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.

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

Tuesday, 8 April 2014

Freezing Injunction and Arrest of Ship Compared

A short and schematic comparison between freezing injunction and arrest of ship regimes. Main characteristics and differences.  
A guide as to the differences between the two main weapons in the hand of the claimant. 

Monday, 7 April 2014

EON to Boost Turkish Power Trading Amid Rising Demand

April 7, 2014. 
By Julia Mengewein.
EON SE plans to more than double its power trading in Turkey this year, helping to offset falling profits from buying and selling in shrinking western European markets.

The trading arm of EON’s Turkish joint venture Enerjisa will probably boost activity by 150 percent to about 30 percent of the nation’s total, according to Benedikt Messner, Istanbul-based managing director at the Enerjisa unit.

EON is seeking to make money in Turkey to offset losses in Europe, where falling demand and power prices are hurting the company’s profits. The Dusseldorf, Germany-based company said last month that it expects its profit to decline by one-third this year as consumption in Europe may slide further.

“Turkey is especially interesting as energy demand is rising long term,” Messner said in an interview at EON’s headquarters. “Trade, volumes and transparency are growing.”

The Mediterranean country needs to build as much as 5,000 megawatts of additional power capacity a year, from about 62,000 megawatts in October, to meet annual growth of on average 6 percent over the next decade, according to Enerjisa. One megawatt is enough to power 2,000 European homes. Energy demand in the European Union is expected to fall 6 percent by 2035, according to BP Plc’s Energy Outlook.

Enerjisa operates 20 power plants with a total capacity of 2,437 megawatts and has 1,826 megawatts under construction, according to EON’s factbook. Enerjisa seeks 7,500 megawatts, or 10 percent of total generation, by 2020, Chairman Selahattin Hakman said in December.

Make Money

Enerjisa’s four power traders may buy and sell about 15 terawatt-hours this year, up from 6 terawatt-hours in 2013, as trading volume in the Turkish day-ahead auction and on its over-the-counter market rises by 67 percent from 30 terawatt-hours last year, according to Messner. Total power generation was 239 terawatt-hours in 2013, according to Enerjisa. One terawatt-hour is about one month of output from EON’s biggest nuclear reactor, Brokdorf in Germany.

“It’s about securing the value of our power plants and to make money from it,” he said.

EON, Germany’s biggest utility, said last month that power trading volume at its Global Commodities unit dropped 8.3 percent in 2013 as Europe’s renewable energy boom drove power prices to record lows. The unit’s profit declined 75 percent.

German power for next-year delivery, a European benchmark contract, declined to a nine-year low of 33.65 euros ($46.09) a megawatt-hour yesterday on the European Energy Exchange AG. The contract traded at 33.75 euros as of 5:13 p.m. in Berlin.

Liberalization Process

Turkey started liberalizing its energy market from 2001 and the power sector should be fully opened by the end of this decade, when most of the long-term power delivery contracts from state-owned generators expire, Messner said. Those contracts currently cover half of the country’s usage, he said.

Five of Enerjisa’s plants, or 54 percent of generation, are fueled by natural gas, which the company buys at tariffs set by Turkish incumbent Botas Boru Hatlari Ile Petrol Tasima AS. Turkey gets about 59 percent of its gas from Russia’s OAO Gazprom under long-term contracts linked to oil prices, according to Eurogas, a Brussels-based lobby group.

“If this market opens, then it would quicken the market development,” Messner said. “An insight into the pricing formula would allow buyers of Botas’ gas, including us, to hedge the oil price component.”

Gas Plants

Last year, gas plants provided 44 percent of Turkey’s total power production, according to Sabine Meixner, EON spokeswoman for political affairs and corporate communications, citing data from Turkish grid operator Teias. That compares with around 11 percent in Germany, according to data from AG Energiebilanzen e.V., an association of energy lobbies and economic research institutes.

“Turkey has higher prices as gas-fired plants set prices in more than 7,000 hours per year,” Messner said. “In Germany, we have a different development now.”

Angela Merkel’s plans to boost Germany’s renewable energy supply to as much as 45 percent by 2025 from about 24 percent are cutting into profit at gas-fired plants in Germany. Output from gas-fired plants dropped 25 percent since 2010 while generation of green power rose 45 percent in the 2010-13 period, AGEB data show.

To contact the reporter on this story: Julia Mengewein in Frankfurt at jmengewein@bloomberg.net

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Rob Verdonck, Andrew Reierson

Sunday, 6 April 2014

Mongolian-Flagged Cargo Ship Sinks off South Korea

April 7, 2014

A cargo ship sailing under the Mongolian flag has sunk earlier today some 63 km off the coast of Yeosu, South Korea due to jet unknown reasons, Xinhua news agency reports.

There were 16 North Korean sailors onboard the ship Grand Fortune 1, which was en route to the Chinese port of Changdao in Shandong province when the accident occurred.

South Korean coast guard launched a search and rescue operation right after receiving the distress call from the ship. The coast guard has managed to rescue three crew members and recovered bodies from two, while 11 people are still unaccounted for. The rescue mission is still ongoing.
Also, an investigation has been launched to determinate the cause of the accident.

Tuesday, 1 April 2014

Novation: Application of Contractual Arbitration Clauses to Pre-Contractual Disputes


CMA CGM SA v Hyundai Mipo Dockyard Ltd [2009] Lloyd’s Rep Plus 4

CMA commenced proceedings in tort against the Hyundai Mipo Dockyard (HMD) in France alleging that HMD had unreasonably refused to agree to the novation of four shipbuilding contracts to CMA. Following the commencement of the French proceedings HMD agreed to novate the four shipbuilding contracts, each of which provided for disputes in connection with their interpretation and fulfilment to be determined in London arbitration. Having been held liable to CMA in damages by the French proceedings and paid those damages, HMD commenced arbitral proceedings in London under the novated shipbuilding contracts to recover the sums paid out.

The Tribunal found in HMD’s favour, with the result that CMA were obliged to pay as damages to HMD the damages that CMA had recovered from HMD in the French proceedings. On appeal the Judge (Mr Justice Burton) upheld the arbitration award, holding that, by continuing the French proceedings, CMA was in breach of the arbitration agreements in the novated shipbuilding contracts which required the CMA to arbitrate in London disputes in connection with the interpretation and fulfilment of the contract.

The Background

HMD entered into four separate shipbuilding contracts with subsidiaries of ER Schiffahrt GmbH (ERS), each of which provided that “If any dispute should arise in connection with the interpretation and fulfilment of this contract, same shall be decided by arbitration in the City of London …”
CMA wished to take over the shipbuilding contracts from ERS and following HMD’s refusal to consent to a novation as requested by ERS, CMA issued a tort-based claim in the Marseilles Commercial Court (the French proceedings) alleging that HMD had unreasonably withheld its consent.
The French proceedings were still ongoing when the parties negotiated and eventually entered into four novation agreements, one for each vessel, in each case, the novation taking effect only after construction work on the vessel had been completed (the “transfer date”). The novation agreements each contained a mutual release and discharge between HMD and ERS, in respect of all matters other than any liability that might arise out of the French proceedings. CMA continued the French proceedings, in which HMD entered an appearance under protest and on 13 September 2006, the Marseilles Court held that HMD had unreasonably refused consent to novation and awarded significant damages to CMA, which HMD paid.

HMD subsequently brought an arbitration in London, under the novated shipbuilding contracts to recover the sums paid to CMA contending that by continuing the French proceedings, CMA were in breach of the arbitration clause and should not be entitled to benefit from their own wrong. The arbitrators found in favour of HMD and CMA appealed, the two questions of law being:

(i) Whether the arbitration clause in the novated shipbuilding contracts applied to the pre-existing dispute between CMA and HMD which had been referred to the French court and was pending before it at the time of novation; and

(ii) If so, whether the arbitrators were bound by the French court’s determination of the same issues between the same parties in a judgment which the English courts would be bound to recognise pursuant to the Council Regulation (EC) No 44/2001 (the Judgment's Regulation).

Did the arbitration clause in the novated shipbuilding contracts apply to the pre-existing dispute between CMA and HMD?

Agreeing with the arbitrators, the Judge held that it was wholly apparent that in the absence of any express agreement as to the effect of or on the French proceedings the two parties simply left the matter to be resolved as a matter of law. Therefore, what was the effect of the novation on the arbitration clause?
CMA had two arguments, both relating to the construction of the arbitration clause in the novated shipbuilding contracts.

(a) "If any dispute should arise"

CMA contended that the clause referred only to disputes arising in the future ("if any dispute should arise") and that as between HMD and CMA that meant any dispute arising after the transfer date. Accordingly, the arbitration clause did not apply to the existing dispute between HMD and CMA which had arisen prior to the Transfer Date.
The Judge rejected this argument and agreed with the arbitrators who had held that, although the words "if any dispute should arise" referred to something that may happen in the future, they were contained in a contract dated 26 February 2004 and referred to disputes arising after that date – which the dispute in question here did. The meaning and effect of the arbitration clause was not altered by the Novation Agreement. Before and after the coming into force of the Novation Agreement it referred to disputes in connection with the interpretation and fulfilment of the shipbuilding contracts arising after the date of those contracts.

On CMA’s case a dispute arising between the parties one day after the transfer date, albeit a dispute about events occurring before the transfer date, would be subject to an obligation to arbitrate, while precisely the same dispute, arising one day before the transfer date, would not. The arbitrators considered this to be a result which made little commercial sense, and which rational businessmen were not likely to have intended. Following the approach commended by the House of Lords in the Fiona Trust (Fiona Trust & Holding Corporation v Privalov [2008] 1 Lloyd’s Rep 254), they considered that the clause should be construed so as not to produce this surprising result, unless the language of the contract clearly required a different conclusion.

CMA also argued that the ordinary legal effect of a novation was to "extinguish the original contract and replace it by another", with effect that there should now be deemed to be novated shipbuilding contracts each dated on the relevant transfer date. This too was rejected: Burton J holding that the novation agreements were not self-standing, as they simply re-peopled the original contracts, leaving their provisions (including their dates) unchanged.

(b) Not an arbitrable claim

CMA’s second submission was that although the claim was one which could be said to be "in connection with the interpretation and fulfilment" of the shipbuilding contracts, it was outside the ambit of the Arbitration Clause and thus not subject to the obligation to arbitrate.

This was also rejected by the Judge, who held that the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter, to be decided by the same Tribunal. The Judge found that, like a dispute about misrepresentation prior to contract, a dispute about whether licence to assign or novate a contract was unreasonably refused was a dispute “in connection with the interpretation and fulfilment of” the shipbuilding contract. He had no doubt that once CMA became party to the novated shipbuilding contract, and the question fell to be asked whether a dispute within the arbitration clause had arisen between the two parties to that novated contract, the answer could only be in the affirmative.

Were the arbitrators bound by the Judgments Regulation to recognise the French judgment?

The case had been argued before the Tribunal on the premise that, if the Judgment Regulation applied, they would bound by the Regulation to recognise the French judgment. If the French judgment was entitled to recognition under the Regulation, it was common ground between the parties that CMA’s claim should be treated as if it would have succeeded, and therefore that (subject perhaps to issues about costs) HMD has suffered no loss.
Although they did not resolve this point, the arbitrators were doubtful as to why, even if the Judgment Regulation applied, any question of recognising the French judgment arose. If instead of proceeding in Marseilles, CMA had brought its claim in a London arbitration, and they were required to decide what conclusion a notional arbitral tribunal would have reached, there would be no French judgment and no question of recognition could arise. The one thing that the London tribunal could not have done would be to recognise a French judgment, since there would be no such judgment to recognise.

The Judge held that there was no question of needing to consider what a notional tribunal would have considered. The claim before the arbitrators was a simple claim for damages for breach of contract, i.e., breach of the arbitration agreement. The relevant question was what would have happened if the contract had not been breached. In this event the parties would have complied with their obligations to arbitrate and there would be no French judgment. This was not a question of not recognising the French judgment, but concluding that, as the parties were required to go to arbitration, it was only the outcome of the arbitration which was of any relevance.


The facts of this dispute are unusual in that it both arose and the French proceedings were commenced at a time when there was no contract, and no arbitration agreement, between the parties. Whilst such circumstances are likely to be rare, the decision serves to emphasise the English law approach following the House of Lords decision in The Fiona Trust litigation that construction of an arbitration clause should start from the assumption that the parties are likely to have intended any dispute arising out of the relationship into which they have entered, or purported to enter to be decided by the same Tribunal.