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.

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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.

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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.

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IMO 2020 and Liberia’s stance

Last week, the Liberian flag state called for the IMO to issue a resolution or circular requiring early reporting of low-sulphur fuel availability by member states.  From the flag state’s point of view, littoral states should be doing more to assist shipowners and, by extension, time charterers in planning for compliance with the 1 January 2020 deadline for the global reduction of sulphur content (down to 0.5 per cent m/m) in marine fuels.

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Sanctions on Iran – Fight for the survival of the JCPOA

As readers will be aware, following President Trump’s announcement on 8 May 2018, the USA has indicated its withdrawal from the Iran nuclear deal – the JCPOA – and that it will be reimposing secondary sanctions on Iran, being those which affect non-U.S. persons. The first tranche of secondary sanctions took effect in early August, with the second to follow in early November.

The remaining participants to the JCPOA, including the EU, have been looking for ways to signal their continued commitment to the agreement with a view to persuading Iran to fulfil its obligations. The EU, for example, has recently reactivated its so-called “blocking” Regulation, as we reported here.  This week, the JCPOA signatories met in New York and released a statement explaining they were exploring ways of providing a mechanism to facilitate payment for Iranian exports. The expectation is that such a mechanism would be designed to avoid the use of U.S. dollars and therefore limit the possibility for interference by the U.S. authorities. The full text of the statement can be found here.

It remains to be seen precisely how this mechanism might work in practice, and indeed whether it would be successful in providing a route for non-U.S. companies to continue to trade with Iran whilst avoiding U.S. sanctions. The statement serves as a reminder that the issue of Iranian sanctions remains a live, and complex, issue.

Big data analytics and autonomous vessels – when will legislation catch up?

In a survey conducted by Reed Smith in the first half of 2018, industry participants predicted that big data analytics will be one of the most significant drivers of change in the shipping industry over the next five years. In addition, for the same five-year period, the survey revealed that the shipping industry considers the development of automated processes and functions on board vessels to be the biggest driver of efficiency in shipping.

The collection, analysis and management of huge volumes of unstructured data (i.e., big data), such as data on voyage performance, ship structure, machinery, fuel consumption, traffic, cargo and the weather, are expected to provide valuable insights into the operation of ships, and uncover hidden patterns as well as market trends. The analysis of big data will also allow the prediction of likely outcomes in certain voyages. In addition, it is likely to reduce costs, as the industry will be able to identify more efficient ways of doing business; it will allow decisions to be made more quickly; and it will make shipping safer by reducing risks. Continue Reading

Dera Commercial Estate v. Derya Inc [2018] EWHC 1673

In Dera Commercial Estate v. Derya Inc [2018] EWHC 1673, the Commercial Court considered several issues of interest arising out of Article III Rule 6 of the Hague Rules ( “Article III Rule 6”), in the context of a bill of lading for the carriage of maize destined for Jordan which, on arrival, was not allowed into the country by the Jordanian customs authorities, due to damage and “apparent fungus”.  Although, after various efforts to reverse the decision of the customs authorities, the local court gave permission to fumigate the cargo on board the vessel in the hope of preserving its condition, the vessel nevertheless sailed to Turkey, where the cargo was ultimately discharged and sold pursuant to a judicial sale order. Continue Reading

IRAN SANCTIONS: UNITED STATES REIMPOSES SANCTIONS AND THE EU RESPONDS

In the early hours of Tuesday, 7 August 2018, and as foreshadowed by President Trump’s announcement on 8 May 2018, the United States reimposed certain secondary sanctions on Iran, being those which apply to non-U.S. persons. The imposition of these sanctions follows the conclusion of a 90-day wind-down period and, as mentioned in our previous blog post, will impact (among other things) trade in graphite, raw or semi-finished metals and the Iranian automotive sector. Importantly, the new Iran sanctions permit the U.S. government to impose sanctions on non-U.S. persons who provide significant support to those acting in violation of the sanctions. Note that a second wind-down period expires in early November, at which time further secondary sanctions will be reimposed, affecting, among other things, shipping, the petroleum and petrochemical industry, and insurance.

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Ship arrests in the UK – can an arresting party be required to give cross-undertakings in damages?

The law on ship arrest in England is well-entrenched. In essence, a party’s ability to arrest a ship in the UK occurs as of right. Accordingly, a shipowner will be unable to recover any compensation at all for wrongful arrest unless the arrest was obtained by mala fides (bad faith or malice) or crassa negligentia (gross negligence). This would also include whether a vessel owner is entitled to request that the arresting party provide a cross-undertaking in damages in the same form as that typically required in applications for freezing orders in the Commercial Court.  The recent decision in Natwest Markets plc v. Stallion Eight Shipping Co. S.A. [2018] EWHC 2033 (Admlty) confirms the Admiralty Court’s position that such undertakings are not applicable in vessel arrests. Continue Reading

No hindsight for implied terms

In Robert Bou-Simon v. BGC Brokers LP [2018] EWCA Civ 1525, the Court of Appeal considered deleted provisions and implied terms. Although in the context of an employment contract, the decision obviously has wider application.

The Court held that the judge at first instance had not properly applied the legal test for the implication of contractual terms, as established in Marks & Spencer Plc v. BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742.

It was emphasised that in such cases, it is important to:

  • Approach the matter of the implied term from the perspective of the reasonable reader of the contract, with an awareness of its provisions and the surrounding circumstances, at the time the contract was made, not at the time at which the dispute comes before the Court.
  • Consider the issue of implied terms only after the process of construing the express words of the contract has been completed.
  • Remember that it is not necessary to give business efficacy to a contract to imply a term to deal with circumstances which are not just omitted from the express terms but are outside the scope of the agreement altogether.
  • Exercise care when considering the question to pose to an official bystander when asking whether a term is so obvious as to be implied (this is reminiscent of the notice of redelivery cases, where, you will remember that, one of the problems was not being able to work out what term was to be implied).

The case will also be noted for considering the extent to which we should consider deleted provisions when seeking to imply terms, a distinction being drawn between what one can consider when construing written terms and what can be taken into account when considering whether a term should be implied.

LJ Singh said, albeit obiter, that he can see the force in the suggestion that “the consideration of deleted words may negative the implication of a term in the form of those deleted words”. He added that he does not necessarily accept that, in the context of implied terms, there is a threshold requirement that there must be an ambiguity in the contract before deleted words can be admissible.

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