Update on the impact of Brexit on English jurisdiction

On January 18, the European Commission published guidelines outlining the impact a no-deal Brexit will have on the recognition and enforcement of UK judgments in the remaining 27 EU countries (EU 27). The Commission states that where the judgment concerned requires exequatur, and the UK court has obtained exequatur before March 29 (or any extended exit date) but the judgment has not yet been enforced in an EU 27 country, then that judgment can still be enforced in the EU 27. In any other circumstances, EU rules will no longer apply to UK judgments in the EU 27 even where:

– the judgment was handed down before the exit date; or
– the enforcement proceedings were commenced before the exit date.

Instead, the Commission states that the domestic rules of each EU member state will apply to the enforcement of any such UK judgment. This is as we foreshadowed in our earlier client alert. Also, it should be noted that, on December 28, 2018, the UK deposited its instrument of accession to the Hague Convention on Choice of Court Agreements 2005. In the event of no deal, the UK will be a party to the Hague Convention (again, see our earlier client alert), and it is intended that the UK will be a party to the Hague Convention from April 1.

Blockchain Boost for the Shipping Industry

After several successful trials over the last year, Israel’s largest cargo shipping company, Zim, has implemented a blockchain platform for electronic bills of lading.  According to Zim, this technology could replace paper bills of lading and further improve other activities which rely on physical means of transfer.

Zim recently conducted several transactions in which bills of lading were transferred to the receiver less than two hours from the vessel’s departure, a process that typically takes days or can take weeks.  Following these successful trials and initial transactions, Zim will soon be entering the next phase, providing an opportunity for all of its customers to take advantage of electronic bills of lading utilizing blockchain technology.

Zim’s successful implementation of blockchain-enabled bills of lading, demonstrates the power of distributed leger technology to add efficiency and reduce costs in memorializing and settling financial transactions.

Read the full article on our Fintech blog here.

 

Update on BIMCO 2020 Fuel Transition Clause for Time Charter Parties

On 21 December 2018 we commented on the newly released BIMCO clauses intended to address the International Maritime Organization’s revised sulphur content limits with regard to the consumption and carriage of marine fuel (in accordance with Regulation 14 of Annex VI of the International Convention for the Prevention of Pollution from Ships, 1973 as modified by the Protocol of 1978, MARPOL), which enter into force on 1 January and 1 March 2020 respectively.

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The crossing rule and narrow channels – Court of Appeal hands down judgment in the Alexandra 1

On 5 October 2018, the English Court of Appeal confirmed the High Court decision in National Challenge Ltd. v. Evergreen Marine (UK) Ltd [2017] EWHC 453 (Admlty) that the crossing rule does not apply where one vessel is approaching a narrow channel intending to enter it and another vessel is navigating in the narrow channel intending to exit it, so as to involve risk of collision. This decision seeks to provide certainty in such situations and promote safe navigation; however, the decision may not be relevant in all situations when vessels are crossing, whilst navigating in or near a narrow channel.

Background

On 11 February 2015, a laden VLCC, Alexandra 1, and a laden container vessel, Ever Smart, collided just outside the dredged entrance channel to Jebel Ali in the United Arab Emirates. At the time of the collision, the Alexandra 1 was inbound and the Ever Smart was outbound.

As previously reported, at first instance the Admiralty Judge, Mr. Justice Teare (“Teare J”), held that Rule 15 of the International Regulations for Preventing Collisions at Sea, 1972 (the Collision Regulations), the crossing rule, did not apply and that when Alexandra 1 approached the narrow channel she was not under a duty to keep out of the way of Ever Smart. Instead, the navigation of the two vessels was governed by: Rule 9, the narrow channel rule, in the case of Ever Smart; and Rule 2, the requirement of good seamanship, in the case of Alexandra 1.

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Significant amendments in the pipeline to Singapore’s Merchant Shipping Act

The Merchant Shipping (Miscellaneous Amendments) Bill was read in the Singapore Parliament for the first time on 19 November 2018.

The Bill proposes to make a number of significant amendments to Singapore’s merchant shipping legislation. These include:

  1. enacting the International Convention on Salvage 1989 as part of Singapore law; and
  2. adopting the 1996 Protocol to amend the Convention on Limitation of Liability for Maritime Claims, 1976.

The Bill is expected to be debated in parliament over the coming weeks. A further update will follow if the Bill is passed.

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The 2020 Global Sulphur Cap: Whitepaper

On 1 January 2020 amendments to the International Maritime Organization’s (IMO’s) International Convention for the Prevention of Pollution from Ships (MARPOL) enters into force.

Read our Shipping Group’s latest whitepaper, by Ron Clark, on the 2020 Global Sulphur Cap here.

Including topics covering:

  • 2020 SOx issues
  • An introduction to marine fuels
  • Abatement technology
  • Scrubbers
  • Control and regulation
  • BIMCO
  • Industry response
  • Alternatives

ICA Incorporation Clauses: An update

Readers will recall from Reed Smith’s recent blog that concerns have been raised regarding common Inter-Club Agreement (ICA) incorporation clauses.

A London Tribunal, in a recent arbitral award in which Reed Smith acted, held in favour of Reed Smith’s client that a traditional ICA incorporation clause incorporated the entire ICA, including clause 9 (i.e. the entitlement to security).

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IRAN SANCTIONS – UPDATE

On 8 May 2018, President Trump announced that the United States would withdraw from the Joint Comprehensive Plan of Action (JCPOA). In conjunction with that announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the re-imposition of certain secondary sanctions, being those that apply to non-U.S. persons even where there is no U.S. nexus (e.g. no U.S. persons, no U.S.-origin goods, or U.S. dollar payments). As discussed in our earlier blog post, the first batch of sanctions was reimposed on 6 August  and the second batch will become effective 5 November.

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The English High Court provides much needed guidance on the effectiveness of sanction exclusion language, following the USA’s withdrawal from the JCPOA

  1. After a tumultuous year in the Iranian sanctions landscape, much needed guidance is starting to trickle down through the English courts as to the scope and application of the US secondary sanctions and the EU Blocking Regulation regimes. On 12 October 2018, the English High Court handed down judgment in Mamancochet Mining Ltd v Aegis Managing Agency Ltd [2018] EWHC 2643 (Comm), in which Teare J was asked to consider contractual sanctions exclusion clause wording in the context of a marine cargo insurance policy.
  2. The Claimants sought to claim under the policy for the theft of steel billets from bonded storage in Iran. The Defendant underwriters resisted payment on the basis of the policy wording, which provided inter alia that no cover would be provided if it exposed the insurer to any US or EU sanctions. The case was heard on an expedited basis in light of the fact that the relevant US sanctions will be re-imposed on 4 November 2018.
  3. The Claimants succeeded. The court held that it was insufficient for the insurers to allege there was a risk that the US / EU authorities might conclude that payment was prohibited and so impose sanctions. The insurers were required to go further and establish that (on the balance of probabilities) the payment would be prohibited under either EU or US sanctions regimes and would, therefore, expose them to a sanction. This judgment may well see the insurance market re-visit its sanctions exclusion language, though the position will once again evolve come 4 November.
  4. Of equal, if not greater, interest however are the judge’s obiter comments on the interaction between a contractual exclusion clause and the EU Blocking Regulation. Though non-binding, the judge appeared to be of the view that insurers may be able to suspend payments to their assured that would otherwise contravene US secondary sanctions, without being in breach of the EU Blocking Regulation. The insurers’ answer to allegations of a breach of the Blocking Regulation would be that the decision not to pay was predicated on a contractual entitlement rather than in compliance with a third country’s prohibition. The judge was not required to reach a firm conclusion on this because, on the facts, no secondary sanctions were engaged (a finding that would have been different post 4 November). No doubt this important point will be developed in subsequent cases.

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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