account of the latest best practice, large sections have been totally rewritten to assist comprehension”.

The updated ICS Guide takes full account of the adoption by IMO in May 2014 of important amendments to the SOLAS Convention, following a major IMO review of tanker safety that has taken the best part of a decade.

These amendments to SOLAS include new mandatory requirements for the inerting of chemical tankers.  Together with recent changes made to the IMO Fire Safety Systems (FSS) Code, these SOLAS amendments are fully reflected in the new edition of the ICS Guide.

Mr Hinchliffe said “Particular attention has also been given during preparation of the updated Guide to the question of how to inculcate an effective safety culture amongst everyone involved in chemical tanker operations.”
The 4th Edition of the ICS Tanker Safety Guide (Chemicals) is available for purchase from all maritime booksellers worldwide, or direct from ICS.  The updated ICS Guide, with almost 300 pages and numerous illustrations, is accompanied by a CD including a search function and the facility to print and complete various checklists and other documentation.  The recommended price is UK £395.

The ICS Tanker Safety Guide (Chemicals) should be regarded as a companion to the International Safety Guide for Oil Tankers and Terminals (ISGOTT), jointly published by ICS and the Oil Companies International Marine Forum (OCIMF).

Source: http://www.marineinsight.com

Friday, 5 December 2014

What is a Flag of Convenience?

December 5, 2014

When registering a vessel for international travel, one must choose a nation under the flag of which that vessel will sail. The term “flag of convenience” refers to registering a ship in a sovereign state different from that of the ship's owners.

Why register a flag of convenience?

Ships registered under flags of convenience can often reduce operating costs or avoid the regulations of the owner's country. To do so, a vessel owner will find a nation with an open registry, or a nation that allows registration of vessels owned by foreign entities. A ship operates under the laws of its flag state, so vessel owners often register in other nations to take advantages of reduced regulation, lower administrative fees, and greater numbers of friendly ports.

History of open registries

The modern practice of flagging ships in foreign countries began in the 1920s in the United States after shipowners became frustrated with increased regulations and rising labor costs and began registering their ships in other nations (originally Panama). As other nations began to allow open registries a few nations became standouts in the flag of convenience industry. In 1968, Liberia grew to surpass the United Kingdom as the world's largest shipping register and, as of 2009, more than half of the world’s merchant ships were registered with open registries, with Panama, Liberia, and Marshall Islands flags accounting for almost 40% of the entire world fleet as calculated by tonnage.

Criticisms of flag of convenience systems

Many nations with open registries are criticized for having substandard regulations. For example, many shipowners are allowed to remain legally anonymous in open registry systems, making it difficult to identify and prosecute legal actions (whether civil or criminal) against these individuals. Some ships with flags of convenience have been found engaging in criminal activity, offering substandard working conditions, and spewing pollution into the environment or illegally fishing. As a result, ships flying under these flags are now targeted by other nations for special enforcement when they make call in one of the host nation's ports.
Finding the best open registry for your needs

There are about a dozen countries most widely used for open vessel registrations. Which country will be best for your purposes will depend largely on the type of shipping you intend to do, the reputations of the country of registration (i.e., whether their vessels are targeted for special enforcement), and the relative convenience and expense of registering in that country. If you have questions about the registration process and which country will best serve your needs, you should contact an attorney experienced with admiralty law.

Source: http://www.hg.org

Wednesday, 12 November 2014

Commercial Court rules on buyers rights to extensions of time under GAFTA 49

November 12, 2014.
Nidera BV v. Venus International Free Zone for Trading and Marine Services SAE (Pioneer Wave) [2014] EWHC 2013 (Comm)

This recent decision from the Commercial Court provides useful guidance on the construction of Clause 8 of the popular GAFTA 49 form; in particular, on the nature and scope of a buyer’s right to extend the delivery period under that clause.

The Court held that the “clear and unqualified” words in Clause 8 mean that a buyer has an absolute right to extend the shipment period under Clause 8 of GAFTA 49, and the right would remain available to a buyer whose nominated vessel had already arrived and was presented within the delivery period.

The background facts

In late 2010, Venus (“Buyers”) bought 30,000 mt of Ukrainian yellow corn from Nidera (“Sellers”) on FOB terms, using the GAFTA 49 standard form contract with delivery 16-31 October. The Buyers nominated a vessel that tendered NOR at the load port, Yuzhny, Ukraine, on 15 October 2010. However, no berth was available and loading did not commence.

In the meantime, Ukraine had adopted a Resolution implementing a quota system over various exports including corn, and issued an Order setting a quota for corn export of 2,000,000 metric tons and prescribing an export licence application procedure. The Resolution was made before the vessel tendered NOR on 15 October, but both the Resolution and Order were only published after 15 October.

The Buyers claimed that under Clause 6 of GAFTA 49, the Sellers were obliged to have the goods ready for delivery at any time within the delivery period. Meanwhile, the Sellers asserted that the cargo had been available at the loading port from the beginning of the loading period and the delays were due to the Resolution and the Order.

The delivery period was due to expire on 31 October, but on 29 October the Buyers claimed an "extension of the shipment period to 21 November in accordance with Clause 8 of GAFTA 49".

Clause  8, so far as here relevant, reads:

8. EXTENSION OF DELIVERY

[8.1] The contract period of delivery shall be extended by an additional period of not more than 21 consecutive days, provided that Buyers serve notice claiming extension not later than the next business day following the last day of the delivery period.

The Sellers argued that the Buyers’ purported extension was invalid and ineffective. Having been unable to obtain an export licence, on 2 November the Sellers cancelled the contract in reliance on GAFTA Prohibition Clause 13, on the basis that they had been prevented from performing the contract due to prohibition.

On 5 November, the Buyers advised the Sellers that the Buyers accepted the Sellers’ repudiatory and/or renunciatory breaches of contract as bringing the contract to an end.

The Buyers claimed in a GAFTA arbitration that they were entitled to damages. The Sellers denied that there was any such entitlement on the following grounds:

the Buyers’ claim for an extension to the delivery period was wrong, because GAFTA Clause 8 was not intended to apply to a situation where a vessel had already arrived and was presented within the delivery period. The extension was invalid and ineffective; and
the Sellers were entitled to rely upon the GAFTA Prohibition Clause 13.
The GAFTA Tribunal and the Appeal Board both held that the Buyers had validly extended the contract delivery period. As a result, the Sellers’ cancellation of the contract was premature, constituting a repudiatory breach of contract that had been validly accepted by the Buyers.
It was on this issue - the nature and scope of Clause 8 of GAFTA 49 and whether the Buyers’ extension was valid - that the Sellers appealed to the Commercial Court.

The Commercial Court decision

The issue was whether GAFTA Clause 8, which offered the Buyers the option to extend the delivery period, ought to be limited in its application. Could Clause 8 apply to a situation where a vessel had already arrived and was presented within the delivery period?

The Sellers’ main argument in favour of construing such a limitation into the wording of Clause 8 was that since the Buyers’ obligation under the contract was to nominate a vessel for loading (Clause 6), any extension of time sought by the Buyers would logically be an extension allowing the Buyers additional time to perform that obligation.

It followed, therefore, that any right on the part of the Buyers under Clause 8 to extend time must naturally be linked to Clause 6 and limited only to an allowance of additional time for the Buyers to present a contractual vessel within the extended delivery period.

In circumstances where the Buyers had already fulfilled their contractual obligation under Clause 6 to nominate and present such vessel for loading, Clause 8 insofar as it conferred a right on the part of the Buyers to extend the delivery period, no longer had any relevance, and could not be invoked to grant the Buyers additional time to do something they had already done.

The Commercial Court was not persuaded by these arguments. The Judge held that the Sellers’ arguments provided no sound basis for departing from what Clause 8 appears to say on its face: namely, where a timely notice is served, there is an unqualified right of extension under clause 8. The Judge accepted the Buyers’ assertions that the extension of time was valid on the basis that Clause 8 was clear and unqualified in its terms.

Although the Judge accepted that there was a link between Clauses 6 and 8, the Judge held that it could not follow that Clause 8 is solely concerned to mitigate what would otherwise be the effect of Clause 6. Significant weight was placed on the fact that the parties had used an unmodified provision in a standard form contract for use all over the world from day to day. The Court would only find that the words had limited meaning if there was compelling evidence that the limited meaning would be obvious to a trader.

The Sellers’ appeal was dismissed and leave to appeal was refused.

Comment

For traders and other frequent users of GAFTA 49, the decision offers helpful guidance on an important clause in a widely-used standard form contract. Buyers will be glad to know that they have an unqualified right to extend the shipment period under a sale contract, even if they have already nominated (and presented) a vessel for loading, to seek to prevent sellers seeking to rely on potentially temporary impediments (such as prohibition) to avoid performance of their contracts.

Article authors:

Wai Yue Loh, Ajay Ahluwalia

Source: http://incelaw.com

Thursday, 23 October 2014

New Shipping Law Act in Spain


October 23, 2014.

New Spanish Shipping Act

The Spanish Parliament has recently approved a new Shipping Act –Ley 14/2014, de 24 de Julio, de Navegación Marítima–, which will enter into force on the 25th of September 2014. Its 524 sections, divided into 10 titles, cover nearly all aspects of shipping law, either private or public.

So far, Spanish maritime law was mainly contained in a Commercial Code that dates back from 1885, whose provisions reflected a model of maritime trade and transport that is no longer valid. It is truth that Spanish shipping law has evolved through the incorporation of international conventions; however some of them were in contradiction with domestic law. The result? A shipping legislation outdated, incoherent and dispersed in many different texts.

This long-awaited Act tries to put those problems to and end. As the same Act expresses, “it is a renovation that not only involves a mere updating and codification, but it also meets the need of coordination with the international maritime law and the adaption to current shipping practice”.

The legislative technique used has been the referral to the international conventions in force on the different fields, whose provisions are complemented by the Act on the issues that concern national law. That is the case of ship arrests, salvage, ship mortgages and maritime liens, or general average. In those fields, the law remains practically unchanged, with some aspects that are further defined and nuanced. For example, the countersecurity for ship arrests is now fixed at a minimum of 15% of the maritime claim.

Some areas have however experienced major changes. We will examine here below some of the changes that have been introduced.

Charterparties

The new Act regulates separately the demise charterparty and the contracts for the carriage of goods by sea, which include time and voyage charterparties and bills of lading.

Among the shipowner’s obligations we must highlight that of seaworthiness, since reasonable care must be applied not only at the beginning but also during the voyage.

Another innovation concerns the recognition of a lien on the goods in favour of the carrier. So far, a Court order was needed in order to place a lien upon the cargo, which made the process long and expensive. The new Act allows the carrier to hold the goods until freight is paid, but only against the charterer, unless the bill of lading states that freight is payable at the port of discharge.

Carriers’ liability

The carrier’s liability regime follows that contained in the Hague-Visby Rules that are currently in force under Spanish law. However, we must remind that Spain has signed the UN Convention on the International Carriage of Goods Wholly or Partly by Sea (the “Rotterdam Rules”) and, although they are not in force yet, they have put its stamp on this text. Effectively, a significant novelty is that the carrier is not only liable for losses and damages to the goods, but also for delays in delivering.

Ship agents’ liability

The new Act finally overcomes the great controversy originated by our Supreme Court’s decision to hold the ship agent liable for the loss and damage suffered by the goods during its transport. That decision was based on a very confusing provision of the 1885 Spanish Commercial Code that has been derogated. Instead, the Shipping Act clearly states that ship agents will not be liable against receivers for those losses or damages, which is much more adequate to the role that they currently play in the carriage of goods.

Marine insurance

The regulation of marine insurance is primarily based on the conditions of coverage drafted by the Institute of London Underwriters (ILU), which are broadly applicable in the insurance market. The Act also expressly states the subsidiary application of the provisions of the Insurance Contract Act.

Jurisdiction/Arbitration clauses

The Act provides for the nullity of foreign jurisdiction and arbitration clauses contained in the contracts of carriage or other the contracts ancillary to the navigation (ship agency, ship management, pilotage and port handling contracts) as long as those clauses has not been negotiated individually and separately. It further establishes that insertion of such clauses within print forms of any of those contracts will not constitute sufficient evidence, on its own, of the parties’ choice.

Pollution civil liability insurance

Section 389 (2) of the Act establishes that claimants will have now a direct action against the liability insurers up to the agreed insurance cover, or up to the applicable limits of liability, as the case might be.

Arrest of ships

The arrest of ships remains regulated by the 1999 Convention on the Arrest of Ships, although the Shipping Act has introduced some nuances and specifications touching on the procedural aspects of the current regulation. The Act basically writes down the procedure that is followed in practice. However it is convenient to highlight that:

The countersecurity that judges usually request to the claimant is now fixed at a minimum of 15% of amount of the maritime claim.
Arrests requested by a Spanish creditor over a Spanish ship can be based on any type of claims, not only of maritime nature. This is also applicable to vessels with flag of a country that is not party to the 1999 Convention on the Arrest of Ships.
Where the Spanish Court that has ordered the arrest has no jurisdiction over the merits of the claim, the Court will determine a period of between 30 and 90 days within which the claimant must file the claim before the appropriate Tribunal.

by ARIZON ABOGADOS S.L.P.

Source: http://www.arizon.es/shipping-law-act

Saturday, 11 October 2014

Punitive Damages Not Available in Jones Act


October 11, 2014.

In McBride v. Estis Well Service LLC, (Case 12-30714), the Fifth Circuit Court of Appeals, sitting en banc, affirmed the decision of the Western District of Louisiana, holding that the Jones Act limits a seaman’s recovery to pecuniary losses where liability is predicated on the Jones Act or unseaworthiness, and because punitive damages are non-pecuniary losses, punitive damages may not be recovered.  

This action arose out of an accident onboard Estis Rig 23, a barge supporting a truck mounted drilling rig operating in Bayou Sorrell, a navigable waterway in the state of Louisiana.  The truck toppled over and one crewmember, Skye Sonnier, was fatally pinned down by the truck, while three (3) other crewmembers, Saul Tochet, Brian Suire and Joshua Bourque (collectively referred to as the “crewmembers”), suffered injuries.   Haleigh McBride (“McBride”) brought an action on behalf of Sonnier’s minor child for unseaworthiness under general maritime law and negligence under the Jones Act, seeking compensatory and punitive damages under both claims from Estis Well Service LLC (“Estis”), the owner and operator of Estis Rig 23 and employer of the crewmembers.  Each injured crewmember also filed actions against Estis for the same causes of action and requested compensatory and punitive damages.  The actions were consolidated and Estis moved to dismiss the claims for punitive damages, arguing that punitive damages are not an available remedy as a matter of law where liability is based on unseaworthiness or Jones Act negligence.   The District Court treated the motion to dismiss as a motion for judgment on the pleadings, granted the motion, and entered judgment dismissing all claims for punitive damages.

On appeal, the Fifth Circuit Court of Appeals was tasked with determining whether the U.S. Supreme Court’s decision in Miles v. Apex Marine Corp., 498 U.S. 19 (1990), was still good law and would preclude the plaintiffs’ claims for punitive damages.  In Miles, the Supreme Court held that recovery under the Jones Act and general maritime law was limited to pecuniary losses.  The Miles court squarely held that the recovery of the deceased seaman’s survivors under the Jones Act was limited to pecuniary losses.  The Miles court also held that the damages available under the general maritime law cause of action for wrongful death were likewise limited to recovery of pecuniary losses.

The appellants argued that the Supreme Court’s decision in Atlantic Sounding Co. v. Townsend, 557 U.S. 404 (2009) overruled or severely undermined its holding in Miles.  In Townsend, the court considered a seaman’s claim for punitive damages for the willful failure of an employer to pay maintenance and cure.

The Townsend court also recognized that an action for maintenance and cure is independent and cumulative from other claims; therefore, remedies available under the Jones Act and for unseaworthiness would be in addition to claims for maintenance and cure.  Furthermore, the Townsend court also stated that in an action for maintenance and cure it is possible to adhere to traditional maritime remedies without abridging or violating the Jones Act.  The Townsend court also carefully distinguished its facts from Miles and expressly stated that the Miles reasoning remained sound.

The Fifth Circuit Court of Appeals found that the Supreme Court’s interpretation of the Jones Act and general maritime law in Miles controlled in the instant case, remained good law, and would apply to both the wrongful death and personal injury actions of the crewmembers.   The Fifth Circuit also stated that pecuniary loss is designed to compensate the Plaintiff for an actual loss suffered, while punitive damages are meant to punish the wrongdoer for some extraordinary misconduct.   Therefore, by definition, punitive damages are not pecuniary losses.   Additionally, the Fifth Circuit stated that in interpreting Miles, at least one other Circuit Court has held that punitive damages are barred for an unseaworthiness claim under general maritime law because such damages are non-pecuniary and no Circuit cases have found to the contrary.  Therefore, punitive damages were not recoverable in the wrongful death and personal injury actions of the crewmembers brought under the Jones Act and general maritime law because the available damages are limited to pecuniary losses only.

In the dissenting opinion, Circuit Judges Higginson, Stewart, Barksdale, Dennis, Prado and Graves stated that because punitive damages were available under general maritime law before the passage of the Jones Act, and because the Jones Act does not address unseaworthiness or limit its remedies, punitive damages should remain available to seamen as a remedy for the general maritime law claim of unseaworthiness until Congress concludes that punitive damages are no longer an available remedy.

Source: http://www.maritime-executive.com

Monday, 29 September 2014

BP found guilty of gross negligence

September 29, 2014.

BP Plc could have to pay a fine of up to $18bn dollars after being found guity of gross negligence in the wake of the 2010 Gulf of Mexico oil spill, the biggest of its type in US history.

In a case that also involved Transocean Ltd. (RIG) and Halliburton Co. (HAL), US District Judge Carl Barbier ruled that “BP’s conduct was reckless” while “Transocean’s conduct was negligent' and "Halliburton’s conduct was negligent.” The court apportioned 67% of blame for the accident with BP, 30% with Transocean and 3 % with Halliburton.

BP is thought to have set aside $3.5bn to cover the costs of fines for the disaster that killed 11 people and spilled oil for almost three months into waters that reach the shores of five states.

The company had taken a $43 billion charge to cover all the costs related to the spill, according to a July 29 earnings statement. The ultimate cost is “subject to significant uncertainty,” BP said.

Source: http://readmt.com

Friday, 26 September 2014

Captain Schettino Lecturer at the University, De Falco Transferred to Coastguard Admin Duties

September 27, 2014.
We already knew that Italy is not the best example of efficiency, fairness and transparency in the world.  We knew also that central and local authorities and institutions are often the cause of a device broken, often corrupted, and inclined to follow the profit and the need of power rather than the principle of meritocracy.

We all remember the drama of almost three years ago when "the brave" captain Schettino abandoned the Costa Concordia vessel after she struck her port side on a reef. "Get on board, get on board for fuck's sake" Many of you probably will remember the telephone call from the Coastguard to Schettino, in which the enraged captain De Falco ordered captain Schettino to return to the ship from his lifeboat while almost 100 people were still on board. We all known the tragic ending of that night: 32 people lost their lives in the Italian waters.

Schettino is still facing in the trial charges of multiple manslaughter and abandoning ship; on the other hand De Falco has became a symbol of responsibility, the "voice of the duty" as addressed by the Italian newspaper La Repubblica.

What instead nobody would never have  expected is that Captain Schettino would be prized by being invited to the Sapienza University to hold a seminar on "how to resist and quell panic". Stunning, stunning indeed! Does not this sound like asking to Vito Corleone (The Godfather) to hold a lecture on "the legality and justice in Italy"? To me it really does!  Further, as the Costa Concordia was towed away from Giglio this summer, photographs emerged of the former captain partying on the island of Ischia.

Someone could imagine now that the coastguard official De Falco was awarded with some medals of honour or prized with a promotion. He has not. On Thursday, he has said he is being transferred out of operational service at the Livorno coastguard and into administrative duties. De Falco said he was saddened by the transfer, which he had not requested. He referred to La Repubblica that no one has ever blame him for how he tackled the emergency that night and also admitted his anger suspecting of being a victim of mobbing. He therefore confessed he is considering the possibility either of commencing a legal action or dismiss the uniform.

Indeed, public clarification is expected in the following days so as to illustrate the reason that brought the coastguard officer to be punished. Meanwhile, Italians read this news stunned and even a bit ashamed.

Lorenzo Macchi

Thursday, 25 September 2014

Hyundai Heavy Enters MOU on Development of MOBILE POWERSHIP

September 26, 2014.

Polaris Shipping Co., Ltd., Korea Midland Power Co., Ltd., Hyundai Heavy Industries Co., Ltd., and Siemens Energy Solutions Ltd. signed a Memorandum of Understanding at COEX Intercontinental Hotel in Seoul on December 10, 2013 to develop MOBILE POWERSHIP, an integration of shipbuilding and power generating technology in which a highly efficient power generating facility will be installed onto a FSRU (Floating Storage Regasification Unit) for the very first time in the world.

It is expected that MOBILE POWERSHIP will commence its operation in December 2017 with total investment of U$ 940 Million. When compared to building a power plant on land, the model will substantially reduce civil complaints as it will not require a large scale land. In addition, due to systemized and skillful shipbuilding process, overall construction period will be shortened. In terms of power transmission, MOBILE POWERSHIP will utilize existing cables so that sections subject to new installation will be minimized, which leads to significant cost saving. Once the business model is successfully launched in Korea, it is anticipated to move overseas to selectively target combined cycle power producing market where high yields can be generated.
“MOBILE POWERSHIP is the world’s first invention to integrate a combined cycle power generating facility and liquefied gas storage in which a gas turbine and a regasification unit are directly linked to achieve curtailment of fuel cost. Hence, we are of a view that it can be a smart solution to surging demand for electricity in and out of Korea and a successful business model for the Creative Economy.” commented by spokesperson from Korea Midland Power Co., Ltd.
“This Powership integrates the LNG FSRU, the model first designed and built by Hyundai, with the top-of-the-line combined cycle unit in the capacity of 880 MW, which will give birth to an innovative naval architecture through combination of shipbuilding and plant engineering. We plan to target overseas newbuilding market upon successful launch of the project.” commented by Hyundai Heavy Industries.
“Siemens is delighted to participate in the Powership project based on an innovative business model to share our technical expertise and competitiveness which we have built in the global power producing market. Furthermore, synergy between Siemens’ engineering knowhow and Hyundai Heavy Industries’ world class shipbuilding technology will create a state-of-the-art offshore combined cycle power plant.” stated by Dr. Rochus Bergmann, CEO of Siemens .
“MOBILE POWERSHIP is a mobile power plant with a capacity to promptly manage natural disasters such as earthquake and flood. As the world’s no.1 VLOC (Very Large Ore Carrier) owner in shipping industry, we are willing to bring in our best effort based on experiences in new ship design and trust we have earned from highly valued clients” spokesperson from Polaris Shipping mentioned.
4 concerned parties including Korea Midland Power will launch a Task Force Team after signing the Memorandum of Understanding to closely examine technical issues which will be reflected in the engineering of Powership. It is said that once performance of the Powership is ascertained through pilot project in Korea, then it will be exported to Philippines, Indonesia, Brazil, and other countries where power shortage has become a critical issue. In addition, it is anticipated that the project will firmly position itself as a business model well-suited for South Korean policies under the “Creative Economy” by generating approximately $2 billion per project.

Source:http://worldmaritimenews.com

World Maritime Day 2014

September 25, 2014.

Over the years, IMO has built up an enviable track record for developing and adopting new international conventions. There are some 53 in all.


Collectively, they are aimed either at the prevention of accidents, casualties and environmental damage from ships; at mitigating the negative effects of accidents when they do occur, or at establishing a mechanism for ensuring that those who suffer the consequences of an accident can be adequately compensated.

While most of these are in force and have done so much to make shipping safer, more efficient and more environment-friendly, there are still several conventions for which a slow pace of ratification and a lack of implementation are serious causes for concern. There is no doubt that more can, indeed must, be done in this respect.

The adoption of an IMO convention can feel like the end of a process. A conference is held, the text is agreed, there are handshakes all round. But this should not be where the process ends. Indeed, adoption of a convention should be just the end of the beginning, because an IMO convention is only worth anything if it is effectively and universally implemented. All those hundreds, even thousands of man-hours spent refining the text, all that technical expertise that has been brought to bear, all those studies and all that research count for nothing unless the end result has a tangible impact. And, for that to happen, ratification, widespread entry into force and effective implementation are all needed.
It was with this in mind that the theme for World Maritime Day 2014 – namely “IMO conventions: effective implementation” – was selected. It is a theme that provides an opportunity to shine a spotlight on those IMO treaty instruments which have not yet entered into force, as well as those for which ratification by more States and more effective implementation would yield significant benefits.

The traditional diplomatic reception to celebrate the Day will be held at IMO Headquarters on 25 September 2014. The World Maritime Day Parallel Event will be held in Morocco from 27 to 29 October 2014. 

"At a time when the world is beset by conflict and crisis, it is easy to forget that, day in and day out, the international shipping industry works quietly and efficiently to keep the wheels of global trade in motion and ensure the timely delivery of the goods and commodities on which we all rely.

For more than 50 years, international conventions developed by the International Maritime Organization have made global shipping progressively safer, more secure and more environment-friendly. There are more than 50 in all. Collectively, they are aimed at strengthening maritime safety and security, protecting the marine environment, mitigating the negative effects of accidents or establishing regulations covering liability and compensation for damage.

The real value of those conventions can be fully realized only if they are properly implemented. This entails early entry into force, broad participation, effective policies and programmes, stringent oversight and vigorous enforcement. Shipping States, coastal States and the shipping industry itself all have a part to play.

On World Maritime Day, let us recall the often unheralded but always vital contribution by international shipping to peoples and communities all over the world.  I urge all concerned to strengthen their efforts to achieve the full and effective implementation of all IMO conventions." 
Ban Ki-moon, UN Secretary-General

Source:http://www.maritime-executive.com

The Recast Brussels Regulation: Enhancing the Effectiveness of Jurisdiction Agreements

September 25, 2014.
We consider how the recast Brussels Regulation is aimed at reinforcing exclusive jurisdiction agreements within the EU.
Reforms to the Brussels Regulation (on jurisdiction, recognition and enforcement of judgments in civil and commercial matters in the EU) apply from 10 January 2015. In an article in our Winter 2014 Shipping E-Brief (“The recast Brussels Regulation: reinforcing the arbitration exception”), we considered how certain of the changes might affect the interaction between proceedings in court and arbitration. In this follow-up article, we address a different topic: how the recast Regulation is intended to strengthen choice of court (i.e. exclusive jurisdiction) agreements.

Background - Jurisdiction Under the Regulation

The general rule in the Regulation is that a defendant must be sued in the courts of his country of domicile (Article 2). There are various exceptions – for example, in relation to contract matters (where the defendant may be sued “in the courts for the place of performance of the obligation in question”) and tort (where he may be sued “in the courts for the place where the harmful event occurred or may occur”) (Article 4). A further exception is where there is an exclusive jurisdiction agreement: an EU member state court will have jurisdiction over a dispute where the parties have agreed that it should do so, provided at least one of those parties is domiciled in the EU (Article 23).

The Regulation also provides for what is to happen if proceedings are started in different EU member states in relation to the same cause of action and between the same parties. In that event, the court first seised takes precedence. The court second seised is required to stay its proceedings - until the first court has determined whether or not it has jurisdiction (Article 27).

The lack of flexibility in the application of Article 27 has proved controversial and been widely criticised, not least since it allows for disruptive litigation tactics to flourish. These include the so-called “torpedo” or “Italian torpedo”, where a party prospectively facing a claim takes the pre-emptive step of seeking a declaration of non-liability, usually in his local court, while being fully aware that a court in a different member state is provided for in a jurisdiction agreement. The strategy is aimed at delay and obstruction, and at taking advantage of the strictly applied lis pendens rule in Article 27. In Research in Motion v. Visto Corporation [2008] EWCA Civ153, the Court of Appeal noted that:

“much ingenuity is expended on all this elaborate game playing…A party who fires an Italian torpedo may stand to gain much commercially from it. It would be wrong to say that he is “abusing” the system, just because he fires the torpedo or tries to”.

Difficulties have been caused, not least since the automatic stay in Article 27 has operated regardless of whether the “torpedo” proceedings are started with any genuine belief that the court first seised will ultimately retain jurisdiction. Matters have then been compounded by the fact that some courts are unwilling to decide jurisdiction as a preliminary issue, but will only do so at the same time as hearing the substantive merits of the case.

Issues concerning Article 27 were considered by the Supreme Court in London at the end of last year in The Alexandros T [2013] UKSC 70.In that case, proceedings were brought in Greece by assureds against their insurers, for claims in tort based on Greek law that were associated with the insurers' conduct when handling a total loss claim. The insurers then commenced proceedings in England against the assureds, arguing that the Greek proceedings breached English exclusive jurisdiction agreements. One question was whether the Greek and English actions involved the “same cause of action” for the purposes of Article 27, such that they might give rise to irreconcilable judgments. The Supreme Court held that a claim for damages and/or an indemnity for breach of an English exclusive jurisdiction agreement does not involve the same cause of action as (and is not the mirror image of) foreign proceedings said to be started in breach of that agreement.

The Relevant Reforms

The strict application of the court first seised rule has been relaxed by the re-cast Regulation in situations where there is an exclusive jurisdiction agreement. Article 31(2) of the revised Regulation provides that if the parties have agreed to the exclusive jurisdiction of the courts of an EU member state and proceedings are commenced in those courts, the courts of any other member state in which proceedings have also been commenced shall stay their proceedings. For these purposes, it is irrelevant which set of proceedings was commenced first. It is then for the courts to which exclusive jurisdiction has been granted by the parties to decide whether the jurisdiction agreement is valid and effective.

So precedence to decide on the validity and scope of an exclusive jurisdiction agreement will no longer be given to the court first seised; provided an action is started in the EU court designated in the jurisdiction agreement, the decision on jurisdiction will rest with that designated court.

This revision is welcome and should go some way towards defusing the torpedo and enhancing the effectiveness of jurisdiction agreements.

In addition to this reform of the rules on lis pendens, Article 23 has been amended (becoming new Article 25) so as to extend the scope of jurisdiction agreements. There is no longer a requirement that at least one of the parties must be domiciled in the EU. However, the Regulation does not apply where the exclusive jurisdiction provided for is a non-EU member state court. And it should also be noted that neither new Article 31(2) nor new Article 25 will assist a party in the case of a non-exclusive jurisdiction agreement (although, by Article 25, an agreement as to jurisdiction will be considered to be exclusive, unless the parties have agreed otherwise).

There are also new provisions (new Articles 33 and 34) giving EU member state courts a discretion to stay their proceedings where earlier proceedings have been commenced in the court of a non-EU “third state”. The EU court is not obliged to order a stay, but has a discretion to do so having assessed “all the circumstances in the case before it” (Recital 24). Some of the factors that the EU court may consider in deciding how to exercise its discretion are stated to include: connections between the facts of the case, the parties and the non-EU state concerned, how far the proceedings in the non-EU court have progressed by the time proceedings are initiated in the EU member state court, and whether or not the non-EU state court can be expected to give judgment within a reasonable time. The EU court may also take into account any exclusive jurisdiction clause in favour of the non-EU court in deciding how to exercise its discretion. So whilst a jurisdiction agreement in favour of a non-EU member state does not oblige an EU court to stay its own proceedings, it can be a factor influencing that EU court's discretion as to whether or not to grant a stay.

It is worth noting that the recast Regulation expressly provides that jurisdiction agreements are separable from the main contract (Article 25(7)), so that their validity cannot be contested solely on the basis that the main contract is alleged to be invalid. This reflects the English common law position, as confirmed by the House of Lords in an Ince case in 2007, Fiona Trust v. Privalov.

Comment

These reforms follow a long period of consultation. The UK Government's position was that reform was “an important priority” and the UK has opted into the changes.

Our view is that there was a clear case for changes to be made to the Regulation in relation to exclusive jurisdiction agreements and the impact of the court first seised rule. The strengthening of the protection given to exclusive jurisdiction agreements – and in particular the precedence given to the courts chosen by the parties, to decide on the agreement's validity and application - is an overdue change, but one that is most welcome.

ABOUT THE AUTHOR: Ian Chetwood, Reema Shour
A partner for 20 years, Ian’s practice embraces shipping cases and large scale commercial disputes in court proceedings, arbitrations and ADR for clients around the world.

Copyright Ince & Co LLP

Source: http://www.hg.org

Wednesday, 24 September 2014

Court of Appeal gives broad meaning to “charterers’ agents” in off-hire clause


September 24, 2014.
NYK Bulkship (Atlantic) N.V. v. Cargill International S.A. (Global Santosh) [2014] EWCA Civ 403.
The Court of Appeal recently considered the meaning of “charterers’ agents” for the purposes of a proviso to an off-hire clause in a case involving the arrest of a vessel that was time chartered on the NYPE form.

The background facts

By a charterparty dated 11 September 2008 on an amended NYPE form, NYK time chartered the Global Santosh to Cargill. Cargill sub-chartered the vessel to Sigma, by way of a voyage charter, for a shipment of cement sold by Transclear, also a sub-charterer of the vessel under a voyage charter, to IBG. Under the contract of sale, IBG was responsible for the unloading of the cargo and was liable to pay Transclear demurrage if unloading of the cargo was delayed.

Upon arrival at the discharge port, the vessel was held at anchor due to the breakdown of IBG’s unloader. Over two months later, she was eventually called in to berth. However, Transclear had obtained an Arrest Order on the cargo the day before to secure a claim for demurrage against IBG for $1,560,000. The Order prohibited any attempt to remove the cargo from the vessel, but also mistakenly named the vessel as the object of the arrest. Discharge only began nearly a month later.

Cargill withheld hire for the period during which the vessel was under arrest. NYK sought the payment of hire and the dispute was submitted to arbitration.

Arbitration and Commercial Court decisions

Clause 49 of the charterparty provided as follows:

“Should the vessel be captured or seizured or detained or arrested by any authority or by any legal process during the currency of this Charter Party, the payment of hire shall be suspended until the time of her release, unless such capture or seizure or detention or arrest is occasioned by any personal act or omission or default of the Charterers or their agents.”

The question in issue was therefore whether the arrest was “occasioned by any personal act or omission or default of the Charterers or their agents”, i.e. whether it had been caused by the personal act or omission or default of Transclear or IBG, as Cargill’s agents. If the answer was ‘yes’, then Cargill was not entitled to put the vessel off-hire under Clause 49. If the answer was ‘no’, the proviso did not apply and Cargill was right to put the vessel off-hire for the period in question.

The arbitral Tribunal, by a majority, found that neither Transclear nor IBG were acting as Cargill’s agents and therefore the proviso did not apply. This decision was reversed by Mr Justice Field on appeal. The Judge found that IBG had become Cargill’s delegate of the obligation to unload under the charterparty by reason of the sale contract. For the purposes of Clause 49, the failure to unload within the lay days was an act, omission or default that occurred in the course of performing the obligation to discharge as delegated to it by Cargill.

The Court of Appeal

The Court of Appeal was unanimous – 3:0. The judgment was given by Lord Justice Gross, a judge with long experience of shipping law. He dismissed the appeal and upheld Mr Justice Field’s ruling in favour of NYK. The ship was on-hire for the period of the arrest. The proviso did apply. However, he reached his view on a different basis from Mr Justice Field.
He agreed that the proviso applied to agents in the broad sense. As he put it, you look at who the actors are. Delegates of cargo can be agents for the purpose of the proviso, irrespective of the precise contractual relationship between them. They can include sub-charterers, sub-sub-charterers and receivers.

But Lord Justice Gross took a different line from Mr Justice Field on the relevance of the acts covered by the proviso to Clause 49. In his view, there was nothing there to restrict the application of Clause 49 to acts occurring in the course of the performance by the delegate of the delegated task. It was enough that the act of the delegate occasioned the arrest or detention of the vessel.

The Court of Appeal was in no doubt that on the act/actor analogy, the vessel’s arrest had been occasioned by an act or default of an agent of Cargill. The relevant actors were Transclear as well as IBG. Lord Justice Gross approached things by looking at which side of the line the problem fell on. Was it on NYK’s side or Cargill’s? He concluded that it fell on Cargill’s side of the line. It involved Cargill’s delegate. NYK was not involved in the dispute between Transclear and IBG about the delay. True, Cargill was under no obligation either to discharge the vessel in a given time – their charter was a time charter. However, the proviso was not limited to Cargill’s contractual obligations; what mattered was that the dispute arose out of their trading arrangements for the vessel.  The general scheme of Clause 49 provided for the vessel to be on-hire or off-hire depending on which side of the line things fell.

Comment

This decision gives a broad meaning to “charterers’ agents” under a clause like this. It can include the whole chain of parties, down to the sub-charterers and the receivers. It remains to be seen how and to what extent this broad reading will be adopted for other provisions of dry time charters.

The decision will be welcomed by shipowners. Each case will depend on its facts, but the balance now seems to have shifted towards a more equal approach. The risks of the arrest will be borne by the party who is the most closely related to it – depending on which side of the line the matter falls.

The Court of Appeal’s reasoning was based on the approach of the Supreme Court recently in the Rainy Sky case, in which Ince acted for the successful shipowners. The Supreme Court ruled that where a contract term is capable of two meanings, you should prefer the meaning which is more consistent with business commonsense – and that, in doing so, you should look at (a) the clause; (b) the contract as a whole; and (c) its commercial context. That is what Lord Justice Gross did in the Global Santosh.

Article authors: Florence Preux

Source: http://incelaw.com

Sunday, 21 September 2014

BIMCO Publishes Clause Addressing Electronic Bills Of Lading

September 18, 2014.

BIMCO has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use of electronic documentation, particularly in the dry cargo sector, has resulted in a growing user demand from owners and charterers. In response to this demand, BIMCO brought together a group of charterers and owners to develop a new clause for charter parties that specifically addresses the use of electronic bills of lading (paperless trading) systems.

Today there are two platforms at the forefront of developments in electronic bills of lading systems – essDOCS and Bolero – both of which have been approved by the International Group of P&I Clubs (“the International Group”) as well as by P&I Clubs outside the group.

The use of electronic bills of lading is said to offer benefits both to charterers and owners in streamlining the documentation process and reducing the risk of fraud. The purpose of BIMCO’s new Electronic Bills of Lading Clause is to provide a contractual agreement to permit the use by charterers of the essDOCS and Bolero systems for bills of lading, waybills and delivery orders. The clause effectively confers on electronic bills of lading the same status as paper bills of lading under the terms of the charter party. The full wording of the Electronic Bills of Lading Clause is as follows:

BIMCO Electronic Bills of Lading Clause

(a)At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charter Party shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent.

(b)For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless) Trading Systems as directed by the Charterers, provided such systems are approved by the International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems shall be for the Charterers’ account.

(c)The Charterers agree to hold the Owners harmless in respect of any additional liability arising from the use of the systems referred to in Sub-clause (b), to the extent that such liability does not arise from Owners’ negligence.

A BIMCO Special Circular containing the full wording of the Electronic Bills of Lading Clause with an accompanying explanatory note can be downloaded at BIMCO’s website.

The Position of the P&I Clubs within the International Group with regard to paperless trading

Already from 1998, the Association together with other P&I Clubs in the International Group has reviewed progress on electronic trading systems. Please find Circulars from 11 December 1998 and 5 October 1999 (and subsequent circulars) on our website.

Until February 2010, the Rules of all of the Clubs comprising the International Group specifically excluded liabilities in respect of the carriage of cargo under all electronic trading systems to the extent that the liabilities under such systems would not have arisen under a ‘normal’ paper system, using transferable paper documentation.

The International Group, after reviewing a number of electronic trading systems, agreed in 2010 that liabilities arising in respect of the carriage of cargo under such systems would be covered from 20 February 2010 provided that the system had first been approved by the International Group. The Circular can be found on Skuld’s website.

Approved Systems

The two systems currently approved by the International Group are the ones administered by

ess DOCS version called DSUA 2013.1 (into effect as of 18 March) and it enables electronic trading both in respect of bills of lading and waybills. This version supersedes the essDOCS previous electronic trading system version DSUA 2009.3, which remains approved for the purposes of Club cover (cf. the 2013 Circulariv) and
Bolero International Ltd. (the Bolero system – Rulebook/Operating Procedures, September 1999).

Cover Position

Members should be aware that traditional exclusions of cover under Club Rules relating to the carriage of cargo, will of course continue to apply in respect of essDOCS and Bolero in the same way as for paper systems, e.g. discharge at a port or place other than the port or place provided for in the contract of carriage, the issue/creation of an ante- or post-dated electronic document/ record, delivery of cargo without the production of the negotiable electronic document/record.

Non-covered Risks

The 2010 and 2013 Circulars also clarify that using an electronic bill of lading may expose members to liabilities which are not of a traditional P&I nature.

This is a reference to the types of liabilities members face when using any electronic system or electronic interface in their office or on their ships, for example the risk of viruses, “hacking”, or the accidental release or theft of information.

Further liabilities may include, for example, those which arise under the contractual arrangements, which members have to make directly with the system operator (Bolero or essDOCS or other,non-approved systems), such as obligations to maintain computer links, or the introduction of a virus within the operator’s or a user’s system.

The user agreements also contain undertakings of confidentiality and could give rise to liabilities, if broken. All of these risks are non-marine risks, and may be covered by members’ own business insurances. These are not in the nature of P&I risks. In insurance terms, they may be described as”cyber-risks” or business risks.

Please find further helpful information about paperless trading in the International Group’s FAQs dated 6 August 2013. In addition, BIMCO has compiled a list of FAQs  for its members that answer many of the questions about the use of electronic bills of lading

Feedback requested

Finally, the Association encourages its members who are using either of the two approved electronic trading systems, to report to us that they are doing so and of any benefits or difficulties which they encounter, legal or practical, in the operation of either system. This information would be helpful to the International Group, in monitoring the use and development of the two systems.

Practical Advice on how paperless trading works

We recommend that members consult the websites from those organisations providing the two systems that are approved by the International Group to familiarise themselves with the systems and how paperless trading works.

Reference: skuld.com

Source: www.marineinsight.com

Thursday, 18 September 2014

How Will Scottish Independence Impact Maritime Industry?



September 18, 2014.

The long-awaited vote on the Scottish independence taking place today has seen international maritime players raise concern on the possible effects of the vote on the Scottish maritime industry.

According to Moore Stephens’s recently conducted survey of the international shipping community members on the impact of the vote, over half of respondents (55 % ) felt the vote could have a negative effect.

The results of the survey showed that, overall, the majority of those who predicted negative effect had an existing business relationship with Scotland, while those respondents with no existing business relationships with Scotland thought that a Yes vote would have a positive effect.
However, 74 % said they had no plan of action if Scotland voted to abandon the Union, indicating a high level of confidence in a No vote, according to the survey.

Cassie Forman, Moore Stephens director of Shipping and Offshore Maritime, said: “The shipping and offshore maritime industry is a vital part of the Scottish economy – it plays a critical role in the North Sea oil and gas industry, for example. It is an industry that will play a central role in the economic fortunes of Scotland whatever the outcome of the vote.”

The UK Chamber  of Shipping has raised various issues concerning shipping that should be addressed by Scotland, should the majority vote Yes.
According to the UK Chamber, obvious questions include establishment of a separate ship registry and MCA; taxation of shipping, followed by potential introduction of work permits and trade restrictions, seafarer training standards along with funding and provision of marine safety infrastructure (coastguards, lights, emergency tugs etc).
Having in mind that not too many ships are calling at Scottish ports, the Chamber President Ken MacLeod, was quoted by BBC as asking: “Are ships calling at a Scottish port going to have to pay four times the dues that they pay at the moment?”
The Scottish Government said that these issues would be addressed in a form of consultation with relevant stakeholders after the referendum.

The future of the oil and gas sector are also a key issue in the debate. Energy and research consultancy group Wood Mackenzie says the issues to be addressed in the event of a ‘Yes’ vote include fiscal (un)certainty, the offshore boundary and regulatory change.
Wood Mackenzie says that oil and gas companies will be closely following the result of the referendum, and the potential issues which might arise in the event of a ‘Yes’ vote, but of more pressing concern to the industry is the underperformance of exploration and production on the UK Continental Shelf (UKCS).

“Fiscal uncertainty is a chief concern of oil and gas companies in the UKCS and there is an ongoing review of the industry’s fiscal terms.  Regardless of which government is in charge of the industry, companies will seek stability and simplicity around existing fiscal terms as well as tax incentives for harder to produce reserves.  Industry engagement will be paramount to maximising value for both government and companies,” Wood Mackenzie said.

“We estimate that by 2030 nearly US$9 billion of tax relief will be claimed in respect of decommissioning spend on Scottish fields. This relief has been guaranteed through the Decommissioning Relief Deeds (DRDs) that exist between licence holders and the UK Government. The Scottish Government has stated that it will provide similar contractual certainty on decommissioning tax relief in the event of independence.”

In addition, Wood Mackenzie explained that a border for oil and gas activities would need to be negotiated, as prolonged dispute could cause uncertainty and negatively impact the investment plans of companies active in the disputed area.
Wood Mackenzie forecasts that the bulk of UK oil and gas reserves lie in Scottish waters, and forecasts that an independent Scotland would control the vast majority of production as well as the most prospective acreage.

In terms of remaining reserves, Wood Mackenzie estimates that circa 15.3 billion barrels of oil equivalent remain in the UK.  This comprises reserves which are being produced, yet to be produced and yet to be found:  the Scottish portion of commercial reserves is 84%.
Over 2,600 polls have opened across Scotland since early this morning and a high turnout is expected from over 4.2 million registered voters. The results are expected early Friday morning.

Source: www.worldmaritimenews.com

Sunday, 27 July 2014

After little more than four days of navigation Costa Concordia has entered the Port of Genoa.


 July 27, 2014. In the final stages of the journey the convoy travelled at a speed of about 1 knot per hour.
That speed was further reduced to allow the arrival in the port, as expected, during the night between Saturday and Sunday, and the following entrance into the port during the morning of Sunday, July 27.
Preliminary operations for the entrance of the Concordia in the Prà-Voltri port have begun this morning at about 5 am.
Harbour pilots have boarded the Concordia.
One of the two tugboats that have towed the Concordia to Genoa – Resolve Earl – has been disconnected, while the first harbor tug is now connected to the stern.
Next one to be disconnected will be the Blizzard.
The draft of the ship is approximately 18.5 meters.
Costa Concordia Reaches Genoa
This morning Costa Crociere Ceo Michael Thamm went onboard the Concordia to meet Nick Sloane and his team.
“I wanted to personally thank Nick Sloane and the whole team for the extraordinary commitment they have always demonstrated throughout the project and wish them good work at the beginning of an important day of complex mooring operations,” said Michael Thamm.

Source: www.worldmaritimenews.com  

Thursday, 10 July 2014

THE REDWOOD: Rough Sea for the Classification Societies Even Before Italian Court

July 11, 2013.

Soc. Argos Shipping Agency   C.  Lloyd's Register of Shipping - Tribunale di Genova 24/02/2010 

Classification of vessels has a huge impact on the choice of the operators which rely upon the credit of such Societies in running their business. The Italian Court has recently held that a classification society may be liable in tort, namely responsabilità aquiliana  – ie under article 2043 Italian civil code – for erroneous valuation of the vessel.


THE BACKGROUND FACTS

Under a contract dated 14 March 2003 the company Argos Shipping Agency S.r.l. incorporated in Italy (the plaintiff) time chartered the vessel REDWOOD registered under the Maltese flag, for the carriage of dried milk from Hamburg to Libya. The vessel, according with the certificate LR 100 A1 issued in Kandla (India) on 15 November 2001 was in the highest classification rendered by Lloyd’s Register.

On 18 January 2003 the REDWOOD berthed in Hamburg, although the Port Authority detained the vessel as considered it to be unseaworthy. Therefore, the plaintiff unloaded the cargo already loaded and eventually chartered another vessel so as to complete the voyage.

The Maltese Maritime Authority, after had carried inspections on board, suspended the vessel certificate arguing that not only the inspection made three months before was to be considered invalid, but also that such deficiencies existed in India when the certificate was issued.


THE CLAIM 

The plaintiff brought an action in tort before the Genoa Court against Lloyd’s register asserting compensatory damages accounting for 562.324,27 Euro including freight for chartering the other vessel, unloading expenditure and other disbursement.

By contrast, Lloyd’s Register (the defendant) contended that the shipowner and not the register should be held liable vis-à-vis the charterer for the unseaworthiness of the REDWOOD and therefore he should bear such compensatory damages. In fact, neither after the inspection in Vlissingen on 15 October 2002 nor after the one in Lisboan, the vessel resulted to be defective whatsoever. Therefore, as there are no evidences that the vessel was defective in India, when the certificate was issued, the deficiencies have to be attributable to the negligence of the shipowner or their servants.  


THE JUDGMENT 

The preliminary issues

No preliminary issues arose in this case as to the competence of the Italian court. In fact, according with art. 5(3) of Council Regulation no 44/2001 “A person domiciled in a Member State may, in another Member State, be sued: in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur.  In this case the event, that is the monetary damage bear by the charterer, occurred in Italy (Argos s.r.l. is a company incorporated under italian law).

Expert Appraisals 

The relevant issue in the dispute, in which the charter and the Register are involved, concerns ultimately the follow question: was the vessel, when the certificate was released, in poor condition so that the certificate should not have been rendered?
The first appraisal over the condition of the vessel provided that:
- On November 2001 the REDWOOD was not in good condition as to their structures.
- The Lloyd’s register surveyors discovered such conditions being on board of the vessel so as to decide whether or not the renewal should be issued.
- However, the corrosion of the structure was held to be acceptable and the higher-class certificate was rightly confirmed.
The second appraisal instead went in the opposite direction. The Eng. Martinoli stated that: After the analysis  “ex post” made upon the condition of the REDWOOD, it is clear that the amount of deficiencies and deterioration of the structure of the vessel was such that they should exist even on November 2001.  In other words, Eng. Martinoli showed in systematic way that the defects observed during the inspection in Hamburg could not be inexistent 15 months before. Therefore, if the Register had applied the due diligence, it would have discovered the deficiencies and it would not have been renewed the class certificate.
Furthermore, both the first and the second appraisal assert that the vessel was in poor condition at the time of the intermediate class inspections occurred between 2001 and 2003.
The second appraisal was held to be more appropriate in the light either of the different methodological approach used (i.e. ex post) or the uncertainty and gaps occurred in the first appraisal. The decision therefore, is based on the second appraisal.

Decision 

The Italian Court first analysed the nature of the classification societies denying that they can play merely a private role in the shipping industry. Indeed they are not government agencies, however a “semi-public” nature can be recognised by the fact they enjoy a massive reputation among maritime operators who rely upon their certifications when making commercial decisions. The certificate not only reflects the private interest of the shipowner but also becomes a characteristic of the vessel, which immediately and universally confirms to third parties that such vessel is reliable. Furthermore, such societies are delegated to issue certificates in accordance with international maritime convention on behalf of the State – for instance certificates for the safety of lives at sea.
Then, J. Braccialini in the wake of the French and German Judgments suggested a possible contractual relationship between the classification societies and the users. In fact, he compared the role and responsibilities of classification societies with those of auditors and hazarded a “grey zone” between liability in contract and tort. Furthermore, a contractual relationship of the register descends from the so-called “Social Contract”, that is whenever the register fails to comply with the rules of law without a proper contract being in force among the parties.
However, the idea of the liability in contract of the Lloyd’s Register was not considered further before this court as the claim addressed by the plaintiff was exclusively based on tort.
The vessel should not have been accorded the highest classification; nor should it have been granted a clean class certificate, valid for the purpose of the International convention for the Safety at Sea (SOLAS) and in accordance with the rules of Lloyd’s register and internal Guideline 3 of the International association of Classification Society.
The highest classification obtained by REDWOOD indeed played a fundamental role in chartering that vessel in so far every operator would have relied on a Lloyd’s Register classification. The wrongful classification caused an erroneous valuation on the vessel by the charterer. If the register had properly inspected the vessel, the class would not have been issued and Argos would have never chartered the vessel.  Register’s conduct was unlawful as well as inconsistent with the law concerning the class verification. For that reason, the Register is to be considered in breach of art 2043. Cod. civ. and then liable in tort. The plaintiff application as to compensatory damages was therefore sustained.


COMMENT 

The Italian Court has done a crucial step in considering the liability of classification societies following, at least in first instance, the decisions of the Criminal Section of the Court of Cassation in respect of The Erika accident. In fact, in 2012 the French Supreme Court  - as stated by the Court of Appeal of Versailles as to The Elodie II nearly a couple of decades before - affirmed the civil liability for the Italian classification society RINA for conferring classification to a vessel well beyond the level of corrosion. Those decisions depart by now from the English Court position, which once again in The Nicholas H refused to recognize any duty of care for the classification societies. Accordingly, The House of Lord stated that: “ The classification society acted in the public interest; they fulfilled a role which in their absence would be fulfilled by states, and if they became the alternative target of cargo-owners they might adopt a more defensive position” and “The Recognition of a duty of care would also be unfair, unjust and   unreasonable   towards   classification societies, notably because they act for the collective welfare and unlike shipowners they would not have the benefit   of   any   limitation   provisions” [emphasis added]. Whether or not Italy will continue to follow the French position is for the Italian Court of Appeal to decide.

By Lorenzo Macchi













Saturday, 5 July 2014

Italian Government Gives Green Light to Tow Concordia to Genoa

July 5, 2014


The Italian Government has approved the transportation of the Concordia wreck to Genoa for dismantling and recycling and technicians are ready for refloating the wreck in two weeks.


The Cabinet’s approval of the project for transportation of the Concordia to Genoa for dismantling and recycling means that achievement of the goal we set ourselves 2½ years ago – namely the safe and definitive removal of the wreck from Giglio Island – is now well within sight,” said Costa Crociere CEO Michael Thamm.
“We are now just two weeks away from refloating of the ship. We wiIl supervise the final phase of the Concordia project with the same commitment and attention that we have put into this challenge since the very beginning, using the best expertise and technologies, in compliance with the highest environmental safety standards, and in full cooperation with the authorities”.
With the green light for the towage of the Concordia wreck to Genoa, the 350-plus Titan Micoperi technicians working 24/7 at Giglio Island can now rapidly complete the preparatory operations for refloating.
Currently only 2 more sponsons are still to be installed to reach the total of 30 needed to refloat the wreck. Refloating is scheduled to start by the middle of July upon authorization of the Monitoring Observatory, and the definitive departure from Giglio Island is planned by the end of the month.
“The Concordia’s last voyage will be provided by Titan Micoperi, the consortium commissioned to carry out the salvage operation on Giglio Island,” Thamm explained. “Once the ship is in Genoa, we will be able to count on the cutting-edge technical and management skills of the consortium formed by Saipem, dealing with the environmental aspects of the Concordia dismantling operations, and San Giorgio del Porto, the first shipyard in Italy to be included in the Special Register of Environmental Ship Reclamation & Recycling Facilities, which has many decades of experience in ship repairs and refitting.
The technical and financial solidity of Saipem/SGdP represents an important guarantee for the project.”
Transportation from Giglio Island to Genoa
Once it is afloat, the wreck will travel a distance of about 190 nautical miles at an average speed of 2 knots, taking an estimated 4 days. The time window for the transportation falls statistically in the period characterized by the best sea and weather conditions.
Studies and analyses have confirmed the safety of the planned method of transportation.The ship will be towed at low speed and escorted by other vessels, with equipment and specialized personnel, including a team of marine biology experts, ready to intervene should any problem arise.
Background on the dismantling/recycling project
Dismantling and recycling will be provided by a consortium formed by Saipem, part of state-owned ENI Group, a specialist in Engineering and Environmental projects, and San Giorgio del Porto, a shipyard active since 1928 in ship repairs and refitting, the first shipyard in Italy to be included in the Special Register of Environmental Ship Reclamation & Recycling Facilities.
The Saipem/San Giorgio del Porto plan for dismantling and recycling of the Concordia wreck will be carried out in four separate phases, which are expected to last for a total of 22 months.
In the first, the Port of Genova Voltri will be readied to receive the vessel and perform initial ship breaking activities including stripping of the interior furnishings and fittings on the decks above water.
In the second phase the wreck will be transferred from the Voltri Breakwater to the “Molo Ex Superbacino” dock, where the structures of decks 14 to 2 will be dismantled. The third phase will consist of preparatory activities for transfer of the wreck to Dry Dock no. 4: at this stage the sponsons will be removed and the food storerooms and cold storage rooms on deck will be cleaned.
In the fourth and final phase, operations will be carried out in the segregated area of Dry Dock no. 4 with complete disassembly of the wreck, involving removal of the other interior fittings, clean-up of the various areas and final demolition of all remaining structures. This phase will conclude with appropriate handling, disposal and recycling of the discarded materials.


Source: http://worldmaritimenews.com

Thursday, 3 July 2014

ICC Launches 2014 Mediation Rules in North America

July 4, 2014


On May 28, the International Chamber of Commerce (ICC) held a promotional event to celebrate the North American launch of its revised mediation rules, hosted by law firm Simpson Thacher in New York City. 

Administered by the ICC International Centre for ADR, the new rules were drafted by the Commission on Arbitration and ADR, a task force of dispute resolution specialists and company representatives from 29 countries. The new mediation rules replace the former ICC ADR rules, a name-change that Andrea Carlevaris, Secretary General of the ICC International Court of Arbitration® said “reflects the reality that 90% of cases are mediation cases.”

“The main value of the ICC mediation rules is that they can help parties overcome hurdles,” said Hannah Tuempel, senior counsel and manager of the ICC International Centre for ADR, during a panel discussion. Ms Tuempel was involved in the revision of the new mediation rules.

She said that the new rules make it easier for parties to overcome common obstacles that thwart mediation. Such hurdles include how to start a mediation if it is not included in a prior contract clause; where to mediate and in what language if both parties come from different countries, how and where to find the right mediator with the appropriate experience and language skills, and how the parties bear the cost of mediation.

The new rules address all those obstacles. If one disputant wishes to mediate but is wary about approaching the other party for fear of showing weakness, the disputant can contact the ICC International Centre for ADR, who will assist the parties in considering a proposal to mediate even if there is no prior mediation clause in their contract. ICC can also help select a neutral mediator, and can even provide a list of qualified mediators that both parties agree upon. Once both parties agree to mediate, the new rules describe the conduct of mediation and stipulate that both parties must bear the cost of mediation in equal parts, unless agreed upon otherwise. Disputants may also contact ICC at any time for mediation guidance and assistance.

The first panel discussion of the event covered mediation’s relevance to businesses today. Speakers included Teresa Garcia-Reyes, senior counsel, litigation, GE Oil & Gas at General Electric; Deborah Masucci, former head of the Employment Dispute Resolution Group at AIG and Chair of the International Mediation Institute; and Doug McKay, Vice-President of international organizations at Shell. Participants noted that mediation had become a more common and important form of cross-border dispute resolution and companies are increasingly interested in law firms’ success rates with mediation.

“If you’re not into mediation, you’re not the right lawyer for us,” said Ms Garcia-Reyes.

Ms Masucci noted that organizations like ICC help add credibility to the mediation process, particularly when parties involve an American corporation in foreign jurisdictions where the foreign party may be distrustful of a US mediator.

The evening’s second panel discussion focused on the new mediation rules and how they help parties initiate, conduct and pay for mediation proceedings. Mr Carlevaris and Ms Tuempel explained the new rules and their attendant guidance notes, while Robert Smit, partner and Co-chair of the International Arbitration and Dispute Resolution Practice at Simpson Thacher; and Jason Fry, co-head of the International Arbitration Group at Clifford Chance; offered the American and European perspective on the new rules, respectively.

While the new rules aren’t relevant for purely domestic US disputes, Mr Smit explained that for the US market, “the real value of ICC mediation rules lies in international disputes.” He said that under the new rules an American corporation can ask ICC to contact the other disputant to get the ball rolling on mediation, which is “valuable assistance indeed.” Mr Smit also cited the benefit of having ICC select the location and language of the mediation, which eliminates the burden of leaving those contentious choices up to the mediator. Also, most American disputants don’t know where to find a qualified mediator in jurisdictions outside of the US, so Mr Smit appreciates that ICC can provide a list of qualified mediators to the disputants.

“Mediation has imposed itself as the main form of amicable dispute resolution,” Mr Carlevaris concluded. “The new ICC rules facilitate the mediation process, helping to avoid common obstacles and stalling”.

Source: International Chamber of Commerce (ICC)

Passing Costs Liability Down a Charterparty Chain



July 3, 2014

Occidental Chartering Inc v. Progress Bulk Carriers Ltd (The Chada Naree) [2012] EWHC 3515 (Comm)

The judgment in this case deals with the recoverability of the costs of an arbitration as damages in a series of arbitration references, notwithstanding the absence of an arbitration reference for one of the links in the charterparty chain. The Commercial Court, on appeal from an arbitration award, held that where there was a claim being passed down through a chain of charterparties and there was a break in the arbitration references, this would not necessarily prevent the liability from being passed on through the chain. The decision is significant because of the frequency with which charterparty chain disputes arise in maritime arbitration.

The background facts

The vessel, Chada Naree, was the subject of a string of charterparties. Precious Garnets Ltd (“PG”) were the registered owners and they time-chartered her to Occidental Services Corporation (“OSC”). OSC re-let her to a company within its corporate group, Occidental Chartering Inc (“OCI”) and OCI time-chartered her on to Progress Bulk Carriers (“PBC”). Finally, PBC voyage chartered the vessel to CNAN. All of the charters were on materially identical terms.

PG commenced arbitration against OSC claiming damages for breach of the safe port warranty. This claim was passed down the charterparty chain and this gave rise to the following three arbitrations, in which the same tribunal was appointed for each case:

1.  UNDER THE HEAD CHARTER BETWEEN PG AND OSC;
2.  UNDER THE TIME CHARTER BETWEEN OCI AND PBC; AND
3.  UNDER THE VOYAGE CHARTER BETWEEN PBC AND CNAN.

There was no arbitration reference in relation to the internal re-let between OSC and OCI, the two being related companies. However, there was an agreement for an extension of time to preserve rights between the two.

The arbitration awards

In June 2010, the tribunal issued their first award in all three references, finding that there was a breach of the safe port warranty in all of the charters in the string and that damages were recoverable from the respondent in each of the references. In this award, they referred to "Disponent Owners" and no distinction was drawn between the two Occidental companies.

The disponent owners also claimed as damages their own liability for costs in the arbitration with the registered owners, PG. When making their award, the tribunal reserved jurisdiction to deal with the disponent owners’ claim for their costs.

Subsequently, an amending award was handed down to address a number of errors in the first award. At that stage, and for the first time since the dispute arose, PBC submitted that OCI was not a party to an arbitration with the registered owners and it had not therefore incurred any liability for costs that could be passed on as a claim for damages to PBC.

As a result of these further submissions, the tribunal then published a second award and held that OCI were not entitled to recover, as damages, the costs incurred in the head arbitration between OSC and PG as it was impossible to show that OCI had sustained a loss. Their reason for reaching this conclusion was that "this gap in the chain of references seemed to us to be fatal to OCI’s claim for costs as damages. If the loss had not been suffered by the party claiming it in the arbitration over which we had jurisdiction, then that seemed to us to be the end  to the matter."

The Commercial Court decision

OCI were granted permission to appeal this second award to the Commercial Court under s.69 of the Arbitration Act 1996 and the matter was then considered by Mr Justice Teare. The key issue before the court was the ability of a party to recover, as damages, sums for which it had not been liable to pay to a third party.

The Judge found that, in reaching its decision, the tribunal had overlooked the background to the award and, in particular, that any sensible reading of the first award shows that the two Occidental companies were treated as one and the same for the purpose of passing liability down through the charter chain.

The Judge also considered that there was an inconsistency in the tribunal’s reasoning. The claim made by PG against OSC was a claim for damages based upon the breach of the safe port warranty and the arbitrators found that this claim could be passed down through the charterparty chain to CNAN, the ultimate voyage charterer, despite the break in the arbitration references. If the arbitrators had not found that liability flowed down the chain from OSC to OCI, OCI would have been unable to recover from PBC in respect of the substantive losses. The same breach of the safe warranty obligations also gave rise to a claim for the costs to be recovered as damages and, according to Mr Justice Teare, there was no difference in the nature of those two heads of damages (i.e. substantive losses and costs).

The Judge therefore allowed the appeal and concluded that OCI could recover the costs incurred by OSC in the head arbitration from  PBC.

Comment

One of the key points that was taken into consideration by the Judge was the background and the fact that the parties had treated the two Occidental companies as being one and the same and that no point had been made in relation to the break in the chain of arbitrations until after publication of the first award.

Contract chain disputes, which arise on a frequent basis in the maritime sector, can be problematic because the tribunal cannot make costs orders against third parties, and the costs must therefore be claimed down the chain as an indemnity or damages. However, this judgment suggests that technical arguments will not be allowed to prevent liability for costs flowing up and down a chain of contracts as long as a breach is established.

Jonathan Elvey

Heloise Clifford

Article contributors:

Jonathan Elvey

Source: INCE&CO

Monday, 26 May 2014

Italian Navy Rescues Hundreds Of Children On Migrant Boat


May 26, 2014. The rescue, which occurred on Friday afternoon, is the latest in a seemingly endless succession as the chronic migrant crisis in the southern Mediterranean has picked up this year.


At least 34,800 people have crossed from North Africa to Europe so far this year, compared to 43,000 in the whole of 2013. That leaves the annual total set to surpass the 60,000 who made the trip in 2011 when the Arab Spring revolutions loosened border controls, according to the U.N. refugee agency UNHCR.

The near daily arrivals of migrant boats has become an issue in the European parliamentary elections due to be wrapped up on Sunday with growing demands in Italy for more help from the European Union to confront the emergency.

Source: Marine Insight

Wednesday, 23 April 2014

Athens Convention relating to the Carriage of Passengers and their Luggage by Sea



The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 2002, which substantially raises the limits of liability for the death of, or personal injury to, a passenger on a ship, enters into force on 23 April 2014.

The higher limits of liability will apply to ships registered in the following States which have ratified the 2002 treaty: Albania, Belgium, Belize, Bulgaria, Croatia, Denmark, Greece, Latvia, Malta, the Netherlands, Norway, Palau, Panama, Saint Kitts and Nevis, Serbia, Syrian Arab Republic and the United Kingdom.
Additionally, the Convention is mandatory for European Union Member States (including those that have not ratified the Athens Protocol regime yet as individual States) to the extent that the European Union has competence over matters governed by the Protocol, as the European Union has ratified the treaty under a novel article in the Protocol which allows for a Regional Economic Integration Organization, which is constituted by sovereign States that have transferred competence over certain matters governed by this Protocol to that Organization, to sign, ratify, accept, approve or accede to the Protocol.

The 2002 Protocol to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974, (PAL), revises and updates the 1974 Convention, which established a regime of liability for damage suffered by passengers carried on a seagoing vessel.  As a precondition for joining, Parties to the 2002 Protocol are required to denounce the 1974 treaty and its earlier Protocols.  

The Athens Convention declares a carrier liable for damage suffered by a passenger resulting from death, personal injury or damage to luggage if the incident causing the damage occurred in the course of the carriage and was due to the fault or neglect of the carrier.  Such fault or neglect is presumed, unless the contrary is proved.

Carriers can limit their liability unless they acted with intent to cause such damage, or recklessly and with knowledge that such damage would probably result. For the death of, or personal injury to, a passenger, this limit of liability was set at 46,666 Special Drawing Rights (SDR) per carriage in the 1974 convention. 

In case of shipping incidents the 2002 Protocol substantially raises those limits to 250,000 SDR per passenger on each distinct occasion, unless the carrier proves that the incident resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character; or was wholly caused by an act or omission done with the intent to cause the incident by a third party. 

If the loss exceeds this limit, and also in case of non-shipping incidents, the carrier is further liable - up to a combined limit of 400,000 SDR per passenger on each distinct occasion - unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier. 

As far as loss of, or damage to, luggage is concerned, the carrier's limit of liability varies, depending on whether the loss or damage occurred in respect of cabin luggage, of a vehicle and/or luggage carried in or on it, or in respect of other luggage.

• The liability of the carrier for the loss of or damage to cabin luggage is limited to 2,250 SDR per passenger, per carriage. 
• Liability of the carrier for the loss of or damage to vehicles including all luggage carried in or on the vehicle is limited to12,700 SDR per vehicle, per carriage. 
• Liability of the carrier for the loss of or damage to other luggage is limited to 3,375 SDR per passenger, per carriage.

The carrier and the passenger may agree that the liability of the carrier shall be subject to a deductible not exceeding 330 SDR in the case of damage to a vehicle and not exceeding 149 SDR per passenger in the case of loss of or damage to other luggage, such sum to be deducted from the loss or damage.

The 2002 Athens Convention also introduces compulsory insurance, as well as mechanisms to assist passengers in obtaining compensation, based on well-accepted principles applied in existing liability and compensation regimes dealing with environmental pollution. These include replacing the fault-based liability system with a strict liability system for shipping related incidents, backed by the requirement that the carrier take out compulsory insurance to cover these potential claims. 

Ships are to be issued with a certificate attesting that insurance or other financial security is in force and a model certificate is attached to the Protocol in an Annex.

The limits contained in the Protocol set a maximum limit, empowering - but not obliging - national courts to compensate for death, injury or damage up to these limits. 

The Protocol also includes an "opt-out" clause, enabling State Parties to retain or introduce higher limits of liability (or unlimited liability) in the case of carriers who are subject to the jurisdiction of their courts.

Amendment of limits
The 2002 Protocol introduces a tacit acceptance procedure for raising the limits of liability, whereby a proposal  to amend the limits would be circulated on the request of at  least one-half of the Parties to the Protocol, and adopted by a two-thirds majority of the States Parties.  Amendments would then enter into force within 36 months unless not less than one fourth of the States Parties at the time of the adoption informed that they did not accept the amendment.

Source: http://www.imo.org