update - wikborg rein · clare calnan cover photo istockphoto layout & design lise h. rØed...

OW Bunkers page 4

Petrobras – the wounded giant page 10

Markets decline -disputes do not page 28

June 2016 Shipping Offshore

Update

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Dear friends and readers,

It is with pleasure that we introduce the latest edition of Wikborg Rein’s Shipping Offshore Update. Our articles address current issues being faced in what continue to be challenging shipping and offshore markets. The world economy remains unstable with continued pressure on economic growth. The US and European economies have shown a gradual but steady improvement whilst the growth in emerging markets, and especially China, has slowed. With exception of the tanker market, most global shipping markets remain under stress with many markets close to rock bottom. Newbuild contracting in 2015 was sig-nificantly down compared to 2014 and this was the lowest since 2009. Newbuild prices have also continued to fall, putting further pressure on shipyards. The Korean shipyards are facing particularly tough times with STX Offshore and Engineering seeking the protection of the Korean Courts through rehabilitation. 2016 is likely to see further reductions in shipyard capacity both in China and Korea. At Wikborg Rein we also endeavour to follow the changing shifts in the world economy and continue to diversify and extend the services we provide. We are very happy to announce that our London office has been strengthened with Nick Shepherd and Michael Stewart joining as partners, and Mary Lindsay as senior lawyer. Nick is a heavyweight in the international shipping market and the preferred English lawyer for shipowners such as George Economou and Angeliki Frangou. Michael special-ises in complex, high-value disputes arising out of major energy and infrastructure projects in emerging markets, and has developed particular expertise in relation to FIDIC contracts. This Update is part of the services we offer to clients to enable you to stay in touch with changes and developments in Norwegian and English law. In this edition we look at how the OW Bunkers story finally ended; the status of Iranian Sanctions six months after they were lifted and an update on the dramatic developments in Brazil with Petrobras. We also look at some new developments and in particular the new Bimco Superman contract and changes in the London insurance market with the entry into force of changes to the English Marine Insurance Act. The last few months have also been a busy time for the English Courts and we have included articles comment-ing on recent judgments concerning quantification of damages, consequential losses in offshore contracts and penalty clauses. We hope that you will find these articles interesting and informative. We welcome any feedback and would be particularly interested in receiving requests for topics that you would like us to address in future Updates.

Gaute GjelstenHead of Wikborg Rein’s Shipping Offshore Group

Publisher WIKBORG REIN JUNE 2016Chief editor ODDBJØRN SLINNINGEditors HERMAN STEEN, ROBERT JOINER, ROBERT JARDINE-BROWN, CLARE CALNANCover photo ISTOCKPHOTOLayout & design LISE H. RØEDPrint ROLF OTTESEN / 2600 COPIES

THE NEW FLAMENCO

PAGE 20

From a shipowner’s perspective, the process of ensuring that a vessel is built on time, on budget and in accordance with the technical specifications can be extremely challenging. • PAGE 16

SHIPPING OFFSHORE UPDATE

Update June 2016 Shipping Offshore

This Update is produced by Wikborg Rein. It provides a summary of the legal issues, but is not intended to give specific legal advice. The situations described may not apply to your circumstances. If you require legal advice or have questions or comments, please contact your usual contact person at Wikborg Rein or any of the contact persons mentioned herein. The information in this Update may not be reproduced without the written permission of Wikborg Rein.

4 OW Bunkers – the final say

6 Some relief for offshore contractors

8 Iranian sanctions – six month review

10 Petrobras – the wounded giant

12 Norway-Brazil – maritime transport co-operation

13 All change in the London insurance market

14 Superman – a new Bimco contract is born

16 NYPE 2015 – a major revision

20 A penalty shoot out

22 The New Flamenco

24 Laying up the lay up agreement

26 Bareboat charters – charterer’s maintenance and redelivery obligations

28 Markets decline but disputes do not

30 International arbitration rules – differences matter

32 Personnel news

33 Wikborg Rein’s Maritime and Offshore Emergency Response Team

34 Wikborg Rein’s Shipping Offshore Group

3

2UPDATE • June 2016 Shipping Offshore

EDITORIAL

2

CONTENT

OW BUNKERS – THE FINAL SAY

CONTACTS /

Nick [email protected]

Chris [email protected]

On 11 May 2016, the Supreme Court handed down judgment in the long running OW Bunkers case. The decision is unlikely to be welcomed by owners who now face the prospect of having to pay twice for bunkers: once to their immediate supplier, who, as in

the OW Bunkers case may be insolvent, and again to the physical supplier of the bunkers.

T he party appealing in the case were the owners and managers of the vessel Res Cogitans who contracted with OW Bunker Malta Ltd (“OWBM”) for the provi-

sion of bunkers to the vessel. The contract incorporated the OW standard terms, including the provision that, until payment, “the Buyer agreed that it is in possession of the Bunkers solely as Bailee for the Seller, and shall not be entitled to use the Bunkers other than for the propulsion of the Vessel, nor mix, blend, sell, encumber, pledge, alienate, or surrender the Bunkers to any third party or other Vessel.” OWBM obtained the bunkers under a contract with its par-ent company, OW Bunker & Trading A/S (“OWBAS”), another member of the OW Bunker Group, which at the time was the world’s largest bunker supplier. OWBAS procured the bun-

kers from a physical supplier, Rosneft. OWBAS’s contract with Rosneft was on Rosneft’s standard terms, which provided for retention of title by Rosneft until payment, which was to be made 30 days after delivery. The owners were supplied with bunkers under this contrac-tual scheme on 4 November 2014. Following the supply of the bunkers (and after it was likely that some or all of the bun-kers had been consumed) but before payment had been made, OWBAS applied to the court in Aalborg for restructuring. It was at this point that the spectre of the owners having to pay twice for the bunkers first reared its head. The insolvency proceedings triggered default provisions under OWBAS’ financ-ing agreement and ING Bank NV (“ING”), became the assignee of any claim which OWBM had against owners. ING therefore asserted a right to the debt that the owners owed to OWBM. Waiting in the wings was the physical supplier, Rosneft, who asserted that it remained the owner of the bunkers (pointing to its retention of title clause) and that it was entitled to payment from the owners.

THE PROCEEDINGS PRIOR TO THE SUPREME COURTThe owners commenced arbitration proceedings claiming a declaration that they had no liability to pay OWBM and/or ING for the bunkers. The arbitrators held that OWBM/ING were entitled to payment.

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BUNKER SUPPLY

The tribunal’s reasoning was that the contract between OWBM and the owners was not one to which the Sale of Goods Act 1979 (“SGA”) applied. If the contract was one of sale, then, accord-ing to authority which the arbitrators considered binding (F G Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2014] 1 WLR 2365, often referred to as the “Caterpillar” case), s. 49 pre-cluded recovery of the price of goods in circumstances where the property in goods had not passed to the buyer. In other words, if the contract was subject to the SGA, the Caterpillar case meant that OWBM was barred by s. 49 from any claim to the price. As the SGA did not apply the arbitrators found that the contract price fell due on expiry of the 60 day credit period and could be recovered as a debt claim against the owners irre-spective of the question as to who owned the bunkers. The owners appealed to the High Court. Males J upheld the arbitrators’ decision with particular reference to paragraph 51 of the award, which stated: “Stripped of all unnecessary detail, the deal between the parties was that OWBM would ensure delivery of the bunkers, the use of which would be immediately available to the owners, who would pay for them according to OWBM’s invoice. Such an agreement does quite obviously resemble in some respects a contract of sale, but its terms and their performance do not to any extent rely on property or title or their transfer.” The owners then appealed to the Court of Appeal. Again, the owners argued that the contract between themselves and OWBM was a contract for the sale of goods, which is defined in s.2 SGA as follows: “A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price.” The main difficulty with owners’ argument lay in the words “transfer of property”. Given the 60 day credit period, it was probable that the bunkers would have been consumed before the price fell due. Since property cannot be passed in a non-existent thing, the contractual arrangements did not fit with the definition of a contract of sale in the SGA. The decision of Males J was upheld. Finally, the owners appealed to the Supreme Court.

THE PROCEEDINGS IN THE SUPREME COURTThere were three questions for the Supreme Court. First, was the contract between the owners and OWBM a contract of sale within the meaning of the SGA? Second, if not, was it subject to any implied term that OWBM would perform or had performed its obligations to its supplier, in particular by paying for the bunkers timeously? And third, should the Caterpillar case be overruled? On the first question, the owners argued that the contract between themselves and OWBM was a conditional contract for the sale of goods. The contract of sale was conditional upon the bunkers not having been consumed on the expiry of the credit period, with property in those bunkers passing on payment. Insofar as any bunkers had been consumed, this was permitted

under the contract and the property in such consumed bunkers was deemed to have been transferred. The Supreme Court rejected this argument and held that the contract was “in substance an agreement with two aspects: first, to permit consumption prior to any payment… without any property ever passing in the bunkers consumed; and, second, but only if and so far as bunkers remained unconsumed, to transfer the property

in the bunkers so remaining to the owners in return for the price.” The court went on to note that “in its essential nature” the con-tract “offered a feature quite different from a contract of sale of goods - the liberty to consume all or any part of the bunkers sup-plied without acquiring property in them or having paid for them”. Accordingly, the Supreme Court held that the contract was not one of sale within SGA with the result that the owners had no defence to the claim for the price. On the second question, the Supreme Court held that the contract between OWBM was not subject to any implied term regarding performance by OWBM or OWBAS of any sup-ply contract higher up the chain, though it was subject to an implied promise by OWBM that OWBM was entitled to supply them to the owners on terms permitting their use on the vessel prior to payment. The Supreme Court’s answer to the third question was that the Caterpillar case was wrongly decided and that s. 49 SGA is not a complete code for when a seller might sue to recover the contract price of the goods. If the contract between the owners and OWBM had been one of sale, the Court concluded that it would have permitted OWBM to found an action for the price.

COMMENTThe legal basis for the Supreme Court’s decision was that the contract between the owners and OWBM for the supply of bun-kers was not a contract for sale of goods with the result that OWBM (and ING) were entitled to sue for the price. While this legal reasoning may be considered sound, there can be little doubt that it has led to a commercially surprising result and the very real prospect of owners around the world having to pay twice for the same bunkers. •

The Supreme Court held that the contract was not one of sale within the Sale of Goods Act.

SOME RELIEF FOR OFFSHORE

CONTRACTORS There was some relief for offshore contractors when the Court of Appeal recently

handed down its judgment on the construction of a consequential loss exclusion clause in a drilling contract on an amended LOGIC form between Transocean Drilling UK

Limited and Providence Resources Plc.¹

T he original dispute concerned the allocation of financial risk for the delays that occurred in

the drilling of an appraisal well by the “GSF Artic III” rig caused by problems with subsea well control equipment. Transocean claimed under the contract for the applicable day rate remunera-tion notwithstanding that during the period in question the rig was not able to carry out any drilling activities due to the breakdown of the well control equipment. For their part Providence denied liability for any day rate remu-neration and also sought to recover their wasted “spread costs”, that is, the cost of the equipment and third party contrac-

tor costs which they incurred during the period of downtime. At first instance Popplewell J held that Transocean had breached both its warranty as to the condition of the rig, which was absolute, and its maintenance obligation which amounted to a continuing warranty to maintain the condition of the rig. The judge further held that Transocean were not entitled to be paid for the periods of delay where these arose as a consequence of their breach of contract. The judge also found that Providence was entitled to recover spread costs for the period of delay despite the mutual exclusion of claims for consequential loss in the contract.

APPEAL Whilst Transocean accepted the judge’s decision regarding their entitlement to day rate remuneration, not unexpectedly, they appealed the decision on the inter-pretation of the consequential loss clause. The Court of Appeal reversed the decision below and held that Providence’s wasted spread costs fell within the terms of the mutual exclusion for consequential losses and that any liability that Transocean might have for these losses was excluded. The only judgment in the Court of Appeal was delivered by Moore-Bick LJ with whom the two other judges agreed.

His judgment is important since it once again revisited the English Court’s approach to the construction of exclu-sion clauses in commercial contracts. His starting point was that the mutual exclu-sion clause in respect of consequential losses was part of a clear scheme under the contract for apportioning losses between the parties on a knock for knock basis regardless of cause or fault. It had been agreed that both parties would gen-erally be responsible for their own losses and they would arrange their insurances on this basis. The Court also took the view that the consequential loss clause in the contract was not a typical situation where exclusion clauses are often considered. The clause was to the benefit of both parties who were of equal bargaining power and who had entered into mutual undertakings to accept the risk of any consequential losses flow-ing from each other’s breaches of contract. As such this was not the type of exclusion clause that the courts should feel com-pelled to construe restrictively in order to avoid the risk of commercial oppression. In construing the clause the starting point was to consider the language chosen by the parties to express their intentions. So the main question in the case was whether the language of the exclusion

CONTACTS /

Ben [email protected]

Clare [email protected]

Rob [email protected]

was apt to encompass the spread costs. The critical words were: “loss of use (includ-ing, without limitation, loss of use or the cost of use of property, equipment, materials and services including without limitation, those provided by contractors or subcontractors of every tier or by third parties). . . ”. The Court was of the view that the words “.. the cost of use of property, equip-ment, materials and services ..” were apt to cover spread costs. Moreover, the purpose of these words “was clearly to catch conse-quential losses of all kinds: one obvious exam-ple of consequential loss is expenditure on goods or services from which no benefit can be obtained, as in this case.” The trial judge’s interpretation of the clause was held not to be correct and, in particular, it was held that he was wrong to treat the words in brackets in the clause as being limited to the general term “loss of use” which appeared immediately before the bracket. The Court of Appeal’s view was that the words in brackets were clearly intended to expand the meaning of “loss of use”, particularly where the parties used the expression “without limitation”. Further the Court held that the contra proferentem principle (where wording is interpreted against the party who provided it) should only apply where the wording is ambiguous and favours one party. The

wording in this case favoured both parties, possessing equal bargaining power, and was clear. Thus the actual words used by the parties can override any presumption that a party intends to give up their rights. In this specific case the Court determined that this did not have the effect of depriving Providence of any effective remedy arising from Transocean’s breach but rather it was a specific agreement reached between the parties that dealt with a specific type of loss, namely consequential losses.

COMMENT The Court of Appeal’s judgment is an important restatement of the rules of con-struction relating to contracts in offshore sector where risk is commonly allocated on a knock for knock basis with a mutual exclusion for consequential losses. The decision is also important because the Court of Appeal emphasised once again the freedom of parties to contract on their own terms without unnecessary interference from the courts, particularly where they are sophisticated commercial entities with equal bargaining power. As Mr Justice Moore-Bick said “the Court’s task is not to re-shape the contract but to ascertain the parties’ intention, giving the words they have used their ordinary and nat-ural meaning.”

The judgment should provide welcome relief for offshore drilling contractors. It makes clear that the English Courts will give effect to clearly worded clauses excluding liability for particularly types of losses. Yet, as is made clear through-out the judgment, the key issue was the precise wording used by the parties. The clause here expanded upon the term “loss of use” so that it clearly included spread costs. It is not entirely clear whether the words “loss of use” would without further definition cover spread costs. Although such costs may be covered within a clear knock for knock and indemnity regime the lesson of this case may be not to take the risk and to make the position clear. Thus parties negotiating offshore drill-ing contracts would be well advised to include a specific reference to spread costs as coming within category of any “loss of use” claims in any clause excluding liabil-ity for consequential loss. It is yet to be seen whether this case will be taken further to the Supreme Court. •

1 Transocean Drilling (UK) Ltd –v- Providence Re-sources PLC (2016) EWCA Civ 372


OFFSHORE CONTRACTS

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IRANIAN SANCTIONS – a six month review

On 2 June 2016 the governments of the US, EU, UK, France and Germany issued a joint statement confirming that there are now extensive economic opportunities for companies and financial institutions to do business in Iran. The EU is actively

exploring areas of cooperation with Iran, including the use of export credits to facilitate trade, project financing and investment.

CONTACTS /

Morten Valen [email protected]

Øyvind [email protected]

Øyvind Grø[email protected]

T he message is clear, trade with Iran is both permitted and encouraged but it comes with a warning. For those investing compliance with applicable laws, includ-

ing those relating to sanctions is essential. Further for Iran to achieve its own economic ambitions it is being encouraged to create an economic environment that is conducive to interna-tional investment and in particular to comply with recommen-dations relating to money laundering and terrorist financing.

THE MOVE FORWARDFollowing confirmation from the International Atomic Energy Agency that Iran had complied with its part of the Joint Comprehensive Plan of Action (JCPOA) a range of sanctions originally implemented in response to Iran’s nuclear program

were lifted on 16 January 2016. Although this opened up the Iranian market some sanctions remain in force and that has made companies understandably cautious about what they can do and what remains prohibited. The impression given by the recent inter-government joint statement is that misconceptions and lack of information remains a barrier to companies exploring business opportunities in Iran. This is perhaps not surprising given that doing business with countries affected by sanctions involves being in waters that need to be navigated with care. Below we provide a brief summary of the current position regarding Iranian sanctions and activities it is now possible for companies to engage in.

CURRENT POSITIONThe starting point is that business with Iran and Iranian nationals is permitted unless specifically forbidden. Before sanctions were lifted on 16 January 2016, the sanctions regime implemented by the UN, EU and US was extensive which made any trade with Iran difficult. With sanctions lifted EU nationals and companies may once again engage in the following trades/activities with Iran¹. • Financial, banking and insurance activities• Oil, gas and petrochemical activities• Shipping, shipbuilding and transport• Gold, other precious metals, banknotes and coinage• Certain metals (remains subject to authorisation regime)• Software (some software remains subject to authorisation

regime if the use is for military/nuclear application)

In addition many persons or entities have been de-listed although some remain on the sanctions list. It is therefore important to consult the updated lists when considering a business relationship with Iranian nationals or companies to ensure that they are a permitted person. The sanctions that were implemented for reasons other than to prevent the development of Iran’s nuclear programme remain in force. In particular there remains in place:

• an arms embargo• sanctions relating to missile technology • prohibitions against the transfer of nuclear related materials

and activities• restrictions on relationships with certain listed individuals

and entities• an authorisation regime covering certain software and metals

Depending on the type of business being considered it may be difficult to determine whether a business opportunity is now permitted or whether it is still subject to the restrictions that remain in force. The classic example of this being dual use technology and equipment which could have both civilian and military applications.

REASONS FOR CAUTIONThere are a number of reasons as to why companies may approach opportunities in Iran with some caution. The Iranian banking system has been badly affected by sanctions and the political climate as a result of recent elections in Iran has cre-ated some uncertainty. What concerns many thinking about doing business in Iran is the risk of “snap-back”, that is that the previous sanctions are snapped back into place. This understandably creates uncer-tainty as to whether long term investment is viable. Although the JCPOA specifically states that snap back will not have retro-active effect, in practice difficulties may be faced where subcon-tracts are not placed prior to snap back or financiers insist that further involvement in Iran must be discontinued. All contracts entered into with Iranian counterparties, which may fall under sanctions regime were they to be re-imposed, should contain clauses that excuse non-performance resulting from sanctions. Force majeure provisions in these circumstances are unlikely to provide adequate protection. The US sanctions regime also deserves a brief mention as the situation there differs vastly from the situation in the EU. The United States continues to prohibit any US person doing business in Iran, with some very specific exceptions (most notably the sale of passenger aircraft). However, the JCPOA contains a carve out which allows for non-US subsidiaries of US companies to do business in Iran². Their involvement is contingent on ensuring that no US nationals are involved in

such transactions even though conducted on behalf of the non-US subsidiary. It should also be noted that the retention of primary sanc-tions by the US means that it remains prohibited also for foreign financial institutions to clear USD denominated transactions through US financial institutions. Payment under contracts entered into with Iran or Iranian companies should therefore be made in currencies other than USD. Finally corruption remains a challenge for anyone doing business in Iran given current legislation introduced by many countries, including Norway, EU, UK and US, concerning brib-ery and corruption. Any company doing business with Iran must ensure that it has in place a robust and effective policy to ensuring full compliance with any bribery and corruption legislation and the means to extract itself from any contract where there is a risk of non-compliance. •

1 For Norway, see statute on changes in the statute on sanctions and measures against Iran, effective 16 January 2016. For the UN, see UN Security Council resolu-tion 2231 and for EU, see Council Decision (CFSP) 2015/1863 with related legislation ² The US Department of the Treasury has in compliance with this issued a general license for such non-US subsidiaries. See: Iranian Transactions and Sanctions Regu-lations 31 C.F.R. Part 560 GENERAL LICENSE H.


IRANIAN SANCTIONS

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On 14 July 2015 the P5+1, the EU and Iran reached an agreement (JCPOA) where Iran committed itself to reduce its nuclear enrich-ment capabilities in exchange for sanctions relief. On 16 January 2016, the IAEA confirmed that Iran had complied with its obliga-tions, which triggered the immediate lifting of the relevant sanc-tions. In Norway the sanctions relief is put into force by the statute on changes in the statute on sanctions and measures against Iran (16 January 2016).

Sanctions lifted:• Financial, banking and insurance activities• Oil, gas and petrochemical activities• Shipping, shipbuilding and transport• Gold, other precious metals, banknotes and coinage• Certain metals (remains subject to authorisation regime)• Software (some software remains subject to authorization regime

if military/nuclear application)

FACTS /

Over a period of the last three years Petrobras, the Brazilian state-run oil company has reached both the unprecedented heights of success and some terrible blows. Corruption scandals, government interference in management and low oil prices have come together to form the perfect

storm that has severely wounded the oil giant as well as the supply chain which both supports and depends on it.

O slo, June 2011 - picture a crowded room at the Nor-Shipping Conference with

people listening attentively to Mr. Sergio Gabrielli, who at the time was CEO of Petrobras. Not long before, in 2008, Petrobras had announced to the world the discovery of major reserves of oil and gas offshore Brazil, in ultra-deep waters and underneath a thick layer of salt; the so called “pre-salt”. The discov-eries were so large that it was expected that it would put Brazil in the group of oil exporting countries.

CONTACT /

Daniela Ribeiro DavilaPartner, Vieira [email protected]

WHAT WENT WRONG?Undoubtedly the most dramatic devel-opment came in 2014 when the results of a huge investigation campaign called “Operation Carwash”, which had been carried out secretly by the Federal Prosecution Office, became public and revealed a major bribery and political kickback scheme involving Petrobras’ executive directors and high representa-tives of the party in power – the Workers’ Party (Partido dos Trabalhadores, “PT”). Private shareholders, contractors and the Brazilian public in general have had to face the fact that Petrobras had been a part of the Government plan to win elec-tions and perpetuate power. The projects contaminated by corrup-tion were numerous and the sums were astronomic. Pre-salt exploration, new refineries, petrochemical complexes – everything was involved – and in all of these business areas Petrobras entered into multimillion dollar contracts with construction companies, offshore con-tractors and other service providers.Quite apart from this in order to imple-ment a very ambitious investment plan, Petrobras needed substantial finance with the consequence that it increased its debt exposure considerably. In addi-tion, as the controlling shareholder, the Government consistently used Petrobras to generate positive numbers and con-trol inflation – Petrobras was for instance obliged to sell gasoline below market prices for substantial periods of time. To complete the perfect storm, from mid-2014 oil prices started to fall all the way to below USD 30 per barrel. This hit Petrobras at the worst possible moment and its value decreased dra-matically. Petrobras’ troubles have had a direct knock-on effect on the suppli-ers: Contracts have been terminated and orders were cancelled. Penalties started to be applied and the financing for the Sete Brasil Project was never closed. The Petrobras crisis crossed Brazilian borders when a US judge ordered

In order to explore the pre-salt areas, it was recognized that Petrobras needed to contract a massive number of rigs, plat-forms, support vessels, specialized offshore workers and more. And up there at the centre stage in 2011 was Mr. Gabrielli on a road-show inviting the Norwegian companies to come to Brazil. The demand was unprecedented in the offshore market. The Norwegian offshore community took good note of this. Many of the players who had not yet made the move, arrived in Brazil shortly afterwards. Another symbol of this era was the Sete Brasil Project that involved the construction of 28 state of the art drilling ships at an estimated cost of around USD 1 billion each, intended to be chartered to Petrobras. The fact was that demand was higher than the current worldwide offer. The international offshore market was excited and eager to learn how to comply with local content rules and enter the Brazilian market. The oil price had been stable for some time at comfortable levels and it seemed that the future had finally arrived to the “country of the future”. But things changed and now only a few years later the pic-ture looks dramatically different.

Petrobras to face class-action litigation by investors seeking to recoup billions of dollars in losses stemming from the Carwash scandal. In fact, the Carwash operation showed that the controlling shareholder had been using the company to serve its own inter-ests. A credibility crisis began to emerge. In view of the cha-otic scenario, a new administration took office in Petrobras in

February 2015 and accounting was revised to allow signature by external auditors. The impeachment of Brazil’s president may improve the for-tunes of Petrobras with the appointment of Mr. Pedro Parente as the new CEO, very well regarded by the market. However, few will relish the challenge given that Petrobras is the most indebted oil company in the world and the continuing low oil prices make that debt burden increasingly difficult to manage. The company is also seeking to sell off assets but appears to be currently falling short of the USD 15.1 billion in asset sales that it is targeting in 2015 and 2016. In the meantime Petrobras’ technical teams continue to work hard in the hope that better days will come. Petrobras is focusing on cutting costs and increasing production. New FPSOs, such as the “Cidade de Maricá”, are starting operations. A new tender for the Libra field early this year is also a part of the positive agenda. In the short and medium term, some opportunities may be created for other oil companies to step up and acquire Petrobras’ assets given that it is likely that the law that established the sole operatorship by Petrobras in the pre-salt areas will be changed to allow other oil companies to operate. Also some dominant players in the offshore sector involved in the Carwash scandal will have to shrink and sell assets, generating opportunities for other market players as well. In the longer run, provided that Petrobras’ new management is capable of restructuring the company, focusing on upstream high value assets, and if the Government adopts a healthier control of the company, Petrobras can rise again. More efficient than before and hopefully in a less corrupt environment and within a more equal and balanced market. Brazil is and always will be a country where only long term bets pay off. Resilience and long term commitment may lead to a good position when the market picks up again. •

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PETROBRAS – THE WOUNDED GIANT

PETROBRAS – the wounded giant seeks

a way forwardPetrobras can rise again.

NORWAY – BRAZIL: maritime transport

cooperation

The bilateral cooperation between Norway and Brazil is extensive within several industry sectors as well as in connection with matters relating to the environment and education. New areas of cooperation are constantly being developed and the most recent step forward is the signing of a memorandum of understanding on maritime transport.

T his memorandum of understanding was signed by Norway and Brazil on 16 November 2015, and its pur-pose is to enhance the cooperation between the two

countries within the area of maritime transport. The memo-randum is in line with the Norwegian Government’s long term cooperation strategy towards Brazil, where the aim is to strengthen the partnership in those areas where each country has strengths and expertise to offer the other, and where coop-eration will result in mutual enrichment and economic growth and development in both countries. The memorandum of understanding aims at increasing both public and private sector cooperation and awareness and ultimately create mutual economic opportunities and promote investments. The two countries will establish direct cooperation between their respective administrative agencies in order to increase awareness of areas of mutual interest and

to identify ways to best promote the cooperation within the main areas; international maritime transport; port services; offshore navigation support services; chartering of vessels, and other services related to the maritime transport sector. A coordinating committee with representatives from both countries is to be established and regular meetings will be

arranged in order to prioritize upcoming activities, assess pro-gress and measure results achieved. On the Brazilian side, the coordinating committee will be led by the Ministry of External Relations with participation of the Ministry of Transport, the Brazilian Navy, and the National Waterway Transportation Agency. On the Norwegian side the coordinating committee will be led representatives from the Norwegian Ministry of Trade, Industry and Fisheries. •

CONTACT /

Oddbjørn [email protected]

The purpose is to increase both public and private sector cooperation and awareness

to ultimately create mutual economic opportunities and promote investments.

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Herman [email protected]


TRANSPORT COOPERATION

T he Insurance Act 2015 amends certain key sections of the Marine Insurance Act 1906 (MIA). Its

aim is to create a fairer balance between the insured and insurer. The main changes under the Act include:

• A duty of fair presentation in place of the absolute obligation to disclose all material information.

• Depriving insurers of the right to avoid the policy on the grounds of a breach of warranty unrelated to the loss.

• The abolition of ‘basis of contract’ clauses.

• New remedies to insurers following a breach of the new duty of disclo-sure.

• Clarification of remedies for insur-ers in the event of fraudulent claims.

• The maintenance of the duty of good faith, but with the insurer no longer being able to avoid the con-tract solely on this ground.

DUTY OF FAIR PRESENTATIONThe MIA imposed a heavy duty of dis-closure on insureds requiring them to disclose everything that they knew, or ought to have known, which would influence an insurer when accepting or rating the risk. The Act introduces a new duty based on a fair presenta-tion of the risk aimed at encouraging active engagement by insurers, as well as clarifying matters which ought to be known by the insurer. Under the Act, insureds are required to disclose every matter which they know - or ought to know - that would influence the judgement of an insurer

or sufficient information to put insur-ers on notice that they need to make further enquiries about potentially material circumstances. Insureds will be considered to know matters that can be revealed by a reasonable search for information. Insureds will also be deemed to have the knowledge of anyone who is a part of the organisation’s senior manage-ment and those responsible for insur-ance. Insurers will be considered to know matters known to their employees or agents; information which is avail-able to them within their organisa-tion’s records; and matters of common knowledge or which an insurer offering insurance in a particular field would be expected to know. Brokers will no longer be subject to disclosure duties. The disclosure itself must be made in a reasonably clear and accessible manner, and representations must be made in good faith. This is to discour-age ‘data-dumping’ or bombarding

All change in the LONDON INSURANCE

MARKET

The insurance landscape in England is about to change fundamentally with the biggest shake-up for over a century. On 12 August 2016 the Insurance Act 2015 will come into force and will amend the Marine Insurance Act 1906 in areas such as warranties and disclosure. Furthermore, the Enterprise Act 2016 will come into force on 4 May 2017,

and will, among other things, impose an obligation on insurers to pay claims promptly.

CONTACTS /

Camilla [email protected]

Clare [email protected]

insurers with large amounts of infor-mation with no effort to identify its rel-evance.

WARRANTIES AND BASIS OF CONTRACT CLAUSESA ‘basis of contract’ clause has the effect of converting representations made by the insured into contractual warran-ties. Such clauses are now prohibited. Further, under the Act, a breach of war-ranty now results in insurance cover being suspended for the duration of the breach and reinstated once the breach has been remedied. An insurer will not be able to rely on non-compliance with a warranty if it does not increase the risk of loss. This is a welcome change in the law and it will now no longer be possi-ble for an insurer to reject a claim on the grounds that there is a breach of war-ranty unrelated to the type of loss that has been suffered.

REMEDIES FOR INSURERSNon-disclosureUnder the MIA, an insurer was able to deny liability in the event of a material non-disclosure. The Act has now intro-duced a range of proportionate remedies to replace this rather draconian right. The remedies available to insurers are now tailored to the nature of the breach and what insurers would have done had they been aware of the information on placing. Thus, for a deliberate or reckless breach, the insurer can avoid the con-tract and retain the premium. The contract can also be avoided for non-deliberate or reckless breaches if the insurer would not have entered into the contract, but the premium must be repaid. If the insurer would have entered into the contract on different terms, the insurer will be able to treat the contract as if those terms applied. Where the rate would have been increased, there will be a proportionate reduction in cover. In order to exercise any remedy for non-disclosure, insurers will need to

prove how they would have acted dif-ferently if the breach had not occurred. Disclosure of underwriting guides and other relevant documents may be required to support the insurer’s posi-tion, as well as evidence of the factors considered in taking on the risk.

Fraudulent claimsIn the event of fraud, insurers will be entitled to not pay the claim, recover any sums already paid to the insured, treat the policy as terminated with effect from the fraudulent act and retain all premiums paid. Previous claims paid are not affected. Where there is group insurance policy, then these provisions only apply to the insured responsible for the fraudulent acts.

DUTY OF UTMOST GOOD FAITHInsurers will no longer be able to avoid the insurance contract solely on the grounds of a breach of the duty of utmost good faith. However duties of utmost good faith will remain at the heart of the insurance and the insured’s obligations will be construed in a way that favours compliance with this duty.

CONTRACTING OUTThe parties can agree contracts on less favourable terms than those in the Act but such provisions must be clear and unambiguous and sufficient steps must be taken to draw them to the attention of the insured before the contract is con-cluded.

PRACTICAL TIPSBoth insurers and insureds will have to respond to the new provisions in the Act in a practical manner. Insureds should review their processes for placing insur-ance to ensure that the risk is presented fairly and that all material matters within their knowledge are disclosed. Insureds may wish to agree in advance with insurers what constitutes a reasonable search. It would be sensi-ble to keep internal records of the names

and roles of individuals responsible for arranging insurance cover, involve senior management in disclosure, and establish demonstrable search proce-dures. Where appropriate, insurers will

need to look closely at their standard terms to ensure that they too comply with the transparency requirements, particularly if they wish later to rely on remedies in the event of non-disclosure.

ENTERPRISE ACTIt will be another year before the pro-visions of the Enterprise Act relating to insurance contracts come into force. However when they do it will be a radi-cal departure from the current position regarding the payment of claims. The Act will amend the Insurance Act by introducing an implied term that an insurer will pay a claim within a rea-sonable period of time and to require damages to be paid in the event that the insurer fails to do so. The Act defines what is meant by reasonable and in the main this will turn on the size and the complexity of the claim and the type of insurance. Insurers are also permitted to contract out where it is a non-consumer insurance contract and providing the breach was neither deliberate nor reck-less. Once these provisions come into force they are likely to have an impact on the manner and speed on which insurance claims are handled. •

15


INSURANCE

Insurers will become deprived of the right to avoid

the policy on the grounds of a breach of warranty

unrelated to the loss.

January 2016 saw the publication of the new SUPERMAN agreement published by BIMCO which governs the contractual relationship between third party ship managers and shipowners for the provision of technical supervisory services during construction,

repair and conversion projects.

SUPERMAN – a new BIMCO contract is born

F rom a shipowner’s perspective, the process of ensuring that a vessel is built on time, on budget and in accord-ance with the technical specifications can be extremely

challenging. Larger or more established shipowners with sub-

stantial order books may have in-house technical teams availa-ble to provide on-site supervision at the yard. However for many shipowners it is often easier and more cost-efficient to contract out the construction supervision services to third party ship managers who have regional experience and technical expertise to deal with complex newbuilding, repair or conversion projects. To address this, BIMCO has recently added the memorably titled SUPERMAN contract to its existing stable of standard form contracts. The aim is to set out a ship manager’s duties and obligations when providing supervisory services and act-ing as agents on behalf of a shipowner during construction, repair or conversion projects. As well as on-site supervision, SUPERMAN also provides for various optional services which can be incorporated into the scope of works to be provided by the ship manager, including a review of technical specification,

From a shipowner’s perspective, the process of

ensuring that a vessel is built on time, on budget and in

accordance with the technical specifications can be extremely

challenging.

SUPERMAN completes BIMCO’s suite of “cradle to grave” pro-forma shipping

agreements available to shipping professionals.

CONTACTS /

Lesley [email protected]

Jonathan [email protected]

plan approval and the handling of war-ranty claims. SUPERMAN is substantially mod-elled on the SHIPMAN 2009 agreement, which is widely used by shipowners seeking to outsource the technical and/or commercial management of their ves-sels. It is no surprise therefore that there are a number of similarities between the two standard contracts, including the provisions relating to the authority of the manager, arrangements for termi-nation and the “cost plus fee” payment profile. The liability regime is also simi-lar, with supervisors facing liability for loss, damage or delay caused by their own negligence, gross negligence or wilful default, subject to a suggested (but negotiable) cap on overall liability limited at 10 times the gross fee pay-able in connection with the services. In

contrast however to SHIPMAN 2009, a suggested time bar of 12 months dur-ing which shipowners are obliged to notify supervisors of any loss, damage or delay arising from the supervisor’s negligence, gross negligence or wilful default has been added. SUPERMAN completes BIMCO’s suite of “cradle to grave” pro-forma shipping agreements available to ship-ping professionals, and it will be inter-esting to see the extent to which it is now adopted by the industry. •

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CONTRACTS

NYPE 2015 – a major revision

On 15 October 2015, the Association of Ship Brokers and Agents, Baltic and International Maritime Council (“BIMCO”) and the

Singapore Maritime Foundation jointly published a revised New York Produce Exchange (“NYPE”) 2015 form.

I n addition to NYPE 1993 earlier NYPE forms, such as NYPE 1946, are still in use in some trades although typically they incorporate a number of amendments

and include extensive additional rider clauses. The drafting committee’s aim with the 2015 revision was, in the words of BIMCO, to create a “version of NYPE that will have global appeal and which takes proper stock of the most commonly applied amend-ments and additional clauses used by practitioners in the dry cargo sector” whilst ensuring that the newly incorporated clauses were “relevant, balanced and consistent”.

NYPE 2015 is undoubtedly more extensive than its predeces-sors. Whilst NYPE 1946 contains 28 clauses, NYPE 2015 runs to a total of 57 clauses together with an appendix of four pages where the vessel’s description is to be inserted. There are also 32 pages of explanatory notes. NYPE 2015 therefore provides far greater standardisation of clauses commonly used.

NOTABLE CHANGESIn addition to adding a number of new clauses the NYPE 2015 form also amends standard clauses found in earlier versions of the NYPE form. The most notable changes are:

• Duration/Trip Description (Clause 1) – Owners and char-terers are now given a choice between selecting a trip or period time charter. Previous forms provided for period charters only.

• Redelivery (Clause 4) – After serving an approximate notice of redelivery to owners charterers are only permit-ted to employ the vessel up until the time specified in the redelivery notice. This is a departure from the general posi-tion under English law where such approximate notices, if

Emilie [email protected]

CONTACTS /

Herman [email protected]

qualified by the words such as “without prejudice” or “without guarantee”, do not prevent a charterer from employing the vessel up until the final date specified for redelivery under a charter.

• Bunkers (Clause 9) – All matters relating to bunkers are regulated by very detailed provisions. Owners and charter-ers alike should therefore review the clause carefully before entering into a charter on the new form.

• Hire Payments (Clause 11) – Owners are now given the right to withdraw the vessel from service and claim dam-ages for the loss of the remainder of the charter should the charterer fail to pay hire within a three banking day grace period. The grace period does no longer refer to “due to over-sight, negligence, errors or omission on the part of the Charterers or their bankers” as was stipulated in NYPE 1993. The grace period now relates to a simple failure to make payment on time. However, NYPE 2015 does not explicitly state that the payment of hire is a condition of the charter so this might be the subject of an amendment when using the charter to avoid disputes on this issue where the English law position is not fully settled.

• Speed and Consumption (Clause 12) – This clause now includes a continuing warranty by the owners that the ves-sel as at the date of delivery and “throughout the duration” of the charter complies with the speed and fuel consumption description specified in the new Appendix A. In the previ-ous NYPE forms the speed and consumption warranty only applied as at the date of delivery and was not a continuing warranty. It is also worth noting that the warranty now does not include the words “without guarantee”. Thus the obliga-tion on owners is more although any claims by charterers for underperformance are now expressly limited to compen-sation for time lost and/or additional fuel consumed. In rela-tion to speed and consumption clause 38 of the new form entitles charterers to give slow steaming orders.

• Off-Hire (Clause 17) – The exceptions to the vessel being placed off-hire are now extended to include events for which sub-charterers are responsible. The clause also includes named events which will result in the vessel being placed off-hire.

• Liens (Clause 23) – This clause now covers liens over sub-hires and sub-freights from sub-charters (sub-freights also expressly include dead freight and demurrage).

• Law and Arbitration (Clause 54) – A broad choice is given in respect of law and arbitration. The parties can choose between New York (US law), London (English law) or Singapore (Singapore law or English law) or any other place/law. It should be noted that if no choice is made by the parties then US law and New York arbitration will apply by default.

The form also includes a number of new clauses in relation to, amongst others, oil pollution, hold cleaning/residue disposal, hull fouling, stevedore damage, sanctions, electronic bills of lading and piracy.

USING NYPE 2015 Whilst the detail of NYPE 2015 is impressive it remains to be seen whether owners and charterers will make use of the new form. Due to the length of NYPE 2015 using the form is likely

to require extensive review work from owners and charterers alike to ensure that they incorporate any necessary amend-ments to the new form and develop shorter rider clauses which do not conflict with the standard wording. When reviewing the new form certain points should be borne in mind: • Changes have been made to previously standard NYPE

clauses so no assumptions should be made in respect of their wording.

• There may be conflicts between owners’ and charterers’ existing rider clauses and in the new form these conflicts will need to be resolved (it is worth noting the preamble of NYPE 2015 states that the provisions of any additional clauses shall prevail over those in the main body in the event of any conflict).

• Some clauses apply default choices, should the parties not make a choice. Careful review is therefore needed to ensure the parties have made the choices they want.

It remains to be seen how the NYPE 2015 will be received by the dry cargo industry. It is certain however that once the form is taken up by the industry a number of the new and amended clauses may be the subject of review by arbitration tribunals in London, New York and Singapore. •

The aim has been to create a version of NYPE that will have

global appeal.

19


CHARTERPARTIES

A PENALTY SHOOT OUT

One of the significant differences between civil and common law jurisdictions is that whereas the former generally see no objection to fixed sums being paid in the event of a breach that may not reflect a loss that is incurred, common law jurisdictions will strike down such clauses where they amount to a penalty rather an a genuine

pre-estimate of a loss likely to flow from a breach.

I n a recent judgment relating to two cases the Supreme Court has reformulated the rules relating to penalty clauses under English law and in doing so has narrowed

the differences between civil and common law jurisdictions.

CAVENDISH SQUARE AND PARKINGEYEThe first case, Cavendish Square,¹ concerned a commercial con-tract where a seller, Mr El Makdessi, had breached certain restrictive covenants under a share purchase agreement. The agreement provided that in the event of a breach the seller would not be entitled to receive the final instalments of the purchase price and that the seller would be required to sell his remaining shares at a price that excluded the goodwill. Mr El Makdessi claimed that this amounted to a penalty and should not be enforced. In the second case ParkingEye² Mr Beavis had parked his car in a car park managed by ParkingEye for more than the two hour limit and as a result he received a fine of £85. Mr

Beavis disputed the fine claiming it was an unenforceable penalty. In both cases the Supreme Court held that neither claimant was correct and the rule against penalties could not be invoked.

THE PENALTY RULE The Supreme Court approached the cases by first asking two questions:

• in what circumstances is the penalty rule engaged; and

• if engaged, what makes a contractual provision penal?

As to the first question as to when the penalty rule is engaged the Supreme Court decided that it only applied in circumstances where the compensation agreement appears in the contract as an alternative to the usual rule on damages for breach. Thus agreement to pay com-pensation is a secondary term, which only comes into effect once a main or primary obligation has been breached. The Supreme Court held that the rule against penalties does not apply to a clause which obliges a party to pay a

CONTACTS /

Simone [email protected]

Robert [email protected]

PENALTIES

monetary sum that is not a secondary or compensatory term, but a main or primary obligation. In the Cavendish Square the price adjustment term which prevented a shareholder from receiving interim payments was held not to be a secondary term even though it was triggered by a breach of restrictive covenants. The rationale for this was that the inclusion of the price adjustment was part of the commercial bargain and related to the importance of the covenants to the company’s goodwill. Its primary purpose was not to provide compensa-tion for any breach. By a majority the Supreme Court also considered that the same reasoning applied to the associated term that required the seller to sell his remaining shares at a lower price that excluded goodwill. A minority of the judges considered this to be a secondary compensatory term designed to deter a breach of contract, although they also considered that it was neither exorbitant nor unenforceable. The task of identifying whether a particular term alleged to be a penalty is a primary or secondary term is unlikely to be easy. Further the Supreme Court recognised that primary terms can still be exorbitant, particularly if there is inequality of bargaining power, so that extreme examples could still be held to be unenforceable as a penalty. With regard to the second question, which is what makes a contractual term penal, the established test is whether the clause is “compensatory or a deterrent”. The Supreme Court did not depart from this rule but it clearly thought it was of limited application since its view was that a damages clause may be justified by some other consideration rather than simple com-pensation. The Court noted that case law has developed much more sensitive criteria for cases where the liquidated damages were set relatively high with the aim of deterring breaches of con-tract which would have a detrimental impact on the innocent party’s trade as a whole or where the breaches did not give rise to an immediate and measurable monetary loss. In such cases, it must be asked whether the innocent party’s interest in protecting its trade as a whole gave rise to a “commercial justification” for the specified liquidated damages. The Court therefore reformulated the test as “…whether the impugned pro-vision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation”. In the Cavendish Square, it was considered that even if the price adjustment term was a secondary term, it was still not a penalty because it was carefully negotiated and reflected the importance of the non-competing covenants where the loss could be greater than monetary value attributable to a breach. Similarly, in the ParkingEye, the charge of £85 for staying more than two hours in the car park was not considered a reasonable pre-estimate of the car park’s loss, but the commercial reasons for the charge, which were to help pay for the operation of the

car park for the benefit of the retail out-let it belonged to, were considered suf-ficient to justify it. The Supreme Court also took the opportunity to restate what is a continu-ing theme of judgments from this Court which is that in construing any contrac-tual provision there is a strong initial presumption that contracting parties are the best judges of what they intend to be the legitimate consequence of a breach of contract.

PRACTICAL IMPLICATIONSTime will tell but the Supreme Court’s decisions suggest that in the future there may be far fewer challenges to compen-sation clauses on the grounds that they amount to a penalty and that it will be much easier to enforce well drafted liq-uidated damages clauses. When drafting these types of clauses it will be helpful to bear in mind that:

• A primary obligation is generally to be exempt from the penalty rules, so ensure that the payment term is expressed as a primary term.

• Where a party is seeking to include a straightforward pre-estimation of loss, ensure that this pre-estimate is genuine and not “unconscionable” or “extravagant” (reference can be made to industry practices/sums).

• Where a liquidated damages clause goes beyond a pre-estimate of loss, then identify the “legitimate interest” that justifies it in the preamble to the contract or in the clause itself, and define the criteria by which it will be deemed to be proportionate.

1 Cavendish Square Holdings BV v Talal El Makdessi ² ParkingEye Limited v Beavis [2015] UKSC 67

21


THE NEW FLAMENCO – keeping in step with

damages and mitigation

The Court of Appeal’s decision in The New Flamenco acknowledges the difficulties of laying down general principles of law in connection with an

innocent party’s obligation to mitigate its loss following a repudiatory breach of contract. The case arose in the context of assessing damages for early redelivery where there was no available market at the time of the breach against which to

measure the loss.

T he court was concerned with a case where charterers had agreed a two year extension to

a time charter. Charterers later denied they had agreed to extend a time char-ter and maintained that they were enti-tled to redeliver the vessel at the end of the previously agreed period. Owners treated charterers’ conduct as being an anticipatory repudiation of the charter, which they accepted as bringing the contract to an end. Soon after redelivery

owners sold the vessel at what was, at the time, close to the top of the market. Owners then brought a claim for damages for breach of charter. It was agreed that there was no available mar-ket against which to assess losses, so owners claimed damages on the basis of their actual losses being the loss of profit that they claimed to have suf-fered as a result of the early redelivery and consequently the vessel not trading for the two additional years. Charterers argued that in order to establish the amount of their actual loss owners had to bring into account and give credit for the difference between the sale price of the vessel as at the date of her redeliv-ery and as at the date when the vessel would have been delivered under the two year extended term. The point was an important one since if charterers were correct then owners’ claim would be extinguished.

FIRST TIME AROUNDThe case originally started in arbitration and the arbitrator held that there was no reason why capital savings brought about by way of reasonable mitigation should not be brought into account in considering the net loss suffered by owners. Owners appealed and Popplewell J allowed the appeal. He held that although factually the breach caused the mitigation and the mitigation caused the benefit, this was not “legally suffi-cient to establish the necessary causative link between breach and benefit”. He found that the owners’ decision to sell the ves-sel was a decision made independent of the breach. The judge further held that the benefit and the loss were different, the former being a capital gain, and the latter an income stream. This, together with the fact that the owners, if they had wanted, could have sold the vessel any

CONTACTS /

Stewart [email protected]

Chris [email protected]

THE NEW FLAMENCO

time irrespective of charterers’ breach, was a further indication that the benefit was not caused by the breach. The judge was also of the view that to allow char-terers to benefit from owners’ business decision to buy and sell the vessel when they did would be contrary to public policy.

COURT OF APPEALThe charterers appealed to the Court of Appeal. Popplewell J’s judgment was set aside and the arbitrator’s decision was reinstated. The Court held that the important question in this area of law was whether there was an available mar-ket. If there was not then then the prima facie measure of damages for an innocent shipowner is the difference between the contractual hire and the cost of earning that hire less any amounts that the ship-owner is able to earn by reason of trading the vessel. If rather than trading the ves-

sel the owner decides to sell it, and it was reasonable for him to do so, then there was no sound legal reason not to take into account the benefit of a sale of the vessel at the top of the market, since the sale was both an act of mitigation and the benefit which owners received. Thus for any benefit to be taken into account in assessing damages the Court of Appeal held that it was sufficient to show that it arose in the ordinary course of business from the consequences of the breach that occurred. The arbitrator’s approach was correct in that he formed a “common sense overall judgement” on cau-sation. The Court of Appeal also rejected the public policy argument on the grounds that public policy arguments do not constitute a general principle of law to be followed in all cases, and in any event they should not override the fundamental principle that an injured

party should, as far as money can do it, be placed in the same situation had the contract been performed.

COMMENT Whilst this judgment does not make new law, it does emphasise the impor-tant point that, in the absence of an available market against which to assess damages, a close analysis is required of the decisions made by owners in order to ascertain what losses they have in fact incurred. If owners do not wish income – including capital windfalls – arising from their post breach commercial deci-sions to be taken into account in assess-ing their damages then clear evidence will be required to persuade a Court that those decisions were independent from and collateral to the breach. It is understood that owners are seek-ing permission to appeal to the Supreme Court. •

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T he background to the case was that a lay up agreement was terminated in March 2013 fol-

lowing a failure by the owners of vessels to pay lay up fees due under the con-tract. The lay up facility was in the Far East and its owner initially went to the local courts in order to try and secure payment of the sums due from the ves-sel owner. The claim included fees due

CONTACTS /

Robert [email protected]

Stewart [email protected]

after the period of termination given that the vessel owner had ignored a direction to remove the vessels from the facility. Six months after termination the facility unilaterally increased the monthly fees for the vessels. Subsequently the facility brought an arbitration claim in London seeking an award for USD2,275,825 in respect of the unpaid fees.

ARBITRATORS’ DECISIONThe arbitrators started by considering what was the nature of the legal relationship between the parties in the period follow-ing the termination of the agreement. They concluded that the lay up facility was required to continue providing services as a matter of local law, and that they were also an involuntary bailee of the vessel. As bailees the facility were under a duty to provide and maintain the same level of service as provided under the original lay up agreement. As for payment for these continuing services, the arbitrators decided that the standard fee terms in the lay up agreement did not apply after termination, but even if they did, the facility could not claim the unilateral increase that they had imposed because this increase would not have been permitted under the contract which limited the facility to increases in inflation

Laying up the lay up agreement

The first reported London arbitration decision in 2016 raises a number of interesting points in connection with lay up

agreements and how much can be claimed for continuing to provide services after the original contract has been terminated.

and costs. However, the arbitrators held that the contract terms allowing the facility to recover its “costs and expenses” for the failure to follow the order to remove the vessels from the facil-ity after termination did continue to apply. The next issue was whether these costs and expenses were limited to direct costs of USD 6,000 per month (excluding a gen-erator) or whether the facility could also claim indirect costs, with a profit element, which took the value up to USD 18,000 per month. The arbitrators decided the increased value claim was allowable. Furthermore the arbitrator’s held that even if the contract had no terms for costs and expenses post termi-nation then the facility would have been entitled to recover these costs and expenses as damages for breach of the order to remove the vessel as well as under the rules of bailment and/or quantum meruit which apply in the absence of a contract. The same principle also applied to the generator costs, which were allowed as post termination costs and expenses with the bonus that while the facility could not claim a profit element on the diesel used before termination, it could do so as an indirect cost after termination. The outcome therefore was that by terminating the lay up contract, the facility ended up being able to claim a signifi-cantly higher monthly fee than it would have received had the contract continued and the facility been limited to claiming the contractual remuneration due. In their award the arbitrators also dealt with two interest-ing procedural issues:

• The vessel owners complained about the original court cases brought against them, saying these too should have been arbitrated and had this happened, they would have saved about USD 83,000 in legal fees not otherwise awarded to them in the local courts. They claimed this sum in damages for the breach of the arbitration agreement and the tribunal accepted the claim, on the basis that there had been a breach of the arbitration agreement and was no proper taxation of costs in the local courts.

• The facility asked for an order for the removal of the ves-sels, subject to local court injunctions preventing the ves-sels from leaving the local jurisdiction. Practically speaking, arranging such a removal was close to impossible due to lack of funds and internal disputes between the owning interests. As such, while the arbitrators accepted that they had the power to make an order for removal they declined to do so because it could not be complied with or enforced.

COMMENTThe arbitration decision has brought clarification as to the nature of costs and expenses recoverable after contract ter-mination either as a result of the original lay up agreement

or more generally for a bailee, with the effect that the claimant was able to recover more than if the original con-tract had continued. In addition, we have had confirmation that foreign proceed-

ings started in breach of London arbitra-tion agreements can permit a recovery of costs incurred in the foreign proceed-ing in excess of the costs recovery in those proceedings. Finally, the ability to give orders for removal of vessels was accepted in principle, but also subject to the condition that such orders will not be given if there is no prospect of com-pliance. In all, this was a good result for the lay up facility, and one which will be of interest to others who see their unpaid charges increasing, as well as to other involuntary bailees, such as vessel own-ers left holding cargo with no bills of lading binding them after their char-terers have ceased operations. In these difficult times, a claim for direct and indirect costs plus a profit margin may well be more rewarding compensation than claiming the market rate normally associated with time spent on an invol-untary bailment. •

By terminating the lay up contract, the facility ended up being able to claim a significantly higher monthly fee

than if the contract had continued.

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LAY UP AGREEMENT

CONTACTS /

Stian Holm [email protected]

Øystein [email protected]

T he Barecon form published by BIMCO is generally accepted as the industry standard bare-

boat charter, and has seen few disputes.However, difficult market conditions in segments of the maritime sector have forced the parties to save costs and ves-

sels are increasingly redelivered in a worse condition than the mere aging of the vessel would account for. Under Barecon 2001, as under most bareboat charters, the charter-ers are obliged to redeliver the vessel in the “same or as good structure, state, condition and class as that in which she was delivered, fair wear and tear not affecting class excepted”, cf. clause 15. Accordingly, the charterers are liable for any costs associated with repair-ing damage to the vessel above and beyond what can be considered “fair wear and tear”, regardless of whether class is maintained, while not bearing responsibility for the fact that the ship becomes older.

WHAT IS “FAIR WEAR AND TEAR”?Issues naturally arising under nor-mal use, such as marine growth, will typically be for the owners’ account. Additionally, if the vessel was chartered and used for a particular purpose, “fair wear and tear” should be interpreted by reference to the purpose for which it has been used. Owners would for example have to accept a higher level of wear and tear where the vessel was chartered for navig ation in ice covered waters or for military purposes such as conveying of troops and equipment. Looking specifically at the issue of lack of general maintenance, some initial guidance can be found in the charterers’ duty under clause 10(a)(i) to maintain

BAREBOAT CHARTERS –

charterer’s maintenance and redelivery obligations

Difficult market conditions motivate cost savings wherever possible and this includes expenditure relating to the general maintenance of vessels. There has been an increase

in disputes concerning the condition of vessels at the time of redelivery under a bareboat charter. Questions arise as to what is the charterers’ duty of maintenance under a bareboat charter and how can the parties best position themselves to avoid

disputes?

the vessel (i) in a “good state of repair”, (ii) in “efficient operating condition”, and (iii) in accordance with “good commercial maintenance practice” during the charter period. While these obligations must all be complied with, charterers will not automatically be in breach just because a defect has occurred. For a breach to arise, charterers must have failed to act promptly to remedy the defect. The obligation of maintenance puts the burden on charterers to keep the ves-sel in a good state of repair. Failing to establish a sufficient maintenance sys-tem according to manufacturers’ guide-lines may well amount to a breach of “good commercial maintenance practice” and damage and/or decline caused by this would therefore not be considered “fair wear and tear”. Further the obligation of keeping the vessel in a “good state of repair” is not dependent on knowledge of the defect. That being said, the obligation does not arise if the defect is not reasonably dis-coverable.

THE POSITION UNDER NORWEGIAN AND ENGLISH LAWThere is little case law regarding the charterers’ duty of maintenance under Barecon 2001 under either Norwegian or English law or what is the threshold of “fair wear and tear”. Few other sources give any real guidance on the question of what level of deterioration owners have to accept. Even after establishing a relevant threshold, the issue of proving that each particular item of damage and the corresponding loss is above “fair wear and tear” remains. Any ensuing litiga-tion would revolve around the facts of the matter, and while it can be argued that the charterers, at least initially, would have the burden of proof, litiga-tion would in practice come down to the opinion of experts as to what part of the vessel’s condition on redelivery can rea-sonably be expected and where a failure to maintain has occurred. This is likely

to lead to a “battle of experts” which can often be an expensive and risky form of litigation.

SAFEGUARDING OWNERS’ INTERESTSThe issue concerning how one assesses the condition of the vessel on redelivery should be borne in mind when main-taining current charters and negotiating new charters. In respect of current charters, own-ers should take particular care to comply with the provisions relating to off-hire surveys found in clause 7, ensuring a joint survey where possible. Independent verification of the state of the vessel at redelivery will give own-ers a much stronger position when faced with charterers’ breach, whether trying to reach an amicable solution or if liti-gating the claim becomes necessary. It is also advisable for owners to take advantage of their right to inspect the vessel pursuant to clause 8, consistently keeping records throughout the charter period, noting any observed failures of the charterers. Should a dispute arise in relation to the charterers’ failure to maintain and/or repair the vessel, own-ers will have first-hand evidence with which to support their case. When negotiating and drafting new charters, owners should give careful consideration to their expectations at the redelivery stage of the charter, and may wish to set out charterers’ spe-cific obligations concerning the duty of maintenance and the state of the vessel on redelivery. A definition of what falls within “fair wear and tear” would also be advisable. Examples of other safeguards would be to make it a condition precedent for owners taking redelivery that charter-ers’ tender the vessel in the same or as good state of repair, fair wear and tear not affecting class excepted. Owners could further make charterers’ main-tenance obligations a condition of the charter.

It may however, be difficult to agree on more onerous maintenance obliga-tions for the charterers, especially under a much-used standard form and in the current market conditions. Thus owners should at the very least take advantage of the rights already afforded to them under the standard Barecon charter. This includes the right to inspect the vessel, and to carry out an on-hire sur-vey. Securing evidence of the vessel’s condition on delivery is in the interest of both parties, but of particular impor-tance when establishing deterioration over the course of the charter.

QUANTUM OF DAMAGESWhere charterers are found to be in breach of their redelivery obligations then owners have the burden of proof to show the loss that has been caused. Establishing the facts is typically secured by survey reports prepared either jointly or individually by each party. However the ability to document losses suffered by the improper technical condition of the vessel may be impacted by the own-ers’ disposal of the vessel upon it being redelivered. Where owners take over the vessel for own trading, the burden of proof is relatively easy to meet by obtaining quotes for repair work deemed necessary to bring the vessel back to the required condition. If however the vessel is sold upon redelivery, quantum of damages may be more challenging to prove. Owners may well argue that the buyer would have been willing to pay more for the vessel if the redelivery condition had been as expected under the bareboat contract. Proving this may however turn out to be difficult, and in event of a dis-pute owners may not succeed with their claim in full, unless such facts are estab-lished by documenting the arguments from the buyer during negotiations for the purchase price agreed. •

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BAREBOAT CHARTERS

Markets decline but disputes do not

When markets slow down it is often assumed that everything else also slows down including disputes. That is not the case and resources are

often used to enhance and improve positions in disputes with the result that it can take longer and cost more to achieve the right outcome.

A t present several markets are in decline, notably the oil service, offshore and dry shipping markets. Lay-offs, lay-ups and cancellations are daily topics in ship-

ping and offshore journals. Combined with a substantial change of focus of major players to reduce costs, and to pursue contrac-tual claims to a greater extent, there is now a different approach to disputes as compared to when the markets are booming.

MORE AVAILABLE RESOURCESThere is no question that handling disputes can – and often will – be an incredible strain on an organisation. A legal team needs to be supplied with input on numerous factual and tech-nical issues, and the workload is often underestimated by the management. Furthermore, preparatory proceedings are time-consuming and an oral hearing can take days, weeks and some-times even months. When the markets are good and there are new contracts to bid on or new projects are to be initiated, it may be particu-larly challenging to decide where to use resources, especially key personnel such as project leaders and heads of engineering department. Allocating these resources to disputes may have significant negative impacts on a project and is unlikely to be a productive use of resources. However, as the number of new projects decrease, both owners and suppliers have more human resources available and disputes may be a necessary part of securing payment of much needed income. Investing time and money in improving one’s position in a dispute is one way utilise these resources and to allocate them in this way often makes sense from a com-mercial standpoint.

DISPUTES TAKE LONGER TO SETTLEThere may, however, be many good commercial reasons for not pursuing a claim. With the high number of lay-offs, it is pos-sible that key personnel have left the organisation when they are needed in connection with litigation. It is also possible that a dispute is perceived as putting a relationship with an owner or a supplier unnecessarily at risk, or it may simply be better to

use limited resources to pursue other opportunities, typically other projects or contracts with other players. When the prospects of projects and contracts in the near future vanish, such considerations may not be given the same weight. Not only are disputes litigated that perhaps would not have been pursued just months earlier, but there is much less willingness to settle and resolve disputes at an early stage to preserve relationships or to release resources to a new project.

LIQUIDITY AND BANKRUPTCYNot all businesses are able to survive in tougher market con-ditions. Pushing the due date of a payment may be necessary to increase the prospect being able to continue to trade. In a legal process, be it arbitration, court proceedings or alternative dispute resolution, there are unfortunately several opportuni-ties for a party wanting to disrupt the process or delay a final decision. Attempts may for instance be initiated by one party in order to delay an oral hearing, and thus a final decision which is necessary to enforce payment. For the opposite party, it can often be difficult choice as to whether to push forward – with one risk being to bankrupt the defendant – or to slow down pro-gress in the hope that the other party’s financial situation may improve so that money can be found. It may be very challenging to obtain sufficient facts in order to decide exactly how good or bad the financial position of the other party is. There is also only limited ways to secure one-self against an approaching bankruptcy on the other side. Thus, careful consideration needs to be made in respect of whether an award by a court or an arbitral tribunal, or a settlement agreement, will actually result in a payment. The old saying that a meagre settlement may be better than a lucrative judg-ment is still valid.

CONCLUSIONAt present, disputes are taking longer time to resolve than is the case in better market conditions. In these challenging times parties need to be prepared to invest more time and resources in disputes and to understand that it may take longer to find an acceptable solution. Strategies may also be required to deal with cases where the rationale of the opposing party’s actions may very well be based on considerations other than achieving a correct result within a reasonable time. •

There is now a different approach to disputes as compared to when the markets are

booming.

CONTACTS /

Ola Ø. [email protected]

Trond [email protected]

Kaare Andreas [email protected]

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DISPUTES

T he decision of whether or not to agree to arbitrate can be made either when negotiating a contract or after a dispute has arisen, although in the latter case it

is often much harder to agree. The alternative to arbitration or other forms of alternative dispute resolution is litigation. Sometimes referred to as “litigation behind closed doors”, arbitra-tion has certain advantages which contribute to its increasing popularity. These benefits can be summarised as follows:

• Enforcement: simplified enforcement procedures using the New York Convention

• Certainty: forum of dispute resolution is settled • Flexibility: procedures can be tailor made• Expertise: parties can select their tribunal

International arbitration rules – differences matter

Commercial agreements require careful consideration of the proposed treatment of disputes before they arise. Both the forum for dispute

resolution and the rules to be applied should be agreed as part of the contractual negotiation.

INTERNATIONAL ARBITRATION

CONTACTS /

Ola Ø. [email protected]

Rita [email protected]

Kaare Andreas [email protected]

Differences ICC 2012 Rules SCC 2010 Rules LCIA 2014 Rules SIAC 2013 Rules

ICDR 2014 Rules OCC 2005 Rules

Awards Awards are scrutinised by ICC to ensure consistently high standard of awards.

No scrutiny of Awards. No scrutiny of Awards.

Awards are scrutinised by SIAC to ensure con-sistently high standard of awards.

No scrutiny of Awards. No scrutiny of Awards.

Fees Determined based on the amount in dispute and complexity using a fee scale.

Determined based on the amount in dispute.

Charged by the hour, regardless of amount in dispute. Maximum hourly rate is capped.

Calculated based on a schedule of fees.

Administrative fee is based on the amount in dispute. Arbitrators charge by the hour or day, with no cap on rates charged.

Administrative fee is based on the amount in dispute.Arbitrators set their own fee, with no cap on rates charged.

Nationality of Arbitra-tors

Not usually of the same nation-ality as a party.

Not of the same nation-ality as a party unless agreed or the SCC deems it appropriate.

Not usually of the same nationality as a party.

No restric-tions.

Not usually of the same nationality as a party.

No restrictions.

Confiden-tiality

No express con-fidentiality provi-sions – parties may agree these in Terms of Reference.

Sets out rules on confi-dentiality.

Sets out rules on confidentiality.

Sets out rules on con-fidentiality.

Sets out rules on confi-dentiality unless parties agree otherwise.

Sets out rules on confidentiality.

Emergency or expedited proceedings available?

Yes (but can opt out of these).

Yes Yes. Yes, where: (a) amount in dispute is under 5mn SGD, (b) the Parties agree, or (c) in cases of exceptional urgency.

Yes for claims less than 250,000 USD in value, or by agreement.

Disputes valued under 100,000 use a docu-ments-only procedure, unless the parties agree to an oral hearing as well.

Yes.

Other factors

One of the oldest and best known arbitral institutions, with members from over 90 coun-tries.

Agreeing Terms of Reference and ICC Court’s vet-ting of Awards adds time and costs to process.

Perceived as neutral and speedy as no terms of reference or scrutiny of awards. Arbitrations that take place in Swe-den do not have certain powers that are com-mon in other jurisdic-tions, e.g. the power to order witnesses to tes-tify under oath. Interim relief such as injunctions can be time consuming in the Swedish courts.

Highly regarded.

Speedy as no terms of reference or scru-tiny of awards. Wide range of interim relief options.

LCIA seat of arbitra-tion is generally London, which may affect perception of neutrality where one party is English.

Perceived as neutral location. Schedule of fees gives certainty over costs.Procedures are deter-mined by the tribunal rather than the Parties.

May be viewed as too US focused, as most approved arbitrators are US citizens.

Procedure tends to be more flexible and less bureaucratic than elsewhere.

Somewhat surprisingly little used. Has a list of highly competent ar-bitrators. Work is in progress in order to make the institute more attractive, including a new 2016 revision of the rules.

tual property, or ICSID Rules for investor-state dispute set-tlement), geography, or indeed the comparative success of an institutions’ marketing campaign. Well established organisations providing rules for interna-tional commercial arbitration include:

• ICDR/AAA: International Centre for Dispute Resolution, established by the American Arbitration Association

• ICC: International Chamber of Commerce International Court of Arbitration

• LCIA: London Court of International Arbitration• OCC: Oslo Chamber of Commerce • SCC: Stockholm Chamber of Commerce• SIAC: Singapore International Arbitration Centre• ICAC: International Commercial Arbitration Court of Russia• CIETAC: China International Economic and Trade Arbitration

Commission

In addition, bodies in both London and Singapore offer spe-cialised maritime arbitration services. The London Maritime

• Privacy: dispute and proceedings are typically confidential• Neutrality: parties can select a neutral forum• Cost: can be lower than courts if managed well• Speed: often faster and more efficient than courts• Finality: generally not subject to appeal• Predictability: significant international harmony of law

WHICH RULES TO APPLY?The widespread international adoption of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 alongside the introduction of many local arbitration laws based on the UNCITRAL Model Law on international commercial arbitration of 1985, might suggest that there are few differences between the various international arbitration rules on offer. However, differences do exist and often these can be significant and important. The various rules all provide a framework for the proce-dures and timeframes of the arbitration. These are designed to be flexible manner and can be adjusted to suit the parties’ needs. Some rules offer an emphasis on narrow areas of geo-graphic or commercial focus, whilst others provide sector specific expertise. Local court systems of many countries also commonly facilitate the use of arbitration or other forms of ADR. In all cases the rules are designed to be fair and trans-parent, but there are certain key differences between the rules which need to be carefully considered on a case by case basis. The decision of which rules to use may be influenced by the nature of the dispute (e.g. using Word Intellectual Property Organization (WIPO) Rules for a dispute concerning intellec-

fig.1

31


Arbitrators Association (LMAA) is an association of independ-ent arbitrators who are experienced in maritime law which offers a set of procedural terms (or rules) for its arbitrations. However, LMAA arbitrations remain ad-hoc and the conduct of arbitrations are not administered or supervised by an inde-pendent arbitration body, unlike the LCIA and the ICC. The UK’s Arbitration Act applies to LMAA arbitrations. The Singapore Chamber of Maritime Arbitration (SCMA) was first established in 2004. The SCMA Rules are similar in approach to that of LMAA. The SCMA is not involved in the management and administration of arbitrations, but is avail-able to facilitate the process when called upon to do so and offers expert member arbitrators. Amongst the perceived ben-efits of this approach is the fact that the parties do not pay administration fees and they are free to agree fee rates with arbitrators rather than using a fee schedule.

NORWEGIAN ARBITRATION In Norway, an agreement to arbitrate may be recorded in an express written agreement, or, an arbitration clause may also be incorporated through:

• Oral agreement (except for consumer relations)• General reference to a standard form agreement • Customary use • Failure to object to the tribunal’s competence

Domestic and international arbitrations are governed by the Norwegian Arbitration Act 2004 (“NAA”) if the seat of the arbi-tration is in Norway, which is based on the UNCITRAL Model Law. The Norwegian Code of Procedure applies to agreements to arbitrate recorded in writing before the NAA came into effect. In substance, the NAA shares features common to most international sets of rules. It provides a flexible framework for resolving disputes and achieving a binding award with the assistance of one or three arbitrators. However, where an arbi-tration clause is included in an international commercial con-tract involving a Norwegian party, it has become common for a foreign set of arbitration rules to be chosen.

KEY DIFFERENCES The rules offered by the various arbitral institutions are highly detailed and complex. In the table (fig.1) we have summarised some of the key differences to be considered. It is worth noting that some rules have also been revised we have referred cur-rent rules in the table below, since they will generally apply unless express reference to a particular year of the applicable rules is made in a contract. •

33

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Personnel news

Finn Bjørnstad has taken over as man-aging partner of the firm.

In Oslo, Ellen Søiland has been pro-moted to senior lawyer. Mari G. Christensen is on a secondment with a P&I Club. Christian James-Olsen has taken over as head of the Shanghai office.

Morten Valen Eide has been promoted to senior lawyer at the Bergen office.

Nick Sheppard and Mike Steward have joined as partners in the London office. Mary Lindsay has joined as senior law-yer. They all have significant experience from other law firms. Jonathan Page has returned to the firm as a partner having spent some time as general counsel with Seajacks. Ben Williams has been promoted to senior associate. Camilla Burton and Alexandra Walls have joined the firm having previously worked at other English firms.

Xiaomin Qu has been promoted to senior lawyer at the Shanghai office.

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PERSONNEL NEWS

TS Taipei Grounding and wreck removalof bulk carrier, pollution, cargo, TaiwanStolt Commitment c/w Thorco Cloud which sank, wreck removal, cargo claims, multi-juris-diction litigation, Singapore Strait, IndonesiaFair Afroditi Explosion, sale of oil tanker, Lomé, TogoTroll Solution Punch through of jack-up rig; fatalities, wreck removal, Gulf of MexicoSorrento Fire on ro-ro passenger vessel, CTL, cargo damage, off MallorcaGoodfaith Grounding of bulk carrier; wreck removal, Andros, Greece FPSO Cidade de Sao Mateus Explosion, fatalities, salvage, Espirito Santo Basin, BrazilUSNS Sgt Matej Kocak Grounding and salvage off Okinawa, JapanSinar Capuas c/w Alyarmouk, pollution, Singapore StraitAsian Empire Fire and salvage of car carrier, cargo damage, Pacific OceanLuno Wreck removal of grounded bulk carrier, Bayonne, FranceWan Hai 602 Exploded container under deck at Suez CanalB-Elephant Alleged submarine cable damage by VLCC, Alexandria, Egypt Chamarel Wreck removal of grounded cable laying vessel, NamibiaGelso M Wreck removal of grounded chemi-cal tanker, ItalyBareli Grounding of container ship; oil pollu-tion, cargo damage, wreck removal, ChinaKS Endeavour Explosion and fire on jack-up rig, NigeriaIkan Jahan LOF/transhipment; grounded cargo ship, IndonesiaRena Wreck removal of grounded container ship, New ZealandNordlys Fire on passenger ferry; c/w berth, salvage, Norway

B Oceania Wreck removal of bulk carrier; c/w MV Xin Tai Hai, Malacca StraitNavios Saggittarius Salvage of grounded bulk carrier, DenmarkDouble Prosperity Salvage of grounded bulk carrier, Bakud Reef, PhilippinesGodafoss Grounding; oil pollution, GA, sal-vage of multipurpose container ship, Norway Jupiter 1 Wreck removal of capsized semisub accommodation rig, Gulf of Mexico Hub Kuching Salvage after fire and CTL of container ship, South China Sea Far Grimshader Supply vessel c/w semisub Songa Dee, North SeaWest Atlas Wreck removal of drilling rig;blowout and fire, Timor Sea, AustraliaFull City Grounding; oil pollution, refloating of bulk carrier, Norway Big Orange XVII Well stimulation vessel c/w platform, Ekofisk field, North SeaCrete Cement Grounding; oil pollution, re-floating and sale of cement carrier, NorwayBourbon Dolphin Capsizing and total loss of anchor handler; casualties, Shetland Repubblica di Genova Refloating and sale of capsized roro ship; cargo damage, BelgiumCembay Grounding on coral reef; salvage of cement carrier, oil pollution, cargo damage, MexicoServer Grounding; oil pollution, wreck removal of bulk carrier, NorwayAlaska Rainbow Cargo ship c/w passenger ferry, River Mersey, EnglandFjord Champion Fire and salvage of tanker, NorwayOcean Victory Grounding and total loss of bulk carrier, Kashima, Japan. Unsafe port issuesHyundai No. 105 Car carrier c/w VLCC Kaminesan; cargo damage, wreck removal, Singapore Strait Rocknes Refloating of grounded and

capsized bulk carrier; oil pollution, casual-ties, NorwayPanam Serena Explosion and fire; salvage and sale of chemical tanker, terminal claims, casualties, Sardinia, ItalyVans Princess Grounding of roro vessel; oil pollution, cargo damage, Tartous, Syria Tricolor Car carrier c/w container ship Ka-riba; sinking, wreck removal, cargo damage, multi-jurisdiction litigation, English ChannelHual Europe Grounding of car carrier; fire, oil pollution, cargo damage, wreck removal, Tokyo Bay, JapanAmorgos Grounding of bulk carrier; sinking, oil pollution, TaiwanNorwegian Dream Cruise ship c/w container ship Ever Decent; fire, personal injury, cargo damage, salvage, English channelSun Vista Fire and total loss of cruise vessel, Malacca Strait

Global contactMorten Lund Mathisen +47 99 45 75 75

OsloMorten Lund Mathisen +47 99 45 75 75

Gaute Gjelsten +47 99 52 35 35

Herman Steen +47 93 03 46 93

LondonChris Grieveson+44 79 6644 8274

Clare Calnan +44 75 9560 7958

Nick Shepherd +44 77 0375 6039

SingaporeTorgeir Willumsen+65 9236 6440

Robert Joiner +65 8518 6239

ShanghaiYafeng Sun +86 139 1700 6677

Chelsea Chen +86 138 1687 8480

KobeTormod Kløve +81 903 260 7668

Emergency number: +47 22 82 77 00

CONTACTS

WIKBORG REIN’S MARITIME AND OFFSHORE EMERGENCY RESPONSE TEAM

AVAILABLE WORLDWIDE 24/7

Members of our Maritime and Offshore Emergency Response Team have extensive experience in handling the practical and legal issues associated with casualties and maritime emergencies. Our team, led by Morten Lund Mathisen, assists insurers and owners in connection with a wide range of incidents including:

MARITIME AND OFFSHORE EMERGENCY RESPONSE TEAM

33

MARITIME AND OFFSHORE EMERGENCY RESPONSE TEAM


• Construction, repair and conversion contracts for ships, rigs and other offshore units.• Sale and purchase of ships, rigs and other offshore units.• Ship financing, liens and mortgages• Organization and management structures for shipowners. • Restructurings and acquisitions of shipping and offshore companies.• Emergency response and casualty work, including investigations, limitation of liability, liability for oil spill and collisions, maritime inquiry, wreck removal and related public law issues.• Chartering and operation of ships, both general marine and offshore.• Offshore charter contracts for rigs, FSOs, FPSOs, FSRUs and FLNGs.• Cargo claims and crew matters.• Arrest, salvage and general average.• Maritime insurance, including hull & machinery and P&I claims and interpretation of club rules.• Registration of ships, choice of flag and registration.• Control and classification of ships.• Freight forwarding and land transportation.

WIKBORG REIN’S SHIPPING OFFSHORE GROUP

With offices in Oslo, Bergen, London, Singapore, Shanghai and Kobe, and an alliance with Brazilian law firm Vieira Rezende, Wikborg Rein has a unique industry knowledge and competence matched with an international presence. The Group, together with many of our individual lawyers, has for many years been recommended as leaders in their field by Legal 500, Chambers and other rating agencies.

Over the last three years we have been instructed on more than 2500 inter-national shipping and offshore cases, and we have acted on numerous cross-border transactions in more than 50 countries. We serve clients across the full range of shipping, transport and offshore activities, including shipowners, offshore companies, marine insurers, shipyards, equipment providers, ship-brokers and agents, shipping banks as well as companies related to freight forwarding and land transportation.

Wikborg Rein’s Shipping Offshore Group is a leading global maritime practice with more than 80 dedicated Norwegian, English, Chinese and

Singaporean lawyers.F

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SHIPPING OFFSHORE CONTACTS

OSLOKronprinsesse Märthas pl. 1PO Box 1513 Vika0117 Oslo, Norway

PartnersFinn Bjørnstad [email protected]+47 22 82 76 11/+47 415 04 481

Trond Eilertsen [email protected]+47 22 82 76 12/+47 901 99 186

Anders W. Færden [email protected]+47 22 82 75 44/+47 908 28 382

Gaute Gjelsten [email protected]+47 22 82 76 31/+47 995 23 535

Henrik Hagberg [email protected]+47 22 82 75 52/+47 916 16 888

Bernhard Haukali [email protected]+47 22 82 76 16/+47 480 34 625

Morten Lund Mathisen [email protected]+47 22 82 76 75/+47 994 57 575

Johan Rasmussen [email protected]+47 22 82 76 35/+47 918 00 933

Oddbjørn Slinning [email protected]+47 22 82 75 14/+47 481 21 650

Geir Sviggum [email protected]+47 22 82 76 76/+47 911 11 841

Are Zachariassen [email protected]+47 22 82 76 72/+47 909 18 308

Senior LawyersEna Aarseth Barder [email protected]+47 22 82 75 45/+47 958 30 638

Yannis Litinas [email protected]+47 22 82 75 29/+47 912 46 775

Vidar Løhre [email protected]+47 22 82 76 42/+47 988 10 677

Anne-Karin Nesdam [email protected]+47 22 82 76 53/+47 975 54 948

Herman Steen [email protected]+47 22 82 75 94/+47 930 34 693

Ellen Søiland [email protected]+47 22 82 75 68/+47 938 14 014

Senior AssociatesMari G. Christensen [email protected]+47 +47 22 82 75 74/ +47 990 32 991

Nina M. Hanevold-Sandvik [email protected]+47 22 82 75 09/+47 911 18 200

AssociatesBård Breda Bjerken [email protected]+47 22 82 76 45/+47 984 78 344

Emilie Christiansen [email protected]+47 22 82 76 27/+47 469 56 496

Camilla Barr [email protected]+47 22 82 75 26/+47 481 51 516

Agnete Nummedal [email protected]+47 22 82 75 20/+47 922 47 236

Halvard Saue [email protected]+47 22 82 75 32/+47 906 53 258 Sindre Slettevold [email protected]+47 22 82 76 26/+47 977 59 418

BERGENOlav Kyrresgt. 11PO Box 1233 Sentrum,5811 Bergen, Norway

PartnersØyvind Axe [email protected]+47 55 21 52 71/+47 970 55 558

Linn Hertwig Eidsheim [email protected]+47 55 21 52 21/+47 970 55 557

Christian Friis [email protected]+47 55 21 52 35/+47 911 48 237

Jon Heimset [email protected]+47 55 21 52 72/+47 908 55 702

Øystein Meland [email protected]+47 55 21 52 75/+47 901 42 033

Geir Ove Røberg [email protected]+47 55 21 52 65/+47 900 35 045

Senior LawyersMorten Valen Eide [email protected]+47 55 21 52 67/+47 932 20 980

Hågen Hansen [email protected]+47 55 21 52 68/+47 920 67 807

Cecilie Koch Hatlebrekke [email protected]+47 55 21 52 81/+47 416 49 158

Terje Fiskerstrand [email protected]+47 55 21 52 56/+47 917 97 279

AssociatesMattias Grieg [email protected]+47 55 21 52 47/+47 472 84 282

Øyvind Grøneng [email protected]+47 55 21 52 86/+47 908 86 333

Stian Holm Johannessen [email protected]+47 55 21 52 78/+47 917 59 272

Gunnvor Dyrdi Remøy [email protected]+47 55 21 52 51/+47 991 60 608

LONDONCheapside House138 CheapsideLondon EC2V 6HS, England

Partners Clare Calnan [email protected]+44 20 7367 0304/+44 7595 607 958

Chris Grieveson [email protected]+44 20 7367 0308/+44 7966 448 274

Rob Jardine-Brown [email protected]+44 20 7367 0305/+44 7785 722 147

Birgitte Karlsen [email protected]+44 20 7367 0309/+44 7525 071 742

Jonathan Page [email protected]+44 20 7367 0303/+44 7803 515 388

Nick Shepherd [email protected]+44 20 7367 0302/+44 77 0375 6039

Michael Stewart [email protected]+44 20 7367 0320/+44 77 0375 6038

Senior LawyersAndreas Fjærvoll-Larsen [email protected]+44 20 7367 0321/+44 7711 304 251

Mary Lindsay [email protected]+44 20 7367 0339/+44 7703 756 038

Senior AssociatesLesley Tan [email protected]+44 20 7367 0314/+44 7889 605 529

Ben Williams [email protected]+44 20 7367 0319/+44 7568 106 131

AssociatesCamilla Burton ccb@wr co.co.uk+44 20 7367 0300/+44 7540 760 797

Mari Berg Rindahl [email protected]+44 20 7367 0323/ +44 7545 165 373

Alexandra Walls [email protected]+44 20 7367 0336/+44 7803 514 072

SHANGHAIHong Kong New World Tower, Room 1902No. 300 Huai Hai Middle RoadShanghai 200021, China

PartnersChristian James-Olsen [email protected]+47 55 21 52 70/+47 928 33 919

Tormod L. Nilsen [email protected]+86 21 6339 0101/+86 186 2194 4892

Yafeng Sun [email protected]+86 21 6339 0101/+86 139 1700 6677

Ronin Zong [email protected]+86 21 6339 0101/+86 138 1665 0656

Senior Lawyers Chelsea Chen [email protected]+86 21 6339 0101/+86 138 1687 8480

Xiaomin Qu [email protected]+86 21 6339 0101/+86 135 6475 3289

Senior AssociatesYvonne Hu [email protected]+86 21 6339 0101/+86 138 1813 9635

Claire Jiang [email protected]+86 21 6339 0101/+44 138 1676 7292

William Turner [email protected]+86 21 6339 0101/+86 185 1612 6780

AssociatesJiahao Lu [email protected]+86 21 2316 3621/+86 137 8890 9200

Isaac Yang [email protected]+86 21 6339 0101/+86 137 7420 9316

KOBESannomiya Kokusai Bldg. 5F1-30, Hamabe-dori 2-chome, Chuo-kuKobe 651-0083, Japan

Japan RepresentativeTormod Kløve [email protected]+81 78 2721 777/+81 90 3160 7668

SINGAPORE6 Raffles Quay #10-05/07Singapore 048580

PartnersJune Ho [email protected] +65 6496 8350/+65 9690 3391

Robert Joiner [email protected]+65 6496 8359/+65 8518 6239

Florence Ong [email protected]+65 6496 8228/+65 9150 8237

Siri Wennevik [email protected]+65 6496 8219/+65 9674 4906

Senior LawyersTorgeir Willumsen [email protected]+65 6496 8230/+65 9236 6440

Senior AssociatesMaria Norum Aguilera [email protected]+65 6496 8229/+65 9771 9483

Simone Centola [email protected]+65 6496 8221/+65 9187 4211

Stewart Ian Munro [email protected]+65 6496 8212/+65 9833 4410

VIEIRA, REZENDE, BARBOSA e GUERREIRO ADVOGADOS in alliance with Wikborg ReinAv. Presidente Wilson, 23118 º andar, Rio de Janeiro, Brasil20030-021

Wikborg Rein contactJoyce B. Souza Jacobsen [email protected]+55 21 8094 6666/+55 21 2217 2834


OsloTel +47 22 82 75 [email protected]

BergenTel +47 55 21 52 [email protected]

LondonTel +44 20 7367 [email protected]

SingaporeTel +65 6438 [email protected]

ShanghaiTel +86 21 6339 [email protected]

KobeTel +81 78 272 [email protected]

www.wr.no

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