world gdp has been growing at historically high levels · world gdp has been growing at...
TRANSCRIPT
World GDP has been growing at historically high levelsover the last three years and is currently predicted to riseby close to 5% in 2007. In response, demand forshipping has produced record new building orders and aprojected growth in the world fleet of about 5% a yearfor the next three years, assuming no major change in theeconomic climate1.
This growth in the world fleet is most welcome but, evenleaving aside the problems of supply and demand, thegrowth in world trade is creating a number of challengesfor P&I Clubs. One example is the increase in claim costsdiscussed extensively in the Steamship Mutual Mid YearReview:
The apparent upward trend in claims values is notsurprising given the combination of an increasing worldfleet, the greater volume and increased value of cargoesbeing shipped, rising commodity prices and escalatingrunning costs, but these are factors over which the Clubcan have no influence.
The other major factor underlying the rising trend inclaims, namely human error, inevitably comes to the forewhen there are, as now, both chronic and acuteshortages of experienced officers and crews as the resultof the growth in demand. This is an area in whichSteamship Mutual can and does play a proactive rolethrough its many loss prevention and training initiatives.In association with Videotel, Steamship Mutual hasproduced over 50 training programmes since 1994. Lastyear alone saw the release of the new edition of theClub’s innovative Claims Handling Guide, four additionaltraining guides, the second edition of “Training Matters”and a new product “Sea News”.
These publications are discussed in an article in this issueof Sea Venture. There are also 14 other articles fromSteamship Mutual, discussing such varied subjects asarbitration in China, the new Mexican law of Navigation,liens for unpaid premiums, plus the normal summaries ofrecent English Court and arbitration decisions. We arealso pleased to include an article by the General Counselof Intertanko setting out the challenge to the legality ofthe EU Ship Source Pollution Directive currently before theEuropean Court of Justice, as well as articles on the NewILO Consolidated Labour Convention, the amendments tothe SOLAS and SAR conventions covering the treatmentof persons rescued at Sea, and a discussion by RichemontNicolas & Associes, Paris, of their experience of theprosecution in France of oil pollution fines subsequent tothe Erika and Prestige incidents.
Malcolm Shelmerdine
1st February 2007.
Introduction
“Last year alone saw
the release of the new
edition of the Club’s
innovative Claims
Handling Guide, four
additional training
guides, the second
edition of “Training
Matters” and a new
product “Sea News”.”
Sea Venture newsletter Issue 7 3Sea Venture newsletter Issue 7
Introduction........................................3
Freedom of the City of Londonawarded to Nikolaus W. Schües ........4
Steamship Mutual launches NewWebsite ..............................................4
Pilotage Incidents................................5
China - First Step towards Recognition and Enforcement of Foreign Awards..............................6
Loss Prevention Publications ..............7
Rescue Respite for the Shipowner? ........................................8
French law - Oil Pollution Prosecutions........................................9
Recent Arbitration Awards ................9
The New ILO Consolidated MaritimeLabour Convention - Charting LabourStandards for the Future ..................10
Hong Kong - Conflicting Decisions on Delivery under Straight Bills of Lading ........................................10
Brazil - Carrier’s Liability forUnauthorised Imported Merchandise ....................................11
The Shipping Industry takes its Case to the European Court of Justice ....12
Master’s Duty to rescue Persons at Seaand recent IMO Amendments ........14
Club’s Lien on Vessel for UnpaidPremium upheld by United StatesEleventh Circuit Court Of Appeals ..15
Regional Cooperation Agreement on Combating Piracy and ArmedRobbery in Asia (ReCAAP)................16
Contracts of Affreightment -Nomination Terms ............................17
Misdelivery of Cargo ........................17
Distinguishing Cargo Loss andDamage Claims in CharterpartyDisputes............................................18
Freight Deduction under TankerVoyage Charter ................................18
China - Validity of ArbitrationAgreements......................................19
Noxious Liquid Substances in Bulk -Strict Enforcement of MARPOL Annex II in Paris MOU Ports ............20
Ship-Shape and Bristol Fashion........21
New Mexican Law of Navigation and Maritime Commerce ................22
Package Limitation Revisited ............22
Bimco Hold Cleaning / Cargo Residue Clause ................................23
Recent Publications ..........................23
Articles Published on the Steamship Mutual Website..............23
Contents
2
Editorial TeamNaomi Cohen Malcolm ShelmerdineSue Watkins
Sea Venture is available in electronic format. If you wouldlike to receive additional copies of this issue or futureissues in electronic format only please send your name andemail address to [email protected].
Feedback and suggestions for future topics should also besent to this address.
1 Clarkson Research Services
www.simsl.com/MidYearReview.html
Sea Venture newsletter Issue 7 5
The International Group’s Pilotage sub-committeerecently collected data from all Group Clubs in relationto incidents costing in excess of US$100,000 occurringbetween 20 February 1999 and 20 February 2004 inwhich pilot error was a feature. Based on this data, ithas produced a report, a copy of which is available onthe Steamship Mutual website at:
setting out the frequency and severity of “pilotage”incidents on a worldwide basis.
The frequency of casualties has ranged between thirty-seven and sixty-six per annum, with an average annualcost per incident between US$470,000 andUS$1,690,000. Although these figures are substantialthey do not appear to identify any particular trend.
Appendix I of the Report gives details of theMaster/Pilot Exchange (MPX) forms that should becompleted prior to each pilotage. A Group circular ofDecember 1998 encouraged shipowners to use theseMPX forms and Members should be reminded of theimportance of ensuring that such exchanges shouldtake place.
Enclosed as Appendix II is IMO Resolution A960outlining the recommendations for training andcertification of Maritime Pilots. The internationalresponse to this Resolution has been varied and many governments ignore it entirely. Accordingly, the Group is of the view that it should liaise withinterested industry bodies, such as the InternationalMaritime Pilots’ Association (IMPA), InternationalChamber of Shipping and International ShippingFederation, and governments to investigate thepossibility of making A960 mandatory such that allpilots will be required to be trained, certified andaudited to an international standard.
Article by Colin Williams ([email protected]).
PilotageIncidents
“ The frequency of
casualties has ranged
between thirty-seven and
sixty-six per annum ..”
www.simsl.com/PilotError.pdf
Sea Venture newsletter Issue 7
The new Steamship Mutual website goeslive this month and will allow improvednavigation and access to articles andinformation.
The remodelled website is the first step inthe process of making the Club moreaccessible via the web. The site willcontinue to be developed to enhance theservice provided by Steamship Mutual. To
assist in this process feedback will bewelcome as we consider the next stage ofthe project.
The look may have changed but theaddress remains the same:
Steamship Mutual launches New Website
4
(www.simsl.com)
BIMCO has recently issued a clausedesigned to address the allocation ofresponsibility between owners and timeCharterers for time and costs incurred asa consequence of complying withMARPOL Regulations relating to thedisposal of cargo residues.
The background to the clause isdiscussed in a Steamship Mutual websitearticle by Sacha Patel([email protected]):
Bimco Hold Cleaning / CargoResidue Clause
www.simsl.com/BIMCOHold0107.asp
Congratulations to Nikolaus W. Schües,Joint Managing partner of Reederei F.Laeisz, who, in a move that highlightsthe strong links between London andHamburg, was recently awarded theFreedom of the City of London.
Until 1835 the Freedom of the City wasessential to anyone who wished toexercise a trade in the City. It was firstawarded in 1237. A number of ancientprivileges were associated with it. Theyincluded the right to herd sheep overLondon bridge, to go about the City witha drawn sword, and if convicted of acapital offence, to be hung with a silkenrope. It is only since 1996 that theFreedom has been open to non British or Commonwealth citizens.
Reederei F. Laeisz is represented on theBoard of Steamship Mutual and has been a strong supporter of the Club for many years.
Freedom of the City of Londonawarded to Nikolaus W. Schües
Sea Venture newsletter Issue 7 7Sea Venture newsletter Issue 7 7
Since the last issue of Sea Venture was published inSeptember, 2006, Steamship Mutual’s association withVideotel Marine International has resulted in the releaseof a further training programme called “Pilot On Board! -Working Together”. This programme is directed towardsmasters and navigating officers, and its objective is toachieve improved integration of the pilot into the bridgeteam. The Club regularly experiences incidents whichoccur whilst a pilot is onboard and these can result insubstantial liabilities for the shipowner (see page 5 of thisissue of Sea Venture).
Even if incidents arise as the result of negligence on thepart of the pilot, it is rarely possible for the shipowner toavoid the financial consequences. In view of this, lossprevention is a better remedy than an attempt to seekrecourse after a casualty has occurred. There is often alack of understanding on the part of the bridge team ofprecisely what will be involved in the passage from thepilot station to berth. Equally, the pilot may lackimportant information about the vessel, her equipmentand characteristics. “Pilot On Board! - Working Together”promotes the need for a full exchange of informationbetween the master and the pilot, and will hopefullyresult in closer cooperation during passages underpilotage such that the risk of loss or damage is greatlyreduced.
This theme, of incidents involving pilotage, is continuedin another new product called “Sea News”, againproduced with Videotel. This takes the form of a news digest covering a small number of issues of topical interest, and a case study of a casualty. The first edition covers the ILO Maritime Labour Convention(see page 10 of this issue of Sea Venture), a case-studyof an incident that occurred when a vessel was underpilotage, a review of computer based training, and an examination of problems that arise in the use oftarget tracking devices.
Steamship Mutual and Videotel have also issued a newversion of their product “Training Matters”. This bookletand DVD emphasise the increasing importance oftraining, and explain how Steamship Mutual andVideotel cooperate in the production of trainingprogrammes. Details are also provided of the variousmeans by which onboard training can be provided byVideotel.
Other programmes produced by Steamship Mutual inassociation with Videotel this year address training onthe following topics:
• Freefall Lifeboats• Minimising Fatigue - Maximising Performance• Environmental Officer Training Course
Further details of these programmes, and of any othersproduced by Videotel in association with the Club can beobtained from Chris Adams ([email protected]).
LossPreventionPublications
“…loss prevention
is a better remedy
than an attempt
to seek recourse
after a casualty
has occurred.”
Sea Venture newsletter Issue 7
China - First Step towards Recognitionand Enforcement of Foreign Awards
6
Foreign parties involved in disputes withChinese companies encounter numerousdifficulties. A major hindrance is inenforcing foreign court judgments. Chinahas signed very few judicial-assistancetreaties, thus hampering the developmentof a system to litigate such disputes at aninternational level. Yet foreign courtjudgments are rarely recognised in China.Under the present circumstances,therefore, the foreign company is usuallyobliged to litigate directly in China.
On 14 July 2006, the Supreme People’sCourt and the government of the HongKong Special Administrative Regionsigned and published the Arrangementon Reciprocal Recognition andEnforcement of Judgments in Civil andCommercial Matters by the Courts of theMainland and of the Hong Kong SpecialAdministrative Region. This Arrangementprovides a first opening for civil andcommercial awards in Hong Kong to be enforced against assets in China, and vice versa, and will come into force once guidelines have beenpublished by both sides.
Although internal procedural guidelineshave yet to be finalized, July’sArrangement already provides certainconditions for recognition andenforcement. It is necessary, for example,for a Choice of Court clause to have beenagreed in writing between the twoparties before the ‘Hong Kong route’ canbe pursued. Cases generally include civiland commercial monetary cases, and theArrangement only applies to judgmentsthat cannot be appealed under generalcivil procedures. Additionally, strict time
limits of between six months and oneyear apply to recognition andenforcement of a judgment.
Given the close business ties betweenHong Kong and mainland China, thesereciprocal enforcement arrangements mayhave a considerable impact. As lawyersand businesses take the new contractualterms into account, this impact shouldincrease. This new route may prove to beespecially favorable for those withcommon law expertise, although thereare at present certain constraints to itseffectiveness. For example, the issue ofprovisional remedy, such as propertypreservation or injunctions, remainsunresolved. This is a major considerationin such disputes, as the Chinese partyfrequently transfers its properties in thecourse of a litigation to frustrate a finaljudgment.
Despite these complexities, the openingof a new route will please those foreigncompanies that would prefer to litigateoutside Mainland China, even if theopposing party has assets in China only.An awareness of the Arrangement’svarious clauses and requirements willenable businesses to plan ahead andmake best use of the new legal situation.
Article by Janet Ching([email protected]), based on thefull article by Wang Jing & Co Law Firmwhich is, with their kind permission,reproduced on the Steamship Mutualwebsite at:
www.simsl.com/HKChinaRecog0107.asp
In 2003, and following the Erika and Prestigecasualties fines for oil pollution off the French coastwere increased substantially to a maximum Euro1,000,000, or the value of the vessel, or four times thevalue of cargo on board and freight. In additionspecialized Courts were established at Le Havre, Brest,and Marseille to deal with such incidents.
The Court at Brest covers incidents in the Atlantic andhas over the last three years heard 30 cases. In morethan half of these cases the shipowner against whomthe allegation of pollution has been directed has beenrepresented before the court by Christophe Nicolas ofRichemont Nicolas & Associes, Paris. In an articlewritten for the Steamship Mutual website
Christophe shares his experience, describes the Frenchsystem, some of the defences available to theshipowner and sets out a number of recommendationsto be followed by the master in the event his vessel isalleged to have caused or to be the source of apollution incident.
French Law -Oil PollutionProsecutions
www.simsl.com/FrenchPollution0107.asp
Sea Venture newsletter Issue 7 9
Going to the aid of those in distress is afundamental principle by which mostseafarers live. Unfortunately some countriesare less sympathetic than others whenasked to assist in easing the smoothpassage ashore of those saved at sea. It ishoped that this situation may improve afterrecent IMO amendments coveringobligations now imposed upon ship’smasters and Member States whenrendering assistance to refugees and/orasylum seekers. An article prepared by DanCarr, Assistant General Counsel for Stolt-Nielsen Transportation Group Inc., and DonMurnane and Daniel Fitzgerald of FreehillHogan & Mahar, New York, discussingthese amendments can be read at page 14of this issue of Sea Venture
The IMO amendments came into force inJuly 2006. The Club has recently hadexperience of their impact when amember’s vessel, the ‘Stolt Guardian’, cameto the aid of a small craft in the Gulf ofMexico. The boat sank shortly after the lastof the 8 occupants scrambled onboard. Allthe occupants were carrying identity papersconfirming they were refugees from Cuba.
The vessel was scheduled to transit the Panama canal. Prior to the IMOamendments the authorities in Panamararely allowed such people to be landedashore and, if they could be persuadedotherwise, the shipowner probably wouldhave been required to pay for their welfare and security until their status was determined.
Fortunately, after the Club’s Panamaniancorrespondent brought the authorities’attention to their obligations under theIMO amendments, and contact had alsobeen made with the local US Embassy,the regional Rescue Co-Ordination Centre(RCC) and Office of the United NationsHigh Commissioner for Refugees(UNHCR) in Switzerland, the refugeeswere allowed to disembark withoutsignificant delay to the vessel, andwithout any requirement that theshipowner should have to bear any futureresponsibility.
Achieving this successful outcome was byno means straightforward and theauthorities’ initial reaction was perhapsnot surprising given the recent nature ofthe regulatory amendments. Althoughassistance can be sought form the Cluband Club’s correspondents in thesecircumstances the joint IMO/UNHCRpublication on this subject, entitled‘Rescue at Sea’, is a useful referencesource. The ‘Procedures’ section gives thefollowing guidance to the master ifsomeone in distress at sea is rescued andclaims asylum:
• Alert the closest RCC;
• Contact UNHCR;
• Do not ask for disembarkation in thecountry of origin or from which theindividual has fled;
• Do not share personal informationregarding the asylum-seekers withthe authorities of that country, orwith others who might convey thisinformation to those authorities.’
The ‘Rescue at Sea’ guide can be foundon the Steamship Mutual Website at:
Article by Mark Underhill ([email protected])
Rescue Respite for the Shipowner?
Sea Venture newsletter Issue 78
www.simsl.com/SAR_SOLASAmends_IMOLeaflet.asp
There have been a number of LMAA decisions reportedsince the last edition of Sea Venture. Of particularinterest have been disputes on when a fixture that isnegotiated “subject to details” is fixed,
the proper measure of damages arising from the lateredelivery of a vessel by Charterers,
as well as Charterers’ liability for demurrage when delaywas caused by their refusal to discharge cargo untilsecurity for alleged cargo damage claims had beenprovided by or on behalf of owners
These decisions are discussed by Sian Morris([email protected]) in articles written for theSteamship Mutual website - see links above.
RecentArbitrationAwards (www.simsl.com/SubjectDetails0107.asp)
(www.simsl.com/LateRedelivery0107.asp)
(www.simsl.com/Demurrage0107.asp).
Brazil -Carrier’sLiability forUnauthorisedImportedMerchandise
Sea Venture newsletter Issue 7 11Sea Venture newsletter Issue 710
Article 24 of Medida Privisoria No. 320, dated 24August 2006, is a provisory measure.
The article imposes an obligation on an importer toreturn or destroy cargo which is not authorised forimport pursuant to environmental, health, securitylegislation or sanitary regulations. In the past thisobligation was solely directed to the importer. Theproposed article, however, provides that an owner willbe liable if the cargo is covered under a bill of ladingissued “to order” or to a non-existent individual orcorporation with an unknown address.
The new regulation provides for fines equivalent to tentimes the value of the freight, plus the costs incurredin returning or destroying the cargo. Therefore, theconsequences of contravention are significant.
The measure is clearly aimed at reducing the costsincurred by customs for storage and destruction ofunauthorised cargo. This has, apparently, been anendemic problem in some Brazillian ports for aconsiderable time.
Cases where a negotiable document is issued, such asa to order bill of lading, where the final receivers ofthe cargo are not readily known to the ship owner,will be problematic; This legislation clearly poses anadditional burden on the carrier to ensure that theaddress and a contact details of the receiver areavailable and that these can be verified. In this waythe risk of liability for unauthorised imports becomesthe responsibility of the receiver. Receivers should benotified repeatedly of the fact that the cargo is at theirdisposal, once it is discharged from the vessel.
This is, as yet, only a provisional measure. Congresswill vote on 23rd December to decide whether itshould become law (with or without amendment).
Whilst there is a possibility that liability may becovered under the Club Rule relating to ”failure ofcargo interests to collect cargo”, Members are advised to follow the steps mentioned above toprotect their interests.
Fines imposed under this Provisory Regulation, do notfall squarely within the types of fines contemplated bythe Club’s Rules. For this type of fine to be coveredunder the heading of “Other Fines” (Rule 25xvi (e))Members would have to show that they took allnecessary steps as would appear reasonable to theDirectors to avoid the event giving rise to the fine.
Article by Luis Ongay ([email protected])
“ The new regulation
provides for fines
equivalent to ten
times the value of
the freight ..”
“What is fundamentally different about thisConvention is that it is about qualityshipping. Beyond improving the workingconditions of the seafarers, it is also aboutfurther marginalising the bad shipownerswho end up costing the entire industry.This is a very sound economic benefit forthe entire industry” (Bruce Cariton of theMaritime Lawyers Association of the USA).
New maritime labour standards wereestablished at the 94th International Labour
Conference last February in Geneva. Exceptfor the four abstentions, a unanimous 314votes were cast in favour of adopting theNew Maritime Labour Convention 2006.This “super Convention” consolidates andupdates more than 54 international labourstandards adopted since 1920. The newConvention lays out seafarers’ rights todecent work conditions. It is meant to beeasily understandable, globally applicable,readily updatable and uniformlyenforceable. Primarily, the 2006 Conventionprovides a comprehensive Charter forseafarers and shipowners.
In an article written for the SteamshipMutual website, Larry Kaye, of Kaye Roseand Partners, San Diego, explains the aimsand of the Convention and mechanisms bywhich these will be achieved once it comesinto force. The article can be found at:
The New ILO Consolidated MaritimeLabour Convention - Charting LabourStandards for the Future
www.simsl.com/MLC0107.asp
The question of whether delivery under astraight bill of lading requires production ofan original bill has recently been throwninto confusion in Hong Kong following therecent first instance decision of Mr JusticeStone in Carewins Development (China) Ltdv Bright Fortune Shipping Ltd. In hisjudgment Stone J relied on the Singaporeancase of Voss v APL Co Pte Ltd andcomments made in the English case, the“Rafaela S,” in the House of Lords thatarguably were obiter dicta, to find thatproduction of an original bill of lading was acondition precedent to the delivery of goodsunder a straight bill of lading. Stone J wentso far as to affirm the obiter comments ofLord Bingham in the House of Lords andagreed that, if necessary, he too would hold
presentation of an original bill of lading tobe a necessary pre-condition to delivery,even where there was no express provisionto that effect within the bill.
This latest decision would seem to conflictwith that handed down by Mr JusticeWaung in the first instance decision in the“Brij” in July 2000. In light of theseconflicting decisions the situation in HongKong with regard to delivery under straightbills of lading remains uncertain.
This decision is discussed in further detail by Sue Watkins ([email protected])in an article prepared for the SteamshipMutual website:
Hong Kong - Conflicting Decisions onDelivery under Straight Bills of Lading
www.simsl.com/BrightFortune0107.asp
Sea Venture newsletter Issue 7 13Sea Venture newsletter Issue 712
The European Court of Justice (the ECJ)now has before it an important caseconcerning the EU Ship Source PollutionDirective (35/2005). The Directive seeks tocriminalise accidental pollution. The case issignificant not just for the shippingindustry but also to clarify European Union(EU) and European Economic Area (EEA)Member States’ obligations. It examinesthe inter-relationship between aninternational regime established by treatiesand contrasting legislation emanating fromthe EU. The Directive, which was hastilydrawn up following the Prestige incident,is very broad in its scope. It appliesirrespective of flag and its provisions applynot just within States’ territorial seas butalso within their Exclusive Economic Zones(EEZ) and on the High Seas.
A broad coalition of interests within theshipping industry is seeking clarification bythe ECJ in Luxembourg as to the legality ofthe Ship Source Pollution Directive. Theshipping industry submits that it goesbeyond the provisions laid down inMARPOL and UNCLOS, which they sayestablish a uniform regime. The Directiveseeks to criminalise pollution when causedwith intent, recklessness or with seriousnegligence. This last test of culpability, it issubmitted, does not satisfy the EUrequirement of legal certainty. There isconcern that if the consequences of thepollution are serious, then the degree offault will also be taken to be serious.
The coalition of shipping interests is led byINTERTANKO, joined by INTERCARGO, theGreek Shipping Cooperation Committee,the International Salvage Union andLloyd’s Register. All these claimants arevery concerned about the Directive andthe increased exposure to criminal liabilityfor their members. Seafarers and salvors,who are in the front line in the event ofany casualty, are particularly concernedand do not wish to be exposed to ill-defined legislation that may be used “inthe heat of the moment” as a means tosatisfy the public’s demand foraccountability and retribution.
The case was brought before the ECJ uponthe reference of the English High Court ofJustice following the judgment of MrJustice Hodge on 30th June 2006. The ECJis the only body that can rule on thelegality of EU legislation. Cases are notlightly referred to the ECJ. The claimantshad to show that their case was “wellfounded”. The court interpreted this asmeaning that the claimants had “areasonable prospect of success”. The HighCourt referred four key questions to theECJ for preliminary ruling. Meanwhile theproceedings before the High Court werestayed. The questions referred to the ECJwere:
(1) Whether it is lawful for the EU to impose criminal liability in respect of discharges from foreign flag ships on the high seas or in the Exclusive Economic Zone, and to limit MARPOL defences in such cases.
(2) Whether it is lawful for the EU to exclude MARPOL defences for discharges in the territorial sea.
(3) Whether the imposition of criminal liability for discharges caused by “serious negligence” hampers the right of innocent passage.
(4) Whether the standard of liability in the Directive of “serious negligence” satisfies the requirement of legal certainty.
The law as regards matters of criminal lawmust not only be clear but crystal clear.The test of serious negligence gives rise toconcern. Its ambiguity may well leadnational courts seeking to apply the test tolook to the consequences of the act(s) and,if they are serious, they may hold thenegligence to have been serious. A majoroil pollution incident is one of the mosthighly politically charged events and thereaction of the public is often one ofoutrage. Due to the Directive there isincreased possibility that individuals may be held to be criminally liable.
It must be emphasised that the shippingindustry does not in any way condoneillegal acts causing pollution to the marine
environment. But accidents can happenand whilst adequate compensation shouldbe available, it should not follow as amatter of course that someone should becriminally liable.
The shipping industry provides an efficientand environmentally friendly transportationsolution for the global economy. Its seafarers often work in demandingcircumstances and their dedication to dutyis rarely recognised sufficiently. Creating anuncertain criminal liability regime will donothing to ensure adequate retentionlevels or encourage recruitment ofprofessional mariners.
The claimants have now filed their writtensubmissions before the ECJ. EU and EEAMember States have also had theopportunity to file written observationsbefore the ECJ. It is understood that theGovernments of Greece, Cyprus andMalta have done so in support of theclaimants’ case.
Given that Member States must implementthe Directive by 1 April 2007 it wasrecognised by the High Court that the caseshould be considered expeditiously by theECJ. Despite these proceedings theDirective has not been in anywaysuspended. Member States must complywith the deadline set to bring their ownlaws into line with the Directive.
Now that written observations have beensubmitted the Judge Rapporteur will drawup a preliminary report which will bediscussed at a general meeting of theJudges and Advocates General. This will befollowed by an assignment of the case forthe formation of the Court, the size andchamber of which is decided by theRegistrar and possibly by intervention ofMember States. In effect this decides thenumber of judges who will sit on the panel(the maximum number being 13). A datewill then be fixed for an oral hearing.Whilst it is hoped that this will take placeduring 2007 it is not certain. After thehearing an Opinion is produced by theAdvocate General assigned to the case.There is no scope for the parties to makeadditional representations after seeing theOpinion, which may or may not beadopted by the court as the basis for itsdecision. The decision of the ECJ will befinal - there is no procedure for appeal.
This case has generated a great deal ofinterest from legal commentators in manyjurisdictions. The traditional legal order isbeing challenged. The shipping industry asa truly international industry is governed bya complex web of laws. Pre-eminent arethe international treaties that have beencarefully negotiated. These provide thebackbone to the legal order. The role ofthe International Maritime Organization(IMO) is pivotal, the IMO treaties are widelyratified and accepted, none more so thanMARPOL which is a truly global frameworkfor the industry. Where national or regionallaws are implemented it is vital that theydo not contradict binding treaty law thatso many States have also submitted to.
There is an analogy with a previous casebrought by the shipping industry. In thatcase INTERTANKO lead a challenge tocertain regulations concerning equipmentand manning of tankers enacted by theState of Washington in the U.S.(INTERTANKO v. Governor Locke). It wasargued that these were pre-empted byU.S. federal laws. The case was ultimatelydecided by the U.S. Supreme Court in2000, which ruled unanimously in favourof the shipping industry. That decision hasbecome the bedrock of U.S. jurisprudenceon issues as to pre-emption by Federallaws. That decision helped to reduce theproliferation of laws enacted by U.S.coastal States. Such an issue is once againbefore the U.S. courts this time concerningthe State of Massachusetts and their OilSpill Prevention Act of 2004. The DistrictCourt held in favour of the Shippingindustry ruling that the law was pre-empted by federal law. The State ofMassachusetts has filed an appeal and thematter is now before the U.S. Court ofAppeals for the First Circuit.
It is hoped that the decision of the ECJ willprovide clarity in the law, provide guidanceon the bounds of the EU’s competenceand confirm the pre-eminence ofinternational law as laid down in treaties.The court’s decision is awaited with greatinterest from commentators, States andthe shipping industry.
We are grateful to John C. Fawcett-Ellis,General Counsel, INTERTANKO for thisarticle. For further information see:
The Shipping Industry takes its Caseto the European Court of Justice
www.intertanko.com
Owing to the mutual nature of a P&I Association, it is inthe interest of all the Members to ensure that thepremium agreed by any particular Member for entry inthe Club is paid in full and the Managers of the Clubhave a duty to take steps to ensure that recovery is madefrom defaulting Members. The Club Rules, which formpart of the Member’s contract of insurance, endorse thisby stipulating that the Club shall have a contractual lienover each ship owned by the Member, for outstandingpremiums and any other sums whatsoever due to theClub in respect of that ship, or any other ship, enteredby the same Member. This contractual lien is in additionto any other rights available to the Club, including anymaritime lien or right in rem available by statute or otherlaw of any jurisdiction.
In the context of the bankruptcy of a former Member ofthe Club, the United States Court for the SouthernDistrict of Florida upheld the Club’s lien on an ownedvessel for amounts due to the Club in respect of unpaidP&I premiums on the vessel. The Court held there weretwo separate rights of lien available to the Club: amaritime lien on the vessel for necessaries in accordancewith United States statute (the Federal Maritime LienAct, “FMLA”); and a contractual lien as conferred by the Club Rules.
An issue remained in respect of quantum which theUnited States 11th Circuit Court of Appeals has recentlyresolved in the Club’s favour, finding that the maritimelien arises from the time the necessary (insurance) isprovided to the vessel at the inception of the policyperiod, not when invoiced. The Court found accordinglythat the Club’s lien included the total value of thepremium payable for the insurance provided to thevessel before her arrest and reversed the lower DistrictCourt’s finding that the lien only attached to the amountof the premium which the Club had invoiced at the timeof the arrest, which, because premium had been debitedin instalments, was a significantly lesser sum. The lowerCourt had also rejected the ship’s mortgagee’s argumentthat the lien be pro-rated for the period the vessel was inU.S. waters.
This decision sets a precedent in an important maritimeCircuit for the future lien rights of P&I Clubs for vesselsarrested in the US.
A more detailed article on the decision by ChristineGordon ([email protected]) can be foundon the Steamship Mutual website at:
Club’s Lienon Vessel forUnpaidPremiumupheld byUnited StatesEleventhCircuit CourtOf Appeals.
www.simsl.com/ClubLien0107.asp
“ …the Club’s lien
included the total value
of the premium payable
for the insurance
provided…”
Sea Venture newsletter Issue 7 15
Every year, thousands of migrants andasylum seekers undertake perilousjourneys at sea in search of safety, refugefrom persecution, or simply bettereconomic conditions. Under internationalmaritime law, vessel masters have anobligation to render assistance to those indistress at sea. In most circumstances, theembarkation of distressed persons presentnumerous logistical and politicalconsiderations for masters, owners andCharterers, which prevent timelydisembarkation to a place of safety. Inrecognition of this dilemma, theInternational Maritime Organization (IMO)has recently adopted amendments to tworelevant maritime conventions.
The 1974 International Convention for theSafety of Life at Sea (SOLAS Convention)obliges the
“master of a ship at sea which is in aposition to be able to provide assistance,on receiving information from any sourcethat persons are in distress at sea, isbound to proceed with all speed to theirassistance, if possible informing them orthe search and rescue service that the shipis doing so…”
The 1979 International Convention onMaritime Search and Rescue (SARConvention) obliges State Parties to:
“…ensure that assistance be provided toany person in distress at sea… regardlessof the nationality or status of such aperson or the circumstances in which thatperson is found”… and to “provide fortheir initial medical or other needs, anddeliver them to a place of safety.”
On 1 July 2006, amendments to theSOLAS and SAR Conventions concerningthe treatment of persons rescued at seaentered into force. The SOLASamendments add to and clarify theexisting obligations to provide assistance,adding the words: “This obligation toprovide assistance applies regardless ofthe nationality or status of such persons orthe circumstances in which they arefound.” Of further significance to vesselmasters, owners and charterers, is theamendments to the SOLAS and SARConventions mandating ContractingStates to (1) coordinate and cooperate to
ensure that masters of ships providingassistance by embarking persons indistress at sea are released from theirobligation with minimum further deviationfrom the ship’s intended voyage; and (2)arrange disembarkation as soon asreasonably practicable.
To the benefit of owners and charterersalike, these amendments firmly obligateContracting States to assist vessel masters.The overwhelming majority of memberstates of the IMO have adopted theSOLAS Convention. While not as popularas SOLAS, many member states haveadditionally adopted the SAR Convention.When making arrangements to disembarkpersons rescued at sea, vessel owners,Charterers, insurers and localcorrespondents would be well advised toengage immediately nearby ContractingStates at the onset of rescue efforts.
In the event that Contracting Statesappear unsure of their humanitarianobligations, the United Nations’ refugeeagency, UNHCR, and other local refugeerelief agencies should be consulted foradditional assistance. To further assistContracting States and vessel masters,the IMO published Resolution MSC.167(78), “Guidelines on the treatment ofpersons rescued at sea,” providing thatassisting vessels, serving as a temporaryplace of safety, should be relieved of thisresponsibility as soon as alternativearrangements can be made. The newamendments help resolve ambiguitiesand clarify obligations surrounding therescue of distressed persons while servingas an incentive to vessel masters to fulfilltheir obligations under internationalmaritime law.
We are grateful to Dan Carr, AssistantGeneral Counsel for Stolt-NielsenTransportation Group Inc. Don Murnane andDaniel Fitzgerald of Freehill Hogan & Mahar,New York for contributing this article.
A version of this article, which includesreferences to SOLAS, SAR and IMOsources, can be found on the SteamshipMutual website at:
Sea Venture newsletter Issue 7
Master’s Duty to rescue Persons at Seaand recent IMO Amendments
14
www.simsl.com/Rescue0107.asp
Sea Venture newsletter Issue 7 17Sea Venture newsletter Issue 716
Given the long term nature of the contract, a Contractof Affreightment (“COA”) is almost always tailor madeto meet the specific needs of the parties concerned.These parties are the shipper or buyer of the cargowho is often motivated by requiring certainty for thecosts of transportation, and the shipowner who isconcerned with providing assured long termemployment and flexibility for his owned or Charteredin tonnage. COAs enable shipowners to be flexibleand allow vessels to be fitted into a pattern of trade.However, it is rare that a COA makes the acceptanceof the nomination of a vessel the essence of thecontract, when delay in acceptance can havesubstantial consequences for the party nominating avessel, particularly in a rising market.
These issues are discussed in an article by Janet Ching([email protected]) on the Steamship Mutualwebsite at:
Contracts ofAffreightment- NominationTerms
www.simsl.com/COANomination0107.asp
Liability arising from delivery of cargo withoutproduction of bills of lading is not as of right coveredunder the Rules of the P&I Clubs.
In consequence, a carrier faced with a claim formisdelivery of cargo will be particularly concerned to know whether he can limit his liability under the package limitation provisions in the relevant bill of lading.
Until recently the generally accepted view was that a carrier who misdelivered cargo could not limit hisliability under the Hague or Hague-Visby Rules.However, that view now appears to be in doubt.
In an article written for the Steamship Mutual website at:
David Morriss of Holman Fenwick & Willan considersthe current state of the law, and how a Carrier may beable to limit or even avoid liability where there hasbeen a misdelivery of cargo.
Misdeliveryof Cargo
www.simsl.com/Misdelivery0107.asp
The United Nations Convention on theLaw of the Sea (UNCLOS) defines piracyas an act that takes place on the “highseas” outside the jurisdiction of any state.International Maritime Organisation(“IMO”) statistics demonstrate that mostattacks occur whilst a vessel is at anchoror in berth and within a state’s territorialwaters. Legally, such attacks are classifiedas armed robbery and fall under thejurisdiction of the coastal/port state inwhich the attack occurs.
Both piracy and armed robbery at sea are,though, threats to international trade.IMO compiles monthly reports on suchincidents, from which it is apparent thereare a number of global hot-spots. Inparticular, the Malacca Strait, SingaporeStrait and South China Sea are identifiedas the areas most affected in Asia.
Given the level of trade transiting thesewaterways, and the strategic importanceof the Malacca and Singapore Straits thethreat to the global economy cannot beunderestimated. It is important that thisthreat is actively challenged by the littoralstates and other stakeholders.
IMO has played a pivotal role indeveloping initiatives to address theproblem. It publishes recommendationsto Governments for the prevention andsuppression of piracy and armed robbery
and actively promotes co-operationbetween littoral states and stakeholders inthe areas most affected.
The Regional Co-operation Agreement onCombating Piracy and Armed Robberyagainst ships in Asia (ReCAAP) wasconcluded in Tokyo on November 2004by 16 countries. Following ratification by the majority the Member states,ReCAAP entered into force on the 4 September 2006.
Given the increased co-operation in theregion, there is cautious optimism thatthe co-ordination of the anti-piracymeasures will lead to an appreciablereduction in the number of attacks. The latest figures published by IMO andInternational Maritime Bureau (IMB)appear to suggest such an improvementis underway. These figures and the IMOrecommendations can be found at:
Further information on ReCAAP is givenin an article by Paul Amos([email protected]) on theSteamship Mutual website at:
Regional Cooperation Agreement onCombating Piracy and Armed Robberyin Asia (ReCAAP)
www.imo.org/includes/blastDataOnly.asp/data_id%3D16408/93b&w.pdf
www.simsl.com/ReCAAP0107.asp
www.icc-ccs.org/main/news.php?newsid=76.
On 8 September 2006, the People’s Court of the PRCprovided an interpretation on several issues of PRCarbitration law (“interpretation”). The current law wasimplemented in 1994. Even though the drafting of thecurrent law on arbitration was influenced by theUNCITRAL model law, PRC Arbitration Law is quitedifferent from that in other common law countries andhas been criticised for not being able to cope with therapid economic development in China in recent years.
The recent interpretation sought to clarify certainambiguities. It consolidated previous judicialinterpretations and focused on three key issues inarbitration, namely, (i) the validity of arbitrationagreements, (ii) applications for setting aside andappealing against arbitral awards and (iii) theenforcement of arbitral awards. The Interpretationreconfirms that the intentions of the parties should berecognised when deciding on the validity of arbitrationagreements and looks at the procedures to be appliedwhen validity is in question. It also clarifies when arbitralawards may be set aside and/or where an appeal maybe made to the Court against an award. TheInterpretation represents a concerted attempt by theChinese judiciary to rationalise the law on arbitrationand to move Chinese arbitration procedure into linewith International practice. However, the interpretationdid not deal with the status of foreign arbitration bodiesor their ability to conduct arbitration in China.
The recent interpretation is discussed in detail by ConnieLee ([email protected]) in an article written forthe Steamship Mutual Website at:
China -Validity ofArbitrationAgreements
http://www.simsl.com/ChinaArbitration0107.asp
“…PRC Arbitration
Law is quite different
from that in other
common law
countries…”
Sea Venture newsletter Issue 7 19Sea Venture newsletter Issue 718
It is important that ship owners are awareof potential pitfalls and problems whichmay be encountered when deliveringcargo when specific contractual stepshave been taken to try and protect their
position as against cargo claims under theCharterparty. Some of these issues wereraised in a recent dispute whenCharterers agreed to indemnify ownersagainst any cargo losses caused as aresult of following Charterers’ orders tocall at Yemen. An addendum to theCharter provided that the normal Inter-Club Agreement apportionment of cargoclaims between owners and Chartererswould not apply so that cargo shortageclaims, even if caused by owners’ fault,would be for Charterers’ account.
After the vessel had been detained bycargo receivers cargo claims for shortageand wet damage were settled by owners.Disputes arose under the Charterparty inrespect of liability for the cargo shortageand damage claims, as well as unpaid hirecovering the period of the vessel’sdetention. The disputes were arbitrated inLondon.
A summary of this case by James Foot ofMFB Solicitors can be found on theSteamship Mutual website at:
To circumvent the well-establishedprinciple of English law that the ownerhas an overriding right to be paid freight,tanker voyage Charters often containclauses purporting to allow Charterers tomake deductions from freight payment.
Whether Charterers were entitled to relyon such clause in circumstances wherethere was a short outturn of cargo whenthe cause of the shortage was notestablished was recently decided byarbitration in London. The clause wastitled “cargo clingage”, and gave
Charterers a right to deduct for shortagein excess of 0.5% of the bill of ladingquantity. However, the Charterers wereunable to establish the short outturn wasrelated to clingage and the Tribunaldecided in favour of the owners.
The reasoning of the Tribunal is discussed in an article by Sacha Patel([email protected]) which can be found on the Steamship Mutualwebsite at:
www.simsl.com/Indemnity0107.asp
www.simsl.com/Clingage0107.asp
Distinguishing Cargo Loss and DamageClaims in Charterparty Disputes
Freight Deduction under TankerVoyage Charter
Early October saw five Steamship Mutual lawyers andunderwriters travelling north to Liverpool to attendTaylor Marine’s ship familiarisation course.
Anja Perry, Bengi Ljubisavljevic, Janet Ching, MacarenaBandres and Dan Thomas exchanged their businessattire for hard hats, steel capped boots and highvisibility clothing to spend three days exploring thedocks and vessels. At Mersey Docks the team scrutinised the process of containers being checked in,photographed, sealed, and the monitoring of reefercontainers. They attended on board a bulk cargovessel discharging animal feed, a tug and ro-ro vessel,and were taken on a vessel tour from the dizzyheights of the bridge to the depths, noise and warmthof the engine room, questioning the master andengineers as they went.
There was also a visit to the dry dock at Birkenhead inthe pouring rain, but the highlight of the course wasthe 360º ship handling simulator at Lairdside MaritimeCentre. It was here that our gang of five pilotedvessels in and around the River Mersey with its strongcurrent, and raced from Calais to Dover, across busyshipping lanes, all without incident.
Ship-Shapeand BristolFashion
Sea Venture newsletter Issue 7 21Sea Venture newsletter Issue 7
The revised MARPOL Annex II “Regulationsfor the control of pollution by noxiousliquid substances in bulk” enter into forceon 1 January 2007. Under the revisedsystem substances are divided into fourcategories - X, Y, Z and “Other”. Theclassification of a substance as either amajor hazard to marine resources andhuman health, a hazard, a minor hazard oras posing no threat, will dictate whetherdischarge is prohibited, restricted (to agreater or lesser degree) or permitted.
The potential for marine pollution posedby thousands of chemicals has beenevaluated by the Evaluation of HazardousSubstances Working Group at IMO, giving a resultant GESAMP2 Hazard Profile whichindexes the substance according to its bio-accumulation; bio-degradation; acute toxicity; chronic toxicity; long-termhealth effects; and effects on marinewildlife and habitats.
The revision of MARPOL Annex II is asignificant step forward in the preventionof marine pollution. The Paris MOU hasannounced its commitment to theenforcement of the new requirements:With effect from 1 January 2007 port
state control inspections in the Paris MOUregion will include, but not be limited to,verification of:
• Validity of the Certificate of Fitness(CoF) for the Carriage of LiquidChemicals in Bulk;
• Validity and approved Procedures andArrangements Manual on board;
• Products on board in accordance withthe CoF and as per revised list;
• New operational requirementsfollowed and recorded;
• STCW requirements regarding therelevant and appropriate certificatesand endorsement of duly authorizedcertificates in accordance with Reg. V-1 and 2
Vessels which are deficient in any of theseaspects may face action by port statecontrol officers, including detention.
Article by Naomi Cohen([email protected])
20
Noxious Liquid Substances in Bulk- Strict Enforcement of MARPOLAnnex II in Paris MOU Ports
“…the highlight of the
course was the 360º
ship handling
simulator”
After two years of discussion by theMexican legislature the new law ofNavigation and Maritime Commerceentered into force on 1 July 2006. Thelaw gives precedence to internationaltreaties ratified by Mexico so as topromote consistency with other
jurisdictions, for example, in matterscovered by the Hague Visby Rules,CLC/FUND Conventions, 1976 LimitationConvention, Salvage Convention,COLREGS, and MARPOL
There are also prescribed time limits forclaims brought under specific types ofcontracts, provisions in relation totowage liabilities, the arrest of vesselsand jurisdiction for claims secured by thearrest of a vessel, as well as arequirement that all vessels navigating inMexican waters must have P&I insurance.
The new Mexican Law of Navigation andMaritime Commerce is discussed in anarticle by Luis Ongay([email protected]) on theSteamship Mutual website at:
New Mexican Law of Navigation andMaritime Commerce
www.simsl.com/MexicoNewLaw0107.asp
Sea Venture newsletter Issue 7 23Sea Venture newsletter Issue 722
Steamship Mutual has recently undertakena review of package limitations in a largenumber of jurisdictions. The informationcollated has been used to update theearlier schedule on package limitationwhich appeared in the June 1999 editionof Sea Venture.
In many jurisdictions there has been nochange in the law as it relates to package
limitation whilst in some jurisdictionschanges are imminent. Rather than publish periodic reviews a “living”schedule will in future be available onSteamship Mutual’s website
which, with the assistance of the Club’scorrespondents, will be updated as andwhen details of changes are received. Inthis respect, we greatly appreciate theircooperation to date and look forward tothe continuing assistance of our manycorrespondents.
We would be very pleased to hear fromthose who wish to provide information ofdevelopments in jurisdictions already listedin our schedule as well as from jurisdictionswhich so far have not been included.
Comments should be addressed to JaneGray ([email protected]) or to theusual Sea Venture address.
Package Limitation Revisited
The following are some of the articles published based on the outcome of the 55th session of IMO’s Marine Environment Protection Committee in October 2006:
• Ballast Water Management - IMO Guidelineswww.simsl.com/Ballast1106.asp
• Air Pollution - North Sea SECA in Forcewww.simsl.com/AirPoll_NSeaSECA1106.asp
• Southern South Africa - Special Area under MARPOL Annex Iwww.simsl.com/SA_SpecialArea1106.asp
• Air Pollution - Developments at IMOwww.simsl.com/MARPOLVI1106.asp
Other articles include:
• Ukraine - New Customs Codewww.simsl.com/UkraineCustoms0107.asp
• Dakar - Customs Fineswww.simsl.com/Dakar_CustomsFines1106.asp
• Rescue at Sea - IMO/UNHCR Guide www.simsl.com/SAR_SOLASAmends_IMOLeaflet.asp
• Update/Clarification on e-NOA/D Filingswww.simsl.com/US_eNOAD1106.asp
Articles Published on the SteamshipMutualWebsite
2006 Mid Year Review
The Club published its 2006 Mid Year Review inDecember, providing Members with an update on theClub’s progress in preparation for the forthcomingrenewal. The Review features information about newentries, investment income, cash and investments,claims per GT, pool claims, combined pure underwritingsurplus and the standard increase for 2007/08 set at9% for all classes, with a 10% increase in deductiblesfor Class 1 P&I. Members received hard copies of theReview in December. It can also be found on theSteamship Mutual website at:
www.simsl.com/MidYearReview.html
RecentPublications
(www.simsl.com/PackageLimitationsurvey.pdf)
For further information please contact:
Steamship Insurance Management Services LimitedAquatical House,39 Bell Lane, London E1 7LU. Telephone: +44 (0)20 7247 5490 and +44 (0)20 7895 8490 Email: [email protected]
Website: www.simsl.com