Exemption clauses subject to contractual interpretation

Exemption clauses, including those purporting to exclude or limit liability for deliberate and repudiatory breaches, are to be construed by reference to the normal principles of contractual construction. There is no presumption in English law that exemption clauses do not apply to fundamental breaches. Nor is there a requirement for any particular form of words or level of language to exclude liability.

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Possession as we (don’t) know it!

Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. The change could finally unlock the full potential of digital trade documents, while at the same time keeping English law at the forefront of global commerce.

The existing position under English law is that one cannot legally ‘possess’, or have physical control of, something intangible (not including intellectual property rights, which are governed by separate rules). This means that a purely electronic or digital trade document cannot be possessed, and so cannot fulfil the legal functions of its possessable paper equivalent. But the UK Law Commission’s recent proposals for the reform of English law regarding possession of electronic trade documents and the accompanying draft legislation (the Draft Bill) suggest that more universal digitisation of electronic bills of lading and other trade documents will soon be a reality.

Electronic trade documents, at least in the form of ‘e-bills’, have been in use for almost two decades due to their undisputed benefits and efficiency. However, they remain, as the Law Commission puts it, “workarounds” to the problem of intangible, digital documents not being capable of possession under English law. This is primarily because electronic documents are created under multi-party contracts between a closed group of parties engaged in a particular trade that agrees to recognise them as having the same qualities as a paper document.

What the Law Commission’s proposals seek to address is the “possession problem”, a timely example of English law keeping up with technological solutions (including blockchain) to give electronic trade documents the same legal function as their paper equivalents.

What does the new law say?

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Executive Order 14036 encourages competition compliance for shipping companies

President Joe Biden has issued Executive Order 14036 “Promoting Competition in the American Economy” (“the EO”) which was signed on 9 July 2021. The EO has the goal to promote competition within the U.S. economy to lower prices for families, increase wages for workers, promote innovation and foster economic growth.

The EO puts forward 72 initiatives for multiple federal agencies. While it does not establish new requirements, it is a call to action for federal agencies to establish policies in order to address the harmful trends associated with corporate consolidation, decreased competition and the ultimate harm they cause to America’s consumers, workers, farmers and small businesses.

Joe Biden is attempting to enforce competition compliance more vigorously than his predecessor. As illustrated by the EO, ship owners, carriers and airlines need to ensure that their competition compliance programmes are up to date. Some shipping companies do not have compliance programmes in place as they are advisory, rather than compulsory. As can be seen in the EO, rather than make it compulsory, Biden’s administration directs the Department of Transportation to consider issuing clear rules and encourages both the Surface Transportation Board and the Federal Maritime Commission to establish certain rules in relation to the shipping industry, air travel and rail travel. Continue Reading

New initiatives concerning sustainable transportation is published by the European Commission

Last month, the European Commission published two new proposals for EU regulations to encourage the use of sustainable fuels in aviation and shipping – namely the ReFuelEU Aviation and FuelEU Maritime initiatives, respectively. Both proposals are subject to public feedback until 5 October.

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Court of Appeal clarifies that term in trade recap stating that certificate of quality is final and binding is not qualified

BP GTCs 2007: Septo Trading Inc v Tintrade Limited [2021] EWCA Civ 718

 

Introduction

In Septo Trading Inc v Tintrade Limited ([2021] EWCA Civ 718) the Court of Appeal overturned a High Court decision ([2020] EWHC 1795 (Comm)) that a term in a trade recap which provided that an inspector’s results were “binding on the parties save for fraud or manifest error” was qualified by the BP 2007 General Terms and Conditions for FOB sales (the “BP GTCs 2007”). Our blog post on the High Court’s decision can be found here.   Continue Reading

U.S. cruises could restart by mid-July, U.S. CDC says

Recently, on April 28, 2021 the U.S. Centers for Disease Control and Prevention (“CDC”) distributed a letter to the cruise industry in which it notified the industry regarding clarifications and amplifications of the CDC’s Conditional Sailing Order (“CSO”) (the Letter). The CSO provided guidelines for the resumption of cruises from the United States. Notably, following the Letter, the CDC’s spokesperson stated that passenger voyages from the United States could resume in mid-July depending on pace and compliance with the CSO. Continue Reading

An update on security and enforcement during a global pandemic

  1. Security

Obtaining security for a party’s claim on the one side or security for a party’s costs on the other can be crucial remedies in times of a global pandemic where there may be issues with enforcement due to the closures of courts, delayed processes and a general lack of available assets.

Security and enforcement interact closely with each other where unless security has been obtained in advance, the process of issuing enforcement proceedings may be disproportionately expensive or time-consuming, particularly where it is difficult to locate assets. In practical terms, it is often pointless to arbitrate if the claim is not secured. Continue Reading

Performance guarantees, vessel arrests, and implied terms

In CVLC Three Carrier Corp and Anor v Arab Maritime Petroleum Transport Company ([2021] EWHC 551 (Comm)), Reed Smith (Nick Austin, Charles Weller, Alfred Perkins, Vassilis Mavrakis) represented two shipowning companies in successfully overturning an arbitration award which held that there was an implied term in a performance guarantee that the beneficiary would not seek further security beyond that created by the guarantee itself, thus protecting the guarantor’s vessels from arrest. Continue Reading

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