Update on BIMCO 2020 Fuel Transition Clause for Time Charter Parties

On 21 December 2018 we commented on the newly released BIMCO clauses intended to address the International Maritime Organization’s revised sulphur content limits with regard to the consumption and carriage of marine fuel (in accordance with Regulation 14 of Annex VI of the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978, MARPOL), which enter into force on 1 January and 1 March 2020 respectively.

Continue Reading

The crossing rule and narrow channels – Court of Appeal hands down judgment in the Alexandra 1

On 5 October 2018, the English Court of Appeal confirmed the High Court decision in National Challenge Ltd. v. Evergreen Marine (UK) Ltd [2017] EWHC 453 (Admlty) that the crossing rule does not apply where one vessel is approaching a narrow channel intending to enter it and another vessel is navigating in the narrow channel intending to exit it, so as to involve risk of collision. This decision seeks to provide certainty in such situations and promote safe navigation; however, the decision may not be relevant in all situations when vessels are crossing, whilst navigating in or near a narrow channel.

Background

On 11 February 2015, a laden VLCC, Alexandra 1, and a laden container vessel, Ever Smart, collided just outside the dredged entrance channel to Jebel Ali in the United Arab Emirates. At the time of the collision, the Alexandra 1 was inbound and the Ever Smart was outbound.

As previously reported, at first instance the Admiralty Judge, Mr. Justice Teare (“Teare J”), held that Rule 15 of the International Regulations for Preventing Collisions at Sea, 1972 (the Collision Regulations), the crossing rule, did not apply and that when Alexandra 1 approached the narrow channel she was not under a duty to keep out of the way of Ever Smart. Instead, the navigation of the two vessels was governed by: Rule 9, the narrow channel rule, in the case of Ever Smart; and Rule 2, the requirement of good seamanship, in the case of Alexandra 1.

Continue Reading

Significant amendments in the pipeline to Singapore’s Merchant Shipping Act

The Merchant Shipping (Miscellaneous Amendments) Bill was read in the Singapore Parliament for the first time on 19 November 2018.

The Bill proposes to make a number of significant amendments to Singapore’s merchant shipping legislation. These include:

  1. enacting the International Convention on Salvage 1989 as part of Singapore law; and
  2. adopting the 1996 Protocol to amend the Convention on Limitation of Liability for Maritime Claims, 1976.

The Bill is expected to be debated in parliament over the coming weeks. A further update will follow if the Bill is passed.

Continue Reading

The 2020 Global Sulphur Cap: Whitepaper

On 1 January 2020 amendments to the International Maritime Organization’s (IMO’s) International Convention for the Prevention of Pollution from Ships (MARPOL) enters into force.

Read our Shipping Group’s latest whitepaper, by Ron Clark, on the 2020 Global Sulphur Cap here.

Including topics covering:

  • 2020 SOx issues
  • An introduction to marine fuels
  • Abatement technology
  • Scrubbers
  • Control and regulation
  • BIMCO
  • Industry response
  • Alternatives

ICA Incorporation Clauses: An update

Readers will recall from Reed Smith’s recent blog that concerns have been raised regarding common Inter-Club Agreement (ICA) incorporation clauses.

A London Tribunal, in a recent arbitral award in which Reed Smith acted, held in favour of Reed Smith’s client that a traditional ICA incorporation clause incorporated the entire ICA, including clause 9 (i.e. the entitlement to security).

Continue Reading

IRAN SANCTIONS – UPDATE

On 8 May 2018, President Trump announced that the United States would withdraw from the Joint Comprehensive Plan of Action (JCPOA). In conjunction with that announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the re-imposition of certain secondary sanctions, being those that apply to non-U.S. persons even where there is no U.S. nexus (e.g. no U.S. persons, no U.S.-origin goods, or U.S. dollar payments). As discussed in our earlier blog post, the first batch of sanctions was reimposed on 6 August  and the second batch will become effective 5 November.

Continue Reading

The English High Court provides much needed guidance on the effectiveness of sanction exclusion language, following the USA’s withdrawal from the JCPOA

  1. After a tumultuous year in the Iranian sanctions landscape, much needed guidance is starting to trickle down through the English courts as to the scope and application of the US secondary sanctions and the EU Blocking Regulation regimes. On 12 October 2018, the English High Court handed down judgment in Mamancochet Mining Ltd v Aegis Managing Agency Ltd [2018] EWHC 2643 (Comm), in which Teare J was asked to consider contractual sanctions exclusion clause wording in the context of a marine cargo insurance policy.
  2. The Claimants sought to claim under the policy for the theft of steel billets from bonded storage in Iran. The Defendant underwriters resisted payment on the basis of the policy wording, which provided inter alia that no cover would be provided if it exposed the insurer to any US or EU sanctions. The case was heard on an expedited basis in light of the fact that the relevant US sanctions will be re-imposed on 4 November 2018.
  3. The Claimants succeeded. The court held that it was insufficient for the insurers to allege there was a risk that the US / EU authorities might conclude that payment was prohibited and so impose sanctions. The insurers were required to go further and establish that (on the balance of probabilities) the payment would be prohibited under either EU or US sanctions regimes and would, therefore, expose them to a sanction. This judgment may well see the insurance market re-visit its sanctions exclusion language, though the position will once again evolve come 4 November.
  4. Of equal, if not greater, interest however are the judge’s obiter comments on the interaction between a contractual exclusion clause and the EU Blocking Regulation. Though non-binding, the judge appeared to be of the view that insurers may be able to suspend payments to their assured that would otherwise contravene US secondary sanctions, without being in breach of the EU Blocking Regulation. The insurers’ answer to allegations of a breach of the Blocking Regulation would be that the decision not to pay was predicated on a contractual entitlement rather than in compliance with a third country’s prohibition. The judge was not required to reach a firm conclusion on this because, on the facts, no secondary sanctions were engaged (a finding that would have been different post 4 November). No doubt this important point will be developed in subsequent cases.

ICA Incorporation Clauses

Last week, the International Group of P & I Clubs published a recommended Inter-Club Agreement (ICA) incorporation clause.

It is commonplace for charterparties to incorporate the ICA as a contract term.  For decades, ICA incorporation clauses have been considered relatively uncontroversial. However, the recent London Arbitration 18/18 decision has thrown the cat amongst the pigeons; the Tribunal found the effect of the ICA incorporation clause in that charterparty was to incorporate, or contractually apply, those parts of the ICA dealing with apportionment but not clause 9 which deals with the provision of security.

Continue Reading

Singapore courts and PRC courts sign memorandum of guidance on the recognition and enforcement of money judgments in commercial cases

On 31 August 2018, the Supreme Court of Singapore and the Supreme People’s Court of the People’s Republic of China (PRC) signed a memorandum of guidance (MOG) on the recognition and enforcement of money judgments in commercial cases.

Continue Reading

Cyber Risk in Shipping

The following guest blog was written by William Egerton LVO, Cyber Advisor, Charles Taylor

The amount of concern articulated about new technology in the recent survey conducted by Reed Smith is both welcome and revealing.  It is a healthy sign that respondents are concerned about cyber security and the impact of new technology on their business, whether for emissions control or other areas of improved performance.  But the rise of automation and the prospect of greater autonomous capability raise the issue of asset protection too: how can owners and charterers be sure that a vessel laden with precious cargo will travel without incident from port A to port B?  Will the (reduced) number of people left on board be able to regain control if the autonomous capability somehow gets subverted?  I would, however, challenge shipowners and charterers to match their rhetoric and concern with the resources necessary to do what is required to secure their business.

Continue Reading

LexBlog