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TRANSCRIPT
Sea Venture newsletter Issue 5
Introduction........................................3
CMA CGM - Proud Sponsors ofDame Ellen MacArthur’s Asia Tour ....4
“Spam” Email or Effective Service? ..5
China - Evidence of Adequate Stowage and Lashing ........................5
Salvage - Review of SCOPIC Rates ....6
Arab Boycott Of Israel - Maritime Implications ......................7
Stowage of Dangerous Goods - Who is Responsible - An Update ......8
China - Delivery Under a Straight Bill of Lading and Choice of Law ......9
U.S. - Alcohol and Drug Testing Requirements ........................9
The Practical v Effective Cause of Loss and the Inter Club Agreement 10
Bird Flu - Contractual Implications ..10
Nominal Arbitration Awards- Beware Cost Penalties....................11
U.S. Ports - Electronic Submission of Advance Information - eNOA and APIS ............................12
The “Doric Pride” - Outcome Of Owners’ Appeal..........14
STOPIA 2006 and TOPIA -Developments in Compensation for Oil Pollution Damage ................14
Ship v Shore Figures ........................15
What Constitutes a
Binding Agreement? ........................16
Enforcing an Express
Jurisdiction Clause ..........................16
Hooked Up - When the Duty to
Exercise Due Diligence Bites ..........17
Three Men in a Tub - What
Constitutes a Vessel under
the Jones Act?..................................17
Ballast Water Management ............18
Illegal Oily Waste Discharges ..........19
Are You Ready For Competition? ....20
The Cost of Deviation to
Interim Ports ....................................21
Cargo Shortfall -
Who Bears the Cost? ......................21
Liability of North American
Rail Carriers - One Continent,
Two Systems ....................................22
Recent Publications ..........................23
Articles Published on the
Steamship Mutual Website..............23
Contents
2
Editorial TeamNaomi Cohen Malcolm Shelmerdine
Sea Venture is available in electronic format. If you wouldlike to receive additional copies of this issue or futureissues in this format please send your name and emailaddress to [email protected].
Feedback and suggestions for future topics should also besent to this address.
In considering the level of the standard increase for the2006 year the Directors felt able to set the increase at alower level than has been seen in previous years. Thisturned out to be at the lower end of the range set byInternational Group Clubs. The intention was to strike abalance between the need to continue improving theunderwriting result whilst acknowledging the soundfinancial position of the Club. But an increase is still anincrease. It was therefore not a complete surprise thathard negotiations ensued. The fact that freight rateswere off their 2004 peaks, added to the improvement inMembers’ records probably only strengthened the naturaldetermination of shipowners to get the best deal possible.It is pleasing to be able to report that by the completionof the renewal a satisfactory increase had been achievedwithout the loss of valued Members.
At the renewal there was a net increase of ownedtonnage of 1,600,243, equivalent to 4% of the ownedentered tonnage. We are pleased to welcome newMembers from China, Germany, Slovenia and the UnitedStates. Several Members increased their entered tonnageby transferring tonnage from other International GroupClubs. Prior to the renewal and during the course of theyear there was a net increase of tonnage of 1,459,427.Taken together this represents an 8% increase in enteredowned tonnage. Given that the world fleet is growing byapproximately 7% per annum, the Club’s enteredtonnage is growing in a measured manner.
Growth in tonnage by itself is not necessarily beneficial. It is essential that any growth in entered tonnage doesnot detract from the sound underwriting base of theClub. The realistic assessment of risk, vigilance inreviewing ship management standards, resisting the lureof new tonnage at uneconomic rates, will all play theirpart. We are fortunate to be currently enjoying benigneconomic circumstances reflected in satisfactory freightrates and growth in world shipping. History teaches usthat more challenging times must inevitably lie ahead. It behoves us to ensure that we are fit and ready for these challenges as and when they occur.
Gary Rynsard
1st May 2006
Introduction
“It is essential that any
growth in entered tonnage
does not detract from the
sound underwriting base
of the Club.”
Sea Venture newsletter Issue 5 3
Sea Venture newsletter Issue 5
CMA CGM - Proud Sponsors of DameEllen MacArthur’s Asia Tour
4
CMA CGM played a crucial part in DameEllen’s Asia Tour when on 9 February 2006Dame Ellen’s trimaran was loaded on tothe forward hatches of the "CMA CGMBizet", a 6,662-TEUS container carrierentered with Steamship Mutual, for the23 day voyage from Southampton toHong Kong. The 75 foot long trimaranwas loaded onto cradles on a bed of 2640 foot platforms occupying 84 TEUS andwas securely lashed with nylon lashings soas to avoid damage to the hull. CMACGM's bill of lading was claused with thenormal deck carriage wording.
Dame Ellen’s tour of Asia's largest citiesbegan on 25 March and will end in earlyMay. She aims to visit Japan, SouthKorea, Vietnam, Singapore, Taiwan andfive major cities in China. This is the firsttime Dame Ellen will have sailed hertrimaran in Asia and she hopes to set anumber of sailing records along theChinese coast.
Once her Asian Tour is complete, CMACGM will be transporting Dame Ellen'sTrimaran back to Le Havre from Singaporeon 23 May onboard the “CMA CGMElbe”, a 3,000-TEUS container carrier.
Is service of notification of arbitration by emaileffective service for the purposes of the ArbitrationAct 1996? This was the question before the EnglishCommercial Court when an application challenging anarbitration award was made on the grounds of seriousirregularity. Charterers claimed to have been unawareof the proceedings which Owners had purported toserve by email. The notification of arbitration and allsubsequent correspondence had been sent by emailand had allegedly been ignored as “spam”.
The facts of the case and the decision in Bernuth Lines Ltd v High Seas Shipping Ltd (“The EasternNavigator”) are discussed in greater detail in a casereport by Sian Morris ([email protected]) whichcan be found on the Steamship Mutual website at:
Sea Venture newsletter Issue 5 5
www.simsl.com/Articles/EasternNavigator0406.asp
“notification of
arbitration...had been
sent by email and had
allegedly been ignored
as “spam” ”
“Spam”Email OrEffectiveService?
The second article in a series focussing on maritimecases in the People’s Republic of China (see SeaVenture issue 4 “China - Emerging Trends in MaritimeLitigation”) looks at another decision from theShanghai Maritime Court.
Rohan Bray’s case note on PICC Jinhua Branch v The Charterers of the“Ville De Tanya” considers theinteraction of the carrier’s obligation properly andcarefully to stow cargo and the error of navigationdefence under the PRC Maritime Code. This case alsosheds some light on the issue of how the PRC courtswill treat choice of law clauses in standard form billsof lading.
Rohan’s article can be found on the Steamship Mutualwebsite at:
www.simsl.com/Articles/PICC0406.asp
China -Evidence ofAdequateStowage andLashing
Sea Venture newsletter Issue 5
SCOPIC - the Special Compensation P & IClause - was introduced in August 1999to provide an alternative to Article 14 ofLOF in order to allow a simplified methodfor dealing with special compensationunder salvage contracts.
The clause provides that the ShipownersCasualty Representative (SCR) committee(comprising 3 representatives from ship-owners, salvors, property insurers and theP&I Clubs) should review the SCOPICrates for personnel and equipment on anannual basis.
In order to ensure that salvors undertakesalvage work and thereby protect theenvironment in cases where the chancesof saving property are doubtful, it hasalways been the intention that SCOPICrates be generous and encouraging and,in that sense, “profitable”.
Reviews in previous years had notconsidered any adjustment in the rates to be necessary. However, a review ofpersonnel rates undertaken by 2independent salvage experts in 2005indicated that the value of these rateshas been eroded by inflation in the 6years since their introduction to theextent that, whilst they are stillconsidered to be “profitable”, they arenow only marginally so.
Accordingly, it has been agreed that:
• there will be a 10% increase inpersonnel rates for all salvagecontracts incorporating SCOPICsigned after 1 January 2006;
• there will be a moratorium onSCOPIC rate increases for tugs andportable salvage equipment untilSeptember 2006 to allow time for areview as to the actual daily cost ofthis equipment. The ISU will arrangefor the collection of all the necessarydata so that the SCR committee canundertake such a review;
• following this review, tariff rates fortugs and equipment will be adjustedto reflect actual cost plus an agreedpercentage mark-up;
• thereafter, SCOPIC tariff rate reviewsfor personnel, tugs and equipment willbe undertaken on a triennial basis.
With thanks to Colin Williams([email protected]) forpreparing this article.
Further information on Salvage, SCOPICand related issues can be found on theSteamship Mutual website at:
Salvage - Review of SCOPIC Rates
6
www.simsl.com/Articles/Contents/S_Contents.asp#Salvage
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The Central Office of the Arab Boycott of Israel inDamascus (the Central Boycott Office) was establishedby the Arab League in 1951. Enforcement of theboycott varies widely from country to country withinthe Arab League.
In a maritime context, ships calling at an Arab Leagueport after calling at an Israeli port will have theirnames and other details placed on the blacklistmaintained at the Central Boycott Office. These detailsare circulated to the national Boycott offices of otherStates in the Arab League. The countries that applyand enforce the Boycott most strictly are Iraq,Lebanon, Libya and Syria.
Blacklisting is based on a vessel’s IMO number andthus changes in name or ownership will not affectblacklisting. The consequences of blacklisting include:
• Loading or discharging cargo may be prohibited
• Detention
• Fines
• Impact on sale of a vessel due to warranty that thevessel is not the subject of blacklisting
• Removal from the blacklist is a complicated andtime consuming process
• A vessel which has been removed from theblacklist but is subsequently discovered to havecalled again at an Israeli port will blacklistedpermanently.
Further information about the Boycott and the de-blacklisting procedure is given in an article based oninformation supplied by Elias Marine Consultants,Cyprus. The article can be found on the SteamshipMutual Website at:
Arab BoycottOf Israel -MaritimeImplications
Sea Venture newsletter Issue 5 7
“...ships calling at an
Arab League port after
calling at an Israeli port
will have their names
and other details placed
on the blacklist”
www.simsl.com/Articles/ArabBoycott0406.asp
Sea Venture newsletter Issue 5
In Sea Venture issue 2, the decision of theLondon Tribunal dealing with the divisionof responsibility between Owners andCharterers for the stowage of dangerousgoods on board a container vessel wasdiscussed. The vessel was chartered on anNYPE charterparty with an unamendedclause 8 (that is without the addition ofthe words “and responsibility”).
The Tribunal had decided the Chartererswere responsible for damage to both thevessel and cargo caused by the stowage
of a container in contravention of theIMDG Code. The Charterers appealed thedecision before the High Court in Londonarguing that the arbitrators had erred intheir interpretation of the relationshipbetween clause 8 and the Hague-VisbyRules in the Charterparty.
In addition to the clause 8 issue theCharterers also appealed the Tribunal’sdecision to allow Owners the defence of“Error of Management” of the vessel ifthe heating of the bunker tanks hadbeen causative of the explosion.
The decision of the High Court washanded down on the 14 March 2006.Both issues are discussed in further detail in an article by Neil Watson([email protected]) which can befound on the Steamship Mutual website at:
Stowage of Dangerous Goods - Who is Responsible - An Update
8
www.simsl.com/Articles/DangStow0406.asp
China -DeliveryUnder aStraight Billof Lading andChoice ofLaw
U.S. - Alcoholand DrugTestingRequirements
Sea Venture newsletter Issue 5 9
During the Thirteenth National Seminar on MaritimeAdjudication held in September 2004, the judges ofChina’s maritime courts and appeal courts reached acommon understanding that the carrier is obliged todeliver cargo under a straight bill of lading againstsurrender of the original bill of lading. However, sucha common understanding is limited to cases whereChinese law is the applicable law.
The Chinese Higher Court of Guangdong Province hasrecently confirmed that disputes concerning the deliveryof cargo without production of a bill of lading arecontractual disputes. This raises the question of whatview the Chinese courts will take when the applicablelaw is not Chinese and, in particular, if the applicablelaw differs from Chinese law or is unclear on the issue.
Wang Jing & Co law firm acted in a recent case in whichthe choice of law under the bill of lading did, in fact,conflict with Chinese law. This case is discussed by SueWatkins ([email protected]) and Wang Jing &Co law firm in a joint article prepared for the SteamshipMutual website. The article also contrasts the decision inthat case with the current approach of English law tothe question of delivery of cargo without production ofa straight bill of lading:
New U.S. Coast Guard requirements for alcohol anddrug testing after “a serious marine incident” comeinto force on 20 June 2006; Foreign and U.S. flagvessels are required to have alcohol testing devices onboard and saliva has been authorised as an acceptablespecimen for alcohol testing.
The new requirements include some changes to theexisting regime on the timing for taking a sample, thenumber of testing devices to be carried on board andthe requirement for personnel trained in sampletaking. There are also provisions addressing the stepsto be taken when it has not been possible to comply,such as when samples have not been taken within therequired timeframes or where an individual refuses togive a sample.
Further details are provided in an article on theSteamship Mutual website based on informationsupplied by ECM Maritime:
www.simsl.com/Articles/US_ChemTest0106.asp
www.simsl.com/Articles/Guangzhou0406.asp
Shipping contracts in use today do notcontain any specific provisions dealing withbird flu. However, certain existing clauses,particularly in charterparties, may assist shouldproblems occur.
Duncan Howard ([email protected])considers the contractual implications of bird flu in the shipping industry in his article written for the Steamship Mutual website:
See also website article “Avian Influenza -Guidance” at:
which provides links to useful World HealthOrganisation (WHO) website pages.
The recent decision in Kamilla Hans-PeterEckhoff KG v. A.C. Oerssleff’s ETFT A/B,“The Kamilla”, is a reminder of theapproach that the English courts haveadopted when dealing with disputesconcerning the application of the Inter-Club Agreement (ICA) to cargo claims.
In “The Kamilla”, although unseaworthinessof the vessel resulted in approximately 1%of the cargo being damaged, the entirecargo was rejected. Owners argued thatthis scale of loss was not within thereasonable contemplation of the partiesand as such, the loss was not caused byunseaworthiness. Owners said that the lossshould have been regarded as a shortageclaim, for which Charterers would havebeen, at the very least under the ICA,equally responsible.
Should the ICA be employed as a form of"rough and ready justice" or should issuesof practical or effective causation be takeninto account when applying the ICAformula to settle cargo claims? AbigailCooles ([email protected])reviews this and earlier decisions in relationto the ICA in an article on the SteamshipMutual website at
The Practical v Effective Cause of Loss and the Inter Club Agreement
Sea Venture newsletter Issue 510
www.simsl.com/Articles/Kamilla0406.asp
Although the H5N1 (bird flu) virus has beenlargely confined to the Far East countries ofVietnam, Indonesia and Thailand to dateand human cases remain rare, scientists fearthe virus has the potential to affect humanson a pandemic scale. If this happens, theimpact on the worldwide shipping industryshould not be underestimated.
Bird Flu - Contractual Implications
www.simsl.com/Articles/BirdFlu0406.asp
www.simsl.com/Articles/AvianFlu0306.asp
Sea Venture newsletter Issue 5 11
A recent award of costs in a London Arbitration serves asa warning to potential litigants of the financialconsequences of pursuing claims of limited merit.
The case concerned Owners’ claim for $64,121.86 as thefinal balance of account due under a NYPE time charter,part of which related to deductions for alleged off hire ata discharge port. The vessel had been required to have anarrival draught of 9.75m on an even keel and declared soby the master. However, the harbour authorities found thedraught to be 10.05m and that the vessel had a "serious"hog. The vessel was ordered out to the anchorage for“security reasons”. Subsequently, some 3 days and 20hours later the vessel returned to the lightering berth,lightered to 9.58m and proceeded to the main silo berthto complete discharge. Charterers deducted hire for thisperiod pursuant to clause 15; they had been denied thefull working of the vessel as a consequence of themaster’s negligence in miscalculating the cargo that couldbe loaded and this constituted a " …default of crew,officers or Owners.....".
The Owners argued that regardless of the vessel's draught on first arriving at the lightering berth it wouldhave been necessary to lighten the vessel beforeproceeding to the main silo, and the vessel was in anyevent always capable of performing the service thenrequired by Charterers - to lighten.
The tribunal did not agree. The refusal to allow lighteringand loss of time was a consequence of port authoritiessecurity concerns caused by one or a combination of thevessel 's excess draught, uneven keel, or hoggedcondition, which were attributable to the “default of thecrew” in failing to calculate correctly the ship’s hydrostaticcondition . The deduction of hire was justified save thatCharterers had miscalculated the loss of time byUS$1,021.57. This sum, plus a shortfall of US$335.31 onan undisputed sum paid during the hearing, and interestwas awarded to Owners.
Although Owners were the recovering party their claimfor hire deducted had substantially failed. Therefore, thetribunal penalised Owners by ordering that they shouldbear their own costs in full plus 75% of Charterers’recoverable costs, as well as 75% of the tribunal’s costs.No doubt Owners’ costs were significantly in excess of thesum they recovered. This case serves as yet anotherreminder that costs liabilities should be factored into thedecision whether or not to litigate.
Article by Ian Freeman ([email protected])
NominalArbitrationAwards -Beware CostPenalties
“The refusal to allow
lightering and loss of time
was a consequence of port
authorities security
concerns...”
The U.S. Coast Guard and Customs andBorder Protection (CBP) require vessels tosubmit information for safety and securitypurposes and for the enforcement of U.S.immigration, import, and export laws,prior to arrival in a U.S. port or place.Notice of Arrival provisions requireinformation about vessel and voyage,International Ship Security Certificate(ISSC), Cargo (general description), crew,non-crew and passengers and DangerousCargo to be submitted.
Since 6 June 2005 all vessels calling at U.S.ports have been required to submit noticeof arrival information in electronic format.
When?The electronic notice of arrival (eNOA)and other required information must besubmitted as follows:
• Voyage of 96 hours duration or more- submit at least 96 hours beforeentering the port of destination
• Voyage of less than 96 hoursduration but more than 24 hours -submit not less than 24 hours beforeentering port
• Voyage of 24 hours duration or less - submit prior to departing theforeign port
Vessels leaving the U.S. for a foreign portmust submit electronic notice ofdeparture (eNOD) and crew/passengermanifest 15 minutes prior to departure.
(Different rules apply to vessels sailingbetween U.S. ports.)
How?Since January 2005 carriers have beenable to satisfy the notificationrequirements of both the Coast Guardand CBP by the submission of one eNOAto the National Vessel Movement Center(NVMC). However, the detailed advancenotification of cargo under theAutomated Manifest Requirements muststill be made separately to the CBP.
Passenger and Crew InformationRegulations dealing specifically with thepassenger and crew information to besubmitted with the eNOA, the AdvancedPassenger Information System (APIS),became effective for cargo vessels inJune 2005 and passenger vessels inOctober 2005. Since October 2005 CBPhave been issuing penalties for omissionsand errors in crew and/or passengermanifests submitted as part of eNOA/D.Errors can include, but are not limited to,incorrect passport numbers, dates ofbirth, misspellings or omissions of crewor passenger names, etc. Penalties areassessed on a per manifest (not per error)basis. It appears that CBP audits allvessels submitting departure informationto ensure that the crew/passengermanifests have been updated andaccurately reflect any changes that mayhave taken place while the vessel was inthe U.S.
Sea Venture newsletter Issue 5
U.S. Ports - Electronic Submission ofAdvance Information - eNOA and APIS
12
Penalties & BondsPenalties can be imposed for violations ofthe regulations. These penalties amount toUS$5,000 for the first violation, and$10,000 for each subsequentinfringement. Seizure and forfeiture arealso possible consequences but aregenerally only likely in limitedcircumstances. In order to secure thepayment of any penalties that may beimposed, the carrier must establish aninternational carrier bond (ICB). The carrierfor these purposes is the entity responsiblefor providing the vessel’s crew.
Members who have a valid and currenttype 3 ICB, which is used as part of theAutomated Manifest System filingrequirements, should not need to obtain anew bond as the type 3 ICB may bedeemed to be acceptable for APISpurposes. However, this should beconfirmed with the relevant Area PortDirector. If Members do not have a validICB they should request from the AreaPort Director, in the port that they usemost frequently, details of the amount ofbond that will be required.
Article by Paul Brewer([email protected]) and NaomiCohen ([email protected]).
Further detail on APIS and the ICB can be found in Club Circular B.349 of January 2006:
There are several Steamship Mutualwebsite articles on the subject of eNOAand advance information requirements atU.S. Ports. These can be found in thePorts section at:
Sea Venture newsletter Issue 5 13
www.simsl.com/Publications/Circulars/2006/B439.asp
www.simsl.com/Articles/Contents/P_Contents.asp#Ports
As reported in Sea Venture issue 4(“Developments in the CLC/FundConventions”), following the IOPC FundAssembly meeting in October 2005, thequestion of sharing the burden ofcompensation for oil pollution liabilitieswas further discussed. To this end, anumber of meetings took place betweenthe International Group, the FundSecretariat and OCIMF in order to find anacceptable mechanism to give effect tothe offer made by shipowners that theoverall cost of claims be shared equallywith oil receivers. In addition, there wereregular consultations with ICS andIntertanko to ensure that the content ofany new agreements was acceptable toas wide a cross-section of theshipowning industry as possible.
These discussions resulted in two newdraft agreements:
• STOPIA 2006 (Small Tanker OilPollution Indemnification Agreement2006); and
• TOPIA (Tanker Oil PollutionIndemnification Agreement).
The terms of the new agreements are explained in greater detail in an article written by Colin Williams([email protected]) for theSteamship Mutual Website:
The original Commercial Court decisionin the “Doric Pride” was discussed in SeaVenture issue 3. The dispute related towhether time lost waiting for inspectionby the U.S. Coast Guard under a triptime charter should be for Owners’ orCharterers’ account. The CommercialCourt decided in favour of Charterers forreasons which were met with a measureof criticism at the time. The Court of
Appeal has now upheld the decision.The reasoning behind that decision, aswell as the contractual implications forOwners, is considered in an articlewritten by Sacha Patel([email protected]) the full text of which can be found at:
Sea Venture newsletter Issue 5
The “Doric Pride” - Outcome Of Owners’ Appeal
STOPIA 2006 and TOPIA -Developments in Compensationfor Oil Pollution Damage
14
www.simsl.com/Articles/STOPIA_TOPIA0406.asp
www.simsl.com/Articles/DoricAppeal0406.asp
A frequent problem encountered by masters of vesselsloading bulk cargoes is whether or not to sign bills oflading presented by shippers or Charterers showingloaded quantities based on shore figures that differsignificantly from the vessel’s figures. If the mastersigns or authorises the issue of a bill of lading that isknown to contain an incorrect description of thequantity of cargo loaded Club Cover is prejudiced.However, if the master refuses to sign or authorise theissue of a bill of lading containing the shipper’s figures,not only will there be commercial pressure from theshipper and possibly charterer to do so but anunreasonable refusal can invite potentially substantialclaims for damages.
Article III rule 3 of the Hague/Hague-Visby Rulesprovides that the carrier or master or agent of thecarrier shall issue a bill of lading on the demand of theshipper that shows the quantity or weight of thecargo as furnished by the shipper. This obligation fallsaway if there are reasonable grounds for suspectingthat information to be inaccurate. The difficulty isdetermining what constitutes reasonable grounds, andwhat influence the law of the jurisdiction of loadingwill have. The master is in the front line and often hasa difficult, and potentially costly, decision to make. Inan article on the Steamship Mutual website at:
Neil Watson ([email protected]) discussesthese issues and some of the alternatives available tothe master.
Ship v ShoreFigures
Sea Venture newsletter Issue 5 15
www.simsl.com/Articles/LoadFigures0406.asp
Sea Venture newsletter Issue 5
What Constitutes aBinding Agreement?
16
The English High Court recently consideredthe issue of whether an exchange of lettersgave rise to a binding agreement under ashipbuilding contract. In Covington MarineCorporation v Xiamen Shipbuilding Industrythe buyers appealed to the Court followinga Tribunal decision.
The Court could only consider the issue ifthis aspect of the Tribunal decision could beshown to be wrong as a matter of law. Anappeal on a finding of fact by the Tribunalwould not have been permitted.
Sue Watkins ([email protected])reviews the Court’s findings on thejurisdictional issues, on the question ofwhether an agreement had been reachedand whether the shipbuilder had, in anyevent, repudiated the contract. Her casereport can be found on the SteamshipMutual website at:
www.simsl.com/Articles/Covington0406.asp
In the recent case of Horn Linie v (1)Panamericana (2) ACE Seguros theEnglish High Court was asked to consider(1) whether it had jurisdiction where,despite a exclusive English law and HighCourt jurisdiction clause in the bill oflading, proceedings had beencommenced in Colombia and (2) whetherit should grant an anti-suit injunction inrespect of the Colombian proceedings.
A cargo of printing machinery shippedfrom Hamburg to Cartagena was stowedon deck contrary to instructions; The cargowas a total loss. The Colombian consigneeand the cargo insurer commenced courtproceedings against the Owner’s agent inColombia, ignoring the law and jurisdictionclause in the bill of lading.
In Sea Venture issue 3 the approach ofthe English Courts to anti-suit injunctionsto enforce a jurisdiction clause in thecontext of court proceedings in Europewas discussed. English Courts are,however, still able to enforce jurisdictionclauses where the foreign courtproceedings are outside Europe. Thejudgment of Mr Justice Morison in thiscase considers the application of Article 8of the Rome Convention in determiningwhether a party can have agreed toEnglish jurisdiction and reviews theprinciples involved in deciding whether ananti-suit injunction should be granted.These issues are discussed in an article byJanet Ching ([email protected])on the Steamship Mutual website:
Enforcing an Express Jurisdiction Clause
www.simsl.com/Articles/Horn0406.asp
Sea Venture newsletter Issue 5 17
Three Menin a Tub -WhatConstitutesa Vesselunder theJones Act?
The “Happy Ranger” was delivered by the shipbuilderto her owner in mid February 1998. The vessel’smaiden voyage involved the carriage of a processvessel weighing 833mt for a gas plant in Saudi Arabia.Unfortunately, when lifting the process vessel the hookon the vessel's aft crane broke. The process vessel wasdropped to the ground with resulting damages inexcess of US$ 2m.
Not surprisingly cargo interests commencedproceedings alleging a failure to exercise due diligenceto make the vessel seaworthy before and at thebeginning of the voyage. It was accepted that thehook failed because of a latent defect but the Ownerdenied responsibly for negligence of the ship, crane orhook manufacturers prior to delivery of the vessel.
An article written for the Steamship Mutual Websiteby Laura Woodhead ([email protected])discusses when the carrier’s obligation to exercise duediligence to make the vessel seaworthy commences:
Hooked Up -When theDuty toExercise DueDiligenceBites
In the 1982 decision of Burks v Am River Transport Co.the court posited that “three men in a tub… would fitwithin our definition [of a Jones Act seaman], and onecould probably make a convincing case for Jonah insidethe whale”. Following the decision in Holmes v AtlanticSounding Company it would seem that the court inBurks was perhaps not that far from the truth.
The Appeal Court for the fifth circuit made afundamental change to previous jurisprudence anddefined a Jones Act vessel as “every description ofwatercraft or other artificial contrivance used, orcapable of being used, as a means of transportation onwater”.
The relative “feather weight burden of proof” for thosequalifying as Jones Act claimants means that plaintiffattorneys will now undoubtedly look to the Holmes“practically capable of transport” language to seekJones Act status for their client.
This important decision and its impact are discussedfurther in a Steamship Mutual website article byBradleigh McArthur with input from James T Brown ofLegge Farrow Kimmit McGrath & Brown, Houston:
www.simsl.com/Articles/Holmes0406.asp
www.simsl.com/Articles/HappyRanger0406.asp
Sea Venture newsletter Issue 518
Ballast Water Management
New Requirements in BrazilA new regulation in Brazil imposesrequirements for ballasting withinterritorial waters and for recording theseoperations. Vessels are obliged to carryout exchange of ballast water at least 200nautical miles from the coast and inwaters which are no less than 200 metresdeep. The exchange is mandatory for allvessels engaging in commercial navigationbetween distinct hydrographic basinsand/or when the vessel is navigatingbetween maritime and fluvial ports.
Violation of the requirements can resultin the maritime authorities institutingadministrative proceedings and takingsteps to detain the vessel or to prohibitentry into port or terminal. There are alsosubstantial fines of upto US$ 23 millionfor failure to comply.
The new regulation is discussed in furtherdetail in an article written for theSteamship Mutual website by Luis Ongay([email protected]). The article canbe found at:
Changes in California and WashingtonSince 22 March 2006 vessels operatingwithin the Pacific Coast Region of Californiahave had to comply with new managementand reporting requirements. Earlierregulations affected only vessels arriving atCalifornian ports from a distance of morethan 200 nautical miles from the coast.Further details of the new regime can befound on the Steamship Mutual website at:
Ballast water exchange is currently agreedto be the most effective treatment optionfor ballast water. There are, however,circumstances in which exchange cannotbe carried out without exposing the vesseland crew to danger. Research intoalternative methods of treatment has yet tobe completed. Until then, most port stateswith ballast water treatment requirementsaccept exchange as an effective treatmentmethod but also provide an exemptionwhere conditions make this unsafe.
Nonetheless, vessels calling at Washingtonports after 1July 2007 will no longer beable to rely on the safety exemption; analternative treatment method must beavailable to cover situations whereexchange is unsafe. A report on theproposed alternative method must besubmitted to the Washington Departmentof Fish and Wildlife by 1 July 2006.Further information is available at:
Other articles by Naomi Cohen([email protected]) on ballastwater management requirements both inthe U.S and internationally can be foundin the Pollution Articles section of theSteamship Mutual website at:
www.simsl.com/Articles/BrazilBallast0406.asp
www.simsl.com/Articles/Washington_Ballast.asp
www.simsl.com/Articles/Contents/P_Contents.asp#Pollution
www.simsl.com/Articles/California_Ballast0404.asp
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Sea Venture newsletter Issue 5 19
Investigation and prosecution of oily waste offencescontinues in the United States and other jurisdictions.This issue remains a focus for many Port States and theSteamship Mutual website has featured several articleson this subject in recent months:
• USCG - MARPOL Annex I Enforcement Policy In January 2006 the U.S. Coast Guard published apolicy letter, "Guidance for the Examination ofMARPOL Annex I During Port State ControlExaminations", which establishes new inspectionand testing procedures for USCG Port State ControlOfficers. The letter itself together with an executivesummary by Daniel J. Fitzgerald of Freehill Hogan &Mahar, LLP can be found at:
• Port States CIC on MARPOL Annex IRequirementsThe Tokyo and Paris MOUs and Viña del MareAgreement conducted, in parallel, a ConcentratedInspection Campaign (CIC) on MARPOL Annex Irequirements from February to April 2006. Thepurpose of the CIC was to verify whether oilfiltering equipment was installed, maintained andoperated appropriately and whether pollutionprevention arrangements and procedures wereproperly followed on board ship. Inspectionsfocused mainly on the equipment located in theengine room. Past inspections revealed illegal by-passes of the oil filtering system, illegal overboardconnections from sludge and many instances werethe oil record books were not properly kept.
• Industry Guidance on the Use of Oily Water SeparatorsSeveral of the major international shipping industryorganisations have collaborated to produce somebasic guidance for management and crew on the useof oily water separators. The guidance emphasises thevital importance of strict adherence to InternationalMaritime Organization (IMO) requirements.
A link to the ICS/ISF website, from where the six-page guidance leaflet can be downloaded free ofcharge, is at:
Club circular B.432 of June 2005 on the subject of OilyWater Separators can be found at:
Illegal OilyWasteDischarges
www.simsl.com/Articles/USCG_MARPOLI_Policy0206.asp
www.simsl.com/Articles/ParisTokyoCIC0106.asp
www.simsl.com/Articles/OWSGuide0306.asp
www.simsl.com/Publications/Circulars/2005/B432.asp
In February 2006, the EuropeanCommission (the Commission)announced that it was undertaking adetailed study on how the specialistshipping sector operates. This latestannouncement follows on from theCommission’s statement at the end of2005 that European competition ruleswill be actively applied to that sector.
Many have been alarmed that theCommission is turning its attention to specialist shipping operators when the sector has, in the past, enjoyedrelative anonymity in terms ofcompetition regulation.
However the Commission’s statementsover the last few months present thesector with a unique opportunity on two fronts:
• The Commission’s study affords thesector the opportunity to explain howspecialist shipping operates. If theCommission has a properunderstanding of the sector from theoutset, it will be in a better positionto apply the competition ruleseffectively and fairly. In the long termthis can only benefit the sector.
• As the Commission is turning itsfocus towards the sector, individualpools and ship operators should beconsidering whether or not theiractivities and practices breach thecompetition rules, in the absence ofthe benefit of a block exemptionsimilar to that which is in place for
liner shipping consortia. This meanstaking steps now to ensurecompliance with the competitionrules. Some will argue that this isdifficult without guidelines from theCommission on how to apply theserules to the sector. However linershipping and other transport sectorsalready give guidance on how therules can be applied. Taking steps toensure compliance now and, ifnecessary, to lobby in favour of ablock exemption, should mean thatthe Commission does not spring anysurprises on pool managers andspecialist operators in the future.
A more detailed article on this subject byMarjorie Holmes and Lesley Davey ofRichards Butler’s Competition and EUdepartment can be found on theSteamship Mutual website at:
Sea Venture newsletter Issue 5
Are You Ready For Competition?
20
www.simsl.com/Articles/Competition0406.asp
When a vessel is ordered to sail with a shortfall ofcargo are Owners entitled to claim deadfreight?
During loading operations it became apparent that ifthe vessel continued to load cargo she would misshigh tide and, owing to her size, if a full cargo wasloaded the vessel would then have to wait a further 3weeks for the next spring tide. Therefore, the vesselwas ordered to sail by the “terminal/port authority”with a shortfall of 15,845 tonnes and Owners claimedUS$134,682 deadfreight. However, on behalf ofwhom was the order to sail given, and did thisconstitute an order of the charters or, rather, aninstruction by a terminal or port that did not want theberth occupied for a prolonged period of time?
These are the issues that recently came before theEnglish Commercial Court on appeal from arbitrationin Pentonville Shipping Ltd v Transfield Shipping Inc. Ina report prepared for the Steamship Mutual websiteSarah McGuire ([email protected]) discussesthe case in greater detail. Her report can be found at:
CargoShortfall -Who Bearsthe Loss?
Sea Venture newsletter Issue 5 21
www.simsl.com/Articles/Pentonville0406.asp
Oil tanker charterparties now commonly incorporate anadditional clause allowing Charterers to direct the vesselto additional load or discharge ports and makeprovision for payment to Owners for costs incurred.Such clauses usually provide that load and dischargecosts are to be paid at cost, with additional steamingtime incurred for the deviation to the interim port.However, they often do not make clear whether timespent in port should count at the laytime or demurragerate. As there are usually other clauses in thecharterparty which contain provisions dealing with thecommencement, running of and exceptions to laytime,unless the clauses are carefully drafted having regard tothe interrelationship with other relevant clauses in thecharterparty, the consequences can be severe when aCharterer exercises an option under such a clause.
Stephen Mackin, partner at Eversheds discusses draftingsuch clauses and their interpretation in an article he hasprepared for the Steamship Mutual website:
The Cost ofDeviation toInterim Ports
www.simsl.com/Articles/InterimPort0406.asp
The Canadian Federal Court recently heldthat under the Canadian legislation a railcarrier was prevented from relying on thebenefit of an ocean carrier’s himalayaclause to limit liability in the absence of awritten agreement to which bothclaimant and defendant rail carrier werea party.
The case, Boutique Jacob Inc. v PantainerLtd & Others, concerned a claim byreceivers for damage to container cargoas a result of train derailment. Thisdecision is to be contrasted with theposition adopted by the United States’Supreme Court in Norfolk SouthernRailway v Kirby. (That case was reportedin Sea Venture issue 3 with further detailsgiven in a Steamship Mutual websitearticle at:
The Court was also required to examinethe issue of electronic bills of lading andthe applicability and enforceability ofterms displayed on a company's website;Could parties who deal regularly witheach other and use the other’s websitefor electronic data processing purposesand online traffic control claim that theyhad no knowledge of the standard termsand conditions displayed on that websitesimply because they had neglected toread them?
David Colford of Canadian law firmBrisset Bishop discusses the case furtherin an article written for the SteamshipMutual website:
Liability of North American RailCarriers - One Continent, Two Systems
Sea Venture newsletter Issue 522
www.simsl.com/Articles/kirby0805.asp
www.simsl.com/Articles/Boutique0406.asp
Loss Prevention Materials
Minimising Fatigue, Maximising Performance -Video/DVD Training Programme
Many incidents giving rise to claims are attributable tohuman error. The potential for human error can increaseas a result of fatigue induced by busy shipboardschedules. In response to the growing concerns within theindustry regarding fatigue the Managers of theAssociation, in association with Videotel MarineInternational Limited have produced a training packageconsisting of a Video/DVD and Work Book that isdesigned to raise awareness of this important topic.
Members are entitled to a 20% discount from thestandard price for either purchase or rental of thisprogramme. Further details concerning pricing and howto place orders can be obtained from: Videotel MarineInternational, 84 Newman Street, London W1T 3EU, Tel: +44 0207 299 1800, Fax: +44 0207 299 1818,
When contacting Videotel, and in order to obtain theappropriate discount, Members should confirm theirMembership with the Association, with the names ofentered vessels for which the programme may berequired. Further details may also be obtained from theManagers' London Representatives.
RecentPublications
• MARPOL Annex VI - Fuel Quality Requirementswww.simsl.com/Articles/MarpolVI_Fuel0406.asp
• Wood Packaging Material Regulations - Enforcementin North America and Mexicowww.simsl.com/Articles/US_WoodPack0306.asp
• Piracy off Somali Coast www.simsl.com/Articles/SomaliaGuidance1105.asp
• Arbitration v Mediation - a Comparisonwww.simsl.com/Articles/ArbMedComp0306.asp
• Anti-Dumping Protocol comes into Forcewww.simsl.com/Articles/AntiDump0306.asp
• Pollution Fines In Turkey www.simsl.com/Articles/Pollution_Turkey0104.asp
• Spain - Container Security Requirements www.simsl.com/Articles/Spain_ContainerSecurity0106.asp
• India - Entry Requirements www.simsl.com/Articles/India_Entry0106.asp
• Amended USCG Marine Casualties Reporting Requirementswww.simsl.com/Articles/US_ReportEnvHarm0106.asp
Articles Published on the SteamshipMutualWebsite
Sea Venture newsletter Issue 5 23
www.videotel.co.uk
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