England 1 Scotland 1. Brexit prorogation in the courts. Extra time now being played in the Supreme Court.

Last week in Cherry v Lord Advocate the First Division, Inner House, Court of Session [2019] CSIH 49 P680/19 held that Mr Johnson’s decision to advise the Queen to prorogue Parliament for five weeks was justiciable. The key part of the decision is quoted below.

“[91] I can see that just because a government has resorted to a procedural manoeuvre in order to achieve its purpose does not mean that there is necessarily scope for judicial review. Procedural manoeuvres are the stuff of politics, whether conducted in Parliament or in lesser bodies. However, when the manoeuvre is quite so blatantly designed “to frustrate Parliament” at such a critical juncture in the history of the United Kingdom I consider that the court may legitimately find it to be unlawful.

There are undoubted difficulties in the courts applying its supervisory jurisdiction to an exercise of the royal prerogative within the political sphere, but Mr Johnston for the respondent did not go the distance of saying that there could never be a case which would justify intervention. He accepted that a two year prorogation of Parliament might be amenable to review. Here, the prorogation is only five weeks (and it is to be borne in mind that in practice the reduction of sitting days will be less because of the traditional adjournment of Parliament during the political party conference 49 season). However, it is a lengthy prorogation at a particularly sensitive moment when time would seem to be of the essence. In my opinion Mr Mure QC for the Lord Advocate (whose analysis I accept) was right to point to the dictum of Lord Sumption in Pham v Secretary of State [2015] UKSC 19 at paras 105-106: “in reality [there is] a sliding scale, in which the cogency of the justification required for interfering with a right will be proportionate to its perceived importance and the extent of the interference”.

Here there has been interference with Parliament’s right to sit, should it wish to. The petitioners want to protect that right. If Parliament does not wish to be so protected it can decide accordingly but the petitioners want to give it the opportunity to determine whether and when it is to sit between now and 31 October. The petitioners submit that as yet Parliament has not had that opportunity, notwithstanding the legislative activity that was going on during the hearing of the reclaiming motion.

What has led me to conclude that the court is entitled to find the making of the Order unlawful is the extreme nature of the case. A formulation to which I have been attracted is found in chapter 14, Crown Powers, the Royal Prerogative and Fundamental Rights, in Wilberg & Elliott, The Scope and Intensity of Substantive Review (Hart, 2015) at p 374 where the author of the chapter, Sales LJ, as he then was, refers to a group of authorities where the courts had been prepared to review exercises of the Crown’s common law and prerogative powers. The formulation is: “these are egregious cases where there is a clear failure to comply with generally accepted standards of behaviour of public authorities”. I see this as an egregious case. Mr O’Neill came to submit that the essence of the illegality here was irrationality (as had been the cases with the cases referred to by Sales LJ). Mr O’Neill may be right about that, although I would see it as having to do with improper purpose. At all events, I consider the Order to be unlawful and that making it was contrary to the rule of law.”

 

A contrario, the English High Court has found that the matter is one of high politics and is not justiciable.

The case is currently being heard on appeal in the Supreme Court. Eleven of the Twelve Justices of the Supreme Court are hearing the case.

 “Anchor aweigh”. No retrospective invalidity of NOR.

 

In London Arbitration 16/19 a vessel was chartered on Gencon form which was amended so that notice of readiness (NOR) could be tendered at any time after the ship’s arrival at an anchorage 150 km downriver from the discharge port with passage time from anchorage to discharge port not to count as laytime. The vessel arrived at anchorage and tendered NOR. When the pilot boarded the vessel was found to have only one anchor available which had not been notified in advance to the port authorities. The pilot would only proceed upriver if the owners would hire an escort tug. The owners declined on cost grounds and decided to replace the second anchor instead. The vessel was sent back to the anchorage to do this and then proceeded back to the pilot station with two anchors and from there proceeded to the discharge port and berthed the following day. The owners claimed laytime started with giving of NOR but as a good will gesture discounted the time from when the vessel first weighed anchor to proceed to the pilot station to when the vessel arrived at the discharge port.

The tribunal accepted charterer’s evidence that  two anchors was a normal requirement for river navigation, and that in a case of a missing anchor it was usual and reasonable for a standby tug to be required. However, when the vessel gave NOR, the absence of a second anchor was not an absolute bar, as the possibility existed of proceeding to the discharge port with tug assistance. When the vessel tendered NOR she was not, therefore, in a condition in itself that necessarily precluded her from completing the contractual voyage. It was owners’ later decision not to employ a standby tug that had that effect. Owners’ decision did not retrospectively invalidate the NOR tendered at a time when the vessel was able to proceed to the discharge port, albeit with tug assistance rather than by having two anchors on board.

Owners’ decision not to proceed with an escort tug, on cost grounds, was appropriately addressed by the exclusion of time in the manner adopted in their calculations.

Much Ado About Nothing! A Marine Insurance Case That Promised A Lot But Delivered Very Little

McKeever v. Northernreef Insurance CO SA (22 May 2019)(LM-2018-000044) 

The owner of a sailing yacht named CREOLA, Mrs McKeever, brought an action against Northernreef Insurance CO SA, a Uruguayan insurance company, under a yacht policy providing against the usual range of marine risks, including perils of the seas, piracy, malicious acts and theft.

On 19 March 2014, the insured yacht grounded on a reef in the Sulu Sea. The assured and her friend’s attempts to re-float her were unsuccessful and they had to abandon the yacht as the waves were becoming stronger. Having secured and padlocked the hatches, they were picked up by a fishing vessel which responded to their mayday signal. The next day, they returned to the yacht with the coastguard to find out that the windows had been broken and she had been looted. Various valuable items including electronic navigation aids had been stolen. The assured engaged a firm to guard the yacht and also a salvage company to move the yacht to a place of safety. The salvage company found flooding to a depth of six inches in the portside midsection. On 7 April 2014, the salvage company managed to re-float the yacht and tow her to the Penuwasa boatyard.

The assured’s numerous attempts to claim from the insurer failed. The current proceedings were issued against the insurer in the UK and served on its UK agent. The insurer failed to engage with any of the litigation process save for filing a defence and did not attend trial.

The assured’s claim included:

  1. Damage to the yacht;
  2. Indemnity for the items stolen;
  3. Recovery of the sums paid for guarding the yacht and sums paid for re-floating and towing the yacht (as sue and labour expenses)

Miss Julia Dias QC sitting as the Deputy High Court Judge awarded the assured the diminution in the market value of the yacht owing to the totality of the damage suffered, the value of the stolen items, and her sue and labour expenses.

Grounding Damage

The trial judge was convinced that the initial damage of the hull was caused by “perils of the seas” as the grounding itself was fortuitous. The defendant insurer’s counter arguments that i) the maintenance warranty was breached; ii) the yacht was unseaworthy owing to out-dated charts; and iii) the grounding was caused by the assured’s negligence, had no prospect of success as no evidence was presented by the insurer to maintain these points. There was also no doubt that damage caused by the ingress of water was also recoverable as a loss caused by perils of the seas. In this context, discussion was carried out whether damage caused by ingress of water could be attributable to “piracy” or “theft” or “malicious acts” of third parties given that the looters broke the windows and left hatches open enabling the entry of seawater. The observations of the judge on these points are interesting. On the point of piracy, she indicated that piracy in English law can be defined as “forcible robbery at sea” (The Andreas Lemos [1983] 1 QB 647, at 796-7). She then, relying on s. 8(1) of the Theft Act 1968 reached the conclusion that robbery requires there to be a threat of violence or use of force directed at some person and it was, accordingly, not adequate that violence was directed at the property. This conclusion is not free from criticism. Most would find it strange that assistance is sought from a national legislation, e.g. the Theft Act 1968, in ascertaining the meaning of a marine peril which invariably occurs at high seas, i.e. outside the jurisdiction of any national state. More fundamentally, however, in relevant authorities (especially Republic of Bolivia v. Indemnity Mutual Marine Assurance Co [1909] 1 KB 785, at 796-7) emphasis has been made to the fact that piracy was in essence indiscriminate plunder for personal benefit carried out at sea and with force. There is nothing in that case stressing that violence must be directed to people and violence directed at property would not suffice for the purposes of defining the boundaries of piracy. 

The judge acknowledged that violence directed at property was adequate to bring an action under the peril of the “theft”, she held that while the water ingress can be regarded as having resulted in a general sense from the theft, its proximate cause was the forcible entry rather than the theft of the machinery and it is only the latter which is insured under the policy. This is a curious reasoning, to say the least, considering that the efficient cause of the loss here seems to be breaking of the windows to facilitate theft of various items on board the yacht.

It was relatively easy to rule out “malicious acts” as a cause of the loss on the premise that the looters here were motivated by self-interest (i.e. their actions were motivated for the purpose of facilitating theft).

Indemnity for items stolen

The insurers themselves had conceded that indemnity for the items stolen was recoverable under the peril of the “theft” as there was clear evidence of violence against the property.

Sue and Labour Expenses

The trial judge had no doubt that expenses incurred, i.e. engaging a firm to protect the insured yacht and engaging the salvage company to remove her from the reef and tow to Penuwasa boat yard were properly and reasonably incurred for the purpose of taking reasonable measures to avert or minimise a loss

Conclusion

The case leaves so many points unanswered. The conclusion about the essential elements of “piracy” in the context of a marine insurance policy is debatable. Also, the judge’s findings on issue of identifying “proximate cause” of the loss are questionable. The case also presented an opportunity to deliberate to what extent a clause excluding claims from negligence of an assured is valid in the context of a policy that is taken by an individual. No doubt, these issues would have been evaluated further had the insurer appeared before the Court. As it stands, the judgment does not add much to the development of marine insurance law. 

Brexit in the courts. Miller loses, but Supreme Court to hear on 17 Sept.

Gina Miller’s challenge to prorogation was unsuccessful but an appeal to the Supreme Court has been scheduled for 17 Sept. The court’s reasons are to be released shortly.

With the possibility of a new PM early next week this may all become somewhat academic.

Today the House of Lords has passed the Benn bill to prevent a no-deal Brexit and it will receive the Royal Assent on Monday.

It has been revealed that a former Prime Minister has been referred to by Mr Johnson in a leaked memo as ‘a girly swot’.

Brexit in the courts

A Scottish court has today declined to intervene in the challenge to prorogation brought in the court of session as follows.

[25] In my opinion the authorities discussed during the submissions vouch the following propositions. The exercise of some prerogative powers in some circumstances is justiciable, in other cases it is not. The court’s role in relation to prerogative powers is dependent on the nature and the subject matter of the power or its exercise, particularly on whether the subject matter is justiciable. Whether the exercise of a prerogative power is reviewable depends on the subject-matter and the context of the power and of the challenge. Some functions
exercised or decisions taken are non-justiciable. Among them are matters of high policy and political judgement. The court does not have the tools or standards to assess the legality of such matters. That is political territory and decision-making which cannot be measured against legal standards, but rather only by political judgments. The courts will not seek to superimpose legal controls on such matters. Rather, the accountability for them is to Parliament and the electorate.

[26] I am not persuaded that any of the matters relied upon by the petitioners or the Lord Advocate result in the claim being justiciable. In my view the advice given in relation to theprorogation decision is a matter involving high policy and political judgement. This is political territory and decision-making which cannot be measured against legal standards, but only by political judgements. Accountability for the advice is to Parliament and, ultimately, the electorate, and not to the courts.

[27] I do not accept the submission that the prorogation contravenes the rule of law, and that the claim is justiciable because of that. In my opinion there has been no contravention of the rule of law. The power to prorogue is a prerogative power and the Prime Minister had the vires to advise the sovereign as to its exercise. The executive is accountable to Parliament and the electorate for the advice to prorogue.

[28] Parliament is the master of its own proceedings, rules and privileges and has
exclusive control over its own affairs. The separation of powers entails that the courts will not interfere. It is for Parliament to decide when it will sit and it routinely does so. It is not for the courts to devise further restraints on prorogation which go beyond the limits which Parliament has chosen to provide. Parliament can sit before and after the prorogation. It has recently, in the Northern Ireland (Executive Formation etc) Act 2019, s 3, exercised its legislative power to make provision about periods when it should sit.”

A similar challenge will be heard in the High Court, brought by Gina Miller and supported by Sir John Major.

 

 

A Brexit Dictionary (2). Pro rogue, or anti rogue?

 

Constitutional crisis. What would happen if Mr Johnson advised the Queen to refuse the Royal Assent to an Act of Parliament requiring he seek an extension under article 50.

Contempt of Parliament. Mr Johnson’s possible situation if he refused to abide by any Act of Parliament requiring he seek an extension under article 50. Michael Gove has refused to say whether the government would abide by legislation against no-deal Brexit, if it were passed by Parliament. A case of ‘Who GOVErns Britain’ then (c. Heath, E 1974).

Cummings. ee, American poet (1894-1962) who broke the rules of punctuation. Dominic, chief adviser and major domo to Mr Johnson.

General Election. Cannot be called until 2022 under the Fixed Term Parliament Act 2011 unless either the Government or the Opposition put forward a motion of no confidence in the government. If this is passed there are then fourteen days for an alternative government to be formed and if this is not possible Parliament will be dissolved and there will be a general election at a time specified by the Prime Minister. Alternatively, as in 2017, Parliament may be dissolved before the expiry of five years from the previous general election if there is a two thirds majority for this in the House of Commons. The opposition may not necessarily cooperate in which case there could be no ‘snap election’ for Mr Johnson, but Mr Corbyn might have to accept the soubriquet ‘frit’ (c Thatcher, M).

GNU. A Wildebeest, celebrated in song by Flanders and Swann.  Alternatively, a Government of National Unity.

Interdict. Scottish for ‘injunction’. This was refused on Friday in the current proceedings in Scotland challenging the legality of the prorogation of Parliament by Mr Johnson, but the hearing of the proceedings has been advanced to this Tuesday. Gina Miller has launched a separate application for judicial review of Mr Johnson’s prorogation of Parliament to be heard on Thursday. Today’s ‘Times’ reports that space has been made for the Supreme Court to hear the inevitable appeal this coming Friday. A further application is before the court in Northern Ireland. A busy week for the judiciary.

Labour votes. What Mr Johnson may need to get a new withdrawal agreement through Parliament (see ‘Spartans’ below).

No deal Brexit, ways of stopping.

  1. Mr Johnson renegotiates a withdrawal agreement and seeks an extension from the EU under article 50 to get Parliament’s approval.
  2. Article 50 is revoked. Must be done by a PM so need a new PM via Vote of No Confidence (VONC).
  3. An extension to article 50 is sought. Must be done by a PM so need a new PM via VONC.
  4. Act of Parliament requiring PM to seek further specified extension under article 50 and to revoke article 50 if the EU had not given the extension sought by 30 October. See, too, contempt of parliament, constitutional crisis.

Making your mind up. Rare Eurovision win for UK in 1981. Alternatively, something Parliament was incapable of doing in the indicative votes in the Spring.

Rebel Alliance. Han Solo, Luke Skywalker, Princess Leia (still fighting the same enemy thirty odd years after their decisive victory).  Alternatively, Oliver Letwin, Dominic Grieve, Anna Soubry etc

Spartans.  Members of the European Reform Group who are likely to vote against any new withdrawal agreement negotiated with the EU by Mr Johnson.

Standing Order 24

From Parliament’s website

“An MP may apply to the Speaker for an emergency debate on Mondays to Thursdays during sitting time under the rules of Standing Order No. 24.

If the Speaker has given the MP leave they will have three minutes to make a speech after question time and any urgent questions or ministerial statements. The Speaker then decides whether to submit the application to the House.

The House will have to agree that the debate takes place. If the House agrees to the application the emergency debate will take place on a future day, usually the next sitting day. The motion to be debated will be “That the House has considered the matter of [Topic]”.

Expect Speaker Bercow to allow an emergency debate on a bill requiring the PM to apply to the EU for an extension under art.50.

TBP. The Brexit Party.  Hovering in the wings.

 

 

The Brexit dictionary.

 

P is for prorogue.

This is the action of discontinuing a session of a parliament or other legislative assembly without dissolving it. The Prime Minister, Mr Johnson, has today announced his intention to ask the Queen to prorogue Parliament in the second week of September ahead of a Queen’s Speech on 14 October.

Other notable proroguers have been Charles I, James II, Clement Attlee, and John Major.

Last month Lord Doherty in the Scottish Court of Session fast-tracked a legal challenge backed by 75 MPs and peers to prevent the Prime Minister Mr Johnson proroguing parliament to force through a no-deal Brexit. A hearing is scheduled for the end of the next week and in the meantime Jolyon Maugham QC who is representing the challengers has stated that he will be seeking an order that the prospective prorogation of Parliament for four and a half weeks from 11 September announced today be put on hold until after the result of that hearing.

S is for Supreme Court

Which is where this will probably end up.

Tort and implied contract in Singapore. The case of the ‘Bum Chin’.

 

In Wilmar Trading Pte Ltd v Heroic Warrior Inc (The “Bum Chin”) [2019] SGHC 143, Singapore High Court, an FOB buyer, Wilmar, nominated the ‘Bum Chin’ for shipping palm oil from Indonesia to Jeddah and Adabiyah.  An incident on the vessel caused physical damage to the vessel and loss of and damage to the cargo. Wilmar arranged for a substitute vessel to transport the palm oil purchased under the sale contracts and claimed damages from the registered owner on the grounds of contract and negligence. The registered owner counter claimed asserting that Wilmar was responsible for the damage sustained by the vessel because the loading terminal, as Wilmar’s agent, had improperly loaded the cargo.

Was there a contract between the parties? Wilmar relied on Pyrene v Scindia [1954] 1 Lloyd’s Rep 321, where there was found to be a  contract of carriage between the shipowner and the cargo interest. But Belinda Ang Saw Ean J found that here there was no such contract as the bills to be issued would have been charterers’ bills and the defendant was not the contractual carrier. Turning to tort, although Wilmar had no proprietary interest to found a cause of action in negligence since NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd [2018] 2 SLR 588, pure economic loss was claimable under Singapore law and the question was whether the defendant owed a duty of care. The judge found that this was the case. The shipowner as performing carrier would have reasonably foreseen that its negligence would cause economic loss to a buyer of cargo who bore the risk of damage to or loss of the cargo. The requirement of legal proximity was also satisfied. The countervailing policy consideration of indeterminacy did not arise because the plaintiff as FOB buyer bore the risk of loss or damage to the cargo. In the absence of a contract of carriage, the defendant owed the plaintiff a duty to take reasonable care of the cargo loaded on board.

The counterclaim was dismissed on the basis that, absent a contract of carriage between the parties, Wilmar, who was not responsible for the actions in loading of the FOB seller in agency or otherwise, owed no duty of care to the defendant. On the evidence Wilmar’s loss was caused by the shipowner’s negligence as structural weaknesses were a cause of the failure of the tank which had caused leakage and contamination of the cargo.

Another twist in the OWB bunkers saga. Bunker supply contracts are contracts “relating to sale of oil products” under assignment to ING Bank.

 

Cockett Marine Oil v Ing Bank [2019] EWHC 1533 (Comm) involved a a challenge to two arbitration awards pursuant to section 67 of the Arbitration Act 1996 on the grounds that the arbitral tribunal had no jurisdiction. The awards were in respect of bunkers supplied to Cockett Dubai and Cockett Asia in October 2014. ING as OWB’s assignee commenced arbitration in London in respect of the supplies which Cockett challenged on two grounds. First, that their contracts had not been subject to London arbitration so London arbitrators had no jurisdiction. Second, that the assignment by OWB applied only to contracts “relating to the sale of oil products traded by the Group”. As the Supreme Court had held in PST Energy 7 Shipping LLC v OW Bunker Malta [2016] UKSC 23 that OWBG’s supply contracts were not contracts for the sale of goods within the meaning of the Sale of Goods Act, the assignment cannot have been effective.

Teare J found for ING on both grounds.

(1) In 2013 OWBG altered their terms and conditions. Prior to 2011 their terms and conditions provided for Danish law and Danish arbitration. Their 2013 terms and conditions provide for English law and London arbitration. OWBG took steps to inform their customers of the change. In view of the number of customers involved they employed an independent company, Concep, to communicate with their customers, rather than perform the task themselves. There was no evidence from Concep as to the steps they took to inform customers of the change in the terms and conditions. However, OWBG was able to access Concep’s web page and, by use of a password, access information about the “campaign”. That was the method provided by Concep to its customers to enable them to assess the success of the campaign. this contract for the supply of bunkers was on OWBG’s 2013 standard terms and conditions. Both contracts were subject to the 2013 revised OWB terms and therefore the arbitration tribunal had jurisdiction to determine the claim referred to it.

In relation to the second sale it was argued that OWB’s terms provided for variation when the bunkers were physically supplied by a third party who insisted on using its own terms. The bunkers had been supplied by a Greek supplier whose terms provided for Greek law and jurisdiction but the supplier had not insisted that its terms applied and accordingly there had been no variation.

(2) The assignment did cover the supply contracts. The parties to the Omnibus Security Agreement assumed that OWBG’s supply contracts were contracts of sale and intended that the security provisions of the contract applied to them, an assumption reflected in OWBG’s standard terms and conditions. In the Court of Appeal in PST Energy 7 Shipping LLC v OW Bunker Malta [2016] 2 WLR 1072 at paragraphs 44 Longmore LJ had said that there can be agreements which “may ……be described in commercial terms as contracts for the sale of goods but are contracts to which the 1979 Act does not apply.”  The parties to the Omnibus Security Agreement described OWBG’s supply contracts as contracts “relating to the sale of oil products” because in commercial terms they had many of the features or characteristics of a sale, notwithstanding that they were not contracts of sale within the meaning of the Sale of Goods Act because they did not envisage the passing of property before payment was due. As there was a valid assignment in favour of ING Bank the arbitrators had jurisdiction to make an award in its favour.

Are CMR consignment notes electric?

 

They will be soon. The UK has indicated its intention to accede to the e-CMR protocol allowing an electronic consignment note as an alternative to a paper consignment note. In 2008 the CMR protocol became part of the Convention and came into force in 2011 for accepting countries, of which there have been few to date. The UK intends to deposit its instrument of accession to the UN in September 2019, after which it will take 90 days for the Protocol to come into force in the UK. Next stop, extending COGSA 1992 to electronic bills of lading?