18563 Sea Venture 10 7/2/08 12:28 Page 1

Sea Venture newsletter Issue 10

Introduction....................................3

Steamship Mutual Members Receive Top Seatrade Awards ........4

Indian Iron Ore Alert - ExcessiveMoisture Content ..........................5

Option for Continuation - When Does it Commence? ............6

Steamship Mutual Director President of the Indian NationalShipowners’ Association ................7

Steamship Mutual Director Receives Lloyd’s List Award ............7

Deepwater Exploration ..................8

NOR Tendered at Outer Anchorage to Terminal - Valid? ......9

EU Ship-Source Pollution Legislation - Developments...........10

Disputes Arising “Under” or “Out of” a Charter? ....................11

Crew Claims in the Philippines -“120 Days” Update......................12

VLCC to VLOC Conversions ........14

U.S. - Recent Decisions on Punitive Damages ........................15

Low Sulphur Fuels - Some Practical Implications ..........15

Pleural Plaques Not Actionable in Tort ........................16

Frustrating Delays Revisited ..........16

Risks in Carriage of Food Cargoes 17

Mediation - Tried and Tested? ......18

Loss Prevention Posters ................19

Small Claim, Serious Irregularity & Substantial Injustice ..................20

Singapore - MOU on Oil SpillResponse Rates ............................21

Anti-Fouling Systems and Bunker Conventions ....................22

Steamship Mutual Website ..........23

Contents

2

Editorial TeamNaomi Cohen Sue WatkinsMalcolm Shelmerdine

Sea Venture is available in electronic format. If you wouldlike to receive additional copies of this issue or futureissues in electronic format only please send your name andemail address to seaventure@simsl.com.

Feedback and suggestions for future topics should also besent to this address.

18563 Sea Venture 10 7/2/08 12:28 Page 2

The new look Sea Venture is now entering its fourth year.During this period shipping markets have enjoyed anunprecedented boom with vessel earnings at or aroundtheir historic peaks in many markets. As the strength ofthe new building order book indicates, the market view isone of continued optimism with only a minority ofcommentators advocating caution

A consequence of the booming shipping industry hasbeen increased costs; both in terms of asset values, andoperational and claims costs. The cost of claims andrelated disputes is discussed in the Club’s Mid Year Review:

as is the Club’s revised approach to claims records andfuture risk profiles and their relevance to the premiumincreases sought by Steamship Mutual at the forthcomingrenewals. Higher claims levels oblige the P&I Clubs toraise their rates and, at the time of publication, SteamshipMutual is in the process of agreeing terms for theforthcoming 2008/09 policy year on the basis of the 15%standard increase set by the Board. While a reduction inclaims levels for the year ahead would be most welcome,the strong market outlook remains one that demands acautious underwriting approach.

This edition of Sea Venture includes nine articles fromSteamship Mutual, covering a variety of subjects includingrecent arbitration and court decisions on frustration,options to extend charterparties, permanent disabilityclaims, pollution, the conversion of VLCCs to VLOCs, andloss prevention issues. There are also externalcontributions from US and English solicitors and expertson topics including punitive damages, whether anagreement to arbitrate is valid if the contract in which theagreement is incorporated is not, the carriage offoodstuffs and deepwater exploration.

As ever we are grateful to those that have contributed tothis edition of Sea Venture and welcome any feedback orsuggestions for topics for future editions.

Malcolm Shelmerdine

Introduction

www.simsl.com/MidYearReview.html

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14th February 2008.

Sea Venture newsletter Issue 10 3

Sea Venture newsletter Issue 104

On 5 November 2007 Seatrade held theirAnnual Middle East and Indian SubcontinentAwards ceremony in Dubai.

The Awards are designed to acknowledgeexcellence and innovation in the maritimesector across the region. Winners arechosen by a select panel of independentindustry peers, taking into account criteriasuch as contribution to development ofthe region’s maritime sector, innovation,commitment to safety, quality andenvironmental responsibilities, businessenterprise and achievement, and trainingand development.

Steamship Mutual would like to extendcongratulations to all those who receivedrecognition at this year’s ceremony and,in particular, to the following Members:

National Iranian Tanker Company -Tanker Operator Award. The awardwas accepted by Mr Mohammed Souri,chairman of the NITC and SteamshipMutual director.

The Shipping Corporation of India -Ship Owner/Operator Award. Theaward was accepted by Mr KailashGupta, director of SCI.

Orient Express Ship Management -Ship Manager Award. The award wasaccepted by Mr S. Ramakrishnan,chairman of the Transworld Group.

In addition, Sir C.P. Srivastava, who wasthe first chief executive of the ShippingCorporation of India, was honoured with the Seatrade LifetimeAchievement Award.

For a full list of award winners go to:

Steamship Mutual MembersReceive Top Seatrade Awards

www.seatrade-middleeast.com/awards/index.html

Sir C.P. Srivastava

Mr S. Ramakrishnan

Mr Kailash Gupta

Mr Mohammed Souri

Sea Venture newsletter Issue 104

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Sea Venture newsletter Issue 10 5

There have been a number of recent incidents,including major casualties, resulting from the loadingand carriage of iron ore fines from Indian ports.

Shippers are under an obligation to provide validcertificates stating the moisture content of the cargoin question, which content needs to be below thetransportable moisture limit (TML). Both figures needto be identified at the time of shipment. Cargo with amoisture content that exceeds its transportablemoisture limit is liable to liquefy. Should that occur, thestability of the vessel will be compromised and mayresult in severe consequences, including the potentialloss of the vessel.

Masters loading these cargoes must satisfy themselvesthat the cargo is safe to carry. They need to ensure notonly that the actual moisture content is below theTML, but also that the information in the moisturecontent certificate is valid: for example a moisturecontent analysis carried out at a different location, orat some time in the past may be of little value if thecargo has been sitting in the open immediately priorto shipment, unprotected from rain.

If the master reasonably believes that the moisturecontent of a cargo may be excessive, possibly basedon visual observation during loading, he may take aseries of samples and carry out a ‘can test’, as detailedin the BC Code. This is a rudimentary test. It will notindicate definitively whether a bulk cargo does containexcessive moisture; however, it may provide evidenceallowing the master to require further testing to becarried out on the cargo in order to assess itstransportability. It is recommended that the masterundertake such tests where he believes that a cargomay be excessively moist and/or that liquefaction mayoccur. If in doubt he should seek assistance fromSteamship Mutual’s local correspondent.

It is recommended that Members loading thesecargoes instruct their masters to proceed with extremecaution and to contact the Managers’ Londonrepresentatives if they have any concerns. Masters mayface considerable local pressure to load and sail. Suchpressure should be resisted where the cargo potentiallypresents a threat to the safety of the vessel and crew;Steamship Mutual’s highly experienced, wellestablished and widespread correspondent network inIndia will be able to assist in such circumstances.

The principles and potential problems involved in thecarriage of this type of cargo are not necessarilylimited to Indian iron ore. It is important that thecorrect regulations are complied with and precautionsobserved when loading similar cargoes anywhere inthe World.

Indian IronOre Alert - ExcessiveMoistureContent

“...Cargo with a moisture

content that exceeds its

transportable moisture

limit is liable to liquefy.”

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Sea Venture newsletter Issue 10

Option for Continuation - When Does it Commence?

6

In a recent arbitration the tribunal had toconsider whether the exercise of an optionof a “further 6 months in directcontinuation” had been validly made andfrom when the 6 month period ran.

The vessel was chartered for “about 3 to 5months in charterers’ option” with anoption to charterers for a further 6months in direct continuation at anincreased rate of hire. The option clauseprovided: “Charterers option further 6 (six) months in direct continuation to bedeclared after 3 months…”

The vessel was delivered into charter andjust under 3 months later charterers soughtto exercise the option given to them.Owners contended that the 6 months ranfrom the end of the third month whilstcharterers contended it commenced at theend of the fifth month. Owners refused toallow charterers to have the vessel on hireafter a 9 month period (3 + 6 months).Charterers alleged owners were inrepudiatory breach and accepted this byredelivering the vessel just short of the 9month period.

Charterers claimed overpayment of hire forthe period from the end of the third monthuntil end of the fifth month and damagesfor their market losses from redelivery untilthe date they contended the vessel couldhave been redelivered.

The tribunal found for charterers; owners’interpretation of how the option wouldwork was not how one would normallyexpect an option to work and clear wordswould have been needed to have the effectowners contended. The initial charter

period gave charterers the right to use thevessel for a minimum period of 3 monthsto a maximum period of 5 months at theoriginal rate of hire. The tribunal’s viewwas that on exercising the option properlythe charter period was extended from“about 9 to about 11 months.”

Owners had submitted that the wording ofthe option clause itself supported theirposition as the word “after” made nocommercial sense. Options were normallyto be declared before a fixed date and notafter. Owners argued that the clause hadto be read as follows: “Charterers optionfurther 6 (six) months in direct continuation(to be declared) after 3 months…”

The tribunal rejected owners’construction of the clause and posed therhetorical question; why was it necessaryto state that the exercise of an optionhad to be declared, since that was selfevident, and yet not state what wasimportant - by when the option had tobe declared. The tribunal held that theword “after” was to be read as meaning“not later than” or “at the end of” anda precise date was not necessary.

The charterers’ approach was correct as a matter of law and “of commercialcommon sense”. Owners were inrepudiatory breach, which charterersaccepted and charterers were entitled to proven losses flowing from owners’breach, including the hire overpaid fromthe end of the third month.

London Arbitration 4/07 (2007) 715 LMLN 2

Article by Sian Morris(sian.morris@simsl.com)

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Sea Venture newsletter Issue 10 7

We are pleased to note the election of Mr. S. Hajara,chairman & managing director, Shipping Corporationof India Ltd. as the new president of the IndianNational Shipowners’ Association (“INSA”).

The Club has a strong and longstanding position inthe Indian market and the Managers wish INSA well asthey continue to promote the development ofshipping interests in India.

Other former Steamship Mutual directors to haverecently held this position include Mr Hajara’spredecessor as chairman at SCI, Mr P.K. Srivastava, andthe late Mr Sudhir Mulji of Great Eastern.

SteamshipMutualDirectorPresident ofthe IndianNationalShipowners’Association

At the Lloyd’s List Greek Shipping Awards in earlyDecember, 2007, an independent panel chose PericlesPanagopulos for the prestigious Lifetime Achievementaward. Through his companies Royal Cruise Line,Magna Marine, Superfast Ferries and Blue Star MaritimeMr Panagopulos has had a career of some 50 years inshipping, and has been at the forefront of innovation in the passenger sector. The relationship with SteamshipMutual first started with Royal Cruise Line in 1981. Mr Panagopulos has been a director of SteamshipMutual since 2000.

SteamshipMutualDirectorReceivesLloyd’s ListAward

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As the price of oil approaches US$100 perbarrel, the demand for industrial levels ofpower increase and accessible oil reservesdiminish, it is inevitable that the search for oilwill extend to deeper areas of the ocean.

Exploration in deeper waters has developedinto a serious commercial endeavour formajor energy companies. As such, thetechnology required to find and produce oileconomically from very deep water has beenthe subject of much research.

As vessels with capacities to drill at over3,600m (12,000ft) become available thetechnology to produce from this depthneeds to be developed to an economicallevel. The deepest water productionplatform is currently at 2,400m (7,800 ft) inthe Gulf of Mexico but units at depths ofover 1,000m are common in West Africa,India, Indonesia and Australia.

Predicted environmental data, critical to thesafe design of offshore units, has been feltto be reliable enough to allow confidence inthe robustness of platforms. However, as aresult of climate change, environmentalevents greater than those originally predictedmean that platforms must be designedeither to withstand increasing extremes ofwind and waves or to be disconnectablesystems which can be moved from harm’s way.

In an article written for the SteamshipMutual website by Ian Sherrington andJeremy Panes of Mwaves Limited this subjectis discussed in greater detail and the currentindustry trend towards disconnectablesystems is considered:

Deepwater Exploration

Sea Venture newsletter Issue 108

www.simsl.com/Deepwater1207.html

© C

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Sead

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18563 Sea Venture 10 7/2/08 12:28 Page 8

The voyage charter provided that NOR could betendered at the inner anchorage of the load port andonly at outer anchorage if congestion prevented thevessel from proceeding to the inner anchorage. Onarrival, although there was no congestion at the inneranchorage, the vessel anchored at the outeranchorage and tendered NOR to the terminal and tocharterer’s agents. The terminal orally accepted theNOR and owners contended that laytime commenced12 hours later. Charterers contended that laytime onlycommenced when loading actually began.

Owners submitted that the clause in the charterrequiring NOR to be tendered at inner anchorage gaveway to a clause allowing tender of NOR “whether inberth or not, whether in port or not…” If this werenot the case the terminal’s acceptance of the NORwaived any defect and charterers were estopped fromdisputing the validity of the notice by reason of thisacceptance. Charterers submitted that owners werenot entitled to tender NOR at the outer anchorageabsent any congestion at the inner anchorage andacceptance of the NOR by the terminal did not bindthem as there was no unequivocal representation bycharterers and no reliance by owners capable of givingrise to an estoppel.

The Charterparty was governed by English law and provided for disputes to be submitted to theexclusive jurisdiction of the English High Court.

Ocean Pride Maritime Limited Partnership v QingdaoOcean Shipping Co [2007] EWHC 2796 (Comm)

The case and the Court’s reasons for deciding infavour of owners are discussed in an article by Sian Morris (sian.morris@simsl.com) on theSteamship Mutual website:

NORTendered atOuterAnchorage toTerminal -Valid?

Sea Venture newsletter Issue 10 9

www.simsl.com/OceanPride1207.html

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Sea Venture newsletter Issue 1010

The EU Directive on Ship-Source Pollution2005/35/EC defines those ship-sourcedischarges of oil and noxious liquidsubstances which Member States are toregard as offences when discharged inCommunity Waters. The EU CouncilFramework Decision (2005/667/JHA) wascreated to ensure the effectiveness of theDirective by imposing criminal penalties.

These instruments, which seek tocriminalise accidental pollution, bothwithin EC Member State’s territorialwaters and exclusive economic zones,and on the high seas, resulted in twocases in the European Court of Justice(“ECJ”). The first was started byINTERTANKO and others (“theCoalition”) in the English High Court andquestioned the legality of the Directivewith regards to pre-existing internationallaws, i.e. MARPOL and UNCLOS 1982.See “EU Directive on Ship-SourcePollution - Open to Challenge?” articleon the Steamship Mutual website at:

The English High Court referred thequestion of the validity of Directive2005/35/EC to the ECJ. On 20November 2007, the Attorney Generaldelivered an opinion upholding thevalidity of the Directive. However, theAttorney General did support theCoalition’s argument that outside theterritorial seas the EC has no power tolegislate in matters that go beyondMARPOL. The Directive had sought toimpose a “serious negligence” test ofliability within both the territorial seasand EEZ of Member States. To do sooutside the territorial seas would have

been in conflict with international law –for example MARPOL. Therefore, in anattempt to reconcile EC and Internationallaw the Attorney General’s opinionprovides for the “serious negligence” testto be applied restrictively in the case ofan incident outside a Member State’sterritorial seas and to be equivalent tothe MARPOL test of recklessness, butmore broadly in the event of an incidentwithin a Member State’s territorial seas.Although the ECJ does tend to followthe opinion of the Attorney General, it isnot bound to do so. The ECJ’s judgmentis expected in early 2008.

The second action was brought by theEuropean Commission to annul the EUCouncil Framework Decision. InNovember 2007 the ECJ held that (i) theinstrument must be annulled and (ii) theCommunity is not competent to legislateas to the type and level of any penalsanctions for criminal offencescommitted under Community law. Itremains for the Member States to imposetheir own penalties in the event of abreach of Community law.

Therefore, irrespective of whether theECJ follows the Attorney General’sopinion on the question of the validity ofthe Directive, the Directive must bereviewed to bring it in line with the ECJ’sNovember ruling.

Both cases are discussed in more detail byClarissa Cefai (clarissa.cefai@simsl.com)in an article written for the SteamshipMutual website at:

EU Ship-Source Pollution Legislation- Developments

www.simsl.com/Articles/EU_CrimPoll1205.asp

www.simsl.com/EUPollution1207.html

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Sea Venture newsletter Issue 10 11Sea Venture newsletter Issue 10 11

The House of Lords recently handed down its decisionin the “Fiona Trust” litigation. The Court of Appealdecision was discussed in Sea Venture issue 8 and onthe Steamship Mutual website at:

The issue before the House of Lords was whether thedefendant charterers should be granted a stay of courtproceedings where the charters contained anarbitration clause and so should be referred toarbitration pursuant to s.9 Arbitration Act 1996. Theclaimant owner alleged that the charters wereprocured by bribery and had therefore been validlyrescinded.

The House of Lords granted a stay for two reasons:

1. The language of the clause contained nothing toexclude disputes about the validity of the contractand therefore it should be assumed that, asrational businessmen, the parties intended alldisputes (including whether the charter wasprocured by bribery) to be decided by the sametribunal.

2. The allegation that a party can rescind anagreement because it was induced by bribery (orfor any other reason) does not undermine thevalidity of an arbitration clause as it must betreated as a distinct agreement pursuant to s.7Arbitration Act. It can be void or voidable only ongrounds which relate directly to the arbitrationagreement, not the main contract.

These represent important principles of generalapplication relating to the effect of arbitration clausesand should be borne in mind when entering intoagreements containing such clauses.

Nick Barber of Stephenson Harwood discusses thisdecision in more detail in an article prepared for theSteamship Mutual website:

DisputesArising“Under” or“Out of” aCharter?

www.simsl.com/Fiona0407.html

www.simsl.com/Fiona1207.html

18563 Sea Venture 10 7/2/08 12:29 Page 11

Sea Venture newsletter Issue 1012

In Crystal Shipping the PhilippineSupreme Court ruled that seafarers aresubject to the Labour Code concept ofpermanent disability so that those whoare unable to perform their customarywork for more than 120 days aredeemed totally and permanentlydisabled. This principle was reiterated inRemigio and in both cases the seafarerswere awarded US$60,000 in permanentdisability benefits. See Sea Venture issues6 and 8 and the Steamship Mutualwebsite at

A Motion for Reconsideration has beenfiled before the Supreme Court, FirstDivision, in the Remigio case. An answeris expected in early 2008. In the interim,the Supreme Court has handed down aninteresting decision in Maris C. Palisoc v

Easy Ways Marine, 1997: This caseinvolves a crewmember suffering withleft renal colic gallstone impairment. Hewas repatriated to the Philippines andsubsequently went on to make a claimfor total disability payment ofUS$25,000. This was on the basis of theassessment of the seafarer’s personalphysician who found him to be sufferingfrom a disability grading of Grade 6.Palisoc claimed that he was entitled toUS$25,000 in accordance with the termsof the (pre-2000) POEA.

The Labour Arbiter agreed with Palisoc’sview. However, on appeal the NationalLabour Relations Court, First Division, setaside the award and absolved the ownersfrom liability on the grounds that thecompany designated physician found theseafarer as fit to work. After taking hiscase to the Court of Appeals, and losing,Palisoc’s claim was then appealed to theSupreme Court.

Crew Claims in the Philippines -“120 Days” Update

www.simsl.com/Philippine120Days0507.html

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Sea Venture newsletter Issue 10 13

On 11 September 2007 the SupremeCourt delivered its verdict thatpermanent disability refers to the inabilityof a seaman to perform his job for morethan 120 days and that loss of functionof a bodily part is not necessary for apermanent disability status to beawarded. The Supreme Court also ruledthat where a crewmember is deemed tobe permanently disabled as aconsequence of 120 days’ absence fromwork the disability rating that followsshould not automatically be a full Grade1 rating but be determined by thecompany designated doctor. In this casethe company doctor had ruled that thecrewmember was fit for duty and so theshipowner was only liable to pay sickwages and medical expenses - not theGrade 6 benefit of US$25,000 claimed.

This is a very important and welcomeruling because it now means that acrewmember will not be automaticallyentitled to the Grade 1 payment ofUS$60,000 in the event that he is absentfrom work for 120 days or more. Where,for example, the lowest grade (Grade 14)is applied then the award will onlyamount to US$1,870 – a significantfinancial saving to shipowners.

It appears that the Supreme Court is nowgradually rectifying the problemsresulting from the original 120 day rulingin Crystal Shipping. Whilst the currentposition remains that 120 days absencemeans that a seaman is consideredpermanently disabled, at least in the caseof the pre-2000 POEA the Court hasrecognised that this should notautomatically justify a Grade 1 disabilitypayment. The payment will bedependent upon the grading determinedby the company doctor. This is a realimprovement and a big step towardssolving the 120 day problem.

Aspects of this decision are still beingappealed and it is hoped that theSupreme Court may ultimately completelyreverse the Crystal Shipping ruling.

Article by Paul Brewer(paul.brewer@simsl.com)

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With the IMO requirement for single hull tankers to be phased out by 2010approaching, the options available to theowner of these older vessels are limited.Previously it was thought that thesevessels would either be converted todouble hull, scrapped or converted into Floating Production StorageOffloading units.

However, in light of the high charterrates being achieved by bulk carriersmany shipowners are now looking atthe cheaper option (due to reducedshipyard time and less new steelrequired) of converting their VLCCs intoVery Large Ore Carriers. Approximately30 single hulled VLCCs are presentlydestined to be converted.

The conversion generally takes 3 to 6months in the shipyard, this processadding another 10 to 14 years to thelife of a vessel. This compares favourablywith the 4 year wait for delivery of anew bulk carrier, even if yard capacitycan be obtained.

The attraction for owners of sendingtheir VLCC’s for conversion is easily seenwhen the cost of converting a VLCC willgenerally be paid off in 1 to 2 years atpresent charter rates and with a bullishoutlook for the dry bulk market.However, the impact on charter rates ofthe influx of over 550 capesizebulkcarriers, due to be delivered over thenext five years, remains to be seen.

Generally, these vessels will be largerthan the traditional capesize bulkcarrier(140-200,000 dwt) at 230-300,000 dwtand are intended for the Brazil and SouthAfrica to China trade to satisfy China’sprodigious requirements for iron ore.

The structural changes, statutory andclass requirements involved in theconversion of VLCCs to VLOC arediscussed in an article on the SteamshipMutual website by Captain Simon Rapley(simon.rapley@simsl.com) of the Club’sLoss Prevention Department:

VLCC to VLOC Conversions

www.simsl.com/VLCCconversion0108.html

Sea Venture newsletter Issue 1014

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Sea Venture newsletter Issue 10 15

The United States Supreme Court recently agreed todecide whether punitive damages awarded to thirdparties as a result of the grounding of the “ExxonValdez” in Alaskan waters in 1989 were excessive. TheSupreme Court’s consideration of the “Exxon Valdez”award is likely to be guided by a number of the Court’sdecisions over the past few years concerning theavailability of punitive damages in certain types of civilactions; these have established certain still-evolvingparameters for the lower U.S. federal and state courts.Though none of these recent Supreme Court decisionsrelate directly to maritime law, recent maritime decisionsof the lower courts in the U.S. have held that punitivedamages are still available in certain classes of maritimecases. These are claims which are not contractuallybased or where the subject matter of the claims has notbeen pre-empted by federal legislation excludingpunitive damages altogether. Subject to these broadexceptions, punitive damage awards do still remain apossibility in cases arising under general maritime law,assuming of course that the requisite degree of willfuland wanton conduct exists and other substantive andprocedural due process requirements are met.

In an article written for the Steamship Mutual websiteCharles G. De Leo of Fowler White Burnett P.A. Miamiconsiders these issues in greater detail:

U.S. - RecentDecisions onPunitiveDamages

www.simsl.com/USPunitive1207.html

Low Sulphur Fuels have been a topic for considerablediscussion since MARPOL Annex VI came into force in2005. Recent developments such as the entry intoeffect of the North Sea Sulphur Emission Control Area(SECA) under MARPOL Annex VI and the reduction inthe maximum sulphur limit for MGO used in EuropeanUnion territory to 0.1% (under EU Marine Fuel SulphurDirective 2005/33) serve to underline the considerableburden vessel operators face in ensuring the vessel isproperly and cost-effectively bunkered.

The legislation, being driven by environmental concerns,makes limited allowance for present vessel design andengine configuration and, as such, poses a number ofpractical difficulties for ships’ engineers. In an articleaddressing the likely impact of the existing and increasinglimits on the sulphur content of marine fuels, Ian Greenof Casebourne Leach, highlights the practical difficultiesinvolved with the transition to low sulphur fuels.

The article can be found on the Steamship Mutualwebsite at:

Low SulphurFuels - SomePracticalImplications

www.simsl.com/LowSulphur0108.html

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Sea Venture newsletter Issue 1016

In the long-awaited recent judgment inRothwell v Chemical & Insulating Co Ltdthe House of Lords unanimously upheldthe majority decision of the Court ofAppeal that pleural plaques do notconstitute actionable damage under theEnglish law of tort.

This landmark ruling has ended years ofdebate as to whether claimants shouldreceive compensation under tort law forthis asymptomatic condition, caused byexposure to asbestos during the course oftheir employment.

The Lords rejected an argument that theAppellants were entitled to damages onthe basis that the presence of the plaques,combined with the risk of future injury andanxiety at the prospect of future injuryconstituted sufficient damage to give riseto actionable damage in the law of tort.This decision confirms the position that

proof of damage is essential in a claim innegligence and that symptomless plaquesare not compensatable damage.

Nevertheless, the House of Lords noted thepossibility that claimants diagnosed withpleural plaques could in future seekcompensation from former employers byclaiming in contract for breach of contractualduty of care. A cause of action may exist incontract without proof of damage.

In an article which can be found on theSteamship Mutual website at:

Rachel Butlin, Rebecca King and HollyButwell of Holman Fenwick & Willan reviewthe judgment in detail and consider thefuture of pleural plaques litigation.

Pleural Plaques Not Actionable in Tort

www.simsl.com/PleuralPlaques1107.html

The circumstances in which a charterpartycan be frustrated were considered in June2007 by the Court of Appeal in the “SeaAngel”. Charterers, Tsavliris, were salvorsinvolved in the “Tasman Spirit” casualty andhad chartered the “Sea Angel” to lighterthe “Tasman Spirit” for a period of up to 20 days.

Shortly before redelivery by Tsavliris the “SeaAngel” was detained by the Port Authorityin Karachi.

In the event, Tsavliris were delayed fromredelivering the vessel by some 31/2 monthsduring which time they did not pay hire. Thevessel owner commenced proceedings inthe English High Court claiming theoutstanding hire. Tsavliris refused to pay thehire on the basis that the port authority hadunlawfully detained the vessel; a frustratingevent. The Court decided that the delaycaused to the vessel had not frustrated thecharter. This decision was discussed in SeaVenture issue 6 and on the website at:

Generally, a frustrating event is somethingthat significantly alters the nature of theparties’ contractual obligations in a mannersuch that it would be unjust to hold them tothe contract.

In upholding the decision of the High Court,Rix LJ, delivering the leading judgment,found that the charterparty had not beenfrustrated and the charterers remained liablefor the payment of hire until the ship wasredelivered. Even though the courtsrecognised and appreciated that thedetention was unprecedented, the generalrisk of detention by port authorities was aforeseeable risk of the salvage industry.Further, given this was a time charter underwhich the charterer had assumed the risk ofdelay, it would be inconsistent with theinterests of justice, on which the doctrine offrustration is based, to reverse thiscontractual risk.

The Court of Appeal decision is discussed inmore detail by Zehra Mujtaba(zehra.mujtaba@simsl.com) in an articleon the Steamship Mutual website at:

Frustrating Delays Revisited

www.simsl.com/Articles/SeaAngel0906.asp

www.simsl.com/SeaAngel1207.htmlTsavliris appealed.

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Sea Venture newsletter Issue 10 17

Most foodstuffs are in a condition of prime quality atthe time when they are harvested or produced.However, they are all inherently perishable and have afinite shelf-life. Therefore from that point onwards,during subsequent handling, processing, packaging,storage and transportation, they will inevitablydeteriorate until they are no longer fit for purpose.Many people realise that this is the case with fish, fruitand vegetables, but they wrongly believe that grainsare durable commodities. This is not the case and allgrains will behave as perishables unless they aremanaged correctly.

The modern food industry depends on a plentiful allyear round supply of ingredients for manufacturingprocesses or of the food itself for sale to consumers.Therefore, it is necessary to extend the natural life offoodstuffs so as to permit successful carriage andtransportation to the end market.

Methods used to achieve this include:

• Control of temperature

• Control of moisture content

• Physical security from insects, rodents, fungi, water and contamination

• Modified atmosphere

• Preservation by salting, sugaring or use of other chemicals

However, all of these methods, and others, need to beemployed with an adequate knowledge andunderstanding of food science and a necessary level ofskill and expertise. Otherwise the very proceduresintended to extend the usable life of the foodcommodity could, and do, result in reduction ofquality, market rejection and subsequent financial loss.The very opposite of what was intended.

In an article written for the Steamship Mutual websiteDavid Walker of CWA International highlights the keyissues necessary to ensure that the usable life of foodcargoes is maintained or extended sufficiently for thepurposes of shipping from producer to end user:

Risks inCarriage ofFood Cargoes

www.simsl.com/FoodRisks1207.html

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Mediation is an increasingly popular“alternative dispute resolution” methodfor resolving shipping disputes governedby English law. Parties to disputes (oftenalready engaged in arbitration or courtlitigation) now frequently attempt to reacha settlement with the assistance of amediator under an agreement to mediate.

The popularity of mediation is aconsequence of a number of importantadvantages over other dispute resolutionforums. These are generally known butinclude speed in comparison to eitherarbitration or court proceedings and cantherefore produce substantial costsavings. Mediation is also confidentialand nothing said in the mediation cangenerally be disclosed to an arbitrator orcourt. The parties themselves can be fullyinvolved in the mediation with theassistance of their lawyers and thesettlement reached can be much morecommercially orientated than either acourt order or arbitration award.

The presence of the mediator as a neutralchannel for communication facilitates thediscussions and encourages the parties tomove towards an appropriate settlement,if possible.

In contrast, it is sometimes suggested thatmediation can be used by the opposingparty to gain early access to informationfor its own advantage and that mediationindicates a weakness on the part of theproposing party, undermining its position.These disadvantages are often moreperceived than real, though there aresome circumstances where mediationmay not be appropriate or advantageous.

In an article written for the SteamshipMutual website Rebecca King of HolmanFenwick & Willan explores in more detailthe points to consider before decidingwhether to mediate. The article can befound at:

Mediation - Tried and Tested?

www.simsl.com/Mediation1207.html

Sea Venture newsletter Issue 1018

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Many of the shipboard incidents that give rise toclaims occur for reasons that are avoidable. In manyinstances human error is involved, the nature of whichindicates that issues of basic training and seamanshipmay have been overlooked or forgotten. Consequentlythe ship's crew is a focal point for loss prevention andvisual reminders of safe working practices and goodseamanship have the potential to improve standardsand thereby avoid unnecessary loss.

With this in mind, the Managers are producing aseries of loss prevention posters for use onboardMembers' vessels. There are currently two broadthemes for these posters:

• “Work Safely” - which address safe workingpractices with a view to avoiding unnecessarypersonal injury.

• “Stay Shipshape” - which address goodseamanship and ship husbandry to encourageseamanlike behaviour, and the identification andrectification of vessel deficiencies before they havethe opportunity to give rise to claims.

The posters are based upon images of actualexamples of poor practice and an illustration is usedto convey the correct message.

The first in the series are now available and will besent to Members shortly. The posters can also bedownloaded from the Steamship Mutual website at:

Further posters in the series will be developed andissued at regular intervals.

LossPreventionPosters

http://www.simsl.com/loss-prevention-posters.html

Sea Venture newsletter Issue 10 19

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In July 2007 the Commercial Courtallowed an appeal to set aside anarbitration award on the ground thatthere had been a failure to give eachparty a reasonable opportunity of puttingits case, leading to a finding of seriousirregularity under s.68(2)(a) ArbitrationAct 1996. The award, appealed bybuyers, related to a dispute arising out ofan agreement for the sale and purchaseof an ice classed tug.

In the arbitral proceedings the buyers had sought damages on the basis that the agreement had been induced by arepresentation as to the total power ratingof the tug’s engine. This representationwas alleged to have occurred when, at the pre-purchase inspection, the sellersprovided the buyers’ agent with acertificate of class showing a higher totalpower rating than that of which the tugwas, in fact, capable.

The buyers’ case was that there had beena material representation by the sellers ofthe tug’s power rating when theyproduced the class certificate. This cut noice with the arbitral tribunal.

However, the arbitrators also concludedthat, if there had been a representation,such representation would have inducedthe contract and the buyers’ claim fordamages would have succeeded.

The thrust of the buyers’ appeal was thatsince the case had been presented to thearbitrators on the basis that the“representation” point was no longer anissue between the parties, the tribunalhad found against it on a ground whichwas neither raised nor seriously disputed.The tribunal had invited submissions onother issues but not the one on which ithad finally based its award. Thisargument found favour with theCommercial Court which allowed theappeal, Mrs Justice Gloster holding thatthe “representation” issue was one ofthe essential building blocks of thetribunal’s decision.

The case is discussed in further detail in anarticle prepared for the Steamship Mutualwebsite by Peter Gercans of MFB Solicitors:

Sea Venture newsletter Issue 1020

Small Claim, Serious Irregularity &Substantial Injustice

www.simsl.com/OAONorthern1207.html

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On 24 September 2007 the Maritime & Port Authorityof Singapore (MPA) entered into a Memorandum ofUnderstanding with the International Tanker OwnersPollution Federation (ITOPF) which established aschedule of rates covering oil spill response resourcesprovided by the MPA and its supporting responseagencies and resource owners.

It is hoped that the establishment of such a scheduleof rates will expedite settlement of claims as betweenspill responders and the P&I Clubs in the event of anoil pollution incident in Singaporean waters, avoidlong and costly disputes and thus increase theresponders’ commitment to engage in oil spill clean-upresponse efforts as promptly and efficiently as possiblewhilst ensuring clarity of costs.

The MOU is supported by both the InternationalGroup of P&I Clubs and the International Oil PollutionCompensation (IOPC) Fund; both of whom use ITOPFto provide technical advice in the event of a marinepollution incident.

The schedule covers oil spill response craft, portableequipment, boom, dispersant and personnel and tookeffect from 1 October 2007. It will be reviewed on athree-year cycle; the next such review taking place inJanuary 2009.

This is the first such costs schedule establishedbetween ITOPF and a national government and otherIOPC Fund Member States are being encouraged toenter into similar arrangements.

Article provided by Colin Williams(colin.williams@simsl.com)

Singapore -MOU on Oil SpillResponseRates

Sea Venture newsletter Issue 10 21

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The International Convention on theControl of Harmful Anti-FoulingSystems on Ships, 2001 (“the AFSConvention”) will enter into force on 17September 2008

Anti-fouling systems are defined by theAFS Convention as “a coating, paint,surface treatment, surface, or device thatis used on a ship to control or preventattachment of unwanted organisms”.When the AFS Convention is in force,ships will no longer be permitted to applyor re-apply organotin compounds whichact as biocides in their anti-foulingsystems; ships either shall not bear suchcompounds on their hulls or externalparts or surface or, for ships alreadycarrying such compounds on their hulls,a coating that forms a barrier to suchcompounds will have to be applied toprevent them leaching from theunderlying non-compliant anti-foulingsystems. The AFS Convention alsoestablishes a mechanism to evaluate andassess other anti-fouling systems andprevent the potential future use of otherharmful substances in these systems.

Further information on the AFSConvention can be found on theSteamship Mutual website at:

International Convention on CivilLiability for Bunker Oil PollutionDamage, 2001 (“the BunkerConvention”) will enter into force on 21November 2008

Current international regimes covering oilspills do not include bunker oil spills fromvessels other than tankers. The lastsignificant gap in the internationalregime for compensating victims of oilspills will close when the BunkerConvention enters into force; Ships over1,000 GT registered in a convention statewill be required to carry on board acertificate certifying that the ship hasinsurance or other financial security tocover the liability of the registered ownerfor pollution damage in an amount equalto the limits of liability under theapplicable national or internationallimitation regime. Owners, definedbroadly, will be liable to paycompensation for pollution damage(including the costs of preventativemeasures) caused in the territorial watersand exclusive economic zone of aconvention state.

Further details, including maximumcompensation levels, are available on thewebsite at:

Anti-Fouling Systems and BunkerConventions

Sea Venture newsletter Issue 1022

Recent months have seen the criteria necessary for the entry into force oftwo important IMO Conventions satisfied:

www.simsl.com/Bunkers1207.html

www.simsl.com/AntiFoul1107.html

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Sea Venture newsletter Issue 10 23

There is also an option to subscribe to an RSS feedwhich contains article headlines, links and descriptionsand is updated as the website is updated. Readers canview the content of the RSS feeds using specialist newsreaders, either on desktop or online, which allow feedsto be viewed from multiple sources, including mobilephones and hand held devices. In this way readers cankeep up to date with the latest developments even ifthey do not always have time to visit the website itself.

Website Articles

• U.S. - Stowaways from Dominican Republic and Haitiwww.simsl.com/USStowaways0108.html

• Nigeria - Drug Enforcement Agency Fineswww.simsl.com/NigeriaDrugFine0108.html

• California Shoreline Protection Regulations.www.simsl.com/CaliforniaShoreProtect0108.html

• USCG - Environmental Crimes Voluntary Disclosure Policywww.simsl.com/USVoluntaryDisc1107.html

• South Africa - Infested Wheat Cargoes from U.S.www.simsl.com/InfestedWheat1107.html

• Philippines - Navigational Warning for Dinagat Soundwww.simsl.com/DinagatNavigation1107.html

• California - Court Rules on Sulphur EmissionRegulationswww.simsl.com/CaliforniaSOxRuling1007.html

What’s New?

The “What’s New?” area of the Steamship Mutualwebsite makes it easier to find the most recentlypublished items; this page is a new option in the mainmenu and provides easy access to different parts of thewebsite where the latest items, such as articles and lossprevention bulletins, have been published.

http://www.simsl.com/whats-new.html

SteamshipMutualWebsite

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For further information please contact:

Steamship Insurance Management Services LimitedAquatical House,39 Bell Lane, London E1 7LU. Telephone: +44 (0)20 7247 5490 and +44 (0)20 7895 8490 Email: seaventure@simsl.com

Website: www.simsl.com

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