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 June 2015

IMO Adopts New Code for Gas-Fuelled Ships

June 15, 2015.

The International Maritime Organization’s Maritime Safety Committee (MSC), which met at the IMO’s London headquarters for its 95th session from 3 to 12 June 2015, adopted a new Code for Gas-Fuelled Ships.

The Committee adopted amendments to SOLAS Chapter II-1 Part G and the Code of Safety for Ships Using Gases or Other Low-Flashpoint Fuels, IGF Code. The Code’s mandatory provisions will enter into force on 1 January 2017 and will apply to new cargo ships ≥ 500gt and passenger ships using natural gas fuel.

The IGF Code aims to minimize the risk to the ship, its crew and the environment, having regard to the nature of the fuels involved.

The proposed draft amendments to SOLAS chapter II-1 (Construction – Structure, subdivision and stability, machinery and electrical installations), include amendments to Part F Alternative design and arrangements, to provide a methodology for alternative design and arrangements for machinery, electrical installations and low-flashpoint fuel storage and distribution systems; and a new Part G Ships using low-flashpoint fuels, to add new regulations to require ships constructed after the date of entry into force to comply with the requirements of the IGF Code, together with related amendments to chapter II-2 and Appendix (Certificates).

The amendments to SOLAS slated to enter into force on 1 January 2017 include:

  • Revised cargo tank venting arrangements in SOLAS Chapter II-2 for new oil tankers constructed on/after 1 January 2017 that will require secondary means of venting to allow full flow relief of cargo or inert gas vapors at all times
  • Power ventilation systems serving vehicle, special category and ro-ro spaces on new passenger and cargo ships constructed on/after 1 January 2017 are to deliver the specified number of air changes (6 or 10 air changes per hour depending on ship type and space served) at all times when vehicles are in such spaces.
  • Amendments of the mandatory provisions of Section 3 (Safety of personnel and ship) of the International Maritime Solid Bulk Cargoes (IMSBC) Code providing interim measures requiring the ship’s crew to conduct regular on board operational fire safety risk assessments of cargo handling areas on self-unloading bulk carriers with internally installed conveyor systems.
  • Intact Stability Code was revised with respect to the non-mandatory provisions of Part B, to address the means to account for ice accretion on cargo ships carrying timber deck cargoes.

Approved SOLAS Amendments also cover:

  • Enhanced Survey Program Code, which was revised to refer to recommendations for entering enclosed spaces aboard ships
  • Fire Systems Safety (FSS) Code – a new Chapter 17 of the FSS Code was approved, which contains specifications for foam firefighting appliances for the protection of helicopter facilities on new SOLAS-certified ships and MODUs
  • Intact Stability Code – the non-mandatory provisions of part B were revised, consequential o the amendments to the introduction of the 2008 IS Code regarding vessels engaged in anchor-handling operations
  • Watertight doors – SOLAS II-1/22 was revised to remove two of the provisions for determining when certain watertight doors may be permitted to remain open during navigation.
Source: http://worldmaritimenews.com

Get Ready for 57 New IMO Requirements


June 15, 2015. 

Keeping updated on new and retroactive requirements from IMO and ILO can be a challenge. To help, DNV GL has made a summary of the most important requirements entering into force from July 1, 2015 to July 1, 2018.


















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

Wednesday, 10 June 2015

Co-Insurance: When is an Insurer Entitled to Subrogate

June 10, 2015. 

Where an underwriter has paid an indemnity under an insurance policy, it becomes entitled to pursue an action in the name of the insured to enforce the insured’s rights and remedies against a third party. This principle is known as ‘subrogation’. In the case of composite insurance, however, the position can be more complicated, as illustrated by the Court of Appeal’s decision in Rathbone Brothers Plc & Anor v Novae Corporate Underwriting Limited [2014] EWCA Civ 1464.

Background

The second claimant, a Jersey solicitor, was a partner in NH&P and subsequently a director and shareholder in its successor firm, NHTC, which carried out trust business. In March 2000 NHTC was acquired by Rathbone Brothers and the second claimant became an employee of NHTC. NHTC subsequently changed its name to Rathbone Trust Company Jersey Ltd (RTCJ). 

In July 2003 RTCJ and Rathbone Brothers entered into an Instrument of Release and Indemnity (the Indemnity) with the second claimant, under which they gave him an indemnity of £40 million in respect of the provision of services or the conducting of activities at the request of RTCJ and Rathbone Brothers. The Indemnity expressly included his acting as a trustee.

In June 2007 the second claimant ceased to work full time and instead became a consultant to  RTCJ. The Consultancy Agreement provided that RTCJ would provide him with professional indemnity insurance. The cover taken out by Rathbone Brothers was a claims made policy with a primary layer of £5 million with AIG and an excess layer of £45 million with Novae. The policy gave cover for Rathbone Brothers and RTCJ themselves, as well as various employees and other individuals. It included a subrogation clause in the following terms: “The insurer shall be subrogated to all insureds’ rights of recovery, contribution and indemnity before or after any payment under this policy…The insurer shall not exercise its rights of subrogation against an insured person in connection with a claim”. 

The Insurance Claim

The second claimant was for many years a personal trustee of a settlement known as the Jack Walker 1987 Settlement. Following his retirement as a trustee, proceedings were brought against him in Jersey by the beneficiaries of the trust, alleging breach of duty. It was also claimed that RTCJ was vicariously liable. The second claimant, RTCJ and Rathbone Brothers sought cover from the insurers for the 2008-9 year. AIG accepted that the claim was covered but Novae and the other excess layer insurers did not. The claimants sued the excess layer insurers to establish their right to cover in respect of both liability and defence costs.

At first instance Mr Justice Burton held that, on a proper construction of the policy, the claim was covered. However, he then had to consider whether the insurers had a right of subrogation against Rathbone Brothers or RTCJ. He held that they did because Rathbone Brothers’ liability under the Indemnity was not covered under the insurance policy and there was no relevant exclusion of subrogation. Click here to read our article on the first instance decision.
The Court of Appeal has now unanimously allowed the appeal from that decision, although the judges differed as to the reasons why the insurers had no subrogation rights.

Subrogation

Lords Justice Elias and Sharp considered that there were two separate obstacles to subrogation.
First, notwithstanding the express subrogation clause in the policy, they held that the insurance policy contained an implied term that the insurers would not seek to be subrogated to the second claimant’s rights under the Indemnity. The parties could not have intended subrogation to apply to that contractual right because that would “seriously undermine the purpose of the policy”. It would deny Rathbone Brothers the very benefit which the policy was intended to confer if the Indemnity was treated as the primary source of protection for the second claimant. It was “pure happenstance” that the Indemnity was in place.

Second, there was an implied term in the Indemnity to the effect that it was intended to provide supplemental protection only once the claim against the insurers had been exhausted. The Indemnity was the secondary source of indemnity, whereas the insurance policy was the primary source of indemnity. At first instance Burton J held that there can never be a subrogated claim brought against a policyholder who has paid the premium in respect of coverage for a loss for which the policyholder was not insured. Elias LLJ, giving the leading judgment, disagreed with this, stating that it was not the mere fact that Rathbone Brothers had paid the premium which justified treating the insurance as the primary source of indemnity. It was the fact that Rathbone Brothers was not at fault and that the subrogated right related to an indemnity which was providing the same protection as the insurance itself. Therefore, even if there was a right of subrogation in principle which was not waived by the policy itself, that right had no substance in the circumstances of this case. There was no right to which the insurers could be subrogated.

Lord Justice Beatson agreed with the second point but disagreed that it was possible to imply a term into the policy excluding rights of subrogation against Rathbone Brothers. He stated that although there is no rule of law that only an express exclusion of subrogation in a policy will suffice, this “should be the position in practice in all but an exceptional case”. 

Comment

Under English law, an insurer will usually be unable to exercise rights of subrogation in the name of one co-insured against another co-insured. The first instance decision in this case, therefore, might have been thought rather harsh on Rathbone Brothers. On the facts of this case the Court of Appeal was prepared to imply a term excluding subrogation rights. It should not, however, be presumed that the Courts will be ready to do this in every case. The lesson remains: if it is intended to remove all rights of subrogation against co-insureds, this should be expressed unambiguously in the policy.

Source: http://incelaw.com

English Parliament passed the Insurance Act 2015

June 10, 2015. 

On 12 February 2015 Parliament passed the Insurance Act 2015 which will introduce the most significant changes to English commercial insurance law for at least 100 years and arguably the most significant changes ever.

The Act will come into force on 12 August 2016. Some leading insurers, however, have already said that they are acting on the basis that the new laws are in force. Brokers will, no doubt, be encouraging many others to follow suit.
The new laws will apply to all insurance other than consumer insurance; they are equally applicable to reinsurance.
The key changes are summarised below. A more detailed commentary can be found here. 

Placement – Duty to Make a “Fair Presentation”

The insured must disclose all material circumstances about the risk or give the insurer sufficient information to put it on notice that it needs to make further enquiries for the purposes of revealing all the material circumstances about the risk.
This will put a greater emphasis on the insurer to ask questions about the risk and to make clear what information it requires.
The insured is obliged to make disclosure in a manner which is reasonably clear and accessible to a prudent underwriter (no data dumping) and not to misrepresent material information.

Graduated Remedies for Breach

The single remedy of avoidance from inception for a breach by the insured of its duty to disclose the risk at placement is abolished.
Instead there will be a new system of graduated remedies based on what the insurer would have done had a fair presentation been made, including:
avoidance if the underwriter would not have written the risk at all;
if the underwriter would have imposed different terms had a fair presentation been made, those terms may be imposed from inception (which may mean that some claims which have already been paid have to be revisited);
further, any claims under the contract may be reduced by the same proportion as the actual premium charged bears to the premium that would have been charged if there had been a fair presentation; and
if the breach of duty was deliberate or reckless the insurer may avoid the contract and keep the premium whatever it would have done in the event of a fair presentation.

Warranties and Terms Not Relevant to the Actual Loss

A breach of an insurance warranty will no longer automatically discharge insurers from further liability under the contract.
Instead, the contract will be suspended until the breach of warranty is remedied. Insurers will not be liable in respect of losses occurring or attributable to something happening during the period of breach.
Where a loss occurs when an insured is not in compliance with a term which “tends to reduce the risk” of loss of a particular kind or at a particular time or place, the insurer will not be able to rely on that non-compliance to exclude, limit or discharge its liability if the insured can show that its non-compliance could not have increased the risk of the loss which in fact occurred in the circumstances in which it did occur.

Remedies in the Event of a Fraudulent Claim

The insurer will not be liable to pay any part of a fraudulent claim and may recover any money paid in respect of that claim prior to discovery of the fraud.
The insurer may give the insured notice that the contract is terminated from the date of the fraud (regardless of when the fraud is discovered). The insurer can then keep the premium and has no liability for claims arising after the fraud.
In the event of a fraudulent claim by one beneficiary under a group scheme, cover for the innocent beneficiaries is not impacted.

Source: http://incelaw.com/

Monday, 1 June 2015

ECJ upholds anti-suit injunction ordered by arbitral tribunal

June 1, 2015.

Gazprom (Judgment) [2015] EUECJ C-536/13

The European Court of Justice (“ECJ”) has recently confirmed that the Brussels Regulation does not prevent a EU member state court from recognising and enforcing an anti-suit injunction granted by arbitrators. Its reasoning is that arbitration and arbitral tribunals fall outside the scope of the Brussels Regulation (Regulation (EC) No 44/2001). 


The ECJ had, but did not take, the chance to consider whether its prohibition of anti-suit injunctions issued by member state courts in relation to the pursuit of proceedings within the EU should be lifted, in light of the clarifications in the ‘recast’ Brussels Regulation that became effective from 10 January 2015. This would have required the ECJ to reverse its decision in the Front Comor (West Tankers) case. The ECJ chose not to go down this road in Gazprom, but decided instead to confine itself to an analysis of the compatibility with the 2001 Regulation of anti-suit injunctions ordered by arbitral tribunals. The ECJ concluded that arbitral awards of this type are permissible.   

Background

Where one party commences foreign court proceedings in breach of an English exclusive jurisdiction clause or arbitration agreement, the other party may wish to apply to the English court for an anti-suit injunction. This is an order by the court that the first party should desist from its pursuit of the foreign action. Such injunctions have traditionally been available from the English court either on the grounds that the foreign proceedings are a breach of contract, or alternatively because they are vexatious and oppressive. 

Anti-suit injunctions issued by EU courts were rendered impermissible within the EU, however, following the ECJ’s decisions in Turner v. Grovit in 2004 and the Front Comor in 2009. In Turner v. Grovit, where there was a breach of an exclusive English jurisdiction clause, the ECJ held that an anti-suit injunction issued by the English court to restrain proceedings in another EU state, represented an unacceptable interference with the right of the court first seised of proceedings to decide its own jurisdiction. In the Front Comor, the ECJ held that a similar prohibition extended to an injunction granted by the English court to restrain the pursuit of proceedings in Italy, which had been brought in breach of a London arbitration agreement. The ECJ recognised that the English action leading to the anti-suit injunction was not within the Brussels Regulation, as the action related to arbitration. Arbitration is altogether excluded from the scope of the Regulation by Article 1.2(d). Questions of enforcement and recognition of arbitral awards are instead subject, as between state parties to it, to the 1958 New York Convention.  Despite this exclusion, the English court’s injunction was said to strip the Italian court’s power to rule on its jurisdiction under the Regulation. As such, the injunction undermined the effectiveness of the Regulation and ran counter to the concept of ‘mutual trust’ between courts of the EU member states, upon which the Regulation is based. 

While anti-suit injunctions within the EU were ruled out as a result of these decisions, they have continued to be available to the English courts in order to restrain breaches outside the EU, either of exclusive jurisdiction clauses or of arbitration agreements. 

Not least as a result of the Front Comor decision, which gave rise to considerable controversy, changes were made to the Brussels Regulation and the recast Brussels Regulation (EU) 1215/2012 came into force on 10 January 2015. The recast Regulation maintains the arbitration exception and indeed emphasises it in new Recital 12. No mention is made of injunctions in the recast Regulation. There has in consequence been some uncertainty whether court-issued anti-suit injunctions might be permitted in the future within the EU to protect arbitration agreements. Gazprom offered the ECJ the opportunity to revisit that point and the interface between arbitration and EU law.  

Gazprom 

In Gazprom, the relevant contract provided for Stockholm arbitration. One of the parties instead commenced Lithuanian court proceedings. The other party obtained an anti-suit injunction in the form of an arbitration award from the arbitrators and then sought to enforce that arbitral award in Lithuania, under the New York Convention. The Supreme Court of Lithuania referred the matter to the ECJ, asking if it could refuse to recognise and enforce an arbitration award on the basis that the award restricted the Lithuanian court’s right to rule on its own jurisdiction in a case falling within the Brussels Regulation.

The Advocate General’s opinion

The opinion rendered by Advocate General Wathelet (“AG”) in Gazprom on 4 December 2014 took into account the recast Brussels Regulation (even though the opinion was handed down before the revisions came into effect). The AG concluded that, given the arbitration exception, the Brussels Regulation must be construed as not requiring the court of a member state to refuse to recognise and enforce an anti-suit injunction issued by an arbitral tribunal.

Just as significantly, perhaps, the AG considered the decision in the Front Comor and indicated that, under the recast Regulation, the court-issued anti-suit injunction in the Front Comor would have been compatible with the recast Regulation. The AG suggested that the ruling in the Front Comor was inconsistent with certain earlier ECJ decisions (in Hoffman, Marc Rich and Van Uden) and observed that the recast Regulation was intended to combat the so-called ‘Italian torpedo’ of delaying tactics. His view was that courts within the EU should be permitted to take measures to ensure the effectiveness of arbitration agreements, without being prevented from doing so by the Brussels Regulation. 

The AG considered that Gazprom could in any event be distinguished from the Front Comor, because Gazprom concerned an arbitration award (rather than an anti-suit injunction ordered by a court). The award was, therefore, subject to recognition and enforcement under the New York Convention, rather than the Regulation. The AG added that the fact that an arbitration award contains an anti-suit injunction is not a sufficient reason for refusing to recognise or enforce it on grounds of public policy. 

The ECJ decision

On 13 May 2015, the ECJ handed down its decision in Gazprom. The ECJ agreed with the AG that it is not incompatible with the Brussels Regulation for a member state court to recognise an arbitration award that contains an anti-suit injunction. The Regulation does not prevent a court in an EU member state from recognising and enforcing (or from refusing to recognise and enforce) an award, either pursuant to national law or the New York Convention.  So far so good.

Unlike the AG, however, the ECJ did not consider the position under the recast Brussels Regulation. The ECJ instead restricted itself to the 2001 Brussels Regulation. Further, while it cited and recalled the Front Comor, it made no reference to the AG’s observations and chose not to comment on whether the proscription of anti-suit injunctions within the EU might be altered under the recast Regulation. Instead, the ECJ merely distinguished the Front Comor, on the basis that the anti-suit injunction in Gazprom was not issued by a member state court but by an arbitral tribunal. The conclusion was that there was no question in Gazprom of an infringement of the principle of mutual trust between member states or of any interference by a member state court with the jurisdiction of another member state court under the 2001 Brussels Regulation. 

Comment

The decision in Gazprom is, as far as it goes, favourable to arbitration supporters. There is now a clear statement from the ECJ that it is not contrary to or incompatible with the Brussels Regulation for arbitral tribunals to issue awards containing anti-suit injunctions.  Such awards can, at least prospectively, be enforced within the EU (and elsewhere) under the 1958 New York Convention. No doubt in appropriate instances they will be coupled with awards for damages for breach of the agreement to arbitrate. 

Nevertheless, arbitration awards are likely to be rather less effective than court-issued injunctions carrying sanctions for non-compliance. Further, under the New York Convention, courts can refuse to recognise and enforce awards if they consider such recognition and enforcement would be contrary to public policy. 

The ECJ declined, despite the AG’s invitation, to consider the recast Brussels Regulation and to re-consider the prohibition of court-issued injunctions in the EU. It is difficult to detect in the short judgment in Gazprom any appetite on the part of the ECJ to change the status quo and to allow member state courts to issue anti-suit injunctions affecting other EU proceedings. 
We are left, then, in a rather perverse position.  Arbitrators can issue anti-suit injunctions to restrain breaches of arbitration agreements, wherever those breaches occur. In respect of breaches within the EU, however, it remains unacceptable for member state courts to do likewise

Source: http://incelaw.come
              http://www.eric-group.co.uk/