shipping and arbitration: insights from the black sea countries
TRANSCRIPT
SHIPPING AND ARBITRATIONINSIGHTS FROM THE BLACK SEA COUNTRIES
SPECIFICS OF PERFORMANCEIN BLACK SEA REGION
By Andrey PerepelitsaSenior lawyer, ACIArb
• Black Sea is one pool of emerging economies• Much paperwork, sometimes bureaucracy• Split of commercial and administrative
functions is different in every country• Local regulations• Geographic & climate conditions
Charter Parties in Azov-Black Sea
REGIONAL FEATURES
• Short shoulder of the voyage• Shippers/Receivers impact on the voyage• Specific charter party clauses
Charter Parties in Azov-Black Sea
CONTRACT FEATURES
SHORT VOYAGE SHOULDER
1 GSPB AAAA AZOV
1 GSPB AAAA EGYPT
100 PCT FRT LESS
COMM TO BE PAID
WI 3 BD AFTER S/R
BS/L BUT IN ANY
CASE BBB INTO OWS
NOMINATED BANK
ACCT
FROM: CHARTERER BA
NK
TRANSACTION REFERE
NCE
==================
==========
20: SENDER REFEREN
CE
PAY123456789
32A: VALUE DATE
29.05.2014
33B: CURRENCY/AMOU
NT
USD 50000.00
50K: INSTRUCTING P
ARTY
CHARTERER
54A: RECEIVER’S CO
RRESPONDENT
CHASUS33
59: BENEFICIARY
SHIPOWNER
70: REMITTANCE INF
ORMATION
FREIGHT M/V SHIP
71A: DETAILS OF CH
ARGES
OUR
(-) END OF MESSAGE
Charter Parties in Azov-Black Sea
CLIMATE
Ice Occurrence In Black Sea And Azov Sea
83-157 daysDecember to April
86-142 daysDecember to April
General Ice Clause – Prior to Loading
18(a) In the event of the loading port being inaccessible by reason of ice when the Vessel is ready to proceed from a last port or at any time during the voyage or on the Vessel's arrival or in case frost sets in after the Vessel's arrival, the Master for fear of being frozen in is at liberty to leave without cargo, and this Charter Party shall be null and void.
Charter Parties in Azov-Black Sea
LOCAL REGULATIONS
72hours
72hours
SSHEX
24hours
+++
72hours
PROHIBITION to ENTER the PORT
from the HARBOUR MASTER
VALID for 72 HOURS
LOCAL REGULATIONS
PORT RULES of GEORGIA - 2012
Article 10. Ships Enter to the Port
The entry of the ship to or departure out of the port takes place at any time during a 24 hour day except in the event of bad weather and certain circumstances justifying the prohibition of the entry and departure of ships to and out of the port.
BE CAREFUL!
Charter Parties in Azov-Black Sea
SPECIFIC CLAUSES
“WRONG” CLAUSE
• GENCON 1994• Cargo: fertilizers• Factory break down• Not possible to supply the cargo• Date of supply -
unknown
ADDITIONAL CLAUSEStrike and Force Majeure
Fire, strikes, labour disturbances, lock-outs, requisitions, intervention of authorities, accidents, tidal wave, flood, fire, lightning, explosion, earthquake, storms, land slides, interruption of facilities of transportation or communication, navigation accident, breakdown of production or forming plant, equipment or facilities
affecting production, production capacity or transportation of cargo or production, failure of the railroad to furnish railroad cars, railroad washouts, breakdown of
equipment or facilities at loading port, denial of export or import licenses, Acts of God, Acts of Governments, blockade, war, riot, insurrection, wrecks, epidemics,
quarantine, or any other unforeseen event, cause or causes of any nature, whether similar or dissimilar to any of those herein before enumerated beyond the
reasonable control of the parties are excepted and neither of the parties including Shippers/Receivers shall be liable for any loss or damage resulting from any such
excepted causes. The time lost by reason of such excepted causes mentioned above in this clause shall not count as laytime or time on demurrage either at port of loading, port of
discharge or both.
• Vessel delay in port for 5 days• Charter-party terminated (by frustration)• Extra operational expenses• Costs of idle ballast voyage• No compensation from the
Charterers
LMAASmall Claims Procedure
•The claim – up to agreed sum•Sole arbitrator•Arbitrator may be nominated by
LMAA•Fixed arbitration fee - £ 3,000•Submissions limits •Fast – 2-3 months
ADD TO RECAP: For claims under XXXXX USD LMAA Small Claims Procedure to apply
LMAASmall Claims Procedure
FREQUENT PROBLEMSIN SHIPPING
MARITIME FRAUD
By Alexey RemesloSenior lawyer
DOCUMENTARY FRAUDFake Bill of Lading
GOAL:• RECEIVE CARGO INSTEAD
OF THE REAL OWNERS• RECEIVE MONEY FROM
L/C
AGENCY RELATED FRAUDFake Agency Invoice
VESSEL WAS FIXED THROUGH BROKER
THE SHIPPER SAID TO BE WELLKNOWN ON THE MARKET
BROKER
OWNER
CHARTERER
CHARTERERS APPOINTED THE AGENT AT THE LOADING PORT
ADVANCE D/AUSD ~70 000
3 DAYS OF WAITING…
LOSSES:• $70,000 – FAKE AGENCY• RUNNING COSTS• BALLAST VOYAGE
CARGO RELATED FRAUDDouble cargo sale
SELLER
BUYER
FOB
SELLER
BUYERTERMINAL
BUYERTERMINAL
LAWFUL CARGO OWNER
LOSSES:• ADVANCE PAYMENT• FREIGHT• LEGAL COSTS
CHARTERING FRAUDIntercepted Freight
SHIPOWNER
BROKER
CHARTERER
SHIPOWNER
BROKER
CHARTERERSHIPPER
SHIPOWNER
BROKER
SHIPPER CHARTERER
B/LFreight Prepaid
SHIPOWNER
SHIPPER
B/LFreight Prepaid
LOSSES:• FREIGHT• LEGAL COSTS• DISBURSEMENTS
CHARTERING FRAUDIntercepted Freight + Fake E-Mail
SHIPOWNER
AGENT
SHIPPER CHARTERER
B/LFreight Prepaid
EMAIL WAS RECEIVED BY THE AGENT
AT THE SAME TIMETHE SHIPOWNER’S INBOX HASBEEN SPAMMED
SHIPOWNER
AGENT
SHIPPER CHARTERER
B/LFreight Prepaid
SHIPOWNER
AGENT
SHIPPER CHARTERER
B/LFreight Prepaid
• Business with unknown intermediaries acting for unknown principals can be risky without due diligence and counterparty checks
• Ensure that business is conducted with known or verified counterparties. Local P&I Correspondents, agents etc. may help in confirming whether a particular local party is a known company or whether there are concerns
• Request of unknown counterparties for an advance payment must be considered twice
• Where possible “freight pre-paid” B/Ls should be avoided, especially if the freight has not in fact been pre-paid.
TERMINATION OF CHARTERPARTY
By Andrey PerepelitsaSenior lawyer, ACIArb
CHARTERERS’ QUIZ
02/11 You fix MV “Elf” from Varna to Rostov on Gencon-94 basis with laycan dates November 09-13, and cancelling date November 14
11/11 Owners inform that the vessel delayed in previous voyage and will not be able to arrive within laycan. Owners expect the vessel to be ready on November 15
What options are open to you?How would you respond?
Can you cancel now?
Christie & Vesey v Helvetia [1960]The Madeleine [1967]
There is no anticipatory right to cancel in advance of the specified cancelling date, even though it is clear that the owner will be unable to tender the ship in time.
Cancellation if exercised until the cancellation date constitutes an anticipatory breach and repudiation of the charterparty.
12/11 You agreed to extent laycan and set newCancelling date on November 22
16/11 Owners inform that the vessel is still not ready to load and they cannot guaranteeher readiness before or on November 22
What options are open to you?How would you respond?
Can you cancel now?
22/11 You send the notice of cancellation ofcharter party and seek for another vessel
26/11 New vessel MV “Dwarf” loaded and sailed. However, due to declaration of ice conditions in Azov sea, the vessel spent 5 days waiting for ice convoy and used breaker assistance. These sums were claimed from you by theOwners of MV “Dwarf”.
As a result of these events, total delay in delivery of cargo was more than 2 weeks,and your company has sustained losses as follows:
• Extra freight - USD 10,000• Waiting for ice convoy – USD 5,4000• Ice breaker assistance – USD 1580,00• Penalty claimed from you by consignees for late delivery – USD 12,000
Which (if any) of these sums youcan recover from the Owners?
Hadley v Baxendale [1854]
• Naturally arise from the breach according the usual course of things; or
• Were within the reasonable contemplation of the parties at the time of contracting as the probable result of a breach
DAMAGES RECOVERABLE:
OWNERS’ QUIZ
02/11 Your MV “Elf” arrived to Poti from Varna and started discharging. Next voyage was fixed from Poti to Mersin on Gencon-94 basis with laycan Poti - November 05-11
04/11 Charterers inform that the full cargo is not ready due to factory problems, and will notbe ready within laycan dates. Charterersoffered you to cancel CP.
What options are open to you?How would you respond?
06/11 After discharging, your MV “Elf” tendered NOR in Poti
08/11 Charterers stated that the factory problems are the event of force majeure, and thePerformance of CP must be suspended for the period of force majeure event.Charterers also requested you to wait in Poti until November 14, when production is said to be restored
What options are open to you?How would you respond?
11/11 You send the notice of cancellation ofcharter party. As a result of these events, your company has sustained losses as difference in freight - USD 7,000
May these sums berecovered from the Owners?
THANK YOU !QUESTIONS ?