In London Arbitration 7/21 a vessel was chartered to carry coal. The owners were given the option to load between 27,000 and 33,000 mt of cargo, and the charterers were bound to provide a safe port/berth at the specified terminal. The owners exercised their option to load 33,000 mt
Prior to the fixture being concluded the owners had emailed the charterers’ agents at the loading port and had been advised that the maximum draft at the terminal was in excess of 13 m. The agents indicated that the vessel would berth at a specified berth where the vessel would have had no problem in loading 33,000 mt.
Charterers ordered vessel to load at a different berth where there was a lower maximum sailing draft and failed to change the berth nomination. There was a shortfall of 1,590 mt of cargo.
The tribunal held that the owners were entitled to exercise their option as to cargo quantity unfettered, and the charterers were bound to load whatever amount the owners opted for up to 33,000 mt. If, by their choice of berth, the charterers prevented the vessel from loading that quantity, they put themselves in breach of that obligation. By ordering the vessel to a berth where the draft was so limited as to stop the vessel loading 33,000 mt, the charterers frustrated the exercise of the owners’ option. Charterers were liable to owners in damages for the shortfall in cargo loaded
On 15 December 2018, while under time charter to Navision the “Mookda Naree” was arrested at Conakry in respect of a claim against sub-sub charterers Cerealis, and remained under arrest for nearly a month. The claim related to an alleged shortage claim against them by SMG in respect of cargo discharged at Conakry from a previous, unrelated vessel. The head charter and the sub-charter were time charters on the Asbatime form with additional clauses. In both cases, additional clause 47 put the ship off hire inter alia upon her being detained or arrested by any legal process, until the time of her release, “unless such … detention or arrest [was] occasioned by any act, omission or default of the Charterers and/or sub-Charterers and/or their servants or their Agents.” Additional clause 86 of the head charter, not included in the sub-charter, provided as follows:
When trading to West African ports Charterers to provide adequate security guards during port stays in these countries to protect the vessel her crew and cargo.
When trading to West African ports Charterers to accept responsibility for cargo claims from third parties in these countries (except those arising from unseaworthiness of vessel) including putting up security, if necessary, to prevent arrest/detention of the vessel or to release the vessel from arrest or detention and vessel to remain on hire.
By cl.43 the Inter-Club Agreement was incorporated into the head charter.
Owners claimed that the vessel never went off-hire and that Navision was liable in damages for breach of cl.86. It was common ground that in the context of both time charters, Cerealis was a “sub-Charterer” within the clause 47 proviso.
The tribunal heard separate references by the sub charterer against the time charterer, and by the time charterer against the owners. They held that the clause 47 proviso applied, so that the vessel was not off hire after 12:00 hrs on 17 December 2018, because by that time her detention under arrest thereafter was occasioned by Cerealis’ failure promptly to deal with or secure SMG’s claim so as to procure her release.
In the head charter reference, the arbitrators held that the second paragraph of cl.86 applied, and was not limited to claims concerning cargo carried under the head charter. Therefore, the vessel was off -hire for the entire period under arrest.
On appeals by sub-charterers and time charteres against the awards, Andrew Baker J held,  EWHC 558 (Comm) 10.3.21, that the tribunal had correctly concluded that the detention of “Mookda Naree” after 12:00 hrs on 17 December 2018 was occasioned by Cerealis’ failure to act. It ought reasonably to have acted to deal promptly with the claim being made against it by SMG, that being an “act or omission or default of … sub-Charterers” within the meaning of the proviso to clause 47 of both charters. As regards s.86 under the head charter which concerned the award of hire up to 12,00 on 17 December 2018 it was clear that clause 86 was intended to create a different regime to that generally applicable by reason of clause 47. The vessel never went off-hire during the period of the arrest.
The arbitrators had erred in their construction of clause 86 and should have said that SMG’s claim, though it related to a cargo that had been carried to a West African port, was not a cargo claim within clause 86 of the charter between the Owner and Navision because it did not concern “Mookda Naree’s” West African trading pursuant to that charter but a different ship altogether. It was therefore not a claim allocated to be Navision’s full responsibility by clause 86, any more than it would have been a claim to be dealt with under the Inter-Club Agreement pursuant to clause 43 in the absence of clause 86. Navision’s appeal against the award in the head charter reference succeeded to the extent that because the arbitrators misconstrued clause 86 they wrongly held that the ship never went off hire, whereas they should have held that when arrested she went off hire under clause 47 until the proviso bit from 12:00 hrs on 17 December 2018. They had also wrongly held that Navision had a liability for damages to be assessed for breach of clause 86.
What happens if an assured fails to disclose to the insurer the fact that special conditions were imposed by another insurer as part of another insurance contract? Could that amount to an actionable non-disclosure under s. 18 of the Marine Insurance Act (MIA) 1906? This was the main issue in Niramax Group Ltd v. Zurich Insurance plc  EWHC 535 (Comm). The assured, Niramax, is a company carrying out the business of waste collection and waste cycling from various sites in north-east England. Niramax held a suite of insurance policies with the insurer, Zurich, which provided cover for a variety of risks relating to its plant and machinery. One of these policies was a contractor’s plant policy which provided all risks cover for a mobile plant owned by the assured (the Policy). Niramax also held buildings cover separately with a variety of other insurers. One of these insurers was Millennium Insurance. In the process of providing insurance cover for a building owned by Niramax in 2014, a risk survey report was prepared by Millennium which laid out seven risk requirements. One of these requirements was the installation of a fire suppression system at the main recycling facility of Niramax located at Hartlepool. Even though the assured was reminded by Millennium of the need to install the fire suppression system on several occasions, the system was never installed and as a result special conditions stipulated by the policy came into force on 22 October 2014 increasing the deductible to £ 250,000 and requiring Niramax to self-insure for thirty five percent of the balance of any loss.
In December 2014, Niramax renewed its policy with Zurich on the mobile plant. In 2015, Niramax acquired another mobile plant (Eggersmann plant) and in September 2015, Zurich was persuaded to amend the Policy to extend cover to the newly acquired plant until the renewal date of mid-December 2015. On 4 December 2015, a fire broke out at Niramax’s premises and the Eggersmann plant along with the other plant was destroyed. Niramax made a claim, which, at trial was valued at around £ 4.5 million, under the Policy. The majority of the claim related to the loss of the Eggersmann plant, which was valued around £ 4.3 million. Zurich refused to pay stating that it was entitled to avoid the Policy for material non-disclosure and/or misrepresentation. Niramax brought the current proceedings against Zurich.
It was held that the assured’s non-compliance with risk requirements under the buildings policy with Millennium and the imposition of special terms under that policy were materials facts which needed to be disclosed under s. 18(1) of the MIA 1906. However, the insurer (Zurich) failed to demonstrate that, if the facts had been fully disclosed, the Policy for the plant (effected in December 2014) would have been renewed. On the other hand, Zurich was able to demonstrate that, if the facts had been fully disclosed (especially imposition of special circumstances for the assured company (Niramax) by another insurer), the extension of cover for the Eggersmann plant would have been refused. Accordingly, it was held that the insurer, Zurich, was entitled to avoid the cover for the endorsement under the Policy and no indemnity was due for the loss of the Eggermanns plant. The insurer was required to return the premium received for the endorsement. Otherwise, the original Policy stood and the insurer was bound to indemnify Niramax for the items of mobile plant which were covered by the original Policy (as renewed in December 2014) and damaged in the fire.
Two comments are in order. First, it is interesting to see that the trial judge (Mrs Justice Cockerril) found that the original policy stood (i.e. there was no inducement) even though it would have not been written on the same terms (i.e. with higher premium to reflect the correct multiplier) if full disclosure had been made by the assured. This certainly raises an interesting question going forward on the application of the test of inducement and seems to be at odds with the sentiments expressed by Clarke, LJ, in Assicurazioni Generali SpA v. Arab Insurance Group  EWCA Civ 1642;  Lloyd’s Rep IR 131, at  (emphasis added): In order to prove inducement the insurer or reinsurer must show that the non-disclosure or misrepresentation was an effective cause of his entering into the contract on the terms on which he did. He must therefore show at least that, but for the relevant non-disclosure or misrepresentation, he would not have entered into the contract on those terms. On the other hand, he does not have to show that it was the sole effective cause of his doing so.
Second, the contract was obviously concluded before the Insurance Act 2015 (IA) came into force but is highly unlikely that the application of the AA 2015 would have led to a different outcome. The materiality test applicable under the IA 2015 (under s. 7(3) of the IA 2015) is practically the same and there is still a need to prove inducement for actionable non-disclosure under the 2015 Act.
Another cyber-attack labelled ‘Microsoft Exchange Email hacks’ hits the news again! This attack has been concerningly described as ‘zero day’ attack. A zero-day attack means that the points of vulnerability were unknown before the attack therefore the cyber-attack occurs on the same day that the weakness is discovered in the software. Like so many things happening around the world at this point, the race is on to get on top of these attacks which are believed to be state sponsored and cultivated in China by the hacking group Hafnium. Chinese government denies any involvement. This method of attack has already been replicated and used to infiltrate companies and public bodies in more than 115 countries around the world. It is still early days, so many UK companies may still be unaware that their systems have been hacked. The European Banking Authority has reported that their system has been compromised and that there is a possibility that personal data has been exposed.
Microsoft announced that the hacking group exploited four (4) zero-day vulnerabilities in the server’s system to enter the Microsoft Exchange Server which is used by large corporations and public bodies across the world. The calendar software of governments and data centres were also compromised. The hackers also sometimes used stolen passwords to gain unauthorized access to the system. The hackers would then take control of the server remotely and steal data from the network. The attack has affected thousands around the world.
Tom Burts, a VP at Microsoft described in a sequential order how the attack was carried out;
First, it would gain access to an Exchange Server either with stolen passwords or by using the previously undiscovered vulnerabilities to disguise itself as someone who should have access.
Second, it would create what’s called a web shell to control the compromised server remotely.
Third, it would use that remote access – run from the U.S. based private servers to steal data from an organization’s network.
What is not affected?
The identified vulnerabilities do not affect Exchange Online, Microsoft’s cloud-based email and calendar services that’s included in commercial Office 365 and Microsoft 365 subscriptions.
In response Microsoft issued a software update for its 2010, 2013, 2016 and 2019 versions of Exchange. The UK National Cybersecurity Centre, the US and the Norwegian governments are already issuing warnings and guidelines to businesses about the hacks.
But what does this mean for insurers?
This is an extra dent in the cyber security efforts of companies and public bodies yet another opportunity for a lesson to the insurance market of the potential global and high aggregate loss from just one attack. This incident is another illustration of how susceptible computer systems and servers are to cyber-attacks. Similarly, it is another indication to corporations and public bodies that foreign entities are working assiduously to identify and exploit vulnerabilities within their systems to achieve their motives, whatever they may be. So far, the impact is widespread, and victims include organisations such as infectious disease researchers, law firms, higher education institutions, defence contractors, NGOs. Cybersecurity group Huntress has reported many of their partners servers have been affected and they include small businesses for example small hotels, ice cream company, senior citizen communities, banks, local government and electricity companies.
In light of the recent business interruption decision from the Supreme Court, it will be interesting to see how many of these UK companies will present their claims to insurers and how insurers will respond to claims from assured whose businesses may have been interrupted by the Exchange Email hacks.
There will be gaps and exclusions in these Business Interruption policies which may not provide adequate protection against cyber risks so it is the assured with a cyber risk policy / insurance coverage who will be the most protected during and after these attacks.
Applicable cyber insurance clauses and possible response of insurers
Most cyber insurance policies cover data loss and business interruption as a result of a security breach so this will not be much of an issue for assureds with cyber insurance coverage. There are exclusions in most cyber insurance policies which may leave an assured vulnerable when hacking of this nature (Microsoft Exchange hack) occurs. Let us consider some of these exclusions and their potential impact further:
for repairing, replacing or restoring the Insured’s Computer System to a level beyond that which existed prior to any Claim or Loss;
The inclusion of this or any clause with similar wording means the assured may not be covered for the expenses and cost incurred to hire experts to identify or remediate vulnerabilities within their IT systems. Consequently, the assured will not be indemnified for the expenses or costs incurred to install the patches as recommended by Microsoft as these will be classified as updates or enhancement to the computer system beyond a level that which existed prior to the security breach.
We will not make any payment for any claim, loss or any other liability under this section directly or indirectly due to:
Any failure or interruption of service provided by an internet service provider, telecommunications provider, utilities supplier or other infrastructure provider. However, this exclusion does not apply where you provide such services as part of your business.
ii. failure or malfunction of satellites or of power, utility, mechanical or telecommunications (including internet) infrastructure or services that are not under the insured organization’s direct operational control.
Third party providers
arising out of the failure of any third party provider including any utility, cloud, internet service provider or telecommunications provider, unless arising from a failure of the Insured to protect against unauthorised access to, unauthorised use of, or a denial of service attack or damage, destruction, alteration, corruption, copying, stealing or misuse by a Hacker of the Insured’s Computer system;
ii. The Insurer shall not be liable to indemnify the Insured against any Loss arising as a result of the failure of a third party service provider or cloud provider unless they are hosting hardware or software that is owned by the Insured.
Could the relationship between Microsoft and its clients fall into the category of ‘other infrastructure provider’ to relieve the insurer of any liability to the assured? As software service providers of Microsoft 365 and Azure it will be no surprise to see claims being denied based on clauses with the same or similar wording. However, the assured may object to the insurer’s denial of the claim by the applying ejusdem generis rule in stating that ‘or other infrastructure provider’ should be limited to companies such as Virgin Media, British Gas or Welsh Water and not extend to software providers. According to Cambridge dictionary, infrastructure as it relates to IT means the ‘equipment, software, etc. that a computer system needs in order to operate and communicate with other computers.’ If this definition is accepted by the parties, the challenge for the insurer will be to establish that the Microsoft Exchange Server qualifies as a software needed for a computer system to operate and communicate with other computers. Rather, the function of the Microsoft exchange server is to aid with email storage and calendaring and is unrelated to other operational functions necessary to communicate with other computers.
Certainly ‘infrastructure or services that are not under the insured organization’s direct operational control’ will create less problems for the insurer to establish that the exclusion applies as this broad construction will exclude losses and expenses from incidents such as Microsoft Email Exchange Hack.
which results, directly or indirectly, from access to, confiscation or destruction of the Insured’s Computer system by any government, governmental agency or sub-agency, public authority or any agents thereof;
Since the Microsoft Exchange Email are believed to be carried out by Hafnium which is a government backed group, it is reasonable to identify them as agents of the government of China. Therefore, assureds whose policies include a government intrusion exclusion may be denied coverage for their loss or expenses arising directly or indirectly from access to or destruction of the assured’s computer system by groups such as Hafnium.
Conclusion and the way forward
As aforementioned, it is early days and the real financial impact if any from these attacks are not yet known. However, what is certain is that hackers, whether state sponsored are not are using very sophisticated techniques to identify and exploit vulnerabilities within computer servers and networks. Therefore, companies and public bodies must continue to invest in employee training and take reasonable steps to manage and mitigate their losses from potential cyber-attacks which unfortunately will happen at one point. Among those decisions should be the purchase of cyber insurance policies that addresses the needs of the business with particular attention being placed on the exclusions clauses and ensuring that as an assured you are adequately protected against the cybersecurity risks to which you are most directly and indirectly prone .
While large corporations and government entities may have the requisite IT expertise to support them, the real concern remains for those small and medium sized businesses that do not have the resources for a complete check and cleaning of their systems. Therefore, larger corporations within the supply chain must offer their expertise to the small and medium sized businesses with which they trade to respond to this and other cyber security threats. Since Microsoft Exchange Online servers have not been affected, many small and medium sized businesses may begin to switch to using cloud-based email storage. However, this does not mean they will be immune from cyber-attacks.
Tokio Marine in their Cybersecurity Insurance Policy wording 0417 went as far as to include a list of reasonable steps that an insured should take to avoid / mitigate their loss and these along with government and industry guidelines should be a good starting point in your fight against cyber attacks and their debilitating impacts.
Reasonable steps to avoid Loss
The Insured shall protect its Computer system by:
a. having Virus protection software operating, correctly configured and regularly or automatically updated;
b. updating Computer systems with new protection patches issued by the original system or software manufacturer of supplier;
c. having a fire wall or similar configured device to control access to its Computer system;
d. encrypting and controlling the access to its Computer system and external devices including plug-in devices networked to its Computer system;
e. controlling unauthorised access to its Computer system by correctly configuring its wireless network;
f. changing all passwords on information and communication assets at least every 60 days and cancel any username, password or other security protection once an Employee’s employment has been terminated or after it knew or had reasonable grounds to suspect that it had become available to any unauthorised person;
g. taking regular back-up copies of any data, file or programme on its Computer system are taken and held in a secondary location;
h. having an operational system for logging and monitoring user activity on its Computer system;
i. remote wipe functionality is installed and enabled on all portable devices where such functionality is available
As we mentioned on this blog last August, these days you have to be careful who you sell an old ship to. In Begum v Maran  EWCA Civ 326 MUK, the English managers of a Liberian ship fit only for scrap, helped arrange her sale to a buyer who paid fairly handsomely. That buyer proceeded (entirely foreseeably) to have her scrapped by a thoroughly dodgy outfit called Zuma in a dangerous and environmentally irresponsible way on a Bangladeshi beach. A worker engaged in stripping the hulk fell to his death. Prospects of recovery from Zuma being low, if for no other reason because of a local one-year statute of limitations during the running of which nothing had been done, his widow sued MUK as of right in England because of its domicile here, alleging negligence. Jay J decided that it was arguable that MUK had owed the man a duty of care, and that the local limitations law might be circumvented, and refused a strikeout. MUK appealed.
The Court of Appeal yesterday allowed the case to go ahead, though only very grudgingly and on a more limited basis than Jay J. The Court was particularly sceptical on the limitation point. Under Rome II, applicable to the claim as it predated Brexit (and still applicable to post-Brexit claims in its domesticated form), the law governing the claim – including on the subject of limitation – was Bangladeshi. This immediately defeated the claimant unless she could escape it. The judge had regarded as possibly plausible a contention that Art.7 of Rome II allowed her to invoke English law because her husband’s death had resulted from environmental damage caused by an event here – namely, MTM’s arrangements for sale of the ship. But this was dismissed on appeal as unarguable: rightly so, since this simply wasn’t an environmental case in the first place. But the court did see it as arguable – just – that the limitation period was so short that an English court might disapply it on public policy grounds under Art.26 of Rome II, and ordered a preliminary issue on the point.
On the substantive points, the widow argued either that MUK had owed her husband a duty of care on the principle of Donoghue v Stevenson  AC 562, or that MUK’s sale of the vessel when it should have known that it was likely to be dangerously demolished had created an immediate danger to her husband’s life and thus engendered a duty in respect of the bad practices of his employers Zuma.
Giving the lead judgment, Coulson J was very sceptical on the first point. This wasn’t, he said, a case of a disposal of a dangerous thing, but rather the furnishing of an opportunity for a third party to be negligent in respect of a thing not inherently perilous. Whether this could give rise to a duty his Lordship thought very doubtful indeed – but still not quite implausible enough to justify an immediate strikeout. Our view is that the doubts were fully justified. We normally expect employers to look after their employees; to put a duty on third parties to police the behaviour of contractors they engaged in that respect is to say the least drastic. Should I really have to scrutinise or supervise the employment practices of the builder I employ to extend my house in case one of his workers is hurt? It seems doubtful.
On the second point, the difficulty (a considerable one) was the general rule that people were not generally made responsible for the wrongs of others, however foreseeable. But, said Coulson J, there were possible exceptions where the danger in question had been created by a defendant. And while it seemed unlikely that this would apply here, the law was not absolutely clear and the prospect of persuading a sceptical judge to recognise a duty of care wasn’t dismal enough to deny the widow the chance to argue the toss. Her prospects might be slim, but she was entitled to chance her arm.
This case will possibly be hailed in the liberal media as an advance in the campaign to make big business in Britain take responsibility for the activities of its dodgier partners abroad. But commercial lawyers know better than to engage in chicken-counting. Remember, the claimant here only avoided a strikeout by the skin of her teeth. Her chances of recovering much over and above a nuisance value or reputation-saving settlement remain, it seems fair to say, pretty slim.
Oh, and one more thing. The ability to sue a UK-domiciled company here as of right disappeared with Brussels I Recast in a puff of celebratory Brexit firework smoke at 2300 hours on 31 December last. It follows that, barring swift adherence by the UK to the Lugano convention (increasingly unlikely by all the indications), any future claimant basing their complaint on events in a far-off land with no ostensible connection to England will now also face the prospect of a forum non conveniens application. This may well have an appreciable chance of success. There is, after all, no immediately apparent reason why the English courts should act as the policemen of work practices worldwide, hoewever much sympathy we may feel for a claimant personally.
In short, the boardrooms of corporate Britain, and even more those of their liability insurers, may well see some sighs of relief, if not discreet socially-distant celebrations, in the next few days.
Issues of confidentiality often arise in litigation under procurement challenges, as illustrated in the recent case of Bechtel v High Speed Two (HS2)  EWHC 458.
In this case Mr Justice Fraser noted, “[I]n my judgment, the level of profit in percentage terms that a tenderer included in its bid in this procurement competition is properly described as commercially confidential, and is also something that any tenderer, whether a claimant in proceedings or otherwise, would wish to keep confidential for justifiable reasons.”
In terms of how to retain the confidentiality of such information during litigation, it is contrary to open justice and transparency to have trials conducted (even partially) in secret for all but those legal representatives who sit within a court’s prescribed ‘confidentiality ring’.
At the same time judgements need to be readily comprehensible and include reference to all relevant material and reasoning of the the judge, so having a separate confidential appendix or schedule in a judgement should only occur when there is no viable alternative.
In the circumstances of the present case Mr Justice Fraser concluded there was no viable alternative available to him, for without such a confidential appendix to his judgement (available only to those within the ‘confidentiality ring’), he “would run the real risk of destroying justified confidentiality in commercial issues.”
BIMCO have released new versions of their TOWCON, TOWHIRE and BARGEHIRE forms. New to TOWCON 2021 are a provision for mid-voyage bunkering on longer tows, and a mechanism for calculating compensation due to slow steaming or deviation. BARGEHIRE 2021 now contains clearer wording relating to off-hire surveys, repairs and redelivery. These have often been a source of dispute in the past.
BIMCO has also announced details of progress on its new Force Majeure clause. It takes the approach that neither party may terminate the contract while the vessel is carrying cargo. It notes that termination by owners with cargo on board will entail their continuing responsibility for the cargo as bailees, with no rights of recourse against charterers for discharge costs.
The new bolt-on to the clause sets out a number of liberties if force majeure prevents the completion of loading, or the departure from the load port, or discharge, for more than 21 days from when force majeure notice was declared. Extra costs incurred thereby should be allocated in accordance with the contract, in particular terms as to allocation of responsibility for loading or discharge, such as FIOST terms.
Any extra costs incurred in exercising any of the liberties should be allocated in accordance with the contract. This will require examining how the responsibility for loading and discharge has been allocated in the underlying contract, for example, if it is on FIOST (Free In Out Stowed and Trimmed) terms.
The BIMCO sub committee also considered how the draft clause would relate to other BIMCO clauses in the same contract such as the war, piracy and infectious or contagious diseases clauses. These allow owners to reject proceeding to a risk area, and if they do, to provide a cost allocation mechanism. By contrast the purpose of the Force Majeure clause is to protect a party from liability in damages in case of force majeure, and as a last resort to allow termination, something complementary to the other BIMCO clauses, and not in conflict with them.
The sub-committee noted that it is for the parties to decide whether a Force Majeure clause belongs in a period time charter, and the triggers for the clause have been set deliberately high. Firstly, the party claiming force majeure must prove the existence of the force majeure event; that the event was beyond its control; that it could not have been foreseen; and that its effects were unavoidable. Secondly, the right to terminate will only be available if performance becomes impossible, illegal or radically different, or substantially affects the whole contract during an agreed number of days.
This second aspect is similar to the doctrine of frustration but BIMCO state that “However, there is an important difference – if a party can bring itself within that termination provision, it will be able to terminate immediately, from day one. Under frustration, the contract would only be considered frustrated and terminated after a very long time compared to the overall contract period. There are two termination provisions in the clause and the other one provides a longstop right to terminate after an agreed amount of time has passed. The number of days will have to be negotiated depending on the contract in question.”
The BIMCO Force Majeure Clause and the additional bolt-on provision will be presented for adoption in May this year.
Evergreen Marine (UK) Limited (Appellant) v Nautical Challenge Ltd (Respondent)
 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, atfirst 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  1 Lloyd’s Rep 24 and Kulemesin v HKSAR  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.
‘Statutory liens’ or ‘statutory rights in rem’ come into existence on commencement of in rem proceedings (TheMonicaS  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’  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.
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’  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’  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  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.