Is the shipping industry embracing the digital age?

How ready is the shipping industry for data and digital technologies?

We are conducting a short anonymous survey to discover whether the shipping industry is embracing the digital age. Through collecting responses from companies representing the industry across different sectors and geographies, we’ll be looking to analyse how prepared different segments of the market are for the digital age.

We want your insight – take part in our short survey. This will only take a few minutes to complete and we greatly appreciate your participation.  

Singapore launches an ambitious blueprint to drive Singapore Port as the future global maritime hub

On 12 January 2018, Singapore’s Minister of State for Transport, Lam Pin Min, launched Singapore’s new “Sea Transport Industry Transformation Map.”

Considering the maritime industry’s pivotal role in Singapore’s economy, and the fierce competition between global ports, Singapore’s government is determined to ensure the country remains a leading maritime trading hub. The strategic blueprint aims to create over 5,000 new jobs in the maritime sector and grow its “value-add” by S$4.5bn (US$3.50bn) by 2025, by developing technological innovation, workforce talent, and connectivity between maritime industry actors.

The strategic blueprint will be implemented by the Maritime and Port Authority of Singapore with close support from industry stakeholders and Singapore research centres, and will operate through a collaborative effort of public and private initiatives and the promotion of tech start-ups. Continue Reading

“Demurrage claims” for the purposes of documentary time bars

On 2 February 2018 the Commercial Court allowed an appeal from a decision of the Arbitration Tribunal  in Lukoil Asia Pacific Pte Ltd v Ocean Tankers Pte Ltd.

The Judgment serves as a reminder to Owners to ensure that, if they have a claim for demurrage (no matter how it arises under the charter), as opposed to a claim for which any delay is compensated at the demurrage rate, they comply with any time bars in relation to demurrage claims.

The Claim

The question before the Court was whether a claim categorised as one for delay waiting for orders, was in fact a demurrage claim.

The clause under which the claim was brought provided:

Litasco Clause 4 – Waiting for Orders Clause

If Charterers require vessel to interrupt her voyage awaiting at anchorage further orders, such delay to be for Charterers’ account and shall count as laytime or demurrage, if vessel on demurrage. Drifting clause shall apply if the ship drifts.

Under Litasco Clause 2, claims for demurrage had to be presented to Charterers in writing within 90 days of completion of discharge. The clause included a list of supporting documents which were to be provided whenever possible.

Tribunal Decision

The Tribunal had already decided that the majority of the Owners’ claims for demurrage were time barred, but they treated the claim arising under Litasco Clause 4 as falling outside the scope of the time bar defence.

Judgment

The Judgment includes a discussion of the principles that Courts must adopt in relation to the construction of commercial documents. It distinguishes between clauses referring to time counting “… as laytime or demurrage, if vessel on demurrage”, and those, such as the BIMCO ISPS Clause and the Interim Port Clause in the Fixture Recap in this case, which referred to “any delay caused by such failure shall be compensated at the demurrage rate” and “…Charterers to pay for additional interim port at cost with additional steaming time, at demurrage rate”.

A distinction was therefore made between claims which are, in fact, demurrage claims, and those where the quantification of loss is at the demurrage rate. The decision emphasises that where different wording is used, it is to be “inferred that the parties have taken care with the language used”, and “the presumption [is] that where parties have used different language in different parts of their contract they intend to achieve a different effect”.

 

Prohibition on the carriage of non-compliant marine fuels

The global 0.5% sulphur cap for marine fuel, due to take effect from 1 January 2020, has led to calls for a prohibition on the carriage of non-compliant marine fuels. This is due to concerns that the cap will not achieve the desired benefits unless it can be consistently enforced worldwide.

A proposal has been made to the IMO which involves an amendment to Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL Convention), stipulating that “the sulphur content of any fuel oil carried for use on board ships shall not exceed [0.50% m/m sulphur]”, unless they are using an approved alternative compliance method, such as “scrubbers” (see the full proposal here).

Whilst this prohibition will provide significant health benefits for the population and the environment, it has also given rise to a number of concerns of ship owners: Increased ship owners’ costs in complying with the prohibition, and the fear that an inability of Governments to enforce the prohibition consistently could lead to “market distortion and unfair competition” (BIMCO Press Release, 22 January 2018).

The increasing rate of scrapping of tankers is also thought to be attributable, in part, to ship owners’ concerns about the prohibition. For example, low-sulphur fuel is expected to be more costly, therefore increasing ship owners’ costs and rendering the maintenance of inefficient vessels unjustifiable (TradeWinds, ‘Deluge of tankers set to be torched as regulations kick in’, 1 February 2018).

The prohibition proposal is widely supported and will be discussed by the IMO at its Pollution, Prevention and Response meeting this week (5–9 February 2018).

 

Summary judgment in respect of quality claim

Trafigura Beheer Ltd v Renbrandt Ltd

On 1 December the Commercial Court gave a judgment for the Claimant seller in this matter, which arose out of the sale of a cargo of gas oil in 2008.

The facts

The cargo was to be loaded by STS transfer from a mother vessel.

The Quality clause in the sale contract provided that the sulphur content should not exceed 3%; and that “The Seller gives no guarantees, conditions, warranties or representations, express or implied… in relation to the quality… of the product … which extend beyond the description of the product and any specifications contained in this contract.

The Determination of [Quantity and] Quality clause provided that “Quality shall be as already determined at the time of loading of the mother vessel.” This was to be by a certificate of quality which was final and binding on the parties for all purposes save for fraud or manifest error, in the usual way. There was a further requirement that any claim regarding quality had to be submitted in writing, with various documents attached, within 5 days of the bill of lading date.

There was a confused jurisdiction clause in the contract providing for English law and High Court jurisdiction but reference to commencement of arbitration within five days of the bill of lading date if disputes arose and were not settled (with a carve out for particular types of claim).

Delivery took place in October 2008 but no claim about the quality was made by the Buyer until the following year, when it first commenced proceedings in Nigeria. These were withdrawn but further proceedings were commenced, again in Nigeria, in 2016.

The Claimant Seller sought a declaration of non-liability from the English court and summary judgment in respect of that claim.

The decision

The Court made short work of finding that the Claimant was entitled to summary judgment.

  1. In relation to whether the claim form was validly served in Nigeria, the Defendant’s evidence was found to be of no evidential value and the CPR’s aim of protecting the position of a defendant who wishes to dispute jurisdiction from being required to engage in the merits of the claim pending such application does not apply where the time limit for filing an acknowledgement of service has passed and no jurisdictional challenge has been raised.
  2. The arbitration provisions in the jurisdiction clause related to quantity / quality disputes, not a claim for a declaration of non-liability.
  3. There was found to be no undue delay by the Claimant in bringing its claim, in circumstances where it was claiming in the contractually agreed forum that the Defendant’s claims were time barred, the latter having been brought out of time in a non-contractual jurisdiction.
  4. It confirmed that the purpose of a conclusive evidence clause is to avoid disputes as to quality and to achieve finality. Quality here was to be determined at the time of loading of the mother vessel.
  5. The Court’s declaration would serve a useful purpose insofar as it would assist the Nigerian courts, in circumstances where the contract was governed by English law, to have a ruling of the English court on the issue.

Significance

The decision confirms the role of conclusive evidence clauses and that a claim for a non-declaration of liability in respect of a quality / quantity claim is not impacted by any restrictive time bars relating to the underlying claim. It also provides a useful insight for practitioners on the role of summary judgment, as opposed to default judgment, proceedings.

The Yangtze Xing Hua

Transgrain Shipping (Singapore) Pte Ltd V Yangtze Navigation (Hong Kong) Co Ltd [2017] EWCA Civ 2107

This was a further appeal, to the Court of Appeal, from an LMAA arbitration award, considering the true construction of the sweep-up provision at sub-clause 8(d) of the Inter-Club Agreement 1996 (“ICA ‘96”); specifically, whether the meaning of the term “act” in the phrase “act or neglect” should be restricted to a culpable act or given a broader meaning that included positive (no-fault) conduct.

As with the Tribunal and High Court (Teare J) before it, the Court of Appeal has found that “act”, even though paired with “neglect” as an alternative, is to be given the broader meaning in this context and not to be confined to culpable (fault) conduct.

The decision also confirms that clause 8 of the ICA ’96 is a mechanical process for the allocation of risk to which the critical factual enquiry is one of causation and not fault.

Our previous blog on this case can be found here.

Extension of common law rule against set off from freight to air freight

The London Circuit Commercial Court has held that the well established common law rule in shipping law that “a claim in respect of cargo cannot be asserted by way of a deduction from freight” extends to air freight.

In this landmark case, the contract was for the carriage of chia seeds between a well known specialist in the transportation of goods by road, rail, air and sea, and a seller of raw materials. The Defendant asserted that it was a condition of the contract that the goods would be delivered within seven days.  They were considerably delayed. The dispute arose because the Claimant sought recovery of its air freight (i) which the Defendant  denied was due, or alternatively (ii) from which the Defendant wished to make deductions on the basis that the only freight payable was the sea freight equivalent, ie that payable if the goods had been transported by sea.

Also in issue was whether the British International Freight Association (“BIFA”) standard trading conditions were incorporated into the contract. If they were, clause 21A provides: “The punctual receipt in full of sums falling due from the Customer to the Company is critical to the operation of the Company’s business and its performance of its obligations to the Customer. Accordingly the Customer shall pay to the company in cash, or as otherwise agreed, all sums when due, immediately and without reduction or deferment on account of any claim, counterclaim or set-off…”

This led to a consideration of whether the common law rule, which originates in shipping law, extends to air freight. Considerable weight was given to the Claimant’s expert’s evidence, to the effect that the rule is the basis upon which the market for freight currently contracts. Although it was acknowledged that the basis for the original rule, namely cash flow, would not alone justify the extension of the rule to air freight, given the shorter time periods involved, the Court was influenced by the fact that the rule has already been extended to international and domestic road haulage. It found that there isno logical or sensible distinction between the three means of transport for the purpose of the common law rule”.  As the expert pointed out, there could be considerable uncertainty otherwise in relation to multi-modal freight contracts. It was also held that the rule as applied in relation to air freight extends to claims for delay.

This means that in such cases, air freight will need to be paid in full, and any cargo related claim, including one for delay, will need to be made by way of separate claim.

 

Are you ready for changes to EU data protection regulation?

The General Data Protection Regulation (the Regulation or GDPR) comes into effect on 25 May 2018. The Regulation is arguably the most seismic change in European Union (EU) data protection law in over 20 years and will present major challenges for businesses operating within the shipping sector.

With just six months to go before the Regulation is in effect, advance preparation is key. In our briefing, we highlight six key areas that shipping companies, their insurers, and service providers should be aware of, along with recommended practical steps to aid compliance. You can read it here

 

Appointment of Arbitrator

Hot on the heels of the Sino v Dana decision (reported in our blog on 16 November), the Commercial Court considered the question of notice of appointment of an arbitrator once again in Glencore Agriculture BV (formerly Glencore Grain BV) v Conqueror Holdings Limited [2017] EWHC 2893. 

This is another case where the Respondent (Glencore as Charterer) took no part in the arbitration and was unaware of the proceedings until it received the Award. Continue Reading

CV Stealth – Arrest of vessel under Shelltime 4 – causation

By way of follow up to our blog on this matter dated 3 May 2016, the Commercial Court heard a further arbitration appeal earlier this month arising out of the detention of the vessel at Puerto la Cruz on 19 September 2014.

The vessel was chartered on an amended Shelltime 4 form, and the vessel remained at Puerto la Cruz at the time judgment was given.

This appeal related to two issues:

  1. Whether the Charterers’ employment order could still be said to be the cause of the continued arrest of the vessel; and
  2. Whether drydocking costs which Owners saved as a result of the vessel being under arrest should be deducted from their claim for damages.

Continue Reading

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