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.

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