Supreme Court overrules Court of Appeal on interaction of crossing and narrow channel rules in COLREGs.

 Evergreen Marine (UK) Limited (Appellant) v Nautical Challenge Ltd (Respondent)

[2021] UKSC 6

On 11 February 2015, the appellant’s large container vessel, Ever Smart, and the respondent’s VLCC (very large crude carrier), Alexandra 1, collided at sea at night just outside the entrance/exit channel to the port of Jebel Ali in the United Arab Emirates.

Ever Smart was outbound from Jebel Ali and had been navigating along the channel at a speed over the ground of 12.4 knots at the time of the collision. Alexandra 1 was inbound to Jebel Ali but had not entered the channel as she was waiting in the pilot boarding area to pick up a pilot, and was moving over the ground very slowly, approaching the channel at a speed over the ground of 2.4 knots, but with a varying course. Visibility was good enough for the vessels to have seen each other from about 23 minutes before the collision. For the whole of that period, the two vessels were approaching each other on a steady bearing.

The High Court held Ever Smart 80% liable for the damage caused by the collision and Alexandra 1 20% liable. The Court of Appeal agreed on both issues and on apportionment. Two issues arose on appeal.

1. The interplay between the narrow channel rules and the crossing rules.

2. Whether the crossing rules only engaged if the putative give-way vessel is on a steady course.

The Supreme Court in which Lords Briggs and Hamblen gave the judgment, addressed the second issue first.

The Supreme Court held that there was no ‘steady course’ requirement. In The Alcoa Rambler the Privy Council had held that the crossing rules did not apply because the putative give-way vessel (the vessel which would be required to keep out of the way if the crossing rules applied) could not determine that she was on a steadily crossing course with the putative stand-on vessel, as that vessel was concealed behind other anchored vessels until the last moment before the collision. Importantly, there was no opportunity for the putative give-way vessel to take bearings of the putative stand-on vessel. In the present case Alexandra 1 had been approaching Ever Smart on a steady bearing for over 20 minutes before the collision, on a crossing course, enough to engage the crossing rules even though she was not on a steady course. For the same reasons the stand-on vessel need not be on a steady course to engage the crossing rules either.

On the first issue, the  interplay between the narrow channel rules and the crossing rules, at first instance and in the Court of Appeal it had been  held that the narrow channel rules displaced the crossing rules, relying on The Canberra Star [1962] 1 Lloyd’s Rep 24 and Kulemesin v HKSAR [2013] 16 HKCFA 195. However, the Supreme Court noted that these cases concerned a vessel intending to enter and on her final approach to the entrance, shaping her course to arrive at the starboard side of it. They did not apply where the approaching vessel was waiting to enter rather than entering. The crossing rules should not be overridden in the absence of express stipulation, unless there was a compelling necessity to do so.

Here, Alexandra 1 was the approaching vessel, intending and preparing to enter the channel but, crucially, waiting for her pilot rather than shaping her course for the starboard side of the channel, on her final approach. Accordingly, there was no necessity for the crossing rules to be overridden as the narrow channel had not yet dictated the navigation of the approaching vessel.

That vessel could comply with its obligations under the crossing rules, whether it was the give-way vessel or the stand-on vessel. Nor did the crossing rules need to be displaced as regards the vessel leaving the channel. The crossing rules were only displaced when the approaching vessel was shaping to enter the channel, adjusting her course so as to reach the entrance on her starboard side of it, on her final approach. Here, the crossing rules applied and Alexandra 1, as the give-way vessel, was obliged to take early and substantial action to keep well clear of Ever Smart.

The Supreme Court unanimously allowed the appeal. Apportionment of liability would be redetermined by the High Court.

In Rem Action- Demise Charterer or Not?

‘Statutory liens’ or ‘statutory rights in rem’ come into existence on commencement of in rem proceedings (The Monica S [1967] 2 Lloyd’s Rep 113). In practice, this means that, if a ship is sold to a third party before the jurisdiction has been invoked or if a charter by demise is terminated before such time, then the potential claimant may be unable to benefit from the in rem proceedings and the accompanying right of ship arrest. The most recent judgment of the Admiralty Court in Aspida Travel v The Owners and/or Demise Charterers of the Vessel ‘Columbus’ and The Owners and/or Demise Charterers of the Vessel ‘Vasco Da Gama’ [2021] EWHC 310 (Admlty) highlights that.

In this case, Aspida Travel claimed against the proceeds of sale of the vessels ‘Vasco De Gama’ and ‘Columbus’ in respect of travel agency services for the transport of crew to and from the vessels which took place between 1 January 2020 to 31 July 2020 when the vessels went to lay-up due to the pandemic. At that time the vessels ‘Vasco De Gama’ and ‘Columbus’ were demise chartered to Lyric Cruise Ltd and Mythic Cruise Ltd respectively to whom Aspida provided the relevant services and rendered the resulting invoices. The claim forms were issued on 13 November and 20 November 2020. The basis of the claims was Section 21 of the Senior Courts Act 1981, paragraph 4 of which provides that:

‘In the case of any such claim as is mentioned in section 20 (2) (e) to (r), where –

  • the claim arises in connection with a ship; and
  • the person who would be liable on the claim in an action in personam (‘the relevant person’) was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, an action in rem may (whether or not the claim gives rise to a maritime lien on that ship) be brought in the High Court against –
    • that ship, if at the time when the action is brought the relevant person is either the beneficial owner of that ship as respects all the shares in it or the charterer of it under a charter by demise; or
    • any other ship of which, at the time when the action is brought, the relevant person is the beneficial owner as respects all the shares in it.’

The main objection to the claims was that they do not meet the requirements of Section 21 (4) of the Senior Courts Act 1981, in that Lyric Cruise Ltd and Mythic Cruise Ltd as the ‘relevant persons’ (i.e. the persons who would be liable in personam on the claims) were the charterers at the time when the cause of action arose, but not the demise charterers at the time when the action was brought. In fact, Mythic Cruise Ltd and Lyric Cruise Ltd terminated their charters on 7 October 2020 and 9 October 2020. As the claims were brought more than a month later, it was held that the third require of the Section 21 (4) of the Senior Courts Act 1981 was not fulfilled. By the time the claims were issued, Mythic Cruise Ltd and Lyric Cruise Ltd were no longer the demise charterers.

A “maritime COVID” case in the Admiralty Court. First of many?

One of the features of the pandemic has been to throw some businesses into insolvency. This recently became an issue in P&O Princess Cruises International Ltd v The Demise Charterers of the Vessel ‘Columbus’ [2021] EWHC 113 (Admlty) (26 January 2021)  as regards lay-up charges for cruise vessels at the Port of Tilbury following the collapse of the CMV cruise line.

(1) P&O Princess Cruises International Ltd v The Demise Charterers of the Vessel ‘Columbus’ [2021] EWHC 113 (Admlty) (26 January 2021) Admiralty Registrar Davison

In March 2020 the pandemic caused cruise line CMV to suspend operations. Layup at the Port of Tilbury was agreed verbally at the rate of £3,000 per vessel per week. The Port did not look with favour on extended lay-bys as these tended to interfere with the trading upon which the Port’s business model was based. Vessels on extended lay-by blocked berths that could otherwise have been in use for working vessels whose quick turnaround enabled the Port to charge for embarking and disembarking passengers and goods and for other services. On 19 June 2020, the Vessels were detained by the Maritime and Coastguard Agency for non-payment of crew wages. A month later, the CMV empire collapsed. Some of the CMV companies went into administration on 20 July 2020. Shortly after in an exchange of emails the Port, pursuant to the “Extra Charges Schedule” found on its website and disseminated to regular port users (which included the Vessels’ former agents) by Notice to Mariners purported to switch the Vessels from the agreed lay-over rate of £3,000 per week to the “published tariff” rate which involved a dramatic increase over the previous agreed rate.

The combined effect of sections 26 and 31 of the Harbours Act 1964 summarised by Lightman J in The Winnie Rigg [1999] QB 1119 at 1125B:

“The Act of 1964 in section 26 provides that harbour authorities shall (notwithstanding any provision in earlier legislation) be free to charge such “ship, passenger and goods dues” as they think fit (subject only to the provision of a right of objection under section 31 to the Secretary of State.”

The issues were whether this power was subject to a requirement of reasonableness and the effect, if any, of the amendment from 26 June 2020 of the Insolvency Act 1986 by the Corporate Insolvency & Governance Act 2020.

(1) The relevant Port Regulation 5.6 required “reasonable prior notice” which was manifestly not complied with because the email gave less than 12 hours’ notice and the letters gave no notice at all. Less than 12 hours’ notice would not qualify as “minimum practicable”, let alone reasonable, notice. In the circumstances then prevalent a reasonable period would have been 28 days. The notice of variation was effective in accordance with that period of notice and was not required to be limited. Regulation 5.6 is not qualified by a requirement that charges may only be varied by an amount which is reasonable. The wording of 5.6 was clearly intended to give the Port complete freedom to increase the charges as it saw fit, on reasonable notice.

Although the email and the letters referred to the “published tariff”, had they used words such as “charges per Extra Charges Schedule” or similar the result would be no different. In that scenario, no one on the Vessels’ side could have thought that the part of the Schedule referring to “negotiated” rates for “extended lay-by” was the applicable part – because the negotiated rate had just been withdrawn. Equally, this was not a case of a failure to leave a berth at the required time “on completion of cargo operations”. That left only the rate for a vessel “detained at the port”. The Vessels had indeed been detained at the Port

If and to the extent that it was necessary for the Port to rely upon the Regulations’ statutory origin for their binding effect, then Section 22 of the 1968 Act would not prevent that as it makes the binding effect of the 2005 Regulations subject to a requirement that “a relevant extract from subsisting regulations” was “included in each schedule of charges published by the Port Authority”. In 1968 that would, no doubt, have taken the form of the Regulations (or at least Regulation 5) being cited alongside the Extra Charges Schedule or perhaps included in the same booklet or fixed to the same notice board. The Extra Charges Schedule stated in the top line, immediately below the title, that it was to be read in accordance with the Port of Tilbury’s General Terms and Conditions – 2005 Edition. That was, and was acknowledged to be, a reference to the 2005 Regulations which were on the same website. That plainly satisfied the requirements of Section 22, the statutory intention of which was to bring the 2005 Regulations to the attention of the Port’s users and to make them readily accessible.

(2) The position was not affected by the new Section 233B (3) inserted into the Insolvency Act 1986 which provides that

(3) A provision of a contract for the supply of goods or services to the company ceases to have effect when the company becomes subject to the relevant insolvency procedure if and to the extent that, under the provision—

(a) the contract or the supply would terminate, or any other thing would take place, because the company becomes subject to the relevant insolvency procedure, or (b) the supplier would be entitled to terminate the contract or the supply, or to do any other thing, because the company becomes subject to the relevant insolvency procedure.”

Although section 233B of the Insolvency Act 1986 was capable of qualifying the right of a supplier of services to terminate or “do any other thing” in respect of a company which had entered administration, that was not relevant here because the counterparties to the contracts were two CMV companies Mythic and Lyric, neither of which were in administration.

Admiralty Registrar Davison concluded, somewhat reluctantly, that the Port was entitled to its lay-up charges, stating.

58.       By implementing an increase from the agreed rate to the “tariff” rate, the Port, which already had a privileged position under statute, has considerably advanced that privileged position at the expense of other creditors. That observation is tempered by the fact that the Port was willing to reduce its rate to £10,000 per week (which, had it been necessary, I would have designated a “reasonable rate”) provided that the arrears were brought up to date. It was not the Port’s fault that that did not happen. Nevertheless, the overall recovery of the Port remains disproportionate to the services provided, the size of the available funds from the sales of the Vessels and the other claims against those funds.

59.       The Admiralty Court has no residual jurisdiction to moderate a claim so characterised. This claim, as with any claim, has to be assessed in accordance with the Port’s legal rights. I have found those rights to be clear.

Another bad week for Shell. Supreme Court allows Okpabi appeal

Yesterday, the Supreme Court, for whom Lord Hamblen gave judgment, allowed the appeal in the Okpabi Nigerian oil spill case against Shell’s UK parent, Royal Dutch Shell, Okpabi & Ors v Royal Dutch Shell Plc & Anor [2021] UKSC 3 (12 February 2021). This comes shortly after the decision of the Dutch Court of Appeal in parallel proceedings involving oil spills in other parts of Nigeria with claims against Shell’s Dutch parent and its Nigerian subsidiary.

The Supreme Court criticised the approach of both the court at first instance and of the Court of Appeal in allowing what was in effect a mini-trial based on the voluminous evidence before the Court. This was incorrect for interlocutory proceedings. Legally, in the light of the Supreme Court’s decision in Vedanta  which was given after the Court of Appeal’s judgment in Okpabi, various errors of law were apparent in the approach of the majority of the Court of Appeal.

The case made against RDS was that it owed the claimant a common law duty of care because, as pleaded, it exercised significant control over material aspects of SPDC’s operations and/or assumed responsibility for SPDC’s operations, including by the promulgation and imposition of mandatory health, safety and environmental policies, standards and manuals which allegedly failed to protect the appellants against the risk of foreseeable harm arising from SPDC’s operations. The issue of governing law pointed to the application of Nigerian law under the Rome II Regulation and it was agreed that the laws of England and Wales and the law of Nigeria wee materially the same.  The majority of the Court of Appeal (Simon LJ and the Chancellor) held that there was no arguable case that RDS owed the appellants a common law duty of care to protect them against foreseeable harm caused by the operations of SPDC. Sales LJ delivered a dissenting judgment in which he explained why he considered there was a good arguable case that RDS did owe the appellants a duty of care.

The pleaded case and the legal argument in the courts below focused on the then understood threefold test for a duty of care set out in Caparo Industries plc v Dickman [1990] 2 AC 605 and, in particular, whether there was sufficient proximity and whether it would be fair, just and reasonable to impose a duty of care. This was incorrect in the light of this court’s decision in Vedanta, where Lord Briggs had stated [49] “the liability of parent companies in relation to the activities of their subsidiaries is not, of itself, a distinct category of liability in common law negligence”.

The appellants recast their case based on Vedanta with the following four routes:

(1)              RDS taking over the management or joint management of the relevant activity of SPDC;

(2)              RDS providing defective advice and/or promulgating defective group-wide safety/environmental policies which were implemented as of course by SPDC;

(3)              RDS promulgating group-wide safety/environmental policies and taking active steps to ensure their implementation by SPDC, and

(4)              RDS holding out that it exercises a particular degree of supervision and control of SPDC.

Apart from corporate material from the Shell group there was also the evidence of Professor Jordan Siegel who produced an expert report in 2008 in litigation in the United States involving RDS’s immediate predecessors as SPDC’s parent companies. He considered that these documents showed that “The Royal Dutch/Shell Group of Companies tightly controls its Nigerian subsidiary, SPDC. This control comes in the form of monitoring and approving business plans, allocating investment resources, choosing the management, and overseeing how the subsidiary responds to major public affairs issues.” He summarised various corporate documents that post-dated his 2008 report and explains that, “there has been no material change in the senior management of the Shell Group’s ability to tightly control SPDC” since that report. Hes tated that the role of the RDS ExCo is “fundamentally the same” as the predecessor Committee of Managing Directors.

Apart from the error of conducting a mini-trial, there were two other errors of law alleged by the appellants.

The first alleged error is in the Court of Appeal’s analysis of the principles of a parent company’s liability in its consideration of the factors and circumstances which may give rise to a duty of care. The second alleged error is in the court’s overall analytical framework for determining whether a duty of care exists in cases of this type and its reliance on the Caparo threefold test.

The approach of the Court of Appeal had to be considered in the light of the guidance subsequently provided by this court in Vedanta. To the extent that the Court of Appeal indicated that the promulgation by a parent company of group wide policies or standards can never in itself give rise to a duty of care, that was inconsistent with Vedanta.  At para 52 of Vedanta Lord Briggs said that he did not consider that “there is any such reliable limiting principle”. He pointed out that: “Group guidelines … may be shown to contain systemic errors which, when implemented as of course by a particular subsidiary, then cause harm to third parties.” This is what the appellants have described as Vedanta route (2).

Secondly, the majority of the Court of Appeal may be said to have focused inappropriately on the issue of control. Simon LJ appears to have regarded proof of the exercise of control by the parent company as being As Lord Briggs pointed out in Vedanta, it all depends on: “the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations … of the subsidiary.[49]” Control was just a starting point for that question. Lord Hamblen stated:

“The issue is the extent to which the parent did take over or share with the subsidiary the management of the relevant activity (here the pipeline operation). That may or may not be demonstrated by the parent controlling the subsidiary. In a sense, all parents control their subsidiaries. That control gives the parent the opportunity to get involved in management. But control of a company and de facto management of part of its activities are two different things. A subsidiary may maintain de jure control of its activities, but nonetheless delegate de facto management of part of them to emissaries of its parent.” [147]

A specific example of a case in which a duty of care may arise regardless of the exercise of control was provided by what the appellants have described as Vedanta route (4), based on what Lord Briggs stated at para 53:

“… the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken.”

The Supreme Court then went on to consider whether these errors were material to the decision of the Court of Appeal.

It held that the case set out in the pleadings, fortified by the points made in reliance upon the RDS Control Framework and the RDS HSSE Control Framework, established that there was a real issue to be tried under Vedanta routes (1) and (3).  It was not necessary to make any ruling in relation to Vedanta routes (2) and (4), and the Court preferred not to do so given that the pleading has not been structured around such a case, although it observed that there was currently no pleaded identification of systemic errors in the RDS policies and standards.

Lord Hamblen concluded [154]:

“Whilst I consider that the appellants’ pleaded case and reliance on the RDS Control Framework and the RDS HSSE Control Framework is sufficient to raise a real issue to be tried, that conclusion is further supported by their witness evidence, as summarised when setting out the appellants’ case above, and, for reasons already given, the very real prospect of relevant disclosure being provided. That prospect is specifically borne out by the evidence of Professor Siegel and the identification of some of the most likely documents of relevance in the Dutch proceedings.”

Prefering, generally, the analysis of Sales LJ  to that of the majority of the Court of Appeal he noted observations of Sales LJ at para 155 that it was significant that the Shell group is organised along Business and Functional lines rather than simply according to corporate status. This vertical structure involves significant delegation

The appellants argued that the Shell group’s vertical organisational structure means that it is comparable to Lord Briggs’ example of group businesses which “are, in management terms, carried on as if they were a single commercial undertaking, with boundaries of legal personality and ownership within the group becoming irrelevant” (para 51).  How this organisational structure worked in practice and the extent to which the delegated authority of RDS, the CEO and the RDS ExCo was involved and exercised in relation to decisions made by SPDC were very much in dispute, as apparent from the witness statements. It wa also an issue in relation to which proper disclosure was of obvious importance. It clearly raised triable issues.

Demurrage time bar. Equivalence of requisite documents.

In London Arbitration 1/21 a vessel was chartered on amended Asbatankvoy for a voyage between two Italian port. An addition clause required the claim and supporting documents to be received by Charterers in writing within ninety days of completion of discharge, failing which any claims by owners would be waived and absolutely barred. The clause went on to specify the supporting documents for a demurrage claim. “Insofar as demurrage claims are concerned the supporting documents to be received by Charterers must include a Laytime and Demurrage calculation issued in accordance with the allowances and exceptions provided in this Charter Party. Owners’ invoice, Notices of Readiness and Statements of Facts issued at loading and discharging ports, duly signed in accordance with Clause 17 above. If other Time Sheets or Statements of Facts are separately issued for other cargoes handled at the same port or berth, these documents should also be attached to Owners Laytime and Demurrage calculation.”

Owners sent documents and the claim to charterers within the ninety days, but charterers claimed three documents were invalid.

1. Owners’ demurrage invoice. Owners had submitted their invoice at the bottom of the document headed ‘Time Sheet’ but had not stated on the face of the document that it was an invoice. The Tribunal followed Lia Oil SA v ERG Petroli SpA [2007] 2 Lloyd’s Rep 509 and found that a single document could be both a laytime and demurrage calculation and an invoice.

2. Statement of facts at discharge port. Owners submitted an unsigned Statement of Facts, and a Time Sheet which had all the information expected of a statement of facts which was signed by receivers. The Tribunal accepted the second document as the Statement of Facts for the purposes of the time bar.

3. Port log, discharging log, and pumping log for discharge port. Owners had provided a detailed signed time sheet which was functionally equivalent to a port log and the unsigned statement of fact. They also provided a manifolds pressure log, which provided inter alia, the average discharge rate, the manifold pressure and number of pumps used for each hour of the discharge operation. That document was functionally equivalent to a discharging log and a pumping log.

Owners were obliged to present all supporting documents but Charterers had failed to identify any specific document owners had failed to produce or to produce an equivalent. That part of the challenge failed. Owners’ demurrage claim was not time barred.

The affair of the century? France’s Urgenda Moment.

In March 2019, various NGOs lodged four charges before the administrative court of Paris against the French State in respect of its deficiencies in the fight against climate change, and sought reparation for their moral damage, for ecological damage. Last Wednesday the court ruled that the action for compensation for ecological damage, provided for by the civil code, was admissible and open against the State. The court held that the State should be held responsible for part of this damage if it had not respected its commitments in terms of reducing greenhouse gas emissions. It rejected the claim for compensation for ecological damage and stressed that such compensation is primarily in kind, the damages being pronounced only in the event of impossibility or insufficient repair measures. 

However, the applicants were justified in requesting compensation in kind for the ecological damage caused by non-compliance with the objectives set by France in terms of reducing greenhouse gas emissions. A two month period for additional investigation was ordered to determine the measures to be ordered to the State to repair the damage caused or prevent its aggravation.

Finally, the court considered that the shortcomings of the State in respecting its commitments in the fight against global warming undermined the collective interests defended by each of the applicant associations, and awarded each of the NGOs the sum of one euro which each had requested by way of compensation. 

The judgment, in French, is to be found here: 1904967-1904968-1904972-1904976

“VACCESS”. That AstraZeneca contract – terms and conditions apply.

Following last week’s storm in a vaccine vial between the EU, the UK, and AstraZeneca, a redacted version of the contested contract was published last Friday. Here are the salient provisions, with cl. 18.7 being relevant in the event of the UK placing an embargo on export of vaccines produced at plants within the UK. Clause 5.1 imposes the obligation to use” best reasonable efforts” to manufacture the initial Europe doses. Cl 5.4 again refers to the use of best reasonable efforts to manufacture the vaccine at manufacturing sites within the UK, including those in the UK. This seems to be at odds with what the EU President stated on 29 January that the “best-effort” clause was only valid as long as it was not clear whether AstraZeneca could develop a vaccine.

In construing cl. 13(e) reference needs to be made back to cl.5.1 in determining what “conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the complete fulfilment of its obligations under this Agreement.”

Under clauses 18.4/5 the contract is subject to Belgian Law and Belgian jurisdiction.

“5.1 Initial Europe Dose. AstraZeneca shall use its Best Reasonable efforts to manufacture the Initial Europe Doses within the EU for distribution, and to deliver to the Distribution  Hubs, following Eu marketing authorization, as set forth more full in Section 7. Approximately…..2020 Q1 2021 and (iii) the remainder of the Initial Europe Doses by the end of …..

5.4 Manufacturing Sites. AstraZeneca shall use its Best Reasonable Efforts to manufacture the Vaccine at manufacturing sites located within the EU ( which for the purpose of this Section 5.4. only shall include the United Kingdom) and may manufacture the Vaccine in non-Eu facilities, if appropriate, to accelerate supply of the  Vaccine in Europe….

13 Representations and Warranties.

AstraZeneca represents, warrants and covenants to the Commission and the Participating Member States that:

(e) it is not under any obligation, contractual or otherwise, to any Person or third party in respect of the Initial Europe Doses or that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the complete fulfilment of its obligations under this Agreement.

18.7. No liability of either party for failure or delay caused by or results from “events beyond the reasonable control of the non-performing party including…embargoes, shortages…(except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement.

The situation or event must not be attributable to negligence on the part of the parties or on the part of the subcontractors.

The non-performing Party shall notify the other Party of such force majeure promptly following such occurrence takes place by giving written notice to the other Party stating the nature of the event, its anticipated  duration (to the extent known) and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer durations than is necessary and the non-performing Party shall use Best Reasonable Efforts to remedy its inability to perform and limit any damage.”

Canada and the UK are the countries that have ordered the most vaccines per head of population at 9.6 and 5.5 per person respectively. The figure for the African Union is 0.2 per person.

https://www.theguardian.com/world/2021/jan/29/canada-and-uk-among-countries-with-most-vaccine-doses-ordered-per-person

Apparent good order and condition: apparent to whom?

Shippers are in the nature of things in a position to know rather more about a cargo they are shipping than the carrier who transports them. This can cause problems, as appears from the Court of Appeal’s decision a couple of days ago in Noble Chartering v Priminds Shipping [2021] EWCA Civ 87. The Tai Prize, a 73,000 dwt bulker owned by Tai Shing Maritime, was voyage-chartered by Priminds from time-charterers Noble to carry a cargo of Brazilian soya beans from Santos to Guangzhou in southern China. They presented clean bills of lading to agents who signed it on behalf of the head owners Tai Shing. On arrival the beans were mouldy and damp; this was due to the fact they had been shipped too wet, something which the master had had no reason to suspect, but which Priminds ought to have realised.

The consignees sued Tai Shing in China and got $1 million (in round figures). Tai Shing claimed in turn from Noble, who settled the claim for $500,000. Noble then claimed this sum from Priminds. They relied on their right of indemnity under the charter and an allegation that a dangerous cargo had been shipped, and also argued that the bill of lading that Priminds had sent for signature had been inaccurate, since a cargo which Priminds had had reason to know was over-wet could not be said to have been shipped in apparent good order and condition. The first two claims were rejected by the arbitrator, and nothing more was heard of them; but the arbitrator allowed the third claim. HHJ Pelling on a s.69 appeal held that she had been wrong to do so (see [2020] EWHC 127 (Comm)). Noble appealed.

The issue was simple. “Apparent good order and condition” means good order and condition “as far as meets the eye” (e.g. Slesser LJ in Silver v Ocean SS Co [1930] 1 K.B. 416, 442). But whose hypothetical eye matters here? The master’s, or that of the shipper presenting the bill? The Court of appeal had no doubt: upholding HHJ Pelling, it decided that it was the former. The master here had had no reason to suspect anything wrong with the soya beans in Santos; Tai Shing had there therefore been entitled (and indeed bound) to sign a clean bill. It followed that the clean bill presented had been correct and not misleading, and equally that Priminds had not been in breach.

The arbitrator’s decision on this had, we suspect, been seen by most as heterodox. We agree, and join what we suspect will be the majority of shipping lawyers in welcoming the Court of Appeal’s decision. It is worth making three points, however.

First, this is actually a hard case, even though it does not make bad law. It is difficult not to have some sympathy for the head owners (and through them Noble). On any normal understanding of the law the head owners, having issued entirely legitimate clean bills, were not liable to the receivers at all. It is perhaps tactful not to inquire too closely into how judgment was given against them for $1 million. Priminds, by contrast, were pretty clearly liable for a breach of contract in shipping wet beans. One can see why the head owners’ P&I Club might have felt sore at becoming piggy-in-the-middle and bearing a loss that by rights ought to have fallen on the shippers who escaped scot-free.

Incidentally, it is worth noting one possibility in this respect. A consignee not infrequently has the option, in a case where it is alleged that a clean bill was improperly issued, to sue either the carrier for failing to deliver a cargo in good condition, or his seller for breach of contract in not shipping it in like good condition. It is in most cases more convenient to sue the carrier, if necessary by threatening to arrest the ship at the discharge port. Nevertheless all may not be lost for P&I interests. It seems at least arguable that they may be able to lay off at least some of the risk by bringing contribution proceedings against the seller as a person who, if sued by the consignee, might also have been liable for the same loss. They do not even have to show that they were in fact liable to the consignee: merely that the claim alleged against them was good in law (see s.1(4) of the Civil Liability (Contribution) Act 1978).

Thirdly, Males J in the Court of Appeal at [57] left open the possibility of the liability of a shipper who presented clean bills when he actually knew of hidden defects in the cargo. This will have to remain for decision on another day. But it is certainly hard to have much sympathy for such a shipper: particularly since there are suggestions that a carrier who knows that a cargo is defective cannot legitimately issue a clean bill merely by looking complacently at impeccable outside packaging and then sanctimoniously turning a Nelsonian blind eye to the horrors he knows lurk beneath it (see e.g. Atkinson J in Dent v Glen Line (1940) 67 Ll.L.L.R. 72, 85).

Things don’t go well for Shell. Dutch Court of Appeal finds it liable for pipeline spills in Nigeria

The Dutch Court of Appeal has held that Shell Nigeria is liable for two pipeline spills in Oruma and Goi that took place between 2004-05. Shell had argued that the spills were caused by sabotage, so-called ‘bunkering’. Under Nigerian law, which was applied pursuant to the Rome I Regulation, the company would not be liable if the leaks were the result of sabotage. However, the court said that Shell had not been able fully to prove the causes of the spill. Although the parent company Royal Dutch Shell was not found directly responsible, the court ordered it to install a leak detection system on the Oruma pipeline, the source of several spills in the case – a finding of great interest in the ongoing debate about tort and multi-national companies..

Another case involving pipeline spills in Nigeria, Okpabi v Royal Dutch Shell, came before the UK Supreme Court last June. A previous UK case involving spills in the Bodo area was settled in 2015.

P&I Fixed Premium Renewals. Coronavirus exclusion clause to apply.

So far, P&I Insurance has operated continued to afford liability cover without any specific exclusions for incidents arising out of COVID-19. However, fixed premium and Charterers’ P&I covers are reinsured outside the International Group’s Pooling Agreement and with effect from 20.2.2021 and will be subject to the Coronavirus Exclusion Clause (LMA 5395) and The Cyber Endorsement (LMA 5403) in the Rules for Mobile Offshore Units (MOUs).

The coronavirus exclusion for marine and energy provides:

“This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith.

This insurance excludes coverage for:

1) any loss, damage, liability, cost, or expense directly arising from the transmission or alleged transmission of:

a) Coronavirus disease (COVID-19);

b) Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2); or

c) any mutation or variation of SARS-CoV-2;

or from any fear or threat of a), b) or c) above;

2) any liability, cost or expense to identify, clean up, detoxify, remove, monitor, or test for

a), b) or c) above;

3) any liability for or loss, cost or expense arising out of any loss of revenue, loss of hire,

business interruption, loss of market, delay or any indirect financial loss, howsoever

described, as a result of any of a), b) or c) above or the fear or the threat thereof.

All other terms, conditions and limitations of the insurance remain the same.”

Gard have recently announced that they will offer Members and clients in respect of the categories of covers listed below a special extension of cover. The extension of cover (hereinafter referred to as the ‘Special Covid-19 Extension’) shall comprise liabilities, losses, costs and expenses falling within the scope of terms of entry agreed but for the Coronavirus Exclusion Clause (LMA 5395) and subject to a sub-limit of USD 10 million per ship or vessel per event. This extension does not apply to the Cyber Endorsement.