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  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.
Nick Austin is a partner in Reed Smith’s Transportation Industry Group, with a focus on shipping and international trading disputes in court, arbitration and mediation. He acts for vessel owners and operators, charterers and traders in a wide range of dry shipping and commodity disputes, including charterparty, bill of lading and environmental, social and governance (ESG) issues. He supports clients in the extractive and LNG sectors on their marketing and transportation needs, and maintains strong links in the Japanese market.
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?
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.…
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?…
BP GTCs 2007: Septo Trading Inc v Tintrade Limited  EWCA Civ 718
In Septo Trading Inc v Tintrade Limited ( EWCA Civ 718) the Court of Appeal overturned a High Court decision ( 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
In CVLC Three Carrier Corp and Anor v Arab Maritime Petroleum Transport Company ( 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 Performance guarantees, vessel arrests, and implied terms
At a glance: the words “CLEAN ON BOARD” and “SHIPPED in apparent good order and condition” in a draft bill of lading presented to the Master for signature, were merely an invitation by the shippers to the Master to make those representations in accordance with his own assessment.
Our previous briefing on this case can be found here.
Continue Reading The “Tai Prize”  EWCA Civ 87: An invitation to the Master?
Public today: an important judgment handed down by the English High Court this morning has re-opened the door to recovering damages in addition to demurrage for losses caused by exceeding laytime in cargo operations.
In today’s 43 page judgment in K Line Pte Ltd vs Priminds Shipping (HK) Co Ltd (The Eternal Bliss)  EWHC 2373 (Comm), Mr Justice Andrew Baker thoroughly surveys almost 100 years of law and commentary on a question that has never been properly resolved and which has divided the opinion of academics and practitioners alike.
In reaching the “firm and clear view” that The Bonde (1990), thought by some to have settled the issue 30 years ago, was wrongly decided the Court found that, quite apart from demurrage, damages can be also recovered for other losses caused by a failure to load or discharge within the allowable laytime. No separate breach of charter is required.
Continue Reading Damages in addition to demurrage – long standing debate settled in owners’ favour
On 11 March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. Two days later, the WHO stated that Europe showed more reported cases and deaths than the rest of the world combined, apart from China. Italy now has more reported deaths from COVID-19 than China and, as COVID-19 continues to spread, governments…