Featured

15TH ANNUAL COLLOQUIUM OF THE IISTL, SWANSEA UNI

SHIP OPERATIONS: NEW RISKS, LIABILITIES AND TECHNOLOGIES IN THE MARITIME SECTOR

12-13 SEPTEMBER 2019

Sponsored By

Ship Operators are facing new challenges every day, with innovative tech in the maritime sector exposing them constantly to unchartered liabilities, like cyber risk and adequate data protection, all while regulators continue to impose more exacting regimes. This has led to operators seeking protection through attempting to shift risk to charters or other parties. 

The 15th IISTL Colloquium will look at the issues in detail and examine the liabilities which might arise out of them, including extended reference to the wording of common insurance policies, charterparty forms and other contracts. 

We envisage four sessions on the first day and two on the second, finishing at about 1.30 pm on the latter. The format will be as in previous Colloquiums: that is, each session will be regulated by a chairman with discussion led by two or three speakers, followed by free and open debate.

Delegates will be provided with a pack containing papers and source materials. The proceedings will, at a later date, be published in full by Informa (to whom we are enormously grateful for sponsorship and unstinting support).

The topics discussed will be very varied, but we envisage including:

  • Sanctions and money laundering
  • Shipping and data protection
  • The EU Pollution Directive
  • The Sulphur Directive
  • Insolvency-related issues
  • The liability of ancillary players such as shipbrokers and managers
  • Cyber risks and tort liabilities
  • Cyber risks insurance
  • BIMCO clauses dealing with new risks
  • GENCON and ship operations
  • Indemnity issues in charterparties
  • Bunkers – who pays when things go wrong?
  • Ship management contracts
  • Ship arrest and legal/practical difficulties

Speakers and Chairpersons

· Professor Simon Baughen, Institute of International Shipping and Trade Law, Swansea University

· Professor Olivier Cachard, University of Lorraine, France

· Sir Bernard Eder (TBC), Arbitrator, 4 Essex Court, International Judge of the Singapore International Commercial Court, Acting Judge of the Eastern Caribbean Supreme Court

· Grant Hunter, Chief Officer for Legal and Contractual Affairs, BIMCO

· Daniel Jones, Clyde & Co, London

· Associate Professor George Leloudas, Institute of International Shipping and Trade Law, Swansea University

· Daniel Martin, Partner, HFW, London

· Dr Tabetha Kurtz-Shefford, Institute of International Shipping and Trade Law, Swansea University

· Professor Henrik Ringbom, Scandinavian Institute of Maritime Law, Oslo University

· Simon Rainey QC, Quadrant Chambers, London

· Associate Professor Frank Stevens, Erasmus University Law School, The Netherlands

· Professor Barış Soyer, Director, Institute of International Shipping and Trade Law, Swansea University

· Professor Andrew Tettenborn, Institute of International Shipping and Trade Law, Swansea University

· John Weale, Fednav, Montreal

Registration, Fees & Accommodation

To register (and book university accommodation) please click the link here: Eventbrite  Early booking is recommended as placed are limited.

Fee, inc. materials, dinner & accommodation for 2 nights (9 & 10 Sept): £440

Fee, inc. materials and dinner: £350

Fee (for postgrads & Swansea alumni) inc. materials, dinner & accommodation for 2 nights (9 & 10 Sept): £265

Fee (for postgrads & Swansea alumni) inc. materials & dinner: £175

Should you not like to take advantage of our on-campus accommodation, please feel free to make your own arrangements. There are several good hotels in town, notably the Dragon Hotel, tel: 01792 657100, and the Marriott Hotel, tel: 01792 642020. Please note, however, that the organisers cannot take responsibility for booking accommodation off campus.

The closing date for registration is 03 September 2019

Let’s  not be punitive. SCOTUS goes ‘wet’ on unseaworthiness.

 

American seamen have three avenues of recovery against a shipowner in respect of injuries sustained on board a ship: maintenance and cure; the Jones Act; a claim of unseaworthiness.

Punitive damages are available for the first of these, but not the second. The position as regards unseaworthiness was, until recently, unclear with a Circuit split on the issue. This has now been resolved by the Supreme Court’s decision in Dutra Group v Batterton ,588- U.S.. ____ (2019) , to the effect that punitive damages are not recoverable. The  overwhelming historical evidence was against such damages being available in an action for unseaworthiness. A  novel remedy could not be sanctioned unless it is re­quired to maintain uniformity with Congress’s clearly expressed poli­cies, particularly those in the Merchant Marine Act of 1920 (Jones Act), under which only compensatory damages were recoverable.

To allow punitive damages on unseaworthiness claims would create bizarre disparities in the law. First, a mariner could make a claim for punitive damages if he was injured onboard a ship, but his estate would lose the right to seek punitivedamages in a wrongful death action if he died from his injuries. Second, because unseaworthi­ness claims run against the owner of the vessel, the owner could be liable for punitive damages while the ship’s master or operator—who could be more culpable—would not be liable for such damages under the Jones Act. Third, allowing punitive damages would place Amer­ican shippers at a significant competitive disadvantage and discour­age foreign-owned vessels from employing American seamen

Iran’s Claim that the UK’s Seizure of a Vessel Suspected of Transporting Oil to Syria Constitutes “Piracy”: Mere Rhetoric?

In the early hours of 4 July 2019, a commercial oil tanker (Grace 1), flying the flag of Panama, was boarded and seized while passing through the Strait of Gibraltar by UK marines and the Gibraltar police. Connecting the Mediterranean Sea to the North Atlantic Ocean, the Strait of Gibraltar is one of the busiest shipping routes in the world.

The reason lying behind the seizure of the oil tanker by the UK was that the Grace 1 was suspected of transporting crude oil, which was loaded onto the vessel in an Iranian port, to Syria, in violation of EU sanctions. What might have drawn attention to the vessel, was its circuitous route. Starting at an Iranian port, the vessel first set sail south, to then follow the coastline around the entire African continent up until entering the Strait of Gibraltar, where it was intercepted. Its ultimate destination remains a subject of dispute, however.

The arrest of the vessel led to an outcry in Iran, protesting the lawfulness of the UK’s seizure on several bases. One contention that was raised by Iran, and which will be at the heart of this short blog post, is its condemnation that the UK’s seizure was an act of piracy.

But is there any validity to Iran’s piracy claim from the view of international law? Or, rather, must it be brushed off as rhetoric? The rhetorical force that the label of piracy carries is invariably strong, readily conjuring up vivid images of individuals pillaging and threatening security at sea.

Before delving into the question whether, away from its rhetorical force, Iran’s claim has legal merit, there is a preliminary issue that needs to be addressed: how was it that Iran took centre stage in condemning the UK’s action against the oil tanker? Surely, not in the role of flag State. Ownership, or whatever links a cargo may have to a particular State, is irrelevant from a legal point of view in determining the nationality of a vessel. Interestingly enough, Panama indicated that it had removed the Grace 1 from its registry at the end of May 2019, because of its link to terrorism financing. This does raise the issue – that will not be addressed here – whom the flag State of the Grace 1 is. Iran’s involvement seems to stem rather from that it perceives the seizure by the UK of the oil tanker, carrying Iranian oil, as a provocation, one that has to be read against the background of flaring tensions between the US and Iran that arose over the shooting down of a US drone, and the latter’s pulling out from the earlier agreed nuclear agreement.

Criteria that need to be satisfied for an act to be piracy are given in Article 101 of the 1982 Law of the Sea Convention (LOSC). This provision, reflecting customary international law, establishes what the crime of piracy consists of:

‘any illegal acts of violence or detention, committed for private ends by the crew or the passengers of a private ship or aircraft and directed … on the high seas (or in a place beyond the jurisdiction of any State) against another ship or aircraft, or against persons or property on board such ship or aircraft.’

From this provision, several requirements can be distilled. One being that a violent act must have been committed on the ‘high seas’ or ‘in a place beyond the jurisdiction of any State’. Were a violent act to be committed within the territorial sea, it cannot be included in the definition of piracy under Article 101 LOSC. Such an act would be considered armed robbery at sea.

But does the Strait of Gibraltar meet the description of  ‘high seas’ or ‘a place beyond the jurisdiction of any State’? To start with some background, the entire Strait of Gibraltar is composed of waters that are either part of coastal States’ their territorial seas or exclusive economic zones, thus being under their sovereignty or jurisdiction of the relevant coastal States respectively. Further complicating matters is that some of these waters are disputed, because of the ongoing sovereignty dispute between the UK and Spain over Gibraltar. However, even if disputed waters are underpinned by a sovereignty dispute, they cannot be considered high seas.

Nowadays, most scholars adhere to the view that the Gibraltar Strait can be considered a strait that falls within the scope of Part III LOSC. The implication of which would be there being a right of transit passage for vessels. However, Article 34 LOSC makes it clear that the coastal State’s sovereignty and jurisdiction within a strait is not affected. In this light, if a vessel passes through the territorial sea part of a strait, criminal jurisdiction pursuant to Article 27 LOSC might arguably still exist for the coastal State. So, to know the exact location of where the Grace 1 was boarded and arrested is critical in determining whether the geographical scope requirement laid down in Article 101 LOSC has been met.

As its first sentence makes clear, an illegal act “of violence or detention” has to be committed for ‘private ends’. Looking at the UK’s seizure of the oil tanker, a private end component is fundamentally lacking. By its very nature, the UK’s action was public; it occurred with the authorisation of a State. And there is a further difficulty for Iran’s piracy claim to succeed. For an act to fall within the scope of Article 101 LOSC, it must have been committed by the crew or passengers of a private ship against another ship.

And was the act at all violent? What only could be construed as a ‘violent’ act or ‘detention’ would be the boarding and arresting of the Grace 1. Rather, the UK response concerned law enforcement, which does not constitute a violent act in and of itself; that is, as long as it occurs in accordance with international law. The dividing line between what constitutes law enforcement and a threat of the use of force, may not always be easily drawn, as during lawful enforcement a measure of force may be involved, but this is permissible if it is necessary, unavoidable and proportional.

Given that the requirements for an act to be considered piracy under Article 101 LOSC are cumulative, Iran’s claim cannot be upheld, seemingly failing to meet a plethora of requirements. But at the same time, it is questionable whether Iran’s use of the word piracy, or a variation thereon, to condemn the seizure is meant to convey its legal position on the matter. It seemingly fits into a broader development, where it has become en vogue to refer to all violent acts that occur at sea as piracy, no matter whether it satisfies the legal definition thereof under international law (see more generally on this phenomenon J. Schechinger, ‘An incident of “piracy” off the coast of Suriname? The definition of piracy and the use (and misuse) of international law terminology’, MarSafeLaw Journal (forthcoming)).

“But you weren’t going to perform anyway!”: A new hurdle when invoking Force Majeure

Classic Maritime Inc v Limbungan Makmur SDN BHD [2019] EWCA Civ 1102

Simon Rainey QC and Andrew Leung

Is it necessary when a party seeks to rely on a force majeure or exceptions clause to show that it would have performed “but for” the force majeure or excepted event? And if the party is liable for failing to perform, but performance would have been impossible in any event, is the innocent party entitled to damages?

These important questions were considered by the Court of Appeal in Classic Maritime Inc v Limbungan Makmur SDN BHD [2019] EWCA Civ 1102. The judgment, which is the sequel to the first instance decision discussed here, clarifies that:

  1. Contrary to what textbooks such as Chitty and Treitel on Frustration and Force Majeure suggest, there is no general principle that it is not necessary to show “but for” causation in order to invoke a force majeure or exceptions clause.
  • The innocent party is entitled to substantial damages even if it would never have received performance in any event.

The dam burst and the COA

The litigation was fuelled by the Samarco dam burst on 5 November 2015. The charterer under a COA, Limbungan, claimed it was prevented from supplying cargoes for shipment as a result and was excused from having to perform under Clause 32 of the COA, which provided in material part:

“Neither the Vessel, her Master or Owners, nor the Charterers, Shippers or Receivers shall be responsible for…failure to supply, load…cargo resulting from: Act of God…floods…landslips…accidents at mine or production facility…or any other causes beyond the Owners’, Charterers’, Shippers’ or Receivers’ control; always provided that such events directly affect the performance of either party under this Charter Party.”

The first instance decision

At first instance, Teare J held that though the dam burst had rendered performance impossible, Limbungan could not rely on Clause 32 as it required the charterer to prove that it would have performed but for the collapse of the dam, and Limbungan would have defaulted anyway. However, the owner, Classic, was only entitled to nominal damages. Even if Limbungan had been able and willing to perform, the dam burst would inevitably have prevented performance. The compensatory principle would be breached if Classic was awarded substantial damages when it would never have received freight in any event.

The Court of Appeal’s decision

The Court of Appeal upheld Teare J’s decision that Clause 32 required Limbungan to prove but for causation and reversed his decision in relation to damages.

Limbungan had submitted that the House of Lords decision in Bremer Handelgesellschaft v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109 laid down the general principle that a party relying on force majeure need not show it would have performed but for the force majeure event.

However, the Court of Appeal, like Teare J, treated Bremer v Vanden as a case concerning a “contractual frustration” clause (Clause 21 of the GAFTA 100 form), i.e. a clause which automatically discharged the parties from an obligation to perform in the future, much like the common law doctrine of frustration. The automatic cancellation effected by Clause 21 meant it was not necessary to meet the test of but for causation.

Starting from first principles, it was open to the parties to agree a clause which only excused non-performance if that test was met. The Court of Appeal considered that Clause 32 was just such a clause. Unlike the “contractual frustration” clause in Bremer v Vanden, it was an exemption clause which relieved a party of liability for a past breach. It was hard to see why the dam burst should make any difference to Limbungan’s liability when it was never going to perform anyway.

On the issue of damages, what Teare J thought was an orthodox application of the compensatory principle the Court of Appeal viewed as a “sleight of hand”. When assessing Classic’s loss, the Judge should have compared the freights Classic would have earned with the actual position it was in due to Limbungan’s breach. Teare J had instead drawn a comparison between Classic’s actual position and its position if Limbungan had been ready and willing to perform.

The Court of Appeal distinguished the present case from two cases in which events occurring after a breach of contract were taken into account:

  1. In The Golden Victory [2007] 2 A.C. 353, the House of Lords held that the owners could not recover hire for the full-term of a charterparty prematurely cancelled by the charterers. The charterparty would not have run its full course anyway as the charterers would have lawfully cancelled due to the Second Gulf War.
  • In Bunge v Nidera [2015] 3 All E.R. 1082, the Supreme Court held that a buyer had suffered no loss despite the repudiation of a sale contract by the seller. A subsequent embargo would however have prevented the sale from taking place in any event.

Both cases were however concerned with assessing damages for an anticipatory breach. Contrastingly, the present case was concerned with an actual breach. Since Clause 32 gave Limbungan no defence to liability, Limbungan had to pay damages for failing to perform.

Comment

The Court of Appeal has underlined the fact that, whatever the current understanding of Bremer v Vanden in the textbooks,there is no default position whereby it is unnecessary to prove but for causation in order to rely on a force majeure or exceptions clause. The specific Force Majeure remedy afforded by Clause 21 of GAFTA 100 was held to be the reason that clause did not import a requirement of but for causation. Why this remedy should determine the test for causation is not entirely clear, when the effect of contractual cancellation and an exemption from liability is for practical purposes the same: the non-performing party cannot be successfully sued.

In other respects, this case presents a number of novelties:

  1. The Court of Appeal held that Clause 32 was not even a force majeure clause, but an exemption clause. It was not previously clear that these categories were mutually exclusive (see e.g. Lewison, Interpretation of Contracts, 13.02).
  • Both Treitel and Lewison suggest in the light of the authorities that a clause which makes provision for the consequences of supervening events which occur without the fault of either party and are beyond their control (i.e. Clause 32) defines the parties’ obligations rather than operating as an exemption clause. This now needs to be reconsidered.
  • The Court of Appeal’s take on The Golden Victory and Bunge v Nidera is that subsequent events and their potential effect on the parties’ rights and obligations are only relevant when assessing damages caused by an anticipatory breach accepted as terminating the contract. They are not relevant in the case of an actual breach. This is arguably a new development and suggests there is not one compensatory principle, but two.

Permission to appeal was refused by the Court of Appeal but an application for permission to appeal is being made to the Supreme Court. The authors are Counsel for Limbungan and appeared below and in the Court of Appeal.

Cybersecurity recognised as an urgent global legal challenge

Delighted to see cybersecurity identified as one of the urgent global legal challenges to be addressed under the Hillary Rodham Clinton Scholarship programme just launched by Sky and Swansea University (see below).

No understanding of innovation is complete without an understanding of intellectual property law and as Alec Ross, Senior Advisor for Innovation to Hillary Clinton when Secretary of State, states in his work The Industries of the Future (2016), “We all want the liberty that comes with a vibrant online life, but liberty without security is fragile, and security without liberty is oppressive. The years ahead will force us to balance these two as we have not had to before.”

_____________________________________________________________________________

Sky and Swansea University today announced the first ever global Hillary Rodham Clinton Scholarship programme.

The scholarships will support the next generation of leaders committed to addressing urgent global challenges, including the rights and protection of children online, the climate crisis and cybersecurity.  

Each of the scholars will be selected over the summer and granted a fully-funded, postgraduate, one-year scholarship at Swansea University, starting in the autumn.

Launching the Hillary Rodham Clinton Global Challenges Scholarship, Secretary Clinton said: “I’m delighted that this partnership between Sky and the School of Law at Swansea will be able to achieve something truly unique, with an urgency that the challenges we face today demand. The programme is a modern, flexible approach which combines the rigour of academic excellence with practical, real world impact. These scholars will embody our shared values of working together across disciplines and geographic boundaries to improve conditions and opportunities for all, and especially for women, children, the marginalised and the disenfranchised.”

Sky Chief Executive, Jeremy Darroch said: “We are honoured to be the inaugural partner for the Hillary Rodham Clinton Global Challenges Scholarship and are immensely proud to support a programme so committed to building a better tomorrow.

“As a society we face a number of global challenges and as a responsible business we recognise the importance of using our reach and voice to make a difference in addressing these, making an impact in the wider world, and helping others do the same. I look forward to welcoming the scholars to the Sky family and exploring the good we can do together.”

Dean of the Hillary Rodham Clinton School of Law at Swansea University, Professor Elwen Evans QC, said: “This is a wonderfully exciting initiative and we are delighted to be working with Sky. These scholarships will support the delivery of a transformational programme and we hope that our students will be outward-looking in addressing the big issues. If we are to tackle the major challenges, such as climate, security, protecting children online, and inequality, we require innovative thinking and leadership, and a sustained commitment to transnational cooperation and collaboration. 

“This programme capitalises on the considerable research expertise within the Hillary Rodham Clinton School of Law in order to provide students with an incredible opportunity to undertake study into areas of global challenge, and to be equipped with the skills to undertake legal research and to effectively advocate for transformational change to law, policy and practice.”

Apply for a Hillary Rodham Clinton Global Challenges Scholarship.

Of damages and counterfactuals — again

It’s not often that we can say “You read it first on the IISTL blog.” But it seems we may be able to, following the decision of the Court of Appeal (Males, Rose and Haddon-Cave L.JJ.) in Classic Maritime Inc v Limbungan Makmur Sdn Bhd [2019] EWCA Civ 1102.

The facts briefly recap thus. A charterer signed a CoA promising to come up with vast cargoes of Brazilian iron ore that would have netted the shipowner profits of something like $20 million. It didn’t, and in hindsight it was abundantly clear that it it never could have. The contract was subject to a force majeure clause including floods preventing performance. Floods duly materialised; but (as was held both at first instance and on appeal) the charterer couldn’t invoke the clause, since if it had never had any cargoes in the first place the floods hadn’t prevented it doing anything. Nevertheless Teare J held at first instance that even though there was breach the damages were not $20 million, but zilch (or rather nominal). His argument was that, hindsight having shown that the shipowner wouldn’t have had a right to performance even if the cargoes had been there, the value of the lost rights was zero.

We raised an eyebrow here at the idea that a defendant who hadn’t, and never could have, performed should be able to cut damages from $20 million to zero by pointing to a force majeure clause that might have protected him but in fact didn’t. The Court of Appeal has now made it clear that it thinks the same way, and substituted an award of $20 million. If (it was said) a claimant showed that a defendant had failed to perform and the defendant could not invoke any exculpatory provision, there was no reason why damages should not be substantial. The reasons behind the non-performance were irrelevant, as was the fact that had the defendant been able to perform in the first place he would have had an excuse.

In our view, despite the beguiling advocacy of the Institute’s own Simon Rainey QC, this is sensible and logical. Males LJ hit the nail on the head at [89] when he pithily pointed out that the breach was not inability or unwillingness to supply cargoes, but the simple fact that the cargoes, for whatever reason, were not there. Put that way, everything neatly falls into place. If you don’t perform your contract and can’t point to any excuse, you are liable for substantial damages. End of story.

Targets, targets, targets. Climate change hots up.

 

Last year we reported on two judicial review challenges to government policy on climate change, one in the Netherlands, the other in the UK.

The Netherlands challenge brought by Urgenda resulted in an order that that the Netherlands State be ordered to achieve a reduction so that the cumulative volume of Netherlands greenhouse gas emissions would be reduced at least by 25%, by the end of 2020, relative to 1990 levels. The Netherlands State appealed against the order and the Dutch Supreme Court heard the case on 24 May 2019 and a judgment is expected over the summer.

The UK challenge was brought by Plan B and sought judicial review of the UK government’s decision not to amend the 2050 target in the Climate Change Act 2008 in the light of article 2(1) (a) the 2015 Paris Agreement on Climate Change, which the UK has ratified, the parties commit to: “Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognising that this would significantly reduce the risks and impacts of climate change.” The challenge failed and leave to appeal was rejected earlier this year.

Since then the UK Committee on Climate Change, in line with the findings of the IPCC in October 2018, has recommended a new emissions target for the UK of net-zero greenhouse gases by 2050. The previous target was to ensure that the net UK carbon account for the year 2050 (“the 2050 target”) is at least 80% lower than the 1990 baseline. This week a statutory instrument, the Climate Change Act 2008 (2050 Target Amendment) Order 2019, was laid amending the Climate Change Act 2008 so that ‘80%’ is replaced by ‘100%’.

This is a ‘net’ figure, which allows for the ability to use international carbon credits to offset emissions within an appropriate monitoring, reporting and verification framework. In addition, under s.30(1) of the Act emissions from international aviation and shipping do not count as emissions from sources in the UK. The Government have said that they will review the ‘net zero’ target within 5 years to check that other countries are following suit, and, if not, reserve the right to revert to the original 80% target.

To stabilise at 1.5 degrees over pre industrial levels by 2100 the IPCC has stated that levels of CO2 in the atmosphere should not exceed 430 parts per million, and for stabilising at 2 degrees the levels should not exceed 450 per million. Last month a reading at a weather station in Hawaii recorded 415 parts per million of CO2 in the atmosphere. The current annual rate of increase is in the order of 3 parts per million.

Supreme Court Clarifies the Law on CTL Calculation in Marine Insurance

The Swedish Club v Connect Shipping (The MV Renos) [2019] UKSC 29

Under s. 60(2)(ii) of the Marine Insurance Act (MIA) 1906, there is constructive total loss (CTL) when the insured ship is damaged by a peril it’s insured against and the cost of repairing said damage would exceed the insured value of the ship when repaired. In estimating the cost of repairs for the purposes of this provision, it has been held by Knowles, J, [2016] EWHC 1580 (Comm) that i) the costs incurred prior to the date of notice of abandonment and ii) the costs of salvage operations performed before the notice of abandonment, including sums payable under the SCOPIC clause, should be taken into account.

The underwriters’ appeal to the Court of Appeal on these points was rejected unanimously [2018] EWCA Civ 230 (per Hamblen, LJ, with whom Simon, LJ and Sir Geoffrey Vos C agreed). In a previous case note, the author was critical of the Court of Appeal’s reasoning, especially with regard to the second point, i.e. taking into account SCOPIC expenses incurred before the notice of abandonment in estimating the cost of repairs.

The Supreme Court (composed of Lords Sumption, Reed, Hodge, Kitchin and Lloyd Jones) allowed the appeal on this ground holding that SCOPIC charges cannot be considered as part of the “cost of repairing the damage” under s. 60(2)(ii) of the MIA 1906 (or the “cost of recovery and/or repair” under clause 19.2 of the Institute Hull Clauses). The Supreme Court stressed that the primary purpose of SCOPIC expenditure is to protect owners’ potential liability for environmental pollution not to enable the ship to be repaired. Hence, such expenditure is not connected with the damage to the hull or its hypothetical reinstatement and the mere fact that a prudent uninsured owner would have contracted with the same contractors for both prevention of environmental pollution and protection of the property does not make them indivisible. The author believes that the Supreme Court’s decision on this issue is intuitive and makes sense.   

On the issue of whether expenses incurred prior to the notice of abandonment should count towards the calculation of a CTL under s. 60(2)(ii) of the MIA 1906, the Supreme Court rejecting the submission of the underwriters, affirmed the findings of the lower courts. The Supreme Court approached the matter with reference to basic principles of insurance law indicating that several older judgements on the matter (in particular Hall v. Hayman (1912) 17 Comm Cases 81 and The Medina Princess [1965] 1 Lloyd’s Rep 361) lacked reasoning and legal argument. Taking into account the objective character of the factual enquiry of whether a vessel is a CTL and the fact that in marine insurance context the loss is suffered at the time of the casualty, the Supreme Court was adamant that the reference to “damage” in s. 60(2)(ii) was in fact reference to the entire damage arising from the casualty from the moment that it happened. Therefore, it cannot make any difference when costs are incurred, i.e. pre or post notice of abandonment. On that premise, the Supreme Court evaluated whether this principle might be affected by the legal requirement for a notice of abandonment but reached the conclusion that it is not.                   

At the commencement of litigation, it was agreed by the parties that, to be declared a CTL under s. 60 of the MIA 1906, the repair costs needed to be in excess of US$ 8 million. The matter in the light of the Supreme Court judgment will be remitted to the trial judge to determine whether the vessel had been a CTL and what financial consequences would follow from that. 

Examples of recent IP Wales impact on the Welsh Innovation Economy

Reading the IP Wales SME Guide to IP Cybersecurity, underpinned by Beale A., Ratcliffe S., Tettenborn A., The Protection of Data in our Digital Age [2017] Journal of Business Law, Issue 6, 2017 p.461-472, has resulted in each of the following businesses seeking to adopt new methodologies and processes to protect their online commercial activities:-

Benchmark Skincare Limited (Managing Director: Peter Friswell) “By seeking to be certified for Cyber Essentials will enable our business to become “GDPR compliant, protect itself from phising emails, protect itself from external cyberattacks, creating an effective and robust backup data storage process.”

Boyns Information Systems (Director: Robert Boyns) “Reading the IP Wales SME Guide to IP Cybersecurity helped increase our awareness on the importance of cybersecurity in the field intellectual property. As a result, we have adopted new methodologies and processes to allow Boyns Information Systems to grow our cybersecurity infrastructure, whilst protecting us from online harm. Being awarded the IP Wales grant assisted our bid to achieve the Cyber Essentials Plus accreditation, preparing us more fully to mitigate any cyberattack.”

Cadmhas Limited (Director of Services: Elfed Williams) “We are a registered charity and company limited by guarantee and as the Director of Services of CADMHAS I have a duty of care and responsibility to both my Directors, Staff and Service Users that we mitigate the threat of a Cyber Attack. I have spoken to our suppliers Boyns Information Systems Ltd., and they have assured me that by following the 5 pillars of the Cyber Essentials Scheme this will help towards my goal of having a system secured to government guidelines. By having the certification and adhering to it, I will be able to focus on the development of our day to day operations and plan towards the future with a good IT foundation to move forward.”

Castell Howell Foods Limited (Head of IT: Paul Rankin) “Having read the IP Wales SME Guide to Cybersecurity, we decided to increase our protection to Cyber Essentials Plus to reduce the risk of being infiltrated or having data breaches in line with GDPR. With an ever-increasing rise in cybercrime it makes sense to do as much as we can to prevent attacks on our company. I can honestly say that I feel much more confident in our security now and would highly recommend others to carry out this process. Thanks again for considering us for the funding, much appreciated.”

CCTV Wales Limited (Compliance Supervisor: Steve Gallagher) “…to ensure that all customer data and company information is properly protected allowing the company to enhance their service and support Cybersecurity in the area.”

David W.Harris & Co. Solicitors (Practice Manager: Neil Startup) “We are now in the process of undertaking risk analysis and management relating to cyber security. We have updated our internal governance to include more detail on IT security, such as: maintenance of an asset register to include the addition or removal of any assets, Updated IT security and systems policies, Implementation of remote access control, Implementation of a protocol to manage remote devices with access to exchange accounts, Implementation of server password policies, Implementation of automatic screen lock down through user inactivity, Introduction of periodic penetration testing, Password Protection introduced for all electronic documents.”

Daydream Education (Operations Director: Wesley Paetel) “Reviewing and updating all internal cybersecurity awareness and reporting processes, reviewing all third-party anti-virus and malware applications, ensuring system security is reviewed regularly, and reviewing our disaster recovery processes as well as educating staff members about the dangers of cybersecurity and how to become more aware of threats.”

Guardian Property Services Limited (Business Development: Lauren Thomas) “It’s apparent that cybersecurity should be a priority of any business, irrespective of size. Having the right level of knowledge and preparation is vital to minimise and control damage, as well as an understanding of the consequences of a breach and how to recover.”

Health & Her Limited (Marketing Director: Kate Bache) “Collecting, protecting and processing sensitive customer data to improve our understanding in the therapeutic areas of female health, including menopause and menstrual wellbeing.”

Masons Moving Group Limited (Financial Controller: Robert Power) “Protecting the business from online harm is of paramount importance and the Guide has enabled us to implement new security and knowledge to ensure cyber threats are eliminated. These new systems will be monitored frequently and updated when necessary.”

Masons Self Storage Limited (Marketing Manager: James Mason) “The Guide has been extremely helpful in helping our business truly understand the impact cyberattacks can have on a small business. We have ensured brand new office procedures have been put in place with efficient regimes of how we hold and process all types of data.”

PLF Wealth Management Limited (Director: Jeremy Freeman) “Your Guide has made me appreciate the myriad of potential cybersecurity attacks that my small firm has to be aware of, and the steps we as a company need to take to protect our data and network from becoming a victim of these attacks. As a small business our in the financial services arena, we control large amounts of personal data and sensitive data which could make us a viable target to such attacks.”

The Business Centre (Cardiff) Limited (Centre Manager: Emma Mason) “Reading the Guide has given me great knowledge on how to protect our business from online harm. Using this knowledge has enabled us to put new office processes and procedures in place to ensure that we are protected. We have looked closely at how we hold and process our data.”

IP Wales Online Initiative (2017-2020)

IP crime is traditionally viewed as counterfeiting (false branding) and piracy (illegal copying) but cybercriminals (& some state players) are increasingly coming to recognise the value of confidential data held by businesses, be it sensitive information about the business operation (trade secrets) or customer information such as passwords and credit card details (made even more topical with the arrival of the EU General Data Protection Regulation 2016).

These attacks on confidential data are happening globally with increasing rapidity and ever more complexity. Zero-day vulnerabilities (where hackers have discovered and exploit a software security breach before a fix is available) are increasing exponentially.

In response our award-winning business support initiative IP Wales has launched a new Online Initiative 2017-2020, the aim of which is to help small/medium sized enterprises (SMEs) to protect their IP from online threats.

SMEs are particularly vulnerable to cyberattack, with our research (commissioned by the Welsh Government) showing that many take little or no precautions against cyber threats, in the mistaken belief that they are too small to attract the cybercriminal’s attention, or that they don’t possess any data worth stealing. Examples of cyberattacks on SMEs have included:-

• IP ‘Theft’ (i.e. trade secrets), the loss of which seriously undermines a company’s attractiveness to both investors and prospective buyers of the business.

• Ransoming of Data, where the business is coerced into paying off hackers in order to retrieve or access stolen or encrypted data.

.• ‘Theft’ of Customer Data (including payment details) which exposes the business to lawsuits, regulatory fines for improper handling of personal data, and reputational damage.

Our website www.ipcybersecurity.co.uk is dedicated to helping SME Boards of Directors to better understand and better protect their business from this increasing threat of IP cybercrime. It also acts as a repository for our research into emerging trends in Cyber-Risk oversight, offering free Briefing Guides for the IP Service Community (IP active Solicitors and Patent Attorneys) on:-

Protecting Trade Secrets Using Employment Law

Cyber Defence

SMEs Outsourcing Cybersecurity Incident Response & Data Recovery Activities

Who is threatening SME Clients & Why?

SMEs Reporting IP Cybercrime