Sanctions and Restrictions in Qatar

Earlier this month several countries, including Saudi Arabia, the United Arab Emirates, Egypt and Bahrain, severed diplomatic and economic relations with Qatar. This is an important issue for the shipping industry to monitor. In our recent client alert we explained the position to date and looked at what shipping companies trading Qatar need to consider to limit and manage any potential impact on their business.

You can read the alert here

 

Cyber issues in shipping

We have had reports of an email scam being circulated amongst owners and charterers and, in particular, being sent to ships. These emails are being sent by scammers posing as law firms in order to distribute malware, including the latest ransom-ware.

QUOTE

Dear Sir,

We have been appointed to proceed with legal steps in arresting your vessel due to your inability to clear your long overdue payment with our client. Our client claims that several reminder has been sent to you on this subject matter without getting any response from you.

Find attached lawsuit filed by our client including Court and lawyer cost. Kindly review and revert with your comment. Meanwhile, vessel will be arrested by the court till further notice.

Your urgent response will be appreciated.

THKS N B’RGDS

UNQUOTE

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India extends service tax on freight

Indian authorities have recently extended the service tax on ocean freight, payable under the Finance Act 1994 (“Service Tax”), to cargoes imported on a CIF basis. The amendments to the Act in this regard came into effect from 22 January 2017.

This Service Tax has been levied since June 2016 over freight on cargoes imported on an FOB basis, including where ships have been chartered by importers domiciled in India. But it was not applicable where transportation services were provided from a place outside India to a port in India by a foreign shipping line at the request of a foreign shipper. The amendments are intended to correct this anomaly. Continue Reading

Collecting your goods – Electronic Release System

The Court of Appeal handed down a judgment this week in MSC Mediterranean Shipping Company SA v Glencore International AG [2017] EWCA Civ 365 relating to a dispute arising out of the Electronic Release System (“ERS”) in operation at the port of Antwerp.

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The Supreme Court decision in the Ocean Victory

The Supreme Court decision in the Ocean Victory was handed down this morning.  We will prepare a detailed client alert on the implications of the decision, but for now can report that:

(1) Unsafe ports

The Supreme Court upheld the decision of the Court of Appeal that there was no breach of the safe port undertaking: it was held that it was wrong to extrapolate from the fact that there were two weather conditions which were characteristic of the port, namely swells from “long waves” and severe northerly gales, that the port was unsafe because they could occur together. The mere possibility of those two weather conditions coinciding ( when they had not done so in the previous 35 years, albeit there was no meteorological reason why they should not do so)  was not sufficiently regular or sufficiently foreseeable to amount to an attribute or feature of the port – it was unexpected.

The Supreme Court  confirmed that the question in such cases is whether the event (or in this case the combination of natural events) which led to the casualty was an abnormal and unexpected occurrence or not.  It held that “abnormal occurrence” has its ordinary meaning and is not a term of art: it just means something “out of the ordinary course and unexpected“, and that the Court of Appeal was entitled to reach the decision that it did, namely that the port was not unsafe.

(2) Clause 12 of Barecon 89 form

As to the question of whether, if there was a breach of the safe port undertaking, the provisions for joint insurance in clause 12 of the Barecon 89 Form preclude rights of subrogation of hull insurers and the right of owners to recover in respect of losses by hull insurers against the demise charterer for breach of an express safe port undertaking, the Court was split.  By a 3:2 majority, it was held that in accordance with the general rule that an insurer cannot exercise rights of subrogation to pursue a claim in the name of one co-insured against another, and notwithstanding an amendment to the Barecon Form in this case to refer to employment in lawful trades for the carriage of lawful merchandises “only between good and safe berths, ports or areas where the [vessel] can safely lie always afloat etc“., the critical question of whether the contractual scheme between the owners and the demise charterer precluded any claim by the former against the latter for the insured loss of the vessel, was a matter of construction.  It was held that the scheme in this contract was for there to be an insurance fund and that if demise charterers were in breach of the safe port clause they would be under no liability to the owners for the amount of the insured loss because they had made provision for looking to the insurance proceeds for compensation.  The commercial purpose of maintaining the joint insurance in such circumstances was said to be “not only to provide a fund to make good the loss but to avoid litigation between them, or the bringing of a subrogation claim in the name of one against the other“.

It is notable that the position in the case of an insolvent insurer, not being relevant in this case, was left open.

(3) Limitation

On the question of whether, assuming a breach of the safe port undertaking, the charterer is entitled to limit its liability for the insurer’s losses pursuant to section 185 and Schedule 7 Article 2(1) of the Merchant Shipping Act 1995, it was held that the CMA Djakarta [2004] 1 Lloyd’s Rep 460 was correctly decided: the ordinary meaning of Article 2(1)(a) does not extend the right to limit to a claim for damage to the vessel by reference to the tonnage of which limitation is to be calculated: the charterer is therefore not entitled to limit its liability in accordance with the limitation fund calculated by reference to the vessel.

 

Project MARTHA, crew fatigue and the implications for a vessel’s “seaworthiness”

In January of this year the findings of “Project MARTHA”, a three year study into the causes and effects of crew fatigue, were released – along with proposals as to how best to mitigate against the risks posed by crew fatigue. The study was conducted by a number of eminent academic institutions with extensive input from the shipping community.

The report serves as a timely reminder of the dangers associated with fatigue to those serving on board vessels, as well as those who own and operate them. Continue Reading

EU threatens to bring shipping within its emissions trading scheme unless the IMO sets a target for reduction of greenhouse gas emissions

Last week the top EU climate official, Jos Delbeke, issued a challenge to the International Maritime Organization (the IMO) to adopt an ambitious target for reduction of emissions as part of the IMO’s planned 2018 strategy on reduction of greenhouse gas emissions from ships. Continue Reading

Piracy – additional premium and crew costs

In London Arbitration 11/17 it was held in respect of a charter on an amended NYPE 93 form, incorporating the BIMCO Piracy clause and the Conwartime clause, that:

  1. A claim for reimbursement of additional premium (AP) for transiting the Gulf of Aden and a call to Yemen was not analogous to a claim for hire but gave rise to a claim in debt. In this case there was no express or implied right to equitable set off of the debt and so the AP was payable by Charterers to Owners (such sums being payable within 15 days of receipt of the Owners’ supported invoices or on redelivery under the Conwartime and BIMCO Piracy clauses). Charterers could then counterclaim in respect of any alleged breach of charter.
  2. The charter required the Owners to employ crew on terms that were acceptable to the ITF, and under the terms of the crew contracts the Owners could not insist on the crew remaining on board if the vessel proceeded to Yemen.  The facts meant that there was no culpable delay on the part of Owners in changing the crew. Charterers were therefore responsible for the expense of the crew change and the crew bonus, the latter remaining payable notwithstanding the crew change.

The decision clarifies the nature of such claims and illustrates the strength of Owners’ position under the standard clauses.

Within Port Limits

NAVALMAR UK LTD V KALE MADEN HAMMADDELER SANAYI VE TICART AS [2017] EWHC 116 (COMM) – The MV “ARUNDEL CASTLE”

In this case the Commercial Court considered the meaning of “within port limits” in the context of a charterparty on an amended Gencon 94 form which provided that:

“[Notice of readiness] to be tendered at both ends even by cable/telex/telefax on vessels arrival at load/disch ports within port limits. The [notice of readiness] not to be tendered before commencement of laydays.”

The underlying decision

In the arbitration which was subject to appeal, the arbitrators had held that as the Vessel had tendered NOR outside the port limits as identified on an Admiralty chart of the port, the NOR was invalid.

The arguments

Owners argued that any area within which vessels are customarily asked to wait by the port authorities and over which the port authorities exercise authority or control over the movement of shipping is within port limits. Alternatively, Owners argued that any place where vessels load or discharge cargo, including places outside the legal, administrative or fiscal area where vessels are “ordered to wait for their turn no matter the distance from that area”, is within port limits.

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