The question of whether demurrage liquidates all or just some of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime will no longer be decided by the UK Supreme Court following a commercial settlement. The parties have therefore consented to the appeal not proceeding.
Continue Reading The Eternal Bliss – Court of Appeal has the final say
Can Charterers withhold hire without Owners’ consent, even if the vessel was off hire on the hire due date and where they had agreed deductions from hire would not be allowed without Owners’ written agreement?
Key facts
Under a charterparty dated 13 April 2021 on a heavily amended NYPE 1993 form, Bulk Trident Shipping Ltd (”Owners”) trip time chartered the “Anna Dorothea” (the “Vessel”) to Fastfreight Pte Ltd (“Charterers”) for the carriage of a bulk cargo from East Coast, India to China (the “Charterparty”).
The EU Emissions Trading Scheme (“EU ETS”) is a legislative scheme by which the EU caps emissions of greenhouse gases from certain industries by requiring emitters to surrender emission allowances to offset the gases they emit. A limited number of emitters are granted some free emission allowances, but most allowances must be purchased in auctions arranged by the European Energy Exchange (the “EEX”), which allowances may then be traded, before being surrendered to a competent authority by the emitters. Hence, the EU ETS is a “cap and trade” emissions scheme.
Change is underway to include certain emissions from shipping within the EU ETS, by phasing in requirements to report emissions and to purchase and surrender allowances for increasing proportions of carbon dioxide (CO2), nitrous oxides (N2O) and methane (CH4) emissions from shipping activity within the EU, between now and 2026.
Continue Reading EU formalises its plans for the expansion of the EU ETS into shipping in 2024
Just as there is no easy route to decarbonisation, there is no straightforward way of balancing a shipowner’s obligation to comply with the MARPOL Carbon Intensity Indicator (“CII”) Regulations with a time charterer’s right to direct the employment of a vessel.
That much is clear from the long-awaited BIMCO CII Operations Clause for Time Charters 2022 and, more tellingly, from the industry reaction.
Now that the dust is settling: what does the clause actually say? What are the key sticking points? And how are owners and charterers positioning themselves before the CII Regulations come into force on 1 January 2023? In this briefing, we take a closer look at some of the emerging themes.
Continue Reading BIMCO CII Clause for Time Charters – The dust begins to settle
The question of whether demurrage liquidates all or just some of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime has divided practitioners and academics for decades and, more recently, the English Court in K Line Pte Ltd v. Priminds Shipping (HK) Co Ltd [2021] EWCA Civ 1712 (The Eternal Bliss). Now, in granting permission to appeal to the shipowners, it is a question which the Supreme Court has said it will answer.
Continue Reading The Eternal Bliss – Permission to appeal granted by the UK Supreme Court
In our October 2021 blog “Possession as we (don’t) know it!”, we discussed the existing position under English law in respect of electronic trade documents and the scope for reform in light of the Law Commission’s consultation paper and draft legislation “Digital assets: electronic trade documents (2021) Law Commission Consultation Paper No 254”, published on 30 April 2021.
Continue Reading Solving the ‘possession’ problem – Law Commission publishes draft legislation for the legal recognition of electronic trade documents
In light of the unprecedented challenges faced by the shipping industry in recent years, BIMCO has recently released its long-awaited model force majeure clause for inclusion in charterparties and other shipping contracts.
Reed Smith first reported on the clause in January 2021 in our article ‘All eyes on BIMCO’s new clauses’ .
Now that the clause is finally here, what does it say and how can it support the industry?
The context
BIMCO’s new clause aims to provide a comprehensive regime for parties to follow if certain circumstances arise, beyond their reasonable control, that prevent performance of a charterparty or other shipping contract. Force majeure clauses in carriage contracts are traditionally quite rare, with English law preferring to treat the issue as one of risk allocation.
A clearly drafted force majeure clause offers a party the flexibility to suspend performance, and potentially terminate a contract, without, in theory, facing a claim from the unaffected party for breach of contract.
Continue Reading Expecting the unexpected – BIMCO releases force majeure clause
There cannot be many people left in the shipping sector unaware that the International Maritime Organisation (IMO) has set a target of reducing annual greenhouse gas emissions in shipping by at least 40% by 2030 and pursuing a 70% reduction by 2050.
As a key means of achieving this, the IMO, through the Marine Environment Protection Committee (MEPC) has adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI. These changes will implement major new technical rules called the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). The regulations are due to come into force on 1 January 2023, just over a year from now.
Put simply, EEXI is a framework for determining the efficiency of the design of in-service vessels over 400 GT falling under MARPOL Annex VI. The CII is an operational measure of how efficiently a ship transports goods or passengers measured, in essence, in grams of CO2 emitted by cargo-carrying capacity and nautical mile.
Both EEXI and CII are complex and evolving, with much of the detail still unclear. However, they need to be carefully considered and understood now so that those affected can start planning for January 2023.
In this article, we set out in an easy-to-use table the main points, and explain some of the key issues owners and charterers need to consider.
Continue Reading EEXI and CII – shipping’s next environmental challenge
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?
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 Court of Appeal clarifies that term in trade recap stating that certificate of quality is final and binding is not qualified