Limits on Receivers’ obligations

In Sea Master Shipping Inc v Arab Bank (Switzerland) Ltd & Yousef Freiha & Sons SA [2020] EWHC 2030, Owners, in a situation where Charterers were in insolvent liquidation and unable to meet their obligations under a voyage charter, sought to hold receivers liable for delay at the discharge port under the bill of lading.

The decision by the arbitration tribunal that neither the financing bank nor the receivers were liable for discharge port demurrage was unappealable.

That left the Commercial Court considering the Owners’ attempt to introduce an implied term into the contract of carriage (contained in or evidenced by the bill of lading), that the bank and / or the receivers would: (i) take all necessary steps to enable the cargo to be discharged and delivered within a reasonable time; and / or (ii) discharge the cargo within a reasonable time.

In the usual way, the bill of lading included a clause incorporating the terms of the voyage charter and it was common ground that this meant that they were incorporated “insofar as they [were] appropriate and relevant for such incorporation”. Continue Reading

Hydrogen fuel cell demonstrations in rail and marine applications at ports – California Energy Commission workshop

Companies reliant upon the use of rail services and commercial harbor craft at California’s ports should be interested in the State’s:

  • Increasing focus on utilizing zero emission technologies to reduce greenhouse gas emissions resulting from port-related operations; and
  • Provision of $6.6 million in available grants to “fund the design, integration, and demonstration of hydrogen fuel cell systems and hydrogen fueling infrastructure for locomotive and commercial harbor craft” operations

On July 31, 2020 (10:30-12:30 PDT), the California Energy Commission will be hosting a workshop to assist applicants in obtaining these funds.

Due to COVID-19, the Workshop is available on-line only at:

https://zoom.us/join

Meeting ID: 947 9266 2867
Meeting Password: 357152
Topic: GFO-20-604 Pre-Bid Workshop

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Final and binding or just binding? Term in trade recap stating that a certificate of quality is binding is qualified by the BP GTCs 2007: Septo Trading Inc. v Tintrade Limited [2020] EWHC 1795 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Teare, 8 July 2020

Background

This dispute arose out of a contract for the sale and purchase of fuel oil on FOB Ventspils, Lativa terms between Septo Trading Inc. as Buyer and Tintrade Limited as Seller. The sale contract was evidenced by a trade recap which incorporated the BP general terms & conditions for sales and purchases of Petroleum Products 2007 (the “BP GTCs 2007”) “where not in conflict with the above” (i.e. the recap itself). Continue Reading

Notice requirements to prevent the time bar under the Inter Club Agreement

Recently, Lloyd’s Maritime Law Newsletter reported on a recent arbitration award in which Reed Smith acted, regarding the requirements for notice under the 1996 Inter-Club Agreement (ICA), as amended in 2011.

The decision concerned a notice that, on the face of it, bore no resemblance to a usual ICA notice as it: a) was given by Charterers prior to the cargo being discharged and hence cargo interests becoming aware of the damage, let alone asserting a cargo claim; b) did not say it was an ICA notice; c) primarily concerned Owners and Charterers arranging a joint survey at discharge; and d) did not contain certain mandatory information prescribed by the ICA. Continue Reading

‘Shipper’ proves it was not the shipper and avoids claim for cargo explosion: MVV Environment Devonport Ltd v. NTO Shipping GmbH & Co. KG MS Nortrader [2020] EWHC 1371 (Comm), “MV NORTRADER”

Summary

The claimant was named as shipper on a bill of lading for a consignment of cargo on the MV Nortrader, despite not being a party to the contract of carriage. The defendant, the owner of the vessel, suffered losses after a cargo explosion occurred on board the vessel shortly after the cargo had been loaded. The defendant commenced arbitration and brought a claim for damages against the claimant, as the named shipper. Although a London tribunal found it had jurisdiction to hear the dispute, the claimant was successful in its application to the High Court under section 67 of the Arbitration Act 1996 to set aside the award on the basis it was not the shipper and therefore was not a party to an arbitration agreement with the defendant.

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The term “mandatory provision of law” in an English law loan agreement found to cover U.S. secondary sanctions

The English Court of Appeal handed down judgment in the case of Lamesa Investments Limited v. Cynergy Bank Limited [2020] EWCA Civ 821 on 30 June 2020.

The Court of Appeal upheld the High Court’s decision that U.S. sanctions targeting Lamesa Investments Limited’s (LIL) ultimate owner justified Cynergy Bank Limited’s (CBL) withholding of interest payments on a £30 million loan from LIL.

While this case was decided in the context of a loan agreement, the case is of interest to anyone drafting or interpreting a provision of an agreement that grants a party rights if another party is affected by some form of illegality, including illegality clauses and sanctions clauses. In particular, it illustrates the court’s approach to interpreting such clauses in the context of U.S. secondary sanctions: measures which do not directly prohibit certain conduct by non-U.S. persons but which allow U.S. authorities to take severe action against such persons if they engage in that conduct. It is therefore of relevance to the shipping industry.

You can read the full client alert here.

Remote surveys – the future?

In these unprecedented times of global shutdown, the shipping industry has been forced to move rapidly into the digital age. Vessels still require their statutory surveys and the clock does not stop just because the surveyors are unable to fly out to a vessel. This has forced flag states and Recognised Organisations (ROs) to develop their own procedures for remote surveys/inspections.

Remote surveys/inspections were already in use before COVID-19 – Lloyd’s Register performed one in five of its surveys without attending the ship – but their use has increased considerably. In March 2020 the number of complex remote surveys performed by Lloyd’s Register increased by 25 per cent. As resources continue to remain limited, remote surveys/inspections will be an increasingly utilised tool from the suite of options available to flag states and ROs. Continue Reading

CARB continues to advance its regulation of air emissions for shipping industry

The California Air Resources Board (CARB) will conduct a public Board hearing later this month as it continues its efforts to expand the state’s existing Ocean-Going Vessels At-Berth Regulation to further reduce air emissions from ships docked in California. As earlier reported, CARB recently released further modifications to the at-berth rulemaking documents (15-day change). Due to these proposed changes, regulated parties remain concerned about significant increased costs related to supporting infrastructure and capital improvements – and some predict that not extending the compliance date to allow for economic recovery from the COVID-19 pandemic will make compliance more costly, or even “infeasible.”

You can read the full blog here.

COVID-19 and the impact on shipping– what have we learnt from Asia

Today’s global economy is facing unprecedented challenges and many firms are in the business of survival as a consequence of the Covid-19 outbreak. While some Asian countries are starting to show signs of emerging from lockdown, it is nonetheless a grim and trite recital to acknowledge that many Asian countries were heavily affected in the early stages of the global crisis. According to official figures, China’s GDP recorded an unprecedented 6.8 percent year-on-year decline in the first quarter of 2020. Being at the geographic forefront of the current crisis, our Asian offices have been both advising and counseling numerous clients with their commercial matters and arrangements that have faced interference as a result of the Covid-19 outbreak.

We would like to share our experience of handling Covid-19 in Asia, and lessons learned. Continue Reading

Singapore’s accession to the International Salvage Convention

Singapore’s accession to the International Salvage Convention is an important step, which will align the city state with other prominent maritime jurisdictions such as the United Kingdom, the United States, Australia, and China.

When the Salvage Convention becomes part of Singapore law under amendments to be made to the Singapore Merchant Shipping Act (1), it will enshrine into Singapore law a salvor’s right to recover expenses they have incurred in their attempts to prevent or minimize environmental damage, even if they are unable to salve the vessel or where the value remaining in the salved fund is insufficient.  This type of recovery is referred to as “special compensation,” which is available under article 14 of the Salvage Convention and protects salvors against the traditional consequences of “No Cure, No Pay,” which depended entirely on the successful salvage of the maritime property.  Article 14 is intended to incentivize salvors to invest and maintain the assets, in terms of salvage craft, equipment, and personnel, that are necessary to render prompt assistance to vessels in difficulty.  This is vitally important, and mitigates against the risk of geographical regions having insufficient response capacity.  Such a scenario could have a profoundly detrimental effect on local marine ecologies, particularly in the event of an oil spill.  At a time when the number of professional salvors is declining, providing an assurance to salvors that they will not be left out of pocket is increasingly important.

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