the swedish club letter · pdf filesignificant changes in the nlrc rules of procedure 12-13...

The Swedish Club LetterThe Swedish Club LetterNo. 2 – 2002

July – November

Annual General Meeting-reports

Pages 14-17

pages 19-26

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of

The Swedish Club Letter 2–2002

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No. 2 – 2002 July – NovemberLEADING ARTICLE

Where do we come in the minds of shipowners and managers? 3

CLUB INFORMATIONNews from Tokyo 7News from London 8News from Hong Kong 9News from Piraeus 11The Publications Group 18Annual General Meeting 19-26Club Diary / Public Holidays / Staff News 27The Swedish Club offices 28

THE SWEDISH CLUB ACADEMY

Marine Insurance Course Insurance course delegates share in The Swedish Club’s expertise 4BRMWallem launches BRM training in Karachi 9

STOWAWAYS Stowaways with destination Spain 5

ISMReasons for OPTIMISM 6-7

FINANCE2001 – a disappointing year in many respects 8

PERSONAL INJURY House of Lords overturns Court of Appeal on asbestos appeals 10-11

FREIGHT DEMURRAGE & DEFENCEBerth or port charterparty? Voyage charterparties – commencement of laytime 12-13

CREW Significant changes in the NLRC rules of procedure 12-13

THE FORCES OF NATURE The rough weather defence 14-15The forces of nature 16-17

The Swedish Club Letter

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The Swedish Club is a mutual marine insurance company, owned and controlled by its members. The Club writes Hull & Machinery, War risks, Protection & Indemnity, Loss of Hire, Freight Demurrage and Defence insurance and any additional insurance required by shipowners.

The Swedish Club Letter is published three times a year and distributed free of charge to vessels insured with us and to our members. The Swedish Club Letter is an editorially independent newsletter and opinions expressed by external contributors are not necessarily those of The Swedish Club. Furthermore, the Club does not accept responsibility for errors or omissions or their consequences.

Readers’ comments and views are welcome by phone, fax or e-mail. The Swedish Club P.O. Box 171 SE-401 22 Göteborg, Sweden Tel +46 31 638 400 Fax +46 31 156 711 E-mail [email protected] www.swedishclub.com

Managing editor& responsible publisherFrans Malmros

Editors

Underwriting & MarketingClaes Lindh

Claims & Legal SupportLars RhodinHelena Wallerius Dahlsten

Loss Prevention & TechnicalClas Brantmark

Finance & AdministrationJan Rydenfelt

Production Co-ordinatorAnnelie Fellbom

Editorial Frans Malmros, Helena Wallerius Dahlsten, Advisory Martin Hernqvist, Susanne Blomstrand,Board Annelie Fellbom, Petra Setterberg, Claes Lindh, PR-consultant TRS Public Relations Ltd.

Layout Eliasson Information, Göteborg

Printed by PR Offset, Mölndal

© The Swedish Club. Articles or extracts may be quoted provided that The Swedish Club is credited as the source.

14-0207PR4800F


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Leading Article

Where do we come in the minds of shipowners and managers?

Frans Malmros MANAGING DIRECTOR

Occasionally I ask myself, where do we come in the minds of shipowners and managers? Maybe it is difficult to always fully appreciate the true value of a high-service insurer such as The Swedish Club. In the excitement of starting out in any new venture, the insurer can easily be overshadowed by the more front line players: the shipyard, which has built the latest acquisition, the bank, that has put together the financing scheme and the broker, who has succeeded in finding suitable employment for the vessel. It’s certain

that the insurer is not uppermost in the mind of the owner, though we know our rightful place is up there, somewhere. Paradoxically, we will only be called upon when things have gone wrong and one has to deal with loss mitigation.

Well used and used when things are going well, without the pressures building up during a claims situation, we can be of much more benefit to the average member than we are today. The Club is a mine of information and experience. We employ lawyers, master mariners, marine engineers, naval architects and a number of other experts, who all are there for you. We have introduced SCOL, Swedish Club OnLine, which is an excellent tool for claims benchmarking. We run regular Bridge Resource Management courses and

now also have an annual Marine Insurance Course. We are further developing our loss prevention activities under a new concept called Safety Management Support or SMS for short.

Recently, we enjoyed the celebration of The Club’s 130th anniversary. I have also had the dubious pleasure of presenting the results for 2001.

We have really been hit by a double whammy, or even a triple whammy. We have achieved a negligible return on investments, at the same time as premium levels persist in remaining at an unsatisfactory level. Moreover, during the

latter part of the year, we were hit by an unusually high number of claims. All the same, I am optimistic about the future. In our long history we have had our ups and downs, like everyone else. Over the years, members have shown an unflinching loyalty, our staff have always put their shoulders to the wheel and jointly we possess a staying power second to none.

Our Club is a small one. For reasons of economies of scale, we need to continue to grow, with members having the correct attitude towards mutuality, loss prevention and high-quality operations. We shall, however, always endeavour to project ourselves as the small Club, with the personal touch and an unrivalled service.Try us; use us!


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The Swedish Club Academy - Marine Insurance Course

Insurance course delegates sharein The Swedish Club's expertise

Åsa Agdestein is a marine lawyer with CMA-CGM, a leading French shipping company. CMA-CGM operates a fleet of 99 vessels, of which 25 are owned by the company. Last year, CMA-CGM transported more than two million TEUs* and is ranked, in the container shipping sector, fourth in Europe and eighth worldwide.

Åsa Agdestein says: “I saw details of the course on The Swedish Club’s website and de-cided to register. The content was well-rounded and covered a broad spectrum of insurance top-ics that complemented my cargo claims experi-ence. It was interesting to see how different aspects of marine insurance work together and to review loss prevention in both H&M and P&I contexts.”

Åsa adds: “The course also provided a great opportunity to make new contacts and share knowledge and information with people from different shipping backgrounds.”

Bengt Meuller is the Operations Manager of Gorthon Lines, Sweden. This company was established in 1915, and currently operates a fleet of 14 vessels. It specialises in the transport of paper in the Baltic, North Sea and Atlantic regions.

Bengt Meuller says: “Having spent ten years at sea, I now have a shore-based role. Conse-quently, I am still fairly new to office-based tasks and a friend recommended The Swedish Club's Marine Insurance Course as a useful introduction to marine insurance.

“The course provided a very sound overall picture of how this sector functions. It gave a clear summary of P&I and H&M subjects. I also found the Club’s proactive approach to loss prevention very interesting. The interac-tive practical workshops were valuable; it was good to split into smaller groups and use case studies to explore what had been covered dur-ing the week.”

Vincent Albuquerque is an Insurance and Claims Manager for Great Circle Shipping Agency of Thailand – technical managers for Precious Shipping. The latter was established in 1989 and has a fleet of 30 handysize bulk carriers.

Vincent Albuquerque found the programme well-planned: “It was evident that a great deal of effort is put into making the course both educational, interesting and fun. It enhanced my knowledge of claims handling and pollu-tion legislation, particularly concerning op-erations in the United States. In addition, the course gave me the opportunity to meet other colleagues and develop contacts.”

As the sole ‘all-in-one’ insurance provider, we are in an excellent position to share our experience in the Hull & Machinery (H&M), Protection & Indemnity (P&I) and Freight Demurrage &Defence (FD&D) sectors. Each year, we invite Club members and non-members to attend our comprehensive week-long Marine Insurance Course, held in Göteborg.

This course provides both experienced profes-sionals and those new to marine insurance with knowledge which can be transferred directly to the workplace. We combine presentations and interactive workshops, to brief delegates on the latest develop-ments within H&M and P&I. We cover issues, such as collisions, cargo liability, pollution, FD&D and loss prevention. The course also provides an informal networking environment and a forum where delegates can meet and share experience with colleagues from other countries and industry sectors.

This year’s course, held on April 22nd-26th, was attended by 26 delegates from 14 countries.

Details of the Marine Insurance Course 2003 are available at our website or from our Club contacts, see the bottom of this page.

Club contact:

Helena Wallerius Dahlsten, Deputy Director, Claims & Legal Support Department/Martin Hernqvist, Loss Prevention Manager, Loss Prevention & Technical Department - The Swedish Club, Göteborg

”The interactive practical

workshops werevaluable”

”A great opportunity

to make new contacts

and share knowledge”

”A great deal of effort is put into making the course both educational,

interesting and fun”

Delegates from The Swedish Club's Marine Insurance Course 2002 at the stairs of the restaurant 'Jungman Jansson' just outside Göteborg.

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* Twenty Foot Equivalent Unit Unit of measurement equivalent to one standard twenty foot container.


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It is not uncom-mon for people who are

‘forced’ to leave their home country, due to poverty or political

beliefs, to make their way on board a vessel. Leaving the rest, such as their survival during

the voyage and their destination, to destiny. Under these circumstances of uncertainty, they hide on board in

the hope that they will end up in a country that will offer them opportunities for a better life. They can afford such ‘uncertainty’

because, most likely, they will have nothing to lose in doing so. However, uncertainty is definitely not a key word for the shipowner

on whose ship these people are discovered, and who cannot afford to miss the estimated time frames of the scheduled voyage. Once the stowaways are found on board, the objective should be to disembark them. This can be achieved by informing and cooperating with the relevant authori-ties, finally placing the stowaways in their custody. With that in mind, a prudent shipowner and the vessel’s crew need to be informed about the law, regulations and special characteristics of the ports of call.

As per information received from our correspondents, Messrs Bull Sworn Marine Surveyors and Consultants, the following is a summary of the law governing the handling of stowaways arriving at Spanish ports.

Thus, upon arrival of a merchant vessel to a Spanish port with stowa-ways on board, the master should immediately inform the Immigration Authorities. This information should be communicated by means of a signed declaration by the captain on which basic information should be included, in relation to both the stowaways and the vessel’s itinerary start-ing from the port of loading. With regard to the stowaways, information such as the port of their embarkation, the day and time that embarkation took place and the geographical position of the vessel at the time the stowaways were discovered is sufficient at this first stage.

When the ship is berthed at a Spanish port, the Immigration Police will board the vessel accompanied by an interpreter, if necessary. The police will interview the stowaways in order to verify their identity, their physical condition, in case a doctor’s attendance is required, as well as to verify the treatment that the stowaways received on board. In the event that the stowaways show their intention to enter Spanish territory, or request the protection of the Spanish government, a lawyer will also be present during the interview. If the stowaways do not ask for political asylum, then the master or vessel’s agent will have to ask for their repatria-tion to their country of origin.

At the end of above process, the captain is made aware of the responsibility he assumes as far as the security and physical integrity of

the stowaways is concerned. He is also warned about the prohibition of disembarking the stowaways in any Spanish port.

At the next stage, the local police station will have to submit a report to the Assistant Representative of Government, as it is called, within 24 hours of the vessel’s berth. The above mentioned representative will assess all the information made available in relation to the incident. Whether or not

the stowaways may disembark will depend upon the treatment received on board and whether it was in accordance with the European Agreement for the Protection of the Human Rights and Fundamental Liberties, their medical condition, whether the vessel’s agent will ask for their repatriation and whether the stowaways will make a request for political asylum.

When a stowaway requests political asylum in Spain, this request will be relayed to the Office of Asylum and Refuge for further assessment. In the meantime, and as long as the vessel stays at the port and the authorities are satisfied with the living conditions on board, the applicant will remain on the ship under the responsibility of the captain. Please note that the above by no means restricts the vessel to stay at the port until the final de-cision of the authorities. If the vessel is due to sail before such a decision is made, the applicant will be transferred to the authorities’ dependencies.

In the case the stowaways have been disembarked for one of the above reasons and their application has not been accepted, they will be repatri-ated to their country of origin.

As regards expenses incurred from the time the stowaways are found until their disembarkation, they will be accounted for by the owner, and the same applies for the expenses incurred in the event that these people are repatriated.

Finally, we would like to draw our readers’ attention to the fact that heavy fines will be imposed by the authorities in the event that the master fails to declare a stowaway on board upon arrival or at the time of the vessel’s clearance. Particularly high fines will also be imposed in case the master does not take precautionary measures to prevent stowaways from escaping while the vessel calls Spanish ports. In that case, the fine could be in the region of USD 175,000-200,000. It is also worth mentioning that if a fine is imposed then, security in the form of a bank guarantee will be requested as the authorities will not accept Club Letters of Undertaking. The issuing of a bank guarantee may take a while and thus, causing delay of the vessel. (Please see The Swedish Club News 1-1997.)

We trust the above will be of assistance to you should you have to deal with a stowaway case in Spain, although we wish you all the best with your efforts in avoiding such a situation!

Stowaways with destination…

…Spain!

Stowaways

Cleopatra GeorgantzisCLAIMS EXECUTIVE

Claims & Legal Support DepartmentThe Swedish Club, Göteborg

ILLUSTRATION: HANS DAHLB ERG


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ISM

By the date of publication of this newsletter, the ‘ISM phase 1’ vessels (tankers, bulk carriers and passenger vessels) have had their Safety Management Certificates for more than four years and the deadline for the ‘phase 2’ vessels (other cargo ships of 500 gross tonnage and upwards) has just passed. There are differing opinions as to whether ISM (International Safety Management) has been a failure or a success so far. Perhaps it is too early to make any general statements concerning the shipping industry as a whole. The truth is probably that for some companies it has been as success while for others ISM has produced few significant improvements.

The studies on ISM that The Swedish Club has made, have shown that those of the Club’s members who operate phase 1 vessels have made large improvements in the claims rate compared to those who operate phase 2 vessels. These improvements that, to a large extent, seem to be related to efficient safety management should serve as encouraging examples for the phase 2 vessel operators who should have their safety management systems in place by now.

The will and the toolAccording to the Club, there are many factors that explain why ISM ought to have a great im-pact on the accident rate for the industry. First of all we believe that the shipping industry previously had a higher acceptance and toler-

ance of accidents, that accidents have more or less been considered a natural part of shipping operations and have all happened ‘by accident’. This has changed. Increased environmental awareness and concern, greater care for people and property, public opinion, goodwill factors and a greater insight into the fact that there are ways of preventing accidents have created a strong will to make a change.

Even if an organisation’s will and motivation to make a change are prerequisites for improved results, there have to be efficient measures to achieve the goals as well. Historically, safety has to a large extent been approached from a tech-nical perspective. This too has changed. ISM focuses on the human and the organisational factors. It is within these areas we often find the root causes of accidents. Many accidents do not happen accidentally, they could rather be described as ‘system failures’ or the results of the company’s safety culture*. The main ex-planation why some companies are found more often than others in the accident statistics, is differing safety cultures. The overall objective of ISM is to raise the general standard amongst all shipping companies, ensuring more uniform

safety cultures, where safety issues are managed in such a way that the risk of failures is mini-mised. ISM is therefore an important tool for companies that aim to improve their safety records and reduce their costs.

The positive results that the Club has noted amongst Club members following the implementation of ISM have, as far as we are aware, still not been reported by any other H&M insurer or P&I Club. We felt the need to try to identify the reason for this. One idea is that the large proportion of quality members in the Club could have played an important part

- members who have the will to use available tools to further improve safety.

30 per cent improvementThe Club’s conclusion from the ISM studies was that a shipowner could expect to achieve a reduction of claims in the region of 30 per cent. This is an average figure based on the difference in claims development that evolved between the phase 1 and phase 2 vessels after the phase 1 deadline passed in 1998. A few things related to this figure should be stressed further. We have measured the difference between these

Reasons forOPTIMISM

Martin HernqvistLOSS PREVENTION MANAGER

Loss Prevention & Technical DepartmentThe Swedish Club, Göteborg

Bridge procedures form an important part of the Safety Management System of Star Cruises of Malaysia. Here, on board the cruise vessel SUPERSTAR VIRGO, both the Normal Bridge Procedures as well as the Emergency Bridge Procedures are found at arm’s length just behind the navigating officers.

*Safety culture: By professor James Reason described as “the way we do things around here”.


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ISM / News from Tokyo

two vessel groups and not the claims develop-ment just for phase 1. This is important to stress, since it may be difficult to understand why pre-mium increases are needed if claims have been reduced. The truth is that the claims rate for phase 1 has been stable while we have seen an increase for phase 2. This has occurred during a period when average deductibles have fallen. Normally, lower deductibles mean more claims,

but this was not the case for the phase 1 vessels during the study period. This was most likely thanks to improvements in safety. The phase 2 vessels, however, could not withstand the lower deductibles and produced more claims reported to the Club. The gap between phase 1 and 2 eventually amounted to about 30 per cent. Premiums, on the other hand, have fallen dramatically over the past years and this has

resulted in most H&M insurers and P&I clubs making huge losses. Combined with lower returns from investments, there is an obvious need to restore a balance between premiums and claims. Seemingly, however, ISM has made such an impact that we may find a balance at a lower level than before.

Another thing that could be worth touching upon in relation to the 30 per cent figure is the size of the figure itself. There are those who are sceptical and believe that 30 per cent is too good to be true. At first, the author thought so too. However, just as a comparison, let us compare this with total loss statistics produced by Lloyd’s Register and published in the Seaways magazine in April 2002. (See graph on your left side.) If we were to ask people back in 1978 whether it was possible to reduce the number of losses by 30 per cent, many would find it difficult. How-ever, that was achieved only four years later. In fact, the number of total losses was reduced by 30 per cent as much as four times during the 20-year period from 1978-1997. 30 per cent is certainly a lot, but obviously not an utopia.

Bad debt Early May this year marked the anniversary of Jinichiro Koizumi becoming Prime Minister of Japan. Most Japanese people believed at the time that he could reform the country’s political and economic structures. However, such expectations have now been disappointed. The approval rate for the Cabinet of Prime Minister Koizumi has plummeted dramatically.

To activate the economy again, the issue of bad debt has to be normalised. However, both the government and financial institutions have not taken any drastic steps for the last ten years.

Japanese underwriters have also suffered from the issue of bad debt. Furthermore, the events of September 11th 2001 were another body blow for them. Their current financial positions are much worse than they were five years ago. They have taken steps to merge and/or cut all costs over the last two years. Despite this, there have been no signs showing there will be an improvement in the financial position.

On the other hand, the level of Japanese hull premiums is still very low. Their results have been negative for quite a few years. Japanese hull underwriters need an increase in premium levels this year. Yet, as the Japanese freight and chartering markets have not been improved, Japanese shipping companies will not accept the premium increase and will put pressure on them. The Japanese hull underwriters have been in tough competition with one another. So, how will they survive in this situation?

Under current circumstances, the crucial moment for the Japanese hull market will be the second half of this year.

Newsfrom

Tokyo

Ryuzou ImaiGENERAL MANAGER

The Swedish Club Japan

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The frequency of total losses has been reduced by 30 per cent as much as four times during the period 1978-1997.

Actual loss rate per 1,000 ships 1978-1997.


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2001– a year in many respects

DISAPPOINTINGFinance / News from London

2001 proved difficult for many sectors and marine insurance was no exception. Cor-porate profits decreased sharply over the past 12 months and the U.S. economy entered a reces-sion for the first time in a decade. The events of September 11th increased the uncertainty currently shaping views of future prospects. Conditions grew more difficult in the ship-ping industry – by its very nature dependent on world trade levels. Freight rates, especially for container vessels, fell substantially. Fur-thermore, the Club was affected by the soft insurance market and a continuing weak stock market. The result before appropriation and tax was a loss of USD 23 million.

Gross premiums of USD 61.1 million were

up 13 per cent compared to the previous year. After the cost of reinsurance, net premiums increased from USD 35.3 million to 38.6 between 2000 and 2001. The gross claims of USD 57.4 million were on a par with 2000, but a smaller portion of the claims were on the reinsurers´ account. As a result, net claims were up from USD 38.0 million to 55.1. The underwriting result showed a loss of USD 16.5 million, compared to a loss of USD 2.7 mil-lion for 2000.

The administrative expenses of USD 7.8 million were USD 0.5 million higher than for 2000. The increase was due to higher commis-sions to brokers as a result of higher volumes.

In terms of volume, the Club grew substan-tially in the H&M insurance business: meas-ured in terms of the number of vessels insured, the increase was about 40 per cent.

We did not lose money on our investments, but it was close. The investment income of USD 0.6 million was more than USD 8 mil-

lion less than for 2000. The stock markets were turbulent – the world index was down 30 per cent from January 1st to its low on September 21st. Subsequently, it made a 17 per cent recov-ery, ending 18 per cent down over the full year. The Nordic Market was down 17 per cent. The Club’s equity portfolios performed a little better than the benchmark and ended the year down 14 per cent. However the profit on other invest-ments, especially bonds, was slightly higher than the losses made on equities.

This year has started with some further losses on investments. We also predict a loss on the insurance business. We have good reasons to believe that most other marine insurance companies are in the same situation. In order to cover the losses, shipowners have to foresee higher premium levels in the future. With that in mind, our ambition is unchanged and we will continue to offer a high service level, to-gether with competitive premiums to quality shipowners.

A lawyer’s lot

Ken BrightGENERAL MANAGER

The Swedish Club U.K.

At the time of writing, London is in the throes of the final preparations for the Golden Jubilee celebration of the Queen’s fifty-year reign. To facilitate the celebration, an extra day has been declared a public holiday and throughout the land the villages and towns will hold their own celebrations of this event.

Of almost equal importance is the beginning of the football World Cup in Korea and Japan. Many bars and restaurants are installing special wide screens and offering ‘soccer’ breakfasts and lunches that can be eaten while viewing the action.

With over one hundred new claims and enquiries since the start of the new year on February 20th 2002 and 226 open active files in existence, the four legally qualified FD&D specialists of the London office, who between them handle almost all of the FD&D claims and enquiries that come to the Club, will have to start their days earlier and finish later to keep up with the national celebrations.

In addition to handling claims and disputes that arise worldwide, these four claims handlers are frequently called upon to advise on the wording of charterparties and other contracts and also to give consideration to the legal consequences of practical and commercial situations.

That London and English law have a dominant position in the world of maritime disputes is beyond question. There is a wealth of expertise in maritime matters in London, with highly experienced lawyers, arbitrators and judges, not to mention the insurance experts, all of which are second to none. This is why almost all of the FD&D enquiries and claims of the Club are handled in

the London office. With contracts being fixed and broken, incidents and accidents occurring every day of the year, there is little respite for the claims handlers.

In the majority of cases the disputes will be resolved through negotiations conducted either directly by or under the guidance of the claims handlers and 174 such matters have been brought to a successful conclusion in the past twelve months.

But some cases, perhaps not more than ten percent, go to trial or arbitration, and those that do can absorb as much as 75 per cent of the handler’s time during the preparation and actual hearing.

With an income last year of about USD 1.8 million we are mindful of the need to keep costs, and so premiums, as low as possible, so we deal with as much of the work as is reasonable in-house. When outside lawyers are used they are given limited instructions and control of the case is always retained in-house.

So while the world’s media reports on the celebrations taking place in this green and pleasant land, spare a thought for the claims handlers who will be shouldering their responsibilities with their usual care and attention.

To paraphrase a line from a Gilbert and Sullivan opera, ‘A lawyer’s lot is not a happy one’.

Jan Rydenfelt DIRECTOR

Finance & Administration DepartmentThe Swedish Club, Göteborg

Newsfrom

London


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The Swedish Club Academy - BRM / News from Hong Kong

Global warming has done wonders for Hong Kong this spring. The rainy, misty and damp conditions we usually have from the Chinese New Year until the time the tropical rain starts in May/June were replaced this year by dry and warm conditions.

Although the Hong Kong stock market has started to recover, unemployment rates have hit seven per cent recently. With the economies in Korea, Taiwan and China doing quite well, we are hoping for a spillover to help out the stumbling economy in Hong Kong.

The World Cup has meant that football fever has hit China, Korea and Japan. Although the sport has never been the most popular in any of these countries, it is gaining followers at an increasing speed. Tickets, especially for the Chinese games, were sold out a long time ago and are amongst the most expensive on the black market. If an Asian team were to win the World Cup it would not only be a big surprise to many people, it would also turn the present football fever into euphoria.

On a recent trip to Taiwan with a colleague, we were greeted and cheered on by an enthusiastic crowd of about 200 teenage girls at the airport. Although a bit surprised, we re-gained our composure quickly and were ready to start signing autographs and handing out the latest Swedish Club brochures

Spring in Hong Kong 2002

Newsfrom

Hong Kong

Tord NilssonMANAGING DIRECTOR

The Swedish Club Hong Kong Ltd.

A new training centre, Wallem Maritime Training Centre Karachi (WMTC Karachi), was recently approved and licensed by The Swedish Club to conduct the Club's BRM course. With this, Wallem Shipmanagement Inc. further strengthens its commitment to BRM training by making the SAS-BRM course available also to its Pakistani officers and engineers. Today, Wallem is authorised to conduct the course at three training centres, WMTC Mumbai, WMTC Moscow and WMTC Karachi.

Wallem’s Capt. SMR Rizvi, who was recently trained as BRM Workshop Leader at the SAS Flight Academy in Stockholm, will be heading the BRM course at the Karachi training centre. Captain Rizvi plans to conduct the first course in early August this year.

For further information about courses and dates, please contact Capt. Rizvi at [email protected].

BRM Training Centres licensed by The Swedish Club (in order of date of licensing): The Swedish Club Training Centre, Piraeus, Greece Wallem Maritime Training Centre, Mumbai, India Anglo Eastern Maritime Training Centre, Mumbai, India PHILCAMSAT, Manila, the Philippines Southfield Agencies, Manila, the Philippines Wallem Maritime Training Centre, Moscow, Russia Wallem Maritime Training Centre, Karachi, Pakistan

Wallem Maritime Training Centre Karachi c/o Terra Marine Agency 2nd floor, Old Ralli Building, Talpur Road P.O. Box 5300 Karachi, Pakistan Telephone +92 21 242 8812 Fax: +92 21 241 0041 E-mail: [email protected]

Wallem launches BRM training in Karachi

when reality came crashing down on us. They were not there to see us. They started to push and shove us aside to get photos and signed posters of a famous Hong Kong Canto-pop band who happened to have been on our flight.

It suddenly dawned on us that marine insurance, although at times fascinating to many of us, does not thrill and capture the imagination of the masses. We are a tool, needed by shipowners so they can trade their ships. A financial arrangement established to minimise their exposure to unexpected liabilities, as well as a service provider offering legal, technical, loss preventive and claims services. As such, we try to stay away from the headlines and try to integrate ourselves to form an important part of a shipowner’s organisation. No flashes, no fan clubs. Member satisfaction is the only leading star in our lives.

Capt. SMR Rizvi, who will be heading the BRM course at the Karachi training centre.

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Personal Injury

On December 11th 2001, the Court of Appeal gave judgment on six appeals deciding three issues on asbestos claims. The most important part of that judgment determined whether a claimant was entitled to recover damages if he was exposed to asbestos by two or more employers and subsequently developed mesothelioma – the ‘Fairchild’ decision. The Court of Appeal decided that he was not, even if either or both employers accept that they negligently exposed him to asbestos.

Mesothelioma – ‘all or nothing’ diseaseThis surprising result was due to the unusual way in which mesothelioma develops. The ma-jority of asbestos-related conditions such as pleural plaques, pleural thickening and asbes-tosis are cumulative diseases. This means that once the threshold level is exceeded the more asbestos an individual inhales, the worse the condition becomes. However, mesothelioma, (a malignant tumour that is always almost fatal within two years of its appearance) is, according to current medical thinking, an ‘all or nothing’ disease. This is because it is triggered on one particular occasion when a process is started by one or more asbestos fibres which ultimately leads to the development of the disease. This means that when a claimant has been exposed to asbestos from two different sources, it is impossible definitively to determine which exposure caused mesothelioma to develop.

In the above Appeals, the claimants devel-oped mesothelioma after exposure to asbestos from two or more sources. The claimants’ solicitors argued that as mesothelioma is an in-divisible injury, once one defendant is brought before the Court, that defendant, on the bal-ance of probabilities should be held liable for the whole of the claimant’s injury.

Unjust resultsThe Court of Appeal concluded that this argu-ment not only defies logic but may also lead to unjust results. It may, for example, impose liability for the whole of the disease on an em-ployer with whom the claimant was employed

for only a short time, if his other employers can-not be traced. The Court of Appeal therefore decided that if a claimant cannot show, on the balance of probabilities, that exposure to asbes-tos dust with one particular employer caused the development of his mesothelioma, then his claim must fail. The result was an obvious anomaly; a claimant who has negligently been exposed to asbestos dust by one defendant will be able to succeed with a claim. However, a claimant exposed to asbestos by two or more defendants is likely to fail.

Provisional damagesThe Court of Appeal also considered these issues in relation to claims for provisional dam-ages. This is where a claimant, who is suffering from a mild asbestos-related condition, such as pleural plaques, wishes to accept a sum of money on the basis that he may return to Court for further damages at a future date, if he were to contract a more serious condition such as pleural thickening, asbestosis, mesothelioma or asbestos-related lung cancer. The Court of Appeal had to decide whether it was appropriate to allow a claimant to return in the future to re-cover damages for mesothelioma or lung cancer where there were two or more defendants.

The Court of Appeal approved the Trial Judge’s decision that pleural thickening and asbestosis can be dealt with by the normal provisional damages order, but decided that if mesothelioma or lung cancer were contracted in the future, there should be another hearing to decide the causation element of the claim on the basis of medical knowledge and law at that time. This could obviously result in some future claims succeeding and others failing depending upon the state of medical knowledge or opinion and changing attitude of the law at the time that the disease develops.

Permission to appealThe House of Lords granted the claimants permission to appeal which was due to take place on the April 22nd - 24th 2002 inclusive. However, in what has been described as a

‘cynical and underhanded’ bid by the insurance industry to stop them, the insurers offered to pay the claimants their damages and costs in full if they all dropped their appeals. This would have resulted in the Court of Appeal decision in favour of the defendants remaining as binding authority unless another claimant took his case to the House of Lords. The offer was to include a voluntary compensation scheme organised on an industry-wide basis by the Association of British Insurers which would be open to hundreds of other claimants whose cases had been stayed pending the decision of the House of Lords and to future claimants. However, payments under that scheme would be less generous than typical Court awards.

A solicitor for the employers and their insurers, pre-emptively informed the House of Lords Judicial Office that a settlement had been concluded, when at least one claimant was unaware that an offer had been made. This meant that the hearing dates in April were lost when Mrs Fox refused to accept the offer. Mrs Fox felt there were hundreds of people in the same position as her late husband awaiting the outcome of the appeal and she was sure her husband would want the appeal to continue. All three appeals were then re-listed for the May 7th - 9th 2002.

Claimants’ appeals allowedOn May 16th 2002, the House of Lords allowed the claimants’ appeals. The written reasons in support were handed down on June 20th 2002. We will provide a further update once we have had an opportunity to discuss the way forward in dealing with such claims with the defendant Solicitors Industrial Disease Special Interest Group. The House of Lords has held that a claimant who developed mesothelioma due to inhaling asbestos fibres in more than one employment may claim damages against all of his employers, even though he could not prove with which employer he contracted the disease. The House of Lords considered the directly conflicting policy arguments. They

House of Lords Overturns Court of Appeal and finds against Defendants in Asbestos Appeals

Mr John CaddiesPARTNER

Personal Injury, Employment and ITF Unit Hill Taylor Dickinson, London


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Personal Injury / News from Piraeus

accepted that a finding for the claimant could mean that a defendant may be held liable for all of the claimant’s damages, even if that defendant was only responsible for a small proportion of the claimant’s overall exposure to asbestos. However, they were of the view that any unfairness to a defendant was outweighed by the injustice to an employee who could not recover simply because he had been negligently exposed to asbestos by more than one employer. Therefore, in these specific circumstances, the

Ancient wisdom

“Listen to me; they were children before I gave them the use of reason and made them wise. I revealed the science of numbers, the foundation of all learning, and the coupling of letters.”

These are words written by Aeschylus in 450 BC, and describe the god Prometheus in the Greek tragedy Prometheus Bound. Prometheus, whose name means 'forethought', is known as the god who was responsible for the creation of humanity.

One may ask how a Greek tragedy written 25 centuries ago relates to our time. These ancient tragedies deal with reflecting the future in subjects that never change, with problems that are always topical, concerning both heart and mind.

Newsfrom

Piraeus

Clas RydénGENERAL MANAGER

The Swedish Club Greece

The tragedy of Prometheus has to do with a key theme in our contemporary world: the potential of technical and scientific knowledge and its relation to good and evil. Marine insurance is presently facing some difficult times, combined with a weak freight market. But it will not be too difficult if we try to use some of Prometheus’s wisdom.

Let the future be guided by our hearts and minds and do what we believe is right. That is why we aim to ensure that we provide competent cover, combined with trustworthy service and adequate premiums.

House of Lords adopted a lower threshold for causation, namely that where the claimant could show that his exposure to asbestos with two or more defendants materially increased the risk that he would develop mesothelioma, this would be treated as proof that each defendant materially contributed to his illness. This means

that if a claimant has been exposed to asbestos by a number of defendants, he need now only sue one defendant as he can recover full damages from that defendant. It will then be up to that defendant to locate and attempt to recover contributions from other employers who exposed the claimant to asbestos.

House of Lords Overturns Court of Appeal and finds against Defendants in Asbestos Appeals

Judith Fairchild (suing as Administratrix and Widow of Arthur Eric Fairchild (Deceased)-v-

Glenhaven Funeral Services Limited, Waddingtons Plc and Leeds City Council and five other appeals

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Freight Demurrage & Defence / Crew

The distinction between the two types of voyage charterparty has been accorded further significance recently, particularly following the Court’s decision in The Happy Day [see The Swedish Club Letter Issue 1-2002]. This dispute arose under a berth charterparty, but because owners did not tender a valid Notice of Readiness, laytime never commenced at the discharge port and no demurrage was payable to owners (in fact they had to pay despatch!) The vessel had tendered notice when she was not yet an arrived ship in accordance with the terms of the berth charterparty.

Voyage charterpartyIn a voyage charterparty, the charterer pays freight to the owner. This is payment, not only for the voyage itself, but also for the agreed time in which to load and discharge his cargo. If a charterer takes longer to load and discharge than the laytime provided for in the charterparty, then he is usually liable to pay damages by way of demurrage. The rate of demurrage is normally fixed on a daily basis and will be payable per day or pro rata for any part of a day. Some charterparties also provide that if the cargo is loaded and discharged in less than the laytime allowed, then the shipowner will pay a sum of money to the charterer. This is despatch and is often set at half the demurrage rate.

Commencement of laytimeSubstantial sums of money can turn on exactly when laytime begins and ends. For example, does time begin to run when the vessel arrives at the loadport or when it actually begins to load the cargo? Similarly, what happens if the cargo is not ready to be loaded, so the vessel has to sit idle for a day? Even a difference of a few hours can mean thousands of dollars for owners and charterers. Consequently, there is a need for clear rules as to when time starts and finishes.

The first place to look for laytime provisions will always be in the charterparty itself. Usually the charterparty will stipulate exactly when lay-time should begin. Subject to the specific terms of the charterparty, the general rule is that laytime begins to run when the following three requirements have been satisfied: 1. The vessel has arrived at the place specified in

the charterparty;2. The vessel is, in fact, ready to load/discharge;

and 3. A valid Notice of Readiness has been ten-

dered in accordance with the terms of the charterparty. In this article, we are concentrating on the

first requirement for when laytime begins: when the vessel has arrived at the place specified in the charterparty.

Terms of berth charterpartyThere are essentially two different types of voyage charter – namely a berth charter and a port charter. The distinction is important for determining when the loading voyage, that is to say the voyage of the ship to the loadport, ends. A berth is a specific place within a port. It is the place where the vessel actually loads and discharges. Under the terms of a berth charterparty, the loading voyage does not end until the vessel is actually in the berth where it will load the cargo. The charterparty will usually name the berth or provide that a berth will be nominated as the place for loading or discharging. This will make the charter a berth charter. The berth is the agreed destination and therefore the vessel will be an arrived ship when she is securely moored there. In the case of North River Freighters Ltd. v President of India [1955] 2 Lloyd’s Rep 668 Jenkins LJ made it clear that laytime in a berth charterparty could not commence until the vessel has arrived at its particular berth as specified in the charterparty.

Berth or port charterpartyThe determination of whether a charterparty is a berth or a port charterparty can simply be dependent on the order of the words in the relevant clause. Donaldsen J, in The Finix

Berth or port charterparty?Voyage charterparties – Commencement of laytime

The National Labor Relations Commission (NLRC) has jurisdiction over the claims of Filipino seafarers. On March 18th 2002, the NLRC amended some of their rules of procedure. Certain changes deserve some discussion.

The old rules of the NLRC provide that Labor Arbiters have jurisdiction to hear and decide claims of ‘all workers’. The new rules now clearly state that Labor Arbiters also have original and exclusive jurisdiction to decide the claims of ‘overseas Filipino workers provided for by law’. The term ‘overseas Filipino workers’ includes seafarers.

The NLRC amended this provision to conform to the Migrant Workers Act of 1995,

Significant changes in the NLRC Rules of Procedure

Mr Ruben T. Del RosarioMANAGING PARTNER

Del Rosario & Del Rosario, Manila

which gave the NLRC the original and exclu-sive jurisdiction to hear the claims of ‘overseas Filipino workers’. This amendment leaves no doubt as to the Labor Arbiter’s jurisdiction to hear the claims of Filipino seafarers.

Declaration of Non-Forum ShoppingA complaint must now include a ‘declaration of non-forum shopping’. This is taken from the Revised Rules of Court of the Philippines, which prohibits the filing of two or more suits in different forum. Forum shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultane-ously or successively for the purpose of obtain-ing a favorable judgment. If a seafarer has filed suit in the NLRC, he is prohibited from filing a similar suit in another forum. This rule has been extended to a respondent or defendant who for some reason commences a new action against a complainant or plaintiff.

A certificate of non-forum shopping is also required in cases of appeal. A mere notice of ap-

peal without such a certificate shall not stop the running of the period for perfecting an appeal.

Surety BondThe surety bond to be filed together with the appeal shall be accompanied by:a) a joint declaration under oath by the em-

ployer, his counsel, and the bonding company attesting that the bond posted is genuine, and shall be in effect until the final disposition of the case;

b) a copy of the indemnity agreement be-tween the employer-appellant and bonding company; and

c) a copy of the security deposit or collateral securing the bond.The requirement on the copy of the security

deposit or collateral is new. At the moment, it is still not settled as to whether a Club Letter of Guarantee is considered to comply with the new requirement.

Another new provision is the recognition by the NLRC rules of a motion to reduce a bond,


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Berth or port charterparty?Charlotte Lacey

MANAGER FD&D LONDONThe Swedish Club U.K.

Freight Demurrage & Defence / Crew

Significant changes in the NLRC Rules of Procedure

(1975) 2 LLR 668, held that the words in a charterparty ‘one safe berth, London’ would be a berth charterparty, but the words ‘London, one safe berth’ would be a port charterparty. The charterparty must be construed fully to determine whether or not it is a berth or port charterparty. However, when it comes to the tendering of Notice of Readiness and the commencement of laytime, it is important that owners know whether they have a port or berth charterparty to ensure that a valid Notice is tendered and to ensure that time commences.

A berth charter therefore puts the risks of delays and congestion in the port on the own-ers. Of course, each charterparty will be worded differently and a WIBON (Whether In Berth Or Not) clause may transfer the risk for the de-lay back to charterers even in a berth charter if the reason preventing the vessel getting into the berth to be an arrived ship is caused by charter-ers (The Kyzikos (1989) 1 LLR 1).

Under a port charterpartyBy contrast, under a port charterparty, a vessel becomes an arrived vessel for the purpose of calculating laytime once she arrives within the confines of the port as stipulated by Lord Reid in The Johanna Oldendorff [1973] 2 Lloyd’s Rep 285. In this case, Lord Reid said that the test was whether the vessel was at such a place within the

POEA implements Amended Standard Employment Contract The Philippine Overseas Employment Administration (POEA) issued Memorandum Circular No. 02 dated June 5th 2002 imme-diately implementing the amended POEA Contract. The Philippine Supreme Court has finally dismissed with finality the two petitions filed by seafarers groups questioning the provi-sions of Section 20 of the amended Contract. The amended Contract has added provisons on work-related injury, illness or death, release from ‘all claims’ upon payment of benefits, a third physician to resolve disputes on disability gradings, concealment of past medical condi-tion and voluntary arbitration.

port that she was at ‘the immediate and effective disposition of the charterers’. If she is at a place where waiting vessels customarily lie, then there is a presumption that she has arrived unless the charterers can show otherwise. Conversely, if she is at some other place within the port, then it is for the owners to show that she is nonetheless at the charterer’s disposition.

With a port charterparty then, if the berth is free, the vessel will only be an arrived ship when she is all fast at the berth. However, if she is unable to proceed directly to the berth because of congestion, tides, bad weather, the lack of availability unavailability of tugs etc. she will still have arrived at her agreed destination under a port charterparty if she has satisfied the Lord Reid test above: i.e., she has reached a position within the port and at that position she is at the immediate and effective disposition of the charterers.

In the case of a port charterparty, a WIPON (Whether In Port Or Not) clause can assist owners if they are unable to enter the usual port area, providing all other requirements of readiness are met.

Valid Notice of ReadinessTherefore, for owners to ensure that they are serving a valid Notice of Readiness, it is important to establish whether or not they

have entered into a berth or port charterparty so that in the event that the vessel cannot steam straight to the berth, owners know whether or not they can tender a valid Notice of Readiness. There are several other clauses, often within a charterparty, which will impact on when the vessel can validly tender notice, for example in the Asbatankvoy charter – clause 9, which puts an additional obligation on charterers that a berth will be ‘reachable on arrival’. Therefore, if there is a berth charterparty (under which laytime would not start because the vessel has not reached the berth) that contains a reachable- on- arrival warranty, charterers would pay for the time lost waiting to berth because they would be in breach of their obligations to provide a berth reachable on arrival. In the absence of other such provisions in a berth charterparty, owners must consider whether the vessel has reached her destination pursuant to the charterparty. Is the vessel where she should be to tender notice? As The Happy Day confirmed, an invalid notice will not become valid. A new and valid notice must be tendered to commence laytime.

The concept of an arrived ship is a complex one under English law and this article has only touched on one or two major aspects; the well- known London arbitrator Mr Donald Davies managed to write a whole book on the subject!

provided a ‘bond in a reasonable amount’ is posted. If a shipowner claims that his liability is only USD 60,000 and the decision of the Labor Arbiter is for USD 100,000, the shipowner may file a motion to reduce the amount of the bond together with the appeal. However, it is still unclear as to what is to be considered a ‘reason-able amount’. It would appear, however, that the appeal could be considered perfected provided a bond in a reasonable amount is posted.

Execution ProceedingsWhereas under the old rules, execution may issue after the decision of the NLRC Commis-sion has become final, under the new rules, it is required that a pre-execution conference is held within two (2) working days from the receipt of the motion for the issuance of a writ of execu-tion. Thus, there will be no surprises for the respondents as to the execution of a decision.

Another rule change deals with the filing of a petition for certiorari, with a higher court assailing the decision of the NLRC Commis-

sion. Even if such a petition is filed before the Court of Appeals or the Supreme Court, execution proceedings will still proceed unless the aforesaid courts issue a temporary restrain-ing order. Under the old procedure, the Labor Arbiters do not issue a writ of execution in def-erence to the petition for certiorari filed with the higher courts. Now, under the new rules, it is quite clear that execution may issue unless a temporary restraining order is issued by the higher court.

Unfortunately, when an execution of the de-cision is effected and the higher court reverses the decision, it is quite difficult to retrieve the judgment award from the complainant.

ConclusionThe new provisions on the jurisdiction of La-bor Arbiters and the certification of non-forum shopping may impact on actions filed in foreign jurisdictions by Filipino seafarers. The new pro-visions on appeal may cause the non-perfection of the appeal if the new rules are not followed. It is important that expert advice be obtained on the new rules.

We are pleased to report on the latest developments referring to the implementation of the amended POEA contract of 2000 as per the above statement received from our correspondents Del Rosario & Del Rosario. Should you have any questions in relation to the relevant contract which is now in force or in connection with other crew contracts, please do not hesitate to call us. Birgitta Hed - Claims Executive, Claims and Legal Support Department, Göteborg +46 31 638 431.


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The Forces of Nature

A ship encounters a storm with heavy winds and high waves. Some of the cargo is lost overboard and some sustains damage. Under these circumstances, the shipowner may feel that he should not be blamed for the damage, as his vessel was in good condition and the cargo was secured as well as it could be. As shall be shown below, he may find that he has a hard time succeeding in his efforts to avoid liability. However, it is not impossible, and, in certain legal systems, it is even quite feasible.

BackgroundHistorically, the shipowner was strictly liable for damage to the cargo. During the 19th century, they started to insert clauses into the contracts whereby they were relieved of liability to a large extent. ‘The exclusions went so far as to make the shipowner liable only for the collection of freight’, (SOU 1990:13).

At this time, England had a strong ship-owning community, whereas a large number of cargo owners were to be found in the U.S. Possibly as a consequence of this, the matter of carrier liability came to be interpreted dif-ferently, with the U.S. courts being inclined to overrule the exclusion clauses inserted by the shipowners. This difference still exists to a certain extent.

A compromise was reached in the U.S. in

1893 with the introduction of the Harter Act. The shipowner became liable for his negligence,

but was not allowed to exclude liability. The act also gave the shipowner a defence against liability for damage caused by negligent navigation and management of the ship. These regulations were further developed in the Hague and the Hague-Visby Rules, in which the shipowner was given

a ‘catalogue’ of defences, one of them being ‘Perils of the Sea’.

‘Perils of the Sea’The basic obligation for the carrier, according to the Hague and the Hague-Visby Rules, is to exercise due diligence in making his ship sea-worthy, both before and at the beginning of the voyage. During carriage, he must also handle and care for the goods properly and carefully. Provided that the carrier has been able to prove that he has fulfilled these obligations, the rules give him a catalogue of defences.

Assuming the carrier can prove that the vessel was seaworthy at the beginning of the voyage, neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from perils, dangers and accidents of the sea or other navigable waters. In the

Inchmaree’ case of 1887, it was clarified that this exception only covers liability for damage caused by dangers specific to the sea. This is an important distinction, since weather damage that could easily occur on land, such as rain or lightning, is not covered. The most common situation in which a carrier may be inclined to invoke the defence is when the vessel has encountered heavy weather during the voyage. As shall be shown below, this is normally very difficult to prove. However, there are certain situations when the defence can be successfully invoked against a claimant. For example, it can be used to defend claims for damage caused by the vessel running aground in fog, or by collisions where the other vessel was negligent. One should note that the carrier could also invoke this defence against damage resulting from actions taken to avoid a peril of the sea, but not against normal wear and tear.

Interpretations in certain legal systemsThe interpretation of this defence differs in one important aspect between different jurisdictions and legal systems. The issue is whether this defence can be successfully used where the weather was harsh, but still

foreseeable and expected under the circumstances of the voyage. In many countries, the weather needs to be exceptional and unexpected for the defence to be applicable.

Fredrik OlssonCLAIMS EXECUTIVE

Claims & Legal Support DepartmentThe Swedish Club, Göteborg

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“The exclusions went so far as to make the shipowners liable only for the collection of freight."

”It is not the level of harshness of the weather that sets the limit but rather the relation between the expected weather and the actions of the carrier.”


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Since it is possible to forecast most weather situations, this will limit the scope of the defence quite substantially.

Very generally, it can be said that U.K. and Australian courts have tended to allow the owner to discharge liability in a wider range of circumstances. German, Scandinavian and U.S. courts have only allowed the defence when the weather has been extreme and out of the ordinary for the specific circumstances.

An example of a more generous applica-tion of the defence can be found in the recent Australian case of the BUNGA SEROJA. The vessel experienced force 11 gales during a pas-sage of the Great Australian Bight from Burnie to Fremantle. Because of the severe weather, she lost containers overboard and experienced dam-age to a cargo of steel coils. It was accepted that the vessel had been seaworthy before the voyage. The gale was forecast, and could be considered normal in the circumstances. The court still allowed the carrier to invoke the defence and argued that in principle, the decisive factor is whether the carrier has exercised due diligence to avoid the consequences of the perils of the sea. In this way, it is not the level of harshness of the weather that sets the limit but rather the relation between the expected weather and the actions of the carrier.

The opposite approach was adopted in the U.S. in the case of Thyssen Inc. v.

S.S. EUROUNITY. Thevessel encountered Beau-fort 10-11 winds and 10-11.5 metre waves during a winter crossing of the North Atlantic and suffered damage to the cargo. The U.S.

court did not accept that the carrier should avoid liability by invoking the perils of the sea defence. According to the court, one can only invoke a peril of the sea when the circumstances are of an extraordinary nature and cannot be avoided. The conditions in this case were not unforeseeable for this particular voyage.

The same thinking can be found in Ger-many. The courts focus on the question of pre-dictability or what is foreseeable. The carrier may not invoke the defence against perils that can be expected on each particular voyage that a seaworthy and properly stowed vessel should be able to withstand. There is no comprehensive definition of the concept, since it depends heav-ily on the circumstances in each particular case. However, it is not enough for the peril to be unusual. It must be impossible to foresee under the circumstances.

The phrase ‘peril of the sea’ has been removed from the Scandinavian Maritime Codes. The issue has, however, been raised in several recent cases when the carrier has tried to avoid liability by proving that he has not acted in a negligent manner. For the carrier to be able to succeed in invoking the perils of

the sea defence, the weather must be extremely rough. The courts concentrate a great deal on the level of the wind and whether it was possible to foresee the conditions. From previous cases, one can draw the conclusion that there should be winds in the region of Beaufort 11-12 before the courts consider allowing the carrier to avoid liability.

Conclusion In most legal systems, the carrier may be able to avoid liability for cargo damage caused by per-ils and dangers specific to transporting goods at sea. The idea behind this is that the owner of the cargo should carry some of the risk, as the shipowner is putting his vessel in jeopardy for the common good. In theory, this defence would seem to be quite extensive and to cover a large number of possible claims. In certain situ-ations it will, in fact, allow the carrier to avoid liability. However, in most situations when a carrier might try to rely on this defence, it is of little or no value. In most legal systems, the courts focus on the level of heavy weather. They demand that the conditions have to have been exceptional and impossible to predict under the circumstances. For the carrier, it is almost always impossible to prove this. The position in the U.K. and Australia is different, allowing the defence to be invoked in a wider set of circum-stances. The reason for this difference could possibly be traced back to the historic relations between shipowners and cargo interests on the Atlantic trade route during the 19th century.

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”One can only invoke a peril of the sea when the circumstances are of an extraordinary nature and cannot be avoided.”


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Peter StålbergDIRECTOR

Loss Prevention & Technical DepartmentThe Swedish Club, Göteborg

At the beginning of June 1998, a tropical depression started to develop over the Arabian Sea outside the west coast of the Indian conti-nent. Feeding on hot humid air, the low pres-sure soon developed into a full tropical cyclone. The cyclone was spotted near the Lakshadweep Islands by the meteorological institute on June 4th and monitored as it moved north towards the coast of Gujarat. It was heading straight for Kandla.

By the morning of June 8th 2002, danger signal eight (wind speed exceeding 30 m/s) was issued specifically for Kandla port. During the day port officials went on board all vessels in the harbour, informing them about the bad weather that was expected and that precautions should be taken to ensure that all vessels were safely moored. Some masters certainly became worried and wanted to leave the port but they were calmed by the officials who assured them that Kandla was an extraordinarily safe port, a good distance from the open sea and that they had experienced conditions similar to what was expected without any problems. That same night, the district administration of Kutch was specifically and urgently informed of the cyclone coming their way.

It was early morning on June 9th when the crew on the M/V SURPRISE watched with apprehension as the sky grew dark. There was a rumble of thunder and the wind had started to pick up. This was, after all, normally a time of cloudless skies in the sweaty, busy port of Kandla. At 10.30 am all hell broke loose – a fierce, driving rain began to lash the vessel with a force 12 wind that blew in from the sea and howled like a million souls in agony. Along the berth shore cranes were tossed like confetti and the air was filled with debris from buildings and shacks that were literally blown apart. The mooring lines, or perhaps it was the 100 met-ric tonne shore bollards, broke and the vessel drifted away from the berth as a ten meter high freakwave rolled through the port.

Almost all vessels in the port, including a floating dock with a vessel inside, broke their moorings and drifted aground. Multiple col-lisions occurred instantly and within minutes floodwaters swept up the harbour basin and submerged the marshland.

Upstream along the creek, on the treeless saltpans, hundreds of locals were working at harvesting the white gold from the ocean. When the rain started, and without knowing a cyclone was brewing, they took shelter in their makeshift shacks. The water was rising and there was nowhere to escape – only a few of them could swim.

The official figures put the death toll at 600, plus 100 missing, but the figure, as rescue workers and reporters confirmed, was a gross understatement. It was suggested that over 2000 people had died, most of whom were probably swept out into the ocean. With a mixed religion of Hinduism, Buddism and Christianity, the officials could not make up their minds about what to do with all the dead bodies – some had to be buried and others had to be cremated, but who could tell? After some discussions, and when the smell of dead bodies had become almost unbearable, it was decided to cremate all the corpses.

The Swedish Club had two vessels, M/V SURPRISE and M/V CLIPPER KAWA in Kandla at the time of the disaster. The SUR-PRISE was safely aground, on the marshland, together with three other vessels, on the other side of the harbour opposite the commercial berth.

CLIPPER KAWA had disappeared and was nowhere to be found. We were told that a vessel had been spotted some ten nautical miles up the creek way up in the saltpan area. After a two-hour ride on a local fishingboat up the narrow creek we spotted the vessel. She had sustained collision damages and the engine room and the no. 4 cargo hold were flooded. On deck one of her gantry cranes had collapsed and the other one was totally distorted. As it was deemed not economically feasible to salvage and repair the vessel she was declared a constructive total loss.

With some 15 vessels aground in the port, surveyors and lawyers soon flocked to assess the damages and sort out what had happened. Could anybody be blamed? In a little while it became evident that no individual vessel could be held responsible. This was an act of God or perhaps, more appropriately, simply the forces of nature!


Just about all vessels in the port stranded.

CLIPPER KAWA was declared a constructive total loss.


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Just about all vessels in the port stranded.

CLIPPER KAWA was declared a constructive total loss. Widespread devastation in Kandla town.Shore cranes were tossed like confetti.PHOTOS: THE SWEDISH CLUB


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Club Information

The Swedish Club’s Publications Group consists of Susanne Blom-strand, Annelie Fellbom and Petra Setterberg. It was formed in 1999 fol-lowing the Club’s decision to centralise responsibility for all publications and marketing material within one unit. One primary objective was to provide The Swedish Club with a consistent graphic profi le world-wide. Prior to 1999, different departments and the various offi ces produced the Club’s publications, stationery and other marketing material and consequently, material tended to differ in appearance and the production process lacked coherence.

These activities are now managed by the Publications Group’s three-strong team, who oversee print production and deliver a consistent graphic profi le for all materials produced by the Club’s head offi ce, liaison offi ces and other external parties, together with information distributed to Club members. The Publications Group has now been in existence for almost four years and now produces almost all publications in-house. When this is not technically or otherwise possible, the Group co-ordinates the production, thus getting a total overview of the production process. This way of working, centralised and as a unit, has proved to be both effi cient and cost-effective. Below you will fi nd some of The Publications Group's main responsibilites.

Susanne Blomstrand, Publications Co-ordinatorLoss Prevention & Technical DepartmentE-mail [email protected] tel +46 31 638 439Main responsibilites: List of Correspondents and Rules

Annelie Fellbom, Publications Co-ordinatorLoss Prevention & Technical DepartmentE-mail [email protected] tel +46 31 638 459Main responsibilities: The Swedish Club Letter, Stationery

Petra Setterberg, PR and Marketing Co-ordinatorUnderwriting & Marketing DepartmentE-mail [email protected] tel + 46 31 638 490Mobile +46 706 788 720Main responsibilities: Marketing, PR, The Annual Report and website

The Publications Group

Staff DirectoryPublished for the fi rst time in the beginning of 2002 and is a pure in-house production.

The Swedish Club Letter The Swedish Club Letter is the Club’s main publication for members, shipboard staff and business contacts. Most articles contain loss prevention messages, together with recommendations, advice and information on legal developments, etc. General Club information, including staff news and social events,is also found in the newsletter. The majority of articles is written by the Club’s staff, however external help is used concerning the layout.

The Swedish Club Letter The Swedish Club Letter is the Club’s main publication for members, shipboard staff and business contacts. Most articles contain loss prevention messages, together with recommendations, advice and information on legal developments, etc. General Club information, including staff news and social events,is also found in the newsletter. The majority of articles is written by the Club’s staff, however external help is used concerning the layout.

Annual ReportThe Annual Report is published at the end of May/beginning of June each year, and is a pure in-house production.

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From left to right: Susanne Blomstrand, Petra Setterberg and Annelie Fellbom.

Staff DirectoryPublished for the fi rst time in the beginning of 2002 and is a pure in-house production.

Loss Prevention Fact SheetsThese informative fact sheets were originally produced in the beginning of 2001. The fact sheets are continously updated and are completely produced in-house.

List of CorrespondentsThe List of Correspondents is updated and published annually after the P&I renewals and is completely produced in-house.

Rules for P&I Insurance/Rules for Rules for P&I Insurance/Rules for FD&D InsuranceThe P&I / FD&D Rules are updated and published The P&I / FD&D Rules are updated and published annually in connection with the P&I renewals and is completely produced in-house.

Website: www.swedishclub.com - The Swedish Club's website is completely managed in-house.

Rules for P&I Insurance/Rules for Rules for P&I Insurance/Rules for FD&D InsuranceThe P&I / FD&D Rules are updated and published


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Annual General Meeting

The Publications Group

The events of September 11th 2001, have had a profound impact on the international in-surance community. The rising cost of natural catastrophes, however, offers a challenge of even greater magnitude to the world’s insurance ma-jors. In his address to delegates attending the Club’s Members’ Day in Göteborg on June 13th, Dr Anselm Smolka, Munich Re’s Head of Geophysical/Geological Risk Research, paint-ed a sober picture. He reviewed a trend already prompting the majors to take a fresh look at the fundamentals of loss prevention.

Dr Smolka began by outlining the statistics behind the steady increase in natural disasters producing huge insurance losses. In recent dec-ades, the number of events producing economic losses greater than USD 100 million has risen by a factor of three, while economic losses as such have increased by a factor of 7.7 and in-sured losses by a factor of 14.3.

In his assessment of underlying causes, Dr Smolka said: “The important changes behind dramatic increases in the frequency and size of losses include a general rise in population, higher standards of living, the concentration of populations in large conurbations and the settlement in, and industrialisation of, ex-tremely exposed regions. Furthermore, mod-ern society is more susceptible to damage from natural hazards and, in addition, we now face new and adverse environmental conditions, including global warming.”

He made his point by showing a photograph of Miami Beach in 1926; it was virtually un-developed at that time. Today, Miami Beach is certainly developed, despite its obvious vulner-ability to hurricanes. Other examples include the gigantic mudslides which have caused havoc in the coastal strip adjacent to Caracas, Ven-ezuela, in December 1999 and the August 1999 earthquake which levelled large areas around Izmit, Turkey. This city was also struck by a se-vere earthquake in 1894, but the damage – and

loss of life - was on a much smaller scale.The continued colonisation, industrialisa-

tion and development of vulnerable regions is a matter of concern to all insurers, said Dr Smolka. In this context, he noted the special vulnerabilities of ports and harbours. He then demonstrated the fragility of modern society by citing the example of the September 1999 earthquake in Taiwan. The major power - con-suming centres of the island are located in the north, while the main power stations are in the south. The earthquake brought down national power transmission lines and, as a result, caused extreme economic dislocation.

Dr Smolka has some firm views on climate change: “There is no doubt that this has major significance for the insurance industry, given increasing weather variability and extremes. These translate into new risk exposures. Hur-ricanes, for example, require a sea surface tem-perature of at least 27°C. in order to sustain their strength. As a result of global warming, sea areas with such temperatures increase year by year. Not surprisingly, the rise in the number of extreme weather events has produced sharp growth in the demand for natural hazards cover.”

Is global warming a myth? Dr Smolka doesn’t think so: “In the period 1961-90, the average summer temperature in Central Eng-land was 15.3°C. In 1995, the figure was 17.3° C. – a very warm summer! Climate models now suggest, however, that warm summers will be-come more frequent, with Central England’s average summer temperature by 2050 rising to 16.9° C. The exception, in other words, will become the rule.”

Referring to September 11th, Dr Smolka said that the aftermath of the World Trade Centre disaster and the other attacks had revealed many previously hidden exposures, including multi-branch losses. September 11th may involve insurance costs of some USD 40

billion, with material damage accounting for 22 per cent, business interruption, 20 per cent, life insurance, 15 per cent and workers’ compensa-tion, 11.5 per cent. Dr Smolka observed: “There is no doubt that September 11th has prompted a greater willingness to consider the possibility of more extreme events - both man-made and natural.”

In considering the insurer’s response, Dr Smolka said that insurability centred on three issues: risk assessment, risk control and risk re-duction. He underlined the importance of risk-sharing – the ‘risk partnership’. The success of this strategy hinged on two questions:

• How to finance losses?• How to prevent or at least reduce losses?

He told the Club’s members: “There must be adequate premiums and substantial deducti-bles. More prominence will be given to liability limits and exclusions – especially in relation to natural hazards and the risks of particularly exposed areas. We will need more effort and innovation in the area of loss prevention. ”Fol-lowing his address, Dr Smolka added: “There has been a dramatic increase in losses from natural catastrophes and some risks, in some circumstances, will become uninsurable unless action is taken. We need new and practical measures to achieve risk reduction and preven-tion. The advances made in the fire sector show just what can be achieved. After all, insurers are very efficient risk managers. Attitudes are bound to harden concerning the development of flood plain zones, for example. Strategies will be linked to climate change. Almost certainly, climatic conditions 50 years from now will support a dramatic increase in extreme weather events. One important loss prevention func-tion, of course, is better communication, to increase awareness through structured public education.”

Global warming taken seriously

Dr Anselm Smolka, Head of Geological/Geophysical Risks at Munich Reinsurance Company in Munich, was one of the speakers at The Swedish Club's AGM held in Göteborg, June 12th-14th.

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New concepts in cruise shipping Nils G. Nordh, who became a member of The Swedish Club’s Board on June 12th, is a prominent figure in the international cruise shipping sector. He has spent the past five years with Star Cruises of Malaysia, where he is Executive Vice President, Marine Operations and Newbuildings. Over this period, Star Cruises has continued to build

profile as a major operator, with a large fleet and over 16,000 employees. The group now consists of Star Cruises, Norwegian Cruise Lines and Orient Line, with a combined fleet of 20 vessels.

Nils Nordh’s association with The Swedish Club goes back a long way: “I first got to know the Club some 28 years ago, when I joined Red AB Transatlantic in 1974. Most of the vessels were with The Swedish Club. My personal dealings with

the Club have been maintained over the years and, today, Star Cruises has a substantial portfolio with the Club. Over this long period, I have retained my view of the Club as a provider of good service, especially when it comes to claims handling and loss prevention - areas where it excels. At present, we have 18 vessels placed with the Club for Hull & Machinery cover. Much of the Asian fleet’s Protection & Indemnity is also with the Club.”

In 1982, Nils Nordh joined Trans Ship Management AB and was Managing Director until 1990. During the following year, he became Senior Vice President of Marine Operations for Miami-based Royal Car-ibbean Cruise Line. He recalls: “The telephone rang in the middle of the night. The caller was a U.S.-based headhunter, picking up on a rumour that I was looking for a new challenge. He was right. At that time, the organisation had two operating companies, Admiral Cruises and Royal

Suay Umut, Chairman of Dünya Denizcilik ve Ticaret A.S., became a Member of The Swedish Club’s Board on June 12th. His company is one of Turkey’s leading tanker shipping operators, with a fleet totalling 399,235 dwt. He has a long-standing relationship with The Swedish Club. All vessels in the Dünya Denizcilik ve Ticaret fleet are entered with the Club for Hull & Machinery cover. Many are also entered for Protection & Indemnity.

Suay Umut graduated as a marine mechanical engineer and opened his career with four years at sea. In 1963, he joined state oil company Petrol Ofisi as an engineer. Later, he established the company’s shipping arm – purchasing five tankers and commissioning six newbuildings from Turkish yards.

His career took a new turn in the early 1970s: “I left my post as Deputy General Manager in 1971 and struck out on my own. I decided to base myself in London. Within two years, I had established my first company and went on to set up Ganmount Oil Trading – which remains active today under the name Ganoil.”

These ventures were successful and in the early 1980s Suay Umut was in a position to purchase a number of handysize product tankers from Exxon. Ganmount Shipping was established to operate the ships. This company is now known as Ganship International, representing Dünya Denizcilik ve Ticaret in London. The latter was set up in the mid-1980s, to operate the five vessels in the Ganmount Shipping fleet under the Turkish flag.

Suay Umut lived in England for over 25 years. He says: “Life in London was rather unfamiliar at the beginning, with my morale not

Making plans for tanker newbuildings

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Mr Nils G Nordh, Executive Vice President, Marine Operations and Newbuildings at Star Cruises in Malaysia.

Nils NordhNew member

of The Swedish Club’s Board


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New concepts in cruise shipping

encouraged by the British weather. Britain, however, provided a highly stable business environment. Gradually, things became easier. Where did the years go? My child started school in England and it didn’t seem very long before university was finished! By the mid-1990s, however, I wanted to return to Turkey. Things changed dramatically over the 20 years to 1995, with major improvements in the economic climate. This has promoted change in the dynamics of oil trading and it made sense to return to Istanbul – my home city.”

The Dünya Denizcilik ve Ticaret fleet now consists of nine vessels, primarily engaged in the products trades. The ships include the five double-hulled newbuildings. Two were delivered in 2000 and the remaining three joined the fleet during the course of last year.

Future plans will involve a new phase of fleet renewal. Suay Umut says: “The single-hull ships will be replaced by double-hulled newbuild-ings. We are now talking with various yards and hope to reach decisions by the end of the year.”

Suay Umut retains his close business and social ties with Britain: “I still have offices in London and a London home. I visit England around half a dozen times every year.” In his leisure time, he enjoys sailing in the summer and walking and other exercise during the winter months.

“Exercise is very important to me. I had a heart transplant in the United States two years ago and walking is a fine exercise regime – not too strenu-ous but enough to keep me fit.”

Caribbean. The intention was to integrate these enterprises and create a common culture. Initially, I was minded to reject the offer from Royal Caribbean. In the event, I changed my mind and enjoyed seven happy and satisfying years with the company. Then it rang again…”

Star Cruises caters for a distinct market with special characteristics not applicable elsewhere in the global cruise market. Nils Nordh explains:

“We have a very young cruise product serving the Asian market. It is only eight years old, although it is already No. 4 in the world, with 20 vessels and a newbuilding programme. In many ways, it is a unique venture. I have been fortunate to enjoy five very challenging years. Our newbuilding programme consists of four large vessels and the final ship in the series will be delivered at the end of this year. The future looks just as exciting, as we consider options for continuing our heavy expansion into China. We are evaluating concepts for vessels in the 50,000 tonnes range for this market, together with vessels of 90,000 tonnes for the U.S. market.”

Freestyle strategyThe strategy of this vigorous group is described as ‘freestyle’. Nils Nordh says: “In Asia, we don’t have the concentrated shipping environment of Scandinavia and, in the cruise industry context, the concentration present in Miami. In a sense, this has helped, as it has encouraged us to develop a distinct style which is flexible and open to change. Typically, our projects have very short lead times. We also cater for a market with quite different vacation patterns to those prevailing in the West. Our cruises are struc-tured to allow vessels to embark and disembark passengers in a series of ports, during an intensive sailing schedule. Many join our vessels for just one or two days, to refresh themselves, rather than commit to the more

conventional one or two-week cruises that are traditional in other parts of the world. Our cruise concept is the ultimate logistics challenge. The solution is to own the terminals, an unusual policy in the cruise shipping sector.”

In addition to his demanding role within Star Cruises, Nils Nordh is the active Chairman of a number of Boards, including Dynamar B.V. in The Netherlands, a leading provider of transport and shipping company information. He played a major role in the establishment of Dynamar in the early 1980s. Over the past five years, this company has made notable progress in building its client base amongst the major banks, container lessors and law firms.

Not surprisingly, leisure time is at a premium. Nils tries to get out on the golf course at weekends. He also enjoys reading. Nils is married to Ingrid and has two sons. One recently graduated in Business Administra-tion and IT and now works for Norwegian Cruise Lines. The younger son, aged 22, is studying civil engineering.

Strong views on safety mattersNils Nordh is a frequent speaker at international conferences. He adds:

“I do have some strong views on safety issues and I often speak on this subject. Star Cruises’ vessels have the latest nautical equipment, including ‘black boxes’. Star Cruises is also the only cruise shipping group in the world to operate its own simulator. We also maintain constant on-line contact with the ships. If a problem arises, it is possible to use the ship’s video camera systems to examine and monitor the situation in real time. I have no doubt that, in future years, the cruise industry as a whole will work closer together on safety issues. There is a lot of value in defining and applying best practice.”

Making plans for tanker newbuildings

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Mr Suay Umut, Chairman of Dünya Denizcilik ve Ticaret A.S. in Turkey.

Suay UmutNew member

of The Swedish Club’s Board


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New and powerful forces are now at work in society, changing the way people live their lives and do business. Using a carefully crafted mix of observation, example and wit, Dr Kjell A. Nordström, of the Institute of International Business, analysed these forces in a presentation during The Swedish Club’s Members’ Day.

Dr Nordström, based at Stockholm’s School of Economics, began with a startling premise:

“Karl Marx is back”, albeit in a new guise. He claimed: “In modern business organisations

– from Nokia of Finland to Sony of Japan – up to 90 per cent of the work done is intellectual in character. This has transformed ownership structures. We are shifting rapidly from the traditional pattern – from the owners of capital to the owners of intellectual capital. Ten years from now, Nokia will be up to 40 per cent owned by its employees. Every year, option programmes continue to dilute capital ownership.”

Bowling aloneKey individuals with exceptional intellectual or other gifts enjoy dominant positions in this new hierarchy. The music business provides an obvious model: “Today, a big star owns all the rights. What does the record company bring to the table, other than the ability to offer a little service by way of distribution?”

Dr Nordström moved on, introducing his audience to the concept of ‘bowling alone’. In the immediate post-war years, American men (together with a few women) often went bowl-ing together after work. The tradition contin-ues to this day, but with two important differ-ences. Firstly, there are more women bowling. Secondly, and more importantly, both men and women bowl alone, rather than in social groups. This is a symptom of the new, super-personalised society, centred almost entirely on the individual: “We are busy ‘building down’ to the singles society and, therefore, do fewer things together. This is true of Europe in gen-eral and Scandinavia in particular. Individuals living alone now account for some 62 per cent of households in Stockholm, for example, and this fi gure continues to increase. In today’s so-ciety, the three biggest-selling pharmaceuticals are Losec (the No. 1 treatment for stomach ulcers), Prozac (to treat depressive illness) and Viagra (needing no explanation). The new society is gaining strength in major cities around the world and this has implications for

all aspects of life, including politics, education and commerce.”

New rules and behavioursThis new socio-economic landscape is rich in new rules and behaviours. Dr Nordström observed: “One dimension of the landscape is ‘Superstar Economics’, under which No. 1 takes all. In sport, the arts and business, there is little room for No. 2 and the other also-runs. What counts is to be No. 1 or, at least, to have a fi rm expectation of being No. 1. Is this good? Is this bad? These questions are irrelevant. The situation is what it is!”

In this globalised society, populated by individuals, the unit of analysis is changing. Traditional households have less relevance in urban communities dominated by ‘singles’. Dr Nordström commented: “The old maps still fi ll our minds but the realities are different. Family, household and nation state are increas-ingly irrelevant. Nations, for example, have lost control of their multinationals.”

The new unit of analysis is the ‘tribe’. Dr Nordström said: “We are creating tribes. Hell’s Angels are the same the world over… as are pop fans. They think the same way and their con-sumption patterns are identical worldwide.”

Technology may drive change but Dr Nordström is scathing about the signifi cance of the Internet as a competitive force. He said:

“The Internet will never, ever, for any company in any industry, or for any product or service, provide any competitive advantage. The Inter-net is an element of infrastructure and nothing more – just like water, sewerage, electricity and telecoms. There is no competitive advantage in having what everyone else has.”

Commercial promiscuityIn the 1950s, the pharmaceutical industry introduced the contraceptive pill, prompt-ing widespread sexual promiscuity. This was a dramatic change in human behaviour. Dr Nordström said: “Today, the Internet is the global business community’s equivalent to the pill. It exerts a downward pressure, by in-creasing fi xed costs without an accompanying competitive advantage. In short, it encourages commercial promiscuity. You can shop around for lower cost.”

Dr Nordström then placed his remarks into a human context, by examining the impact on institutions. He said: “Institutions

are human contracts. Marriage is a human contract, as is Christmas

– which could be moved to April with ease if everyone decided this would be advantageous. New human contracts are now applied and internationalism is irreversible. Political forces campaigning for an end to immigration are irrelevant, for this very reason. The Le Pen argument is as pointless as getting angry about gravity.”

He continued: “There are now 22 ways of creating a child. There will be 50 ways in fi ve years’ time. The new society is about choice and freedom, with individuals behaving like the multi-millionaires of old. There are now 247 varieties of Sony Walkman, 504 Business Schools in Europe and 17,500 different funds to chose from. The applicable economist’s term, ‘lower switching costs’, is having dramatic consequences for the provider-customer rela-tionship.”

Average a dismal conceptThis is a society regarding ‘average’ as a dismal concept: “We have a world in which average singers don’t work and no-one attempts to launch an average beer! This society is made of glass and its extreme transparency makes poli-ticians feel extremely uncomfortable. This is a crucial issue – ethical behaviour is now a good bet. It makes commercial sense, as the price of unethical behaviour is too high.”

Innovation is another critical factor. Dr Nordström said: “Success is not about competitiveness, but exactly the opposite. It is about creating and defending temporary monopolies. Innovation can create a temporary monopoly. Innovation, however, is ubiquitous and, therefore, is no longer suffi cient to guarantee success. Recent successes, emerging over the past ten years, came from nowhere. Absolut Vodka is an example. Dell didn’t exist

in Dr Nordström’s New Wave New WorldFUNKY BUSINESS


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15 years ago. How did Ryanair increase profits by 30 per cent while most other airlines struggled to survive? Each adopted one or both of the new success strategies – models (including the creative destruction and reconstruction of the organisation) and moods.”

The tribe of bankersConcerning mood, Dr Nordström used the ex-ample of an attractive female classical violinist, clad in an unusually revealing dress. A familiar activity is presented with a new mood, so creat-ing a highly effective temporary monopoly con-structed from aesthetics. “One day, of course, the new factors of ethics, functionality and aesthetics will no longer be entirely sufficient for success.”

According to Dr Nordström, the principles of current evolution are best demonstrated by the ‘tribe’ of investment bankers: “They look the same and think the same worldwide. The sole remaining factor available to create a temporary monopoly – in effect, a niche

– is the client relationship. Suddenly, the ‘soft’ stuff in business has become the ‘hard stuff ’. Success may simply boil down to the answer to a blunt question: Do you like that person?” In conclusion, Dr Nordström considered the

Dr Kjell A Nordström from Stockholm School of Economics talked about ‘Funky Business’ at The Swedish Club's Member's Day in Göteborg June 13th.

power of ‘attraction’. He said: “Companies now play the attraction game and with very good reason.”

Finishing his presentation, Dr Nordström added that, overall, he was optimistic about the future: “Never have so many people lived within democratic societies. Never have so many people had an opportunity to lead a de-cent style of life.” Yet, at the same time, surely some aspects of the new society are depressing

– not least the fact that so many people now live alone? Dr Nordström told The Swedish Club Letter: “I am optimistic for 350 days of the year. I have the freedom to build my life, cafeteria-style. All it takes is the intellectual and physical stamina to exploit this freedom.”

Curiosity cannot be boxedIs the ‘individualised society’ the inevitable outcome of technological innovation? “I don’t think so, but I am a determinist in the sense that technological innovation is linked to human curiosity. The point about technological development is that it cannot be confined. We cannot say that, as there are now 22 ways to make babies, there should not be a 23rd. Human curiosity cannot be boxed, as the boxes available to us have no lids.”

Switching costs may be lower, but what about the limited access to No. 1? Dr Nord-ström said “We are talking about very small dif-ferences – just one or two per cent on the key performance indicators. The obvious parallel is that of the athlete who, with supreme effort, highly favourable conditions and sheer luck, breaks through the barrier and shaves a frac-tion of a second from the existing record. What counts here is perception, or ‘attraction!’”

When people lose the context of family and country – the very fabric of the traditional sense of belonging – can they be happy? Dr Nordström said: “There is a sense of loss ac-companying all change. Again, perceptions are important. For our parents, success was meas-ured by material progress – a better job, more money, a bigger car and a bigger house. These ‘units of analysis’ were applied to the children… to us. For this reason, we didn’t become what we were meant to be but, rather, the people we were expected to be. Perhaps the new freedoms outweigh the price and will allow our children to become what they were meant to be. I have a three-year-old son and I certainly hope that this is so, although the jury is still out!”

in Dr Nordström’s New Wave New World

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The Mutual Cup Sweden vs Greece International - June 12th 2002

Back row: Mr Chris Goumas, Mr Christer Ekström (referee), Nick Adams, Magnus Axelsson, Mr Spilios Fassois, Peter Carlsson, Mr Matthew Warren, Gert Josefsson, Mr Costis Constantakopoulos, Per-Erik Jornert, Mr Stephanos Lekanidis, Tony Schröder and Tord Nilsson.Front row: Mr Keith Jones, Peter Elvingsson, Jens Huzell, Claes Åman, Henrik Lind and Clas Rydén.

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Greece International’s Mr Spilios Fassois displays the new Mutual Cup trophy - a bronze football boot.

Greek team win haltsSweden’s victory run


Football fever has captivated the attention of millions as the five continents battle to lift the golden World Cup trophy in Japan. Dedicated football fans need not wait another four years for the 2006 tournament to witness such international spirit. The Swedish Club holds its own football competition - the ‘Mutual Cup’- every year.

The traditional match took place on June 12th be-tween Sweden and Greece International - consisting of staff from the Club’s Göteborg office and a mix of international Club staff and members, respectively. This year’s game provided 40 minutes of tense, nail-biting entertainment, as Greece International suc-cessfully battled to bring an end to Sweden’s three consecutive Cup victories.

Unfortunately for Sweden, Greece International’s Tord Nilsson had obviously received some personal training sessions from Brazil’s Ronaldo, putting away an early goal in the first half and setting the tone for the match. There was no let up in Greece Interna-tional’s attacking pace in the second half, with two more goals by Stephanos Lekanidis and Keith Jones. Sweden failed to score, leading to a 3-0 result for the Greek side.

Reflecting on his team’s failed loss prevention tactics, Sweden’s Captain Jens Huzell said: “It was a tough game. The youth of our team was no match for our skilled opponents. Greece International played with accurate passing and plenty of stamina. Young legs are only an advantage when you are better or-ganised!”

The Club’s annual football event, held the day before the Annual General Meeting, is sponsored by: reinsurance brokers AON Jauch & Hübener, of Hamburg; brokers Marsh Marine & Energy, Göte-borg; London-based Miller Marine and JLT Risk Solutions; and Arion Enterprises of Piraeus.


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Annual General Meeting Dinner - June 13th Radisson SAS Scandinavia Hotel Göteborg

Informal Dinner on June 12th

at Resturant 'Reveljen' in Göteborg

Expectant! (l to r); Jan Rydenfelt, Mrs Helena Olsson and Chairman Mr Christer Olsson.

From left to right: Mrs Gunbritt Patriksson, Fritiof Granberg, Mrs Jill Southwood and Mr John Samartzis catching the last rays of the afternoon sun.

Three happy fellows (l to r) – Claes Lindh, Mr Paul Spencer and Mr Dieter Berg.

At the informal dinner (l to r) – Mr Joe Balls, Ms Anne-Marie Svensson and Mr Suay Umut.

Greeting the guests; Kathy and Frans Malmros with Mr Clarence and Mrs Birgitta Dybeck.

Between courses (l to r); Mr Olle Noord, Mr Christo Anagnostou, Peter Stålberg, Mrs Christina Noord, Mr Ralf and Mrs Angelika Gurzan.


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Sailing with ATHENE, Wilderness and The Swedish Club Grand Classic - June 14th 2002

One of the Friday’s events was sailing with the old schoona ATHENE. Here, the crew is trimming the sails in free wind off the Swedish west coast.

The 2002 ’crew’ after a sunny day on board the ATHENE. Filled with joy, sprayed with saltwater and a fresh tan. A delicious lunch completed the day.

The traditional golf event, The Swedish Club Grand Classic, was played under sunny but windy conditions. Above is Mr Matthew Warren, LarsLandelius and Mr Nils G. Nordh posing for the camera at the tee of hole No. 6.

Happy winners of the team competition; Björn Josefson, Mr Björn Dahlström and Mr Andrew Challacombe. Overall winner was Fredrik Olsson.

Mrs Alice Wong trying archery in the Swedish wilderness.

Playing the 'Kubb' – The yellow team consisting (l to r) of Mr Anton Ahlebaek, Mrs Metteke de Boer, Gert Josefsson, Mr Don Messick and Mrs Kirsti Ahlebaek.

A busy broker – Mr Peter Ahlås on the pond.

PHOTOS: THE SWEDISH CLUB


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PUBLIC HOLIDAYS

CLUB DIARY

when The Swedish Club offices are closed

HEAD OFFICE SWEDEN November 1st All Saints' DayEmergency tel +46 31 151 328 GREECE August 15th Assumption DayEmergency tel October 28th National Day+30 944 530 856 HONG KONG July 1st Special Administrative Emergency tel Region Establishment Day +852 2598 6464 September 21st Mid-Autumn Festival October 1st China National Day October 14th Cheung Yeung Festival

JAPAN September 16th The day following24 hour tel Respect for the Elderly Day+81 3 5442 5466 September 23rd The day following Autumnal Equinox Day October 14th Health and Sports Day November 4th The day following Culture Day UNITED KINGDOM August 26th Late Summer Bank Holiday Emergency tel +44 20 7397 4999

October 1st 2002Club Evening for members and associates in Göteborg

October 3rd 2002Club Evening for members and associates in Stockholm

November 1st 2002Board Meeting in Kuala Lumpur

June 12th 2003Annual General Meeting

STAFF NEWS

Anders Hultman joined the Club’s Loss Prevention & Technical Department in June 2002, as Loss Preven-tion Support Engineer. This is a new position that has been established to increase the Club’s achievements in its commitment to reduce losses. Anders has previously studied Engineering and Naval Architecture at Chalmers University of Technology, Sweden.

Alf Persson has been appointed Manager of Personnel and will start his employment with the Club in August. Alf has a B. Sc in Social Sciences from Göteborg University. He has also taken courses in Business Administration, Psychology and Sociology from Göteborg University. Alf worked as Personnel Manager between 1983-1989 and Deputy Managing Director between 1989-1997 at Svenska Handelsbanken.

Bengt Israelsson retired from the Swedish Club in June. He was employed in October 1983 and previously worked as an auditor for the Club. Bengt held the position of Manager of the Finance Department and his skill in bookkeeping matters together with his carefulness has been to invaluable use for the Club. We wish Bengt all the best in the future and a happy retirement.

From July 1st 2002, Peter Stålberg (right) will take over the position as Director of the Loss Prevention & Technical Department and also be part of the Club’s management team.

Clas Brantmark (left) says: “Time has come for me to hand over the leadership of the Loss Prevention & Technical Department to the next generation. This process is in line with the Club’s policy of management, which I support wholeheartedly. In addition to being a very competent professional, Peter has shown strong commitment and dedication to the Club. I am fully convinced that Peter will be a good leader, and I wish him all success in the future.

I will continue to work in the department with technical support in Göteborg, and look forward to serving the Club also in the future.”

PHOTOS: LENA BRYNGELSSON ©


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The Swedish Club Offices

HEAD OFFICE SWEDEN

Gullbergs Strandgata 6, P.O. Box 171SE-401 22 Göteborg, SwedenTel +46 31 638 400, Fax +46 31 156 711E-mail [email protected] tel +46 31 151 328

GREECE

5-7, Agiou NicolaouGR-185 37 Piraeus, GreeceTel +30 10 452 2397, Fax +30 10 452 5957E-mail [email protected] tel +30 944 530 856

HONG KONG

Suite 6306, Central Plaza18 Harbour Road, Wanchai, Hong KongTel +852 2598 6238, Fax +852 2845 9203E-mail [email protected] tel +852 2598 6464

JAPAN

Suzuyo Hamamatsucho Building 5F.2-1-16 Kaigan, Minato-Ku, Tokyo 105-0022, JapanTel +81 3 5442 5466 (24 hour tel), Fax +81 3 5442 5922E-mail [email protected]

UNITED KINGDOM

100 Fenchurch StreetLondon EC3M 5JD, United KingdomTel +44 20 7397 4950, Fax +44 20 7397 4951E-mail [email protected] tel +44 20 7397 4999

Website www.swedishclub.com

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